INTRODUCTION

OBLIGATIONS AND CONTRACTS

NEW CIVIL CODE OF THE PHILIPPINES
ARTS. 1156
-1304 (OBLIGATIONS
)
ARTS. 1305
-1422
 CHAPTER 1
GENERAL
PROVISIONS
OBLIGATIONS
(CIVIL
OBLIGATIONS)
❖A JURIDICAL NECESSITY
❖TO GIVE, TO DO OR NOT TO DO.

OBLIGATION
•ART. 1156. AN OBLIGATION IS A JURIDICAL
NECESSITY TO GIVE, TO DO OR NOT TO DO.
(N)
JURIDICAL NECESSITY

• CONNOTE THAT IN CASE OF NON-COMPLIANCE , THERE WILL BE LEGAL

SANCTIONS
 ELEMENTS

• 1. ACTIVE SUBJECT (OBLIGEE/CREDITOR): ONE IN WHOSE

FAVOR THE OBLIGATION IS CONSTITUTED
• 2. PASSIVE SUBJECT (OBLIGOR/DEBTOR): ONE WHO HAS
THE DUTY OF GIVING, DOING OR NOT DOING
• 3. OBJECT: PRESTATION; THE CONDUCT WHICH HAS TO BE
OBSERVED BY THE DEBTOR/OBLIG

REQUISITES
• 1. IT MUST BE LICIT(OTHERWISEITIS VOID)
• 2. IT MUST BE POSSIBLE,PHYSICALLY AND JURIDICALLY
 (OTHERWISEIT IS VOID)
• 3. IT MUST BE DETERMINATE OR DETERMINABLE (OTHERWISE IT IS VOID)
• 4. IT MUST HAVE PECUNIARYVALUE

• A. VINCULUM JURIS: JURIDICAL/LEGAL TIE; BINDS THE PARTIES TO THE

OBLIGATION
• B. CAUSA (CAUSA DEBENDI/CAUSA OBLIGATIONES): WHY
OBLIGATIONEXISTS

SOURCES OF OBLIGATIONS (LACQ ) 2

(ART 1157)

1.LAW
2.CONTRACTS
3. QUASI-CONTRACTS
4.ACTS OR OMISSIONS PUNISHED BY LAW
5. QUASI-DELICTS (ART. 1157, NCC)
LAW

• A RULE OF CONDUCT, JUST AND OBLIGATORY, LAID DOWN BY LEGITIMATE

AUTHORITY FOR THE COMMON OBSERVANCE AND BENEFIT.
. MUST BE EXPRESSLY OR IMPLIEDLY SET FORTH AND CANNOT BE
PRESUMED
CONTRACT

• IS A MEETING OF THE MINDS BETWEEN TWO PERSONS WHEREBY ONE BINDS

HIMSELF WITH
RESPECT TO THE OTHER TO GIVE SOMETHING OR TO RENDER SOME SERVICE
(ART. 1305, NCC)

• -IT IS THE “LAW” BETWEEN PARTIES

• -MUST BE COMPLIED WITH IN GOOD FAITH

• -PARTIES MAY FREELY ENTER INTO ANY STIPULATIONS

PROVIDED
 THEY ARE NOT CONTRARY TO LAW, MORALS, GOOD CUSTOMS,
PUBLIC ORDER OR PUBLIC POLICY
QUASI-CONTRACTS

• •JURIDICAL RELATION RESULTING FROM LAWFUL, VOLUNTARY

AND UNILATERAL ACTS, WHICH HAS FOR ITS PURPOSE, THE
PAYMENT OF INDEMNITY TO THE END THAT NO ONE SHALL
BE UNJUSTLY ENRICHED OR BENEFITED AT THE EXPENSEOF
ANOTHER.
TWO TYPES OF QUASI-CONTRACT

1. NEGOTIORUM GESTIO
- REFERS TO THE VOLUNTARY ADMINISTRATION OF THE PROPERTY, BUSINESS
OR AFFAIRS OF ANOTHER

- WITHOUT HIS CONSENT OR AUTHORITY.

2. SOLUTIO INDEBITI

- REFERS TO PAYMENT BY MISTAKE OF AN OBLIGATION WHICH WAS NOT DUE

WHEN PAID.

ACTS OR OMISSIONS PUNISHABLE BY LAW

• THESE ARE CRIMES OR FELONIES. THE COMMISSION OF THE CRIME MAKES THE
OFFENSER CIVILLY LIABLE.

• SCOPE OF CIVIL LIABILITY

• 1. RESTITUTION-THE RESTITUTION OF THE THING ITSELF MUST BE MADE WHENEVER

 POSSIBLE, WITH ALLOWANCE FOR ANY DETERIORATION, OR DIMINUTION OF VALUE AS
DETERMINED BY THE COURT. (ARTICLE 105 OF THE REVISED PENAL CODE OF THE
PHILIPPINES)

2. REPARATION FOR DAMAGE CAUSED-THE COURT SHALL DETERMINE THE AMOUNT

OF DAMAGE, TAKING INTO CONSIDERATION THE PRICE OF THE THING, WHENEVER POSSIBLE,
AND ITS SPECIAL SENTIMENTAL VALUE TO THE INJURED PARTY, AND REPARATION SHALL BE
MADE ACCORDINGLY.(Article 106 of the Revised Penal Code of the Philippines)

3. INDEMNITY FOR CONSEQUENTIAL DAMAGES- INDEMNIFICATION FOR

CONSEQUENTIAL DAMAGES SHALL INCLUDE NOT ONLY THOSE CAUSED THE INJURED PARTY,
BUT ALSO THOSE SUFFERED BY HIS FAMILY OR BY A THIRD PERSON BY REASON OF THE CRIME.
(Article 107 of the Revised Penal Code of the Philippines)
• FIRST REMEDY GRANTED BY LAW IS NO. 1, IN CASE THIS IS
NOT POSSIBLE NO. 2.
• IN EITHER CASE, NO. 3 MAY BE REQUIRED

EXAMPLE: X IS FOUND GUILTY FOR THE CRIME ROBBERY.

• RESTITUTION –CULPRIT IS DUTY BOUND TO RETURN THE
PROPERTY STOLEN
• REPARATION – IN CASE OF INABILITY TO RETURN THE
PROPERTY STOLEN, THE CULPRIT MUST PAY THE VALUE OF
THE PROPERTY STOLEN.
QUASI-DELICTS (ALSO KNOWN AS
”TORT/CULPAAQUILIANA” )
• ACTS OR OMISSIONS THAT CAUSE DAMAGE TO ANOTHER THERE BEING FAULT
OR NEGLIGENCE BUT WITHOUT ANY PRE-EXISTING CONTRACTUAL
OBLIGATION.

• • ELEMENTS:
1. THERE MUST BE AN ACT OR OMISSION
 2. THERE MUST BE FAULT OR NEGLIGENCE
ATTRIBUTABLE TO THE PERSON CHARGED
3. THERE MUST BE DAMAGE OR INJURY
• 4. THERE MUST BE A DIRECT RELATION OF CAUSE AND
EFFECT BETWEEN THE ACT ARISING FROM FAULT OR
NEGLIGENCE AND THE DAMAGE OR INJURY (PROXIMATE
CAUSE);
• 5. THERE IS NO PRE-EXISTING CONTRACTUAL RELATION
• BETWEEN THE PARTIES.
EXAMPLE:
 A IS PLAYING BASKETBALL. WHEN THE LATTER SHOT THE BALL, HE
MISSED AND ACCIDENTALLY HIT B'S CAR. A IS OBLIGATED TO COMPENSATE
B FOR THE CAR’S DAMAGE.

NATURE AND EFFECTS OF

OBLIGATION
SEE ARTS. 1163 – 1178 OF THE NEW CIVIL CODE OF THE
PHILIPPINES

ART. 1163. EVERY PERSON OBLIGED TO GIVE SOMETHING IS ALSO

OBLIGED TO TAKE CARE OF IT WITH THE PROPER DILIGENCE OF A
GOOD FATHER OF A FAMILY, UNLESS THE LAW OR THE STIPULATION
OF THE PARTIES REQUIRES ANOTHER STANDARD OF CARE. (1094A)
1.DETERMINATE OR SPECIFIC THING

- IS SOMETHING WHICH IS SUSCEPTIBLE OF PARTICULAR DESIGNATION OR

SPECIFICATION

- PARTICULARLY DESIGNATED OR PHYSICALLY SEGREGATED FROM ALL

OTHERS OF THE SAME CLASS

EXAMPLE; A MERCEDES BENZ CAR, MODEL 2000, CHASSIS NO.232323 WITH

PLATE NO.
AAA 999

2. INDETERMINATE THING OR GENERIC THING

- IS SOMETHING WHICH IS NOT PARTICULARIZED OR SPECIFIED BUT HAS

REFERENCE ONLY TO A CLASS OR GENUS
- EXAMPLE: A CAR, AN OUNCE OF GOLD

• GENUS NEVER PERISHES (GENUS NUNGUAM PERIT)

IN OBLIGATIONS TO GIVE
• IF THE OBLIGATION IS DETERMINATE, DUTIES WHICH
ARE IMPOSED UPON THE DEBTOR ARE:
1. TO DELIVER THE THING WHICH HE HAS OBLIGATED
HIMSELF TO GIVE INCLUDING THE FRUITS OF THE
THING;
• ARTICLE 1164 THE CREDITOR HAS THE RIGHT TO THE FRUITS OF
THE THING FROM THE TIME THE OBLIGATION TO DELIVER
ARISES. HOWEVER, HE SHALL ACQUIRE NO REAL RIGHT OVER
IT UNTIL THE SAME HAS BEEN DELIVERED TO HIM.

KINDS OF FRUITS
1. NATURAL FRUITS

• – SPONTANEOUS PRODUCTS OF THE SOIL, AND THE YOUNG, AND OTHER PRODUCTS OF ANIMALS.
• EX: GRASS, ALL TREES AND PLANTS ON LAND PRODUCED WITHOUT THE INTERVENTION OF HUMAN
LABOR.
1. INDUSTRIAL FRUITS

• - ARE THOSE PRODUCED BY LANDS OF ANY KIND THROUGH CULTIVATION OR LABOR.

• EX: SUGAR CANE, VEGETABLES, RICE; AND ALL PRODUCTS OF LANDS BROUGHT ABOUT BY REASON
OF HUMAN LABOR.
1. CIVIL FRUITS

• – ARE THOSE DERIVED BY VIRTUE OF A JURIDICAL RELATION.

• EX: RENTS OF BUILDING, PRICES OF LEASES OF LANDS AND OTHER PROPERTIES.

• 2. TO TAKE CARE OF THE THING WITH THE PROPER DILIGENCE

OF A GOOD FATHER OF A FAMILY (ordinary care or that diligence which
an average orreasonably prudent person would exercise over his own property;

• Ordinary Diligence
• - Diligence required of person obliged to deliver a determinate
thing
• - An accepted notion that a FATHER will never put his family
at risk
• - The obligor/Debtor/Passive subject should take care of it as his
own determinate thing
• 3 KINDS OF DILIGENCE UNDER THE LAW:

• 1. EXTRAORDINARY
• – EXTREME MEASURE OF CARE AND CAUTION
• 2. ORDINARY
• – “DILIGENCE OF A GOOD FATHER OF A FAMILY”
• 3. SLIGHT DILIGENCE OR SLIGHT CARE
• – LESS OR NO PRUDENCE
3. TO DELIVER ALL ACCESSIONSAND ACCESSORIES

ART. 1166. THE OBLIGATION TO GIVE A DETERMINATE THING INCLUDES

THAT OF DELIVERING ALL ITS ACCESSIONS AND ACCESSORIES, EVEN THOUGH
THEY MAY NOT HAVE BEEN MENTIONED.
ACCESSIONS – ADDITIONS TO OR IMPROVEMENTS UPON A THING.
EX: AIR CONDITIONER IN A CAR.
• ACCESSORIES – THINGS JOINED TO, OR INCLUDED WITH THE
PRINCIPAL THING FOR ITS BETTER USE,
• EMBELLISHMENT OR COMPLETION. EX:KEY OF A HOUSE; FRAME OF A
PICTURE

• Exception: It is stipulated otherwise

• 4. TO PAY DAMAGES IN CASE OF BREACH OF OBLIGATION BY
REASON OF DELAY, FRAUD, NEGLIGENCE OR CONTRAVENTION
OF THE TENOR OF THE OBLIGATION.
OBLIGATIONS IS GENERIC:

• 1. TO DELIVER A THING WHICH MUST BE NEITHER OF SUPERIOR NOR

INFERIORQUALITY

• 2. TO PAY DAMAGES IN CASE OF BREACH OF THE OBLIGATION IN CASE OF

BREACH OF THE OBLIGATION BY REASON OF DELAY, FRAUD,
NEGLIGENCE
OR CONTRAVENTION OF THE TENOR OF THE OBLIGATION (ART.
1246)
 PROBLEM:

MR. A BOUND HIMSELF TO DELIVER TO B A (1) 21-INCH 1983 MODEL TV SET, AND
(2) THE 13
CUBIC FEET WHITE WESTINGHOUSE REFRIGERATOR WITH MOTOR NO.WERT-385 ,
WHICH B SAW IN A’S STORE, AND (3)TO REPAIR B’S PIANO. A DID NONE OF
THESE THINGS.

MAY B COMPEL A TO DELIVER THE TV SET AND THE REFRIGERATOR AND

REPAIR THE PIANO?

ANSWERS:
1.CANNOT. THE OBLIGATION IS A GENERIC OBLIGATION. OBJECT IS DESIGNATED
MERELY BY ITS CLASS OR GENUS WITHOUT ANY PARTICULAR DESIGNATION
OR PHYSICAL SEGREGATION
2.MAY COMPEL A. OBLIGATIONS IS DETERMINATE
3.CANNOT COMPEL A TO REPAIR THE PIANO. THE OBLIGATION OF A IS AN
OBLIGATION TO DO. IN THIS TYPE OF OBLIGATION,
4.THE LAW RECOGNIZES THE INDIVIDUALS FREEDOM TO CHOOSE BETWEEN
DOING THAT WHICH HE HAS PROMISED TO DO AND NOT DOING IT.

KINDS OF DELIVERY

• 1. ACTUAL (TRADITION) - THE PROPERTY CHANGES

HANDS PHYSICALLY.
• EXAMPLE: A BUYS CAKE FROM B. THE DELIVERY
MADE BY B IS THE ACTUAL DELIVERY OF THE THING
DUE.

• 2. CONSTRUCTIVE DELIVERY - THE PHYSICAL

TRANSFER OF THE PROPERTY IS IMPLIED.

KINDS OF CONSTRUCTIVE DELIVERY

• A. TRADITION SIMBOLICA (SYMBOLICAL TRADITION)

• EXAMPLE: WHEN THE KEYS OF A HOUSE ARE GIVEN TO THE

NEW OWNER, THE HOUSE BEING THEOBJECT OF THE SALE.
• B. TRADITIO LONGA MANU - DELIVERY BY MERE CONSENT OR
POINTING OUT THE OBJECT

• EXAMPLE: WHEN POINTING OUT TO A VAN WHICH IS THE

OBJECT OF THE SALE

• C. TRADITION BREVI MANU (DELIVERY BY SHORT HAND) - FROM POSSESSOR

NON – OWNER TO POSSESSOR OWNER

• EXAMPLE: WHEN A TENANT ALREADY IN POSSESSION OF A HOUSE BUYS THE

HOUSE HE IS RENTING.

• D. TRADITIO CONSTITUTUM POSSESSORIUM. - FROM POSSESSOR OWNER TO

POSSESSOR NON – OWNER.
• EXAMPLE: A HOUSE OWNER, WHO SELLS HIS HOUSE, BUT REMAINS IN
POSSESSION AS TENANT OF THE SAME HOUSE.

• E. TRADITION BY EXECUTION OF LEGAL FORMS.

• EXAMPLE: THE EXECUTION OF PUBLIC INSTRUMENT IN SELLING REAL
PROPERTIES.

