Oblicon Reviewer

OBLIGATIONS AND CONTRACTS
REVIEWER
TITLE I OBLIGATIONS
CHAPTER 1
GENERAL PROVISIONS
1156. An obligation is a j!i"i#al n$#$ssit% to gi&$' to "o' o! not to "o.
JURIDICAL NECESSITY juridical tie; connotes that in case of nonco!liance" there #ill $e le%al sanctions&
An obligation is nothin% ore than the dut' of a !erson (o$li%or) to satisf' a s!ecific deanda$le clai of another !erson
(o$li%ee) #hich" if $reached" is enforcea$le in court&
A contract necessaril' %i*es rise to an o$li%ation $ut an o$li%ation does not al#a's need to ha*e a contract&
+INDS ,- ,.LI/ATI,N
A& -ro the *ie#!oint of 0sanction1 2
(a)CI3IL ,.LI/ATI,N that defined in Article 4456; an o$li%ation" if not fulfilled #hen it $ecoes due and
deanda$le" a' $e enforced in court throu%h action; $ased on la#; the sanction is judicial due process
(b)NATURAL ,.LI/ATI,N defined in Article 4789; a s!ecial :ind of o$li%ation #hich cannot $e enforced in court
$ut #hich authori;es the retention of the *oluntar' !a'ent or !erforance ade $' the de$tor; $ased on e<uit'
and natural la#& (i&e& #hen there is !rescri!tion of dut' to !a'" still" the o$li%or !aid his dues to the o$li%ee the
o$li%or cannot reco*er his !a'ent e*en there is !rescri!tion) the sanction is the law" $ut onl' conscience had
ori%inall' oti*ated the !a'ent&
(c) =,RAL ,.LI/ATI,N the sanction is conscience or oralit'" or the la# of the church& (Note> If a Catholic
!roises to hear ass for 4? consecuti*e Sunda's in order to recei*e @4"???" this o$li%ation $ecoes a ci*il
one&)
.& -ro the *ie#!oint of su$ject atter 2
(a) REAL ,.LI/ATI,N the o$li%ation to %i*e
($) @ERS,NAL ,.LI/ATI,N the o$li%ation to do or not to do (e&%& the dut' to !aint a house" or to refrain fro
coittin% a nuisance)
C& -ro the affirati*eness and ne%ati*eness of the o$li%ation 2
(a) @,SITI3E ,R A--IR=ATI3E ,.LI/ATI,N the o$li%ation to %i*e or to do
($) NE/ATI3E ,.LI/ATI,N the o$li%ation not to do (#hich naturall' inludes not to %i*e)
D& -ro the *ie#!oint of !ersons o$li%ed 2 0sanction1 2
(a) UNILATERAL #here onl' one of the !arties is $ound (e&%& @lato o#es Socrates @4"???& @lato ust !a'
Socrates&)
($) .ILATERAL #here $oth !arties are $ound (e&%& In a contract of sale" the $u'er is o$li%ed to deli*er)
2 a' $e>
($&4) reci!rocal
($&8) non2reci!rocal #here !erforance $' one is non2de!endent u!on !erforance $' the other
ELE=ENTS ,- ,.LI/ATI,N
a) ACTI3E SU.JECT (Creditor A ,$li%ee) the !erson #ho is deandin% the !erforance of the o$li%ation;
$) @ASSI3E SU.JECT (De$tor A ,$li%or) the one $ound to !erfor the !restation or to fulfill the o$li%ation or dut';
c) @RESTATI,N (to %i*e" to do" or not to do) o$ject; su$ject atter of the o$li%ation; conduct re<uired to $e o$ser*ed $' the
de$tor;
d) E--ICIENT CAUSE the JURIDICAL TIE #hich $inds the !arties to the o$li%ation; source of the o$li%ation&
@RESTATI,N (,$ject)
4& T, /I3E deli*er' of a thin% to the creditor (in sale" de!osit" !led%e" donation);
8& T, D, co*ers all :inds of #or:s or ser*ices (contract for !rofessional ser*ices);
9& N,T T, D, consists of refrainin% fro doin% soe acts (in follo#in% rules and re%ulations)&
Re<uisites of @restation A ,$ject(
4) licit (if illicit" it is *oid)
8) !ossi$le (if i!ossi$le" it is *oid)
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REVIEWER
9) deterinate or deterina$le (or else" *oid)
7) !ecuniar' *alue
INJURY #ron%ful act or oission #hich causes loss or har to another
DA=A/E result of injur' (loss" hurt" har)
115). Obligation a!is$s *!o+ ,1- la./ ,0- #ont!a#ts/ ,1- 2asi3#ont!a#ts/ ,4- a#ts o! o+issions 5nis6$" b% la./ ,5-
2asi3"$li#ts.
,1- LA7 (,$li%ation eB le%e) i!osed $' la# itself; ust $e eB!ressl' or i!liedl' set forth and cannot $e !resued
2 CSee Article 1158D
,0- CONTRACTS (,$li%ation eB contractu) arise fro sti!ulations of the !arties> eetin% of the inds A foral a%reeent
2 ust $e co!lied #ith in %ood faith $ecause it is the 0la#1 $et#een !arties; neither !art' a' unilaterall' e*ade his o$li%ation
in the contract" unless>
a) contract authori;es it
$) other !art' assents
Note:
Parties may freely enter into any stipulations, provided tey are not contrary to law, morals, good customs, public order or public
policy
! "See Article 115#D
,1- 89ASI3CONTRACTS (,$li%ation eB <uasi2contractu) arise fro la#ful" *oluntar' and unilateral acts and #hich are
enforcea$le to the end that no one shall $e unjustl' enriched or $enefited at the eB!ense of another
2 8 :inds>
a. Ne%otioru %estio 2 unauthori;ed ana%eent; This ta:es !lace #hen a !erson *oluntaril' ta:es char%e of
anotherEs a$andoned $usiness or !ro!ert' #ithout the o#nerEs authorit'
b. Solutio inde$iti 2 undue !a'ent; This ta:es !lace #hen soethin% is recei*ed #hen there is no ri%ht to deand it"
and it #as undul' deli*ered thru ista:e
2 CSee Article 11$%D
,4- :ELICTS (,$li%ation eB aleficio or eB delicto) arise fro ci*il lia$ilit' #hich is the conse<uence of a criinal offense
2 /o*ernin% rules>
4& @ertinent !ro*isions of the R@C and other !enal la#s su$ject to Art 84FF Ci*il Code
CArt 4??" R@C E*er' !erson criinall' lia$le for a felon' is also ci*ill' lia$leD
8& Cha!ter 8" @reliinar' title" on Guan Relations ( Ci*il Code )
9& Title 4H of .oo: I3 of the Ci*il Code on daa%es
2 CSee Article 11$1D
,5- 89ASI3:ELICTS ; TORTS (,$li%ation eB <uasi2delicto or eB <uasi2aleficio) arise fro daa%e caused to another
throu%h an act or oission" there $ein% no fault or ne%li%ence" $ut no contractual relation eBists $et#een the !arties
! "See Article 11$&D
115<. Obligations *!o+ la. a!$ not 5!$s+$". Onl% t6os$ ,1- $=5!$ssl% "$t$!+in$" in t6is #o"$ o! ,0- in s5$#ial la.s
a!$ "$+an"abl$' an" s6all b$ !$glat$" b% t6$ 5!$#$5ts o* t6$ la. .6i#6 $stablis6$s t6$+/ an" as to .6at 6as not
b$$n *o!$s$$n' b% t6$ 5!o&isions o* t6is #o"$.
Unless such o$li%ations are EI@RESSLY !ro*ided $' la#" the' are not deanda$le and enforcea$le" and cannot $e
!resued to eBist&
The Ci*il Code can $e a!!lica$le su!!letoril' to o$li%ations arisin% fro la#s other than the Ci*il Code itself&
S!ecial la#s refer to all other la#s not contained in the Ci*il Code&
115>. Obligations a!ising *!o+ #ont!a#ts 6a&$ t6$ *o!#$ o* la. b$t.$$n t6$ #ont!a#ting 5a!ti$s an" s6ol" b$
#o+5li$" .it6 in goo" *ait6.
C,NTRACT eetin% of inds $et#een t#o !ersons #here$' one $inds hiself" #ith res!ect to the other" to %i*e" to do
REVIEWER
soethin% or to render soe ser*ice; %o*erned !riaril' $' the a%reeent of the contractin% !arties&
3ALID C,NTRACT it should not $e a%ainst the la#" contrar' to orals" %ood custos" !u$lic order" and !u$lic !olic'&
In the e'es of la#" a *oid contract does not eBist and no o$li%ation #ill arise fro it&
,.LI/ATI,NS ARISIN/ -R,= C,NTRACTS !riaril' %o*erned $' the sti!ulations" clauses" ters and conditions of their
a%reeents&
If a contractEs !restation is unconsciona$le (unfair) or unreasona$le" e*en if it does not *iolate orals" la#" etc&" it a'
not $e enforced totall'&
Inter!retation of contract in*ol*es a <uestion of la#&
C,=@LIANCE IN /,,D -AITG co!liance or !erforance in accordance #ith the sti!ulations or ters of the contract or
a%reeent&
-ALSI-ICATI,N ,- A 3ALID C,NTRACT onl' the unauthori;ed insertions #ill $e disre%arded; the ori%inal ters and sti!ulations
should $e considered *alid and su$sistin% for the !artied to fulfill&
116?. Obligations "$!i&$" *!o+ 2asi3#ont!a#ts s6all b$ sbj$#t to t6$ 5!o&isions o* #6a5t$! 1' titl$ 1) o* t6is boo@.
JUASI2C,NTRACT juridical relation resultin% fro la#ful" *oluntar' and unilateral acts $' *irtue of #hich" $oth !arties $ecoe
$ound to each other" to the end that no one #ill $e unjustl' enriched or $enefited at the eB!ense of the other& (See Article 8478)

(4) NE/,TI,RU= /ESTI, juridical relation #hich ta:es !lace #hen soe$od' *oluntaril' ana%es the !ro!ert'
affairs of another #ithout the :no#led%e or consent of the latter; o#ner shall rei$urse the %estor for necessar'
and useful eB!enses incurred $' the latter for the !erforance of his function as %estor&
(8) S,LUTI, INDE.ITI soethin% is recei*ed #hen there is no ri%ht to deand it and it #as undul' deli*ered
throu%h ista:e; o$li%ation to return the thin% arises on the !art of the reci!ient& (e&%& If I let a store:ee!er
chan%e ' @5?? $ill and $' error he %i*es e @56?" I ha*e the dut' to return the eBtra @6?)
1161. Ci&il obligations a!ising *!o+ #!i+inal o**$ns$s s6all b$ go&$!n$" b% t6$ 5$nal la.s' sbj$#t to t6$ 5!o&isions
o* A!ti#l$ 01))' an" o* t6$ 5$!tin$nt 5!o&isions o* C6a5t$! 0' P!$li+ina!% in H+an R$lations' an" o* Titl$ 1< o* t6is
boo@' !$glating "a+ag$s.
/o*ernin% rules>
4& @ertinent !ro*isions of the R@C and other !enal la#s su$ject to Art 84FF Ci*il Code
CArt 4??" R@C E*er' !erson criinall' lia$le for a felon' is also ci*ill' lia$leD
8& Cha!ter 8" @reliinar' title" on Guan Relations ( Ci*il Code )
9& Title 4H of .oo: I3 of the Ci*il Code on daa%es
E*er' !erson criinall' lia$le for a felon' is also criinall' lia$le (art& 4??" R@C)
CRI=INAL LIA.ILITY INCLUDES>
(a) RESTITUTI,N restoration of !ro!ert' !re*iousl' ta:en a#a'; the thin% itself shall $e restored" e*en thou%h it
$e found in the !ossession of a third !erson #ho has ac<uired it $' la#ful eans" sa*in% to the latter his action
a%ainst the !ro!er !erson #ho a' $e lia$le to hi&
($) RE@ARATI,N ,- TGE DA=A/E CAUSED court deterines the aount of daa%e> !rice of a thin%" sentiental
*alue" etc&
(c) INDE=NI-ICATI,N -,R C,NSEJUENTIAL DA=A/ES includes daa%es suffered $' the fail' of the injured
!art' or $' a third !erson $' reason of the crie&
'ffect of ac(uittal in criminal case:
a& #hen ac<uittal is due to reasona$le dou$t no ci*il lia$ilit'
$& #hen ac<uittal is due to eBe!tin% circustances there is ci*il lia$ilit'
c& #hen there is !re!onderance of e*idence there is ci*il lia$ilit'
REVIEWER
1160. Obligations "$!i&$" *!o+ 2asi3"$li#ts s6all b$ go&$!n$" b% t6$ 5!o&isions o* #6a5t$! 0' titl$ 1) o* t6is boo@'
an" b% s5$#ial la.s.
JUASI2DELICT (cul!a a<uiliana) an act or oission $' a !erson #hich causes daa%e to another %i*in% rise to an o$li%ation to
!a' for the daa%e done" there $ein% fault or ne%li%ence $ut there is no !re2eBistin% contractual relation $et#een !arties& (See
Article 84F6)
REJUISITES>
a& oission
$& ne%li%ence
c. daa%e caused to the !laintiff
d& direct relation of oission" $ein% the cause" and the daa%e" $ein% the effect
e& no !re2eBistin% contractual relations $et#een !arties
-ault or Ne%li%ence consists in the oission of that dili%ence #hich is re<uired $' the nature of the o$li%ation and corres!onds
#ith the circustances of the !erson" tie" and of the !lace&
BASIS :ELICTS 89ASI3:ELICTS
4& INTENT Criinal A alicious Ne%li%ence
8& INTEREST Affects @U.LIC interest Affects @RI3ATE interest
9& LIA.ILITY Criinal and ci*il lia$ilities Ci*il lia$ilit'
7& @UR@,SE @ur!ose !unishent Indenification
5&C,=@R,=ISE Cannot $e co!roised Can $e co!roised
6& /UILT @ro*ed $e'ond reasona$le dou$t @re!onderance of e*idence
CHAPTER 0
NAT9RE AN: EAAECT OA OBLIGATIONS
1161. E&$!% 5$!son oblig$" to gi&$ so+$t6ing is also oblig$" to ta@$ #a!$ o* it .it6 t6$ 5!o5$! "ilig$n#$ o* a goo"
*at6$! o* a *a+il%' nl$ss t6$ la. o! t6$ sti5lation o* t6$ 5a!ti$s !$2i!$s anot6$! stan"a!" o* #a!$.
S!ea:s of an o$li%ation to care of a DETER=INATE thin% (that is one #hich is s!ecific; a thin% identified $' its
indi*idualit') #hich an o$li%or is su!!osed to deli*er to another&
Reason> the o$li%or cannot ta:e care of the #hole classA%enus
DUTIES ,- DE.T,R>
@reser*e or ta:e care of the thin%s due&
DILI/ENCE ,- A /,,D -ATGER a %ood father does not a$andon his fail'" he is al#a's read' to !ro*ide and
!rotect his fail'; ordinar' care #hich an a*era%e and reasona$l' !rudent an #ould do&
2 Defined in the ne%ati*e in Article 44F9
AN,TGER STANDARD ,- CARE eBtraordinar' dili%ence !ro*ided in the sti!ulation of !arties&
-ACT,RS T, .E C,NSIDERED dili%ence de!ends on the nature of o$li%ation and corres!onds #ith the
circustances of the !erson" tie" and !lace&
KK De$tor is not lia$le if his failure to deli*er the thin% is due to fortuitous e*ents or force ajeureL #ithout ne%li%ence or fault in
his !art&
Deli*er the fruits of a thin%
Deli*er the accessionsAaccessories
Deli*er the thin% itself
Ans#er for daa%es in case of non2fulfillent or $reach
1164. T6$ #!$"ito! 6as a !ig6t to t6$ *!its o* t6$ t6ing *!o+ t6$ ti+$ t6$ obligation to "$li&$! it a!is$s. Ho.$&$!' 6$
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REVIEWER
s6all a#2i!$ no !$al !ig6t o&$! it ntil t6$ sa+$ 6as b$$n "$li&$!$" to 6i+.
REAL RI/GT (jus in re) ri%ht !ertainin% to !erson o*er a s!ecific thin%" #ithout a !assi*e su$ject indi*iduall' deterined
a%ainst #ho such ri%ht a' $e !ersonall' enforced&
a ri%ht enforcea$le a%ainst the #hole #orld
@ERS,NAL RI/GT (jus ad re) a ri%ht !ertainin% to a !erson to deand fro another" as a definite !assi*e su$ject" the
fulfillent of a !restation to %i*e" to do or not to do&
a ri%ht enforcea$le onl' a%ainst a definite !erson or %rou! of !ersons&
.efore the deli*er'" the creditor" in o$li%ations to %i*e" has erel' a !ersonal ri%ht a%ainst the de$tor a ri%ht to as: for
deli*er' of the thin% and the fruits thereof&
,nce the thin% and the fruits are deli*ered" then he ac<uires a real ri%ht o*er the&
,#nershi! is transferred $' deli*er' #hich could $e either actual or constructive& (Art& 47FF)
The reed' of the $u'er #hen there is no deli*er' des!ite deand is to file a co!laint for 0S@ECI-IC @ER-,R=ANCE
AND DELI3ERY1 $ecause he is not 'et the o#ner of the !ro!ert' $efore the deli*er'&
ACTUAL DELI3ERY actual deli*er' of a thin% fro the hand of the %rantor to the hand of the %rantee (!resonall')" or
anifested $' certain !ossessor' acts eBecuted $' the %rantee #ith the consent of the %rantor (realt')&
-RUITS>
4& NATURAL s!ontaneous !roducts of the soil" the 'oun% and other !roducts of anials;
8& INDUSTRIAL !roduced $' lands of an' culti*ation or la$or;
9& CI3IL those deri*ed $' *irtue of juridical relation&
KK SEE Article 4467 (retroacti*it' of the effects of conditional o$li%ation to %i*e once the condition has $een fulfilled)
1165. 76$n .6at is to b$ "$li&$!$" is a "$t$!+inat$ t6ing' t6$ #!$"ito! B +a% #o+5$l t6$ "$bto! to +a@$ "$li&$!%.
I* t6$ t6ing is in"$t$!+inat$ o! g$n$!i#' 6$ +a% as@ t6at t6$ obligation b$ #o+5li$" .it6 at t6$ $=5$ns$ o* t6$
"$bto!. I* t6$ obligo! "$la%s o! 6as 5!o+is$" to "$li&$! t6$ sa+$ ting to t.o o! +o!$ 5$!sons .6o "o not 6a&$ t6$
sa+$ int$!$st' 6$ s6all b$ !$s5onsibl$ *o! an% *o!titos $&$nt ntil 6$ 6as $**$#t$" t6$ "$li&$!%.
KThis !ro*ision a!!lies to an o$li%ation to %i*e&
DETER=INATE TGIN/
soethin% #hich is susce!ti$le of !articular desi%nation or s!ecification;
o$li%ation is eBtin%uished if the thin% is lost due to fortuitous e*ents&
Article 476?> a thin% is deterinate #hen it is !articularl' desi%nated and !h'sicall' se%re%ated fro all others of the
sae class&
INDETER=INATE TGIN/
soethin% that has reference onl' to a class or %enus;
o$li%ation to deli*er is not so eBtin%uished $' fortuitous e*ents&
RE=EDIES -,R -AILURE ,- DELI3ERY (deterinate thin%)
4& Co!laint for s!ecific !erforance an action to co!el the fulfillent of the o$li%ation&
8& Co!laint for rescission of the o$li%ation action to rescind
9& Co!laint for daa%es action to clai for co!ensation of daa%es suffered
As a %eneral rule" 0no !erson shall $e res!onsi$le for those e*ents #hich could not $e foreseen" or #hich" thou%h
foreseen" are ine*ita$le" eBce!t>
4& in cases eB!ressl' s!ecified $' the la#
8& #hen it is sti!ulated $' the !arties
9& #hen the nature of the o$li%ation re<uires assu!tion of ris:
An indeterinate thin% cannot $e o$ject of destruction $' a fortuitous e*ent $ecause %enus ne*er !erishes&
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1166. T6$ obligation to gi&$ a "$t$!+inat$ t6ing in#l"$s t6at o* "$li&$!ing all its a##$ssions an" a##$sso!i$s' $&$n
t6og6 t6$% +a% not 6a&$ b$$n +$ntion$".
ACCESSI,NS fruits of the thin% or additions to or i!ro*eents u!on the !rinci!al
those #hich are naturall' or artificiall' attached to the thin%
ACCESS,RIES thin%s included #ith the !rinci!al for the latterEs e$ellishent" $etter use" or co!letion
)en does rigt to fruits ariseM fro the tie the o$li%ation to deli*er arises
Conditional fro the oent the condition ha!!ens
Nith a terA!eriod u!on the eB!iration of the terA!eriod
Si!le fro the !erfection of the contract
116). I* a 5$!son oblig$" to "o so+$t6ing *ails to "o it' t6$ sa+$ s6all b$ $=$#t$" at 6is #ost. T6is sa+$ !l$ s6all
b$ obs$!&$" i* 6$ "o$s it in #ont!a&$ntion o* t6$ t$no! o* t6$ obligation B it +a% b$ "$#!$$" t6at .6at 6as b$$n
5oo!l% "on$ b$ n"on$.
K This !ro*ision a!!lies to an o$li%ation to do&
TGREE SITUATI,NS>
a) De$torEs failure to !erfor an o$li%ation
creditor a' do the o$li%ation" or $' another" at the eB!ense of the de$tor;
reco*er daa%es
$) @erforance #as contrar' to the ters a%reed u!on
order of the court to undo the sae at the eB!ense of the de$tor
c) @erforance in a !oor anner
order of the court to undo the sae at the eB!ense of the de$tor
116<. 76$n t6$ obligation #onsists in NOT :OING an" t6$ obligo! "o$s .6at 6as b$$n *o!bi""$n 6i+' it s6all also b$
n"on$ at 6is $=5$ns$.
K This !ro*ision a!!lies to an o$li%ation not to do&
116>. T6os$ oblig$" to "$li&$! o! to "o so+$t6ing in#! in "$la% *!o+ t6$ ti+$ t6$ oblig$$ j"i#iall% o! $=t!aj"i#iall%
"$+an"s *!o+ t6$+ t6$ *l*ill+$nt o* t6$i! obligation.
Ho.$&$!' t6$ "$+an" b% t6$ #!$"ito! s6all not b$ n$#$ssa!% in o!"$! t6at "$la% +a% $=ists(
76$n t6$ la. o! obligation so $=5!$ssl% "$#la!$s/
76$n *!o+ t6$ nat!$ o* t6$ #ont!a#t' ti+$ s t6$ $ss$n#$ an" +oti&ating *a#to! *o! its $stablis6+$nt/
76$n "$+an" .ol" b$ s$l$ss ,5!$station is i+5ossibl$-/
In !$#i5!o#al obligations' *!o+ t6$ +o+$nt on$ o* t6$ 5a!ti$s *l*ills 6is obligation/
76$n t6$ "$bto! a"+its 6$ is in "$*alt
,RDINARY DELAY ere failure to !erfor an o$li%ation at the a!!ointed tie&
LE/AL DELAY (DE-AULT) tantaount to non2fulfillent of the o$li%ation and arises after an eBtrajudicial or judicial deand #as
ade u!on the de$tor&
CIN:S OA :EAA9LT >
a) DORA SOLVEN:I dela' on the !art of the de$tor to fulfill his o$li%ation;
REJUISITES>
4& failure of the o$li%or to !erfor o$li%ation on the DATE a%reed u!on;
2. deand (judicialAeBtrajudicial) $' the creditor;
9& failure to co!l' #ith such deand
E--ECTS>
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REVIEWER
4) de$tor lia$le for daa%es and interests
8) de$tor lia$le for the loss of a thin% due to a fortuitous e*ent
+INDS>
4) ora sol*endi eB re default in real o$li%ations (to %i*e)
8) ora sol*endi eB !ersona default in !ersonal o$li%ations (to do)
b) DORA ACCIPIEN:I dela' on the !art of the creditor to acce!t the !erforance of the o$li%ation;
Effects>
4& creditor lia$le for daa%es
8& creditor $ears the ris: of loss of the thin%
9& de$tor not lia$le for interest fro the tie of creditorEs dela'
7& de$tor release hiself fro the o$li%ation
c) CODPENSATIO DORAE dela' of the o$li%ors in reci!rocal o$li%ation&
Effect> the default of one co!ensates the default of the other; their res!ecti*e lia$ilities shall $e offset e<uita$le&
Default A Dela' in ne%ati*e o$li%ation is not !ossi$le& (In ne%ati*e o$li%ation" onl' fulfillent and *iolation are !ossi$le)
11)?. T6os$ .6o in t6$ 5$!*o!+an#$ o* t6$i! obligations a!$ gilt% o* *!a"' n$glig$n#$' o! "$la%' an" t6os$ .6o in
an% +ann$! #ont!a&$n$ t6$ t$no! t6$!$o*' a!$ liabl$ *o! "a+ag$s.
-RAUD (dolo) deli$erate intentional e*asion of the faithful fulfillent of an o$li%ation;
NE/LI/ENCE (cul!a or fault) *oluntar' act or oission of dili%ence" there $ein% no alice" #hich !re*ents the noral fulfillent
of an o$li%ation;
DELAY (ora) default or tardiness in the !erforance of an o$li%ation after it has $een due and deanda$le;
C,NTRA3ENTI,N ,- TER=S ,- ,.LI/ATI,N (*iolation) *iolation of ters and conditions sti!ulated in the o$li%ation; this ust
not $e due to a fortuitous e*ent&
11)1. R$s5onsibilit% a!ising *!o+ *!a" is "$+an"abl$ in all obligations. An% .ai&$! o* an a#tion *o! *t!$ *!a" is
&oi".
To allo# such #ai*er #ill necessaril' render the o$li%ator' force of contracts illusor'&
The la# does not !rohi$it #ai*er of an action for daa%es $ased on fraud alread' coitted&
An' deli$erate de*iation fro the noral #a' of fulfillin% the o$li%ation a' $e a !ro!er $asis for clai for daa%es
a%ainst the %uilt' !art'&
INCIDENTAL -RAUD (a!!lica$le !ro*isions are Arts& 44F? O 4977) coitted in the !erforance of an o$li%ation alread'
eBistin% $ecause of a contract; incidental fraud o$li%es the !erson e!lo'in% it to !a' daa%es&
CAUSAL -RAUD (Art& 499H) e!lo'ed in the eBecution of contract in order to secure consent; reed' is annulent $ecause of
*itiation of consent&
11)0. R$s5onsibilit% a!ising *!o+ n$glig$n#$ in t6$ 5$!*o!+an#$ o* $&$!% @in" o* obligation is also "$+an"abl$' bt
s#6 liabilit% +a% b$ !$glat$" b% t6$ #o!ts' a##o!"ing to #i!#+stan#$s.
CourtEs discretion $ecause>
(a) ne%li%ence de!ends u!on the circustances of a case %ood or $ad faith of the o$li%or a' $e considered
as #ell as the conduct or isconduct of the o$li%ee;
($) it is not as serious as fraud&
Ne%li%ence lac: of foresi%ht or :no#led%e
I!rudence lac: of s:ill or !recaution
TEST ,- NE/LI/ENCE
Did the defendant" in doin% the alle%ed ne%li%ent act" use the reasona$le care and caution #hich an ordinar' !rudent an #ould
ha*e used in the sae situationM
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TN, TY@ES ,- NE/LI/ENCE>
Basis 1. Cl5a A2iliana
,8asi3"$li#t-
0. Cl5a Cont!a#tal
,B!$a#6 o* #ont!a#t-
DE-INITI,N Ne%li%ence $et#een !arties not so
related $' !re2eBistin% contract
Ne%li%ence in the !erforance of contractual
o$li%ation
NATURE ,- NE/LI/ENCE Direct" su$stanti*e and inde!endent Incidental to the !erforance of the o$li%ation&
/,,D -ATGER ,- TGE
-A=ILY DE-ENSE
Co!lete and !ro!er defense (!arents"
%uardian" e!lo'ers)
Not co!lete and !ro!er defense in the selection
of e!lo'ees&
@RESU=@TI,N ,-
NE/LI/ENCE
No !resu!tion injured !art' ust
!ro*e ne%li%ence of the defendant&
There is !resu!tion defendant ust !ro*e
that there #as no ne%li%ence in the carr'in% out
of the ters of the contract&
11)1. T6$ *alt o! n$glig$n#$ o* t6$ obligo! #onsists in t6$ o+ission o* t6at "ilig$n#$ .6i#6 is !$2i!$" b% t6$ nat!$
o* t6$ obligation an" #o!!$s5on"s .it6 t6$ #i!#+stan#$s o* t6$ 5$!sons' o* 6$ ti+$ an" o* t6$ 5la#$B I* t6$ la. o!
#ont!a#t "o$s not stat$ t6$ "ilig$n#$ .6i#6 is to b$ obs$!&$" in t6$ 5$!*o!+an#$' t6at .6i#6 is $=5$#t$" i* a goo"
*at6$! o* a *a+il% s6all b$ !$2i!$".
2 This !ro*ision !ro*ides for a ne%ati*e definition of 0!ro!er dili%ence of a %ood father of a fail'1
-RAUD distin%uished fro NE/LI/ENCE
ARA9: NEGLIGENCE
There is deli$erate intention to cause daa%e& There is no deli$erate intention to cause daa%e&
Lia$ilit' cannot $e iti%ated& Lia$ilit' a' $e iti%ated&
Nai*er for future fraud is *oid& Nai*er for future ne%li%ence a' $e allo#ed in certain cases>
DILI/ENCE the attention and care re<uired of a !erson in a %i*en situation and is o!!osite of ne%li%ence&
NE/LI/ENCE consists in the oission of that dili%ence #hich is re<uired $' the nature of the !articular o$li%ation and
corres!onds #ith the circustances of the !ersons" of the tie" and of the !lace&
+INDS of DILI/ENCE>
4& DILI/ENCE ,- A /,,D -ATGER a %ood father does not a$andon his fail'" he is al#a's read' to !ro*ide and
!rotect his fail'; ordinar' care #hich an a*era%e and reasona$l' !rudent an #ould do&
8& Dili%ence re<uired $' the la# %o*ernin% the !articular o$li%ation
9& Dili%ence sti!ulated $' the !arties
11)4. E=#$5t in #as$s $=5!$ssl% s5$#i*i$" b% t6$ la.' o! .6$n it is ot6$!.is$ "$#la!$" b% sti5lation' o! .6$n t6$
nat!$ o* t6$ obligation !$2i!$s t6$ ass+5tion o* !is@' no 5$!son s6all b$ !$s5onsibl$ *o! t6os$ $&$nts .6i#6 #ol"
not b$ *o!$s$$n' o! .6i#6' t6og6 *o!$s$$n' .$!$ in$&itabl$.
-,RTUIT,US E3ENT an occurrence or ha!!enin% #hich could not $e foreseen or e*en if foreseen" is ine*ita$le; a$solutel'
inde!endent of huan inter*ention; act of /od&
-,RCE =AJEURE 2 an e*ent caused $' the le%itiate or ille%itiate acts of !ersons other than the o$li%or; there is huan
inter*ention&
REJUISITES ,- -,RTUIT,US E3ENT> CI93IAD
1. Inde!endent of the huan #ill (or at least of the o$li%orEs)
2. 9nforeseen or una*oida$le
3. ,f such character as to render it i!ossi$le for the o$li%or to co!l' #ith his o$li%ation in a noral anner
4. ,$li%or *ree fro an' !artici!ationAa%%ra*ation of the injur' to the o$li%ee (no ne%li%ence or i!rudence)
EIE@TI,NS>
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REVIEWER
4& Nhen it is eB!ressl' sti!ulated that he shall $e lia$le e*en if non2!erforance of the o$li%ation is due to fortuitous
e*ents;
8& Nhen the nature of the o$li%ation re<uires the assu!tion of ris:;
9& Nhen the o$li%or is in dela';
7& Nhen the o$li%or has !roised the sae thin% to t#o or ore !ersons #ho do not ha*e the sae interest;
5& Nhen the !ossessor is in $ad faith and the thin% lost or deteriorated due to fortuitous e*ent;
6& Nhen the o$li%or contri$uted to the loss of the thin%&
11)5. 9s!ios t!ansa#tions s6all b$ go&$!n$" b% s5$#ial la.s.
