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 CIVIL CODE
of the
PHILIPPINES
ANNOTATED

EDGARDO L. PARAS,t Litt.B., LL.B., LL.M., LL.D.

Associate Justice, Supreme Court of the Philippines
(1986-1992)

EIGHTEENTH EDITION

2016

VOLUME FOUR
ARTS. 1106-1457
(PRESCRIPTION; OBLIGATIONS
AND CONTRACTS)

44;11:Mri*IT
Ti

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 PREFACE TO THE 2016 EDITION

There are numerous new cases decided by the Supreme Court

in the matter of Obligations and Contracts. While many of these
decisions merely reiterate existing jurisprudence, there are some,
nonetheless, which illustrate comparatively new concepts. Obviously,
with the dawning of the 21st century, there is much judicial progress in
this highly-important field of law; principally the advent of electronic
contracts vis-à-vis e-Commerce, and the spawning of derivatives (new
exotic financial instruments based on hedging) — a new phenomenon
in contracts law.
For the eventual realization of this revised and expanded
edition, the Publisher hereby values the solicitous help rendered
by Dr. Edgardo "Edgie" C. Paras (LL.B., LL.M., and D.C.L.), a
product of the United States (Harvard), Europe (Hague Academy
of International Law), and Asia (National University of Singapore,
Ateneo de Manila, San Beda, and UST Graduate School of Law).
Grateful acknowledgments are likewise made to Prof. Emmanuel
C. Paras (Of Counsel of SyCip Salazar Hernandez & Gatmaitan law
firm), RTC Judge of Makati, Eugene C. Paras, Ms. Yla Paras, a JD
graduate of the Ateneo Law School, and currently handling various
projects at the Ateneo School of Government as a policy, legal, and
research associate, and Edgardo Paras III, a student of the DLSU
College of Law — for additional research.

'Rex Book Siam 3nc.

Puhlidher

V
 CONTENTS

Volume Four

Title V. - PRESCRIPTION 1
CHAPTER 1 - GENERAL PROVISIONS 1
ARTICLE 1106 1
COMMENT: (1) Definition of Prescription, 1; (2) Proof
Needed, 2; (3) Reasons or Bases for Prescription, 2; Director of
Lands, et al. v. Funtillar, et al., GR 68533, May 23, 1986, 2; (4)
Classification of Prescription, 2; (5) Laches, 3; Arradaza, et al.
v. Court of Appeals and Larrazabal, GR 50422, Feb. 8, 1989,
3; (6) Rationale for Laches, 3; (7) 'Prescription' Distinguished
from 'Laches,' 4; Mapa III v. Guanzon, 77 SCRA 387, 4; Akang
v. Mun. of Isulab, Sultan Kudarat Province, 699 SCRA 745,
4; David v. Bandin, GR 48322, April 8, 1987, 4; Gallardo
v. IAC, GR 67742, Oct. 29, 1987, 5; Narciso Buenaventura
& Maria Buenaventura v. Court of Appeals & Manotok
Realty, Inc., GR 50837, Dec. 28, 1992, 5; (8) Constitutional
Provision, 5; (9) Cases, 6; Republic v. Animas, 56 SCRA 871,
6; Aldovino v. Alunan III, 49 SCAD 340 (1994), 6; Francisco v.
Court of Appeals, 122 SCRA 538, 6; (10) Prescriptive Period
on Registered Land covered by Torrens System, 6; Quirino
Mateo & Matias v. Doroteo Diaz, et al., GR 137305, Jan. 17,
2002, 6; Far East Bank & Trust Co. v. Estrella 0. Querimit,
GR 148582, Jan. 16, 2002, 8; Development Bank of the
Phils. v. Court of Appeals & Carlos Cajes, GR 129471, April
28, 2000, 10; (11) Presumptive Period re Ill-gotten wealth
or 'Behest' Loans, 11; Presidential Ad Hoc Fact-Finding
Committee on Behest Loans v. Aniano Desierto (Recovery of
Ill-gotten Wealth), GR 130340, Oct. 25, 1999, 114 SCAD 707,
11; (12) Cases, 11; Disini v. Sandiganbayan, 705 SCRA 459,
11; Jackwell Parking Systems Corp. v. Lidua, Sr., 706 SCRA
724, 11; (13) Query, 12.
ARTICLE 1107 12
COMMENT: (1) Who May Acquire Property or Rights by
Prescription, 12; (2) Reason for Par. 1 (Those Capable of
Acquiring Property or Rights Through the Other Modes), 13;

vii
 CHAPTER 2— PRESCRIPTION OF OWNERSHIP
13; (4) Reason Why
(3) Query (Re Donation by Paramour), AND OTHER REAL RIGHTS 28
Minors May Acquire Persona lly, 13.
13 ARTICLE 1117 28
ARTICLE 1108
Prescription May COMMENT: (1) Requisites Common to Ordinary and
COMMENT: (1) Persons Against Whom Extraordinary Prescription, 28; (2) Additional Requisites, 29.
Parents, etc.) 14; (3)
Run, 14; (2) Query (Re Minors Without
ions, 14. ARTICLE 1118 29
State and Its Subdivis
15
ARTICLE 1109 COMMENT: (1) Characteristics of the Possession Needed for
Husband and Prescription, 29; (2) Possessor in the Concept of Holder, 29;
COMMENT: (1) No Prescription Between (3) Owner-Administrator, 29.
, 15; (3) Between
Wife, 15; (2) Between Parents and Children
ARTICLE 1119 30
Guardian and Ward, 16.
16
ARTICLE 1110 COMMENT: Possession by License or Tolerance of Owner, 30.
Married Woman,
COMMENT: Prescription in the Case of a ARTICLE 1120 30
16. COMMENT: (1) How Possession Is Interrupted for Purposes of
16
ARTICLE 1111 Prescription, 30; (2) Natural Interruption, 30; (3) Suspension
-Proprietor or of Prescription, 30.
COMMENT: (1) Prescription Obtained by Co
Co-Owner, 16; (2) Limitation, 17. ARTICLE 1121 31
17
ARTICLE 1112 COMMENT: (1) 'Natural Interruption' Defined, 31; (2) Reason
ation of Property for the Period Involved, 31; (3) Reason for the Non-Revival of
COMMENT: (1) Requisites for Renunci the Possession, 31.
Prescrip tion, 17; (2) Form, 17; (3) Implied or
Acquired by
Tacit Renunciation, 18. ARTICLE 1122 31
18
ARTICLE 1113 COMMENT: The Article explains itself, 31.
Prescription,
COMMENT: (1) Things That May Be Acquired by ARTICLE 1123 31
nial Property , 18; (3) No Prescrip tion With
18; (2) Patrimo
Some Doctrine s, 20; COMMENT: 'Civil Interruption' Defined, 31.
Respect to Public Property, 19; (4) by
es That Cannot Be Acquired 31
(5) Things or Properti ARTICLE 1124
Prescrip tion, 20; (6) Query, 20.
21 COMMENT: (1) When Judicial Summons Cannot Be Con-
ARTICLE 1114 sidered Civil Interruption, 32; (2) Apparent Interruption, 32;
Use of Prescrip- (3) Applicability to Acquisitive, Not Extinctive Prescription,
COMMENT: (1) Right of Creditors to Make
Sambran o v. Court of Tax Appeals, 32; (4) Acquisitive MCQ, 32; (5) Case, 33; Vda. de Figuracion
tion, 21; (2) Example, 21;
1, 21. v. Figuracion-Guillo, 690 SCRA 495, 33; (6) Acquisitive Pre-
et al., 101 Phil.
22 scription, 33; Pabalan v. The Heirs of Simeon A.B. Maamo
ARTICLE 1115 Sr., 694 SCRA 56, 33.
Prescription, 22; (2)
COMMENT: (1) Specific Provisions on ARTICLE 1125 33
Examples, 22.
23 COMMENT: (1) Recognition by Possessor of Owner's Right,
ARTICLE 1116 33; (2) Example, 33.
Prescription, 23; (2)
COMMENT: (1) Transitional Rules for ARTICLE 1126 33
First Rule Given, 24; Paz Ongsiaco and the
Example of the
v. Roman D. Dallo, et COMMENT: (1) Prescription of Titles Recorded in Registry
Heirs of the Late Augusto Ongsiaco
1969, 24; (3) Example of the Third Rule of Property, 34; (2) Lands Registered Under the Land
al., L-27451, Feb. 28,
Given, 24; BAR, 24; (4) Example of the Exception, 25; (5) Registration Law, 35; Alfonso v. Jayme, L-12754, Jan. 30,
Some Doctrines, 25. 1960, 35; Jocson, et al. v. Silos, L-12998, July 25, 1960, 35.
 35 CHAPTER 3— PRESCRIPTION OF ACTION 44
ARTICLE 1127 44
ARTICLE 1139
Defined, 36.
COMMENT: 'Good Faith of Possessor'
36 COMMENT: (1) How Actions Prescribe, 44; (2) Scope or
ARTICLE 1128 Nature of the Chapter, 44; (3) Prescription as a Defense, 44;
Good Faith, 36; (2) (4) Effect of Death on Prescription, 45; (5) Conflict of Laws —
COMMENT: (1) Other Requisites for
Faith Must Last, 36; (3) Good Faith Variance of Foreign and Local Law Re Prescription, 45; (6)
For How Long the Good
How Long Is a Month?, 46; Quizon v. Baltazar, 76 SCRA 560,
Changing to Bad Faith, 37.
37 46; (7) Query, 46.
ARTICLE 1129 ARTICLE 1140 46
COMMENT: 'Just Title' Defined, 37.
37 COMMENT: Recovery of Movables, 46.
ARTICLE 1130 ARTICLE 1141 46
d, 37.
COMMENT: Nature of the Title Require
38 COMMENT: Recovery of Immovables, 46; De Jesus, et al. v.
ARTICLE 1131 Court of Appeals, et al., GR 57092, Jan. 21, 1993, 47.
Just Title, 38.
COMMENT: Necessity of Proving the ARTICLE 1142 47
38
ARTICLE 1132 COMMENT: (1) Prescription of Mortgage Actions, 47; (2)
for Movables, 39; (2) When Period Begins, 47; (3) Lands With a Torrens Title, 48;
COMMENT: (1) Period of Prescription (4) Effect if Mortgage Is Registered, 48; (5) Effect on Interest
Movable s and Those of Which the
Rule With Respect to Lost on Debt, 48.
39; (3) Rule with Respect
Owner Has Been Illegally Deprived,
, and Merchant's Store, 39. 48
to Public Sales, Fairs, Markets ARTICLE 1143
40
ARTICLE 1133 COMMENT: (1) Rights Not Extinguished by Prescription, 48;
Through a Crime, 40; (2) (2) Some Other Actions That Do Not Prescribe, 49; Budiong
COMMENT: (1) Movables Possessed v. Pandoc, 79 SCRA 24, 49; Rodil v. Benedicto, L-28616, Jan.
Are Involved), 40.
Rule for Immovables (Where Crimes 22, 1980, 50.
40
ARTICLE 1134 ARTICLE 1144 50
Periods for Acquiring Real
COMMENT: Prescriptive COMMENT: (1) Actions That Prescribe in Ten Years, 50;
Property, 40. Veloso v. Workmen's Compensation Commission, 78 SCRA
40
ARTICLE 1135 503, 51; Negre v. Workmen's Compensation Commission, GR
from Area in Title, 43795, April 15, 1985, 51; Villamor v. Court of Appeals, GR
COMMENT: When Area Possessed Varies 97332, Oct. 10, 1991, 51; (2) Example of a Written Contract,
40. 52; (3) Examples of Obligations Created by Law, 52; (4) Actions
41 Based on a Judgment, 53; Olego v. Rebueno, L-39350, Oct. 29,
ARTICLE 1136
1975, 54; (5) Action Not Actually Based on Written Contract,
Time, 41; (2) Fortuitous
COMMENT: (1) Possession in War 54; Bucton, et al. v. Gabar, et al., L-36359, Jan. 31, 1974, 54;
Event — Effect on Prescription, 41. (6) Payment of Life Insurance, 55; Phil. American Life & Gen.
41 Insurance Co. v. Judge Lore R. Valencia-Bagalacsa, RTC of
ARTICLE 1137 Libmanan, Camarines Sur, Br. 56, etc., GR 139776, Aug. 1,
tion With Respect to
COMMENT: (1) Extraordinary Prescrip 2002, 55.
Period Require d, 42; (3) What Are Not
Immovables, 41; (2) tion, 42. ARTICLE 1145 57
the Prescrip
Needed, 42; (4) Retroactive Effect of
42 COMMENT: (1) Actions That Prescribe in Six Years, 57; (2)
ARTICLE 1138 Examples, 58; (3) Actions Where Period Are Not Fixed, 58.
Time, 43.
COMMENT: Rules for Computation of ARTICLE 1146 58

COMMENT: (1) Actions That Prescribe in Four Years, 58;

(2) Example of "Injury to the Rights of the Plaintiff", 59; (3)
 ARTICLE 1155 72
et al. v. Sarabia, et al.,
Rules for Quasi-Delicts, 59; PauIan, v. Li Chui, L-11640,
Degollac ion COMMENT: (1) Old Law Re Interruption of Prescriptive
L-10542, July 31, 1958, 59;
the Code of Civil Procedure, Periods, 72; (2) When Prescription of Actions Is Interrupted
May 22, 1956, 60; (4) Rule Under
17, 1957, 61.
61; Lapuz v. Sy Uy, L-10079, May Under the Civil Code, 72; (3) Requirement of Written Demand
61 or Acknowledgment, 72; (4) Moratorium Law Suspended Right
ARTICLE 1147 to Sue, 73; (5) Effect of President Osmefia's Moratorium Order
e in One Year, 61; (2) (EO 32), and the Moratorium Law (RA 342), upon the Statute
COMMENT: (1) Actions That Prescrib
and Detainer, 62; (3) Rule in of Limitations for Debts Contracted Before Dec. 31, 1941, 73;
Rule in Case of Forcible Entry
That Prescribe in Six Months, (6) Closure of Courts During the Japanese Occupation, 74;
Case of Libel, 62; (4) Actions
(7) Actions Under the Carriage of Goods by Sea Act, 74; Dole
63. Phils., Inc. v. Maritime Co. of the Phils., GR 61352, Feb. 27,
63
ARTICLE 1148 1987, 74; (8) Rule in Taxation Cases, 75; (9) Effect of a Motion
tion Specified Elsewhere, for Reconsideration, 75; (10) Some Cases, 75; Buccat v. Dispo,
COMMENT: (1) Periods of Prescrip
45277, Aug. 5, 1985, 63; Republic v. L-44338, April 15, 1988, 75; PDCP v. IAC, GR 73198, Sept. 2,
63; Basa v. Republic, GR
63; Baliwag Transit, Inc. 1992, 76; Montero v. Times, GR 190828, March 16, 2015, 76.
Ricarte, GR, 46893, Nov. 12, 1985,
57493, Jan. 7, 1987, 64; (2) Rules in
v. Court of Appeals, GR
Case of Fraud, 64. BOOK IV
65
ARTICLE 1149 OBLIGATIONS AND CONTRACTS
years, 65; Tolentino
COMMENT: (1) General Proviso - 5
and David, L-41427 , June 10, 1988, 78
v. Court of Appeals Validity of Stipulation Title I. - OBLIGATIONS
(Re
65; (2) Examples, 65; (3) Query 78
Concerning Period), 66. CHAPTER 1- GENERAL PROVISIONS
66 78
ARTICLE 1150 ARTICLE 1156
Period Is to Be Counted, COMMENT: (1) Elements of an Obligation (derived from the
COMMENT: (1) From What Time
(3) Examples, 66; (4) Some Latin `obligare' - to bind), 78; (2) Example, 78; (3) Concept of
66; (2) Reason for the Law, 66;
Cases, 67; Lichauco v. Soriano , 35 Phil. 203, 67; Varela v. Prestation (BAR QUESTION), 79; Mataas na Lupa Tenants'
1958, 68; Intestate Estate Association v. Carlos Dimayuga and Juliana Diego Vda. de
MarEdas, et al., L-19215, April 30,
v. Atanasi a Ubat de Montes, PNB, et Gabriel, L-32049, June 25, 1984, 79; (4) Kinds of Obligations,
of Francisco Ubat, et al.
Castrillo v. Court of Appeals, 79; (5) Criticism of the Definition by the Code, 81; (6) Some
al., L-11633, Jan. 31, 1961, 68;
69; Republi c v. Hon. Numeriano Cases, 81; Pelayo v. Lauron, 12 Phil. 453 (BAR), 81; Poss v.
L-18046, March 31, 1964,
Gottlieb, 193 N.Y.S. 418, 82; Joaquin P. Nemenzo v. Bernabe
Estenzo, L-24656, Sept. 25, 1968, 69.
69 Sabillano, L-20977, Sept. 7, 1968, 82; Leonides Pengson v.
ARTICLE 1151 Court of Appeals, GR L-65622, June 29, 1984, 83; Philippine
l With Interest or National Bank v. Court of Appeals, 74 SCAB 786 (1996),
COMMENT: Obligations to Pay Principa 83; (7) In an option to Buy, Payment of Purchase Price by
Annuity, 69. Creditor is Contingent Upon Execution and Delivery of a
69
ARTICLE 1152 Deed of Sale by Debtor, 83; (8) Case, 83; Heirs of Luis Bacus,
Judgment, 70; Luzon et al. v. Court of Appeals & Spouses Faustino and Victoriana
COMMENT: Obligations Declared by a Duray, GR 127695, Dec. 3, 2001, 83.
30, 1987, 70.
Surety Co. v. IAC, GR 72645, June
71 ARTICLE 1157 84
ARTICLE 1153
Accounting and Actions COMMENT: (1) Sources of Obligations, 84; (2) Criticism of
COMMENT: (1) Actions to Demand the Enumeration Listed Down by the Law, 84; (3) Offers of
ing, 71; (2) Accounting and
Arising from Result of the Account Reward in Newspaper or Public Contest, 84; (4) Exclusiveness
Reliquidation, 71. of the Enumeration, 85.
71
ARTICLE 1154 ARTICLE 1158 85
Event, 71.
COMMENT: Effect of a Fortuitous COMMENT: (1) Obligations Ex Lege, 85; Canonizado v. Beni-
tez, L-49315, L-60966, Feb. 20, 1984, 85; Vda. de Recinto v.

xii
 11, Case, 101; Co San v. Director of Patents, et al., L-10563, Feb.
o v. Central Bank, L-305
Inciong, 77 SCRA 196, 86; Serran Appeals, L-60210, March 23, 1961, 101; (12) Example of Independent Civil Actions, 102;
Court of (13) Effect of Reservation of the Civil Aspect, 102; Jovencio
Feb. 14, 1980, 86; Santos v.
Philippine National Bank, GR Luansing v. People of the Philippines & Court of Appeals,
27, 1984, 86; Gonzales v.
Meaning of the Article (BAR), 86; L-23289, Feb. 28, 1969, 102; (14) Is There Need of Making
33320, May 30, 1983,86; (2)
ganbayan, L-56170, Jan. 31, 1984, a Reservation of the Civil Case (Where the Law Grants an
Hilario Jaravata v. Sandi
Code and Special Laws, 87. Independent Civil Action) if a Criminal Case is First Brought
87; (3) Conflict Between Civil 87 to Court, 102; Garcia v. Florido, L-35095, Aug. 31, 1973, 103;
ARTICLE 1159 Crispin Abellana and Francisco Abellana v. Hon. Geronimo
Ex-Contractu, 87; (2) Meaning R. Maraue and Geronimo Companer, et al., L-27760, May 29,
COMMENT: (1) Obligations
Martin, et al., L-12439, May 23, 1974, 103; (15) Recovery of Damages in SAME CASE Despite
of the Article, 88; Martin v.
Corp. (NAMARCO) v. Tan, et Acquittal, 105; Roy Padilla v. Court of Appeals, L-39999,
1959, 88; National Marketing
88; (3) The Right to Enter into May 31, 1984, 105; People v. Castafieda, GR 49781, June 24,
al., L-17074, March 31, 1964,
Between an Obligation and a 1983, 105; People v. Teresa Jalandoni, GR 57555, Aug. 28,
Contracts, 89; (4) Differences v.
d Cases, 90; De los Reyes 1984, 105; (16) Affidavit of Desistance, 105; People v. Entes,
Contract, 89; (5) Some Decide De la Riva, 6 Phil. 12,
a v. L-50632, Feb. 24, 1981, 105; People v. Mayor Caruncho, Jr.,
Alejado, 16 Phil. 499, 90; Molin
Bachr ach v. Goling co, 39 Phil. 138, 90; Conrado v. Judge L-57804, Jan. 23, 1984, 105; (17) Effect of Non-Allegation of
90;
91; Alcantara v. Alinea, 8 Phil. Damages, 106; Badiong v. Judge Apalisok, GR 60151, June
Tan, 51 O.G. 2923, June 1955,
Sanch o, GR 56450, July 23, 1983, 24, 1983, 106.
111, 91; Ganzon v. Judge inia
, 38 Phil. 585, 92; Herm
91; Ofiendorf v. Abrahamson L-176 47, Feb. 28, 1964, 92; ARTICLE 1162
et al.,
Goduco v. Court of Appeals, 77,
Laron and Geminiano, L-653 COMMENT: (1) Obligations Ex Quasi-Delicts or Ex Quasi-
Molave Motor Sales, Inc. v. IAC, GR 70099 , Jan. 7,
et al. v. Maleficio, 106; (2) Another Name for Quasi-Delict, 106; (3)
May 28, 1984, 92; Borcena, , 93; (6) The So-
SCAD 323 (1996) Definition of a 'Quasi-Delict', 106; Elcano v. Hill, 77 SCRA
1987, 92; PNB v. Se, Jr., 70 of
Innom inate Contr acts, 93; Vicente Aldaba v. Court 98, 107; (4) Examples, 107; (5) Definitions of Negligence
called
1969, 94.
Appeals, et al., L-21676, Feb. 28, 94
(Culpa), 107; (6) Test for Determination of Negligence, 107;
(7) Case, 108; Allied Banking Corp. v. BPI, 692 SCRA 186,
ARTICLE 1160 108; (8) Requirements Before a Person Can Be Held Liable for
Defined, 94; (2) The Two
COMMENT: (1) 'Quasi-Contract' Gestio, 95; (4) Solutio
a Quasi-Delict, 108; (9) Culpa Aquiliana of Married Minors,
iorum 109; Elcano v. Hill, 77 SCRA 98, 109; (10) Violation of an
Principal Kinds, 95; (3) Negot
Piccio and Caballero, L-13012 Obligation, 109; Mascunana v. Verdeflor, 79 SCRA 339, 109;
Indebiti, 95; City of Cebu v.
UST Cooperative Store v. City (11) Doctrine of 'Last Clear Chance,' 109; Allied Banking
and 14876, Dec. 31, 1960, 95; Is a
Dec. 31, 1965, 96; (5) Query: Corp. v. BPI, 692 SCRA 186, 109.
of Manila, et al., L-17133, ct, 96; (6) Other Exam ples
Contra
Quasi-Contract an Implied t Enrich ment, 96; Lirag
(7) No Unjus
of Quasi-Contracts, 96; Commission, 79 SCRA 675,
CHAPTER 2- NATURE AND EFFECT OF
Textile Mills, Inc. v. Reparations OBLIGATIONS
96. 96 ARTICLE 1163
ARTICLE 1161
COMMENT: (1) Duty to Exercise Diligence, 110; (2) Diligence
Delicto or Ex Maleficio, 97;
COMMENT: (1) Obligations Ex Needed, 110; (3) Some Cases, 111; Obejera, et al. v. Iga Sy, 76
60151, June 24, 1983, 97; (2)
Badiong v. Judge Apalisok, GR Phil. 580, 111; Bishop ofJaro v. De la Pefia, 26 Phil. 144, 111;
the Revise d Penal Code, 97; Elcano
Pertinent Provision of Bernabe Africa, et al. v. Caltex, et al., L-12986, March 31,
Liability of an Insane Criminal,
v. Hill, 77 SCRA 98, 97; (3) L-14414, April 27, 1960, 98;
1966, 111; Ronquillo, et al. v. Singson, CA, L-22612-R, April
Balce,
97; (4) Case, 98; Sales v. es, 98; 22, 1959, 112.
Arising from a Crime Includ
(5) What Civil Liability Mitiga ting Circum stance s, 99; ARTICLE 1164
(6) Effect of Aggravating and Action Implic itly
, 99; (8) Civil
(7) Damages in Case of Death (9) Effect of Death of the COMMENT: (1) When Creditor Is Entitled to the Fruits, 112;
99;
Instituted in Criminal Case, (2) Latin Maxim (Re Delivery and Ownership), 113; (3) Kinds
99; Buenaventura Belamala
Criminal Offender Pending Trial, 18, 1967, 99; Lamberto
of Delivery, 113; (4) Delivery of Ideal Share, 114; Gatchalian
98, Nov.
v. Marcelino Polinar, L-240 v. Arlegui, 75 SCRA 234, 114; (5) When Does the Obligation
L-40336, Oct. 24, 1975, 100; (10)
Torrijos v. Court of Appeals, to Deliver Arise, 114.
Effect of Acquittal in Criminal
Kind of Proof Needed, 101; (11)
 (2) Examples of Violation of a Contract ("In Any Manner
115
Contravene the Tenor Thereof"), 134; Santiago v. Gonzales,
ARTICLE 1165 79 SCRA 494, 135; (3) Liability for Damages, 136; Buayan
from the
ion of Obligation Cattle Co., Inc. v. Quintillan, L-26970, March 19, 1984, 136;
COMMENT: (1) Classificat Speci fic or Dete rminate
er, 115; (2) Bobis v. Prov. Sheriff of Camarines North, GR 29838, March
Viewpoint of Subject Matt Indeterminate Things, 115; (4)
Things, 115; (3) Generic
or 18, 1983, 136; Phil. Long Distance Telephone Co. v. National
to Comply
Cred itor When the Debtor Fails Labor Relations Commission, GR 58004, May 30, 1983, 136;
Remedies of the 598, 116;
Uy v. Puzon, 79 SCRA (4) Kinds of Damages (Keyword - MENTAL), 136; Compania
With His Obligation, 116; Because of a Debt), 116; Rufo
(5) Case (Re Impr
isonment Maritima v. Allied Free Workers' Union, 77 SCRA 24, 137;
Jan. 16, 1968, 116;
v. Cour t of Appeals, L-22794, Travellers' Indemnity Co. v. Barber Steamship Lines, Inc.,
Quemuel
Events, 117; (7) Two Instances Where
77 SCRA 10, 137; Bagumbayan Corporation v. Intermediate
(6) Effect of Fortuitous Exem pt, 118; (8) 'Ordinary
a Fortuitous Event
Does Not
Exam ples, 118; Appellate Court & Lelisa Sena, GR 66274, Sept. 30, 1984,
'Default,' 118; (9) 137; (5) Damages in Monetary Obligations, 138; (6) Remedies
Delay' Distinguished from Cour t Rulin gs, 119; Yu Tek v.
(10) Some Decided Case
s and 96, of Professors and Teachers, 138; (7) Creditor of a Judge, 138;
Roman v. Grimalt, 6 Phil. Taboada v. Cabrera, 78 SCRA 235, 138.
Gonzales, 29 Phil. 384, 119; 39 Phil. 190, 120.
Alzelius,
119; Gutierrez Repide v. 120 ARTICLE 1171
ARTICLE 1166 COMMENT: (1) Liability for Fraud or Dolo, 138; (2) While
Determinate
Obligation to Give a dolo causante is so important a fraud that vitiates consent
COMMENT: (1) What the 120; (3) Acce ssions, 121;
Accessories, (allowing therefore annulment), dolo incidente is not
Thing Includes, 120; (2)
, 121. important, 139; Bangoy v. Phil.-American Life Insurance
(4) Effect of Stipulation 121
Company, CA-GR 55652-R, 139; (3) Tax Evasion, 139.
ARTICLE 1167 (2)
Personal Obligations, 121; ARTICLE 1172
COMMENT: (1) Positive Fails to Do, 121; Chavez v.
Debtor COMMENT: (1) Fraud Distinguished from Negligence, 140;
Remedies of Creditor if Thing May
1970, 122; (3) When a
Gonzales, L-27454, April 30, Laurel v. Abroga, 483 SCRA 243 (2006), 140; (2) Stipulations
123. Regarding Negligence (Future Negligence), 140; Phoenix
Be Ordered Undone, 123
Assurance Co. v. Macondray & Co., Inc., L-25048, May 13,
ARTICLE 1168 1975, 142; (3) Rule in Contracts of Adhesion, 143; Delgado
nal Obligations, 123.
COMMENT: Negative Perso 123 Brothers, Inc. v. Court of Appeals, et al., L-15654, Dec. 29,
1960, 143; (4) Reason Why a Contract of Adhesion is not a One-
ARTICLE 1169 Sided Document, 144; (5) Kinds of Culpa Classified According
Necessity in
or Mora, 124; (2) to the Source of the Obligation, 144; (6) Distinctions Re the
COMMENT: (1) Default Not Needed
(3) When Demand Is Three Kinds of Culpa, 144; (7) Some Illustrative Examples,
General of Demand, 124; rent Kind s of Mora,
ult, 124; (4) Diffe 146; Antonio V. Roque v. Bienvenido P. Buan, L-22459, Oct.
to Put Debtor in Defa , 127; (7)
125; (6) Mora Accipiendi
125; (5) Mora Solvendi, Rodr iguez , et al. v. 31, 1967, 147; San Pedro Bus Line v. Navarro, L-6291, April
128; Mariano
Reciprocal Obligations, Feb. 28, 1961 , 128; (8) When 29, 1954, 147; Lourdes Munsayac v. Benedicta de Lara,
L-108 01, L-21151, June 26, 1968, 149; Ambaan, et al. v. Bellosillo, et
Porfirio Belgica, et al., Decided
Be Lost, 129; (9) Some
Damages or Interest May Araz 7 Phil.
a, al., CA-GR 56874-R, July 8, 1981, 149; Ibanez, et al. v. North
General de Tabacos v.
Cases, 129; Compania al., L-820 53, May 26, Negros Sugar Co., Inc., et al., L-6790, March 28, 1955, 151;
Rilloraza, et
465, 129; Price, Inc. v. and Mart inez, 62 Phil. 879, Ramos v. Pepsi-Cola, L-22533, Feb. 9, 1967, 151; Vinluan
Gard uno
1955, 129; Queblar v. 130; De la Rosa v. Bank v. Court of Appeals, L-21477-81, April 29, 1966, 152; People
37 Phil. 417,
129; Causing v. Bencer, yan Insur ance Co., Inc. v. Court v. Alejandro 0. Tan, Jr., CA-GR 21947-CR, July 21, 1981,
Mala
of P.I., 51 Phil. 926, 130; Spouses Puerto 152; (8) Some Cases, 154; Barredo v. Garcia and Almario, 73
Nov. 25, 1986, 130;
of Appeals, GR 59919, 131; (10) Phil. 607, 154; Nagrania v. Muluaney, Inc., L-8326, Oct. 24,
138210, June 13, 2002,
v. Court of Appeals, GR Bangko Sent ral ng Pilip inas v. 1955, 155; Maria Luisa Martinez v. Manuel B. Barredo, et
Imposition of Interest, 131; 2003 , 131; (11) Quer y, 132; al., GR 49308, 155; People of the Philippines v. Jesus Verano,
Jan. 13,
Santamaria, GR 139885, SCRA 439, 133. L-15805, Feb. 28, 1961, 156; Virata v. Ochoa, L-46179, Jan.
Gallery Frames, 703
(12) Case, 133; Nacar v. 133 31, 1978, 157; (9) Effects of Victim's Own Negligence and of
His Contributory Negligence, 157; Ong v. Metropolitan Water
ARTICLE 1170
ce of District, L-7664, Aug. 29, 1968, 158; Rakes v. Atlantic Gulf
Liability in the Performan
COMMENT: (1) Grounds for 234, 134;
n v. Arlegui, 75 SCRA
Obligations, 133; Gatchalia
xvii
xvi
 and Pacific Co., 7 Phil. 359, 158; (10) Some Doctrines, 159;
(11) Liability for the Culpa Aquiliana of Others, 160; Goldin
v. Lipkind (Fla) 49 So. 2nd 539, 27 ALR 2d 816 (1953), 161.
ARTICLE 1173
COMMENT: (1) Degrees of Culpa Under Roman Law, 161;
(2) Kinds of Diligence Under the Civil Code, 162; Glenn v.
Haynes, 192 Va. 574 (1953), 163; Drybrough v. Veech, 238
SW 2d, 996 (1953), 163; Davao Gulf Lumber Corp. v. N.
Baens del Rosario, et al., L-15978, Dec. 29, 1960, 163; Far
East Bank and Trust Co. v. Estrella 0. Querimit, GR 148582,
Jan. 16, 2002, 163; (3) Meaning of a 'Contract of Carriage,'
164; Cathay Pacific Airways v. Reyes, 699 SCRA 725, 164;
(4) Definition of 'Gross Inexcusable Negligence.' 164; Jaca v.
People, 689 SCRA 270, 164.
ARTICLE 1174
COMMENT: (1) General Rule for Fortuitous Events, 165; (2)
Exceptions, 165; (3) Equivalent Terms for Fortuitous Event,
165; Juan F. Nakpil and Sons, et al. v. Court of Appeals, et
al., GR 47851, Oct. 3, 1986, 165; (4) Essential Characteristics
of a Fortuitous Event, 166; (5) Some Cases, 167; Lasam v.
Smith, 45 Phil. 657, 167; Republic of the Philippines v. Litton
and Co., 94 Phil. 52, 167; Victorias Planters Assn., et al. v.
Victorias Milling Co., Inc., 97 Phil. 318, 167; Crane Sy Pauco
v. Gonzaga, 10 Phil. 646, 168; Bailey v. Le Crespigny, Law
Reports, 40 B 180, 168; Sian, et al. v. Lopez, et al., L-5398,
Oct. 20, 1954, 169; Pacific Vegetable Oil Corporation v.
Singson, L-7917, April 29, 1955, 169; Tan Chiong Sian v.
Inchausti & Co., 22 Phil. 152, 169; Soriano v. De Leon, et al.,
(C.A.) 48 0.G. 2245, June 1952, 169; U.S. v. Mambag, 36 Phil.
384, 169; Nakpil and Sons v. Court of Appeals, GR 47851,
Oct. 3, 1986, 170; Gatchalian v. Delim, GR 56487, Oct. 21,
1991, 170; Roberto C. Sicam, et al. v. Lulu V. Jorge, et al., GR
159617, Aug. 8, 2007, 171; (6) Loss in a Shipwreck, 171; (7)
Loss Because of an Act of Government, 172; (8) Combination
of Fortuitous Event and Negligence, 172; (9) MCQ, 172; (10)
Meaning of 'Fortuitous Events,' 172.
ARTICLE 1175
COMMENT: (1) 'Usury' Defined, 173; (2) Kinds of Interest,
173; (3) Regard of People for Usury, 173; (4) Definition of
Simple Loan (Mutuum), 173; (5) Lawful and Legal Rates,
174; (6) Important Distinction Between Secured (Sec. 2) and
Unsecured (Sec. 3) Loans - Under the Old Usury Law, 175;
(7) Inconsistency in the Code, 175; Angel Jose Warehousing
Co., Inc. v. Chelda Enterprises and David Syjuico, L-25704,
April 24, 1968, 176; Liam Law v. Olympic Sawmill, L-30711,
May 28, 1984, 177; (8) Status of CB Circular 905, 178;
Advocates for Truth in Lending, Inc. v. Bangko Sentral
Monetary Board, 688 SCRA 530, 178; (9) Loans Extended by
Banks, 178; Advocates for Truth in Lending, Inc. v. Bangko
Sentral Monetary Board, 188 SCRA 530, 178; (10) Where the
Interest Rate is 20% 'Per Annum,' 178; First Lepanto Taisho
161 Insurance Corp. v. Commissioner of Internal Revenue, 695
SCRA 639, 178; (11) Government Debt, 179; Republic v. Court
of Appeals, 383 SCRA 611 (2002), 179; (12) Where the Interest
Rate of 23% Per Annum was not Deemed Unconscionable,
179; (13) Where Stipulated Interest Rate of 3% Per Month
and Higher were Frowned Upon, 179; Torting v. Spa.
Ganzon-Olan, 568 SCRA 376 (2008), 180; (14) Imposition of
Delinquency Interest, 180; First Lepanto Taisho Insurance
Corp. v. Commissioner of Internal Revenue, 695 SCRA 639,
180; (15) Instance where a Stipulation Remains Valid and
Binding, 180; Andal v. PNB, 711 SCRA 15, 180; (16) Absence
of an 'Express' Stipulation, 181; Nacar v. Gallery Frames, 703
164 SCRA 439 (2013), 181; (17) Query, 182.
ARTICLE 1176 182
COMMENT: (1) Example of Par. 1 (Receipt of Principal
Without Reservation as to Interest), 182; (2) Example of Par.
2 (Receipt of a Later Installment), 182.
183
ARTICLE 1177
COMMENT: (1) Rights of Creditors, 183; Regalado v.
Luchasingco and Co., 5 Phil. 625, 184; Serrano v. Central
Bank, et al., L-30511, Feb. 14, 1980, 184; (2) Examples of
Rights Inherent in the Person of the Debtor and Which
Therefore Cannot Be Exercised by the Creditors, 184; (3)
Properties Exempt from Execution, 185; Municipality of San
Miguel v. Hon. Oscar Fernandez, L-61744, June 26, 1984, 186;
(4) When Family Home Is Not Exempted from Attachment
or Execution, 186; (5) Extent of Debtor's Liability, 187;
Special Services Corporation v. Centro La Paz, L-44100,
April 28, 1983, 187; (6) Right of the Creditor of an Insolvent
Corporation, 187; Eastern Shipping Lines, Inc. v. South Sea
Exports, Inc., et al., Ricardo V. Alindayu and Adrian° D.
Isasos, CA-GR 58883-R, July 21, 1981, 187.
ARTICLE 1178 188
173
COMMENT: (1) Transmissibility of Rights, 188; (2) Non-
Negotiable Promissory Note, 188; (3) Transfer of Rights
from the Japanese to the Americans to the Filipinos, 188;
Republic v. Emilio Guanzon, L-22374, Dec. 18, 1974, 188; (4)
Assignment by a Guarantor, 189; Co Bun Chun v. Overseas
Bank of Manila, L-27342, May 24, 1984, 189.
CHAPTER 3- DIFFERENT KINDS OF
OBLIGATIONS 190
Classification of Obligations, 190; Rogales v. Intermediate
Appellate Court, L-65022, Jan. 31, 1984, 191.
 ARTICLE 1184 206
Section 1 - PURE AND CONDITIONAL
192
OBLIGATIONS COMMENT: (1) Positive Conditions, 206; Addison v. Felix, 38
192 Phil. 404, 206; (2) Effect if Period of Fulfillment Is Not Fixed,
ARTICLE 1179 206; Martin v. Boyero, 55 Phil. 760, 206.
COMMENT: (1) Pure Obligation, 192; (2) Conditional ARTICLE 1185 207
Obligation, 192; (3) Definition of Condition, 193; (4)
Definition of a Term or Period, 193; (5) When an Obligation COMMENT: (1) Negative Conditions, 207; (2) Example, 207
to the
Is Demandable at Once, 193; (6) Past Event Unknown ARTICLE 1186 207
Parties, 193; (7) Classification of Conditions, 193; (8) When
the Condition Should be Deemed Satisfied, 194; International COMMENT: (1) Rule When Debtor Voluntarily Prevents
Hotel Corp. v. Joaquin, Jr., 695 SCRA 382, 194 Fulfillment of the Condition, 207; (2) Requisites, 208; (3)
195 Example, 208; (4) Cases, 208; Labayen v. Talisay, 52 Phil.
ARTICLE 1180 440, 208; Valencia v. RFC, L-10749, April 25, 1958, 208;
COMMENT: (1) Debtor to Pay "When His Means Permit", Mana v. Luzon Consolidated Mines & Co., (C.A.) 40 O.G. (4th
195.
195; (2) Similar Phrases, 195; (3) How Long Is the Term, Series) 129, 209; Taylor v. Yu Tieng Piao, 43 Phil. 873, 209;
195 (5) Applicability of the Article to Resolutory Conditions, 209
ARTICLE 1181
ARTICLE 1187 210
COMMENT: (1) Suspensive and Resolutory Conditions, 196;
Bengson v. Chan, 78 SCRA 113, 196; San Miguel v. Elbinias, COMMENT: (1) Effects of Fulfillment of Suspensive
L-48210, Jan. 31, 1984, 197; Agapito Gutierrez v. Capital Conditions, 210; (2) Examples of Retroactive Effects, 210;
Insurance and Surety Co., L-26827, June 29, 1984, 197; (3) No Retroactive Effects as to Fruits and Interests, 211; (4)
1986,
Integrated Construction v. Relova, GR 41117, Dec. 29, Scope of "Fruits," 211.
197; Parks v. Prov. of Tarlac, 49 Phil. 142, 198; (2) Conditional ARTICLE 1188 212
Perfection of a Contract, 199; (3) Some Cases and Doctrines,
3167,
199; Panganiban v. Batangas Trans. Co., (C.A.) 46 O.G. COMMENT: (1) First Paragraph (Actions to Preserve
199; Paulo Ang, et al. v. Furton Fire Insurance Co., L-15862, Creditor's Rights), 212; Phil. Long Distance Telephone Co. v.
CIR,
July 31, 1961, 200; Luzon Stevedoring Corporation v. Jeturian, L-7756, July 30, 1955, 212; (2) Second Paragraph
v.
L-17411, 18681 and 18683, Dec. 31, 1965, 200; Bengson (Right of Debtor to Recover What Was Paid by Mistake), 213.
1977, 200; Luzon Surety Co., Inc. v.
Chan, L-27283, July 29, ARTICLE 1189 213
Quebrar, L-40617, Jan. 31, 1984, 200; San Miguel v. Elbinias,
L-48210, Jan. 31, 1984, 201; (4) Where Payment of the Price COMMENT: (1) Loss, Deterioration, and Improvement
Luna,
is a Positive Suspensive Condition, 201; Bonrostro v. During the Pendency of Condition, 214; (2) "Loss" Defined,
702 SCRA 1, 201. 215; (3) Effects of Partial Loss, 215; (4) Illustrative Problems,
201 216.
ARTICLE 1182
ARTICLE 1190 218
COMMENT: (1) Potestative, Casual, Mixed Conditions, 201;
202;
(2) Potestative (Facultative) Condition, 201; (3) Query, COMMENT: Effects When Resolutory Condition is Fulfilled,
Cases, 202; Smith, Bell and Co. v. Sotelo Matti, 44 Phil. 218; (2) Problems, 219.
(4)
203;
874, 202; Jacinto v. Chua Leng, (C.A.) 45 O.G. 2919, ARTICLE 1191 219
Trillana v. Quezon Colleges, Inc., 93 Phil. 383, 203.
204 COMMENT: (1) Right to Rescind, 219; Spouses Mariano Z.
ARTICLE 1183 Velarde & Avelina D. Velarde v. Court of Appeals, David A.
COMMENT: (1) Impossible and Illegal Conditions, 204; (2) Raymundo, & George Raymundo, GR 108346, July 11, 2001,
Classification, 204; (3) Effects, 204; (4) Some Cases, 205; 220; (2) Reciprocal Obligations, 220; (3) What is Implied in
and a Reciprocal Obligation, 221; (4) Cases, 221; Aspon Simon v.
Santos v. Sec. of Agriculture and Natural Resources
v.
Director of Lands, 91 Phil. 832, 205; Luneta Motor Co. Adamos, L-39378, Aug. 28, 1984, 221; DMRC Enterprises v.
205; Litton, et al. v. Luzon Surety, Este del Sol Mountain Reserve, GR 57936, Sept. 26, 1984,
Federico Abad, 67 Phil. 23,
v. 221; (5) Examples, 221; Asturias Sugar Central v. Pure Cane
Inc., 90 Phil. 783, 205; Fieldman's Insurance Co., Inc.
the Court of Appeals, Molasses Co., 60 Phil. 255, 222; Abaya v. Standard Vacuum
Mercedes Vargas Vda. de Songco and
Oil Co., L-9511, Aug. 30, 1957, 222; Pio Barreto Sons, Inc. v.
L-24833, Sept. 23, 1968, 206.