RIGHTS OF CREDITOR IF DEBTOR FAILED TO

DELIVER
(ART. 1165 TO 1170)
• RIGHTS OF CREDITOR IF DEBTOR FAILED TO DELIVER

• 1. IF THE THING IS SPECIFIC OR DETERMINATE:

• A. AN ACTION FOR SPECIFIC PERFORMANCE WITH A RIGHT TO INDEMNITY FOR
DAMAGES
IF THE DEBTOR IS GUILTY OF FRAUD, NEGLIGENCE, DELAY, OR CONTRAVENTION
IN THE
PERFORMANCE OF THE OBLIGATION. THE CREDITOR CAN COMPEL THE
DEBTOR TO MAKE THE DELIVERY. OR

• B. DEMAND FOR RESCISSION OR CANCELLATION OF THE OBLIGATION WITH A

RIGHT TO
INDEMNITY FOR DAMAGES IF THE DEBTOR IS GUILTY OF FRAUD, NEGLIGENCE,
DELAY, OR CONTRAVENTION IN THE PERFORMANCE OF THE OBLIGATION. OR

• C. DEMAND PAYMENT FOR DAMAGES ONLY, WHERE IT IS THE ONLY FEASIBLE

REMEDY.

• 2. IF THE THING IS GENERIC OR INDETERMINATE:

• A. ASK FOR COMPLIANCE OF THE OBLIGATION BY THE DEBTOR HIMSELF OR

BY THIRD
 PERSON AT THE DEBTOR’S EXPENSE. DEMAND A REPLACEMENT WHICH IS
NOT OF INFERIOR OR SUPERIOR QUALITY.

• B. DEMAND DAMAGES FROM THE DEBTOR IF THE DEBTOR IS GUILTY OF

FRAUD,
NEGLIGENCE, DELAY, OR CONTRAVENTION IN THE PERFORMANCE OF THE
OBLIGATION.
(ARTICLE 1170)

CAUSES OF BREACH OF
OBLIGATION
CAUSES OF BREACH OF OBLIGATION
1. DEFAULT OR MORA
2. FRAUD OR DOLO
3. NEGLIGENCE OR CULPA
4. CONTRAVENTION OF THE TENOR OF
THE
OBLIGATION
 CAUSES OF BREACH OF
OBLIGATION
1. DEFAULT OR MORA (ART. 1169. THOSE OBLIGED TO DELIVER OR
TO DO SOMETHING INCUR IN DELAY FROM THE TIME THE OBLIGEE
JUDICIALLY OR EXTRAJUDICIALLY DEMANDS FROM THEM THE
FULFILLMENTOF THEIR OBLIGATION.
1. ORDINARY DELAY IS MERELY THE FAILURE TO PERFORM AN
OBLIGATION ON TIME. THIS DOES NOT CONSTITUTE BREACH.
2. LEGAL DELAY OR DEFAULT OR MORA IS THE FAILURE TO
PERFORM AN
OBLIGATION ON TIME WHICH FAILURE CONSTITUTES A BREACH
OF THE
OBLIGATION. (ARTICLE 1169)

KINDS DEFAULT OR MORA

1. MORA SOLVENDI
- DELAY OF THE OBLIGOR/DEBTOR TO PERFORM HIS
OBLIGATION.

I. THE DEBTOR IS GUILTY OF BREACH OR VIOLATION

OF THE OBLIGATION;
II. HE IS LIABLE TO CREDITOR FOR INTEREST;
III. HE IS LIABLE EVEN FOR A FORTUITOUS EVENT WHEN
THE
 OBLIGATION IS TO DELIVER A DETERMINATE THING
2. MORA ACCIPIENDI
- DELAY OF OF THE OBLIGEE/CREDITOR TO ACCEPT THE
DELIVERY OF
THE THING W/C IS THE OBJECT OF THE OBLIGATION
I. A. THE CREDITOR IS GUILTY OF BREACH OR VIOLATION OF THE OBLIGATION;

II. B. HE IS LIABLE FOR DAMAGES SUFFERED, IF ANY, BY THE DEBTOR;

III. C. HE BEARS THE RISK OF LOSS OF THE THING DUE;

IV. D. WHERE THE OBLIGATION IS TO PAY MONEY, THE DEBTOR IS NOT LIABLE FOR
INTEREST FROM THE TIME OF CREDITOR’S DELAY
V. E. THE DEBTOR MAY RELEASE HIMSELF FROM THE OBLIGATION BY THE
CONSIGNATION OR DEPOSIT IN COURT OF THE THING OR SUM DUE.

3. COMPENSATIO MORAE
- DELAY OF THE PARTIES/OBLIGORS IN RECIPROCAL OBLIGATIONS

I. THE DELAY OF THE OBLIGOR CANCELS THE DELAY

OF THE OBLIGEE, AND VICE VERSA
II. NO ACTIONABLE DEFAULT ON THE PART OF BOTH PARTIES.

DEFAULT OR MORA
 QUESTION:
IN OBLIGATIONS TO GIVE OR
TO DO, WHEN DOES THE
OBLIGOR/DEBTOR INCUR
DELAY?
 ANSWER: NON-FULFILLMENT
OF OBLIGATION DESPITE OF
DEMAND.
• DEBTOR INCURS IN DELAY FROM THE TIME THE
CREDITOR
JUDICIALLY OR EXTRAJUDICIALLY DEMANDS FROM
HIM THE
FULFILLMENT OF HIS OBLIGATION

• AND IN SPITE OF SUCH DEMAND

• HE IS UNABLE TO COMPLY WITH THE OBLIGATION
DEFAULT/MORA

WHEN IS DEMAND BY THE

CREDITOR NOT NECESSARY IN
ORDER THAT DELAY MAY EXIST?
 DEMAND BY CREDITOR IS NOT NECESSARY:
TROUL

I. OBLIGATION OR THE LAW EXPRESSLY SO DECLARES

II. TIME IS OF THE ESSENCE
III. THE NATURE AND THE CIRCUMSTANCES OF THE OBLIGATION IT
APPEARS
THAT THE DESIGNATION OF THE TIME WAS A CONTROLLING
MOTIVE FOR THE ESTABLISHMENT OF THE CONTRACT
IV. DEMAND WOULD BE USELESS
V. RECIPROCAL OBLIGATIONS
 DEFAULT/MORA

• RECIPROCAL OBLIGATIONS
WHERE THE OBLIGATIONS ARISE OUT OF THE SAME CAUSE AND MUST BE FULFIILED
AT THE SAME TIME.

- FROM THE MOMENT ONE OF THE

PARTIES
FULFILLS HIS OBLIGATION, DELAY BY THE
OTHER
BEGINS, DESPITE THE ABSENCE OF
DEMAND
EFFECTS OF DELAY

• ON THE PART OF THE DEBTOR

1. LIABLE FOR DAMAGES

2. OBLIGATION CONSISTS IN THE DELIVERY OF

DETERMINATE THING
-RESPONSIBLE FOR ANY FORTUITOUS EVENT UNTIL HE
EFFECTED THE DELIVERY.
 EFFECTS OF DELAY

• ON THE PART OF CREDITOR

1. BEAR THE RISK OF LOSS

2. SHOULDER THE PRESERVATION OF THE THING
3. DEBTOR MAY RESORT TO CONSIGNATION OF THE
THING DUE.
 CAUSES OF BREACH OF OBLIGATION

2. FRAUD/DOLO (ART. 1170. THOSE WHO IN THE PERFORMANCE OF

THEIR OBLIGATIONS ARE GUILTY OF FRAUD, NEGLIGENCE, OR DELAY, AND THOSE WHO IN ANY
MANNER CONTRAVENE THE TENOR THEREOF, ARE LIABLE FOR DAMAGES. )

I. DELIBERATE/INTENTIONAL EVASION BY THE DEBTOR OF NORMAL

COMPLIANCE OF HIS OBLIGATION
II. IMPLIES SOME KIND OF MALICE OR DISHONESTY AND IT CANNOT
COVER CASES OF MISTAKE AND ERRORS OF JUDGMENT MADE IN GOOD
FAITH.
 KINDS OF FRAUD/DOLO

• FRAUD IN OBTAININNG CONSENT

1. CAUSAL FRAUD/DOLO CAUSANTE

- FRAUD W/OUT W/C CONSENT WOULD NOT HAVE BEEN GIVEN.

EFFECT:
CONTRACT IS VOIDABLE.
 KINDS OF FRAUD/DOLO
• FRAUD IN OBTAINING CONSENT

EXAMPLE: B BOUGHT A RING FROM S

WHO TOLD HIM THAT THE RING WAS
EMBELLISHED WITH BLUE DIAMOND
WHICH IS NOT TRUE.
KINDS OF FRAUD/DOLO
• FRAUD IN OBTAINING CONSENT
2. INCIDENTAL FRAUD/DOLO INCIDENTE
- FRAUD WITHOUT WHICH CONSENT WOULD HAVE STILL BEEN GIVEN BUT THE
PERSON GIVING IT WOULD HAVE AGREED ON DIFFERENT TERMS.
- EFFECTS: CONTRACT IS VALID, GUILTY PARTY LIABLE FOR DAMAGES

• REMEDY IS NOT ANNULMENT BUT DAMAGES

• ORIGINALLY, INJURED PARTY VALIDLY GAVE HIS CONSENT

KINDS OF FRAUD/DOLO

• FRAUD IN THE PERFORMACE OF THE OBLIGATION

- DELIBERATE ACT OF EVADING FULFILLMENT OF AN OBLIGATION IN A NORMAL
MANNER

- PRESUPPOSES AN EXISTING OBLIGATION

EFFECT: FRAUD NO EFEFCT ON THE VALIDITY OF THE CONTRACT SINCE IT

WAS EMPLOYED AFTER PERFECTION. GUILTY PARTY LIABLE FOR DAMAGES.

BREACHES OF AN OBLIGATION

3. NEGLIGENCE/CULPA (ART. 1172. RESPONSIBILITY ARISING FROM NEGLIGENCE

IN
THE PERFORMANCE OF EVERY KIND OF OBLIGATION IS ALSO DEMANDABLE, BUT SUCH LIABILITY MAY
BE REGULATED BY THE COURTS, ACCORDING TO THE CIRCUMSTANCES)
• ART. 1173. THE FAULT OR NEGLIGENCE OF THE OBLIGOR CONSISTS IN THE OMISSION OF THAT
 DILIGENCE WHICH IS REQUIRED BY THE NATURE OF THE OBLIGATION AND CORRESPONDS
WITH THE CIRCUMSTANCES OF THE PERSONS, OF THE TIME AND OF THE PLACE. WHEN
NEGLIGENCE SHOWS BAD FAITH, THE PROVISIONS OF ARTICLES 1171 AND 2201, PARAGRAPH
2, SHALL APPLY.

• IF THE LAW OR CONTRACT DOES NOT STATE THE DILIGENCE WHICH IS TO BE OBSERVED IN THE
PERFORMANCE, THAT WHICH IS EXPECTED OF A GOOD FATHER OF A FAMILY SHALL BE REQUIRED.

KINDS OF NEGLIGENCE

1.CULPA CONTRACTUAL/CONTRACTUALL NEGLIGENCE

- NEGLIGENCE IN THE PERFORMANCE OF A CONTRACT

2. CULPA AQUILIANA/ CIVIL

NEGLIGENCE/TORT/QUASI-DELICT
- ACTS OR OMISSION THAT CAUSE DAMAGE TO ANOTHER, NO CONTRACTUAL
RELATION BETWEEN PARTIES.

3.CULPA CRIMINAL/ CRIMINAL NEGLIGENCE

- NEGLIGENCE THAT RESULTS IN THE COMMISSION OF A CRIME.

BREACHES OF AN OBLIGATION

TEST OF NEGLIGENCE:
WHETHER THE DEFENDANT IN DOING THE
ALLEGED ACT
USED THAT REASONABLE CARE AND CAUTION
WHICH
AN ORDINARY PERSON WOULD HAVE USED IN
THE SAME SITUATION
BREACHES OF AN OBLIGATION

WHAT KIND OF DILIGENCE ?

GEN. RULE:DILIGENCE OF A GOOD FATHER
OF A FAMILY.
 IF THE LAW OR CONTRACT DOES NOT STATE
THE
DILIGENCE TO BE OBSERVED IN THE
PERFORMANCE
OF THE OBLIGATION
FORTUITOUS EVENTS (ART. 1174. EXCEPT IN CASES
EXPRESSLY
SPECIFIED BY THE LAW, OR WHEN IT IS OTHERWISE DECLARED BY
STIPULATION, OR WHEN THE NATURE OF THE OBLIGATION REQUIRES THE
ASSUMPTION OF RISK, NO PERSON SHALL BE RESPONSIBLE FOR THOSE
EVENTS WHICH COULD NOT BE FORESEEN, OR WHICH, THOUGH FORESEEN,
WERE INEVITABLE)
 •ARE THOSE EVENTS THAT
COULD NOT BE FORESEEN OR
WHICH, THOUGH FORESEEN,
ARE INEVITABLE.
FORTUITOUS EVENT DISTINGUISHED FROM
FORCE MAJEURE / CLASSIFICATION OF
FORTUITOUS EVENTS:
• 1. ACT OF MAN - STRICTLY SPEAKING, A FORTUITOUS EVENT IS AN EVENT INDEPENDENT OF
THE WILL OF THE
 OBLIGOR BUT NOT OF THE OTHER HUMAN WILLS. THOSE ARISE FROM LEGITIMATE OR
ILLEGITIMATE ACTS OF PERSONS OTHER THAN THE OBLIGOR (FUERZA MAYOR OR FORCE
MAJEURE)
• EXAMPLE:
• WAR, ROBBERY, MURDER, INSURRECTION
• 2. ACT OF GOD - THEY REFER TO WHAT IS CALLED AS FORCE MAJEURE OR THOSE EVENTS
WHICH ARE TOTALLY INDEPENDENT OF THE WILL OF EVERY HUMAN BEING. BROUGHT BY
NATURAL FORCES. SITUATION SHOULD BE PROVEN
• EXAMPLES:
• EARTHQUAKE, FLOOD, RAIN, SHIPWRECK, LIGHTNING, ERUPTION OF VOLCANO

REQUISITES OF F.E
1. THE EVENT MUST BE INDEPENDENT OF THE HUMAN WILL;
2. THE EVENT COULD NOT BE FORESEEN, OR IF FORESEEN, IS
INEVITABLE;
3. THE OCCURRENCE MUST RENDER IT IMPOSSIBLE FOR THE
DEBTOR TO FULFILL THE OBLIGATION IN A NORMAL
MANNER; AND
4. THE OBLIGOR MUST BE FREE OF PARTICIPATION IN, OR
AGGRAVATION OF THE INJURY TO THE CREDITOR
 LIABILITY FOR F.E

• GENERAL RULE: NO PERSON SHALL BE LIABLE FOR

FORTUITOUS EVENT. OBLIGATION WILL BE
EXTINGUISHED.

