CHAPTER 1 GENERAL PROVISIONS A.

LAW (Article 1158) – When they are imposed by

OBLIGATIONS OBLIGATION (Article 1156) the law itself.
– An obligation is a juridical necessity to give, to do B. CONTRACTS (Articles 1159 and 1306) – When
or not to do. they arise from the stipulations of the parties.
– An obligation is a juridical relation whereby a C. QUASI-CONTRACTS (Articles 1160 and 2142)
person called the creditor may demand from another – Lawful, voluntary, and unilateral acts which
person called the debtor, the observance of a generally require a person to reimburse or
determinative conduct which is the giving, doing or compensate another in accordance with the principle
not doing, and in case of breach, may demand that no one shall be unjustly enriched or benefited at
satisfaction from the assets of the latter. the expense of another .
ESSENTIAL REQUISITES OF OBLIGATIONS D. ACTS OR OMISSIONS PUNISHABLE BY
ESSENTIAL REQUISITES OF AN OBLIGATION LAW (Article 1161 and Article 100, Revised Penal
Code, Act No. 3815, December 8, 1930)
A. PASSIVE SUBJECT or DEBTOR or OBLIGOR
– He who has the duty of giving, doing or not doing. – When they arise from civil liability which is the
The person who is bound to the fulfillment of the consequence of a criminal offense.
obligation; he who has a duty.
E. QUASI-DELICTS (Articles 1162 and 2176)
B. ACTIVE SUBJECT or CREDITOR or
– When they arise from damage caused to another
OBLIGEE – The possessor of a right; he in whose
through an act or omission, there being fault or
favor the obligation is constituted. The person who is
negligence, but no contractual relation exists
entitled to demand the fulfillment of the obligation;
between the parties.
he who has a right.
SOURCES OF OBLIGATIONS
C. OBJECT or PRESTATION or SUBJECT
MATTER – The conduct required to be observed by LEGAL OBLIGATIONS or OBLIGATIONS EX
the debtor which may consists in giving a thing, LEGE (Article 1158)
doing or not doing a certain act.
– These obligations are not presumed because they a
D. JURIDICAL TIE or LEGAL TIE or EFFICIENT considered a burden upon the debtor. They are the
CAUSE or VINCULUM JURIS exception, not the rule. To be demandable, they must
be clearly set forth in the law.
– The reason why the obligation exists.
– No agreement is necessary before legal obligations
FORM OF OBLIGATIONS
can arise, but the law steps in only because of human
– The manner in which an obligation is manifested actuations.
or incurred. It may be oral, or in writing, or partly
CONTRACTUAL OBLIGATIONS or
oral and partly in writing.
OBLIGATIONS EX CONTRACTU
RULES AS TO FORM
– A contract is a meeting of the minds between two
A. As a general rule, the law does not require any persons whereby one binds himself, with respect to
form in obligations arising from contracts for their the other, to give something, or to render some
validity or binding force. service (Article 1305).
B. Obligations arising from other sources do not have – Obligations arising from contracts have the force
any form at all. of law between the contracting parties, i.e., they have
the same binding effect as legal obligations (Article
SOURCES OF OBLIGATIONS (Article 1157)
1159).
– A contract, assuming all essential elements are C. Indemnification for consequential damages.
present, is valid if it is not contrary to law, morals,
OBLIGATIONS ARISING FROM QUASI-
good customs, public order and public policy.
DELICTS or TORTS or CULPA AQUILIANA or
QUASI-CONTRACTUAL OBLIGATIONS or OBLIGATIONS EX QUASIDELICTO or
OBLIGATIONS EX QUASI-CONTRACTU OBLIGATIONS EX QUASI-MALEFICIO
(Article 1160)
– An act or omission by a person (tortfeasor) which
– A juridical relation resulting from lawful, voluntary causes damages to another in his person, property, or
and unilateral acts by virtue of which the parties rights giving rise to an obligation to pay for the
become bound to each other to the end that no one damage done, there being fault or negligence but
will be unjustly enriched or benefited at the expense there is no pre-existing contractual relation between
of another (Article 2142). the parties (Article 2176).
TWO PRINCIPAL KINDS OF QUASI- REQUISITES OF QUASI-DELICT
CONTRACTS
A. There must be an act or omission.
A. NEGOTIORUM GESTIO – This takes place
B. There must be fault or negligence.
when a person voluntarily manages another’s
abandoned business or property without the owners’ C. There must be damage caused.
consent (Article 2144). Reimbursement must be
made to the officious manager or gestor for necessary D. There must be a direct relation or connection of
and useful expenses, as a rule (Article 2150). cause and effect between the act or omission and the
SOURCES OF OBLIGATIONS damage (DOCTRINE OF PROXIMATE CAUSE).

B. SOLUTIO INDEBITI – It is the juridical relation E. There is no pre-existing contractual relation

which is created when something is received when between the parties.
there is no right to demand it and it was unduly CHAPTER 2 NATURE AND EFFECTS OF
delivered through mistake. The recipient has the duty OBLIGATIONS SPECIFIC AND GENERIC
to return it (Article 2154). OBJECTS SPECIFIC AND GENERIC OBJECTS
REQUISITES OF SOLUTIO INDEBITI A. SPECIFIC or DETERMINATE OBJECT
1. There is no right to receive the thing delivered; and – If the thing can be particularly designated or
2. The thing was delivered through mistake. physically segregated from others of the same
class. It is identified by its individuality.
CIVIL LIABILITY ARISING FROM CRIMES or
ACTS OR OMISSIONS PUNISHABLE BY LAW – The debtor cannot substitute it with another
or DELICT or OBLIGATIONS EX DELICTO or although the latter is of the same kind and quality
OBLIGATIONS EX MALEFICIO (Article 1161) without the consent of the creditor.

– The commission of a crime causes not only moral B. GENERIC or INDETERMINATE OBJECT
evil but also material damage. From this principle, – A thing is generic when it refers only to a class
the rule has been established that every person or genus to which it pertains and cannot be
criminally liable for an act or omission is also civilly pointed out with particularity. It is identified only
liable for damages (Article 100, Revised Penal Code, by its specie.
Act No. 3815, December 8, 1930).
– The debtor can give anything of the same class
SCOPE OF CIVIL LIABILITY as long as it is of the same kind.
A. Restitution. DUTIES OF A DEBTOR IN SPECIFIC REAL
B. Reparation for the damage caused. OBLIGATIONS
A. DUTY TO PRESERVE THE THING or regards the right of the creditor to the fruits of
DUTY TO EXERCISE DILIGENCE the thing.
– In real obligations, the debtor has the 3. In a contract of sale, the obligation arises from
incidental duty to take care of the thing due the perfection of the contract even if the
pending delivery with the diligence of a good obligation is subject to a suspensive condition or
father of a family a suspensive period where the price has been
paid.
. B. DUTY TO DELIVER THE FRUITS OF
THE THING 4. In obligations to give arising from law, quasi-
contracts, delicts, and quasi-delicts, the time of
– The creditor has a right to the fruits of the thing
performance is determined by the specific
from the time the obligation to deliver it arises.
provisions of the law applicable.
However, he shall acquire no real right over it
until the same has been delivered to him (Article C. DUTY TO DELIVER THE ACCESSIONS
1164). AND ACCESSORIES
KINDS OF FRUITS – The obligation to give a determinate thing
includes that of delivering all its accessions and
1. NATURAL FRUITS – Spontaneous
accessories, even though they may not have been
products of the soil and the young and other
mentioned (Article 1166).
products of animals.
ACCESSIONS – The fruits of a thing or
2. INDUSTRIAL FRUITS – Produced by lands
additions to or improvements upon a thing (the
of any kind through cultivation or labor.
principal).
3. CIVIL FRUITS – Those derived by virtue of
ACCESSORIES – Those joined to or included
a juridical relation.
with the principal thing for the latter’s
RIGHT OF CREDITOR TO THE FRUITS embellishment, better use, or completion.
(Article 1164)
C. DUTY TO DELIVER THE THING ITSELF
– The creditor is entitled to the fruits of the thing – Every person obliged to give a determinate
to be delivered from the time the obligation to thing must deliver, and the creditor may
make delivery arises. The intention of the law is compel the delivery of, that itself which was
to protect the interest of the obligee should the promised, and he cannot substitute it unless
obligor commit delay, purposely or otherwise, in the creditor agrees (Article 1165).
the fulfillment of his obligation.
WHEN THE OBLIGATION TO DELIVER
WHEN OBLIGATION TO DELIVER FRUITS ARISES
ARISES
1. If there is no term or condition, then from the
1. Generally, the obligation to deliver the thing perfection of the contract.
due and, consequently, the fruits thereof, if any,
2. If there is a term or a condition, then from the
arises from the time of the perfection of the
moment the term arrives or the condition
contract.
happens.
2. If the obligation is subject to a suspensive
E. DUTY TO ANSWER FOR DAMAGES IN
condition or period (Articles 1179, 1189, and
CASE OF NON-FULFILLMENT OR BREACH
1193.), it arises upon the fulfillment of the
condition or arrival of the term. However, the – Those who in the performance of their
parties may make a stipulation to the contrary as obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene
the tenor thereof, are liable for damages (Article fortuitous event does not exempt the debtor from
1170). responsibility because an indeterminate thing
cannot be the object of destruction based on the
GENERIC REAL OBLIGATIONS DUTIES OF
doctrine genus never perishes (genus nunquam
A DEBTOR IN GENERIC REAL
perit).
OBLIGATIONS
PERSONAL OBLIGATIONS
A. The creditor may ask that the obligation be
complied with at the expense of the debtor STIPULATIONS CONTEMPLATED
(Article 1165).
A. The debtor fails to perform an obligation to
B. If the thing to be delivered is indeterminate or do.
generic, the obligor must deliver a thing of the
B. The debtor performs an obligation to do but
quality specified or intended by the parties taking
contrary to the terms thereof.
into consideration the purpose of the obligation
and other circumstances; if none is fixed, he must C. The debtor performs an obligation to do but in
deliver one of average quality and neither can the a poor manner.
obligor deliver a thing of inferior quality nor the
obligee demand one of superior quality (Article OBLIGATIONS REMEDIES OF A
1246). CREDITOR IN POSITIVE PERSONAL
OBLIGATIONS (Article 1167)
C. To be liable for damages in case of fraud,
negligence, or delay, in the performance of his A. If the debtor fails to comply with his
obligation, or contravention of the tenor thereof obligation to do, the creditor has the right:
(Article 1170). 1. To have the obligation performed by himself,
REMEDIES IN REAL OBLIGATIONS or by another, unless personal considerations are
REMEDIES OF CREDITOR IN CASE OF involved, at the debtor’s expense.
BREACH OF REAL OBLIGATIONS (Article 2. To recover damages.
1165) A. SPECIFIC REAL OBLIGATION
B. In case the obligation is done in contravention
1. Demand specific performance or fulfillment of of the terms of the same or is poorly done, it may
the obligation with a right to indemnity for be ordered (by the court) that it be undone if it is
damages. still possible to undo what was done.
2. Demand rescission or cancellation (in certain RULES REGARDING PERFORMANCE BY
cases) of the obligation also with a right to A THIRD PERSON
recover damages.
1. A personal obligation can be performed by a
3. Demand payment of damages only where it is third person. However, an action for specific
the only feasible remedy. performance cannot be ordered in a personal
B. GENERIC REAL OBLIGATION obligation because this may amount to
– Demand compliance with the obligation. If involuntary servitude, which as a rule, is
debtor fails, it can be performed by a third prohibited under the Constitution.
person since the object is expressed only 2. Where personal qualifications of the debtor are
according to its family or genus. However, the determining motive for the obligation
the creditor can recover damages in case of contracted, the performance of the same by
breach. another would be impossible or would result to
WHEN DEBTOR DELAYS OR IS IN BAD be so different that the obligation could not be
FAITH – If the debtor is in delay or promised considered performed. Hence, the only remedy of
delivery to separate creditors, the happening of a the creditor is indemnification for damages.
REMEDIES OF CREDITOR IN NEGATIVE 1. ORDINARY DELAY – Merely the failure to
PERSONAL OBLIGATIONS (Article 1168) perform an obligation on time.
A. The thing may be ordered undone provided 2. LEGAL DELAY or DEFAULT or MORA
undoing is possible at the expense of the debtor
– The failure to perform an obligation on time
plus damages.
which failure constitutes a breach of the
B. If it is not possible to undo what was done, obligation.
either physically or legally, or because of the
– Those obliged to deliver or to do something
rights acquired by third persons who acted in
incur in default from the time the creditor
good faith, or for some other reason, the remedy
judicially or extrajudicially demands from them
is an action for damages caused by the debtor’s
the fulfillment of their obligation (Article 1169).
violation of his obligation.
KINDS OF DEFAULT
GROUNDS FOR LIABILITY (Article 1170)
1. MORA SOLVENDI – Default on the part of
A. FRAUD or DECEIT or DOLO – The
the debtor to fulfill his obligation.
deliberate or intentional evasion of the
normal fulfillment of an obligation. As a 2. MORA ACCIPIENDI – Default on the part of
ground for damages, it implies some kind of the creditor to accept performance of the
malice or dishonesty and it cannot cover obligation.
cases of mistake and errors of judgment made
in good faith. It is synonymous to bad faith in 3. COMPENSATIO MORAE – The delay of the
that, it involves a design to mislead or deceive obligors in reciprocal obligations, the delay of the
another. obligor cancels the delay of the obligee, and vice
versa. The net result is that there is no actionable
KINDS OF FRAUD default as both parties are in default; here it is as
if neither is in default.
1. CAUSAL FRAUD or DOLO CAUSANTE –
Fraud employed in the execution of a contract GROUNDS FOR LIABILITY WHEN
which vitiates consent. – Substantial fraud that DEMAND IS NOT NEEDED TO PUT
may constitute a ground for annulment of the DEBTOR IN DEFAULT (Article 1169)
contract. GROUNDS FOR LIABILITY
1. When the obligation expressly so provides.
2. INCIDENTAL FRAUD or DOLO
INCIDENTE – Fraud committed in the 2. When the law so provides.
performance of an obligation already existing 3. When time is of the essence of the contract.
because of a contract so although fraud is absent
or not exercised, the other party would have 4. When demand would be useless.
nonetheless entered into the agreement on 5. When there is performance by a party in
significantly the same terms. – Incidental fraud reciprocal obligations.
which merely calls for reparation for damages.
C. CONTRAVENTION OF THE TERMS OF
B. NEGLIGENCE or FAULT or CULPA – It is THE OBLIGATION
any voluntary act or omission, there being no bad
faith or malice, which prevents the normal – The violation of the terms and conditions
fulfillment of an obligation. stipulated in the obligation. The contravention
must not be due to a fortuitous event or force
C. LEGAL DELAY or DEFAULT or MORA majeure.
(Article 1169)
RESPONSIBILITY ARISING FROM FRAUD
KINDS OF DELAY (Article 1171)
– Responsibility arising from incidental fraud can A. Nature of the obligation.
be demanded with respect to all kinds of
B. Circumstances of the person.
obligations and unlike in the case of
responsibility arising from negligence, the court C. Circumstances of time.
is not given the power to mitigate or reduce the
damages to be awarded. D. Circumstances of the place.

RULES REGARDING WAIVER FOR FRAUD FORTUITOUS EVENT FORTUITOUS

EVENT or ACT OF GOD or FORCE
A. A waiver of an action for future fraud is void MAJEURE or CASO FORTUITO
(no effect, as if there is no waiver) as being
against the law and public policy. GROUNDS – Is any event which cannot be foreseen, or
FOR LIABILITY which, though foreseen, is inevitable. Stated
otherwise, it is an event which is either
B. A past fraud can be the subject of a valid impossible to foresee or impossible to avoid. It is
waiver because the waiver can be considered as independent of the will of the debtor and which
an act of generosity and magnanimity on the part happening, makes the normal fulfillment of the
of the party who is the victim of the fraud. obligation impossible.
RESPONSIBILITY ARISING FROM REQUISITES OF A FORTUITOUS EVENT
NEGLIGENCE (Article 1172) – In the
performance of every kind of obligation, the A. The event must be independent of the human
debtor is also liable for damages resulting from will or at least of the debtor’s will.
his negligence. The courts, however, are given B. The event could not be foreseen, or if
wide discretion in fixing the measure of damages foreseen, is inevitable.
because negligence is a question which must
necessarily depend upon the circumstances of C. The event must be of such a character as to
each particular case and is not as serious as fraud render it impossible for the debtor to comply with
because there is not deliberate intention to cause his obligation in a normal manner.
injury or damages. D. The debtor must be free from any
KINDS OF NEGLIGENCE ACCORDING TO participation in, or the aggravation of, the injury
SOURCE OF OBLIGATION to the creditor, that is, there is no concurrent
negligence on his part.
A. CONTRACTUAL NEGLIGENCE or
CULPA CONTRACTUAL – Negligence in RULES AS TO LIABILITY IN CASE OF
contracts resulting in their breach. FORTUITOUS EVENT

B. CIVIL NEGLIGENCE or QUASI-DELICT or A. GENERAL RULE – As a general rule, a

TORTS or CULPA AQUILIANA or person is not responsible for loss or damage
OBLIGATIONS EX QUASI-DELICTO or caused to another resulting from the non-
OBLIGATION EX QUASI-MALEFICIO – performance of his obligation due to fortuitous
Negligence which by itself is the source of an events. In other words, the obligation is
obligation between the parties not so related EXTINGUISHED.
before any pre-existing contract. B. EXCEPTIONS (WHEN OBLIGATION IS
C. CRIMINAL NEGLIGENCE or CULPA NOT EXTINGUISHED) (Article 1174)
CRIMINAL – Negligence resulting in the 1. WHEN EXPRESSLY SPECIFIED BY LAW
commission of a crime.
a. The debtor is guilty of fraud, negligence, or
FACTORS TO BE CONSIDERED TO delay, or contravention of the tenor of the
DETERMINE NEGLIGENCE (Article 1173) obligation (Article 1170).
 b. The debtor is in bad faith or has promised to Parties are now free to stipulate any amount of
deliver the same (specific) thing to two or more interest. It does not, however, give absolute right
persons who do not have the same interest to the creditor to charge the debtor interest that
(Article 1165). FORTUITOUS EVENT is iniquitous or unconscionable.
c. The obligation to deliver a specific thing arises REQUISITES FOR RECOVERY OF
from a crime (Article 1268). INTEREST
d. The thing to be delivered is generic (Article A. The payment of interest must be expressly
1263) in accordance with the principle genus stipulated (Article 1956).
never perishes (genus nunquam perit).
B. The agreement must be in writing.
2. WHEN DECLARED BY STIPULATION
C. The interest must be lawful.
– The basis for this exception rests upon the
PRESUMPTION – The inference of a fact not
freedom of contract (Article 1306).
actually known arising from its usual connection
3. WHEN THE NATURE OF THE with another which is known or proved.
OBLIGATION REQUIRES THE
TWO KINDS OF PRESUMPTION
ASSUMPTION OF RISK or DOCTRINE
OF CREATED RISK – The risk of loss or A. CONCLUSIVE PRESUMPTION – One
damage is an essential element in the which cannot be contradicted.
obligation.
B. DISPUTABLE PRESUMPTION or
USURY REBUTTABLE PRESUMPTION – One which
can be contradicted or rebutted by presenting
SIMPLE LOAN (MUTUUM) – Is a contract
proof to the contrary.
whereby one of the parties delivers to another,
money, or other consumable thing, upon the TWO PRESUMPTION
condition that the same amount of the same kind
and quality shall be paid. It may be gratuitous or A. The receipt of the principal by the creditor
with a stipulation to pay interest (Article 1933). without reservation with respect to the interest,
shall give rise to the presumption that said
USURY (Article 1175) interest has been paid.
– It is contracting for or receiving interest in B. The receipt of a later installment of a debt
excess of the amount allowed by law for the loan without reservation as to prior installments, shall
or use of money, goods, chattels or credits. In likewise raise the presumption that such
other words, usury is the exaction of excessive installments have been paid.
interest.
EXCEPTIONS TO PRESUMPTIONS (WHEN
– A stipulation for payment of usurious interest PRESUMPTIONS DO NOT APPLY)
is void, that is, as if there is no stipulation as to
interest. A. WITH RESERVATION AS TO INTEREST
– The presumption do not arise where there is a
USURY – By virtue, however, of Central Bank reservation that no payment has been made as to
Circular No. 905 (December 10, 1982), the rate interest or prior installments, as the case may be.
of interest and other charges on a loan or The reservation may be made in writing or
forbearance of money, goods, or credit, verbally. PRESUMPTION
regardless of maturity and whether secured or
unsecured, that may be charged or collected shall B. RECEIPT WITHOUT INDICATION OF
not be subject to any ceiling prescribed under the PARTICULAR INSTALLMENT PAID – The
Usury Law. Usury is now legally inexistent. presumption is not applicable if the receipt does
not recite that it was issued for a particular commodatum which are purely personal in
installment due as when the receipt is only dated. character.
C. RECEIPT FOR A PART OF THE B. PROHIBITED BY STIPULATION OF THE
PRINCIPAL – Such a receipt, without PARTIES
mentioning the interest, implies that the creditor
– When prohibited by stipulation of the parties,
waives his right to apply payment first to the
like the stipulation that upon the death of the
interest and then to the principal. It is only when
creditor, the obligation shall be extinguished, or
the principal is fully receipted for and there is
that the creditor cannot assign his credit to
failure by the creditor to reserve claim for
another.
interest, that the presumption that the said
interest has been paid will arise. – Such stipulation, being contrary to the general
rule, must be clearly proved, or, at the very least,
D. PAYMENT OF TAXES – There is no
clearly implied from the wordings or terms of the
presumption that previous taxes have been paid
contract itself.
by payment of later ones.
CHAPTER 3 DIFFERENT KINDS OF
E. NON-PAYMENT PROVEN – A
OBLIGATIONS SECTION
presumption cannot prevail against a proven
fact. PURE AND CONDITIONAL OBLIGATIONS
REMEDIES AVAILABLE TO CREDITORS PURE OBLIGATION (Article 1179) – One which is
IN CASE OF BREACH not subject to any condition and no specific period or
date is mentioned for its fulfillment and is, therefore,
A. Exact fulfillment or SPECIFIC
immediately demandable provided there will be no
PERFORMANCE (specific real obligations), or
absurdity.
SUBSTITUTE PERFORMANCE (personal
obligations) with damages. CONDITION – A future and uncertain event, upon
the happening of which, the effectivity or
B. Pursue the leviable (not exempt from
extinguishment of an obligation or right subject to it
attachment under the law) property of the debtor.
depends.
C. Exercise all rights (like the right to redeem)
– It may also refer to a past event unknown to the
and bring all actions of the debtor (like the right
parties which refers to the knowledge to be acquired
to collect from the debtor of his debtor
in the future of a past event which at the moment is
(SUBROGATORY ACTION or ACCION
unknown to the parties interested.
SUBROGATORIA)) except those inherent in or
personal to the person of the debtor. CONDITIONAL OBLIGATION – One whose
consequences are subject in one way or another
D. Ask the court to rescind or impugn acts or
to the fulfillment of a condition.
contracts which the debtor may have done to
defraud him when he cannot in any manner – The acquisition of rights, as well as the
recover his claim (RESCISSORY ACTION or extinguishment or loss of those already acquired,
ACCION PAULIANA). shall depend upon the happening of the event
which constitutes the condition.
GENERAL RULE – All rights acquired by
virtue of an obligation are transmissible. CHARACTERISTICS OF A CONDITION
EXCEPTIONS A. FUTURE AND UNCERTAIN – In order to
constitute an event as a condition, it is not
A. PROHIBITED BY LAW – When prohibited
enough that it be future, it must also be uncertain.
by law like the rights in partnership, agency, and
 B. PAST BUT UNKNOWN – A condition may knowledge determines whether the obligation
refer to a past event unknown to the parties. If it will arise or not.
refers to a future event, both its very occurrence
PERIOD – A future and certain event upon the
and the time of such occurrence must be
arrival of which the obligation subject to it either
uncertain, otherwise, it is not a condition.
arises or is extinguished.
C. POSSIBLE – A condition must not be
WHERE DURATION OF PERIOD DEPENDS
impossible.
UPON THE WILL OF DEBTOR (Article 1180)
TWO PRINCIPAL KINDS OF CONDITION – If the debtor promises to pay when his means
permit him to do so, the obligation shall be
A. SUSPENSIVE CONDITION or
deemed to be one with a period. In this case,
CONDITION PRECEDENT or
what depends upon the debtor’s will is not
CONDITION ANTECEDENT – One the
whether he should pay or not for indeed he binds
fulfillment of which will give rise to an
himself to pay. What is left only to his will is the
obligation or right. The demandability of the
duration of the period.
obligation is suspended until the happening
of the uncertain event which constitutes the – If the debtor and the creditor cannot agree as
condition. to the specific time for payment, the court shall
– When the acquisition of rights or fix the same on the application of either party
demandability of the obligation must await (Article 1197).
the occurrence of the condition (Article
POTESTATIVE or FACULTATIVE
1181).
CONDITION – A condition suspensive in
B. RESOLUTORY CONDITION or
nature which depends upon the sole will of one
CONDITION SUBSEQUENT – One the
of the contracting parties.
fulfillment of which will extinguish an
obligation or right already existing A. SUSPENSIVE POTESTATIVE
DEPENDENT UPON THE WILL OF THE
. – When the obligation is at once due and
DEBTOR
demandable but the right is extinguished or lost
upon the fulfillment of the condition (Articles 1. CONDITIONAL OBLIGATION VOID
1179 and 1181). (Article 1182) – Where the potestative condition
depends solely upon the will of the debtor, the
WHEN OBLIGATION IS DEMANDABLE AT
conditional obligation shall be void because its
ONCE
validity and compliance is left to the will of the
A. When the obligation is pure. debtor and it cannot, therefore, be easily
demanded. In order not to be liable, the debtor
B. When it is subject to a resolutory condition.
will not just fulfill the condition. There is no
C. When it is subject to a resolutory period. burden on the debtor and consequently, no
juridical tie is created. The obligation is really
PAST EVENT UNKNOWN TO THE illusory since the debtor will simply choose not
PARTIES – A past event cannot be said to be a to fulfill the condition to evade the obligation. –
condition since the demandability of an Both the condition and the obligation is void.
obligation subject to a condition depends upon KINDS OF CONDITIONS
whether the event will happen or will not
happen. What is really contemplated by the law 2. ONLY CONDITION VOID – If the
is the knowledge to be acquired in the future of obligation is a pre-existing one and, therefore,
a past event which at the moment is unknown to does not depend for its existence upon the
the parties interested, for it is only in that sense fulfillment by the debtor of the potestative
that the event can be deemed uncertain. This condition, only the condition is void leaving
unaffected the obligation itself. Here, the B. CONDITIONAL OBLIGATION VALID –
condition is imposed not on the obligation itself If the condition is negative, that is, not to do an
but on its fulfillment. impossible thing, it is disregarded and the
obligation is rendered pure and valid. Actually,
B. RESOLUTORY POTESTATIVE
the condition is always fulfilled when it is not to
DEPENDENT UPON THE WILL OF THE
do an impossible thing so that it is the same as if
DEBTOR – The obligation is valid although its
there were no condition.
fulfillment depends upon the sole will of the
debtor since the fulfillment of the condition C. ONLY THE AFFECTED OBLIGATION
merely causes the extinguishment or loss of VOID – If the obligation is divisible, the part
rights already acquired. The debtor is naturally thereof not affected by the impossible condition
interested in its fulfillment. shall be valid.
C. POTESTATIVE DEPENDENT UPON THE D. ONLY THE CONDITION VOID – If the
WILL OF THE CREDITOR – The obligation obligation is a pre-existing obligation, and,
and condition is valid because the creditor is therefore, does not depend upon the fulfillment
naturally interested in the fulfillment of the of the condition which is impossible, for its
obligation. existence, only the condition is void.
KINDS OF CONDITIONS POSITIVE CONDITION (Article 1184)
CASUAL – If the suspensive condition – The condition that some event happen at a
depends upon chance or upon the will of a third determinate time shall extinguish the obligation
person, the obligation subject to it is valid. as soon as the time expires or if it has become
indubitable that the event will not take place.
MIXED – The obligation is valid if the
suspensive condition depends partly upon – Refers to positive and suspensive condition
chance and partly upon the will of a third person.
– the happening of an event at a determinate
TWO KINDS OF IMPOSSIBLE time.
CONDITIONS
WHEN THE OBLIGATION IS
A. PHYSICALLY IMPOSSIBLE EXTINGUISHED
CONDITIONS – When they, in nature of things,
A. As soon as the time expires without the event
cannot exist or cannot be done. Includes logical
taking place.
impossibility.
B. As soon as it has become indubitable that the
B. LEGALLY IMPOSSIBLE CONDITIONS or
event will not take place although the time
ILLEGAL CONDITIONS – When they are
specified has not expired.
contrary to or prohibited by law, morals, good
customs, public order, or public policy. NEGATIVE CONDITION (Article 1185)
EFFECTS OF IMPOSSIBLE CONDITIONS – The condition that some event will not happen
(Article 1183) at a determinate time shall render the obligation
effective from the moment the time indicated
A. CONDITIONAL OBLIGATION VOID –
has elapsed, or if it has become evident that the
Impossible conditions annul the obligation
event cannot occur.
which depends upon them. Both the obligation
and the condition are void. The reason behind – Speaks of a negative condition
the law is that the obligor knows his obligation
cannot be fulfilled. He has no intention to – that an event will not happen at a determinate
comply with his obligation. time.
 WHEN THE OBLIGATION BECOMES in these obligations the principle of
EFFECTIVE retroactivity is not applicable. The courts are
empowered by the use of sound discretion
A. From the moment the time indicated has
and bearing in mind the intent of the parties,
elapsed without the event taking place.
to determine, in each case, the retroactive
B. From the moment it has become evident that effect of the suspensive condition that has
the event cannot occur, although the time been complied with. It includes the power to
indicated has not yet elapsed. decide that the fulfillment of the condition
shall have no retroactive effect or from what
RULES REGARDING CONDITIONS date such retroactive effect shall take effect.
DOCTRINE OF CONSTRUCTIVE or
PRESUMED FULFILLMENT OF RETROACTIVE EFFECTS AS TO FRUITS
SUSPENSIVE CONDITION (Article 1186) AND INTERESTS IN REAL OBLIGATIONS
(Article 1187)
– The condition shall be deemed fulfilled when
the obligor voluntarily prevents its fulfillment A. IN RECIPROCAL OBLIGATIONS – There
for one must not profit by his own fault or bad is no retroactivity because the fruits and interests
faith. The act must be voluntary and there must during the pendency of the condition shall be
be actual prevention. deemed to mutually compensate each other even
though they really be unequal for the purpose of
REQUISITES convenience and practical effectiveness since
A. The condition is suspensive. the parties would not have to render mutual
accounting of what they have received.
B. The obligor actually prevents the fulfillment
of the condition. B. IN UNILATERAL OBLIGATIONS – There
is usually no retroactive effect because they are
C. He acts voluntarily. gratuitous. The debtor receives nothing from the
DOCTRINE OF CONSTRUCTIVE or creditor. Thus, fruits and interests belong to the
PRESUMED FULFILLMENT OF RESOLUTORY debtor unless from the nature and other
CONDITION – This article applies also to an circumstances of the obligation it should be
obligation subject to a resolutory condition with inferred that the intention of the person
respect to the debtor who is bound to return what he constituting the same was different.
has received upon the fulfillment of the condition. RIGHTS PENDING FULFILLMENT OF
RETROACTIVE EFFECTS OF SUSPENSIVE CONDITION (Article 1188)
FULFILLMENT OF SUSPENSIVE A. RIGHTS OF CREDITOR – He may take or
CONDITION (Article 1187) bring appropriate actions for the preservation of
A. IN REAL OBLIGATIONS – An obligation his right, as the debtor may render nugatory the
to give subject to a suspensive condition obligation upon the happening of the condition.
becomes demandable only upon the fulfillment B. RIGHTS OF DEBTOR – He is entitled to
of the condition. However, once the condition is recover what he has paid by mistake prior to the
fulfilled, its effect shall retroact to the day when happening of the suspensive condition. This
the obligation was constituted. right is granted to the debtor because the creditor
B. IN PERSONAL OBLIGATIONS – With may or may not be able to fulfill the condition
respect to the retroactive effect of the imposed and hence, it is not certain that the
fulfillment of a suspensive condition in obligation will arise. This is a case of solutio
obligations to do or not to do, no fixed rule is indebiti. Note that the payment before the
provided. This does not mean, however, that fulfillment of the condition must be by mistake,
otherwise, the debtor is deemed to have
impliedly waived the condition. In any case, he 1. There is a return to the status quo. In other
cannot recover what he has prematurely paid words, the effect of the fulfillment of the
once the suspensive condition is fulfilled. condition is retroactive.
RULES REGARDING CONDITIONS RULES 2. In case the thing to be returned is legally in
IN CASE OF LOSS, DETERIORATION, OR the possession of a third person in good faith,
IMPROVEMENT OF THING DURING the remedy of the party entitled to restitution is
PENDENCY OF SUSPENSIVE CONDITION against the party bound to return.
(Article 1189)
3. The obligation of mutual restitution is
A. LOSS OF THING WITHOUT DEBTOR’S absolute. It applies not only to the thing
FAULT – The obligation is extinguished. As a received but also to the fruits and interests. The
general rule, the debtor is not liable for a fruits or the interests thereon should also be
fortuitous event. returned after deducting of course the expenses
made for their production gathering and
B. LOSS OF THING THROUGH DEBTOR’S
preservation (Article 443).
FAULT – The debtor is obliged to pay damages.
4. The rules in Article 1189 will apply to
C. DETERIORATION OR IMPAIRMENT OF
whoever has the duty to return in case of the
THING WITHOUT DEBTOR’S FAULT – The
loss, deterioration or improvement of the thing.
creditor suffers the deterioration, impairment, or
reduction in value. 5. The only exception to the rule is the intention
of the parties not to avail of restitution.
D. DETERIORATION OF THING
THROUGH DEBTOR’S FAULT – The creditor B. IN PERSONAL OBLIGATIONS – In such
may choose between the rescission of the obligations, the courts shall determine the
obligation or its fulfillment with indemnity for retroactive effect of the fulfillment of the
damages in either case. resolutory condition. The courts in the exercise
of discretion may even disallow retroactivity,
E. IMPROVEMENT OF THING BY
taking into account the circumstances of each
NATURE OR BY TIME – The improvement
case.
shall inure to the benefit of the creditor.
KINDS OF BILATERAL OBLIGATION
F. IMPROVEMENT OF THING AT
EXPENSE OF DEBTOR – The debtor shall A. RECIPROCAL BILATERAL
have no other right than that granted to the OBLIGATION – Arises from the same cause
usufructuary. and the performance of one party is designed to
be the equivalent and the condition for the
EFFECTS OF FULFILLMENT OF
performance of the other. Each party may treat
RESOLUTORY CONDITION (Article 1190)
the fulfillment of what is incumbent upon the
A. IN REAL OBLIGATIONS other as a suspensive condition to this
– When the resolutory condition in an obligation and its non-fulfillment, as a tacit or
obligation to give is fulfilled, the obligation implied resolutory condition, giving him the
is extinguished and the parties are obliged right to demand the rescission of the contract.
to return to each other what they have
B. NON-RECIPROCAL BILATERAL
received under the obligation.
OBLIGATION – Those which do not
RULES REGARDING CONDITIONS impose simultaneous and correlative
EFFECTS performance on both parties. The
performance of one party is not dependent
upon the simultaneous performance by the
other.
 REMEDIES IN RECIPROCAL F. AVAILABLE ONLY TO INNOCENT PARTY –
OBLIGATIONS (Article 1191) It can be demanded only if the plaintiff is ready,
willing and able to comply with his own obligation
A. ACTION FOR SPECIFIC
and the other is not. Moreover, the guilty party
PERFORMANCE OR FULFILLMENT OF
cannot rescind.
THE OBLIGATION WITH DAMAGES
RESCISSION WITHOUT PREVIOUS JUDICIAL
B. ACTION FOR RESCISSION OF THE
DECREE
OBLIGATION WITH DAMAGES –
Rescission in Article 1191 governs where there A. WHERE AUTOMATIC RESCISSION
is non-compliance by one of the contracting EXPRESSLY STIPULATED – The parties may
parties in case of reciprocal obligations. The validly enter into an agreement that violation of the
remedy is granted for breach by the other terms of the contract would cause cancellation
contracting party that violates the reciprocity thereof even without judicial intervention or
between them. permission. Where the contract itself contains such a
stipulation, the right to rescind is not "implied" but
LIMITATIONS ON THE RIGHT TO
expressly recognized by the parties. Hence, Article
DEMAND RESCISSION
1191 not applicable.
A. RESORT TO THE COURTS – The
B. WHERE CONTRACT STILL EXECUTORY –
rescission contemplated by Article 1191 is a
Where there is no performance yet by both parties,
judicial rescission or one granted by a court.
but one is ready and willing to comply with what is
The injured party has to resort to the courts to
incumbent upon him and the other is not, the willing
assert his rights judicially for the same article
party may, by his own declaration, rescind the
provides that "the court shall decree the
contract without a previous judicial decree of
rescission claimed, unless there be just cause
rescission. In such a case, it is not necessary that
authorizing the fixing of a period."
there be stipulation providing for automatic
B. POWER OF COURT TO FIX PERIOD – rescission.
The court has discretionary power to allow a
RULES IN CASE OF BREACH BY BOTH
period within which a person in default may be
PARTIES (Article 1192)
permitted to perform his obligation if there is a
just cause for giving time to the guilty party A. FIRST INFRACTOR KNOWN – One party
such as when he is willing to comply with his violated his obligation; subsequently, the other also
obligation but needs time to do so and not where violated his part of the obligation. In this case, the
he refuses to perform. The default incurred was liability of the first infractor should be equitably
not willful or could be excused in view of the reduced.
surrounding circumstances.
B. FIRST INFRACTOR CANNOT BE
C. RIGHT OF THIRD PERSON – If the thing DETERMINED
subject matter of the obligation is in the
– One party violated his obligation followed by the
hands of a third person who acted in good
other, but it cannot be determined which of them was
faith, rescission is not available as a remedy.
the first infractor. The rule is that the contract shall
D. SUBSTANTIAL VIOLATION – The general be deemed extinguished and each shall bear his own
rule is rescission will not be granted for trivial causes damages.
or slight breaches of contract; the violation should be
– In effect, the court shall not provide remedy to
substantial and fundamental as to defeat the object of
either of the parties, who must suffer the damages
the parties in making the agreement.
allegedly sustained by them.
E. WAIVER OF RIGHT – The right to rescind may
be waived, expressly or impliedly.
CHAPTER 3 DIFFERENT KINDS OF as in the case of death. – Where the period is not fixed
OBLIGATIONS SECTION 2. but a period is intended, the courts are usually
empowered by law to fix the same.
OBLIGATION WITH A PERIOD – One whose
effects or consequences are subjected in one way or RULES IN CASE OF LOSS, DETERIORATION,
another to the expiration or arrival of said period or OR IMPROVEMENT OF THING BEFORE THE
term. ARRIVAL OF THE SUSPENSIVE PERIOD
(Article 1194)
PERIOD or TERM
– In case of loss, deterioration or improvement of the
– A future and certain event upon the arrival of which
thing before the arrival of the day certain, the rules in
the obligation or right subject to it either arises or is
Article 1189 shall be observed.
terminated.
A. LOSS OF THING WITHOUT DEBTOR’S
– It is a day certain which must necessarily come,
FAULT – The obligation is extinguished. As a
although it may not be known when (Article 1193).
general rule, the debtor is not liable for a fortuitous
KINDS OF PERIODS KINDS OF PERIOD OR event.
TERM
B. LOSS OF THING THROUGH DEBTOR’S
A. ACCORDING TO EFFECT FAULT – The debtor is obliged to pay damages.

