TITLE II b.

Remuneratory or
CONTRACTS remunerative
c. Gratuitous
Chapter 1- GENERAL PROVISIONS • Form
a. Informal, common or simple
Article 1305 b. Formal or solemn
Meaning of contract • Obligatory Force
- A contract is a meeting of minds a. Valid
between two persons whereby b. Rescissible
one binds himself, with respect c. Voidable
to the other, to give something d. Unenforceable
or to render some service. e. Void or inexistent
- In a contract, there must be at • Person obliged
least 2 persons or parties. a. Unilateral
Contract vs. Obligation b. Bilateral
• Contract: source of obligation • Risk
• Obligation: legal tie or relation a. Commutative
itself that exists after a contract b. Aleatory
has been entered into. May exist • Liability
without a contract. a. Unilateral
*No contract if there is no b. Bilateral
obligation accepted • Status
Contract vs. Agreement a. Executory
• Contract: binding agreements b. Executed
enforceable through legal • Dependence to another contract
proceedings a. Preparatory
• Agreements: not contracts but b. Accessory
merely moral or social c. Principal
agreements. • Dependence of part of contract
*Agreement is broader than a to other parts
contract; the former may not a. Indivisible
have all the elements of a b. Divisible
contract.
Classifications of contract Article 1306
• Name or designation Principle of Freedom or Liberty to
a. Nominate Stipulate
b. Innominate - The contracting parties can
• Perfection establish such stipulations,
a. Consensual clauses, terms, and conditions as
b. Real may deem convenient provided
• Cause they are NOT CONTRARY to law,
a. Onerous morals, good customs, public
order, and public policy.
Meaning of valid contracts long usage have been
- Those that meet all the legal followed and enforced by
requirements and limitations for society or some part of it
the type of agreement involved, as binding rules of
therefore, legally binding and conduct.
enforceable. • Public order
Freedom to contract guaranteed. - Refers principally to
- One of the liberties guaranteed public safety although it
to the individual by the has been considered to
Constitution. mean also the public
- Not absolute to enter to any kind weal.
of contract. • Public policy
Limitations on contractual Stipulation - Broader than public
• Law: contract entered into must order, may refer not only
be in accordance with, and not to public safety but also
repugnant to, an applicable to considerations which
statute. are moved by the
• Police Power: in case no law in common good.
existence or when the law is
silent, will of the parties shall Article 1307
prevail unless their contract Classification of contracts according to
contravenes the limitations of its name or designation
morals, good customs, public • Nominate Contract
order or public policy. - Has a specific name or
Contract must not be contrary to: designation in law
• Law • Innominate Contract
- Definition: A rule of - Has no specific name or
conduct, just, obligatory, designation in law:
promulgated by Kinds of innominate contract
legitimate authority, and • do ut des ( I give that you may
of common observance give)
and benefits. • do ut facias (I give that you may
- Contract cannot be given do)
effect if it is contrary to • facto ut des (I do that you may
law because LAW IS give)
SUPERIOR TO A • facto ut facias (I do that you may
CONTRACT. do)
• Morals *do ut des is no longer an
- Deals with norms of good innominate contract.
and right conduct Reasons for innominate contracts
evolved in a community - impossibility of anticipating all
• Good customs forms of agreement on one
- Consists of habits and hand, and the progress of man’s
practices which through
 sociological and economic Article 1311
relationship Principle of Relativity
Rules governing innominate contracts
• Agreement of the parties Persons affected by a contract:
• Provisions of the Civil Code on General rule: Party’s rights are
obligations and contracts
transmissible to successors
• Rules governing the most
analogous contracts Exception: effective only between
• Customs of the place parties when rights are not
transmissible by nature, stipulation, and
Article 1308 provision of law
Principle of Mutuality of Contract
Cases when strangers/ 3rd persons are
Contract binds both contracting parties
affected by a contract:
- In order that it can be enforced
against each other. 1. In contracts containing a
- Fundamental Rule: No party can stipulation in favor of a 3rd
renounce or violate the law of person (stipulation pour autrui)
the contract without the consent 2. In contracts creating real rights
of the other. 3. In contracts entered into to
defraud creditors
Article 1309
4. In contracts which have been
Determination of performance by a
third person violated at the inducement of a
- Compliance with a contract 3rd person
cannot be left to the will of one
of the contracting parties. Stipulation pour autrui- stipulation
- May be left to a third person, deliberately conferring a favor upon a
shall bind the parties only AFTER
3rd person who has right to demand
it has been made known to
fulfillment.
BOTH of them.
Classes of stipulations pour autrui
Article 1310 • Where stipulation is for the sole
- Determination shall not be benefit of 3rd person. In effect,
obligatory if it is evidently confers a gift.
inequitable. • Where obligation is due form the
- The courts shall decide what is
promise to the 3rd person, which
equitable under the
circumstances. former seeks to be discharged by
means of stipulation
Requisites: Article 1314
1. Stipulation of contracting parties In contracts which have been violated at
must have clearly and the inducement of a 3rd person:
deliberately conferred a favor 3rd person becomes liable to other
upon a 3rd person contracting party for breach of contract.
2. 3rd person must have
communicated his acceptance to Article 1315 & 1316
the obligor before its revocation Principle of obligatory force and
by obligee/ original parties compliance in good faith
3. Stipulation in favor of the 3rd
person should be a part, not the Classification of contracts according to
whole of the contract perfection:
4. Favorable stipulation should not ▪ Consensual contract- perfected
be conditioned/ compensated by by mere consent.
any kind of obligation ▪ Real contract- perfected by
5. Neither of the contracting delivery of the thing subject
parties bears the legal matter of the contract
rd
representation of the 3 party ▪ Solemn contract- requires
compliance w/ certain
Article 1312 formalities prescribed by law,
In contracts creating real rights: which is an essential element
rd
3 persons are bound by contracts thereof
creating real rights.
-If contract is duly registered, it Stages in the life of a contract:
constitutes real right, and is a • Preparation/ negotiation- steps
prejudicing the right of 3rd person leading to perfection of contract.
-If it is not registered, 3rd person in good • Perfection/birth- parties have
faith is protected under provisions of come to a meeting of minds
Property Registration Decree regarding the subject matter and
cause of contract.
Article 1313 • Consummation/ termination-
In contracts entered into to defraud when contract is fully
creditors: accomplished resulting to
Creditor is given the right to impugn the termination.
contracts of his debtor to defraud him.
How contracts are perfected:
1. Consensual contracts
Principle of Consensuality
General rule: contracts are perfected by Chapter 2 ESSENTIAL REQUISITES OF
mere consent regarding the subject CONTRACTS
matter and cause of contract. Article 1318
2. Real contracts- perfected by a. Consent of the contracting
delivery , actual or constructive, parties
of the object of the obligation. b. Object certain which is the
3. Solemn contracts- form subject matter of the contract
prescribed by law is necessary c. Cause of the obligation which is
for perfection. establishes