K see Article 4749
USURY contractin% for or recei*in% interest in eBcess of the aount allo#ed $' la# for the loan or use of one'" %oods" etc&
USURY LAN a:es the usurers criinall' lia$le if the interest char%ed on loans are ore that the liit !rescri$ed $' la#&
This la# is re!ealed Circular No& P?5 of the Central .an: has eB!ressl' reo*ed the interest ceilin%s !rescri$ed $' the
USURY LAN&
11)6. T6$ !$#$i5t o* t6$ 5!in#i5al b% t6$ #!$"ito! .it6ot !$s$!&ation .it6 !$s5$#t to t6$ int$!$st' s6all gi&$ !is$ to
t6$ 5!$s+5tion t6at sai" int$!$st 6as b$$n 5ai".
T6$ !$#$i5t o* a lat$! install+$nt o* a "$bt .it6ot !$s$!&ation as to 5!io! install+$nts' s6all li@$.is$ !ais$ t6$
5!$s+5tion t6at s#6 install+$nts 6a&$ b$$n 5ai".
These are ere !resu!tions&
To $e sure #rite the interest and the dates co*ered $' such !a'ent in the recei!t&
11)). T6$ #!$"ito!s' a*t$! 6a&ing 5!s$" t6$ 5!o5$!t% in 5oss$ssion o* t6$ "$bto! to satis*% t6$i! #lai+s' +a%
$=$!#is$ all t6$ !ig6ts an" b!ing all t6$ a#tions o* t6$ latt$! *o! t6$ sa+$ 5!5os$' sa&$ t6os$ .6i#6 a!$ in6$!$nt in
6is 5$!son/ t6$% +a% also i+5gn t6$ a#ts .6i#6 t6$ "$bto! +a% 6a&$ "on$ to "$*!a" t6$+.
RE=EDIES A3AILA.LE T, CREDIT,RS -,R TGE SATIS-ACTI,N ,- TGEIR CLAI=S>
4& EBact fulfillent #ith ri%ht to daa%es
8& EBhaustion of the de$torEs !ro!erties still in his !ossession #rit of attachent ($efore jud%ent) or #rit of eBecution
(for final jud%ent not 'et eBecuted)
3. ACCI,N SU.R,/AT,RIA an action #here the creditor #hose clais had not $een full' satisfied" a' %o after the
de$tors (9
rd
!erson) of the defendant de$tor&
7& ACCI,N @AULIANA an action #here the creditor files an action in court for the RESCISSI,N of acts or contracts entered
into $' the de$tor desi%ned to defraud the forer&
11)<. Sbj$#t to t6$ la.s' all !ig6ts a#2i!$" in &i!t$ o* an obligation a!$ t!ans+issibl$' i* t6$!$ 6as b$$n no
sti5lation to t6$ #ont!a!%.
EICE@TI,NS>
a) Those not transissi$le $' their nature li:e !urel' !ersonal ri%hts;
$) Those not transissi$le $' !ro*ision of la#;
c) Those not transissi$le $' sti!ulation of !arties&
CHAPTER 1
:IAAERENT CIN:S OA OBLIGATIONS
Section 1 Pure and Conditional Obligations
11)>. E&$!% obligation .6os$ 5$!*o!+an#$ "o$s not "$5$n" 5on a *t!$ o! n#$!tain $&$nt' o! 5on a 5ast $&$nt
n@no.n to t6$ 5a!ti$s' is "$+an"abl$ at on#$.
E&$!% obligation .6i#6 #ontains a !$solto!% #on"ition s6all also b$ "$+an"abl$' .it6ot 5!$j"i#$ to t6$ $**$#ts o*
t6$ 6a55$ning o* t6$ $&$nt.
@URE ,.LI/ATI,N an o$li%ation #hich does not contain an' condition or ter u!on #hich the fulfillent is ade to de!end;
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iediatel' deanda$le $' the creditors and the de$tor cannot $e eBcused fro not co!l'in% #ith his !restation&
C,NDITI,NAL ,.LI/ATI,N an o$li%ation #hich de!ends u!on a future or uncertain e*ent" or u!on a !ast e*ent un:no#n to the
contractin% !arties&
an o$li%ation su$ject to a condition&
a) Sus!ensi*e ,$li%ation its fulfillent %i*es rise to an o$li%ation; the deanda$ilit' of the o$li%ation or the
effecti*it' of the contract can ta:e !lace onl' after the condition has $een fulfilled&
b) Resolutor' ,$li%ation its ha!!enin% eBtin%uishes the o$li%ation #hich is alread' eBistin%;
11<?. 76$n t6$ "$bto! bin"s 6i+s$l* to 5a% .6$n 6is +$ans 5$!+it 6i+ to "o so' t6$ obligation s6all b$ "$$+$" to
b$ on$ .it6 a 5$!io"' sbj$#t to t6$ 5!o&isions o* A!ti#l$ 11>).
@ERI,D a future and certain e*ent u!on the arri*al of #hich" the o$li%ation su$ject to it either arises or is eBtin%uished&
INDICATI,NS ,- A TER= ,R @ERI,D>
Nhen the de$tor $inds hiself to !a'
#hen his eans !erit hi to do so
little $' little
as soon as !ossi$le
fro tie to tie
as soon as I ha*e the one'
in !artial !a'ent
#hen in the !osition to !a'
11<1. In #on"itional obligations' t6$ a#2isition o* !ig6ts' as .$ll as t6$ $=tingis6+$nt o! loss o* t6os$ al!$a"%
a#2i!$"' s6all "$5$n" 5on t6$ 6a55$ning o* t6$ $&$nt .6i#6 #onstitt$s t6$ #on"ition.
Sus!ensi*e Condition the ac<uisition of ri%hts $' the creditor de!ends u!on the ha!!enin% of the e*ent #hich constitutes the
condition; if such condition does not ta:e !lace" it #ould $e as of the conditional o$li%ation had ne*er eBisted&
(e&%& !roise to %i*e a car after %raduatin% fro la# school as cu laude)
Resolutor' Condition the ri%hts and o$li%ations alread' eBistin% are under threat of eBtinction u!on the ha!!enin% or fulfillent
of such condition&
(e&%& donation $' reason of arria%e the cele$ration of arria%e is a resolutor' condition; if the arria%e did not !ush throu%h"
the donation a' $e re*o:ed)
11<0. 76$n t6$ *l*ill+$nt o* t6$ #on"ition "$5$n"s 5on t6$ sol$ .ill o* t6$ "$bto!' t6$ #on"itional obligation s6all
b$ &oi". I* it "$5$n"s 5on #6an#$ o! 5on t6$ .ill o* a t6i!" 5$!son' t6$ obligation s6all ta@$ $**$#t in #on*o!+it%
.it6 t6$ 5!o&isions o* t6is Co"$.
A!!lies onl' to sus!ensi*e conditions&
9 +INDS ,- C,NDITI,NS UNDER TGIS ARTICLE>
1. @,TESTATI3E a sus!ensi*e condition #hich de!ends u!on the #ill of one of the contractin% !arties Q if at the
sole #ill of the de$tor" it is *oid; if at the creditorEs" still *alid& this is to !re*ent the esta$lishent of illusor'
o$li%ations&
2. CASUAL the condition de!ends u!on chance or the #ill of a third !erson;(e&%& cell!hone #arrant')
9& =IIED the condition de!ends !artl' u!on the #ill of the !arties and !artl' u!on chance or the #ill of a third
!erson; (eBa!le ni Att'& De Cha*e;> !assin% the $ar)
11<1. I+5ossibl$ #on"itions' t6os$ #ont!a!% to goo" #sto+s o! 5bli# 5oli#% an" t6os$ 5!o6ibit$" b% la. s6all annl
t6$ obligation .6i#6 "$5$n"s 5on t6$+. I* t6$ obligation is "i&isibl$' t6at 5a!t t6$!$o* .6i#6 is not a**$#t$" b% t6$
i+5ossibl$ o! nla.*l #on"ition s6all b$ &ali".
T6$ #on"ition not to "o an i+5ossibl$ t6ing s6all b$ #onsi"$!$" as not 6a&ing b$$n ag!$$" 5on.
@,SSI.LE C,NDITI,N if it is ca!a$le of reali;ation or actuali;ation accordin% to nature" la#" !u$lic !olic' or %ood custos&
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REVIEWER

8 +INDS ,- I=@,SSI.LE C,NDITI,NS>
4& @h'sicall' I!ossi$le cannot eBist or cannot $e done in its nature;
8& Le%all' I!ossi$le contrar' to la#" %ood custos" or !u$lic !olic'&
,nl' the affected o$li%ation is *oid" if the o$li%ation is di*isi$le" and the !art thereof not affected $' the i!ossi$le condition is
*alid&
,nl' the condition is *oid if there is alread' a !re2eBistin% o$li%ation and it does not de!end u!on the fulfillent of the condition
#hich is i!ossi$le&
11<4. T6$ #on"ition t6at so+$ $&$nt 6a55$n at a "$t$!+inat$ ti+$ s6all $=tingis6 t6$ obligation as soon as t6$
ti+$ $=5i!$s o! i* it 6as b$#o+$ in"bitabl$ t6at t6$ $&$nt .ill not ta@$ 5la#$.
@ositi*e condition refers to the fulfillent of an e*ent or !erforance of an act
Ne%ati*e condition refers to the non2fulfillent or non2!erforance of an act&
@,SITI3E SUS@ENSI3E C,NDITI,N
The o$li%ation is eBtin%uished>
4& As soon as the TI=E EI@IRES #ithout the e*ent ta:in% !lace;
8& As soon as it has $ecoe certain that the E3ENT NILL N,T TA+E @LACE althou%h the tie s!ecified has not 'et eB!ired&
11<5. T6$ #on"ition t6at so+$ $&$nt .ill not 6a55$n at a "$t$!+inat$ ti+$ s6all !$n"$! t6$ obligation $**$#ti&$ *!o+
t6$ +o+$nt t6$ ti+$ in"i#at$" 6as $la5s$"' o! i* it 6as b$#o+$ $&i"$nt t6at t6$ $&$nt #annot o##!.
I* no ti+$ 6as b$$n *i=$"' t6$ #on"ition s6all b$ "$$+$" *l*ill$" at s#6 ti+$ as +a% 6a&$ 5!obabl% b$$n
#ont$+5lat$"' b$a!ing in +in" t6$ nat!$ o* t6$ obligation.
KK This is a condition of non2ha!!enin% of a future e*ent&
The o$li%ation shall $ecoe effecti*e and $indin%>
a) -ro the oent the tie indicated has ela!sed #ithout the e*ent ta:in% !lace;
$) -ro the oent it has $ecoe e*ident that the e*ent cannot occur" althou%h the tie indicated has not 'et ela!sed&
44H7 2*s2 44H5
11<4
,POSITIVE S9SPENSIVE-
11<5
,NEGATIVE S9SPENSIVE-
*ose obliges imself to give te pregnant woman +aria P5%%%
if se would give birt on or before ,ecember -%.
*ose obliges imself to give te pregnant woman +aria
P5%%% if se would N/0 give birt on ,ecember -%.
a& Jose is LIA.LE if =aria %i*es $irth on or $efore Dece$er
9?&
a& Jose is N,T LIA.LE if =aria %i*es $irth on Dece$er 9?&
$& Jose is N,T LIA.LE if =aria %i*es $irth after Dece$er 9?& $& Jose is LIA.LE if =aria DID N,T %i*e $irth on Dece$er
9? if =aria %i*es $irth .E-,RE or A-TER Dece$er 9?&
c& If =aria #ould ha*e a iscarria%e $efore Dece$er 9?" the
o$li%ation is EITIN/UISGED&
c& If =aria #ould ha*e a iscarria%e $efore Dece$er 9?"
the o$li%ation is deeed -UL-ILLED&
11<6. T6$ #on"ition s6all b$ "$$+$" *l*ill$" .6$n t6$ obligo! &olnta!il% 5!$&$nts its *l*ill+$nt.
This !ro*ision s!ea:s of the D,CTRINE ,- C,NSTRUCTI3E -UL-ILL=ENT
Co!are #ith Art& 48?9
2 REJUISITES>
4& The condition is SUS@ENSI3E;
8& The o$li%or ACTUALLY @RE3ENTS the fulfillent of the condition;
9& Ge acts 3,LUNTARILY&
REVIEWER
=alice or fraud is not re<uired" as lon% as his !ur!ose is to !re*ent the fulfillent of the condition&
No !erson shall !rofit $' his o#n #ron%&
11<). T6$ $**$#ts o* a #on"itional obligation to gi&$' on#$ t6$ #on"ition 6as b$$n *l*ill$"' s6all !$t!oa#t to t6$ "a% o*
t6$ #onstittion o* t6$ obligation. N$&$!t6$l$ss' .6$n t6$ obligation i+5os$s !$#i5!o#al 5!$stations 5on t6$ 5a!ti$s'
t6$ *!its an" int$!$sts "!ing t6$ 5$n"$n#% o* t6$ #on"ition s6all b$ "$$+$" to 6a&$ b$$n +tall% #o+5$nsat$". I*
t6$ obligation is nilat$!al' t6$ "$bto! s6all a55!o5!iat$ t6$ *!its an" int$!$sts !$#$i&$"' nl$ss *!o+ t6$ nat!$ an"
#i!#+stan#$s o* t6$ obligation it s6ol" b$ in*$!!$" t6at t6$ int$ntion o* t6$ 5$!son #onstitting t6$ sa+$ .as
"i**$!$nt.
In obligations to "o an" not to "o' t6$ #o!ts s6all "$t$!+in$' in $a#6 #as$' t6$ !$t!oa#ti&$ $**$#t o* t6$ #on"ition
t6at 6as b$$n #o+5li$" .it6.
A!!lies onl' to fulfilled sus!ensi*e conditions&
Retroacti*e statute
The effects of the o$li%ation is deeed to coence not fro the fulfillent of the o$li%ation $ut fro the da' of its
constitution (siilar to the le%itiation of a natural child)
Nhen the o$li%ation is unilateral" the de$tor shall a!!ro!riate the fruits and interests recei*ed $ecause he does not
recei*e an' e<ui*alent or *alua$le consideration fro the o$li%ee&
The article does not re<uire the deli*er' of fruits or !a'ent of interests accruin% (accuulatin%) $efore the fulfillent of
the sus!ensi*e condition&
,$li%ations to do or not to do the retroacti*e effect shall $e deterined $' the court usin% its sound discretion #ithout
disre%ardin% the intentions of the !arties&
11<<. T6$ #!$"ito! +a%' b$*o!$ t6$ *l*ill+$nt o* t6$ #on"ition' b!ing t6$ a55!o5!iat$ a#tions *o! t6$ 5!$s$!&ation o*
6is !ig6t.
T6$ "$bto! +a% !$#o&$! .6at "!ing t6$ sa+$ ti+$ 6$ 6as 5ai" b% +ista@$ in #as$ o* a ss5$nsi&$ #on"ition.
Actions a*aila$le to the creditor>
Action for !rohi$ition restrainin% the alienation of the thin% !endin% the ha!!enin% of the sus!ensi*e condition;
Action to deand securit' if the de$tor has $ecoe insol*ent;
Action to set aside alienations ade $' the de$tor in fraud of creditors;
Actions a%ainst ad*erse !ossessors to interru!t the runnin% !rescri!ti*e !eriod&
To ha*e his ri%hts annotated in the re%istr'&
Ri%hts of the DE.T,R entitled to reco*er #hat has $een !aid $' ista:e !rior to the ha!!enin% of the sus!ensi*e condition&
11<>. 76$n t6$ #on"itions 6a&$ b$$n i+5os$" .it6 t6$ int$ntion o* ss5$n"ing t6$ $**i#a#% o* an obligation to gi&$'
t6$ *ollo.ing !l$s s6all b$ obs$!&$" in #as$ o* t6$ i+5!o&$+$nt' loss o! "$t$!io!ation o* t6$ t6ing "!ing t6$
5$n"$n#% o* t6$ #on"ition(

L,SS
(4) de$tor #ithout fault o$li%ation is eBtin%uished
(8) de$tor #ith fault o$li%ation to !a' daa%es
DETERI,RATI,N
(4) de$tor #ithout fault i!airent is to $e $orne $' the creditor
(8) de$tor #ith fault creditor chooses> rescission of o$li%ation" fulfillent" indenit'
I=@R,3E=ENT
(4) $' nature or tie i!ro*eent> inure to the $enefit of the creditor
(8) at the eB!ense of the de$tor %ranted to the usufructuar'
11>?. 76$n t6$ #on"itions 6a&$ *o! t6$i! 5!5os$ t6$ $=tingis6+$nt o* an obligation to gi&$' t6$ 5a!ti$s' 5on t6$
*l*ill+$nt o* sai" #on"itions' s6all !$t!n to $a#6 ot6$! .6at t6$% 6a&$ !$#$i&$".
REVIEWER
In #as$ o* t6$ loss' "$t$!io!ation o! i+5!o&$+$nt o* t6$ t6ing' t6$ 5!o&isions .6i#6' .it6 !$s5$#t to t6$ "$bto!' a!$
lai" "o.n in t6$ 5!$#$"ing a!ti#l$ s6all b$ a55li$" to t6$ 5a!t% .6o is bon" to !$t!n.
As *o! t6$ obligations to "o an" not to "o' t6$ 5!o&isions o* t6$ s$#on" 5a!ag!a56 o* A!ti#l$ 11<) s6all b$ obs$!&$"
as !$ga!"s t6$ $**$#t o* t6$ $=tingis6+$nt o* t6$ obligation.
Refers to the fulfillent of a resolutor' condition&
Nhen the resolutor' condition ha!!ened" the o$li%ation is considered as if it did not eBist&
The !arties are $ound to return or restore #hate*er the' ha*e recei*ed fro each other 0reci!rocal restitution1
Donation $' reason of arria%e if the arria%e does not ha!!en" such donation should $e returned to the donor&
Loss" deterioration and i!ro*eent %o*erned $' 44HP&
In o$li%ations to do and not to do" the courts shall deterine" in each case" the retroacti*e effect of the condition that
has $een co!lied #ith&
11>1. T6$ 5o.$! to !$s#in" obligations is i+5li$" in !$#i5!o#al on$s' in #as$ on$ o* t6$ obligo!s s6ol" not #o+5l%
.it6 .6at is in#+b$nt 5on 6i+.
T6$ inj!$" 5a!t% +a% #6oos$ b$t.$$n t6$ *l*ill+$nt an" t6$ !$s#ission o* t6$ obligation' .it6 t6$ 5a%+$nt o*
"a+ag$s in $it6$! #as$. H$ +a% also s$$@ !$s#ission' $&$n a*t$! 6$ 6as #6os$n *l*ill+$nt' i* t6$ latt$! s6ol"
b$#o+$ i+5ossibl$.
T6$ #o!t s6all "$#!$$ t6$ !$s#ission #lai+$"' nl$ss t6$!$ b$ jst #as$ at6o!iEing t6$ *i=ing o* a 5$!io".
T6is is n"$!stoo" to b$ .it6ot 5!$j"i#$ to t6$ !ig6ts o* t6i!" 5$!sons .6o 6a&$ a#2i!$" t6$ t6ing' in a##o!"an#$
.it6 A!ti#l$s 11<5 an" 11<< an" t6$ Do!tgag$ La..
K This reed' should $e tered as 0resolution"1 not rescission (@aras)&
K This !ro*ision is not a!!lica$le to contracts of !artnershi! (%o*erned $' Arts& 4FH6 O 4FHH)" and sales of real and !ersonal
!ro!erties $' installents (%o*erned $' =aceda and Recto la#s)
RECI@R,CAL each is a de$tor and creditor of the other
RESCISSI,N resolution or cancellation of the contract
A!!lies onl' to reci!rocal o$li%ations #here t#o !arties are utuall' de$tor and creditor of each other in the sae
transaction& The cause ust $e identical ad the o$li%ations ust arise siultaneousl'&
The !art' #ho can deand rescission should $e the !art' #ho is read'" #illin%" and a$le to co!l' #ith his o#n
o$li%ations #hile the other is not ca!a$le to !erfor his o#n&
RE=EDIES>
4& S!ecific !erforance or fulfillent of o$li%ation #ith daa%es;
8& Rescission of contract #ith daa%es&
Effect of rescission> the !arties ust surrender #hate*er the' ha*e recei*ed fro the other" and the o$li%ation to !a' is
eBtin%uished&
If there is an eB!ress sti!ulation of automatic rescission $et#een !arties such resolution shall ta:e !lace onl' after the creditor
has notified the de$tor of his choice of rescission su$ject to judicial scrutin'&
11>0. In #as$ bot6 5a!ti$s 6a&$ #o++itt$" a b!$a#6 o* t6$ obligation' t6$ liabilit% o* t6$ *i!st in*!a#to! s6all b$
$2itabl% t$+5$!$" b% t6$ #o!ts. I* it #annot b$ "$t$!+in$" .6i#6 o* t6$ 5a!ti$s *i!st &iolat$" t6$ #ont!a#t' t6$
sa+$ s6all b$ "$$+$" $=tingis6$"' an" $a#6 s6all b$a! 6is o.n "a+ag$s.
-IRST IN-RACT,R +N,NN
The lia$ilit' of the first infractor should $e e<uita$l' reduced& e<uita$l' offset each otherEs daa%es&
-IRST IN-RACT,R CANN,T .E DETER=INED
The court shall declare the eBtin%uishent of the o$li%ation and each shall $ear his o#n daa%es&
Section 2 Obligations with a Period
11>1. Obligations *o! .6os$ *l*ill+$nt a "a% #$!tain 6as b$$n *i=$"' s6all b$ "$+an"abl$ onl% .6$n t6at "a% #o+$s.
Obligations .it6 a !$solto!% 5$!io" ta@$ $**$#t at on#$' bt t$!+inat$ 5on a!!i&al o* t6$ "a% #$!tain.
REVIEWER
A "a% #$!tain is n"$!stoo" to b$ t6at .6i#6 +st n$#$ssa!il% #o+$' alt6og6 it +a% not b$ @no.n .6$n.
I* t6$ n#$!taint% #onsists in .6$t6$! t6$ "a% .ill #o+$ o! not' t6$ obligation is #on"itional' an" it s6all b$ !$glat$"
b% t6$ !l$s o* t6$ 5!$#$"ing S$#tion.
@ERI,D A TER= consists in a s!ace or len%th of tie u!on the arri*al of #hich" the demandability or the e1tinguisment of an
o$li%ation is determined; it a' $e definite (eBact date or tie is :no#n) or indefinite (arri*al of date is un:no#n $ut sure to
coe)&
2 -uture R Certain e*ent
/ENERAL CLASSI-ICATI,NS>
a) EI DIE A SUS@ENSI3E @ERI,D fro a da' certain %i*e rise to the o$li%ation; sus!ensi*e effect&
$) IN DIE= A RES,LUT,RY @ERI,D arri*al of a ter certain terinated the o$li%ation; resolutor' effect&
Ter len%th of tie sure to coe
Condition fact or e*ent uncertain to coe
Basis P$!io";T$!+ Con"ition
4& TI=E Al#a's refers to -UTURE Can refer to !ast e*ents un:no#n to the
!arties
8& -UL-ILL=ENT Sure to ha!!en at an eBact date or
indefinite tie $ut sure to coe&
=a' or a' not ha!!en&
9& IN-LUENCE =erel' fiBes the tie for the
deanda$ilit' or !erforance of
o$li%ation&
=a' cause the arisin% or cessation of the
o$li%ation&
11>4. In #as$ o* loss' "$t$!io!ation o! i+5!o&$+$nt o* t6$ t6ing b$*o!$ t6$ a!!i&al o* t6$ "a% #$!tain' t6$ !l$s in
A!ti#l$ 11<> s6all b$ obs$!&$".
11>5. An%t6ing 5ai" o! "$li&$!$" b$*o!$ t6$ a!!i&al o* t6$ 5$!io"' t6$ obligo! b$ing na.a!$ o* t6$ 5$!io" o!
b$li$&ing t6at t6$ obligation 6as b$#o+$ "$ an" "$+an"abl$' +a% b$ !$#o&$!$"' .it6 t6$ *!its an" int$!$sts.
If he #as not a#are of the !eriod or he $elie*es that the o$li%ation has $ecoe due and deanda$le he can
reco*er #hat he !aid or deli*ered includin% fruits and interests;
If he #as a#are and he !aid *oluntaril' he cannot reco*er the deli*er' ade; it is deeed a #ai*er of the
$enefit of the ter and the o$li%ation is considered alread' atured&
The !resu!tion is that the de$tor :ne# that the de$t #as not 'et due& Ge has the $urden of !ro*in% that he #as
una#are of the !eriod&
11>6. 76$n$&$! in an obligation a 5$!io" is "$signat$"' it is 5!$s+$" to 6a&$ b$$n $stablis6$" *o! t6$ b$n$*it o*
bot6 t6$ #!$"ito! an" t6$ "$bto!' nl$ss *!o+ t6$ t$no! o* t6$ sa+$ o! ot6$! #i!#+stan#$s it s6ol" a55$a! t6at t6$
5$!io" 6as b$$n $stablis6$" in *a&o! o* on$ o! o* t6$ ot6$!.
@RESU=@TI,N> ,$li%ation #ith a !eriod is for the $enefit of $oth the creditor and de$tor&
EICE@TI,N> #hen it a!!ears that the !eriod is for the $enefit of one or the other
The $enefit of the ter a' $e the su$ject of sti!ulation of the !arties&
1. Ter is for the $enefit of the de$tor alone he cannot $e co!elled to !a' !reaturel'" $ut he can if he
desires to do so&
2 EBa!le> A o$li%es hiself to !a' . #ithin 5 'ears& A cannot $e co!elled to !a' !reaturel'" $ut he can !a' an'tie #ithin 5
'ears (A #ill $enefit $ecause he can !a' an'tie he #ants as lon% as it is #ithin 5 'ears; . #ill not $enefit fro the interests if A
decides to !a' earl')&
2. Ter is for the $enefit of the creditor Ge a' deand fulfillent e*en $efore the arri*al of the ter $ut the
de$tor cannot re<uire hi to acce!t !a'ent $efore the eB!iration of the sti!ulated !eriod&
REVIEWER
2 EBa!le> A $orro#s one' fro . and is o$li%ed to a:e the !a'ent on Dece$er 5& . a' co!el A to a:e the !a'ent
$efore Dece$er 5" $ut A a' not co!el . to recei*e the !a'ent $efore Dece$er 5 (. #ill $enefit fro the interests that #ill
accrue $efore Dece$er 5)&
The creditor a' ha*e reasons other than the aturit' of interest" thatEs #h'" unless the creditor consents" the de$tor
has no ri%ht to accelerate the tie of !a'ent e*en if the !reature tender includes an offer to !a' the !rinci!al and
interest in full&
11>). I* t6$ obligation "o$s not *i= a 5$!io"' bt *!o+ its nat!$ an" t6$ #i!#+stan#$s it #an b$ in*$!!$" t6at a
5$!io" .as int$n"$"' t6$ #o!ts +a% *i= t6$ "!ation t6$!$o*.
T6$ #o!ts s6all also *i= t6$ "!ation o* t6$ 5$!io" .6$n it "$5$n"s 5on t6$ .ill o* t6$ "$bto!.
In $&$!% #as$' t6$ #o!ts s6all "$t$!+in$ s#6 5$!io" as +a% n"$! t6$ #i!#+stan#$s 6a&$ b$$n 5!obabl%
#ont$+5lat$" b% t6$ 5a!ti$s. On#$ *i=$" b% t6$ #o!ts' t6$ 5$!io" #annot b$ #6ang$" b% t6$+.
JUDICIAL @ERI,D !eriod desi%nated $' the court&
C,NTRACTUAL @ERI,D !eriod fiBed $' the !arties in their contract&
Court #ill fiB a !eriod>
4& Nhen no !eriod is entioned" $ut it is infera$le fro the nature and circustances of the o$li%ation that a !eriod #as
intended $' the !arties&
8& Nhen the !eriod is de!endent u!on the #ill of the de$tor&
If the o$li%ation does not state and intend a !eriod" the court is not authori;ed to fiB a !eriod&
The court ust fiB the duration of the !eriod to !re*ent the !ossi$ilit' that the o$li%ation a' ne*er $e fulfilled or to cure
a defect in a contract #here$' it is ade to de!end solel' u!on the #ill of one of the !arties&
Court cannot fiB the !eriod>
4& If there is a !eriod a%reed u!on $' the !arties and it has alread' la!sed or eB!ired&
8& -ro the *er' oent the !arties %i*e their acce!tance and consent to the !eriod fiBed $' the court" it
$ecoes a la# %o*ernin% their contract&
11><. T6$ "$bto! s6all los$ $&$!% !ig6t to +a@$ s$ o* t6$ 5$!io"(
,1- 76$n a*t$! t6$ obligation 6as b$$n #ont!a#t$"' 6$ b$#o+$s insol&$nt' nl$ss 6$ gi&$s a ga!ant% o! s$#!it% *o!
t6$ "$bt/
,0- 76$n 6$ "o$s not *!nis6 to t6$ #!$"ito! t6$ ga!anti$s o! s$#!iti$s .6i#6 6$ 6as 5!o+is$"/
,1- 76$n b% 6is o.n a#ts 6$ 6as i+5ai!$" sai" ga!anti$s o! s$#!iti$s a*t$! t6$i! $stablis6+$nt' an" .6$n t6!og6
a *o!titos $&$nt t6$% "isa55$a!' nl$ss 6$ i++$"iat$l% gi&$s n$. on$s $2all% satis*a#to!%/
,4- 76$n t6$ "$bto! &iolat$s an% n"$!ta@ing' in #onsi"$!ation o* .6i#6 t6$ #!$"ito! ag!$$" to t6$ 5$!io"/
,5- 76$n t6$ "$bto! att$+5ts to abs#on".
The !eriod is disre%arded and the o$li%ation $ecoes !ure and iediatel' deanda$le> CIGIVAD
FIG Nhen de$tor $ecoes insol*ent ;
The insol*enc' need not $e judiciall' declared& It is sufficient that de$tor could not !a' his de$ts due to lac: of
one' or funds&
FGG Nhen the de$tor does not furnish g uaranties or securities;
FIG Nhen %uaranties or securities %i*en ha*e $een i!aired or ha*e disa!!eared ;
If securit' #as lost throu%h de$torEs fault 2 impairment
If securit' #as lost throu%h fortuitous e*ent 2 disappearance
FVG Nhen de$tor & iolates an underta:in% ;
If such underta:in% is the reason for the creditor to a%ree #ith such !eriod&
FAG Nhen de$tor atte!ts to a $scond (esca!e)&
=ere atte!t to a$scond is sufficient& It is an indication of $ad faith&
Section 3 Alternative Obligations
page 1! [dioryRabajante]
REVIEWER
11>>. A 5$!son alt$!nati&$l% bon" b% "i**$!$nt 5!$stations s6all #o+5l$t$l% 5$!*o!+ on$ o* t6$+.
T6$ #!$"ito! #annot b$ #o+5$ll$" to !$#$i&$ 5a!t o* on$ an" 5a!t o* t6$ ot6$! n"$!ta@ing.