1. SUSPENSIVE PERIOD (EX DIE) – A period or C. DETERIORATION OR IMPAIRMENT OF

term with a suspensive effect. The obligation begins THING WITHOUT DEBTOR’S FAULT – The
only from a day certain, in other words, upon the creditor suffers the deterioration, impairment, or
arrival of the period. – Obligations for whose reduction in value. RULES REGARDING
fulfillment a day certain has been fixed, shall be PERIODS
demandable only when that day comes (Article
D. DETERIORATION OF THING THROUGH
1193).
DEBTOR’S FAULT – The creditor may choose
2. RESOLUTORY PERIOD (IN DIEM) – A period between the rescission of the obligation or its
or term with a resolutory effect. Up to a certain time, fulfillment with indemnity for damages in either
the obligation remains valid, but upon the arrival of case.
said period, the obligation terminates.
E. IMPROVEMENT OF THING BY NATURE OR
B. ACCORDING TO SOURCE BY TIME – The improvement shall inure to the
benefit of the creditor.
1. LEGAL PERIOD – A period granted under the
provisions of the law. F. IMPROVEMENT OF THING AT EXPENSE OF
DEBTOR – The debtor shall have no other right than
2. CONVENTIONAL PERIOD or VOLUNTARY that granted to a usufructuary.
PERIOD – Period agreed upon or stipulated by the
parties. PAYMENT BEFORE ARRIVAL OF PERIOD
(Article 1195)
3. JUDICIAL PERIOD – The period or term fixed by
the courts for the performance of an obligation or for – Anything paid or delivered before the arrival of the
its termination. KINDS OF PERIODS period, the obligor being unaware of the period or
believing that the obligation has become due and
C. ACCORDING TO DEFINITENESS demandable, may be recovered, with the fruits and
1. DEFINITE PERIOD – The exact date or time is interests.
known and given. – The creditor cannot unjustly enrich himself by
2. INDEFINITE PERIOD – Something that will retaining the thing or money received before the
surely happen but the date of happening is unknown arrival of the period.
DEBTOR PRESUMED AWARE OF PERIOD – B. TERM IS FOR THE BENEFIT OF THE
The debtor is presumed to be aware of the period. He CREDITOR ALONE – The creditor can demand
has the burden of proving that he was unaware of the payment at any time even before the term expires and
period. Where the duration of the period depends he cannot be compelled to accept payment from the
upon the will of the debtor, payment by him amounts, debtor prior to the stipulated period.
in effect, to his determination of the arrival of the
GENERAL RULE – If the obligation does not state
period. The debtor may no longer recover the thing
a period and no period is intended, the court is not
or money once the period has arrived but he can
authorized to fix a period. The courts have no right
recover the fruits or interests thereof from the date of
to make contract for the parties.
premature performance to date of maturity of the
obligation. EXCEPTIONS (WHEN THE COURTS CAN FIX
THE TERM) (Article 1197)
PERIOD WITHIN WHICH RECOVERY MAY BE
MADE A. NO PERIOD IS FIXED BUT A PERIOD WAS
INTENDED – When although the obligation does
A. IF THE DEBTOR DID NOT KNOW THAT
not fix a period, it can be inferred from its nature and
PAYMENT WAS NOT YET DUE – Before the debt
the circumstances that a period was intended.
matures regarding what was paid. Even after
maturity, regarding interest for after all, the creditor B. DURATION OF THE PERIOD DEPENDS
was in bad faith. However, the right prescribes five UPON THE WILL OF THE DEBTOR AS
years after premature payment. PROVIDED FOR IN ARTICLE 1180 – In this case
what really depends on the debtor is not the payment,
B. IF THE DEBTOR KNEW THAT PAYMENT
for he had promised to pay, but the TIME when
WAS NOT YET DUE – No recovery can be had of
payment is to be made. When such is the case, the
what has been paid, much less can there be recovery
court is obliged to fix the duration of the period. The
of interest. This is true whether the creditor is in good
creditor must ask the court first for the fixing of the
or bad faith, since the important thing is the
term, and it is only when that term set arrives that he
knowledge by the debtor of the prematureness for
can demand fulfillment. Any action to recover before
this is implied waiver.
this is done is considered premature.
PRESUMPTION AS TO BENEFIT OF PERIOD
PERIOD FIXED CANNOT BE CHANGED BY
(Article 1196) – In an obligation subject to a period
THE COURTS
fixed by the parties, the period is presumed to have
been established for the benefit of both the creditor A. If there is a period agreed upon and it has already
and debtor. Before the expiration of the period, the lapsed, the court cannot fix another period.
debtor may not fulfill the obligation and neither may
the creditor demand its fulfillment without the B. From the very moment the parties give their
consent of the other especially if the latter would be acceptance and consent to the period fixed by the
prejudiced or inconvenienced thereby. The debtor court, said period acquires the nature of a contract,
cannot pay prematurely and the creditor cannot because the effect of such acceptance and consent by
demand prematurely. It applies only where the the parties is exactly the same as if they had expressly
parties to a contract themselves have fixed a period. agreed upon it, and having been agreed upon by
them, it becomes a law governing their contract.
EXCEPTIONS IF THERE BE SUCH INTENT However, the parties may modify the term by a new
agreement.
A. TERM IS FOR THE BENEFIT OF THE
DEBTOR ALONE – He is required to pay only at the WHEN DEBTOR SHALL LOSE EVERY RIGHT
end but he may pay even before if he desires to do TO MAKE USE OF THE PERIOD (FIIVA) (Article
so. The debtor may also resist premature demand for 1198)
compliance.
A. WHEN DEBTOR BECOMES INSOLVENT – b. FACULTATIVE OBLIGATION – One where
When after the obligation has been contracted, he only one prestation has been agreed upon, but the
becomes insolvent, unless he gives a guaranty or obligor may render another in substitution.
security for the debt.
RIGHT OF CHOICE (Article 1200)
B. WHEN THE DEBTOR DOES NOT FURNISH
– GENERAL RULE: As a general rule, the right of
GUARANTIES OR SECURITIES PROMISED
choice belongs to the debtor.
C. WHEN GUARANTIES OR SECURITIES
– EXCEPTION: It may be exercised by the creditor
GIVEN HAVE BEEN IMPAIRED OR HAVE
but only when expressly granted to him or by a third
DISAPPEARED – When by his own acts he has
person when the right is given to him by common
impaired said guaranties or securities after their
agreement.
establishment, and when through a fortuitous event
they disappear, unless he immediately gives new LIMITATIONS ON THE RIGHT OF CHOICE OF
ones equally satisfactory. RULES REGARDING THE DEBTOR
PERIODS
A. ARTICLE 1199 – The right of choice, as a
D. WHEN DEBTOR VIOLATES AN general rule, belongs to the debtor. The debtor must
UNDERTAKING – When the debtor violates any choose one prestation and completely deliver or
undertaking, in consideration of which the creditor perform such prestation. The creditor cannot be
agreed to the period. compelled to receive part of one and part of the other
prestation.
E. WHEN THE DEBTOR ATTEMPTS TO
ABSCOND B. ARTICLE 1200 – The debtor cannot choose those
prestations which are impossible, unlawful or which
SECTION 3. ALTERNATIVE OBLIGATIONS
could not have been the object of the obligation.
OBLIGATIONS ACCORDING TO NUMBER OF These prestations are void. Their presence does not
OBJECTS DUE invalidate the obligation if it includes other
undertakings otherwise free from such defects. The
KINDS OF OBLIGATION ACCORDING TO
right of choice is not extinguished but limited to the
NUMBER OF OBJECT
remaining valid prestations.
A. SIMPLE OBLIGATION – One where there is
C. ARTICLE 1202 – The debtor has no more right of
only one prestation.
choice when, among the prestations whereby he is
B. COMPOUND OBLIGATION – One where there alternatively bound, only one is practicable. In this
are two or more prestations. case, there is not only a limitation but a loss of the
right of choice belonging to the debtor. The
KINDS OF COMPOUND OBLIGATION obligation becomes simple.
1. CONJUNCTIVE OBLIGATION – One where COMMUNICATION OF NOTICE THAT CHOICE
there are several prestations and all of them are due. HAS BEEN MADE
OBLIGATIONS ACCORDING TO NUMBER OF
OBJECTS DUE
2. DISTRIBUTIVE or DISJUNCTIVE A. EFFECTS OF NOTICE (Article 1201)
OBLIGATION – One where one, two, or more
1. Until the choice is made and communicated,
prestations are due. KINDS OF
the obligation remains alternative.
a. ALTERNATIVE OBLIGATION – One where
several prestations are available and the obligor must
2. Once the notice of the election has been
completely perform one of the alternatives.
given to the person entitled to receive the
 same, the obligation ceases to be alternative RULES IN CASE OF LOSS OR IMPOSSIBILITY
and becomes a simple obligation to do or to BEFORE CHOICE IS COMMUNICATED BY THE
deliver the object selected. DEBTOR
A. IF ONLY ONE OR SOME OF THE
3. Such choice once properly made and
PRESTATIONS ARE LOST DUE TO
communicated is irrevocable and cannot,
FORTUITOUS EVENT OR FAULT OF THE
therefore, be changed by either party without
DEBTOR – The debtor may deliver any of the
the consent of the other. The concurrence of
remainder, or that which remains if only one subsists.
the creditor to the choice made by the debtor
is not required. B. IF ALL PRESTATIONS ARE LOST DUE TO
FORTUITOUS EVENT – The obligation is
extinguished.
4. Where the choice has been expressly given
to the creditor, such choice shall likewise C. IF ALL PRESTATIONS ARE LOST DUE TO
produce legal effects upon being DEBTOR’S FAULT (Article 1204) – The creditor
communicated to the debtor. shall have the right to indemnity for damages since
the obligation can no longer be complied with. The
debtor shall pay the value of the last thing which
B.PROOF AND FORM OF NOTICE – The burden disappeared or that of the service which last became
of proving that such communication has been made impossible was lost plus damages.
is upon him who made the choice. The law does not
require any particular form regarding the giving of – Other damages may also be awarded.
notice. It may be made expressly which may be oral D. IF ALL PRESTATIONS EXCEPT ONE ARE
or written. It may be made impliedly, such as when LOST DUE TO DEBTOR’S FAULT AND
the debtor already performs one of the prestations. REMAINING IS SUBSEQUENTLY LOST DUE
TO FORTUITOUS EVENT – The debtor’s
obligation is extinguished.
RULES REGARDING ALTERNATIVE
OBLIGATIONS WHEN THE DEBTOR MAY E. IF ALL PRESTATIONS EXCEPT ONE ARE
RESCIND THE CONTRACT (Article 1203) LOST DUE TO FORTUITOUS EVENT AND
REMAINING IS SUBSEQUENTLY LOST DUE
– It is the very nature of an alternative obligation that TO DEBTOR’S FAULT – Debtor shall pay
the debtor can make his choice without the consent damages.
of the creditor. Hence, the right is given to the debtor
to rescind the contract and recover damages if, RULES REGARDING ALTERNATIVE
through the creditor’s fault, he cannot make a choice OBLIGATIONS RULES IN CASE OF LOSS OR
according to the terms of the obligation. However, IMPOSSIBILITY BEFORE CHOICE IS
the debtor is not obliged to rescind but may choose COMMUNICATED BY THE CREDITOR (Article
to perform any of the remaining prestations but still 1205)
with a right to recover the value of the item destroyed A. IF ONLY ONE OR SOME PRESTATIONS
by the creditor with damages. ARE LOST DUE TO FORTUITOUS EVENT – The
– In case the debtor does not rescind but choses the debtor shall perform the obligation by delivering that
object destroyed by the creditor, the creditor shall no which the creditor should choose from among the
longer be liable for damages. remainder or that which remains if only one subsists.
B. IF ALL PRESTATIONS ARE LOST DUE TO
FORTUITOUS EVENT – The obligation is
extinguished.
 C. IF ONLY ONE OR SOME PRESTATIONS a. If due to fortuitous event, the obligation is
ARE LOST DUE TO DEBTOR’S FAULT – The extinguished.
creditor may claim any of those subsisting, or the
b. If due to debtor’s fault, he shall be obliged to pay
price of any of those which were lost due to debtor’s
damages.
fault plus damages in both cases.
SECTION 4
D. IF ALL PRESTATIONS ARE LOST DUE TO
DEBTOR’S FAULT – The creditor may claim the JOINT AND SOLIDARY OBLIGATIONS
price of any of the objects lost plus damages. OBLIGATIONS ACCORDING TO NUMBER OF
PARTIES KINDS OF OBLIGATIONS
RULES APPLICABLE TO PERSONAL
ACCORDING TO THE NUMBER OF PARTIES
OBLIGATIONS – The above rules are also
applicable to personal obligations. A. INDIVIDUAL OBLIGATION – One where
there is only one obligor or one obligee.
FACULTATIVE OBLIGATIONS FACULTATIVE
OBLIGATION (Article 1206) – One where only one B. COLLECTIVE OBLIGATION – One where there
prestation has been agreed upon but the obligor may are two or more debtors and/or two or more creditors.
render another in substitution. KINDS OF COLLECTIVE OBLIGATIONS
EFFECT OF LOSS 1. JOINT OBLIGATION
A. BEFORE SUBSTITUTION – One where the whole obligation is to be paid or
fulfilled proportionately by the different debtors
1. LOSS OF THE PRINCIPAL THING
and/or is to be demanded proportionately by the
a. If due to a fortuitous event, the obligation is different creditors.
extinguished.
– Each obligor answers only for a part of the whole
b. If due to debtor’s fault, the debtor is liable for liability and to each obligee belongs only a part of the
damages. correlative rights.
FACULTATIVE OBLIGATIONS – To each his own.
2. LOSS OF THE SUBSTITUTE – The loss of the OBLIGATIONS ACCORDING TO NUMBER OF
thing intended as a substitute whether due to a PARTIES
fortuitous event or the debtor’s fault does not make
2. SOLIDARY OBLIGATION
the debtor liable because the substitute is not due.
The debtor has still to deliver the principal thing – One where each one of the debtors is bound to
which is the thing due. The effect of the loss of the render, and/or each one of the creditors has a right to
substitute is merely to extinguish the facultative demand from any of the debtors, entire compliance
character of the obligation and convert it into a with the prestation.
simple obligation.
– The relationship between the creditors and debtors
B. AFTER SUBSTITUTION is so close that each of the former or of the latter may
demand the fulfillment of or must comply with the
1. LOSS OF THE PRINCIPAL THING – If the
whole obligation.
principal thing is loss, the debtor is not liable
whatever may be the cause of the loss because it is – One for all, all for one.
no longer due. After substitution, the obligation
ceases to be facultative and becomes a simple to COLLECTIVE OBLIGATION PRESUMED TO
deliver or perform the substituted thing or service. BE JOINT

2.LOSS OF THE SUBSTITUTE – GENERAL RULE: In collective obligations

where there are two or more debtors or two or more
creditors and the share of each debtor or creditor is a. Even when the agent has exceeded his authority,
not specified, the obligation is presumed to be the principal is solidarily liable with the agent if
JOINT. the principal allowed the agent to act as though
he had full powers (Article 1911).
This presumption is rebuttable.
b. All partners are solidarily liable with the
– EXCEPTIONS: There is solidary liability only
partnership for crimes or quasidelicts committed by
when the obligation expressly so states, or when the
any partner acting in the ordinary course of the
law or the nature of the obligation requires solidarity.
business of the partnership or with authority of the
WHEN OBLIGATION IS SOLIDARY other partners (Articles 1822 to 1824).
(EXCEPTIONS TO THE PRESUMPTION THAT
c. If two or more persons have appointed an agent
OBLIGATION IS JOINT)
for a common transaction or undertaking, they shall
A. When there is a stipulation in the contract that the be solidarily liable to the agent for all the
obligation is solidary. consequences of the agency (Article 1915).

B. When the nature of the obligation requires liability d. When there are two or more bailees in
to be solidary. commodatum to whom the thing is loaned in the
same contract, they are liable solidarily (Article
C. When the law declares the obligation to be 1945).
solidary.
e. The responsibility of two or more payees when
KINDS OF SOLIDARITY there has been a payment of what is not due, is
A. ACCORDING TO PARTIES BOUND solidary (solutio indebiti) (Article 2157).

1. PASSIVE SOLIDARITY – Solidarity on the part f. The responsibility of two or more persons who are
of the debtors, where any one of them can be made liable for a quasi-delict is solidary (Article 2194).
liable for the fulfillment of the entire obligation. g. If the engineer or architect supervises the
2. ACTIVE SOLIDARITY – Solidarity on the part construction of a building, he shall be solidarily
of the creditors, where any one of them can demand liable with the contractor for damages for any defect
the fulfillment of the entire obligation. in the construction (Article 1723).

3. MIXED SOLIDARITY – Solidarity on the part of h. In a felony, the principal, accomplices and
the debtors and creditors, where each one of the accessories, each within their respective class, shall
debtors is liable to render, and each one of the be liable severally (in solidum) among themselves
creditors has a right to demand, entire compliance of for their quotas, and subsidiarily for those of other
the obligation. persons liable (Article 110, Revised Penal Code, Act
No. 3815, December 8, 1930).
B. ACCORDING TO SOURCE
3. REAL SOLIDARITY – Where solidarity is
1. CONVENTIONAL SOLIDARITY – Where imposed by the nature of the obligation
solidarity is agreed upon by the parties. If nothing is
mentioned in the contract relating to solidarity, the SOLIDARITY IS NOT PRESUMED – Solidary
obligation is only joint. obligations are very burdensome for they create
unusual rights and liabilities. Solidarity between
2. LEGAL SOLIDARITY – Where solidarity is debtors increases their responsibility while solidarity
imposed by the law. between creditors increases the right of each creditor.
INSTANCES OF LEGAL SOLIDARITY (WHERE The law tends to favor the debtors in presuming that
THE LAW IMPOSES SOLIDARY LIABILITY) they are bound jointly and not solidarily.
JOINT AND SOLIDARY OBLIGATIONS JOINT
INDIVISIBLE OBLIGATION (Article 1209)
– The obligation is joint because the parties are debtors are concerned, the act shall be valid and
merely proportionately liable. It is indivisible binding.
because the object or subject matter is not physically
ASSIGNMENT BY SOLIDARITY CREDITOR OF
divisible into different parts. In other words, joint as
HIS RIGHT (Article 1213)
to liabilities of the debtors or rights of the creditors
but indivisible as to compliance. – GENERAL RULE: The solidary creditor cannot
assign his rights.
– This constitutes the middle ground between a joint
obligation and a solidary obligation. – EXCEPTION: A solidary creditor is allowed if all
the others consent. – If the assignment is made to co-
creditor, the consent of the other creditors is not
RULES REGARDING SOLIDARY necessary.
OBLIGATIONS INDIVISIBLE OBLIGATIONS
PAYMENT TO ANY OF THE SOLIDARY
NOT NECESSARILY SOLIDARY
CREDITORS (Article 1214)
OBLIGATIONS (Article 1210)
– The rule is that the debtor may pay any one of the
– The indivisibility of an obligation does not
solidary creditors. But when a demand, judicial or
necessarily give rise to solidarity nor does solidarity
extrajudicial, has been made by any one of them, to
of itself imply indivisibility.
avoid confusion, as well as prejudice to the more
SOLIDARITY NOT AFFECTED BY DIVERSE diligent creditor, payment should be made to him;
STIPULATIONS (Article 1211) otherwise, the obligation will not be extinguished
except insofar as the creditor-payee’s share is
– The essence of solidarity consists in the right of
concerned in case the latter does not give to the other
each creditor to enforce the rights of all and the
creditors their shares in the payments.
liability of each debtor to answer for the liabilities of
all. Therefore, there may be a solidary obligation – If there are two or more debtors, only the debtor,
although the parties may not be bound in the same upon whom demand has been made, is bound to
manner and by the same periods and conditions. make payment to the creditor who made the demand.
– The rule is that the creditor may bring his action in LIABILITY OF SOLIDARY CREDITOR IN CASE
toto against any of the solidary debtors less the shares OF NOVATION, COMPENSATION,
of the other debtors with unexpired terms or CONFUSION, OR REMISSION (Article 1215) –
unfulfilled conditions who are entitled to defenses Novation, compensation, confusion, and remission
under Article 1222. Upon the expiration of the term are mode or causes of extinguishment of obligations.
or the fulfillment of the condition, the creditor will It is but logical that the creditor who executed any of
have the right to demand the payment of the these acts should be liable to the others for their
remainder. The parties may stipulate that any corresponding shares considering that such acts are
solidary debtor already bound may be made liable for prejudicial to them.
the entire obligation. RULES REGARDING
SOLIDARY
RIGHT OF CREDITOR TO PROCEED AGAINST
ANY SOLIDARY DEBTOR (Article 1216)
OBLIGATIONS BENEFICIAL OR PREJUDICIAL
– The above provision is not applicable to a joint
ACT OF SOLIDARY CREDITOR (Article 1212)
obligation. It reiterates the rule that in a solidary
– A solidary creditor may do any act beneficial or obligation (passive solidarity), any one or some or all
useful to the others but he cannot perform any act of the solidary debtors simultaneously, may be made
prejudicial to them. If he performs such act and as a to pay the debt so long as it has not been fully
result the obligation is extinguished, he shall be collected.
responsible to the others for damages. As far as the
 – The choice is left to solidary creditor to determine – When a solidary debtor pays the obligation he is
against whom he will enforce collection. There is no entitled, as a rule, to reimbursement from his co-
waiver against those not yet sued. They may be debtors. However, when the obligation has already
proceeded against later. prescribed or become illegal, the obligation is
extinguished. Hence, there is no more obligation to
EFFECTS OF PAYMENT BY A SOLIDARY
be complied with.
DEBTOR (Article 1217)
EFFECT OF REMISSION OF SHARE AFTER
A. BETWEEN THE SOLIDARY DEBTORS AND
PAYMENT – If the share of a solidary debtor is
CREDITORS -Payment made by one of the solidary
remitted by the creditor after another solidary debtor
debtors extinguishes the obligation. However, the
had paid the whole obligation, the remission is
creditor for his protection is given the right to choose
useless because there was really nothing more the
which offer to accept if two or more solidary debtors
creditor could remit in view of the complete
offer to pay.
payment. In such a case, the debtor whose share was
B. AMONG THE SOLIDARY DEBTORS – After remitted can still be made to reimburse his share to
payment of the debt, the paying solidary debtor can the payer-debtor. Inferentially, had remission
demand reimbursement from his co-debtors for their preceded payment, solutio indebiti arises. The debtor
proportionate shares with legal interest only from the whose share has been remitted cannot be made to
time of payment. reimburse anything, for after all, the payer-debtor
will have only the balance of the debt after deducting
C. AMONG THE SOLIDARY CREDITORS – The the share of the debtors who have received the benefit
receiving creditor is jointly liable to the others for of remission.
their corresponding shares.
NO RIGHT TO REIMBURSEMENT IN CASE OF
RULES REGARDING SOLIDARY REMISSION (Article 1220) – The reason for the
OBLIGATIONS PRESCRIPTIVE PERIODS OF above article is that the debtor who obtains remission
ACTIONS pays nothing to the creditor. Remission is essentially
A. WITHIN TEN YEARS FROM THE TIME THE gratuitous. It is really a donation. The article applies
RIGHT OF ACTION ACCRUES only when the whole obligation is remitted.

1. Upon a written contract. RULES IN CASE THING HAS BEEN LOST OR

PRESTATION HAS BECOME IMPOSSIBLE
2. Upon an obligation created by law.
A. LOSS IS WITHOUT FAULT AND
3. Upon a judgment. BEFORE DELAY – Obligation is
B. WITHIN SIX YEARS FROM THE TIME THE extinguished.
RIGHT OF ACTION ACCRUES B. LOSS IS DUE TO FAULT ON THE PART OF A
1. Upon an oral contract. SOLIDARY DEBTOR – All solidary debtors shall
be responsible for the price as well as damages. The
2. Upon a quasi-contract. RULES REGARDING innocent debtors can recover from the guilty debtor
SOLIDARY OBLIGATIONS the amount they have paid including damages if they
C. WITHIN FOUR YEARS FROM THE TIME THE have already contributed. If the guilty debtor is made
RIGHT OF ACTION ACCRUES to pay the price as well as damages, he cannot claim
reimbursement from the innocent ones. RULES
1. Upon an injury to the rights of the plaintiff. REGARDING SOLIDARY OBLIGATIONS
2. Upon a quasi-delict. C. LOSS IS WITHOUT FAULT BUT AFTER
EFFECT OF PAYMENT AFTER OBLIGATION DELAY – Creditor can still recover damages from
HAS PRESCRIBED OR BECOME ILLEGAL all solidary debtors. This is without prejudice to the
right of action of the innocent debtors against the 2. Incapacity to give consent on the part of the other
guilty debtor. debtor as when he is a minor (complete defense).
DEFENSES AVAILABLE TO A SOLIDARY 3. Non-fulfillment of condition imposed regarding
DEBTOR (Article 1222) the share of the other debtor (partial defense).
4. Non-arrival of term regarding the share of the
other debtor (partial defense).
A. DEFENSES DERIVED FROM THE NATURE
OF THE OBLIGATION DIVISIBLE AND INDIVISIBLE OBLIGATIONS
1. Illegality or absence of consideration or cause.
2. Absolute simulation. DIVISIBLE OBLIGATION – One the object of
which, in its delivery or performance, is capable of
3. Extinguishment of the obligation as when the
partial fulfillment.
whole debt has been paid, remitted or has prescribed.
RULES INDIVISIBLE OBLIGATION – One the object of
which, in its delivery or performance, is not capable
4. Non-fulfillment of the suspensive condition if
of partial fulfillment.
made upon the whole object or upon all the debtors.
KINDS OF DIVISION
5. Statute of Frauds.
A. QUALITATIVE DIVISION – One based on
6. When all the debtors were incapacitated to give
quality, not on number or quantity of the
consent such as a minor, insane, idiot and persons
things which are the object of the obligation.
under a hypnotic spell.
Depends on value and worth, irrespective of
7. When there are vices of consent on the part of all quantity.
the debtors such as when all were forced or
B. QUANTITATIVE DIVISION – One based on
intimidated or unduly influenced or were led into
quantity rather than on quality. Depends on number.
error or there is fraud.
C. IDEAL DIVISION or INTELLECTUAL
8. Res judicata. RULES REGARDING SOLIDARY
DIVISION or MORAL DIVISION – One that exists
OBLIGATIONS
merely in the minds of the parties and not in physical
B. DEFENSES PERSONAL TO, OR WHICH reality.
PERTAIN TO SHARE OF, DEBTOR SUED
KINDS OF INDIVISIBILITY
1. Vitiated consent on the part of the debtor sued
A. LEGAL INDIVISIBILITY – Where a specific
(complete defense).
provision of law declares as indivisible, obligations
2. Incapacity to give consent on the part of the debtor which, by their nature, are divisible.
sued as when he is a minor (complete defense).
B. CONVENTIONAL INDIVISIBILITY – Where
3. Non-fulfillment of condition imposed regarding the will of the parties makes as indivisible,
his share (partial defense). obligations which, by their nature, are divisible.