Effect of perfection of the contract Classes of Elements of a Contract

o Bound not only to the fulfillment 1. Essential elements - no contract can
of what has been expressly validly exist regardless of the
stipulated but also; intention of the parties.
o To all the consequences which a. common- present in all
according to their nature, may be contract
in keeping w/ good faith, usage, b. special- not common or must
and law. be presented only in
certain specified
Article 1317 contracts.
Unauthorized contracts are 2. Natural elements- are presumed to
unenforceable
exist in certain contracts unless
Unless:
Ratified by the person in whose contrary.
name the contract was entered or by his 3. Accidental elements- the particular
duly authorized agent. stipulations, clauses, terms or
conditions established by the
When a person is bound by a contract of parties.
another
Requisite:
SECTION 1- Consent
1. Person entering into the contract
must be duly authorized Article 1219
2. He must act within his power Meaning of Consent
(ultra vires: to act w/o authority) Consent is the conformity or
concurrence of wills and with respect to
contracts, the agreement of one (1)
contracting party with that of another
or other, upon the object and terms of
the contract.
Meaning of Offer Article 1321
Offer is a proposal made by one Matters that may be fixed by the
(1) party (offerer) to another (offeree), offerer
indicating willingness to enter into a - The time, the place, and the
contract. manner of acceptance, all of
which must be complied with.
Offered must be certain and seriously
intended Communication of the Offer
1. Offer must be CERTAIN and - Offer must be communicated
DEFINITE so that the liability of and received by the offeree.
the parties may be fixed. - It may be by letter, telephone, e-
2. An offer made in JEST or ANGER mail or the like.
is NOT a valid offer.
Article 1322
Meaning of Acceptance Communication of Acceptance
Acceptance is the manifestation 1. To offerer- must be absolute;
by the offeree of his assent to all terms acceptance must be
of the offer. communicated to the
offerer.
Acceptance of offer must be clear and 2. To agent- alter ego; if duly
absolute authorized, the act of
- Contract consist of offer and agent is the act of the
acceptance principal.
- Acceptance of offer must not
only be clear; it must also be Article 1323
absolute, unconditional or When offer becomes Ineffective
unqualified. By means of:
a. Death
Article 1920 b. Civil interdiction
Form of Acceptance of Offer c. Insanity
a. Express- oral or writing d. Insolvency
b. Implied- inferred from act or BEFORE acceptance is conveyed
conduct
Other grounds which render offer
ineffective
a. Failure to comply with the
condition of the offer as to time,
 place, and the manner of a contract, it may amount to a
payment. definite offer.
b. The expiration of the period
fixed in the offer for acceptance Article 1326
c. Destruction of the thing due Advertisements for bidders’ generally
before acceptance not definite offers
d. Rejection of the offer - Bidder: making the offer
- Advertiser: free to accept/ reject
Article 1324 General Rule: adviser not bound to
Meaning of Contract of Option; Option accept highest bidder (offer to
Period; Option Money buy) or the lowest bidder (to
1. Option contract- a certain construct building) unless
period within which to contrary appears.
accept the offer of the In judicial sales, sheriff/
offerer. auctioneer is bound to
2. Option period- the period given accept highest bidder.
within which the offeree
must accept the offer. Article 1327
3. Option Money- money paid or Capacity to give consent Presumed
promised to be paid in - Civil Code does not define who
CONSIDERATION for the have capacity or legal ability to
option. give consent, instead it defines
who have NO CAPACITY.
Withdrawal of offer where period
stipulated for acceptance Persons who cannot give Consent
General Rule: offer may be withdrawn 1. Unemancipated minors-
as a matter of right at any time persons who have not
BEFORE acceptance. yet reached the age of
EXCEPTION: when option is founded majority and are still
upon consideration. subject to parental
authority.
Article 1325 2. Insane or Demented persons-
Business advertisement generally not insanity exists at time of
definite offers contracting, unless
- They are merely invitations to proved otherwise.
the reader to make an offer. 3. Deaf-mutes- deaf and dumb;
- If the advertisement is complete they do not know how
in all the particulars necessary in to read and write.
Reason for disqualification 4. A contract is valid where a minor
- Can easily be victims of fraud. misrepresented his age and
convincingly led the other party
Article 1328 to believe in his legal capacity.
Contracts entered into during a Lucid 5. A contract is valid where a minor
Interval between 18 and 21 years of age
Lucid interval- temporary period of voluntarily pays a sum of money
sanity. or delivers a fungible thing in
General Rule: it is VALID, however it fulfillment of his obligation and
must be shown that there is a the oblige has spent or
full return of the mind to consumed it in GOOD FAITH.
sanity as to enable him to
understand the contract he is Article 1330
entering into. Characteristics of Consent
1. It is intelligent- there is
Effect of Drunkenness and Hypnotic capacity to act.
Spell 2. It is free and voluntary- there is
General Rule: It is VOIDABLE, equivalent no vitiation of consent.
to temporary insanity. 3. It is conscious or spontaneous-
there is no vitiation of
Article 1329 consent by reason of
Incapacity declared in Article 1327 violence or intimidation.
subject to modifications
1. When necessaries such as food, Vices of Consent
are sold and delivered to a minor a. Error or mistake
or other person without capacity b. Violence or force
to act, he must pay a reasonable c. Intimidation or threat
price therefor. d. Undue influence
2. A minor 18 years old or above e. Fraud
may contract for life, health and
accident insurance, provided the Causes vitiating consent and causes of
insurance is taken on his life and incapacity distinguished
the beneficiary appointed is the Vitiation of Incapacity
minor’s estate. Consent
3. A contract is valid if entered into 1. temporary 1. permanent
through a guardian or legal 2. contract 2. person entering
representative. itself contract
 Article 1331 Article 1332
Meaning of mistake or error Burden of proof in case of mistake of
Mistake or error is the false fraud
notion of a thing or a fact material to - The person enforcing the
the contract. contract must show that the
terms thereof have been fully
Nature of Mistake explained to the former.
1. Mistake of fact or law
2. Mistake contemplated by law is Article 1333
substantial mistake of fact. Effect of knowledge of risk
3. Mistake may be unilateral - There is no mistake.
Mistake of fact which law refers
1. The substance of the thing which Article 1334
is the object of the contract Meaning of mistake of law
2. Those condition which have Mistake of law arises from an
principally moved on or both ignorance of some provision of law.
parties to enter into the
contract. Effect of mistake of law
3. The identity or qualifications of Rule: “Ignorance of the law excuses no
one of the parties. one from compliance therewith”