Compania Maritima, L-22358, Jan. 29, 1975, 223; Santiago v.
Gonzales, L-36627, Oct. 20, 1977, 223; Central Bank v. Court
of Appeals, GR 45710, Oct. 3, 1985, 223; (6) Characteristics
of the Right to Rescind or Resolve Under This Article, 224;
Ang, et al. v. Court of Appeals and Lee Chuy Realty Corp.,
GR 80058, Feb. 13, 1989, 224; Filoil Marketing Corp. v. IAC,
et al., GR 67115, Jan. 20, 1989, 225; Angeles v. Calasanz,
et al., GR 42283, March 18, 1985, 226; Quano v. Court of
Appeals, GR 95900, July 23, 1992, 226; (7) Choice by the
Injured Party, 227; (8) Illustrative Cases, 228; Ramirez
v. Court of Appeals, et al., 98 Phil. 225 (Illustrating Effect
of Loss in Connection with Art. 1191), 228; Song Fo & Co.
v. Hawaiian-Phil. Co., 47 Phil. 821 (Illustrating Effect of a
Slight Breach), 228; Philippine Amusement Enterprises,
Inc. v. Natividad, L-21876, Sept. 29, 1967, 229; Asiatic Corn.
Corp. v. Ang, (CA) 40 O.G. (11th Supp., p. 102) (Illustrating
Rights of Innocent Third Persons), 230; Guevara v. Pascual,
12 Phil. 811 (Illustrating Necessity of Judicial Action When
There Has Been Delivery), 230; Magdalena Estate v. Myrick,
71 Phil. 344 (Illustrating Effect of Making the Choice,
Effect of Rescission and When Rescission May Be Allowed
Even Without Judicial Approval), 231; Soledad T. Consing
v. Jose T. Jamandre, L-27674, May 12, 1975 (Illustrating
When Judicial Rescission is Unnecessary), 232; Ramos v.
Bias, (C.A.) 51 0.G. 1920, April 1955 (Illustrating Implied
Waiver of the Right to Rescind), 233; Tan Guat v. Pamintuan,
(C.A.) 37 O.G. 2494 (Illustrating Partial Rescission and
Partial Performance), 234; Abella v. Francisco, 55 Phil. 447
(Rescission When Time Is of the Essence), 234; (9) Damages
for Breach of Lease Contract, 235; Rios v. Jacinto Palma, et
al., 49 Phil. 7, 235; Spouses Mariano Z. Velarde & Avelina D.
Velarde v. Court of Appeals, David A. Raymundo & George
Raymundo, GR 108346, July 11, 2001, 235; (10) Damages in
Case of Breach of Employment, 236; Sta. Cecilia Sawmills,
Inc. v. CIR, L-19273 and L-19274, Feb. 29, 1964, 236; (11)
Instance Where Article Is Inapplicable, 236; Suria v. IAC, GR
73893, Jan. 30, 1987, 236; (12) Extrajudicial Rescission, 238;
Spouse Reynaldo Alcaraz & Esmeralda Alcaraz v. Pedro M.
Tangga-an, et al., GR 128568, April 9, 2002, 238; (13) Query,
238.
ARTICLE 1192
COMMENT: Rule if Both Parties Have Committed a Breach,
239.
Section 2- OBLIGATIONS WITH A PERIOD
ARTICLE 1193
COMMENT: (1) 'Period' Defined, 239; (2) Manresa's Definition
of a Period, 240; Aparri v. Court of Appeals, L-30057, Jan. 31,
1984, 240; (3) Period Distinguished from a Condition, 240; (4)
The Different Kinds of Terms or Periods, 240; (5) Example
of an Obligation with a Period 'Ex Die', 241; (6) Example of
an Obligation with a Period 'In Diem', 241; New Frontier
Mines, Inc. v. National Labor Relations Commission and
Crisanto Briones, GR 51578, May 29, 1984, 241; (7) Queries,
241; (8) 'A Day Certain' Defined, 242; (9) Some Cases, 243;
De Cortes v. Venturanza, 79 SCRA 709, 243; Lirag Textile
Mills, Inc. and Felix K. Lirag v. Court of Appeals and Cristan
Alcantara, L-30736, July 11, 1975, 243; Smith, Bell & Co. v.
Sotelo Matti, 44 Phil. 874; 244; Compania General de Tabacos
v. Anoza, 7 Phil. 455, 244; Berg v. Magdalena Estate, Inc., 92
Phil. 110,244; Santos v. Court of Appeals, L-60210, March 27,
1984, 244; J. Ameurfina Melencio-Herrera (concurring and
dissenting), 245; Balucanag v. Judge Francisco, GR 33422,
May 30, 1983, 245; Ace-Agro Development Corp. v. Court of
Appeals, GR 119729, Jan. 21, 1997, 78 SCAD 146, 245; (10)
Requisites for a Valid Period or Term, 245; (11) Query, 246;
(12) When Period of Prescription Begins, 246; (13) Extension
of Period, 246; (14) The Moratorium Laws of the Philippines,
246.
ARTICLE 1194
COMMENT: Rules in Case of LOSS, Deterioration, or
Improvement, 247.
ARTICLE 1195
COMMENT: (1) Payment or Delivery Made Before the
Arrival of the Period, 247; (2) Period Within Which Recovery
May Be Made, 249; (3) Presumption that Debtor Knew of
Prematureness, 249; (4) Different Meanings of Phrases, 249
ARTICLE 1196
COMMENT: (1) For Whose Benefit Term Has Been
Established, 250; (2) Exceptions, 250; (3) Circumstances
Which Indicate For Whom the Benefit of the Term Is, 250;
Nicolas, et al. v. Matias, et al., 89 Phil. 126, 251; (4) Some
Decided Cases, 252; Sarmiento v. Villaseiler, 43 Phil. 880,
252; Pastor v. Gaspar, 2 Phil. 592, 252; Illusorio and Vida
v. Busuego, L-822, 1949, 252; Ochoa v. Lopez, (C.A.) 50 O.G.
5871, Dec. 1954, 253; Nepomuceno v. Narciso, et al., 84 Phil.
542, 253; (5) When Prescriptive Period Begins, 254.
239
ARTICLE 1197
COMMENT: (1) When the Court May Fix a Period, 254;
Gregorio Araneta, Inc. v. Phil. Sugar Estates Development
Co., L-22558, May 31, 1967, 256; (2) When the Court May
239
Not Fix the Term, 256; Barrette v. Santa Marina, 26 Phil.
239 440, 257; Nicanor M. Baltazar v. San Miguel Brewery,
L-23076, Feb. 27, 1969, 258; (3) Applicability of the Article
to the Obligations Contemplated Therein, 258; (4) The Action
to Bring Under This Article, 259; Tiglao, et al. v. Manila

Epifanio Alano, et al. v. Claro
Railroad Co., 98 Phil. 181, 259;
1960, 260; (5) Query: Within
Cortes, et al., L-15276, Nov. 28, t,
Action to Fix the Period Be Brough
What Period Must the 261; (7) An Examp le
the Period,
261; (6) How the Court Fixes
ble, 262; Milare v. Hernando,
Where the Article Is Not Applica
262.
GR 55480, June 30, 1987,
ARTICLE 1198
Loses the Benefit of the
COMMENT: (1) When the Debtor
les, 263; Song Fo and Co. v. Oria, 33
Period, 263; (2) Examp 264;
or Periods Are Computed,
Phil. 3, 263; (3) How Terms v. Carolina Abalos, et
o Soriano
(4) Some Cases, 265; Modest Tabia,
L. Gomez, et al. v. Miguel
al., 84 Phil. 206, 265; Jose
84 Phil. 269, 266.
OBLIGATIONS
Section 3- ALTERNATIVE
ARTICLE 1199
Obligation' Defined, 267; (2)
COMMENT: (1) 'Alternative
Example, 267; (3) Query, 267.
ARTICLE 1200
Right of Choice, 268; (2)
COMMENT: (1) Who Has the llo
(4) Some Cases, 268; Agonci
Example, 268; (3) Query, 268; Can and Bank of
268; Ong Guan
v. Javier, 30 Phil. 124, Phil.
y Insurance Company, 46
the Phil. Islands v. Centur Casual ty Co., Inc. v. Rural
ce
592, 270; Equitable Insuran
L-17436, Jan. 31, 1962, 270;
Insurance and Surety Co., Inc.,
's Choice , 270; (6) Example, 270
(5) Limitation on the Debtor
ARTICLE 1201
ation or Communication to
COMMENT: (1) Means of Notific
Effect of Notice that Choice
Other Party of Choice, 271; (2) Choice
Reason for Communicating
Has Been Made, 271; (3) of the Choice ,
ites for the Making
to Creditor, 271; (4) Requis
271.
ARTICLE 1202
the Right of Choice, 272;
COMMENT: When Debtor Loses
1954, 272.
San Jose v. Javier, L-6802,
ARTICLE 1203
Cannot Choose Because of
COMMENT: Rule When Debtor
Creditor's Acts, 273.
ARTICLE 1204
Rights of Creditor When Loss
COMMENT: (1) Alternative (2)
Before Debtor's Choice, 273;
or Impossibility Occurs
Example, 274.
ARTICLE 1205 274
COMMENT: (1) Rules When Choice Has Been Given to
Creditor, 275; (2) Example, 275; (3) Effect if Creditor Delays
in Making the Choice, 276.
ARTICLE 1206 276
262 COMMENT: (1) 'Facultative Obligation' Defined, 276; (2)
Distinctions Between the Alternative and the Facultative
Obligations, 277; Quizana v. Redugerio and Postrado, 94 Phil.
218, 278; (3) Query, 278.
278
Section 4- JOINT AND SOLIDARY OBLIGATION
ARTICLE 1207 278
COMMENT: (1) Joint Distinguished from Solidary Obliga-
267
tions, 279; (2) Examples, 279; (3) General Rule and Excep-
tions, 279; (4) Some Instances Where the Law Imposes Soli-
267
dary Liability, 280; (5) Query, 280; (6) Some Decided Cases,
281; Uk Pa Leung v. Nigorra, 9 Phil. 381, 281; Pimentel v.
Gutierrez, 14 Phil. 49, 281; De Leon v. Nepomuceno and De
Jesus, 37 Phil. 180, 281; Parot v. Gemora, 7 Phil. 94, 282;
267
Cabo, Jr. v. Cabanos, L-19704, Oct. 19, 1966, 282; Oriental
Commercial Co., Inc. v. Felix Lafuente, (C.A.) 38 0.G. 947,
282; Worcester v. Ocampo, et al., 22 Phil. 42, 283; Abella v.
Co Bun Kim, et al., 100 Phil. 1019, 283; Tamayo v. Aquino,
L-12634-12720, May 29, 1959, 284; Jereos v. Court of Ap-
peals, L-48747, Sept. 30, 1982, 284; Fe Perez v. Josefina Gut-
ierrez, et al., L-30115, Sept. 28, 1973, 285; Gonzales v. Halili,
et al., L-11521, Oct. 31, 1958, 285; Republic Planters Bank v.
271
Court of Appeals, GR L-93073, Dec. 21, 1992, 286; (7) 'Joint
Tort-feasors,' 286.
ARTICLE 1208 287
COMMENT: (1) Presumption That Obligation Is Joint,
287; (2) Distinct Shares, 287; (3) Some Decided Cases, 287;
Compania General de Tabacos v. Obed, 13 Phil. 391, 287;
Oriental Commercial Co. v. Abeto, 60 Phil. 723, 288; Purita
272 Alipio v. Court of Appeals, GR 134100, Sept. 29, 2000, 289; (4)
Synonyms, 289; (5) Some Consequences of Joint Liability, 289;
(6) Liabilities of Partners, 290; Liwanag, et al. v. Workmen's
Compensation Commission, L-12164, May 22, 1959, 290;
273 (7) Liabilities of Agents, 291; (8) Liabilities of Co-Principals
(In Agency), 291; (9) Liabilities of Husband and Wife, 291;
(10) Liabilities of Violators of Arts. 19, 20, 21, 22 (on Human
Relations) of the Civil Code, 291; (11) Liabilities of Employer
273 and Employee for the Latter's Tortious Act, 292; (12) Query,
292.
ARTICLE 1209 292
COMMENT: (1) Indivisible Joint Obligation, 292; (2) Example
of a Joint Indivisible Obligation, 292; (3) Manresa's Comment,
 ARTICLE 1218 312
Example, 293; (6) A Demand
293; (4) Characteristics, 293; (5)
Demand by the Others, 294. COMMENT: (1) Effect of Payment of Prescribed Debt, 312; (2)
by One Joint Creditor Is Not a
295 Effect of Payment of an Illegal Obligation, 313.
ARTICLE 1210
ARTICLE 1219 313
Distinguished from
COMMENT: (1) Indivisibility as
Examp les, 295; (3) The Different Kinds of COMMENT: (1) Effect of Remission Made After Total
Solidarity, 295; (2)
Payment Had Already Extinguished the Obligation, 313; (2)
Solidarity, 295.
295 Reason for the Provision, 313; (3) Problems, 314.
ARTICLE 1211 314
ARTICLE 1220
Different Terms or
COMMENT: (1) Solidarity Despite
297; Inchau sti & Co. v. Yulo, 34 COMMENT: (1) Remission of the Whole Obligation, 314; (2)
Conditions, 296; (2) Case, Example, 315.
Phil. 978, 297; (3) Problem, 297.
298 ARTICLE 1221 315
ARTICLE 1212
May Do Useful, Not COMMENT: (1) Effect of Loss or Impossibility, 315; (2)
COMMENT: Solidary Creditors Problems, 315.
Prejudicial Acts, 298.
298 ARTICLE 1222 316
ARTICLE 1213
Non-Assignment of COMMENT: (1) Defenses in Actions Filed, 316; (2) Kinds of
COMMENT: (1) General Rule About Defenses, 316; (3) Examples, 318; (4) Problem, 318; Braganza
(2) Criticism by Justice
Rights by Solidary Creditor, 298; v. Villa Abrille, L-12471, April 13, 1957, 318; Ouano Arrastre
J.B.L. Reyes, 299. Service, Inc. v. Aleonor, et al., GR 97664, Oct. 10, 1991, 319;
299 (5) Effect of Debtor's Death, 320.
ARTICLE 1214
Must Pay, 299; (2)
COMMENT: (1) To Whom Debtor Section 5— DIVISIBLE AND INDIVISIBLE OBLIGATIONS 321
Problems, 300.
301 ARTICLE 1223 321
ARTICLE 1215
COMMENT: (1) Divisible and Indivisible Obligations Defined,
n, 301; (2) Effect of
COMMENT: (1) Effect of Novatio 321; (2) 'Indivisibility' Distinguished from 'Solidarity,' 321; (3)
Confusi on (or Merger), 302;
Compensation, 302; (3) Effect of Classes or Kinds of Indivisibility, 321; (4) Kinds of Division,
Waiver ), 303.
(4) Effect of Remission (or 322.
304
ARTICLE 1216 ARTICLE 1224 322
r May Proceed, 304;
COMMENT: (1) Against Whom Credito COMMENT: (1) Joint Indivisible Obligation, 322; (2) Effect of
11838, July 18, 2002, 304;
Constants Amor de Castro v. CA, GR Non-Compliance, 322.
Against All, 305; (3) Applicability
(2) Effect of Not Proceeding 323
l Bank v. Concepcion Mining ARTICLE 1225
of Art. 1216, 305; Phil. Nationa
305; Phil. Nat. Bank v.
Co., et al., L-16968, July 31, 1962, COMMENT: (1) Obligations That Are Deemed Indivisible,
29, 1965, 306; Operators Incorporated
Nuevas, L-21255, Nov. 323; (2) Obligations That Are Deemed Divisible, 324; (3)
34767, Oct. 23, 1987,306; (4)
v. American Biscuit Co., Inc., GR Effect of Illegality on a Divisible Contract, 324; (4) Cases,
Passive Solidarity and Suretyship,
Passive Solidarity, 306; (5) 324; Blossom & Co. v. Manila Gas Corp., 55 Phil. 226, 324; L.
s, 307.
306; (6) Examples, 307; (7) Problem Buck & Son Lumber Co. v. Atlantic Lumber Co., 109 Federal
307 411, 325.
ARTICLE 1217
t, 308; (2) 'Payment'
COMMENT: (1) Effects of Paymen Section 6— OBLIGATIONS WITH A PENAL CLAUSE 326
(4) Nature of Liability for
Defined, 308; (3) Problems, 308; 34 Phil. 978, ARTICLE 1226 326
Inchaus ti & Co. v. Yulo,
Reimbursement, 309; Wilson v.
Reimbu rsed, 310;
310; (5) Basis of the Right to be ution of Parties, COMMENT: (1) 'Penal Clause' Defined, 326; (2) Kinds of
310; (6) Substit
Berkenkotter, 92 Phil. 918, Problem , 312.
Penal Clauses, 326; (3) Penal Clause Distinguished from a
(9) Anothe r
311; (7) BAR, 311; (8) Problem, 311; Condition, 327; (4) Principal Purpose of the Penal Clause,
 L-25532, Feb. 28, 1969, 346; Lambert° Torrijos v. Court of
Exceptions to the General Rule
327; (5) Examples, 327; (6) ges Appeals, L-40336, Oct. 24, 1975, 347; Lazaro v. Sagun, 78
Place of Indemnity for Dama
that the Penalty Takes the d otherw ise, Instan ces SCRA 100, 347.
Interests (state
and for the Payment of be recovered), 328; (7)
damag es may
when ADDITIONAL 329; Section 1- PAYMENT OR PERFORMANCE
Demandable?, 328; (8) Cases,
May Any Penalty Be Lamb ert v. Fox, 26 Phil. ARTICLE 1232
242, 329;
Navarro v. Mallari, 45 Phil. Club,
Club, Inc. v. Manila Jockey
588, 329; Manila Racing al. v. Court of Appeals, COMMENT: (1) 'Payment' Defined, 348; (2) Pre-Existing
and Sons, et
69 Phil. 65, 329; Nakpil 330; Obligation, 348; (3) Acceptance by Creditor, 348; (4) Effect of
Motion for Reconsideration,
GR 47851, Resolution on v. Court of Appeals, GR Payment Made Under a Void Judgment, 348.
Corp.
Country Bankers Insurance Penal
(9) Obligations with a ARTICLE 1233
85161, Sept. 11, 1991, 331; from the Facul tative
Exam ples
Clause Distinguished from COMMENT: (1) Completeness of Payment, 349; (2) How
Oblig ations , 333.
and the Alternative 333 Payment or Performance Is Made, 349; (3) Burden of Proof,
349; (4) Means of Proving Payment, 350; Javier v. Brinas,
ARTICLE 1227
ty (C.A.) 40 O.G. 4th Supp. No. 8, p. 279, 350; (5) Usury Case,
r Cannot Substitute Penal
COMMENT: (1) Generally, Debto Exam ple, 334; Cui v. 350; Gui Jong & Co. v. Rivera and Avellar, 45 Phil. 778, 350
334; (2)
for the Principal Obligation, Cannot
(3) Generally, Creditor ARTICLE 1234
Sun Chan, 41 Phil. 523, 334; Penal ty at the Same Time,
the
Demand Both Fulfillment and Phil. 686, 335; Navarro COMMENT: (1) Substantial Performance in Good Faith, 351;
Coron el, 40
335; Vitug Dimatulac v. Rosete, et al. v. Perober Dev. Corp., CA-GR 61032-R, July 31,
v. Mallari, 45 Phil. 242, 336. 337
1981, 351; (2) When is Art. 1234 Applicable?, 352.
ARTICLE 1228 ARTICLE 1235
Proving Actual Damages,
COMMENT: (1) No Necessity of COMMENT: (1) Estoppel on the Creditor's Part in View of His
ert v. Fox, 26 Phil. 588, 337.
337; (2) Reason, 337; Lamb 338
Acceptance, 352; (2) Qualified Acceptance, 352; (3) Case, 353;
Constante Amor de Castro v. Court of Appeals, GR 115838,
ARTICLE 1229 July 18, 2002, 353.
,
May Be Reduced by the Court
COMMENT: (1) When Penalty Chua Gui Seng v. ARTICLE 1236
Cases, 339;
338; (2) Examples, 338; (3) Pe,
Sales Suppl y Co., Inc., 91 Phil. 153, 339; Yulo v. COMMENT: (1) Right of Creditor to Refuse Payment by Third
General t, L-926 2, July
Umali v. Micla Person, 353; (2) Comment of the Code Commission, 353; (3)
L-10061, April 22, 1957, 340; 46
Reyes v. Viuda y Hijos de Formoso, (C.A.) Observation of Justice J.B.L Reyes, 354; (4) Payment by a
10, 1959, 340; Corp. of Cagay an de
ercial Credi t Third Person (BAR), 354; (5) Cases, 356; Agoncillo v. Javier,
O.G. 5621, 341; Comm um,
the Cagayan de Oro Colise 38 Phil. 424, 356; Gonzaga v. Garcia, 27 Phil. 7, 356; Mitsui
Oro v. Court of Appeals and Insula r Bank of Asia and
341; Bussan Kaisha v. Meralco, 39 Phil. 624, 357; Rehabilitation
Inc., GR 78315, Jan. 2, 1989,
, March 25, 1988, 342. Finance Corp. v. Court of Appeals, et al., 94 Phil. 985, 358;
America v. Salazar, GR 82082 342 Chonney Lim v. Court of Appeals, Lea Castro Whelan &
ARTICLE 1230 Keith Lawrence Whelan, GR 104819-20, July 20, 1998, 358.
of the Penalty Clause, 342;
COMMENT: (1) Effect of Nullity ARTICLE 1237
(2) Examples, 342.
COMMENT: (1) When No Subrogation Exists, 359; (2)
344 'Subrogation' Defined, 359; (3) Some Rights Which May
SHMENT OF OBLI GATION Be Exercised by the Person Subrogated in the Place of the
CHAPTER 4- EXTINGUI 344 Creditor, 359; (4) Problems, 360; (5) Questions, 361; (6)
GENERAL PROVISIONS 344
'Subrogation' Distinguished from 'Reimbursement,' 362; (7)
Similarity, 362.
ARTICLE 1231
by CASTAN of Causes of ARTICLE 1238
COMMENT: (1) Classification n
, 344; (2) Classificatio
Extinguishment of Obligations er of Intern al COMMENT: (1) When Payment by Stranger Is Deemed a
345; Commission
According to the Civil Code, Donation, 362; (2) Example, 362.
Willia m J. Suter and The Court of Tax Appeals,
Revenue v.

xxviii
 363 Reasons Why Dation in Payment Is Governed by the Law of
ARTICLE 1239 Sales, 380; (5) Sale Distinguished from Dation in Payment,
Incapacitated Person, 363; (2) 380; (6) Conditions Under Which a Dation in Payment Would
COMMENT: (1) Payment by an Be Valid, 381.
Example of the Exception, 364. 364 ARTICLE 1246
ARTICLE 1240
Payment Must Be Made, 364; COMMENT: (1) Obligation to Give Generic Things, 382; (2)
COMMENT: (1) To Whom Rodriguez, Waiver, 382; (3) When Contract Is VOID, 382.
Keeler Electric Co. v.
(2) Cases, 365; Harry E. Phil. 194, 365;
hea v. Trillana, 13 ARTICLE 1247
44 Phil. 19, 365; Ormac p. 3734, 366; (3) Payment
156,
Crisol v. Claveron, 38 O.G. No. China Banking COMMENT: (1) Debtor Pays Generally for Extrajudicial
366; Haw Pia v.
Made to Authorized Entities, Steam ship Corpo ration Expenses, 383; (2) What Governs Judicial Costs, 383; (3) How
Evere tt
Corporation, 80 Phil. 604,367; 202, 368; Republic Judicial Costs Are Determined, 383; (4) Generally No Costs
Island s, 84 Phil.
v. Bank of the Philippine Lizares Against the Government, 383.
31, 1965, 369; Arcache v.
v. Grijaldo, L-20240, Dec. Bank v. Erene ta, et al.,
Phil. Nat.
& Co., 91 Phil. 348, 369; Josefina Ruiz de Luzuriaga
ARTICLE 1248
L-13058, Aug. 28, 1959, 370;
al de Tabacos de Filipinas, et COMMENT: (1) Performance Should Generally Be Complete,
Blanco v. Compania Gener a
370; Rido Montecillo v. Ignaci 383; (2) Exceptions, 384.
al., L-10810, Nov. 29, 1960, Abuca y, GR 13801 8, July
Elisa
Reynes & Sps. Redemptor & ARTICLE 1249
26, 2002, 370. 371 COMMENT: (1) 'Legal Tender' Defined, 385; (2) Legal Tender
ARTICLE 1241 in the Philippines, 385; (3) Doctrines for Transactions During
Incapacitated or Unauthorized the Japanese Occupation, 386; Feliciano A. Cruz v. Auditor
COMMENT: (1) Payment to an General, L-12233, May 30, 1959, 387; (4) Illustrative Cases,
Paragraph - Payment to
Persons, 371; (2) First - Paym ent 391; Allison J. Gibbs, etc. v. Eulogio Rodriguez, Sr., etc.,
Second Paragraph
Incapacitated Person, 371; (3)
Not Duly Autho rized, 373; People v. Yabut, L-1494, August 3, 1949 (Validity of Japanese Transactions),
to a Third Party 391; Domingo Aurreocoecha v. Kabankalan Sugar Co., Inc., 81
1977, 373.
L-42847, L-42902, April 29, Phil. 476 (Defense of Alleged Duress), 391; Philippine Trust
374
ARTICLE 1242 Co. v. Luis Ma. Araneta, et al., 83 Phil. 132 (No Collective or
in General Duress), 392; De Asis v. Buenviaje, et al., 45 O.G. No.
in Good Faith to a Person
COMMENT: (1) Payment Made 374; (3) Exam ples 1, p. 317 (Seller Benefited with Use of Japanese Money), 393;
Requisites,
Possession of the Credit, 374; (2) 374; Mondejar v. Nicolo, 43 O.G. No. 12, p. 5099 (When "Emergency
in Posses sion of the Credit, 374; (4) Case,
of a Person 9, 2003, 374; Notes" Ceased to Be Legal Tender), 393; Fernandez, et al.
GR 128568, April
Sps. Alcaraz v. Tangga-an, niban v. Cueva s, 7 Phil. v. Nat. Insurance Co. of the Philippines, L-9146, Jan. 27,
375; Panga
(5) Belligerent Occupant, 1957, 394; (5) Stipulation of Another Currency, 394; Phoenix
477, 375.
376 Assurance Company v. Macondray and Co., Inc., L-25048,
May 13, 1975, 395; Zagala v. Jimenez, GR 33050, July 23,
ARTICLE 1243
1987, 396; (6) Uniform Currency Law, 396; C.F. Sharp &
After Judicial Order to
COMMENT: (1) Payment Made Co. v. Northwest Airlines, GR 133498, April 18, 2002, 396;
t' Define d, 376; (3) Example
Retain, 376; (2) 'Garnishmen (7) Bar, 398; (8) Delivery of Commercial Instruments, 399;
Interpleadef Defined, 377; (5)
of Garnishment, 376; (4) 378; Quiros v. Tan Guinlay, 5 Phil. 675,400; (9) Postdated Checks,
(6) 'Injunction' Defined,
Example of Interpleader, 378; 400; Ongsip v. Prudential Bank, GR 27328, May 30, 1983,
378.
(7) Example of Injunction, 379
400.
ARTICLE 1244 ARTICLE 1250
Compel Creditor to Accept a
COMMENT: (1) Debtor Cannot Not COMMENT: (1) 'Inflation' Defined, 401; (2) 'Deflation' Defined,
Instances When Art. 1244 Does
Different Object, 379; (2) 401; (3) Non-applicability of the Article Today, 401; Evelyn J.
Apply, 379. Sangrador, Joined by her husband Rodrigo Sangrador, Jr. v.
379
Spouses Francisco Valderrama and Teresita M. Valderrama,
ARTICLE 1245 GR 79552, Nov. 29, 1988, 401; Filipino Pipe and Foundry
Payment' Defined, 380; (2)
COMMENT: (1) 'Dation in Corp. v. National Waterworks and Sewerage Authority, GR
ent, 380; (3) Examples, 380; (4)
Synonyms for Dation in Paym
'cod
 Subsection 3- TENDER OF PAYMENT AND
Basis for Payment, 402; Pan CONSIGNATION
43446, May 3, 1988, 402; (4)
yees, L-18345, Jan. 30, 1964, 403;
American v. PAA Emplo al., INTRODUCTORY COMMENT
ays v. Hon. Burgos, et
Commissioner of Public Highw
L-36706, March 31, 1980, 403. (1) 'Tender of Payment' Defined, 419; Soco v. Judge Militante,
404 GR 58961, June 28, 1983,419; (2) 'Consignation' Defined, 419;
ARTICLE 1251 De Vera, et al. v. Republic, et al., L-32998, July 12, 1973, 419;
(2)
nt Must Be Made, 405; (3) 'Tender of Payment' Distinguished from 'Consignation,'
COMMENT: (1) Where Payme , 405; Manal ac v.
Cases
Examples, 405; (3) Illustrative Phil. 555, 406; 419; (4) Rules on Payment Must Be Complied With, 420.
v. Ng Fat, 75
Garcia, 76 Phil. 216, 405; Gomez
Navig ation, Ltd. v. Ysmael and Co., L-9090, Sept. ARTICLE 1256
Eastboard ilitation
and Hernandez v. Rehab
10, 1957, 406; Gonzaga 406.
COMMENT: (1) Effect of Tender Without Consignation,
1957,
Finance Corp., L-8947, Feb. 20, 420; Velez v. Avelino, L-48448, Jan. 20, 1984, 421; (2) When
407 Consignation Is Not Required, 421; Villegas v. Capistrano, 9
OF PAYMENTS Phil. 416, 421; Co v. PNB, L-61787, June 29, 1982, 422; (3)
Subsection 1 - APPLICATION 407 When Creditor Is Justified in Refusing Tender of Payment,
ARTICLE 1252 422; Far East Bank and Trust Co. v. Diaz Realty, GR 138588,
Payment, 408; (2) 'Application Aug. 23, 2001, 423; (4) Running of Interest, 423; (5) When
COMMENT: (1) Special Forms of
(3) Impor tance, 408; (4) Requisites Consignation Is Sufficient Even Without a Prior Tender, 424;
of Payments' Defined, 408; Rule
to Be Made Use of, 409; (5) Rural Bank v. Court of Appeals, L-32116, April 21, 1981, 425;
for Application of Payment (6) Prefer ential Right of
When Debts Are Not Yet Due,
409; (6) Instances Where Art. 1256 Authorizes Consignation Alone
Is Made, 409; (8)
of Payment Without Need of Prior Tender of Payment, 425; Cacayarin v.
Debtor, 409; (7) How Application s
ation Made by Credit or, 410; Bank of the Phil. Island Armed Forces & Police Mutual Benefit Association, Inc., 696
Applic Aug. 23, 1941, 410;
Sup. 4, p. 68, SCRA 311, 425; (7) Case, 425; Borrostro v. Luna, 702 SCRA
v. Espinosa, (C.A.) 40 O.G. ation
Revoc ation of the Applic ation, 410; (10) When Applic 1, 425.
(9) a Credit or Makes
Examples of How
Must Be Made, 411; (11) 411;
Applic ation, 411; Powel l v. Nat. Bank, 54 Phil. 54, ARTICLE 1257
the t Be Availe d of,
Payments Canno
(12) When Application of rsal Deep -Sea Fishin g COMMENT: (1) Essential Requisites for Consignation, 426;
v. Unive
412; Reparations Commission (2) First Requisite - Existence of a Valid Debt, 426; (3)
27, 1978, 412.
Corp., L-21901, L-21996, June 412
Second Requisite - Valid Prior Tender Unless Tender Is
Excused, 427; Ludwig Hahn v. Lazatin, et al., L-11346 and
ARTICLE 1253 L-11549, June 30, 1959, 427; (4) Third Requisite - Prior
,
Be Paid First, 413; Rosete
COMMENT: (1) Interest Must -R, July 31, 1981, Notice to Persons Interested, 427; Soco v. Judge Militante,
CA-GR 61032 GR 58961, June 28, 1983, 428; Hulganza, et al. v. Court of
et al. v. Perober Dev. Corp.,
Credited to the Principal, 413; (3)
413; (2) Effect if Payment Is Appeals, GR 56156, Jan. 7, 1987, 429; (5) Fourth Requisite
Be Paid, 413.
What Interest Is Supposed to 413
- Actual Deposit with the Proper Judicial Authorities, 429;
St. Dominic Corp. v. IAC, GR 67207, Aug. 26, 1985, 431; (6)
ARTICLE 1254 Fifth Requisite - Subsequent or Second Notice (Made After
Application of Payment Has
COMMENT: (1) Rules in Case No nsome the Deposit), 431.
(2) Samples of More Burde
Been Voluntarily Made, 413; ong and Shang hai Bank ARTICLE 1258
Hongk
(More Onerous) Debts, 414; Determ inatio n of Which
415; (3)
v. Aldanese, 48 Phil. 990, COMMENT: How Consignation Is Actually Made, 432.
Obliga tion is Most Onero us, 416; (4) Problem, 416.
ARTICLE 1259
417
CESSION
Subsection 2 - PAYMENT BY 417
COMMENT: (1) Creditor Generally to Bear Expenses of
Consignation, 432; (2) The Expenses, 432.
ARTICLE 1255
Assignment in Favor of Creditors ARTICLE 1260
COMMENT: (1) Cession or (3)
Classes of Assignment, 417;
Defined, 417; (2) Kinds or 417; (4) Effect of COMMENT: (1) Effects if Consignation Has Been Duly Made,
Assign ment,
Requisites for Voluntary d 433; (2) Risk of Loss, 433; (3) Effects of Improper Consignation,
(5) CESSION Distinguishe
Voluntary Assignment, 417;
418.
from DACION EN PAGO,
 ARTICLE 1268 445
Query, 434;
of the Case, 434; (5)
433; (4) Effect of Dismissal or Sum Consigned, COMMENT: (1) Effect of Loss in Criminal Offenses, 446; (2)
Withdraw the Thing
(6) When Debtor May Illustrative Questions, 446.
434; (7) Query, 434. 435 ARTICLE 1269 446
ARTICLE 1261
Consignation COMMENT: (1) Transfer of Rights from the Debtor to the
by Debtor After
COMMENT: (1) Withdrawal Creditor in Case of Loss, 447; (2) "Rights of Action," 447;
Effects, 435.
Has Been Made, 435; (2) Urrutia & Co. v. Baco River Plantation Co., 26 Phil. 632, 447.
435
THE THING DUE
Section 2— LOSS OF Section 3— CONDONATION OR REMISSION OF
435 447
T THE DEBT
INTRODUCTORY COMMEN
a Loss, 436; 447
es, 435; (2) When Is There ARTICLE 1270
(1) What "Loss" Includ Performance Includes, 436; Asia Bed
(3) What Impossibility of L-9126, Jan. COMMENT: (1) 'Remission or Condonation' Defined, 448; (2)
Worker's Union, et al.,
Factory v. National Bed 68 Phil. 742, 437. Example, 448; (3) Essential Requisites for Remission, 448; (4)
Sixto de la Costa,
31, 1957, 436; House v. 437
Classes of Remission, 449; (5) Remission Must Be Gratuitous,
450; Lyric Film Exchange v. Cowper, (C.A.) 36 O.G. 1642,450;
ARTICLE 1262 (6) Effect if Remission Is Not Accepted by the Debtor, 450; (7)
438; (2)
of Obligations "To Give,"
COMMENT: (1) Two Kinds Deliv er a Specif ic Thing, What Remission Includes, 450; Francisco Puzon v. Marcelino
Obligation to Gaerlan, et al., L-19571, Dec. 31, 1965, 450; (8) When Waiver
Effect of Loss on an (4) Examples
When Claim of Loss Must Be Made, 439; or Abandonment Is Defective, 451; Jovencio Luansing v.
438; (3) res Liabil ity Even in the
Law Requi
of Instances When the People of the Philippines & Court of Appeals, L-23289, Feb.
Event, 439. 28, 1969, 451.
Case of a Fortuitous 440
ARTICLE 1263 ARTICLE 1271 451
Deliver
Loss on Obligation to
COMMENT: (1) Effect of 440; (3) Mone tary COMMENT: (1) Effect of Delivery of Private Document
(2) Exceptions,
a Generic Thing, 440; Philip pines v. Jose Grijaldo, Evidencing the Credit, 452; (2) Example, 452; (3) Implied
the
Obligations, 440; Republic of Remission, 452; (4) Falsehood Not Allowed, 452; (5) Conflict
L-20240, Dec. 31, 1965, 440. 441
of Presumption, 453.

ARTICLE 1264 ARTICLE 1272 453

l Loss, 441.
COMMENT: Effect of Partia 441 COMMENT: (1) Presumption of Voluntary Delivery, 453;
Lopez Vito v. Tambunting, 33 Phil. 226, 453; (2) Rule if the
ARTICLE 1265 Instrument of Credit Is Still in Creditor's Hands, 453; (3)
Debtor's
That Loss Was Due to
COMMENT: (1) Presumption Not Apply , 441. Presumption in Joint or Solidary Obligations, 454.
Presumptio n Does
Fault, 441; (2) When 442 ARTICLE 1273 454
ARTICLE 1266 COMMENT (1) Renunciation of Principal Extinguishes
442; (2)
Personal Obligations,
COMMENT: (1) Loss in (3) Exam ples of Accesory, But Not Vice-Versa, 454; (2) Example, 454.
Must Exist, 442;
When the Impossibility Olaba rrieta , 45 Phil. 718, ARTICLE 1274 455
Rio y
Impossibility, 442; Milan v. (5) Effect of
ctive Impossibility, 443; COMMENT: (1) Remission of Pledge, 455; (2) Reason for the
442; (4) Effect of Subje Recip rocal Oblig ations,
Event in
Loss Through a Fortuitous Presumption, 455; (3) Possession by a Third Person, 455.
Partia l Impos sibilit y, 444.
443; (6) 444
Section 4— CONFUSION OR MERGER OF RIGHTS 455
ARTICLE 1267
Parties'
Difficulty Beyond the ARTICLE 1275 455
COMMENT: (1) Effect of to Real Oblig ations,
Non-ApplicabilitY
Contemplation, 444; (2) ission , 444; (4) Examples COMMENT: (1) 'Merger or Confusion' Defined, 455; (2) Reason
Code Comm
444; (3) Comment of the or Basis for Merger, 456; (3) Requisites of a Valid Merger, 456;
Mora l Impos sibilit y, 445.
of
my