4. Non-arrival of term regarding his share (partial C. NATURAL INDIVISIBILTY or ABSOLUTE

defense). INDIVISIBILITY – Where the nature of the object
or undertaking does not admit of division.
C. DEFENSES PERSONAL TO OTHER
SOLIDARY DEBTORS JOINT INDIVISIBLE OBLIGATION (Article
1224) – Here the object or compliance is indivisible
1. Vitiated consent on the part of the other debtor and yet the parties are merely bound jointly.
(complete defense).
EFFECT OF NON-COMPLIANCE BY A DEBTOR OBLIGATION WITH A PENAL CLAUSE – One
IN A JOINT INDIVISIBLE OBLIGATION (Article which contains an accessory undertaking to pay a
1224) – If any one of the debtors does not comply previously stipulated indemnity in case of breach of
with his undertaking in a joint indivisible obligation, the principal prestation, intended primarily to induce
the obligation is converted into one for damages, i.e. its fulfillment.
to pay money. The creditor cannot ask for specific
PURPOSES OF PENAL CLAUSE
performance or rescission because there is no cause
of action against the other debtors who are willing to A. To insure the performance of an obligation by
fulfill their promises. creating an effective deterrent against breach,
making the consequences of such breach onerous as
OBLIGATIONS THAT ARE DEEMED
it may be possible. The purpose is reparation. This is
DIVISIBLE (Article 1225)
the general purpose of a penal clause.
A. OBLIGATIONS WHICH HAVE FOR THEIR
B. To substitute a penalty for the indemnity for
OBJECT THE EXECUTION OF A CERTAIN
damages and the payment of interests in case of non-
NUMBER OF DAYS OF WORK
compliance, or to punish the debtor for the non-
B. OBLIGATIONS WHICH HAVE FOR THEIR fulfillment or violation of his obligation. The purpose
OBJECT THE ACCOMPLISHMENT OF WORK is punishment. (Article 1226)
BY METRICAL UNITS
KINDS OF PENAL CLAUSE
C. OBLIGATIONS WHICH BY THEIR NATURE
A. AS TO ITS ORIGIN
ARE SUSCEPTIBLE OF PARTIAL
PERFORMANCE 1. LEGAL PENAL CLAUSE – One that is imposed
by law.
OBLIGATIONS DEEMED INDIVISIBLE (Article
1225) 2. CONVENTIONAL PENAL CLAUSE – That
which has been agreed upon by the parties.
A. OBLIGATIONS TO GIVE DEFINITE THINGS
OBLIGATIONS WITH A PENAL CLAUSE
– The obligation is indivisible because of the nature
of the subject matter. B. AS TO ITS PURPOSE
B. OBLIGATIONS WHICH ARE NOT 1. COMPENSATORY PENAL CLAUSE – When
SUSCEPTIBLE OF PARTIAL PERFORMANCE – the penalty takes the place of damages.
The obligation is indivisible by reason of its purpose
which requires the performance of all the parts. 2. PUNITIVE PENAL CLAUSE – When the
penalty is imposed merely as punishment for breach.
C. OBLIGATIONS PROVIDED BY LAW TO BE
INDIVISIBLE EVEN IF THING OR SERVICE IS C. AS TO ITS DEMANDABILITY OR EFFECT
PHYSICALLY DIVISIBLE 1. SUBSIDIARY – When only the penalty may be
D. OBLIGATIONS INTENDED BY THE asked.
PARTIES TO BE INDIVISIBLE EVEN IF THING 2. JOINT – When both the principal contract and the
OR SERVICE IS PHYSICALLY DIVISIBLE penal clause can be enforced.
SECTION 5 CLAUSE OBLIGATIONS WITH A CLAUSE PENALTY SUBSTITUTES FOR
PENAL CLAUSE DAMAGES AND INTERESTS (Article 1226) – As
PENAL CLAUSE – An accessory undertaking a general rule, penalty takes the place of indemnity
attached to an obligation to assume greater liability for damages and the payment of interest in case of
in case of breach, i.e. the obligation is not fulfilled, non-compliance. Proof of actual damages suffered
or is partly or irregularly complied with. by the creditor is not necessary in order that the
penalty may be enforced.
WHEN CREDITOR MAY RECOVER DAMAGES – In case of non-compliance, the creditor may ask for
IN ADDITION TO THE PENALTY (Article 1226) the penalty or require specific performance. The
remedies are alternative and not cumulative nor
A. When so stipulated by the parties.
successive, subject to the exception that the penalty
B. When the obligor refuses to pay the penalty, in may be enforced if after the creditor has decided to
which case the creditor may recover legal interest require fulfillment, the same should become
thereon. impossible without his fault. If there was fraud on the
part of the debtor, the creditor may recover the
C. When the obligor is guilty of fraud (dolo penalty as well as damages for non-fulfillment.
incidente) in the fulfillment of the obligation, in
which case the creditor may recover damages caused
by such fraud.
WHEN PENAL CLAUSE JOINT – The creditor has
WHEN PENALTY MAY BE ENFORCED (Article the right to demand performance and payment of
1226) – The penalty, as a stipulation in a contract, is penalty jointly when this right has been clearly
demandable only if there is a breach of the obligation granted to him. It is therefore not required that this
and it is not contrary to law, morals, good customs, right be expressly reserved for him; an implied grant
public order, or public policy. Thus, if the obligation clearly deducible from the evidence or the nature of
cannot be fulfilled due to a fortuitous event, the the obligation is sufficient.
penalty is not demandable.
PENALTY DEMANDABLE WITHOUT PROOF
PENALTY NOT SUBSTITUTE FOR OF ACTUAL DAMAGES (Article 1228)
PERFORMANCE (Article 1227)
– All that the creditor has to prove to enforce the
– GENERAL RULE: The debtor cannot just pay the penalty is the violation of the obligation by the
penalty instead of performing the obligation. debtor. It is not necessary to adduce evidence to
Precisely, the purpose of the penalty is to secure prove losses and damages suffered by the creditor or
compliance. the extent of the same. One of the reasons of fixing
the penalty is to avoid such necessity and other
– EXCEPTION: The debtor can exempt himself difficulties involved in litigations.
from the non-fulfillment of the obligation only when
this right has been expressly reserved for him. – The creditor may enforce the penalty whether he
suffered damages or not but he cannot recover more
PENAL CLAUSE PRESUMED SUBSIDIARY than the stipulated penalty even if he proves that the
(Article 1227) amount of his damages exceed the penalty.
– GENERAL RULE: The creditor cannot demand WHEN PENALTY MAY BE REDUCED BY THE
the fulfillment of the obligation and the satisfaction COURTS (Article 1229)
of the penalty at the same time. A penal clause is
presumed to be subsidiary not joint. A. WHEN THERE IS PARTIAL OR IRREGULAR
PERFORMANCE – The first refers to the extent of
A. WHEN THERE IS PERFORMANCE fulfillment, the latter, to the manner.
– Once the obligation is fulfilled, the purpose B. WHEN THE PENALTY AGREED UPON IS
is attained and, therefore, there is no need to INIQUITOUS OR UNCONSCIONABLE – The
demand the penalty. penalty may be reduced even if there is no
– EXCEPTION: When the right has been clearly performance at all. Even if iniquitous or
granted to him. unconscionable, liquidated damages, whether
intended as an indemnity or as a penalty, are not void,
B. WHEN THERE IS NO but subject merely to equitable reduction.
PERFORMANCE
WHEN PENAL CLAUSE CANNOT BE G. Fulfillment of a resolutory condition.*an
ENFORCED obligation subject to a respiratory is immediately due
and demandable, the obligation is already existing.
A. The breach is the fault of the creditor.
Upon the happening of resolutory, the pre existing
B. A fortuitous event intervened, unless the debtor obligation is terminated.
expressly agreed on his liability in case of fortuitous
H. Rescission.
event.
I. Annulment. *cancels an obligation by the decree
C. The debtor is not yet in default.
of court, the court can cancel the obligation
EFFECT OF NULLITY OF THE PENAL CLAUSE
J. Prescription. *Extinctive prescription or young
(Article 1230) – If only the penal clause is void, the
prescription, the rights of the creditor to demand
principal obligation remains valid and demandable.
payment are lost due to the lapse of time.
The penal clause is just disregarded. The injured
party may recover indemnity for damages in case of OTHER CAUSES OF EXTINGUISHMENT OF
non-performance of the obligation as if no penalty OBLIGATIONS (DEAD COMFI)
had been stipulated. This is pursuant to the general
A. DEath of a party in case the obligation is personal.
principle that the accessory follows the principal and
*obligation is personal, it cannot be performed by
not vice versa.
any one else
EFFECT OF NULLITY OF THE PRINCIPAL
B. Arrival of a resolutory period. * Immediately
OBLIGATION (Article 1230) – If the principal
demandable
obligation is void, the penal clause is likewise void
because the clause cannot stand alone without the C. Mutual Desistance or withdrawal. * The
principal obligation to which it is subordinated. parties agreed to mutually widthraw from the
However, if the nullity of the principal obligation is contract
due to the fault of the debtor who acted in bad faith,
by reason of which the creditor suffered damages, on D. COMpromise. *Parties agreed to settle the
equitable grounds, the penalty may be enforced. contract. Usually happens pag may demanda sa isa’t
isa.
E. Happening of a Fortuitous event.*General Rule,
CHAPTER 4 EXTINGUISHMENT OF absent any ground of liablity such as mora violation,
OBLIGATIONS bad faith
GENERAL PROVISIONS F. Impossibility of fulfillment. *It is impossible to
fulfill, usually in personal obligation
CAUSES OF EXTINGUISHMENT OF
OBLIGATIONS (PALOREMECON FRAP) SECTION 1. PAYMENT OR PERFORMANCE
A. PAyment or performance. * PAYMENT or PERFORMANCE
B. LOss of the thing due. – May consist of not only the delivery of money but
also the giving of a thing, the doing of an act, or not
C. Condonation or REmission of the debt.
doing of an act (Article 1232)
D. Confusion or MErger of the rights of creditor and
– To properly exist, the creditor has to accept the
debtor.
payment, expressly or implicitly.
E. COmpensation.
*payment refers to delivery of money/giving a thing
F. Novation.
*performance refers to personal obligation (to do/
not to do)
CONSIDERATIONS IN PAYMENT or 2. Article 1245 – In case there is another agreement
PERFORMANCE (WHEN DEBT IS resulting in either dation in payment or novation.
CONSIDERED PAID)
3. In case of waiver by the creditor.*If debtor offers
A. INTEGRITY OF PRESTATION (Article different thing and debtors accept the thing, there is
1233) – A debt to deliver a thing or to render a waiver in the part of creditor. The obligation is
service is not understood to have been paid extinguish.
unless the thing or service has been
*burden of proof, creditor must proved the debtor has
completely delivered or rendered, as the case
utang. The debtor has a right to proved that he has
may be. Payment is complete when the very
paid the debt.
thing or service contemplated has been paid
completely. * SUBSTANTIAL PERFORMANCE or
COMPLIANCE IN GOOD FAITH (Article 1234)
EXCEPTIONS TO INTEGRITY OF PRESTATION
– A performance according to the fair intent of the
1. Article 1234 – Substantial performance in good
contract, with an attempt in good faith to perform.
faith. *not full payment, but the oblig. Is extinct.
Good faith is always presumed in the absence of
2. Article 1235 – Acceptance of incomplete or contrary proof. *Good faith is always presumed he
irregular performance. *the payment is not complete who alleges bad faith has a burden of proving that
and irregular, but extinct there is a bad faith; pag sinabi mong bad faith ako,
payunayan mo.
3. Article 1248 – When partial performance is
allowed. RECOVERY ALLOWED IN CASE OF
SUBSTANTIAL PERFORMANCE IN GOOD
*lf performance is not complete/patrtial
FAITH (Article 1234)
payment, the creditor can refuse to accept
your own payment specially if there is no – In case of substantial performance, the obligee is
stipulation benefited. So the obligor should be allowed to
A. IDENTITY OF THE PRESTATION (Article recover as if there had been a strict and complete
1244) fulfillment less damages suffered by the obligee.
This last condition affords a just compensation for
– The very thing, service or prestation due must be
the relative breach committed by the obligor.
delivered or performed. *kung anong mismong
*damages suffered by the creditor, is just a
pinagusapang bagay/service yun ang idedeliver,
compensated . Meron namang naperfrom substantial
hindi pwedeng palitan.
committed by the obligor, meron nagperform, pero
– In real obligations, a thing different from that due merong relative partial breach commited by the
cannot be offered or demanded against the will of the debtor. Remember, there is a substantial performance
creditor or debtor, as the case may be. *debtor cannot and the debtor must be in good faith.; example the
offer a different object, creditor cannot demand a debtor supposed to deliver 10 boxes of noodles chili
different object even it is a cheaper object or more mansi, kaso nagkaubusan pero nadeliver yung 3
expernsive. boxes. Partial yung dineliver nya yung 9 boxes kaso
wala na talanga kahit anong flavor. There is a relative
– In positive personal obligations, the act to be breach, walang integrity, but the creditor is benefited
performed or the act prohibited cannot be substituted the debtor should be allowed to recover as if there is
against the obligee’s will. * strict and fulfillment
EXCEPTIONS TO IDENTITY OF PRESTATION 1000 per box = 10,000
1. Article 1206 – In case of facultative obligations. Babayaran lang 9,000 pesos which is minus 1,000 for
* the 1 box
. *Sinubukan ni debtor to perform pero kinapos lang unliquidated hindi pa pwedeng idemand kasi hindi pa
alam kung magkano.
C. WHEN THE DIFFERENT PRESTATIONS
RECOVERY ALLOWED WHEN INCOMPLETE
ARE SUBJECT TO DIFFERENT CONDITIONS
OR IRREGULAR PERFORMANCE IS WAIVED
OR DIFFERENT TERMS – When the different
(Article 1235)
prestations in which the obligation consists are
– The reason is the presence of waiver and estoppel. subject to different terms or conditions which affect
If payment is incomplete or irregular, the creditor some of them. In obligations which comprehend
may properly reject it. In case of acceptance, the law several distinct prestations, it is evident that the
considers that the creditor waives his right. The prestations need not be executed simultaneously but
whole obligation in extinguished. The waiver must each successive execution thereof must be complete.
be proved by the debtor. A mere receipt of payment *Yung mga diif. prestation cannot be executed
is not necessarily acceptance. *Kahit hindo buo ang simultaneously but executed successively. Kailangan
payment is waiver, payment is not full, creditor muna mangyari yung condition or magarrive yung
accept the payment, there is a waiver in right of term which is pertinent to a particular or 1 prestation.
creditor to collcet in balance.The whole obligation is Kaya pwede ang partial performance since hindi pa
extinguish but waiver must be proven by the debtor. dumadating yung term ng ibang prestation. Different
Ex. 5 pesos ang utang ng debtor, pero binayad sayo prestation is subject to different terms.
is 4.75 kaso tinanggap. The .25 is waiver right to
FACULTATIVE OBLIGATION (Article 1206) –
collect, but this waiver must be proven by the debtor.
One where only one prestation has been agreed upon
QUALIFIED ACCEPTANCE OF INCOMPLETE but the obligor may render another in
OR IRREGULAR PAYMENT or ACCEPTANCE substitution.*Choice of the debtor whether or not he
UNDER PROTEST will substituted the object. If may pinagusapan na
pwedeng palitan, pwede naman.
*Kung partially lang binayad tapos tinaggap mo,
pero gusto mo pang habulin yung kulang DATION IN PAYMENT or DACION EN PAGO or
ADJUDICATION EN PAGO or DATIO IN
– A protest or objection made by the creditor SOLUTUM (Article 1245)
showing that there is no waiver on his part to enforce
his right to further recover from the debtor. *creditor – It is the conveyance of ownership of a thing as an
accept the 4.75 but will not waive to right to collect accepted equivalent of performance. An existing
the .25, thus the obligation is not extinguish until the debt in money is satisfied not by payment of money
debt is fully paid. but by the alienation of property. *debt is money
debt, utang is pera. if ang utang mo is pera, ang
WHEN PARTIAL PERFORMANCE IS bayad mo rin ay pera. What is accepted as
ALLOWED (Article 1248) performance is the indonation of property.
A. BY STIPULATION – When there is an express – The law on sales governs dation in payment
stipulation to that effect. *pag nagagree si creditor at because the amount of the money debt becomes the
debtor na pwede yung partial payment, the creditor price of the thing alienated. *bayaran ng property, the
has a right to accept the partial payment. amount of money becomes the price of the property.
B. PARTIALLY LIQUIDATED DEBT – When the – The true intention of the parties to subject the
debt is in part liquidated (definitely and determined obligation to dation in payment, express or implied,
or computed) and in part unliquidated. Performance must be clear. *intention of the party is to enter the
of the liquidated part may be insisted upon either by dation in payment must be clear.
the debtor or the creditor.*part of liquidated may be
insisted upon either by the debtor or the creditor. *No identity because money that is paid with another
creditor can demand payment liquated. Yun object or property.
RULES REGARDING PAYERS tinaggap naman ni creditor. But 3rd person can
recover/beneficial reimbursed the money from
PERSONS FROM WHOM CREDITOR MUST
debtor.
ACCEPT PAYMENT
Ex. Debtor has a debt of 10k, and partially pay of 1k,
A. The debtor. *primarily liable to accept
9,000 balance nalang, and 3rd person pays 10k
B. Any person who has an interest in the obligation. without any knowledge that there is 1k partial
payment, but debtor doesn’t know. 3rd person is
C. A third person who has no interest in the allowed to recover the 9k only, it is called beneficial
obligation when there is stipulation that he can make reimbursement. 3rd person can recover the 1k based
payment. on solution indebiti.
CREDITOR MAY REFUSE PAYMENT BY A – The payor is not entitled to subrogation and is
THIRD PERSON (Article 1236) allowed only beneficial reimbursement.
– The creditor has the right to insist on the liability B. IF MADE WITH THE KNOWLEDGE AND
of the debtor. The creditor should not be compelled CONSENT OF THE DEBTOR
to accept payment from a third person for whatever *subrogation- pinapalitan ang creditor
reason. *Creditor may insist that debtor will pay. *substitution- change the person of the debtor
Hindi mo pwedeng pilitin si creditor na iaccept yung
payment ni third person. – The payer shall have the right to reimbursement
and subrogation to such rights as guaranty, penalty
EXCEPTIONS TO THE RIGHT OF CREDITOR clause, or mortgage. The payer shall have the right to
TO REFUSE PAYMENT BY THIRD PERSON recover what he has paid (not necessarily the amount
(WHEN CREDITOR MUST ACCEPT PAYMENT of the debt) and to acquire all the rights of the
OF THIRD PERSON) creditor. *alam ng debtor at pumayag na si 3rd person
A. If there is a stipulation allowing this. * ang magbayad, if creditor accepts the payment. 3rd
person is subrogated to the rights of the creditor.
B. If said third person has an interest in the Subrogation is putting somebody in the shoes of the
fulfillment of the obligation like a co-debtor, creditor. Ex. 1k partially paid by debtor to creditor,
guarantor or joint debtor. *3rd person may pay and 3rd person paid 10k to the creditor, thus 3rd person
because it is stipulated, and interest in the obligation. become the creditor and debtor need to pay 10k, and
*General Rule: Creditor may refuse payment from debtor can recover the 1k to 1st creditor accrd.
the 3rd person Solution indebiti. If may sanla si debtor, the 3rd
person/new creditor can get the sanla.
EFFECT OF PAYMENT BY THIRD PERSON
(Article 1236) WHEN THIRD PERSON CAN RECOVER
PAYMENT MADE TO THE CREDITOR (NOT
A. IF MADE WITHOUT THE KNOWLEDGE FROM THE DEBTOR)
OR AGAINST THE WILL OF THE
DEBTOR A. When the debt has prescribed. *tumanggap ng
payment yung creditor, hindi naman aware yung 3rd
– The payer can recover from the debtor only insofar person na nagprescribe na yung debt. Noong
as the payment has been beneficial to the latter. The nagprescribe na yung debt, the obligation is
recovery is only up to the extent or amount of the extinguish. 3rd person can recover from creditor.
debt at the time of payment.*If the creditor willingly
accepts the payment of 3rd person and the obligation B. When the debt had been completely remitted. *the
in so far as the predator is concerned is extinguish. If creditor condones the debt of debtor.
creditor accepts payment form 3rd person, wala ng C. When the debt has already been paid. *there is
utang si debtor. Wala ng magagawa si creditor kahit already extinguish
ayaw nyang bayaran ni 3rd person yung utan at
D. When legal compensation had already taken payment and the remedy of consignation would not
place. *nagkaroon ng quits ng utang. If may utang sa be proper. *the person is not incapacitated to enter
isat isa ang creditor at debtor kaya quits na. into contracts. If the payer does not have
Extinguish na. predisposition of the thing, it is void payment even it
is accepted by the creditor. Ex. If nagbayad is minor,
RULES REGARDING PAYERS RIGHT OF
the minor can recover the payment
THIRD PERSON TO SUBROGATION (Article
1237) – EXCEPTION: Article 1427 – When a minor
between eighteen and twenty-one years of age, who
– Whoever pays on behalf of the debtor is entitled to
has entered into a contract without the consent of the
subrogation if the payment is with the consent of the
parents or guardians voluntarily pays a sum of money
latter. If the payment is without the knowledge or
or delivers a fungible thing in fulfillment of the
against the will of the debtor, the third person cannot
obligation, there shall be no right to recover the same
compel the creditor to subrogate him in the latter’s
from the obligee who has spent or consumed it in
accessory rights of mortgage, guaranty, or penalty.
good faith. *the creditor does not know the debtor is
*If the debtor has a consent, the c3rd person will be
a minor, and he spend it in good faith. If may natira,
subrogated by the rights of creditor.
the incapacitated person can recover.
PAYMENT BY A THIRD PERSON WHO DOES
TO WHOM PAYMENT SHALL BE MADE
NOT INTEND TO BE REIMBURSED (Article
(Article 1240)
1238)
A. THE CREDITOR OR OBLIGEE OR THE
– The provision embodies the idea that no one should
PERSON IN WHOSE FAVOR THE OBLIGATION
be compelled to accept the generosity of another. If
HAS BEEN CONSTITUTED – The creditor referred
the paying third person does not intend to be
to must be the creditor at the time the payment is to
reimbursed, the payment is deemed a donation which
be made, not at the constitution of the obligation.
requires the debtor’s consent to be valid. However, if
*the creditor at the time of payment, sya ang dapat
the creditor accepts the payment, it shall be valid as
bayaran
to him and the payer although the debtor did not give
his consent to the donation. The debtor cannot legally B. THE CREDITOR’S SUCCESSOR-IN-
refuse to pay the third person and instead insist on INTEREST (HEIR OR ASSIGNEE) *heirs or
paying the creditor. *3rd person pays for the debt of assignees
debtor, 3rd person does not intent to reimburse, so the
C. ANY PERSON AUTHORIZED TO RECEIVE IT
payment will be donation to him, if it is donation, the
– It means not only a person authorized by the
debtors consent to be valid. Creditor who accepts
creditor, but also a person authorized by law to
payment from the 3rd wperson who does not intend
receive payment, such as a guardian, executor, or
to reimbursed, will extinguish the obligation of
administrator of the estate of a deceased, and
debtor to creditor. If nagbago isip ni 3rd person,
assignee or liquidator of a partnership or corporation
pwede nya pa ring singilin si debtor. If it against the
as well as any other person who may be authorized
will of the debtor, beneficial reimbursement is
to do so by law. The authorization may be by
allowed.
agreement or by law *any person authorized to
FREE DISPOSAL OF THE THING DUE AND receive the paymen: GUARDIAN, EXECUTOR
CAPACITY TO ALIENATE REQUIRED (Article ADMINITRATOR OF THE STATE OF A
1239) DECEASED ASSIGNEE OR LIQUADATOR OF A
PARTNERSHIP OR CORP.
– GENERAL RULE: If the person paying does not
have free disposition of the thing due and capacity to
alienate it is not valid even if accepted by the
EFFECT OF PAYMENT TO AN
creditor. This means that the thing can be recovered.
INCAPACITATED PERSON (Article 1241)
Moreover, the creditor cannot be compelled to accept
 – Payment to a person incapacitated to administer or C. If by the creditor’s conduct, the debtor has been
manage his property is not valid unless such led to make the payment. *there is a representation
incapacitate person kept the thing paid or delivered, which is rendered conclusive upon the person who
or was benefited by the payment. In the absence of makes your representation and the person who make
this benefit, the debtor may be made to pay again by sthe representation cannot deny it or disprove it. Ex:
the creditor’s guardian or by the incapacitated person IkAW AY CREDITOR AY MAY LENDING KA,
himself when he acquires or recovers his capacity. tapos yung janitor na hindi naman authorized to
Proof of such benefit is incumbent upon the debtor receive the payment, pinagsuot mo ng uniform ng
who paid. The benefit may be financial, moral or mga agent na naniningil, pinalabas mon a authorized
intellectual but it must be proved. *PAYMENT IN A sya magrecieve ng payment, the creditor can no
INCAPACITATED PERSON IS NOT VALID longer deny or disproved the representation na
UNLESS SHE/HE IS BENEFITED BY THE ginawa nya. Nagrely si debtor doon kaya nagbayad
PAYMENT. KUNG DI TINAGO OR DI sya kay janitor,
NAGBENEFIT, THE DEBTOR MAY BE PAID
PAYMENT TO THIRD PERSON IN POSSESSION
AGAIN BY THE CREDITORS GUARDIAN.
OF CREDIT (Article 1242)
EFFECT OF PAYMENT TO A THIRD PERSON
– Refers to a person who is not the creditor but who,
(Article 1241)
on the face of the instrument, appears to be the
– Payment to a third person or unauthorized party is rightful holder thereof.
not valid except insofar as it has redounded to the
– The third person must be in possession of the credit
benefit of the creditor. Such benefit is not presumed
itself and not merely of the document or instrument
and must be satisfactorily established by the person
evidencing the credit. Mere possession of the
interested in proving this fact. In the absence of such
instrument (unless a bearer instrument) does not
proof, the payment thereof in error and in good faith
entitle the holder to payment nor does payment
will not deprive the creditor of his right to demand
release the debtor. Furthermore, the payer must act in
payment. * 3RD PERSON OR UNAUTHORIZED
good faith, i.e. in honest belief that he is making a
PERSON IS NOT VALID EXCEPT WHEN IT HAS
valid payment and that the payee is the owner of the
REDUNDANT TO THE benefit of the creditor.
credit. Good faith is presumed. *nakapulot ka ng
Benefit is not presumed, but is proven.
promissory note at nakasulat “I promise to pay to
– The payment is valid but only to the extent of bearer 10,000 pesos any person who is is the
benefit, financial, moral or intellectual, to the possession will be paid by debtor”, nawala ni debtor,
creditor. The payment must be proved and is napulot ni 3rd person T at pinakita nya kay debtor, so
therefore not presumed except in certain cases. si debtor binayaran nya kay T, that is valid.
WHEN BENEFIT TO THE CREDITOR IS WHEN PAYMENT TO CREDITOR NOT VALID
PRESUMED IN CASE OF PAYMENT TO AN (Article 1243)
UNAUTHORIZED PERSON (Article 1241)
– Payment is ordered by the court or other competent
A. Subrogation of the payee in the creditor’s rights. authority to be retained by the debtor. Payment made
*the debtor pay in an agent or 3rd person pretending by such debtor is invalid and he is considered in bad
to be authorized instead of paying to you, if it is faith. *payment is not valid because there is an order
impostor agent, there is a subrogation of the 3rd to court made to the debtor or retain the payment,
person to the creditors right. Benefit is presumed. payment made by such debtor in invalid and
considered to be in bad faith. Huwag magbabayad
B. If the creditor ratifies the payment to the third
kahit sino.
person. *binigay ni debtor D kay T, tapos sinabi ni
creditor, O D okay na yung bayad mo kay T, okay – Retention is pursuant to an order of interpleader,
nay un, ayos na yun injunction, or garnishment.*Interpleader is an action
in which a person in possession of a certain property
once calaimant to litigate among themselves who is Court, January 1, 1964).* pwede naman sabihin ng
entitled to the property, the debtor is in the position court na pwede kayo maghati.
of property, and merong dalawang nagcleclaim kaso
– No costs are allowed against the Government,
hindi nya alam kung sino si creditor, kaya magpafile
unless otherwise provided by law.
ng interpleader si debtor, and yung mga nagcleclaim
will litigate among themselves kung sino ang entitled PAYMENT IN LEGAL TENDER (Article 1249)
sa property. And sasabihin ni court na iretain muna
yung property,tapos napili mo yung isa na ibigay na – The payment of debts in money shall be made in
sa kanya dahil nabola mo, it is not valid because the currency stipulated, and if it is not possible to
debtor is judicially ordered by the court to retain the deliver such currency, then in the currency which is
debt. legal tender in the Philippines. *right amount, right
currency pwedeng ipilit ng debtor na tanggapin ni
OTHER RULES IN PAYMENT RULE OF THE creditor. Legal tender: Philippine Peso
MEDIUM QUALITY (Article 1246)
PAYMENTS BY MEANS OF INSTRUMENTS OF
– If the obligation is to deliver a generic thing, the CREDIT
purpose of the obligation and other circumstances
shall be taken into consideration to determine the A. RIGHT OF CREDITOR TO REFUSE OR
quality or kind of thing to be delivered. *Creditor ACCEPT – Promissory notes, checks, bills of
and debtor did not agree as to the quality of the exchange and other commercial documents are not
object, so the creditor cannot insist on a superior legal tender and therefore, the creditor cannot be
quality object, debtor cannot deliver an inferior compelled to accept them. This is true even though
object. the check is certified or is a manager’s check. The
creditor, if he chooses, may accept them without
– The benefit of this provision may be waived. Thus producing the effect of payment. In the meantime,
the creditor may accept a thing of inferior quality and the demandability of the original obligation is
the debtor may deliver a thing of superior quality. suspended. The creditor must then cash the
instrument, and it is only when it is dishonored that
EXPENSES FOR PAYMENT (Article 1247)
he can bring an action for non-payment of the debt.
A. EXTRAJUDICIAL EXPENSES *Creditor cannot compelled to accept them. If
creditor chooses to accept even if it is not legal
– GENERAL RULE: The debtor has to pay for the
tender, suspended ang payment. Creditor must cash
extrajudicial expenses incurred during the payment.
the instrument (check). Pag successfully naging cash
When payment is made, the obligation is
na, doon palang magiging effective ang payment.
extinguished and it is the debtor who is primarily
Pag dishonored yung check, doon palang sya pwede
benefited. *
magdemanda
– EXCEPTION: When there is a stipulation to the
B. EFFECT ON OBLIGATION – Payment by means
contrary. *Dahil si debtor naman ang magbebenefit
of mercantile documents does not extinguish the
sa pagextinguish ng obligation, sya ang gagastos para
obligation until they have been cashed or unless they
sa extrajudicial expenses
have been impaired through the fault of the creditor.
B. JUDICIAL COSTS *pag di pa nya pinapapalit yung check within 1 year,
check become stale, it is fault of creditor and
– Judicial costs shall be awarded to the winning obligation is extinguish.
party hence, the costs of action shall be paid by the
losing party. The court shall have the power, for EXTRAORDINARY INFLATION OR
special reasons, to adjudge that either party shall pay DEFLATION (Article 1250) – A decrease or
the costs of an action, or that the same be divided, as increase in the purchasing power of the Philippine
may be equitable (Section 1, Rule 142, Rules of currency which is unusual or beyond the common
fluctuation in the value of said currency, and such
increase or decrease could not have been reasonably RULES REGARDING PLACE OF PAYMENT
foreseen or was manifestly beyond the contemplation (Article 1251)
of the parties at the time of the establishment of the
A. If there is a stipulation, the payment shall be made
obligation. *Inflation is sharp sudden increase of
in the place designated.*kung may nagpagusapan,
money or credit or both without coreesponding in
doon yung place of payment
increase in a business operation. Inflation will cause
a drop in the value of money, there is a rise in general B. If there is no stipulation and the thing to be
price level. Deflation is the reduction in volume and delivered is specific, the payment shall be made at
circulation of available money or credit resulting in a the place where the thing was, at the perfection of the
decline of the price level. * contract. If merely temporarily there, as when the
object is being shipped or is already in the ocean,
BASIS OF PAYMENT IN CASE OF
payment should be at the domicile of the debtor.
EXTRAORDINARY INFLATION OR
*kung nasaan yung speficic object, doon yung place
DEFLATION (Article 1250) – The purchasing value
of payment
of the currency at the time of the establishment of the
obligation shall be the basis of payment in case of C. If there is no stipulation and the thing to be
any extraordinary increase or decrease in the delivered is generic, the place of payment shall be the
purchasing power of the currency which the parties domicile of the debtor. In this case, the creditor bears
could not have reasonably foreseen unless otherwise the expenses in going to the debtor’s place to accept
stipulated by the parties. *if nagkaroon ng payment. *kung generic, sa place ni debtor yung
extraordinary increase in money, the basis of the place of payment.
payment is obligation value is at the time of
constitution. SPECIAL FORMS OF PAYMENT