Mistake of fact which does not vitiate When mistake of law vitiates consent
consent - Analogous to mistake of fact,
1. Mistake regarding object therefore maxim of ignorantia
2. Mistake regarding condition of legis neminem excusat should
the contract have no proper application.
3. Mistake regarding identity or
qualifications Requisites for the application Article
4. Mistake which could have been 1334
avoided. 1. Error must be mutual
2. It must be as to legal effect of an
Effect of mistake of account agreement; and
a. Where mistake is simple- 3. It must frustrate the real
amount is corrected. purpose of the parties.
b. Where mistake gross- rescission
or cancellation of the
contract.
 Article 1335 party as to prevent him from acting
Nature of Violence or Force understandingly and voluntarily.
- Requires the employment of
physical force. Circumstances to be considered
- Must either be SERIOUS or 1. Confidential, family, spiritual
IRRESISTIBLE and other relations
2. Mental weakness
Nature of Intimidation or Threat 3. Ignorance
1. It must produce a reasonable 4. Financial distress of the
and well-grounded fear of evil person alleged to have been
2. The evil must be imminent and unduly influenced.
grave
3. The evil must be upon his person Article 1338
or property Meaning of Causal Fraud
4. It is the reason why he enters Causal fraud- committed by one
into the contract. (1) party BEFORE or AT the time of the
Factors to determine degree of celebration of the contract to secure the
intimidation consent of the other.
- Age, sex and condition of the
person How causal fraud committed
Reverential fear- fear of displeasing a - Committed through insidious
person whom respect or obedience are words or machinations or
due. concealment of one contracting
party.
Threat to enforce just or legal claim
- Demand payment of creditor’s Requisites of causal fraud
account with the threat that 1. There must be misinterpretation
upon failure to do so, an action or concealment of a material fact
would be instituted in court. with knowledge of its falsity.
2. It must be serious.
Article 1336 3. It must have been employed by
Violence or intimidation by 3rd person ONLY ONE of the contracting
- Annul the obligation parties.
4. It must be made in BAD FAITH or
Article 1337 with intent to DECEIVE.
Meaning of Undue Influence 5. It must have induced the
Undue influence is influence of a consent of the other contracting
kind that so overpowers the mind of the party.
 6. It must be alleged and proved by Article 1343
CLEAR and CONVINCING Effect of misrepresentation made in
evidence. Good Faith
- NOT fraudulent BUT may
Article 1339 constitute ERROR
Fraud by concealment
- A neglect or failure to ART. 1344
communicate or disclose that Two (2) kinds of fraud in the making of
contract:
which a party to a contract
1. Causal fraud – is a ground for the
knows and ought to
annulment of a contract,
communicate. although it may also give rise to
- Equivalent to misinterpretation an action for damages.
or false representation. 2. Incidental fraud – only renders
the party who employs it liable
Article 1340 for damages because the fraud
Usual exaggerations in trade was not the principal
- Not fraudulent inducement that led the other to
Dealer’s talk or trader’s talk- give his consent.
representation which do not appear on Requisites of causal fraud:
the face of the contract and these do 1. It should be serious.
not bind either party. 2. It should not have been
employed by both contracting
Article 1341 parties, they should not be in
Expression of Opinion pari delicto.
1. It must be made by an expert 3. It should not have been known
2. The other contracting party has by the other contracting party.
relied on the expert’s opinion ART. 1345
3. The opinion turned out to be Simulation of a contract may be
false and erroneous absolute or relative. The former takes
place when the parties do not intend to
Article 1342 be bond at all; the latter, when the
parties conceal their true agreement.
Fraud by a3rd person
ART. 1346
- Does NOT vitiate consent, Simulation of a contract – is the act of
UNLESS such misrepresentation deliberately deceiving others, by
has created substantial mistake feigning or pretending by agreement,
and the same is mutual. the appearance of a contract which is
either non-existent or concealed.
Kinds of simulation:
 1. Absolute simulation – when the of a new contract between the
contract does not really exist and parties.
the parties do not intend to be
Requisites of services as object of
bound at all.
contract:
2. Relative simulation – when the 1. The service must be within the
contract entered into by the commerce of men.
parties is different from their 2. It must not be impossible,
true agreement. legally or physically.
SECTION 2. – OBJECTS OF CONTRACTS 3. It must be determinate or
ART. 1347 determinable.
All things which are not outside the
Rights as object of contract
commerce of men, including future
General rule: All rights may be the
things, may be the object of a contract.
object of a contract.
All rights which are not intransmissible
Exceptions: Intransmissible by
may also be the object of contracts.
nature, by stipulation or by provision of
No contract may be entered into upon
law.
future inheritance except in cases
Future inheritance – is any property or
expressly authorized by law.
right, not in existence or capable of
All services which are not contrary to
determination at the time of the
law, morals, good custom, public order
contract, that a person may inherit in
or public policy may likewise be the
the future, such person having only an
object of a contract.
expectancy of a purely hereditary right.
ART. 1348
Inheritance ceases to be future
The object of a contract is its subject
upon the death of the decedent or
matter.
deceased.
Kinds of object of contract:
Validity of contracts upon future
1. Things
inheritance
2. Rights
The law permits contracts on future
3. Services inheritance –
Requisites of things as object of 1. In the case of donations by
contract: reason of marriage between
1. The thing must be within the future spouses with respect to
commerce of men, that is, it can their future property to take
legally be the subject of effect, only in the event of
commercial transaction. death, to the extent laid down
2. It must not be impossible, legally by law in testamentary
or physically. succession.
3. It must in existence or capable of 2. In the case of partition of
coming into existence. property by act inter vivos by a
4. It must be determinate or person to take effect upon his
determinable without the need death.
Kinds of impossibility: It is the Civil Code term for
1. Physical – when the thing or consideration in Anglo-American or
service in the very nature of common law.
things cannot exist or be Cause distinguished from object
performed. With particular Point of Object Cause
reference to services, the view
impossibility may be: Seller Thing Price
a) Absolute – when the act Buyer Price Thing
cannot be done in any
Classification of contracts according to
case so that nobody can
cause:
perform it.
1. Onerous – is one the cause of
b) Relative – when it arises
which, for each contracting party
from the special
is the prestation or promise of a
circumstances of the case
thing or service by the other. In
or the special conditions other words, in this contract, the
or qualifications of the
parties are reciprocally obligated
obligor.
to each other.
2. Legal – when the thing or service
2. Remuneratory or remunerative –
is contrary to law, morals, good is one the cause of which is the
customs, public order, or public
service or benefit which is
policy. An act is contrary to law,
remunerated.
either because it is forbidden by
3. Gratuitous – is one the cause of
penal law or a rule of law makes
which is the liberality of the
it impossible to be done, to take
benefactor or giver.
a valid will, where the testator is
under 18 years of age. ART. 1351
Motive – is the purely personal or
ART. 1349 private reason which a party has in
The object of every contract must be entering into a contract.
determinate as to its kind. The fact that Cause distinguished from motive
the quantity is not determinate shall not Cause Motive
be an obstacle to the existence of the Direct reason Indirect reason
contract, provided it is possible to Always known to May be unknown
determine the same, without the need the other
of a new contract between the parties. contracting party
SECTION 3. – CAUSE OF CONTRACTS Essential element Not an essential
ART. 1350 element
Cause (cause) – is the essential reason
Illegality affects the Illegality does not
or purpose which the contracting
validity of a render the
parties have in view at the time of
contract contract void
entering into the contract.
ART. 1352
Contracts without cause, or with Illegality of cause implies that there is a
unlawful cause, produce no effect cause but the same is unlawful or illegal.
whatever. The cause is unlawful if it is Contract with unlawful cause are also
contrary to law, morals, good custom, null and void.
public order or public policy. Effect of falsity of cause