,.LI/ATI,NS NITG @LURAL @RESTATI,NS>
4& C,NJUNCTI3EAC,=@,UND ,.LI/ATI,N 2 an o$li%ation #here the de$tor has to !erfor ALL the se*eral !restations in
the contract to eBtin%uish the o$li%ation&
8& ALTERNATI3E ,.LI/ATI,N an o$li%ation #here the de$tor is re<uired to fulfill ,NLY ,NE of the se*eral !restations to
eBtin%uish the o$li%ation&
9& -ACULTATI3E ,.LI/ATI,N an o$li%ation #here the de$tor is $ound to !erfor ,NLY ,NE !restation" #ith a reser*ed
ri%ht to choose another !restation as SU.STITUTE for the !rinci!al&
10??. T6$ !ig6t o* #6oi#$ b$longs to t6$ "$bto!' nl$ss it 6as b$$n $=5!$ssl% g!ant$" to t6$ #!$"ito!.
T6$ "$bto! s6all 6a&$ no !ig6t to #6oos$ t6os$ 5!$stations .6i#6 a!$ i+5ossibl$' nla.*l o! .6i#6 #ol" not 6a&$
b$$n t6$ obj$#t o* t6$ obligation.
I!lied %rant to the creditor is not allo#ed& If it does not a!!ear on the a%reeent as to #ho aon% the has the ri%ht to
choose" it is the de$tor #ho can choose&
10?1. T6$ #6oi#$ s6all 5!o"#$ no $**$#t $=#$5t *!o+ t6$ ti+$ it 6as b$$n #o++ni#at$".
The choice shall not !roduce an' le%al effect until it has $een dul' counicated to the other !art'&
It can $e done in #ritin%" *er$all'" i!liedl'" or an' une<ui*ocal eans&
,nce the choice has $een counicated to the other !art'>
4& The o$li%ation is no# LI=ITED onl' to the @RESTATI,N CG,SEN" #ith all the natural conse<uences flo#in% therefro;
8& The choice is IRRE3,CA.LE&
The !erforance of !restation #ithout announcin% the choice to the creditor is N,T .INDIN/&
The consent of the other !art' is N,T REJUIRED in a:in% the choice that #ill in effect frustrate the clear intention of
the la# and the nature of the alternati*e o$li%ation&
If there is dela' in the a:in% of choice !unish the one #ho is su!!osed to eBercise the ri%ht of choice for the dela' he
caused court a' order the de$tor to a:e a choice" or creditor to a:e the choice #ithin certain !eriod" or court
a:es the choice&
10?0. T6$ "$bto! s6all los$ t6$ !ig6t o* #6oi#$ .6$n a+ong t6$ 5!$stations .6$!$b% 6$ is alt$!nati&$l% bon"' onl%
on$ is 5!a#ti#abl$.
There $ein% $ut one !restation a*aila$le" this !restation $ecoes a si!le o$li%ation&
10?1. I* t6!og6 t6$ #!$"ito!Hs a#ts t6$ "$bto! #annot +a@$ a #6oi#$ a##o!"ing to t6$ t$!+s o* t6$ obligation' t6$
latt$! +a% !$s#in" t6$ #ont!a#t .it6 "a+ag$s.
(4) If the de$tor could not a:e a choice due to the creditorEs act of a:in% the !restations i!ossi$le" de$tor a'
RESCIND the contract #ith daa%es 2 rescission ta:es !lace at the initiati*e of the de$tor&
(8) If the de$tor is $ein% !re*ented to choose onl' a !articular !restation" and there are others a*aila$le" he is free
to choose fro the" after notif'in% the creditor of his decision&
10?4. T6$ #!$"ito! s6all 6a&$ a !ig6t to in"$+nit% *o! "a+ag$s .6$n' t6!og6 t6$ *alt o* t6$ "$bto!' all t6$ t6ings
.6i#6 a!$ alt$!nati&$l% t6$ obj$#t o* t6$ obligation 6a&$ b$$n lost' o! t6$ #o+5lian#$ o* t6$ obligation 6as b$#o+$
i+5ossibl$.
T6$ in"$+nit% s6all b$ *i=$" ta@ing as a basis t6$ &al$ o* t6$ last t6ing .6i#6 "isa55$a!$"' o! t6at o* t6$ s$!&i#$
.6i#6 last b$#a+$ i+5ossibl$.
:a+ag$s ot6$! t6an t6$ &al$ o* t6$ last t6ing o! s$!&i#$ +a% also b$ a.a!"$".
If the i!ossi$ilit' of all the o$jects of the alternati*e o$li%ation is caused $' the de$tor" the creditor is entitled to
daa%es&
If such i!ossi$ilit' is caused $' a fortuitous e*ent" the o$li%ation is eBtin%uished and the de$tor is released fro
res!onsi$ilit'" unless the contrar' is sti!ulated $' the !arties&
page 1" [dioryRabajante]
REVIEWER
The creditor cannot clai for daa%es if the de$tor can still !erfor the reainin% !restations&
The daa%es that a' $e reco*ered is $ased on the last thin% #hich disa!!eared or the ser*ice #hich $ecae
i!ossi$le& This last one is con*erted into a si!le o$li%ation&
10?5. 76$n t6$ #6oi#$ 6as b$$n $=5!$ssl% gi&$n to t6$ #!$"ito!' t6$ obligation s6all #$as$ to b$ alt$!nati&$ *!o+ t6$
"a% .6$n t6$ s$l$#tion 6as b$$n #o++ni#at$" to t6$ "$bto!.
9ntil t6$n t6$ !$s5onsibilit% o* t6$ "$bto! s6all b$ go&$!n$" b% t6$ *ollo.ing !l$s(
A. onl' one thin% lost fortuitous e*ent creditor chooses fro the reainder de$tor deli*ers the choice to creditor;
.& onl' one reains de$tor deli*ers the sae to the creditor;
C. onl' one thin% lost fault of the de$tor
4& creditor a' choose an' one of the reainders;
8& creditor a' choose the !rice or *alue of the one #hich #as lost;
9& a' choose 4 or 8 !lus daa%es
D& all thin%s lost fault of the de$tor creditor a' choose the !rice of ANY,NE of the thin%s" #ith daa%es if #arranted&
T6$ sa+$ !l$s s6all b$ a55li$" to obligations to "o o! not to "o in #as$ on$' so+$ o! all o* t6$ 5!$stations s6ol"
b$#o+$ i+5ossibl$.
This article a!!lies onl' #hen the ri%ht of choice has $een eB!ressl' %ranted to the creditor&
10?6. 76$n onl% on$ 5!$station 6as b$$n ag!$$" 5on' bt t6$ obligo! +a% !$n"$! anot6$! in sbstittion' t6$
obligation is #all$" *a#ltati&$.
T6$ loss o! "$t$!io!ation o* t6$ t6ing int$n"$" as a sbstitt$' t6!og6 t6$ n$glig$n#$ o* t6$ obligo!' "o$s not !$n"$!
6i+ liabl$. Bt on#$ t6$ sbstittion 6as b$$n +a"$' t6$ obligo! is liabl$ *o! t6$ loss o* t6$ sbstitt$ on a##ont o*
6is "$la%' n$glig$n#$ o! *!a".
If loss or deterioration ha!!ened $efore su$stitution is ade" o$li%or is not lia$le; after su$stitution is counicated" he
is lia$le for loss (throu%h dela'" ne%li%ence or fraud)
Section 4 Joint and Solidary Obligations
10?). T6$ #on#!!$n#$ o* t.o o! +o!$ #!$"ito!s o! o* t.o o! +o!$ "$bto!s in on$ an" t6$ sa+$ obligation "o$s not
i+5l% t6at $a#6 on$ o* t6$ *o!+$! 6as a !ig6t to "$+an"' o! t6at $a#6 on$ o* t6$ latt$! is bon" to !$n"$!' $nti!$
#o+5lian#$ .it6 t6$ 5!$station. T6$!$ is a soli"a!% liabilit% onl% .6$n t6$ obligation $=5!$ssl% so stat$s' o! .6$n t6$
la. o! t6$ nat!$ o* t6$ obligation !$2i!$s soli"a!it%.
K In case of concurrence of t#o or ore creditors or t#o or ore de$tors in one o$li%ation" the !resu!tion is that the o$li%ation
is joint" and not solidar'&
INDI3IDUAL ,.LI/ATI,N one de$tor and one creditor
C,LLECTI3E ,.LI/ATI,N t#o or ore de$tors and t#o or ore creditors
1. J,INT entire o$li%ation is to $e !aid or !erfored proportionately $' the de$tors;
2. S,LIDARY eac one of the de$tors are o$li%ed to !a' the entire obligation" each one of the creditors has the
ri%ht to deand fro an' of the de$tors" the fulfillent of the entire o$li%ation;
A& @assi*e Solidarit' solidarit' on the !art of the DE.T,RS
.& Acti*e Solidarit' solidarit' on the !art of the CREDIT,RS&
S,LIDARITY SG,ULD .E EI@RESSED la#" sti!ulation" nature of o$li%ation&
Nhen the o$li%ation is a$i%uous" it ust $e considered as joint o$li%ation&
C,NSEJUENCES ,- S,LIDARITY>
1. @assi*e Solidarit' full !a'ent ade $' an'one of the solidar' de$tors eBtin%uishes the o$li%ation& The one #ho !aid
can clai rei$urseent fro his co2de$tors as re%ards their corres!ondin% shares in the o$li%ation&
page 1# [dioryRabajante]
REVIEWER
A" ." O C are solidar' de$tors of D in the su of @P??&
D can deand !a'ent of the entire o$li%ation #hen it $ecoes due" fro an' one of the de$tors or fro all of the at the sae
tie&
If C !aid the #hole @P?? to D" he a' clai rei$urseent fro A and .&
2. Acti*e Solidarit' full !a'ent to an' of the creditors eBtin%uishes the o$li%ation& The creditor #ho recei*ed the entire
aount #ill $e lia$le to !a' the corres!ondin% shares of his co2creditors in accordance #ith their internal a%reeent&
/arfield o#es the su of @7?"??? to =ic:e'" =innie" Donald" and @luto" #ho are solidar' creditors& /arfield can !a' an'one of
the& If =ic:e' recei*ed the @7?"???" he is lia$le to !a' the corres!ondin% shares of his co2creditors&
=IIED S,LIDARITY
a& Solidar' De$tors" Joint Creditors
@P"???&?? total de$t
:$bto!s ,Soli"a!%- C!$"ito!s ,Ioint-
Aida !a's @7"5??&?? John Q @ 7"5??&??
Lorna !a's @7"5??&?? =arsha @ 7"5??&??
-e
$& Joint De$tors" Solidar' Creditors
@ P"???&?? total de$t
:$bto!s ,Ioint- C!$"ito!s ,Soli"a!%-
Aida (@ 9"???&??) John (can clai fro de$tors)
Lorna (@ 9"???&??) =arsha (2sae2)
-e (@ 9"???&??)
10?<. I* *!o+ t6$ la.' o! t6$ nat!$ o! t6$ .o!"ing o* t6$ obligations to .6i#6 t6$ 5!$#$"ing a!ti#l$ !$*$!s t6$
#ont!a!% "o$s not a55$a!' t6$ #!$"it o! "$bt s6all b$ 5!$s+$" to b$ "i&i"$" into as +an% s6a!$s as t6$!$ a!$
#!$"ito!s o! "$bto!s' t6$ #!$"its o! "$bts b$ing #onsi"$!$" "istin#t *!o+ on$ anot6$!' sbj$#t to t6$ Rl$s o* Co!t
go&$!ning t6$ +lti5li#it% o* sits.
This !ro*ision s!ea:s of J,INT DI3ISI.LE ,.LI/ATI,N&
Nhen there is a concurrence of se*eral creditors or of se*eral de$tors in one and in the sae o$li%ation" there is a
!resu!tion that the o$li%ation is joint&
Each of the creditors shall $e entitled to deand onl' the !a'ent of his !ro!ortionate share of the credit&
Each of the de$tors a' $e co!elled to !a' onl' his !ro!ortionate share of the de$t&
The credits or de$ts shall $e considered distinct fro one another&
C,NSEJUENCES ,- J,INT ,.LI/ATI,N>
4& Each de$tor lia$le for a !ro!ortionate !art of the entire de$t;
Thales" Socrates" @lato" O Aristotle o#e @4?? to .ruce Lee
Q 7 de$tors and 4 creditor
Each of the o#es .ruce Lee @85
.ruce Lee cannot collect the entire @4?? fro an' one of the&
8& Each creditor entitled to a !ro!ortionate !art of the credit;
@i%%' o#es @4?? to -ro%%' and -ish'
Q 4 de$tor and 8 creditors
-ro%%' can onl' collect 5? fro @i%%'"
Sae #ith -ish'
9& Deand ade $' one creditor u!on one de$tor !roduces the effects of default onl' as $et#een the" $ut not #ith
res!ect to the others;
.u$$les deanded !a'ent fro .uttercu!; .uttercu! #as in default& This does not ean that the others are in default too
$ecause .u$$les did not deand fro the&
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REVIEWER
7& The interru!tion of !rescri!tion caused $' the deand ade $' one creditor u!on one de$tor #ill not $enefit the co2
creditors;
Nitt%enstein eBtended the !eriod in #hich Tars:i should ha*e !aid his de$t to hi& This does not ean that the sae eBtension
a!!lies to Tars:iSs de$t to Da*idson&
5& The insol*enc' of one de$tor #ill not increase the lia$ilit' of his co2de$tors" nor #ill it allo# a creditor to deand
an'thin% fro the co2creditors&
If Gusserl and =erleau2@ont' are de$tors of Sartre for @4"???"???&?? and Gusserl $ecoes insol*ent" the lia$ilit' of =erleau2
@ont' #ill onl' $e @5??"???&?? re!resentin% his !ro!ortional share of T in the #hole o$li%ation&
10?>. I* t6$ "i&ision is i+5ossibl$' t6$ !ig6t o* t6$ #!$"ito!s +a% b$ 5!$j"i#$" onl% b% t6$i! #oll$#ti&$ a#ts' an" t6$
"$bt #an b$ $n*o!#$" onl% b% 5!o#$$"ing against all t6$ "$bto!s. I* on$ o* t6$ latt$! s6ol" b$ insol&$nt' t6$ ot6$!s
s6all not b$ liabl$ *o! 6is s6a!$.
J,INT INDI3ISI.LE ,.LI/ATI,N an o$li%ation #here solidarit' is not !ro*ided and the !restation or o$ject is not susce!ti$le of
di*ision; its fulfillent re<uires the concurrence of all de$tors" #hile doin% each oneEs !arts&

.atan and Ro$in jointl' o$li%ed thesel*es to deli*er a $rand ne# To'ota -ortuner #orth @4"5??"???&?? to Su!eran& The
o$ject" a *ehicle" is indi*isi$le& The' ust deli*er the thin% jointl'& In case of $reach" the o$li%ation is con*erted into onetar'
o$li%ation for indenit' for daa%es& .atan and Ro$in #ill $e lia$le onl' for @ F5?"???&?? each&
The act of one is not $indin% (others ust concur)
101?. T6$ in"i&isibilit% o* an obligation "o$s not n$#$ssa!il% gi&$ !is$ to soli"a!it%. No! "o$s soli"a!it% o* its$l* i+5l%
in"i&isibilit%.
Solidarit' is eB!ressed in the sti!ulations of the !art'" la# %o*ernin% the o$li%ation" or the nature of the o$li%ation&
INDI3ISI.LE ,.LI/ATI,N an o$li%ation #here the !restation or o$ject to $e deli*ered cannot $e !erfored $' !arts #ithout
alterin% its essence or su$stance&
.asis Indi*isi$ilit' Solidarit'
4& Nature Refers to the prestation of the contract Refers to the tie eBistin% $et#een !arties
of the o$li%ation (#ho is lia$le)
8& Nu$er of
su$jects A !arties
Does not re<uire !luralit' of !arties Re<uires !luralit' of !arties
9& Effect of $reach
of o$li%ation
,$li%ation is con*erted into onetar'
o$li%ation for indenit' for daa%es
each de$tor is lia$le onl' for his !art in
the indenit'&
The lia$ilit'" e*en if con*erted into
indenit' for daa%es" reains solidar'&
1011. Soli"a!it% +a% $=ist alt6og6 t6$ #!$"ito!s an" t6$ "$bto!s +a% not b$ bon" in t6$ sa+$ +ann$! an" b% t6$
sa+$ 5$!io"s an" #on"itions.
The solidarit' of the de$tors is not affected e*en if different ters and conditions are ade a!!lica$le to the&
Enforceent of the ters and conditions a' $e ade at different ties& The o$li%ations #hich ha*e atured can $e
enforced #hile those still undue #ill ha*e to $e a#aited& Enforceent can $e ade a%ainst an' one of the solidar'
de$tors althou%h it can ha!!en that a !articular o$li%ation char%ea$le to a !articular de$tor is not 'et due& Ge #ill $e
ans#era$le for all the !restations #hich fall due althou%h char%ea$le to the other co2de$tors&
Sad -ace" Ga!!'" and -ann' %ot a loan of @45? fro Sile'& The' si%ned a !roissor' note solidaril' $indin% thesel*es to !a'
Sile' under the follo#in% ters>
Sad -ace #ill !a' @5? #ith 9U on Dece$er 9?" 8??6
Ga!!' #ill !a' @5? #ith 7U on Dece$er 9?" 8??F
-ann' #ill !a' @5? #ith 5U on Dece$er 9?" 8??H
,n Dece$er 94" 8??6" Sile' can collect his @5? #ith 9U fro an' one of the de$tors" $ut not the #hole @45? $ecause it is not
'et entirel' due& The aturit' of the other aounts should still $e a#aited& If aturit' coes" Sile' can collect fro an' of the
page 1% [dioryRabajante]
REVIEWER
de$tors" $ecause the' are eB!ressl' solidar' in lia$ilities" and not affected $' the secondar' sti!ulations&
1010. Ea#6 on$ o* t6$ soli"a!% #!$"ito!s +a% "o .6at$&$! +a% b$ s$*l to t6$ ot6$!s' bt not an%t6ing .6i#6 +a%
b$ 5!$j"i#ial to t6$ latt$!.
E*er' solidar' creditor is $enefited $' the useful acts of an' one of the&
If a solidar' creditor !erfors an act #hich is not fair to his co2creditors" the act a' ha*e *alid le%al effects or the
o$li%ation of the de$tor due to the a' $e eBtin%uished" $ut the !erforin% creditor shall $e lia$le to his co2creditors&
8$stion> =a' solidar' creditors !erfor an act that is $eneficial to othersM
1011. A soli"a!% #!$"ito! #annot assign 6is !ig6ts .it6ot t6$ #ons$nt o* t6$ ot6$!s.
Assi%n transfer of ri%ht
The assi%nee does not $ecoe a solidar' creditor" and an' !a'ent ade u!on hi $' the de$tor does not eBtin%uish
the o$li%ation& Ge is considered a STRAN/ER" and his acts are not $indin% to the solidarit'&
D,CTRINE ,- =UTUAL A/ENCY 2 In solidar' o$li%ations" the act of one is act of the others&
EBce!tions to the doctrine>
4& Art& 4848 a creditor a' not !erfor an act !rejudicial to other creditors
2. Art& 4849 a creditor cannot transfer his ri%ht #ithout consent
1014. T6$ "$bto! +a% 5a% an% on$ o* t6$ soli"a!% #!$"ito!s/ bt i* an% "$+an"' j"i#ial o! $=t!aj"i#ial' 6as b$$n
+a"$ b% on$ o* t6$+' 5a%+$nt s6ol" b$ +a"$ to 6i+.
The de$tor can !a' an' one of the solidar' creditors& Such !a'ent #hen acce!ted $' an' of the solidar' creditors #ill
eBtin%uish the o$li%ation&
To a*oid confusion on the !a'ent of the o$li%ation" the de$tor is re<uired to a' onl' to the deandin% creditor and that
!a'ent is sufficient to effect the eBtin%uishent of the o$li%ation&
In case t#o or ore deands ade $' the other creditors" the first deand ust $e %i*en !riorit'&
1015. No&ation' #o+5$nsation' #on*sion o! !$+ission o* t6$ "$bt' +a"$ b% an% o* t6$ soli"a!% #!$"ito!s o! .it6 an%
o* t6$ soli"a!% "$bto!s' s6all $=tingis6 t6$ obligation' .it6ot 5!$j"i#$ to t6$ 5!o&isions o* A!ti#l$ 101>.
T6$ #!$"ito! .6o +a% 6a&$ $=$#t$" an% o* t6$s$ a#ts' as .$ll as 6$ .6o #oll$#ts t6$ "$bt' s6all b$ liabl$ to t6$
ot6$!s *o! t6$ s6a!$ in t6$ obligation #o!!$s5on"ing to t6$+.
N,3ATI,N o$li%ations are odified $'>
4& Chan%in% their o$ject or !rinci!al conditions;
8& Su$stitutin% the !erson of the de$tor; and
9& Su$ro%atin% (!lacin%) a third !erson in the ri%hts of the creditor& CArt& 48P4D
C,=@ENSATI,N ta:es !lace #hen t#o !ersons" in their o#n ri%ht" $ecoe creditors and de$tors of each other
the aount of one is co*ered $' the aount of the other
Era! $orro#ed @4?? fro -ernando&
-ernando $orro#ed @F5 fro Era!&
Era!Es o$li%ation to -ernando is no# @85 onl'" $ecause the ori%inal o$li%ation #as offset $' -ernandoEs su!!osed2to2$e o$li%ation
to Era!&
C,N-USI,N ta:es !lace #hen the characters of creditor and de$tor are er%ed in the sae !erson&
Tito !a's his de$t to 3ic #ith a chec: !a'a$le to 0cash1&
3ic !aid his de$t to Joe' #ith the sae chec:&
Joe' !aid his de$t to Tito" #ith the sae chec: Tito issued to 3ic&
Tito $ecoes !aid $' his o#n chec:& Ge $ecoes the de$tor and the creditor of hiself at the sae tie&
RE=ISSI,N the %ratuitous a$andonent $' the creditor of his ri%ht; acce!tance of the o$li%or is necessar'&
REVIEWER
These 7 odes of eBtin%uishin% o$li%ations are acts !rejudicial to the other solidar' co2creditors $ecause these ha*e the
effect of eBtin%uishin% the de$t or o$li%ation #hich is due to all of the&
The onl' recourse of the co2creditors is to let the one #ho eBecuted an' of those acts $e lia$le for the shares
corres!ondin% to all his co2creditors (in their internal a%reeent)&
1016. T6$ #!$"ito! +a% 5!o#$$" against an% on$ o* t6$ soli"a!% "$bto!s o! so+$ o! all o* t6$+ si+ltan$osl%. T6$
"$+an" +a"$ against on$ o* t6$+ s6all not b$ an obsta#l$ to t6os$ .6i#6 +a% sbs$2$ntl% b$ "i!$#t$" against t6$
ot6$!s' so long as t6$ "$bt 6as not b$$n *ll% #oll$#t$".
Nhen there is !assi*e solidarit'" the creditor can !roceed a%ainst>
An' of the solidar' de$tors;
Soe of the solidar' de$tors;
All of the solidar' de$tors" siultaneousl'&
EBtrajudicial deands 2 first deand shall not !re*ent su$se<uent deands on the other co2de$tors" if co2de$tor first to ha*e
$een re<uired to fulfill o$li%ation did not act on it&
101). Pa%+$nt +a"$ b% on$ o* t6$ soli"a!% "$bto!s $=tingis6$s t6$ obligation. I* t.o o! +o!$ soli"a!% "$bto!s
o**$! to 5a%' t6$ #!$"ito! +a% #6oos$ .6i#6 o**$! to a##$5t.
H$ .6o +a"$ t6$ 5a%+$nt +a% #lai+ *!o+ 6is #o3"$bto!s onl% t6$ s6a!$ .6i#6 #o!!$s5on"s to $a#6' .it6 t6$
int$!$st *o! t6$ 5a%+$nt al!$a"% +a"$. I* t6$ 5a%+$nt is +a"$ b$*o!$ t6$ "$bt is "$' no int$!$st *o! t6$ int$!&$ning
5$!io" +a% b$ "$+an"$".
76$n on$ o* t6$ soli"a!% "$bto!s #annot' b$#as$ o* 6is insol&$n#%' !$i+b!s$ 6is s6a!$ to t6$ "$bto! 5a%ing t6$
obligation' s#6 s6a!$ s6all b$ bo!n$ b% all 6is #o3"$bto!s' in 5!o5o!tion to t6$ "$bt o* $a#6.
@a'ent consists in the deli*er' of the thin% or the rendition (renderin%) of the ser*ice #hish is the o$ject of the o$li%ation&
Interest co!ensation for the use of $orro#ed one'
@artial !a'ent the solidar' de$tor #ho ade the !artial !a'ent is entitles to $e rei$ursed onl' for such aount of one'
#hich he had !aid and #hich eBceeds his o#n share in the o$li%ation&
If one of the de$tors is insol*ent and could not !a' his share in the o$li%ation" all solidar' de$tors includin% the !a'in% de$tor
shall share !ro!ortionatel' in the settleent of the corres!ondin% share of the insol*ent de$tor& CIn short" his co2de$tors #ill sa*e
his ass&D
101<. Pa%+$nt b% a soli"a!% "$bto! s6all not $ntitl$ 6i+ to !$i+b!s$+$nt *!o+ 6is #o3"$bto!s i* s#6 5a%+$nt is
+a"$ a*t$! t6$ obligation 6as 5!$s#!ib$" o! b$#o+$ ill$gal.
No rei$urseent if>
4& ,$li%ation @RESCRI.ES
The creditor did not a:e an' deand for ore than 4? 'ears&
8& ,$li%ation $ecoes ILLE/AL
La# has $een !assed" a:in% such !restation ille%al&
101>. T6$ !$+ission +a"$ b% t6$ #!$"ito! o* t6$ s6a!$ .6i#6 a**$#ts on$ o* t6$ soli"a!% "$bto!s "o$s not !$l$as$ t6$
latt$! *!o+ 6is !$s5onsibilit% to.a!"s t6$ #o3"$bto!s' in #as$ t6$ "$bt 6a" b$$n totall% 5ai" b% an%on$ o* t6$+
b$*o!$ t6$ !$+ission .as $**$#t$".
Att' De Cha*e;> Ito a' !ro*ision sa tan%a&&& (si'e!re" S!a% na%$a'ad na" #ala nan% o$li%ation" #ala na din% ire2
reit&&&)
An' $elated (dela'ed) reission $' the creditor of the share of an' of the de$tor has no effect on the internal
relationshi! of the co2de$tors&
REVIEWER
Payment before remission> A" ." and C solidaril' o#e D @4"5??&??& . !aid the entire o$li%ation& After #hich" D reitted the share
of C& . can collect @5??&?? each fro A and C e*en if the share of C in the o$li%ation had $een reitted&
2emission before payment> A" ." and C solidaril' o#e D @4"5??&??& D reitted the share of C& Thereafter" . !aid the entire
o$li%ation& . can collect @5??&?? fro A $ut not fro C& Go#e*er" . a' as: D to %i*e $ac: @5??" #hich is the su!!osed2to2$e
share of C&
After the !rior !a'ent of the entire o$li%ation" there is nothin% to reit $ecause the o$li%ation had $een eBtin%uished&
100?. T6$ !$+ission o* t6$ .6ol$ obligation' obtain$" b% on$ o* t6$ soli"a!% "$bto!s' "o$s not $ntitl$ 6i+ to
!$i+b!s$+$nt *!o+ 6is #o3"$bto!s.
There is nothin% to $e rei$ursed $ecause he did not s!end an' one'" the reission $ein% a %ratuitous act&
1001. I* t6$ t6ing 6as b$$n lost o! i* t6$ 5!$station 6as b$#o+$ i+5ossibl$ .it6ot t6$ *alt o* t6$ soli"a!% "$bto!s'
t6$ obligation s6all b$ $=tingis6$".
I* t6$!$ .as *alt on t6$ 5a!t o* an% on$ o* t6$+' all s6all b$ !$s5onsibl$ to t6$ #!$"ito!' *o! t6$ 5!i#$ an" t6$
5a%+$nt o* "a+ag$s an" int$!$st' .it6ot 5!$j"i#$ to t6$i! a#tion against t6$ gilt% o! n$glig$nt "$bto!.
I* t6!og6 a *o!titos $&$nt' t6$ t6ing is lost o! t6$ 5$!*o!+an#$ 6as b$#o+$ i+5ossibl$ a*t$! on$ o* t6$ soli"a!%
"$bto!s 6as in#!!$" in "$la% t6!og6 t6$ j"i#ial o! $=t!aj"i#ial "$+an" 5on 6i+ b% t6$ #!$"ito!' t6$ 5!o&isions o*
t6$ 5!$#$"ing 5a!ag!a56 s6all a55l%.
Loss of the thin% or i!ossi$ilit' of !restation
4& N, -AULT solidar' de$tors o$li%ation is eBtin%uished
8& -AULT of an' one of the all are lia$le $ecause of their utual a%enc'
9& -,RTUIT,US E3ENT dela' on the !art of the de$tors all #ill $e lia$le
If the thin% due #as not lost" $ut there is erel' a dela'" fraud or ne%li%ence on the !art of one of the solidar' de$tors"
all (includin% the innocent) de$tors #ill share in the !a'ent of the @RINCI@AL !restation& The daa%es and interest
i!osed #ill $e $orne $' the %uilt' de$tor&
,$li%ation to deli*er is con*erted into an o$li%ation to !a' indenit' #hen there us loss or i!ossi$ilit' of !erforance&
1000. A soli"a!% "$bto! +a%' in a#tions *il$" b% t6$ #!$"ito!' a&ail 6i+s$l* o* all "$*$ns$s .6i#6 a!$ "$!i&$" *!o+ t6$
nat!$ o* t6$ obligation an" o* t6os$ .6i#6 a!$ 5$!sonal to 6i+' o! 5$!tain to 6is o.n s6a!$. 7it6 !$s5$#t to t6os$
.6i#6 5$!sonall% b$long to t6$ ot6$!s' 6$ +a% a&ail 6i+s$l* t6$!$o* onl% as !$ga!"s t6at 5a!t o* t6$ "$bt *o! .6i#6
t6$ latt$! a!$ !$s5onsibl$.
DE-ENSES ,- A S,LIDARY DE.T,R>
4& Defense arisin% fro the nature of the o$li%ation such as !a'ent" !rescri!tion" reission" statute of frauds" !resence
of *ices of consent" etc&
8& Defenses #hich are !ersonal to hi or #hich !ertains to his o#n share alone such as inorit'" insanit' and others
!urel' !ersonal to hi&
9& Defenses !ersonal to the other solidar' creditors $ut onl' as re%ards that !art of the de$t for #hich the other creditors
are lia$le&
Section !ivisible and "ndivisible Obligations
1001. T6$ "i&isibilit% o! in"i&isibilit% o* t6$ t6ings t6at a!$ t6$ obj$#t o* obligations in .6i#6 t6$!$ is onl% on$ "$bto!
an" onl% on$ #!$"ito! "o$s not alt$! o! +o"i*% t6$ 5!o&isions o* C6a5t$! 0 o* t6is Titl$.
DI3ISI.ILITY refers to the susce!ti$ilit' of an o$li%ation to $e !erfored !artiall'&
,$li%ation to deli*er 4?? sac:s of rice or a !articular t'!e
INDI3ISI.ILITY refers to the non2susce!ti$ilit' of an o$li%ation to !artial !erforance&
,$li%ation to deli*er a !articular co!uter set
If a thin% could $e di*ided into !arts and as di*ided" its *alue is i!aired dis!ro!ortionatel'" that thin% is INDI3ISI.LE&
REVIEWER
1004. A joint in"i&isibl$ obligation gi&$s !is$ to in"$+nit% *o! "a+ag$s *!o+ t6$ ti+$ an%on$ o* t6$ "$bto!s "o$s not
#o+5l% .it6 6is n"$!ta@ing. T6$ "$bto!s .6o +a% 6a&$ b$$n !$a"% to *l*ill t6$i! 5!o+is$s s6all not #ont!ibt$ to
t6$ in"$+nit% b$%on" t6$ #o!!$s5on"ing 5o!tion o* t6$ 5!i#$ o* t6$ t6ing o! o* t6$ &al$ o* t6$ s$!&i#$ in .6i#6 t6$
obligation #onsists.