REQUISITES A. Application or imputation of payments (Article

1252).*
- THERE IS A EXISTENCE OF
B. Dation in payment or dacion en pago or
EXTRAORDINARY INFLATION OR
adjudicacion en pago or datio in solutum (Article
DEFLATION
1245).
- THERE IS AN OFFICIAL DECLARATION
MADE BY THE GOVERNMENT C. Cession or assignment in favor of creditors
- OBLIGATION IS TO PAY A SUM (Article 1255). *
CERTAIN IN MONEY
- OBLIGATION IS BASED ON THE D. Tender of payment and consignation (Articles
CONTRACT 1256 to 1261). *
- AND THERE IS NO EXISTS NO
STIPULATION TO THE CONTRARY
SUBSECTION 1. APPLICATION OF PAYMENTS
EX. The debtor borrowed money form the
creditor, 5000, payable at 5 years, there is a APPLICATION or IMPUTATION OF
contract, obligation to pay certain money, there is PAYMENTS – The designation of the debt to which
no stipulation na yung basis ng money is yung should be applied the payment made by a debtor who
value at the time of payment. After 5 years, gov. has various debts of the same kind in favor of one
announce that there is a inflation. 5000 peoso and the same creditor. *
become 2000 value, that’s why debtor need to REQUISITES OF APPLICATION OF PAYMENT
pay 10,000 pesos (inflation), deflation 5,000
pesos become 10,000 value, debtor need to pay A. There must be one debtor and one creditor.
2,000 pesos B. There must be two or more debts.
C. The debts must be of the same kind.
D. The debts to which payment made by the debtor most onerous to the debtor among those due, shall be
has been applied must be due (Article 1252). deemed to have been satisfied. The application is
made by operation of law. *If di dinesignate ni
E. The payment made must not be sufficient to cover
creditor at debtor yung application, application is
all debts. *si debtor ang mamimili kung saang debt
made by the operation of law.
nya ibabayad yung pera nyang kulong to cover all
debts E. If the debts due are of the same nature and burden,
the payment shall be applied to all of them
APPLICATION OF PAYMENTS AS TO DEBTS
proportionately. *
NOT YET DUE (Article 1252)
INTEREST EARNED PAID AHEAD OF
A. There is a stipulation that the debtor may so apply.
PRINCIPAL (Article 1253)
B. It is made by the debtor or creditor, as the case
– This is obligatory, thus the debtor cannot insists
may be, for whose benefit the period has been
that his payment be credited to the principal instead
constituted.
of the interest unless the creditor agrees. The
*sa dami ng utang mo, piliin mo kung anong utang payment must be applied first to the interest and
babayaran mo. whatever balance is left can be credited to the
principal. The creditor can refuse application of the
RULES ON APPLICATION OF PAYMENTS debtor made contrary to this provision. The rule is
A. The debtor has the first choice; he must indicate subject to any agreement between the parties or to
at the time of making payment, and not afterwards, waiver by the creditor. *Kailangan muna bayaran
which particular debt is being paid (Article 1252). If, ang interest, kung may sobra doon palang ibabawas
in making use of his right, the debtor applied the sa principal.
payment to a debt, he cannot later claim that it should APPLICATION OF PAYMENT TO MOST
be applied to another debt. If there was a valid prior ONEROUS DEBT (Article 1254)
but contrary agreement, the debtor cannot choose.
The debtor cannot choose to pay part of the principal – In case no application of payment has been made
ahead of the interest (Article 1253) unless the by the debtor and the creditor or the application
creditor consents. *debtor has the first choice pero cannot be inferred from other circumstances, then the
pag may napagusapan na yung debt 1 ang unang payment shall be applied to the most onerous debt. *
babayaran, yun ang susundin. Debtor must pay only
RULES REGARDING MORE ONEROUS DEBTS
yung debt na kasya sap era nya, kasi hindi pwedeng
magbayad partially. A. Older debts in case of running accounts.* Mas
onerous yung mga old debts
B. The right to make the application once exercised
is irrevocable unless the creditor consents to the B. An interest-bearing debt is more onerous than a
change. However, the revocation or change in the non-interest-bearing debt even if the latter is an older
application will not be allowed if third persons would one.*Mas mabigat ang interest bearing kahit mas
be prejudiced. *hindi pwedeng palitan yung choice. matanda na yung non interest bearing
C. If the debtor does not apply payment, the creditor C. A debt as a sole debtor is more onerous than as a
may make the designation by specifying in the solidary debtor. *Kung solidary debtor kasi pwede
receipt which debt is being paid with the knowledge mo pang singilin yung ibang debtor kay sole debt is
and consent of the debtor otherwise the application is more onerous
void. *application made by the creditor should be
D. Debts secured by a mortgage or by a pledge are
made by the consent and knowledge of the debtor.
more onerous than unsecured debts.*mas mabigat
Otherwise the application I void.
yung mga may collateral, baka makuha yung
D. If the creditor has not also made the application, collateral mo.
or if the application is not valid, the debt, which is
 E. Of two interest-bearing debts, the one with a A. The creditors do not become owners; they are
higher rate is more onerous.* merely assignees with authority to sell.
F. An obligation with a penalty clause is more B. The debtor is released up to the amount of the net
burdensome than one without penalty clause. proceeds of the sale, unless there is a stipulation to
the contrary. Thus the debtor is still liable for the
APPLICATION OF PAYMENT TO DEBTS OF
balance if any unless otherwise stipulated (Article
THE SAME NATURE AND BURDEN (Article
1255). *kung kulang yung napagbentahan lahat ng
1254)
properties, the debtor is liable for the balance unless
– In case no application of payment has been made there is a stipulation to the contrary.
by the debtor and the creditor and the debts are of the
C. Creditors will collect credits in order of
same nature and burden, payment should be applied
preference agreed upon, or in default of agreement,
to all of them proportionately.
in proportion to their credits.*kung may agreemeny
*if different burdens, it cannot definitely determined ang mga creditors among themselves kung sinong
which that is most onerous to the debtor, payment unang babayaran if si debtor 1 ba or 2 or 3. Kung mag
will again be made to all of them proportionately. ORDER PREFERENCE, yun ang sundan

SUBSECTION 2. CESSION SUBSECTION 3. TENDER OF PAYMENT AND

CONSIGNATION
PAYMENT BY CESSION or ASSIGNMENT OF
CREDIT – It is the assignment or abandonment of all TENDER OF PAYMENT *Go to court and file of
the properties of the debtor for the benefit of his consignation, pagkatender mo, you have to go for
creditors in order that the latter may sell the same and consignation
apply the proceeds thereof to the satisfaction of their
– The act on the part of the debtor, of offering to the
credits. *if iaassign ni debtor lahat ng properties nya
creditor the thing or amount due together with a
sa lahat ng creditors nya, ititinda ng mga creditors
demand that the creditor accept the same. The debtor
and yung proceeds ng sale will be used to satisfy or
must show that he has in his possession the thing or
pay the credits.
money to be delivered at the time of the offer. *offer
KINDS OF ASSIGNMENT made to the creditor to accept the thing or amount
due together with a demand to accept.
A. LEGAL – Governed by the law on insolvency. *
– Tender of payment must be proved by the debtor
B. VOLUNTARY – Referred to under Article 1255. unless tender is excused.*proved by the debtor na
– All the creditors must agree. *all creditor must nagdemand sya na tanggapin nya na, ie excused
agree
REQUISITES OF A VALID TENDER OF
REQUISITES OF VOLUNTARY PAYMENT BY PAYMENT
CESSION
A. It must comply with the rules on payment. It must
A. There must be two or more creditors. *maraming be made in legal tender and must include whatever
creditors pero iisang debtor interest is due. The obligation must be already due.
B. The debtor must be partially or completely *It must be in legal tender, include interest and due
insolvent. demandable

C. The assignment must involve all the properties of B. Generally, it must be unconditional and for the
the debtor. whole amount. If made with conditions but accepted
by the creditor without protest, the creditor cannot
D. The cession must be accepted by the creditors. later on prescribe the terms for the validity of the
EFFECT OF VOLUNTARY PAYMENT BY acceptance which he had already made. *accepted by
CESSION creditor, waiver on the fulfillment of the conditions
C. It must be actually made. The manifestation of a payment such that payment should be made in legal
desire or intention to pay is enough. *it opera, tender (Article 1257) *payment made should be in
tanggapin mo na legal tender
*if the creditor refuses the tneder of payment, the REQUISITES OF CONSIGNATION
debtor will be released from the responsibility by the
A. Existence of a valid debt which is due.
consignation of the things due in court.
B. Valid prior tender of payment by the debtor and
*Tender without consignation will not extinguish the
refusal of without justifiable cause by the creditor to
obligation.
accept it, unless tender is excused. *if wala namang
WHEN TENDER OF PAYMENT NOT valid reason si creditor para hindi iaccept yung
REQUIRED (Article 1256) payment,
A. When the creditor is absent or unknown or C. Previous notice of consignation to persons
does not appear at the place of payment. *pag interested in the fulfillment of the obligation (Article
di mo mahanap yung creditor or di mo kilala, 1257).*ayaw nyo na talagang tanggapin ahh, pupunt
kanino ka magooffer? na ako sa court
B. When the creditor is incapacitated to receive D. Actual consignation of the thing or sum due. *
payment at the time it is due. *
E. Subsequent notice of consignation made to the
C. When, without just cause, the creditor refuses to interested parties (Article 1258). *naifile ko nay an,
give a receipt. *need lagging may resibo, if ayaw bahal na kayo
punta ng court
CONSIGNATION MUST BE WITH PROPER
D. When two or more persons claim the same right JUDICIAL AUTHORITY (Article 1258)
to collect. *deposit mo nalang sa court
– Consignation is necessary to effect payment. As
E. When the title or written document of the tender of payment must precede consignation, the
obligation has been lost. Need ilabik yung tender must be proved by the debtor in the proper
promissory note, and if cannot you can refuse to pay case. In other cases when tender is not required, only
the creditor directly, and deposit it on the court prior notice to interested persons of the consignation
needs to be proved. *deposit it to the court, tender
F. When the debtor had previously been notified by
must be proved by the debtor, if tneder is not
the creditor that the latter would not accept any
required, need lang ng prior notice sa mga interested
payment. *hindi naman tatanggapin ni creditor on the
person
date due,
CREDITOR BEARS EXPENSES OF
CONSIGNATION
CONSIGNATION (Article 1259)
– The act of depositing the thing or amount due with
– The consignation is made necessary because of the
the proper court when the creditor does not desire or
fault or unjust refusal of the creditor to accept
cannot receive it, after complying with the
payment. That being the case, it is but just that the
formalities required by law. *inoffer muna kaso di
expenses should be charged against the creditor.
tinanggap ng creditor, punt aka na sa court para hindi
*fault din naman ni creditor dahil ayaw nyang
na magkarron ng interest
tanggapin
– It is always judicial and it generally requires a prior
– If consignation is not properly made or if the
tender of payment which is, by its very nature,
debtor withdraws payment, expenses are chargeable
extrajudicial. *tender is required before consignation
to the debtor.
– Consignation, to amount to a valid payment, must
also comply with the provisions which regulate
WHEN CONSIGNATION DEEMED PROPERLY CHAPTER 4 EXTINGUISHMENT OF
MADE OBLIGATIONS
A. When the creditor accepts the thing or sum SECTION 2. LOSS OF THE THING DUE
deposited, without objection, as payment of the
WHEN IS THERE LOSS IN REAL
obligation. *ninotify ni court na may nakadeposit nap
OBLIGATIONS (Article 1189)
era, kunin mon a, kinuha na ni creditor, this is
considered proper consignation A. When the object perishes or it is destroyed
physically.*destroyed physically or naglaho
B. When the creditor questions the validity of the
consignation, and the court, after hearing, declares B. When it goes out of commerce.*hindi na pwede
that it has been properly made. *oh creditor may per ibenta, naging illegal na (dati pwede pero ngayon
aka ditto dineposit ni debtor, marami pag syang bawal na)
sinasabi,
C. When it disappears in such a way that its
C. When the creditor neither accepts nor questions existence is unknown, or it cannot be recovered. *Di
the validity of the consignation, and the court after mo malaman kung nasaan na or kung alam mo naman
hearing, orders the cancellation of the obligation. na hindi mo marerecover.
*NO COMMENT LANG SI CREDITOR, after the
cancellation of obligation GENERAL RULE: Obligation will extinguish

EFFECTS OF CONSIGNATION WHEN LOSS OF THING WILL EXTINGUISH

REAL OBLIGATIONS (Article 1262)
A. The debtor may ask the judge to order the
cancellation of the obligation after due hearing and a A. The obligation is to deliver a specific or
judgment that all the requisites of consignation have determinate thing.
been met and this operates as a valid payment B. The loss of the thing occurs without the fault of
(Article 1260). * the debtor.
B. The debtor may withdraw the thing or sum C. The debtor is not guilty of legal delay.*kung
consigned as a matter of right before the creditor has walang grounds of liability
accepted the consignation or before there is a judicial
declaration that the consignation has been properly WHEN LOSS OF THING WILL NOT
made. In such case, the obligation will continue and EXTINGUISH LIABILITY (Article 1262)
all expenses are paid by the debtor (Article 1260). A. WHEN THE LAW SO PROVIDES
*bago tanggapin ng creditor yung money deposited,
after court announces that consignation is valid, the 1. The debtor is guilty of fraud, negligence, or delay,
debtor can withdraw the money deposited and she or contravention of the tenor of the obligation
will be the one who will pay the fee for consignation (Article 1170).

C. If, the consignation having been made, the creditor 2. The debtor is in bad faith or has promised to
should authorize the debtor to withdraw the same, he deliver the same (specific) thing to two or more
shall lose every preference which he may have over persons who do not have the same interest (Article
the thing. The co-debtors, guarantors and sureties 1165).
shall be released (Article 1261). *after the 3. The obligation to deliver a specific thing arises
consignation is made, pwedeng iwithdraw pero from a crime (Article 1268).
meron dapat authority to creditor, and fi he agrees
syempre pwede na iwithdraw but he will lose every 4. The thing to be delivered is generic (Article 1263)
preference. in accordance with the principle genus never perishes
(genus nunquam perit).
5. When a borrower of an object had lent the thing to EFFECT OF PARTIAL LOSS OF A SPECIFIC
another who is not a member of his own household THING (Article 1264)
(Article 1942). *nanghiram ng bagay, tapos
– There is partial loss when only a portion of the
pinahiram sa iba. Tapos nawala sa fortuitous event,
thing is lost or destroyed or when it suffers
liable pa rin si debtor
depreciation or deterioration. In personal obligations,
6. When the thing loaned has been delivered with partial loss is equivalent to difficulty of
appraisal of the value, unless there is a stipulation performance.*
exempting the borrower for responsibility in case of
– The courts shall determine, in case of
a fortuitous event (Article 1942). *Sinabi kung
disagreement between the parties, whether under the
magkano sya,
circumstances, the partial loss of the object is so
7. When the payee in solutio indebiti is in bad faith important in relation to the whole as to extinguish the
(Article 2159). obligation.
B. WHEN THE STIPULATION SO PROVIDES – In certain cases, partial loss may indeed be
*pag napagusapan na liable pa rin kahit mawala equivalent to a complete loss. In other cases, the loss
may be insignificant. Hence, judicial determination
C. WHEN THE NATURE OF THE OBLIGATION
of the effect is needed.
REQUIRES THE ASSUMPTION OF RISK
(DOCTRINE OF CREATED RISK) *incase of *example: kabayo na pangkarera, naputol ang paa
insurance contracts, pag hindi nangyari yung thing pero di naman nawala buong katawan nya. Partial
insured against walang liability, pero pag meron loss is equal to complete loss. If the purpose of horse
magkakaroon ng liability. Ex:Pag nasunog yung is to eat, the partial loss is not equal to complete loss.
bahay, dun palang magkakaroon ng liability
PRESUMPTION OF FAULT IN CASE OF LOSS
EFFECT OF LOSS OF A GENERIC THING OF THING IN POSSESSION OF DEBTOR (Article
1265) – This article establishes a disputable
A. GENERAL RULE (Article 1263)
presumption of fault whenever the thing to be
– The debtor is liable even for a fortuitous event delivered is lost in the possession of the debtor. This
because the law provides so. It is based on the presumption is reasonable because the debtor who
principle that a generic thing never perishes (genus has the custody and care of the thing can easily
nunquam perit). The debtor can still be compelled to explain the circumstances of the loss. The creditor
deliver a thing of the same kind. The creditor, has no duty to show that the debtor was at fault. *In
however, cannot demand a thing of superior quality case of loss, the presumption it is the fault of debtor,
and neither can the debtor deliver a thing of inferior the object is in the possession of debtor, it is debtors
quality. * obligation will remain if the generic fault. But creditor can prove that it is not his fault.
object is loss, you can substitute it with another.
WHEN PRESUMPTION NOT APPLICABLE
B. EXCEPTIONS (Article 1265)

1. DELIMITED GENERIC THING – If the generic – In case of natural calamities, the presumption of
thing is delimited. *Ex. 50kls of sugar from my 2020 fault does not apply.
harvest, if all your harvest in farm are destroyed, the
KINDS OF IMPOSSIBILITY *the service is
obligation is extinguish
impossible to perform
2. SEGREGATED GENERIC THING – If the
A. PHYSICAL IMPOSSIBILITY – Occurs in
generic thing has already been segregated or set
purely personal obligations when the personal
aside, in which case, it has become specific.
qualifications of the obligor are involved, the obligor
*warehouse, maraming asukal, lahat ng asukal sa 2nd
dies or becomes physically incapacitated to perform
floor kay X na pero nasunong kaya obligation is
the obligation. *pag hindi na magawa ni debtor, you
extinguish.
can do it or 3rd person will perform it in debtors – The general rule is that moral impossibility releases
expense. BUT if is really impossible/personal the obligor. When there is moral impossibility, the
qualification, if the debtor die, the obligation is court is authorized to release the obligor in whole or
extinguish in part. It would be doing violence to the intention of
the parties to hold the obligor liable still responsible.
B. LEGAL IMPOSSIBILITY
There is an element of the unforeseen or fortuitous
– Occurs when the obligation cannot be performed event in the situation.
because it is rendered impossible by provision of law,
– This article applies not only to personal obligations
although physically it may be possible to perform *
but also real obligations (Article 1156).
. – It may be directly caused as when prohibited by
. *Genereal rule: it releases the debtor from the
law, or indirectly caused as when the debtor is
obligation, debtor may releasr in whole or part by the
required to enter a military draft. Ex. Pwede noong
court. Ex; magpipintura ka baguio, at the time,
una pero later on, it became impossible
nagkaroon ng landslide, kaya there is no way to
C. MORAL IMPOSSIBILITY or perfrom since it last 3 months.
IMPRACTICABILITY – When the service has
REBUS SIC STANTIBUS or THINGS
become so difficult as to be manifestly beyond the
STANDING THUS
contemplation of both parties due to change of
certain conditions. * – A treaty or agreement remains valid only if the
same conditions prevailing at the time of contracting
D. SUBJECTIVE IMPOSSIBILITY – When the act
continue to exist at the time of performance. *very
is subjectively impossible for the debtor himself but
easy to go to baguio pero at the time of the
otherwise objectively possible for all others, usually
performance, nakalandslide. The debtor may release
the obligation subsists, unless personal
from the obligation. *Kung same lang yung
considerations are involved. *pintor ka tapos okay
condition from the very start hanggang ngayon,
lang magpaint ng naked portrait, pero nung anako
pwedeng iperform yung obligation.
mon a naggawa nun, hindi mon a magawa. Possible
for others EFFECT OF FORTUITOUS EVENT WHERE
OBLIGATION PROCEEDS FROM A CRIMINAL
EFFECT OF LOSS IN PERSONAL
OFFENSE (Article 1268)
OBLIGATIONS OR IMPOSSIBILITY OF
PERFORMANCE (Article 1266) – The debtor in – The obligation subsists except when the creditor
personal obligations shall be released from the refused to accept the thing (e.g. property stolen from
obligation when the prestation becomes legally or him) without justification (mora accipiendi), after it
physically impossible without the fault of the had been offered to him. Consignation is not
obligor. The impossibility must take place after the necessary. The debtor, however, must still exercise
constitution of the obligation. If the obligation is due diligence. *Binabalik yung kalabaw pero ayaw
impossible from the very beginning, the obligation is pa rin ng creditor, kay default of creditor nay un.
void. In such case, there is no obligation to be
RIGHT OF CREDITORS TO PROCEED
extinguished. *It is impossible from the very
AGAINST THIRD PERSONS (Article 1269)
beginning.
– The creditor is given the right to proceed against
EFFECT OF PARTIAL IMPOSSIBILITY – In case
the third person responsible for the loss. There is no
of partial impossibility, the courts shall determine
need for an assignment by the debtor. The rights of
whether, under the circumstances, the partial
action of the debtor are transferred to the creditor
impossibility of the obligation is so important as to
from the moment the obligation is extinguished, by
extinguish the obligation. Article 1264 applies
operation of law to protect the interest of the latter by
EFFECT OF MORAL IMPOSSIBILITY (Article reason of the loss.
1267)
– This rule finds frequent application in insurance. okay to call the creditor as donor dahil hindi na sya
maniningil * it will take effect habang buhay na yung
*if nasira ni 3rd person yung object na dapat
donor
idedeliver ni debtor kay creditor, hindi fault ni
debtor, creditor can proceeds against the 3rd person. 2. MORTIS CAUSA – When it will become
effective upon the death of the donor. It must
CHAPTER 4 EXTINGUISHMENT OF
comply with the formalities of a will. *last will and
OBLIGATIONS
testament
SECTION 3. CONDONATION OR REMISSION
ESSENTIAL REQUISITES OF REMISSION
OF DEBT
(Article 1270)
A. IT MUST BE GRATUITOUS – The cause or
CONDONATION or REMISSION OF DEBT consideration must be liberality for remission is
essentially gratuitous. *wala syang kapalit, the only
– The gratuitous abandonment by the creditor of his cause or consideration is the liberality or generosity
right against the debtor. It may be made expressly or of the creditor * ang mga remission od debt is
impliedly. *creditor waives his right to collect to essentially gratuitous, walang dahilan kung
debtor mapagbigay mga creditor.
– It is a form of donation. *need ng acceptance ni B. IT MUST BE ACCEPTED BY THE OBLIGOR
debtor, hindi mo pwedeng pilitin si debtor na or DONEE – There must be an agreement since the
magkaroon ng utang na loob. *requires the acceptance of the offer is required. *need ng
acceptance of the debtor acceptance ni debtor dahil hindi mo pwedeng pilitin
KINDS OF REMISSION si debtor na magkaroon ng utang na loob * dapat
magagree muna si debtor
A. AS REGARDS ITS EFFECT OR EXTENT
C. THE PARTIES MUST BE CAPACITATED
1. TOTAL or COMPLETE – When it covers the AND MUST CONSENT *the creditor obviously
entire obligation. *if ang utang of is 5,000, creditors consents *both parties must agree to the remission of
remits 5,000 contract
2. PARTIAL – Only a portion is remitted or the D. THE REMISSION MUST NOT BE
remission may refer only to the accessory INOFFICIOUS *
obligations. * 5k ang utang, niremit yung kalahati,
kayang 2,500 nalang babayaran ni debtor * 5,000 – Otherwise, it would be reducible on petition of the
may nakapledge kang property, mortgage or interest heirs insofar as they are inofficious or excessive, so
(accessories), pwedeng tanggaling mga interest, that the legitimes of the compulsory heirs would not
multa, property na nakapledge be impaired. Such remission may also be revoked on
the grounds of ingratitude. *mga pamana ng
B. AS REGARDS ITS FORM compulsory heir will not be impaired or
1. EXPRESS or FORMAL – When it is made either mababawasan * Compulsory or sapilitang heirs
verbally or in writing. (anak, magulang, husband/wife kapatid) *may 1 M
state ka, ngayon nagpagawa ka ng last will testament,
2. IMPLIED or TACIT – When it can only be may 5 na anak (legitimate), ½ of the state will be
inferred from conduct. Conduct is sufficient and it received by legitimate child (500k). Asawa will
requires no formality. *base sa mga diskarte ganun receive the equivalent pamana sa ISANG
C. AS REGARDS ITS DATE OF EFFECTIVITY LEGITIMATE CHILD (500,000/5 = 100K),the
spouse will receive 100,000. Yung 600k nay un, yun
1. INTER VIVOS – When it will take effect during yung compulsory or sapilitan mong need na ibigay sa
the lifetime of the donor. * form of donations, it is kanila. 400k is free portion, si stator is may credit kay
creditor D is 500,000. Tapos pinalagay mo sa LWT – This is an example of implied or tacit remission. If
that he is remitting the debt of D (mortis causa) upon the debt is not yet paid, the creditor would need the
his death, you will remit the debt of Debtor. document to enforce payment. In case the creditor
Remission is more than the free portion, the donation voluntarily delivers it to the debtor, the only logical
is in officious, so natamaan yung compulsory heir ng inference is that he is remitting the debt. * If the debt
100k. The heir may petition to court na ireduce yung is not yet paid, the creditor needs the document of
remission dahil nagkaroon ng impairment, or indebtedness to prove yung debt ng debtor. Paano ba
invalidate the remission. So ang pwede lang na iremit sisingiling ng dreditor ang debt ni debtor, need nyang
ni stator/creditor kay debtor is 400k. So pwede pa ipakita yung promissory note, kung wala yun hindi
singilin ng heirs yung 100k. na pwedeng singilin. Pag binigay na ni creditor kay
debtor yung Promissory, that is assumed as remission
– While a person may make donations, no one can
of debt
give more than that which he can give by will,
otherwise, the excess shall be inofficious and shall be – The presumption is prima facie (on its face) or
reduced by the court accordingly. * sufficient on his rebuttable by contrary evidence. Evidence is
own support, kung wala ng natira sa creditor kung admissible to show otherwise. Pag binigay na ni
magdodonate sya, so need bawasan ng court creditor kay debtor yung Promissory, that is assumed
*kungmagdodonate ka need mo pa rin magtira para as remission of debt but this presumption is
sayo rebuttable *you can present evidence to show that
the debtor is in possession of the promisorry note or
dic. Of indebtness for some other reason ex: binigay
C. FORMALITIES OF A DONATION ARE ni creditor yung promissory note kay debtor para si
REQUIRED IN THE CASE OF EXPRESS debtor can show it to his lawyer, so the lawyer can
REMISSION inspect the promissory note.
*Obligation to be remitted, must be
Plural of evidence – pieces of evidence
demandable at the time of remission
otherwise the remission is useless *If the Verb - Evidences
obligation is already prescribed or it is not yet
– The presumption applies only to a private
due, it will be ineffective remission * wavers
document because a copy of a public document is
or remission generally are not pressured,
easy to obtain being public record. *yung public
there must be aclear and convincing to show
document kasi is easily obtain because it is a public
that there is actually a remission or
record *any writing is a private document, but when
condonation of debt.
you go to a lawyer, tapos pinanotaryo nyo yung
EFFECT IF REMISSION IS NOT ACCEPTED BY private instrument, it will become public document.
THE DEBTOR
PRESUMPTION OF REMISSION IN JOINT OR
– This would not be remission; however, if the SOLIDARY OBLIGATIONS
creditor does not really collect within the statute of
– If the obligation is joint, the presumption of
limitations, the debt may be said to have been
remission pertains only to the share of the debtor who
extinguished by prescription. *if the remission is not
is in possession of the document. If solidary, to the
accepted by debtor, the remission is ineffective but if
total obligation. *if obligation is joint, presumption
the creditor does not collect within the prescriptive
of remission will pertain only to the share of debtor
period, the debt will be extinguish by the prescription
who is in the possession of the promissory
PRESUMPTIONS IN REMISSION note/document of indebtness * if it is solidarity, it
PRESUMPTION IN CASE OF VOLUNTARY will refer to the total obligation, example : your debt
DELIVERY OF DOCUMENT OF is 5000 tapos lima kayong debtors, and one of you is
INDEBTEDNESS BY CREDITOR (Article 1271) in the possession of promissory note, there is a
disputable or prima facie presumption that the not have to return the thing pledged. *umutang tapos
obligation is remitted. may sinanla si debtor, in pledge remember it is
necessary na isurrender mo kay creditor yung thing
PRESUMPTION IN CASE DOCUMENT FOUND
which is pledge, it can also be put in the possession
IN POSSESSION OF DEBTOR (Article 1272)
of 3rd person by agrrement of the creditor and debtor.
– Ordinarily the document evidencing the debt is in If yung sinanla mo, found in the hands of debtor, the
the possession of the creditor. He has in his favor the pledge have been remitted but not the principal
legal presumption that his credit is not yet collected, obligation.
unless the debtor proves otherwise. The possession
SECTION 4. CONFUSION OR MERGER OF
of the instrument of credit by the creditor is prima
RIGHTS
facie proof of non-payment.
CONFUSION or MERGER OF RIGHTS (Article
– If the document is later found in the hands of the
1275) – It is the meeting in one person of the qualities
debtor and it is not known how he came into
of creditor and debtor with respect to the same
possession of the same, the presumption is that it was
obligation. It has the effect of extinguishing an
voluntarily delivered by the creditor. The
obligation. *yung personality ng creditor at debtor
presumption of voluntary delivery, in turn, gives rise
nagsasama sa iisang tao example: si DI ang isang
to the presumption of remission. *Voluntarily
debtor, DI eexecuted a promissory note in my Llyan
delivered by creditor, the presumption will give rise
favor. May utang si Di kay llyan na 10k, as an
to the presumption of our remission. *pag nasa
evidence of indebtness to llyan, DI executed a
possession palang ni creditor ang PS, it is assumed
promissory note, “I promise to pay to llyan a 10k on
na hindi pa paid dang debt, kung nagbayad na si
aug. 1, 2021. Ibibigay ni creditor kay debtor yung PS
debtor need ibigay sa kanya yung PS. If ayaw kang
, and as creditor I will give you the Ps pag dating ng
bigyan ng resibo, you can refuse to pay and go to
due date at babayran ni debtor yung utang. At dun,
court and consigned the payment
ibabalik ni credito yung PS note kay debtor, and
EFFECT OF REMISSION OF THE PRINCIPAL debtor will issue a receipt. During the time na hindi
DEBT WITH AN ACCESSORY OBLIGATION pa nagdudue yung utang, si llyan may utang kay
(Article 1273) – This follows the rule that the martin na 10k rin, so gusto ni llyan ibayad nalang
accessory follows the principal. While the accessory yung promisorry note na inissue, so llyan endorse the
obligation cannot exist without the principal PS or pinasa kay martin. Tapos sinulat sa likod na “to
obligation, the principal obligation may exist without martin signed by llyan”. Na kay martin na PS, si
the accessory. *accessory follows principal, so if you martin may utang kay FPJ ay 10k din, si martin
remit the principal obligation, accessory also be inendorse na naman kay fpj “to FPJ SIGNED”.
remitted. Pero pwede rin yung accessory lang iremit Kapag nagdue date, si FPJ pupunta kay DI and
dahil pwede yung partial remission babayran ni Di yung obligation. Everyone will be
release from obligation. *If inendorse na naman ni
PRESUMPTION IN CASE THING PLEDGED FPJ kay susan at si susan may utang kay DI na 10k,
FOUND IN POSSESSION OF DEBTOR (Article tapos due date pumunta si susan kay Di, at pinakita
1274) – In a contract of pledge, it is necessary that yung PS. So si D ay naging creditor at Debtor. The
the thing pledged be placed in the possession of the obligation is extinguish
creditor, or of a third person by common agreement
(Article 2093). A third person who is not a party to REQUISITES OF CONFUSION
the principal obligation my secure the latter by
A. It must take place between the principal debtor
pledging his own property (Article 2085). If the thing
and creditor. *
pledged is later found in the hands of the debtor or
the third person only the accessory obligation of B. It must be complete.
pledge is presumed remitted, not the obligation itself.
The debtor shall continue to be indebted but he does
EFFECT OF MERGER IN THE PERSON OF COMPENSATION (Article 1279) – It is the
PRINCIPAL DEBTOR OR CREDITOR (Article extinguishment to the concurrent amount of the debts
1276) of two persons who, in their own right, are debtors
and creditors of each other. * Si A may utang kay B,
– Merger in the person of the principal debtor or
si B may utang kay A. Instead na magbayaran sila,
creditor extinguishes the obligation. Hence, the
their debts will be compensated against one another
accessory obligation of guaranty is also extinguished
specially so if the ddbts are of the same amount. The
in accordance with the principle that accessory
obligation will be extinguish
follows principal. * what if there is a guarantee, may
utang si ma’am kay coco, tapos si coco binigay kay KINDS OF COMPENSATION
martin, martin to fpj, fpj to susan,. Yung utang ni
A. BY ITS EFFECT OR EXTENT (Article 1281)
ma’am kay coco may guarantor (G), nagkataon na
may utang si susan kay ma’am, nung binigay ni susan 1. TOTAL COMPENSATION – When both
kay ma’am yung Ps, the obligation is extinguish. obligations are of the same amount and are entirely
Yung guarantee ni G (accessory contract) will extinguished. *
extinguish kasi naextinguish na yung debt. *If si
susan may utang kay guaranter, the accsorry is 2. PARTIAL COMPENSATION – When the two
extinguish, the obligation principal will remain. obligations are of different amounts and a balance
remains. The extinctive effect of compensation will
be partial only as regards the larger debt or in other
words, there is partial compensation of the larger
EFFECT OF MERGER IN THE PERSON OF
debt. *One is higher, the one is lower and the balance
GUARANTOR (Article 1276)
will remain, the smaller debt (total or complete
– The extinguishment of the accessory obligation extinguish), yung may mas mataas na utang, balance
does not carry with it that of the principal obligation. will remain, the debtor for the obligation will have to
Consequently, merger which takes place in the pay for the balance.
person of the guarantor, while it extinguishes the
B. BY ITS CAUSE OR ORIGIN
guaranty, leaves the principal obligation in force. *
1. LEGAL COMPENSATION (Article 1279, 1286,
CONFUSION IN A JOINT OBLIGATION (Article
and 1290) – When it takes place by operation of law
1277) – Confusion taking place in the person of any
even without the knowledge of the parties.
debtor or creditor does not affect the others. In other
words, the confusion will extinguish only the share 2. VOLUNTARY or CONVENTIONAL
corresponding to the creditor or debtor in whom the COMPENSATION (Article 1282)
two characters concur. *kung sinong personality lang
ang nagmerge yung creditor at debtor, yun lang ang * lahat ng voluntary or conventional is always by the
maeextinguish kasi kanya kanya sa joint obligation agreement of parties