ART. 1353 Falsity of cause is meant that the
Requisites of cause: contract states a valid consideration but
1. It must exist at the time the such statement is not true.
contact is entered into. Cause Definition Effect
2. It must be lawful. Absence Total lack of Void
3. It must be true or real. valid
consideration
Effect of absence of cause Failure Failure to Not void
Absence or want of cause means that comply with
there is a total lack of any valid the stipulation
consideration for the contract. Contract of the parties
without cause confer no right and illegality There is cause Void
produce no legal effect. but unlawful or
1. A contract which is absolutely illegal
simulated or fictitious is Falsity There is a valid Erroneous
inexistent and void. cause but not – Void
2. Where there is, in fact, no true or real Simulated
consideration, the statement of – Void or
one in the contract will not voidable
suffice to bring it under the rule
of Article 1353 as stating a false ART. 1354
consideration. Although the cause is not stated in the
3. Promise to make a gift, or to contract, it is presumed that it exists
and is lawful, unless the debtor proves
render some gratuitous service
the contrary.
in the future are not enforceable
The presumption is not
contracts because they contain conclusive but only prima facie and may
no consideration. be contradicted by contrary evidence.
4. Promises made in gratitude for ART. 1355
good deeds of others cannot be Lesion – is any damage cause by the fact
enforced for they constitute only that the price is unjust or inadequate.
moral, not legal, consideration. Effect of lesion or inadequacy of cause
1. General rule – lesion of cause
Effect of failure of cause
does not of itself invalidate a
Failure of cause does not render a
contract.
contract void. It is the failure to comply
with the stipulation of the parties. 2. Exceptions – lesion will invalidate
Effect of illegality of cause a contract:
 a) When there has been provided all the three (3)
fraud, mistake or undue essential requisites are present.
influence. 2. Exceptions – when the law
b) In cases specified by law. requires some form:
a) To be valid
CHAPTER 3 – FORMS OF CONTRACTS
b) To be enforceable or
ART. 1356
Form of a contract – refers to the proved in a certain way
manner in which a contract is executed c) For the convenience of
or manifested. the parties or for the
1. Oral purpose of affecting third
2. In writing persons.
3. Partly oral Form of validity of contract
4. Partly in writing 1. Donation of real property – it
Express- when the parties expressly set must be in a public instrument.
forth their intentions. 2. Donation of personal property
Implied – when their intentions may be the value of which exceeds P5,
inferred from their actions or conduct. 000 – the donation and
acceptance must be in writing.
In writing All terms Written 3. Sale of land through an agent –
must be in contract the authority of the agent must
writing be in writing.
Oral Oral, partly Oral 4. Stipulation to pay interest – it
oral, partly contract must be in writing.
in writing
5. Contracts of partnership – if
immovable are contributed, it
Classifications of contracts according to
form: must be in a public instrument to
1. Informal or common or simple which shall be attached a signed
contract – that which may be inventory of the immovable
entered into in whatever form property contributed.
provided all the essential Form for enforceability of contract
requisites for their validity are In the cases of contracts covered by the
present. Statute of Frauds, the law requires that
2. Formal or solemn contract – that they be in writing subscribed by the
which is required by law for its party charged or by his agent.
efficacy to be in a certain Contract is valid but cannot be proved.
specified form. ART. 1357
Form for the convenience of the parties
Rules regarding form of contracts In certain cases, a certain form is
1. General rule – contracts are required for the convenience of the
binding and enforceable parties in order that the contract may
be registered in the property registry to 2. The written instrument does not
make effective, as against third persons, express the true agreement or
the right acquired under such contract. intention of the parties.
Non-compliance with the required form 3. The failure to express the true
would not adversely affect the validity intention is due to mistake,
nor the enforceability of the contract fraud, inequitable conduct or
between the parties themselves.
accident.
ART. 1358
4. The facts upon which relief by
Contracts which must appear in a
public document way of reformation of the
- Only for the convenience of the instrument is sought are put in
parties issue by the pleadings.
- To make the contract binding as 5. There is clear and convincing
against third persons. evidence of the mistake, fraud,
inequitable conduct or accident.
1. Creation of real right over Reformation distinguished from
immovable property. annulment
2. Cession or remuneration of Reformation Annulment
hereditary rights or those of There is a meeting There has been no
conjugal partnership of gains. of the minds meeting of the
3. Power to administer property. minds
4. Cession of actions or rights. Does not express Consent is vitiated
the true intention by mistake, etc.
CHAPTER 4 – REFORMATION OF of the parties by
INSTRUMENTS reason of mistake,
ART. 1359 fraud, inequitable
Reformation – is that remedy allowed conduct or
by law by means of which a written accident.
instrument is amended or rectified so as
to express or conform to the real ART. 1360
agreement or intention of the parties The principle of the general law on the
when by reason of mistake, fraud, reformation of instruments are hereby
inequitable conduct, or accident, the adopted insofar as they are not in
instrument fails to express such conflict with the provisions of this Code.
agreement or intention. General Law of Reformation (suppletory
Reason: In order that the effect) < New Civil Code (prevails)
intention of the contracting parties may ART. 1361
be expressed. Mutual mistake – is mistake of fact that
Requisites of reformation: is common to both parties of the
1. There is a meeting of the minds instrument which causes the failure of
of the parties to the contract. the instrument to express their true
agreement.
Requisites:
 1. The mistake must be of fact. ART. 1366
2. Such mistake must be proved by There shall be no reformation in the
clear and convincing evidence. following cases:
3. The mistake must be mutual, 1. Simple donations inter vivos
that is, common to both parties wherein no condition is imposed
to the instrument. 2. Wills
4. The mistake must cause the 3. When the real agreement is void
failure of the instrument to ART. 1367
express their true intention. Cases when reformation is not allowed:
If the mutual mistake is of law, the 1. Simple donations inter vivos
remedy is annulment. wherein no condition is imposed
- Donation is an act of liberality
ART. 1362 whereby a person disposes
Mistake on one (1) side, fraud o gratuitously of a thing or right in
inequitable conduct on the other favor of another, who accepts it.
- The right to ask for reformation Act is essentially
is granted only to the party who gratuitous and the done
was mistaken in good faith. has no just cause for
- Mistake is not mutual. complaint. Donor not
bound to correct a
ART. 1363 mistake in the deed.
Mistake by one (1) of the parties 2. Wills
- Availed of the party who acted in - Will is an act whereby a person is
good faith. permitted with the formalities
- Concealment mistake by the prescribed by law to control to a
other party constitutes fraud. certain degree the disposition of
ART. 1364 his estate, to take effect after his
Ignorance of third (3rd) person death.
- Neither party is responsible for
Will is a strictly personal
the mistake. and a free act. Right to
- Either party may ask for reformation is lost upon
reformation. the death of the testator.
It may be revoked by the
ART. 1365
testator any time before
Mortgage or pledge stated as a sale
his death.
- Reformation of the instrument is
3. When the real agreement is void
proper.
When real agreement is
- True intention must prevail for
void, there is nothing to
the contract must be complied
reform. It is
with good faith. unenforceable.
-
 4. When one (1) party has brought It is the determination of the meaning
an action to enforce the of the terms or words used by the
instrument parties in their written contract.
The party admits the
validity of the contract LITERAL MEANING CONTROLS WHEN
and that it expresses the LANGUAGE CLEAR
true intention of the Contracts should be fulfilled according
parties. to the literal sense of their stipulations if
the terms of a contract are clear and
unequivocal.
ART. 1368
PARTY ENTITLED TO REFORMATION EVIDENT INTENTION OF PARTIES
1. Either of the parties, if the mistake PREVAILS OVER TERMS OF CONTRACT
It is a cardinal rule in the interpretation
is mutual. of contracts because their will has the
2. The injured party, in all other force of law between them.