K Relate this !ro*ision to Articles 4465" 48?H and 48?P&
J,INT INDI3ISI.LE ,.LI/ATI,N the o$ject is indi*isi$le $ut the lia$ilit' of the !arties is joint&
The unfulfilled underta:in% (dut') is con*erted into a onetar' o$li%ation #hich is not di*isi$le&
The %uilt' de$tor is lia$le for daa%es&
1005. Ao! t6$ 5!5os$s o* t6$ 5!$#$"ing a!ti#l$s' obligations to gi&$ "$*init$ t6ings an" t6os$ .6i#6 a!$ not
ss#$5tibl$ o* 5a!tial 5$!*o!+an#$ s6all b$ "$$+$" to b$ in"i&isibl$.
76$n t6$ obligation 6as *o! its obj$#t t6$ $=$#tion o* a #$!tain n+b$! o* "a%s o* .o!@' t6$ a##o+5lis6+$nt o*
.o!@ b% +$t!i#al nits' o! analogos t6ings .6i#6 b% t6$i! nat!$ a!$ ss#$5tibl$ o* 5a!tial 5$!*o!+an#$' it s6all b$
"i&isibl$.
Ho.$&$!' $&$n t6og6 t6$ obj$#t o! s$!&i#$ +a% b$ 56%si#all% "i&isibl$' an obligation is in"i&isibl$ i* so 5!o&i"$" b%
la. o! int$n"$" b% t6$ 5a!ti$s.
In obligations not to "o' "i&isibilit% o! in"i&isibilit% s6all b$ "$t$!+in$" b% t6$ #6a!a#t$! o* t6$ 5!$station in $a#6
5a!ti#la! #as$.
The follo#in% are considered INDI3ISI.LE o$li%ations>
4& ,$li%ation to %i*e definite thin%s
8& ,$li%ations #hich are not susce!ti$le of !artial !erforance
9& E*en thou%h the o$ject or ser*ice a' $e !h'sicall' di*isi$le" it is indi*isi$le if>
a& the la# so !ro*ides
$& #hen the !arties intended it to $e indi*isi$le
The follo#in% o$li%ations are deeed DI3ISI.LE>
4& Nhen the o$ject of the o$li%ation is the eBecution of a certain nu$er of da's of #or:
8& Nhen the o$ject of the o$li%ation is the acco!lishent of #or: easured in units
9& Nhen the o$ject of the o$li%ation is susce!ti$le of !artial co!liance
7& Nhen the o$ject of the o$li%ation is such that the de$tor is re<uired to !a' in installents
If the contract is di*isi$le" and a !art of it is ille%al" the ille%al !art is *oid" and the rest shall $e *alid and enforcea$le&
If the contract is indi*isi$le" and a !art of it is ille%al" the entire contract is *oid&
@artial !erforance of an indi*isi$le o$li%ation is tantaount to non2!erforance&
Section # Obligations with a Penal Clause
1006. In obligations .it6 a 5$nal #las$' t6$ 5$nalt% s6all sbstitt$ t6$ in"$+nit% *o! "a+ag$s an" t6$ 5a%+$nt o*
int$!$sts in #as$ o* non#o+5lian#$' i* t6$!$ is no sti5lation to t6$ #ont!a!%. N$&$!t6$l$ss' "a+ag$s s6all b$ 5ai" i*
t6$ obligo! !$*s$s to 5a% t6$ 5$nalt% o! is gilt% o* *!a" in t6$ *l*ill+$nt o* t6$ obligation.
T6$ 5$nalt% +a% b$ $n*o!#$" onl% .6$n it is "$+an"abl$ in a##o!"an#$ .it6 t6$ 5!o&isions o* t6is Co"$.
K An o$li%ation #ith a !enal clause a' $e defined as one to #hich an accessor' underta:in% is attached for the !ur!ose of
insurin% its !erforance $' *irtue of #hich the o$li%or is $ound to !a' a sti!ulated indenit' or !erfor a sti!ulated !restation in
case of $reach&
@ur!oses>
1. 3uncion coercitiva o de garantia to insure the !erforance of the o$li%ation
2. 3uncion li(uidatoria to li<uidate the aount of daa%es to $e a#arded to the injured !art' in case of $reach
of the !rinci!al o$li%ation; and
3. 3uncion estrictamente penal in certain eBce!tional cases" to !unish the o$li%or in case of $reach of the
REVIEWER
!rinci!al o$li%ation&
This is an accessory obligation attached to the !rinci!al o$li%ation" #hich i!oses an additional lia$ilit' in case of $reach
of the !rinci!al o$li%ation&
It !ushes the de$tor to !erfor his o$li%ation faithfull' and #ithout dela' #ithin the !eriod a%reed u!on" or else" he
suffers a fiBed ci*il !enalt' #ithout need of !ro*in% the daa%es of the other !art'&
The !enalt' i!osa$le is a su$stitute for the indenit' for>
a& daa%es
$& !a'ent of interest in case of $reach of o$li%ation
2unless the contrar' is sti!ulatedV
EICE@TI,NS additional daa%es a' $e reco*ered fro the follo#in% acts>
If the de$tor refuses to !a' the !enalt'
If the de$tor is %uilt' of fraud in the fulfillent of the o$li%ation
If there is eB!ress sti!ulation that the other daa%es or interests are deanda$le to the !enalt' in the !enal
clause
100). T6$ "$bto! #annot $=$+5t 6i+s$l* *!o+ t6$ 5$!*o!+an#$ o* t6$ obligation b% 5a%ing t6$ 5$nalt%' sa&$ in t6$
#as$ .6$!$ t6is !ig6t 6as b$$n $=5!$ssl% !$s$!&$" *o! 6i+. N$it6$! #an t6$ #!$"ito! "$+an" t6$ *l*ill+$nt o* t6$
obligation an" t6$ satis*a#tion o* t6$ 5$nalt% at t6$ sa+$ ti+$' nl$ss t6is !ig6t 6as b$$n #l$a!l% g!ant$" 6i+.
Ho.$&$!' i* a*t$! t6$ #!$"ito! 6as "$#i"$" to !$2i!$ t6$ *l*ill+$nt o* t6$ obligation' t6$ 5$!*o!+an#$ t6$!$o* s6ol"
b$#o+$ i+5ossibl$ .it6ot 6is *alt' t6$ 5$nalt% +a% b$ $n*o!#$".
A de$tor cannot e*ade fro !a'ent of his !rinci!al o$li%ation $' choosin% to !a' the !enalt' sti!ulated" eBce!t #hen
the de$tor is EI@RESSLY %ranted #ith the ri%ht to su$stitute the !enalt' for the !rinci!al o$li%ation& an o$li%ation #ith
!enalt' clause cannot $e turned to facultati*e o$li%ation unless eB!ressl' sti!ulated in the contract&
The creditor cannot deand the sti!ulated fulfillent of the !rinci!al o$li%ation and the !enalt' at the sae tie" eBce!t
a& #hen the creditor #as clearl' %i*en the ri%ht to enforce $oth the !rinci!al o$li%ation and !enalt';
$& #hen the creditor has deanded fulfillent of the o$li%ation $ut cannot $e fulfilled due to the
4& de$torEs fault creditor a' deand for !enalt'
8& creditorEs fault he cannot clai the !enalt'
9& fortuitous e*ent !rinci!al o$li%ation and !enalt' are eBtin%uished
100<. P!oo* o* a#tal "a+ag$s s**$!$" b% t6$ #!$"ito! is not n$#$ssa!% in o!"$! t6at t6$ 5$nalt% +a% b$ "$+an"$".
As lon% as the a%reeent or contract is $reached&
The ere non2fulfillent of the !rinci!al o$li%ation entitles the creditor to the !enalt' sti!ulated&
The !ur!ose of the !enalt' clause is !recisel' to a*oid !ro*in% daa%es&
100>. T6$ j"g$ s6all $2itabl% !$"#$ t6$ 5$nalt% .6$n t6$ 5!in#i5al obligation 6as b$$n 5a!tl% o! i!!$gla!l%
#o+5li$" .it6 b% t6$ "$bto!. E&$n i* t6$!$ 6as b$$n no 5$!*o!+an#$' t6$ 5$nalt% +a% also b$ !$"#$" b% t6$ #o!ts
i* it is ini2itos o! n#ons#ionabl$.
JUDICIAL REDUCTI,N ,- @ENALTY
@rinci!al o$li%ation !artl' co!lied #ith $' the de$tor ($ut not in indi*isi$le o$li%ation" $ecause it is tantaount to
non2co!liance)
@rinci!al o$li%ation co!lied not in accordance #ith the tenor of the a%reeent (refers to irre%ular !erforance)
@enalt' ini<uitous or unconsciona$le
Jud%eEs !o#er to reduce !enalties are liited to !ri*ate contracts&
INIJUIT,US ,R UNC,NSCI,NA.LE #hen it is re*oltin% to the conscience or coon sense; %rossl' dis!ro!ortionate to the
daa%es suffered&
@ENALTY N,T EN-,RCEA.LE>
4& I!ossi$le !erforance of !rinci!al o$li%ation due to fortuitous e*ents
REVIEWER
8& Creditor !re*ented the de$tor fro fulfillin% the o$li%ation
9& @enalt' is contrar' to %ood orals or %ood custos
7& .oth !arties are %uilt' of $reach of contract
5& .reach of contract $' the creditor
6& None of the !arties coitted an' #illful or cul!a$le *iolation of the a%reeent
101?. T6$ nllit% o* t6$ 5$nal #las$ "o$s not #a!!% .it6 it t6at o* t6$ 5!in#i5al obligation.
T6$ nllit% o* t6$ 5!in#i5al obligation #a!!i$s .it6 it t6at o* t6$ 5$nal #las$.
.ecause the !enal clause is onl' an accessor' to the !rinci!al o$li%ation" it cannot eBist alone&
If the !enal clause is *oid" the !rinci!al o$li%ation reains enforcea$le&
0e nullity of penal clause does not mean te nullity of te principal.
-or eBa!le>
In case of non2!a'ent of @4?"???" @4"??? !er da' as !enalt' shall $e i!osed& It is a *oid contract $ut it is not an eBcuse that
'ou donSt ha*e to !a' the !rinci!al #hich is @4?"???&
CHAPTER 4
EJTINHG9ISHDENT OA OBLIGATIONS
GENERAL PROVISIONS
1011. Obligations a!$ $=tingis6$"(
5. b% 5a%+$nt o! 5$!*o!+an#$
6. b% loss o* t6$ t6ing "$
). b% #on"onation o! !$+ission
<. b% #on*sion o! +$!g$! o* t6$ !ig6ts o* #!$"ito! an" "$bto!
>. b% #o+5$nsation
1?. b% no&ation
Ot6$! #as$s o* $=tingis6+$nt o* obligations' s#6 as annl+$nt' !$s#ission' *l*ill+$nt o* a !$solto!% #on"ition'
an" 5!$s#!i5tion' a!$ go&$!n$" $ls$.6$!$ in t6is Co"$.
1010. Pa%+$nt +$ans not onl% t6$ "$li&$!% o* +on$% bt also t6$ 5$!*o!+an#$' in an% ot6$! +ann$! o* an
obligation.
Payment means not only delivery of money but also te performance.
It is the fulfillent of the !restation due that eBtin%uishes the o$li%ation $' the reali;ation of the !ur!oses for #hich it
#as constituted
It is a juridical act #hich is *oluntar'" licit and ade #ith the intent to eBtin%uish an o$li%ation
Re<uisites>
4& !erson #ho !a's
8& the !erson to #ho !a'ent is ade
9& the thin% to $e !aid
7& the anner" tie and !lace of !a'ent etc
The !a'in% as #ell as the one recei*in% should ha*e the re<uisite ca!acit'
+inds>
4& noral #hen the de$tor *oluntaril' !erfors the !restation sti!ulated
2. a$noral #hen he is forced $' eans of a judicial !roceedin% either to co!l' #ith !restation or to !a' indemnity
1011. A "$bt s6all not b$ n"$!stoo" to 6a&$ b$$n 5ai" nl$ss t6$ t6ing o! s$!&i#$ in .6i#6 t6$ oligatoin #onsists
6as b$$n #o+5l$t$l% "$li&$!$" o! !$n"$!$"' as t6$ #as$ +a% b$.
States 8 re<uisites of !a'ent>
a&) identit' of !restation 2 the *er' thin% or ser*ice due ust $e deli*ered or released
$&) inte%rit' !restation ust $e fulfilled co!letel'
Tie of !a'ent the !a'ent or !erforance ust $e on the date sti!ulated (a' $e ade e*en on Sunda's or on
REVIEWER
an' holida'" althou%h soe" li:e the Ne%otia$le Instruents La#" states that !a'ent in such case a' $e ade on the
neBt succeedin% $usiness da')
The $urden of !ro*in% that the o$li%ation has $een eBtin%uished $' !a'ent de*ol*es u!on the de$tor #ho offers such a
defense to the clai of the !laintiff creditor
The issuance of a recei!t is a conse<uence of usa%e and %ood faith #hich ust $e o$ser*ed (althou%h our Code has no
!ro*ision on this) and the refusal of the creditor to issue a recei!t #ithout just cause is a %round for consi%nation under
Art 4856 ( if a recei!t has $een issued $' !a'ee" the testion' alone of !a'er #ould $e insufficient to !ro*e alle%ed
!a'ents)
1014. I* t6$ obligation 6as b$$n sbstantiall% 5$!*o!+$" in goo" *ait6' t6$ obligo! +a% !$#o&$! as t6og6 t6$!$ 6a"
b$$n a st!i#t an" #o+5l$t$ *l*ill+$nt' l$ss "a+ag$s s**$!$" b% t6$ oblig$$.
In order that there a' $e su$stantial !erforance of an o$li%ation" there ust ha*e $een an atte!t in %ood faith to
!erfor" #ithout an' #illful or intentional de!arture therefro
The non2!erforance of a aterial !art of a contract #ill !re*ent the !erforance fro aountin% to a su$stantial
co!liance
A !art' #ho :no#in%l' and #illfull' fails to !erfor his contract in an' res!ect" or oits to !erfor a aterial !art of it
cannot $e !eritted under the !rotection of this rule to co!el the other !art' to !erfor; and the trend of the ore
recent decisions is to hold that the !ercenta%e of oitted or irre%ular !erforance a' in and of itself $e sufficient to
sho# that there has not $een a su$stantial !erforance
The !art' #ho has su$stantiall' !erfored a' enforce s!ecific !erforance of the o$li%ation of the other !art' or a'
reco*er daa%es for their $reach u!on an alle%ation of !erforance" #ithout !roof of co!lete fulfillent&
The other !art'" on the other hand" a' $' an inde!endent action $efore he is sued" or $' a counterclai after
coenceent of a suit a%ainst hi" reco*er fro the first !art' the daa%es #hich he has sustained $' the latterEs
failure to co!letel' fulfill his o$li%ation
1015 76$n t6$ oblig$ a##$5ts t6$ 5$!*o!+an#$' @no.ing its in#o+5l$t$n$ss o! i!!$gla!it%' an" .it6ot
$=5!$ssing an% 5!ot$st o! obj$#tion' t6$ obligation is "$$+$" *ll% #o+5li$" .it6
A !erson enterin% into a contract has a ri%ht to insist on its !erforance in all !articulars" accordin% to its eanin% and
s!irit& .ut if he chooses to #ai*e an' of the ters introduced for his o#n $enefit" he a' do so&
.ut he is not o$li%ed to acce!t an'thin% else in !lace of that #hich he has contracted for and if he does not #ai*e this
ri%ht" the other !art' cannot reco*er a%ainst hi #ithout !erforin% all the sti!ulations on is !art
To constitute a #ai*er" there ust $e an intentional relin<uishent of a :no#n ri%ht& A #ai*er #ill not result fro a ere
failure to assert a clai for defecti*e !erforanceA!a'ent& There ust ha*e $een acce!tance of the defecti*e
!erforance #ith actual :no#led%e if the inco!leteness or defect" under circustances that #ould indicate an intention
to consider the !erforance as co!lete and renounce an' clai arisin% fro the defect
A creditor cannot o$ject $ecause of defects in !erforance resultin% fro his o#n acts or directions
1016. T6$ #!$"ito! is not bon" to a##$5t 5a%+$nt o! 5$!*o!+an#$ b% a t6i!" 5$!son .6o 6as no int$!$st in t6$
*l*ill+$nt o* t6$ obligation' nl$ss t6$!$ is a sti5lation to t6$ #ont!a!%. 76o$&$! 5a%s *o! anot6$! +a% "$+an"
*!o+ t6$ "$bto! .6at 6$ 6as 5ai"' $=#$5t t6at i* 6$ 5ai" .it6ot t6$ @no.l$"g$ o! against t6$ .ill o* t6$ "$bto!' 6$
#an !$#o&$! onl% inso*a! as t6$ 5a%+$nt 6as b$$n b$n$*i#ial to t6$ "$bto!
Reason for this article> #hene*er a third !erson !a's there is a odification of the !restation that is due&
/enerall'" the 9rd !erson #ho !aid anotherEs de$t is entitled to reco*er the full aount he !aid& The la#" ho#e*er liits
his reco*er' to the aount $' #hich the de$tor has $een $enefited" if the de$tor has no :no#led%e of" or has eB!ressed
his o!!osition to such !a'ent
If the de$t has $een reitted" !aid co!ensated or !rescri$ed" a !a'ent $' a third !erson #ould constitute a !a'ent
of #hat is not due; his reed' #ould $e a%ainst the !erson #ho recei*ed the !a'ent under such conditions and not
a%ainst the de$tor #ho did not $enefit fro the !a'ent
!a'ent a%ainst de$torEs #ill e*en if !a'ent of the third !art' is a%ainst the #ill of the de$tor" u!on !a'ent $' the
third !art'" the o$li%ation $et#een the de$tor and creditor is alread' eBtin%uished
101). 76o$&$! 5a%s on b$6al* o* t6$ "$bto! .it6ot t6$ @no.l$"g$ o! against t6$ .ill o* t6$ latt$!' #annot #o+5$l
t6$ #!$"ito! to sb!ogat$ 6i+ in 6is !ig6ts' s#6 as t6os$ a!ising *!o+ a +o!tgag$' ga!ant% o! 5$nalt%
This article %i*es to the third !erson #ho !aid onl' a si!le !ersonal action for rei$urseent" #ithout the securities"
%uaranties and other ri%hts reco%ni;ed in the creditor" #hich are eBtin%uished $' the !a'ent
REVIEWER
101<. Pa%+$nt +a"$ b% a t6i!" 5$!son .6o "o$s not int$n" to b$ !$i+b!s$" b% t6$ "$bto! is "$$+$" to b$ a
"onation' .6i#6 !$2i!$s t6$ "$bto!Ks #ons$nt; bt t6$ 5a%+$nt is in an% #as$ &ali" as to t6$ #!$"ito! .6o 6as
a##$5t$" it
ART 101>. In obligations to gi&$' 5a%+$nt +a"$ b% on$ .6o "o$s not 6a&$ t6$ *!$$ "is5osal o* t6$ t6ing "$ an"
#a5a#it% to ali$nat$ it s6all not b$ &ali$"' .it6ot 5!$j"i#$ to t6$ 5!o&isions o* a!ti#l$ 140) n"$! t6$ Titl$ on
LNat!al ObligationsM
consi%nation #ill not $e !ro!er here& In case the creditor acce!ts the !a'ent" the !a'ent #ill not $e *alid eBce!t in
the case !ro*ided in article 478F
104?. Pa%+$nt s6all b$ +a"$ to t6$ 5$!son in .6os$ *a&o! t6$ obligation 6as b$$n #onstitt$"' o! 6is s##$sso! in
int$!$st' o! an% 5$!son at6o!iE$" to !$#$i&$ it
the authorit' of a !erson to recei*e !a'ent for the creditor a' $e
a&) le%al conferred $' la# (e&%&"%uardian of the inca!acitated" adinistrator of the estate of the deceased)
$&) con*entional #hen the authorit' has $een %i*en $' the creditor hiself (e&%&" a%ent #ho is a!!ointed to collect fro the
de$tor
!a'ent ade $' the de$tor to a #ron% !art' does not eBtin%uish the o$li%ation as to the creditor (*oid)" if there is no
fault or ne%li%ence #hich can $e i!uted to the latter (e*en #hen the de$tor acted in utost %ood faith" or throu%h error
induced $' the fraud of the 9rd !erson)& It does not !rejudice the creditor and the accrual of interest is not sus!ended $'
it
1041. Pa%+$nt to a 5$!son .6o is in#a5a#itat$" to a"+inist$! 6is 5!o5$!t% s6all b$ &ali" i* 6$ 6as @$5t t6$ t6ing
"$li&$!$"' o! inso*a! as t6$ 5a%+$nt 6as b$$n b$n$*i#ial to 6i+. Pa%+$nt +a"$ to a t6i!" 5$!son s6all also b$ &ali"
inso*a! as it 6as !$"on"$" to t6$ b$n$*it o* t6$ #!$"ito!. S#6 b$n$*it to t6$ #!$"ito! n$$" not b$ 5!o&$" in t6$
*ollo.ing #as$s(
,1- I* a*t$! t6$ 5a%+$nt' t6$ t6i!" 5$!son a#2i!$s t6$ #!$"ito!Hs !ig6ts/
,0- I* t6$ #!$"ito! !ati*i$s t6$ 5a%+$nt to t6$ t6i!" 5$!son/
,1- I* b% t6$ #!$"ito!Hs #on"#t' t6$ "$bto! 6as b$$n l$" to b$li$&$ t6at t6$ t6i!" 5$!son 6a" at6o!it% to !$#$i&$ t6$
5a%+$nt. ,1161a-
!a'ent shall $e considered as ha*in% $enefited the inca!acitated !erson if he ade an intelli%ent and reasona$le use
thereof" for !ur!oses necessar' or useful to hi" such as that #hich his le%al re!resentati*e #ould ha*e or could ha*e
done under siilar circustances" e*en if at the tie of the co!laint the effect of such use no lon%er eBists (e&%&" taBes
on creditorEs !ro!ert'" one' to eBtin%uish a ort%a%e on creditorEs !ro!ert')
the de$tor is not released fro lia$ilit' $' a !a'ent to one #ho is not the creditor nor one authori;ed to recei*e the
!a'ent" e*en if the de$tor $elie*ed in %ood faith that he is the creditor" eBce!t to the eBtent that the !a'ent inured to
the $enefit of the creditor
in addition to those entioned a$o*e" !a'ent to a third !erson releases the de$tor>
a&) #hen" #ithout notice of the assi%nent of credit" he !a's to the ori%inal creditor
$&) #hen in %ood faith he !a's to one in !ossession of the credit
e*en #hen the creditor recei*es no $enefit fro the !a'ent to a third !erson" he cannot deand !a'ent ane#" if the
ista:e of the de$tor #as due to the fault of the creditor
1040. Pa%+$nt +a"$ in goo" *ait6 to an% 5$!son in 5oss$ssion o* t6$ #!$"it s6all !$l$as$ t6$ "$bto!. ,1164-
the !erson in !ossession of the credit is neither the creditor nor one authori;ed $' hi to recei*e !a'ent" $ut a!!ears
under the circustances of the case" to $e the creditor& Ge a!!ears to $e the o#ner of the credit" althou%h in realit'" he
a' not $e the o#ner (e&%&" an heir #ho enters u!on the hereditar' estate and collects the credits thereof" $ut #ho is
later de!ri*ed of the inheritance $ecause of inca!acit' to succeed)
it is necessar' not onl' that the !ossession of the credit $e le%al" $ut also that the !a'ent $e in %ood faith
1041. Pa%+$nt +a"$ to t6$ #!$"ito! b% t6$ "$bto! a*t$! t6$ latt$! 6as b$$n j"i#iall% o!"$!$" to !$tain t6$ "$bt s6all
not b$ &ali". ,1165-
the !a'ent to the creditor after the credit has $een attached or %arnished is *oid as to the !art' #ho o$tained the
attachent or %arnishent" to the eBtent of the aount of the jud%ent in his fa*or&
The de$tor u!on #ho %arnishent order is ser*ed can al#a's de!osit the one' in court $' #a' of consi%nation and
thus relie*e hiself fro further lia$ilit'
REVIEWER
1044. T6$ "$bto! o* a t6ing #annot #o+5$l t6$ #!$"ito! to !$#$i&$ a "i**$!$nt on$' alt6og6 t6$ latt$! +a% b$ o* t6$
sa+$ &al$ as' o! +o!$ &alabl$ t6an t6at .6i#6 is "$. In obligations to "o o! not to "o' an a#t o! *o!b$a!an#$
#annot b$ sbstitt$" b% anot6$! a#t o! *o!b$a!an#$ against t6$ oblig$$Hs .ill. ,1166a-
U!on a%reeent of consent of the creditor" the de$tor a' deli*er a different thin% or !erfor a different !restation in
lieu of that sti!ulated& In this case there a' $e dation in !a'ent or no*ation
The defects of the thin% deli*ered a' $e #ai*ed $' the creditor" if he eB!ressl' so declares or if" #ith :no#led%e
thereof" he acce!ts the thin% #ithout !rotest or dis!oses of it or consues it
1045. :ation in 5a%+$nt' .6$!$b% 5!o5$!t% is ali$nat$" to t6$ #!$"ito! in satis*a#tion o* a "$bt in +on$%' s6all b$
go&$!n$" b% t6$ la. o* sal$s. ,n-
This is the deli*er' and transission of o#nershi! of a thin% $' the de$tor to the creditor as an acce!ted e<ui*alent of
the !erforance of the o$li%ation&
The !ro!ert' %i*en a' consist not onl' of a thin% $ut also of a real ri%ht (such as a usufruct)
Considered as a no*ation $' chan%e of the o$ject
Nhere the de$t is one'" the la# on sale shall %o*ern; in this case" the act is deeed to $e a sale #ith the aount of
the o$li%ation to the eBtent that it is eBtin%uished $ein% considered as !rice
Difference $et#een Dation and Cession (see Art& 4855)
1046. 76$n t6$ obligation #onsists in t6$ "$li&$!% o* an in"$t$!+inat$ o! g$n$!i# t6ing' .6os$ 2alit% an"
#i!#+stan#$s 6a&$ not b$$n stat$"' t6$ #!$"ito! #annot "$+an" a t6ing o* s5$!io! 2alit%. N$it6$! #an t6$ "$bto!
"$li&$! a t6ing o* in*$!io! 2alit%. T6$ 5!5os$ o* t6$ obligation an" ot6$! #i!#+stan#$s s6all b$ ta@$n into
#onsi"$!ation. ,116)a-
If there is disa%reeent $et#een the de$tor and the creditor as to the <ualit' of the thin% deli*ered" the court should
decide #hether it co!lies #ith the o$li%ation" ta:in% into consideration the !ur!ose and other circustances of the
o$li%ation
.oth the creditor and the de$tor a' #ai*e the $enefit of this article
see Art& 4877
104). 9nl$ss it is ot6$!.is$ sti5lat$"' t6$ $=t!aj"i#ial $=5$ns$s !$2i!$" b% t6$ 5a%+$nt s6all b$ *o! t6$ a##ont
o* t6$ "$bto!. 7it6 !$ga!" to j"i#ial #osts' t6$ Rl$s o* Co!t s6all go&$!n. ,116<a-
This is $ecause the !a'ent is the de$torEs dut' and it inures to his $enefit in that he is dischar%ed fro the $urden of
the o$li%ation
104<. 9nl$ss t6$!$ is an $=5!$ss sti5lation to t6at $**$#t' t6$ #!$"ito! #annot b$ #o+5$ll$" 5a!tiall% to !$#$i&$ t6$
5!$stations in .6i#6 t6$ obligation #onsists. N$it6$! +a% t6$ "$bto! b$ !$2i!$" to +a@$ 5a!tial 5a%+$nts.
Ho.$&$!' .6$n t6$ "$bt is in 5a!t li2i"at$" an" in 5a!t nli2i"at$"' t6$ #!$"ito! +a% "$+an" an" t6$ "$bto!
+a% $**$#t t6$ 5a%+$nt o* t6$ *o!+$! .it6ot .aiting *o! t6$ li2i"ation o* t6$ latt$!. ,116>a-
The creditor #ho refuses to acce!t !artial !restations does not incur dela' eBce!t #hen there is a$use of ri%ht or if %ood
faith re<uires acce!tance
This article does not a!!l' to o$li%ations #here there are se*eral su$jects or #here the *arious !arties are $ound under
different ters and conditions
104>. T6$ 5a%+$nt o* "$bts in +on$% s6all b$ +a"$ in t6$ #!!$n#% sti5lat$"' an" i* it is not 5ossibl$ to "$li&$!
s#6 #!!$n#%' t6$n in t6$ #!!$n#% .6i#6 is l$gal t$n"$! in t6$ P6ili55in$s.
T6$ "$li&$!% o* 5!o+isso!% not$s 5a%abl$ to o!"$!' o! bills o* $=#6ang$ o! ot6$! +$!#antil$ "o#+$nts s6all 5!o"#$
t6$ $**$#t o* 5a%+$nt onl% .6$n t6$% 6a&$ b$$n #as6$"' o! .6$n t6!og6 t6$ *alt o* t6$ #!$"ito! t6$% 6a&$ b$$n
i+5ai!$".
In t6$ +$anti+$' t6$ a#tion "$!i&$" *!o+ t6$ o!iginal obligation s6all b$ 6$l" in t6$ ab$%an#$. ,11)?-
LE/AL TENDER 2 eans such currenc' #hich in a %i*en jurisdiction can $e used for the !a'ent of de$ts" !u$lic and
!ri*ate" and #hich cannot $e refused $' the creditor
2 That #hich a de$tor a' co!el a creditor to acce!t in !a'ent of de$t&
so lon% as the notes #ere le%al tender at the tie the' #ere !aid or deli*ered" the !erson acce!tin% the ust suffer
the loss if thereafter the' $ecae *alueless
the !ro*isions of the !resent article ha*e $een odified $' RA No& 58P #hich states that !a'ents of all onetar'
o$li%ations should no# $e ade in currenc' #hich is le%al tender in the @hils& A stipulation providing payment in a
REVIEWER
foreign currency is null and void but it does not invalidate te entire contract" and R&A& 74??&
A chec:" #hether a ana%erEs chec: or an ordinar' chec: is not le%al tender and an offer of the chec: in !a'ent of de$t
is not a *alid tender of !a'ent
105?. In #as$ an $=t!ao!"ina!% in*lation o! "$*lation o* t6$ #!!$n#% sti5lat$" s6ol" s5$!&$n$' t6$ &al$ o* t6$
#!!$n#% at t6$ ti+$ o* t6$ $stablis6+$nt o* t6$ obligation s6all b$ t6$ basis o* 5a%+$nt' nl$ss t6$!$ is an
ag!$$+$nt to t6$ #ont!a!%. ,n-
A!!lies onl' #here a contract or a%reeent is in*ol*ed& It does not a!!l' #here the o$li%ation to !a' arises fro la#"
inde!endent of contracts
EBtraordinar' inflation of deflation a' $e said to $e that #hich is unusual or beyond te common fluctuations in te
value of te currency" #hich !arties could not ha*e reasona$l' foreseen or #hich #as anifestl' $e'ond their
conte!lation at the tie #hen the o$li%ation #as constituted
1051. Pa%+$nt s6all b$ +a"$ in t6$ 5la#$ "$signat$" in t6$ obligation. T6$!$ b$ing no $=5!$ss sti5lation an" i* t6$
n"$!ta@ing is to "$li&$! a "$t$!+inat$ t6ing' t6$ 5a%+$nt s6all b$ +a"$ .6$!$&$! t6$ t6ing +ig6t b$ at t6$
+o+$nt t6$ obligation .as #onstitt$". In an% ot6$! #as$ t6$ 5la#$ o* 5a%+$nt s6all b$ t6$ "o+i#il$ o* t6$ "$bto!.