CONFUSION IN A SOLIDARY OBLIGATION – – It includes any compensation which takes place by

Merger in the person of one of the solidary debtors the agreement of the parties even if all the requisites
shall extinguish the entire obligation because it is for legal compensation are not present. This kind of
also a merger in the other solidary debtors. In a compensation has no special requisites. It is
solidary obligation, there is only one obligation and sufficient that the contract of the parties, which
every debtor is individually responsible for the declares the compensation. * even if not all the
payment of the whole obligation. He who makes requisites for legal obligation is present, the parties
payment may claim reimbursement from his co- may still choose to compensate against one another,
debtors for the shares which correspond to them. * parties must freely give consent, they must me
capacitated
SECTION 5. COMPENSATION
– The agreement or contract which declares the
compensation should itself be valid; thus among
other things, the parties must have legal capacity and – This must be pleaded and proven; it can be made
must freely give their consent. * effective only by an order from the court.
– This provision of law is an exception to the general 4. FACULTATIVE COMPENSATION
rule that only debts which are due and demandable (Article 1287 and 1288)
can be compensated. *this will be the exception to
– When it can be set up only by one of the parties.
general rule that only debts which are due and
One of the parties has the choice of claiming the
demandable can be compensated against one
compensation or of opposing compensation. *one
another, because choice at may agreement ang both
parties may claim or opposed to compensation. Isa
parties to compensate even if it is not due or
lang ang pwedeng magclaim ng compensation, pag
demandable
clinaim ng isang tao who is not entitled to claim
3. JUDICIAL COMPENSATION or SET-OFF compensation, pwede syang ioppose ng isang tao
(Article 1283) who is allowed by law to compensation
– When it takes place by order from a court in LEGAL COMPENSATION REQUISITES OF
litigation. Strictly speaking, judicial compensation is LEGAL COMPENSATION (Article 1279)
merely a form of legal or voluntary compensation
A. THE PARTIES ARE PRINCIPAL CREDITORS
when declared by the courts by virtue of an action by
AND PRINCIPAL DEBTORS OF EACH OTHER
one of the parties, who invokes it, and by the defense
*si a may utang na 500 kay B, Si B may utang na 500
of the other who refuses to admit it. *one of the
kay A. They are principat creditor and debtor pf one
parties will go to court and the other one will raise a
another. What if si A may utang kay B na 500, pero
defense of compensation, party may set off his claim
ang utang ni A kay B ay may guarantor na 500. The
for damages against by his obligation to the other
principal debtor is A and principal cresitor is B. G
party by proving his right to set damages and amount
will only pay only if cannot pay anymore. *B is
*yung claim ng defendant must be pleaded and
indebted to G (2nd obligation), G is not principal
proven incourt ex: Si D may utang kay C 10k, so C
bound but only subsidiary bound, here compensation
pupunta sa bahay ni D para maningil, so nagalit si D,
cannot take place for the 1st requisites *
at napikon si C kaya kinuha nya yung phone ni D at
binato nya. The cp worth of 7,000. Loss is fault of B. BOTH DEBTS CONSIST IN A SUM OF
the creditor, now C will find an action to collect the MONEY, OR OF CONSUMABLE THINGS OF
sum of money from the D. So magdedemanda si C THE SAME KIND AND QUALITY
para makolekta yung debt. The action made by C
against the debtor, debtor can admit the obligation to *If ang utang ni A kay B ay pera na 500, ang Utang
the creditor. Napatunayan ni C na may utang si D, ni B kay A ay 500, compensable against one another.
turn naman na ni D na iprove if there is payment *If ang utang ni A kay B ay 500, ang utang ni A kay
already happened, what if no payment has been made B is cellphone worth 500, they are not compensable
pero D can claim for damages for the cellphone. D dahil different sila. If object, same kind and quality
should plead to the court and proved that in fact pwede icompensate.
damages were caused to him by creditor. Pwedeng
mabawasan yung obligation ni debtor. If d has been C. THE TWO DEBTS ARE DUE OR
successfully proves that damages has been caused to DEMANDABLE
him by creditor, the court may order a set off (10,000 – GENERAL RULE: If one of the debts is not yet
– 7,000 = 3000). 3000 nalang ibabayad ni D kay C due, there can be no compensation.
– A party may set off his claim for damages against – EXCEPTION: The parties may agree upon the
his obligation to the other party by proving his right compensation of debts which are not yet due. In
to said damages and the amount thereof. which case, the compensation becomes conventional
or by agreement of the parties *compensation is
based on the agreement of parties, not by operation to deliver ro B 500 sacks of rice in davao, while B
of law obliged himself to A 100 sacks of rice in bulacan,
same kind. If the expenses for transportation of the
D. THE TWO DEBTS ARE LIQUIDATED
rice to Davao is 4,000 and 1000 for Bulacan. If A
*Liquadated debts are that’s which the exact amount
claim for compensation, he must imdemnify B of
has already been determined even if not in figures.
3,000 for the expense of transportation of rice to
There is capacity of being arrived at by simple
Davo.
mathematical computations or processes. Simple
math can comoute the utang, they can be INSTANCES WHEN LEGAL COMPENSATION
compensated against one another IS NOT ALLOWED BY LAW
E. NO RETENTION OR CONTROVERSY A. WHEN ONE OF THE DEBTS ARISES FROM
COMMENCED BY THIRD PERSON – This is a A DEPOSITUM (Article 1287) – This is actually
negative requisite. The other such requisite is that the facultative compensation. Here the depositor has the
compensation is not prohibited by law. Of course, option to claim or not to claim compensation. *
compensation will not take place where there is Depositum – people will receive a thing belonging to
waiver. *there is a controversy on a debts, may another person. The person (depositary) who
nagcleclaim na iba, hindi pwedeng icompensate. receives the object will have a obligation of safely
Bawal ang may retention at controversy keeping it and later returning yung object. Ex: A
sinabi kay B keep my money worth 100,000, nakay
LEGAL COMPENSATION WHERE DEBTS
B na yung pera ngayon, A is indebted to B amount to
PAYABLE AT DIFFERENT PLACES (Article
50,000. Ngayon gusto na ni A na kuning yung 100k
1286)
pero ayaw ni B na ibigay yung 100k kasi gusto nya
– The indemnity contemplated above does not refer 50k nalang ibabalik, gusto ni B ng compensation,
to the difference in the value of the things in their hindi pwede. The obligation of B to return the money
respective places but to the expenses of monetary is based on depositum. Obligation ni B na to keep the
exchange (in case of money debts) and expenses of money safely and return it later on. Yung utang ni A
transportation (in case of things to be delivered). kay b is a contract of loan. Magkaiba ang source of
Once these expenses are liquidated, the debts also obligation. If A agrees compensation, pwede yun
become compensable. The indemnity shall be paid kasi may chose si A na mag claim or opposed to
by the person who raises the defense of compensation.
compensation.
B. WHEN ONE OF THE DEBTS ARISES FROM A
*applied to legal compensation, there is a COMMODATUM (Article 1287) – This is actually
compensation by operation of law even if the debts facultative compensation. Here the lender has the
are payable at different places but there is an option to claim or not to claim compensation.
indemnity / babayaran nung party who claims Commodatum – gratuitious contract, one delivered
compensation yung expense of exchange or to another something which is not consumable, so
transportation to the place of payment. To expenses that the latter may use it for some time and then
of monetary exchange in case of money debts and return it *Nagpahiram ka ng bagay na gagamitin in a
also expenses of transportation in case of things to be certain amount of time and then ibabalik din. *the
delivered. *the imdemnity will shouldered by the lender who has the option to calim or not to claim a
person who raises the defense of compensation Ex: compensation. Ex. A owes B 10,000, B borrows the
A owes B 1,000 dollars payable in new york, B owes ring of A . So kinukuha na ni A yung singsing (10k),
A 45,000 pesos payable in manila, debts are payable si B ayaw nya ng ibalik dahil may utang si A na 10k.
in different places, whoever will claim to own a B tries to claim compensation, B cannot claim
compensation its either A or B, they must pay the compensation. But A (lender) pwede syang
exchange rate of currency baka kasi may difference magclaim ng compensation.
when it comes to exchange rate. * A obliged himself
C. WHERE ONE OF THE DEBTS ARISES FROM criminal offense, creditor must return the cellphone
A CLAIM FOR SUPPORT DUE BY (restitution).
GRATUITOUS TITLE (Article 1287) – Support in
OTHER RULES IN COMPENSATION
arrears may be compensated but not future support.
*Support will comprise everything that is COMPENSATION BENEFITS GUARANTOR
indespensible or kailngan for sustenance dwelling, (Article 1280)
clothing, medical attendace, education and
transportation in keeping with the financial capacity – This is an exception to the general rule that only the
of support accrdg. Family code. Errears pwedeng principal debtor can set up as against his creditor
icompensate, pero yung support in arrears , eto yung what the latter owes him. Although the guarantor is
support na hindi naibigay noon Ex. Tatay ninyo tapos only subsidiarily liable, not principally bound, he is
minor kayo, dapat tatay ang magbibigay ng support given the right to set up compensation. The reason is
dahil hindi nyo naman kaya dahil minor kayo, tapos that the extinguishment of the principal obligation as
nangutang kayo sa tatay nyo ng 2000. Later on, tapos a consequence of compensation carries with it the
sinabi ng tatay nyo na hindi na kayo bibigyan ng accessory obligations such as guaranty. *Evenan if
baon dahil binigyan na kayo ng 2000. Pwede bang the guarantor is liable pwede syang magset up ng
sabihin ng tatay yun? That pertains to future support compensation, because extinguishment of principal
kasi di pa binibigay. This cannot be compensated, obligation cares with it also the extinguishment of
dahil different source ang obligation (contract of loan accessory such as guarantee. Compensation can be
& obligation provided by law which is family claimed only by the guarantor if the guarantor is
obligation. Support is essential to the life of minor, being made liable already for the debt ex: Si a may
di pwedeng wag nalang ibigay yan ng basta basta. utang kay B 100k, may guanrator G, si B naman may
Yung mga support na ng nakaraan na di naman na utang kay A na 80k, may partial compensation, if a
nabigay meaning the minor has successfully survived cannot pay b na 100k, pero may guarantor, kaya si B
without the support na hindi naman binigay noon. sisingilin nya sa G, now the guarantor can claim the
This may be successfully compensated against sa compensation available to a because the
utang ng minor. compensation will benefit also the guarantor, itong si
B may utang na 80k, so G can claim the
compensation that is available to the principal debtor.
Kapag siningil ni B si guarantor, so guarantor will
only pay 20k because will claim the compensation
D. WHERE ONE OF THE DEBTS CONSISTS IN available to A.
CIVIL LIABILITY ARISING FROM A PENAL
COMPENSATION OF RESCISSIBLE OR
OFFENSE (Article 1288)
VOIDABLE DEBTS (Article 1284)
– If one of the debts consists in civil liability arising
– Rescissible and voidable obligations are valid until
from a criminal offense, compensation would be
they are judicially rescinded or annulled. Prior to
improper and inadvisable because the satisfaction of
rescission or annulment, the debts may be
such obligation is imperative. *if one of the debts
compensated against each other. *the decree of
consists criminal offense , Restitution, Reparation,
annulment ot recission that the court will issue will
Indemnification
retro act. Paranf hindi nagkaroon ng recission, pwede
– This is another case of facultative compensation pa rin singiling yung mga utang owing to the
on the part of the victim. The criminal cannot claim respective creditors doon sa obligation na matitira.
compensation but the victim may claim the same.
– To avoid unfairness, if rescission or annulment is
*Victim can claim compensation and criminal
later on decreed by the court, it is as if NO
cannot. Ex: si D may utang na 10k kay C, and C steals
compensation ever took place. The decree thus acts
to D a phone worth of 10k, if the C is guilty of
retroactively
RULES AS TO ASSIGNMENT (Article 1285) *exception: while A consenting to the assignment
reserves the right to compensation.So A mareretain
A. WHEN DEBTOR CONSENTS TO
niya yung right to compensation Ex: A owes 3000
ASSIGNMENT – The assignment of the credit of the
kay B, B owes 1000 kay A due yesterday. Kahapon
creditor may be made with the consent of the debtor.
nagkaroon na ng partial compensation, B assigns his
In consenting to the assignment, the right to the
credit to C. Nung nalaman ni A yung assignment ni
compensation is waived by the debtor. The rule
B kay C, pumayag sya kaso irereserve nya yung right
applies whether the consent to the assignment was
to compensation. Kapag naningil na si C, 2000 naang
before or after the debts become compensable. In
babayaran ni A
other words, when there is consent, compensation
shall be deemed not to have taken place. *may *A owes B a 3,000, B owes A 1000, both due in Nov.
consent si debtor sa assignment, pag nagkaroon ng 15. Assignment tapos nagkarron ng compensation, B
consent si assignment, the right to compensation is assigned his right to C on Nov. 1. Before the debts
wait by the debtor wether the consent is given before are already due and demandable and before they
or after the debts become compensable, dahil nga become compensable against one another, inassign
may consent, this is considered as waiver, it is as if na agad ni B kay C, pero may consent pa rin si A. On
there is no compensation nov. 15 pag siningil na ni C si A, a cannot set up
against C the assignee the compensation which
Ex: A owes B 3000 due yesterday
pertain to him against B the assignor. Dahil pumayag
B owes 1,000 due also yesterday na naman si A sa assignment, A still liable for 3000
pesos
If you apply the rules in legal compensation, as of
yesterday these obligation have been partially *mauna man yung extinguishment bago yung
compensated against one another. Pasok na sila sa assignment or mauna yung assignment kesa
legal obligation because they are both due and extinguishment, kapag nagconsent si debtor, the
demandable yesterday. Dahil nagkaroon na ng partial assignee can collect the entire amount to debtor
compensation kahapon, ngayong araw na ito yung
B. WHEN COMPENSATION HAS TAKEN
utang na lang ni A kay B is 2000 pesos.
PLACE BEFORE ASSIGNMENT AND DEBTOR
*If B assigns is right to C (assignee), C will demand IS AWARE BUT DOES NOT CONSENT TO
payment to A. If C demands payment to A, C can ASSIGNMENT – When compensation takes place
collect only 2000 from A. by operation of law, the debts are extinguished to the
concurrent amount. If subsequently, the extinguished
*A gives his consent to the assignment before it was debt is assigned by the creditor to a third person with
made even after. A will loss the right to set up the the knowledge but without the consent or against the
compensation . will of the debtor, the debtor can raise or set up the
*Diba bago inassign ni B si C, kinausao nya muna si defense of compensation against the third person
A na iaasign niya kay C, tapos pumayag si A, the (assignee) regarding debts previous to the cession or
extinguish obligation assigned subsequently, tapos assignment. This refers to debts maturing before the
magkaroon ng compensation, dun nagkarron ng assignment, that is, before the NOTICE, hence here,
assignment kasi pumayag si A. So pag naningil si C legal compensation has already taken place. The
kay A, A is obligated to pay3,000 pesos kasi remedy of the assignee is against the assignor. *may
pumayag si A sa assignment. A has no right to claim legal compensation and after that legal
compensation anymore. A can still collect the 1000 compensation, one of the parties will and extinguish
kay B dahil it is due and demandable. *Pag yung debt a debt , the extinguishment that is assigned by
already extinguish tapos bigla nagkaroon ka ng creditor to a third person with the knowledge but
assignment, tapos ikaw na debtor pumayag sa without consent of the debtor or against the will of
assignment thus debtor cannot claim any debtor, so debtor can set up the defense of
compensation.
compensation against the 3rd person regarding the SECTION 6. NOVATION
cession or assignment.
NOVATION
Ex: A owes 1,000 to B nov. 1, B owes A 2000 dues
– It is the total or partial extinction of an obligation
Nov. 10, a owes B 1000 due in nov. 15. A assigned
through the creation of a new one which substitutes
his right to C on nov, 12, A notified B na iassign na
it.
yung right nya kay C, B did not give his consent to
assignment, so C will collect from B, before nov. 12 – The substitution or change of an obligation by
may partial compensation na, after that partial another, which extinguishes or modifies the first,
compensation tapos nagkarron ng assignment pero either by changing its object or principal conditions,
walang consent si B, so B can claim compensation, or by substituting another in place of the debtor, or
the compensation is valid only for 1000 , and C can subrogating a third person in the rights of the
demand 1000 kay B sa Nov. 15 palang. creditor. *The original obligation is extinguish or
modified by changing the object or principal
C. WHEN COMPENSATION HAS TAKEN
obligation , palitan yung debtor by substitution, or
PLACE BEFORE ASSIGNMENT AND DEBTOR
palitan yung creditor by subrogation. *not mode of
HAS NO KNOWLEDGE OF THE ASSIGNMENT
extinguishment of the obligation.
– The assignment may be made without the
knowledge of the debtor. The debtor can set up KINDS OF NOVATION
compensation as a defense for all debts maturing
prior to his knowledge of the assignment whether the A. ACCORDING TO HOW IT IS CONSTITUTED
debts matured before or after the assignment. The 1. EXPRESS – When so declared in unequivocal
crucial time here is the time of knowledge of the terms. *
assignment, not the time of assignment itself.
*Assignement made without the knowledge of 2. IMPLIED – When the old and the new obligation
debtor, for all debts na nagmature nab ago nya are essentially incompatible with each other. *hindi
nalaman na may assignment, he can claim mo sila mapagsasama
compensation, it does not matter wether debts HOW IMPLIED NOVATION IS DONE
matured before or after the assignment basta di niya
alam, creditor can claim compensation *A owes B a. By making substantial changes in the object or
1000 due on Nov. 11, B owes 2000 to A dues on Nov. subject matter of the contract. *from a cellphone,
10, and A owes 1000 due November 15. A assigned papalitan mo yung object to a ring or bracelet
his right to C on Nov. 12, B is not aware pero b. By making substantial changes in the cause or
nalaman nya on Nov. 16, dahil hindi alam ni B na consideration of the contract. *Change sa cost or
may assignment, so si C maniningil na sya kay B, B price, yung purchase of price is 500 tapos tinaasan ng
can claim the defense of compensation dahil nung 1000. If nireduce mo naman from 500 to 300, this is
time nay un di nya alam na may nagyari na not novation but it is implied remission.
assignment at Nov. 16 nya nalang nalaman. Nov. 16,
due and demandable kaya wala ng utang si B kay C. c. By making substantial changes in the principal
terms or conditions of the contract. *Payable in six
RULES ON APPLICATION OF PAYMENTS months tapos gagawin mong 1 year.*sa conditional
APPLY TO ORDER OF COMPENSATION obligation gagawin mong pure obligation ,
(Article 1289)
B. ACCORDING TO EXTENT OR EFFECT
– Compensation is similar to payment. If a debtor
has various debts which are susceptible of 1. TOTAL or EXTINCTIVE – When the old
compensation, he must inform the creditor which of obligation is completely extinguished.
them shall be the object of compensation. In case he 2. PARTIAL or MODIFICATORY or IMPERFECT
fails to do so, then the compensation shall be applied or IMPROPER – When the old obligation is merely
to the most onerous obligation.
modified, i.e., the change is merely incidental to the A. PREVIOUS VALID OBLIGATION EFFECT
main obligation. The original obligation still remains WHERE THE OLD OBLIGATION IS VOID OR IS
in force except insofar as it has been modified. * VOIDABLE (Article 1298) *Kailangan valid yung
unang original obligation, if the original obligation is
C. ACCORDING TO THE SUBJECT OR OBJECT
not valid, there is nothing to novate
OR PURPOSE
– If the old obligation is void or non-existent, there
1. REAL or OBJECTIVE – When the object or
is nothing to novate. *kasi yung mga void obligation,
cause or principal conditions of the obligation are
technically wala talaga silang or hindi sila nageexist
changed. *
– If the old obligation is voidable, novation is still
2. PERSONAL or SUBJECTIVE – When the person
possible provided the obligation has not yet been
of the debtor is substituted and/or when a third person
annulled. If the original obligation is ratified, it can
is subrogated in the rights of the creditor
be novated. *avoidable obligation are valid
KINDS OF PERSONAL or SUBJECTIVE obligation until they are annulled, if they are annulled
NOVATION edi babalik sa original rule “if the obligation is
annulled” non existent na rin yan. *if the original
A. PASSIVE NOVATION – Substituting the obligation is ratified , it can be innovated. Kapag
person of the debtor. naratify ang isang obligation it is cleansed of its
KINDS OF PASSIVE NOVATION or defects from the beginning, as if wala syang defect,
SUBSTITUTION as if hindi sya voidable

i. EXPROMISION – That which takes place when a B. CAPACITY AND INTENTION OF THE
third person of his own initiative and without PARTIES TO MODIFY OR EXTINGUISH THE
knowledge or against the will of the original debtor OBLIGATION NOVATION IS NOT PRESUMED
assumes the latter’s obligation with the consent of the (Article 1292) *novation is not presumed
creditor. – Novation is never presumed. It must be clearly and
ii. DELEGACION – That which takes place when unmistakably established either by express
the creditor accepts a third person to take the place of agreement of the parties or acts of equivalent import
the debtor at the instance of the latter. or by the incompatibility of the two obligations with
each other in every material respect. *it must be
b. ACTIVE NOVATION – Subrogating a third stablished by clear and unmistakeable facts and there
person in the rights of the creditor. is a expressed agreement of the parties, if wala
KINDS OF ACTIVE NOVATION or kayong narining na express agreement,there are act
SUBROGATION which signify that the two obligation are compatible
with one another
i. LEGAL SUBROGATION – That which takes
place by operation of law. C. THE MODIFICATION OR
EXTINGUISHMENT OF THE OBLIGATION –
ii. CONVENTIONAL or VOLUNTARY The extinguishment or modification itself is a result
SUBROGATION – That which takes place by of novation. *
agreement of the parties.
D. THE CREATION OF A NEW VALID
3. MIXED – When the object and/or principal OBLIGATION
conditions of the obligation and the debtor or the
creditor, or both the parties, are changed. It is a *creation of new obligation, original obligation must
combination of real and personal novations. be valid and new obligation must be valid, if the new
obligation is void, original ones shall be subsist
REQUISITES OF NOVATION
EFFECT WHERE THE NEW OBLIGATION IS
VOID (Article 1297)
– GENERAL RULE: If the new obligation is void, RIGHT OF NEW DEBTOR WHO PAYS
the original one shall subsists.
A. In expromision, payment by the new debtor gives
– EXCEPTION: Unless the parties intended that the him the right to beneficial reimbursement under the
former relation should be extinguished in any event. second paragraph of Article 1236. *Initiative from
(by stipulation) 3rd person/new debtor, dahil sya ang nagprisinta, it
does not require the consent of old debtor. *the new
*Even if the new one is void obligation, original will
debtor as against the old debtor will not have the
no longer susbsist
rights of the creditor. *yung new debtor hindi
EFFECT WHERE THE NEW OBLIGATION IS magiging creditor ni old debtor kasi walang consent
VOIDABLE – If the new obligation is voidable, na required es expromission, ang binibigay lang na
novation can take place. If the obligation has been right sa 3rd person is beneficial reimbursement.
annulled, the old obligation subsists, and whatever
B. If the payment was made with the consent of the
novation has taken place will naturally have to be set
original debtor and on his own initiative
aside unless the parties stipulate otherwise. *If new
(delegacion), the new debtor is entitled to
obligation is voidable, novation can take place.
reimbursement and subrogation under Article 1237.
Voidable obligation is valid until it is annulled. If the
*Initiative came from original debtor, so may
valid obligation has been annulled, we will revert to
consent sya, may consent din dapat si 3rd person.
the general rule, the old obligation will subsist
Yung new debtor/ 3rd person will become the new
KINDS OF PASSIVE NOVATION or creditor dahil may consent si old debtor.
SUBSTITUTION
EFFECT OF NEW DEBTOR’S INSOLVENCY OR
A. EXPROMISION (Article 1293) NON-FULFILLMENT OF THE OBLIGATION

– Where the initiative comes from a third person. It *what if the new debtor is insolvent or non
logically requires the consent of the third person and fulfillment
the creditor. *there is a 3rd person who volunterr to
A. IN EXPROMISION (Article 1294) – In
pay for the debt of the debtor, payment from 3rd
expromision, the new debtor’s insolvency or non-
person may be refused or accepted by the creditor,
fulfillment of the obligation will not revive the action
– It is essential that the old debtor be released from against the old debtor whose obligation is
his obligation; otherwise, there is no expromision. extinguished by the assumption of the debt by the
*3rd person pupunta kay creditor tas sasabihin na sya new debtor. *The obligation of old debtor is hindi na
na magbabayad para kay debtor, pag ganun lang maibabalik dahil anextinguish na yung obligation
there is no clear explanation, pero if sinabi ni 3rd nya.
person kay creditor, ako nalang magbabayad para
B. IN DELEGACION (Article 1295)
kay debtor at wag mon a syang sisingilin, debtor will
released from the obligation *if yung idea galling kay 1. If the non-fulfillment of the obligation is due to
3rd person causes other than insolvency, the old debtor is not
liable.
B. DELEGACION
*old debtor is not liable, if hindi na kayang
– The initiative comes from the old debtor himself.
magbayad ni new debtor
In delegacion, all the parties must agree. *new
debtor, old debtor and creditor must consent in 2. In case of insolvency:
delagacion. *si old debtor ang nakaisip na
a. GENERAL RULE – If the insolvency of the new
magsubstitute sya ng new debtor. *yung idea galling
debtor occurred only after the delegation, the old
sa old debtor. T
debtor is not liable. *The old debtor is not liable if
– The old debtor must be released from the the onsolvency occurred only after delegacion.
obligation; otherwise there is no valid delegacion.
 b. EXCEPTIONS TO GENERAL RULE – In this TACIT APPROVAL OF THE DEBTOR *debtor
case the old debtor is liable. owes creditor, 3rd person face creditor with the
consent of the debtor,debtor consents the 3rd person,
i. The said insolvency was already existing and of
3rd person will be subrigated into the rights of the
public knowledge (although it was not known to the
original creditor.
old debtor) at the time of the delegacion. *Insolvent
na at the time of delegacion yung new debtor, even C. THIRD PERSON WITH INTEREST IN THE
the old debtor is not aware, mababalik or marerevive OBLIGATION PAYS EVEN WITHOUT THE
yung obligation ni old debtor KNOWLEDGE OF THE DEBTOR EFFECT OF
LEGAL SUBROGATION (Article 1303) – The
ii. The insolvency was already existing and known to
effect of legal subrogation is to transfer to the new
the debtor (although it was not of public knowledge)
creditor the credit and all the rights and actions that
at the time of the delegacion. *connote bad faith,
could have been exercised by the former creditor
alam nap ala ni old debtor na insolvent si new debtor.
either against the debtor or against third persons, be
If it is not publicly known, at the time of delegation,
they guarantors or mortgagors. *Debtor is indebted
the obligation will revert to original debtor/old
to creditor which secured by a guarantor, guarantor
debtor.
pays the creditor, guarantor will become the new
ACTIVE NOVATION KINDS OF ACTIVE creditor.
NOVATION OR SUBROGATION (Article 1300)
EFFECT OF PARTIAL SUBROGATION (Article
A. LEGAL SUBROGATION – It is not presumed 1304) – The creditor to whom partial payment has
except in case expressly provided by law. been made by the new creditor remains a creditor to
the extent of the balance of the debt. In case of
B. CONVENTIONAL or VOLUNTARY insolvency of the debtor, he is given a preferential
SUBROGATION (based on agreement of parties) right under this article to recover the remainder as
– It must be clearly established in order that it may against the new creditor. Example: debtor is indebted
take place. to creditor 500k, with the consent of the debtor and
creditor a 3rd person pays the part of 200k. may
– Requires the consent of the original parties and of partial subrogation, may dalawa ng creditor si debtor,
the third person (Article 1301). if kulang yung pera ni debtor, hindi nya mabaran
CASES OF LEGAL SUBROGATION (WHEN yung dalawang utang nya, preferred yung original
LEGAL SUBROGATION IS PRESUMED) (Article creditor sya ang unang mababayaran.
1302) EFFECT OF NOVATION ON ACCESSORY
A. CREDITOR PAYS ANOTHER CREDITOR OBLIGATIONS (Article 1296)
WHO IS PREFERRED EVEN WITHOUT – GENERAL RULE: Extinguishment of the
THE DEBTOR’S KNOWLEDGE principal obligation carries with it the
• Debtor is indebted to creditor 1 & 2, creditor extinguishment of the accessory obligations such as
1 is preferred creditor 100k secured mortgage pledges, mortgages and guaranties. *the
(sya ang unang pwedeng kumuha ng extinguishment of the principla obligation will
mortgage), 2nd creditor is an ordinary creditor extinguish the accessory obligation such as pledge …
80,000, walang security yung debt . If
creditor 2 pays the obligation of debtor to – EXCEPTION: It may be agreed that despite the
credtor 1, creditor 2 will be legally extinguishment of the old obligation, the accessory
subrogated into the rights of creditor 1 obligations would still remain provided that the
debtors of said accessory obligations give their
ACTIVE NOVATION consent.
B. THIRD PERSON, NOT INTERESTED IN THE – EXCEPTION: In case of an accessory obligation
OBLIGATION, PAYS WITH THE EXPRESS OR created in favor of a third person (stipulations pour
autrui) which remains in force unless said third
person gives his consent to the novation because a
person should not be prejudiced by the act of another
without his consent. *scessory will remain kahit
walang consent si 3rd person, if the 3rd person agreen CHAPTER 1 GENERAL
with the novation, it will be extinguish yung PROVISIONS CONTRACTS
accessory
CONTRACT (Article 1305) – A meeting of minds
PRESUMPTION WHERE ORIGINAL between two persons whereby one binds himself,
OBLIGATION SUBJECT TO A CONDITION with respect to the other, to give something or to
(Article 1299) render some service. *Si A at B ay pumayag sa
contract. May consent given.
– GENERAL RULE: The conditions attached to the
old obligation are also attached to the new obligation. *mas malawak ang sakop ng obligation, in case of
contract there is always an obligation, source of
– EXCEPTION: If there is a contrary stipulation.
obligation is contract. Hindi sa lahat ng oras na kung
may obligation ka, meron ka ring kontrata.
*Contracts may be nominate meaning there is a
specific name or designation Ex: contract of sale
(sales), contract of partnership (partnership), pledge,
commudatum…
KINDS OF INNOMINATE CONTRACTS
*innominate contract has no specific name or
designation in law
A. DO UT DES – I give that you may give.
*magbibigay ako, para bibigyan mo rin ako ng
bagay *barter or exchange/swap *do connotes
something personal kasi parang do sya, dito yung
Do means give
B. DO UT FACIAS – I give that you may do.
*magbibigay ako, para sumayaw ka *I will give
something that you will render a service *facio/facia
connotes doing
C. FACIO UT DES – I do that you may give.
*Gagawin ko, ara bigyan mo ako
D. FACIO UT FACIAS – I do that you may do.
*Gagawin ko, para ikaw ay sasayaw/render ka ng
service
*ginawa yung mga innominate contract because
there is impossibility of anticipating all forms of
agreement *hindi kaya ng mga law makers natin
isipin or ianticipate lahat ng klase ng agreement na
papasukan ng lahat ng klase ng tao.
RULES THAT WILL GOVERN
1. Stipulation of parties *kung ano yung 5. Public Policity*broader in scope, refers to
napagusapan will govern public safety nay un ang target ng public
order, refers to consideration which are
2. Civil Codes on obligation and contracts, look at
moved by the common good *kapag ang
provision of law regarding the most analogous
contract ay may tendency na makainjured to
nominee contract *kung sino yung pinakamalapit na
public, it is contrary to public policy
nominate contract, rules din nun ay will govern
*stipulation in a contract na nagbebenta ng
3. The customs of place will govern the contract right to vote or nagbebenta ng right to run as
public officials
BASIC PRINCIPLES OR CHARACTERISTICS
OF CONTRACTS (MARCO) MUTUALITY (Article 1308)