cases. ART. 1371

3. The heirs or successors in interest, CONTEMPORANEOUS AND
SUBSEQUENT ACTS RELEVANT IN THE
inlieu of the party entitled. DETERMINATION OF INTENTION
Burden of proof: Upon the party who Such interpretation of may be
insists that the contract should be considered by the court in determining
reformed because of its failure to its meaning and ascertaining the
express the true intention of the parties. intention of the parties when the
Effect of reformation: RETROACTIVE intention cannot clearly be ascertained
from the time of the execution of the from the words used in the contract.
contract. ART. 1372
SPECIAL INTENT PREVAILS OVER A
ART. 1369 GENERAL INTENT
PROCEDURE FOR REFORMATTION As a rule, the special provisions in a
The Rules of Court governs procedure. contract controls over the general
Supreme Court has not yet promulgated provisions covering the same subject
the procedure for the reformation of matter when the two cannot stand
instruments. together.
Reason: Special provisions express the
CHAPTER 5 parties’ intent and attention is directed
INTERPRETATION OF CONTRACTS to that, whereas a reference to some
ART. 1370 general matter does not necessarily
MEANING OF INTERPRETATION OF indicate parties’ particular matter in
CONTRACTS mind.
ART. 1373 Reason: the party who drafts the
INTERPRETAION OF STIPULATION WITH contract could have prevented mistakes
SEVERAL MEANINGS or ambiguity in meaning by careful
When an agreement is susceptible of choice of words; and generally, the
several meanings, one of which would party who causes the obscurity acts with
render it effectual, it should be given ulterior motives.
that interpretation.
Applied to contracts of adhesion:
ART. 1374 contracts most of the terms of which do
INTERPRETATION OF VARIOUS not result from mutual negotiation
STIPULATIONS OF A CONTRACT between the parties prescribed in
A contract must be interpreted as a printed forms prepared by one party to
whole and the intention of the parties is which the other may “adhere” if he
to be gathered from the entire chooses but which he cannot change.
instrument and NOT from particular
words, phrases, or clauses. ART. 1378
RULES IN CASE DOUBTS IMPOSSIBLE TO
ART. 1375 SETTLE FOR
INTERPRETATION OF WORD WITH 1. Gratuitous contract –
DIFFERENT SIGNIFICATIONS
Interpretation should be made
If a word is susceptible of two or more
meanings, it is to be understood in that which would result in the least
sense which is most in keeping with the
transmission of rights and interests.
nature and object of the contract.
2. Onerous contract – The doubts
ART. 1376
should be settled in favor of the
RESORT TO USAGE OR CUSTOM AS AID
IN INTERPRETATION greatest reciprocity of interests.
The usage or custom of the place where
3. Principal object of the contract –
the contract was entered into may be
received to explain what is doubtful in a The contract shall be null and void.
contract. It is necessary to prove the
existence of usage or custom. USAGE OR
ART. 1379
CUSTOM is NOT admissible to
The rules in the Rules of Court on the
supersede or vary the plain terms of a
interpretation of documents are now
contract.
contained in Rule 130, Sections 8 to 17
thereof.
ART. 1377
INTERPRETATION OF OBSCURE WORDS
Kinds of Defective Contracts:
A written agreement should be
✓ Rescissible Contracts
interpreted against the party who has
✓ Voidable Contract
drawn it upon the faith of which has
✓ Unenforceable Contracts
incurred an obligation.
✓ Void Contracts
 Article 1380 A. Contracts entered into in behalf
Rescissible Contracts: are those validly of wards, when wards suffer
agreed upon because all the essential lesion by more than ¼ of the
elements exist and therefore, legally value of the object.
effective, but in the cases established by B. Contracts agreed upon in
law, the remedy of rescission is granted representation of absentees, if
in the interest of equity. absentee suffers lesion by more
than ¼ of the value of the
Binding force: Contracts is valid and object.
enforceable but defective because of C. Contracts undertaken in fraud
economic damage/lesion of creditors. (accion pauliana)
D. Contracts, which refer to things
Rescission: is a remedy granted by law under litigation.
to the contracting parties in order to E. Other instances provided by
secure reparation of damages caused by law- Art. 1098, 1526, 1534,
a valid contract by means of restoration 1538, 1539, 1542, 1556, 1560,
1567, 1659
Requisites:
1. The contract must be validly Article 1382
agreed upon Payment by an insolvent-- on
2. There must be lesion/ pecuniary debts w/c are not yet due; prejudices
prejudice to one of the parties or claim of others are RESCISSIBLE.
to the 3rd person
3. The rescission must be based Article 1383
upon a case especially provided Nature of action of Rescission:
by law Rescission is subsidiary, and can only be
4. There must be no other legal availed if there is no other legal means
remedy to obtain reparation for of remedy aside from rescinding the
the damage contract.
5. The party asking rescission must Article 1384
be able to return what he is Extent of Rescission:
obliged to restore by reason of Only to the extent necessary to cover
the contract damages, up to the creditor’s
6. The object of the contract must unsatisfied credit
not legally be in the possession
of 3rd persons who acted in good Article 1385
faith Effect of Rescission:
7. The period for filing the action A. Mutual Restitution
for rescission must not have a. Object of the contract w/ its
prescribed fruits
b. Price w/ interest
Article 1381 B. Abrogation of contract
Cases of rescissible contracts: C. Obligations of 3rd persons to restore
When rescission is not allowed: his property by a debtor,
▪ If party who demands rescission especially when he is insolvent
cannot return what he is obliged or greatly embarrassed
to restore under the contract financially;
▪ If the property is legally in 5. The fact that the transfer is
possession of a 3rd person who made between father and son,
acted in good faith when there are present some or
any of the above circumstances;
Article 1386 6. The failure of the vendee to take
If contracts entered into in behalf of a exclusive possession of all the
ward or absentee has been approved by property; and
the court, rescission cannot take place 7. It was known to the vendee that
because it is valid whether there is the vendor had no properties
lesion or not. other than that sold to him.