If the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" the additional eB!enses shall $e $orne $'
hi& These !ro*isions are #ithout !rejudice to *enue under the Rules of Court&(44F4a)
Since the la# fiBes the !lace of !a'ent at the doicile of the de$tor" it is the dut' of the creditor to %o there and
recei*e !a'ent; he should $ear the eB!enses in this case $ecause the de$tor cannot $e ade to shoulder the eB!enses
#hich the creditor incurs in !erforin% a dut' i!osed $' la# and #hich is for his $enefit&
.ut if the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" then the additional eB!enses shall $e
$orne $' hi
Nhen the de$tor has $een re<uired to reit one' to the creditor" the latter $ears the ris:s and the eB!enses of the
transission& In cases ho#e*er #here the de$tor chooses this eans of !a'ent" he $ears the ris: of loss&
S9BSECTION 1
APPLICATION OA PANDENTS
1050. H$ .6o 6as &a!ios "$bts o* t6$ sa+$ @in" in *a&o! o* on$ an" t6$ sa+$ #!$"ito!' +a% "$#la!$ at t6$ ti+$ o*
+a@ing t6$ 5a%+$nt' to .6i#6 o* t6$+ t6$ sa+$ +st b$ a55li$". 9nl$ss t6$ 5a!ti$s so sti5lat$' o! .6$n t6$
a55li#ation o* 5a%+$nt is +a"$ b% t6$ 5a!t% *o! .6os$ b$n$*it t6$ t$!+ 6as b$$n #onstitt$"' a55li#ation s6all not
b$ +a"$ as to "$bts .6i#6 a!$ not %$t "$.
I* t6$ "$bto! a##$5ts *!o+ t6$ #!$"ito! a !$#$i5t in .6i#6 an a55li#ation o* t6$ 5a%+$nt is +a"$' t6$ *o!+$! #annot
#o+5lain o* t6$ sa+$' nl$ss t6$!$ is a #as$ *o! in&ali"ating t6$ #ont!a#t. ,11)0a-
Re<uisites>
4& 4 de$tor and 4 creditor onl'
8& 8 or ore de$ts of the sae :ind
9& all de$ts ust $e due
7& aount !aid $' the de$tor ust not $e sufficient to co*er the total aount of all the de$ts
It is necessar' that the o$li%ations ust all $e due& EBce!tions> (4) #he there is a sti!ulation to the contrar'; and (8) the
a!!lication of !a'ent is ade $' the !art' for #hose $enefit the ter or !eriod has $een constituted (relate to Art&
44P6)&
It is also necessar' that all the de$ts $e for the sae :ind" %enerall' of a onetar' character& This includes o$li%ations
#hich #ere not ori%inall' of a onetar' character" $ut at the tie of a!!lication of !a'ent" had $een con*erted into an
o$li%ation to !a' daa%es $' reason of $reach or non!erforance&
If the de$tor a:es a !ro!er a!!lication of !a'ent $ut the creditor refuses to acce!t it $ecause he #ants to a!!l' it to
another de$t" such creditor #ill incur in dela'
RI/GT ,- DE.T,R T, =A+E A@@LICATI,N& If at the tie of !a'ent" the de$tor does not eBercise his ri%ht to a!!l' it to
an' of his de$ts" the a!!lication shall $e understood as !ro*ided $' la#" unless the creditor a:es the a!!lication and
his decision is acce!ted $' the de$tor& This a!!lication of !a'ent can $e ade $' the creditor onl' in the recei!t issued
at the tie of !a'ent (althou%h the a!!lication ade $' creditor a' $e contested $' the de$tor if the latterEs assent
to such a!!lication #as *itiated $' such causes as ista:e" *iolence" intiidation" fraud" etc)
The de$tor and the creditor $' a%reeent" can *alidl' chan%e the a!!lication of !a'ent alread' ade #ithout !rejudice
to the ri%hts of third !ersons ac<uired $efore such a%reeent
REVIEWER
1051. I* t6$ "$bt 5!o"#$s int$!$st' 5a%+$nt o* t6$ 5!in#i5al s6all not b$ "$$+$" to 6a&$ b$$n +a"$ ntil t6$
int$!$sts 6a&$ b$$n #o&$!$". ,11)1-
Interest !aid first $efore !rinci!al
A!!lies $oth to co!ensator' interest (that sti!ulated as earnin%s of the aount due under the o$li%ation) and to
interest due $ecause of dela' or ora on the !art of the de$tor
SC held that this !ro*ision a!!lies onl' in the a$sence of a *er$al or #ritten a%reeent to the contrar' (erel' director'"
not andator')
1054. 76$n t6$ 5a%+$nt #annot b$ a55li$" in a##o!"an#$ .it6 t6$ 5!$#$"ing !l$s' o! i* a55li#ation #an not b$
in*$!!$" *!o+ ot6$! #i!#+stan#$s' t6$ "$bt .6i#6 is +ost on$!os to t6$ "$bto!' a+ong t6os$ "$' s6all b$ "$$+$"
to 6a&$ b$$n satis*i$". I* t6$ "$bts "$ a!$ o* t6$ sa+$ nat!$ an" b!"$n' t6$ 5a%+$nt s6all b$ a55li$" to all o*
t6$+ 5!o5o!tionat$l%. ,11)4a-
As to #hich of 8 de$ts is ore onerous is fundaentall' a <uestion of fact" #hich courts ust deterine on the $asis of
the circustances of each case
De$ts are not of the sae $urden (4
st
!ar&) Rules>
4& ,ldest are ore onerous than ne# ones
8& ,ne $earin% interest ore onerous than one that does not
9& secured de$t ore onerous than unsecured one
7& !rinci!al de$t ore onerous than %uarant'
5& solidar' de$tor ore onerous than sole de$tor
6& share in a solidar' o$li%ation ore onerous to a solidar' de$tor
F& li<uidated de$t ore onerous than unli<uidated
De$ts are of the sae $urden (8
nd
!ar&) the !a'ent shall $e a!!lied to all of the pro rata or !ro!ortionatel'.
EBa!le> de$tor o#es his creditor se*eral de$ts" all of the due" to #it> (4) unsecured de$t" (8) a de$t secured #ith
ort%a%e of the de$torSs !ro!ert'" (9) a de$t #ith interest" (7) a de$t in #hich the de$tor is solidaril' lia$le #ith another&
@artial !a'ent #as ade $' the de$tor" #ithout s!ecification as to #hich the !a'ent should $e a!!lied&
The ost onerous is (7)" follo#ed $' (8)" then (9)" then (4)& Conse<uentl'" !a'ent shall $e ade in that order&
S9BSECTION 0
PANDENT BN CESSION
1055. T6$ "$bto! +a% #$"$ o! assign 6is 5!o5$!t% to 6is #!$"ito!s in 5a%+$nt o* 6is "$bts. T6is #$ssion' nl$ss t6$!$
is sti5lation to t6$ #ont!a!%' s6all onl% !$l$as$ t6$ "$bto! *!o+ !$s5onsibilit% *o! t6$ n$t 5!o#$$"s o* t6$ t6ing
assign$". T6$ ag!$$+$nts .6i#6' on t6$ $**$#t o* t6$ #$ssion' a!$ +a"$ b$t.$$n t6$ "$bto! an" 6is #!$"ito!s s6all
b$ go&$!n$" b% s5$#ial la.s. ,11)5a-
Cession is a s!ecial for of !a'ent #here$' the de$tor a$andons or assi%ns all of his !ro!ert' for the $enefit of his
creditors so that the latter a' o$tain !a'ent of their credits fro the !roceeds of the !ro!ert'&
Re<uisites>
4& !luralit' of de$ts
8& !artial or relati*e insol*enc' of the de$tor
9& acce!tance of cession $' the creditors
+inds of Cession>
4& Contractual (Art& 4855)
8& Judicial (Insol*enc' La#)
=ust $e initiated $' de$tors
Re<uires t#o or ore creditors" de$tors insol*ent" cession acce!ted $' creditors
Such assi%nent does not ha*e the effect of a:in% the creditors the o#ners of the !ro!ert' of the de$tor unless there
is an a%reeent to that effect
Difference $et#een Dation and Cession
DATI,N CESSI,N
a' $e 4 creditor an' creditors
does not re<uire insol*enc' re<uires !artial or relati*e insol*enc'
REVIEWER
deli*er' of a thin% deli*er' of all the !ro!ert'
transfer of o#nershi! of the !ro!ert' no transfer of o#nershi! (onl' of !ossession and
adinistration)
a no*ation
!a'ent eBtin%uishes o$li%ation (to the eBtent of
the *alue of the thin% deli*ered)
the effect is erel' to release de$tor fro the net !roceeds
of the !ro!ert'; hence" !artial eBtin%uishent of
o$li%ation&
S9BSECTION 1
TEN:ER OA PANDENT AN: CONSIGNATION
1056. I* t6$ #!$"ito! to .6o+ t$n"$! o* 5a%+$nt 6as b$$n +a"$ !$*s$s .it6ot jst #as$ to a##$5t it' t6$ "$bto!
s6all b$ !$l$as$" *!o+ !$s5onsibilit% b% t6$ #onsignation o* t6$ t6ing o! s+ "$.
Consignation alon$ s6all 5!o"#$ t6$ sa+$ $**$#t in t6$ *ollo.ing #as$s(
,1- 76$n t6$ #!$"ito! is abs$nt o! n@no.n' o! "o$s not a55$a! at t6$ 5la#$ o* 5a%+$nt/
,0- 76$n 6$ is in#a5a#itat$" to !$#$i&$ t6$ 5a%+$nt at t6$ ti+$ it is "$/
,1- 76$n' .it6ot jst #as$' 6$ !$*s$s to gi&$ a !$#$i5t/
,4- 76$n t.o o! +o!$ 5$!sons #lai+ t6$ sa+$ !ig6t to #oll$#t/
,5- 76$n t6$ titl$ o* t6$ obligation 6as b$$n lost. ,11)6a-
T$n"$! o* 5a%+$nt > anifestation ade $' the de$tor to the creditor of his desire to co!l' #ith his o$li%ation; The
act of the de$tor of offerin% to the creditor the thin% or aount due
Consignation > De!osit of the o$ject or the aount due #ith the !ro!er court after refusal or ina$ilit' of the creditor to
acce!t the tender of !a'ent
Tender of !a'ent $' certified chec: is *alid; a ere chec: #ould also $e *alid for tender of !a'ent if the creditor
a:es no !ro!t o$jection" $ut this does not esto! the latter fro later deandin% !a'ent in cash
Nhen a tender of !a'ent is ade in such a for that the creditor could ha*e iediatel' reali;ed !a'ent if he had
acce!ted the tender" follo#ed $' a !ro!t atte!t of the de$tor to de!osit the eans of !a'ent in court $' #a' of
consi%nation" the accrual of interest on the o$li%ation #ill $e sus!ended fro the date of such tender& .ut #hen the
tender of !a'ent is not acco!anied $' the eans of !a'ent" and the de$tor did not ta:e an' iediate ste! to
a:e a consi%nation" then the interest is not sus!ended fro the tie of such tender&

/ENERAL REJUISITES ,- 3ALID C,NSI/NATI,N *s S@ECIAL REJUISITES
/eneral Re< > relati*e to !a'ent (Arts& 4898 2 4854)
S!ecial Re< > *er' nature of consi%nation (Arts& 4856 485H)
S!ecial Re<uisites of consi%nation> F:LN3:NG
1. F:G There #as a "e$t due
2. FLG The consi%nation of the o$li%ation #as ade $ecause of soe le%al cause !ro*ided in the !resent article
3. FNG That !re*ious notice of the consi%nation has $een %i*en to !ersons interested in the !erforance of the o$li%ation
4. F:G The aount or thin% due #as !laced at the "is!osal of the court
5. FNG After the consi%nation had $een ade the !ersons interested had $een notified thereof
If the reason for consi%nation is the unjust refusal of the creditor to acce!t !a'ent" it ust $e sho#n>
4& That there #as !re*ious tender of !a'ent" #ithout #hich the consi%nation is ineffecti*e
8& That the tender of !a'ent #as of the *er' thin% due" or in case of one' o$li%ations that le%al tender currenc' #as
offered
9& That the tender of !a'ent #as unconditional and
7& That the creditor refused to acce!t !a'ent #ithout just cause
EBce!tion to re<uireent for tender of !a'ent> FAIR3TTG
1. FAG Nhen creditor is a$sent or un:no#n or does not a!!ear at !lace of !a'ent
REVIEWER
2. FIG Nhen he is inca!acitated to recei*e !a'ent
3. FRG Nhen he refuses to %i*e !ecei!t" #ithout just cause
4. FTG Nhen t#o or ore !ersons clai sae ri%ht to collect
5. FTG Nhen title of the o$li%ation has $een lost
The 4
st
and 8
nd
S!ecial Re<uisites of Consi%nation are e$odied in Article 4856&
As to the 8
nd
re<uisite (CLD le%al cause) the follo#in% usst $e !resent>
(a)the tender of !a'ent ust ha*e $een ade prior to te consignation
(b)that it ust ha*e $een unconditional Ce&%& #here the de$tor tendered a chec: for @9"85? to the creditor as !a'ent of a
de$t conditioned u!on the si%nin% $' the latter of a otion to disiss a co!laint for le%al se!aration" such tender of
!a'ent is in*alid&D
(c) that the creditor ust ha*e refused to acce!t the !a'ent witout just cause Cit is not necessar' for the court #here the
thin% or the aount is de!osited to deterine #hether the refusal of the creditor to acce!t the sae #as #ith or #ithout
just cause& The <uestion #ill $e resol*ed an'#a' in a su$se<uent !roceedin%& Gence" the ere refusal of the creditor to
acce!t the tender of !a'ent #ill $e sufficient (=anresa)D
105). In o!"$! t6at t6$ #onsignation o* t6$ t6ing "$ +a% !$l$as$ t6$ obligo!' it +st *i!st b$ annon#$" to t6$
5$!sons int$!$st$" in t6$ *l*ill+$nt o* t6$ obligation.
T6$ #onsignation s6all b$ in$**$#tal i* it is not +a"$ st!i#tl% in #onsonan#$ .it6 t6$ 5!o&isions .6i#6 !$glat$
5a%+$nt. ,11))-
The lac: of notice does not in*alidate the consi%nation $ut si!l' a:es the de$tor lia$le for the eB!enses
The tender of !a'ent and the notice of consi%nation sent to the creditor a' $e ade in the sae act& In case of
a$sent or un:no#n creditors" the notice a' $e ade $' !u$lication
4
st
!ara%ra!h of this article !ertains to the 9
rd
S!ecial Re<uisite of Consi%nation (CND @re*ious Notice)
2 Tender of @a'ent *s @re*ious Notice > the forer is a friendl' and !ri*ate act anifested onl' to the creditor; the
latter is anifested also to other !ersons interested in the fulfillent of the o$li%ation&
8
nd
!ara%ra!h of this article !ertains to the /eneral Re<uisites of Consi%nation (Arts& 489824854)" #hich ust $e
co!lied #ith
105<. Consignation s6all b$ +a"$ b% "$5ositing t6$ t6ings "$ at t6$ "is5osal o* j"i#ial at6o!it%' b$*o!$ .6o+ t6$
t$n"$! o* 5a%+$nt s6all b$ 5!o&$"' in a 5!o5$! #as$' an" t6$ annon#$+$nt o* t6$ #onsignation in ot6$! #as$s.
T6$ #onsignation 6a&ing b$$n +a"$' t6$ int$!$st$" 5a!ti$s s6all also b$ noti*i$" t6$!$o*. ,11)<-
4
st
!ara%ra!h hereof 2 7
th
S!ecial Re<uisite of Consi%nation (CDD Dis!osal of the Court)
2 this is co!lied #ith if the de$tor de!ostis the thin% or aount #ith the Cler: of Court
8nd !ara%ra!h hereof 2 5
th
S!ecial Re<uisite of Consi%nation (CND Su$se<uent Notice)
2 this is to ena$le the creditor to #ithdra# the %oods or one' de!osited&
105>. T6$ $=5$ns$s o* #onsignation' .6$n 5!o5$!l% +a"$' s6all b$ #6a!g$" against t6$ #!$"ito!. ,11)>-
The consi%nation is !ro!erl' ade #hen>
4&) after the thin% has $een de!osited in court" the creditor acce!ts the consi%nation #ithout o$jection and #ithout an'
reser*ation of his ri%ht to contest it $ecause of failure to co!l' #ith an' of the re<uisites for consi%nation; and
8&) #hen the creditor o$jects to the consi%nation $ut the court" after !ro!er hearin%" declares that the consi%nation has $een
*alidl' ade
Kin these cases" the creditor $ears the eB!enses of the consi%nation
106?. On#$ t6$ #onsignation 6as b$$n "l% +a"$' t6$ "$bto! +a% as@ t6$ j"g$ to o!"$! t6$ #an#$llation o* t6$
obligation. B$*o!$ t6$ #!$"ito! 6as a##$5t$" t6$ #onsignation' o! b$*o!$ a j"i#ial "$#la!ation t6at t6$ #onsignation
6as b$$n 5!o5$!l% +a"$' t6$ "$bto! +a% .it6"!a. t6$ t6ing o! t6$ s+ "$5osit$"' allo.ing t6$ obligation to !$+ain
in *o!#$. ,11<?-
Consi%nation has a retroacti*e effect and the !a'ent is deeed to ha*e $een ade at the tie of the de!osit of the
thin% in court or #hen it #as !laced at the dis!osal of the judicial authorit'
REVIEWER
The effects of consi%nation are> 4&) the de$tor is released in the sae anner as if he had !erfored the o$li%ation at
the tie of the consi%nation $ecause this !roduces the sae effect as a *alid !a'ent" 8&) the accrual of interest on the
o$li%ation is sus!ended fro the oent of consi%nation" 9&) the deteriorations or loss of the thin% or aount consi%ned
occurrin% #ithout fault of the de$tor ust $e $orne $' the creditor" $ecause the ris:s of the thin% are transferred to the
creditor fro the oent of de!osit 7&) an' increent or increase in *alue of the thin% after the consi%nation inures to
the $enefit of the creditor&
Nhen the aount consi%ned does not co*er the entire o$li%ation" the creditor a' acce!t it" reser*in% his ri%ht to the
$alance& If no reser*ations are ade" the acce!tance $' the creditor of the aount consi%ned a' $e re%arded as a
#ai*er of further clais under the contract
1061. I*' t6$ #onsignation 6a&ing b$$n +a"$' t6$ #!$"ito! s6ol" at6o!iE$ t6$ "$bto! to .it6"!a. t6$ sa+$' 6$
s6all los$ $&$!% 5!$*$!$n#$ .6i#6 6$ +a% 6a&$ o&$! t6$ t6ing. T6$ #o3"$bto!s' ga!anto!s an" s!$ti$s s6all b$
!$l$as$". ,11<1a-
Nhen the consi%nation has alread' $een ade and the creditor has acce!ted it or it has $een judiciall' declared as
!ro!er" the de$tor cannot #ithdra# the thin% or aount de!osited unless the creditor consents thereto& If the creditor
authori;es the de$tor to #ithdra# the sae" there is a re*i*al of the o$li%ation" #hich has alread' $een eBtin%uished $'
the consi%nation" and the relationshi! of de$tor and creditor is restored to the condition in #hich it #as $efore the
consi%nation& .ut third !ersons" solidar' co2de$tors" %uarantors and sureties #ho are $enefited $' the consi%nation are
not !rejudiced $' the re*i*al of the o$li%ation $et#een the de$tor and the creditor
SECTION 0
LOSS OA THE THING :9E
1060. An obligation .6i#6 #onsists in t6$ "$li&$!% o* a "$t$!+inat$ t6ing s6all b$ $=tingis6$" i* it s6ol" b$ lost o!
"$st!o%$" .it6ot t6$ *alt o* t6$ "$bto!' an" b$*o!$ 6$ 6as in#!!$" in "$la%.
76$n b% la. o! sti5lation' t6$ obligo! is liabl$ $&$n *o! *o!titos $&$nts' t6$ loss o* t6$ t6ing "o$s not $=tingis6
t6$ obligation an" 6$ s6all b$ !$s5onsibl$ *o! "a+ag$s. T6$ sa+$ !l$ a55li$s .6$n t6$ nat!$ o* t6$ obligation
!$2i!$s t6$ ass+5tion o* !is@.
1061( In an obligation to "$li&$! a g$n$!i# t6ing' t6$ loss o! "$st!#tion o* an%t6ing o* t6$ sa+$ @in" "o$s not
$=tingis6 t6$ obligation. ,n-
1064. T6$ #o!ts s6all "$t$!+in$ .6$t6$!' n"$! t6$ #i!#+stan#$s' t6$ 5a!tial loss o* t6$ obj$#t o* t6$ obligation is
so i+5o!tant as to $=tingis6 t6$ obligation. ,n-
1065. 76$n$&$! t6$ t6ing is lost in t6$ 5oss$ssion o* t6$ "$bto!' it s6all b$ 5!$s+$" t6at t6$ loss .as "$ to 6is
*alt' nl$ss t6$!$ is 5!oo* to t6$ #ont!a!%' an" .it6ot 5!$j"i#$ to t6$ 5!o&isions o* a!ti#l$ 1165. T6is 5!$s+5tion
"o$s not a55l% in #as$ o* $a!t62a@$' *loo"' sto!+' o! ot6$! nat!al #ala+it%. ,11<1a-
9
rd
!ara%ra!h of Art& 4465> #he the o$li%or dela's" or has !roised to deli*er the sae thin% to t#o or ore !ersons
#ho do not ha*e the sae interest" he shall $e lia$le for an' fortuitious e*ent until he has effected the deli*er'
Gence" in cases #here Art& 4465" !ar& 9 is a!!lica$le" e*en if the de$tor can !ro*e that the loss of the thin% in his
!ossession #as not throu%h his fault or that it #as throu%h a fortuitous e*ent" he shall still $e lia$le to the creditor for
daa%es&
1066. T6$ "$bto! in obligations to "o s6all also b$ !$l$as$" .6$n t6$ 5!$station b$#o+$s l$gall% o! 56%si#all%
i+5ossibl$ .it6ot t6$ *alt o* t6$ obligo!. ,11<4a-
LE/AL I=@,SSI.ILITY > a' either $e 2
4& direct (#hen the la# !rohi$its the !erforance or eBecution of the #or: a%reed u!on" i&e& #hen it is ioral or
dan%erous)
8& indirect (the la# i!oses duties of a su!erior character u!on the o$li%or #hich are inco!ati$le #ith the #or: a%reed
u!on" althou%h the latter a' $e !erfectl' licit" as #here the o$li%or is drafted for ilitar' ser*ice or for a ci*il function)
@GYSICAL I=@,SSI.ILTY > eBa!les death of the de$tor; #hen there is an accident&&&
106). 76$n t6$ s$!&i#$ 6as b$#o+$ so "i**i#lt as to b$ +ani*$stl% b$%on" t6$ #ont$+5lation o* t6$ 5a!ti$s' t6$
obligo! +a% also b$ !$l$as$" t6$!$*!o+' in .6ol$ o! in 5a!t. ,n-
REVIEWER
D,CTRINE ,- UN-,RESEEN E3ENT A D,CTRINE ,- RELATI3E I=@,SSI.ILITY
(re$us sic stanti$us)
It refers to o$li%ation Wto doW (!ersonal o$li%ation)
@arties are !resued to ha*e the ris:
It does not a!!l' to aleator' contracts (insurance contract)
EBcludes hi%hl' s!eculati*e $usiness (stoc: eBchan%e)
=onator' o$li%ations are also eBcluded (%o*erned $' 495F)

Re<uisites>
4& e*ent or chan%e in the circustances could ha*e $een foreseen of the tie of the eBecution contract
8& it a:es the !erforance of the contract eBtreel' difficult $ut not i!ossi$le
9& the e*ent ust not $e due to the act of an' of the !arties
7& the contract is for a future !restation& If the contract is of iediate fulfillent" the %ross ine<ualit' of the reci!rocal
!restations a' $e in*ol*e desion or #ant of cause&
106<. 76$n t6$ "$bt o* a t6ing #$!tain an" "$t$!+inat$ 5!o#$$"s *!o+ a #!i+inal o**$ns$' t6$ "$bto! s6all not b$
$=$+5t$" *!o+ t6$ 5a%+$nt o* its 5!i#$' .6at$&$! +a% b$ t6$ #as$ *o! t6$ loss' nl$ss t6$ t6ing 6a&ing b$$n
o**$!$" b% 6i+ to t6$ 5$!son .6o s6ol" !$#$i&$ it' t6$ latt$! !$*s$" .it6ot jsti*i#ation to a##$5t it. ,11<5-
106>. T6$ obligation 6a&ing b$$n $=tingis6$" b% t6$ loss o* t6$ t6ing' t6$ #!$"ito! s6all 6a&$ all t6$ !ig6ts o* a#tion
.6i#6 t6$ "$bto! +a% 6a&$ against t6i!" 5$!sons b% !$ason o* t6$ loss. ,11<6-
10)?. Con"onation o! !$+ission is $ss$ntiall% g!atitos' an" !$2i!$s t6$ a##$5tan#$ b% t6$ obligo!. It +a% b$
+a"$ $=5!$ssl% o! i+5li$"l%.
On$ an" t6$ ot6$! @in" s6all b$ sbj$#t to t6$ !l$s .6i#6 go&$!n ino**i#ios "onations. E=5!$ss #on"onation s6all'
*!t6$!+o!$' #o+5l% .it6 t6$ *o!+s o* "onation. ,11<)-
10)1. T6$ "$li&$!% o* a 5!i&at$ "o#+$nt $&i"$n#ing a #!$"it' +a"$ &olnta!il% b% t6$ #!$"ito! to t6$ "$bto!' i+5li$s
t6$ !$nn#iation o* t6$ a#tion .6i#6 t6$ *o!+$! 6a" against t6$ latt$!.
I* in o!"$! to nlli*% t6is .ai&$! it s6ol" b$ #lai+$" to b$ ino**i#ios' t6$ "$bto! an" 6is 6$i!s +a% 56ol" it b%
5!o&ing t6at t6$ "$li&$!% o* t6$ "o#+$nt .as +a"$ in &i!t$ o* 5a%+$nt o* t6$ "$bt. ,11<<-
10)0. 76$n$&$! t6$ 5!i&at$ "o#+$nt in .6i#6 t6$ "$bt a55$a!s is *on" in t6$ 5oss$ssion o* t6$ "$bto!' it s6all b$
5!$s+$" t6at t6$ #!$"ito! "$li&$!$" it &olnta!il%' nl$ss t6$ #ont!a!% is 5!o&$". ,11<>-
10)1. T6$ !$nn#iation o* t6$ 5!in#i5al "$bt s6all $=tingis6 t6$ a##$sso!% obligations/ bt t6$ .ai&$! o* t6$ latt$!
s6all l$a&$ t6$ *o!+$! in *o!#$. ,11>?-
10)4. It is 5!$s+$" t6at t6$ a##$sso!% obligation o* 5l$"g$ 6as b$$n !$+itt$" .6$n t6$ t6ing 5l$"g$"' a*t$! its
"$li&$!% to t6$ #!$"ito!' is *on" in t6$ 5oss$ssion o* t6$ "$bto!' o! o* a t6i!" 5$!son .6o o.ns t6$ t6ing. ,11>1a-
K Aticles 48F4 48F7> eBa!les of i!lied reission
SECTION 4
CONA9SION OR DERGER OA RIGHTS
10)5. T6$ obligation is $=tingis6$" *!o+ t6$ ti+$ t6$ #6a!a#t$!s o* #!$"ito! an" "$bto! a!$ +$!g$" in t6$ sa+$
5$!son. ,11>0a-
=er%er or confusion is the eetin% in one !erson of the <ualities of creator and de$tor #ith res!ect to the sae
o$li%ation& It erases the !luralit' of su$jects of the o$li%ation& -urther" the !ur!oses for #hich the o$li%ation a' ha*e
$een created are considered as full' reali;ed $' the er%er of the <ualities of de$tor and creditor in the sae !erson&
Re<uisites of er%er or confusion are>
(4) It ust ta:e !lace $et#een the creditor and the !rinci!al de$tor"
(8) the *er' sae o$li%ation ust $e in*ol*ed" for if the de$tor ac<uires ri%hts fro the creditor" $ut not the !articular
o$li%ation in <uestion in <uestion there #ill $e no er%er"
(9) the confusion ust $e total or as re%ards the entire o$li%ation&
The effect of er%er is to eBtin%uish the o$li%ation&
REVIEWER
10)6. D$!g$! .6i#6 ta@$s 5la#$ in t6$ 5$!son o* t6$ 5!in#i5al "$bto! o! #!$"ito! b$n$*its t6$ ga!anto!s. Con*sion
.6i#6 ta@$s 5la#$ in t6$ 5$!son o* an% o* t6$ latt$! "o$s not $=tingis6 t6$ obligation. ,11>1-
The eBtin%uishent of the !rinci!al o$li%ation throu%h confusion releases the %uarantorEs $ecause the o$li%ation of the
latter is erel' accessor'& Nhen the er%er ta:es !lace in the !erson of a %uarantor" the o$li%ation is not eBtin%uished&
10)). Con*sion "o$s not $=tingis6 a joint obligation $=#$5t as !$ga!"s t6$ s6a!$ #o!!$s5on"ing to t6$ #!$"ito! o!
"$bto! in .6o+ t6$ t.o #6a!a#t$!s #on#!. ,11>4-
SECTION 5
CODPENSATION
10)<. Co+5$nsation s6all ta@$ 5la#$ .6$n t.o 5$!sons' in t6$i! o.n !ig6t' a!$ #!$"ito!s an" "$bto!s o* $a#6 ot6$!.