A. AUTONOMY or LIBERTY or FREEDOM TO – A contract must bind both contracting parties in

STIPULATE (Article 1306) * order that it can be enforced against either party.
Without this equality between the parties, the
B. MUTUALITY (Articles 1308 to 1310) contract has no force of law between them. *dapat sa
C. RELATIVITY (Articles 1311 to 1314) isang contract ay hindi dapat isa lang binabind, dapat
pareho sila
D. CONSENSUALITY (Articles 1315 to 1316)
– It also includes the fundamental rule that no party
E. OBLIGATORINESS or OBLIGATORY FORCE can renounce or violate the law of the contract
(Articles 1159 and 1315) without the consent of the other. Hence, its validity
AUTONOMY or LIBERTY or FREEDOM TO or compliance cannot be left to the will of one of
STIPULATE (Article 1306) – The contracting them. *as a consequence of mutuality, hindi
parties may establish such stipulations, clauses, pwedeng irevoke ng isang party ang isang contract
terms and conditions as they may deem convenient, without the consent of another *hindi rin pwedeng
provided they are not contrary to law, morals, good iset aside ang isang contract dahil feeling lang ng
customs, public order or public policy. *pwedeng isang party lugi sya or bad bargain
pagusapan ng mga parties ang kahit anong DETERMINATION OF PERFORMANCE BY A
stipulation na gusto nila kahit anong clauses, terms , THIRD PERSON (Article 1309)
conditions as long as hindi contrary sa to law, morals,
good customs. *yung compliance cannot be left to the third person,
compliance cannot be left to the will of one of the
Limitations contracting parties
1. Law (promulgated by a legitimate authority) – The compliance with a contract cannot be left to
*contracts must respect the law the will of one of the parties. However, under this
2. Morals *it deals a good and right conduct in provision, the determination of its performance may
community and it differs at different time and be left to a third person. In such a case, the obligation
place, and people does not depend upon any potestative condition. The
3. Good Customs *habits and practices *Dahil decision of the third person shall bind the parties only
sa sobrang tagal ng ginagawa, it has gain after it has been made known to both of them. * the
practical and social confirmation determination of wether or not the contract has been
*ex:pagmamano performed may be left to the will of 3rd person,
4. Public Order *refers to public safety
*example is bawal ang mga stipulations sa Ex: fixing of price, delivery date
contract na wherein a landlord can use force Ex. Nagbebenta ka ng piano, pero di mo talaga alam
to evict yung tenant pag di nakabyad ,that is kung magkano yung piano tapos binebenta mo rin sa
against to public order* Public will *which is buyer na wala ring idea kung magkano. Pero may
best for someone or something kilala kayong expert sa field ng music, and very
knowledgeable, this expert can fixed the price. There INTRANSMISSIBLE – The rights and obligations
is a determination made by the 3rd person. arising from the contract are not transmissible
Ex. A under the construction of house of B, using SCOPE OF INTRANSMISSIBILITY
quality materials. Si B is not aware about quality
a. BY NATURE – Contracts involving personal
material, we can ask 3rd person to determine
qualifications. *talents: singing, painting*kung yung
performance.
mo lang is yung particular na singer na ito, it involve
EFFECT WHERE DETERMINATION IS personal qualification and not transmissible
INEQUITABLE (Article 1310)
b. BY STIPULATION – In accordance with the
– A contracting party is not bound by the principle of autonomy. * the parties agree that the
determination if it is evidently inequitable or unjust contract will be intransimisable based on the
as when the third person acted in bad faith or by principle od autonomy.
mistake. In such case, the courts shall decide what is
c. BY PROVISION OF LAW – When death
equitable under the circumstances.*if the
extinguishes the legal relationship. *example,
determination is unfsir and unjust as 3rd person acted
contract of agency, partnership, commodatum *In
in bad faith or by mistake, im such case, it is the court
partnership, when a partner dies, the partnership will
who will decide what equitable under the standard or
dissolve. *In case of relativity the contract is binding
circumstances.
between parties and pwedeng ipasa sa heirs and
BASIC PRINCIPLES OF CONTRACTS assign.
RELATIVITY (Article 1311) BASIC PRINCIPLES OF CONTRACTS
– Contracts are generally effective only between the 2. THE CONTRACT AFFECTS STRANGERS OR
PARTIES, their ASSIGNS and their HEIRS. THIRD PERSONS * 3rd person is a person who is
*principal parties are bound by the contract based on not part of the contract. Pero ditto pwede syang
the doctrine of mutuality and also because they are maging part.
principal parties, so based on relativity the contract
a. Article 1311 – Contracts containing stipulations
effective between them, also the contract po si
pour autrui.
effective between their heirs. Right is transmisable,
yung efevtivity ng contracts is pwede ring ipasa sa b. Article 1312 – Contracts creating real rights.
heirs generally.
c. Article 1313 – Contracts intended to defraud
PERSONS AFFECTED BY A CONTRACT creditors.
A. GENERAL RULE – A party’s rights and d. Article 1314 – Contracts violated at the
obligations derived from a contract are transmissible inducement of a third person.
to the successors. Contracts take effect only between
the parties, their assigns, and heirs. This means that STIPULATION POUR AUTRUI (Article 1311)
only the parties, their assigns, and heirs can have – A stipulation in a contract clearly and deliberately
rights and obligations under the contract. * ang may conferring a favor upon a third person who has a right
right at obligation under the contract is yung parties, to demand its fulfillment provided he communicates
heirs and assigns.General rule: the person who are his acceptance to the obligor before its revocation by
not part of the contract cannot be prejudice by a the obligee or the original parties. The stipulation is
contract who are not part. *if 3rd person ka sa merely part of the contract entered into by the parties,
contract, wala kang rights at obligation neither of whom acted as agent of the third person.
B. EXCEPTIONS TO RELATIVITY *stipulation in contract which will clearly and
deliberately confor to person a favor upon a 3rd
1. THE CONTRACT IS EFFECTIVE ONLY person. This person together with the oblige will
BETWEEN THE PARTIES or
have a right to demand the fulfillment of the contract. 3. Stipulation is only part of contract and not the
It will be demandable by the 3rd person, if the 3rd entire contract
person communicates his acceptance with the obligor 4. Favorable stipulation is not on any kind of
before the contract is revoked by the oblige/ the compensation or obligation whatsoever
original parties. * the stipulation pour autrui is 5. There is no relation of agency legal
merely part of the contract but it is not the principal representation or authorization between the
contract. 3rd person must not act as an agent of either parties and 3rd person
party. *debtor is indebted to creditor 10,000, 10% per 6. A mere incidental benefit or interest of a
anum, bothe creditor and debtor agree that the person is not suffiecient *if nagkarron ng
interest will be paid to pokwang, pokwang is the incidental benefit ang 3rd person it is not a
sister of the creditor, so merong stipulation in the stipulation for autrui.
contract of debtor and creditor , the stipulation in the
Example: x and y agree x will contruct a building on
contract of debtor and creditor will confor a favor or
the lot of y, pag nagkarron ng building (sm), pag
will give a right or favor to pokwang who is a 3rd
nagkarron ng benefit ang joing owner, si A ang
person. Yung stioulation in favor of pokwang is a
mayari ng lupa na katabi ng iappatayo na building,
stipulation of autrui. So pokwang as a 3rd person has
magkakaroon din ng benefit si A, kahit na nagbenefit
to communicate her acceptance of the stipulation in
si A it is not a stipulation for autrui (incidental
her favor to the obligor or debtor before it is revoked.
benefit)
Pag tinaggap na ni pokwang yung favor or right,
hindi lang si creditor kundi si 3rd person ang pwedeng – The acceptance of the stipulation by the third party
magdemand ng fulfillment of the stipulation. may be made expressly or implicitly, formally or
informally.
-dhoni beneficiary – the stipulation is intended for
the sole benefit of the dhoni beneficiary, it confers a BASIC PRINCIPLES OF CONTRACTS
gift to the 3rd person. Binibigay lang. Basta binigay
nalang, it is a gift given by the creditor THIRD PERSONS ARE BOUND BY
CONTRACTS CREATING REAL RIGHTS
-favor in creditor beneficiary- the obligation is due (Article 1312)
from the promise to the 3rd person and promissee
seeks to discharge by means of such stipulation. *si – Third persons who come into possession of the
pokwang is actually the creditor of the creditor, object of a contract over which there is a real right,
debtor is indebted to creditor, creditor has a creditor are bound thereby even if they were not parties to the
also which is si pokwang. Bilang installment contract. A real right is binding against the whole
payment ni creditor kay 3rd person (pokwang), ang world and attaches to the property over which it is
napagusapan ni debtor at creditor is ibigay ang 10% exercised wherever it goes. *3rd person are bound by
interest per snum kay pokwang para onti onting contracts creating real rights, so contracts which will
makabayad si creditor kay pokwang. Tinatanggap ni create real rights involve real property. Kapa gang
pokwang dahil he is the creditor of the promise contract nyo is involves real property meaning lupa,
house and lot…they are bound by contract even they
REQUISITES FAVOR INTO 3RD PERSON are not parties. *If there is a real right overn an object
tapos yung mga parties subsequently marereceive
1. Clearly and deliberately conferred upon the
nila yung come into possession of a contract over
3rd person
which there is a real right, they are boud by this real
2. 3rd person must communicate his acceptance
right.
to death or obligor before the revocation of
the contract by the oblige or original parties -Real right must be registered in the registry od
*accpetnace here maybe in the form of deeds, if not hindi macoconsider as real right
demand *if pokwang demands na ideliver na
10% na para sa akin, this is a form of Example: contract of leese, ako yung mayari ng
acceptance house and lot at pinaupa ko kay A or lessee, if yung
right ni lesee pinaregister sa registry of interference with the contract. It presupposes that the
property/pinaregister sa title ng property, it will contract interfered with is valid and the third person
create a real right. has knowledge of the existence of the contract. *May
nangiganyo sa into na iviolate yung contract nyo, pag
Example: yung house and lot ko binenta ko sa iba
kayo ay sulsulera merong liability if the contract is
tapos yung buyer ko is aware na may pinapaupa ako,
violated. Ex: coco martin, an artist of star cinema.
alam na register yung right ng mga nangungupahan.
May kontrata na 20 films in 5 years si coco martin
Yung bibili ng lupa ko hindi pwedeng basta bastang
kay star cinema, ang bayad sa kanya per film is
paalisin yung mga pinaupa ko because they entered
2,000,000 so 40M in 5 years. Tapos si VIVA films,
in the contract of leese, the contract of leese created
yung president nila si Joey , tapos sinabi na COCO
a contract real right and must be respected by a third
lipat ka nalang sa amin, tapos kinumbinse sya na 40
person.
films in 3 years tapos 3M per movie, dahil sa
Exception to relativity : because 3rd person pagkumbinse ni joey kay coco, he is induced to
nagkaroon ng right to demand yung stipulation in his violate the contract with star cinema. Contract is
favor. Pokwang is not part of the contract but he has valid and 3rd person is aware of the contract between
right to demand the stipulation. coco and star cinmema, but there is a unwarranted
interference in the contract. Star cinema pwedeng
1312 is also a exception because the buyer of the idemanda si coco para s abreach of contract, Sc can
house, hindi part ng contract of leese, pero meron also demanda si joey for damages based on quasi
syang obligation to respect the contract of leese. delict. The liability of joey cannot be morethan the
RIGHT OF CREDITOR TO IMPUGN liability of Coco who is in fact the person who
CONTRACTS INTENDED TO DEFRAUD THEM actually violated the contract. And this is exception
(Article 1313) – The creditor is given the right to because joey is not part of the contract between
impugn the contracts of his debtor to defraud him. COCO AND SC, but joey can be made liable.
*the creditor is given a right to impugn yung – The liability of the third person cannot be more
contracts na itothrough an action pauliana or resistor than that of the party who violated the contract. The
action*impugh means question, creditor will have a liability will be based on the theory of quasi-delict.
right to question the contract of his debtor whuch
entered into by the debtor so that he can defraud yung STAGES IN THE LIFE OF A CONTRACT
creditor. *debtor is indebted to creditor 1000,000, so STAGES IN THE LIFE OF A CONTRACT
the debtor has no property, no money to pay creditor
A. PREPARATION or NEGOTIATION or
but debtor has this property worth of 1,000,000.
CONCEPTION or GENERACION – The parties are
Noong sinisingil na ni creditor si debtor, imbes na
progressing with their negotiations and this stage
itinda nya yung property nya para ipambayad, debtor
includes all the steps taken by the parties leading to
sells his property to his son,there are 2 contracts: the
the perfection of the contract; they have not yet
contract of mutuum/loan between creditor and
arrived at any definite agreement, although there may
debtor. There is also a contract of sale between
have been a preliminary offer and bargaining.
debtor and son. Tapon binenta lang ni debtor sa son
*pinaguusapan palang kung ano yung object, price
nya ng 100k, ginawa ni debtor ito para pwede nyang
wala pang definite agreement. Eto yung part ng
idefaud si creditor. The creditor has given a right ro
paguusap na kung saan nagtatawaran palang.
precint or to file an action pauliana to rescind and
*magkano tawad mo tapos sinabi ni buyer 500, tapos
cancel yung contract between father and son.
di nagagree si seller
LIABILITY OF THIRD PERSON RESPONSIBLE
B. PERFECTION or BIRTH – This is when the
FOR BREACH OF CONTRACT (Article 1314)
parties have come to a definite agreement or meeting
– Since contractual right is a property, the law of the minds regarding the subject matter and cause
recognizes an instance when a stranger to a contract of the contract, i.e. upon concurrence of the essential
can be sued for damages for his unwarranted elements thereof.
*magkano tawad mo tapos sinabi ni buyer 850, tapos constructive delivery includes delivering halimbawa
nagagree si seller, meron ng meeting of minds at lupa, titulo, execution of deed of sale, pagdeliver ng
papasok na rin ditto ang consent sushi sa warehouse. Example:pledge deposit.
C. CONSUMMATION or TERMINATION or C. FORMAL or SOLEMN CONTRACTS (Article
DEATH – This is when the parties have performed 1356) – When the law requires that a contract be in
their respective obligations and the contract may be some form to be valid, this special form is necessary
said to have been fully accomplished or executed, for its perfection. *kung hindi ginawa sa form na
resulting in the extinguishment or termination nirequire ng law, the contract is void.
thereof. * It happens when buyer delivers payment
UNAUTHORIZED CONTRACTS (Article 1317) –
and sellers delivers shoes. Parties performed
A contract entered into in the name of another by one
respective obligation and contract will be fully
who has no authority or legal representation, or who
accomplish or executed.
has acted beyond his powers. *papasok ka sa contrata
KINDS OF CONTRACTS ACCORDING TO kaso hindi sa pangalan mo. You have no authority to
PERFECTION from the principal or right to legal representation,
pero pwede syang authorized but he has acted
A. CONSENSUAL CONTRACT (Article 1315) –
beyond his powers.
As a general rule, contracts are perfected by mere
consent of the parties regarding the subject matter UNAUTHORIZED CONTRACTS ARE
and the cause of the contract. They are obligatory in UNENFORCEABLE (Article 1317) – A person is
whatever form they may have been entered into, not bound by the contract of another of which he has
provided all the essential requisites for their validity no knowledge or to which he has not given his
are present. *If the parties already have a agreement consent. A contract entered into in the name of
between as regards to subject matter and alos the cost another by one who has no authority is unenforceable
of the contract and the part of both parties give their against the former unless it is ratified by him before
consent to the contracy, so contract is already it is revoked by the other contracting party. *a person
perfected consensual contracts are obligatory in pumasok sa contract na kinuhang consent sa kaniya,
whatever from they may have been entered into entered in behald of another *Example: kayo
provided that the essential cost object, consent are pumasok sa contract tapos sinabi na nirerepresent
present. *they come into perfection upon mutual nyo ako pero wala akong kaalam alam, that is
consent even if the subject matter or the payment unauthorized contract and it is not enforceable
cost have not been delivered yet. So pag walang contract. *if the debtor exceeded his authority or
dineliver the object at wala pa ring bayad, they are acted beyond his powers for example, nagpabili ako
already perfected. In case of the delivery, perfection ng ballot tapos binli mo penoy, so pwede mong hindi
will not transfer or create a real right because as a bayaran si seller.
general rule, delivery will transfer ownership but it
Enforceable contract- walang effect, kahit pumunta
will give rise to the obligation between the parties on
ka sa court, hindi ka papansininsince the contract is
the part of the seller to deliver the object, on th part
enforceable Example: Unauthorize
of the buyer to pay the price
UNAUTHORIZED CONTRACTS CAN BE
B. REAL CONTRACTS (Article 1316) – They are
CURED ONLY BY RATIFICATION
perfected by the delivery, actual or constructive, of
the object of the obligation. These contracts have for – The mere lapse of time cannot give efficacy to
their purpose restitution because they contemplate such a contract. The defect is such that it cannot be
the return by a party of what has been received from cured except by the subsequent ratification of the
another. *they are perfected by delivery which may person whose name the contract was entered into or
be actual or constructive delivery of the object of by his duly authorized agent and not by any other
obligation. *actual delivery, iabot mo. Constructive person not so empowered. 8IN CASE OF
delivery if actual delivery is not possible , CONTRACT IS RATIFIED it is cured from the
beginning of its defect *kahit iba yung binigay which COMMON ESSENTIAL ELEMENTS
is penoy, tinanggap mo, nung sinabi mon a okay nay
A. Consent
un, it is actually a ratification of contract.
B. Object
– The ratification must be clear and express so as not
to admit of any doubt of vagueness. C. Cause
Chapter 2 ESSENTIAL REQUISITES OF CONSENT (Article 1319) – The conformity or
CONTRACTS concurrence of wills (offer and acceptance) and with
respect to contracts, it is the agreement of the will of
ELEMENTS OF CONTRACTS
one contracting party with that of another or others,
A. Essential *absolutely necessary for the existence upon the object and terms of the contract.
of contract *nagkakaroon ng conformity or concurrence of will
if nagtagpo ang offer at acceptance. *ang
1. Common * cost object and consent
pinagaagreehan nila is object of contract, terms of
2. Special * they are peculiar or unique to certain contract. They agree in terms of cost. Kapag nagmeet
types of contract *example: real contracts, perfected yang dalawang yan, may consent. So sa contracts
by merely delivery, contract of pledge- hindi need ng dalawang parties dahil hindi pwedeng
mapeperfect hanggat hindi mo nadedeliver yung magmeet ang offer at acceptance pag iisang party
object na sinasanla *in case of real contracts, merong lang/ plularity of parties.
additional element which is special essential element
GENERAL RULE – Capacity to give consent is
delivery cost object
presumed.
B. Natural * Kapag pinagusapan, andyan. Pag hindi
CONSENT OFFER
napagusapan, nandyan pa rin *presumed to exist in
certain contract unless the contrary is stipulated. • Article 1319 – Offer must be certain. *kapag
Maalis lang sila if stipulated na aalisin. *contract of nagoffer ka ng object example contract of sale, you
sale * warranties are natural element of sale * are the seller/offerer, kung halimbawa nagtitinda ka
example may binenta kang bahay at lupa, a natural ng sasakyan, tapos 10 ang sasakyan mo, dapat
element is warranty against eviction, merong sigurado ka kung anong binebenta mo, which one
warranty ang seller na hindi mapapalayas ang buyer you are trying to sell and for how much. That will
sa property na binenta nya, pag ikaw na buyer is make your offer certain. Hindi ka pwedeng magoffer
napalayas sa property na binenta sayo, the seller ng hindi moa lam kung anong inoffer mo. *fix ang
violated the warranty against eviction. *warranty is a liability at rights para makapagbigay ng acceptance
natural element at nandun sya sa lahat ng contract of angg offeree.
sale, it is incorporated by law. How will you removed
• Article 1321 – Offer may fix time, place, and
warranties? It must be expressly stipulated that the
manner of acceptance. *offerer can designate how
warranties will be removed from the contract.
offeree will accept the offer, the time and the place
C. Accidental *kapag napagusapan nandyan. Kung to accept it. *example: I’m selling to you my car
hindi napagusapan, wala. Example: stipulation to pay 500k, that is a certain offer. My car isa lang ang
interest, nangutang si debtor kay creditor, may sasakyan ko, 500k, fixed price that is a certain offer,
stipulation na magbabayad ng interest if the interest so I can fix also the manner of acceptance or the time
in writing, may pingusapan, pwedeng maningil ng and place of acceptance, I tell you “accept my offer
interest si creditor. Pag hindi napagusapan na may in 5 days via email, via text, yung offerer is allowed
interest, hindi pwedeng maningil si creditor ng to do so, to fix the circumstances of acceptance, on
interest. *The interest is due and demandable if it is the other hand, the offeree must comply time, place
in writing, pag interest is not in writing hindi and manner of acceptance na sinet ng offerer.
pwedeng maningil ng interest even pinagusapan.
 • Article 1322 – Offer may be made through an • Article 1324 – Offer may be withdrawn at any time
agent. *ang agent is a representative of somebody before acceptance. *I offer to you my car, tapos ikaw
else called the principal. Sometimes, our agent is also hindi pa makapagdecide kaagad, medyo magulo pa
known as your attorney in fact, hindi totoong ang isip mo,need mo pa ng time. Maghihintay ako
attorney, representative lang sya. So ang principal or tapos sabi ko bigyan kita ng 5 days to decide, ikaw
grantor is represented by a agents parang extension na offeree tinanggap mo yung 5 days, later on
ng personality nila yan, yung offer may be made without waiting for the 5 days period to expire, sakto
through an agent. Sa part ng offeree, if the offer is may mas nakita ako na mas magandang sayo, tapos
made by an agent, the acceptance of the offeree must shes willing to buy my car right now, can I sell my
also communicated through an agent. car to that 3rd person without waiting for the
expiration 5 days? Yes why as a general rule, the
• Article 1323 – Offer becomes ineffective upon the
offer may be withdrawn anytime before acceptance.
death, civil interdiction, insanity, or insolvency
Execptions: In case the option here is paid with
before acceptance is communicated. *I make an
consideration, so remember sa contracts pag
offer, thus I’m the offerer, I make an offer 500k
binigyan kita ng 5 days, we actually enter into an
certain offer, pagkaoffer ko sayo hindi mo pa
option contract, you have an optiom to buy it,
natatanggap, namatay ako. So the offer will be
binigyan kita ng 5 days period, and that is option
ineffective. Same rule in sanity, pagka offer ko sayo,
period kaya meron tayong option contract. But
specific certain offer, and then bago mo tanggapin,
because of that option period ay hindi binayaram, so
nabaliw ka, offer is innefective. Same rule in
I can withdraw it anytime, pag binayaran ang option
insolvency, if either of us namatay, nabaliw naging
period (option money) I cannot withdraw it until the
insolvent or bankrupt, the offer becomes ineffective.
expiration of option period. Ex: car 500k, five days
Civil Interdiction is also known as civil death, it is a
to decide, ikaw naman dahil ikaw ay maganda at veru
penalty wherein nawawalan ka ng civil rights, if
considerate, sigi dahil sa pagaabala mo sa akin ng 5
nawalan ka ng civil rights, you can no longer enter
days, binigyan mo ako ng 5,000. 5000 is the option
into contracts. Sa civil interdiction ang pwede mo
money for option period. I cannot sell the car to the
nalang gawin is to make last will testament. It is an
3rd person dahil binayaran mo yung period, tapos
accessory penalty, so there is a principal penalty. The
after 5 days napagisipan mon a na bilhin yung car,
principal penalty here is imprisonement, bakit ka
magkano ang ibabayad mo? 500k. yung 5,000 pesos
nakulong because you committed a crime, you are
is for option period, hindi mo binayran ang purchase
convicted of that kind of guilty. The accessory
price. Option money vs. earnest money, earnest
penalty is the suspension of civil rights known as
money or arras, paid as to part of the purchase price
civil debt. *example: nagviolate ng curfew, dinampot
known as downpayment. This earnest money signify
ka ng police, umuwi ka ng 9:30, dinala ka ng police
perfection of contract unlike of option money.
sa may konakor tapos kinulong ka, meron ka rin bang
civil interdiction? Wala, in case of civil interdiction, • Article 1325 – Business advertisements of things
it will apply only if you are convicted, nadampot ka for sale are not definite offers. *are not definite
palang , kinulong ka palang, hindi ka pa nakasuhan offers, eto yung nakikita nyong house and lot for sale.
or sintensyahan, you are not found guilty. Yung mga General rule: Paano ka makakapagdecide kung
hindi pa nasintensyahan is called detention prisoners bibilhin mo yun or hindi, hindi mo nga alam kung
because their offense is not available, hindi nasaan yung house at tsaka yung land. What if yung
makapagpiyansa ex: case in rape; your offense is business advertisement is complete in all material
available, but you do not have the money to post vail, particulars, may price, location, they describe yung
wala kang pampiyansa, you cannot pay for bahay , yung lupa, may contact person, at number. If
provisional liberty. This detension prisoners has still yung house and lot has a complete material
a civil rights. May offer ako sayo but I’m found particulars, it is definite. If it is definite, buyer can
guilty in murder, my offer to you become ineffective. decide if he can buy it or not.
• Article 1326 – Advertisements for bidders are not case of acceptance by letter, it is effective by the time
definite offers. *ang advertisement for bidders that the acceptance is communicated. Ex: offere
naghahanap sila ng magbibid para sa isang bagay, nagbigay ako ng offer sa offeree, sumulat ako tapos
example: maghahanap ako ng tao para sa magbibid nabasa ng offeree, pagkabasang basa nya ng offer ko,
ng aking tablet, I’m an advertiser para sa bid, sa isang tinatanggap nya na yung offer, the offeree should
auction or bidding, ako na advertiser ng bid, I’m the write also to me, tapos tinanggap ko kinabukasan, the
offeree and kayo is the offeree magooffer kayo ng offer is accepted or the contract is perfected noong
price, example for this tablet 15k, tapos yung katabi time na natanggap ko yung sulat. Acceptance of letter
mo 60k. In case of bidding, as a advertiser I want the mabe actual or contructive, so acceptance by
highest price, dahil naghahanap ako ng bidders, hindi correspondence, at the time ot had the acceptance has
sya definite offer kasi ako yung offeree at kayo ang come to the knowledge of the offere, that is the only
offerer na nagbibigay ng offer sa akin, also in time it is perfected constructive or actual. Aceptance
auction, advertiser is not bound to accepts the highest only effective noong time na nalaman ng offerer
or the lowest bid general rule except if it is specified yung acceptance ni offeree.
in the advertisement that the advertiser will acceots
• Article 1320 – Acceptance may be express or
the higher the highest or the lowest bid. Bakit po may
implied. *pwede mo iaccept vocally or by actions
lowest bid, hindi po baa ng bidding is pataasan? Not
really, what if you are trying to hire a construction • Article 1321 – Acceptance must comply with the
company to contruct your house , obviously you are terms of the offer. *offer may fix the time, place and
trying to get the lowest bid. Auction is perfected by the matter of acceptance. The offeree should comply
the fall of the hammer. Ex: 50k sabi ni a, 60k sabi ni with the terms na sinet by the offerer.
b, sabi ni c 80k, sabi ni d 100k, pag pinukpok nya na
yung hammer, that is perfection of contract. Can • Article 1322 – Acceptance must be communicated
advertiser can bid sa sarili nyang auction? Pwede to the agent who made the offer. *offer may be made
nyang gawin yun para tumaas yung price as long as through an agents. Acceptance must be
it is advertised that he will be bidding. Advertiser can communicated to the agent who made the offer.
also hire 3rd person to bid on his behalf. Ang tawag PERSONS WHO CANNOT GIVE CONSENT
sa kanila is by-bibders or puffers. (Article 1327)
OFFER A. Minors. *17 and below or below 18
• Article 1319 – Acceptance must be absolute. * If B. Insane or demented. *baliw the tao
the offer is certain, dapat ang acceptance is also
absolute. *Acceptance is absolute if tinanggap ng C. Deaf-mutes who do not know how to write. *pipe
offeree yung offer ng buong buo. If the offeree does na binge. They can be easily victims of fraud,
not try to change any of the terms of the offer, the madaling lokohin. Pag hindi ka marunong magsulat,
acceptance is considered absolute. *kung ano yung obviously hindi ka marunong magsulat. Pag
offer, walang papalitan ang offeree, tatanggapin nya marunong magsulat ang deaf-mute, they are removed
ng buong buo. What if the offeree pinalitan nya yung from the enumeration of person who cannot give
terms ng offer, that is considered as counter offer consent.
ibigsabihin, he rejects the original offer and makes a MODIFICATIONS ON INCAPACITY
new offer in lieu of the rejected offer. 500k car is the DISCUSSED UNDER ARTICLE 1327 (Article
original offer, tapos sabi ni offeree gusto nyang 1329)
bilhin but for 300k only, here the offer is certain but
the acceptance is not absolute. A counter offer is a A. When necessaries such as food, are sold and
new offer. The offeree is now the offere, the offorer delivered to a minor or other person without capacity
becomes the offeree. Tapos sinabi 450,000 this is to act, he must pay a reasonable price therefor
rejection of the counter offer of the buyer and again (Articles 1489 and 290). *kapag bumili ng pagkain
there is a counter offer, it is actually new offer. In kahit minor ka, you have to pay for the price
 B. A contract is valid if entered into through a D. Undue influence. (Article 1337)
guardian or legal representative (Article 1381 (1) and
E. Fraud or deceit. (Articles 1338 to 1344)
(2)). *as long as the guardian is authorized
CONSENT MISTAKE (Article 1331)
C. A contract is valid where the minor
misrepresented his age and convincingly led the – The false notion or belief about a thing or a fact
other party to believe his age his legal capacity. * material to the contract.
based on the doctrine of estoppel -
– The mistake contemplated by law is substantial
LUCID INTERVAL – A temporary period of sanity. mistake of fact, that is, the party would not have
*temporary period of sanity , in case of lucid interval, given his consent had he known of the mistake.
araw araw baliw ka . One day gumising ka tapos Hence not every mistake will vitiate consent and
matino na pagiisip mo, that is lucid interval. make a contract voidable.
Pumasok ka sa contract at the time of your lucid
interval , contract is valid. *Contract is voidable if there is a mistake. Mistake
should be substantial mistake of fact. *In case of
EFFECT OF LUCID INTERVAL (Article 1328) – A mistake as to substance of object, pmirma ka ng
contract entered into by an insane or demented contract, akala mo nangungutang ka lang, yun pala
person during a lucid interval is valid. It must be pinipirmahan mo is a contract of sale, later on you
shown however, that there is a full return of the mind found out that you are what you signed is a deed of
to sanity as to enable him to understand the contract sale over your properties.; akala mo eto yung binibili
he is entering into. *Kapag kinabukasan nabaliw ulit, mong lupa tapos hindi pala yun yung boundaries, so
still valid. The reckoning point is at the time you had you known na iba yung boundaries, hindi mo sa
entered into the contract. bibilhin. Kung alam mon a nagkamali ka, hindi mo
bibilhin yung property, hindi ka papasok sa contract.
EFFECT OF DRUNKENNESS AND HYPNOTIC
3. Mistake in identity: nagdonate ka ng kotse to a
SPELL (Article 1328)
person, thinking that he is you half brother, later on
*pumasok ka sa contract na medyo lasing ka or nalaman mon a hindi kayo related, so here had you
nahypnotise ka, this will impair the capacity of a known na hindi mo sya haf brother, you woudn’t
person to give again intelligent concept what else, have donated your own car. 4. Mistake of account
contract is voidable because this is temporary will only give rise to correction. *In 1332, person
insanity because persons who cannot give consent who alleges mistale must prove that there is in fact
minors, demented and deaf-mute. Kapag lasing mistake committed pero ang kausap nyo is ignorant,
voidable, voidable contract is valid until annulled. and the ignorant person claims mistake you have to
There is a possibility of invalidating of a contract. establish that you already explained ng mabuti sa
kanya yunh contract na pinasukan nya. Pag
– Drunkenness and hypnotic spell impair the
nakikipagcontract kayo sa hindi nakapagaral, tapos
capacity of a person to give intelligent consent.
sinabi na nya hindi ko alam na nagkamali, its your
– These conditions are equivalent to temporary burden of proof kasi ikaw yung nagaral na patunayan
insanity. Hence the contract entered into during such na inexpalin mo sa kanya yung contract at the time
state is voidable and it is not required that such state of signing na he understood the content of contract.
was procured by the circumvention of the other party. Do not contract with a person who does not
understand ver well *1333, If you have knowledge of
CONSENT VICES OF CONSENT (VIMFU) the risk, this is not a mistake. *1334 mutual error as
A. Error or mistake. (Articles 1331 to 1334) to the effects of an agreement can also invalidate
consent but remember the error was mutual and it
B. Violence or force. (Articles 1335 to 1336) must be with respect to the legal effects of a contract
C. Intimidation or threat or duress. (Articles 1335 to and it must frustrate the intention of the parties.
1336)
CONSENT VIOLENCE (Article 1335) – Requires party as to destroy his free will and make him express
the employment of physical force which must be the will of another, rather than his own. *expressing
either serious or irresistible. *Seious or irresistible the will of another person, para maging visiated
force , the force must be either serious or irresistible, consent (defective consent), the influence must be
hindi mo sya maovercome , hindi mo malabanan. Ex: undue or improper 1. Confidential family spiritual in
tinali ka ng mga friends mo tapos kiniliti ka ng other relation and also mental weakness, ignorance
kiniliti, so hindi sila titigil hanggat hindi mo (hindi nakapagaral), financial distress, mas madaling
pinirmahan yung contract, kung hindi nila ginawa ma undue influence persons in financial distress.
yun hindi ka pappasok sa contract.
CONSENT TWO KINDS OF FRAUD or DOLO
CONSENT INTIMIDATION or THREAT (Article (Articles 1338 and 1344)
1335)
A. CAUSAL FRAUD or DOLO CAUSANTE
*more on internal, tinakot ka
– This is the kind of fraud which vitiates consent and
– The action of intimidating someone, or the state of the law refers to this when it speaks of vices of
being intimidated. There is no physical force but consent.
moral coercion.
– It is the fraud used by a party to induce the other
– Whether or not the fear is reasonable and well- to enter into a contract without which the latter would
grounded or the evil imminent and grave depends not have agreed to.
upon the circumstances, including the age, sex, and
– It may be committed through insidious words or
condition of the person.
machinations or by concealment.
*upon the person, his spouse, descendants or
*Kung hindi ka niloko, hindi ka papaya na pumasok
ascendants to give consent. *tinakot ka reasonable
sa contract. Fraud before the contract and fraud is
and well grounded fear, hindi yung natakot ka lang.
used as a means to induce or to make other party to
The fear must be because of an evil which is
enter the contract. *How do you commit causal
imminent and grave, and the evil is on the person of
fraud? Through mabulalak na salita. Insidous or
the party who is forced to enter into the contract.
machination words or pwede namang by
Yung evil nay an is upon to his property or sa spouse.
concealment because there are also fraud by
*tinutukan ka ng baril, napilitan kang pumasok sa
concealment, if there is an obligstion to disclosed
contract; tinakot ka na susunugin bahay nyo because
facts pero hindi mo dinidclosed, this is also fraud,
there is an eveil na iinflict upon your property.;
like a agents meron syang obligation to disclosed
tinakot ka na papatayin asawa mo that is an evil upon
facts to the principal, pag hindi nya dinisclosed yung
your spouse, in case of leaving partner the law
fact this is fraud of concealment. *example, si
applies as well known as common law wife/husband.
principal may pinapabenta na object, tapos sabi ni
Example: kung 30 years old ka very healthy, tapos
agent may gusting bumili kaso mababa yung rpice
may 95 years old na nananakot sayo, that cannot be
pero di niya sinabi na may iba pang gusting bumili.
considered as intimidation because you need to
Failure of the agent to disclosed the info that there
consider age, sex, and condition of the person. The
are other people interested to the land, this is fraud of
person who is doing the intimidation he must be in a
concealment.
position to carry out his threat. Threat to enforce just
or legal claim, tinakot ka nya dedemanda ka raw nya, B. INCIDENTAL FRAUD or DOLO
that is not a intimidation because may karapatan tayo INCIDENTE – Renders the party who
magdemanda. Intimidation may be employed by the employs it liable for damages because the
3rd person, iba ang nananakit sayo, hindi yung fraud was not the principal inducement that
kausap mo. led the other to give his consent.
CONSENT UNDUE INFLUENCE (Article 1337) – *Fraud after the point that parties already gave his
Influence of a kind that so overpowers the mind of a consent. It will only gave rise to the action of
damages. Yung mga usual exaggeration in trade, – GENERALRULE: The parties are bound to the
dealer stop, hindi sya fraud kasi bininigyan ng right real or true agreement.
ang mga nagbebenta na mambola. Ex: bumili ka ng
– EXCEPTIONS:
manga matamis ba yan?, alangan sabihin nya na
maasim, tapos sasabihin na sobrang tamis. This is not 1) If the contract should prejudice a third person;
a fraud. Caveat emptor “buyer beware”
and 2) If the purpose is contrary to law, morals, good
1341 in terms na mali yung opinion, its not fraud customs, public order or public policy.
*maganda ba tohh tapos sabi ng kapitbahay, oo
amagnda yan tapos hindi naman pala, this is not OBJECT (Articles 1347 to 1349) – It is the subject
fraud. But if the opinion is made by the expert, it can matter. In reality the object of every contract is the
constitute fraud. obligation created but since a contract cannot exist
without an obligation, the thing, service, or right
1342 misinterpretation of a 3rd person will not which is the object of the obligation is also the object
receive consent. of the contract. *kung subject matter sya, it could be
a service, thing
1342 misinterpretation in good faith is not a fraud but
only error REQUISITES OF THINGS AS OBJECT OF
CONTRACT
Fraud serious and should have not been employed by
the both contracting parties. A. The thing must be within the commerce of men,
that is, it can legally be the subject of commercial
SIMULATION OF A CONTRACT (Article 1345 to
transaction. *hindi pwedeng yung mga sidewalks
1346) – It is the process of intentionally deceiving
hindi pgovernment property, hangin pwede mo bang
others by producing the appearance of a contract that
ibenta, tulay pwede mo bang ibenta, drugs is also
really does not exist or which is different from the
illegal
true agreement. *faking contracts
B. It must not be impossible, legally or physically.
KINDS OF SIMULATION
*drugs and itlog ng tandang
A. ABSOLUTE SIMULATION (FICTITIOUS
C. It must be in existence or capable of coming into
CONTRACTS) – Takes place when the contract
existence (future things) including future rights.
does not really exist and the parties do not intend to
*BUNGA NG MANGGA, not yet existing but
be bound at all. The contract is inexistent or void.
capable of existing. Future inheritance, hindi
*wala talagangng contract, void contract because
pwedeng be the subject of the contract pero future
there is no consent. Nakakita ka ng blank piece of
things pwede.
paper, tapos eto try natin tong ballpen na ito kung
may tint, nagdraft kayo ng deed of sale. The parties D. It must be determinate or determinable without
do not want to be bound by the contract of sale. the need of a new contract between the parties.
*isang basket ng itlong, hindi mo alam kung ilang
B. RELATIVE SIMULATION (DISGUISED
itlog, not determinate yet pero pag binilang mo it is
CONTRACTS)
determinable
– When the parties conceal their true agreement and
REQUISITES OF SERVICES AS OBJECT OF
the contract entered into by the parties is different
CONTRACT
from their true agreement. *merong contract na
nakadraft which is different from the real agreement A. The service must be within the commerce of men.
ex: drinaft na contract is contract of sale, but what *not illegal service like murder, prostitute.
really happened is a contract of donation. Dinonate
ng nanay mo yung lupa sayo pero pinalabas na B. It must not be impossible, legally or physically.
binenta sayo. *magbuhat ng barko, pumatay ng tao
C. It must be determinate or capable of being made seller and the buyer is void contract? No, will not
determinate. invalidate the contract between seller and buyer.
Intransmissable rights (right to vote) cannot be the CAUSE
subject of contracts
• Immediate or direct reason.
OBJECT RIGHTS AS OBJECT OF CONTRACT
• Always known.
– GENERAL RULE: All rights may be object of a
• Essential element of a contract.
contract.
• Illegality affects the validity of a contract.
– EXCEPTION: When the rights are intransmissible
by their nature, or by stipulation, or by provision of • Must be present for a contract to be valid.
law.
MOTIVE
CAUSE or CAUSA or CONSIDERATION – The
essential reason or purpose which the contracting • Remote or indirect reason.
parties have in view at thetime of entering into the • May be unknown to the other party.
contract.
• Not an element of a contract.
KINDS OF CONTRACTS ACCORDING TO
CAUSE (Article 1350) • Illegality does not render the contract void.