• PROVIDED: DEBTOR COMMITTED NO

NEGLIGENCE/MISCONDUCT
 LIABILITY FOR F.E: LAS

EXCEPTIONS :
1. LAW EXPRESSLY PROVIDES
(EX. DEBTOR IN DELAY (ART.1165, OBJECT IS GENERIC,)

2. STIPULATION OF THE PARTIES

3. NATURE OF THE OBLIGATION REQUIRES THE
ASSUMPTION OF RISK
REASON: NO WRONG IS DONE TO ONE WHO CONSENTS
( VOLENTI NON FIT INJURIA)

EXCEPTIONS:
4. OBJECT OF THE OBLIGATION IS LOST AND THE
LOSS IS DUE PARTLY TO THE FAULT OF THE
DEBTOR.
5. OBJECT OF THE OBLIGATION IS LOST AND THE
LOSS OCCURS
AFTER THE DEBTOR HAS INCURRES DELAY
6. DEBTOR PROMISED TO DELIVER THE SAME THING
TO TWO OR
MORE PERSONS WHO DO NOT HAVE THE SAME
INTERESTS;
7. OBLIGATION TO DELIVER ARISES FROM A
CRIMINAL OFFENSE
8. OBLIGATION IS GENERIC
OBLIGATION TO GIVE

QUESTION:
IF THE OBJECT OF THE OBLIGATION TO
GIVE IS
LOST OR DESTROYED THROUGH A
FORTUITOUS EVENT, CAN THE DEBTOR
 OR OBLIGOR STILL BE HELD LIABLE
FOR DAMAGES?
ANSWER: IT DEPENDS.
OBLIGATION IS DETERMINATE
GENERAL RULE: THE OBLIGOR OR DEBTOR CANNOT BE HELD LIABLE FOR DAMAGES PROVIDED
THERE IS NO DELAY OR FAULT ON THE PART OF OBLIGOR.
REASON: DESTROYED BY FORTUITOUS EVENT

• OBLIGATION IS INDETERMINATE
• DEBTOR/OBLIGOR CAN STILL BE LIABLE FOR DAMAGES
REASON: GENUS NUMQUAM PERUIT
(GENERIC THING CAN NEVER PERISH)
 QUESTION:

WHAT ARE THE REMEDIES

WHICH ARE
AVAILABLE TO THE CREDITOR
IN ORDER TO PROTECT HIS
RIGHTS AGAINST THE DEBTOR?
ANSWER: REMEDIES AVAILABLE TO CREDITORS FOR
THE SATISFACTION OF THEIR CLAIMS

1. EXACT FULFILLMENT OF THE OBLIGATION BY SPECIFIC OR SUBSTITUTE

PERFORMANCE WITH A RIGHT TO DAMAGES IN EITHER CASE (ART 1191);
2. RECISSION WITH DAMAGES (ART. 1191);
3. ACCION SUBROGATORIA – TO BE SUBROGATED TO ALL THE RIGHTS AND
ACTIONS OF THE DEBTOR SAVE THOSE WHICH ARE INHERENT IN HIS
PERSON.
4. ACCION PAULIANA – ASKING THE COURT TO RESCIND OR TO IMPUGN ALL
THE ACTS WHICH THE DEBTOR MAY HAVE DONE TO DEFRAUD THE
CREDITORS (ARTS. 1380-1389)
 ACCION SUBROGATORIA

• REQUISITES:
• A. THE DEBTOR TO WHOM THE RIGHT OF ACTION PROPERLY PERTAINS MUST BE
INDEBTED TO THE CREDITOR;
• B. THE CREDITOR MUST BE PREJUDICED BY THE INACTION OR FAILURE OF THE DEBTOR
TO PROCEED AGAINST THE THIRD PERSON;
• C. THE CREDITOR MUST HAVE PURSUED FIRST OR EXHAUSTED ALL THE PROPERTIES OF
THE DEBTOR WHICH ARE NOT EXEMPT FROM EXECUTION;
• D. THE DEBTOR'S ASSETS ARE INSUFFICIENT TO SATISFY HIS CLAIMS; AND

• E. THE RIGHT OF ACCOUNT IS NOT PURELY PERSONAL

ACCION PAULIANA
• • REQUISITES:
• A. THERE IS A CREDIT IN FAVOR OF PLAINTIFF;

• B. THE DEBTOR HAS PERFORMED AN ACT SUBSEQUENT TO THE

CONTRACT, GIVING ADVANTAGE TO OTHER PERSONS;
• C. THE CREDITOR IS PREJUDICED BY THE DEBTOR'S ACT WHICH ARE IN
FAVOR OF 3RD PARTIES AND
• RESCISSION WILL BENEFIT THE CREDITOR;

• D. THE CREDITOR HAS NO OTHER LEGAL REMEDY; AND,

• E. THE DEBTOR'S ACTS ARE FRAUDULENT.

TRANSMISSIBILITY OF RIGHTS (ART 1178)

GENERAL RULE: ALL RIGHTS

ACQUIRED IN VIRTUE OF AN
OBLIGATION ARE
TRANSMISSIBLE.
EXCEPTIONS:
1. LAW PROHIBITS THE TRANSMISSION OF
THE RIGHT
2. STIPULATION OF PARTIES
3. RIGHT IS BY NATURE NOT TRANSMISSIBLE
EXAMPLE: SCHOLARSHIP GRANT, LOVE,

KINDS OF
OBLIGATIONS
 SEE ARTS. 1179 - 1230
As to Sanction
1. CIVIL OR PERFECT OBLIGATION . IT IS AN OBLIGATION WHOSE
SANCTION IS LAW.

2. NATURAL OBLIGATION IS ONE ENFORCEABLE BY LAW BUT

NEVERTHELESS BINDING ON THE OBLIGOR BY DICTATE OF
HIS CONSCIENCE AND THE BASIC POSTULATES OF NATURAL
LAW, JUSTICE AND EQUITY.

3. MORAL OBLIGATION IS A DUTY IMPOSED BY ETHICALOR

RELIGIOUS BELIEF.
AS TO SEQUENCE OF PERFORMANCE
1. PRIMARY OBLIGATION. THE PRINCIPAL OBJECT OF THE
CONTRACT.

2. SECONDARY OBLIGATION . ONE WHICH IS CONTRACTED

AND IS TO BE PERFORMED IN CASE THE PRIMARY
OBLIGATION CANNOT BE PERFORMED.

AS TO OBJECT
•PRINCIPAL OBLIGATION. ONE WHICH ARISES FROM
THE PRINCIPAL OBJECT OF THE ENGAGEMENT OF
THE CONTRACTING PARTIES.
• (EX. CONTRACT TO SELL, DEED OF SALE, LOAN)
•ACCESSORY OBLIGATION . ONE WHICH DEPENDS
UPON OR PERIPHERAL OR COLLATERAL TO THE
PRINCIPAL.
• (EX. INTEREST)
KINDS OF OBLIGATIONS UNDER THE
CIVIL CODE

•PURE AND CONDITIONAL OBLIGATION.

•OBLIGATION WITH A PERIOD
•ALTERNATIVE OBLIGATION
•JOINT AND SOLIDARY OBLIGATION
•DIVISIBLE AND INDIVISIBLE OBLIGATION
•OBLIGATION WITH A PENAL CLAUSE

PURE OBLIGATION

•EVERY OBLIGATION WHOSE PERFORMANCE

DOES NOT DEPEND UPON A FUTURE OR
UNCERTAIN EVENT, OR A PAST EVENT
UNKNOWN TO THE PARTIES, IS DEMANDABLE
AT ONCE AND IS CALLED A PURE OBLIGATION
CONDITIONAL OBLIGATION

• CONDITIONAL OBLIGATION IS ONE THE

FULFILLMENT OF WHICH IS DEPENDENT UPON
THE HAPPENING OF AN EVENT.

• THE CONDITION MAY BE;

• SUSPENSIVE OR CONDITION PRECEDENT – WHEREIN THE
HAPPENING OF THE CONDITION GIVES RISE TO THE
OBLIGATION. THE OBLIGATION IS NOT TO TAKE EFFECT
UNTIL THE EVENT HAPPENS, IT IS A SUSPENSIVE
CONDITION.

• (EX. I WILL GIVE YOU P30, 000 IF YOU GRADUATE FROM

COLLEGE)
RESOLUTORY CONDITION OR CONDITION SUBSEQUENT

•– WHEREIN THE HAPPENING OF THE CONDITION

EXTINGUISHES
THE OBLIGATION, OBLIGATION WITH RESOLUTORY
CONDITION TAKE EFFECT AT ONCE, BUT TERMINATE
UPON THE HAPPENING OF THE EVENT. (EX. I WILL GIVE
YOU P1, 000 PER MONTH UNTIL YOUR
GRADUATION)
• POTESTATIVE – WHEREIN THE CONDITION DEPENDS UPON
• THE WILL OF THE DEBTOR. ( EX. I WILL PAY MY DEBT
WHENEVER I LIKE. INVALID CONDITION, ART. 1182)

• CASUAL – WHEREIN THE CONDITION DEPENDS UPON

CHANCE, OR ON THE WILL OF THE THIRD PERSON (EX. I
WILL GIVE YOU P20, 000 IF MANNY PACQUIAO WINS HIS
NEXT FIGHT)
• IMPOSSIBLE CONDITIONS – THOSE CONTRARY TO GOOD
• CUSTOMS OR PUBLIC POLICY AND THOSE PROHIBITED BY
LAW,

• SHALL ANNUL THE OBLIGATION WHICH DEPENDS UPON

THEM.
(EX. I WILL GIVE YOU P100, 000 IF YOU KILL MY EX WIFE)
OBLIGATIONS WITH A PERIOD OR
TERM
• OBLIGATIONS FOR WHOSEFULFILLMENT A DAY
 CERTAIN HAS BEEN FIXED IS CALLED AN OBLIGATION
WITH A PERIOD OR TERM AND IS DEMANDABLE ONLY
WHEN THAT DAY COMES.
• IN OBLIGATION WITH A PERIOD, THE GENERAL RULE IS
THAT IT IS PRESUMED THAT THE PERIOD HAS
BEEN ESTABLISHED FOR THE BENEFIT OF BOTH
CREDITOR AND DEBTOR (SEE ARTS 1193, 1196)

KINDS:

• 1. RESOLUTORY ( IN DIEM ) – DEMANDABLE AT ONCE BUT

TERMINATES UPON
 ARRIVAL OF THE DAY CERTAIN. (EX. . (EX. I WILL GIVE YOU P1, 000
PER MONTH UNTIL DECEMBER 25, 2022)
• • DAY CERTAIN – THAT WHICH MUST NECESSARILY COME,
ALTHOUGH IT MAY NOT BE KNOWN WHEN.
• 2. SUSPENSIVE ( EX DIE ) –OBLIGATION BECOMES DEMANDABLE ON
THE DAY STIPULATED.
• (EX. I WILL GIVE YOU P30, 000 ON YOUR COLLEGE GRADUATION)
IN THE FOLLOWING INSTANCES, THE COURT
MAY FIX THE PERIOD

•IF THE OBLIGATION DOES NOT FIX A PERIOD BUT

 FROM ITS NATURE AND CIRCUMSTANCES IT CAN BE
INFERRED THAT A PERIOD WAS INTENDED
•WHEN IT DEPENDS ON THE WILL OF THE DEBTOR
•WHEN THE DEBTOR BINDS HIMSELF TO PAY WHEN
HIS MEANS WILL PERMIT HIM TO DO SO.
Alternative Obligation
• AN ALTERNATIVE OBLIGATION IS ONE WHERE
OUT OF TWO OR MORE PRESTATIONS WHICH
MAY BE GIVEN OR PERFORMED, ONLY ONE IS
DUE AND THE COMPLETE PERFORMANCE OF
ONE OF THEM EXTINGUISHES THE OBLIGATION.
 • THE OBLIGEE OR CREDITOR CANNOT BE
COMPELLED TO RECEIVE PART OF ONE AND
PART OF THE OTHER UNDERTAKING OR
PRESTATION (ARTICLE 1199, CIVIL CODE)
As a general rule, the right to choose the alternative belongs to the debtor.
However, there are four limitations to this right of choice of alternative by
the debtor.

•WHEN THE RIGHT OF CHOICE OF THE ALTERNATIVE IS EXPRESSLY

•GRANTED TO THE CREDITOR BY MUTUAL AGREEMENT OF THE
•PARTIES (ART. 1200, CIVIL CODE)
•THE DEBTOR HAS NO RIGHT TO CHOOSE THOSE PRESTATIONS
•WHICH ARE IMPOSSIBLE, UNLAWFUL OR WHICH COULD NOT HAVE
•BEEN THE OBJECT OF THE OBLIGATION (ART. 1200, CIVIL CODE)
•THE CHOICE CANNOT PRODUCE ANY LEGAL EFFECT UNTIL IT
HAS BEEN COMMUNICATED TO THE OTHER PARTY (ART. 1200,
CIVIL CODE)

THE DEBTOR LOSES THE RIGHT OF CHOICE AMONG THE

PRESTATIONS WHEREBY HE IS ALTERNATIVELY BOUND WHEN
ONLY ONE ALTERNATIVE IS LEFT THAT IS PRACTICABLE OF
PERFORMANCE.
EFFECT OF LOSS OF OBJECTS OF
 ALTERNATIVE OBLIGATIONS
• 1. IF THE RIGHT OF CHOICE BELONGS TO THE DEBTOR
• • IF THROUGH A FORTUITOUS EVENT ALL WERE LOST, DEBTOR
CANNOT BE HELD LIABLE FOR DAMAGES

• • IF 1 OR MORE BUT NOT ALL OF THE THINGS ARE LOST OR ONE

OR
SOME BUT NOT ALL OF THE PRESTATIONS CANNOT BE PERFORMED
DUE
TO FORTUITOUS EVENT OR FAULT OF THE DEBTOR, CREDITOR
CANNOT
HOLD THE DEBTOR LIABLE FOR DAMAGES BECAUSE THE
DEBTORCAN STILL COMPLY WITH HIS OBLIGATION
• • IF ALL THINGS, EXCEPT ONE, WERE LOST, THE DEBTOR MUST
COMPLY BY PERFORMING THAT WHICH REMAIN

• • IF ALL WERE LOST BY FAULT OF THE DEBTOR THE LATER IS

LIABLE FOR
• 2. IF RIGHT OF CHOICE BELONGS TO THE CREDITOR

• • IF 1 OF THE THINGS IS LOST THROUGH A FORTUITOUS

EVENT, THE
DEBTOR SHALL PERFORM THE OBLIGATION BY
DELIVERING THAT
WHICH THE CREDITOR SHOULD CHOOSE FROM AMONG
THE REMAINDER OR THAT WHICH REMAINS IF ONLY 1
SUBSISTS
• • IF THE LOSS OF 1 OF THE THINGS OCCURS THROUGH THE
FAULT OF THE DEBTOR, THE CREDITOR MAY CLAIM ANY
OF THOSE
SUBSISTING OR THE PRICE OF THAT WHICH, THROUGH
THE FAULT OF THE FORMER, HAS DISAPPEARED WITH A
RIGHT TO DAMAGES
• • IF ALL THE THINGS ARE LOST THROUGH THE FAULT OF
THE
DEBTOR, THE CHOICE BY THE CREDITOR SHALL FALL

FACULTATIVE OBLIGATION
•WHEN ONLY ONE PRESTATION HAS BEEN HAS BEEN AGREED UPON, BUT THE
OBLIGOR MAY RENDER ANOTHER IN SUBSTITUTION, THE
• OBLIGATION IS FACULTATIVE (ARTICLE 1206, CIVILCODE)
 1. ONLY ONE THING IS DUE BUT A SUBSTITUTE MAY BE GIVEN TO RENDER
PAYMENT/FULFILLMENT EASY
2. IF PRINCIPAL OBLIGATIONS IS VOID AND THERE IS NO NECESSITY OF GIVING
THESUBSTITUTE;
3. IF IT IS IMPOSSIBLE TO GIVE THE PRINCIPAL, THE SUBSTITUTE DOES NOT HAVE
TO BE
GIVEN; IF IT IS IMPOSSIBLE TO GIVE THE SUBSTITUTE, THE PRINCIPAL MUST
STILL BE GIVEN
4. THE RIGHT OF CHOICE IS GIVEN ONLY TO THE DEBTOR

JOINT AND SOLIDARY OBLIGATION

• A JOINT OBLIGATION MAY BE DEFINED AS AN OBLIGATION WHERE THERE
IS A CONCURRENCE OF SEVERAL CREDITORS OR SEVERAL DEBTORS, BY
VIRTUE WHICH EACH OF THE CREDITORS HAS A RIGHT TO DEMAND,
WHILE EACH OF THE DEBTORS IS BOUND TO RENDER THE
COMPLIANCE WITH HIS PROPORTIONATE PART OF THE PRESTATION
WHICH CONSTITUTE THE OBJECT OF OBLIGATION.
• (EX. A AND B IS JOINTY INDEBTED TO C AND D IN THE AMOUNT OF P10,
000.
• C OR D MAY ONLY DEMAND P5, 000 FROM EITHER A OR B. A AND B MAY
PAY THEIR PROPORTIONATE SHARE AMOUNTING TO P5, 000 EACH TO
EITHER C AND D)

SOLIDARY OBLIGATION

• SOLIDARY OBLIGATION AS ONE IN WHICH EACH

OF THE
DEBTORS IS LIABLE FOR THE ENTIRE
OBLIGATION, AND
 EACH OF THE CREDITORS IS ENTITLED TO
DEMAND THE SATISFACTION OF THE WHOLE
OBLIGATION FROM ANY OR ALL OF THE
DEBTORS.
THE RIGHT OF THE CREDITORS IN
SOLIDARY OBLIGATION

1. THE RIGHT TO DEMAND ENTIRE PAYMENT OF THE DEBT OR THE ENTIRE

COMPLIANCE WITH THE PRESTATION FROM ANY ONE OF THE DEBTORS
2. IF THE DEBT HAS NOT BEEN FULLY COLLECTED FROM ONE DEBTOR,
THE CREDITOR HAS THE RIGHT TO DEMAND PAYMENT FROM THE
REMAINING DEBTORS (ART. 1216, CIVIL CODE)
3. THE RIGHT TO FILE AN ACTION FOR COMPLIANCE WITH THE OBLIGATION
AGAINST ONE , SOME ALL OF THE DEBTORS SIMULTANEOUSLY.
4. THE RIGHT TO RECEIVE PAYMENT OR COMPLIANCE WITH THE ENTIRE
PRESTATION, FROM ONE, SOME OR ALL OF THE DEBTORS
5. THE RIGHT TO DO WHATEVER MAY BE USEFUL TO THE OTHER
CREDITORS.