ARTICLE 1283
(4) Example of Merger, 456; (5) Effect of Transfer of Rights,
456; (6) Extinction of Real Rights, 457; (7) Revocability
of
Confusion or Merger, 457; (8) Effect if Mortgagee Become
s Jurisdiction of the Court Regarding the Value of the Demand,
the Owner of the Mortgaged Property , 457.
458
ARTICLE 1276
COMMENT: (1) Effect of Merger on Guarantors, 458;
(2)
Examples, 458; (3) Problems, 458.
459
ARTICLE 1277
COMMENT: Merger in Joint Obligations, 459.
Section 5 — COMPENSATION
459
459
ARTICLE 1278
COMMENT: (1) 'Compensation' Defined, 459; (2) Usefulness
of Compensation, 460; (3) 'Compensation' Distinguished
from 'Payment,' 460; (4) 'Compensation' Distinguished
from 'Merger,' 460; (5) 'Compensation' Distinguished from
'Counterclaim' or `Set-off, 461; (6) Kinds or Classes of
Compensation, 461; (7) When Compensation Cannot Exist,
462; Garcia v. Lim Chu Sing, 59 Phil. 562, 462; Brimo v.
Goldenberg and Co., Inc., 69 Phil. 502, 463; Francia v. IAC,
GR 67649, June 28, 1988, 463; Tan v. Mendez, GR 138669,
9,
June 6, 2002, 464; Carlos v. Abelardo, GR. 146504, April
2002, 464.
465
ARTICLE 1279
COMMENT: (1) Legal Compensation or Compensation
by Operation of Law, 465; (2) Affirmative Requisites for
Legal Compensation, 465; (3) Negative Requisites for Legal
Compensation, 465; (4) The First Affirmative Requisi
te,
466; (5) The Second Affirma tive Requisi te, 467; (6) The
Third Affirmative Requisite, 468; (7) The Fourth Affirmative
Requisite, 468; Compania General de Tabacos v. French and
GR
Unson, 39 Phil. 34, 468; Salinap v. Judge del Rosario,
,
50638, July 25, 1983, 469; Perez v. Court of Appeals, L-56101
Feb. 20, 1984, 469; (8) The First Negativ e Requisi te, 469.
469
ARTICLE 1280
COMMENT: (1) Guarantor May Set Up Compensation With
Respect to Principal Debt, 470; (2) Examples, 470.
470
ARTICLE 1281
Section 6— NOVATION
COMMENT: Total or Partial Compensation, 470.
470
ARTICLE 1282
COMMENT: Conventional or Voluntary Compensation, 471;
(2) 'Legal Compensation' Distinguished from 'Conventional
Compensation,' 471; Mondragon Personal Sales, Inc. v. Sola,
Jr., 689 SCRA 18, 471.
xxxvi
471
COMMENT: (1) Judicial Compensation or Set-off, 471; (2)
472.
472
ARTICLE 1284
COMMENT: (1) Compensation in the Case of Rescissible or
Voidable Debts, 472; (2) Prevention of Unfairness, 473.
473
ARTICLE 1285
COMMENT: (1) Effect of Assignment on Compensation of
Debts, 473; (2) The Three Cases Covered by the Article, 474;
(3) The First Case — The Assignment may be Made With the
Consent of the Debtor [See also Comment No. (1) under this
Article], 474; (4) The Second Case — Assignment Made with
the Knowledge but Without the Consent or Against the Will
of the Debtor, 475; (5) The Third Case — Assignment Made
Without the Knowledge of the Debtor, 475; (6) Reason for the
Article, 476.
ARTICLE 1286
476
COMMENT: (1) Compensation by Operation of Law, 476; (2)
Example, 477; (3) 'Foreign Exchange' Defined, 477.
ARTICLE 1287
477
COMMENT: (1) When Legal Compensation Cannot Take
Place, 477; (2) Some Problems, 478; (3) Obligations of a
Depositary, 479.
ARTICLE 1288
479
COMMENT: (1) Non-Compensation if One Debt Arises from
a Crime, 479; (2) But Victim Can Claim Compensation, 479.
480
ARTICLE 1289
COMMENT: Note the cross-reference to application of
payments, 480; Steve Tan & Marciano Tan v. Fabian Mendez,
Jr., GR 138669, June 6, 2002, 480.
485
ARTICLE 1290
COMMENT: Automatic Compensation if All Requisites Are
Present, 485; International Corporate Bank, Inc. v. IAC, et
al., GR 69560, June 30, 1988, 485.
487
487
ARTICLE 1291
COMMENT: (1) `Novation' Defined, 487; (2) No Difference in
Civil and Common Law Concepts of Novation, 487; (3) Dual
Purpose or Function of Novation, 488; (4) Kinds of Novation,
488; Iloilo Traders Finance, Inc. v. Heirs of Oscar Soriano,
 ARTICLE 1296 512
16, 2003, 489; (5) Requisites
Jr., et al., GR 149683, June hil
490; Boysaw, et al. v. Interp COMMENT: (1) Effect on Accessory Obligation, 512; (2)
for Novation (in General), 491; Torre s, Modificatory Novation, 513; (3) Stipulation Contrary to
March 20, 1987,
Promotions, et al., GR 22590, Dec. 11, 1992, 491; (6) Article 1296, 513; (4) Effect on Stipulation Pour Autrui, 513
GR 92540 ,
et al. v. Court of Appeals,
Means Recognized by the RPC
Novation Is Not One of the ARTICLE 1297 513
be Extingished, 492; SSS v.
Whereby Criminal Liability can
15813 1, Aug. 8, 2007, 492; Cruz v. COMMENT: (1) Effect if the New Obligation Is Void, 514; (2)
Dept. of Justice, et al., GR Other Factors, 514; Martinez v. Cavives, 25 Phil. 581, 514; (3)
492.
Gangan, 443 Phil. 856 (2003), Rule if New Obligation Is Merely Voidable, 514; Encomienda
493
ARTICLE 1292 v. Mendieta, (C.A.) 8 A.C.R. 438, 514; (4) Exception to the
d Novation, 493; (2) How Rule that There Is No Novation if the New Obligation is
COMMENT: (1) Express and Implie
Be Made , 493; (3) Cases, 494; National VOID, 515; (5) Problem, 515.
Implied Novation May
Phil. 310, 494; Rios, et al. v.
Exchange Co., Ltd. v. Ramos, 51 , ARTICLE 1298 515
Phil. 7, 495; Petterson v. Azada
Jacinto, Palma y Honos, 49 o, GR 56450 , July COMMENT: (1) Effect if the Old Obligation Was Void, 515;
Judge Sanch
8 Phil. 432, 495; Ganzon v. la,
1983, 495; Teofisto Guing ona, Jr. v. City Fiscal of Mani (2) Rule if the Old Obligation Was Voidable, 515; (3) Rule
25, When the Court if the Old Obligation Was Extinguished by Loss, 516; (4)
Instances
L-60033, April 4, 1984, 496; (4) Cases,
that There Was NO Extinctive Novation, 496; (5) May a Prescribed Obligation Be the Subject of Novation,
Held Asiati c Petro leum 516; (5) Effect on a VOIDABLE Obligation of Novation by
Phil. 707,497;
497; Tiu Suico v. Habana, 45 1, 1941, p. 44,
O.G. Supp. Nov. EXPROMISION, 517.
Co. v. Quay Sim Pao, (C.A.) 40 Fua Cam Lu v.
Phil. 154, 498;
498; Zapanta v. Rotaeche, 21 and Co. v. Yulo, 34 ARTICLE 1299 517
499; Incha usti
Yap Fauco, 74 Phil. 287,
L-19567, Feb. 5, 1964, 501; COMMENT: (1) Effect if the Original Obligation Was
Phil. 978, 500; People v. Nery,
Serrano, L-25791, Sept. 23, Conditional, 517; (2) Reason for the General Rule, 517; (3)
Carlos B. Gonzales v. Eulogio
Produ cts, Inc. v. PCIB, et al., GR Illustrative Problems, 517; Government v. Bautista, (C.A.),
1968,502; La Campana Food
a Land Transportation Co., 37 O.G. No. 97, p. 1880, 518.
46405, June 30, 1986, 502; Bisay
31, 1987, 503; Reyes v. Court
Inc. v. Sanchez, GR 74623, Aug. never ARTICLE 1300 519
(1996), 504; (6) Novation is
of Appeals, 76 SCAD 29 Pacifi c Techn ologies
v. Micro COMMENT: (1) 'Subrogation' Defined, 519; (2) Kinds of
Presumed, 504; Ace Foods, Inc.
Subrogation, 519; (3) Legal Subrogation Not Presumed, 519;
Co., Ltd., 712 SCRA 679, 504.
504 (4) Conventional Subrogation Must Be Established, 520.
ARTICLE 1293 520
ARTICLE 1301
Subjective Novation, 505; De
COMMENT: (1) Personal or
709, 505; (2) Substitution of COMMENT: (1) Conventional or Voluntary Subrogation,
Cortes v. Venturanza, 79 SCRA
505; (4) Requisites for Expromi- 520; (2) Distinctions Between Conventional Subrogation and
Debtor, 505; (3) Expromision,
Filom eno Girged, L-15154, Dec. Assignment of Credit (See 8 Manresa, p. 448), 520.
sion, 506; Gil Villanueva v. C.
507; C.N. Hodges v. Matias
29, 1960, 507; (5) Delegacion, The Partie s in Deleg a- ARTICLE 1302 521
508; (6)
Rey, L-12554, Feb. 28, 1961, Right s of the
Delegacion, 508; (8) COMMENT: (1) Legal Subrogation, 521; (2) First Instance,
cion, 508; (7) Requisites for
r, 509; (9) Novat ion Cannot Bind Respondent, 509; 522; (3) Second Instance, 523; (4) Third Instance, 524.
New Debto
v. Elpidi o S. Uy, GR 147933-34, Dec.
Public Estates Authority ARTICLE 1303 525
is a Civil Law Concept, 509.
12, 2001, 509; (10) Novation' 510 COMMENT: (1) Effects of Subrogation, 525; (2) Example of
ARTICLE 1294 the Effects of Subrogation, 525; (3) Effect of Presence of a
ency or Non-Fulfillment by Suspensive Condition, 525.
COMMENT: (1) Effect of Insolv
510; (2) Query, 510.
New Debtor in Expromision, 511 ARTICLE 1304 525
ARTICLE 1295 COMMENT: (1) Partial Subrogation, 525; (2) Example, 526;
Insolvency by New Debtor in (3) Preference in the Assets, 526; Somes v. Molina, 15 Phil.
COMMENT: (1) Effect of
to Hold Old Debtor Liable, 133, 526.
Delegacion, 511; (2) Requisites
Article Does Not Apply, 512.
511; (3) Problem, 511; (4) When
 527 Industrial Corp. v. Huang Cho Chum and Yang Tung Fa, GR
142378, March 7, 2002, 550; (5) Limitations Imposed by Good
Title II. - CONTRACTS
527 Customs, 552; (6) Limitations Imposed by Public Order, 552;
PROVISIONS Villanueva v. Castarieda, Jr., GR 61311, Sept. 21, 1987, 552;
CHAPTER 1- GENERAL 527 (7) Limitations Imposed by Public Policy, 552; Florentino B.
ARTICLE 1305 del Rosario v. Eugenio Millado, Adm. Case 724, Jan. 31, 1969,
Defined, 527; Cronico v. J.M. 554; Leal, et al. v. IAC, GR 65425, Nov. 5, 1987, 554; Top-
COMMENT: (1) 'Contract' Radio
72, Aug. 26, 1977, 527; Weld Manufacturing, Inc. v. ECED, S.A., et al., GR 44944,
Tuason & Co., Inc., L-352 Cour t of Appe als, GR
Communications of the PhiIs.,
Inc. v. Aug. 9, 1985, 555; (8) Examples of Stipulations Which Have
Elements of a Cont ract, 528; (3)
44748, Aug. 29, 1986, 528; (2) Been Declared Valid, 555; (9) Designation of the Name of a
v. Centr al Bank , et
Classification of Contracts, 528;
Serra no Contract, 556; (10) Insurance Contract, 556; UCPB General
Jr. v. City Fiscal
al., L-30511, Feb. 14, 1980 , 529; Guin gona, Insurance Co., Inc. v. Masagana Telemart, Inc., GR 137172,
1984, 530; National Power Corp. April 4, 2002, 556.
of Manila, L-60033, April 4, ,
1986 , 531; Lao Sok v. Sabaysabay
v. EIN, GR 24856, Nov. 14, , Inc. v. Bern ardo ARTICLE 1307
Sweet Lines
GR 61898, Aug. 9, 1985, 532;
, et al., L-377 50, May 19, 1978,533; Angeles v. Calasanz, COMMENT: (1) Governing Rules for Innominate Contracts,
Teves and
, 534; Arquero v. Hon. Flojo 557; (2) The Four Kinds of Innominate Contracts, 557; San
GR 42283, March 18, 1985 BPI Expr ess Card Corp.
RCPI, GR 68111, Dec. 20,
1988, 535;
ar Miguel Corp. v. NLRC, GR 80774, May 31, 1988, 557; Santos
6, Dec. 14, 2001, 537; Insul v. Acufia, 53 O.G. 385, 558; (3) Legal Services for a Friend,
v. Eddie C. Olalia, GR 13108 181, 539; (4) Stage s
o, 80 SCRA 558; Corpus v. Court of Appeals, 98 SCRA 424, 558.
Life Assurance, Ltd. v. Ebrad Marim perio
to a Contract, 539;
of a Contract, 539; (5) Parties
Navi era, S.A. v. Cour t of Appeals, GR 40234, Dec. ARTICLE 1308
Compania
Tran sit, Inc. v. Court of Appeals and COMMENT: (1) Mutuality of Contracts, 558; Alcuaz v
14, 1987, 539; Baliwag e
and Zenaida Lopez and Georg PSBA, et al., GR 76353, May 2, 1988, 559; (2) Consequences
Spouses Sotero Cailipan, Jr. 540; (6) Basic Principles
31, 1989, of MUTUALITY, 559; Melencio v. Dy Tiao, 5 Phil. 99, 560;
L. Cailipan, GR 80447, Jan. of a
Contract, 540; (7) Co-existence PNB v. Court of Appeals, GR 88880, April 30, 1991, 560; (3)
or Characteristics of a 541; (8) Legal Effects of a
(Tort ), Exception to Inviolability of Contractual Obligations, 562;
Contract with a Quasi-Delict al. v.
541; Adoracion E. Cruz, et Anucension v. National Labor Union, 80 SCRA 350, 562.
Contract - How Determined, GR 12671 3, July 27,
nia Malo los,
CA & Spouses Eliseo & Virgi e v. Lacap , GR ARTICLE 1309
Thing, 542; Peopl
1998, 541; (9) Delivery of the
(10) 'Reforestation' Contract, 542;
139114, Oct. 23, 2001, 542; COMMENT: (1) Determination by Third Person, 563; (2)
iation , Inc. v. Republic of the Phils., When Decision Is Binding, 563; (3) Effect of Stipulation
Bataan Seedling Assoc
GR 141009, July 2, 2002, 542. 543
Regarding Arbitration, 563.
ARTICLE 1306 ARTICLE 1310
of Freedom, 543; Denila,
COMMENT: (1) The Principle COMMENT: Evidently Inequitable Determination Is Not
sillo, L-39569, May 16, 1975
Gubatanga and Inayan v. Bello Binding, 563.
Contract of Compromise), 544;
(Litigants May Enter Into a
ez v. Court of Appeals and Pedro ARTICLE 1311
Clarita Tankiang Sanch
1984, 545; (2) Limitations on
Cristobal, L-22675, June 22, COMMENT: (1) Principle of Relativity, 564; Quano v. Court of
s, 545; Ochengco v. City Court
the Nature of the Stipulation s Appeals, et al., GR 95900, July 23, 1992, 564; FGU Insurance
11, 1980, 546; (3) Limitation
of Zamboanga, L-44657, Jan. of Appe als, GR 44748, Corp. v. G.P. Sarmiento Trucking Corp. & Lambert M. Eroles,
v. Cour t
Imposed by Law, 546; RCPI 547; GR 141910, Aug. 6, 2002, 564; Siredy Enterprises, Inc. v.
v. Canizares, 1 Phil. 602,
Aug. 29, 1986, 547; Palma 75-76 , L-451 60, L-46211- Court of Appeals and Conrado de Guzman, GR 129039, Sept.
L-448
Cabatan v. Court of Appeals, 17, 2002, 565; (2) Exceptions to the Principle of Relativity,
Limitations Imposed by Morals,
12, Jan. 22, 1980, 548; (4) Cui 567; (3) Discussion of the General Rule, 567; El Hogar Filipino
16 Phil. 499, 548; Emeterio
548; De los Reyes v. Alojado, v. Avey ro, 37 v. Angeles, L-11613, Sept. 30, 1958, 568; Bobis v. Provincial
205, 548; Ibarra
v. Arellano University, 2 SCRA Phil. 156, 549; Goro spe, Sheriff of Camarines Norte, GR 29838, March 18, 1983, 569;
Marcos, 7
Phil. 273, 549; Batarra v. nino Manila Railroad Co. v. Compania Transatlantica, 38 Phil. 875,
35, Oct. 30, 1959, 549; Satur
et al. v. Gochangco, L-127 Adm. Matt er- 804 -CJ, 569; Celis v. Benedicto, O.G. March 6, 1941, p. 652,569; House
Mendoza,
Selanova v. Alejandro E. Deve lopm ent and Agro- International Building Tenants Association, Inc. v. IAC, GR
Comp any
May 19, 1975, 549; LL and
xli
xl
 ARTICLE 1317 589
Republic of
New Manila Lumber v.
75287, June 30, 1987, 570; 1960, 571; GSIS v. Susana COMMENT: (1) Requisite for a Person to Contract in the Name
April 28,
the Philippines, L-14248, Velar de, et al. of Another, 589; Monteverde v. Court of Industrial Relations,
27, 1969, 572;
Romualdo, et al., L-26170, Jan. 30, 1957, 573; (4) The 79 SCRA 269, 590; (2) Example of an UNAUTHORIZED (a
9216, April
v. Paez, et al., L-9208 to d Excep tion - Stipulation Form of UNENFORCEABLE CONTRACT) CONTRACT,
Secon
First Exception, 574; (5) The Appeals, 590; Badillo v. Ferrer, GR 51369, July 29, 1987, 590; (3)
C. Young, et al. v. Court of
Pour Autrui, 574; Rebecca Assoc iated Bank v. Court Implied Ratification, 591; (4) Effect of Ratification, 591; (5)
1989, 575;
et al., GR 79618, Jan. 13, 12379 3, June 29, Effect When an Unauthorized Person Does Not Really Need
Sarmiento, Jr., GR
of Appeals & Lorenzo Sr., 79 SCRA 195, 576; the Authority, 592; (6) Case, 592; Benjamin Coronel & Emilia
Encarnacion,
1998, 576; Florentino v. L-23276, Meking Vda. de Coronel v. Florentino Constantino, Aurea
Coqu ia, et al. v. Fieldmen's Ins. Co., Inc.,
Melec io Bank , 42 Phil. 182, Buensuceso & Court of Appeals, GR 121069, Feb. 7, 2003,
v. Phil. Nat.
Nov. 29, 1968, 576; Kauffman Centr al Bank of the 592.
Inc. v. The
577; Vargas Plow Factory, nacion,
578; Florentino v. Encar
Phil., L-25732, Feb. 27, 1969, rs, Inc. v. Princ e Line, CHAPTER 2- ESSENTIAL REQUISITES
Northern Moto
Sr., 79 SCRA 196, 578; Croni co v. J.M. Tuason & OF CONTRACTS 594
1960, 578;
et al., L-13884, Feb. 29, Becada, 44
26, 1977, 578; Tabar v. GENERAL PROVISIONS 594
Co., Inc., L-35272, Aug. tion, 580; (7) The Fourth
Excep
Phil. 169, 579; (6) The Third v. 594
Exception, 581; Velasco, et al. ARTICLE 1318
Exception, 580; (8) The Fifth 581.
Jan. 28, 1980, COMMENT: (1) Essential Requisites of Consensual
Court of Appeals, L-47544, 582 Contracts, 594; (2) Real Contracts, 594; (3) Solemn or Formal
ARTICLE 1312 Contracts, 594; (4) What Consent Presupposes, 595; (5) Effect
(2)
Creating Real Rights, 582; of Non-Consent, 595; (6) Transportation Ticket as a Contract,
COMMENT: (1) Contracts
(3) Example, 582. 595; Peralta de Guerrero, et al. v. Madrigal Shipping Co.,
Reason for the Article, 582; 582 L-12951, Nov. 17, 1959, 595; (7) Lack of Consent is Separate
ARTICLE 1313 and Distinct from Lack of Consideration, 595; Rido Montecillo
(2)
Defrauded Creditors, 582; v. Ignacia Reynes & Spaires Redemptor & Elisa Abucay, GR
COMMENT: (1) Right of
138018, July 26, 2002, 595.
Example, 582. 583
ARTICLE 1314 Section 1 - CONSENT 596
gh
Contract Is Violated Throu
COMMENT: (1) Rule if ple, 583; (3) ARTICLE 1319 596
n, 583; (2) Exam
Inducement of a Third Perso 21,
Cour t of Appe als, et al., GR 86683, Jan. COMMENT: (1) Consent as an Essential Requisite, 596; (2)
Case, 583; Yu v.
1993, 583. 'Consent' Defined, 596; (3) Requisites of Consent, 597; Roberto
585 Escay, et al. v. Court of Appeals, et al., L-37504, Dec. 18, 1974,
ARTICLE 1315 597; LCC Corporation v. Farrales, L-39804, April 17, 1984,
dor
of Contracts, 585; Salva 598; (4) Requisites for the Meeting of the Minds, 598; (5) An
COMMENT: (1) Consensuality Deve lopme nt
Appeals and S.E.A . Offer That Is CERTAIN, 598; Rosenstock v. Burke, 46 Phil.
P. Malbarosa v. Court of (2) How Contr acts Are 217, 598; Venturanza and Price v. Canizares, et al., L-13396,
2003, 585;
Corp., GR 125761, April 30, 586; Oct. 22, 1958, 599; Consolidated Mills, Inc. v. Reparations
of Consensual Contracts,
Perfected, 586; (3) Perfection Comm ission , L-227 68, Commission, 76 SCRA 18, 599; (6) An Acceptance That Is
Reparations
Lirag Textile Mills, Inc. v. of Perfe ction, 586; Vda. UNQUALIFIED and ABSOLUTE, 599; Cornejo v. Calupitan,
Conse quenc es
Oct. 28, 1977, 586; (4) 587; 48 O.G. 621, Feb. 1952, 600; Zayco v. Serra, 44 Phil. 326, 601;
et al., L-11744, May 28, 1958,
de Murciano v. Aud. Gen., of Appe als & Liber ty H. Meads v. Land Settlement and Development Corp., 98 Phil.
Court
Vicente & Michael Lim v. 119, 601; Batangan v. Cojuangco, 78 Phil. 481, 602; Datoc v.
1996, 75 SCAD 574, 587.
Luna, GR 118347, Oct. 24, 588 Mendoza, et al., (C.A.) 47 O.G. 2427, 602; Halili v. Lloret, et
al., 95 Phil. 78, 602; Montinola v. Victorias Milling Co., et al.,
ARTICLE 1316
ery 54 Phil. 782, 603; American President Lines, Ltd. v. Richard
Real Contracts, 588; (2) Deliv
COMMENT: (1) Perfection of acts Refer red to, 588; A. Klepper, L-15671, Nov. 29, 1960, 603; Clarin v. Rulona,
Real Contr
as a Requisite, 588; (3) The Consensual Contracts, 588; (5) L-30786, Feb. 20, 1984, 604; (7) Query, 604; (8) Acceptance
as
(4) Future Real Contracts Through Correspondence, 605; (9) Cases, 605; Laudico v.
589.
The Contract of Carriage,
 ARTICLE 1328 622
Appeals,
Sambrano v. Court of Tax
Arias, 43 Phil. 270, 605; Magsaysay Award Foundation v. COMMENT: (1) Some Voidable Contracts by Reason of
Ramon
101 Phil. 1, 606; (10) Rule if Incapacity, 622; (2) Lucid Intervals, 622; (3) Insanity in Some
Appeals, GR 55998, Jan. 17, 1985, 606; Things, But Sanity in Other Things, 623.
Court of Withdrawn or Revoked, 606.
Letter of Acceptance Is ............... 607 ARTICLE 1329 623
ARTICLE 1320 ................................................
Examples of COMMENT: (1) Modifications Re Incapacity, 623; (2)
COMMENT: (1) Forms of Acceptance, 607;
Rejection, (2) 608. Incompetents Under the Rules of Court, 623; (3) Problem,
Implied Acceptance, 608; (3) Implied 624.
................................................................................ 608
ARTICLE 1321 ARTICLE 1330 624
Offerer,
COMMENT: (1) Things that May Be Fixed by the
Purchase, 609; COMMENT: (1) Causes of Vitiated Consent, 624; (2) Nature of
609; (3) Contract toCommission, 76
609; (2) Auction Sale, Reparations a Voidable Contract, 625; (3) Clear and Convincing Evidence
Consolidated Mills, Inc. v. Douglas Millares and Rogelio on the Vice of Consent, 625.
Case, 609;
SCRA 18, 609; (4) Inc. & Esso
-Global Maritime Agency, ARTICLE 1331 625
Lagda v. NLRC, Trans GR 110524, July 29, 2002,
International Shipping Co., Ltd., COMMENT: (1) 'Mistake' or 'Error' Defined, 625; (2) Requisites
609. ................................................................................ 610 for Mistake to Vitiate Consent, 625; (3) Substantial Error,
626; (4) Error Regarding the Object of the Contract, 626; (5)
ARTICLE 1322 Through an Error Regarding the Conditions That Principally Induced the
COMMENT: (1) Acceptance of an Offer Made Party to Enter Into the Contract, 626; Rural Bank of Caloocan
Agent, 610; (2) Query, 611. v. Court of Appeals, L-32116, April 21, 1981, 626; (6) Error in
................................................................................ 611
Quality, 627; (7) Error in Quantity, 627; (8) Error in Identity
ARTICLE 1323 (2) or in Qualifications, 627; (9) Excusable Error, 628; (10) Error
COMMENT: (1) When Offer Becomes 611; Ineffective,
(4) Other Instances,
611; of Fact, Not of Law, 628.
Example,
Example, 611; (3) Another 628
ARTICLE 1332
612. ................................................................................ 612
COMMENT: (1) Rule in Case of Inability to Read or
ARTICLE 1324 613; Understand, 629; (2) Presumption, 629; (3) When Presumption
COMMENT: (1) General Rule on Options, SCRA 612; 331,BAR, 613; (2) Does Not Apply, 629; (4) Cases, 629; Ayola v. Valderrama
Co., Inc., 78
Cronico v. J.M. Tuason & Defined, 613; (4) Perfection of an Lumber Manufacturers Co., Inc., (C.A.) 49 O.G. 980, 629;
Exception, 613; (3) 'Option' Tek, L-9871, Transporte v. Beltran, (C.A.) 51 O.G. 1434, 630.
and Co. v. Cua Hian
Option, 614; Atkins, Kroll, 630
614. ARTICLE 1333
Jan. 31, 1958,
................................................................................ 615
COMMENT: (1) Knowledge of Doubt or Risk Does Not Vitiate
ARTICLE 1325
Advertisements, 615. Consent, 630; (2) Example, 631; (3) Mistake Caused by
COMMENT: Business 616 Inexcusable Negligence, 631.
................................................................................
ARTICLE 1326 ARTICLE 1334 631
Problem,
Advertisement for Bidders, 616; (2)
COMMENT: (1) Bidder Submits to COMMENT: (1) Requisites for Mutual Error to Vitiate
a Bid, 616; (4)
616; (3) Acceptance of Postal Savings Bank, 47 Phil. Consent, 631; (2) Reason for the Article, 631; (3) Distinguished
Conditions, 617; Leoquinco v. 618. from the Remedy of Reformation, 632.
Problem, 617; (6) Bids at Execution Sales,
772, 617; (5) ........................ 618 632
......................................... ARTICLE 1335
ARTICLE 1327
Voidable Contracts, 618; (2) COMMENT: (1) Violence and Intimidation, 632; (2) Requi-
COMMENT: (1) Two Classes of Unemancipated sites for Violence to Vitiate Consent, 633; (3) Requisites for In-
Consent, 619; (3)
Persons Incapacitated to Demented Persons (Unless They timidation to Vitiate Consent, 633; (4) Reasonable and Well-
Minors, 619; (4) Insane or -Mutes Who Grounded Fear, 633; (5) Imminent and Grave Evil, 634; (6)
Interval), 620; (5) Deaf
Acted During a Lucid 621; (6) Persons Nature of the Threat on Person and Property of the Persons
to Write (and Read), Persons Specially
Do Not Know How (7) Examples of Enumerated, 634; (7) Reason for Entering Into the Contract,
Specially Disqualified, 621;
Disqualified, 621.
xlv
xliv
 (4) Effect of Fraud in the Performance of a Contract, 649; (5)
Actionable Wrong, 635; 'Incidental Fraud' Defined, 649; (6) Fraud is Incompatible
an Unjust Act or an
635; (8) Threat of L-9071, Jan. 31, 1957, with Good Faith, 649; (7) 'Incontestability Clause,' 649;
Tabacalera v. Collector,
(9) Cases, 636; Oct. 31, 1957, 636; Manila Bankers Life Insurance Corp. v. Aban, 702 SCRA 417,
City Bank, L-9312,
636; Berg v. National v. Erlanger & Galinger, 649.
637; Sabalvaro
(10) Reverential Fear,
588, 637.
Inc., 64 Phil................................................................................. 637 ARTICLE 1345
COMMENT: (1) 'Simulation of a Contract' Defined, 650; (2)
ARTIICLE 1336 Caused by Third Requisites for Simulation, 650.
COMMENT: Violence or Intimidation
Person, 637. ................................................................................ 637 ARTICLE 1346

ARTICLE 1337 COMMENT: (1) Kinds of Simulated Contracts, 650; (2) Exam-
Vitiate ples, 651; (3) 'Absolutely Simulated Contract' Distinguished
COMMENT: (1) Requisites for Undue Influence
Circumstances to to
be Considered, from an Illegal Contract, 651; (4) Case, 652; Edilberto Cruz
of
Consent, 638; (2) Examples (3) Undue
v. Cui, et al., 100 Phil. 913, 638; of
and Simpliciano Cruz v. Bancom Finance Corp. (Union Bank
638; Cui, et al. (4) Contracts of the Phils.), GR 147788, March 19, 2002, 652.
Third Person, 639;
Influence Caused by
Adhesion, 639................................................................................. 639 Section 2 - OBJECT OF CONTRACTS
ARTICLE 1338
640; ARTICLE 1347
COMMENT: (1) Kinds of Fraud, 639;(4) (2)Material
Dolo Causante,and Serious
Causante, 640; COMMENT: (1) Object (Subject Matter) of a Contract, 653;
(3) Requisites of Dolo Marquez, 45 Phil. 381, 641; (5) Fault (2) Requisites, 653; (3) Within the Commerce of Man, 653;
Fraud, 641; Tuason v. Azarraga v. Gay, 52 Phil. 599, 642;
642; Leonardo Navarro v. Luis L. Lardizabal, et al., L-25361, Sept.
of Party Injured, Tuason de Paterno, 91
Phil. 686,
28, 1968, 654; Francisco Cuison, et al. v. Jose Ramolete, GR
Gregorio Araneta, Inc. v.
Contract, 643. 51291, May 29, 1984, 654; (4) Transmissible, 654; (5) Not
642; (6) Entrance Into a Ridiculous 644
................................................................................ Contrary to Law, Morals, etc., 654; (6) No Extension After
ARTICLE 1339 Expiration, 656; Gindoy v. Tapucar, 76 SCRA 31, 656; (7)
Poss v.
Human Blood is not an Object of Contract, 656.
COMMENT: (1) Failure to Cadwallader Disclose Facts, and 644;
Co. v. Smith,
644;
Gottlieb, 118 Misc. 318, Gutierrez Repide, 41 ARTICLE 1348
Co., 7 Phil. 461, 644; Strong v.
Bell and Litigation, 645. COMMENT: (1) Impossible Things or Services, 657; (2)
Phil. 947, 645; (2) Opponents in a 645
................................................................................ Impossibility Not to Be Confused from Mere Difficulty, 657.
ARTICLE 1340 Dacusin v. ARTICLE 1349
COMMENT: Usual Exaggerations in Trade, 645;
80 SCRA 89, 645. COMMENT: Object of the Contract, 657.
Court of Appeals,
................................................................................ 646
ARTICLE 1341 646; (2) Section 3- CAUSE OF CONTRACTS
COMMENT: (1) Mere Expression of an Opinion, ARTICLE 1350
Problem, 647................................................................................. 647
COMMENT: (1) 'Cause' Defined, 658; Private Development
ARTICLE 1342 647; Corp. of the Phils. v. IAC & Ernesto C. del Rosario, GR
COMMENT: (1) Misrepresentation Veloso, by a Third Person, 160, 648. 73198, Sept. 2, 1992, 658; (2) 'Cause' and 'Subject Matter'
31 Phil.
(3) Case, 648; Hill v. Distinguished, 660; (3) Bar Question, 660; (4) Classification of
(2) Query, 647;
................................................................................ 648 Contracts as to Cause, 660; (5) Cause in Accessory Contracts
ARTICLE 1343 Like Mortgage and Pledge, 661; Phil. Guaranty, Inc. v.
Fait,h, 648.
COMMENT: Misrepresentation Made in Good Dino, et al., L-10547, Jan. 31, 1958, 661; Garrido v. Perez
................................................................................ 648 Cardenas, 60 Phil. 964, 661; (6) Cause in Accessory Contracts
ARTICLE 1344 of Personal Guaranty (Guaranty and Suretyship), 661; (7)
Consent, 648;
Moral Obligation as a Valid Cause of a Civil Obligation,
COMMENT: (1) Requisites for Fraud to Vitiate
Consent, 649; (3) Types
Does Not Vitiate 662; Mactal v. Melegrito, L-16114, March 24, 1961, 662; (8)
(2) Incidental Fraud Performance of Contracts, 649;
Contemplated in the
of Fraud
xlvii
xlvi
 CHAPTER 4- REFORMATION OF INSTRUMENTS (n) 684
Vda. de Cruz,
Consideration, 662; Javier v. 1985, 662. INTRODUCTORY COMMENT 684
Shocking Cause or 67888, Oct. 8,
662; Ong v. Ong, GR
80 SCRA 343,
................................................................................ 663 (1) 'Reformation' Defined, 684; (2) Reason for Reformation,
684.
ARTICLE 1351 Entering Into a
COMMENT: (1) Motives ofDistinguished the Parties forfrom Cause, 663; ARTICLE 1359 684
Contract, 663; (2) Motive Supreme Court, 663; (4) COMMENT: (1) Distinctions Between 'Reformation' and 'An-
of Distinction by the
(3) Statement Motive, 663.
Distinguished from Illegal 664
nulment', 685; (2) Requisites for the Action for Reformation,
Illegal Cause................................................................................ 685; Sarming v. Dy, GR 133643, June 6, 2002, 685; BA Fi-
nance Corp. v. IAC & Rene Tan, GR 76497, Jan. 20, 1993, 686;
ARTICLE 1352 Cause,
Requisites for Cause, 664; (2) Existing 1977, (3) No New Contract Is Made, 687; Cosio v. Palileo, L-18452,
COMMENT: (1) L-33360, April 25, May 31, 1965, 687; (4) Reformation May Still Prosper Even if
Court of Appeals, Cause, 665; (5) Lawful
664; Carantes v. 665; (4) True Property Involved Is Already Mortgaged by Buyer to a Third
664; (3) Bar
Problem, al., L-11240, Dec.
Court of Appeals, et 668; Velez v.
Person, 687; Jayme, et al. v. Alampay, et al., L-39592, Jan.
Cause, 666; Liguez v. the Cause Is
Illegal, 28, 1975, 687.
666; (6) Effect if
18, 1957,
Ramas, 40 Phil. 787, 668.
................................................................................ 669 ARTICLE 1360 688
COMMENT: Rule in Case of Conflict, 688.
ARTICLE 1353 Cause, 669.
Statement of a False
COMMENT:................................................................................ 669 ARTICLE 1361 688
COMMENT: (1) When Reformation May Be Asked Because of
ARTICLE 1354 Exists, 669.
Presumption That Cause Mutual Mistake, 688; (2) Example, 688; (3) Another Example,
COMMENT:................................................................................ 670 689; (4) Case, 689; San Miguel Brewery v. La Union and Rock
Insurance Co., 40 Phil. 674, 689.
ARTICLE 1355 on Lesion,
Defined, 670; (2) Rules 690
COMMENT: (1) 'Lesion' Evidence of Vitiated ARTICLE 1362
671; (4) Lesion as
670; (3) Problem, COMMENT: (1) Unilateral Mistake, 690; (2) Example, 690;
Consent, 671. (3) Case, 690; Ong Chua v. Carr, et al., 53 Phil. 975, 690.
.......................................... 672
OF CONTRACTS ARTICLE 1363 691
CHAPTER. 3 - FORM ................................................................................ 672
COMMENT: Unilateral Mistake Also, 691.
ARTICLE 1356 Required, 672;
ARTICLE 1364 691
COMMENT: (1) Generally, Form Is Notde los Angeles, et
Walfrido
Dauden-Hernaez v. Hon. SCRA
Marlene Duque v. Domingo, 80 COMMENT: (1) Failure to Convey the True Intent, 691; (2)
30, 1969,672; Santos, L-46892, Sept. 30,
al., L-27010, April Case, 692; Manila Engineering Co. v. Cranston and Heacock,
del Rosario v. Examples of
654, 673; Heirs of Is Important, 674; (3) 45 Phil. 128, 692.
When Form 674; (5) Case, 675;
1981, 673; (2) (4) Some Problems, ARTICLE 1365 692
Formal Contracts, 674; 29, 1987, 675.
Gallardo v. IAC, GR 67742, Oct. 676 COMMENT: (1) Intent to Have a Mortgage or Pledge, 692; (2)
................................................................................
How to Judge the Parties' Intent, 693.
ARTICLE 1357 Other to
Party to Compel the 693
COMMENT: (1) Right of One 677; (2) Examples, 677; (3) ARTICLE 1366
Form,
Execute the Necessary 92871, Aug. 2,
Jomoc v. Court of Appeals, GR (1996), 680.
COMMENT: (1) When Reformation Is Not Allowed, 693; (2)
Cases, 678; Appeals, 68 SCAD 679 Reason for Instance No. 1 (Simple Donations), 693; (3) Reason
1991, 678; Lim v. Court of
................................................................................ 680 for Instance No. 2 (Wills), 693; (4) Reason for Instance No. 3
ARTICLE 1358 (Void Agreement), 693.
Court of
for Convenience, 681; Fule v. 682; ARTICLE 1367 694
COMMENT: (1) Form (2) Problem,
March 2, 1998, 681;
Appeals, GR 112212, Validity of a Public Instrument, 682; COMMENT: (1) Effect of an Action to Enforce the Instrument,
the L-25650, June 11,
(3) Presumption of v. Sadorra, et al., 694; (2) Example, 694.
Cabaliw and SadorraCastillo, L-18238, Jan. 22, 1980, 683.
1975, 682; Castillo v.
 ARTICLE 1368
694
COMMENT: (1) Plaintiffs in Action for Reformation, 694;
(2) Problem, 695; (3) What Complaint Must Allege, 695;
(4) Prescriptive Period for Reformation of a Contract, 696;
Antonio Jayme, et al. v. Hon. Nestor Alampay, L-39592, Jan.
28, 1975, 696.
ARTICLE 1369
696
COMMENT: Procedural Rules, 696.
CHAPTER 5- INTERPRETATION OF CONTRACTS
697
ARTICLE 1370
697
COMMENT: (1) Reason for Interpretation of Contracts, 697;
(2) Rule in Case of Conflict, 697; (3) Cases, 698; Aniversario v.
Ternate, 10 Phil. 53, 698; Baluran v. Navarro, 79 SCRA 309,
698; Francisco J. Nicolas v. The Reparations Commission and
Pedro Pastoral, L-28649, May 21, 1975, 698; Pay v. Vda. de
Palanca, L-29900, June 28, 1974, 699; AbeIla v. Gonzaga, 56
Phil. 132, 699; Aquino v. Deala, 63 Phil. 582, 700; Jimenez v.
Bucoy, L-10221, Feb. 28, 1958, 701; Bijis v. Legaspi, L-10705,
March 30, 1960, 701; Leonor v. Sycip, L-14220, April 29,
1961, 701; Fidel Teodoro v. Felix Macaraeg and Court of
Agrarian Relations, L-20700, Feb. 27, 1969, 701; Re Mario
B. Chanliongco, 79 SCRA 364, 702; People v. Hon. Constante
A. Ancheta, et al., L-39993, May 19, 1975, 702; GSIS v. Court
of Appeals, GR 52478, Oct. 30, 1986, 703; U.P. College of
Agriculture v. Gabriel, GR 70826, Oct. 12, 1987, 703; Azcona
v. Jamandre, GR 30597, June 30, 1987, 704; Simeon Del
Rosario v. Shell Co. of the Phils., Ltd., L-28776, Aug. 19,
1988, 705; The Manila Banking Corp. v. Anastacio Teodoro,
Jr. and Grace Anna Teodoro, GR 53955, Jan. 13, 1989, 705;
Filoil Marketing Corp. (now Petrophil Corp.) v. IAC and
Josefina Alberto De PahaIan, GR 67115, Jan. 20, 1989, 706;
Baliwag Transit v. Court of Appeals, et al., GR 80447, Jan.
31, 1989, 707; Lucio Tan Alim v. Court of Appeals, GR 93213,
Aug. 9, 1991, 707; Mojica v. Court of Appeals, GR 94247,
Sept. 11, 1991, 709; Republic v. Sandiganbayan, GR 9067,
Nov. 5, 1991, 709; Oil & Natural Gas Commission v. Court
of Appeals & Pacific Cement Co., Inc., GR 114323, July 23,
1998, 710; Petrophil Corp. v. Court of Appeals, GR 122796,
Dec. 10, 2001, 710; Manila Bankers Life Insurance Corp. v.
Aban, 702 SCRA 417, 710; Alpha Insurance & Surety Co. v.
Castro, 704 SCRA 550, 710; (4) Why Monetary Claims under a
'Construction Contract' are Disputes Arising from 'Differences
in Interpretation of the Contract,' 711; The Manila Insurance
Co., Inc. v. Amurao, 688 SCRA 609, 711; (5) Query, 711.
ARTICLE 1371
711
COMMENT: (1) How to Judge Intent of the Parties, 711; (2)
Cases, 712; Manila Electric Co. v. Commissioners, 30 Phil.
1 ii
387, 712; Aurora Capulong v. Court of Appeals, L-61337, June
29, 1984, 712; Weldon Construction Corp. v. Court of Appeals,
GR 35721, Oct. 12, 1987, 712; (3) Some Observations, 713.
ARTICLE 1372
COMMENT: (1) Effect of the Use of General Terms, 713;
(2) Cases, 714; Phil. Trust Co. v. Echaus, 52 Phil. 852, 714;
NAESS Shipping Phils., Inc. v. NLRC, GR 73441, Sept. 4,
1987, 714; (3) Special Intent Prevails Over a General Intent,
715.
ARTICLE 1373
COMMENT: (1) Stipulation Admitting of Several Meanings,
715; (2) Effect of an Interpretation Upholding the Validity of
the Contract, 716.
ARTICLE 1374
COMMENT: Stipulations To Be Read Together, 716; Bank of
the P.I. v. Ty Cameo Sobrino, 57 Phil. 801, 716; North Negros
Sugar Co. v. Compania Gen. de Tabacos, L-9277, March 29,
1957, 717; Shell Co. v. Firemen's Ins. etc., et al., L-8169, Jan.
29, 1957, 717; Carlos Bundalion v. Court of Appeals, L-56739,
June 22, 1984, 718.
ARTICLE 1375
COMMENT: (1) Words to Be Interpreted in Keeping with the
Nature and Object of the Contract, 718; (2) Meaning of the
Article, 718; (3) Use of Other Meanings, 719.
ARTICLE 1376
COMMENT: (1) Effect of Usage or Custom of the Place, 719;
(2) Pleading and Proof of Customs and Usages, 719.
ARTICLE 1377
COMMENT: (1) Interpretation to Be Against the Party Who
Caused Obscurity, 720; (2) Cases, 720; Gov't. of the Phil. v.
Derham Bros., 36 Phil. 960, 720; Enriquez v. A.S. Watson
and Co., 22 Phil. 623, 721; Pao Chuan Wei v. Romerosa and
General Indemnity Co., Inc., L-10292, Feb. 28, 1958, 721;
Lucio Tan v. Court of Appeals & Sanchez, GR 100942, Aug.
12, 1992, 722; Finman Gen. Ass. Corp. v. Court of Appeals &
Surposa, GR 100970, Sept. 2, 1992, 722; (3) Rule in Contracts
of Adhesion, 723; National Power Corp. v. Court of Appeals,
GR 43706, Nov. 14, 1986, 724; Phil. American Gen. Ins. Co. v.
Sweet Lines, Inc., GR 87434, Aug. 5, 1992, 724; (4) A Credit
Card Membership is a Contract of Adhesion, 724; Pantaleon
v. American Express International, Inc. (AMEX), 629 SCRA
276 (2010), 724.
ARTICLE 1378
COMMENT: (1) Doubts as to Principal Object or Incidental
Circumstances, 726; (2) Doubt as to the Principal Object, 726;
 ARTICLE 1383 744
727; Olino v.
Incidental Circumstances,
(3) Doubts as to the COMMENT: (1) Rescission Not a Principal Remedy, 744; (2)
Medina, 13 Phil. 379, 728. Cases, 745; Panlilio v. Victoria, 35 Phil. 706, 745; Contreras
................................................................................ 728
and Gingco v. China Banking Corp., 76 Phil. 709, 745.
ARTICLE 1379 Principles of
Use of the ARTICLE 1384 745
COMMENT: (1) Suppletory 728; (2) Language in the
Court,
Interpretation in the Rules of Used, 729; (4) COMMENT: (1) Partial Rescission, 745; (2) Person Benefited,
(3) Meaning of Words
Place of Execution, 729; (Not Printed) Words, 746.
and Written
Conflict Between Printed 758, 729; (5) Use ARTICLE 1385 746
Bell and Co., 56 Phil.
729; Jarque v. Smith, Interpretation in Favor
Experts and Interpreters, 730; (6) COMMENT: (1) Necessity of Mutual Restitution, 746; (2)
of Customs, 730.
730; (7) Usage or Requisites Before the Action for Rescission Can Be Brought,
of a Natural Right,
................................. 731 746; (3) Illustrative Questions, 747.
RESCISSIBLE CONTRACTS ARTICLE 1386 748
CHAPTER 6- ........................................................... 731
INTRODUCTORY COMMENT COMMENT: Effect if Contracts Were Judicially Approved,
Comment
Defective Contracts, 731; (2) 748.
(1) The Four Kinds of
Commission, 732. ARTICLE 1387 748
of the Code ................................................................................ 733
ARTICLE 1380 COMMENT: (1) Presumptions of Fraud, 749; (2) Gratuitous
for Alienations, 749; (3) Onerous Alienations, 750; Isidora L.
COMMENT: (1) 'Rescission' Defined, 733; (2) Requisites
734; Legarda
of Rescission, Cabaliw and Soledad Sadorra v. Sotero Sadorra, et al.,
Rescission, 734; (3) Two Kinds Jan. 28, 1974, 735;
(4) L-25650, June 11, 1975, 750; De Jesus v. G. Urrutia and
L-26578,
Hermanos v. Suldano, 736; Luneta Motor Co. v. J.B. Co., 33 Phil. 171, 752; (4) Badges of Fraud, 752; Oria v.
Cases,
Mutual Dissent, 735; (5) of Manila, 67 McMicking, 21 Phil. 243, 752; Alpuerto v. Perez Pastor and
(C.A.) 39 O.G. 1101, 736; Noble v. City Contract,
Richey, Not a Void Roa, 38 Phil. 785, 754; (5) Rule in Case of Registered Lands,
Rescissible Contract Is
Phil. 1, 736; (6) Rescinded, 737; (8) 755; Abaya v. Enriquez, et al., L-8988, May 17, 1957, 755; (6)
Contracts Cannot Be
737; (7) Fictitious Marimperio v. Court of Appeals, Valid Before Rescission, 755; Borja v. Addison, 44 Phil. 895,
Extrajudicial Rescission, 738; Refusal, 738; 755; (7) Necessity of a Direct Action for Rescission, 756; (8)
14, 1987, 738; (9) Right of First
GR 40234, Dec. Appeals, GR 117355, April 5,2002, Presumption of Validity, 756; (9) Fraud Alone Not Sufficient
Riviera Filipina v. Court of Gotesco Properties, Inc. for Rescission, 756.
Rescission, 738;
738; (10) Effect of (11) Case, 739;
692 SCRA 319, 738; Query, 738; ARTICLE 1388 756
v. Fajardo, Ltd. (Phil. Branch),
Inc. v. PAP Co.,
Malayan Insurance Co., COMMENT: (1) Effect of Bad Faith, 757; (2) Subsequent
703 SCRA 314, 739. Transfers, 757; (3) Concept of `Bad Faith,' 757; MIAA v.
................................................................................ 739
Rodriguez, 483 SCRA 619 (2006), 758; Citibank, NA v.
ARTICLE 1381 Contracts, Cabamongan, 488 SCRA 517 (2006), 758.
COMMENT: (1) Enumeration of theWards, Rescissible739; (3) Second
In Behalf of ARTICLE 1389 758
739; (2) First Case - Absentees, 740; (4) Third Case
Representation of
Case - In When the Latter COMMENT: (1) Prescriptive Period for Rescission, 758; (2)
Undertaken in Fraud of Creditors, Due Them,"
- "Those Manner Collect Claims Examples, 759; (3) Who Can Bring the Action?, 759; (4) Who
Cannot in Any Other Mortera v. May Be Defendants?, 759.
Things in Litigation, 742; Instances,
740; (5) Fourth Case - Other
(6) Fifth Case -
Martinez, 14 Phil. 541, 742; CHAPTER 7- VOIDABLE CONTRACTS 760
742. ................................................................................ 742
ARTICLE 1390 760
ARTICLE 1382 of
Payments Made in a State COMMENT: (1) Distinctions Between a Rescissible and
COMMENT: (1) Premature Corporation v. a Voidable Contract, 760; (2) Voidable Contract Not Void
Asia Banking
Insolvency, 743; (2) Cases, 743; Bank v. IAC, GR 67881, Ab Initio, 761; (3) Grounds for Annulment (Declaration of
Pilipinas
Corcuera, 51 Phil. 781, 743; Nullity), 761; Mercedes Canullas v. Hon. Willelmo Fortun,
June 30, 1987, 743.