A. Onerous. *the prestation or promise of a thing ex: • The presence of motive cannot cure the absence of
contract of sale, for the seller the reason why he enter cause.
the contract to receive money, in case of buyer, he 1352 – contracts without cause are viod contract .
will receive the object. Merong promise yung isa This will produce no effects. If your contract is
kaya gusto mong pumasok sa contract. illegal, it is viod. *Promise of marriage based on
B. Remuneratory or remunerative. *past service or sexual intercourse, this is a illegal cause.
benefit which is recoverable debt. Binabayran mo is *If ang bayad is kulang , it will not effect the contract
yung past service
1354- caused is always presumed
C. Gratuitous or contracts of pure beneficence. *the
liberality of the benefactor or giver. Sa gratuitous LESION (Article 1355) – Any damage or injury
contract ikaw ay nagbibigay (donation), in a donation caused by the fact that the price is unjust or cause is
wala ka namang natanggap pero the reason why you inadequate. One party does not receive the full
enter into donation is liberality or generosity of the equivalent for what he gives in a commutative
giver. contract. Hindi mo natanggap yung full of
equivqlent of what you give in a contract.
MOTIVE (Article 1351) – The purely personal or
private reason which a party has in entering into a EFFECT OF LESION
contract. The motive may be regarded as the cause in A. GENERAL RULE – Lesion or inadequacy of
a contract if it is founded upon a fraudulent purpose price does not invalidate a contract.
to prejudice a third person. *It does not affect the
contract incase of a illegal motive, the contract is B. EXCEPTIONS
valid. In case of illegal cause, the contract is viod. 1. When, together with lesion, there has been fraud,
*Ex: buyer will buy a knife from the seller, para sa mistake or undue influence. *Kaya siguro ang baba
buyer the object is for is yung kanyang pera what is ng presyo, kala nila fake na kwintas, hindi na tunay
the cause is yung knife, yung motive ni buyer na na gold pero tunay pala
bilhin yung knife is to kill his neighbor, cause is
valid, because the cause for the buyer is the knife, 2. In cases expressly provided by law.
but the motive is illegal, is the contract between the
 B. EXCEPTIONS
1. FORM FOR VALIDITY – When the law requires
that a contract be in some form to be valid.
CHAPTER 3 FORM OF CONTRACTS
2. FORM FOR ENFORCEABILITY – When the law
FORM OF CONTRACTS
requires that a contract be in some form to be
FORM– Refers to the manner in which a contract is enforceable or proved in a certain way. *para
executed or manifested. maprove mo itong existence ng agreement na tohh, it
is required to be in some form para maging
– A contract may be oral, or in writing, or partly oral enforceable at tanggapin sa court.
and partly in writing. If in writing, it may be public
or a private instrument. *PRIVATE lahat ng contract 3. FORM FOR CONVENIENCE OR GREATER
pero if want mong ipapublic need mong ipanotarized. EFFICACY – When the law requires that a contract
Kaya ka nagpapanotaryo because it is required for be in some form for the convenience of the parties or
validity, may instances na yung mga public for the purpose of affecting third persons. *
document lang ang registry sa public property,
FORM FOR VALIDITY
mahirap iaccept at walang ebideciary value ang mga
private instrument. A. REQUIRED TO BE IN WRITING *kailangan ng
kasulatan pero hindi nakanotaryo
– To be recognized as a written contract, all its terms
must be in writing. A contract partly in writing and 1. DONATION OF PERSONAL PROPERTY
partly oral is, in legal effect, an oral contract. *pag (Article 748) – Donations of personal property the
party writing at party contract it is considered as oral value of which exceeds ₱5,000 require that the
contract. donation and acceptance be made in writing
otherwise the donation is void. *examples:
CLASSIFICATION OF CONTRACTS
cellphone, kotse, motor (personal property). Personal
ACCORDING TO FORM
donation – ibibigay mo lang at hindi mo ibebenta.
A. INFORMAL or COMMON – That which may be *kapag ang value ng personal property is 5000 and 1
entered into in whatever form provided all the peso, donation is required to be in writing, and the
essential requisites for their validity are present. This acceptance is required to be in writing. Kapang yung
refers only to consensual contracts. An informal value ng personal property is 5,000 and below, it can
contract may be oral or written.* be donated verbally. Oral donation required only a
simultaneous delivery of the thing or document
B. FORMAL or SOLEMN – That which requires represent the object donated. There is no required
compliance with certain formalities prescribed by formality.
law for its efficacy, such prescribed form being
thereby an essential element thereof. * requires 2. STIPULATIONS REDUCING THE COMMON
compliance with certain formalities prescribed by CARRIER’S EXTRAORDINARY DILIGENCE
law para magkaroon ng validity ang contract. AND LIMITING ITS LIABILITY (Articles 1744-
1750)*common carriers refers to public
RULES REGARDING FORM OF CONTRACTS transportations; commor carriers are required by law
(Article 1356) to have a extraordinary diligence in all circumtances;
A. GENERAL RULE – Form does not matter for the to reduce the liability of the common carrier( yung
validity of a contract. It is enough that there be extraordinary gagawin lang na ordinary diligence;
consent, subject matter and cause. This rule applies, this stipulation must be in writing, so that it will be
however, to consensual contracts. *consensual valid.
contract may cause, subject matter and cause *form 3. SALE OF LAND THROUGH AN AGENT
does not matter for the validity and it only applies to (Article 1874) – Sale of land thru an agent whose
consensual contract. authority must be in writing, otherwise, the sale is
null and void. *kapag nagpapabenta ka ng lupa kay donation, acceptance maybe made in the same deed
agent, yung authority na ibibigay sa agent must be of donation kaya minsan pinagsama ang deed of
in writing, otherwise the sale is null and void. *if you donation and acceptance in the same instrument, pero
sell a land through an agent, the authority of an agent pwede ring yung acceptance is in the different
must be in writing. Kahit yung deed of sale is in instrument as long as it is a public document. In order
writing at nakanotaryo, yung entire sale is null and for the donation to be valid, donation must be in
void. writing, public document ; acceptance must be also
in writing and public document.
4. STIPULATION TO PAY INTEREST (Article
1956) – Stipulation to pay interest on loans, interest 2. CONTRACT OF PARTNERSHIP (Articles 1771
for the use of the money must be in writing. *hindi and 1773) – In partnerships where real property is
nakasulat ang interest at nagbabayad si debtor ng contributed the contract of partnership should be in
interest, and creditor return the portion of money writing. RULES REGARDING FORM FORM FOR
because the interest is not stipulated in writing. ENFORCEABILITY (Article 1403) – In the cases of
Kapag stipulation in writing must be in writing contracts covered by the Statute of Frauds and
Perjuries, the law requires that they be in writing,
5. ANTICHRESIS (Article 2134) – In contracts of
subscribed by the party charged or by his agent. If the
antichresis, the amount of the principal and of the
contract is not in writing, the contract is valid
interest shall be specified in writing; otherwise, the
(assuming all the essential elements are present) but
contract shall be void. *anthichresis- refers to
it cannot be proved in court and is unenforceable
contract entered into by creditor and debtor wherein
(neither party may be compelled by court action to
the creditor is authorized to receive the fruits of
perform) unless it is ratified. *the contract od
immovable of his debtor with the obligation to apply
partnership mus be in writing, if A and B donates
the immovable fruits to the payment of interest, if
cash and C donates industry pwede yun because
there is remaining thereafter the principal of the
contract of partnership is a consensual contract. If a
debtor *ang pang babayad ng debtor sa creditor ay
donates real property to the partnership , the contract
ang fruits. Creditor will receives fruits galling sa lupa
of partnership is required to be in writing plus the
ng isang debtor, the creditor will have an obligation
inventory of immovable.
to apply the fruits to the payment of interest
converted in money, thereafter the principal of credit
of debtor.
FORM OF ENFORCEABILITY (Article 1403)
B. REQUIRED TO BE IN A PUBLIC
-In the cases of contracts covered by the statue of
INSTRUMENT *not only be in writing but should
frauds and prejuries, the law requires that they be in
be also in public instrument or notarized.
writing, subscribed by the party charged or by his
1. DONATION OF REAL PROPERTY (Article agent. If the contract is not in writing, the contract is
749) – Donation of an immovable must be made in a valid (assuming all the essential elements are
public document. The acceptance may be made in the present) but it cannot be proved in court and is
same deed of donation or in a separate public enenforceable (neither party may be compelled by
document, but it shall not take effect unless it is done court action to performd unless it is ratified.
during the lifetime of the donor. If in a separate *enforceable contract is without force and effect but
instrument, the donor shall be notified thereof in an in some it is considered as validable, because pag
authentic form, and this step shall be noted in both niratify moa ng enforceable contract, it will become
instruments. *hanggat walang deed of donation valid contract. Pag hindi naritafy walang kwenta.
which is in writing at nakanotarized, huwag
FORM FOR CONVENIENCE OR GREATER
maniniwala na ibibigay ang lupa sa inyo. Real
EFFICACY – In certain cases, a certain form is
property must be in writing and notarized and
required for the convenience of the parties in order
acceptance must be in writing. Kapag ikaw ang done
that the contract may be registered in the proper
you also need to complete act para maging valid ang
registry to make effective the right acquired under enforeceable, you cannot compel to you parents
such contract as against third persons. Non- (donor) to execute the necessary instrument.
compliance with the required form would not
CONTRACTS WHICH MUST APPEAR IN A
adversely affect the validity nor the enforceability of
PUBLIC DOCUMENT (Article 1358) *for
the contract between the parties themselves. *In
convenience, this are valid contract and they are
some cases, certain form is required for the
enforceable even if they do not contained public
convenience of the party para yung agreement
instru. And writing. *For greater protection of
maregister sa registry of property to make it effective
properties.
against 3rd person, if the contract is not in writing
okay lang yun because in 1357, the one party may A. Acts and contracts which have for their object the
compel to another party to execute the proper public creation, transmission, modification or
instrument which may be registrable. *para extinguishment of real rights over immovable
maregister, kailangan lang gawing public instrument. property. *leese, mortage of lupa. Kung walang
public intru, the mortage between parties valid per
RULES REGARDING FORM – As between parties,
para maregister mo yung pagsasanla ng debtor
the form is not indispensable since they are allowed
mo(morgedor), para maregiter mo yung sanla sa
by law to compel the other to observe the proper form
titulo ng debtor mo, kung hindi makabayd ang debtor
and this right may be exercised simultaneously with
mo, hindi mo pwedeng ifor closed hanggat hindi mo
the action to enforce the contract. It is essential
nairegister yung mortage sa titulo. Para maregister
however that the contract be both valid and
mo yung mortgage mo sa titulo, you need a public
enforceable (Article 1357). *AS BETWEEN the
instru. And creditor can now compel the
parties, form is not indepensible, hindi kailangan na
debtor(mortgador). Pag bayad na ni debtor yung
kailangan, pero they are allowed by law to compel
mortgage, at gusto nan yang icancel, debtor now can
the other to observe the proper form. Example: Si A
compelled to creditor execute the release of real
nagbenta ng lupa sa inyo, sale of land (property) must
estate mortgage.
be in writing, letter E of paragraph 2 of article 1403,
an agreement of a leasing longer for 1 year or for the B. The cession, repudiation or renunciation of
sale of real property or an interest therein, required to hereditary rights or of those of the conjugal
be in writing or some note or memorandum. *kapag partnership of gains *halimbawa tatlo kayong
bumili ng lupa dapat merong writing. Si seller magkakapatid, namatay ang parents nyo,
binenta nya yung lupa kay buyer, the sale is magmamana kayo, yung isa sa inyo mayaman at
evidenced by private instrument, usapan sila sila gusto nya ng iwaive yung mana nya, if gusto mong
lang, hand written na instrument, si buyer nagbayad iwaive yung hereditary rights mo, it must be in
at tinggap ni seller nakasulat doon, tapos binigay ni writing.
seller yung titulo kay buyer. Hnad written and it is
private kasi hindi nakanotarized, dahil nabayaran na C. The power to administer property, or any other
at may delivery ng title, the sale is already valid sale power which has for its object an act appearing or
kasi sabi nga kailangan lang ng writing sa which should appear in a public document, or should
pagbebenta ng real property. But it is not registrable, prejudice a third person. *yung attorney in fact to
yung titulo hindi mo maililipat sa pangalan ni buyer. admiter property nyo mus be in public intru., and
Para mailipat is seller need to execute public writing.
instrument. *pag walang private writing pero fully D. The cession of actions or rights proceeding from
executed na yung contract of sale, valid pa rin sya at an act appearing in a public document. *si mortgador
enforceable. Pero pag hindi pa fully executed, hindi sinanla nya yung lupa kay mortgagee, the mortgage
sya valid. *pag yung parents nagdonate ng lupa, must appear in public instru. Para mairegister ni
walang sulatan pero nasa inyo yung lupa at nakatira mortgagee yung mortgage sa titulo ni mortgagor/
na kayo doon, donation is not valid and not debtor. If the creditor will sign his right to mortage,
it mus be in public instru.
CHAPTER 4 there is a vitiated consent, there is a defective in the
part of one parties.
REFORMATION OF INSTRUMENTS
REFORMATION (Article 1359) – That remedy in WHEN REFORMATION IS PROPER
equity by means of which a written instrument is
A. Article 1361 – Mutual mistake.
made or construed so as to express or conform to the
real intention of the parties when by reason of B. Article 1362 – Mistake on one side and fraud or
mistake, fraud, inequitable conduct, or accident, the inequitable conduct on the other side.
instrument fails to express such agreement or
intention. *yung written instrument ay binabago and C. Article 1363 – Concealment of mistake by the
it is made to conform to the real intention of parties other party.
kasi yung instrument ay iba sa pinagusapan ng D. Article 1364 – Ignorance, lack of skill,
parties through mistake, fraud, inequitable conduct negligence, or bad faith on the part of a third person.
or accident. *instrument as drafted fails to express
the real agreement of the parties. *Hindi binabago E. Article 1365 – Mortgage or pledge stated as sale.
ang agreement ang binabago lang ang written F. Article 1346 – Relative simulation that does not
instrument. prejudice a third person and is not unlawful. *relative
REQUISITES FOR THE ACTION FOR simulated contract, ang binding neto is the real
REFORMATION agreement of the parties unless yung agreement as
drafted will control if prejudices 3rd person and if the
A. There must be meeting of the minds of the parties real agreement is contrary to LAMOGPP. Relative
to the contract. *May nagapusapan na, kumpleo na simulated contrach which not prejudices 3rd person
ang ingredients ng contract and its not contrary to lamogpp, yun ang ang
B. The true intention or agreement of the parties is pwedeng ireform through agreement of the parties.
not expressed in the written instrument. *complaint in reformation, the plaintiff must alleged
to the instrument to be reformdoes not conform to the
C. The failure to express the true intention is due to real agreement or intention of the parties, and it also
mistake, fraud, inequitable conduct, or accident. alleged kung ano yung real agreement and real
inetention of parties.
D. The facts upon which relief by way of
reformation of the instrument is sought are put in PRINCIPLES OF THE GENERAL LAW ON
issue by the pleadings. *ilagay sa initial petition/ REFORMATION (Article 1360) – In case of conflict
complaint ang pleading for reformation *you alleged between the provisions of the New Civil Code and
in the pleading kung baki pinapareform ang the principles of general law on reformation, the
instrument at kung ano yung totoong agreement former prevails. The latter will have only suppletory
effect. *suppletory effect lang yung general law sa
E. There must be clear and convincing proof of the
reformation
mistake, fraud, inequitable conduct, or accident.
REFORMATION OF INSTRUMENTS MUTUAL
F. It must be brought within the proper prescriptive
MISTAKE (Article 1361) – A mistake of fact that is
period of 10 years. *within 10 years dapat
common to both parties of the instrument which
G. The document must not refer to a simple causes the failure of the instrument to express their
unconditional donation inter vivos, wills or to a true intention. * the mistake is mutual meaning it is
contract where the real agreement is void. both parties who are mistaken, failure of the
*documentary and oral evidenced may be admitted instrument to express their true intention is because
to proved yung intention ng mga parties of the mistake of the both of them *dalawa silang
may kasalanan *seller is selling a house to buyer, the
Annullment – it is a remedy when there’s nomeeting
buyer agrees to buy a house, they darfted a
of minds, wala pa talagang napagkasundu because
instrument, they agreed on the same house, tinignan
pa nila, yung inetntio nila is same to buy this concealment. *reformation is only available who
particular house, na yung ang binibili ni buyr at yun acted in good faith, and the party who concealed the
din ang tinitinda ni seller,dahil nakalimutan nila yung mistake cannot avail reformation.
bahay and they are not aware about the no. of house,
IGNORANCE, LACK OF SKILL, NEGLIGENCE,
nilagay nila sa instru. Is 18 road 7, brangay san
OR BAD FAITH ON THE PART PF THE PERSON
vicente hills, and later on they learn na yung house
(1364)- 3RD person drafts the instrument, the
no. 12. The mistake is by the both parties.
instrument failed to represent the true inten. clerk,
REQUISITES typist, secretary, sila yung nagkamali. It is not a
mistake on the part of both parties. Neither party is
A. The mistake must be of fact (Article 1331).
responsible for the mistake. Either party may ask for
B. Such mistake must be proved by clear and reformation.* pwedeng yung both parties ang
convincing evidence. magask ng reformation.