6. THE RIGHT TO ASSIGN HIS RIGHTS WITH THE CONSENT OF

THE OTHER CREDITORS (ART 1213, CIVIL CODE)

7. THE RIGHT TO MAKE A NOVATION, COMPENSATION,

CONFUSION
OR REMISSION OF THE DEBT.
 OBLIGATIONS OF A SOLIDARY DEBTOR
• 1. TO PAY THE ENTIRE DEBT OR FULFILL THE ENTIRE
PRESTATION WHEN SO DEMANDED BY CREDITORS.
PAYMENT MADE BY ONE OF THE SOLIDARY DEBTORS
EXTINGUISHES THE OBLIGATION. IF TWO OR MORE SOLIDARY
DEBTORS
OFFER TO PAY, THE CREDITOR MAY CHOOSE WHICH OFFER
TO ACCEPT. (ART. 1217, CIVIL CODE)
• 2. TO PAY HIS CORRESPONDING SHARE IN THE DEBT IN CASE
ONE OF THE SOLIDARY DEBTORS MADE FULL PAYMENT OF
THE OBLIGATION, WITH THE INTEREST FOR THE PAYMENT
ALREADY MADE. IF PAYMENT IS MADE BEFORE THE DEBT IS
DUE, NO INTEREST FOR THE INTERVENING PERIOD MAY BE
DEMANDED. (ART. 1217, CIVIL CODE)
3. TO PAY FOR THE SHARE OF THE INSOLVENT CO-DEBTOR IN
PROPORTION TO THE DEBT OF EACH WHEN ONE OF THE
SOLIDARY DEBTORS CANNOT, BECAUSE OF HIS INSOLVENCY,
REIMBURSE HIS SHARE TO THE DEBTOR PAYING THE
OBLIGATION (ART. 1217 3RD PAR. CIVIL CODE)
• 4. IF THE SOLIDARY DEBTOR MAKES PAYMENT AFTER THE
OBLIGATION HAS PRESCRIBED OR BECOME ILLEGAL, HE
LOSSES THE RIGHT TO REIMBURSEMENT FROM HIS CO
DEBTORS (ART. 1218, CIVIL CODE)
 DIVISIBLE AND INDIVISIBLE
OBLIGATION
• AN OBLIGATION TO GIVE DEFINITE THINGS AND THOSE
WHICH ARE NOT SUSCEPTIBLE OF PARTIAL PERFORMANCE
IS DEEMED AN INDIVISIBLE OBLIGATION (ART. 1225, CIVIL
CODE)
• WHEN THE OBLIGATION GIVES RISE FOR ITS OBJECT THE
EXECUTION OF CERTAIN NUMBER OF DAYS WORK, THE
ACCOMPLISHMENT OF WORK BY METRICAL UNITS, OR
ANALOGOUS THINGS WHICH BY THEIR NATURE ARE
SUSCEPTIBLE OF PARTIAL PERFORMANCE, SUCH
OBLIGATION IS CALLED DIVISIBLE OBLIGATION.
• A DIVISIBLE OBLIGATION IS ONE THE OBJECT OF WHICH, IN ITS
 DELIVERY OR PERFORMANCE, IS CAPABLE OF PARTIAL
FULFILLMENT. FOR EXAMPLE, A AGREED TO PAY B PHP4,000 IN TWO
EQUAL MONTHLY INSTALLMENTS FOR HIS DEBT. HERE, THE
OBLIGATION OF A ISDIVISIBLEBECAUSE IT IS CAPABLE OF PARTIAL
PERFORMANCE.
• THEREARE THREEKINDSOF DIVISION[1]:
• A) QUALITATIVE OR ONE THAT IS BASED ON QUALITY, E.G. A AND B
AGREED TO DIVIDE THEIR INHERITANCE WHERE AGETS THE HOUSE
AND LOT, AND B GETSA CAR AND PHP1,000,000;
• B) QUANTITATIVE OR ONE THAT IS BASED ON QUANTITY, E.G. A AND B
AGREED TO DIVIDE 2 PARCELS OF LAND WHICH ARE INHERITED FROM
THEIRPARENTS.EACH GOT A PARCEL OF LAND; AND
• C) IDEAL OR INTELLECTUAL DIVISION OR ONE WHICH EXISTS ONLY IN
THE MINDS OF THE PARTIES, E.G. C AND D ARE CO-OWNERS OF A
HOUSE. THEY CANNOT DIVIDE THE HOUSE PHYSICALLY BUT THEIR
ONE-HALF SHARESIN THE HOUSE ARE ONLY SEPARATEDMENTALLY.
 OBLIGATIONS WITH A PENAL CLAUSE (SEE
ARTS. 1226 – 1230)
• WITH PENAL CLAUSE – ONE TO WHICH AN ACCESSORY UNDERTAKING IS ATTACHED FOR
THE PURPOSE OF INSURING ITS PERFORMANCE BY VIRTUE OF WHICH THE OBLIGOR IS
BOUND TO PAY A STIPULATED INDEMNITY OR PERFORM A STIPULATED PRESTATION IN
CASE OF BREACH.
• CHARACTERISTICS OF PENAL CLAUSES:
• 1. SUBSIDIARY - AS A GENERAL RULE, ONLY PENALTY CAN BE DEMANDED, PRINCIPAL
CANNOT BE DEMANDED,
• EXCEPT: PENALTY IS JOINT OR CUMULATIVE
• 2. EXCLUSIVE - TAKES PLACE OF DAMAGE, DAMAGE CAN ONLY BE DEMANDED IN THE FF.
CASES:
• A. STIPULATION – GRANTING RIGHT
• B. REFUSAL TO PAY PENALTY
• C. WITH DOLO ( NOT OF CREDITOR )
 •MODES OF EXTINGUISHING
OBLIGATION CAUSES OF EXTINGUISMENT
(P LC N- PARF)
2 3

(ART. 1231)
1. PAYMENT OR PERFORMANCE

2. LOSS OF THE THING DUE

3. CONDONATION OR REMISSION OF DEBT

4. CONFUSION OR MERGER OF THE RIGHTS OF THE CREDITOR AND DEBTOR

5. COMPENSATION

6. NOVATION

7. ANNULMENT

8. RESCISSION
9. FULFILLMENT OF A RESOLUTORY CONDITION

10. PRESCRIPTION

CAUSES OF EXTINGUISHMENT

1.PAYMENT OR PERFORMANCE
- DELIVERY OF MONEY

- PERFORMACE OF OBLIGATION

CAUSES OF EXTINGUISHMENT
1.PAYMENT OR PERFORMANCE
- DELIVERY OF MONEY

- PERFORMACE OF OBLIGATION

HOW PAYMENT MUST BE MADE?

1.DELIVERY OF THE THING OR RENDITION OF SERVICE

KEY POINTS TO REMEMBER:

A. DEBTOR CANNOT COMPEL THE CREDITOR TO ACCEPT AN ACT (IN
OBLIGATIONS TO DO OR NOT TO DO) OR THING DIFFERENT FROM AGREED UPON
BY PARTIES.

HOW PAYMENT MUST BE MADE?

1.DELIVERY OF THE THING OR RENDITION OF SERVICE

KEY POINTS TO REMEMBER:

B. CREDITOR CANNOT DEMAND A THING OF SUPERIOR QUALITY NOR THE
DEBTOR DEMAND A THING OF INFERIOR QUALITY.

- IN OBLIGATIONS TO GIVE A GENERIC THING, QUALITY AND

CIRCUMSTANCES WERE NOT
STATED,
 HOW PAYMENT MUST BE MADE?

C. IF OBLIGATION IS A MONETARY OBLIGATION

- PAYMENT MUST BE IN LEGAL TENDER

HOW PAYMENT MUST BE MADE?

2. PAYMENT OR PERFORMACE MUST BE COMPLETE.

EXCEPTIONS: IN THE FF. CASES, OBLIGATION IS DEEMED FULLY COMPLIED

A. SUBSTANTIAL PERFORMACE OF OBLIGATION IN GOOD FAITH

B. ACCEPTANCE OF PERFORMANCE/PAYMENT , WITHOUT OBJECTION, KNOWING

ITS
INCOMPLETENESS/IRREGULARITY

PARTIAL PAYMENTS

GEN. RULE: CREDITOR CANNOT BE COMPELLED TO RECEIVE AND DEBTOR

CANNOT BE COMPELLED TO MAKE PARTIAL PAYMENT.

EXCEPTIONS:

A. AGREEMENT
B. DEBT IS IN PART LIQUIDATED AND UNLIQUIDATED

WHO MUST MAKE THE

PAYMENT?
PAYMENT MUST BE MADE BY THE DEBTOR
WHO MUST POSSESS THE FOLLOWING:
1. FREE DISPOSAL OF THE
THING DUE
2. CAPACITY TO ALIENATE THE
THING
QUESTION:
MAY A THIRD PERSON COMPEL
THE
CREDITOR TO ACCEPT
PAYMENT OR PERFORMACE OF
AN OBLIGATION?
ANSWER: NO.
• EXCEPTIONS:

1. MADE BY A THIRD PERSON WHO HAS AN INTEREST IN THE FULFILLMENT

OF THE OBLIGATION
E.G: GUARANTOR/ CO-DEBTOR

2. THERE IS STIPULATION TO THE CONTRARY

 PAYMENT OF PERFORMANCE

QUESTION: IF A THIRD PERSON

PAYS
AN OBLIGATION, WHAT ARE THE
RIGHTS WHICH ARE AVAILABLE
TO HIM?
ANSWER:

RIGHTS OF THIRD PERSON WHO MAKES THE PAYMENT

1. WITH KNOWLEDGE/CONSENT OF DEBTOR

❖REIMBURSEMENT

❖SUBROGATED IN THE RIGHTS OF CREDITOR

2. W/OUT KNOWLEDGE/AGAINST THE WILL OF

DEBTOR
• RECOVER: IF PAYMENT HAS BEEN BENEFECIAL TO THE DEBTOR

TO WHOM PAYMENT BE MADE:

1. CREDITOR (PERSON IN WHOSE FAVOR

THE OBLIGATION HAS BEEN
CONSTITUTED)
2. SUCCESSOR’S INTEREST SUCH AS HEIRS
OR ASSIGNS
3. ANY PERSON AUTHORIZED TO RECEIVE
PAYMENTS
 GEN. RULE: PAYMENT TO AN
UNAUTHORIZED
PERSON IS NOT VALID

EXCEPTIONS :

1. PAYMENT HAS REDOUNDED TO THE BENEFIT OF CREDITOR

2. PAYMENT IS MADE IN GOOD FAITH TO A PERSON IN POSSESSION OF THE

CREDIT

WHERE PAYMENT MUST BE MADE?

1. PLACE DESIGNATED IN THE STIPULATION

2. NO STIPULATION:

A.DETERMINATE THING (OBLIGATION TO GIVE)

- PLACE OF THE THING AT THE TIME OF CONSTITUTION OF OBLIGATION.

B. GENERIC THING/ OBLIGATION TO DO

- DOMICILE OF DEBTOR

SPECIAL FORMS OF PAYMENT (DAPAT)

1. DATION IN PAYMENT
2. APPLICATION OF PAYMENT
3. PAYMENT BY CESSION
4. TENDER OF PAYMENT AND
CONSIGNATION
SPECIAL FORMS OF PAYMENT (DAPAT)

1. DATION IN PAYMENT/DACION EN
PAGO
-A SPECIAL FORM OF PAYMENT WHERE
THE OWNERSHIP OF PROPERTY IS
TRANSFERRED TO HIS CREDITOR TO PAY
A DEBT IN MONEY.
SPECIAL FORMS OF PAYMENT (DAPAT)

1. DATION IN PAYMENT/DACION EN PAGO

EXAMPLE: MR. S OWES MR. T P5M. ON DUE DATE, S

PROPOSES TO T TO ACCEPT A HOUSE AND LOT AS
PAYMENT OF HIS DEBT. T AGREED TO D’S PROPOSAL
AND ACCEPTS THE HOUSE/LOT.
SPECIAL FORMS OF PAYMENT (DAPAT)

2.APPLICATION OF PAYMENT
- DESIGNATION OF THE DEBT TO WHICH
PAYMENT
SHALL BE APPLIED WHEN THE DEBTOR OWES
SEVERAL DEBTS IN FAVOR OF THE SAME
CREDITOR.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF APPLICATION OF
PAYMENT:

1. TWO OR MORE DEBTS

2. DEBTS MUST OF THE SAME KIND
3. DEBTS OWED BY THE SAME CREDITOR
& DEBTOR
4. ALL DEBTS ARE DUE
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF APPLICATION OF PAYMENT:
4. ALL DEBTS ARE DUE
EXCEPTIONS:
1. STIPULATION TO APPLY TO A DEBT NOT YET DUE
2. APPLICATION MADE BY PERSON IN WHOSE FAVOR
THE TERM IS CONSTITUTED
3. PAYMENT IS NOT ENOUGH TO EXTINGUISH ALL
DEBTS
APPLICATION OF PAYMENT
KEY POINTS:

1. DEBTOR IS GIVEN PREFERENTIAL RIGHT TO DESIGNATE DEBT TO BE PAID.

2. IF HE DOES NOT MAKE DESIGNATION, CREDITOR MAY EXERCISE THE SAME.

3. NEITHER DEBTOR NOR CREDITOR MAKES DESIGNATION, THEN PAYMENT BY

OPERATION OF LAW WILL APPLY.
A. PAYMENT APPLIED TO ONEROUS DEBTS.
 B. DEBTS OF THE SAME NATURE, APPLIED PAYMENTS
PROPORTIONATELY.

SPECIAL FORMS OF PAYMENT (DAPAT)

3. PAYMENT BY CESSION
- ABANDONMENT OR ASSIGNMENT BY
THE
DEBTOR OF ALL HIS PROPERTY IN FAVOR
OF HIS
CREDITORS, SO THE LATTER MAY SELL
THEM AND RECOVER THEIR CLAIMS OUT
OF THE PROCEEDS.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF PAYMENT BY CESSION
1. TWO OR MORE CREDITORS
2. DEBTOR IS INSOLVENT
3. DEBTOR ABANDONS ALL HIS PROPERTIES
EXCEPT THOSE WHICH ARE EXEMPT
FROM EXECUTION
4. CREDITORS ACCEPT ABANDONMENT
DIFFERENCE BETWEEN DACION EN PAGO AND

DATION IN CESSION IN
PAYMENT PAYMENT
One creditor Plurality of creditors
Not necessarily in Debtor must b partially
state of financial or relatively insolvent
difficulty
Thing delivered Universality of
is considered as property
equivalent of of debtor is what is
performance ceded
Payment extinguishes Merely releases debtor
obligation to the extent for net proceeds of
of the value of the things ceded of,
thing delivered as assigned, unless there
agreed upon, proved or is a contrary intention
implied from the
conduct of the creditor
PAYMENT BY CESSION
 SPECIAL FORMS OF PAYMENT (DAPAT)
4. TENDER OF PAYMENT
- CONSISTS IN MANIFESTATION MADE BY THE
DEBTOR TO THE CREDITOR OF HIS DECISION TO
COMPLY IMMEDIATELY WITH HIS OBLIGATION.
CONSIGNATION
- ACT OF DEPOSITING THE SUM OR THING DUE
WITH THE JUDICIAL AUTHORITIES
 SPECIAL FORMS OF PAYMENT (DAPAT)
4. TENDER OF PAYMENT & CONSIGNATION
EXAMPLE: D BORROWED P5M FROM C. ON DUE
DATE, D TENDERED PAYMENT IN P100 BILLS
TOTALLING 5M. C REFUSED TO ACCEPT
PAYMENT.