,11>5-
Co!ensation is a ode of eBtin%uishin% to the concurrent aount" the o$li%ations of those !ersons #ho in their o#n
ri%ht are reci!rocall' de$tors and creditors of each other& It is the offsettin% of t#o o$li%ations #hich are reci!rocall'
eBtin%uished if the' are of e<ual *alue& ,r eBtin%uished to the concurrent aount if of different *alues&
+inds of Co!ensation>
As to their effects
co!ensation a' $e total (#hen the t#o o$li%ations are of the sae aount); or
!artial (#hen the aounts are not e<ual)&
As to ori%in
4& it a' $e le%al;
8& facultati*e;
9& con*entional;
7& or judicial&
It is le%al #hen it ta:es !lace $' o!eration of la# $ecause all re<uisites are !resent&
It is facultati*e #hen it can $e claied $' one of the !arties" #ho" ho#e*er" has the ri%ht to o$ject to it" such as
#hen one of the o$li%ations has a !eriod for the $enefit of one !art' alone and #ho renounces that !eriod so as
to a:e the o$li%ation due&
It is con*entional #hen the !arties a%ree to co!ensate their utual o$li%ations e*en if soe re<uisite is
lac:in%&
It is judicial #hen decreed $' the court in a case #here there is a counterclai&
Co+5$nsation &s. Pa%+$nt( In co!ensation" there can $e !artial eBtin%uishent of the o$li%ation; in !a'ent" the
!erforance ust $e co!leter" unless #ai*ed $' the creditor& @a'ent in*ol*es deli*er' of action" #hile co!ensation (le%al
co!ensation) ta:es !lace $' o!eration of la# #ithout siultaneous deli*er'&
Co+5$nsation &s. D$!g$!( In co!ensation" there are at least t#o !ersons #ho stand as !rinci!al creditors and de$tor of each
other" in er%er" there is onl' one !erson in*ol*ed in #ho the characters of creditor and de$tor are er%ed& In er%er" there is
onl' one o$li%ation" #hile in co!ensation" there are t#o o$li%ations in*ol*ed&
10)>. In o!"$! t6at #o+5$nsation +a% b$ 5!o5$!' it is n$#$ssa!%(
,1- T6at $a#6 on$ o* t6$ obligo!s b$ bon" 5!in#i5all%' an" t6at 6$ b$ at t6$ sa+$ ti+$ a 5!in#i5al #!$"ito! o* t6$
ot6$!/
,0- T6at bot6 "$bts #onsist in a s+ o* +on$%' o! i* t6$ t6ings "$ a!$ #ons+abl$' t6$% b$ o* t6$ sa+$ @in"' an"
also o* t6$ sa+$ 2alit% i* t6$ latt$! 6as b$$n stat$"/
,1- T6at t6$ t.o "$bts b$ "$/
,4- T6at t6$% b$ li2i"at$" an" "$+an"abl$/
,5- T6at o&$! n$it6$! o* t6$+ t6$!$ b$ an% !$t$ntion o! #ont!o&$!s%' #o++$n#$" b% t6i!" 5$!sons an" #o++ni#at$"
in "$ ti+$ to t6$ "$bto!. ,11>6-
-or co!ensation to ta:e !lace" the !arties ust $e utuall' de$tors and creditors (4) in their o#n ri%ht" and (8) as
!rinci!als& Nhere there is no relationshi! of utual creditors and de$tors" there can $e no co!ensation& .ecause the
4st re<uireent that the !arties $e utuall' de$tors and creditors in their o#n ri%ht" there can $e no co!ensation
#hen one !art' is occu!'in% a re!resentati*e ca!acit'" such as a %uardian or an adinistrator& The 8nd re<uireent is
that the !arties should $e utuall' de$tors and creditors as !rinci!als& This eans that there can $e no co!ensation
#hen one !art' is a !rinci!al creditor in one o$li%ation $ut is onl' a suret' or %uarantor in the other&
REVIEWER
The thin%s due in $oth o$li%ations ust $e fun%i$le" or thin%s #hich can $e su$stituted for each other&
.oth de$ts ust $e due to !erit co!ensation&
Deanda$le eans that the de$ts are enforcea$le in court" there $ein% no a!!arent defenses inherent in the& The
o$li%ations ust $e ci*il o$li%ations" includin% those that are !urel' natural& An o$li%ation is not deanda$le" therefore"
and not su$ject to co!ensation" in the follo#in% cases> (4) #hen there is a !eriod #hich has not 'et arri*ed" includin%
the cases #hen one !art' is in a state of sus!ension of !a'ents; (8) #hen there is a sus!ensi*e condition that has not
'et ha!!ened; (9) #hen the o$li%ation cannot $e sued u!on" as in natural o$li%ation&
A de$t is li<uidated #hen its eBistence and aount is deterined& Co!ensation can onl' ta:e !lace $et#een certain and
li<uidated de$ts&
K The *i&$ !$2isit$s o* a l$gal #o+5$nsation are enuerated in the Article& All re<uisites ust $e !resent $efore
co!ensation can $e effectual&
4& That each of the o$li%ators $e $ound !rinci!all' and that he $e at the sae tie a !rinci!al creditor of the other&
The !arties ust $e utual creditor and de$tor of each other and their relationshi! is a !rinci!al one" that is" the'
are !rinci!al de$tor and creditor of each other&
8& That $oth de$ts consist in such a su of one'" or if the thin%s due are consua$le" the' $e of the sae :ind" and
also of the sae <ualit' if the latter has $een stated& XXNhen the de$ts consist of one'" there is not uch of a
!ro$le #hen it coes to co!ensation to the concurrent aount& It is a atter of atheatical co!utation&
Nhen the de$t consist of thin%s" it is necessar' that the thin%s are consua$le #hich ust $e understood as
Yfun%i$leE and therefore susce!ti$le of su$stitution& =ore than that the' ust $e of the sae :ind& If the <ualit' has
$een states" the thin%s ust $e of the sae <ualit'&
9& That the t#o de$ts are due& XX A de$t is YdueE #hen its !eriod of !erforance has arri*ed& If it is a su$ject to a
condition" the condition ust ha*e alread' $een fulfilled& Go#e*er" in *oluntar' co!ensation" the !arties a'
a%ree u!on the co!ensation of de$ts #hich are not 'et due&
4. That the' $e li<uidated and deanda$le& XX A de$t is considered Yli<uidatedE #hen its aount is clearl' fiBed& ,f if it
is not 'et s!eciall' fiBed" a si!le atheatical co!utation #ill deterine its aount or *alue& It is Yunli<uidatedE
#hen the aount is not fiBed $ecause it is still su$ject to a dis!ute or to certain condition& It is not enou%h that the
de$ts $e li<uidated& It is also essential that the sae $e deanda$le& A de$t is deanda$le if it is not 'et $arred $'
!rescri!tion and it is not ille%al or in*alid&
5& That o*er neither of the there $e an' retention or contro*ers'" coenced $' third !ersons and counicated in
due tie to the de$tor& XX A de$t of a thin% cannot $e a su$ject of co!ensation if the sae had $een su$ject of a
%arnishent of #hich the de$tor #as tiel' notified& Nhen a credit or !ro!ert' had $een !ro!erl' %arnished of
attached" it cannot $e dis!osed of #ithout the a!!ro*al of the court&
10<?. Not.it6stan"ing t6$ 5!o&isions o* t6$ 5!$#$"ing a!ti#l$' t6$ ga!anto! +a% s$t 5 #o+5$nsation as !$ga!"s
.6at t6$ #!$"ito! +a% o.$ t6$ 5!in#i5al "$bto!. ,11>)-
The lia$ilit' of the %uarantor is onl' su$sidiar'; it is accessor' to the !rinci!al o$li%ation of the de$tor& If the !rinci!al
de$tor has a credit a%ainst the creditor" #hich can $e co!ensated" it #ould ean the eBtin%uishent of the %uaranteed
de$t" either totall' or !artiall'& This eBtin%uishent $enefits the %uarantor" for he can $e held lia$le onl' to the sae
eBtent as the de$tor&
E=#$5tion to t6$ Rl$ On Co+5$nsation( Ri%ht of /uarantor to In*o:e Co!ensation A%ainst Creditor& The %eneral rule is that
for co!ensation to o!erate" the !arties ust $e related reci!rocall' as !rinci!al creditors and de$tors of each other& Under the
!resent Article" the %uarantor is allo#ed to set u! co!ensation a%ainst the creditor&
10<1. Co+5$nsation +a% b$ total o! 5a!tial. 76$n t6$ t.o "$bts a!$ o* t6$ sa+$ a+ont' t6$!$ is a total
#o+5$nsation. ,n-
Total Co!ensationZde$ts are of the sae aount&
@artial Co!ensationZDe$ts are not of the sae aount; o!erati*e onl' u! to the concurrent aount&
10<0. T6$ 5a!ti$s +a% ag!$$ 5on t6$ #o+5$nsation o* "$bts .6i#6 a!$ not %$t "$. ,n-
3oluntar' co!ensation is not liited to o$li%ations #hich are not 'et due& The !arties a' co!ensate $' a%reeent
an' o$li%ations" in #hich the o$jecti*e re<uisites !ro*ided for le%al co!ensation are not !resent& It is necessar'"
ho#e*er" that the !arties should ha*e the ca!acit' to dis!ose of the credits #hich the' co!ensate" $ecause the
eBtin%uishent of the o$li%ations in this case arises fro their #ills and not fro la#&
REVIEWER
10<1. I* on$ o* t6$ 5a!ti$s to a sit o&$! an obligation 6as a #lai+ *o! "a+ag$s against t6$ ot6$!' t6$ *o!+$! +a% s$t
it o** b% 5!o&ing 6is !ig6t to sai" "a+ag$s an" t6$ a+ont t6$!$o*. ,n-
A!t. 10<4. 76$n on$ o! bot6 "$bts a!$ !$s#issibl$ o! &oi"abl$' t6$% +a% b$ #o+5$nsat$" against $a#6 ot6$! b$*o!$
t6$% a!$ j"i#iall% !$s#in"$" o! a&oi"$". ,n-
Althou%h a rescissi$le or *oida$le de$t can $e co!ensated $efore it is rescinded or annulled" the oent it is rescinded
or annulled" the decree of rescission or annulent is retroacti*e" and the co!ensation ust $e considered as cancelled&
Recission of annulent re<uires utual restitution; the !art' #hose o$li%ation is annulled or rescinded can thus reco*er
to the eBtent that his credit #as eBtin%uished $' the co!ensation" $ecause to that eBtent he is deeed to ha*e ade a
!a'ent&
10<5. T6$ "$bto! .6o 6as #ons$nt$" to t6$ assign+$nt o* !ig6ts +a"$ b% a #!$"ito! in *a&o! o* a t6i!" 5$!son'
#annot s$t 5 against t6$ assign$$ t6$ #o+5$nsation .6i#6 .ol" 5$!tain to 6i+ against t6$ assigno!' nl$ss t6$
assigno! .as noti*i$" b% t6$ "$bto! at t6$ ti+$ 6$ ga&$ 6is #ons$nt' t6at 6$ !$s$!&$" 6is !ig6t to t6$ #o+5$nsation.
I* t6$ #!$"ito! #o++ni#at$" t6$ #$ssion to 6i+ bt t6$ "$bto! "i" not #ons$nt t6$!$to' t6$ latt$! +a% s$t 5 t6$
#o+5$nsation o* "$bts 5!$&ios to t6$ #$ssion' bt not o* sbs$2$nt on$s.
I* t6$ assign+$nt is +a"$ .it6ot t6$ @no.l$"g$ o* t6$ "$bto!' 6$ +a% s$t 5 t6$ #o+5$nsation o* all #!$"its 5!io!
to t6$ sa+$ an" also lat$! on$s ntil 6$ 6a" @no.l$"g$ o* t6$ assign+$nt. ,11><a-
Assignment after 4ompensation>
Nhen co!ensation has alread' ta:en !lace $efore the assi%nent" inasuch as it ta:es !lace i!so jure" there has
alread' $een an eBtin%uishent of one of the other of the o$li%ations& A su$se<uent assi%nent of an eBtin%uished
o$li%ation cannot !roduce an' effect a%ainst the de$tor& The onl' eBce!tion to this rule is #hen the de$tor consents to
the assi%nent of the credit; his consent constitutes a #ai*er of the co!ensation" unless at the tie he %i*es consent"
he infors the assi%nor that he reser*ed his ri%ht to the co!ensation&
Assignment before compensation&
The assi%nent a' $e ade $efore co!ensation has ta:en !lace" either $ecause at the tie of assi%nent one of the
de$ts is not 'et due or li<uidated" or $ecause of soe other cause #hich i!edes the co!ensation& As far as the de$tor
is concerned" the assi%nent does not ta:e effect eBce!t fro the tie he is notified thereof& If the notice of assi%nent
is siultaneous to the transfer" he can set u! co!ensation of de$ts !rior to the assi%nent& If notice #as %i*en to hi
$efore the assi%nent" this ta:es effect at the tie of the assi%nent; therefore the sae rule a!!lies& If he consents to
the assi%nent" he #ai*es co!ensation e*en of de$ts alread' due" unless he a:es a reser*ation&
.ut if the de$tor #as notified of the assi%nent" $ut he did not consent" and the credit assi%ned to a third !erson
atures after that #hich !ertains to the de$tor" the latter a' set u! co!ensation #hen the assi%nee atte!ts to
enforce the assi%ned credit" !ro*ided that the credit of the de$tor $ecae due $efore the assi%nent& .ut it f the
assi%ned credit atures earlier than that of the de$tor" the assi%nee a' iediatel' enforce it" and the de$tor cannot
set u! co!ensation" $ecause the credit is not 'et due&
If the de$tor did not ha*e :no#led%e of the assi%nent" he a' set u! $' #a' of co!ensation all credits aturin%
$efore he is notified thereof& Gence" if the assi%nent is concealed" and the assi%nor still contracts ne# o$li%ation in
fa*or of the de$tor" such o$li%ation aturin% $efore the latter learns of the assi%nent #ill still $e allo#a$le $' #a' of
co!ensation& The assi%nee in such case #ould ha*e a !ersonal action a%ainst the assi%nor&
10<6. Co+5$nsation ta@$s 5la#$ b% o5$!ation o* la.' $&$n t6og6 t6$ "$bts +a% b$ 5a%abl$ at "i**$!$nt 5la#$s' bt
t6$!$ s6all b$ an in"$+nit% *o! $=5$ns$s o* $=#6ang$ o! t!ans5o!tation to t6$ 5la#$ o* 5a%+$nt. ,11>>a-
This article a!!lies to le%al co!ensation and not to *oluntar' co!ensation&
10<). Co+5$nsation s6all not b$ 5!o5$! .6$n on$ o* t6$ "$bts a!is$s *!o+ a "$5osit+ o! *!o+ t6$ obligations o* a
"$5osita!% o! o* a bail$$ in #o++o"at+.
N$it6$! #an #o+5$nsation b$ s$t 5 against a #!$"ito! .6o 6as a #lai+ *o! s55o!t "$ b% g!atitos titl$' .it6ot
5!$j"i#$ to t6$ 5!o&isions o* 5a!ag!a56 0 o* A!ti#l$ 1?1. ,10??a-
E& The !rohi$ition of co!ensation #hen one of the de$ts arises fro a de!ositu (a contract $' *irtue of #hich a !erson
Cde!ositar'D recei*es !ersonal !ro!ert' $elon%in% to another Cde!ositorD" #ith the o$li%ation of safel' :ee!in% it and
returnin% the sae) or coodatu (a %ratuitous contract $' *irtue of #hich one of the !arties deli*ers to the other a
non2consua$le !ersonal !ro!ert' so that the latter a' use it for a certain tie and return it) is $ased on justice& A
de!osit of coodatu is %i*en on the $asis of confidence in the de!ositar' of the $orro#er& It is therefore" a atter of
oralit'" the de!ositar' or $orro#er !erfors his o$li%ation&
Nith res!ect to future su!!ort" to allo# its eBtin%uishent $' co!ensation #ould defeat its eBe!tion fro attachent
and eBecution& " and a' eB!ose the reci!ient to iser' and star*ation& Coon huanit' and !u$lic !olic' for$id this
REVIEWER
conse<uence& Su!!ort under this !ro*ision should $e understood" not onl' referrin% to le%al su!!ort" to include all ri%hts
#hich ha*e for their !ur!ose the su$sistence of the de$tor" such as !ensions and %ratuities&
10<<. N$it6$! s6all t6$!$ b$ #o+5$nsation i* on$ o* t6$ "$bts #onsists in #i&il liabilit% a!ising *!o+ a 5$nal o**$ns$.
,n-
If one of the de$ts consists in ci*il lia$ilit' arisin% fro a !enal offense" co!ensation #ould $e i!ro!er and inad*isa$le
$ecause the satisfaction of such o$li%ation is i!erati*e&
The !erson #ho has the ci*il lia$ilit' arisin% fro crie is the onl' !art' #ho cannot set u! the co!ensation; $ut the
offended !art' entitled to the indenit' can set u! his clai in co!ensation of his de$t&
A!t. 10<>. I* a 5$!son s6ol" 6a&$ against 6i+ s$&$!al "$bts .6i#6 a!$ ss#$5tibl$ o* #o+5$nsation' t6$ !l$s on t6$
a55li#ation o* 5a%+$nts s6all a55l% to t6$ o!"$! o* t6$ #o+5$nsation. ,10?1-
It can ha!!en that a de$tor a' ha*e se*eral de$ts to a creditor& And *ice *ersa& Under these circustances" Articles
4858 to 4857 shall a!!l'&
10>?. 76$n all t6$ !$2isit$s +$ntion$" in A!ti#l$ 10)> a!$ 5!$s$nt' #o+5$nsation ta@$s $**$#t b% o5$!ation o* la.'
an" $=tingis6$s bot6 "$bts to t6$ #on#!!$nt a+ont' $&$n t6og6 t6$ #!$"ito!s an" "$bto!s a!$ not a.a!$ o* t6$
#o+5$nsation.
Le%al co!ensation ta:es !lace fro the oent that the re<uisites of the articles 48FH and 48F? co2eBist; its effects
arise on the *er' da' #hich all its re<uisites concur&
3oluntar' of con*entional co!ensation ta:es effect u!on the a%reeent of the !arties&
-acultati*e co!ensation ta:es !lace #hen the creditor declares his o!tion to set it u!&
Judicial co!ensation ta:es !lace u!on final jud%ent&
Effects of Co!ensation>
(4) .oth de$ts are eBtin%uished to the concurrent aount;
(8) interests sto! accruin% on the eBtin%uished o$li%ation of the !art eBtin%uished;
(9) the !eriod of !rescri!tion sto!s #ith res!ect to the o$li%ation or !art eBtin%uished;
(7) all accessor' o$li%ations of the !rinci!al o$li%ation #hich has $een eBtin%uished are also eBtin%uished&
Renunciation of Co!ensation& Co!ensation can $e renounces" either at the tie an o$li%ation is contracted or
after#ards& Co!ensation rests u!on a !otestati*e ri%ht" and a unilateral decision of the de$tor #ould $e sufficient
renunciation& Co!ensation can $e renounced eB!ressl' of i!liedl'&
No Co!ensation& E*en #hen all the re<uisites for co!ensation occur" the co!ensation a' not ta:e !lace in the
follo#in% cases> (4) Nhen there is renunciation of the effects of co!ensation $' a !art'; and (8) #hen the la# !rohi$its
co!ensation&
(Unless other#ise indicated" coentaries are sourced fro the Ci*il Code $oo: I3 $' Tolentino)&
SECTION 6
NOVATION
HO7 OBLIGATIONS ARE DO:IAIE:
10>1. Obligations +a% b$ +o"i*i$" b%(
,1- C6anging t6$i! obj$#t o! 5!in#i5al #on"ition
,0- Sbstitting t6$ 5$!son o* t6$ "$bto!
,1- Sb!ogating a t6i!" 5$!son in t6$ !ig6ts o* a #!$"ito!
No*ation is the eBtin%uishent of an o$li%ation $' a su$stitution or chan%e of the o$li%ation $' a su$se<uent one #hich
eBtin%uishes or odifies the first either $'>
4& chan%in% the o$ject or !rinci!al conditions
8& $' su$stitutin% the !erson of the de$tor
9& su$ro%atin% a third !erson in the ri%hts of the creditor
No*ation is a juridical act of dual function& At the tie it eBtin%uishes an o$li%ation it creates a ne# one in lieu of the old
Classification of No*ation
as to nature
4& Su$jecti*e or !ersonal either !assi*e or acti*e& @assi*e if there is su$stitution of the de$tor& Acti*e if
a third !erson is su$ro%ated in the ri%hts of the creditor&
8& ,$jecti*e or real su$stitution of the o$ject #ith another or chan%in% the !rinci!al conditions
REVIEWER
9& =iBed Co$ination of su$jecti*e and o$jecti*e
as to for
EB!ress !arties declare that the old o$li%ation is su$stituted $' the ne#
I!lied an inco!ati$ilit' eBists $et#een the old and the ne# o$li%ation that cannot stand to%ether
as to effect
4& @artial #hen there is onl' a odification or chan%e in soe !rinci!al conditions of the o$li%ation
8& Total #hen the old o$li%ation is co!letel' eBtin%uished
Re<uisites of No*ation>
1. A !re*ious &ali" o$li%ation
2. A%reeent of all 5a!ti$s
9& EBtin%uishent of the old contract a' $e eB!ress of i!lied
4. Vali"it% of the ne# one
TITLE II.
CONTRACTS
CHAPTER 1
GENERAL PROVISIONS
GENERAL PROVISIONS
A!t. 11?5. A #ont!a#t is a +$$ting o* t6$ +in"s b$t.$$n t.o 5$!sons .6$!$b% on$ bin"s 6i+s$l*' .it6 !$s5$#t to t6$
ot6$! to gi&$ so+$t6ing o! to !$n"$! so+$ s$!&i#$.
K relate to Art& 445P of CC
C,NTRACT 2 a juridical con*ention anifested in le%al for" $' *irtue of #hich one or ore !ersons $ind thesel*es in fa*or of
another or others" or reci!rocall'" to the fulfillent of a !restation to %i*e" to do or not to do&
K ,ther Ters>
@erfect !roise distin%uished fro a contract" in that the latter esta$lishes and deterines the o$li%ations arisin% therefro;
#hile the forer tends onl' to assure and !a*e the #a' for the cele$ration of a contract in the future&
I!erfect @roise ere unacce!ted offer
@act a s!ecial !art of the contract" soeties incidental and se!ara$le for the !rinci!al a%reeent
Sti!ulation siilar to a !act; #hen the contract is an instruent" it refers to the essential and dis!ositi*e !art" as distin%uished
fro the eB!osition of the facts and antecedents u!on #hich it is $ased&
K Nu$er of @arties>
The Code states 0t#o !ersons1; #hat is eant actuall' is 0t#o !arties1& -or a contract to eBist" there ust $e t#o !arties& A !art'
can $e one or ore !ersons&
K Gus$and O Nife> Gus$ands and #i*es cannot sell to each other as a !rotection of the conju%al !artnershi!& The' can ho#e*er
enter into a contract of a%enc'&
K Auto2contracts>
It eans one !erson contracts hiself& As a %eneral rule" it is acce!ted in our la#& The eBistence of a contract does not de!end on
the nu$er of !ersons $ut on the nu$er of !arties& There is no %eneral !rohi$ition a%ainst auto2contracts; hence" it should $e
held *alid&
K Contracts of Adhesion>
Contracts !re!ared $' another" containin% !ro*isions that he desires" and as:s the other !art' to a%ree to the if he #ants to
enter into a contract&
2 EBa!le> trans!ortation tic:ets& It is *alid contract accordin% to Tolentino $ecause the other !art' can reject it
REVIEWER
entirel'&
K Characteristics of Contracts>
9 eleents>
4& Essential eleents #ithout #hich there is no contract; the' are>
a) consent
$) su$ject atter; and
c) cause
8& Natural eleents eBist as !art of the contract e*en if the !arties do not !ro*ide for the" $ecause the la#" as su!!letor' to
the contract" creates the
9& Accidental eleents those #hich are a%reed $' the !arties and #hich cannot eBist #ithout sti!ulated
$ Stages o% a Contract:
9 sta%es>
4& @re!aration" /eneration or @olicitacion !eriod of ne%otiation and $ar%ainin%" endin% at the oent of a%reeent of the
!arties
8& @erfection or .irth of the contract the oent #hen the !arties coe to a%ree on the ters of the contract
9& Consuation or Death the fulfillent or !erforance of the ters a%reed u!on in an' contract
11?6. T6$ #ont!a#ting 5a!ti$s +a% $stablis6 s#6 sti5lations' #las$s' t$!+s O #on"itions as t6$% +a% "$$+
#on&$ni$nt' 5!o&i"$" t6$% a!$ not #ont!a!% to la.' +o!als' goo" #sto+s' 5bli# o!"$!' o! 5bli# 5oli#%.
K This article e$odies the Principle of Autonomy of 4ontracts
K -reedo to contract>
An' !erson has the li$ert' to enter into a contract so lon% as the' are not contrar' to la#" orals" %ood custos" !u$lic order or
!u$lic !olic'& The le%islature" under the constitution" is !rohi$ited fro enactin% la#s to !rescri$e the ters of a le%al contract&
K 3alidit' of Sti!ulations>
An' and all sti!ulations not contrar' to la#" orals" %ood custos" !u$lic order or !u$lic !olic' is *alid
K Contrar' to la#>
-reedo of contract is restricted $' la# for the %ood of the !u$lic& It is fundaental !ostulate that ho#e*er $road the freedo of
the contractin% !arties a' $e" it does not %o so far as to countenance disres!ect for or failure to o$ser*e a le%al
!rescri!tion& The Statute ta:es !recedence&
2 EBa!les>
A !roissor' note #hich re!resents a %a$lin% de$t is unenforcea$le in the hands of the assi%nee&
Sti!ulations to !a' usurious interests are *oid&
A contract $et#een to !u$lic ser*ice co!anies to di*ide the territor' is *oid $ecause it i!airs the control of the @u$lic
Ser*ice Coission&
A%reeent to declare *alid a la# or ordinance is *oid&
K Contrar' to =orals>
=orals ean those %enerall' acce!ted !rinci!les of oralit' #hich ha*e recei*ed soe :ind of social and !ractical confiration&
2 EBa!les>
a !roise to arr' or nor to arr'" to secure le%al se!aration" or to ado!t a child
a !roise to chan%e citi;enshi!" !rofession" reli%ion or doicile
a !roise not to hold !u$lic office or #hich liits the !erforance of official duties
a !roise to enter a !articular !olitical !art' or se!arate fro it
contracts #hich liit in an eBcessi*e anner the !ersonal or econoic freedo of a !erson
to a:e an act de!endent on one' or soe !ecuniar' *alue" #hen it is of such a nature that it should not de!end
thereon; !a'ent to :ill another&
K Contrar' to @u$lic ,rder>
@u$lic order eans the !u$lic #eal or !u$lic !olic'& It re!resents the !u$lic" social" and le%al interest in !ri*ate la# that #hich is
!eranent and essential in institutions" #hich" e*en if fa*orin% soe indi*idual to #ho the ri%ht !ertains" cannot $e left to his
o#n #ill& A contract is said to $e a%ainst !u$lic order if the court finds that the contract as to the consideration or the thin% to $e
done" contra*enes soe esta$lished interest of societ'" or is inconsistent #ith sound !olic' and %ood orals" or tends clearl' to
underine the securit' of indi*idual ri%hts&
2 EBa!les>
page & [dioryRabajante]
REVIEWER
Coon carrier cannot sti!ulate for eBe!tion for lia$ilit' unless such eBe!tion is justifia$le and reasona$le and the
contract is freel' and fairl' ade&
@a'ent to interediaries in securin% i!ort licenses or <uota allocations&
Contract of scholarshi! sti!ulatin% that the student ust reain in the sae school and that he #ai*es his ri%ht to
transfer to another school #ithout refundin% the school
A!t. 11?). Inno+inat$ #ont!a#ts s6all b$ !$glat$" b% t6$ sti5lations o* t6$ 5a!ti$s' b% t6$ 5!o&isions o* Titl$s I O II
o* t6is Boo@' b% t6$ !l$s go&$!ning t6$ +ost analogos no+inat$ #ont!a#ts' an" b% t6$ #sto+s o* t6$ 5la#$.
INN,=INATE C,NTRACTS those #hich lac: indi*idualit' and are not re%ulated $' s!ecial !ro*isions of la#&
K Innoinate Contracts>
do ut des (I %i*e that 'ou a' %i*e) An a%reeent in #hich A #ill %i*e one thin% to ." so that . #ill %i*e another thin% to A&
do ut facias (I %i*e that 'ou a' do) An a%reeent under #hich A #ill %i*e soethin% to ." so that . a' do soethin% for A&
facio ut facias (I do that 'ou a' do) An a%reeent under #hich A does soethin% for ." so that . a' render soe other
ser*ice for A&
facio ut des (I do that 'ou a' %i*e) An a%reeent under #hich A does soethin% for ." so that . a' %i*e soethin% to A&
K Analo%ous contracts>
Innoinate contracts" in the a$sence of sti!ulations and s!ecific !ro*isions of la# on the atter" are to $e %o*erned $' rules
a!!lica$le to the ost analo%ous contracts&
A!t. 11?<. T6$ #ont!a#t +st bin" bot6 #ont!a#ting 5a!ti$s/ its &ali"it% o! #o+5lian#$ #annot b$ l$*t to t6$ .ill o* on$
o* t6$+.
K Principle of +utuality of 4ontract>
The $indin% effect of contract on $oth !arties is $ased on the !rinci!les>
2 that o$li%ations arisin% fro contracts ha*e the force of la# $et#een the contractin% !arties
2 that there ust $e utualit' $et#een the !arties $ased on their essential e<ualit'" to #hich is re!u%nant to
ha*e one !art' $ound $' the contract lea*in% the other free therefro&
A contract containin% a condition #hich a:es its fulfillent de!endent eBclusi*el' u!on the uncontrolled #ill of one of the
contractin% !arties is *oid&
K Unilateral Cancellation>
Just as no$od' can $e forced to enter into a contract" in the sae anner once a contract is entered into" no !art' can renounce
it unilaterall' or #ithout the consent of the other&
No$od' is allo#ed to enter into a contract" and #hile the contract is in effect" lea*es" denounces or disa*o#s the contract to the
!rejudice of the other&
K Nhen Sti!ulated>
Go#e*er" #hen the contract so sti!ulates that one a' terinate the contract u!on a reasona$le !eriod is *alid&
Judicial action for the rescission of the contract is no lon%er necessar' #hen the contract so sti!ulates that it a' $e re*o:ed and
cancelled for the *iolation of an' of its ters and conditions& This ri%ht of rescission a' $e #ai*ed&
A!t. 11?>. T6$ "$t$!+ination o* t6$ 5$!*o!+an#$ +a% b$ l$*t to a t6i!" 5$!son' .6os$ "$#ision s6all not b$ bin"ing
ntil it 6as b$$n +a"$ @no.n to bot6 #ont!a#ting 5a!ti$s.
K EBce!tion to Art& 49?H (=utualit' of Contract)
A third !erson a' $e called u!on to decide #hether or not !erforance has $een done for the fulfillent of the
contract& Such decision $ecoes $indin% #hen the contractin% !arties ha*e $een infored of it&
A!t. 111?. T6$ "$t$!+ination s6all b$ obligato!% i* it is $&i"$ntl% in$2itabl$. In s#6 #as$' t6$ #o!ts s6all "$#i"$
.6at is $2itabl$ n"$! t6$ #i!#+stan#$s.
K EBce!tion to Art& 49?H (=utualit' of Contract)
Go#e*er" #hen the decision cannot $e arri*ed due to ine<uit'" the courts shall decide #hat is e<uita$le for the !arties in*ol*ed&
A!t 1111. Cont!a#ts ta@$ $**$#t onl% b$t.$$n t6$ 5a!ti$s' t6$i! assigns an" 6$i!s' $=#$5t in #as$ .6$!$ t6$ !ig6ts an"
obligations a!ising *!o+ t6$ #ont!a#ts a!$ not t!ans+issibl$ b% t6$i! nat!$' o! b% sti5lation o! b% 5!o&ision o*
REVIEWER
la.. T6$ 6$i! is not liabl$ b$%on" t6$ &al$ o* t6$ 5!o5$!t% 6$ !$#$i&$" *!o+ t6$ "$#$"$nt.
I* a #ont!a#t s6ol" #ontain so+$ sti5lation in *a&o! o* a t6i!" 5$!son' 6$ +a% "$+an" its *l*ill+$nt 5!o&i"$"
6$ #o++ni#at$" 6is a##$5tan#$ to t6$ obligo! b$*o!$ its !$&o#ation. A +$!$ in#i"$ntal b$n$*it o! int$!$st o* a
5$!son is not s**i#i$nt. T6$ #ont!a#ting 5a!ti$s +st 6a&$ #l$a!l% an" "$lib$!at$l% #on*$!!$" a *a&o! 5on a t6i!"
5$!son.
4
st
!ara%ra!h of this article e$odies the Principle of 2elativity of 4ontract
-our eBce!tional instances #here a contract a' !roduce effect on third !ersons (sti!ulation !our autrui)> Art& 4944"
!ar&8 4947
K @arties $ound $' contract>
/enerall'" onl' the !arties that a%reed on the contracts are $ound $' the contract& Transission is !ossi$le to the heirs or
assi%nees if so sti!ulated and in certain contracts&
K Third !ersons not $ound>
It is a %eneral rule that third !arties are not $ound $' the acts of another&
A contract cannot $e $indin% u!on and cannot $e enforced a%ainst one #ho is not a !art' to it" e*en if he has :no#led%e of such
contract and has acted #ith :no#led%e thereof&
K Enforceent of contract>
,nl' a !art' to the contract can aintain an action to enforce the o$li%ations arisin% under said contract&
K Contracts $ind heirs>
Ri%hts and o$li%ations under a contract are transissi$le to heirs& Geirs are not third !ersons $ecause there is !ri*it' of interest
$et#een the and their !redecessor&
A!t 1110. In #ont!a#ts #!$ating !$al !ig6ts' t6i!" 5$!sons .6o #o+$ into 5oss$ssion o* t6$ obj$#t o* t6$ #ont!a#t a!$
bon" t6$!$b%' sbj$#t to t6$ 5!o&isions o* t6$ Do!tgag$ La. an" t6$ Lan" R$gist!ation la.s.