lii
 v. Court of Appeals, GR 35648, May 16, 1983, 775; (3) Non-
Bring, 762;
762; (4) The Action to availability to Strangers, 776; (4) Effect of Registration of the
L-57499, June 22, 1984, 1957, 762; (5) Selling Land, 776; (5) Extra Liability of the Guilty Party, 776; (6)
L-9021, May 31,
Lopez v. Jimmy Ong, Condominium Units, 763; G.G. Personal Obligations, 776.
Lots, and Inc., 614
of Subdivision World Class
Properties,
Sportswear Mfg. Corp. v. ARTICLE 1399
SCRA 75 (2010), 763. 763
................................................................................ COMMENT: (1) Generally, No Restitution by Incapacitated
ARTICLE 1391 Party, 776; (2) No Presumption of Enrichment, 777; (3) Case,
Period for 777; Uy Soo Lim v. Tan Unchuan, 38 Phil. 552, 777; (4) The
COMMENT: (1) Historical Notes on Prescriptive
Prescription, 764; (3) Illustrative Capacitated Person Must Restore Whether He Benefited or
Annulment, 763; (2) Effect of L-33360, April
Court of Appeals, Not, Except if Art. 1427 of the Civil Code Applies, 777.
Problems, 764; Carantes v. and Sewerage
Metropolitan Waterworks 128520, Oct. 7,
25, 1977, 765; Appeals, GR 12600 and ARTICLE 1400
System v. Court of COMMENT: (1) Value May Be Substituted for Thing Itself,
1998, 765. ................................................................................ 766
778; (2) Example, 778; (3) Case, 778; Dumasug v. Modelo, 34
1392 Phil. 252, 778.
ARTICLE Ratification, Acknowledgment
COMMENT: (1) Confirmation, (3) Effects
the Civil Code, 767; (Properly, ARTICLE 1401
Distinguished, 766; (2) Term in Ratification
767; (4) Requisites of COMMENT: (1) Historical Notes on Effect of Loss of Object
of Ratification, Voidable Contract), 767.
of a
Confirmation................................................................................ 767 Through Fraud or Fault of the Victim, 779; (2) Query on
Squandering by Insane Person, 779; (3) Problems, 780.
ARTICLE 1393 Examples of
Ratification, 768; (2) ARTICLE 1402
COMMENT: (1) Kinds of 768.
Tacit Ratification, 768; (3) Lapse of Time, 768 COMMENT: (1) Reason Why One Party Cannot Be Compelled
................................................................................
1394 if Other Party Does Not Restore, 781; (2) Example, 781; (3)
ARTICLE Ratification
Guardian, 768; (2) Effect of Loss Through Fortuitous Event, 781; (4) Problem,
COMMENT: (1) Ratification by 769; (3) Distinguished from 781.
Party Himself,
by the Injured
Action to Rescind, 769. 769
................................................................................ CHAPTER 8- UNENFORCEABLE CONTRACTS
ARTICLE 1395
Not Needed, 769. INTRODUCTORY COMMENT
Conformity of Guilty Party
COMMENT:................................................................................ 769
(1) Unenforceable Contracts Distinguished from Voidable
ARTICLE 1396 and Rescissible Contracts, 782; (2) Kinds of Unenforceable
769; (2)
COMMENT: (1) Retroactive Effect of Ratification, Contracts, 782.
Example, 769. 770 ARTICLE 1403
....................................................
..............
ARTICLE 1397 COMMENT: (1) Unauthorized Contracts, 783; Leabres v. Court
Annulment, 770;
May Ask for
COMMENT: (1) Persons Who 27, 1941, p. of Appeals, GR 41847, Dec. 12, 1986, 784; Bumanlag v. Alzate,
(C.A.) 39 O.G. May
Mendoza v. De Guzman, of Appeals, L-28774, GR 39119, Sept. 26, 1986, 784; (2) The Statute of Frauds, 784;
Development Bank v. Court Philippines v. Heirs of Cecilio Claudel, et al. v. Court of Appeals, GR 85240,
1505, 770;
Development Bank of the Development
Feb. 28, 1980, 770; 1980, 770; July 12, 1991, 785; (3) Examples of the First Principle, 789;
L-28774, Feb. 28,
Court of Appeals, Appeals, L-28774, Feb. Maria Paterno, et al. v. Jao Yan, L-12218, Feb. 28, 1961, 791;
Philippines v. Court of
Bank of the Ong Escutin v. Court (4) Examples of Principle No. 2, 791; (5) Examples of Principle
1980, 771; CFI of Rizal and Elena 771; Earth Minerals No. 3, 793; (6) Examples of Principle No. 4, 793; (7) Example
28, Ong, July 25, 1981,
of Appeals and Felix Executive Sec. Catalino Macaraig, Jr., of Principle No. 5, 794; (8) Example of Principle No. 6, 795; (9)
Exploration v. Deputy of the Victim, 773; Example of Principle No. 7, 795; (10) Example of Principle No.
1991, 771; (2) Creditors
GR 78569, Feb. 11, Minor, 774. 8, 795; (11) Example of Principle No. 9, 795; (12) The Specific
(3) Intimidation or Fraud by a 774 Agreements, 796; (13) Illustration of Specific Agreement No.
................................................................................
1, 796; Babao v. Perez, et al., L-8334, Dec. 28, 1957, 797; (14)
ARTICLE 1398 Examples,
Annulment, 774; (2) Illustration of Specific Agreement No. 2, 799; (15) Illustration
COMMENT: (1) Effects of 602, 775; Tan Queto
Mun. of Cavite v. Rojas, 30 Phil.
776;
lv
liv
 Cabague v. Auxilio, 92 Phil. Court of Appeals, L-37159, Nov. 29, 1977, 816; (4) Simulated
of Specific Agreement No. 3, 800; Contracts, 817; Castillo v. Castillo, L-81238, Jan. 22, 1980,817;
Specific Agreement No. 4, 801;
294, 800; (16) Illustration of Carifio v. Court of Appeals, GR 47661, July 31, 1987, 817; (5)
of Specific Agreemen t No. 5, 802; Western
(17) Illustration Contracts Expressly Prohibited by the Law, 818; De la Cruz v.
Medalle, L-23213, Oct. 28,
Mindanao Lumber Co., Inc. v. Better Living, Inc., L-26936, Aug. 19, 1977, 819; Insular Life
J.M. Tuason and Co., Inc., L-23749, April
1977, 803; Cruz v. Assurance Co., Ltd. v. Ebrado, 80 SCRA 181, 819; Tolentino
Appeals, GR 61932, June
29, 1977, 803; Syquia v. Court of v. Judge Edgardo L. Paras, GR 43095, May 30, 1983, 819;
n of Specific Agreemen t No. 6,
30, 1987, 803; (18) Illustratio COMELEC, etc. v. Judge Ma. Luisa Quijano-Padilla RTC of
Express Trust Concernin g Real Property, 804; (20)
803; (19) QC Br. 215 & Photokina Marketing Corporation, GR 151992,
, 804; (21) Duty of the
Duty of the Attorney for the Defendant Sept. 18, 2002, 819; (6) Sale to a Concubine of Conjugal Abode
Plaintiff, 805; (22) Problem on 'Sufficient
Attorney for the ents Is Considered VOID, 822; Mercedes Canullas v. Hon. Willelmo
Formal Requirem
Memorandum,' 805; (23) Meaning of Fortun, L-57499, June 22, 1984, 822; (7) Contracts Prohibited
806; Berg v. Magdalen a Estate,
of 'Sufficient Memorandum,' Urider the Constitution, 822; (8) Some Characteristics of Void
L. Espino, L-23351,
92 Phil. 110, 806; Cirilo Paredes v. Jose Contracts, 823; Bobis v. Prov. Sheriff of Camarines Norte, GR
QUESTIO N, 808; (25) BAR,
March 13, 1968, 807; (24) BAR 29838, March 18, 1983, 825; Pilipinas Shell Petroleum Corp.
Authority of the Agent to Sell Land or Any
809; (26) Rule on v. De la Rosa and the Workmen's Compensation Commission,
to Put in Writing,
Interest Therein, 809; (27) Oral Promise 809; (29) L-41301, Dec. 15, 1986, 825; (9) Sale of Conjugal Properties,
of Unenforce able Contract,
809; (28) The Third Kind Miranda, 825; (10) Who May Attack Contracts Alleged to Be Fictitious
Cordial v. David
New Jurisprudence, 810; Gerardo or Void, 826; Gorospe v. Santos, L-30079, Jan. 30, 1976, 826;
GR 135492, Dec. 14, 2000, 810. (11) The Case of Abelardo Lim, 826; Abelardo Lim & Esmadito
810 Gunnaban v. Court of Appeals & Donato H. Gonzales, GR
ARTICLE 1404
125817, Jan. 16, 2002, 826.
COMMENT: Unauthorized Contracts, 810.
810 ARTICLE 1410
ARTICLE 1405
Infringing the COMMENT: (1) Action for Declaration of Inexistence of the
COMMENT: (1) Ratification of Contracts Contract Does Not Prescribe, 828; Caram, Jr. v. Laureta,
Example of Waiver, 811.
Statute of Frauds, 810; (2) L-28740, Feb. 24, 1981, 828; Buenaventura v. Court of
811 Appeals, GR 50837, Dec. 28, 1992, 828; Heirs of Ingjugtiro
ARTICLE 1406
v. Sps. Casals, GR 134718, Aug. 20, 2001, 829; (2) Query
Compel the Other to
COMMENT: (1) Right of One Party to on Whether Void Contract Still Has to Be Declared Void,
Example, 811.
Execute the Needed Instrument, 811; (2) 829; Tolentino v. Paras, GR 43095, May 30, 1983, 829; Sps.
811 Narciso Rongavilla & Dolores Rongavilla v. Court of Appeals,
ARTICLE 1407
et al., GR 83974, Aug. 17, 1998, 830.
Are Incapacitated,
COMMENT: Contract Where Both Parties
ARTICLE 1411
812.
812 COMMENT: The Pari Delicto Rule Refuses Legal Remedy to
ARTICLE 1408
Either Party to an Illegal Agreement and Leaves them Where
Unenforceable Con-
COMMENT: Strangers Cannot Assail They Were, 830.
tracts, 812.
ARTICLE 1412
CONTRACTS 814
CHAPTER 9- VOID OR INEXISTENT COMMENT: (1) Two Kinds of Illegal Contracts, 831; (2) Illegal
(New, except, Articles 1411 and 1412.) and Criminal Contracts, 831; Packaging Products Corp. v.
814 NLRC, GR 50383, July 23, 1987, 832; Perez v. Herranz, 7
INTRODUCTORY COMMENT Phil. 693, 834; (3) Illegal But Not Criminal Contracts, 834;
Distinguished, 814; (2) Philippine Banking Corp. v. Lui She, L-17587, Sept. 12,
(1) Voidable and Void Contracts 1967, 835; De Raquiza v. Castellvi, 77 SCRA 88, 835; Teja
able and Void Contracts Distinguis hed, 815.
Unenforce Marketing, et al. v. Nale and IAC, GR 65510, March 9, 1987,
815
ARTICLE 1409 836; Land Ownership by Americans After the Expiration of
Contracts, 815; (2) the Laurel-Langley Agreement on July 3, 1974, 837; Mass v.
COMMENT: (1) Enumeration of the Void Director of Lands, 80 SCRA 269,838; Avila v. Court of Appeals,
815; (3) Non-Existing Cause or Object,
Special Classification, GR. 45255, Nov. 14, 1986, 838; (4) The Pari Delicto Doctrine,
Singson v. Babida, L-30096, Sept. 27, 1977,816; Rivero v.
816;
 ARTICLE 1422 853
Gambling, 841; (6) 'Gambling'
839; (5) Some Questions on QUESTION, 842; COMMENT: Contract That Is the Direct Result of a Previous
Distinguished from 'Betting,' 842; (7) BAR
able to Inexiste nt and Void Illegal Contract, 853; E. Razon, Inc. v. Phil. Ports Authority,
(8) 'In pan delicto' Rule Inapplic et al., GR 75197, June 22, 1987, 853.
Contracts, 843.
843
ARTICLE 1413 Title III. — NATURAL OBLIGATIONS 856
(New, except Article 1427.)
COMMENT: Meaning of Excess, 843.
844
ARTICLE 1414 INTRODUCTORY COMMENT 856
Recovery Can Be Had Comment of the Code Commission Re Natural Obligations,
COMMENT: (1) One Instance Where
Delicto, 845; (2) Example, 845; 856.
Even in the Presence of Pan (4) Applicable
Code Commis sion, 845;
(3) Comment of the ARTICLE 1423 856
845.
Even if Parties Are Not Equally Guilty,
845 COMMENT: (1) Civil and Natural Obligations Distinguished,
ARTICLE 1415 856; (2) 'Voluntary Fulfillment' Defined, 857; (3) Undue
Incapacitated, 846; (2) Payment Distinguished from Natural Obligation, 857; (4) No
COMMENT: (1) Effect if One Party Is
Example, 846. Juridical Tie in Moral Obligations, 857; (5) Example of Other
846 Natural Obligations, 858; (6) Conversion of Moral Obligations
ARTICLE 1416 to Civil Obligations, 858.
and Those Merely
COMMENT: (1) Contracts Illegal Per Se Prohibited, ARTICLE 1424 858
846; (3) Merely
Prohibited, 846; (2) Illegal Per Se, Sua, and
846; Alejand ro Ras v. Estela COMMENT: (1) Effect of Extinctive Prescription, 858; (2)
846; (4) Examples,
847. Example of the Article's Application, 858.
Ramon Sua, L-23302, Sept. 25, 1968,
847
ARTICLE 1417 ARTICLE 1425 859
Payment in Excess of
COMMENT: (1) Rule in Case of COMMENT: (1) Payment by a Third Person, 859; (2) Example,
Maximum Price, 847; (2) Exampl e, 848. 859; (3) Payment With Debtor's Consent, 859.
848
ARTICLE 1418 ARTICLE 1426 859
(2) Basis of Minimum
COMMENT: (1) Hours of Labor, 848; COMMENT: (1) Contracts by Minors Between 18 and 21 —
n Leaves, 848; Re Mario
Wage Rates, 848; (3) Sick and Vacatio When There Has Been Annulment, 860; (2) Example, 860; (3)
B. Chanliongco, 79 SCRA 364, 848. Majority Age, 860.
848
ARTICLE 1419 ARTICLE 1427 860
No Waiver of Right,
COMMENT: (1) Minimum Wage — COMMENT: (1) Contracts by Minors — No Annulment Yet,
et al., L-32362, Sept.
849; Ineceta Alfanta v. Nolasco Noe, Ownership) 849; (2) 860; (2) Query, 861.
19, 1973 (Social Function of Property
Domestic Helpers, ARTICLE 1428 861
Minimum Wages for Household and
Should Be Paid, 850;
849; (3) Penalty, 849; (4) When Wages v. The Hon.
COMMENT: (1) Winner in an Action to Enforce a Civil
and Francisc o Andres Obligation, 861; (2) Example, 861.
San Miguel Corporation 850; Bacata
16, 1975,
Secretary of Labor, et al., L-39195, May , Oct. 27, ARTICLE 1429 861
Commis sion, L-23992
v. Workmen's Compensation
1975, 851. COMMENT: (1) Rule in Case of Payment of Debts Beyond
852 Value of the Decedent's Estate, 861; (2) Example, 862.
ARTICLE 1420
852. ARTICLE 1430 862
COMMENT: Illegal Terms of a Contract,
853 COMMENT: (1) Payment of Legacies Despite the Fact That
ARTICLE 1421 the Will Is Void, 862; (2) Example, 862; (3) Analogous Cases,
Generally Available to
COMMENT: Defense of Illegality Not 862.
Third Persons, 853.
 ARTICLE 1437 880
.................................................................. 863
ESTOPPEL (n) 863 COMMENT: (1) Estoppel Concerning Immovable Property,
Title IV. - ........................................................... 880; (2) Cases, 881; Fabie, et al. v. City of Manila, 10 Phil.
INTRODUCTORY COIVIMENT 64, 881; Cristobal v. Gomez, 50 Phil. 810, 881; (3) Effect of
863.
863 Consent on the Part of the True Owner, 881; Cementina, et
Comment of the Code Commission on Estoppel,
................................................ al. v. Court of Appeals, et al., 91 Phil. 922, 882.
................................
ARTICLE 1431 863; Royales v. ARTICLE 1438 882
of Estoppel,
COMMENT: (1) Concept Jan. 31, 1984, 864;
Appellate Court, L-65072, Development COMMENT: (1) Allowing Someone to Assume Apparent
Intermediate Asia Trust
Pureza v. Court of Appeals, Alejandro, GR Ownership of Personal Property, 882; (2) When Estoppel
Ruperto Bonifacio & Crisanta Applies Even If There Be No Benefits, 883.
Spouses Cruz, et al. v. Court
Bank, and 864; Adoracion E.Malolos, GR 126713,
122053, May 15, 1998, Virginia ARTICLE 1439 883
Sps. Eliseo & Estoppel, 865; (3) Examples
of Appeals and (2) Origin of Mercedes COMMENT: (1) Persons Bound by Estoppel, 883; (2) Estoppel
July 27, 1998, 864; Co., Inc. v.
865; Fieldman's Insurance 1968, 867; on the Part of a Minor, 883; (3) Is the Government Bound
of Estoppel, L-24833, Sept. 23,
Vda. de Songco, et al., L-33794, May 31, by Estoppel?, 883; Antonio Favis, et al. v. Municipality of
Vargas Appeals,
Electric Co. v. Court of Rel., L-9736, May 20, Sabongan, L-26522, Feb. 27, 1969, 884; Republic v. Caballero,
Manila
867; Pantranco v. Court of Ind. Apply), 867; Luzon 79 SCRA 177, 884; (4) Applicability to Questions of Fact, 884;
1982, Not
Where Estoppel Does et al., Abines v. BPI, 482 SCRA 421 (2006), 885; (5) Estoppel by
1957 (Instance v. Luzon Marine Dept. Union, Record, 885; (6) Estoppel Cannot Validate a Void Contract,
Stevedming Co., Inc. Commission v. Ponciano
868; Social Security 1988, 885; Prudential Bank v. Panis, GR 50008, Aug. 31, 1987, 885;
101 Phil. 257, Eufemia P. Almeda, GR 75428, Dec. 14, 28, (7) Promissory Estoppel, 885; Mendoza v. Court of Appeals,
Almeda and GR 71562, Oct.
L. Service Commission, Commodities, GR 116710, June 25, 2001, 885; (8) Concept of an 'Agency by
869; Laurel V. Civil Queensland Tokyo
869; Jefferson Lim v. Estoppel,' 887; Litonjua, Jr. v. Eternit Corp., 490 SCRA 204
1991,
Jan. 4, 2002, 870. (2006), 887.
Inc., GR 136031,................................................................................ 871

ARTICLE 1.432 Principles of Title V. - TRUSTS (n) 888

Effect of the General
COMMENT: (1) Suppletory Alleged Estoppel, 871. CHAPTER 1- GENERAL PROVISIONS 888
Estoppel, 871; (2) Pleading of
................................................................................ 871
INTRODUCTORY COMMENT 888
ARTICLE 1433 Estoppel, 872; Makati
Leasing and
COMMENT: (1) Kinds of Inc. & Court of (1) 'Trust' Defined, 888; Gelano v. Court of Appeals, L-39050,
Corporation v. Weaver Textile Mills, Estoppel IN PAIS Feb. 24, 1981, 888; (2) Characteristics of a 'Trust,' 888; (3)
Finance 16, 1983, 872; (2) Ganzon v. Court
Appeals, GR 58469, May 'Trust' Distinguished from 'Guardianship' or 'Executorship,'
Liquete
873; Carolina Corp.
(Equitable Estoppel), 30, 2002, 873; Nyco Sales 888; (4) 'Trust' Distinguished from a 'Stipulation Pour Autrui,'
136831, July 875; Planters 889; (5) Co-Ownership as a 'Trust,' 889; Sotto v. Teves,
of Appeals, GR Aug. 16, 1991,
Corp., GR 71694, Estoppel L-38010, Oct. 31, 1978, 889; (6) Beneficial Enjoyment on
v. BA Finance Lopez, 708 SCRA 481, 876; (3)
Development Bank v. Interest, 889; Chu, Jr. v. Caparas, 696 SCRA 324, 889; Query;
877 889; (7) Meaning 'Trust Fund,' 889; Gership Association, Inc.
BY DEED, 876.................................................................................
v. GSIS, 707 SCRA 481, 889; (8) Query, 890.
ARTICLE 1434 -Owner, 878; (2)
Sale or Alienation by Non L-13953, July ARTICLE 1440 890
COMMENT: (1) de Cruz,
Inquimboy v. Paez Vda.Bustillo and Achaval, 12
Cases, 878; Munoz de COMMENT: (1) Parties to a 'Trust,' 890; (2) Elements of a
Llacer v.
26, 1960, 878; 'Trust,' 890.
Phil. 328, 878. 879
ARTICLE 1441 890
................................
....................................
ARTICLE 1435 Representation of
Alienation in COMMENT: Classification of Trusts, 890.
COMMENT: (1) Sale or
(2) Example, 879.
Another, 879;................................................................................ 879 ARTICLE 1442 891
COMMENT: (1) Suppletory Effect of the General Law of
ARTICLE 1436 Bailee, 879;
Part of a Lessee or a Trusts, 891; (2) Comment of the Code Commission, 891; (3)
COMMENT: (1) Estoppel on Apply, 880.
Presumption Does Not
(2) When bd
lx
 v. Corp., GR 135462, Dec. 7, 2001, 905; (5) Default or Failure
(4) Cases, 892; Gelano
Anglo-American Precedents, 891; 892; Rizal Surety &
of Entrustee to Comply with Terms of Trust Agreement
L-39050, Feb. 24, 1981, Cancellation of Trust Not Absolutely Necessary, 905.
Court of Appeals, 606 (1996), 892.
Insurance Co. v. Court of Appeals, 73 SCAD ARTICLE 1451
................................................... 893
EXPRESS TRUSTS COMMENT: (1) When Title to Inherited Land Is Not
CHAPTER 2 - ................................................................................ 893 in Owner's Name, 906; (2) Rule in Co-Ownership, 906;
Mariano v. Judge De Vera, GR 59974, March 9, 1987, 906;
ARTICLE 1443 893; (2) (3) Paraphernal Properties Registered Under the Husband's
COMMENT: (1) Formalities Re Express Trusts, Trust, 893.
Formalities of an Implied Name, 907; (4) Title in the Name of the Surviving Husband,
Distinguished from the 893 907; (5) Right of Co-heirs, 908.
................................................................................
ARTICLE 1444 894; Julio ARTICLE 1452
COMMENT: (1) How an Express Trust894; Is Created,
(2) Clear Intent, COMMENT: (1) When Property Is in the Name of Only One
Dalandan, L-19012, Oct. 20, 1967, Trust, 896.
v. of the of the Co-Buyers, 908; Uy Aloe v. Cho Jan Jing, 19 Phil. 202,
896; (3) Capacity, 896; (4) Administration
................................................................................ 897 908; (2) Presumption That Shares Are Equal, 909.
ARTICLE 1445 ARTICLE 1453
Declines, 897.
COMMENT: Effect if Trustee 898 COMMENT: (1) When a Person Declares His Intent to Hold
................................................................................
ARTICLE 1446 Property for Someone Else, 909; (2) Case, 909; Heirs of Emilio
Beneficiary, Candelaria v. Lucia Romero, et al., L-12149, Sept. 30, 1960,
COMMENT: (1) Necessity of Acceptance by the
(3) How Express 909.
Acceptance is Presumed, 898;
898; (2) When
Trusts Are ENDED, 898. ARTICLE 1454
................................................... 900 COMMENT: Absolute Conveyance Made for Security
TRUSTS
CHAPTER 3 - IMPLIED ........................................................... 900 Purpose, 910.
INTRODUCTORY COIVIMENT ARTICLE 1455
900.
the Code Commission,
Comment of ................................................................................ 900 COMMENT: (1) Use of Trust Funds, 911; (2) Applicability of
Article, 911; (3) Example, 911; (4) Reasons for the Rule, 911;
ARTICLE 1447 900; (5) Cases, 911; Sing Joco v. Sunyantung, et al., 43 Phil. 589,
COMMENT: Enumeration of Instances of Implied
Feb. 28, Trust,
1974, 901; 911; Escobar v. Locsin, 74 Phil. 86, 912.
Villegas, L-2466I.,
Rabuco v. Hon. Antonio Court of Appeals, GR
31189,
ARTICLE 1456
Victorias v. Leuenberger and
March 31, 1989, 901. COMMENT: (1) Property Acquired Through Mistake or
................................................................................ 902
Fraud, 912; Laureano v. Stevenson, 45 Phil. 252, 912; (2)
ARTICLE 1448 Not Nature of the Mistake or Fraud, 913; (3) Against Whom the
Property Where Title Is
COMMENT: (1) Purchase of if Document Right Must Be Exercised, 913; (4) When the Article Does Not
Another, 902; (2) Rule
Given to Payer but to 903; (3) Case, 903; Dico,
Sr. v. Apply, 913; Ongsiako, et al. v. Ongsiako, et al., L-7510, March
Expresses a Different Intent, 10, 1957,913; Tiburcio Samonte v. Court of Appeals, et al., GR
903.
Corp., 701 SCRA 367,
Vizcaya Mgt................................................................................. 903 104223, July 12, 2001, 914; (5) Query - Do Trusts Prescribe?,
915; (6) Some Cases, 916; Ramos, et al. v. Gregoria Ramos,
ARTICLE 1449 Ownership of et al., L-19372, Dec. 3, 1974, 916; Armamento v. Central
COMMENT: When Donee Does Not Get Full Bank, L-34228, Feb. 21, 1980, 917; Escay v. Court of Appeals,
Benefit, 903................................................................................. 904 L-37504, Dec. 18, 1974, 917; Heirs of Tanak Pangaaran
Patiwayon, et al. v. Hon. Martinez, et al., GR 49027, June 10,
ARTICLE 1450 1985,918; Horacio G. Adaza and Felicidad Marundan v. Court
Property so That It May Serve
COMMENT: (1) Conveyance of Appeals, 76 SCRA of Appeals and Violeta G. Adaza, Assisted by Her Husband
Carantes v. Court of
as Security, 904; Receipt, 905; (3) 'Trust Receipt' Defined, Lino Amor, L-47354, March 21, 1989, 918; Gonzales, et al.
514, 904; (2) Trust Fortune Motors v. IAC, GR 66479, Nov. 21, 1991, 919; Spouses Horacio &
South City Homes, Inc.,
905; (4) Case, 905; Manufacturing Corp. v. BA Finance Felisa Benito v. Agapita Saquitan-Ruiz, GR 149906, Dec. 26,
(Phils.), Palawan Lumber
hdii
bdi
 Salao,
Trusts, 920; Salao, et al. v.
2002, 920; (7) How to Prove 'Creati ve Trusts' are
920; (8) How
L-26699, March 16, 1976,
Created, 922. 922
ARTICLE 1457
Trust, 922; (2) Case, 922;
COMMENT: (1) Proof of Implied Tala Realty
& Mortgage Bank v.
Banco Filipino Savings 922; (3) Oral Evidence for
208,
Services Corp., 705 SCRA 9, TITLE V. — PRESCRIPTION
923; Salao v. Salao, L-2669
Trust Must Be Trustworthy,
March 16, 1976, 923.

APPENDIX Chapter 1
Recognition
Act Providing for the Transactions GENERAL PROVISIONS
Republic Act No. 8792 (An Non -Comm ercial
Commercial and
and Use of Electronic Thereof and for Other
and Docum ents, Penalti es for Unlawful Use 924
Purposes
Article 1106. By prescription, one acquires ownership
and other real rights through the lapse of time in the manner
and under the conditions laid down by law.
In the same way, rights and actions are lost by prescrip-
Lion.

COMMENT:
(1) Definition of Prescription
Prescription is a mode of acquiring (or losing) ownership
and other real rights through the lapse of time in the manner
and under the conditions laid down by law, namely, that the
possession should be:
(a) in the concept of an owner
(b) public
(c) peaceful
(d) uninterrupted. (Arts. 1106, 1118, Civil Code)
(e) adverse. In order that a possession may really be adverse,
the claimant must clearly, definitely, and unequivocally
notify the owner of his (the claimant's) intention to avert
an exclusive ownership in himself. (Clendenin v. Clenclenin,
181 N.C. 465 and Director of Lands v. Abiertas, CA-GR
91-R, March 13, 1947, 44 O.G. 923)
 CIVIL CODE OF THE PHILIPPINES Art. 1106
CIVIL CODE OF THE PHILIPPINES
Art. 1106

2) extinctive prescription ("liberatory prescription"; pres-

(2) Proof Needed cription of actions); ("Statute of Limitations").
mode of acquiring
Because prescription is an extraordinary (b) as to the object or subject matter:
particularly the period
ownership, all the essential ingredients, Makabenta, CA-GR
(Boyo v. 1) prescription of property
of time, must be shown clearly.
7941-R, Nov. 24, 1952) a) prescription of real property
b) prescription of personal rights
Prescription
(3) Reasons or Bases for 2) prescription of rights
property rights would re-
(a) Economic necessity (otherwise,
main unstable). (5) Laches
lar, et at. Laches (or "estoppel by laches") is unreasonable delay in the
Director of Lands, et al. v. Funtil bringing of a cause of action before the courts of justice. Thus,
GR 68533, May 23, 1986 if an action prescribes say in ten years, it should be brought to
registered was court as soon as possible, without waiting for eight or nine years,
FACTS: Where the land sought to be
years ago, and is no unless the delay can be justifiably explained (as when there is
declared alienable and disposable 33 possess ed and a search for evidence). Note therefore, that while an action has
been
longer a forest land, and the same has ssors for at not yet prescribed, it may no longer be brought to court because
predece
cultivated by the applicants and their of laches.
least three generations.
people to have As defined by the Supreme Court, "laches is failure or
HELD: The attempts of humble
for generations neglect, for an unreasonable and unexplained length of time,
disposable lands they have been tilling to do that which, by exercising due diligence, could or should
only be viewed with an
titled in their names should not have been done earlier; it is negligence or omission to assert a
matter of policy,
understanding attitude but should, as a right within a reasonable time, warranting a presumption that
be encouraged. the party entitled thereto either has abandoned it or declined to
ent (occasioned by claims
(b) Freedom from judicial harassm assert it. However, courts will not be bound by strictures of the
without basis). statute of limitations or laches when manifest wrong or injuries
(in certain instances, would result thereby." (Cristobal v. Melchor, 78 SCRA 175)
(c) Convenience in procedural matters
juridical proof is dispensed with). Arradaza, et at. v. Court of Appeals & Larrazabal
(in view of the owner's
(d) Presumed abandonment or waiver GR 50422, Feb. 8, 1989
indifference or inaction). The principle of laches is a creation of equity. It is applied,
not really to penalize neglect or sleeping upon one's right, but
(4) Classification of Prescription rather to avoid recognizing a right when to do so would result
d or lost:
(a) as to whether rights are acquire in a clearly inequitable situation.
(prescription of ownership
1) acquisitive prescription (6) Rationale for Laches
and other real rights).
If a person fails to act as soon as possible in vindication
a) ordinary prescription of an alleged right, it is possible that the right does not really
b) extraordinary prescription exist.

3
2
 ES Art. 1106
CIVIL CODE OF THE PHILIPPIN
PHILIPPINES
CIVIL CODE OF THE
t. 1106 in favor of a co-heir
Prescription generally does not run
liedly recognizes the
Distin guished from 'Laches' or co-owner as long as he expressly or imp
(7) 'Prescription' ctive trust prescribes
co-ownership. While implied or constru
a fiduciary relation
Mapa III v. Guanzon in ten years, the rule does not apply where
tru st.
77 SCRA 387 exists and the trustee recognizes the
CT of delay,
concerned with the FA
While prescription is delay. e Court
dea ls wit h the EFFECT of unreasonable Gallardo v. Intermediate Appellat
laches GR 67742, Oc t. 29, 198 7
Isulab,
Akang v. Mun. of In determining whether a delay in seekin
g to enforce a right
Pro vince
Sultan Kudarat a fidential relationship
699 SCRA 745 constitutes laches, the existence of con
umstance for considera-
between the parties is an important circ
is not as strictly regarded
As a general rule: tion. A delay under such circumstance
covered by h other. The doctrine
over registered land as where the parties are strangers to eac
1. An action to rec hes ; and near relatives, and the
may not be barred by lac of laches is not strictly applied between
the Torrens System blood or marriage tends
the enforce- fact that parties are connected by ties of
hes be set up to resist
2. neither can lac to excuse an otherwise unreasonable del
ay.
tible legal right.
ment of an imprescrip
uity" which is
NE : Lac hes is a recourse in "eq Narciso Buenaventura & Maria Bu
enaventura
[NO TA BE (Citibank N.A. v.
the abs enc e of statutory law. v. Court of Appeals & Manotok Realt
y, Inc.
applied onl y in rpet Manufactur-
Ga bal dro n, 765 SC RA 172; and Phil. Ca GR 50837, Dec. 28, 1992
Tanco
an, 712 SCRA 489)]
ing Corp. v. Tagyam is applied The defense of laches applies independe
ntly of prescrip-
ly a doc trine of equity, laches tut e of lim itations. Pres-
[NOT E: Pri nci pal result in a tion. Laches is different from the sta
rig ht when to do so would ay, wh ere as laches is
to avoid rec ogn izin g a e. (Secretary of cription is concerned with the fact of del
situ ation or in an injustic scripti on is a matter of
clearly ine qui tab le RA 243)] concerned with the effect of delay. Pre
ays v. Tecson, 700 SC of inequi ty of permitting
Public Works & Highw time; laches is principally a question
ng founde d on the same
David v. Bandin a claim to be enforced, this inequity bei of the
ty or the rela tion
1987 change in the condition of the proper
GR 48322, April 8, hes is not. Laches app lies
, leaving parties. Prescription is statutory; lac
S:A and B, hus ban d and wife, died intestate perty in equity, whereas prescription applies
at law. Prescr ipti on is
FACT inistering the pro
Y. X had been adm based on fixed time; laches is not.
two children, X and 1955. Plaintiffs, the
children of Y,
th in Feb . 15,
until her dea perty, though
ir sha res of the fruits of the pro (8) Constitutional Provision
were giv en the amount of the
tim es litt le, depending on the perties unlawfully
irregul ar and at ldren of Y, sent a The right of the State to recover pro
ril 23, 196 3, plaintiffs, the chi m them or from
harves t. On Ap and on June 14, acquired by public officials or emplo
yee s, fro
and to the heirs of X for partition,
lett er of dem ht years from X's their nominees or transferees, shall not
be bar red by prescrip-
or wit hin a per iod of approximately eig 7 Philippine
196 3, . XL The 198
plaint against X's heirs. tion, laches, or estoppel. (Sec. 15, Art
death, filed their com
laches, nor is Constitution)
Pla inti ffs can not be held guilty of
HE LD : were not guilty of
cla im bar red by prescription. Plaintiffs
their
sleep on their rights.
negligence nor did they 5
4
 CIVIL CODE OF THE PHILIPPINES Art. 1106
Art. 1106 CIVIL CODE OF THE PHILIPPINES

and with just title for a period of ten years, and that ownership
(9) Cases may be acquired through uninterrupted adverse possession for
30 years without need of just title or of good faith. The Court of
Republic v. Animas
Appeals (CA) affirmed that of the trial court, thus, this petition
56 SCRA 871
for review on certiorari.
Prescription does not run against the State, especially ISSUE: Whether or not the equitable doctrine of laches
has
because the recovery of unlawfully acquired properties may override a provision of the Land Registration Act on impre-
become a State policy. scriptibility of title to registered land. Otherwise put, the issue
raised is whether prescription and the equitable principle of
Aldovino v. Altman III
49 SCAD 340 laches are applicable in derogation of the title of the registered
(1994) owner.
HELD: A party who had filed immediately a case as soon as
Prescription must yield to the higher interest of justice.
he discovered that the land in question was covered by a transfer
Francisco v. Court of Appeals certificate in the name of another person is not guilty of laches.
122 SCRA 538 (St. Peter Memorial Park, Inc. v. Cleofas, 92 SCRA 389[1979]) An
action to recover possession of a registered land never prescribe
Philippine jurisprudence shows that the filing of the com- in view of the provision of Sec. 44 of Act 496 (now Sec. 47 of PD
examination
plaint, even if merely for purposes of preliminary 1529) to the effect that no title to registered land in derogation
the running of the
or investigation, suspends and interrupts to that of a registered owner shall be acquired by prescription
prescriptive period. or adverse possession. (J.M. Tuason & Co. v. Aguirre, 7 SCRA
covered by 10911963])
(10) Prescriptive Period on Registered Land
In fact, there is a host of jurisprudence that hold that pre-
Torrens System
scription and laches could not apply to registered land covered
Quirino Mateo & Matias v. by the Torrens system. (Bishop v. CA, 208 SCRA 636[1992]; and
Dorotea Diaz, et al. St. Peter Memorial Park, Inc. v. Cleofas, supra) With more reason
GR 137305, Jan. 17, 2002 are these principles applicable to laches, which is an equitable
Tor- principle. Laches may not prevail against a specific provision
FACTS: The land involved is registered under the of law, since equity, which has been defined as "justice outside
father Claro Mateo.
rens system in the name of petitioners' legality" is applied in the obscene of and not against statutory
of the
There is no question raised with respect to the validity law or rules of procedure. (Causapin v. CA, 233 SCRA 61511994])
the existence of
title. Immediately after petitioners discovered
to assert their rights Upon the other hand, the heirs of the registered owner are
OCT 206 in 1977 or 1978, they took steps
in an
thereto. They divided the land between the two of them not estopped from claiming their father's property, since they
the case below to merely stepped into the shoes of the previous owners. Prescrip-
extrajudicial partition. Then petitioners filed
only surviving children tion is unavailing not only against the registered owner, but
recover ownership and possession as the
of original owners, the late Claro Mateo. also against his hereditary successors because the latter merely
ruled step into the shoes of the decedent by operation of law and are
The Regional Trial Court (RTC), Bulacan, at Malolos, merely the continuation of the personality of their predecessor-
laches are applicable against petitioners,
that prescription and in-interest. (Teofila de Guinoo v. CA [97 Phil. 235]; and Gil Atun
years,
that real actions over an immovable prescribe after 30 v. Eusebio Nunez [97 Phil. 762])
acquired through possession in good faith
that ownership can be
 CIVIL CODE OF THE PHILIPPINES Art. 1106
PHILIPPINES
CIVIL CODE OF THE
Art. 1106

cancel A bank is under obligation to treat accounts of its depositors

the Register of Deeds to with meticulous care whether such accounts consist only of a
The CA erred in ordering are
issue new titles to those who few hundred pesos or of millions of pesos. Responsibility arising
OCT 206 of Claro Mateo and easib ility of
This violates the indef from negligence in the performance of every kind of obligation
occupying the subject land. cancelled only
of Claro Mateo could be is demandable. (Prudential Bank v. CA, 328 SCRA 26412000])
a Torrens title. The title had trans ferre d his rights
f that he Petitioner failed to prove payment of the subject CDs issued to
if there is competent proo would
another party, otherwise title respondent and, therefore, remains liable for the value of the
over the parcel of land to essio n.
testate or intestate succ dollar deposits indicated thereon with accrued interest.
pass to his heirs only by
CA's
t thereupon reverses the
The fano: The Supreme Cour the trial A certificate of deposit is defined as a written acknowledg-
Court remands the case to ment by a bank or banker of the receipt of a sum of money on
decision. In lieu thereof, the a proper
the heirs of Claro Mateo in deposit which the bank or banker promises to pay to the deposi-
court for determination of
proceeding. tor, to the order of the depositor, or to some other person or his
t order, whereby the relation of debtor and creditor between the
Co. v. Estrella 0. Querimi bank and the depositor is created. Principles governing other
Far East Bank & Trust
GR 148582, Jan. 16, 2002 types of bank deposits are applicable to CDs (10 AM Juni 2d
- Sec. 455), as are the rules governing promissory notes when
her savings with petitioner
FACTS: Respondent deposited rity date they contain an unconditional promise to pay a sum certain of
her deposit even after matu
bank. She did not withdraw preci sely beca use she wanted money absolutely. (Ibid., Sec. 457)
(CDs)
of the certificates of deposit 's assur-
retirement, relying on the bank The principle that payment, in order to discharge a debt,
to set it aside for her them selves,
of the instruments must be made to someone authorized to receive it is applicable
ance, as reflected on the face accumulate annually even after
that interest would "accrue"
or to the payment of CDs. Thus, a bank will be protected in mak-
their matu rity. ing payment to the holder a certificate indorsed by the payee,
re- unless it has notice of the invalidity of the indorsement or the
e that it had already paid
Petitioner-bank failed to prov petit ioner holder's want of title. (10 Am Jur 2d Sec. 461) A bank acts at
holder of subject CDs, i.e.,
spondent, bearer and lawful paid out of its fund s, since its peril when it pays deposits evidenced by a CD, without its
had been
failed to prove that the CDs unrebutted that subject CDs until production and surrender after proper indorsement. (Clark v.
s
evidence by respondent stand her.
unindors ed, unde livered, and unwithdrawn by Young, 21 So. 2d 331 [1994])
now remain
allow the doctrine of laches The equitable principle of laches is not sufficient to defeat
ISSUE: Would it be unjust to gs which the rights of respondent over the subject CDs. Laches is the
respondent to recover her savin
to defeat the right of failure or neglect, for an unreasonable length of time, to do
petitioner?
she deposited with the that which, by exercising due diligence, could or should have
to
st not to allow respondent
HELD: Yes, it would be unju petit ione r-ban k. been done earlier. It is negligence or omission to assert a right
deposited with within a reasonable time, warranting a presumption that the
recover her savings which she degr ee of dilig ence
to exercise that party entitled to assert it either has abandoned it or declined to
For one, Petitioner failed business. (Art. 1173) Because the
required by the nature of its
degree assert it. (Felizardo v. Fernandez, GR 137509, Aug. 15, 2001)
with public interest, the
business of banks is impressed father There is no absolute rule as to what constitutes laches
s is more than that of a good
of diligence required of bank business firm. or staleness of demand; each case is to be determined accord-
ary
of the family or of an ordin ing to its particular circumstances. The question of laches is
relationship with their deposi- addressed to the sound discretion of the court and, being an
The fiduciary nature of their the
accounts of their clients with equitable doctrine, its application is controlled by equitable
tors requires banks to treat SCR A 415 [200 0])
las v. CA, 326
highest degree of care. (Can
 PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1106
CIVIL CODE OF THE
Art. 1106

etrate (11) Presumptive Period re: Ill-Gotten Wealth or 'Behest'

to defeat justice or perp
considerations. It cannot be used be guided or bound strictly Loans
will not
fraud and injustice. Courts es when to
ons or the doctrine of lach
by the Statute of Limitati stice would result. (Rosales v. CA, Presidential Ad Hoc Fact-Finding Committee
inju
do so manifest wrong or on Behest Loans v. Aniano A. Desierto
1)
GR 137566, Feb. 28, 200 (Recovery of Ill-Gotten Wealth)
al damages because of the GR 130340, Oct. 25, 1999
Respondent is entitled to mor suffered as a result of the
iliation she 114 SCAD 707
mental anguish and hum had de-
er to pay her even after she tioner
wrongly refusal of petition add ition , peti Behest loans, which are part of the ill-gotten wealth which
7 and 2219) In
livered the CDs. (Arts. 221 l court form President Ferdinand E. Marcos and his cronies accu-
er
resp ond ent exem plary damages which the tria good.
shou ld pay lic mulated and which the Government through the Presidential
or correction for the pub
imposed by way of example to atto rney 's fees since Commission on Good Government (PCGG) seeks to recover,
ent is entitled
(Art. 2229) Finally, respond compelled her to incur expenses to have a prescriptive period to be counted from the discovery of
petitioner's act or omission le. (Art. the crimes charged, and not from the date of their commission.
such award just and equitab
protect her interest making If the commission of the crime is known, the prescriptive period
2208) shall commence to run on the day it was committed.
Phils. v. Court of Appeals The prosecution of offenses arising from, relating or inci-
Development Bank of the
& Carlos Cajes dent to, or involving ill-gotten wealth contemplated in Sec. 15,
0
GR 129471, April 28, 200 Art. XI of the Philippine Constitution of 1987 may be barred
ate
ejectment suit against priv by prescription. Said provision applies only in civil actions for
FACTS: Petitioner filed an el of land cove red by recovery of ill-gotten wealth, and not to criminal cases.
ip of a parc
respondent, claiming ownersh hectares being occupied by the
19.4
a TCT, which included the petitioner to be the owner of
the (12) Cases
latter. The trial cou rt decl ared rt. On
l cou
eals (CA) reversed the tria
land, but the Court of App -int eres t had Disini v. Sandiganbayan
that its predecessor-in
appeal, petitioner claimed registra- 705 SCRA 459
by virtue of the decree of
become the owner of the land Court affirmed the CA. ISSUE: Does the filing of the criminal complaints in the
reme
tion in his name. The Sup his office of the Ombudsman interrupt the running of the period of
sideration the possession of
HELD: Taking into con unin ter- prescription?
ate respondent had been in years
predecessor-in-interest, priv 30
of the land for more than tioner's HELD: Yes. Irrespective of whether the offense charged
rupted adverse possession peti is punishable by the Revised Penal Code on by a special law, it
stration issued in favor of
prior to the decree of regi possession ripened into own
ership is the filing of the complaint or information in the office of the
predecessor-in-interest. Such prescription, a mode of acquiring public prosecutor for purposes of the preliminary investigation
isitive
of the land through acqu property. A
rights over immovable that interrupts the period of prescription.
ownership and other real d a righ t acquired by
of regi stra tion cut off or extinguishe
decr ee encumbrance
pers on only whe n such right refers to a lien or of title
Jackwell Parking Systems
a annotated on the certificate Corp. v. Lidua, Sr.
on the land whi ch was not Regis-
right of ownership thereof. 706 SCRA 724
issued thereon, but not to the title nor vest one. Accordingly,
te a
tration of land does not crea occupied by private respondent FACTS: Prosecutor facts to seasonably file the informa-
ares of land bein g
the 19.4 hect r.
tion.
nvey ed in his favo
must be reco
11
10
 CIVIL CODE OF THE PHILIPPINES Art. 1108
CIVIL CODE OF THE PHILIPPINES
Art. 1107

(2) Reason for Par. 1 (Those Capable of Acquiring Property

result in the dismissal of
ISSUE: Can such circumstance or Rights Through the Other Modes)
the case against private respondent?
Since prescription is also a mode of acquiring ownership,
HELD: Yes, unfortunately. it follows that if a person is capable of becoming an owner by the
resolving the matter of pre- other legal modes, he should also be capable of acquiring the same
Be it borne in mind that in
following factors should be property by prescription. Thus, if a person can become an owner
scription of the offense charge, the
considered. by donation, he can also become an owner by prescription.
the offense charged;
1. the period of prescription for (3) Query (Re Donation by Paramour)
iption starts to run; and
2. the time the period of prescr A husband cannot validly receive a donation from a para-
was interrupted. mour. Now then, can he acquire by prescription the property
3. the time the prescriptive period
donated to him by the paramour?
(13) Query ANS.: Yes, but only by extraordinary prescription (not
the day of the commis- ordinary prescription) since he would be lacking the element
Prescription shall begin to run from
But if the same be not known, of "just title." There would be no "just title" because under the
sion of the violation of the law.
law, they are incapacitated to donate to each other. (See Art.
at the time, when?
739, Civil Code) Note that even if a donation is VOID, it may
the institution ofjudi-
ANS.: From the discovery theres and constitute the legal basis for adverse possession. (See Tagalgal
n and punishment. (Citibank
cial proceedings for its investigatio v. Luega, CA-GR 19651-R, Feb. 19, 1959)
172)
N.A. v. Tanco Gabaldon, 705 SCRA
v. Dept. of Justice, 571 (4) Reason Why Minors May Acquire Personally
[NOTA BENE: In Panaguiton, Jr.
Court expressly ruled that Act
SCRA 540 (2008), the Supreme This is because only juridical capacity is required for pos-
offenses under special laws
3326 is the law applicable to the session, not capacity to act. Thus, even discernment of intent
prescriptive period.]
which do not provide their own to possess is not required for such personal acquisition. This is
so because the law makes no distinction.
capable of acquiring property
Art. 1107. Persons who are
modes may acquire the same by
or rights by the other legal Art. 1108. Prescription, both acquisitive and extinctive,
means of prescription. runs against:
ed persons may acquire
Minors and other incapacitat
ription, either personally or (1) Minors and other incapacitated persons who have
property or rights by presc
or legal representatives. parents, guardians or other legal representatives;
through their parents, guardians
(2) Absentees who have administrators, either appoint-
COMMENT: ed by them before their disappearance, or appointed by the
or Rights by Prescription courts;
(1) Who May Acquire Property
the other modes of acquiring (3) Persons living abroad, who have managers or ad-
(a) those who can make use of ministrators;
ownership.
(4) Juridical persons, except the State and its subdivi-
incapacitated persons (like the
(b) even minors and other sions.
insane).
13
 CIVIL CODE OF THE PHILIPPINES Art. 1109
IPPINES
CIVIL CODE OF THE PHIL
Art. 1108

Art. 1109. Prescription does not run between husband and

from administering their
Persons who are disqualified e- wife, even though there be a separation of property agreed
damages from their legal repr
property have a right to claim pres cript ion. upon in the marriage settlements or by judicial decree.
been the cause of
sentatives whose negligence has Neither does prescription run between parents and
children, during the minority or insanity of the latter, and
COMMENT:
Prescription May Run between guardian and ward during the continuance of the
(1) Persons Against Whom guardianship.
four such groups.
(a) The Article enumerates
3: COMMENT:
(b) Reason for Pars. 1, 2, and
protected by those
These people are supposed to be (1) No Prescription Between Husband and Wife
prop erly prote cted through the
in charge. If they are not
damages against the latter (a) Reason for the law — The close relationship between
latter's negligence, a claim for them, engendered by affection or influence, may prevent
can prosper. one from suing the other. Hence, the general rule is — NO
out Parents, etc.)
(2) Query (Re Minors With PRESCRIPTION.
persons have no parents
Suppose the minors or the insane [NOTE: The Article was applied in Toriba Fontanilla
prescription run against them?
or legal representatives, does Pacio, et al. v. Manuela Pacio Billon, et al., L-15088, Jan.
ingly implies that in such a 31, 1961.]
ANS.: While the Article seem
against them, it is believed that
case, prescription should not run ) (b) Note that there is no prescription even if there has been
190 (the Code of Civil Procedure
Secs. 42, 45, and 46 of Act No. are not looke d upon a "separation of property," for the same reluctance to sue
ed repeals
can apply to them, since impli each other may still exist.
, presc riptio n can still run against minors, the
with favor. Thus
that these people may still bring (c) Query —
insane, and those in jail, except
years after their disability has
the action within a number of Suppose the "separation of property" is the conse-
been removed: quence of legal separation, does prescription run?
recovery of land
(a) three years — in case of ANS.: It is believed that prescription will also. not
actions
(b) two years — in other civil run, for the law does not distinguish. After all, here, the
with some saving clauses
These saving clauses are in line "separation of property" would be "by judicial decree."
incapacitated under the New Civil
provided for minors and the a Exceptions — when prescription is specifically provided for
285 with respect to the right of (d)
Code. (See, for example, Art. after the parent's death , if by law, such as:
natural child to compel recognition a minor).
was still the prescriptive period for legal separation suits (Art.
the parent dies while the child 1)
there is NO DOUBT that pre- 120, Civil Code);
If the minor has a guardian,
during minority. (See Wenzel,
scription runs against him even 31, 2) alienations made by the husband, without the wife's
Mining Co., GR L-10843, May
et al. v. Surigao Consolidated consent. (Art. 173, Civil Code)
1960)
(2) Between Parents and Children
ons
(3) State and Its Subdivisi (a) No prescription shall run between them during the MI-
st them, except with refer-
No prescription can run again NORITY or INSANITY of the latter. A sensu contrario
(See Art. 1113, Civil Code)
ence to patrimonial property.
15
14
 PPINES
CIVIL CODE OF THE PHILI CIVIL CODE OF THE PHILIPPINES Art. 1112
Arts. 1110-1111

ility does not exist any- [NOTE, however, that as between or among co-owners,
prescription runs if the legal disab
there can be prescription when there is a definite repudiation of
more.
the co-ownership, made known to the other co-owners. (Laguna
child is neither insane nor
(b) As a general rule, even if the cannot be predicated v. Levantino, 71 Phil. 566)]
incapacitated, an adverse possession
as against the child, or in the
on the possession of the parent (2) Limitation
its parent. Thus, where
possession of the child as against
one of his sons managed the The prescription obtained by a co-owner must have refer-
a father became insane, and
r's lifetime and remained ence to the property held in common, naturally; otherwise the
farm during the rest of his fathe period, it was held that
tory
in possession of it for the statu Article does not apply.
did not warr ant the presumption of a
these facts alone
r or of a release to him
conveyance to the son by the fathe Art. 1112. Persons with capacity to alienate property may
t to their father's death. (1 renounce prescription already obtained, but not the right to
by the other heirs subsequen
Lands v. Abiertas, 44 O.G.
Am. Jur. 807, and Director of prescribe in the future.
923) Prescription is deemed to have been tacitly renounced
Ward when the renunciation results from acts which imply the
(3) Between Guardian and abandonment of the right acquired.
them during the continuance
No prescription runs between ssly
so even if the guardian expre
of the guardianship. This is other wise,
out court approval); COMMENT:
repudiates the guardianship (with
rende red nugatory.
the trust relationship would be (1) Requisites for Renunciation of Property Acquired by
Prescription
acquisitive and extinctive, runs
Art. 1110. Prescription,
married woman. (a) Renouncer must have capacity to alienate property (be-
in favor of, or against a
cause renunciation is an exercise to the jus disponendi).
(b) The property acquired must have already been obtained
COMMENT:
Married Woman (hence, the right to prescription in the future cannot be
Prescription in the Case of a renounced, since manifestly, this would be contrary to
woman and a stranger.
This Article refers to a married public policy).