HERE: PAYMENT TENDERED BY D WAS LEGAL

TENDER,
HENCE C WAS NOT JUSTIFIED IN REFUSING TO
ACCEPT IT.
SPECIAL FORMS OF PAYMENT (DAPAT)
REQUISITES OF CONSIGNATION
1. DEBT IS DUE.
2. VALID TENDER OF PAYMENT
3. CREDITOR REFUSES W/OUT CAUSE TO ACCEPT PAYMENT
4. NOTICE OF CONSIGNATION
5. THING/AMOUNT DUE PLACED IS DEPOSITED W/ JUDICIAL
AUTHORITIES
6. AFTER CONSIGNATION, NOTICE TO PERSONS INTERESTED
IN THE FULFILLMENT OF OBLIGATION.

SPECIAL FORMS OF PAYMENT (DAPAT)

EFFECTS OF CONSIGNATION:
EXTINGUISHES THE OBLIGATION
IF CREDITOR ACCEPTED
CONSIGNATION OR DECLARATION
FROM JUDGE THAT
CONSIGNATION HAS BEEN PROPERLY
MADE
SPECIAL FORMS OF PAYMENT (DAPAT)

WHAT ARE THE EXCEPTIONS TO

THE RULE THAT BEFORE
CONSIGNATION SHALL
PRODUCE THE EFFECTS OF
PAYMENT, IT IS ESSENTIAL
THAT THERE MUST BE A
PREVIOUS TENDER OF
PAYMENT?
ANSWER:
1. CREDITOR IS ABSENT/UNKNOWN/DOES NOT APPEAR AT THE PLACE OF
PAYMENT

2. INCAPACITATED

3. W/OUT JUST CAUSE, REFUSES TO GIVE RECEIPT

4. TWO OR MORE PERSONS CLAIM THE RIGHT TO COLLECT

5. TITLE OF THE OBLIGATION HAS BEEN LOST

CAUSES OF EXTINGUISHMENT:
LOSS OF THE THING DUE

-THAT THE THING WHICH CONSTITUTES THE

OBJECT
OF THE OBLIGATION PERISHES,
-OR GOES OUT OF COMMERCE OF MAN
-OR DISAPPEARS IN SUCH A WAY THAT ITS
EXISTENCE
IS UNKNOWN OR IT CANNOT BE RECOVERED
CAUSES OF EXTINGUISHMENT:
REQUISITES OF LOSS OF THE THING DUE

1. THING WHICH IS LOST IS DETERMINATE

2. THING IS LOST W/OUT ANY FAULT OF THE
DEBTOR
3. THING IS LOST BEFORE THE DEBTOR
INCURRED DELAY
CAUSES OF EXTINGUISHMENT:
LOSS OF THE THING DUE
EXCEPTIONS:
1. LIABLE FOR FORTUITOUS EVENTS
2. ASSUMPTION OF RISK
3. PARTLY DUE TO THE FAULT OF THE DEBTOR
4. LOSS OCCURS AFTER DEBTOR INCURRED DELAY
5. DEBTOR PROMISES TO DELIVER TO 2 MOR MORE PERSONS
6. OBLIGATION IS GENERIC

CAUSES OF EXTINGUISHMENT:
REMISSION

-GRATUITOUS ABANDONMENT BY
THE
CREDITOR OF HIS RIGHT
-FORGIVENESS OF AN
INDEBTEDNESS
CAUSES OF EXTINGUISHMENT:
REQUISITES OF REMISSION

A. GRATUITOUS
B. MUST BE ACCEPTED BY THE
OBLIGOR
C. OBLIGATION MUST BE
DEMANDABLE
CAUSES OF EXTINGUISHMENT:
 KINDS OF REMISSION/CONDONATION

1. AS TO AMOUNT/EXTENT
2. AS TO FORM
3. AS TO CONSTITUTION
CAUSES OF EXTINGUISHMENT:
 KINDS OF REMISSION/CONDONATION
1. AS TO AMOUNT/EXTENT
a)TOTAL – PRINCIPAL & ACCESSORY
OBLIGATION
a) PARTIAL

2. AS TO FORM
a) EXPRESS – ORALLY/WRITING
b) IMPLIED - INFERRED BY CONDUCT

CAUSES OF EXTINGUISHMENT:
KINDS OF REMISSION/CONDONATION
3. AS TO CONSTITUTION
a) INTER VIVOS
- CONSTITUTED BY AGREEMENT OF BOTH PARTIES
(PARTAKES OF A DONATION)
B) MORTIS CAUSA
- CONSTITUTES BY LAST WILL & TESTAMENT
 CAUSES OF EXTINGUISHMENT:
CONFUSION/MERGER

- MEETING IN THE SAME PERSON

OF THE
QUALITIES OF CREDITOR AND
DEBTOR WITH RESPECT TO ONE
AND THE SAME OBLIGATION.
 CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT
OBLIGATION

MERGER EXTINGUISHES ONLY THE

SHARE OF
THE JOINT CREDITOR/DEBTOR IN
WHOM THE CHARACTERS OF
DEBTOR/CREDITOR CONCUR.
CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT
OBLIGATION
EXAMPLE: A, B AND C ARE JOINT
DEBTORS
OF X P9K. THE PROMISSORY NOTE
EVIDENCING THE DEBT IS ASSIGNED
BY X TO Y, Y TO Z AND Z AND A.
CAUSES OF EXTINGUISHMENT:
MERGER IN A JOINT
OBLIGATION

EFFECTS:
-A’S SHARE OF P3K IS EXTINGUISHED BY
THE
MERGER
-B AND C ARE STILL LIABLE ON THE NOTE
WITH A
NOW AS THE CREDITOR FOR 6K
CAUSES OF EXTINGUISHMENT:
MERGER IN A SOLIDARY
OBLIGATION
MERGER IN ONE OF THE SOLIDARY
DEBTORS/SOLIDARY CREDITORS
EXTINGUISHED THE WHOLE
OBLIGATION
CAUSES OF EXTINGUISHMENT:
MERGER IN A SOLIDARY OBLIGATION
EXAMPLE:
 A, B AND C ARE SOLIDARY DEBTORS
OF X
FOR P9K. THE PROMISSORY NOTE
EVIDENCING THE DEBT IS ASSIGNED
BY X TO Y, Y TO Z AND Z TO A.
EFFECTS:

- WHOLE OBLIGATION IS EXTINGUISHED BY CONFUSION WITH ALL THE DEBTORS

NOW BEING THE CREDITORS

- A MAY DEMAND REIMBURSEMENT FROM B AND C P3K EACH.

 CAUSES OF EXTINGUISMENT:

COMPENSATION
- MODE OF EXTINGUISHING IN THEIR
CONCURRENT AMOUNT THOSE
OBLIGATIONS OF PERSONS WHO IN
THEIR OWN RIGHT ARE CREDITORS AND
DEBTORS OF EACH OTHER.
 ESSENTIAL REQUISITES OF
COMPENSATION

1. TWO PARTIES , PRINCIPAL CREDITORS AND PRINCIPAL DEBTORS;

2. BOTH DEBT CONSISTS IN MONEY/FUNGIBLE THINGS, SAME KIND & QUALITY

3. BOTH DEBTS ARE DUE

4. LIQUIDATED AND DEMANDABLE DEBTS

5. NO RETENTION/CONTROVERSY COMMENCED BY THIRD PERSON

6. COMPENSATION NOT PROHIBITED BY LAW

 KINDS OF COMPENSATION

a) AS TO CAUSE

1. LEGAL – WHEN IT TAKES EFFECT BY OPERATION OF LAW FROM THE MOMENT

ALL OF THE REQUISITES PRESCRIBED BY LAW ARE PRESENT.

2. VOLUNTARY
3. JUDICIAL
B) AS TO EXTENT

1. TOTAL – DEBTS COMPENSATED ARE EQUAL IN AMOUNT

2. PARTIAL – DEBTS ARE NOT EQUAL

NOVATION
• IS THE SUBROGATION OR CHANGE OF AN OBLIGATION BY ANOTHER,
RESULTING IN ITS EXTINGUISMENT OR MODIFICATION, EITHER BY;
CAUSES OF NOVATION:

1. CHANGING ITS OBJECT OR PRINCIPAL CONDITION

2. SUBSTITUTING ANOTHER IN PLACE OF THE DEBTOR

3. SUBROGATING A THIRD PERSON IN THE RIGHTS OF THE CREDITOR

REQUISITES OF NOVATION

1. PREVIOUS VALID OBLIGATION

2. AGREEMENT BETWEEN THE PARTIES TO
MODIFY OR EXTINGUISH THE
OBLIGATION
3. EXTINGUISHMENT OF OLD OBLIGATION
4. VALIDITY OF NEW OBLIGATION
KINDS OF NOVATION

1. REAL/OBJECTIVE- CHANGE OBJECT,

CAUSE/CONSIDERATION OR PRINCIPAL
CONDITION
2. PERSONAL/SUBJECTIVE
-SUBSTITUTING PERSON OF DEBTOR. -
SUBROGATING 3RD PERSON TO RIGHTS OF
CREDITOR.
KINDS OF NOVATION
2 FORMS OF NOVATION BY SUBSITUTION
OF THE PERSON OF THE DEBTOR :
1. EXPROMISION
- IS EFFECTED W/ CONSENT OF CREDITOR AT
THE
INSTANCE OF THE NEW DEBTOR EVEN
W/OUT
KNOWLEDGE/WILL OF DEBTOR
EXPROMISION
• -SUBJECT TO FULL REIMBURSEMENT AND
SUBROGATION IF MADE W/ CONSENT OF OLD
DEBTOR;
• -IF W/O CONSENT OR AGAINST WILL , ONLY
BENEFICIAL REIMBURSEMENT;
• -IF NEW DEBTOR IS INSOLVENT, NOT
RESPONSIBLE SINCE W/O HIS CONSENT.
 KINDS OF NOVATION

2. DELEGACION
- EFFECTED WITH THE CONSENT OF THE
CREDITOR AT
THE INSTANCE OF THE OLD DEBTOR W/
CONCURRENCE OF THE NEW DEBTOR.
 DELEGACION
• -ALL PARTIES TO CONSENT, FULL REIMBURSEMENT;
• - IF INSOLVENT NEW DEBTOR – NOT RESPONSIBLE
OLD DEBTOR BECAUSE OBLIGATION EXTINGUISHED
BY VALID NOVATION UNLESS: INSOLVENCY
ALREADY EXISTING AND OF PUBLIC KNOWLEDGE
OR KNOW TO HIM AT TIME OF DELEGACION.
 CONTRACTS
CHAPTER ONE:
• THE CIVIL CODE DEFINES A CONTRACT AS “A
MEETING OF MINDS BETWEEN TWO PERSONS
WHEREBY ONE BINDS HIMSELF, WITH RESPECT TO
THE OTHER, TO GIVE SOMETHING OR TO RENDER
SOME SERVICE.”

• FOR THERE TO BE A VALID CONTRACT, THESE THREE

ELEMENTS MUST BE PRESENT:
• 1. CONSENT, • 2. OBJECT, AND
• 3. CAUSE.
• CONSENT – CONSENT MEANS THAT THERE HAS BEEN AN
 OFFER AND AN ACCEPTANCE OF THE CAUSE AND OBJECT
OF THE CONTRACT. THE ACCEPTANCE MUST BE CONVEYED
TO THE PARTY MAKING THE OFFER.
• OBJECT – ALL THINGS WITHIN THE COMMERCE OF MEN AND
SERVICES NOT CONTRARY TO LAW, MORALS, GOOD CUSTOMS,
PUBLIC ORDER AND PUBLIC POLICY MAY BE THE OBJECT OF A
VALID CONTRACT.
• CAUSE – CAUSE IS UNDERSTOOD AS ‘CONSIDERATION’ IN
COMMON LAW JURISDICTIONS. CAUSE HAS BEEN DEFINED
BY THE PHILIPPINE SUPREME COURT AS ‘THE ESSENTIAL
REASON WHICH MOVES THE CONTRACTING PARTIES TO ENTER
INTO THE CONTRACT’.
A contract has three distinct stages: preparation, perfection, and
consummation.

• PREPARATION OR NEGOTIATION BEGINS WHEN THE PROSPECTIVE

CONTRACTING PARTIES MANIFEST THEIR INTEREST IN THE
CONTRACT AND ENDS AT THE MOMENT OF THEIR AGREEMENT.
• PERFECTION OR BIRTH OF THE CONTRACT OCCURS WHEN THEY
AGREE UPON THE ESSENTIAL ELEMENTS THEREOF.
• CONSUMMATION, THE LAST STAGE, OCCURS WHEN THE PARTIES
"FULFILL OR PERFORM THE TERMS AGREED UPON IN THE CONTRACT,
CULMINATING IN THE EXTINGUISHMENT THEREOF

CHARACTERISTICS OF CONTRACT
• 1. AUTONOMY (ART. 1306) – WHERE THERE IS A SENSE OF FREEDOM;
 CONTRACTING PARTIES MAY ESTABLISH CONTRACT AS LONG AS IT IS NOT
CONTRARY TO
• LAW, PUBLIC POLICY, MORALS.

• LIMITATIONS:
• LAW – CONTRACT ENTERED INTO MUST CONFORM TO AN APPLICABLE STATUTE
• POLICE POWER – CONTRACT SHALL NOT CONTRAVENE MORALS, GOOD
CUSTOMS, PUBLIC ORDER OR POLICY

CHARACTERISTICS OF CONTRACT
• 2. CONSENSUALITY (ART. 1315, SENT.1) –
• PERFECTED BY MERE CONSENT
• 3. MUTUALITY (ART. 1308) – THAT CONTRACT IS BINDING TO BOTH PARTIES
• - A CONTRACT WHICH ITS FULFILLMENT OR EXTINGUISHMENT IS DEPENDENT
UPON THE WILL OF ONLY ONE OF THE PARTIES IS VOID.
• - NO PARTY CAN RENOUNCE OR VIOLATE THE LAW OF THE CONTRACT WITHOUT
THE CONSENT OF THE OTHER.

CHARACTERISTICS OF CONTRACT
• 4. OBLIGATORINESS (ART. 1315) – CONTRACT IS
• COMPLIED WITH GOOD FAITH (ART. 1157)
• - PARTIES ARE ALSO BOUND TO ALL THE CONSEQUENCES
• 5. RELATIVITY (ART. 1311) – CONTRACTS TAKE EFFECT ONLY BETWEEN THE
PARTIES, THEIR ASSIGNS AND HEIRS

CLASSIFICATION OF CONTRACTS

• A- ACCORDING TO PERFECTION
• 1-CONSENSUAL
• – PERFECTED BY MERE CONSENT, SUCH AS SALE AND BARTER.
• 2-REAL
• – PERFECTED BY THE DELIVERY OF THE OBJECT OF THE CONTRACT, SUCH AS
PLEDGE, LOAN AND DEPOSIT.
CLASSIFICATION OF CONTRACTS
• B-ACCORDING TO DEGREE OF IMPORTANCE
• 1-PRINCIPAL
• -CAN STAND ALONE, SUCH AS SALE, BARTER, DEPOSIT AND LOAN.
• 2-ACCESSORY
• – ITS EXISTENCE AND VALIDITY IS DEPENDENT UPON ANOTHER CONTRACT, SUCH AS PLEDGE , MORTGAGE
AND GUARANTY.
•

• C- ACCORDING TO NAME
• 1- NOMINATE
• -WITH A SPECIAL NAME, SUCH AS PLEDGE, BARTER AND LEASE.
• 2-INNOMINATE
• -WITHOUT ANY NAME
CLASSES OF INNOMINATE CONTRACTS

• 1.DO UT DES(I GIVE AND YOU GIVE)– IS AN AGREEMENT IN WHICH A WILL GIVE ONE
THING TO B, SO THAT B WILL GIVE ANOTHER THING TO A.
• 2.DO UT FACIAS(I GIVE AND YOU DO)-IS A CONTRACT UNDER WHICH A WILL GIVE
SOMETHING TO B, IN ORDER THAT B MAY DO SOMETHING FOR A.
• 3.FACIO UT DES(I DO AND YOU GIVE)– IS AN AGREEMENT IN WHICH A BINDS
HIMSELF TO DO SOMETHING FOR B, SO THAT B WILL GIVE SOMETHING TO A.
• 4.FACIO UT FACIAS(I DO AND YOU DO)– IS A CONVENTION WHEREBY A IS TO DO
SOMETHING FOR B, SO THAT B WILL RENDER SOME OTHER SERVICE TO A.