K Real Ri%hts in @ro!ert'
A real ri%ht directl' affects !ro!ert' su$ject to it; hence" #hoe*er is in !ossession of such !ro!ert' ust res!ect that real ri%ht&
A!t 1111. C!$"ito!s a!$ 5!ot$#t$" in #as$s o* #ont!a#ts int$n"$" to "$*!a" t6$+.
K Contracts in -raud of Creditors
Nhen a de$tor enters into a contract in fraud of his creditors" such as #hen he alienated !ro!ert' %ratuitousl' #ithout lea*in%
enou%h for his creditors (article 49HF)" the creditor a' as: for its rescission&
K see Arts& 44FF and 49H?
A!t 1114. An% t6i!" 5$!son .6o in"#$s anot6$! to &iolat$ 6is #ont!a#t s6all b$ liabl$ *o! "a+ag$s to t6$ ot6$!
#ont!a#ting 5a!t%.
K Interference of Third @ersons>
If a third !erson induced a !art' to *iolate his side of the contract" the other !art' a' sue the third !erson for daa%es&
Re<uisites>
4& the eBistence of a *alid contract
8& :no#led%e $' the third !erson of the eBistence of a contract
9& interference $' the third !erson in the contractual relation #ithout le%al justification
Juris!rudential doctrine>
K=anila Railroad Co& *s& Co!a[ia Transatlantica
The !rocess ust $e acco!lished $' distin%uishin% clearl' $et#een the ri%ht of action arisin% fro the i!ro!er interference
#ith the contract $' a stran%er thereto" considered as an inde!endent act %enerati*e of ci*il lia$ilit'" and the ri%ht of action eB
contractu a%ainst a !art' to the contract resultin% for the $reach thereof&
REVIEWER
A!t 1115. Cont!a#ts a!$ 5$!*$#t$" b% +$!$ #ons$nt' an" *!o+ t6at +o+$nt t6$ 5a!ti$s a!$ bon" not onl% to t6$
*l*ill+$nt o* .6at 6as b$$n $=5!$ssl% sti5lat$" bt also to all t6$ #ons$2$n#$s .6i#6' a##o!"ing to t6$i! nat!$'
+a% b$ in @$$5ing .it6 goo" *ait6' sag$ an" la..
K e$odies the Principle of 4onsensuality>
A!t 1116. R$al #ont!a#ts' s#6 as "$5osit' 5l$"g$ o! #o++o"at+' a!$ not 5$!*$#t$" ntil t6$ "$li&$!% o* t6$ obj$#t
o* t6$ obligation.
K EBce!tion to Art& 4945 or @rinci!le of Consensualit'
K @erfection of real contracts>
Real contract is not !erfect $' ere consent& The deli*er' of the thin% is re<uired&
Deli*er' is deanded" neither ar$itrar' nor foralistic&
A!t 111). No on$ +a% #ont!a#t in t6$ na+$ o* anot6$! .it6ot b$ing at6o!iE$" b% t6$ latt$!' o! nl$ss 6$ 6as b%
la. a !ig6t to !$5!$s$nt 6i+.
A #ont!a#t $nt$!$" into in t6$ na+$ o* anot6$! b% on$ .6o 6as no at6o!it% o! l$gal !$5!$s$ntation' o! .6o 6as
a#t$" b$%on" 6is 5o.$!s' s6all b$ n$n*o!#$abl$' nl$ss it is !ati*i$"' $=5!$ssl% o! i+5li$"l%' b% t6$ 5$!son on .6os$
b$6al* it 6as b$$n $=$#t$"' b$*o!$ it is !$&o@$" b% t6$ ot6$! #ont!a#ting 5a!t%.
K Ratification necessar'>
A contract entered into in $ehalf of another #ho has not authori;ed it is not *alid or $indin% on hi unless he ratifies the
transaction& Nhen ratified" he is esto!!ed to <uestion the le%alit' of the transaction&
+inds of ratification>
4& eB!ress
8& i!lied
CHAPTER 0
ESSENTIAL RE89ISITES OA CONTRACTS
GENERAL PROVISIONS
A!t. 111<. T6$!$ is no #ont!a#t nl$ss t6$ *ollo.ing !$2isit$s #on#!(
,1- Cons$nt o* t6$ #ont!a#ting 5a!ti$s/
,0- Obj$#t #$!tain .6i#6 is t6$ sbj$#t +att$! o* t6$ #ont!a#t/
,1- Cas$ o* t6$ obligation .6i#6 is $stablis6$". ,1061-
CCOCD
SECTION 1
CONSENT
A!t. 111>. Cons$nt is +ani*$st$" b% t6$ +$$ting o* t6$ o**$! an" t6$ a##$5tan#$ 5on t6$ t6ing an" t6$ #as$ .6i#6
a!$ to #onstitt$ t6$ #ont!a#t. T6$ o**$! +st b$ #$!tain an" t6$ a##$5tan#$ absolt$. A 2ali*i$" a##$5tan#$
#onstitt$s a #ont$!3o**$!.
A##$5tan#$ +a"$ b% l$tt$! o! t$l$g!a+ "o$s not bin" t6$ o**$!$! $=#$5t *!o+ t6$ ti+$ it #a+$ to 6is @no.l$"g$. T6$
#ont!a#t' in s#6 a #as$' is 5!$s+$" to 6a&$ b$$n $nt$!$" into in t6$ 5la#$ .6$!$ t6$ o**$! .as +a"$. ,1060a-
C,NSENT (as a!!lied to contracts) > concurrence of the #ills of the contractin% !arties #ith res!ect to the o$ject and the
cause #hich shall constitute the contract
Re<uisites>
4& consent ust $e anifested $' the concurrence of the offer and the acce!tance (Arts& 494P24986);
8& contractin% !arties ust !ossess the necessar' le%al ca!acit' (Arts& 498F2498P); and
9& consent ust $e intelli%ent" free" s!ontaneous and real (Arts& 499?24976)
REVIEWER
K-ors> Consent a' either $e eB!ress or i!lied& There is also a !resu!ti*e consent" #hich is the $asis of <uasi2contracts&
K=anifestation> Consent is anifested $' the concurrence of offer and acce!tance #ith res!ect to the o$ject and the cause of the
contract& ,nce there is such a anifestation" the !eriod or sta%e of ne%otiation is terinated& If consensual" the contract is
!erfected&
KA unilateral !ro!osition ust $e definite (distin%uished fro ere counications)" co!lete (statin% the essential and non2
essential conditions desired $' the offeror)" and intentional (serious) #hen acce!ted $' another !art' for such !ro!osition to for
a *alid contract& Go#e*er" a unilateral !roise is not reco%ni;ed $' our Code as ha*in% o$li%ator' force& To $e so" there ust $e
an acce!tance that shall con*ert it into a contract&
K=ental reser*ationZ#hen a !art' a:es a declaration $ut secretl' does not desire the effects of such declaration& The ental
reser*ation of the offeror" un:no#n to the other" cannot affect the *alidit' of the offer&
A!t. 110?. An a##$5tan#$ +a% b$ $=5!$ss o! i+5li$". ,n-
I!lied acce!tance a' arise fro acts or facts #hich re*eal the intent to acce!t" such as the consu!tion of the thin%s sent to
the offeree" or the fact of iediatel' carr'in% out of the contract offered&
A!t. 1101. T6$ 5$!son +a@ing t6$ o**$! +a% *i= t6$ ti+$' 5la#$' an" +ann$! o* a##$5tan#$' all o* .6i#6 +st b$
#o+5li$" .it6. ,n-
The offer #ith a !eriod la!ses u!on the terination of the !eriod& Thus the acce!tance" to $ecoe effecti*e" ust $e :no#n to
the offeror $efore the !eriod la!ses&
A!t. 1100. An o**$! +a"$ t6!og6 an ag$nt is a##$5t$" *!o+ t6$ ti+$ a##$5tan#$ is #o++ni#at$" to 6i+. ,n-
An interediar' #ho has no !o#er to $ind either the offeror or the offeree is not an a%ent; his situation is siilar to that of a
letter carrier&
A!t. 1101. An o**$! b$#o+$s in$**$#ti&$ 5on t6$ "$at6' #i&il int$!"i#tion' insanit%' o! insol&$n#% o* $it6$! 5a!t%
b$*o!$ a##$5tan#$ is #on&$%$". ,n-
A!t. 1104. 76$n t6$ o**$!$! 6as allo.$" t6$ o**$!$$ a #$!tain 5$!io" to a##$5t' t6$ o**$! +a% b$ .it6"!a.n at an%
ti+$ b$*o!$ a##$5tan#$ b% #o++ni#ating s#6 .it6"!a.al' $=#$5t .6$n t6$ o5tion is *on"$" 5on a
#onsi"$!ation' as so+$t6ing 5ai" o! 5!o+is$". ,n-
It is not the oent of sendin% $ut the tie of recei!t of the re*ocation or acce!tance #hich is controllin%&
The dela' in transission is at the ris: of the sender" $ecause he is the one #ho selects the tie and the anner of a:in% the
transission&
Contract of ,!tion> This is a !re!arator' contract in #hich one !art' %rants to the other" for a fiBed !eriod and under s!ecified
conditions" the !o#er to decide #hether or not to enter into a !rinci!al contract& It ust $e su!!orted $' an inde!endent
consideration" and the %rant ust $e eBclusi*e&
A!t. 1105. 9nl$ss it a55$a!s ot6$!.is$' bsin$ss a"&$!tis$+$nts o* t6ings *o! sal$ a!$ not "$*init$ o**$!s' bt +$!$
in&itations to +a@$ an o**$!. ,n-
A!t. 1106. A"&$!tis$+$nts *o! bi""$!s a!$ si+5l% in&itations to +a@$ 5!o5osals' an" t6$ a"&$!tis$! is not bon" to
a##$5t t6$ 6ig6$st o! lo.$st bi""$!' nl$ss t6$ #ont!a!% a55$a!s. ,n-
A!t. 110). T6$ *ollo.ing #annot gi&$ #ons$nt to a #ont!a#t(
,1- 9n$+an#i5at$" +ino!s/
,0- Insan$ o! "$+$nt$" 5$!sons' an" "$a*3+t$s .6o "o not @no. 6o. to .!it$. ,1061a-
K see Art& 9H
K Uneanci!ated inors cannot enter into *alid contracts" and contracts entered into $' the are not $indin% u!on the" unless
u!on reachin% ajorit' the' ratif' the sae&
K Insane !ersons> It is not necessar' that there $e a !re*ious of declaration of ental inca!acit' in order that a contract entered
into $' a entall' defecti*e !erson a' $e annulled; it is enou%h that the insanit' eBisted at the tie the contract #as ade&
page [dioryRabajante]
REVIEWER
K .ein% deaf2ute is not $' itself alone a dis<ualification for %i*in% consent& The la# refers to the deaf2ute #ho does not :no#
ho# to #rite&
A!t. 110<. Cont!a#ts $nt$!$" into "!ing a l#i" int$!&al a!$ &ali". Cont!a#ts ag!$$" to in a stat$ o* "!n@$nn$ss o!
"!ing a 6%5noti# s5$ll a!$ &oi"abl$. ,n-
KThe use of intoBicants does not necessaril' ean a co!lete loss of understandin%& The sae a' $e said of dru%s& .ut a
!erson" under the influence of su!era$undance of alcoholic drin:s or eBcessi*e use of dru%s" a' ha*e no ca!acit' to contract&
KIn h'!notis and sona$ulis" the utter #ant of understandin% is a coon eleent&
A!t. 110>. T6$ in#a5a#it% "$#la!$" in A!ti#l$ 110) is sbj$#t to t6$ +o"i*i#ations "$t$!+in$" b% la.' an" is
n"$!stoo" to b$ .it6ot 5!$j"i#$ to s5$#ial "is2ali*i#ations $stablis6$" in t6$ la.s. ,1064-
K The Rules of Court !ro*ide a list of inco!etents #ho need %uardianshi!> !ersons sufferin% fro the !enalt' of ci*il interdiction"
hos!itali;ed le!ers" !rodi%als" deaf and du$ #ho are una$le to #rite and read" those of unsound ind (e*en thou%h the' ha*e
lucid inter*als)" and !ersons not $ein% of unsound ind $ut $' reason of a%e" disease" #ea: ind" and other siilar causes
cannot" #ithout outside aid" ta:e care of thesel*es and ana%e their !ro!ert'Z$ecoin% an eas' !re' for deceit and
eB!loitation&
K The inca!acit' to %i*e consent (Arts& 498F O 498H) to contracts renders the contract erel' *oida$le" #hile s!ecial
dis<ualification (Art& 498P) a:es it *oid&
A!t. 111?. A #ont!a#t .6$!$ #ons$nt is gi&$n t6!og6 +ista@$' &iol$n#$' inti+i"ation' n"$ in*l$n#$' o! *!a" is
&oi"abl$. ,1065a-
A!t. 1111. In o!"$! t6at +ista@$ +a% in&ali"at$ #ons$nt' it s6ol" !$*$! to t6$ sbstan#$ o* t6$ t6ing .6i#6 is t6$
obj$#t o* t6$ #ont!a#t' o! to t6os$ #on"itions .6i#6 6a&$ 5!in#i5all% +o&$" on$ o! bot6 5a!ti$s to $nt$! into t6$
#ont!a#t.
Dista@$ as to t6$ i"$ntit% o! 2ali*i#ations o* on$ o* t6$ 5a!ti$s .ill &itiat$ #ons$nt onl% .6$n s#6 i"$ntit% o!
2ali*i#ations 6a&$ b$$n t6$ 5!in#i5al #as$ o* t6$ #ont!a#t.
A si+5l$ +ista@$ o* a##ont s6all gi&$ !is$ to its #o!!$#tion. ,1066a-
K I%norance and error are 8 different states of ind& I%norance eans the co!lete a$sence of an' notion a$out a !articular
atter" #hile error or ista:e eans a #ron% or false notion a$out such atter&
K Annulent of contract on the %round of error is liited to cases in #hich it a' reasona$l' $e said that #ithout such error the
consent #ould not ha*e $een %i*en&
K An error as to the !erson #ill in*alidate consent #hen the consideration of the !erson has $een the !rinci!al cause of the sae&
K =ista:e as to <ualifications" e*en #hen there is no error as to !erson" is a cause *itiatin% consent" if such <ualifications ha*e
$een the !rinci!al cause of the contract&
K A ista:e as to the oti*e of a !art' does not affect the contract; to %i*e it such effect #ould destro' the sta$ilit' of
contractual relations& Nhen the oti*e has" ho#e*er" $een eB!ressed and #as a condition of the consent %i*en" annulent is
!ro!erZ$ecause an accidental eleent is" $' the #ill of the !arties" con*erted into a su$stantial eleent&
A!t. 1110. 76$n on$ o* t6$ 5a!ti$s is nabl$ to !$a"' o! i* t6$ #ont!a#t is in a langag$ not n"$!stoo" b% 6i+' an"
+ista@$ o! *!a" is all$g$"' t6$ 5$!son $n*o!#ing t6$ #ont!a#t +st s6o. t6at t6$ t$!+s t6$!$o* 6a&$ b$$n *ll%
$=5lain$" to t6$ *o!+$!. ,n-
A!t. 1111. T6$!$ is no +ista@$ i* t6$ 5a!t% all$ging it @n$. t6$ "obt' #onting$n#% o! !is@ a**$#ting t6$ obj$#t o* t6$
#ont!a#t. ,n-
To in*alidate consent" the error ust $e eBcusa$le& It ust $e a real error and not one that could ha*e $een a*oided $' the !art'
alle%in% it& The error ust arise fro facts un:no#n to hi& A ista:e that is caused $' anifest ne%li%ence cannot in*alidate a
juridical act&
A!t. 1114. Dtal $!!o! as to t6$ l$gal $**$#t o* an ag!$$+$nt .6$n t6$ !$al 5!5os$ o* t6$ 5a!ti$s is *!st!at$"' +a%
&itiat$ #ons$nt. ,n-
KThree re<uisites under this article> 4) the error ust $e as to the le%al effect of an a%reeent; 8) it ust $e utual; and 9) the
real !ur!ose of the !arties is frustrated&
K The le%al effects include the ri%hts and o$li%ations of the !arties" not as sti!ulated in the contract" $ut as !ro*ided $' the la#&
The ista:e as to these effects" therefore" eans an error as to #hat the la# !ro*ides should s!rin% as conse<uences fro the
contract in <uestion&
REVIEWER
K An error as to the nature or character is al#a's essential" and a:es the act juridicall' ineBistent&
A!t. 1115. T6$!$ is &iol$n#$ .6$n in o!"$! to .!$st #ons$nt' s$!ios o! i!!$sistibl$ *o!#$ is $+5lo%$".
T6$!$ is inti+i"ation .6$n on$ o* t6$ #ont!a#ting 5a!ti$s is #o+5$ll$" b% a !$asonabl$ an" .$ll3g!on"$" *$a! o* an
i++in$nt an" g!a&$ $&il 5on 6is 5$!son o! 5!o5$!t%' o! 5on t6$ 5$!son o! 5!o5$!t% o* 6is s5os$' "$s#$n"ants o!
as#$n"ants' to gi&$ 6is #ons$nt.
To "$t$!+in$ t6$ "$g!$$ o* inti+i"ation' t6$ ag$' s$= an" #on"ition o* t6$ 5$!son s6all b$ bo!n$ in +in".
A t6!$at to $n*o!#$ on$Hs #lai+ t6!og6 #o+5$t$nt at6o!it%' i* t6$ #lai+ is jst o! l$gal' "o$s not &itiat$ #ons$nt.
,106)a-
KDuress is that de%ree of constraint or dan%er either actuall' inflicted (*iolent) or threatened and i!endin% (intiidation)"
sufficient to o*ercoe the ind and #ill of a !erson of ordinar' firness&
K 3iolence refers to !h'sical force or co!ulsion" #hile intiidation refers to oral force or co!ulsion&
KRe<uisites of *iolence>
4) That the !h'sical force e!lo'ed ust $e irresisti$le or of such de%ree that the *icti has no other course" under the
circustances" $ut to su$it; and
8) that such force is the deterinin% cause in %i*in% the consent to the contract&
K Re<uisites of intiidation>
4) that the intiidation ust $e the deterinin% cause of the contract" or ust ha*e caused the consent to $e %i*en;
8) that the threatened act $e unjust or unla#ful;
9) that the threat $e real and serious" there $ein% an e*ident dis!ro!ortion $et#een the e*il and the resistance #hich all en can
offer; and
7) that it !roduces a reasona$le and #ell2%rounded fear fro the fact that the !erson fro #ho it coes has the necessar'
eans or a$ilit' to inflict the threatened injur'&
A!t. 1116. Viol$n#$ o! inti+i"ation s6all annl t6$ obligation' alt6og6 it +a% 6a&$ b$$n $+5lo%$" b% a t6i!" 5$!son
.6o "i" not ta@$ 5a!t in t6$ #ont!a#t. ,106<-
A!t. 111). T6$!$ is n"$ in*l$n#$ .6$n a 5$!son ta@$s i+5!o5$! a"&antag$ o* 6is 5o.$! o&$! t6$ .ill o* anot6$!'
"$5!i&ing t6$ latt$! o* a !$asonabl$ *!$$"o+ o* #6oi#$. T6$ *ollo.ing #i!#+stan#$s s6all b$ #onsi"$!$"( t6$
#on*i"$ntial' *a+il%' s5i!ital an" ot6$! !$lations b$t.$$n t6$ 5a!ti$s' o! t6$ *a#t t6at t6$ 5$!son all$g$" to 6a&$
b$$n n"l% in*l$n#$" .as s**$!ing *!o+ +$ntal .$a@n$ss' o! .as igno!ant o! in *inan#ial "ist!$ss. ,n-
K In intiidation" there ust $e an unla#ful or unjust act #hich is threatened and #hich causes consent to $e %i*en" #hile in
undue influence there need not $e an unjust or unla#ful act& In $oth cases" there is oral coercion&
K=oral coercion a' $e effected throu%h threats" eB!ressed or i!lied" or throu%h harassin% tactics&
KUndue influence is an' eans e!lo'ed u!on a !art' #hich" under the circustances" he could not #ell resist" and #hich
controlled his *olition and induced hi to %i*e his consent to the contractZ#hich other#ise he #ould not ha*e entered into&
A!t. 111<. T6$!$ is *!a" .6$n' t6!og6 insi"ios .o!"s o! +a#6inations o* on$ o* t6$ #ont!a#ting 5a!ti$s' t6$ ot6$!
is in"#$" to $nt$! into a #ont!a#t .6i#6' .it6ot t6$+' 6$ .ol" not 6a&$ ag!$$" to. ,106>-
K-raud is e*er' :ind of dece!tion" #hether in the for of insidious achinations" ani!ulations" concealents" or
isre!resentations" for the !ur!ose of leadin% another !art' into error and thus eBecutin% a !articular act&
K -raud !roduces <ualified error; it induces in the other !art' an ineBact notion of facts& The #ill of another is aliciousl' isled
$' eans of false a!!earance of realit'&
K0Insidious #ords or achinations1 include false !roises; eBa%%eration of ho!es or $enefits; a$use of confidence; and fictitious
naes" <ualifications" or authorit'&
K +inds of fraud>
4) dolo causante (Art& 499H) Z #hich deterines or is the essential cause of the consent; fraud in the !erfection of contract
8) dolo incidenteZ (Arts& 4977 O 44F?) #hich does not ha*e such a decisi*e influence and $' itself cannot cause the %i*in% of
consent" $ut refers onl' to soe !articular or accident of the o$li%ation&
page " [dioryRabajante]
REVIEWER
KDolo causante can $e a %round for annulent; dolo incident cannot $e a %round for annulent&
KThe result of fraud is error on the !art of the *icti&
KRe<uisites of fraud>
4) it ust ha*e $een e!lo'ed $' one contractin% !art' u!on the other;
8) it ust ha*e induced the other !art' to enter into the contract;
9) it ust ha*e $een serious;
7) and it ust ha*e resulted in daa%e or injur' to the !art' see:in% annulent&
A!t. 111>. Aail!$ to "is#los$ *a#ts' .6$n t6$!$ is a "t% to !$&$al t6$+' as .6$n t6$ 5a!ti$s a!$ bon" b%
#on*i"$ntial !$lations' #onstitt$s *!a". ,n-
KSilence or concealent" $' itself" does not constitute fraud" unless there is a s!ecial dut' to disclose certain facts" or unless
accordin% to %ood faith and the usa%es of coerce" the counication should $e ade&
KThus" the innocent non2disclosure of a fact does not affect the foration of the contract or o!erate to dischar%e the !arties fro
their a%reeent&
A!t. 114?. T6$ sal $=agg$!ations in t!a"$' .6$n t6$ ot6$! 5a!t% 6a" an o55o!tnit% to @no. t6$ *a#ts' a!$ not in
t6$+s$l&$s *!a"l$nt. ,n-
KTolerated fraud includes inii;in% the defects of the thin%" eBa%%eration of its %ood <ualities" and %i*in% it <ualities that it does
not ha*e& This is la#ful isre!resentation :no#n as dolus $onus& This is also called la#ful astuteness&
KThese isre!resentations are usuall' encountered in fairs" ar:ets" and alost all coercial transactions& The' do not %i*e
rise to an action for daa%es" either $ecause of their insi%nificance or $ecause the stu!idit' of the *icti is the real cause of his
loss&
KThe thin:in% is that #here the eans of :no#led%e are at hand and e<uall' a*aila$le to $oth !arties" one #ill not $e heard to
sa' that he has $een decei*ed&
A!t. 1141. A +$!$ $=5!$ssion o* an o5inion "o$s not signi*% *!a"' nl$ss +a"$ b% an $=5$!t an" t6$ ot6$! 5a!t% 6as
!$li$" on t6$ *o!+$!Hs s5$#ial @no.l$"g$. ,n-
An o!inion of an eB!ert is li:e a stateent of fact" and if false" a' $e considered a fraud %i*in% rise to annulent&
A!t. 1140. Dis!$5!$s$ntation b% a t6i!" 5$!son "o$s not &itiat$ #ons$nt' nl$ss s#6 +is!$5!$s$ntation 6as #!$at$"
sbstantial +ista@$ an" t6$ sa+$ is +tal. ,n-
KThe %eneral rule is that the fraud e!lo'ed $' a third !erson u!on one of the !arties does not *itiate consent and cause the
nullit' of a contract&
KEBce!tion> If one of the !arties is in collusion #ith the third !erson" or :no#s of the fraud $' the third !erson" and he is
$enefited there$'" he a' $e considered as an acco!lice to the fraud" and the contract $ecoes *oida$le&
A!t. 1141. Dis!$5!$s$ntation +a"$ in goo" *ait6 is not *!a"l$nt bt +a% #onstitt$ $!!o!. ,n-
A!t. 1144. In o!"$! t6at *!a" +a% +a@$ a #ont!a#t &oi"abl$' it s6ol" b$ s$!ios an" s6ol" not 6a&$ b$$n
$+5lo%$" b% bot6 #ont!a#ting 5a!ti$s.
In#i"$ntal *!a" onl% oblig$s t6$ 5$!son $+5lo%ing it to 5a% "a+ag$s. ,10)?-
K-raud is serious #hen it is sufficient to i!ress" or to lead an ordinaril' !rudent !erson into error; that #hich cannot decei*e a
!rudent !erson cannot $e a %round for nullit'&
K.esides $ein% serious" the fraud ust $e the deterinin% cause of the contract& It ust $e dolo causante&
KNhen $oth !arties use fraud reci!rocall'" neither one has an action a%ainst the other; the fraud of one co!ensates that of the
other& Neither !art' can as: for the annulent of the contract&
A!t. 1145. Si+lation o* a #ont!a#t +a% b$ absolt$ o! !$lati&$. T6$ *o!+$! ta@$s 5la#$ .6$n t6$ 5a!ti$s "o not
int$n" to b$ bon" at all/ t6$ latt$!' .6$n t6$ 5a!ti$s #on#$al t6$i! t!$ ag!$$+$nt. ,n-
K Siulation is the declaration of a fictitious #ill" deli$eratel' ade $' a%reeent of the !arties" in order to !roduce" for the
!ur!oses of dece!tion" the a!!earance of a juridical act #hich does not eBist or is different fro that #hich #as reall' eBecuted&
A!t. 1146. An absolt$l% si+lat$" o! *i#titios #ont!a#t is &oi". A !$lati&$ si+lation' .6$n it "o$s not 5!$j"i#$ a
t6i!" 5$!son an" is not int$n"$" *o! an% 5!5os$ #ont!a!% to la.' +o!als' goo" #sto+s' 5bli# o!"$! o! 5bli# 5oli#%
bin"s t6$ 5a!ti$s to t6$i! !$al ag!$$+$nt. ,n-
KIn a$solute siulation" there is color of a contract" #ithout an' su$stance thereof" the !arties not ha*in% an' intention to $e
$ound&
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REVIEWER
KIn relati*e siulation" the !arties ha*e an a%reeent #hich the' conceal under the %uise of another contract& EBa!le> a deed
of sale eBecuted to conceal donation&
SECTION 0. 3 Obj$#t o* Cont!a#ts
The o$ject of a contract is its su$ject atter& It is the thin%" ri%ht" or ser*ice #hich is the su$ject2atter of the o$li%ation
arisin% fro the contract&
Re<uisites> FCILI:G
4) CCD #ithin the #oerce of an;
8) CID not intransissi$le
9) CLD ust $e licit" or not contrar' to la#" orals" %ood custos" !u$lic !olic'" or !u$lic order;
9) CIDnot an i!ossi$le thin% or ser*ice; and
7) CDD it ust $e "eterinate as to its :ind&
A!t. 114). All t6ings .6i#6 a!$ not otsi"$ t6$ #o++$!#$ o* +$n' in#l"ing *t!$ t6ings' +a% b$ t6$ obj$#t o* a
#ont!a#t. All !ig6ts .6i#6 a!$ not int!ans+issibl$ +a% also b$ t6$ obj$#t o* #ont!a#ts.
No #ont!a#t +a% b$ $nt$!$" into 5on *t!$ in6$!itan#$ $=#$5t in #as$s $=5!$ssl% at6o!iE$" b% la..