ined by a co-proprietor or a (c) The renouncing must be made by the owner of the right
Art. 1111. Prescription obta (not by a mere administrator or guardian, for he does not
others.
co-owner shall benefit the own the property).
(d) The renouncing must not prejudice the rights of others,
COMMENT:
er such as creditors. (Arts. 6, 1114, Civil Code)
by Co-Proprietor or Co-Own
(1) Prescription Obtained
Reason: (2) Form
-proprietor acts for the interest may be express or implied (tacit)
In a sense, a co-owner or co (a)
Similarly, an action for ejectment
of the whole co-ownership. (b) requires no consent on the part of the person to be benefited
co-owners. (See Art. 487, Civil
may be brought by just one of the (c) requires no solemnities or formalities
Code)
16 17
 CIVIL CODE OF THE PHILIPPINES Art. 1113
CIVIL CODE OF THE PHILIPPINES
Art. 1113

(b) While it may be claimed that a direct and clear provision

(3) Implied or Tacit Renunciation (Art. 1108, Civil Code — which says that prescription does
is an action which not run against the State or any of its subdivisions) prevails
There is tacit renunciation when there
acquired. over an implication (Art. 1113, Civil Code), still when we
impliee the abandonment of the right
consider the intent of Congress in inserting the phrase "not
Example: patrimonial in character" in the original draft submitted by
debt has already the Code Commission, it is clear that patrimonial property
Sonia formerly owed Esperanza but the
may indeed be the subject of prescription. This is so because
prescribed.
patrimonial properties are really in the same category as
has prescribed, neverthe-
(a) If Sonia, knowing that the debt private properties.
the debt and prom-
less still acknowledges the existence of
renunciation of the
ises to pay for it, there is an implied (3) No Prescription With Respect to Public Property
prescription. She still has a civil obligation.
Public property, however, cannot be the subject of prescrip-
has prescribed, neverthe-
(b) If Sonia, knowing that the debt recover what she
tion. This rule applies even to privately owned unregistered lands
less voluntarily pays the debt, she cannot which, unless the contrary is shown, are presumed to be public
obligat ion.
had paid. This would be a natural lands, under the principle that "all lands belong to the Crown
debt has prescribed pays it, unless they had been granted by the King (State) or in his name,
(c) If Sonia, not knowing that the or by the Kings who preceded him." (Valenton v. Murciano, 3
prescription; and she can
there is no renunciation of the Phil. 53)
indebiti.
still recover on the basis of solutio
complaining re- However, the rule just stated cannot be altogether inflex-
ILLUSTRATIVE CASE: If a taxpayer, ible, as witnessed, for example, by the presence of RA 1942 (ap-
severa l requests for
peatedly against a tax assessment, makes WAIV ED the proved June 22, 1957), amending Sec. 48(b) of the Public Land
said to have
a reinvestigation thereof, he may be Co. v. Ct. of Act (Com. Act 141). Thus, as amended by RA 1952, Sec. 48 of
Hardw are
defense of prescription. (Yutivo & Sons 28, 1961) CA 141 now reads as follows:
L-1320 3, Jan.
Tax Appeals & Collector of Int. Rev.,
"Section 48. The following described citizens of the Philip-
within the commerce of pines occupying lands of the public domain or claiming to own
Art. 1113. All things which are any such land or an interest therein, but whose titles have not
iption, unless otherwise pro-
men are susceptible of prescr been perfected or completed, may apply to the Court of First In-
of its subdivisions not pat-
vided. Property of the State or any stance of the province where the land is located for confirmation
object of prescription.
rimonial in character shall not be the of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:
COMMENT: xxx
by Prescription
(1) Things That May Be Acquired "b) Those who by themselves or through their predeces-
rce of man.
Generally — all things within the comme sors in interest have been in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of
(2) Patrimonial Property the public domain, under a bona fide claim of acquisition of
, patrimonial property ownership, for at least thirty years immediately preceding the
(a) By implication under this Article filing of the application for confirmation of the title except when
may be acquired by
of the State or any of its subdivisions prevented by war or force majeure. These shall be conclusively
prescription.
19
18
 "151,

CIVIL CODE OF THE PHILIPPINES Art. 1114

Art. 1113 CIVIL CODE OF THE PHILIPPINES

l to a ANS.: No, Art. 114 provides that —

presumed to have performed all the conditions essentia
to a certifica te of title "property of the State or any of the subdivision not
Government grant, and shall be entitled
(the chapter deals with patrimonial in character shall not be the object of prescrip-
under the provisions of this chapter
judicial confirmation of imperfect or incomplete titles)." tion."
ap-
[NOTE: However, under RA 107, the deadline of the
Art. 1114. Creditors and all other persons interested
plication was only up to Dec. 31, 1957.]
in making the prescription effective may avail themselves
thereof notwithstanding the express or tacit renunciation by
(4) Some Doctrines
the debtor or proprietor.
can be
(a) A fishpond constructed in the Bambang River
the
ordered removed by the government, regardless of COMMENT:
ction
number of years that have elapsed since the constru
of said fishpond, inasmuch as a river, or a portion thereof, (1) Right of Creditors to Make Use of Prescription
e be
is property of public dominion, and cannot therefor Reason for the law:
Com-
acquired by acquisitive prescription. (Meneses v. While rights may be waived, third persons with a right
monwealth, 69 Phil. 647) recognized by law should not be prejudiced. (Art. 6, Civil Code)
, but
(b) Similarly, a tract of land, formerly low and swampy
the sea, is not suscept ible (2) Example
gradually raised by the action of
e be recover ed by the gov-
of prescription, and may therefor Tom who is indebted to Nicole acquired a parcel of land
uses
ernment despite the construction thereon of wareho by prescription. If Tom renounces the prescription, may Nicole
the public domain . (Insula r
and a wharf The land is part of make use of said land?
Government v. Aldecoa and Co., 19 Phil. 505)
ANS.: Yes, to the extent of her credit, if Tom is not able to
subject to
(c) A plaza intended for public use is likewise not pay his debt. Tom is not allowed to prejudice Nicole.
prescription. (Harty v. Mun. of Victoria, 13 Phil. 152)
Sambrano v. Court of Tax Appeals, et al.
ed by Pre-
(5) Things or Properties That Cannot Be Acquir 101 Phil. 1
scription
FACTS: Although the right of the State to collect the taxes
No. 496)
(a) those protected by a Torrens Title. (Sec. 46, Act had already been extinguished by prescription, taxpayer Sam-
(Francisco v. Cruz, 43 O.G. 5103) brano nevertheless executed a chattel mortgage on his properties
Civil Code) to guarantee the payment of the same. As a matter of fact, he
(b) movables acquired through a crime. (Art. 1133, actually paid part of the debt.
Civil Code)
(c) those outside the commerce of men. (Art. 1113, ISSUE: Can Sambrano later on raise the issue of prescrip-
wards and
(d) properties of spouses, parents and children, tion?
guardians, under the restricti ons imposed by law. (Art. HELD: No more, for his actuations amount to a renewal
1109, Civil Code) (renovacion) of the obligation or to a waiver of the benefit granted
by the law to him. He is, therefore, now estopped from raising the
(6) Query issue of prescription. Moreover, the Court said that a prescribed
tion debt may be the subject of novation. (Estrada v. Villaroel, 40
Can lands under a Torrens title be acquired by prescrip O.G. Supp. No. 5, 9, p. 201)
as adverse possession?
21
20
 CIVIL CODE OF THE PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1116
Art. 1115

present Title are un- 2003, but the action is brought on Nov. 2, 2005, the action
Art. 1115. The provisions of the
to what in this Code or in is ten days late, and can no longer be entertained. (See
derstood to be without prejudice
respect to specific cases of Benedicto v. Phil. American Finance and Development Co.,
special laws is established with L-8695, May 31, 1957)
prescription.
(g) In order to confer jurisdiction on the Court of Tax Appeals,
COMMENT: the suit for refund of taxes erroneously or illegally assessed
Prescription must be brought within the statutory period of two years,
(1) Specific Provisions on and the requirements provided in the National Internal
found elsewhere in
Specific provisions on prescription Revenue Code must be complied with. (Collector of Internal
over the provisions of this
the Code, or in special laws, prevail es when specific
Revenue v. Court of Tax Appeals, et al., L-11494, Jan. 28,
the instanc
Chapter. This is particularly true in 1961)
periods of prescription are provide d for.
(h) An action for accounting or reliquidation of agricultural
crops under par. 3, Sec. 17 of RA 1199 should be brought
(2) Examples within three years from the threshing of the crops in ques-
action to claim legitimacy
(a) A legitimate child may bring an tion. (Agaton Mateo v. Gregorio Duran, et al., L-14314, Feb.
173, Family Code)
as long as he is alive (generally). (Art. 22, 1961)
an action to establish il-
(b) An illegitimate child may bring (generally). (Art. Art. 1116. Prescription already running before the ef-
legitimate filiation during his lifetime
fectivity of this Code shall be governed by laws previously
175, Family Code) in force; but if since the time this Code took effect the entire
real property is lost at the
(c) The real right of possession of period herein required for prescription should elapse, the
end of ten years. present Code shall be applicable, even though by the former
of a will never prescribes. laws a longer period might be required.
(d) The proceeding for the probate 31, 1956)
(Guevara v. Guevara, et al., L-5405, Jan.
ation of an alien must be COMMENT:
(e) The proceeding for the deport the cause for de-
brought within five years from the date (1) Transitional Rules for Prescription
Act)
portation arose. (Sec. 37, Immigration
ines illegally (a) If the period for prescription BEGAN and ENDED under
[Thus, where an alien entered the Philipp the OLD laws, said OLD laws govern.
Immig ration Law in 2004 by
in 1998, but he violated the d to enter
lawfull y entitle (b) If the period for prescription BEGAN under the NEW Civil
bringing in his wife who was not procee ding
the deport ation Code, the NEW Civil Code governs.
or reside in the Philippines, becaus e the
prescri bed. This is
commenced in 2005 had not L-9236 , (c) If the period began under the OLD law, and continues
Porta Perez v. Board,
cause accrued in 1999. (See under the NEW Civil Code, the OLD law applies.
May 29, 1957)]
shares of stock in a corpora- Exception:
(f) An action to annul a sale of
because there was no
tion is violation of the Securities Act In this third rule, it is the NEW Civil Code that will
recove ry of the purchase
permit for the same, and for the apply, provided two conditions are present:
period of two years from
price must be instituted within a
sale is made on Oct. 23, 1) The NEW Civil Code requires a shorter period;
the date of the sale. Hence, if the
23
22
 CIVIL CODE OF THE PHILIPPINES Art. 1116
CIVIL CODE OF THE PHILIPPINES
Art. 1116

who has left in 1944 by reason of the war, was able to return to
elapsed since Aug.
2) This shorter period has already the land only in 1958 and learning of A's possession, files suit.
Civil Code became
30, 1950, the date when the NEW A claims prescription of ten years, because he took possession
effective. of the land before the new Civil Code; but C counters that as
the NEW A entered the land in bad faith, and he had not yet acquired
(Thus, the period prescribed under
1950. However, ownership by the time the New Civil Code took effect, the period
Code should be counted from Aug. 30,
would be needed, a is thirty years under the New Code. Decide with reasons.
if by this method a longer period
provided under
period that is even longer than that ANS.: Inasmuch as here the prescription was already run-
.)
the OLD law, said OLD law applies ning before Aug. 30, 1950, it follows that only ten years would
be required because under the Code of Civil Procedure, regard-
Given
(2) Example of the First Rule less of good faith or bad faith, the period for acquiring land by
the prescription was only ten years. (Sec. 41, Act 190, Code of Civil
Paz Ongsiaco and the Heirs of
aco v. Roma n D. Dallo, et at. Procedure; and Osorio v. Tan Jongko, 51 0.G. 6221) It, therefore,
Late Augusto Ongsi follows necessarily that in 1954, A had already acquired the
L-27451, Feb. 28, 1969
property by acquisitive prescription. Hence, C should lose the
against the family
FACTS: A complaint was filed in 1966 case, unless of course the land is covered by a Torrens Certificate
ownership of a parcel of land
of Paz Ongsiaco for recovery of the of Title. (Osorio v. Tan Jongko, supra)
admitted by claimants that since
in Cuyapo, Nueva Ecija. It was The period of ten years must necessarily start from 1944,
complaint was filed in 1966), said
1924(42 years before the basic and not from Aug. 30, 1950, since here, the prescriptive period
land and that said posses-
family had been in possession of the under the OLD law was SHORTER. Had the period under the
concept of owner. However, it
sion was really adverse or in the old law been LONGER, it is the shorter period under the new
in BAD FAITH.
was alleged that the possession was Civil Code that should apply, but this time, the period should
ty be allowed?
ISSUE: May recovery of the proper commence from the date of effectivity of the new Civil Code —
for the cause of action Aug. 30, 1950 — in view of the clause "but if since the time this
HELD: Recovery cannot be allowed Code took effect. . ."
1116, in a case like this, the
has already prescribed. Under Art.
Code should apply. It is clear
law in force before the New Civil
Civil Procedure, good or bad (4) Example of the Exception
that under such old law, the Code of
of acquisitive prescription.
faith was immaterial for purposes Under the old law, the period was ten years (as in the
year period fixed in the New
(Sec. 41) Moreover, even the thirty- case of reduction of a donation of land on the ground of birth of
faith by prescription of real
Civil Code for the acquisition in bad a child), but under the New Civil Code, the period is only four
this case was filed in 1966.
property had already expired when years, counted from the birth of the first child. (Art. 763) It is
clear here that the New Civil Code (four years) will apply, even
Given
(3) Example of the Third Rule if the donation and the birth occurred under the old law, but
the period should be counted from Aug. 30, 1950, unless in so
BAR
doing, a period of more than ten years would result.
the owner of a parcel of
A, with knowledge that B is not
B in 1944, and since then
land, buys it for a nominal sum from (5) Some Doctrines
ous, and public possession
has been in open, actual, continu In Estayo v. De Guzman, L-10902, Dec. 29, 1958, the
ve of any other rights and (a)
thereof, under claim of title exclusi Supreme Court held that when the action to enforce the
the real owner of the land,
adverse to all other claimants. C,
25
24
 ES CIVIL CODE OF THE PHILIPPINES Art. 1116
CIVIL CODE OF THE PHILIPPIN
Art. 1116

(f) In PNB v. Galicano Ador Dionisio, L-18342, Sept. 19, 1963,

bond in a court action be-
mortgage presented as an appeal it was held that a judgment that had become final in 1949
judgment of the Supreme
came effective by the entry of the could not be revived anymore in 1960 (lapse of more than
mbrance may be cancelled
Court on Aug. 6, 1940, the encu ten years), despite written extrajudicial demand in 1954
after Aug. 6, 1950. for the satisfaction of the judgment. This is because this
siako, et al., L-7510, March 30, case is governed not by Art. 1155 of the Civil Code, but by
(b) In Ongsiako, et al. v. Ong
that Art. 1116 (Civil Code) Sec. 50 of the Code of Civil Procedure (which section does
1957, the Supreme Court held
y rule in Art. 2258 (Civil not state that such written extrajudicial demands interrupt
prevails over the general transitor
ns and rights which came the prescriptive period). The old law applies because Art.
Code) which provides that actio
exercised before the effec- 1116 says "prescription already running before the effec-
into being but which were not
in full force in conformity tivity of this Code shall be governed by laws previously in
tivity of the Code, shall remain
exercise, duration, and force . . ."
with the old legislation, but the
regulated by the Rules
procedure to enforce them shall be
of Court.
L-14357, Aug. 31, 1960, a pro-
(c) In Borromeo v. Zaballero,
, payable in 1937. The
missory note was executed in 1935
d in the settlement of the
claim for payment was presente
. 1955. The Court ruled
estate of the deceased debtor in Sept
cription under Act 190 had
that the ten-year period of pres
already lapsed.
rampa, L-15434, Oct. 31, 1960,
(d) In Nagrampa, et al. v. Nag
the old law, no special
the Court observed that under
for the revocation of dona-
period of prescription was fixed
the conditions stipulated.
tions for non-compliance with
e (Art. 764), the period
However, under the New Civil Cod
s. The suit was filed in July,
fixed for such a case is four year
had demanded compliance
1958, alleging that the plaintiffs
t refused." The Court held
"five years ago, but the defendan
years fixed by the New Civil
that the entire period of four
t in 1950. Suit was filed
Code has elapsed since it took effec
mad e in 1953.
only in July 1958 for a violation
t
179, Sept. 30, 1960, a complain
(e) In Amar v. Odianan, L-15 1948 , al-
in November
for the recovery of land was filed
the land had been seized by the
leging that in April 1948,
it, and strategy. It was
defendant by means of fraud, dece
Act 190 (which provided
held that the old law, Sec. 40 of
real property can only be
that an action for the recovery of
applicable, and that there-
brought within ten years) was
cribed.
fore, the action has already pres
 CIVIL CODE OF THE PHILIPPINES Art. 1118

had to be uninterrupted, actual, exclusive, and not

merely tolerated. (See Pascual v. Mina, 20 Phil. 202;
and Villanueva v. Protacio, CA-GR 7591-R, March
22, 1955)]

Chapter 2 (2) Additional Requisites

(a) for ORDINARY prescription
PRESCRIPTION OF OWNERSHIP
1) good faith
AND OTHER REAL RIGHTS
2) just title (there was a mode of acquiring ownership
but the grantor was not the owner; hence, the just
Art. 1117. Acquisitive prescription of dominion and other title here is "titulo colorado" or "colorable title").
real rights may be ordinary or extraordinary.
(b) for EXTRAORDINARY prescription (no other requisites
Ordinary acquisitive prescription requires possession of except those mentioned in Comment No. 1 under this
things in good faith and with just title for the time fixed by Article are required).
law.
Art. 1118. Possession has to be in the concept of an owner,
COMMENT: public, peaceful and uninterrupted.
(1) Requisites Common to Ordinary and Extraordinary
Prescription COMMENT:
(a) capacity of acquirer to acquire by prescription (1) Characteristics of the Possession Needed for Pres-
(b) capacity of loser to lose by prescription cription

(c) object must be susceptible of prescription
(d) lapse of required period of time
(e) the possession must be:
1) in concept° de duelio (concept of owner)
2) public (not clandestine or non-apparent)
3) peaceful (not through force, violence, or intimidation)
4) continuous or uninterrupted
[NOTE: Under the old law — the Code of Civil
Procedure whether the possession was in good faith
or in bad faith did not matter. The period for im-
movables was always ten years. Also, the possession
need not be peaceful. (See Arboso v. Andrade, 87 Phil.
782) However, the possession, even under the old law
See this Article. See also the comments in the preceding
Article.
(2) Possessor in the Concept of Holder
A possessor in the concept of holder cannot acquire property
by prescription because his possession is not adverse. Thus, the
possession of land in the capacity of administrator (mere holder)
cannot ripen into ownership. (Ranjo v. Payoma, L-1866, May 30,
1951) Neither is the possession by a mortgagee adverse. (Garcia
v. Arjona, L-7279, Oct. 29, 1955)
( 3) Owner-Administrator
The mere fact that the person who claims ownership of the
property also administers the same does not militate against
its acquisition of the property by prescription. The fact that he

28 29
 CIVIL CODE OF THE PHILIPPINES Arts. 1121-1124
CIVIL CODE OF THE PHILIPPINES
Arts. 1119-1120

rties in question does not Art. 1121. Possession is naturally interrupted when
stated that he administered the prope through any cause it should cease for more than one year.
the owner thereof for certainly
necessarily imply that he is not
administrator. (Guarin, The old possession is not revived if a new possession
an owner of a property can be its own
et al. v. De Vera, L-9577, Feb. 28, 1957) should be exercised by the same adverse claimant.

cter executed in vir-

Art. 1119. Acts of possessory chara COMMENT:
of the owner shall not be
tue of license or by mere tolerance
.
available for the purposes of possession (1) 'Natural Interruption' Defined
The definition is implied in the first paragraph. Note the
COMMENT: phrase "any cause."
Owner
Possession by License or Tolerance of (2) Reason for the Period Involved
there is implied rec-
In possession by license or tolerance, Possession de facto is lost if the property be in the posses-
HER. (See Macaltao v.
ognition of ownership residing in ANOT sion of another for more than one year. Hence, if the possession
Castro, CA-GR 22408-R, Aug. 12, 1963) of another has been for one year or less, it is as if there was no
interruption. (Art. 1122, Civil Code)
for the purposes of
Art. 1120. Possession is interrupted
prescription, naturally or civilly. (3) Reason for the Non-Revival of the Possession
Possession here must be continuous and not interrupted.
COMMENT:
Purposes of Prescrip- Art. 1122. If the natural interruption is for only one year
(1) How Possession Is Interrupted for or less, the time elapsed shall be counted in favor of the pre-
tion scription.
Code)
(a) naturally. (Arts. 1121, 1122, Civil
(b) civilly. (Arts. 1123, 1124, Civil Code) COMMENT:
The Article explains itself.
(2) Natural Interruption
possession will gener- Art. 1123. Civil interruption is produced by judicial sum-
If prescription is interrupted, the old
begin all over again. mons to the possessor.
ally not be counted; the period must
COMMENT:
(3) Suspension of Prescription
distinguished from 'Civil Interruption' Defined
If prescription is merely suspended (as
D. This may hap-
interruption), the old possession will be ADDE The definition is implicit in the Article.
NOT open (Arts. 1136,
pen when during war, the civil courts are
on the payment of
Civil Code); or when there is a moratorium Art. 1124. Judicial summons shall be deemed not to have
GR L-10127, June 30,
debts. (Talens, et al. v. Chuakay and Co., been issued and shall not give rise to interruption:
GR L-12301, April 13,
1958; and Rio and Co. v. Datu Jolkipli, (1) If it should be void for lack of legal solemnities;
1959)
31
30
 NES Arts. 1125-1126
CIVIL CODE OF THE PHILIPPI
CIVIL CODE OF THE PHILIPPINES
Art. 1124

(5) Case
from the complaint or
(2) If the plaintiff should desist n-Guillo
should allow the proceedings to
lapse; Vda. de Figuracion v. Figuracio
690 SCRA 495
absolved from the com-
(3) If the possessor should be acquire by acquisitive
plaint. ISSUE: Can co-heirs or co-owners
co-heirs or co-owners?
interruption shall be prescription the share of the other
In all these cases, the period of the ion of the co-ownership.
counted for the prescription. HELD: No, absent a clear repudiat

COMMENT: (6) Acquisitive Prescription

not Be Considered Civil A.B. Maamo Sr.
(1) When Judicial Summons Can Pabalan v. The Heirs of Simeon
Interruption 694 SCRA 56
Three instances are given in the Arti
cle. rio or adverse in order
Possession must be en concepts de due
but emerge victorious, tive right.
[NOTE: If the possessors are sued, to court the foundation of prescrip
ing the period of the suit.
it is as if there was no interruption dur it recognition which the
(Lacuesta v. Guerrero, 8 Phil. 719)] Art. 1125. Any express or tac
ner's right also interrupts
possessor may make of the ow
(2) Apparent Interruption possession.
as if there was NO in-
In the three cases given above, it is
sentence should therefore COMMENT:
terruption. "Interruption" in the last
e under the law there was
read as "apparent interruption" sinc (1) Recognition by Possessor of
Owner's Right
e)
never an interruption. (See first sentenc possession is no longer
Reason for the Article — Here the
Not Extinctive Prescription in concepto de duetio or adverse.
(3) Applicability to Acquisitive,
t. 30, 1960, the Court
In Amar v. Odianan, L-15179, Sep
of the old Civil Code (and (2) Example
held that Arts. 1943, 1945, and 1946
4 of the New Civil Code authorized to so act,
from which Arts. 1120, 1123, and 112 The act of a government official, duly
of possession in relation to a private person, interrupts
were taken), refer to interruption in recognizing ownership of land in
cases of extinctive prescrip- cerned. (Seminary of San
acquisitive prescription, and not to possession by the municipality con
tion. Carlos v. Mun. of Cebu, 19 Phil. 32)

(4) Acquisitive MCQ ed in the Registry of Prop-

utory period of time Art. 1126. Against a title record
An uninterrupted possession for a stat ownership or real rights shall
d faith are requisites for: erty, ordinary prescription of
without the need of just title and goo of a third person, except in
not take place to the prejudice
ed; and the time shall begin
A. extraordinary acquisitive prescription
; virtue of another title also record
latter.
to run from the recording of the
B. laches; the Land Registration Act,
; As to lands registered under
C. ordinary acquisitive prescription the provisions of that special law
shall govern.
D. prescription of action
33
32

PHILIPPINES
CIVIL CODE OF THE
Art. 1126
COMMENT:
try of Property
of Titles Recorded in Regis
(1) Pre scr ipt ion
d registered
1126 does NOT refer to lan
(a) It is clear that Art. To rre ns Title).
ion Law (with a
under the Land Registrat
to all other lands.
(b) It, however, refers
(c) Example: s L-12754, Jan. 30, 1960
d not protected by a Torren
Arcadio is the owner of lan gistry
r, duly registered in the Re
Title. His right is, howeve reg iste red).
(for the deed of sale in his
favor has bee n dul y
land
r, takes possession of the
1) If Artemio, a strange -forger), is there a cha nce
in good faith (from a seller
ten years, the owner the of
for him to become, after
land, as against Arcadio?
o is not protected by
ANS.: Yes, after all, Arcadi
ly is not the third person
a Torrens Title. He certain
e Sison v. Ramos, 13 Phil.
referred to in the Article. (Se io
adio and Artemio, Artem
54) Thus, as between Arc
end of ten years.
becomes the owner at the
after Artemio takes pos
session,
2) Suppose 12 years an inn ocent
Arcadio sells the land to
Benedicto , perty, registered under
Arc adio's
purchaser for value (who,
in investiga ting
iste red in
title found that the proper
ty was indeed reg
ow ner ?
Arcadio's name), will Ben
edicto become the
innocent world was
ANS.: Yes, for insofar as the
l the owner at the time
concerned, Arcadio was stil
He could therefore validly
he sold it to Benedicto.
edicto Artemio's prescrip-
transfer ownership to Ben
not prejudice Benedicto.
tive right should clearly
caused his title to be
[NOTE: If Artemio had
become the owner insofar
registered, he could have tim e he
cerned, not fro m the
the entire world was con
dee d of sale in his favor but from
registered the forg ed
years after such recording
the time of the lapse of ten ing is not the
such record
What begins to run from
per iod or time for prescription.]
ownership, but the
34
Art. 1127
PINES
CIVIL CODE OF THE PHILIP
Land Registration Law
(2) Lands Registered Under the
rrens system cannot be
Lands registered under the To
v. Jayme, L-12754, Jan. 30,
acquired by prescription (Alfonso
only by one under whose name
1960) but this rule can be invoked
e) it was registered. (Jocson,
(or under whose predecessor's nam
et al. v. Silos, L-12998, July 25, 196
0)
Alfonso v. Jayme
by a Torrens Title, was
FACTS: Plaintiffs land, protected
n into a road in 1925, without
taken by Pasay City for conversio
sued for recovery of the land or
compensation. In 1954, plaintiff
its value.
his name under the Tor-
HELD: Since the land was under
ner, and could recover posses-
rens system, plaintiff remained ow
e it is now a ROAD, it is not
sion at any time. However, becaus
ff. Pasay City was ordered to
convenient to restore it to plainti
ue of the land in 1925, with
pay compensation based on the val
legal interest as damages.
Jocson, et at. v. Silos
L-12998, July 25, 1960
FACTS: A widower sold conjugal pro
, to an innocent purchaser
his name under the Torrens system
en or issued a new transfer
for value, who was subsequently giv
e buyer's) name. Twenty-two
certificate of title, under his (th
ed spouse (the wife) sued for
years later, the heirs of the deceas
t to one-half of the land.
annulment of the sale with respec
HELD: The suit for annulment and
recovery has already
prescribed. The claim of imprescrip
tibility would have been cor-
in the name of the husband
rect if the land had been registered
band alone.
and wife, not in the name of the hus
as
possessor consists in the
Art. 1127. The good faith of the
son from whom he received the
. roasonable belief that the per
and could transmit his owner
-
thing was the owner thereof,
Ohlp.
35
 CIVIL CODE OF THE PHILIPPINES Arts. 1129-1130
CIVIL CODE OF THE PHILIPPINES
Art. 1128

(3) Good Faith Changing to Bad Faith

COMMENT:
It is, however, possible that the good faith may later change
ed
'Good Faith of Possessor' Defin to bad faith. In such a case, how many more years of possession
faith applies in con- would be required?
Note that the definition here of good
nection with prescription. ANS.:
good faith required for (a) For real property, three years of possession in bad faith
Art. 1128. The conditions of
and 529 of this Code are would be equivalent to one year of possession in good faith.
possession in Articles 526, 527, 528,
determination of good faith in the
likewise necessary for the (Reason: 30 years would be required for extraordinary
real rights.
prescription of ownership and other prescription, but only ten years are needed for ordinary
prescription.)
COMMENT: (b) For personal property, two years of possession in bad faith
Faith would be equivalent to one year in good faith.
(1) Other Requisites for Good
mentioned must ALL be (Reason: Extraordinary prescription needs eight
The requisites in the Articles
faith. years; ordinary prescription, four years).
present — otherwise, there is no good
possessor in good faith who is not
(a) Art. 526. He is deemed a Art. 1129. For the purposes of prescription, there is just
or mode of acquisition
aware that there exists in his title title when the adverse claimant came into possession of the
any flaw which invalidates it. property through one of the modes recognized by law for the
who possesses in any acquisition of ownership or other real rights, but the grantor
He is deemed a possessor in bad faith
was not the owner or could not transmit any right.
case contrary to the foregoing.
question of law may
Mistake upon a doubtful or difficult COMMENT:
be the basis of good faith.
'Just Title' Defined
s presumed, and upon him
(b) Art. 527. Good faith is alway
a possessor rests the (a) The definition is implied in the Article.
who alleges bad faith on the part of
burden of proof. (b) See Comments under the next Article.
in good faith does not lose
(c) Art. 528. Possession acquired Art. 1130. The title for prescription must be true and valid.
and from the moment
this character except in the case
possessor is not unaware
facts exist which show that the COMMENT:
perly or wrongfully.
that he possesses the thing impro
possession continues to be Nature of the Title Required
(d) Art. 529. It is presumed that
which it was acquired, What is really meant by just title is "titulo colorado," that
enjoyed in the same character in (a)
until the contrary is proved. is, there was a mode of acquisition but the grantor was
not the owner. Had he been the owner, there would be no
Must Last more necessity for prescription. (See Doliendo v. Biarnesa,
(2) For How Long the Good Faith
7 Phil. 232; see also Genova v. Cariobaldes, CA-GR 15945-
the required period.
The good faith must last throughout R, March 25, 1957, 53 O.G. 4511)
(TS, Jan. 25, 1945)
37
36
 PPINES CIVIL CODE OF THE PHILIPPINES Art. 1132
CIVIL CODE OF THE PHILI
Arts. 1131-1132

COMMENT:
1130 does not mean one
(b) "True and valid" as used in Art.
a case, there would be no (1) Period of Prescription for Movables
without any defect, for in such
it means is that the mode
necessity for prescription. What This Article states the rules for MOVABLES:
and true, had the grantor
should ordinarily have been valid
Biarnesa, 7 Phil. 232; 2 Castan (a) ordinary prescription — 4 years
been the owner. (Doliendo v.
defect of the grantor not being
240) Thus, if aside from the (b) extraordinary prescription — 8 years
defect that would render the
the owner, there is another
acquired would not be suf-
acquisition void, the title thus (2) Rule with Respect to Lost Movables and Those of Which
n. Such for example would be
ficient for ordinary prescriptio the Owner Has Been Illegally Deprived
absolutely simulated; or when
the case if the contract were
the owner of certain property, The possession of movable property acquired in good faith
a husband, pretending to be
Even if the husband had
would donate it to his paramour. is equivalent to a title. Nevertheless, one who has lost any mov-
would have been null and able or has been unlawfully deprived thereof, may recover it
been the owner, the donation
donee, lacking "just title,"
void just the same. Here, the from the person in possession of the same.
extraordinary, not by ordinary
can acquire ownership by If the possessor of a movable lost or of which the owner
prescription. has been unlawfully deprived, has acquired it in good faith at
must a public sale, the owner cannot obtain its return without reim-
of prescription, just title
Art. 1131. For the purposes bursing the price paid therefor. (Art. 559, Civil Code)
presumed.
be proved; it is never
(3) Rule with Respect to Public Sales, Fairs, Markets, and
COMMENT: Merchant's Store
Title
Necessity of Proving the Just Subject to the provisions of this Title, where goods are
char-
of the aggressive or offensive sold by a person who is not the owner thereof, and who does not
(a) Proof is needed in view sell them under authority or with the consent of the owner, the
acter of prescription. buyer acquired no better title to the goods than the seller had,
title
ore, the presumption of just
(b) In prescription, theref DEFE NSE of rights does unless the owner of the goods is by his conduct precluded from
given under Art. 541 regarding denying the seller's authority to sell.
not apply. (See 2 Castan 241) Nothing in this Title, however, shall affect:
movables prescribes through
Art. 1132. The ownership of (a) The provisions of any factors' acts, recording laws, or any
years in good faith.
uninterrupted possession for four other provision of law enabling the apparent owner of goods
ribes to dispose of them as if he were the true owner thereof;
nal property also presc
The ownership of perso eight years , with out
possession for (b) The validity of any contracts of sale under statutory power
through uninterrupted
. of sale or under the order of a court of competent jurisdic-
need of any other condition
nal
the owner to recover perso tion;
With regard to the right of depri ved, as
has been illegally (c) Purchases made in a merchant's store, or in fairs, or mar-
property lost or of which he publi c sale,
movables acquired in a kets, in accordance with the Code of Commerce and special
well as with respect to s of
merchant's store the provision laws. (Art. 1505, Civil Code)
fair, or market, or from a rved.
Code shall be obse
Articles 559 and 1505 of this
39
38
 Arts. 1136-1137
CIVIL CODE OF THE PHILIPPINES
CIVIL CODE OF THE PHILIPPINES
Arts. 1133-1135
over the "title."
(b) Notice that "possession" here prevails
ugh a crime can never cle cannot apply.
Art. 1133. Movables possessed thro Necessarily, if there is NO title, the Arti
by the offender.
be acquired through prescription (c) The possession here must be "by mistake."
n the civil courts
COMMENT: Art. 1136. Possession in wartime, whe
in favor of the adverse
(1) Movables Possessed Throug
h a Crime are not open, shall not be counted
lication, subsequent claimant.
Note the word "offender." By imp
ire the property by pre-
acquirers from the "offender" may acqu COMMENT:
scription.
(1) Possession in War Time
Crimes Are Involved) courts are open.
(2) Rule for Immovables (Where (a) The Article does not apply when the civil
301, April 13,
Regarding immovables, possession by
force or violence does In Rio y Compania v. Datu Jolkipli, L-12
stat ute of limita-
1959, the Supreme Court held that the
not give rise to prescription. , cour ts are not or
tions is suspended if during wartime
ke this rule, a party
cannot be kept open. However, to invo
real rights over immov- or could not be
Art. 1134. Ownership and other must first show that the court was clos ed
ordinary prescription through opened for business as a conseque nce of chao s and confu-
able property are acquired by tion of fact,
sion. The determination of this mat ter is a ques
possession of ten years. case on the
the hear ing of a
which should be ventilated in
COMMENT: merits.
ng Real Property e were places in the
Prescriptive Periods for Acquiri (b) During the Japanese occupation, ther
tion.
state the rule for Philippines where no civil courts could func
This Article and the following ones
IMMOVABLES: scription
(2) Fortuitous Event — Effect on Pre
(a) ordinary prescription — 10 year
s e, "the period
Note that under Art. 1154 of the Civil Cod
a fortu itous event
(b) extraordinary prescription —
30 years. (Art. 1137, Civil during which the obligee was prevented by
agai nst him ."
Code) from enforcing his right is not reckoned
ts over immova-
Art. 1135. In case the adverse clai
mant possesses by mis- Art. 1137. Ownership and other real righ
ted adv erse possession
take an area greater, or less, than
that expressed in his title, bles also prescribe through uninterrup
d of title or of good faith.
prescription shall be based on the
possession. thereof for thirty years, without nee

COMMENT:
COMMENT:
pect to Immovables
Area in Title (1) Extraordinary Prescription With Res
When Area Possessed Varies from
tion regarding:
rs to both actual and con- This Article refers to extraordinary prescrip
(a) The term "possesses" here refe
n in the eyes of the law
structive possession, since possessio (a) ownership over immovables
his feet on every
does not mean that a man has to have other real rights over immovables
of Lands, 39 Phil. 175) (b)
square meter of land. (Ramos v. Dir.
41
40
 CIVIL CODE OF THE PHILIPPINES Art. 1138
CIVIL CODE OF THE PHILIPPINES
Art. 1138

COMMENT:
(2) Period Required
Rules for Computation of Time
Note the period — 30 years.
Par. 1 — Tacking of Possession
(3) What Are Not Needed (a) This means ADDING the period of possession of the
Under this Article, neither good faith
nor just title is es- predecessor. Reason: The true owner of the property was
may be acquired by ex- after all NOT in possession, during the possession of said
sential; hence, property voidly donated
insta nce occur when the predecessor.
traordinary prescription. This may for
valid ly accep ted by the
donation of real properties had not been basis for
(b) Tacking is allowed only if there be privity of relationship
it may be the
donee. Although here the donation is void, presc ription.
between the predecessor and the successor, as in the case
properties by of succession, donation, sale, barter, etc. Thus, a mere
the acquisition of the donee of said Pens ader
28, 1957; and intruder or usurper cannot "tack." (See Razote v. Razote,
(Guarin, et al. v. De Vera, L-9577, Feb.
v. Pensader, 47 Phil. 959) 14 Phil. 182; Lacson v. Gov't., 39 Phil. 63)
(c) "Tacking" by a subsequent possessor of his predecessor's
cription
(4) Retroactive Effect of the Pres possession can be allowed if the predecessor's possession
is, the acquirer, as can satisfy the requisites for prescription (such as the fact
Prescription has a retroactive effect, that
d, is considered the owner that the possession must be in the concept of owner, peace-
soon as the necessary period has lapse
ssion. Thus, any encum- ful, etc.). (See 2 Corpus Juris 92; and Casilag v. Fajardo,
from the BEGINNING of the posse
perio d should be considered CA-GR 1066-R, June 18, 1948, 46 O.G. 570)
brances made by him during said
r are not binding on the
as valid, while those of the original owne Par. 2 — Presumption of Continuing Possession
is also entitled to all the
acquirer by prescription. The acquirer
retroactive ownership. The presumption is expressly declared to be rebuttable.
fruits during said period in view of his
(2 Castan 254-255)

time necessary for pre-

Art. 1138. In the computation of
be observed:
scription, the following rules shall
complete the period
(1) The present possessor may
ing his possession to that
necessary for prescription by tack
interest;
of his grantor or predecessor in
ent possessor who was
(2) It is presumed that the pres
time, has continued to be in
also the possessor at a previous
time, unless there is proof
possession during the intervening
to the contrary;
and the last day in-
(3) The first day shall be excluded
cluded.