CLASSIFICATION OF CONTRACTS
• D-ACCORDING TO CAUSE
• 1- ONEROUS
• -THERE IS AN EXCHANGE OF CONSIDERATION, SUCH SALE, BARTER AND LEASE.
• 2-GRATUITOUS
• -THERE IS NO CONSIDERATION, RECEIVED IN EXCHANGE FOR WHAT HAS BEEN GIVEN, SUCH AS
DONATION, REMISSION AND COMMODATUM.
• E- ACCORDING TO RISK
• 1- COMMUTATIVE
• -WHERE EQUIVALENT VALUES ARE GIVEN BY BOTH PARTIES SUCH AS SALE, BARTER AND LEASE.
• 2-ALEATORY
• -WHERE FULFILLMENT OF THE CONTRACT IS DEPENDENT UPON CHANCE, SUCH AS INSURANCE

CLASSIFICATION OF CONTRACTS
• F-ACCORDING TO NATURE OF OBLIGATION PRODUCED OR NUMBER OF PARTIES OBLIGATED
• 1-UNILATERAL
• -WHERE ONLY ONE OF PARTIES IS OBLIGED TO GIVE TO DO SOMETHING SUCH AS COMMODATUM,
GRATUITOUS DEPOSIT AND GRATUITOUS MUTUUM.
• 2-BILATERAL OR SINALAGMATICO.
• -WHERE BOTH PARTIES ARE OBLIGED GIVE OR TO DO SOMETHING, SUCH AS SALE, BARTER AND LEASE.
• G- ACCORDING TO SUBJECT MATTER
• 1-CONTRACTS INVOLVING THINGS, SUCH AS SALE, BARTER
• 2-CONTRACTS INVOLVING RIGHTS OR CREDITS SUCH AS USUFRUCT OR ASSIGNMENT OF CREDIT
• 3-CONTRACT INVOLVING SERVICE, SUCH AS AGENCY, LEASE OF SERVICES AND CONTRACT OF
CARRIAGE.

CLASSIFICATION OF CONTRACTS
• H- ACCORDING TO THE MANNER THAT CONSENT IS GIVEN
1. EXPRESS
• – CONTRACTS WHERE THE CONSENT OF THE PARTIES IS GIVEN EXPRESSLY IN WRITING OR
VERBALLY
• 2-IMPLIED
• – CONTRACTS WHERE THE CONSENT OF THE PARTIES IS NOT GIVEN EXPRESSLY BUT IS
DEDUCIBLE FROM THE CONDUCT OR ACTS OF THE PARTIES (I.E. IMPLIED AGENCY WHEN
THE PRINCIPAL FAILS TO REPUDIATE THE ACTS OF THE PERSON ON HIS BEHALF)
• 3-PRESUMED
• – CONTRACTS WHERE THE CONSENT WAS NOT GIVEN BY THE PARTIES BUT IS PRESUMED
OR PROVIDED BY THE LAW ITSELF, TO PREVENT UNJUST ENRICHMENT ON THE PART OF
ONE PARTY TO THE PREJUDICE OF THE OTHER, SUCH AS QUASI-CONTRACTS.

Chapter Two: REQUISITES

Under Article 1318 of the Civil Code, "[T]here is no contract unless
the following requisites concur:

• (1) CONSENT OF THE CONTRACTING PARTIES;

• (2) OBJECT CERTAIN WHICH IS THE SUBJECT MATTER OF THE
CONTRACT;

• (3) CAUSE OF THE OBLIGATION WHICH IS ESTABLISHED.

CONSENT
• ARTICLE 1319. CONSENT IS MANIFESTED BY THE MEETING OF THE OFFER
AND THE ACCEPTANCE UPON THE THING AND THE CAUSE WHICH ARE TO
CONSTITUTE THE CONTRACT. THE OFFER MUST BE CERTAIN AND
THE ACCEPTANCE ABSOLUTE. A QUALIFIED ACCEPTANCE
CONSTITUTES A COUNTER-OFFER.

OFFER – A PROPOSAL MADE BY ONE PARTY TO ANOTHER TO ENTER INTO A CONTRACT.

• ACCEPTANCE – MANIFESTATION BY THE OFFEREE OF HIS ASSENT TO THE TERMS OF THE
TITLE OFFER.
• WITHOUT IT, NO MEETING OF THE MINDS

OFFER
• ART. 1321. THE PERSON MAKING THE OFFER MAY FIX THE TIME, PLACE, AND
MANNER OF ACCEPTANCE, ALL OF WHICH MUST BE COMPLIED WITH.
• ART. 1322. AN OFFER MADE THROUGH AN AGENT IS ACCEPTED FROM THE TIME
ACCEPTANCE IS COMMUNICATED TO HIM.
• ART. 1323. AN OFFER BECOMES INEFFECTIVE UPON:
• 1) DEATH,
• 2) CIVIL INTERDICTION,
• 3) INSANITY,
• 4) INSOLVENCY OF EITHER PARTY
• BEFORE ACCEPTANCE IS CONVEYED.
• WHEN OFFER BECOMES INEFFECTIVE

• AN OFFER MAY BE WITHDRAWN BEFORE IT IS ACCEPTED. AFTER

ACCEPTANCE,THE CONTRACTIS ALREADYPERFECTED.

• UNDER ARTICLE 1323, EVEN IF THE OFFER IS NOT WITHDRAWN, ITS

ACCEPTANCE WILL NOT PRODUCE A MEETING OF THE MINDS IN CASE
THE OFFER HAS ALREADY BECOME INEFFECTIVE BECAUSE OF THE
DEATH, CIVIL INTERDICTION, INSANITY, OR INSOLVENCY OF EITHER
PARTY BEFORE THE CONVEYANCE OF THE ACCEPTANCE TO THE
OFFEROR.
• ARTICLE 1324. WHEN THE OFFEROR HAS ALLOWED THE OFFEREE A
CERTAIN PERIOD TO ACCEPT, THE OFFER MAY BE WITHDRAWN AT
ANY
TIME BEFORE ACCEPTANCE BY COMMUNICATING SUCH
WITHDRAWAL, EXCEPT WHEN THE OPTION IS FOUNDED UPON A
CONSIDERATION, AS SOMETHING PAID OR PROMISED.

• WHEN ACCEPTANCE OF THE OFFER IS TO BE MADE?

• WHEN THE OFFER FIXES THE TIME OF ACCEPTANCE SHOULD BE MADE WITHIN THAT TIME.

• WITHDRAWAL OF THE OFFER

• THE OFFER MAY BE WITHDRAWN BY THE OFFEROR AT ANY TIME BEFORE ACCEPTANCE,
UNLESS THE OPTION IS FOUNDED A CONSIDERATION.

How offer is withdrawn?

• 1- BY NOTICE GIVEN TO THE OFFEREE, WHICH NOTICE
SHOULD BE RECEIVED BY OFFEREE BEFORE ACCEPTANCE
IS CONVEYED TO THE OFFEROR.
• 2- BY THE EXPIRATION OF THE PERIOD OF THE OFFER.
OPTION CONTRACT.
• AN OPTION CONTRACT IS DEFINED IN THE SECOND PARAGRAPH OF
ARTICLE 1479 OF THE CIVIL CODE:
• ARTICLE 1479. X X X AN ACCEPTED PROMISE TO BUY OR TO SELL A
DETERMINATE THING FOR A PRICE CERTAIN IS BINDING UPON
THE PROMISSOR IF THE PROMISE IS SUPPORTED BY A
CONSIDERATION DISTINCT FROM THE PRICE.
• AS A CONTRACT, IT MUST NECESSARILY HAVE THE ESSENTIAL ELEMENTS
OF SUBJECT MATTER, CONSENT, AND CONSIDERATION.ALTHOUGH AN
OPTION CONTRACT IS DEEMED A PREPARATORY CONTRACT TO THE
PRINCIPAL CONTRACT OF SALE, IT IS SEPARATE AND DISTINCT
THEREFROM,THUS, ITS ESSENTIAL ELEMENTS SHOULD BE
DISTINGUISHED FROM THOSE OF A SALE. (PHILIPPINE NATIONAL OIL COMPANY AND PNOC DOCKYARD
& ENGINEERING CORPORATION, PETITIONERS VS.
KEPPEL PHILIPPINES HOLDINGS, INC. G.R. NO. 202050)

ACCEPTANCE

• ARTICLE 1320.AN ACCEPTANCE MAY BE EXPRESS OR IMPLIED.INLAYMAN’S TERM

• ANG PAGTANGGAPAY MAAARINGIPAHAYAGO IPAHIWATIG.

• DISCUSSION
1.EXPRESS – WHEN IT IS IMPLICITLY MADE IN WRITINGOR VERBALLY
2.IMPLIED – WHEN IT CAN BE DEDUCED FROM THE CONDUCT OF THE PARTY
• EXAMPLES:
1.EXPRESS
• X AGREES TO Y, IN WRITING,THAT THE LATTER WILL PERFORMTHE DELIVERYHIMSELF.
2.IMPLIED
• X AND Y WAS IN AGREEMENT TO DELIVER THE THING DUE TO X, X MODIFIED THE
AGREEMENT THAT THE THING DUE BE DELIVERED TO A, WITHOUT ACCEPTANCE, Y
DELIVERED THE THING DUE TO A.
• EFFECTS OF SILENCE
• SILENCE IS NOT EQUIVALENT TO CONSENT, BUT THERE ARE SPECIFIC LEGAL PROVISIONS
WHICH MAKES SILENCE AMOUNT TO CONSENT.
 PERIOD OF ACCEPTANCE
1. STATED FIXED PERIOD IN THE OFFER
• 2. NO STATED FIXED PERIOD
• A. OFFER IS MADE TO A PERSON PRESENT – ACCEPTANCE MUST BE MADE
IMMEDIATELY
• B. OFFER IS MADE TO A PERSON ABSENT –ACCEPTANCE MAY BE MADE WITHIN
SUCH TIME
• THAT, UNDER NORMAL CIRCUMSTANCES, AN ANSWER CAN BE RECEIVED FROM
HIM
• • NOTE: ACCEPTANCE MAY BE REVOKED BEFORE IT
• COMES TO THE KNOWLEDGE OF THE OFFEROR.
PERSONS WHO CANNOT GIVE CONSENT TO A
CONTRACT:
• 1. MINORS
• 2. INSANE OR DEMENTED PERSONS
• 3. ILLITERATES/ DEAF-MUTES WHO DO NOT KNOW HOW TO
• WRITE
• 4. INTOXICATED AND UNDER HYPNOTIC SPELL
• 5. ART 1331 - PERSON UNDER MISTAKE; MISTAKE MAY DEPRIVE INTELLIGENCE
• 6. ART 1338 - PERSON INDUCED BY FRAUD (DOLOCAUSANTE)
• • NOTE: DOLUS BONUS (USUAL EXAGGERATIONS INTRADE) ARE NOT IN THEMSELVES
FRAUDULENT
RULE ON CONTRACTS ENTERED INTO BY
MINORS

• GENERAL RULE: VOIDABLE

• • EXCEPTIONS:
• A. UPON REACHING AGE OF MAJORITY – THEY RATIFY THE SAME.

• B. THEY WERE ENTERED UNTO BY A GUARDIAN AND THE COURT HAVING JURISDICTION HAD APPROVED

• THE SAME.

• C. THEY WERE CONTRACTS FOR NECESSITIES SUCH AS FOOD, BUT HERE THE PERSONS WHO ARE
BOUND TO

• GIVE THEM SUPPORT SHOULD PAY THEREFORE

• D. MINOR IS ESTOPPED FOR HAVING MISREPRESENTED HIS AGE AND MISLED THE OTHER PARTY.

ART. 1330. A CONTRACT WHERE CONSENT IS GIVEN THROUGH MISTAKE,

VIOLENCE, INTIMIDATION, UNDUE INFLUENCE, OR FRAUD IS VOIDABLE

VICES OF CONSENT:
• A. MISTAKE
• - SHOULD REFER TO MISTAKE OF FACT AND NOT OF LAW.
• REQUISITES: 1. IT MUST BE OF A PAST OR PRESENT FACT
• 2. MISTAKE MUST HAVE INDUCED THE CONSENT

• 3. MISTAKE MUST NOT BE IMPUTABLE TO THE PARTY MISTAKEN, I.E. MISTAKE IS NOT
INADVERTENT AND EXCUSABLE

• 4. MISTAKE MUST BE OF FACT AND NOT OF LAW

B) VIOLENCE
• - REFERS TO PHYSICAL FORCE OR COMPULSION
• - THERE IS VIOLENCE WHEN IN ORDER TO WREST CONSENT, SERIOUS OR
IRRESISTIBLE FORCE IS EMPLOYED - REQUISITES:
• 1. FORCE EMPLOYED IS SERIOUS OR IRRESISTIBLE
• 2. IT IS THE DETERMINING CAUSE OF CONSENT
• 3. IT IS NOT JUSTIFIED
• 4. IT IS SUFFICIENT
C) INTIMIDATION
• - WHEN ONE OF THE CONTRACTING PARTIES IS COMPELLED BY A REASONABLE
AND WELL-GROUNDED FEAR OF AN IMMINENT AND GRAVE EVIL UPON HIS
PERSON OR PROPERTY, OR UPON THE PERSON OR PROPERTY OF HIS
SPOUSE, DESCENDANTS OR ASCENDANTS TO GIVE HIS CONSENT.

- REQUISITES
• 1. IT MUST PRODUCE A REASONABLE AND WELL-GROUNDED FEAR
• 2. FEAR MUST PRODUCE THE CONSENT
• 3. FEAR IS OF IMMINENT AND GRAVE EVIL UPON PERSON AND PROPERTY
4. THREAT MUST BE UNJUST

D) UNDUE INFLUENCE
-WHEN A PERSON TAKES ADVANTAGE OF HIS POWER OVER THE WILL OF ANOTHER,
DEPRIVING THE LATTER OF A REASONABLE FREEDOM OF CHOICE
• - TO DETERMINE WHETHER THE INFLUENCE EXERTED IS UNREASONABLE, THE
FOLLOWING CIRCUMSTANCES SHALL BE CONSIDERED:
• 1. CONFIDENTIAL RELATIONS
• 2. FAMILY RELATIONS
• 3. SPIRITUAL RELATIONS
• 4. OTHER RELATIONS BETWEEN THE PARTIES

E) FRAUD
• - WHEN THROUGH INSIDIOUS WORDS OR MACHINATIONS OF ONE OF THE
CONTRACTING PARTIES, THE OTHER IS INDUCED TO ENTER IN TO A
CONTRACT WHICH, WITHOUT THEM, HE WOULD NOT HAVE AGREE TO.