The law presumes that the court is Article 1388

acting in the interests of the ward or
absentee. Liability of purchaser in bad faith:

Article 1387 The purchaser in bad faith, who

When alienation presumed in fraud of acquired the object of the contract
creditors: alienated in fraud of creditors, must
o Alienation by gratuitous title- return the same if the sale is rescinded
when the donor did not reserve and should it be impossible for him to
sufficient property to pay all return it due to any cause, he must
debts before donation indemnify the former.
o Alienation by onerous title-
when made by persons against Should there be two or more
whom some judgment has been alienations, the first acquirer shall be
rendered in any instance or liable first, and so on successively.
some writ of attachment has
Article 1388
been issued.
Period for filing action for rescission:
General rule: action to claim rescission
Circumstances denominated as badges
must be commenced within 4 years
of fraud:
from the date the contract was entered
1. The fact that the consideration
into.
of the conveyance is fictitious or
Exceptions:
inadequate;
• For persons under guardianship,
2. A transfer made by a debtor
period begins from termination
after suit has been begun and
of incapacity
while it is pending against him.
• For absentees, from the time the
3. A sale upon credit by an
domicile is known
insolvent debtor;
4. The transfer of all or nearly all of
 Persons entitled to bring action: contract, which would be binding on
o The injured party/ the defrauded him with his subsequent consent.
creditor
o His heirs, assigns, or successor in » Ratification cleanses the contract
interest; or from all its defects from the
o The creditor of the above moment it was constituted,
entitled to subrogation. hence the action to annul is
extinguished
Article 1390
Voidable Contracts: are those which Article 1393
possess all the essential requisites of a Kinds of ratification:
valid contract but one of the parties is
legally incapable of giving consent, or • Express- when manifested in
consent is vitiated by mistake, violence, writing
intimidation, undue influence, or fraud. • Implied- takes in forms such as
by silence, by acts showing
Binding force: They are existent, valid approval, or by acceptance and
and obligatory unless annulled or set retention of benefits
aside by a proper action in court. Once
ratified, they become absolutely valid Requisites of ratification:
and can no longer be annulled. a. There must be knowledge of the
reason w/c renders the contract
Annulment: is a remedy as well as a voidable
sanction provided by law, for reason of b. Reason must have ceased
public interest, for the declaration of c. Injured party must have
the inefficacy of a contract based on a executed acts, which implies an
defect or vice in the consent of one of intention to waive his right.
the contracting parties in order to
restore them to their original position. Article 1394
Who may ratify:
Article 1391 1. A contract entered into by an
Period for fling action for annulment: incapacitated person may be
I. In case of intimidation, violence or ratified by:
undue influence, from the time the • The guardian; or
intimidation etc. ceases • The injured party
II. In case of mistake or fraud, from the himself, provided, he is
time it is discovered already capacitated
III. In case of contracts entered into by 2. In case the contract is voidable
minors or incapacitated persons, on the ground of mistake, etc.,
from the time guardianship ceases the party whose consent is
vitiated can make ratification.
Article 1392
Ratification: one voluntarily adopts/or
approves some defective act or
 Article 1395 Article 1400
Ratification is a unilateral act by which a Effect of loss of thing to be returned
party waives the defect in his consent. • Lost without the fault of the
The consent of the guilty party is not person obliged: no more
required obligations to return such thing.
• Lost through his fault: obligation
Article 1396 is not extinguished but
Effect of ratification converted into one an indemnity
- Cleanses the contract from all its for damages, consisting value of
defects from the moment it was the thing at the time of the loss
executed. with interest from the same date
- Extinguishes the right of action and fruits received from the time
to annul. the thing was given to him to the
Article 1397 time it was lost.
Action for annulment of contracts Article 1401
- May be instituted by all who are Extinguishment of action for annulment
PRINCIPALLY or SUBSIDIARILY • Thing which is the object thereof
obliged. is lost through the fraud or fault
Partly entitled to bring an action to of the person who has a right to
annul (requisites): institute the proceedings.
• The plaintiff must have an • When the right of action is based
interest in the contract. upon the incapacity of any one
• The victim and not the party of the contracting parties, the
responsible for the defect is the rule the same.
person who must assert the Article 1402
same. Effect where a party cannot restore
Article 1398 what he is bound to return
Duty of mutual restitution upon - When contract is annulled,
annulment RECIPROCAL OBLIGATION of
• If the contract is annulled, RETITUTION is created
GENERAL RULE: the parties must - No annulment if the party
restore to each other (a) subject cannot restore what he is bound
matter of the contract with its to return. Even if due to a
fruits (b) price thereof. fortuitous event.
• In personal obligations, the
service already rendered, basis UNENFORCEABLE CONTRACTS
for damage: the value thereof Article 1403
with the corresponding interest. Meaning of unenforceable contracts
Article 1399 - Those cannot be enforced or
Restitution by incapacitated person given effect in a court of law or
- Not obliged to make any sued upon by reason of certain
restitution except insofar as he defects provided by law until
has been benefited by the thing unless they are ratified to law.
or price received by him.
Binding force of unenforceable the interest of the
contracts parties.
- Although valid, they are d) Application
unenforceable in court unless a) Not applicable inactions
they are cured or ratified. which are neither for
- Once ratified, these contracts damages because of a
may then be enforceable. violation of a contract,
Kinds of unenforceable contracts nor for the specific
• Unauthorized contracts performance thereof.
• Those that do not comply with b) Applicable only to
the Statute of Frauds COMPLETELY EXECUTORY
• Those where both parties are contracts and not to
incapable of giving consent contracts which are
Meaning of Unauthorized contracts totally executed or partly
- Those entered into the name of executory.
another without, or acting in c) Not applicable where the
excess of, authority contract is admitted
Statute of Frauds expressly, or impliedly by
a) History the failure to dent
- 1676, English Parliament specifically its existence,
enacted statute to counter the no further evidence
evil practice of giving false thereof being required in
testimony in actions founded on such case.
certain contracts. d) Applicable only to the
- Making specified contracts agreements enumerated
unenforceable unless evidenced therein
in a prescribed manner- written e) Not applicable where a
memorandum signed the party writing does not express
against whom liability under the the true agreement of
contract sought to be enforced. the parties
b) Purpose f) Does not declare that
• Not only to prevent fraud contracts infringing it are
but also to guard against void but merely
the mistake of honest unenforceable
men by requiring that g) Defense of the Statute of
certain agreements Frauds may be waived.
specified that are h) Defense of the Statute of
susceptible to fraud must Frauds is personal to the
be in writing. parties and cannot be
c) “writing” interposed by strangers
• May be embodied not in to the contract
a formal written
document as long as it is
intelligible and records
Agreements within the scope of the registration because it is
Statute of Frauds unenforceable
a. Agreement that by its terms is • Right of one party to have the