43
42

Chapter 3
PRESCRIPTION OF ACTION
mere lapse of time
Art. 1139. Actions prescribe by the
fixed by law.
COMMENT:
(1) How Actions Prescribe
in the law. There
By the mere lapse of the time indicated
is no other requirement.
(2) Scope or Nature of the Chapter
Limitations, because
This chapter is our general Statute of
ly prevail. (See Art.
particular provisions on prescription natural
1148, Civil Code)
(3) Prescription as a Defense
ption of action is
In general, we may say that the prescri
d as such, it must be
available as a DEFENSE. To be asserte
s v. Salas, 63 Phil. 567)
specifically pleaded and proved. (Hodge
defense , proof cannot later
Thus, if not set up or pleaded as a of such
to the introdu ction
on be presented if objection is made Upon the other
Phil. 150)
proof. (National Bank v. Escudero, 92 prescrip tion
the defense of
hand, as long as the defendant raised dismiss ed
the compla int was
in his answer to the complaint, but in the ap-
set up in his brief
on some other ground, he can still
f from the decision of
pellate court in an appeal by the plaintif
9, May 17, 1957) If the
the trial court. (Lapuz v. Sy Uy, L-1007
decided from the averments of the
issue of prescription can be
fs complaint, there
pleadings, more particularly from the plaintif
on the matter, before the
is NO necessity of receiving evidence
ground of prescription.
Court may dismiss the complaint on the
5, Jan. 28, 1961)
(Bambao, et al. v. Lednicky, et al., L-1549
44
CIVIL CODE OF THE PHILIPPINES Art. 1139
(4) Effect of Death on Prescription
If a father has a cause of action against a stranger (the
period of prescription of which is, let us say, four years) and the
father dies before the end of such prescriptive period, should
prescription continue to run, even if say his children are still
MINORS? The Supreme Court in the case of Martir, et al. v.
Trinidad, et al., L-12057, May 20, 1959, answered YES, for
after all in this case the cause of action accrued in favor of the
father himself, and not directly in favor of the children. Except
where a statute provides otherwise, one disability (like the
father's death) CANNOT be tacked to another's disability (like
the children's minority). Nor can a party avail himself of several
disabilities, unless they all existed at the time when the right
of action accrued. This is in obedience to the universal rule that
when a Statute begins to run, no subsequent disability can stop
its operation unless specially so provided in the statute.
(5) Conflict of Laws — Variance of Foreign and Local Law
Re Prescription
In the case of D'Almeida v. Hagedorn, L-10804, May 22,
1957, an action was brought in 1954 in the Philippines on two
demand notes executed in 1942 and 1943 in Hong Kong where
both debtor and creditor were residing until liberation. The
Court, in applying the rule that the moratorium law suspended
the running of the prescriptive period and that therefore the ac-
tion had not prescribed, ruled that prescription is governed by
the law of the forum. It would seem from this ruling that even
if the cause of action accrued in Hong Kong and has already
prescribed under Hong Kong law, it has not yet prescribed under
Philippine law. This seems to lose sight of a section of Act 190
(Code of Civil Procedure) which states that "if, by the laws of the
State or country where the cause of action arose, the action is
barred, it is also barred in the Philippines." In the instant case,
however, there was no proof that the claim was barred under
Hong Kong law, and it is well-settled that in the absence of proof
of the foreign law, it is presumed to be the same as Philippine
law.
[NOTE: The presumption has been referred to as a "proces-
sual presumption."]
45
 CIVIL CODE OF THE PHILIPPINES Art. 1142
PHILIPPINES
CIVIL CODE OF THE
Arts. 1140-1141
De Jesus, et al. v. Court of Appeals, et at.
Mon th? GR 57092, Jan. 21, 1993
(6) How Long Is a
Prescription running even after the effectivity of the New
Quizon v. Baltazar
Civil Code on August 30, 1950, continued to be governed by Sec.
76 SCRA 560
41 of the Old Civil Code.
Art. 90 of the
used in a law (such as
The term "month" as -day month Under the present Civil Code, the prescriptive period
understood to refer to a 30
Revised Penal Code) is required for the acquisition of immovable property is ten years
month.
and not to a calendar if the possession is in good faith, and 30 years if in bad faith.
Such open, continuous, exclusive and notorious occupation of the
(7) Query prescribe? disputed property for 30 years must be conclusively established.
part of the public forest
Does a property deemed Reckoned from the time she executed the affidavit of ad-
to recover
reversion filed by the State
ANS.: An action for is part of the judication in 1961, eleven years after the New Civil Code had
regis tered in favo r of any party which taken effect, private respondent's possession of the contested lot
prop erty prescribes. (Heirs
t or of a fores t reservation never is far too short of the prescriptive period of 30 years, consider-
publ ic fores ranea Rafols Vda.
the Late Spou ses Pedr o S. Palanca and Sote ing that her possession is in bad faith. The filing of the petition
of
500 SCRA 209 [2006])
de Palanca v. Republic, for recovery of ownership and possession and quieting of title
l prescribe by petitioners on April 27, 1973 was well below the acquisitive
recover movables shal
Art. 1140. Actions to thereof lost, unless
is prescriptive period for private respondent, which is 30 years
the time the possession under Art. 1141 of the present Civil Code. In this case, the
eigh t year s from by prescription for
poss esso r has acquired the ownership without prejudice statutory period of prescription is deemed to have commenced
the and
rding of Article 1132,
a less period, acco 559, 1505 , and 1133. when petitioners were made aware of a claim adverse to them,
Articles
to the provisions of i.e., when the affidavit of adjudication was duly registered with
the Registry of Deeds which, at the earliest may be considered
COMMENT: to be in 1974, when private respondent was able to secure a tax
declaration in her name.
Recovery of Movables
movables.
ordinary prescription for Art. 1142. A mortgage action prescribes after ten years.
This refers to extra
prescribe after
over immovables
Art. 1141. Real action COMMENT:
thirty years. (1) Prescription of Mortgage Actions
is established
ision is with out prejudice to what
This prov rights by pre-
acqu isiti on of ownership and other real Ten years.
for the
scription.
(2) When Period Begins
COMMENT: From what moment must the ten-year period be counted?
From the day on which it could have been brought. (Art. 1150,
Recovery of Immovables
for immovables. Civil Code) Thus, if the parents of an employee should execute
extraordinary prescription
(a) This refers to a real estate mortgage to secure a performance bond given by a
lost, however,
The poss essio n de jure of an immovable is Code) surety company for their son, the period of prescription begins
(b) l
s. (No. 4, Art. 555, Civi
at the end of ten year
47
46
 CIVIL CODE OF THE PHILIPPINES
Art. 1143
from the moment the surety company pays by reason of said
bond because from said date, the mortgagors become liable,
and foreclosure can be made. (Nabong v. Luzon Surety Co., Inc.,
L-10034, May 17, 1957)
(3) Lands With a Torrens Title
While lands with a Torrens Title cannot be acquired by
prescription (Sec. 39, Act 496; and Rosario v. Aud. General,
L-11817, April 30, 1958), still the right to foreclose a mortgage
on such lands does prescribe for what does not prescribe is the
ownership of said lands.
(4) Effect if Mortgage Is Registered
Even if a mortgage is registered, the action to foreclose
upon it may still prescribe. (Buhat v. Besana, 50 O.G. 4215,
Sept. 1954)
(5) Effect on Interest on Debt
If a mortgage debt had already prescribed, so also has the
action to recover interest thereon. (Soriano v. Enriquez, 24 Phil.
584)
Art. 1143. The following rights among others specified
elsewhere in this Code, are not extinguished by prescription:
(1) To demand a right of way, regulated in Article 649;
(2) To bring an action to abate a public or private nui-
sance.
COMMENT:
(1) Rights Not Extinguished by Prescription
(a) Two rights are indicated in the Article. [The first right,
the demanding of the right of way, would seem to cover
also the right to demand a compulsory or legal easement
of drainage. (See Art. 676, Civil Code)]
(b) Reason for the non-prescriptibility: public policy.
48
CIVIL CODE OF THE PHILIPPINES Art. 1143
(2) Some Other Actions That Do Not Prescribe
(a) The action to demand partition of a co-ownership (as long
as the co-ownership has been expressly or implicitly rec-
ognized). (Art. 494, Civil Code)
Budiong v. Pandoc
79 SCRA 24
The right to demand partition does not prescribe.
(See Art. 494 of the Civil Code)
The action (or the defense) for the declaration of contract
of marriage as null and void or inexistent. (See Art. 1410;
see also Banaga v. Soler, L-15717, Jun. 30, 1961)
The action to have a will probated (otherwise, the desires
of the deceased, who cannot help himself, may be frus-
trated). (Guevara v. Guevara, et al., L-05405, Jan. 31, 1956)
The action for the quieting of title so long as the plaintiff
is in possession of the property. (Sapto, et al. v. Fabiana,
L-11285, May 6, 1958)
The right to demand support (present and future), but in-
stallments on support in arrears may prescribe. (Trinidad
Florencio v. Rufino Organo, GR L-4037, Nov. 29, 1951)
Generally, an action to recover property expressly placed
in trust (express trust) cannot prescribe in view of the con-
fidence reposed, UNLESS such trust has been repudiated
unequivocally. However, constructive trusts are affected by
prescription and laches in view of the lack of confidence or
fiduciary relations. (Diaz, et al. v. Garricho and Agriado,
L-11229, March 20, 1958; see Bachrach Motor Co. v. Lejano,
L-10910, Jan. 16, 1959; see also comments under Art. 1456,
this Volume)
(g) An action to compel reconveyance of property with a Tor-
rens Title does NOT prescribe if the registered owner had
obtained registration in bad faith, and the property is still
in the latter's name. The reason is that the registration is
in the nature of a continuing and subsisting trust. (Cala-
diao v. Vda. de Bias, L-19063, April 29, 1964) However, if
the property has already passed to an innocent purchaser
for value, the principle of imprescriptibility does not apply.
49
 CIVIL CODE OF THE PHILIPPINES
Art. 1144 CIVIL CODE OF THE PHILIPPINES
(Ibid.) INOTE: In Gerona, et al. v. Carmen de Guzman, et
al., L-19060, May 29, 1964, however, the Supreme Court
stated that although there are some decisions to the con-
trary, it is already settled that an action for reconveyance
of real property based upon a constructive or implied trust,
resulting from fraud, may be barred by prescription. The
period is four years from the discovery of the fraud.]
(h) An action brought by a buyer of land to compel the seller to
execute the proper deed of conveyance does NOT prescribe,
provided that said buyer is still in POSSESSION. (See
Castrillo v. Court of Appeals, L-18046, March 31, 1964)
(i) An action by the registered owner of land (protected by a
Torrens Title) to recover possession of said land. (Act 496)
(j) Case of Rodil
Rodil v. Benedicto
L-28616, Jan. 22, 1980
The right of the applicant for registered land (or the
purchaser thereof) to ask for the writ of possession does
not prescribe.
Art. 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
COMMENT:
(1) Actions That Prescribe in Ten Years
The Article enumerates three kinds. (See Manuel Uy &
Sons, Inc. v. Valbueco, Inc., 705 SCRA 537)
Other actions that prescribe in ten years include the fol-
lowing:
(a) action to recover de jure possession of real property from
a possessor in good faith. (Art. 555, Civil Code; also Art.
1141, par. 2, in relation to Art. 1134, Civil Code)
50
Art. 1144
(b) a real mortgage action. (Art. 1142, Civil Code)
[NOTE: An action to annul a marriage on the ground of
impotency prescribes in eight years, counted from the celebra-
tion of the marriage. (Art. 87, par. 6, Civil Code)]
Veloso v. Workmen's Compensation Commission
78 SCRA 503
The liability of an employer for compensation cases under
the Workmen's Compensation Law prescribes in ten years.
Negre v. Workmen's Compensation
Commission
GR 43795, April 15, 1985
A workmen's compensation claim filed eight years after
the employee's death is well within the statutory period to file
a compensation claim, which is ten years.
Villamor v. Court of Appeals
GR 97332, Oct. 10, 1991
Under Art. 1144(1) of the Civil Code, actions upon a written
contract must be brought within ten years. The deed of option
was executed on Nov. 11, 1971. The acceptance was also made
in the same instrument. The complaint was filed by Villamor
on July 13, 1987, 17 years from the time of the execution of the
contract. Hence, the right of action had prescribed. There were
allegations by Villamor that they demanded from Reyes as early
as 1984 the enforcement of their rights under the contract. Still,
it was beyond the ten-year period prescribed by the Civil Code.
It is of judicial notice that the price of real estate in Metro
Manila is continuously on the rise. To allow Villamor to demand
the delivery of the property subject of this case 13 years or 17
years after the execution of the deed at the price of only P70
per square meter is inequitous. For reasons of equity and in
consideration of the fact that Reyes has no other decent place
to live in, the Court in the exercise of equity jurisdiction, is not
inclined to grant Villamor's prayer.
51
 PPINES CIVIL CODE OF THE PHILIPPINES Art. 1144
CIVIL CODE OF THE PHILI
Art. 1144

affirmed by the Commissioner, but the employer raised

Contract
(2) Example of a Written the defense of prescription, on the ground that when the
can bring an action based Commission assumed jurisdiction over the case on June 20,
A passenger of a ship, or his heirs,
period of ten years because the 1952, the six years' prescription period provided for in Act
on culpa contractual within a
ortation is by itself a COMPLETE 190 had already expired. The Supreme Court affirmed the
TICKET issued for the transp
Guerrero, et al. v. Madrigal ruling of the Commission that the period of prescription
WRITTEN CONTRACT. (Peralta de had been extended by Art. 1144(2) of the Civil Code to ten
1959)
Shipping Co., L-12951, Nov. 17, years from the accrual of the action and that the ten-year
ation of a written con-
[NOTE: An action for the reform period did not expire until Dec. 25, 1965. On the claim
(Jayme v. Judge Nestor Alampay,
tract prescribes in ten years. that Art. 1144 could not be applied because Art. 2252 of
L-39592, Jan. 28, 1975)] the Code provides that changes made and new provisions
held that "although the and rules laid down by this Code which may prejudice or
[NOTE: In this case, the Court
transportation was under- impair vested or acquired rights in accordance with the old
complaint does not state that the s
contract of carriage, nevertheles legislation shall have "no retroactive effect" and that the
taken by virtue of a written se it is a matte r of application of Art. 1144 would impair vested rights of the
complaint becau
this can be implied from the
common knowledge that when ever a passenger boards a ship for employer, the Court held that the employer had no vested
another, he is issued a ticket right when the period of six years provided in Act 190 did
transportation from one place to not expire until Dec. 15, 1951.]
are specified."]
wherein the terms of the contract
s Created by Law (4) Actions Based on a Judgment
(3) Examples of Obligation
indemnity for a legal right of way. The judgment referred to here must be a final and executory
(a) The obligation to pay
road was acquired in 1914, one (that is, on appeal, the judgment was confirmed, or that no
(If the right of way of a public
brought to the Auditor- appeal was ever made within the proper period). Parenthetically,
the claim for payment of the same especially where, due
the validity of a judgment or order of a court which has become
General only in 1955 has prescribed,
g the war, the Government final and executory, may be attacked generally only by a direct
to the loss of the papers durin
has been made). (Rosario action, or proceeding to annul the same. (See Rosensons, Inc.,
cannot be sure that no payment
April 30, 1958) et al. v. Hon. Jose Jimenez, et al., L-41225, Nov. 11, 1975)
v. Auditor-General, L-11817,
r
compensation for the death of a worke Installments for support granted by a final judgment pre-
(b) An action to recover in
based on law, prescribes scribe after ten years, each particular installment prescribing
or employee, being an action
any specific provision of law after ten years from the time it is due. (Trinidad Florendo v.
ten years, in the absence of
r law, Act 190, said action Rufino Organo, L-4037, Nov. 29, 1951)
on the matter. (Under the forme
Phil. Corp. v. Workmen's
prescribed after six years). (Pan [NOTE: Under the Rules of Court, a judgment becomes
L-9807, April 17, 1957)
Compensation Corn. and Frias, DORMANT after five years. This means that the judgment
ration case, the death
[NOTE: In the Pan Phil. Corpo may be enforced only within five years by writ of execution.
claim was filed with the
occurred on Dec. 25, 1945. The Thereafter, since the judgment has become dormant, it can be
of the Bureau of Labor
Workmen's Compensation Division enforced only by another action, within ten years from the time
then ordered the employer to
on Feb. 11, 1949. The Bureau there was final judgment on the first action. (See Sec. 6, Rule
1950, but on June 20, 1952,
pay compensation on Sept. 9, 39, Revised Rules of Court) It necessarily follows that the ac-
Commission was created
the Workmen's Compensation tion to enforce the judgment must be filed within ten years. The
case. On Feb. 3, 1955, deci-
and it took cognizance of the time, however, that a moratorium law affecting the obligation
which was subsequently
sion was rendered on the claim
53
52
 CIVIL CODE OF THE PHILIPPINES Art. 1144
CIVIL CODE OF THE PHILIPPINES
Art. 1144

prescriptive Bucton that the latter would pay half of the price, and thus own
was in force should be deducted from the ten-year half of the land. Bucton paid her share to Gabar, and was given
have the effect of
period for the reason that moratorium laws in 1946 receipts acknowledging the payment.
(PNB v. Aboitiz
tolling (suspending) the prescriptive period.
v. Day, L-9944,
and Pascual, L-9500, April 11, 1957; Tioseco In 1947, Villarin executed a formal deed of sale in favor
Mining Investment
April 30, 1957; Liboro, et al. v. Finance and of Gabar, who immediately built a house on half of the lot.
of Montilla, Jr. v.
Corp., L-8948, Nov. 29, 1957; Intestate Estate Bucton took possession of the other half, and built improvements
Manila Motor Co., Inc.
Pacific Co., L-8223, Dec. 20, 1955; and thereon. When Bucton asked for a separate title, she was refused,
v. Flores, L-9396, Aug. 16, 1956)] and so, in 1968, she filed a complaint to compel Gabar to execute
1960, a driver a formal deed of sale in her favor. The Court of Appeals ruled that
In Quimabao v. Mora, L-12690, May 25, the action had already prescribed because this was an action to
May 19, 1950, and was
was convicted in a criminal case on party enforce a written contract, and should have been brought within
indemni fy the offended
sentenced among other things, to t. ten years from 1946, under Art. 1144 of the Civil Code.
said driver was insolven
in the amount of P2,000. However,
for suing the ISSUE: Has the action really prescribed?
ISSUE: What is the prescriptive period
?
driver's employer for his subsidiary liability HELD: No, the action has not really prescribed. The error
the driver's of the Court of Appeals is that it considered the execution of the
HELD: Ten years, for the suit is based, not on
t in the criminal case. receipt (in 1946) as the basis of the action. The real basis of the
negligence, but on the final judgmen
action is Bucton's ownership (and possession of the property).
April 30, 1964,
In Heirs of Sindiong v. Committee, L-15975, No enforcement of the contract of sale is needed, because the
decision (or to revive a
it was held that an action to enforce a property has already been delivered to Bucton, and ownership
n of ten years from
court judgment) prescribes upon the expiratio thereof has already been transferred by operation of law under
the date the decision became final. Art. 1434, referring to property sold by a person (Gabar) who
Olego v. Rebueno subsequently becomes the owner thereof. The action here there-
fore is one to quiet title, and as Bucton is in possession, the action
L-39350, Oct. 29, 1975
is imprescriptible.
compromise
FACTS: More than ten years after a judicial
to cite defenda nt in contempt
had been approved, plaintiff sought (6) Payment of Life Insurance
violated the judgmen t.
of court for having allegedly
Philippine American Life & General Insurance Co.
ISSUE: May this be done? v. Judge Lore R. Valencia-Bagalacsa,
effect what
HELD: No, this will not be allowed, for in RTC of Libmanan, Camarines Sur, Br. 56, etc.,
that had prescribed
plaintiff wanted was to enforce a judgment GR 139776, Aug. 1, 2002
on of contempt pro-
(ten years had passed) through the instituti FACTS: On June 20, 1995, private respondents, as le-
ceedings. gitimate children and forced heirs of their late father, Faustino
Contract Lumaniug, filed with the RTC of Libmanan, Camarines Sur
(5) Action Not Actually Based on Written docketed as Civil Case L-787, a complaint for recovery of sum
Bucton, et at. v. Gabar, et at. of money against petitioner alleging that: (1) their father was
L-36359, Jan. 31, 1974 insured by petitioner under Life Insurance Policy 1305486 with
of land on a face value of P50,000; (2) their father died of "coronary throm-
FACTS: Villarin sold in 1946 to Gabar a parcel bosis" on Nov. 25, 1980; (3) on June 22, 1981, they claimed and
had an oral agreeme nt with
the installment plan. Gabar in turn
55
54
 CIVIL CODE OF THE PHILIPPINES Art. 1145
CIVIL CODE OF THE PHILIPPINES
Art. 1144

interests under the denial, and it was only on Feb. 14, 1995 when petitioner finally
continuously claimed all the proceeds and
t of P641,0 00; and (4) despite decided to deny their claim that the ten-year period began to run.
life insurance policy in the amoun
and/or settlem ent of the claim Petitioner filed a petition for certiorari in the Court of Appeals
repeated demands for payment
which was on Dec. 1, 1994, peti- (CA). On April 30, 1999, the CA rendered its decision finding no
due from petitioner, the last of
wed said claim on Feb. 14, 1995. grave abuse of discretion committed by the court a quo when it
tioner finally refused or disallo
dents filed their compl aint on issued the Orders dated June 7, 1996 and dated Dec. 12, 1997,
In view thereof, private respon
respectively. Hence, the present petition for review.
June 20, 1995.
and Motion ISSUE: Whether or not the complaint filed by private
Petitioner filed an Answer with Counterclaim
respondents for payment of life insurance is already barred by
to Dismiss, contending that:
prescription of action.
dents had prescribed
1. the cause of action of private respon HELD: The RTC's ruling that the cause of action of private
and they are guilty of laches ;
respondents had not prescribed, is arbitrary and patently errone-
a letter dated
2. it had denied private respondents' claim in ous for not being founded on evidence on record, and, therefore,
lment on the part
March 12, 1982 on the ground of concea the same is void. Consequently, while the CA did not err in
he asserte d in his
of the decreased insured Faustino when upholding the June 7, 1996 Order of the RTC, it committed a
he had not been
application for insurance coverage that reversible error when it declared that the RTC did not commit
tion, high blood
treated for indication of "chest pain, palpita any grave abuse of discretion in issuing the Order dated Dec.
heart attack or
pressure, rheumatic fever, heart murmur, 12, 1997. The CA should have granted the petition for certiorari
when, in fact,
other disorder of the heart or blood vessel" assailing said Order of Dec. 12, 1997. Said Order was issued
he was a known hypertensive since 1974; with grave abuse of discretion for being patently erroneous and
25, 1983 re- arbitrary, thus, depriving petitioner of due process.
3. private respondents sent a letter dated May
and
questing for reconsideration of the denial; The petition is partly granted. The assailed CA decision
its decision to dated April 30, 1999 insofar only as it upheld the Order dated
4. in a letter dated July 11, 1983, it reiterated
ds more than ten Dec. 12, 1997 is reversed and set aside. A new judgment is en-
deny the claim for payment of the procee
a letter from Jose tered reversing and setting aside the Order dated Dec. 12, 1997
years later, or on Dec. 1, 1994, it received
Camar ines Sur, of the RTC of Libmanan, Camarines Sur, Br. 56, and affirming
C. Claro, a provincial board member of
iderati on which it its Order dated June 20, 1995. Said RTC is directed to proceed
reiterating the early request for recons
with dispatch with Civil Case L-787.
denied in a letter dated Feb. 14, 1995.
dismiss. On
Private respondents opposed the motion to
reads, in part: Art. 1145. The following actions must be commenced
June 7, 1996 the RTC issued an Order which
to dismis s by defend ants' coun- within six years:
"After a perusal of the motion
tted by plainti ff's counse l, the court
sel and the objection submi (1) Upon an oral contract;
in their respec tive pleadi ngs are
finds that the matters treated mer- (2) Upon a quasi-contract.
the necess ity of a trial on the
evidentiary in nature, hence, by the
recons iderati on was denied
its." Petitioner's motions for in the
12, 1997 uphold ing, howev er, COMMENT:
RTC in its Order dated Dec. that the
respon dents' counse l
same Order the claim of private (1) Actions That Prescribe in Six Years
on May 25, 1983
running of the ten-year period was "stopped"
reques ted for a recons ideration of the The Article enumerates two kinds.
when private respondents
57
56
 Art. 1146
ES
CIVIL CODE OF THE PHILIPPIN
Art. 1146 CIVIL CODE OF THE PHILIPPINES

. 1389, par. 1, Civil

(d) Action for rescission of contracts. (Art
(2) Examples Code)
held
(a) In Ilagan v. Adame, L-19619, March 31, 1964, it was [NOTE: In case of persons under guar
dianship and in
ncy (acti on prescription shall not
that an action to enforce an oral contract of tena the case of absentees, the period of
nt to the land ) er's incapacity, or
to compel the landlord to reinstate the tena begin until the termination of the form
unde r Art. 1149
comes under Art. 1145 (six years) and not until the domicile of the latter is know
n. (Art. 1389, par.
(five years) of the Civil Code. 2, Civil Code)]
044, July
(b) In Belman Compania, Inc. v. Central Bank, L-15 (e) Action for the annulment of a cont
ract. (Art. 1391, par. 1,
14, 1960, it was held that an actio n to reco ver a foreign
tral Bank Civil Code)
exchange tax erroneously collected by the Cen nce, or undue
(Bangko Sentral) is one based on the quasi-contr
act of [NOTE: In cases of intimidation, viole
s. the time the vitiation
solutio indebiti, and it, therefore, prescribes in six
year influence, the period is counted from
l Code ); in case of mistake or
ceases (Art. 1391, par. 3, Civi
the same (Art. 1391,
(3) Actions Where Periods Are Not Fixed fraud, from the time of discovery of
racts entered into
in the par. 4, Civil Code); and in cases of cont
Any other action whose period has not been fixed tated pers ons, from the time
, to be coun ted from the time the right by minors or other incapaci
Civil Code or in other laws par. 5, Civil Code)]
, Civi l Code ) the guardianship ceases. (Art. 1391,
of action accrues. (Art. 1149
hts of the Plaintiff"
Art. 1146. The following actions must be institute
d within (2) Example of "Injury to the Rig
ent Co., et al., L-13715,
four years: In Valencia v. Cebu Portland Cem
plaintiff separated from his
; Dec. 23, 1959, a case involving a
(1) Upon an injury to the rights of the plaintiff causes, the Supreme Court
employment for alleged unjustifiable
the rights of the plaintiff,
(2) Upon a quasi-delict. held that the action is one for "injury to
s."
and must be brought within 4 year
COMMENT:
(3) Rules for Quasi-Delicts
(1) Actions That Prescribe in four Years
ns from the day the quasi-
(a) In a quasi-delict, the period begi
The Article enumerates two kinds.
delict was committed.
Other actions include:
non-age, Paulan, et al. v. Sarabia, et al.
(a) Action for the annulment of marriage based on L-10542, July 31, 1958
idati on. (Art . 87, pars . 1, 4, and 5,
fraud, force, or intim
ed by defend-
Civil Code) FACTS: Basco was riding on a bus own
her truck owned by
is actually only ant Sarabia when it collided with anot
(b) Action for the revocation or reduction (this died on July 25, 1951.
for reduction) of donations base d on birth , appearance, or third-party defendant Lim. Basco
nst Sarabia and his
adoption of a child. (Art. 763, Civi l Code ) On April 19, 1955, a complaint agai
. On July 11, 1955
driver was filed by the widow and heirs
(c) Action to revoke a donation for non-complian
ce with condi- date of the collision),
(after more than four years from the
tions imposed by donor upon donee, the period to be coun
ted complaint against Lim
. (Art . 764, Sarabia in turn filed a third-party
from the non-compliance with the said condition and her driver.
Civil Code)
59
58
 CIVIL CODE OF THE PHILIPPINES Art. 1147
CIVIL CODE OF THE PHILIPPINES
Art. 1146

ear period be (4) Rule Under the Code of Civil Procedure

ISSUE: From what time must the four-y
complaint — from
counted for the filing of the third-party Under the Code of Civil Procedure, an action to recover
filing of the principal
the day of the collision or from the personal property, and an action for the recovery of damages
complaint? for taking, retaining, or injuring personal property, can only be
of the collision, brought within four years after the right of action accrues.
HELD: The period begins from the day
delict. The third-party
since the action is based on a quasi-
complaint was therefore dismissed. Lapuz v. Sy Uy
from physical injuries be- L-10079, May 17, 1957
(b) An action for damages arising years. (See Escueta
cause of a tort must be filed within four FACTS: In a civil case between the defendant and his
1974) However, when a
v. Fandialan, L-39675, Nov. 29, wife, certain jewelries belonging to the plaintiff were alleged to
injuries is instituted,
criminal action for the same physical have been wrongfully attached on Aug. 24, 1943. Unfortunately,
liability arising from the
the civil action for recovery of civil during the liberation, the jewels were looted from the safe of the
with the criminal
offense charged is impliedly instituted sheriff. On April 27, 1952, the plaintiff filed an action for the
expre ssly waives the civil
action, unless the offended party ately.
recovery of the jewelries or of their value. Issue: Has the action
institu te it separ
action or reserves his right to already prescribed?
Degollacion v. Li Chui HELD: The action has prescribed. Whether the case is
L-11640, May 22, 1956 considered as one for the recovery of personal property or one
on Sept. 29, for damages based on a tort, the plaintiff had only four years
FACTS: A traffic accident occurred from Aug. 24, 1943 or up to Aug. 24, 1947, within which to file
again st the defendant's
1949. A criminal case was brought Municipal/ the action against Sy Uy.
Court (now
driver in the Justice of the Peace case was,
Dec. 13, 1949. The
Metropolitan Trial Court) on by the
ssed, witho ut prejud ice, Art. 1147. The following actions must be filed within one
however, eventually dismi
1954. Having failed
Court of First Instance, on Feb. 16, year:
through the fiscal's
to have the criminal case reinstated (1) For forcible entry and detainer;
for damages against
office, the plaintiff filed a civil action
the defendant's employer. (2) For defamation.
ibe, it appearing
HELD: The civil action did not prescr
d the civil action
that the plaintiff neither expressly waive COMMENT:
civil action. Because
nor reserved his right to file a separate
criminal case, the period (1) Actions That Prescribe in One Year
the civil aspect remained with the
Dec. 13, 1949 up to Feb.
of prescription was suspended from The Article enumerates two kinds. Others include:
al case was pending).
16, 1954 (the period when the crimin
t if the civil (a) An action for legal separation, to be counted from knowl-
[NOTE: The ruling stated above is correc edge of the cause (but the action must be brought within
civil action is based
action is based on the CRIME. If the indep endent five years from occurrence). (Art. 102, Civil Code)
ered an
on a QUASI-DELICT (which is consid action cannot
al
civil action), the institution of the crimin on such [NOTE: Under Art. 57 of the Family Code, the pre-
action based
have the effect of interrupting the civil L-105 42, July scriptive period for filing an action for legal separation
ia, et al.,
quasi-delict. (Paulan, et al. v. Sarab shall be counted from the date of occurrence of the cause.]
31, 1958)]
61
60
Art. 1147 CIVIL CODE OF THE PHILIPPINES
(b) Action to impugn the legitimacy of a child, the period to be
counted from the recording of the birth in the Local Civil
Registry, if the husband should be in the same place, or in
a proper case, any of his heirs. (Art. 263, par. 1, Civil Code)
[NOTE: If the husband or his heirs are absent, the
period shall be 18 months if they should reside in the
Philippines; two years if abroad; if the birth of the child is
concealed, the period is to be counted from the discovery
of the fraud. (Art. 263, par. 2, Civil Code)]
(c) Action for the revocation of a donation on the ground of
ingratitude, the period to be counted from the time the
donor had knowledge of the fact, and it was possible for
him to bring the action. (Art. 169, Civil Code)
(d) Action for rescission or for damages for sale of immovable
encumbered with any non-apparent burden or servitude,
the period to be counted from the execution of the deed.
(Art. 1560, par. 3, Civil Code)
(e) Action for damages (no rescission anymore) for sale of
immovable encumbered with any non-apparent burden
or servitude, the one year after the execution of the deed
having lapsed, said period to be counted from the date on
which the burden or servitude is discovered. (Art. 1560,
par. 4, Civil Code)
(2) Rule in Case of Forcible Entry and Detainer
In forcible entry, the period is counted from date of unlaw-
ful deprivation (Sec. 1, Rule 70, 1997 Rules of Civil Procedure);
in case of fraud or stealth, counted from discovery of the same.
In unlawful detainer, the period is to be counted from the date
of last demand. (Sarona, et al. v. Villegas, L-22984, March 2,
1968; DBP v. Canonoy, L-29422, Sept. 30, 1970; and Calipayan
v. Pascual, L-22645, Sept. 18, 1967)
(3) Rule in Case of Libel
In libel, while it is true that the written defamation become
actionable upon its publication (i.e., communication to third
person), still the libelous matter must first be exhibited to the
person libelled before the action can be brought. Hence, the
62
CIVIL CODE OF THE PHILIPPINES Art. 1148
one-year period runs from the time the offended party knows of
the libelous matter. A person defamed can hardly be expected
to institute proceedings for damages arising from libel when he
has no knowledge of the said libel. (Alcantara, et al. v. Amoranto,
L-12493, Feb. 29, 1960)
(4) Actions That Prescribe in Six Months
(a) Action for the reduction of the price or for rescission of a
sale of real estate (by the unit area) if the vendor is unable
to deliver on demand all that is stated in the contract. (Art.
1543, in re Art. 1539, Civil Code)
(b) Action for reduction of the price or for rescission of a sale (a
cuerpo cierto) of real estate (made with mention of bounda-
ries) if the vendor is unable to deliver all that is included
within said boundaries. (Art. 1543, in re Art. 1542, Civil
Code)
Art. 1148. The limitations of action mentioned in Articles
1140 to 1142, and 1144 to 1147 are without prejudice to those
specified in other parts of this Code, in the Code of Commerce,
and in special laws.
COMMENT:
(1) Periods of Prescription Specified Elsewhere
Aside from the periods and actions indicated in the Articles
stated, other periods and other actions are found elsewhere.
Basa v. Republic
GR 45277, Aug. 5, 1985
The five-year period after assessment within which court
action for tax collection shall be instituted is suspended during
the period the Bureau of Internal Revenue is prohibited from
instituting court action.
Republic v. Ricarte
GR 46893, Nov. 12, 1985
The prescriptive period provided for in the Tax Code is
counted from the date when the BIR assessed the income tax
return of the taxpayer. The action has prescribed if it had been
63
 CIVIL CODE OF THE PHILIPPINES Art. 1149
PPINES
CIVIL CODE OF THE PHILI
Art. 1148
made in the application. (Rosario v. Aud. Gen., L-11817,
hs after the assessment. If the April 30, 1958; Jean v. Agregado, L-7921, Sept. 28, 1955)
filed six years and nine mont
the taxpayer received a
Government presents no evidence that
assessment notice regarding Art. 1149. All other actions whose periods are not fixed in
copy of a subsequent or follow-up this Code or in other laws must be brought within five years
the five-year period, then, the
the alleged deficiency tax within from the time the right of action accrues.
lapsed.
prescriptive period is deemed to have
of Appeals
Baliwag Transit, Inc. v. Court COMMENT:
GR 57493, Jan. 7, 1987
(1) General Proviso — five years
created by law, such as a
An action upon an obligation The Article explains itself.
compel the employer to remit
petition filed by an employee to
prescribes after ten years from Tolentino v. Court of Appeals and David
his SSS contributions to the SSS
es. L-41427, June 10, 1988
the time the right of action accru
All actions, unless an exception is provided, have a prescrip-
(2) Rules in Case of Fraud tive period. Unless the law makes an action imprescriptible, it
the ground of fraud may be is subject to bar by prescription and the period of prescription
(a) The action for relief on discovery of the fraud. is five years from the time the right of action accrues when no
brought within four years from the other period is prescribed by law. The Civil Code provides for
43[3], Act 190) Thus, where
(Art. 1391, Civil Code; and Sec. some rights which are not extinguished by prescription, but an
1953 to annul a contract
the plaintiffs filed an action in action against a woman who has been legally divorced from her
had been fraudulently
of sale on the ground that they husband, brought by the latter's present wife, seeking to enjoin
belief that it was a mort-
induced to sign the same in the the former wife from using the surname of her former husband,
fraud in 1945, the same
gage, although they discovered the is not one of them. Neither is there a special law providing for
le, L-7651, Feb. 28, 1955)
is barred. (Raymundo v. Afab imprescriptibility.
plaintiffs against the
A subsequent action by the same
of title and possession The mere fact that the supposed violation of the petitioner's
same defendants for the recovery
er the aforementioned
of right may be a continuous one does not change the principle
of the real property, subject matt
d. While it may be true that the moment the breach of right or duty occurs, the right of
contract of sale is likewise barre
posse ssion of the lot were action accrues and the action from that moment can be legally
that the recovery of the title and
tiffs, still to attain that goal, instituted. It is the legal possibility of bringing the action which
ultimate objectives of the plain
of relief on the ground of determines the starting point for the computation of the period
they must first travel over the road
iring, 91 Phil. 250) Indeed, of prescription. The petitioner should have brought legal action
fraud. (Rone v. Claro and Baqu
as still the owners of the immediately against the private respondent after she gained
the plaintiffs cannot be declared
without annulling the knowledge of the use by the private respondent of the surname
property, entitled to its possession,
ot be annulled without
contract of sale. Said contract cann of her former husband.
annulment on this ground
declaring it fraudulent, and
of the prescription. (Ray- (2) Examples
cannot be done anymore in view
Dec. 29, 1959)
mundo v. De Guzman, L-109020, (a) Action to impugn the recognition of a natural child. (Art.
of land, for which a patent had 296, Civil Code)
(b) An action for reconveyance
reason of fraudulent state- (b) Action to impugn the legitimation of a child. (Art. 275, Civil
been issued to the defendant by
must be instituted within
ments, is one based on fraud, and Code).
the fraudulent statements
four years from the discovery of
65
64
 CIVIL CODE OF THE PHILIPPINES Art. 1150
PPINES
CIVIL CODE OF THE PHILI
Art. 1150
(b) In a promissory note with a maturity date, from the date
donations (to be counted from
(c) Action to reduce inofficious of such maturity. (See Varela v. Marajas, et al., L-10215,
Art. 772, Civil Code)
the death of the donor). (See April 30, 1958)
ver, that the period
[NOTE: Castan believes, howe (c) In a collection for the unpaid balance of subscribed corpora-
years, applying the rule for
for this is four years, not five tion shares, from the date of demand or call by the Board
1389 of the Civil Code. (4
rescissible contracts under Art. of Directors. (Garcia v. Suarez, 67 Phil. 441)
Castan 194)]
d) (d) In an action to compel the registration of an assigned mem-
Stipulation Concerning Perio
(3) Query (Re Validity of bership certificate in a non-stock corporation, the period
action for court enforcement runs not from the date of assignment, but from the date
May the parties stipulate when
of denial of registration. Reason: The existence of a right
may be brought?
: is one thing; right to have is another. It was only from the
ANS.: Yes, unless the stipulation time of denial of registration that the cause of action ac-
(a) contravenes a valid statute; crued. (Lee E. Won v. Wack Wack Golf and Country Club,
unreasonably short.
(b) or the time fixed is L-10122, Aug. 30, 1958)
Pao v. Remorosa,
[Thus, the Supreme Court, in ment whereby (e) In an action to recover payment of the difference between
an agree
L-10292, Feb. 28, 1958, held that d withi n 30 days, the wages paid an employee and that fixed by the Mini-
must be file
the claim against the surety unrea sonab le and is an mum Wage Law, every monthly payment of salaries made
is
otherwise, court action is waived, ako v. World Wide by defendant employer gives the employee a separate and
Ongsi
invalid limitation of action. (See ] independent cause of action to recover the underpayment;
1958)
Insurance Co., L-12077, June 27,
hence, the period provided for by law is to be counted from
ription for all kinds of actions, the date of each and every monthly payment. (Abrasaldo,
Art. 1150. The time for presc wise,
provision which ordains other et al. v. Compania Maritima, L-11918, July 31, 1958)
when there is no special
they may be brought.
shall be counted from the day (4) Some Cases
COMMENT:
d Is to Be Counted Lichauco v. Soriano
(1) From What Time Perio 35 Phil. 203
counted from the day the ac-
Note that the period shall be
there is a special provision that FACTS: A promise to pay within one year was made. At
tion may be brought, except if
ordains otherwise. the option of the creditor, the period could be extended for one
year. The debtor failed to pay, and the creditor failed to demand.
(2) Reason for the Law ISSUE: From what time will the prescriptive period run?
sleeping on his rights, if such
One cannot be said to begin
the starting point is the legal HELD: Mere delay by the debtors and failure to demand
rights have not yet accrued. Thus, by the creditor does not mean that the extension of one year had
possibility. (TS, May 8, 1903)
been granted. Therefore, since the debt became due at the end
of the original year, the prescriptive period should commence
(3) Examples
quasi-delict because of a traffic from said end of the first year.
(a) In an action based on a collision. (Paulan, et al. v.
collision — from the day of the
3, 1958)
Sara bia, et al., L-10542, July
67
66
 CIVIL CODE OF THE PHILIPPINES Arts. 1151-1152
CIVIL CODE OF THE PHILIPPINES
Art. 1150

the suspensive effect of the Moratorium Law, only the first five
Varela v. Marajas, et al. installments have prescribed. The others may still be recovered.
L-19215, April 30, 1958
n settled the estate
FACTS: The heirs of a deceased perso Castrillo v. Court of Appeals
14, 1941, providing that one
in a written agreement dated Feb. reappearance of L-18046, March 31, 1964
upon the
of them would pay an absent heir, Philip pines from
ed to the The prescriptive period within which to ask for a declara-
the latter. Said absent heir return imme diatel y asked
1945. He tion of co-ownership in a parcel of land covered by a Torrens
the United States in November the comp laint for
He then file d Title begins from the moment a transfer certificate is issued in
for his share, but was not paid.
payment of his share on Dec. 6, 1954. the name of the new owners.
prescriptive period be
ISSUE: From what time should the
counted? Republic v. Hon. Numeriano Estenzo
d be counted from L-24656, Sept. 25, 1968
HELD: The prescriptive period shoul
himself for payment but
November, 1945, when he presented ISSUE: To have a judgment on compromise set aside, from
not yet prescribed. It is
was not paid. Hence, the action has what moment should prescription be counted?
when the agreement was
unfair to begin computing from 1941
ment provided for payment
made. This is so, because the agree HELD: By its very nature, a judgment based on compro-
was fixed for said purposes.
upon his appearance, and no period mise is generally final and immediately executory. (Enrique v.
debt evidenced by a written
The situation is similar to that of a Padilla, 77 Phil. 373; Badiongan v. Ceniza, et al., 102 Phil. 750)
period , where the cause of
document payable within a stated For this reason, prescription begins (or tolls) not from the date of
expiration of the stipulated
action would accrue only upon the its entry, but from the date of its rendition. (Dirige v. Biranya,
— certainly, not from the
period in case payment is not made L-22033, July 30, 1966)
date of the agreement.
, et al. v. Art. 1151. The time for the prescription of actions which
Intestate Estate of Francisco Ubat have for their object the enforcement of obligations to pay
Atanasia Ubat de Mont es, PNB, et a/.
L-11633, Jan. 31, 1961 principal with interest or annuity runs from the last payment
of the annuity or of the interest.
from the Philippine
FACTS: Eduardo Ubat borrowed P460
or before the 7th day of
National Bank in 1936, payable "on
provided that the payment COMMENT:
October, 1946." The contract further
installments. Suit for the
"shall be made" in ten equal yearly Obligations to Pay Principal With Interest or Annuity
not a single installment
whole amount was brought in 1954 since
had been paid. Example: If a matured debt is recognized later by the pay-
ment of interest, the prescriptive period begins, not from the
ISSUE: Has the debt prescribed?
date of maturity, but from the last payment of said interest.
Civil Code, the pre-
HELD: Under Art. 1150 of the new (See Obras Pias v. Devera Ignacio, 17 Phil. 45)
credit may file an action,
or
scriptive period starts from the time
so. The payment of yearly
not from the time he wishes to do Art. 1152. The period for prescription of actions to de-
of the phrase "shall be
installments was mandatory because mand the fulfillment of obligations declared by a judgment
for EACH installment
made." Therefore, the prescriptive period commences from the time the judgment became final.
due. However, considering
should start from the time it became
69
68
 S CIVIL CODE OF THE PHILIPPINES Arts. 1153-1154
CIVIL CODE OF THE PHILIPPINE
Art. 1152

Procedure. It cannot be said that such is the letter, and much

COMMENT: less, the intention of the law, for there is nothing in Sec. 447 of
ment the said Code, making this new period different from the one
Obligations Declared by a Judg prescribed in said Sec. 43, No. 1, or reconciling these two provi-
The Article explains itself. sions, there being no other way of reconciling them than to say
that after the expiration of the first five years next following the
Luzon Surety Co. v. IAC judgment, there remains to the victorious party only another
GR 72645, June 30, 1987 five years to review it.
ear period within which an
It is now settled that the ten-y
should be brought, commences Art. 1153. The period for prescription of action to demand
action for revival of a judgment
of the judgment, and not from accounting runs from the day the persons who should render
to run from the date of finality
within which the judgment
the expiration of the five-year period the same cease in their functions.
n.
may be enforced by mere motio The period for the action arising from the result of the ac-
wit:
Three reasons were advanced, to counting runs from the date when said result was recognized
Procedure (which is simi- by agreement of the interested parties.
(1) Sec. 447 of the Code of Civil
6, Rule 39 of the Revised Rules
lar to the last sentence of Sec.
relation to Sec. 43, No. 1 of the COMMENT:
of Court) should be construed in
Art. 1144 of the Civil Code); and
said Code (which is similar to (1) Actions to Demand Accounting and Actions Arising from
one arrives at is that after the
as thus construed, the conclusion Result of the Accounting
which execution can be issued
expiration of the five years within
party can revive it only in the The first paragraph deals with the demand for accounting,
upon a judgment, the winning
as the period of ten years does the second deals with the result of the accounting.
manner therein provided so long
judgment, according to Sec. 43,
not expire from the date of said (2) Accounting and Reliquidation
No. 1 of the same Code.
party to enforce the judg- There is NO difference, however, between an action for
(2) The right of the winning
"begins to exist the moment ACCOUNTING and one for RELIQUIDATION, both of which
ment against the defeated party
right, according to our Code of involve the determination and settlement of what is due the par-
the judgment is final; and this
g an execution of the judgment ties under the provisions of the law. (Mateo v. Duran, L-14314,
Civil Procedure, consists in havin
next following, and in com- Feb. 22, 1961; and Yusay v. Alejado, L-14881 and L-15001-7,
issued during the first five years
proceeding provided in Sec. 447 April 30, 1960)
mencing after that period the
dy can be pursued only before
to revive it, and this latter reme
is to say, during the five years Art. 1154. The period during which the obligee was pre-
the judgment prescribes, that
action to ask for an execution vented by a fortuitous event from enforcing his right is not
next following. It is so much an
reviving it, because, as we know, reckoned against him.
as it is to file a complaint for
demand of the right or rights one
by action is meant the legal
may have." COMMENT:
ing party has still ten years Effect of a Fortuitous Event
(3) If it is held that the winn
ent after the expiration of
within which to revive the judgm The Article explains itself. After all, fortuitous events are
would not prescribe until after
five years, then the judgment generally exempt.
of Sec. 43 of the Code of Civil
15 years, which is against No. 1
71
70
 CIVIL CODE 01."I'llE PHILIPPINES Art. 1156
S
CIVIL CODE OF THE PHILIPPINE
Art. 1155

setting in. (Phil. National Bank v. Hipolito, L-16463, Jan. 30,

of actions is interrupted
Art. 1155. The prescription 1965) Thus also, an oral or verbal acknowledgment has been held
court, when there is a written
when they are filed before the insufficient to interrupt or suspend the running of the prescrip-
itors, and when there is any
extrajudicial demand by the cred tive period. Like the Statute of Frauds, the plain purpose of the
debt by the debtor.
written acknowledgment of the law is to avoid uncertainty in the determination of the periods
of limitation, and not leave such determination on the fallacies
COMMENT: of human memory. This was also the rule under the old rule.
Prescriptive Periods (Sec. 50 of Act 190)
(1) Old Law Re Interruption of
that the prescription of It would be different, however, if such oral acknowledgment
Under the old law, while it is true
filed before the court, still, if assumes a new obligation, and is not merely a promise to pay an
actions is interrupted when they are old debt at a future time. (Borromeo v. Zaballero, L-14357, Aug.
unfavorable judgment against
the case is dismissed without any 31, 1960) Written extrajudicial demands made AFTER an action
prejudice to another action, the
the defendants, even if without has prescribed do NOT of course revive the action. (Belman Co.,
uption of the period of prescrip-
same does not constitute an interr Inc. v. Central Bank, L-15044, May 30, 1960)
the same position. (Ongsiako
tion for the parties are in exactly
1957) This doctrine was reiter-
v. Ongsiako, L-7510, March 30,
Sept. 30, 1960. Moreover, (4) Moratorium Law Suspended Right to Sue
ated in Amar v. Odianan, L-15179,
ins NO provisions on the
according to the Court, Act 190 conta The Moratorium Law suspended the creditor's right to
period of prescription by the
interruption or suspension of the sue, and for purposes of prescription, the time it was in force
mere institution of an action. must be excluded from the computation. (Magdalena, et al. v.
the Benedicto, L-9105, Feb. 28, 1958; Talens, et al. v. Chuakay &
Actions Is Interrupted Under Co., GR L-10127, June 30, 1958; Rio & Co. v. Datu Jolkipli, GR
(2) When Prescription of
Civil Code L-12301, April 13, 1959; Levy Hermanos v. Perez, GR L-14487,
ial demand) (this is true even April 29, 1960) BUT the Moratorium Law does not apply to
(a) filed before the court (judic pre-war debts. (Nielsen & Co., Inc. v. Lepanto, L-21661, Dec.
and even if there be no
if there were no summons issued
Article must not be 28, 1968)
judgment). (Manresa) (NOTE that this
Artic le does not apply
confused with Art. 1124) Said latter
laint amended, with
is (5) Effect of President Osmefia's Moratorium Order (EO 32),
here in Art. 1155. [NOTE: If a comp and the Moratorium Law (RA 342), upon the Statute of
defendant, prescription is
the impleading of an additional Limitations for Debts Contracted Before Dec. 31, 1941
defendant only from the
interrupted as to such additional
ded complaint, not from If the debtor was a WAR DAMAGE claimant, the period
time of the admission of the amen (a)
(Aetna Insurance v.
the filing of the original complaint. of prescription was suspended from March 10, 1945 (Ex.
66, Jan. 15, 1975)]
Barber Steamship Lines, Inc., L-252 Order No. 32) to May 18, 1953 (when the decision in Rut-
nd. ter v. Esteban, 49 O.G. 1807, holding unconstitutional the
(b) written extrajudicial dema further operation of RA 342 became operative). [Note that
the debtor of his debt. in said Rutter case, the Moratorium Law was not declared
(c) written acknowledgment by
void ab initio; the Court only held that its continued opera-
Demand or Acknowledgment tion and enforcement had already become unreasonable
(3) Requirement of Written
extrajudicial demand and oppressive. Said law therefore suspended the Statute
Note the requirement of a WRITTEN of Limitations, and no action for collection could be main-
written offer of payment works
or acknowledgment. Thus, a tained during the period when it was still in effect. (Vda.
and prevents prescription from
as a renewal of the obligation
73
72
 CIVIL CODE OF THE PHILIPPINES Art. 1155
Art. 1155 CIVIL CODE OF THE PHILIPPINES

30, the effect of extending the one-year period of prescription fixed

de Quiambao v. Manila Motor Co., Inc., L-17384, Jan. in the law. It is desirable that matters affecting transportation
the creditor actually brought his
1962)] Whether or not of goods by sea be decided in as short a time as possible. Thus,
suit before or after the Rutter decision, the period for the
the application of Art. 1155 would unnecessarily extend the
enforcement of the credit was tolled or suspended. (Ibid.) period and permit delays in the settlement of question affecting
The presumption is that the creditor was a war damage transportation, contrary to the clear intent and purpose of the
claimant. (Rio y Compania v. Court of Appeals, L-15666, law.
June 30, 1962)
period
(b) If the debtor was NOT a war damage claimant, the (8) Rule in Taxation Cases
of prescription was suspende d from March 10, 1945 (EO
Moratoriu m Law, RA 342, The motion for reconsideration of a decision of the Collector
32) to July 26, 1948 [when the
of Internal Revenue suspends the running of the prescriptive
became effective]. (Rio & Co. v. Datu Jolkipli, GR L-12301, period within which the taxpayer may appeal to the Court of Tax
April 13, 1959; see Hongkong & Shanghai Banking Corp. Appeals; and the period resumes its running the day following
v. Pauli, L-15713, March 31, 1962) the receipt by the taxpayer of the Collector's denial of said mo-
ion tion. (Collector of Internal Revenue v. Convention of Philippine
(6) Closure of Courts During the Japanese Occupat Baptist Churches, L-11807, Jan. 28, 1961)
Judicial notice may be taken of the fact that the regular
ing of
courts were closed or ceased to function with the overrunn (9) Effect of a Motion for Reconsideration
They did not reopen
Luzon by the Japanese forces in Dec. 1941. A motion for reconsideration on the ground that the decision
of the
until Jan. 30, 1942. This interruption in the functions is completely against the evidence and the law, without pointing
of the prescripti ve
courts naturally suspended also the running out the finding and pronouncement made in the judgment that
GR L-10127, June 30,
period. (Talens, et al. v. Chuakay and Co., were allegedly contrary to the evidence and the law is pro forma
1958) and does not stop the running of the period within which to ap-
peal (Valdez v. Jugo, 74 Phil. 49 and Villalon v. Ysip, 53 O.G.
Act
(7) Actions Under the Carriage of Goods by Sea 1094); and the fact that before entry of the order denying the
The interruption by a written extrajudicial demand
does motion for reconsideration, the movants filed a pleading where
of Goods by Sea Act, they pointed out the fraud allegedly committed, does not cure
not apply to actions under the Carriage
year from receipt of the cargo. the defect of such motion. (Garganta, et al. v. Court of Appeals,
which must be filed within one
goods by et al., L-12104, March 31, 1959)
The reason is that matters affecting transportation of
a time as possible. To apply
sea should be decided in as short
permit delays. (Yek Tong Lin (10) Some Cases
the Civil Code provision would
Lines, Inc., L-11081, April
Fire Ins. Co. v. American President Buccat v. Dispo
30, 1958) L-44338, April 15, 1988
Dole Phils., Inc. v. Maritime Co. of the Phils. In order to resolve whether or not the present action has
GR 61352, Feb. 27, 1987 prescribed, it is necessary to first determine when the right of
In a case governed by the Carriage of Goods by Sea Act,
the action for the fixing of the period of lease accrued. Should it be
general provisions of the Code of Civil Procedure on Prescrip- reckoned from the time when the parties entered into the second
tion should not be made to apply. Similarly, in such a
case, Art. contract of lease which was on Aug. 1959 as the defendants-
1155 cannot be made to apply, as such applicatio n would have appellants claim, or at the time when the decision of the Court of

75
74
 CIVIL CODE OF THE PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1156
Art. 1155

Appeals upholding the validity of the second contract of lease was HELD: While the filing of a labor case could have inter-
promulgated which was on Nov. 1972 as the plaintiff-appellee rupted the running of the four-year prescriptive period, the vol-
claims? untary withdrawal of said case effectively cancelled the telling of
the prescriptive period within which to file an illegal dismissal
The Court held that it was only on Nov. 1972 that the cause case, leaving it in exactly the same position as though no labor
of action for the fixing of the period of lease accrued. This is as it case has been filed at all.
should be because prior to that, the validity of the second contract
of lease was being challenged. The case for unlawful detainer
filed by the plaintiff-appellee became in fact a case questioning
the validity of the second contract on the grounds that the said
contract was simulated and that there was no consideration.
The plaintiff-appellee could not have been expected to file an
action for the fixing of the period of the lease before the Court of
Appeals promulgated its decision because she was not yet aware
that the said paragraph of the second contract was a provision
that called for an indefinite period. For the reason that the very
existence, and subsequently, the interpretation of the second
contract of lease, particularly par. 3 thereof, were put in issue
in the unlawful detainer case, the court trying the case was
required to interpret the provisions of, and consequently, rule
on the validity of, the said contract.