• REQUISITES:
• 1. THERE MUST BE A MISREPRESENTATION OR CONCEALMENT OF A
FACT
• 2. IT MUST BE SERIOUS
• 3. IT MUST BE EMPLOYED BY ONE OF THE CONTRACTING PARTIES AND
NOT BY A THIRD PERSON
• 4. IT MUST NOT BE EMPLOYED BY BOTH CONTRACTING PARTIES
• 5. IT MUST HAVE INDUCED THE CONSENT OF THE OTHER PARTY
• 6. IT MUST BE MADE IN BAD FAITH, I.E. WITH KNOWLEDGE OF ITS FALSITY
ART. 1345. SIMULATION OF A CONTRACT MAY BE ABSOLUTE OR RELATIVE. THE FORMER
TAKES PLACE WHEN THE PARTIES DO NOT INTEND TO BE BOUND AT ALL; THE LATTER,
WHEN THE PARTIES CONCEAL THEIR TRUE AGREEMENT

• SIMULATION → IS THE DECLARATION OF A FICTITIOUS INTENT MANIFESTED

DELIBERATELY
AND IN ACCORDANCE WITH THE AGREEMENT OF THE PARTIES IN ORDER TO PRODUCE
FOR THE PURPOSE OF DECEIVING OTHERS THE APPEARANCE OF A TRANSATION WHICH
DOES NOT EXIST OR WHICH IS DIFFERENT FROM THEIR TRUE AGREEMENT.
• → REQUISITES:
• 1. A DELIBERATE DECLARATION CONTRARY TO THE WILL OF THE PARTIES
• 2. AGREEMENT OF THE PARTIES TO THE APPARENTLY VALID ACT
• 3. THE PURPOSE IS TO DECEIVE OR TO HIDE FROM THIRD PERSONS ALTHOUGH IT IS
NOT NECESSARY THAT THE PURPOSE BE ILLICIT OR FOR PURPOSES OF FRAUD

• → 2 TYPES:
• A. ABSOLUTE – WHEN THE PARTIES DO NOT INTEND TO BE BOUND
AT ALL
• B. RELATIVE – WHEN THE PARTIES CONCEAL THEIR TRUE
AGREEMENT
•
• EFFECTS OF SIMULATION

• IF SIMULATION IS ABSOLUTE = NO CONTRACT

• IF SIMULATION IS RELATIVE = VALID CONTRACT UNLESS IT
PREJUDICES A THIRD PERSON OR HAS AN ILLICIT PURPOSE
 OBJECT
• REQUISITES:

• 1. WITHIN THE COMMERCE OF MAN - EITHER EXISTING OR IN

POTENCY
• 2. LICIT OR NOT CONTRARY TO LAW, GOOD CUSTOMS

• 3. POSSIBLE

• 4. DETERMINATE AS TO ITS KIND OR DETERMINABLE W/ONEED TO

ENTER INTO A NEW CONTRACT
• 5. TRANSMISSIBLE

THINGS WHICH CANNOT BE THE OBJECT OF

 CONTRACT

• 1. THINGS WHICH ARE OUTSIDE THE COMMERCE OF MEN;

• 2. INTRANSMISSIBLERIGHTS;
• 3. FUTURE INHERITANCE, EXCEPT IN CASES EXPRESSLY AUTHORIZED BY
LAW;
• 4. SERVICES WHICH ARE CONTRARY TO LAW, MORALS, GOOD CUSTOMS,
PUBLIC ORDER OR PUBLIC POLICY;
• 5. IMPOSSIBLE THINGS OR SERVICES;
• 6. OBJECTS WHICH ARE NOT POSSIBLE OF DETERMINATION AS TO THEIR
KIND.

CAUSE
• • IMMEDIATE, DIRECT AND MOST PROXIMATE REASON WHY
PARTIES ENTER INTO CONTRACT.

• • REQUISITES:
• 1. IT MUST EXIST
• 2. IT MUST BE TRUE
• 3. IT MUST BE LICIT
• ART. 1354. ALTHOUGH THE CAUSE IS NOT STATED IN THE
CONTRACT, IT IS PRESUMED THAT IT EXISTS AND IS LAWFUL,
UNLESS THE DEBTOR PROVES THE CONTRARY.
• ART. 1355. EXCEPT IN CASES SPECIFIED BY LAW, LESION OR
INADEQUACY OF CAUSE SHALL NOT INVALIDATE A CONTRACT,
UNLESS THERE HAS BEEN FRAUD, MISTAKE OR UNDUE
INFLUENCE.
• LESION - ANY DAMAGE CAUSED BY THE FACT THAT THE PRICE IS
UNJUST OR INADEQUATE.
• GENERAL RULE: THE MERE FACT THE CAUSE IS UNJUST OR
INADEQUATE DOES NOT INVALIDATE THE CONTRACT.
• EXCEPTION: UNLESS THERE IS FRAUD, MISTAKE OR UNDUE
INFLUENCE.
CHAPTER THREE: FORMS
ART. 1356. CONTRACTS SHALL BE OBLIGATORY, IN WHATEVER FORM THEY
MAY HAVE BEEN ENTERED INTO, PROVIDED ALL THE ESSENTIAL REQUISITES
FOR THEIR VALIDITY ARE PRESENT. HOWEVER, WHEN THE LAW REQUIRES
THAT A CONTRACT BE IN SOME FORM IN ORDER THAT IT MAY BE VALID OR
ENFORCEABLE OR THAT A CONTRACT BE PROVED IN A CERTAIN WAY, THAT
REQUIREMENT IS ABSOLUTE AND INDISPENSIBLE. IN SUCH CASES, THE
RIGHT OF THE PARTIES STATED IN THE FOLLOWING ARTICLES CANNOT BE
EXERCISED.
• GEN. RULE: WHATEVER MAY BE THE FORM IN WHICH THE CONTRACT
MAY HAVE BEEN ENTERED INTO, IT SHALL BE OBLIGATORY PROVIDED
ALL THE ESSENTIAL REQUISITES FOR ITS VALIDITY ARE PRESENT.
EXCEPTIONS:
• 1. WHEN THE LAW REQUIRES THAT THE CONTRACT MUST BE IN A CERTAIN FORM IN ORDER TO BE
VALID. (DONATION, ACCEPTANCE OF REAL PROPERTY, INTEREST IN LOANS)

• 2. WHEN THE LAW REQUIRES THAT THE CONTRACT MUST BE IN A CERTAIN FORM IN ORDER TO BE
ENFORCEABLE.

• 3. LAW REQUIRES CONTRACT TO BE IN SOME FORM FOR CONVENIENCE - CONTRACT IS VALID AND
ENFORCEABLE, NEEDED ONLY TO BIND 3RD PARTIES

• EX: PUBLIC DOCUMENTS NEEDED FOR THE FF:

• I. CONTRACTS W/C OBJECT IS CREATION, TRANSMISSION OR REFORMATION OF REAL RIGHTS OVER

IMMOVABLES

• II. CESSION, REPUDIATION, RENUNCIATION OFHEREDITARY RIGHTS/CPG

• III. POWER TO ADMINISTER PROPERTY FOR ANOTHER

• IV. CESSION OF ACTION OF RIGHTS PROCEEDING FROM AN ACT APPEARING IN A PUBLIC INST.

• V. ALL OTHER DOCS WHERE AMOUNT INVOLVED IS IN EXCESS OF 500 ( MUST BE WRITTEN

• EVEN PRIVATE DOCS )

ART. 1358. THE FOLLOWING MUST APPEAR IN A PUBLIC DOCUMENT

1. ACTS AND CONTRACTS WHICH HAVE FOR THEIR OBJECT THE CREATION, TRANSMISSION,
MODIFICATION
OR EXTINGUISHMENT OF REAL RIGHTS OVER IMMOVABLE PROPERTY; SALES OF REAL PROPERTY OR OF
AN INTEREST THEREIN ARE GOVERNED BY ARTICLES 1403, NO. 2 AND 1405;

2. THE CESSION, REPUDIATION OR RENUNCIATION OF HEREDITARY RIGHTS OR OF THOSE OF THE

CONJUGAL PARTNERSHIP OF GAINS;

3. THE POWER TO ADMINISTER PROPERTY, OR ANY OTHER POWER WHICH HAS FOR ITS OBJECT AN
ACT APPEARING OR WHICH SHOULD APPEAR IN A PUBLIC DOCUMENT, OR SHOULDPREJUDICE A
THIRD PERSON;

4. THE CESSION OF ACTIONS OR RIGHTS PROCEEDING FROM AN ACT APPEARING IN A PUBLIC

DOCUMENT.

• ALL OTHER CONTRACTS WHERE THE AMOUNT INVOLVED EXCEEDS FIVE HUNDRED PESOS MUST
 APPEAR IN WRITING, EVEN A PRIVATE ONE. BUT SALES OF GOODS, CHATTELS OR THINGS IN ACTION
ARE GOVERNED BY ARTICLES 1403, NO. 2 AND 1405

CHAPTER 4 REFORMATION OF
INSTRUMENTS
ART. 1359. WHEN, THERE HAVING BEEN A MEETING OF THE MINDS OF THEPARTIES TO
A
CONTRACT, THEIR TRUE INTENTION IS NOT EXPRESSED IN THE INSTRUMENT
PURPORTING TO EMBODY THE AGREEMENT, BY REASON OF MISTAKE, FRAUD,
INEQUITABLE CONDUCT OR ACCIDENT, ONE OF THE PARTIES MAY ASK FOR THE
REFORMATION OF THE INSTRUMENT TO THE END THAT SUCH TRUE INTENTION MAY BE
EXPRESSED.
REFORMATION OF CONTRACTS – REMEDY TO CONFORM TO REAL INTENTION OF
PARTIES DUE TO MISTAKE,FRAUD, INEQUITABLE CONDUCT, ACCIDENT.
• REQUISITES:
• 1. THERE MUST BE A MEETING OF THE MINDS OF THE CONTRACTING PARTIES
• 2. THEIR TRUE INTENTION IS NOT EXPRESSED IN THE INSTRUMENT
• 3. SUCH FAILURE TO EXPRESS THEIR TRUE INTENTION IS DUE TO MISTAKE, FRAUD,
INEQUITABLE OR ACCIDENT

CAUSES/GROUNDS
ART. 1361. WHEN A MUTUAL MISTAKE OF THE PARTIES CAUSES THE FAILURE OF THE
INSTRUMENT TO DISCLOSE THEIR REAL AGREEMENT, SAID INSTRUMENT MAY BE
REFORMED.
ART. 1362. IF ONE PARTY WAS MISTAKEN AND THE OTHER ACTED FRAUDULENTLY OR
INEQUITABLY IN SUCH A WAY THAT THE INSTRUMENT DOES NOT SHOW THEIR TRUE
INTENTION, THE FORMER MAY ASK FOR THE REFORMATION OF THE INSTRUMENT
• ART. 1363. WHEN ONE PARTY WAS MISTAKEN AND THE OTHER KNEW OR BELIEVED
THAT THE INSTRUMENT DID NOT STATE THEIR REAL AGREEMENT, BUT CONCEALED
THAT FACT FROM THE FORMER, THE INSTRUMENT MAY BE REFORMED
• ART. 1364. WHEN THROUGH THE IGNORANCE, LACK OF SKILL, NEGLIGENCE OR BAD
FAITH ON THE PART OF THE PERSON DRAFTING THE INSTRUMENT OR OF THE
CLERK OR TYPIST, THE INSTRUMENT DOES NOT EXPRESS THE TRUE INTENTION
OF THE PARTIES, THE COURTS MAY ORDER THAT THE INSTRUMENT BE
REFORMED.
 CHAPTER 5 INTERPRETATION OF CONTRACTS

ART. 1370. IF THE TERMS OF A CONTRACT ARE CLEAR AND LEAVE NO

DOUBT UPON THE INTENTION OF THE CONTRACTING PARTIES, THE LITERAL
MEANING OF ITS STIPULATIONS SHALL CONTROL.
IF THE WORDS APPEAR TO BE CONTRARY TO THE EVIDENT INTENTION OF
THE PARTIES, THE LATTER SHALL PREVAIL OVER THE FORMER.

RULE IN INTERPRETATION OF CONTRACTS:

• THE INTENTION OF THE CONTRACTING PARTIES SHOULD ALWAYS
PREVAIL BECAUSE THEIR WILL HAS THE FORCE OF LAW BETWEEN THEM .
KINDS OF DEFECTIVE CONTRACTS
• 1. RESCISSIBLE CONTRACTS

• ▪ THERE IS DAMAGE OR INJURY TO ONE OF THE CONTRACTING PARTIES OR TO THIRD

PERSONS.

• 2. VOIDABLE CONTRACTS

• ▪ THERE IS VITIATION OF CONSENT OR LEGAL INCAPACITY OF ONE OF THE CONTRACTING

PARTIES

• 3. UNENFORCEABLE CONTRACTS

• ▪ THE CONTRACT IS ENTERED INTO IN EXCESS OR WITHOUT ANY AUTHORITY, OR DOES NOT
COMPLY WITH THE STATUTE OF FRAUDS, OR BOTH CONTRACTING PARTIES ARE LEGALLY
INCAPACITATED .

• 4. VOID OR INEXISTENT CONTRACTS

• ▪ ONE OR SOME OF THE ESSENTIAL REQUISITES OF A VALID CONTRACT ARE LACKING

EITHER IN FACT OR IN LAW
 CHAPTER 6 RESCISSIBLE CONTRACTS
ART. 1380. CONTRACTS VALIDLY AGREED UPON MAY BE RESCINDED IN THE CASES
ESTABLISHED BY LAW.
• RESCISSIBLE CONTRACTS – A CONTRACT WHICH IS VALID BECAUSE IT CONTAINS
ALL THE ESSENTIAL REQUISITES PRESCRIBED BY LAW, BUT WHICH IS DEFECTIVE
BECAUSE OF INJURY OR DAMAGE TO EITHER OF THE CONTRACTING PARTIES
OR TO THIRD PERSONS, AS A CONSEQUENCE OF WHICH IT MAY BE RESCINDED
BY A MEANS OF A PROPER ACTION FOR RESCISSION.
• RESCISSION IS A REMEDY GRANTED BY LAW TO THE CONTRACTING PARTIES, AND
EVEN TO THIRD PERSONS, TO SECURE THE REPARATION OF DAMAGES CAUSED
TO THEM BY A CONTRACT, EVEN IF THE SAME SHOULD BE VALID, BY MEANS OF

THE RESTORATION OF THINGS TO THEIR CONDITION PRIOR TO THE

CELEBRATION OF THE CONTRACT.
REQUISITES:
• ART. 1381. THE FOLLOWING CONTRACTS ARE RESCISSIBLE:
• 1. THOSE WHICH ARE ENTERED INTO BY GUARDIANS WHENEVER THE WARDS WHOM
THEY REPRESENT SUFFER LESION BY MORE THAN ONE-FOURTH OF THE VALUE OF
THE THINGS WHICH ARE THE OBJECT THEREOF;
• 2. THOSE AGREED UPON IN REPRESENTATION OF ABSENTEES, IF THE LATTER
SUFFER THE LESION STATED IN THE PRECEDING NUMBER;
• 3. THOSE UNDERTAKEN IN FRAUD OF CREDITORS WHEN THE LATTER CANNOT IN
ANY OTHER MANNER COLLECT THE CLAIMS DUE THEM;
• 4. THOSE WHICH REFER TO THINGS UNDER LITIGATION IF THEY HAVE BEEN ENTERED
INTO BY THE DEFENDANT WITHOUT THE KNOWLEDGE AND APPROVAL OF THE
LITIGANTS OR OF COMPETENT JUDICIAL AUTHORITY;
• 5. ALL OTHER CONTRACTS SPECIALLY DECLARED BY LAW TO BE SUBJECT TO
RESCISSION.
• ART. 1383. THE ACTION FOR RESCISSION IS SUBSIDIARY; IT CANNOT BE
INSTITUTED EXCEPT WHEN THE PARTY SUFFERING DAMAGE HAS NO OTHER
LEGAL MEANS TO OBTAIN REPARATION FOR THE SAME.

• RESCISSION IS NOT A PRINCIPAL REMEDY. IT IS ONLY SUBSIDIARY, MEANING

THAT IT CAN BE AVAILED OF ONLY IF THE INJURED PARTY PROVES THAT HE
 HAS NO OTHER LEGAL MEANS ASIDE FROM RESCINDING THE CONTRACT TO
OBTAIN REDRESS FOR THE DAMAGE CAUSED.