not to be performed within a other execute a public document
year from the making thereof is not available in a donation of
b. Special promise to answer for realty when it is in a private
the debt, default, miscarriage of instrument because donation is
another void.
c. Agreement made in Article 1407
consideration of marriage, other When unenforceable contract becomes
than the a mutual promise to a voidable contract
marry - Both parties to a contract are
d. Agreement for sale of goods, etc. incapable of giving consent, the
at price not less than P500.00 contract is unenforceable.
e. Agreement for leasing for a - If the parent or guardian, as the
longer period than 1 year case may be, of either party, or if
f. Agreement for the sale of real one of the parties regains
property or of an interest capacity, ratifies the contract, it
therein. becomes VOIDABLE.
g. Representation as to the credit When unenforceable contract becomes
of a third person. a valid contract
Article 1404 - If ratification is made by parents
Unauthorized contracts are governed by or guardians as the case may be,
Art.1317 and the principle of agency. of either party, or if one of the
Article 1405 parties regains capacity, the
Modes of ratification under Statute of contract is validated from the
Frauds inception.
• By failure to object to the Article 1408
presentation of oral evidence to Right of a third person to assail an
prove the contract. unenforceable contract
• By acceptance of benefits under - Strangers to voidable contract
the contract. CANNOT bring an action to annul
Article 1406 the same, neither can they assail
-Contract is enforceable under the or question a contract because
Statute of Frauds, a public document is of its unenforceability.
necessary for its registration in the
Registry of Deeds CHAPTER 9
Right of a party where contract is VOID OR INEXISTENT CONTRACTS
enforceable ART. 1409
• A party to an oral sale of real MEANING OF VOID CONTRACTS
property cannot compel the Contracts which generally produce no
other to put the contract in a effect at all. Considered as inexistent
public document for purposes of from its inception or from the very
beginning. It is often loosely used to
refer to an agreement tainted with ART. 1410
illegality. ACTION OR DEFENSE IS
IMPRESCRIPTIBLE
MEANING OF INEXISTENT CONTRACTS It is unnecessary to bring an action to
It refers to agreements which lack one declare a void contract void. However, it
or some or all of the elements or do not is better that a judicial declaration of
comply with the formalities which are nullity be secured not only to give peace
essential for its existence. of mind to the parties but also to avoid
taking the law into their hands.
CHARACTERISTICS OF A VOID OR
INEXISTENT CONTRACT ART. 1411
1. It produces no force and effect. RULES WHERE CONTRACT IS ILLEGAL
AND THE ACT CONSTITUTES A CRIMINAL
2. It cannot be ratified.
OFFENSE
3. The right to set up the defense for 1. Where both parties are in pari
the declaration of its inexistence delicto –
does not prescribe. a. The parties shall have no
action against each other.
INSTANCES OF VOID OR INEXISTENT
b. Both shall be persecuted.
CONTRACTS
1. Contracts whose cause, object or c. The things or the price of
purpose is contrary to law etc. the contract shall be
2. Contracts which are absolutely confiscated in favor of the
simulated or fictitious. government.
3. Contracts without cause or object. 2. Where only one party is guilty –
4. Contracts whose object is outside applies only to the guilty party or
the commerce of men. the more guilty party.
5. Contracts which contemplate an
ART. 1412
impossible service.
RULES WHERE CONTRACT IS ILLEGAL
6. Contracts where the intention of BUT THE ACT DOES NOT CONSTITUTE A
CRIMINAL OFFENSE
the parties relative to the object
1. Where both parties are in pari
cannot be ascertained.
delicto –
7. Contracts expressly prohibited or
a. Neither party may recover
declared void by law.
what he has given by virtue of
the contract.
 b. Neither party may demand or before any damage has been
the performance of the caused to a third person.
other’s undertaking. 3. The court considers that public
2. Where only one party is guilty – interest will be subserved by
a. The guilty party loses what he allowing recovery.
has given by reason of the
ART. 1415
contract.
RECOVERY BY AN INCAPACITATED
b. The guilty party cannot ask for PERSON
Recovery can be allowed if one of the
the fulfillment of the other’s
parties is incapacitated and the interest
undertaking. of justice so demands.
c. The innocent party may
ART. 1416
demand the return of what he RECOVERY WHERE CONTRACT NOT
ILLEGAL PER SE
has given.
1. The agreement is not illegal per se
d. The innocent party cannot be
but is merely prohibited.
compelled to comply with his
2. The prohibition is designed for the
promise.
protection of the plaintiff.
3. Public policy would be enhanced by
ART. 1413
RECOVERY OF USURIOUS INTEREST allowing the plaintiff to recover
It may be recovered together with the
what he has paid or delivered.
interest thereon from the date of
payment in a proper action for the
same. A stipulation for the payment of PROHIBITED SALE OF LAND
usurious interest is void. 1. A land sold in violation of the
constitutional prohibition against
ART. 1414
RECOVERY WHERE CONTRACT ENTERED the transfer of lands to aliens may
INTO FOR ILLEGAL PURPOSE (Requisites)
be recovered. A sale of land to a
1. The contract is for an illegal
dummy in violation of the
purpose.
Constitution is void for being
2. The contract is repudiated before
contrary to public policy.
the purpose has been accomplished
2. The principle of in pari delicto is
not applicable to a homestead
 which has been illegally sold If an employee receives less than the
minimum wage rate, he can still recover
within the prohibited period of
the deficiency with legal interest and
five years in violation of the the employer shall be criminally liable.
homestead law.
ART. 1420
EFFECT OF ILLEGALITY WHERE
ART. 1417 CONTRACT INDIVISIBLE/DIVISIBLE
RECOVERY OF AMOUNT PAID IN EXCESS 1. When the consideration is entire
OF CEILING PRICE
and single, the contract is
Ceiling law – a statute fixing the
maximum price of any article or indivisible so that if part of such
commodity. Its purpose is to curb the
consideration is illegal, THE
evils of profiteering or black marketing.
WHOLE CONTRACT IS VOID AND
ART. 1418
UNENFORCEABLE.
RECOVERY OF ADDITIONAL
COMPENSATION FOR SERVICE 2. Where the contract is divisible or
RENDERED BEYOND TIME LIMIT
severable and the illegal ones can
Labor Code – sets forth that the normal
hours of work of any employee shall not be separated from the legal
exceed eight hours a day. Applies to
portions, the latter may be
employees in all establishments and
undertakings, whether for profit or not, enforced. This rule is subject to the
but not to:
contrary intention of the parties.
1. Government employees
2. Managerial employees
DIVISIBLE DIVISIBLE
3. Field personnel CONTRACT OBLIGATION
Refers Cause Prestation or
4. Members of the family or
to: object
employees who are dependent Test Divisibility of Susceptibility
upon him for support of: its cause of partial
fulfillment
5. Domestic helpers
6. Persons in the personal service of ART. 1421
PERSONS ENTITLED TO RAISE DEFENSE
another OF ILLEGALITY OR NULLITY
7. Workers who are paid by results Third persons are not allowed to bring
an action to annul or to assail contracts.
In illegal or void contracts, a third
ART. 1419 person may avail of the defense of
RECOVERY OF AMOUNT OF WAGE LESS illegality or set up its nullity as long as
THAN MINIMUM FIXED
his interest is directly affected by the
contract. ART. 1425
REIMBURSEMENT OF THIRD PERSON
ART. 1422 FOR DEBT THAT HAS PESCRIBED
VOID CONTRACTS CANNOT BE If a third person pays the prescribed
NOVATED debt of the debtor without his
It is based on the requisites of a valid knowledge or against his will, the latter
novation. An illegal contract is void and is not legally bound to pay him. The
inexistent and cannot give rise to a valid debtor cannot recover what he has paid
contract. in case he voluntarily reimburses the
third person.