PDCP v. IAC
GR 73198, Sept. 2, 1992
As to petitioner's contention that the cause of action of
respondent is barred by prescription and that there is a pending
case before the Davao RTC with the same cause of action, be
it noted that litis pendentia cannot apply in an instance where
there is no identity of parties.
In the case at bar, records show and as admitted by pe-
titioner, the action filed in the Manila RTC was against the
respondent while the case filed in the Davao RTC was against
DATICOR, the president of which is the respondent. The first
case is against a natural person, while the second, is against a
juridical person.

Montero v. Times
GR 190828, March 16, 2015
ISSUE: Is an illegal dismissal case subject to the fourth-
year prescriptive prior under Art. 1155 of the Civil Code?

76 77
 CIVIL CODE OF THE PHILIPPINES Art. 1156

(Here A is the obligor; B is the obligee; the painting of B's

picture is the object or prestation; the agreement or contract is
the efficient cause.)

BOOK IV (3) Concept of Prestation (BAR QUESTION)

A prestation is an obligation; more specifically, it is the
OBLIGATIONS AND subject matter of an obligation — and may consist of giving a
thing, doing or not doing a certain act. The law speaks of an
CONTRACTS obligation as a juridical necessity to comply with a prestation.
There is a 'juridical necessity," for non-compliance can result
in juridical or legal sanction.
TITLE I. — OBLIGATIONS Mataas na Lupa Tenants'
Association v. Carlos Dimayuga
Chapter 1 and Juliana Diego Vda. de Gabriel
L-32049, June 25, 1984
GENERAL PROVISIONS
Under PD 1517, tenants-lessees are given pre-emptive or
al necessity to give, to preferential rights (right of first refusal) if they have occupied
Art. 1156. An obligation is a juridic the land or lot for over ten years. The owner has this obligation
do or not to do. to grant said preference. Thus, he cannot sell to a third person
without first offering the same to the lessee. If the latter re-
COMMENT: kal‘iRS nounces said right, the waiver must be in a public instrument.
itt
(derived from the Latin "obli-
(1) Elements of an Obligation
gare" — to bind) (4) Kinds of Obligations
obligee or creditor) — the There are various basis for the classification of obligations.
(a) . an active subject (called the the obligation is
possessor of a right; he in whose favor Given hereunder are few of them:
constituted. (a) 'From the viewpoint of "sanction" —
obligor or debtor) — he who
(b) a passive subject (called the doing. 1) civil obligation (or perfect obligation)
has the duty of giving, doing, or not
subject matter of the obliga- 2) natural obligation
(c) the object or prestation (the
tion). 3) moral obligation (or imperfect obligation)
m or juridical tie) — the
(d) the efficient cause (the vinculu Definitions —
reason why the obligation exists.
manner in a) civil obligation .1— that defined in Art. 1156. The
[NOTE: In a few cases, FORM — or the nt.] sanction is judicial process. Example:A promises
is also importa
which the obligation i manifested — to pay B his (A's) debt of P1 million.

(2) Examply b) natural obligation — the duty not to recover

what has voluntarily been paid although pay-
Aipromises tOpain picture for B as a result of ar•Lwpt s.- rm
ment was no longer required. Example: A owes B
ment 1-1)2
79
78
 CIVIL CODE OF THE PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1156
rt. 1156

d.
P1 million. But the debt has already prescribe b) non-reciprocal (where performance by one is
If A, knowing that it has prescribe d, neverthe - non-dependent upon performance by the other).]
less still pays B, he (A) cannot later on get back
what he voluntarily paid. The sanction is the (5) Criticism of the Definition by the Code
law of course, but only because conscience had Art. 1156 defines obligation as "a juridical necessity to give,
originally motivated the payment.
to do, or not to do." As will be noticed, this stresses merely the
c) moral obligation — the duty of a Catholic to hear duty of the debtor (the passive element) without emphasizing
n.
mass on Sundays and holy days of obligatio a corresponding right on the part of the creditor (the active ele-
morality , or
The sanction here is conscience or ment). On this point, Justice J.B.L. Reyes of the Supreme Court
the law of the church. has remarked: "This definition, taken from Sanchez Roman is
[NOTE: If a Catholic promises to hear mass for incomplete, in that, it views obligations only from the debit side.
P1 There is no debt without a credit, and the credit is an asset in
ten consecutive Sundays in order to receive
n becomes a civil one.] the patrimony of the creditor just as the debt is a liability of the
million this obligatio
obligor. Following the defective method of the Spanish Civil
(b) From the viewpoint of subject matter — Code, the new Code separates responsibility from the other ele-
ment of obligation." (Lawyer's Journal, Jan. 31, 1951, p. 47) He
1) real obligation — the obligation to give
or not to do then quotes with approval the following definition given by Arias
2) personal obligation — the obligation to do Ramos:
(Example: the duty to paint a house, or to refrain "An obligation is a juridical relation whereby a person
from committing a nuisance) (called the creditor) may demand from another (called the debtor)
the obliga-
(c) From the affirmativeness and negativeness of the observance of a determinative conduct (the giving, doing, or
tion — not doing), and in case of breach, may demand satisfaction from
obligation to the assets of the latter."
1) positive or affirmative obligation — the
give or to do [NOTE: This definition is accurate because it views "ob-
2) negative obligation — the obligation not
to do (which ligation" from a "total" standpoint (both active and passive
naturally includes "not to give") viewpoint).]

(d) From the viewpoint of persons obliged — (6) Some Cases

is bound
1) unilateral — where only one of the parties
/Pelayo v. Lauron
(NOTE: Every obligation has two parties; If only 12 Phil. 453 (BAR)
n.
one of them is bound, we have a unilateral obligatio
Example: A owes B P1 million. A must pay B.) FACTS: A wife was about to deliver a child. Her parents-
in-law called the doctor. Issue: Who should pay the doctor: the
e:
2) bilateral — where both parties are bound (Exampl husband or the parents?
obliged to pay, while
In a contract of sale, the buyer is
the seller is obliged to deliver.) HELD: The husband should pay, even if he was not the
one who called the doctor. It is his duty to support the wife,
[NOTE: Bilateral obligations may be: and support includes medical attendance. The duty to pay is an
a) reciprocal obligation to give, and is imposed by the law.

80 81
 PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1156
CIVIL CODE OF THE
rt. 1156

Leonides Pengson v. Court of Appeals

Poss v. Gottlieb GR L-65622, June 29, 1984
193 N.Y.S. 418
If the owner of certain shares should pledge the same to
ers engaged in buying and
FACTS: There were two partn asked his creditor, and later said owner sells his shares to a third
bought a piece of land, one
reselling land. After they had price inve sted person, the creditor cannot be compelled to surrender the share
share to him for the
the other to sell the latter's ly owne d the certificates to the buyer, and this refusal will not invalidate the
partner, who now complete
by the latter. The first The seco nd sale.
profit to a third person.
land, resold it at a huge that a big
his share had he known
partner would not have sold ner al- Phil. National Bank v. Court of Appeals
third person. The first part
offer had been made by such he, after 74 SCAD 786
blamed on the ground that
leged that he should not be that is, (1996)
concealment to his partner,
all did not make any false . A local bank, while acting as local correspondent bank, does
that nobody wanted the land
he did not tell the latter not have the right to intercept funds being coursed through it
er successfully bring an ac-
ISSUE: May the second partn by its foreign counterpart for transmittal and deposit to the ac-
first partner?
tion for damages against the count of an individual with another local bank, and thereafter
partner is liable. He had the apply the said funds to certain obligations owed to it by the said
HELD: Yes, because the first abstain
not only to mak e any false concealment but also to individual.
duty ip was
ent insofar as the partnersh
from all kinds of concealm to do (to relay all perti nent (7) In an Option to Buy, Payment of Purchase Price By
concerned. This is an obligation
Creditor is Contingent Upon Execution and Delivery of
information).
a Deed of Sale By Debtor
Bernabe Sabillano Obligations under an option to buy are reciprocal obliga-
Joaquin P. Nemenzo v.
L-20977, Sept. 7, 1968 tions. Performance of one obligation is conditioned on the si-
multaneous fulfillment of the other obligation. In other words,
upon assumption of office,
FACTS: A municipal mayor, the in an option to buy, payment of purchase price by creditor is
(a civil service eligible) in
arbitrarily dismissed a corporal stiga tion. contingent upon the execution and delivery of a deed of sale by
lity, without due inve
police force of the municipa the debtor. (Heirs of Luis Bacus, et al. v. CA & Spouses Faustino
nally liable? and Victoriana Duray, GR 127695, Dec. 3, 2001)
ISSUE: Is the mayor perso
dismissing the corporal with-
HELD: Yes, because his act of fiable
investigation and without justi (8) Case
out previous administrative The may or
to the corporal's rights.
cause is clearly an injury pass Heirs of Luis Bacus, et al. v. Court of Appeals
tle of his official capacity and
cannot hide under the man There & Spouses Faustino and Victoriana Duray
lity of which he was mayor.
the liability to the municipa elec- GR 127695, Dec. 3, 2001
s of this nature, wherein local
are altogether too many case new-found
on of office, wield their FACTS: When private respondents opted to buy the prop-
tive officials, upon assumpti own
replacing employees with their erty, their obligation was to advise petitioners of their decision
power indiscriminately by latio ns gove rning the
and regu and their readiness to pay the price. Issue: At this point in time,
proteges, regardless of the laws author-
polls should not be taken as were respondents already obliged to make actual payment?
civil service. Victory at the
such illegal acts.
ity for the commission of
 CIVIL CODE OF THE PHILIPPINES Art. 1158
PHILIPPINES 16444/1.4 AL
CIVIL CODE OF THE
t. 1157 AJW5
and submitting entries, there is a sort of implied contract that prizes
petitioners' actual execution would eventually be awarded. It is understood that the rules of
HELD: No. Only upon pay. The latte r
were they required to the contest form part of the contractual stipulations.
delivery of the deed of sale
former.
was contingent upon the
(4) Exclusiveness of the Enumeration
from:
Art. 1157. Obligations arise The enumeration by the law is exclusive; hence, no obliga-
tion exists if its source is not one of those enumerated under
(1) Law;
Art. 1157. (Navales v. Rias, 8 Phil. 508)
(2) Contracts;
s;
(3) Quasi-contract Art. 1158. Obligations derived from law are not presumed.
puni shed by law; and
(4) Acts or omissions Only those expressly determined in this Code or in special
laws are demandable, and shall be regulated by the precepts
(5) Quasi-delicts. of the law which establishes them; and as to what has not been
foreseen, by the provisions of this Book.
COMMENT: 61 gtiG
oi00 46f;,rilto
• Char
gations
(1) Sources of Obli taxes and
COMMENT:
Law (oblig ation s ex lege) — like the duty to pay (1) Obligations Ex Lege ( LAW) 1. Do-05 Ka kedi ,
(a) (Art IIW) r(
to support one's family.
e duty to repay (a) Examples: 2-• M472:
Cont racts (oblig ation s ex contractu) — like t 4 (94YS94 11 sel.
6t6111/
(b) agreement. ( Ayr Ilsci 1) the duty to support. (Art. 291, Civil Code) jelofirrif"nwielAettlattwel
a loan by virtue of an
) — like the i
(obligations ex quasi-contractu 2) the duty to pay taxes. (National Internal Revenue 0 '
(c) Quasi-contracts change" of mone y becau se of the
duty to refund an "over (hi I Vo() Code) g 5s I e
indebiti or "undue payment."
quasi-contract of solutio
(obligations Canonizado v. Benitez
Acts or Omissions Punished by Law
Crim es or a stolen L-49315, L-60966, Feb. 20, 1984 6e, Gue‘i_tor
(d)
malef icio or ex delic to) — like the duty to return r4
ex
carabao. (10 11(ui) The obligation of a marr ied coupl e to support each
quasi-delicto or ex other, under the law, generally subsists all throltZhe'loalu7thelw)( 15.110 6+.
Torts — (obligation ex
(e) Quasi-delicts or to repai r damage due to marriage. If support which had been suspended is again IM
quasi-maleficio) — like the duty will suf-
'1197 a le
invoked, simp motio n in the same proce eding
negligence.
fice. There is no necessity to file a separate action. (Note
by the Law
Criti cism of the Enumeration Listed Down that in a very real sense, a final judgment for support can
(2) there never be really final as the amount given may increase,
scientific because in reality
The enumeration is not becau se oblig ation s decrease, or may even cease, at least, temporarily.)
two sourc es: the law and contracts,
are only ts are really
, crimes, and quasi-delic (b) No agreement is necessary before obligation ex lege can
arising from quasi-contracts en, 38 Phil. 182) arise, but of course the law steps in only because of human
Ben v. O'Bri
imposed by the law. (Leung actuations. For example, one who gambles and wins can be
ic Contest compelled by the loser to return the winnings. (Art. 2014)
in Newspaper or Publ
(3) Offers of Reward con- The action by the loser is called indebitatus assumpsit.
sion of law regulates said
Although no express provi the offer by (Leung Ben v. O'Brien, 38 Phil. 182)
once contestants accept
tests, it is understood that
85
84
 PHILIPPINES
CIVIL CODE OF THE
kXt. 1158
Vda. de Recinto v. Inciong
77 SCRA 196
property unaware of the right
A person who buys another's considered a buyer in good
thereto of some other party is to beliability of a person in good
the
faith. While he is liable, his is
faith.
Serrano v. Central Bank
L-30511, Feb. 14, 1980
Sentral) is NOT OBLIGED
The Central Bank (now Bangko bank.
depositor made in an insolvent
to pay the deposit of a
Insurance Corporation —
[NOTE: The Philippine Deposit
per depositor.]
PDIC — pays up to P100,000
Santos v. Court of Appeals
L-60210, March 27, 1984
of first refusal) or redemp-
The right of pre-emption (right person
to urban land leased to a
tion under PD 1517 refers only leased the land
thereon and who has
who constructs his house if both the land
law does not apply
for more than ten years. The latter case, the lessor
lessor. In the
and the house belong to the preemption or redemption.
has no legal obligation to allow
Bank
Gonzales v. Philippine National
GR 33320, May 30, 1983
corporation and therefore
The PNB is not an ordinary charter. A
Corporation Law but by its own
not governed by the therefore, insist on the inspec-
stockholder of the PNB cannot, the Department of
done only by
tion of its books. This can be Central Bank (now Bangko
Supervision and Examination of the
Sentral).
(BAR)
(2) Meaning of the Article
derived from law are not pre-
The law says "obligations obligation must be clearly
sumed." This merely means that the
the law (the Civil Code or
(expressly or impliedly) set forth in ordinarily not required to
is
Special Laws). Thus, an employer
86
CIVIL CODE OF THE PHILIPPINES Art. 1159
furnish his employees with legal assistance, for no law requires
this. (See De la Cruz v. Northern Theatrical Enterprises, 50 O.G.
4225, Sept. 1954, where a movie house guard, forced to defend
himself in court for killing a gate crasher, was acquitted but was
not allowed to recover attorney's fees from the theater owner.)
In case of overpayment of taxes, the National Gov't. cannot be
required to pay interest on the amount refundable in the absence
of a statutory provision expressly directing or authorizing such
payment. (Collector of Int. Rev. v. Fisher, et al., L-11622 and
L-11668, Jan. 28, 1961)
Hilario Jaravata v. Sandiganbayan
L-56170, Jan. 31, 1984
A high school principal has no legal obligation to facilitate
the release of the salary differentials of the teachers under him.
So if he receives reimbursement for his "expenses" or as "gifts,"
he cannot be adjudged guilty under the Anti-Graft Law, for after
all, he had no duty to do said facilitation.
cpetkil \(R)
(3) Conflict Between Civil Code and Special Laws
If regarding an obligation ex lege, there is a conflict between
the New Civil Code and a special law, the latter prevails unless
the contrary has been expressly stipulated in the New Civil Code.
(See Art. 18)
( ot../447OAI e1çcot/mil/4)
Art. 1159. Obligations arising from contracts have the
force of law between the contracting parties and should be
complied with in good faith.
COMMENT:
RatpA14-1ies of cmirAcht. I
(1) Obligations Ex-Contractu t 1/ 4 4116V1
While obligations arising from a contract have the force
of law between the rties, this does not mean that the law is
inferior to contracts/This is because before a contract can be
enforced, it must first be TiTaTiajand it cannot be valid if it is
against the law. Moreover, the right of the parties to stipulate is
limited. Hence, Art. 1306 of the Civil Code says: "The contract-
87

Art. 1159 CIVIL CODE OF THE PHILIPPINES
jug parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided, they are not
contrary to law, morals, good c stoms, public order, or public
policy." We, Ant /3
As long as Art. 1306 is complied with, the contract should
be given effect, even if at the time it was entered into, no legal
provision existed governing it. (Quizana v. Redugerio, 50 O.G.
2444, June 1954) 4444 contmm., 44 Ow- etSeAti4.1
retruirMes eiwiretet
(2) Meaning of the Article
The Article means that neither party may unilaterally and
upon his own exclusive volition, escape his obligations iiiider
the contract, ui
--ile-s-Tibe- other party assented thereto, or un-
less for causes sufficient in law and pronounced adequate by a
competent tribunal. (Katipunan Labor Union v. Caltex
Inc., L-10337, May 27, 1957)
"Compliance in good faith" means that we must inter-
pret "not by the letter that killeth but by the spirit that giveth
life." (See William Golangco Construction Corp. v. PCIB, 485
SCRA 203 [2006])
Martin v. Martin, et at.
L-12439, May 23, 1959
Where the parties to a compromise agreement signed and
executed the same WILLINGLY and VOLUNTARILY, they
are BOUND by its terms, even if the COURT before which it
was made had NO jurisdiction over the case. In a regime of law
and order, the repudiation of an agreement validly entered into
cannot be made without any justifiable reason. (NOTE: The
approval of the court here is immaterial; what is important is
the mutual consent to the compromise.)
National Marketing Corp. (NAMARCO) v. Tan, et at.
L-17074, March 31, 1964
FACTS: On August 8, 1959, the Board of Directors of the
FEDERATION of NAMARCO DISTRIBUTORS requested the
President of the Philippines to allow the NAMARCO to pur-
chase certain commodities, for distribution to the members of
88
CIVIL CODE OF THE PHILIPPINES Art. 1159
the FEDERATION. Upon endorsement by the President, the
NAMARCO authorized the importation. When the Federation
gave NAMARCO certain cash advances for the cost of impor-
tation, NAMARCO and the Federation executed a contract,
whereby the former sold to the latter the goods to be imported.
Part of the goods (when they arrived) was delivered to the Fed-
eration, but when a new Board took charge of the NAMARCO,
the Board refused further delivery to outsiders.
ISSUE: Was NAMARCO's action proper?
/3
HELD: No, because it had entered into a valid contract
with the Federation.
(3) The Right to Enter into Contracts
1,0 C041
Fv( ll‘ 1 The right to enter into lawful contracts constitutes one of
the liberties of the _people of the State. If that right be struck
down or arbitrarily interfered with, a substantial impairment
of constitutional rights would result. (People v. Pomar, 46 Phil.
440) Nevertheless, in contracts wherepublic interest is involved
(as in the case of labor agreements), the government has a right
to intprveJle for the protection of the whole. (Leyte Land Trans.
v. Leyte Farmer's Union, GR L-1977, May 12, 1948)
(4) Differences Between an Obligation and a Contract
An obligation is the result of a contract (or some other
source). Hence, while a contract, if valid, always results in obliga-
tions, 11 obligations come from contracts. A contract always
presupposes a meeting of the minds; this is not necessarily true
for all kinds of obligations.
Be it noted, however, from another viewpoint that a con-
tract may itself be the result of an obligation. Thus, ifP engages
A as the former's agent, we have the contract of agency. As an
agent, A has the obligation, say to look around for clients or
buyers, as in the real estate business. As a result of such obli-
gation, A may enter into a contract of sale with C, a customer.
The contract of sale itself results in the obligations to pay and
to deliver. The obligation to deliver may result in a contract of
carriage, and so on, ad infinitum.
89
 CIVIL CODE OF THE PHILIPPINES Art. 1159
CIVIL CODE OF THE PHILIPPINES
krt. 1159
than the minimum prescribed by law for the jurisdiction of the
(5) Some Decided Cases court over the subject matter of the case for so long as the main
action is within the jurisdiction of said court, upon the theory
De los Reyes v. Alejado that the right to recover attorney's fees is but an INCIDENT of
16 Phil. 499 the case in which the services of counsel have been rendered.
his debt, and in case of (Maria Reyes de Tolentino v. Godofredo Escalono, et al., L-26556,
FACTS: A borrower agreed to pay Jan. 24, 1960; see Palanca v. Pecson, 94 Phil. 419; and Dahlke
as a servant.
non-payment, to render free service v. Vina, 51 Phil. 707)]
ISSUE: Is the obligation valid?
course, valid and cannot Conrado v. Judge Tan MS424-11dr)of
HELD: The obligation to pay is, of prtVlitAi,
g to rende r domestic services 51 O.G. 2923, June 1955
be questioned but the undertakin for_he rg„§ky_ea_would
morals,
for free is contrary to law and servic es will be rendered FACTS: In a validly made contract, some provisions were
"free"
result1 (NOTE: If, however, the can be given effect, later on inserted by a falsifier.
stipulation
in satisfaction of the debt, the gratu itous. Even in this
really be ISSUE: Is the whole contract void?
for here the services will not servic e will not be a
e of the
case, however, specific performanc d, an action for dam- HELD: Only the additional provision should be disregarded,
ance. Instea
proper remedy for non-compli broug ht.) and the original terms should be considered valid and subsisting.
d be
ages of payment of the debt shoul
Alcantara v. Alinea
Molina v. De la Riva
8 Phil. 111
6 Phil. 12
d to go to court in Albay, FACTS: A borrowed from B P480 and agreed that in case
FACTS: The parties in a case agree of non-payment on the date stipulated, A's house and lot would
iction.
although another Court has jurisd be sold to B for the amount of P480.
void, for jurisdiction is
HELD: The agreement is null and parties. ISSUE: Is the stipulation valid?
will of the
conferred by law, and not by the
ffe HELD: Yes, and if A does not pay, A should sell the house
Bachrach v. Golingco and lot for P480. The agreement is not contrary to law. (See also
39 Phil. 138 orivfrild
Quizana v. Redugerio, 50 O.G. 2444, June, 1954)
n contract for fees be-
ISSUE: If there is an express writte [NOTE: It seems to the author that the stipulation may
, may the court still disregard
tween an attorney and his client be considered void as being a pactum commissorium, unless A
the contract? be allowed, instead of selling, to select the option of still being
attorney's fees is differ- indebted, with consequential damages or interest.]
HELD: Yes, because a contract for
be disregarded if the amount
ent from other contracts. It may
unreasonable, considering the value Ganzon v. Judge Sancho
fixed is unconscionable or
GR 56450, July 23, 1983
of the work accomplished.
may be asserted either If a mortgage is substituted by a guaranty or surety bond
[NOTE: A claim for attorney's fees
services in question have been without the consent of all the required parties, the contract may
in the very action in which the
the first alternative is chosen, be said to be impaired.
rendered, or in a separate action. If
claim even if its amount were less
the court may pass upon said
91
90
 CIVIL CODE OF THE PHILIPPINES Art. 1159
CIVIL CODE OF THE PHILIPPINES
Art. 1159

absence of express contract, to recover more than a,reasonable

011endorf v. Abrahamson
compensation fpx-his_aermices—And even when an express con-
38 Phil. 585
tract is made, the court can ignore it and limit the recovery of
hired Abra-
FACTS: 011endorf, needlework manufacturer, reasonable compensation if the amount of the stipulated fee is
that for five years, the found by the court to be unreasonable. This is a very different
hamson for two years, on the condition manufa cture.
needlew ork rule from that announced in Sec. 1091 of the Civil Code of Spain
latter should not engage in competitive Shortly after-
of health. (now Art. 1159, Civil Code) with reference to the obligation of
After one year, the latter left for reasons his former
compet ed with contracts in general, where it is said that such obligation has
wards, after regaining his health, he
such competition.
employer, who now seeks to restrain him from the force of law between the contracting parties.
ion is void, because it is
The defendant argues that the restrict
an unreasonable restraint of trade. PNB v. Se, Jr.
is a reasonable
HELD: The agreement was valid, and 70 SCAB 323
years. Inasmuch
restraint, considering that it was only for five (1996)
law between the parties,
as it is enforceable and has the rule of As contracts, warehouse receipts must be respected by
the defendant can be properly restricted. authority of Art. 1159 of the Civil Code.

Herminia Goduco v. Court of Appeals,

et at. A prior judgment holding that a party is a warehouseman
L-17647, Feb. 28, 1964 obligated to deliver sugar stocks covered by the Warehouse
Receipts does not necessarily carry with it a denial of the ware-
of a seller, an agent
If upon the promise of the son-in-law houseman's lien over the same sugar stocks. Even in the absence
buyer, said buyer, not
sells on commission a parcel of land to a of a provision in the Warehouse Receipts, law and equity dictate
NOT liable therefor.
having promised to give said commission, is the payment of the warehouseman's lien pursuant to Secs. 27
from whoever made
Payment of the commission must be sought and 31 of the Warehouse Receipts Law.
, the son-in-law of the
the promise to pay such amount, namely
A party is in estoppel in disclaiming liability for the pay-
seller.
ment of storage fees due the warehouseman while claiming to
Molave Motor Sales, Inc. be entitled to the sugar stocks covered by the subject Warehouse
v. Laron and Geminiano Receipts on the basis of which it anchors its claim for payment
L-65377, May 28, 1984 or delivery of the sugar stocks. Imperative is the right of the
has his own car warehouseman to demand payment of his lien because he loses
When an employee in a car repair shop his lien upon goods by surrendering possession thereof.
spare parts, his liabil-
repaired therein and purchases certain
not the Labor Code.
ity therefor is governed by the Civil Code, (6) The So-called Innominate Contracts
y (Department)
Therefore, it is the civil courts, not the Ministr
case.
of Labor, that has jurisdiction over the For want of an express name, the following are termed
"contratos innominados":
Borcena, et at. v. IAC
ogrovof (a) Do ut des — I give that you may give.
GR 70099, Jan. 7, 1987 kki (b) Do ut facias — I give that you may do.
pon an entirely
Contracts for attorney's services stand_g (c) Facio at des — I do that you may give.
payment of compensa-
-- different footing from contracts for the (d) Facio at facias — I do that you may do.
is not entitled, in the
tion for any other services. An attorney
93
92
 PPINES CIVIL CODE OF THE PHILIPPINES Art. 1160
CIVIL CODE OF THE PHILI
Art. 1160

reter. Even without an (2) The Two Principal Kinds

Example: A worked for B as interp
ensation, A is entitled to compen- (a) negotiorum gestio (unauthorized management
express agreement as to comp
I do the interpreting that you
sation because of facio ut des — (b) solutio indebiti (undue payment)
Pomar, 2 Phil. 682)
may give the money. (Perez v.
als, et a/. (3) Negotiorum Gestio
Vicente Aldaba v. Court of Appe
L-21676, Feb. 28, 1969 This takes place when a person voluntarily takes charge of
another's abandoned business or prciperty without the owner's
his daughter, Dr. Jane
FACTS: Dr. Vicente Aldaba and authority. (Art. 2144, Civil Code) Reimbursement must be made
Aldaba, a rich woman of
Aldaba, rendered services to Belen to the gestor for necessary and useful expenses, as a rule. (See
ut receiving any compensa-
Malolos, Bulacan for ten years witho Art. 2150, Civil Code)
services, the two doctors did
tion. It was admitted that for such
NOT expect to be paid. (4) Solutio Indebiti
er express or implied?
ISSUES: Was there a contract, wheth This takes place when something is received when there
the two doctors?
Was Belen obliged to compensate is no right to demand it, and it was unduly delivered through
whether express or implied, mistake. The recipient has the duty to return it. (Example: If I
HELD: There was no contract,
d to compensate the two doc- let a storekeeper change my P50.00 bill and by error he gives
and therefore Belen was not oblige
nothing on this point was agreed me P50.60, I have the duty to return the extra P0.60). (See Art.
tors; no express contract, for
for the doctors did not expect 2154, Civil Code)
upon; and no implied contract, to
When a person does not expect
to be paid for their services. contr act impli ed in City of Cebu v: Piccio and Caballero
cannot be a
be paid for his services, there
on for such services. To give rise to an L-13012 and 14876, Dec. 31, 1960 1.101-41-,1
fact to give compensati
es, said services must have
implied contract to pay for servic FACTS: Caballero, an employee of the City of Cebu who
expectation that the other party
been rendered by one party in has been illegally dismissed, sued for backwages by way of
been accepted by the other
would pay for them and must have mandamus and made as defendants thereto the City Mayor, the
expectation. (See 58 Am. Jur., p.
party with knowledge of that Municipal Board, the City Treasurer, and the City Auditor of
512, and the cases cited therein) Cebu City, BUT the City of Cebu itself was not made a defend-
ant. When Caballero was later paid, the City of Cebu brought
from quasi-contracts shall an action for the REFUND of the payment on the ground that
Art. 1160. Obligations derived this
s of Chapter 1, Title XVII, of the payment was illegal because the City of Cebu had NOT been
be subject to the provision
made a party to Caballero's mandamus case.
Book. 4-v (- HELD: The City of Cebu CANNOT recover. The claim for
COMMENT: 6X - +Ms' —tit?'
ed
twItArti 're'd refund is predicated on "solutio indebiti." The requisites for this
are: (a) he who paid was NOT under obligation to do so; (b) the
(I) 'Quasi-Contract' Defin payment was made by reason of an essential mistake of fact.
juridical relation resulting from
e A quasi-contract is that These requisites are NOT present because Caballero has a right
teral act, and which has for its
a lawful, voluntary, and unila to be paid and no mistake was made. The fact that the City
to the end that no one shall
purpose the payment of indemnity itself was NOT a party is immaterial for a judgment against a
at the expense of another. (See
be unjustly enriched or benefited municipal officer, sued in his official capacity, BINDS the City.
Art. 2142, Civil Code)
95
94
 CIVIL CODE OF THE PHILIPPINES Art. 1161
CIVIL CODE OF THE PHILIPPINES
Art. 1161
Oel(cf- act itottlissim pivelishidfle btIcsqAj
l — the COMMENT:
The acts of the duly authorized officials bind the principa
city. (1) Obligations Ex Delicto or Ex Maleficio
et al. Governing rules (BAR QUESTION)
UST Cooperative Store v. City of Manila,
L-17133, Dec. 31, 1965
(a) Pertinent provisions of the Revised Penal Code and other
tax-exempt
FACTS: The UST Cooperative Store, which is penal laws, subject to the provisions of Art. 2177, Civil
Non -Agricu ltural Cooper ative Code.
under RA 2023 (The Philippine to
more than P500,00 0 paid taxes
Act) because its assets are not Issue: (b) Chapter 2, Preliminary Title, on Human Relations (of the
knowin g that it was tax-exe mpt.
the City of Manila, not Civil Code).
May it successfully ask for a refund?
red vol- (c) Title 18 of Book IV of the Civil Code — on damages.
HELD: Yes, because the payment is not conside
made under a
untary in character. Clearly, the payment was Badiong v. Judge Apalisok
mistake. (See 51 Am. Jur. 1023) GR 60151, June 24, 1983
Contract?
(5) Query: Is a Quasi-Contract an Implied Although the defendant in a criminal case has already
ANS.: No, because in a quasi-contract (unlike in
an implied pleaded guilty, and has filed an application for probation, the
contract) there is NO meeting of the minds. court should still set the case for hearing to receive the offended
party's evidence on the civil liability of the accused. If this would
(6) Other Examples of Quasi-Contracts not be done, the offended party will be denied due process.
(a) When during a fire, flood, or other calamit
y, property is /3nsts
(2) Pertinent Provision of the Revised Penal Code
by another person without the
saved from destruction
knowledge of the owner, the latter is bound to pay the ""ii ( !e Art. 100, R.P.C. says: "Every person criminally liable for
former just compen sation. (Art. 2168, Civil Code) a felony is also civilly liable." The reason lies in the fact that
(b) Any person who is constrained to pay the
taxes of another oftentimes the commission of a crime causes not only moral evil
shall be entitled to reimbu rsemen t from the latter. (Art. but also material damage. If no material damage is done, civil
2175, Civil Code) liability cannot be enforced. (See Albert, Rev. Penal Code, Vol.
I, pp. 407-408)
(7) No Unjust Enrichment
Elcano v. Hill
Commission 77 SCRA 98
Lirag Textile Mills, Inc. v. Reparations
79 SCRA 675 An accused in a criminal case may be sued CIVILLY
considering
If the price of certain goods is determined, whether or not he is found guilty or is acquitted. But the victim
procure ment, there is no
the rate of exchange at the time of its cannot recover damages in both cases (only in one).
unjust enrichment involved.
(3) Liability of an Insane Criminal
criminal offenses
Art. 1161. Civil obligations arising from An ,insane man who commits a crime is exempted from
t to the provisions
shall be governed by the penal laws, subjec criminal liability, but his guardian can be held civilly liable
provisions of Chapter 2,
of Article 2177, and of the pertinent unless the latter was diligent in his task of taking care of the
Title XVIII of
Preliminary Title, on Human Relations, and of insane. If there is no guardian, or if said guardian (in the proper
this Book, regulating damages.
97
96
 CIVIL CODE OF THE PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1161
Art. 1161

yet prescribed. In another case, People v. Mostasesa, GR

case) is insolvent, the property of the insane man can be made
L-5684, Jan. 22, 1954, it was held that if a person commits
liable. (See Arts. 12 and 101, R.P.C.)
a crime by taking something, he cannot discharge his civil
liability by offering to give a similar thing. He must pay
(4) Case
the price, for the civil liability arising from a crime is not
Sales v. Balce governed by the Civil Code but by Arts. 100-111, Rev. Penal
L-14414, April 27, 1960 Code.]
FACTS: The son of the plaintiff was killed by the minor son (6) Effect of Aggravating and Mitigating Circumstances
(below 15) of the defendant. The son who acted with discernment
was convicted, but had no money. In crimes, the damages to be adjudicated may be, respec-
tively, increased or lessened according to the aggravating or
ISSUE: Are his parents subsidiarily liable? mitigating circumstances. (Art. 2204, Civil Code)
HELD: Art. 101 of the Revised Penal Code prescribes the
subsidiary liability of the parents in case of a minor over nine (7) Damages in Case of Death
but under 15 who DID NOT act with discernment. If he acted In addition to other damages, if a crime results in death,
WITH discernment, the Revised Penal Code is silent because he Art. 2206 of the Civil Code states that at least three thousand
is criminally liable. In that case, resort is made to the general pesos must be given to the heirs of the victim. However, said
Under
law which is the Civil Code, Art. 2080 of which applies. minimum amount has now been raised to P50,000 in view of
liable unless they can
said Article, the parents would be held the decreasing value of the peso. (Loss of earning capacity and
the Civil Code does not ap-
prove due supervision. To hold that moral damages, among other things, should be given.)
ply because it covers only obligations arising from negligence
in a
or quasi-delicts would result in an ABSURDITY for, while (8) Civil Action Implicitly Instituted in Criminal Case
negligent act, the parents are subsidiarily liable for the damage
caused by their son, no liability would attach if the damage is (lee As a general rule, whenever a criminal action is instituted,
caused with criminal intent. It is clear, therefore, that apply- I/ II if the civil action for the civil liability is also impliedly instituted
be
ing Art. 2080 of the Civil Code, the parents would ordinarily together with the criminal action. (See Rule 3, Sec. 1, Revised
liable. Rules of Court)
of
(Nil I II
(5) What Civil Liability Arising from a Crime Includes (9) Effect of Death of the Criminal Offender Pending Trial

(a) restitution; Buenaventura Belamala v. Marcelino Polinar

(b) reparation of the damage caused;
(c) indemnification for consequential damages. (Art. 104, Rev.
Penal Code)
[NOTE: In the case of People v. Rodriguez, GR L-6592,
July 29, 1956, it was held that if a criminal is convicted
without the court declaring his civil liability and he immedi-
ately commences serving sentence, the court may still grant
indemnity, upon motion of the victim, three days after the
criminal began to serve sentence, because the judgment
has not yet become final, for the period to appeal has not
L-24098, Nov. 18, 1967
FACTS: The defendant in a criminal case for physical
injuries died before final judgment.
ISSUE: Is his civil liability extinguished?
HELD: No, his civil liability is not extinguished for, after
all, in Art. 33 of the Civil Code, there can, in the case of physical
injuries, still be an independent civil action. The action will be
directed against the administrator of the estate, the obligation
having become the obligation of the heirs; but of course the

98 99
 CIVIL CODE OF THE PHILIPPINES Art. 1161
CIVIL CODE OF THE PHILIPPINES
Art. 1161

inheritance. (Art. 774, (10) Kind of Proof Needed

liability cannot exceed the value of the
the remedy is an action (a) If a civil action merely is instituted, mere preponderance
Civil Code) Incidentally, as already said,
merely a claim against the of evidence is sufficient.
against the administrator, and not
e is to recover damages
estate. The reason is because the purpos -contractual as (b) If a criminal case is brought (and with it, the civil case),
, extra
for an injury to person or property (hence v. Llemos, the guilt must be established by proof beyond reasonable
(See Aguas
it arose from either a crime or a tort). contra ctual, a doubt.
liabilit y been
L-18107, Aug. 30, 1962) Had the (See Leung
have suffice d.
mere claim against the estate would (11) Effect of Acquittal in Criminal ease
Ben v. O'Brien, 38 Phil. 182) Suppose a defendant in a criminal case is acquitted, can
ls he still be held liable civilly?
Lamberto Torrijos v. Court of Appea
L-40336, Oct. 24, 1975 ANS.: It depends.
from Diamnuan.
FACTS: In 1964, Torrijos purchased a lot (a) If the reason why there was an acquittal was because the
Diamnuan sold the same
Later, Torrijos learned that in 1969, accused could not have committed the act (as when he was
estafa complaint against
lot to De Guia. Torrijos initiated an in another country at the time he was supposed to have
ted by the CFI (now RTC).
the seller, who was eventually convic murdered somebody in the Philippines), no civil action can
Court of Appeals, the
During the pendency of the case in the later on be brought.
a motion to dismiss the
accused Diamnuan died. His lawyer filed (b) If the reason for the acquittal was because of an exempting
prior to final judgment,
case alleging that the death of his client, ary penalties. circumstance (as in the case of an insane defendant), he
the pecuni
extinguished both the personal and would still be civilly liable (if he has no guardian, or if the
uished? Should the
ISSUE: Is the civil liability also exting guardian who may under the circumstance be ordinarily
case be dismissed? liable, is insolvent).
extinguished, because
HELD: The civil liability here is not (c) If there is an independent civil action allowed by the law,
the accuse d was civilly liable civil liability may still arise if this action is instituted and
independently of the criminal case,
purcha se price from Torrijos, he the defendant's liability is proved by mere preponderance
to Torrijos. Hailer receiving the it again to De
before selling
failed to deliver the property (even of evidence (because while guilt beyond reasonable doubt
but there is no question of might not have been proved, it would be a simpler matter
Guia), there would as yet be no estafa, for specific
by Torrijo s either to prove guilt by mere preponderance of evidence).
his civil liability through an action es. Death
resciss ion plus damag
performance plus damages, or obliga tion.
uishm ent of a civil Co San v. Director of Patents, et al.
is not a valid cause for the exting it is clear that
ssion of estafa, L-10563, Feb. 23, 1961
Had the only basis been the commi would also
al respon sibility
the extinguishment of the crimin comes before A judgment of acquittal in a criminal action for
ed that death
extinguish the civil liability, provid fraudulent registration of a trademark in violation of Sec.
final judgment. 18 of Act No. 666, cannot be invoked as res judicata in a
the Civil Code,
Furthermore, under Arts. 19, 20, and 21 of civil action based on unfair and malicious competition on
indepe ndentl y of the criminal the ground that the facts of the latter are different and
the accused would be civilly liable civil liability
liable. And this have not been passed upon in the judgment rendered in
liability for which he can be held convic tion.
judgm ent of the former case. (See Ogura v. Chua and Confesor, 50 Phil.
exists despite death prior to final
dismissed. 471)
The case, therefore, cannot as yet be
101
100
 CIVIL CODE OF THE PHILIPPINES Art. 1161
CIVIL CODE OF THE PHILIPPINES
Art. 1161

while a reservation is indeed required, the reservation need not

Actions
(12) Example of Independent Civil be made at the time the criminal proceedings are filed, if the
r), fraud (estafa, offended parties had no chance to do so (as when they were still
"In cases of defamation (libel, slande
ing attemp ted, frustrated, in a hospital, as a result of injuries suffered in a vehicular acci-
deceit), and physical injuries (includ or infanticide)
, parricid es dent, at the time the criminal suit against the erring driver was
or consummated homicide, murder distinct from
separat e and filed). However, in the case of Crispin Abellana, et al. v. Judge
a civil action for damages, entirely
by the injured party (or Maraue, L-27760, May 29, 1974, the Court said that Rule 111
the criminal action may be brought independently of the
his heirs). Such civil action shall proceed of the New Rules on Criminal Procedure, insofar as it requires
a preponderance a reservation even in the case of an"independent civil action, is
criminal prosecution, and shall require only
of evidence." (Art. 33, Civil Code) of doubtful constitutionality inasmuch as the Rules of Court
cannot amend substantial law, like the Civil Code.
Civil Aspect
(13) Effect of Reservation of the Garcia v. Florido
Jovencio Luansing v. People of the L-35095, Aug. 31, 1973
Philippines & Court of Appeals
L-23289, Feb. 28, 1969 FACTS: After a vehicular accident, the victims were
brought to the hospital for treatment. In the meantime, the
on, the offended
FACTS: In a criminal action for seducti police authorities filed a criminal case of reckless imprudence
a separate civil action.
party expressly reserved the right to file resulting in physical injuries, WITHOUT making a reservation
guilty, and imposed civil
The CFI (now RTC) found the accused as to the civil aspect. When the victims became well enough to
was filed by the of-
liabilities. No motion for reconsideration go to court, they decided to file a civil case despite the pendency
fended party. of the criminal case.
proper, despite
ISSUE: Was the imposition of civil liability ISSUE: Should the civil case be allowed, despite the pen-
the reservation? dency of the criminal proceedings?
liability was not
HELD: No, the imposition of the civil HELD: Yes, for while it is true that a reservation should
proper because: have been made under Rule 111 of the New Rules on Criminal
civil aspect;
(a) there was the reservation as to the Procedure (though such rule has been assailed by SOME in this
for reconsideration respect as virtually eliminating or amending the "substantive"
(b) the mere failure to file a motion abandonment. right of allowing an "independent civil action," as ordained by
does not necessarily result in waiver or
quantum the Civil Code) still the Rule does not state when the reservation
Abandonment requires a more convincing
to actuall y file the is supposed to be made. Here the victims had no chance to make
of evidence than mere forbearance
conside r the fact that the reservation (for they were still at the hospital); moreover, the
civil action, especially when we
after the decisio n in the trial has not even begun. It is, therefore, not yet too late to make
the same could be filed even
criminal case had been rendere d; the reservation; in fact, the actual filing of the civil case, though
to the amount. at this stage, is even better than the making of the reservation.
(c) proof should be given with respect
Crispin Abellana and Francisco Abellana v.
Reservation of the Civil Case
(14) Is There Need of Making a Hon. Geronimo R. Maraue and
ndent Civil Action) if a
(Where the Law Grants an Indepe Geronimo Companer, et al.
Court?
Criminal Case is First Brought to L-27760, May 29, 1974
Rules on Crimi-
Under Rule 111, Secs. 1 and 3 of the New Garcia, et al. FACTS: Francisco Abellana was driving a cargo truck
the case of
nal Procedure, the answer is YES. In when he hit a motorized pedicab. Four of the passengers of the
L-3509 5, Aug. 31, 1973, the Court ruled that
v. Judge Florido,
103
102
 CIVIL CODE OF THE PHILIPPINES Art. 1161
CIVIL CODE OF THE PHILIPPINES
Art. 1161