All s$!&i#$s .6i#6 a!$ not #ont!a!% to la.' +o!als' goo" #sto+s' 5bli# o!"$! o! 5bli# 5oli#% +a% li@$.is$ b$ t6$
obj$#t o* a #ont!a#t. ,10)1a-
K Thin%s #hich are outside the coerce of an>
Ser*ices #hich i!l' an a$solute su$ission $' those #ho render the" sacrificin% their li$ert'" their inde!endence or
$eliefs" or disre%ardin% in an' anner the e<ualit' and di%nit' of !ersons" such as !er!etual ser*itude or sla*er';
@ersonal ri%hts" such as arital authorit'" the status and ca!acit' of a !erson" and honorar' titles and distinctions;
@u$lic offices" inherent attri$utes of the !u$lic authorit'" and !olitical ri%hts of indi*iduals" such as the ri%ht of suffra%e;
@ro!ert'" #hile the' !ertain to the !u$lic doinion" such as the roads" !la;as" s<uares" and ri*ers;
Sacred thin%s" coon thin%s" li:e the air and the sea" and res nullius" as lon% as the' ha*e not $een a!!ro!riated&
E*en future thin%s can $e the o$ject of contracts" as lon% as the' ha*e the !ossi$ilit' or !otentialit' of coin% into
eBistence&
The la#" ho#e*er" %enerall' does not allo# contracts on future inheritance& A contract entered into $' a fideicoissar'
heir #ith res!ect to his e*entual ri%hts #ould $e *alid !ro*ided that the testator has alread' died& The ri%ht of a
fideicoissar' heir coes fro the testator and not fro the fiduciar'&
A!t. 114<. I+5ossibl$ t6ings o! s$!&i#$s #annot b$ t6$ obj$#t o* #ont!a#ts. ,10)0-
KThin%s are i!ossi$le #hen the' are not susce!ti$le of eBistin%" or the' are outside the coerce of an& @ersonal acts or
ser*ices i!ossi$le #hen the' $e'ond the ordinar' stren%th or !o#er of an&
KThe i!ossi$ilit' ust $e actual and conte!oraneous #ith the a:in% of the contract" and not su$se<uent thereto&
KThe i!ossi$ilit' is a$solute or o$jecti*e #hen no$od' can !erfor it; it is relati*e or su$jecti*e #hen due to the s!ecial
conditions or <ualifications of the de$tor it cannot $e !erfored&
KThe a$solute or o$jecti*e i!ossi$ilit' nullifies the contract; the relati*e or su$jecti*e does not&
A!t. 114>. T6$ obj$#t o* $&$!% #ont!a#t +st b$ "$t$!+inat$ as to its @in". T6$ *a#t t6at t6$ 2antit% is not
"$t$!+inat$ s6all not b$ an obsta#l$ to t6$ $=ist$n#$ o* t6$ #ont!a#t' 5!o&i"$" it is 5ossibl$ to "$t$!+in$ t6$ sa+$'
.it6ot t6$ n$$" o* a n$. #ont!a#t b$t.$$n t6$ 5a!ti$s. ,10)1-
KThe thin% ust ha*e definite liits" not uncertain or ar$itrar'&
KThe <uantit' of the of the o$ject a' $e indeterinate" so lon% as the ri%ht of the creditor is not rendered illusor'&
SECTION 1. 3 Cas$ o* Cont!a#ts
KThe cause of the contract is the 0#h' of the contract"1 the iediate and ost !roBiate !ur!ose of the contract" the essential
reason #hich i!els the contractin% !arties to enter into it and #hich eB!lains and justifies the creation of the o$li%ation throu%h
such contract&
KThe cause as to each !art' is the underta:in% or !restation to $e !erfored $' the other& The o$ject of the contract is the
su$ject atter thereof (e&%&" the land #hich is sold in a sales contract)& Consideration" ean#hile" is the reason" oti*e" or
induceent $' #hich a an is o*ed to $ind hiself $' an a%reeent&
KRe<uisites>
4) it ust eBist;
page $ [dioryRabajante]
REVIEWER
8) it ust $e true; and
9) it ust $e licit&
A!t. 115?. In on$!os #ont!a#ts t6$ #as$ is n"$!stoo" to b$' *o! $a#6 #ont!a#ting 5a!t%' t6$ 5!$station o! 5!o+is$
o* a t6ing o! s$!&i#$ b% t6$ ot6$!/ in !$+n$!ato!% on$s' t6$ s$!&i#$ o! b$n$*it .6i#6 is !$+n$!at$"/ an" in
#ont!a#ts o* 5!$ b$n$*i#$n#$' t6$ +$!$ lib$!alit% o* t6$ b$n$*a#to!. ,10)4-
K In onerous contracts" the cause need not $e ade<uate or an eBact e<ui*alent in !oint of actual *alue" es!eciall' in dealin% #ith
o$jects #hich ha*e a ra!idl' fluctuatin% !rice& There are e<ual considerations&
K A reunerator' contract is one #here a !art' %i*es soethin% to another $ecause of soe ser*ice or $enefit %i*en or rendered
$' the latter to the forer" #here such ser*ice or $enefit #as not due as a le%al o$li%ation& The consideration of one is %reater
than the otherEs&
KA %ratuitous contract is essentiall' an a%reeent to %i*e donations& The %enerosit' or li$eralit' of the $enefactor is the cause of
the contract& There is nothin% to e<uate&
A!t. 1151. T6$ 5a!ti#la! +oti&$s o* t6$ 5a!ti$s in $nt$!ing into a #ont!a#t a!$ "i**$!$nt *!o+ t6$ #as$ t6$!$o*. ,n-
K Cause is the o$jecti*e" intrinsic" and juridical reason for the eBistence of the contract itself" #hile oti*e is the !s'cholo%ical"
indi*idual" or !ersonal !ur!ose of a !art' to the contract&
K As a %eneral !rinci!le" the oti*es of a !art' do not affect the *alidit' or eBistence of a contract& EBce!tions> Nhen oti*e
!redeterines the !ur!ose of the contract" such as>
KNhen the oti*e of a de$tor in alienatin% !ro!ert' is to defraud his creditors" the alienation is rescissi$le;
K Nhen the oti*e of a !erson in %i*in% his consent is to a*oid a threatened injur'" as in the case of intiidation" the
contract is *oida$le; and
KNhen the oti*e of a !erson induced hi to act on the $asis of fraud or isre!resentation $' the other !art'" the
contract is *oida$le&
A!t. 1150. Cont!a#ts .it6ot #as$' o! .it6 nla.*l #as$' 5!o"#$ no $**$#t .6at$&$!. T6$ #as$ is nla.*l i* it is
#ont!a!% to la.' +o!als' goo" #sto+s' 5bli# o!"$! o! 5bli# 5oli#%. ,10)5a-
A!t. 1151. T6$ stat$+$nt o* a *als$ #as$ in #ont!a#ts s6all !$n"$! t6$+ &oi"' i* it s6ol" not b$ 5!o&$" t6at t6$%
.$!$ *on"$" 5on anot6$! #as$ .6i#6 is t!$ an" la.*l. ,10)6-
Nhere the cause stated in the contract is false" the latter a' ne*ertheless $e sustained $' !roof of another licit cause&
A!t. 1154. Alt6og6 t6$ #as$ is not stat$" in t6$ #ont!a#t' it is 5!$s+$" t6at it $=ists an" is la.*l' nl$ss t6$
"$bto! 5!o&$s t6$ #ont!a!%. ,10))-
Unless the contrar' is !ro*ed" a contract is !resued to ha*e a %ood and sufficient consideration& This !resu!tion a!!lies #hen
no cause is stated in the contract&
A!t. 1155. E=#$5t in #as$s s5$#i*i$" b% la.' l$sion o! ina"$2a#% o* #as$ s6all not in&ali"at$ a #ont!a#t' nl$ss t6$!$
6as b$$n *!a"' +ista@$ o! n"$ in*l$n#$. ,n-
K In case of lesion or inade<uac' of cause" the %eneral rule is that the contract is not su$ject to annulent&
K In cases !ro*ided $' la#" ho#e*er" such as those entioned in Art 49H4" the lesion is a %round for rescission of the contract&
K /ross inade<uac' naturall' su%%ests fraud and is e*idence thereof" so that it a' $e sufficient to sho# it #hen ta:en in
connection #ith other circustances&
:EAECTIVE CONTRACTS(
RESCISSIBLE VOI:ABLE 9NENAORCEABLE VOI: O INEJISTENT
3alid and enforcea$le until
rescinded;
there is a sort of eBtrinsic
defect consistin% of econoic
daa%e or lesion
3alid and enforcea$le until
annulled;
The defect is ore or less
intrinsic
3alida$le transaction;
Cannot $e enforce unless
ratified
Does not and cannot !roduce
le%al effect
Causes>
injur' or daa%e to one of the
!arties or to third !ersons
C/A-LAI Arts& 49H4 49H8D
Causes> (Art& 49P?)
2 le%al inca!acit' of one !art';
or
2 *itiation of consent
Causes> (Art& 47?9)
2 contract is entered into in
eBcess or #ithout authorit'
2 non2co!liance #ith Stature
of -rauds
Le%al inca!acit' of $oth
Causes>
(*oid) illicit" !rohi$ited or
declared $' la# as *oid
(ineBistent) lac:s one or all of
the re<uisites of a contract
CCS2D,ICE Art& 47?PD
Cured $' !rescri!tion Cured $' !rescri!tion Not cured $' !rescri!tion Not cured $' !rescri!tion
page % [dioryRabajante]
REVIEWER
Need not $e ratified Can $e ratified Can $e ratified Cannot $e ratified
Can $e assailed $' the injured
or daa%ed !art' or injured
or daa%ed third !erson
Can $e assailed $' a
contractin% !art' (Art& 49PF)
contractin% !art' (Art& 47?H)
contractin% !art' or a third
!erson #hose interest is
affected (Art& 4784)
Assailed directl' onl' Assailed directl' or collaterall' Assailed directl' or collaterall' Assailed directl' or collaterall'
,utline of !ro*isions>
49H?> Nature of rescissi$le
contract
49H4249H8> t'!es of
rescissi$le contract
49H9> su$sidiar' character
49H7> eBtent of rescission
49H5> utual restitution; no
rescission #hen the thin% is
le%all' !ossessed $' a third
!erson
49H6> no rescission in case of
49H4 (4) and (8) #hen the
contract is a!!ro*ed $' court
49HF> !reseu!tion
(eBistence of fraud);
alienation $' %ratuitous title;
alienation $' onerous title
49HH> ac<uisition in $ad faith
(of thin%s alienated in fraud of
creditors)
49HP> !rescri!ti*e !eriod
49P?> *oida$le contracts a'
$e annulla$le e*en if there is
no daa%e to !arties;
t'!es of *oida$le contracts;
$indin% character unless
annulled;
susce!ti$ilit' to ratification
49P4> !rescri!ti*e !eriod
49P8249PF> ratification
49PH247?8> =utual restitution
49PH> utual restitution
49PP> eBce!tion to utual
restitution defect is the
inca!acit' of one
47??> loss of the thin%
throu%h faultAfraud of !art'
o$li%ed to return the thin%
$ut has no ri%ht to institute
!roceedin%" he shall return
the fruits and the *alue of
the thin%
47?4> loss of the thin%
throu%h faultAfraud of the
!erson #ho a' institute
the !roceedin% (action for
annulent is eBtin%uished)
47?8> one does not restore
the other cannot $e
co!elled to co!l'
47?9> t'!es of unenforcea$le
contracts
47?5> ratification of contracts
infrin%in% statute of frauds
47?F> eB!ress or i!lied
ratification $' the !arent or
%uardian of one (#hen $oth
are inca!acitated) sae
effect as if onl' one is
inca!acitated;
Ratification $' !arent or
%uardian of $oth contract is
*alidated fro ince!tion
47?H> cannot $e assailed $'
third !ersons&
47?P> t'!es of *oid or
ineBistent contracts
474?> i!rescri!ti$ilit'
4744> contracts that are $oth
ille%al and criinal $oth
!arties ha*e no action a%ainst
each other and shall $e
!rosecuted
4748> contracts that are
ille%al $ut do not constitute
criinal offense
47492474P> eBce!tions to in
!ari delicto rule
RESCISSIBLE CONTRACTS
A!t. 11<?. Cont!a#ts &ali"l% ag!$$" 5on +a% b$ !$s#in"$" in t6$ #as$s $stablis6$" b% la.. ,10>?-
A!t. 11<1. T6$ *ollo.ing #ont!a#ts a!$ !$s#issibl$(
,1- T6os$ .6i#6 a!$ $nt$!$" into b% ga!"ians .6$n$&$! t6$ .a!"s .6o+ t6$% !$5!$s$nt s**$! l$sion b% +o!$ t6an
on$3*o!t6 o* t6$ &al$ o* t6$ t6ings .6i#6 a!$ t6$ obj$#t t6$!$o*/
,0- T6os$ ag!$$" 5on in !$5!$s$ntation o* abs$nt$$s' i* t6$ latt$! s**$! t6$ l$sion stat$" in t6$ 5!$#$"ing n+b$!/
,1- T6os$ n"$!ta@$n in *!a" o* #!$"ito!s .6$n t6$ latt$! #annot in an% ot6$! +ann$! #oll$#t t6$ #lai+s "$ t6$+/
,4- T6os$ .6i#6 !$*$! to t6ings n"$! litigation i* t6$% 6a&$ b$$n $nt$!$" into b% t6$ "$*$n"ant .it6ot t6$
@no.l$"g$ an" a55!o&al o* t6$ litigants o! o* #o+5$t$nt j"i#ial at6o!it%/
,5- All ot6$! #ont!a#ts s5$#iall% "$#la!$" b% la. to b$ sbj$#t to !$s#ission. ,10>1a-
A!t. 11<0. Pa%+$nts +a"$ in a stat$ o* insol&$n#% *o! obligations to .6os$ *l*ill+$nt t6$ "$bto! #ol" not b$
#o+5$ll$" at t6$ ti+$ t6$% .$!$ $**$#t$"' a!$ also !$s#issibl$. ,10>0-
A!t. 11<1. T6$ a#tion *o! !$s#ission is sbsi"ia!%/ it #annot b$ institt$" $=#$5t .6$n t6$ 5a!t% s**$!ing "a+ag$ 6as
no ot6$! l$gal +$ans to obtain !$5a!ation *o! t6$ sa+$. ,10>4-
A!t. 11<4. R$s#ission s6all b$ onl% to t6$ $=t$nt n$#$ssa!% to #o&$! t6$ "a+ag$s #as$". ,n-
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REVIEWER
A!t. 11<5. R$s#ission #!$at$s t6$ obligation to !$t!n t6$ t6ings .6i#6 .$!$ t6$ obj$#t o* t6$ #ont!a#t' tog$t6$! .it6
t6$i! *!its' an" t6$ 5!i#$ .it6 its int$!$st/ #ons$2$ntl%' it #an b$ #a!!i$" ot onl% .6$n 6$ .6o "$+an"s !$s#ission
#an !$t!n .6at$&$! 6$ +a% b$ oblig$" to !$sto!$.
N$it6$! s6all !$s#ission ta@$ 5la#$ .6$n t6$ t6ings .6i#6 a!$ t6$ obj$#t o* t6$ #ont!a#t a!$ l$gall% in t6$ 5oss$ssion
o* t6i!" 5$!sons .6o "i" not a#t in ba" *ait6.
In t6is #as$' in"$+nit% *o! "a+ag$s +a% b$ "$+an"$" *!o+ t6$ 5$!son #asing t6$ loss. ,10>5-
A!t. 11<6. R$s#ission !$*$!!$" to in Nos. 1 an" 0 o* A!ti#l$ 11<1 s6all not ta@$ 5la#$ .it6 !$s5$#t to #ont!a#ts
a55!o&$" b% t6$ #o!ts. ,10>6a-
A!t. 11<). All #ont!a#ts b% &i!t$ o* .6i#6 t6$ "$bto! ali$nat$s 5!o5$!t% b% g!atitos titl$ a!$ 5!$s+$" to 6a&$
b$$n $nt$!$" into in *!a" o* #!$"ito!s' .6$n t6$ "ono! "i" not !$s$!&$ s**i#i$nt 5!o5$!t% to 5a% all "$bts #ont!a#t$"
b$*o!$ t6$ "onation.
Ali$nations b% on$!os titl$ a!$ also 5!$s+$" *!a"l$nt .6$n +a"$ b% 5$!sons against .6o+ so+$ j"g+$nt 6as
b$$n iss$". T6$ "$#ision o! atta#6+$nt n$$" not !$*$! to t6$ 5!o5$!t% ali$nat$"' an" n$$" not 6a&$ b$$n obtain$"
b% t6$ 5a!t% s$$@ing t6$ !$s#ission.
In a""ition to t6$s$ 5!$s+5tions' t6$ "$sign to "$*!a" #!$"ito!s +a% b$ 5!o&$" in an% ot6$! +ann$! !$#ogniE$" b%
t6$ la. o* $&i"$n#$. ,10>)a-
A!t. 11<<. 76o$&$! a#2i!$s in ba" *ait6 t6$ t6ings ali$nat$" in *!a" o* #!$"ito!s' s6all in"$+ni*% t6$ latt$! *o!
"a+ag$s s**$!$" b% t6$+ on a##ont o* t6$ ali$nation' .6$n$&$!' "$ to an% #as$' it s6ol" b$ i+5ossibl$ *o! 6i+
to !$t!n t6$+.
I* t6$!$ a!$ t.o o! +o!$ ali$nations' t6$ *i!st a#2i!$! s6all b$ liabl$ *i!st' an" so on s##$ssi&$l%. ,10><a-
A!t. 11<>. T6$ a#tion to #lai+ !$s#ission +st b$ #o++$n#$" .it6in *o! %$a!s.
Ao! 5$!sons n"$! ga!"ians6i5 an" *o! abs$nt$$s' t6$ 5$!io" o* *o! %$a!s s6all not b$gin ntil t6$ t$!+ination o*
t6$ *o!+$!Hs in#a5a#it%' o! ntil t6$ "o+i#il$ o* t6$ latt$! is @no.n. ,10>>-
Voi"abl$ Cont!a#ts
Voi"abl$ Cont!a#ts
K Contracts that are *oida$le or annulla$le>
4& Nhen either !art' is inca!a$le of %i*in% consent to a contract
8& Nhen consent is *itiated $' ista:e" *iolence" intiidation" undue influence" fraud
K.indin%" unless annulled $' a !ro!er court action
KRatifia$le (Art& 49P?)
K@rescri!tion for action of annulent> 7 'ears to $e%in>
#hen *ice is due to intiidation" *iolence or undue influence fro the tie defect of consent ceases
ista:e or fraud fro the tie of disco*er'
entered into $' inors or those inca!a$le of %i*in% consent the oent %uardianshi! ceases (Art& 49P4)
KRatification
eBtin%uishes action for annulent (Art& 49P8)
a' $e eB!ress or tacit (Art& 49P9)
tacit ratification the eBecution of an act #hich necessaril' i!lies an intention to #ai*e his ri%ht $' the !art'" #ho" :no#in% of
the reason #hich renders the contract *oida$le" has a ri%ht to in*o:e annulent&
2a' $e effected $' the %uardian of the inca!acitated !erson (Art& 49P7)
2 does not re<uire the conforit' of the !erson #ho does not ha*e a ri%ht to $rin% an action for annulent (Art&
49P5)
2cleanses the contract fro all its defects fro the oent it #as constituted (Art& 49P6)
KAnnulent
2 Nho a' institute (Art& 49PF)
2 .' all #ho are o$li%ed !rinci!all' or su$sidiaril'
EBce!tions>
page !1 [dioryRabajante]
REVIEWER
K@ersons ca!a$le #annot all$g$ t6$ in#a5a#it% of those #ith #ho the' contracted
K@ersons #ho eBerted *iolence" undue influence" #ho e!lo'ed fraud or caused ista:e action for annulent cannot $e
$ased on these fla#s
K/i*es rise to the res!onsi$ilit' of restorin% to each other thin%s su$ject atter of the contract" #ith fruits" !rice #ith its interest"
eBce!t in cases !ro*ided $' la# (Art& 49PH)
Ser*ice *alue thereof #ill ser*e as the $asis for daa%es
KInca!acitated !ersons not o$li%ed to a:e restitutions eBce!t insofar as he has $een $enefited $' the thin% or !rice recei*ed $'
hi (Art& 49PP)
KIf o$jects cannot $e returned $ecause these #ere lost throu%h his fault" he shall return the fruits recei*ed and the *alue of the
thin% at the tie of the loss" #ith interests fro the sae date (Art& 47??)
KAs lon% as one of the contractin% !arties does not restore #hat in *irtue of the annulent decree he is $ound to return" the other
cannot $e co!elled to co!l' #ith #hat is incu$ent u!on hi& (Art& 47?8)
KEBtin%uishent of action (Art& 47?4)
if o$ject is lost throu%h the fault or fraud of !erson #ho has the ri%ht to institute the !roceedin%s
if action $ased on inca!acit' of an' one of contractin% !arties" loss of thin% shall not $e an o$stacle to the
success of action" unless loss or fraud too: !lace throu%h the !laintiffEs fault
9NENAORCEABLE CONTRACTS
A!t. 14?1. T6$ *ollo.ing #ont!a#ts a!$ n$n*o!#$abl$' nl$ss t6$% a!$ !ati*i$"(
,1- T6os$ $nt$!$" into in t6$ na+$ o* anot6$! 5$!son b% on$ .6o 6as b$$n gi&$n no at6o!it% o! l$gal
!$5!$s$ntation' o! .6o 6as a#t$" b$%on" 6is 5o.$!s/
,0- T6os$ t6at "o not #o+5l% .it6 t6$ Statt$ o* A!a"s as s$t *o!t6 in t6is n+b$!. In t6$ *ollo.ing #as$s an
ag!$$+$nt 6$!$a*t$! +a"$ s6all b$ n$n*o!#$abl$ b% a#tion' nl$ss t6$ sa+$' o! so+$ not$ o! +$+o!an"+'
t6$!$o*' b$ in .!iting' an" sbs#!ib$" b% t6$ 5a!t% #6a!g$"' o! b% 6is ag$nt/ $&i"$n#$' t6$!$*o!$' o* t6$ ag!$$+$nt
#annot b$ !$#$i&$" .it6ot t6$ .!iting' o! a s$#on"a!% $&i"$n#$ o* its #ont$nts(
,a- An ag!$$+$nt t6at b% its t$!+s is not to b$ 5$!*o!+$" .it6in a %$a! *!o+ t6$ +a@ing t6$!$o*/
,b- A s5$#ial 5!o+is$ to ans.$! *o! t6$ "$bt' "$*alt' o! +is#a!!iag$ o* anot6$!/
,#- An ag!$$+$nt +a"$ in #onsi"$!ation o* +a!!iag$' ot6$! t6an a +tal 5!o+is$ to +a!!%/
,"- An ag!$$+$nt *o! t6$ sal$ o* goo"s' #6att$ls o! t6ings in a#tion' at a 5!i#$ not l$ss t6an *i&$ 6n"!$" 5$sos'
nl$ss t6$ b%$! a##$5t an" !$#$i&$ 5a!t o* s#6 goo"s an" #6att$ls' o! t6$ $&i"$n#$s' o! so+$ o* t6$+' o* s#6
t6ings in a#tion o! 5a% at t6$ ti+$ so+$ 5a!t o* t6$ 5!#6as$ +on$%/ bt .6$n a sal$ is +a"$ b% a#tion an" $nt!% is
+a"$ b% t6$ a#tion$$! in 6is sal$s boo@' at t6$ ti+$ o* t6$ sal$' o* t6$ a+ont an" @in" o* 5!o5$!t% sol"' t$!+s o*
sal$' 5!i#$' na+$s o* t6$ 5!#6as$!s an" 5$!son on .6os$ a##ont t6$ sal$ is +a"$' it is a s**i#i$nt +$+o!an"+/
,$- An ag!$$+$nt o* t6$ l$asing *o! a long$! 5$!io" t6an on$ %$a!' o! *o! t6$ sal$ o* !$al 5!o5$!t% o! o* an int$!$st
t6$!$in/
,*- A !$5!$s$ntation as to t6$ #!$"it o* a t6i!" 5$!son.
,1- T6os$ .6$!$ bot6 5a!ti$s a!$ in#a5abl$ o* gi&ing #ons$nt to a #ont!a#t.
KUnenforcea$le contracts cannot $e enforced unless it is first ratified in the anner !ro*ided $' la#& An unenforcea$le contract
does not !roduce an' effect unless it is ratified& Unenforcea$le contracts cannot $e sued u!on unless ratified (@aras" 8??9)&
KThere are 9 :inds of unenforcea$le contracts>
a) unauthori;ed contracts;
$) those that fail to co!l' #ith the Statute of -rauds;
c) those #here $oth !arties are inca!a$le of %i*in% consent to a contract&
UNAUTG,RI\ED C,NTRACTS
Nhen a !erson enters into a contract for and in the nae of the another" #ithout authorit' to do so" the contract does not $ind
the latter" unless he ratifies the sae& The a%ent" #ho has entered into the contract in the nae of the !ur!orted !rinci!al" $ut
#ithout authorit' fro hi" is lia$le to third !ersons u!on the contract; it ust ha*e $een the intention of the !arties to $ind
soeone" and" as the !rinci!al #as not $ound" the a%ent should $e& EB> Nithout ' authorit'" ' $rother sold ' car" in '
nae to I& The contract is unauthori;ed and cannot affect e unless I ratif' the sae eB!ressl' or i!licitl'" as $' acce!tin% the
!roceeds of the sale& (@aras)
=ere la!se of tie" no atter ho# lon%" is not the ratification re<uired $' la# of an unenforcea$le contract (Ti!ton *& 3elasco" 6
@hil 6F" as cited in @aras)&
REVIEWER
STATUTE ,- -RAUDS
=eanin%> descri!ti*e of statutes #hich re<uire certain classes of contracts to $e in #ritin%&
@ur!ose> to !re*ent fraud and !erjur' in the enforceent of o$li%ations de!endin% for their e*idence u!on the unassisted eor'
of #itnesses $' re<uirin% certain enuerated contracts and transactions to $e e*idenced $' a #ritin% si%ned $' the !art' to $e
char%ed&
A!!lication> This statute does not de!ri*e the !arties the ri%ht to contract #ith res!ect to atters therein in*ol*ed" $ut erel'
re%ulates the foralities of the contract necessar' to render it unenforcea$le& The statute of frauds" ho#e*er" si!l' !ro*ides for
the anner in #hich contracts under it shall $e !ro*ed& It does not atte!t to a:e such contracts in*alid if not eBecuted in
#ritin% $ut onl' a:es ineffecti*e the action for s!ecific !erforance& The statute of frauds is not a!!lica$le to contracts #hich
are either totall' or !artiall' !erfored" on the theor' that there is a #ide field for the coission of frauds in eBecutor'
contracts #hich can onl' $e !re*ented $' re<uirin% the to $e in #ritin%" a fact #hich is reduced to a iniu in eBecuted
contracts $ecause the intention of the !arties $ecoes a!!arent $' their eBecution" and eBecution concludes" in ost cases" the
ri%hts of the !arties&
A note or eorandu is e*idence of the a%reeent" and is used to sho# the intention of the !arties& No !articular for of
lan%ua%e or instruent is necessar' to constitute a eorandu or note as a #ritin% under the Statute of -rauds&
K/eneral Rules of A!!lication (ainl' @aras)>
Applies only to e1ecutory contracts& .ut it is not enou%h for a !art' to alle%e !artial !erforance in order to render the Statute
ina!!lica$le; such !artial !erforance ust $e dul' !ro*ed" $' either docuentar' or oral e*idence; Cannot a!!l' if the action is
neither for daa%es $ecause of the *iolation of an a%reeent nor for the s!ecific !erforance of said a%reeeent;
KEBclusi*e" i&e& it a!!lies onl' to the a%reeents or contracts enuerated herein;
KDefense of the Statute a' $e #ai*ed;
K@ersonal defense" i&e& a contract infrin%in% it cannot $e assailed $' third !ersons;
Kcontracts infrin%in% the Statute are not *oid; the' are erel' unenforcea$le;
KThe Statute of -rauds is a rule of eBclusion" i&e& oral e*idence i%ht $e rele*ant to the a%reeents enuerated therein and
i%ht therefore $e adissi$le #ere it not for the fact that the la# or the statute eBcludes oral e*idence;
KThe Statute does not deterine the credi$ilit' or #ei%ht of e*idence& It erel' concerns itself #ith the adissi$ilit' thereof;
KThe Statute does not a!!l' if it is claied that the contract does not eB!ress the true a%reeent of the !arties& As lon% as true
or real a%reeent is not co*ered $' the Statute" it is !ro*a$le $' oral e*idence&
INCA@ACITATED @ARTIES
Ratification $' one !art' con*erts the contract into a *oida$le contract2 *oida$le at the o!tion of the !art' #ho has not ratified&
A!t. 14?4. 9nat6o!iE$" #ont!a#ts a!$ go&$!n$" b% A!ti#l$ 111) an" t6$ 5!in#i5l$s o* ag$n#% in Titl$ J o* t6is Boo@.
KArt& 494F& No one a' contract in the nae of another #ithout $ein% authori;ed $' the latter" or unless he has $' la# a ri%ht to
re!resent hi&
KA contract entered into in the nae of another $' one #ho has no authorit' or le%al re!resentation" or #ho has acted $e'ond his
!o#ers" shall $e unenforcea$le" unless it is ratified" eB!ressl' or i!liedl'" $' the !erson on #hose $ehalf it has $een eBecuted"
$efore it is re*o:ed $' the other contractin% !art'& (485Pa)
KRe<uisites for a @erson to contract in the nae of another> a) he ust $e dul' authori;ed (eB!ressl' or i!liedl') or $) he ust
ha*e $' la# a ri%ht to re!resent hi (li:e the %uardian" or the adinistrator) or c) the contract ust $e su$se<uentl' ratified
(eB!ressl' or i!liedl'" $' #ord or $' deed)& (@aras)&
A!t. 14?5. Cont!a#ts in*!inging t6$ Statt$ o* A!a"s' !$*$!!$" to in No. 0 o* A!ti#l$ 14?1' a!$ !ati*i$" b% t6$ *ail!$ to
obj$#t to t6$ 5!$s$ntation o* o!al $&i"$n#$ to 5!o&$ t6$ sa+$' o! b% t6$ a##$5tan#$ o* b$n$*it n"$! t6$+.
KT#o #a's of ratification of contracts infrin%in% the Statute are>
a) failure to o$ject to the !resentation of oral e*idence;
$) acce!tance of $enefits under the" since the Statute does not a!!l' to contracts #hich are !artiall' eBecuted& Cross
eBaination of the #itnesses testif'in% orall' on the contract aounts to a #ai*er or to a failure to o$ject&
A!t. 14?6. 76$n a #ont!a#t is $n*o!#$abl$ n"$! t6$ Statt$ o* A!a"s' an" a 5bli# "o#+$nt is n$#$ssa!% *o! its
!$gist!ation in t6$ R$gist!% o* :$$"s' t6$ 5a!ti$s +a% a&ail t6$+s$l&$s o* t6$ !ig6t n"$! A!ti#l$ 115).
KArt& 495F& If the la# re<uires a docuent or other s!ecial for" as in the acts and contracts enuerated in the follo#in% article"
the contractin% !arties a' co!el each other to o$ser*e that for" once the contract has $een !erfected& This ri%ht a' $e
eBercised siultaneousl' #ith the action u!on the contract& (48FPa)
KThe ri%ht of one !art' to ha*e the other eBecute the !u$lic docuent needed for con*enience in re%istration" is %i*en onl' #hen
the contract is $oth *alid and enforcea$le& (@aras)
A!t. 14?). In a #ont!a#t .6$!$ bot6 5a!ti$s a!$ in#a5abl$ o* gi&ing #ons$nt' $=5!$ss o! i+5li$" !ati*i#ation b% t6$
REVIEWER
5a!$nt' o! ga!"ian' as t6$ #as$ +a% b$' o* on$ o* t6$ #ont!a#ting 5a!ti$s s6all gi&$ t6$ #ont!a#t t6$ sa+$ $**$#t as i*
onl% on$ o* t6$+ .$!$ in#a5a#itat$".
I* !ati*i#ation is +a"$ b% t6$ 5a!$nts o! ga!"ians' as t6$ #as$ +a% b$' o* bot6 #ont!a#ting 5a!ti$s' t6$ #ont!a#t s6all
b$ &ali"at$" *!o+ t6$ in#$5tion.
A!t. 14?<. 9n$n*o!#$abl$ #ont!a#ts #annot b$ assail$" b% t6i!" 5$!sons.
KThe defense of the Statute is !ersonal to the !art' to the a%reeent& Thus" it cannot $e set u! $' stran%ers to the a%reeent&
KJust as stran%ers cannot attac: the *alidit' of *oida$le contracts" so also can the' not attac: a contract $ecause of its
unenforcea$ilit'& Indeed the Statute of -rauds cannot $e set u! as a defense $' stran%ers to the transaction& (A'son *& CA" PF
@hil& P65)&
VOI: OR INEJISTENT CONTRACTS
76at #ont!a#ts a!$ &oi" o! in$=ist$ntP
The follo#in% contracts are *oid or ineBistent fro the $e%innin%>
1. Those #hose cause" o$ject or !ur!ose is contrar' to la#" orals" %ood custos" !u$lic order or !u$lic !olic';
2. Those #hich are a$solutel' siulated or fictitious;
3. Those #hose cause or o$ject did not eBist at the tie of the transaction;
4. Those #hose o$ject is outside the coerce of en;
5. Those #hich conte!late an i!ossi$le ser*ice;
6. Those #here the intention of the !arties relati*e to the !rinci!al o$ject cannot $e ascertained;
7. Those eB!ressl' !rohi$ited or declared *oid $' la#& (a2%" Art 47?P" NCC)&
8. Those #hich are the direct results of !re*ious ille%al contracts (Art 4788" NCC)&
III. NAT9RAL OBLIGATIONS
:$*inition
Natural o$li%ations are those $ased on e<uit' and natural la#" #hich are not enforcea$le $' eans of court action" $ut #hich"
after *oluntar' fulfillent $' the o$li%or" authori;e the retention $' the o$li%e of #hat has $een deli*ered or rendered $' reason
thereof& In other #ords" the' refer to those o$li%ations #ithout sanction" susce!ti$le of *oluntar' !erforance" $ut not throu%h
co!ulsion $' le%al eans&
Nat!al Obligation &s Ci&il Obligation
Nat!al Obligations Ci&il Obligations
5asis E<uit' and natural la# @ositi*e la#
'nforceability Not enforcea$le $' court action Enforcea$le $' court action
1. &s Do!al Obligations
Nat!al Obligations Do!al Obligations
'1istence of juridical tie There eBists a juridical tie $et#een the
!arties not enforcea$le $' court action&
No juridical tie #hatsoe*er&
'ffect of fulfillment 3oluntar' fulfillent !roduces le%al effects
#hich the courts reco%ni;e and !rotect&
3oluntar' fulfillent does not !roduce
le%al effects #hich the courts reco%ni;e
and !rotect&
A!ti#l$s 1404 141?( EBa!les of Natural ,$li%ations

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OBLIGATIONS AND CONTRACTS

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