TITLE III ART. 1426

NATURAL OBLIGATIONS RESTITUTION BY MINOR AFTER
(Arts. 1423-1403, Civil Code) ANNULMENT OF CONTRACT
ART. 1423 A minor is not obliged to make any
CONCEPT OF NATURAL OBLIGATIONS restitution except insofar as he has been
It originated in the Roman law where benefited. If a minor voluntarily return
they grew in importance in order to the thing or price received, he cannot
temper with equity and justice the recover it.
severity of the jus civile. In the old
Spanish law, there were many instances ART. 1427
of natural obligations also. DELIVERY BY MINOR OF MONEY OR
FUNGIBLE THING IN FULFILLMENT OF
CIVIL NATURAL OBLIGATION
OBLIGATIONS OBLIGATIONS The obligee who has spent or consumed
Arises from law, Based on equity in good faith the money or consumable
contracts, quasi- and natural law. thing voluntarily paid or delivered by
contracts, delicts, the minor, is not bound to make
and quasi-delicts. restitution.
Give a right of Do not grant such
action in courts of right of action. ART. 1428
justice. PERFORMANCE AFTER ACTION TO
ENFORCE CIVIL OBLIGATION HAS FAILED
ENUMERATION NOT EXCLUSIVE IN CIVIL If the debtor voluntarily performs his
CODE obligation, he cannot demand the
return of what he has delivered or the
ART. 1424 payment of the value of service he has
PERFORMANCE AFTER CIVIL rendered.
OBLIGATION HAS PRESCRIBED
Prescription (acquisitive) – one acquires ART. 1429
ownership and other real rights through PAYMENT BY HEIR OF DEBT EXCEEDING
the lapse of time in the manner and VALUE OF PROPERTY INHERITED
under the conditions laid down by law.
The heir is not personally liable beyond
the value of the property he received
from the decedent BUT if he voluntarily
pays the difference, the payment is valid
and cannot be rescinded by him.

ART. 1430
PAYMENT OF LEGACY AFTER WILL HAS
BEEN DECLARED VOID
Legacy – act of disposition by the
testator in separating from the
inheritance for definite purposes,
things, rights or a definite portion of his
property.

If a will is disallowed for non-compliance

with the formalities prescribed by law,
the legacy would be void. The payment
is effective and irrevocable, subject to
the rights of the creditors of the
deceased.