City Court of Ozamis (15) Recovery of Damages in SAME CASE Despite Acquittal
pedicab were injured. He was tried in the
was made as to any
for reckless imprudence (no reservation Roy Padilla v. Court of Appeals
convicted. He then
civil action that might be instituted); he was L-39999, May 31, 1984
(now Regional Trial
appealed to the Court of First Instance
appeal (and in fact, If a person is acquitted in a criminal case on reasonable
Court [RTC]). During the pendency of the
victims decided to make doubt, he may, in the very same criminal case, be held liable
before trial in the CFI [now RTC]), the
criminal case, and RES- for damages, if this is warranted by the evidence that had been
a WAIVER re claim for damages in the
ts. The victims then adduced. There is no need to institute a separate civil suit for
ERVATION with respect to the civil aspec
allowe d the FILING
in another Branch of the CFI [now RTC] nce on the
damages.
to the allowa
of the civil case. The accused objected ation has People v. Castafieda
no reserv
theory that in the City Court (original court) ed in
be deeme d includ GR 49781, June 24, 1983
been made, thus, the civil aspect should New Rules
111 of the
the criminal suit, conformably with Rule If a person is not criminally liable, it does not necessar-
maintained that the civil
on Criminal Procedure. The CFI (RTC) ily follow that he is also not civilly liable. He may indeed be
the appeal, the judgment
case should be allowed because, with civilly responsible. Thus, he may still be sued civilly for the
(said court was then not
of the City Court had become vacated same act.
the case was to be tried
a court of record) and in the CFI (RTC)
the CFI (RTC) was elevated
anew (trial de novo). This ruling of People v. Teresa Jalandoni
to the Supreme Court on certiorari. GR 57555, Aug. 28, 1984
e the appeal
ISSUE: May a civil case still be brought despit Even if an accused in an estafa case is acquitted on rea-
in the criminal case? sonable doubt she may still be held civilly liable, following the
HELD: Yes, for three reasons: ruling in Padilla v. Court of Appeals, L-39999, May 31, 1984.
al judgment of convic-
(a) Firstly, with the appeal, the origin
de novo in the (16) Affidavit of Desistance
tion was VACATED; there will be a trial
began ; therefore, a
CFI (RTC), a trial that has not even
action can still be People v. Entes
reservation can still be made and a civil
L-50632, Feb. 24, 1981
allowed.
is barred because no Affidavits of desistance (such as an express pardon in pri-
(b) Secondly, to say that the civil action
made in the vate crimes after the filing of the criminal case) do not justify
reservation (pursuant to Rule 111) had been
is to present the dismissal of a criminal complaint.
City Court when the criminal suit was filed
can the Supreme
a grave constitutional question, namely,
SUBSTANTIVE People v. Mayor Caruncho, Jr.
Court, in Rule 111 amend or restrict a
cannot be done. L-57804, Jan. 23, 1984
right granted by the Civil Code? This
cannot prevail. A
The apparent literal import of the Rule (1) A compromise on the civil liability of a person for having
by Justice Frank
judge "is not to fall prey," as admonished committed a crime does not extinguish his criminal or penal
Frankfurter, "to the vice of literalness." liability.
the circumstances,
(c) Thirdly, it would be UNFAIR, under (2) If a municipal judge dismisses a criminal case for "slight
d to recove r any civil li-
if the victims would not be allowe physical injuries" on account of a voluntary affidavit of de-
ability, considering the damag e done to them.
105
104
 CIVIL CODE OF THE PHILIPPINES
Art. 1162
sistance, while this may be an "abuse of discretion," there
cannot be a "grave abuse of discretion." Thus, a petition
for certiorari re the dismissal of the case will FAIL or BE
DENIED.
(17) Effect of Non-Allegation of Damages
Badiong v. Judge Apalisok
GR 60151, June 24, 1983
In a criminal case, civil liability may be claimed even if
there is no specific allegation of damages in the information or
complaint that has been filed.
Art. 1162. Obligations derived from quasi-delicts shall
be governed by the provisions of Chapter 2, Title XVII of this
Book, and by special laws.
COMMENT:
(1) Obligations Ex Quasi-Delicts or Ex Quasi-Maleficio
Governing laws (Bar Question)
(a) Chapter 2, Title 17, Book IV, Civil Code
(b) Special Laws
(2) Another Name for Quasi-Delict
Another name for quasi-delict is "tort" or "culpa aquiliana."
(3) Definition of 'Quasi-Delict'
A quasi-delict is a fault or act of negligence (or omission
of care) which causes damages to another, there being no pre-
existing contractual relations between the parties.
[NOTE: If a person is sued for causing damage through the
violation of traffic rules, the accusation is one actually referring
to negligence or quasi-delict or culpa aquiliana. "Violation of
traffic rules" is merely descriptive of the failure of the driver to
observe, for the protection of the interests of others, that degree
of care, precaution, and vigilance which circumstances justly
106
CIVIL CODE OF THE PHILIPPINES Art. 1162
demand, which failure results in injury on claimants. Excessive
speed in violation of traffic rule is a clear indication of negli-
gence. (Garcia, et al. v. Judge Florido, CFI, Misamis Oriental,
et al., L-35095, Aug. 31, 1973)]
Elcano v. Hill
77 SCRA 98
Culpa aquiliana (quasi-delicts) can refer to acts which
are criminal in character, whether the same be voluntary or
negligent.
(4) Examples
(a) While driving a car recklessly, I injured a pedestrian.
(b) While cleaning my window sill, my negligence caused a
flower pot to fall on the street, breaking the arms of my
neighbor.
[NOTE: In the above examples, I can also be charged
with the crime of physical injuries through simple or reck-
less imprudence.]
(5) Definitions of Negligence (Culpa)
(a) "Negligence is the failure to observe, for the protection
of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury." (U.S.
v. Barrias, 23 Phil. 434)
(b) As defined by the Civil Code, negligence is the omission of
that diligence which is required by the circumstances of
person, place, and time. (See Art. 1173) Thus, negligence
is a question of fact. (See Tucker v. Milan, [CA.] 49 0.G.
4397, Oct. 1953)
(6) Test for Determination of Negligence
"The test in determining whether a person is negligent
. . . is this: Would a prudent man (in his position) foresee harm
to the person injured as a reasonable consequence of the course
about to be pursued? If so, the law imposes a duty on the actor
to refrain from that course, or to take precaution against its
107
 CIVIL CODE OF THE PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1162
Art. 1162

negli- a carefully-driven car causes damage to a pedestrian

mischievous results, and the failure to do so constitutes
because the driver was suddenly struck by lightning,
gence. Reasonable foresight of harm, followed by the ignoring
e fact this is an instance of damage without injury.)]
of the admonition born of this provision, is the constitut
of negligence." (Picart v. Smith, 37 Phil. 809)
(9) Culpa Aquiliana of Married Minors
(7) Case Elcano v. Hill
77 SCRA 08
Allied Banking Corp. v. BPI
692 SCRA 186 If a married minor commits a quasi-delict or culpa aquili-
ana, his parents would be liable if said minor lives with, and is
Contributory negligence is conduct on the part of the in- dependent on, them.
he has
jured party, contributing as a legal cause to the harm
suffered, which falls below the standard to which he is required
(10) Violation of an Obligation
to conform for his own protection.
Liable for a Mascunana v. Verdeflor
(8) Requirements Before a Person Can Be Held 79 SCRA 339
Quasi-Delict
person Owners of land fronting a public street have a cause of
(a) there must be fault or negligence attributable to the action against a municipal council resolution that has ordered
charged; the closure of said street to vehicular traffic.
(b) there must be damage or injury;
(11) Doctrine of 'Last Clear Chance'
(c) there must be a direct relation of cause and effect between
or
the fault or negligence on the one hand and the damage Allied Banking Corp. v. BPI
injury on the other hand (proximate cause). 692 SCRA 186
[NOTE: In the case of Phil. Bank of Commerce v. CA (336 Phil. 667
1) Proximate cause is that adequate and efficient cause, [1997]), while the Supreme Court found petitioner bank as the
which in the natural order of events, necessarily pro- culpable party under the doctrine of last clear chance since it
duces the damages or injury complained of. had, through its titles, the last opportunity to avert the injury
incurred by its client simply by faithfully observing its own
In the case of Tuason v. Luzon Stevedoring Co., validation procedure, it, nevertheless, ruled that the plaintiff
et al., L-13541, Jan. 28, 1961, the Supreme Court held depositor (private respondent) must share in the loss on account
that since the plaintiff, Eduardo Tuason, was travel- of the contributory negligence in not checking the monthly state-
ling at a very high rate of speed, and on the wrong ments of account.
side of the road, his negligence was the proximate
cause of the accident which badly injured him, and
therefore he cannot recover damages from the other
party in the collision.
2) There are instances when "although there is damages,
there is no legal injury or wrong" (damnum absque
injuria — damage without legal injury). (Example: If
 CIVIL CODE OF THE PHILIPPINES Art. 1163

(3) Some Cases

Obejera, et al. v. Iga Sy

76 Phil. 580
Chapter 2 FACTS: During the Japanese occupation, A and B sought
refuge in the house of a certain Villena in Batangas, Batangas.
NATURE AND EFFECT OF OBLIGATIONS When the Japanese neared the place? A and B hid their valuables
in Villena's dugout. Later, the valtiables were lost. A claimed
that he had given his things to B as a deposit, and that therefore
also B should be liable for the loss. B denied the existence of such
Art. 1163. Every person obliged to give something is
with the proper diligence of a good deposit. Decide the question of liability.
obliged to take care of it
of the par-
father of a family, unless the law or the stipulation HELD: In the first place, it is hard to believe that B con-
ties requires another standard of care. sented to safeguard the valuables at a time when no one could
be sure of his own life. In the second place, granting that B had
assumed the obligation to take care of the property, still consid-
COMMENT:
ering the circumstances of the time and place, the obligation to
(1) Duty to Exercise Diligence return the valuables was extinguished by the loss of the thing
to through something which was not the fault of B.
This Article deals with the first effect of an obligation
thing (as distinguished from a generic thing
deliver a determinate
exercise proper
— or one of a class) — namely — the duty to Bishop of Jaro v. De la Pella
diligence. Unless diligence is exercised, there is a danger that 26 Phil. 144
lost or destroyed, thus rendering illusory
the property would be FACTS: A priest, A. de la Pella, was the custodian of cer-
the obligation. (See 8 Manresa 35-36)
tain charity funds (P6,641) which he deposited together with his
personal account of (P19,000) in an Iloilo Bank shortly before
(2) Diligence Needed the American invasion of the Philippines. During the revolu-
obligation and
(a) That which is required by the nature of the tion, Pella became a political prisoner and his bank deposit
corresponds with the circumstances of person, time, and was confiscated on the ground that they were being used for
is really diligence of a
place. (Art. 1173, Civil Code) This revolutionary purposes.
good father of a family. ISSUE: Is he liable for the loss of the trust funds?
different
(b) However, if the law or contract provides for a HELD: No, because negligence did not exist in his deposit-
standard of care, said law or stipulation must prevail. (Art.
ing the money with the bank. It is as if the money was taken
1163, Civil Code) from him by force and clearly, he should not be responsible.
care
[Example of a case where the law requires extraordinary
(not merely that of a prudent man): Bernabe Africa, et at. v. Caltex, et at.
safely L-12986, March 31, 1966
"A common carrier is bound to carry the passengers
the utmost
as far as human care and foresight can provide, using FACTS: A fire broke out at a Caltex service station. It
diligence of very cautious persons, with a due regard for all the started while gasoline was being hosed from a tank truck into
circumstances." (Art. 1755, Civil Code)] the underground storage, right at the opening of the receiving

110 111
 CIVIL CODE OF THE PHILIPPINES Art. 1164
CIVIL CODE OF THE PHILIPPINES
Art. 1164

the fruits). After Dec. 3, 2004, B, the creditor is entitled (as of

been inserted. The fire
tank where the nozzle of the hose had right) to the fruits. But if the fruits and the land are actually or
station manager were
destroyed several houses. Caltex and the constructively delivered only on Dec. 15, 2004, B becomes owner
sued. of said fruits and land only from said date. Between Dec. 3 and
and origin of the
ISSUE: Without proof as to the cause Dec. 15, B had only a personal right (enforceable against A);
loquitu r apply such that the
fire, would the doctrine of res ipsa after Dec. 15, he has a real right (over the properties), a right
defendants can be presumed neglige nt? that is enforceable against the whole world.
under the care of
HELD: Yes, for the gasoline station was [NOTE: A personal right is aldo called jus in personam or
at all regardin g the fire.
the defendant, who gave no explanation happen ed because
jus ad rem; a real right is a jus in re. (See Fidelity and Deposit
incident
It is fair to reasonably infer that the Co. v. Wilson, 8 Phil. 51) A personal right is power demandable
of their want of care. by one person of another — to give, to do, or not to do (3 Sanchez
Roman 6, 8); a real right is a power over a specific thing (like the
Ronquillo, et at. v. Singson right of ownership or possession) and is binding on the whole
CA, L-22612-R, April 22, 1959 world. (See 3 Sanchez Roman 6, 8)]
Jose Ronquillo,
FACTS: A man ordered a ten-year-old boy, [NOTE: In the case of a purchase of land, for example,
santol tree, with a promise
to climb a high and rather slippery before the land is delivered, the proper remedy of the buyer
was killed in the act of
to give him part of the fruits. The boy (since he is not yet the owner) is to compel specific performance
climbing. and delivery, and not an accion reinvindicatoria (for the latter
liable?
ISSUE: Is the person who ordered him remedy presupposes ownership). (See Garchitorena v. Almeda,
in making the [C.A.] 48 O.G. 3432; see also Cruzado v. Bustos & Escaler, 34
HELD: Yes, in view of his negligent act Phil. 17)]
a reasona bly foresee-
order. He did not take due care to avoid treache rous
tree was a
able injury to the ten-year-old boy. The re from the (2) Latin Maxim (Re Delivery and Ownership)
a departu
one, a veritable trap. His act was clearly should have
t man. He
standard of conduct required of a pruden "Non nudis pactis, sed traditionis dominia rerym transfer-
failed to appreciate the
desisted from making the order. Since he antur."(As a consequence of certain contracts, it is not agreement
negligence by offering
predictable danger and aggravated such but tradition or delivery that transfers ownership). (10 Manresa
that he should be made
part of the fruits as a reward, it is clear committed by
339 and Fidelity & Deposit Co. v. Wilson, 8 Phil. 51)
le wrong
to respond in damages for the actionab
him. (3) Kinds of Delivery
Delivery may be either actual or constructive.
the fruits of the thing
Art. 1164. The creditor has a right to
deliver it arises. However, he (a) Actual delivery (or tradition) — where physically, the prop-
from the time the obligation to
until the same has been erty changes hands. Example: If A sells B a fountain pen,
shall acquire no real right over it
delivered to him. the giving by A to B of the fountain pen is actual tradition.
(b) Constructive delivery — that where the physical transfer
COMMENT: is implied. This may be done by:
Fruits
(1) When Creditor Is Entitled to the 1) traditio simbolica (symbolical tradition) — (as when
2004, a particular
Example: A is obliged to give B on Dec. 3, the keys of a bodega are given).
right whatsoever over
parcel of land. (Before Dec. 3, he has no
113
112
 CIVIL CODE OF THE PHILIPPINES Art. 1165
CIVIL CODE OF THE PHILIPPINES
.rt. 1164

consent or Art. 1165. When what is to be delivered is a determinate

2) traditio longa manu (delivery by mere thing, the creditor, in addition to the right granted him by
the object) (Etymo logical ly, "the
the pointing out of Article 1170, may compel the debtor to make the delivery.
g out the
extending of the hand.") Example: pointin
car, which is the object of the sale. If the thing is indeterminate or generic, he may ask that
ry by the short hand; the obligation be complied with at the expense of the debtor.
3) traditio brevi manu — (delive
sor of a thing
that kind of delivery whereby a posses If the obligor delays, or has promised to deliver the same
sor as owner)
not as an owner, becomes the posses thing to two or more persons who do pot have the same inter-
possession buys
(Example: when a tenant already in est, he shall be responsible for fortuitous event until he has
the house he is renting). effected the delivery. cre24,6c_ çi-
— the opposite of
4) traditio constitutum possessorium ObLIG4-uot4
y a possessor
brevi manu; thus, the delivery whereb COMMENT: N• goran c
ion no longer
of a thing as an owner, retains possess
(like a house
as an owner, but in some other capacity (1) Classification of Obligation from the Viewpoint of Subject
in possession
owner, who sells a house, but remains Matter
as tenant of the same house). From the viewpoint of the subject matter (or object) of the
forms and solemni-
5) tradition by the execution of legal obligation, obligations are divided into:
instrument selling
ties (like the execution of a public (a) real obligations (to give):
land).
a genuine one, 1) to give a specific thing (set apart from a class);
[NOTE: A sale which is simulated, or even
does not transfer owner-
where there is no delivery of the object, 2) to give ageneric or indeterminate thing (one of a class).
34 Phil. 17)]
ship. (See Cruzado v. Bustos & Escaler, (b) personal obligations (to do or not to do).
(4) Delivery of Ideal Share
(2) Specific or Determinate Things
Gatchalian v. Arlegui
75 SCRA 234 A thing is said to be specific or determinate when it is ca-
person is ordered pable of particular designation.
When by virtue of a court judgment, a
of a pro indiviso or ideal
to deliver to another the possession
is understood that what Examples:
share of property, owned in common, it
ctive delivery, not mate-
is contemplated is symbolical or constru (a) this car
rial or actual delivery.
(b) the car owned by A on Sept. 12, 2005
Deliver Arise?
(5) When Does the Obligation to (c) the car with plate number 1814 (2005)
ANS.: It depends: (d) this particular picture of Maui in my notebook
then from the perfection
(a) If there is no term or condition,
of the contract. (3) Generic or Indeterminate Things
then from the moment
(b) If there is a term or a condition, V! A thing is generic or indeterminate when it refers only to a
happens. (See 8 Manresa
the term arrives or the condition class, to a genus, and cannot be pointed out with particularity.
44-45)
115
114
 PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1165
CIVIL CODE OF THE
Art. 1165

(a) That there was no proof that damages had been sustained
Examples: by the offended party; and
(a) a car (b) That subsidiary imprisonment for non-payment of the
indemnity constitutes imprisonment for non-payment of
(b) a 2005 BMW automobile debt and is therefore unconstitutional.
(c) the sum of P5 million HELD:
(d) a kilo of sugar (a) As regards the alleged absence of proof that the offended
to Com- party has suffered mental anarish, loss of sleep, or could
or When the Debtor Fails
(4) Remedies of the Credit not look at his neighbor straight in the eye, suffice it to
ply With His Obligation stress that by its very nature, libel causes dishonor, dis-
obli-
performance (or compliance) of the repute and discredit; that the injury to the reputation of
(a) demand specific obligation be generic or the injured party is a natural and probable consequence of
gation. (This is true whether the the defamatory words in libel cases; that where the article
specific.) is libelous per se — "the law implies damages;" and that
cancellation (in some cases).
(b) demand rescission or rst
the complainant in libel cases is "not required to introduce
with or without either of the fi evidence of actual damages," at least, when the amount of
(c) demand damages either
the award is more or less nominal.
two, (a) or (b).
kilos of sugar from A, I (b) The civil liability arising from libel is not a "debt," within
[NOTE: If I am entitled to ten
sugar and give me ten kilos the purview of the constitutional provision against im-
can demand that A obtain the
obligation here be generic. prisonment for non-payment of a "debt." Insofar as said
thereof. This is true even if the
me damages or the monetary injunction is concerned, "debt" means an obligation to pay
A cannot insist on just paying
other hand, if I desire to, I a sum of money "arising from contract" express or implied.
value of the sugar. Upon the
anywhere and charge the In addition to being part of the penalty, the civil liability
can just buy ten kilos of sugar in the present case arises from a tort or crime, and hence,
expense to A.] from law. As a consequence, the subsidiary imprisonment
Uy v. Puzon for non-payment of said liability does not violate the con-
79 SCRA 598 stitutional injunction.
enterprise fails to fulfill his [NOTE: Under a comparatively new Republic Act,
If a partner in a construction courts can no longer impose subsidiary imprisonment in
is required to indemnify his
commitments to the partnership, he case of civil liability arising from a crime precisely on the
such as the money invested or
co-partner for the latter's losses, theory that said subsidiary imprisonment would seem
spent by the latter. to violate the constitutional injunction. However, if fines
(not civil liabilities) are unpaid to the State (note that
t Because of a Debt)
(5) Case (Re Imprisonmen civil liabilities go to offended private parties), subsidiary
Appeals imprisonment can be imposed (provided the decision of the
Rubo Quemuel v. Court of court imposes such subsidiary imprisonment).]
L-22794, Jan. 16, 1968
convicted by the Court of
FACTS: Rufo Quemuel was (6) Effect of Fortuitous Events
Trial Court) of Rizal of the crime
First Instance (now Regional On Another important difference between a generic and a
affirmed by the Court of Appeals.
of libel. The conviction was , among other things: specific obligation is that, a specific obligation, that is, an obli-
alleged
appeal to the Supreme Court, he
117
116
 PHILIPPINES CIVIL CODE OF THE PHILIPPINES Art. 1165
CIVIL CODE OF THE
Art. 1166

d by default). If on Dec. 8, 2005, an earthquake destroys the

thing, is, as a rule, extinguishe
gation to deliver a specific gener ic Jaguar car, A is not liable because the obligation is extin-
God. Upon the other hand,
a fortuitous event or act of guished.
d by fortuitous events.
obligations are never extinguishe (b) If, however, on Dec. 8, demand was made for delivery, A
Examples: would be in legal delay (default) and if later, the car is de-
earth- stroyed by a fortuitous event, he would still be liable (in that
this car. Before delivery, an
(a) A is obliged to give B delive r the obligation to deliver the lost specific thing is converted
car. The obligation to
quake destroys completely the into a monetary claim for damdges). (See Art. 1165, Civil
is extinguished. Code) However, if the car would have been destroyed at
ic thing,
a book. Since this is a gener
(b) A is obliged to give B lost, other books may take any rate even if no demand had been made, the amount of
even if one particular book is d (genu s damage would be reduced. (Art. 2215, No. 4, Civil Code)
tion is not extinguishe
its place. Hence, the obliga
nunquam pent). (10) Some Decided Cases and Court Rulings
Not Ex- The phrase "100 kilos of 1st class sugar raised in my plan-
a Fortuitous Event Does
(7) Two Instances Where tation" deals with a generic thing because of lack of physical
empt segregation. (Yu Tek v. Gonzales, 29 Phil. 284)
1165 gives two instances when
The third paragraph of Art.
excuse compliance: Yu Tek v. Gonzales
a fortuitous event does not
"mora.") 29 Phil. 384
(This is really default or
(a) if the obligor "delays"
promised FACTS: A obligated himself to sell for a definite price a
of BAD FAITH (for having
(b) if the obligor is guilty perso ns who do certain specified quantity of sugar of a given quality, without
to two or more
to deliver the same thing not the agent designating a particular lot.
as when one is
not have the same interest —
merely of the other) ISSUE: In case the sugar is lost by a fortuitous event, who
events," by definition, are bears the loss prior to delivery, the seller or the buyer?
[NOTA BENE: "Fortuitous
eable or avoidable. (Metro
extraordinary events not forese HELD: In this case, the seller bears the loss because what
Bank Corp., 711 SCRA 479)]
Concert Steel Corp. v. Allied was to be delivered was not a specific thing, but a generic thing.
And genus never perishes. Incidentally, the sale here cannot be
Distinguished from 'Default' said to have been already perfected because of the lack of physi-
(8) 'Ordinary Delay'
legal delay (default). The cal segregation from the rest of the sugar.
Ordinary delay is different from default
ance at the stipulated time;
first is merely non-perform lfillm ent of the
nts to a virtual nonfu Roman v. Grimalt
is that delay which amou must be
debtor in default, there 6 Phil. 96
obligation. (As a rule, to put a judici al or
the demand being either FACTS:A wanted to buy a particular ship from B on condi-
a demand for fulfillment,
extrajudicial.) tion that B would prove by papers that he (B) was the real owner
of the ship. Subsequently, the ship was lost by a fortuitous event
(9) Examples although the papers had not yet been produced.
2005. If on
his Jaguar car on Dec. 7, ISSUE: Is A required to pay?
(a) A is obliged to give B ordin ary delay (not
r, he is in
said day, A does not delive
119
118
 CIVIL CODE OF THE PHILIPPINES Art. 1167
PHILIPPINES
CIVIL CODE OF THE
Art. 1166
there was (3) Accessions — additions to or improvements upon a thing. These
bound to pay because include alluvium (soil gradually deposited by the current of a
HELD: A is not legally condition, namely, the proof of
yet, since the fulfilled. A was river on a river bank) and whatever is built, planted, or sown
no perfected sale of loss, not yet been on a person's parcel of land.
ownership had, at that timewould-be buyer.
only a
not a buyer; he was the proof [NOTE: Even if the windows of a building have been tem-
bought the ship — (had
[NOTE: Had A already would have been porarily removed, they should still be included.]
ownership been presented earlier) — he time of loss,
of purchase price even if at the
compelled to pay the since after all, the (4) Effect of Stipulation
been delivered to him,
the thing had not yet already perfected.] Of course, if there is a stipulation to said effect, accessions
sale would have been and accessories do not have to be included.
Alzelius
Gutierrez Repide v.
39 Phil. 190 Art. 1167. If a person obliged to do something fails to do
installment. When it, the same shall be executed at his cost.
from B on
FACTS: A bought property defense was that This same rule shall be observed if he does it in contra-
installment fell due, A did not pay. His impossibility
the first pleaded vention of the tenor of the obligation. Furthermore, it may be
did not have money, and he therefore
he decreed that what has been poorly done be undone.
of performance.
his obligation?
ISSUE: Is A excused from does not dis- COMMENT:
Mere pecuniary inability to pay
HELD: No. any defense
obligation to pay, nor does it constitute commercial (1) Positive Personal Obligations
charge an stability of
specific performance. The protected The first sentence of the Article deals with a positive per-
to a decree for that the rights of the seller be
transactions requires sonal obligation (TO DO).
buyer.
the rights of the
just as effectively as
determinate thing (2) Remedies of Creditor if Debtor Fails to Do
1166. The obligation to give a accessories,
Art.
delivering all its accessions and (a) To have the obligation performed (by himself or by another)
includes that of mentioned. at debtor's expense (only if another can do the performance).
may not have been
even though they (See Chavez v. Gonzales, L-27454, April 30, 1970)
COMMENT: (b) Also — to obtain damages. (Art. 1170, Civil Code) (Damages
Thing Includes
a Determinate alone cannot substitute for performance if owners can do
(1) What the Obligation to Give it; if purely personal or special — as a painting to be done
Example: by a reputed artist — only damages may be asked, unless
I must also
obliged to deliver a particular car, substitution is permitted.)
If I am obliged to deliver
accessories (like the "jack"). If I am
give the (like a building [NOTE: Specific performance is not a remedy in
land, I must give also the accessions of them
a piece of true even if no mention personal obligations; otherwise, this may amount to invol-
thereon). (This is
constructed untary servitude, which as a rule is prohibited under our
contract.)
was made in the Constitution.]
principal
included with the [NOTE: A party to an agreement to marry who backs
Accessories — those joined to or enjoyment. (Examples:
(2) use, perfection, or out cannot be held liable for the crime of slander by deed
for the latter's better dishes in a restaurant.)
the
the keys to a house,
121
120
 CIVIL CODE OF THE PHILIPPINES
for then that would be an indirect way of compelling said
party to go into a marriage without his or her free consent,
and this would contravene the principle in law that what
cannot be done directly should NOT be done indirectly; and
said party therefore has the right to avoid for himself or
herself the evil of going through a loveless marriage, pur-
suant to Art. 11, par. 4 of the Revised Penal Code. (People
v. Hernandez, et al., 55 0.G., p. 8456, CA)]
Chavez v. Gonzales
L-27454, April 30, 1970
FACTS: A typewriter owner delivered the same to a
repairman for repairs agreed upon orally. Despite repeated
demands, no work was done thereon. Eventually the re-
pairman returned the machine, unrepaired and worse,
several parts were missing, thus the description "cannibal-
ized and unrepaired." The owner was then constrained to
have the typewriter repaired in another shop. Owner now
claims damages from the first repairman (for the cost of
the repairs and the cost of the missing parts). Defendant
repairman, however, alleges that owner should have first
filed a petition for the court to fix the period within which
the job of repairing was to be finished.
ISSUES:
(a) Can the defendant be held liable for damages?
(b) How about the failure of the owner to first ask
the court for the fixing of the period?
HELD:
(a) Yes, the defendant can be held for damages and this
would include the cost of labor and needed materials,
as well as the value of the missing parts. According
to Art. 1167 — "If a person obliged to do something
fails to do it, the same shall be executed at his cost.
The same rule shall be observed if he does it in con-
travention of the tenor of the obligation."
(b) The failure of the owner of the computer notebook
to first ask the court for a fixing of the period within
122
CIVIL CODE OF THE PHILIPPINES Arts. 1168-1169
which the repairs were to be done is of no signifi-
cance. In view of his returning of the machine, the
time for compliance may be deemed to have already
expired. There is, therefore, no more period to be
fixed, there already being a breach of contract by non-
performance. Said non-performance may be said to
have been impliedly admitted when the notebook was
returned unrepaired and %vith some of its essential
parts missing.
(3) When a Thing May Be Ordered Undone
(a) if made poorly (Art. 1167) (Here performance by another
and damages may be demanded).
(b) if the obligation is a negative one (provided the undoing is
possible).
Art. 1168. When the obligation consists in not doing, and
the obligor does what has been forbidden him, it shall also be
undone at his expense.
COMMENT:
Negative Personal Obligations
(a) This Article refers to a negative personal obligation.
(b) As a rule, the remedy is the undoing of the prohibited thing
plus damages. (See Art. 1170, Civil Code)
Art. 1169. Those obliged to deliver or to do something
Incur in delay from the time the obligee judicially or extraju-
dicially demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be neces-
Nary in order that delay may exist:
(1) When the obligation or the law expressly so declares;
or
(2) When from the nature and the circumstances of the
obligation it appears that the designation of the time when the
123
Art. 1169 CIVIL CODE OF THE PHILIPPINES
thing is to be delivered or the service is to be rendered was a
controlling motive for the establishment of the contract; or
(3) When demand would be useless, as when the obligor
has rendered it beyond his power to perform.
In reciprocal obligations, neither party incurs in delay
if the other does not comply or is not ready to comply in a
proper manner with what is incumbent upon him. From the
moment one of the parties fulfills his obligation, delay by the
other begins.
COMMENT:
(1) Default or Mora
Although Art. 1169 uses the words "in delay," these should
be translated to mean default (MORA).
(2) Necessity in General of Demand
To put a debtor in default, as a rule, DEMAND is needed.
The demand may be judicial, as when a complaint for specific
performance is filed; or extrajudicial, without court proceedings.
(3) When Demand Is Not Needed to Put Debtor in Default
(a) When the law so provides. (Example: Taxes should be paid
within a definite period, otherwise penalties are imposed
without need of demand for payment.)
(b) When the obligation expressly so provides.
[NOTE: The mere fixing of the period is not enough;
there must be a provision that if payment is not made
when due, default or liability for damages or interests
automatically arises. (See De la Rosa v. Bank of P.I., 51
Phil. 926)]
[NOTE: The contrary ruling in Siulong and Co. v.
Ylagan, 43 Phil. 393, is wrong.]
When time is of the essence of the contract (or when the
(c)
fixing of the time was the controlling motive for the estab-
lishment of the contract).
124
CIVIL CODE OF THE PHILIPPINES Art. 1169
Examples: The making of a wedding dress, if the wed-
ding is scheduled at the time the dress is due; agricultural
contracts where implements are needed at a particular
time; the selling of land with payment at specified time, so
that the seller could pay off certain debts that were due on
said date (Abella v. Francisco, 55 Phil. 447); money needed
to finance mining installations if said installations had
to be made on a certain date. (Hanlon v. Hausserman, 40
Phil. 796)
[NOTE: It is not essential for the contract to
categorically state that time is of the essence; the intent is
sufficient as long as this is implied. (Hanlon v. Hausserman,
supra)]
(d) When demand would be useless, as when the obligor has
rendered it beyond his power to perform. (Examples: When
before the maturity, the seller has disposed of it in favor of
another, or has destroyed the subject matter, or is hiding.)
(e) When the obligor has expressly acknowledged that he really
is in default (But it should be noted that his mere asking
for extension of time is not an express acknowledgment of
the existence of default on his part). (See 3 Salvat 64)
(4) Different Kinds of Mora
(a) mora solvendi (default on the part of the debtor)
1) mora solvendi ex re (debtor's default in real obliga-
tions)
2) mora solvendi ex persona (debtor's default in personal
obligations)
(b) mora accipiendi (default on the part of the creditor)
(c) compensatio morae (when in a reciprocal obligation both
parties are in default; here it is as if neither is in default)
(5) Mora Solvendi
(a) There is no mora solvendi in negative obligations (one can-
not be late in not doing or giving).
(b) There is no mora in natural obligations.
125
 CIVIL CODE OF THE PHILIPPINES
Art. 1169 CIVIL CODE OF THE PHILIPPINES
(6) Mora Accipiendi
(c) Requisites for mora solvendi:
1) The obligation must be due, enforceable, and already
liquidated or determinate in amount. (TS, March 15,
1926)
2) There must be non-performance.
3) There must be a demand, unless the demand is
not
already discusse d). (When demand is
required (as
needed, proof of it must be shown by the creditor ). (8
Manresa 61)
[NOTE: A mere reminder, like "This is to remind
you that your next installment falls due on Jan. 7,
2005," is not a demand because for all that we know,
lateness may still be tolerated by the creditor. (2
Castan 528)]
4) The demand must be for the obligation that is due
(and not for another obligation, nor one with a bigger
amount, except in certain instances, considering all
the circumstances). (See TS, Jan. 1910)
(d) Effects of Mora Solvendi
1) If the debtor is in default, he may be liable for interest
or damages.
2) He may also have to bear the risk of loss.
(In both cases, it is, however, essential that his being
in default is attributable to his own fault.)
3) He is liable even for a fortuitous event (Art. 1165, Civil
Code), although damages here may be mitigated if he
can prove that even if he had not been in default, loss
would have occurred just the same. (Art. 2215, Civil
Code)
(e) In a purchase by installments, the contract may provide
all
for an "acceleration clause" (a clause which would make
installments due, upon default in one installm ent). Default
in the payment of one installment does not mean default
all
in the whole amount. If there is an acceleration clause,
that happens will be that the whole amount becomes due.
And demand is still needed to put the debtor in default.
(See Queblar v. Garduno & Martinez, 62 Phil. 897)
126
Art. 1169
(a) The creditor is guilty of default when he unjustifiably re-
fuses to accept payment or performance at the time said
payment or performance can be done. Some justifiable
reasons for refusal to accept may be that the payor has no
legal capacity or that there is an offer to pay an obligation
other than what has been agreed upon.
. /
(b) If an obligation arises ex delwto (as the result of a crime),
the debtor-criminal is responsible for loss, even though
this be through a fortuitous event, unless the creditor is
in mora accipiendi. The law says:
"When the debt of a thing certain and determinate
proceeds from a criminal offense, the debtor shall not be
exempted from the payment of its price, whatever may
be the cause for the loss, unless the thing having been of-
fered by him to the person who should receive it, the latter
refused without justification to accept it." (Art. 1268, Civil
Code)
[NOTE: What should the criminal do if the creditor
is in mora accipiendi?
ANS.: He must either:
1) consign it in court (expenses chargeable to creditor);
2) or keep it himself (here he should still exercise dili-
gence and care, but this time, he would not be liable
for loss due to a fortuitous event). (See 2 Manresa 361)
(Loss through robbery with violence is a fortuitous
event provided that the violence or intimidation was
irresistible or grave.)]
(c) The improper refusal of the lessor (creditor) to accept the
rents tendered by the lessee places said lessor in default
(mora) and he must shoulder the subsequent accidental loss
of the premises leased. The mora accipiendi of said lessor
is not cured by the lessee's failure to make consignation of
the rejected payments, but the lessee remains obligated
to pay the amounts he had tendered but did not deposit
in court. (Vda. de Villaruel, et at. v. Manila Motor Co. &
Caloniares, L-10394, Dec. 3, 1958)
127
Art. 1169 CIVIL CODE OF THE PHILIPPINES
(7) Reciprocal Obligations
(a) Reciprocal obligations depend upon each other for perfor-
mance. (Example: In a sale the buyer must PAY, and the
seller must DELIVER.)
(b) Here performance may be set on different dates.
[Example — delivery on Dec. 9, 2005; and payment on Dec.
13,2005. To put the seller in default, demand as a rule must
be made. Delivery, upon the other hand, does not put the
buyer in default, till after demand, unless demand is not
required. This is because, in the example given, different
periods for performance were given. (See 8 Manresa 63-64)]
(c) If the performance is not set on different dates, either by
the law, contract, or custom, it is understood that perfor-
mance must be simultaneous. Hence, one party cannot
demand performance by the other, if the former himself
cannot perform. And when neither has performed, there
is compensatio morae (default on the part of both; so it is
as if no one is in default). If one party performs, and the
other does not, the latter would be in default. (See Gutier-
rez Hermanos v. Oria Hernzanos, 30 Phil. 491)
Mariano Rodriguez, et al. v.
Porfirio Belgica, et al.
L-10801, Feb. 28, 1961
FACTS: Rodriguez and Belgica were co-owners of land
in the proportion of 86% and 14%, respectively. Belgica
owed Rodriguez P30,000. To enable Belgica to pay it, it
was mutually agreed that Rodriguez would grant authority
to Belgica to sell or mortgage within 70 days 36% of the
land, so that Belgica would be able to raise the money for
payment of the loan.
ISSUE: From what time should the 70-day period
begin to run?
HELD: The period commences from the time Rodri-
guez grants said authority to Belgica. For this partakes of
a reciprocal obligation — the granting of the authority and
the payment of the loan. Without such authority, it was
difficult, if not impossible, for Belgica to obtain the needed
P30,000. This was because he owned only 14% of the land.
128
CIVIL CODE OF THE PHILIPPINES Art. 1169
(8) When Damages or Interest May Be Lost
A creditor entitled to damages or interest because of
MORA may lose the same —
(a) If the principal obligation is allowed to lapse by prescrip-
tion;
(b) If the damages or interest are allowed to prescribe;
(c) If the damages or interest are condoned (waived or remit-
ted).
(9) Some Decided Cases
Compania General de Tabacos v. Araza
7 Phil. 455
If a debt is not paid at the stipulated period, interest (as
damages) should be charged not from the date of maturity, but
from the time the judicial action is filed, in case no extrajudicial
demand was made.
Price, Inc. v. Rilloraza, et al.
L-82053, May 25, 1955
FACTS: A tenant leased a land on the landlord's promise
that the latter would make improvements on the property leased.
When the landlord did not make the improvements, the tenant
sued for specific performance, that is, to make the landlord do the
improvements. Three days later, the landlord sued for unlawful
detainer for non-payment of rent.
HELD: This is reciprocal obligation, and since no improve-
ments have yet been made, the landlord cannot demand rents
and the tenant is not yet in default, and therefore unlawful
detainer cannot prosper.
Queblar v. Garduno and Martinez
62 Phil. 879
FACTS: A debt was payable in installments. It was also
agreed that if any installment was not paid on time, the whole
debt would mature (acceleration clause). The debtor did not pay
one installment on time. After some time, because the debtor
did not pay the whole debt, the creditor brought this action.
ISSUE: From what time was the debtor in default, from
the time the installment was not paid at the stipulated date,
129
Art. 1169 CIVIL CODE OF THE PHILIPPINES
or from the time the action was filed? (This was essential to
determine the computation of interest.)
HELD: From the time demand was made by the filing of
the action, there having been no previous extrajudicial demand.
Hence, interest as damages should begin only from that date.
Reason: It is true that there was an acceleration clause, and this
is why the creditor is now entitled to recover the whole debt. But
the contract did not say that failure to pay one installment would
put the debtor in default. Hence, demand was still essential.
Causing v. Bencer
37 Phil. 417
FACTS: Plaintiff A, acting as guardian of some minors,
agreed to sell to defendant B a parcel of land owned in common
by her and her wards on the condition that A would first obtain
judicial approval with regard to the wards' share. B immediately
paid part of the purchase price and proceeded to occupy the
land. Although judicial approval had been obtained, A did not
execute a deed sufficient to convey the whole parcel. Instead,
she asked for the balance of the purchase price. Failing in this,
she charged B with default and now wants to rescind or cancel
the contract on the ground of non-payment.
HELD: In reciprocal obligations like this, default on the
part of one begins only from the moment the other party fulfills
what is incumbent upon him or her. Since the plaintiff Rufina
Causing has not yet executed a deed sufficient to pass the whole
estate, she is not now in a position to rescind the contract.
De la Rosa v. Bank of P.I.
51 Phil. 926
Even if prizes are not distributed on the date set in the rules
of a contest, the sponsoring company is not in default till after
a demand is made, for ordinarily one does not enter a contest
just to get the prize on the date specified.
Malayan Insurance Co., Inc. v. Court of Appeals
GR 59919, Nov. 25, 1986
A debtor who incurs in delay or default is liable for damages
plus interest, generally from extrajudicial or judicial demand in
the form of interest.
130
CIVIL CODE OF THE PHILIPPINES Art. 1169
Spouses Puerto v. Court of Appeals
GR 138210, June 13, 2002
FACTS: Petitioners committed a breach of obligation in
their refusal to pay a sum of money loaned.
ISSUE: Owing to said breach, may compensatory damages
be awarded?
HELD: Yes, by way if an interest is the amount of 12%
per annum, to be computed from default, i.e., from judicial or
extrajudicial demand in accordance with Art. 1169.
Such interest is not due to stipulation. Rather it is due to
the general provision of law that in obligation to pay money;
where the debtor incurs in delay, he has to pay interest by way
of damages. (See Eastern Shipping Lines, Inc. v. CA, 234 SCRA
7811994])
(10) Imposition of Interest
Bangko Sentral ng Pilipinas v. Santamaria
GR 139885, Jan. 13, 2003
In Eastern Shipping Lines, Inc. v. Court of Appeals, 234
SCRA 78 (1994), the following guidelines have been laid down
in the imposition of interest:
1. When an obligation, not constituting a loan or for-
bearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the court's discretion with
6% rate per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until demand
can be established with reasonable certainty. In the event that
demand is established with reasonable certainty, interest shall
begin to run from the time claim is made judicially or extraju-
dicially. (Art. 1169, Civil Code) However, when such certainty
cannot be so reasonably established at the time demand is made,
interest shall begin to run only from the date the court judg-
ment is made (at which time, quantification of damages may be
deemed to have been reasonably ascertained). Actual base for
computation of legal interest shall, in any case, be on amount
finally adjudged.
2. When court judgment awarding a sum of money be-
comes final and executory, the rate of legal interest, whether the
131
Art. 1169 CIVIL CODE OF THE PHILIPPINES
case falls under par. 1 or par. 2 above, shall be 12% per annum
from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to forbearance of credit.
Since the case at bar does not involve any obligation aris-
ing from loan or forbearance of money, then interest should be
imposed as follows:
a. On the first billing for P450,604.96 — 6% per
annum computed from the date of demand on Feb. 23,
1996 while an interest of 12% per annum shall be imposed
on such amount from finality of decision until payment
thereof.
b. On the second billing for P62,451.05 — 6% per
annum computed from date of demand on Sept. 10, 1996
while an interest of 12% per annum shall be imposed
on such amount from finality of decision until payment
thereof.
c. On the P108,610.52 for services rendered from
April 10, 1996 to July 31, 1996 — 6% per annum computed
from date of decision of IAC (Intermediate Appellate Court)
on Feb. 20, 1998 while interest of 12% per annum shall
be imposed on such amount from finality of decision until
payment thereof.
(11) Query
When an obligation, not constituting a loan or forbearance
of money, is breached, may an interest on the amount of dam-
ages awarded be imposed?
ANS.: Yes, at the discretion of the court at the rate of 6%
p.a. Thus, when the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal interest,
shall be 6% p.a. from such finality until its satisfaction. (Nacar
v. Gallery Frames, 703 SCRA 439)
[NOTA BENE: In People v. Galagas, Jr., 707 SCRA 411,
the Supreme Court ruled that the amounts awarded to the victim
shall earn interest at the rate of 6% per annum, to earn from
the date of finality of judgment until fully paid.]
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CIVIL CODE OF THE PHILIPPINES Art. 1170
(12) Case
Nacar v. Gallery Frames
703 SCRA 439
ISSUES: (1) When the obligation is breached, and it con-
sists in the payment of a sum of money, i.e., a loan or forbear-
ance of money, what should be the interest due?; and (2) In the
absence of stipulation, what is the rate of interest, and how shall
it be computed?
HELD: (1) The interest due should be that which may have
been stipulated in writing; (2) Absent any stipulation, the inter-
est rate shall be 6% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to
the provisions load down under Art. 1169 of the Civil Code.
Art. 1170. Those who in the performance of their obliga-
tion are guilty of fraud, negligence, or delay and those who
in any manner contravene the tenor thereof, are liable for
damages.
COMMENT:
(1) Grounds for Liability in the Performance of Obligations
(a) fraud (deceit or dolo) (intentional evasion of fulfillment).
(b) negligence (fault or culpa). (See Art. 1173, Civil Code)
(c) default (or mora) (if imputable to the debtor).
(d) violation of the terms of the obligation (violatio) (unless
excused in proper cases by fortuitous events).
[NOTE: The following do not excuse fulfillment:
1) increase in cost of performance. (U.S. v. Varadero de
la Quinta, 40 Phil. 48)
2) poverty. (Repide v. Alzelius, 39 Phil. 190)
3) war between the subject of a neutral country and the
subject of a country at war, as long as substantial
compliance can still be done. (Int. Harvester Co. v.
Hamburg-American Line, 42 Phil. 854)
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