• ART. 1389. THE ACTION TO CLAIM RESCISSION MUST BE COMMENCED WITHIN

FOUR YEARS.
• FOR PERSONS UNDER GUARDIANSHIP AND FOR ABSENTEES, THE PERIOD OF
FOUR YEARS SHALL NOT BEGIN UNTIL THE TERMINATION OF THE FORMER'S
INCAPACITY, OR UNTIL THE DOMICILE OF THE LATTER IS KNOWN.
GENERAL RULE: THE ACTION TO CLAIM RESCISSION MUST BE
COMMENCED WITHIN FOUR YEARS FROM THE DATE THE
CONTRACT WAS ENTERED INTO.

• EXCEPTIONS:
• 1. UNDER GUARDIANSHIP – THE PERIOD SHALL BEGIN FROM THE
TERMINATION OF INCAPACITY
• 2. ABSENTEES – FROM THE TIME THE DOMICILE IS KNOWN
• PERSONS ENTITLED TO BRING ACTION:
• 1. THE INJURED PARTY
• 2. HIS HEIRS, ASSIGNS OR SUCCESSORS IN INTEREST
• 3. THE CREDITORS OF THE ABOVE ENTITLED TO SUBROGATION

CHAPTER 7 VOIDABLE CONTRACTS

• ART. 1390. THE FOLLOWING CONTRACTS ARE VOIDABLE OR

ANNULLABLE, EVEN THOUGH THERE MAY HAVE BEEN NO DAMAGE
TO THE CONTRACTING PARTIES:
• (1) THOSE WHERE ONE OF THE PARTIES IS INCAPABLE OF GIVING
CONSENT TO A CONTRACT;
• (2) THOSE WHERE THE CONSENT IS VITIATED BY MISTAKE,
VIOLENCE, INTIMIDATION, UNDUE INFLUENCE OR FRAUD. THESE
 CONTRACTS ARE BINDING, UNLESS THEY ARE ANNULLED BY A
PROPER ACTION IN COURT. THEY ARE SUSCEPTIBLE OF
RATIFICATION.
• VOIDABLE CONTRACTS – THOSE WHICH POSSESS ALL THE ESSENTIAL
REQUISITES OF A VALID CONTRACT BUT ONE OF THE PARTIES IS
INCAPABLE OF GIVING CONSENT, OR CONSENT IS VITIATED BY MISTAKE,
VIOLENCE, INTIMIDATION, UNDUE INFLUENCE OR FRAUD.
• - THEY ARE CONSIDERED VALID AND BINDING UNLESS ANNULLED BY A
PROPER ACTION IN COURT.
• - ONCE RATIFIED, IT BECOMES BINDING AND CAN NO LONGER BE
ANNULLED.

• KINDS OF VOIDABLE CONTRACTS: ANY CONTRACT IS VOIDABLE IF THE

DEFECT IS CAUSED BY EITHER:
• 1. LEGAL INCAPACITY TO GIVE CONSENT
• 2. VIOLATION OF CONSENT, WHERE THE VITIATION IS DONE BY MISTAKE,
VIOLENCE, INTIMIDATION, UNDUE INFLUENCE OR FRAUD

LEGAL CAPACITY TO GIVE CONSENT

• WHAT CONTRACTS ARE VOIDABLE:

• A. MINORS ( BELOW 18 )
• B. INSANE UNLESS ACTED IN LUCID INTERVAL
• C. DEAF MUTE WHO CAN’T READ OR WRITE
• D. PERSONS SPECIALLY DISQUALIFIED: CIVIL
• INTERDICTION
• E. IN STATE OF DRUNKENNESS
• F. IN STATE OF HYPNOTIC SPELL
 VIOLATION OF CONSENT, WHERE THE VITIATION IS DONE BY
MISTAKE,
VIOLENCE, INTIMIDATION, UNDUE INFLUENCE OR FRAUD

• MISTAKE - FALSE BELIEF INTO SOMETHING.

• VIOLENCE- SERIOUS OR IRRESISTIBLE FORCE IS EMPLOYED TO WREST CONSENT.

• INTIMIDATION- ONE PARTY IS COMPELLED BY A REASONABLE AND WELL GROUNDED FEAR OF

AN IMMINENT AND GRAVE DANGER UPON PERSON AND PROPERTY OF HIMSELF,
SPOUSE,ASCENDANTS OR DESCENDANTS (MORAL COERCION).

• UNDUE INFLUENCE- PERSON TAKES IMPROPER ADVANTAGE OF HIS POWER OVER WILL OF
ANOTHER DEPRIVING LATTER OF REASONABLE FREEDOM OF CHOICE.

• FRAUD- THRU INSIDIOUS WORDS OR MACHINATIONS OF CONTRACTING PARTIES, OTHER IS

INDUCED TO ENTER INTO CONTRACT W/O W/C HE WILL NOT ENTER (DOLO CAUSANTE).
 REMEDY
• ART. 1391. THE ACTION FOR ANNULMENT SHALL BE BROUGHT WITHIN
FOUR YEARS. THIS PERIOD SHALL BEGIN: IN CASES OF INTIMIDATION,
VIOLENCE OR UNDUE INFLUENCE, FROM THE TIME THE DEFECT OF THE
CONSENT CEASES. IN CASE OF MISTAKE OR FRAUD, FROM THE TIME OF
THE DISCOVERY OF THE SAME. AND WHEN THE ACTION REFERS
TO CONTRACTS ENTERED INTO BY MINORS OR OTHER
INCAPACITATED PERSONS, FROM THE TIME THE GUARDIANSHIP
CEASES.

• ANNULMENT – A REMEDY PROVIDED BY LAW, FOR REASON OF PUBLIC

INTEREST, FOR THE DECLARATION OF THE INEFFICACY OF A CONTRACT
BASED ON A DEFECT OR VICE
 RATIFICATION
ART. 1392. RATIFICATION EXTINGUISHES THE ACTION TO ANNUL A VOIDABLE
CONTRACT.
• RATIFICATION – THE ACT OR MEANS BY VIRTUE OF WHICH EFFICACY IS
GIVEN TO A CONTRACT WHICH SUFFERS FROM A VICE OF CURABLE NULLITY.
• REQUISITES
• I. KNOWLEDGE OF REASON RENDERING CONTRACT VOIDABLE
• II. SUCH REASON MUST HAVE CEASED, EXCEPT IN CASE OF RATIFICATION
EFFECTED BY THE GUARDIAN TO CONTRACTS ENTERED INTO BY AN
INCAPACITATED,
• III. THE INJURED PARTY MUST HAVE EXECUTED AN ACT WHICH EXPRESSLY
OR IMPLIEDLY CONVEYS AN INTENTION TO WAIVE HIS RIGHT

CHAPTER 8 UNENFORCEABLE CONTRACTS

UNENFORCEABLE CONTRACT –ARE THOSE WHICH CANNOT BE ENFORCED BY A PROPER
ACTION IN COURT, UNLESS THEY ARE RATIFIED, BECAUSE, EITHER THEY ARE ENTERED
INTO
WITHOUT OR IN EXCESS OF AUTHORITY OR THEY DO NOT COMPLY WITH THE STATUTE OF
FRAUDS OR BOTH CONTRACTING PARTIES DO NOT POSSESS THE REQUIRED LEGAL
CAPACITY

• CLASSES OF UNENFORCEABLE CONTRACT:

• 1. THOSE CONTRACTS ENTERED INTO IN THE NAME OF ANOTHER PERSON BY ONE
WITHOUT ANY AUTHORITY OR IN EXCESS OF HIS AUTHORITY.
• 2. THOSE WHICH DO NOT COMPLY WITH THE STATUTE OF FRAUDS
• 3. THOSE WHERE BOTH CONTRACTING PARTIES ARE LEGALLY INCAPACITATED.
• ART. 1403. THE FOLLOWING CONTRACTS ARE UNENFORCEABLE, UNLESS THEY ARE
RATIFIED:
• (1) THOSE ENTERED INTO IN THE NAME OF ANOTHER PERSON BY ONE WHO HAS BEEN
GIVEN NO AUTHORITY OR LEGAL REPRESENTATION, OR WHO HAS ACTED BEYOND HIS
POWERS;
• (2) THOSE THAT DO NOT COMPLY WITH THE STATUTE OF FRAUDS AS SET FORTH IN
THIS NUMBER. IN THE FOLLOWING CASES AN AGREEMENT HEREAFTER MADE SHALL
BE UNENFORCEABLE BY ACTION, UNLESS THE SAME, OR SOME NOTE OR
MEMORANDUM, THEREOF, BE IN WRITING, AND SUBSCRIBED BY THE PARTY CHARGED,
OR BY HIS AGENT; EVIDENCE, THEREFORE, OF THE AGREEMENT CANNOT BE
RECEIVED WITHOUT THE WRITING, OR A SECONDARY EVIDENCE OF ITS CONTENTS
•(A) AN AGREEMENT THAT BY ITS TERMS IS NOT TO BE PERFORMED WITHIN A YEAR
FROM THE MAKING THEREOF;
•(B) A SPECIAL PROMISE TO ANSWER FOR THE DEBT, DEFAULT, OR MISCARRIAGE
OF ANOTHER;
•(C) AN AGREEMENT MADE IN CONSIDERATION OF MARRIAGE, OTHER THAN A
MUTUAL PROMISE TO MARRY;
•(D) AN AGREEMENT FOR THE SALE OF GOODS, CHATTELS OR THINGS IN
ACTION, AT A PRICE NOT LESS THAN FIVE HUNDRED PESOS, UNLESS
THE BUYER ACCEPT AND RECEIVE PART OF SUCH GOODS AND
CHATTELS, OR THE EVIDENCES, OR SOME OF THEM, OF SUCH THINGS
IN ACTION OR PAY AT THE TIME SOME PART OF THE PURCHASE MONEY;
BUT WHEN A SALE IS MADE BY AUCTION AND ENTRY IS MADE BY THE
AUCTIONEER IN HIS SALES BOOK, AT THE TIME OF THE SALE, OF THE
AMOUNT AND KIND OF PROPERTY SOLD, TERMS OF SALE, PRICE,
NAMES OF THE PURCHASERS AND PERSON ON WHOSE ACCOUNT THE
 SALE IS MADE, IT IS A SUFFICIENT MEMORANDUM;
•(E) AN AGREEMENT OF THE LEASING FOR A
•LONGER PERIOD THAN ONE YEAR, OR FOR THE SALE OF REAL
PROPERTY OR OF AN INTEREST THEREIN;
•(F) A REPRESENTATION AS TO THE CREDIT OF A THIRD PERSON.

• (3) THOSE WHERE BOTH PARTIES ARE INCAPABLE OF GIVING CONSENT TO A

CONTRACT.

STATUTE OF FRAUD
• STATUTE OF FRAUD

• - IT WAS ENACTED FOR THE PURPOSE OF PREVENTING FRAUD

• - IT IS REQUIRED THAT THE CONTRACT BE IN WRITING AND SUBSCRIBED BY THE PARTY CHARGED OR BY HIS AGENT.

• - IN CASE OF NON-COMPLIANCE, THE CONTRACT IS UNENFORCEABLE BY ACTION.

• - CLASSES COVERED:
• 1. AN AGREEMENT THAT BY ITS TERMS IS NOT TO BE PERFORMED WITHIN A YEAR FROM THE MAKING THEREOF.

• 2. A SPECIAL PROMISE TO ANSWER FOR THE DEBT, DEFAULT OR MISCARRIAGE OF ANOTHER.

• 3. AN AGREEMENT MADE IN CONSIDERATION OF MARRIAGE, OTHER THAN A MUTUAL PROMISE TO MARRY.

• 4. AN AGREEMENT FOR THE SALE OF GOODS, CHATTELS, OR THINGS IN ACTION, AT A PRICE NOT LESS THAN FIVE
HUNDRED PESOS.

• 5. AN AGREEMENT FOR THE LEASING OF REAL PROPERTY FOR A LONGER PERIOD THAN ONE YEAR, OR FOR THE SALE
OF REAL PROPERTY OR AN INTEREST THEREIN.

TWO WAYS OF CURING UNENFORCEABLE

CONTRACTS:

• A. FAILURE OF DEFENDANT TO OBJECT IN TIME, TO THE

PRESENTATION OF PAROLE EVIDENCE IN COURT, THE DEFECT
OF UNENFORCEABILITY IS CURED
• B. ACCEPTANCE OF BENEFITS UNDER THE CONTRACT. IF
THERE IS PERFORMANCE IN EITHER PART AND THERE IS
ACCEPTANCE OF PERFORMANCE, IT TAKES IT OUT OF
UNENFORCEABLE CONTRACTS; ALSO ESTOPPEL SETS IN BY
ACCEPTING PERFORMANCE, THE DEFECT IS WAIVED
CHAPTER 9 VOID AND INEXISTENT
CONTRACTS
• VOID OR INEXISTENT CONTRACTS – ONE WHICH LACKS ABSOLUTELY EITHER
IN FACT OR IN LAW ONE OR SOME OF THE ELEMENTS WHICH ARE ESSENTIAL
FOR ITS VALIDITY
• - VOID CONTRACTS REFER TO THOSE WHERE ALL OF THE REQUISITES OF A
CONTRACT ARE PRESENT, BUT THE CAUSE, OBJECT OR PURPOSE IS
CONTRARY TO LAW, MORALS, GOOD CUSTOMS, PUBLIC ORDER AND PUBLIC
POLICY. THE CONCEPT OF PARI DELICTO IS APPLICABLE. JURADO SAID THAT
THERE CAN STILL BE LEGAL EFFECT ON THIS KIND OF CONTRACT.
• - INEXISTENT CONTRACT, ON THE OTHER HAND, REFERS TO THOSE WHERE
 ONE OR SOME OR ALL OF THE ESSENTIAL REQUISITES FOR THE VALIDITY
OF A CONTRACT ARE LACKING. THE CONCEPT OF PARI DELICTO IS NOT
APPLICABLE AND NO LEGAL EFFECT MAY BE PRODUCED.
• ART. 1409. THE FOLLOWING CONTRACTS ARE INEXISTENT AND VOID FROM THE
BEGINNING:
• (1) THOSE WHOSE CAUSE, OBJECT OR PURPOSE IS CONTRARY TO LAW, MORALS,
GOOD CUSTOMS, PUBLIC ORDER OR PUBLIC POLICY;
• (2) THOSE WHICH ARE ABSOLUTELY SIMULATED OR FICTITIOUS;
• (3) THOSE WHOSE CAUSE OR OBJECT DID NOT EXIST AT THE TIME OF THE
TRANSACTION;
• (4) THOSE WHOSE OBJECT IS OUTSIDE THE COMMERCE OF MEN;
• (5) THOSE WHICH CONTEMPLATE AN IMPOSSIBLE SERVICE;
• (6) THOSE WHERE THE INTENTION OF THE PARTIES RELATIVE TO THE PRINCIPAL
OBJECT OF THE CONTRACT CANNOT BE ASCERTAINED;
• (7) THOSE EXPRESSLY PROHIBITED OR DECLARED VOID BY LAW.
• THESE CONTRACTS CANNOT BE RATIFIED. NEITHER CAN THE RIGHT TO SET UP
THE DEFENSE OF ILLEGALITY BE WAIVED.
 CHARACTERISTICS

• A. IT PRODUCES NO EFFECT WHATSOEVER EITHER AGAINST OR IN FAVOR OF ANYONE;

• B. THERE IS NO ACTION FOR ANNULMENT NECESSARY AS SUCH IS IPSO JURE. A
JUDICIAL DECLARATION TO;

• THAT EFFECT IS MERELY A DECLARATION;

• C. IT CANNOT BE CONFIRMED, RATIFIED OR CURED;

• D. IF PERFORMED, RESTORATION IS IN ORDER, EXCEPT IF PARI DELICTO WILL APPLY;

• E. THE RIGHT TO SET UP THE DEFENSE OF NULLITY CANNOT BE WAIVED; AND,

• F. IMPRESCRIPTIBLE
THE END