C. The mistake must be mutual, that is, common to -The court may order the reformation of the
both parties to the instrument. instrument if the instrument does not convey the true
intention of the parties because of the ignorance, lack
D. The mistake must cause the failure of the of skill, or bad faith of the drafter of the instrument,
instrument to express the true intention of the parties. or the clerk or the typist. *example: debtor is indeted
REFORMATION OF INSTRUMENTS MISTAKE to creditor, 10k pesos ang napagusapan, pero si
ON ONE SIDE, FRAUD OR INEQUITABLE secretary na nagdraft ng instrument, tapos through
CONDUCT ON THE OTHER (Article 1362) – The negligence ni secretary nalagay nya dollar instead of
mistake is unilateral but the other party acted pesos.
fraudulently or inequitably. The right to ask for MORTGAGE OR PLEDGE STATED AS A SALE
reformation is granted only to the party who was – The reformation of the instrument is proper;
mistaken since the mistake is not mutual. *nagloko otherwise the true intention of the parties would be
yung isa, nagkamali yung isa * mistake is not mutual, frustrated. Such true intention must prevail for the
it is unilateral * the right to asl reformation is granted contract must be complied with in good faith.
to the innocent party who made a mistake *Debtor
maghihiram ng pera kay creditor, 10k, creditor -The intent of the parties can be adjudged from their
drafted a promissory note, sinulat ni creditor sa contemporaneous and subsequent acts. *Ang gusto
promissory note instead na 10k, ang nalangay nya ni debtor ditto is to secure the debt only, isesecure
1M, one acted mistake in signing the instrument and nya lang yung payment ng debt nya through
one acted frauduenlently, kasi nilagay nyang 1Mm mortage/pledge of property, pero yung instru. Is not
instead na 10k. Reformation is allowed only for a contract of mortgage but it is a contract of sale,
debtor, kasi sya ang may mistake at innocent sya. yung intention ng parties is frustrated, remedy is
reformation.
CONCEALMENT OF MISTAKE BY THE
OTHER PARTY (Article 1363) – The mistake is CASES WHEN REFORMATION IS NOT
unilateral but the other party is guilty of concealment. ALLOWED
The remedy of reformation may be availed of the
A. SIMPLE DONATIONS INTER VIVOS
party who acted in good faith. The concealment of
WHERE NO CONDITION IS IMPOSED
the mistake by the other party constitutes fraud.
(Article 1366) – The act is essentially
*mistale is unilateral, but the other party is guilty of
gratuitous and the done has no just cause for
concealment *alam mo nan gang mali yung
complaint. The donor is not bound to correct
pinipirmahan nya, hinayaan mo pa sya, one party is
mistakes or defects in the deed of donation
aware that the instrument doesnot express the true
which in the first place he was not bound to
agreement of the parties, here yung isa alam nan yang
make. Of course, the donor may ask for the
mali hindi nya pa pinapacorrect, that is fraud of
reformation of the deed of
 donation*unconditional donation during the parties through words or actions, and 3rd
lifetime of donors, it is not subject to person relied on this misrepresentation, hindi
reformation *Donor is not bound to correct na pwedeng ideny. Ratification, it cleanses a
mistake or defects on the donation *the donor contract of its defects from the beginning,
can ask for reformation dahil sa kanya lang when a party brings action to enforce
nakasalalay. *if the donation is conditional or instrument , nagkakaroon ng admission ng
onerous, the deed of donation may reform so validity of instrument, and he admit that the
that the tru condition imposed by the donor or instruments expresses the true intention of the
the real intention of partiesmight be express parties. If you want to bring an action for
in instrument *conditional donation – reformation, this inconsistent with an action
ibibigay ang lupa na ito pero need magtayo to enforce the instrument. *seller sells a
ng school, eto yung mga onerous kaya pag house to buyer, seller drafts an instrument but
may mistake ditto, pwedeng ireform. the instrument instead of being a contract of
B. WILLS (Article 1366 - The making of will sale, the seller drafts a contract f motgage, so
is strictly personal and free act, hence upon lumalabas na si siller sinangla nya lang yung
the death of the testator, the right to lupa kay buyer, but the instrument darfted by
reformation is lost. Furthermore, a will may seller a mortgage contract instead od sale.
be revoked by the testator any time before his Both parties signed the contract. The buyer
death. However, after the death of the belive all along that the contract is a contract
testator, error or imperfections in descriptions of sale, and seller acted frauduelently , kasi
may be corrected under article 789, but no the ang drinaft nyang instrument is a contract of
manner of property disposal. ) *cannot be mortgage instead of sale. Buyer upon
reformed, eto nga yung wish ng namatay to knowledge mistake in the instrument may
take affect after his death, upon the death of bring an action for reformation. If the buyer
testator, the right to reformation is loss, files an action to for closed the mortgage,
because this is purely voluntary act to the part gusto nya ng iremata yung mortgage,
of testator. But this testator may revoked last sinisingil nya na yung utang ni seller na
will anytime before his death. *In case of lumalabas na debtor sa mortgage contract, if
deaths, error, imperfection, indiscription may the buyer (creditor sa mortgage) enforces the
be corrected under 789. Pero ang pwede lang instrument by demanding payment/
icorrect is simple error at imperfections but forclosing the mortgage, so si seller enforces
not the manner of property disposal. the instrument which is farudeulently drafted,
- Imperfec description: no person or property if buyer enforces the instrument he cannot
exactly answers in the descriptions, in the ask for reformation kasi binibigyang bias nya
context of will and based on the extringsict na yung mortgage kaya naniningil na sya at
evidence pwede syang maicorrect. gusto nyang iremata yung lupa.
C. WHEN THE REAL AGREEMENT IS
PARTY ENTITLED TO REFORMATION (Article
VOID – If the real agreement is void , there
1368)
is nothing to reform.
D. WHEN ONE PARTY HAS BROUGHT AN A. Either of the parties, if the mistake is mutual
ACTION TO ENFORCE THE under Articles 1361, 1364, and 1365. * If case
INSTRUMENT (Article 1367) – Based on of both of them mistakenly
estoppel or ratification. When a party brings B. In all other cases, the injured party, under
an action to enforce the contract, he admits its Articles 1362, 1363, 1364, and 1365.
validity and that is expresses the true C. The heirs or successors-in-interest, in lieu of
intention of the parties. The bringing of the the party entitled. *If the person who is
action is thus inconsistent with reformation. entitled to reformation is namatay, heirs or
*estoppel, kung ano na yung naestablished ng successor-in-interest
PROCEDURE FOR REFORMATION (Article parties; example: A and B entered in a contract of
1369) lease whereby B would pay certain regular as rentals,
and at the end of the lease contract, he would be the
- The rules of Court governs procedure.
absolute owner of the property. Their contract is
However, no rules have yet been
lease, pero makikita mo sa intention ng parties lease
promulgated. *burden of proof is on the party
contract ba talaga or sale through installment. Sa
who insist that the contract should be
lease contract, the debtor will not be the owner of the
reformed. *The effect of reformation is
property kahit gaano katagal yung rental. The
retroactive from the time of the execution of
contract here is really a contract of sale through
the real contract, not to time when
installment payment, because that is the intention of
contract/instrument is reformed.
the parties.
CHAPTER 5 INTERPRETATION OF
C. CONTEMPORANEOUS AND SUBSEQUENT
CONTRACTS
ACTS RELEVANT IN THE DETERMINATION
INTERPRETATION OF CONTRACT – The OF INTENTION (Article 1371) – Where the parties
determination of the meaning of the terms or words to a contract have placed an interpretation to the
used by the parties in their written contract. *ibig terms of the contract by their contemporaneous
sabihin ng mga salita na ginamit ng mga parties sa and/or subsequent acts, as by acts in partial
contract. performance, such interpretation may be considered
by the court in determining its meaning and
RULES IN INTERPRETATION OF CONTRACTS ascertaining the intention of the parties when such
A. LITERAL MEANING CONTROLS WHEN intention cannot clearly be ascertained from the
LANGUAGE IS CLEAR (Article 1370) – If the words used in their contract. *contemporaneous,
terms of a contract are clear and unequivocal, the subsequent and antecedent acts are relevant in the
parties are bound by such terms. The concern here is intention of the parties. Example: R (lessor) and E
not what existed in the minds of the parties but what (lessee) entered in a contract of lease, it states that the
intention is expressed in the language used. *kapag possession of ownership of the land transferred to E,
malinaw ang term ng contract, huwag kang titled to na land binigay ni R kay E, E register the
magiinterpret . There is nothing to interpret because property to his name, before the contract of lease
the terms of the contract is clear and unequivocal. signed,E wrote to R referring to buy the land. Lessee
Whatever the meaning of the clear and unequivocal will get possession dahil sa kanya na nakaregister
term is, yun ang masusunod. Intention must express yung lupa, sya na yung pwepwesto sa property.
in the language use. Pag Malabo ang mga terms, Ownership is transferred to lessee, based on the acts
doon palang magiinterpret; the intention of the of the parties, contemporaneous: pasabay(binigay
parties cannot be determine based solely in the yung ownership, binigay yung possession;
written contract. subsequent: after ng execution of contract of lease,
natransfer yung lupa. Obviously na yung intention ng
B. EVIDENT INTENTION OF PARTIES parties is to sell.
PREVAILS OVER TERMS OF CONTRACT
(Article 1370) – Where the words and clauses of a – Antecedent circumstances may also be considered.
written contract are in conflict with the manifest *saan ka ba nakakita ng nangungupahan na gustong
intention of the parties, the latter shall prevail over bilhin yung lupa. Antecedent act – it occurred before
the former. It is a cardinal rule in the interpretation of the constitution of the contract of the parties.
contracts that the intention of the parties should D. SPECIAL INTENT PREVAILS OVER A
always prevail because their will has the force of law GENERAL INTENT (Article 1372) – The special
between them. *word and intention, inconflict sila. provisions control over the general provisions when
Maxim “let us interpret not by the letter that kill it the two cannot stand together. A reference to a
but by the spirit that given life”, yung interpretation special matter means that attention was given to that
natin is the one that give life to the intention of the
particular matter and it must be assumed that it hindi pwedeng palayasin si lessor dahil if you
expresses their intent. A reference to a general matter interpret the instrument as whole, considered all
within which a particular matter may be included, provision. Remember that there is a additional rental
does not mean that the parties had that particular 1000 need to be paid. If may violation of contract
matter in mind. *Example: A sold to B his house magkakaroon lang ng additiona payment na 1k.
including all furniture, isa sa mga furniture is rocking
G. INTERPRETATION OF WORDS WITH
chair, and this chair belongs to relative of A, yung
DIFFERENT SIGNIFICATIONS (Article 1375) – If
relative ni seller (tita) ask A na iwan nya muna yung
a word is susceptible of two or more meanings, it is
chair temporarily. Hindi kasali ang chair because
to be understood in that sense which is most in
there is a general term here (all furniture) should not
keeping with the nature and object of the contract in
be understood include things that are different, in
line with the cardinal rule that the intention of the
cases that are distinct from those upon which the
parties must prevail. *Examples: si lessor
parties intended to buy. Hindi kasali yung chair kasi
pinaupahan nya yung roof kay lessee, so lessee will
different case yan.
erect a advertising sign in case of there will be
E. PRINCIPLE OF EFFECTIVENESS (Article termination of contract of lease by the lessee if a
1373) – When an agreement is susceptible of several building should be constructed sa katabing property
meanings, one of which would render it effectual, it na makakatakip sa sign ni E, so si lessee nagrenta sya
should be given that interpretation. If one ng rooftop maglalagay sya ng sign, tapos yung
interpretation makes a contract valid and the other contract nya may resolutory condition (kung may
makes it illegal, the former interpretation will nagtayo ng isang building na matatakpan yung
prevail. *Example: wife sells her house and lot for advertising sign, the contract will be terminated. ).
100k, which is a parafernal property (sya lang ang Tapos may nagtayo sa tabi pero nagtayo din ng sign
may ari) and another house which belong to the mas Malaki sa sign ni lessee, natakpan pa rin yung
conjugal partnership (yung bahay nap ag mamayari sign ni lessee. Huwag nating ikulong yung meaning
nya kasama yung asawa nya). If a wife entered in a sa building lang, ang intention kasi ng contract is wag
contract without the consent of the husband, matakpan yung sign ni lessee, term building it can
pwedeng magbigay ng dalwang interpretation yung include all structure will ibstruct na matatakpan sign
agreement ng parties; the house may referred to ni lessee.
conjugal house and lot or it can also referred to the
H. RESORT TO USAGE OR CUSTOM AS AID IN
parafernal property. if yung interpretation sa
INTERPRETATION (Article 1376)
conjugal house, the contract is illegal dahil walang
consent si husband, pag ininterpret natin yung – The usage or custom or the place where the contract
parafernal property, it will give effectivity to the was entered into may be received to explain what is
contract which lead to its validity. doubtful or ambiguous in a contract on the theory that
the parties entered into their contract with reference
F. INTERPRETATION OF VARIOUS
to such usage or custom. *In case there is something
STIPULATIONS OF A CONTRACT (Article 1374)
doubtful or Malabo sa contract, parties may use the
– A contract must be interpreted as a whole and the
usage or customs sa pagiinterpret. Example: contract
intention of the parties is to be gathered from the
of lease for services, walang nakalagay kung
entire instrument and not from particular words,
magkano ang service, obviously may bayad yan, the
phrases, or clauses. All provisions should, if
customs of place where the services rendered should
possible, be so interpreted as to harmonize with each
determine the amount of service.
other. *Example: lessor lease a house to lessee, in the
contract lessee should not subliss (nangungupahan ka – It is necessary to prove the existence of usage or
na nga, pinaupahan mo pa sa iba) the house without custom, the burden of proof being upon the party
the written consent of the lessor. Other stipulation in alleging it. Usage or custom is not admissible to
the contract says lessee subliss yung house + 1000 supersede or vary the plain terms of a contract. *The
rent a month. There is a termination of contract, ditto burden of proof regarding the custom of place nay an
is in the man who claims that there is a usage or alam kung pinahiram lang ba or binigay na talaga,
customs. Kung may nakalagay na talaga kung both are gratuitous contract: binigay (gratuitous);
magkano yung bayad ng services, kahit na may pinahiram (commudatum). The cause is the liberality
existing cutoms or usage, hindi ito admissible. of the donor, ano ba ang interpretation na
magkakaroon ng lease transmission ng rights and
I. INTERPRETATION OF OBSCURE
interest? If nainterpret ng kaklase mon a donation
WORDS (Article 1377)
yun, so yung ballpen hindi na sayo (you are
– In case of doubt, a written agreement should be transmitting ownership); if your classmate interprets
interpreted against the part who has drawn it, or be it as a commodatum (transmits the possession
given an interpretation which will be favorable to the temporarily) Ano baa ng mas konting rights ang
other who, upon the faith of which, has incurred an itratransmit/ itratransfer which is commodatum.
obligation. Since he caused the obscurity, the party Ownership is pertains to you classmate.
who drew up the contract with ambiguous terms
B. GREATEST RECIPROCITY OF INTERESTS –
should be responsible therefore; so the obscurity
Applies when the doubts refer to incidental
must be construed against him.
circumstances of onerous contracts. *What
– The party who drafts the contract, more easily than interpretation will give benefit to both parties;
the other, could have prevented mistakes or example: debtor borrowed to creditor 5k at 12%
ambiguity in meaning by careful choice of words and interest. It cannot determine from the term of contract
general, the party who causes the obscurity acts with when the loan is payable in 6 months or 1 year. Ang
ulterior motives. pakinabang ni debtor ditto is may gagamitin syang
pera mas matagal na panahon mas matagal na
CONTRACTS OF ADHESION – Contracts most of magagmit ang pera; ang pakinabang ni creditor, kung
the term of which do not result from mutual mas matagal ang panahon mas maraming interest, so
negotiation between the parties as they are usually 1 year ang interpretation.
prescribed in printed forms prepared by one party to
which the other party merely “adheres” if he chooses C. PRINCIPAL OBJECT IS DOUBTFUL – If the
but which he cannot change. *contract in printed doubt refers to the principal object of the contract and
form, and prepared by one party only, and other party such doubt cannot be resolved thereby leaving the
merely adheres and sign the contract if he wants. But intention of the parties unknown, the contract is null
stipulation cannot be change by the party who simply and void. *kapag hindi maintindihan ang intention of
signed the contract. *take it or leave it, if you want it parties, contract is null and void. Kung hindi
sign it, if you don’t want don’t sign it. Example: malaman ang principal object . *Seller sells to buyer
insurance contract, transporation contracts *if there his land but seller has money land, and it cannot
are obscure word, malabong word , it is interpreted determine which land intended by the parties,
strictly by the party who drafted the instrument. It contract is null and void.
can be interpreted liberally or in favor of the party
CHAPTER 6 RESCISSIBLE CONTRACTS
who signs the contract of adhesion.
(Defective Contract: In decreasing effectivity nauuna
RULES IN CASE OF DOUBTS AS TO yung recissible contracts
INCIDENTAL CIRCUMSTANCES (Article 1378)
1. Valid Contract
*in case you cannot interpret a doubtful contract
2. Defective Contracts
using all the rules.
- Recissible Contracts
A. LEAST TRANSMISSION OF RIGHTS AND - Voidable Contracts
INTERESTS – Applies when the doubts refer to - Enforceable Contracts
incidental circumstances of gratuitous contracts. - Void Contracts
*Example: yung kaklase nyo naghahanap ng ballpen
RESCISSIBLE CONTRACTS (Article 1380) –
dahil kailangan nya, tapos ikaw inabot mo yung
Those that are validly agreed upon and enforceable
ballpen mo sa kanya, you gave it freely. So hindi
because all the essential elements exist and, absentee. It involves the property of the absentee,
therefore, legally effective, but in the cases absentee will suffer more than ¼ of the value of his
established by law, the remedy of rescission is property and absentee can ask for the recission of the
granted by the court in the interest of equity when contract upon his return.
there is economic damage or prejudice or lesion to
C. Contracts undertaken in fraud of creditors.
one of the parties or to a third person. There is
*action poliana – there is a debtor and creditor and
actually no defect at all but by reason of some
debtor is may utang kay creditor na 1,000,000. Tapos
extrinsic defect, its enforcement would cause
si debtor ayaw magbayad, pero si debtor may
injustice. *Valid and enforceable, parties have a right
property (land worth 1m). Nung naniningil na si
and obligation under the recissible contract, valid sya
creditor, imbes na magbayad si debtor kay creditor,
because all the essential elements exist but in case
pwede naman nyang gawing pera yung lupa nya or
economic damage, prejudice or dacion on the part of
ibenta sa iba. Instead na itinda ni debtor yung land
one of the parties, the law grants the remedy of
sa 3rds person ng 50,000 only sa kanyang anak. Kung
recission dahil merong defect, unfair yung contract.
ikaw si Creditor, ang remedy mo is recission for the
KINDS OF RESCISSIBLE CONTRACTS (Article contract between the debtor and his son because this
1381) is undertaken to defraud you and recissible contract.
Kaya tininda lang ni debtor is para lokohin si
A. Contracts entered into in behalf of wards.
creditor.
*guardian – a person who is incharge of the ward,
ward- somebody who is incapacitated (minor) *The D. Contracts which refer to things under litigation.
person who enters the contract is not the *Object na meron ng demanda, and its already in the
incapacitated person (minor), but the person who will custody of court *may nabili akong lupa may
enter the contract is the guardian of the minor, when naghahabol sa binili kong lupa kaya dinemanda nya
the guardian entered in a contract with the 3rd person, ako, tapos natanggap ko na yung sulat galling sa
it involves property of the ward. It makes recissible court. Since, the property is under litigation, I’m not
because economic damage or lesion more than ¼ the allowed to sell and dispose it. Kung binenta ko yan
value of the property of the minor. Kapag nalugi tapos nanalo yung naghahabol sa case naming, he can
yung minor ng more than ¼ ng kanyang property, ask for the recission of the sale between me and my
yung property ng ward is worth 100k,tapos binenta buyer.
ng guardian to 3rd person, pero tininda lang ng
E. Other instances. (Articles 1098 (partition of mana
50,000. It is recissible dahil merong lesion or lugi si
between heirs, if one of the heirs suffers more than ¼
minor ng 50%. When the minor reaches the legal age,
of the value of his inheritance, 1189 detoriation to the
minor can ask recission of contract. *Paano pag
fault of debtor, 1191 violation of contract by one
tininda ng 700k? It’s not recissible dahil sinabi ng
party in reciprocal obligation, 1382, 1526 and 1534
law lesion ,must be more than ¼ of the value property
law on sale, 1539 law on sale, 1542 law on sale,
of the ward. *In case, na may pera yung ward at gusto
1556, 1560, 1567, 1599, and 1659.
ng kotse so si guardian binilhan nya ng kotse (real
price100k) pero nung nabili ng guardian 190k, it is RESCISSIBLE CONTRACTS
recissible because of the economic damage .
CONTRACTS APPROVED BY THE COURTS
B. Contracts agreed upon in representation of (Article 1386) – If a contract entered into in behalf of
absentees. *Absentee- person who is absent from his a ward or absentee has been approved by the court,
domicile(habitual residence, kung saan ka nakatira, rescission cannot take place because it is valid
tapos pag umalis ka dun pero may intention kang whether or not there is lesion. The law presumes that
bumalik)*Yung tao na may property absent sya, he the court is acting in the interests of the ward or
cannot be located, somebody will ask to be appointed absentee when it approves the contract despite of the
to be his representative, and yung representative nay lesion. *those entered by the guardians and
un is the one who will enter into a contract, not the representative of absentees, that contract is law
approved, sale is approve, even there is lesion, The which is the price of the object. *Pagbabalikan ng
sale is not recissible. The law presumed that the gamit, kung anong natanggap ng buyer kailangan
courts are working or protecting the rights of the nyang ibalik, ex. Parcel of land need nyang ibalik
wards and absentee. yun. Si seller need ibalik yung pera ni buyer. Mutual
restitution – to return the parties to there original
RESCISSIBLE PAYMENT
situation. It also applies to 3rd person.
PAYMENTS MADE IN A STATE OF
Recission is not allowed in 2 cases
INSOLVENCY (1382) – Payments made for
obligations to whose fulfillment the debtor could not 1. If you are the party demanding for recission
be compelled at the time they were effected. Includes and you cannot return the object or what you
obligations which are not yet due and demandable obliged to restore under the contract. Hindi ka
but also those which cannot be legally demanded pwedeng magask for recission kasi hindi mo
such as natural obligations and those that have kayang magbalik.
prescribed. *They are talking about the payment, the 2. If the 3rd person who is in the possession of
payment is made in a state of insolvency, insolvent the property is in good faith . Hindi nya alam
ka na pero nagbayad ka *When the payment is made merong defect or economic benefit suffered
it is not due and demandable or it is no longer by the original owner of the property.
demandable (prescribe na)* Diba may 1M ako tapos
RESCISSION PERIOD FOR FILING ACTION
yung 9 creditors ko is due and demandable na tig1M
FOR RESCISSION (Article 1389)
pero sayo ako nagbayad ng 1M which is not due and
demandable, yung 9 creditors nay un can rescind it A. GENERAL RULE – The action to claim
or recission of payment. rescission must be commenced within four years
from the date the contract was entered into. *
NATURE OF ACTION FOR RESCISSION
(Articles 1383 and 1384) – Rescission is not a B. EXCEPTIONS
principal remedy. It is merely a subsidiary remedy. It
can be availed of only if the injured party proves that 1. For persons under guardianship, the period shall
he has no other legal means aside from rescinding the begin from the termination of incapacity. *for minor,
contract to obtain redress for the damage caused. If Guardianship will end at time of attainmeny of legal
the damage is repaired, rescission cannot take place. age, kapag nag18 ka pwede kang magfile ng
* Recission is not the principal remedy, if may iba recission hanggang 22. *From the time na makuha
pang remedy yun muna. Recission is available only nila yung capacity, they have 4 yrs to file for
when there is no choice. *Diba yung minor nalugi recission.
pero if want naman ng buyer na dagdaggan yung 2. For absentees, from the time the domicile is
purchase price, pwede yun. No need to ask for known. *Pag bumalik na sila, they have 4 yrs to file
recission. fore recission.
1384 – Recission shall be only to the extent necessary RESCISSION PERSONS ENTITLED TO BRING
to cover the damages caused. *Two parcels of land, ACTION FOR RESCISSION
binenta ng 200k yung dalawa pero yung total ng
dalawang yun is 400k (200k each), recind lang yung A. The injured party (1381 P. 1&2) or the defrauded
isang land kasi 200k per land lang. creditor.(p. 3 and made payment in case of
insolvency)
RESCISSION CREATES OBLIGATION OF
MUTUAL RESTITUTION (Article 1385) – The B. The heirs, assigns, or successors-in-interest.
purpose of rescission is to restore the parties to their C. The creditors of the above entitled to subrogation.
original situation. The law presumes that the party
who received the object of the contract has enjoyed BADGES OF FRAUD WHEN ALIENATION
the fruits thereof while the other has used the money PRESUMED IN FRAUD OF CREDITORS (Article
1387) – Prima facie presumption of fraud in case of C. A sale upon credit by an insolvent debtor.
alienation by the debtor of his property. The *Insolvent ka na nga nagbenta ka pa (on credit or
enumeration is not exclusive. *Alienation- may refer pautang pa)
to sale or donation, basta dinidispose yung property.
D. The transfer of all or nearly all of his property by
* this is presumed to be in fraud of creditor, kaya mo
a debtor, especially when he is insolvent or greatly
binenta para lokohin mga creditors mo.
embarrassed financially. *Nilipat nya na lahat ,
A. GRATUITOUS ALIENATION – Presumed binenta nya na lahat ng properties sa kamaganak nya.
fraudulent when the debtor did not reserve sufficient
E. The fact that the transfer is made between father
property to pay all debts contracted before the
and son, when the fact is considered together with
donation. *Donation *Nagdonate ka ng property,
preceding circumstances. *trinansfer mo sa anak mo
walang natira sayo tapos di mo nabyaran mga utang
tapos mababang price
mo. Suffiecint for your own support. So yung
donation na ginawa mo is hindi totoo dahil gusto mo F. The failure of the vendee to take exclusive
lang lokohin mga creditors mo para wala syang possession of all the property. *Kung talagang
makuha sayo. binenta ng debtor sa buyer, bakit hindi nagtake
possession si buyer. Kasi hindi totoo ang sale
B. ONEROUS ALIENATION
G. It was known to the vendee that the vendor had no
1. Presumed to be fraudulent when made by persons
properties other than that sold to him. *buyer knows
against whom some judgment has been rendered in
that the seller has no other properties other than yung
any instance even if not yet a final judgment. *Sales
binenta sa kanya
*debtor already nademanda, may liability na sya,
somejudgement has been made to this debtor, so si PURCHASER IN BAD FAITH *person who will
debtor alam nya ng may liability sya tapos tininda acquire from the debtor yung property na hinahabol
nya yung property nya sa 3rd person. ng creditor *Son (purchaser) pag alam nyang yung
tinatransfer sa kanya is to defraud the creditor.
2. When made by persons against whom some writ
of attachment has been issued. *Writ- hinahawakan LIABILITY OF PURCHASER IN BAD FAITH
muna ng court yung property mo, pero tininda mo pa (Article 1388) – The purchaser in bad faith, who
rin. This is presumed to be onerous alienation. acquired the object of the contract alienated in fraud
of creditors, must return the same if the sale is
BADGES OF FRAUD BADGES OF FRAUD –
rescinded and should it be impossible for him to
Circumstances indicating that certain alienation have
return it, due to any cause, he must indemnify the
been made in fraud of creditors.
creditor.*3rd person must return it and if it impossible
CIRCUMSTANCES DENOMINATED AS to return it he must indemnify the creditor. *Dapat
BADGES OF FRAUD alam ni purchaser pero pag wala syang alam, this will
not apply.
A. The fact that the consideration of the conveyance
is fictitious or inadequate. *binenta mo yung EFFECT OF BAD FAITH
property mo sa sobrang babang price kasi baka fake
A. The acquirer must return or indemnify.
yung sale, baka gusto mo lang itago yung property
mo para hindi makuha ng creditors mo. B. “Due to any cause” includes a fortuitous event.
*you still have the obligation to return dahil bad faith
B. A transfer made by a debtor after suit has been
ka
begun and while it is pending against him.
*Nakademanda ka tapos sinimulan mo ng ibenta mga PURCHASER IN BAD FAITH SUBSEQUENT
property mo. TRANSFERS
A. If the first transferee is in good faith, the good or
bad faith of the next transferee is not important. *Son
transfer to 3rd person ex, if the son is in bad faith and A. Legal incapacity to give consent, where one of
ex is also consider in bad faith pag alam nya. what if the parties is incapable of giving consent to the
the son is in good faith and ex it doesn’t matter if in contract. *Incapacity exist due to minority or
good or bad faith sya as long as yung pagtransfer is insanity.
illegitimate, so pag napunta na kay ex yan hindi na
B. Violation of consent, where the vitiation is done
sya required magbalik.
by mistake, violence, intimidation, undue influence,
B. If the first transferee (son)is in bad faith, the next or fraud.
transferee is liable only if he is also in bad faith. *If
RATIFICATION
both is in bad faith, ex is required to return. If ex is
not in bad faith, hindi sya magrerestore. Pag si son – One voluntarily adopts some defective or
good faith tapos si ex bad faith, hindi na unauthorized contract which, without his subsequent
magrerestore. approval or consent, would not be binding on him.
CHAPTER 7 VOIDABLE CONTRACTS – It cleanses the contract from all its defects from the
moment it was constituted.
VOIDABLE or ANNULLABLE CONTRACTS
*As if na walang defect na nangayri
- Those which possess all the essential requisites of a
valid contract but one of the parties is incapable of (Article 1396) – Extinguishes an action to annul a
giving consent, or consent is vitiated by mistake, voidable contract.
violence, intimidation, undue influence, or fraud.
*valid contract because it possesses all essential Article 1392) – Ratification may be effected
requisites. Meron cause, object and consent. It is expressly or tacitly. *impliedly – by action
defective 1. One of the parties is capable of giving (Article 1393) – Ratification does not require the
consent to the contract 2. Consent on the part of one conformity of the contracting party who has no right
of the contracting parties is visiated by mistake, to bring the action for annulment. *Hindi mo
violenece, intimidation, undue influence or fraud. kailangan ng consent ng guilty party para maratify
*In case of voidable contract, there is a injured party yung voidable contract.
who is the minor. Guilty party is the one who violated
the consent ng isang kacontract nya. (Article 1395) RATIFICATION PERSONS WHO
MAY RATIFY (Article 1394)
- These contracts are valid and binding between the
parties unless annulled by a proper court action. Once A. IN CASE OF INCAPACITY
ratified, they become absolutely valid and can no 1. Guardian. *minor
longer be annulled. *Injured or innconet party can
ask for annulment or ratification. 2. Injured party himself provided he is already
capacitated.
*voidable contract is valid until they are annulled.
Court who will decree annulment. B. IN CASE OF VITIATED CONSENT - Party
whose consent is vitiated.
*When you ratify, you can adapt defective contract.
Hindi mon a ququestionin na yung defect. They can ANNULMENT - A remedy provided by law, for
become absolute valid and hindi ka na pwedeng reason of public interest, for the declaration of the
magpannull. inefficacy of a contract based on a defect or vice in
the consent of one of the contracting parties in order
*Pag pinabayaan mo lang, it will remain valid. to restore them to their original position in which
*If you are the injure person, you have the choice to they were before the contract was executed. *You
choose between annulled and ratification. can only annul voidable contracts and not recissible
contracts. *Ibabalik yung mga parties sa original
KINDS OF VOIDABLE CONTRACTS (Article
1390)
situation bago mangyari yung contracts. *There are pwedeng magunsing. The bases is damages – based
return in status Co on the value of the service rendered with
coreesponding interest.
PARTY ENTITLED TO BRING ACTION TO
ANNUL (Article 1397) RESTITUTION BY AN INCAPACITATED
PERSON (Article 1399) - This is an exception to the
A. The plaintiff who must have an interest in the
general rule of mutual restitution laid down in Article
contract.
1398. The incapacitated person is obliged to make
B. The victim and not the party responsible for the restitution only to the extent that he was benefited by
defect is the person who must assert the same. the thing or price received by him. *The price the
minor receieved is 200k, and object receive is gold
PERIOD FOR FILING ACTION FOR bracelet. Tapos ginawa ng minor 100k nagweting
ANNULMENT (Article 1391) sya, nagsugal, majong etc. pinangsugal nya, tapos
A. In cases of intimidation, violence, or undue may balance na 100k para sa basic necessities. Tapos
influence, four years from the time the intimidation, naging legal age na, yung buyer na legal age need
etc. ceases. *pag huminto na yung vimfu ibalik yung gold bracelet tapos yung minor need nya
lang ibalik is 100k.
B. In case of mistake or fraud, four years from the
time it is discovered. *need munang malamang ng ANNULMENT EFFECT OF LOSS OF THING TO
injured party na injured sya. *from the time of BE RETURNED BY THE GUILTY PARTY
discovery (DEFENDANT) (Article 1400)

C. In case of contracts entered into by minors or other *Guilty party is yung nawala yung object
incapacitated persons, four years from the time the *Minor may gold bracelet, tapos ikaw na legal age na
guardianship ceases. Exclude the first, inclue the last may gold necklace tapos sabi mo sa minor swap tayo.
19-22 Nagswap nga, tapos naging legal age na si minor,
ANNULMENT DUTY OF MUTUAL tapos si minor gusto na ng annulment, meron ng
RESTITUTION (Article 1398) *magbabalikan sila decree of mutual restitution. As an injured party need
ng mga nareceive nila kong ibalik gold necklace mo, ikaw na guilty party
need mo rin ibalik yung gold bracelet pero yung
A. If the contract is annulled, the parties, as a general bracelet is nawala : l
rule, must restore to each other the subject matter of
the contract and the price thereof with legal interest. A. If the thing to be returned is lost without the fault
*Minor meron akong gold bracelet (200k), namana of the person obliged to make restitution (defendant),
ko. Tapos ika wna legal age gusto mong bilhin yung there is no more obligation to return such thing but
bracelet ng 200k at pumayag ako. Contract is still the other cannot be compelled to restore what in
voidable, it is not based on the value but it is based virtue of the decree of annulment he is bound to
on na incapacitated ako,. Tapos legal age na ako, I return. *The guiltyparty has no obligation to return
ask for annulment of this contract, tapos may decree the gold bracelet dahil nawala sa fortuitous event,
ang court para sa mutual restitution. Kaya I have the inagaw ng kabayo tapos nilalag sa komonuy. Tapos
duty to return the money with legal interest, at need is injured person, wala ka ng obligation na ibalik
mo rin ibalik yung gold bracelet. yung g necklace.

B. In personal obligations where the service has B. If it is lost through the fault of the person obliged
already been rendered, the value thereof with the to make restitution (defendant), his obligation is not
corresponding interest, is the basis for damages extinguished but is converted into an indemnity for
recoverable from the party benefited by the service. damages consisting of the value of the thing at the
*you rendered a service, you cannot unreder it time of the loss with interest from the same date and
anymore. Tinutukan mo ako ng baril para kumanta the fruits received from the time the thing was given
ako, later on hindi mon a pwedeng bawiin or di na to him to the time of its loss. *kasalanan ng guilty
party – guilty party tinapon yung bracelet sa crater ng contract the injured party may or may not ratify the
mt. taal, obligation is not extinguish but it is voidable contract, in case of unenforceable contract
converted to pay for damages which will consist the one of the parties must ratify so that it will have force
value of object plus fruits, interest at the time of loss. and effect. Accrdng. To Justice Paras in that sense,
this contracts is also known as validable contract.
ANNULMENT EFFECT OF LOSS OF THE
THING TO BE RETURNED BY THE INNOCENT RIGHT OF THIRD PERSONS TO ASSAIL AN
PARTY (PLAINTIFF) – If the person who has a UNENFORCEABLE CONTRACT (Article 1408) -
right to institute an action for annulment, will not be Strangers to an unenforceable contract cannot bring
able to restore the thing which he may be obliged to an action to assail or question an unenforceable
return in case the contract is annulled because such contract. *Can a 3rd person question the
thing is lost through his fraud or fault, his right to unenforceable contract? NO dahil wala nga syang
have the contract annulled is extinguished. * force and effect.
(Article 1401) – If the loss is not due to his fault or CONTRACTS KINDS OF UNENFORCEABLE
fraud, there is no annulment if the party cannot CONTRACTS (Article 1403)
restore what he is bound to return. This is true even
A. Those unauthorized contracts i.e. those entered
if the loss is due to a fortuitous event. *there is no
into in the name of another by one without, or acting
annulment pag hindi nya kayang ibalik
in excess of, authority. *
(Article 1402) If an innocent party asks for
B. Those that do not comply with the Statute of
annulment but the thing he is supposed to return is
Frauds and Perjuries. *Most commonly as Statute of
lost by a fortuitous event, there may still be
Fraudes
restitution provided he offers to give the value of the
thing lost but he does not have to give interest in view C. Those where both parties are incapable of giving
of the fortuitous event. there is no annulment pag consent to the contract. *It is enforceable contract if
hindi nya kayang ibalik the both parties are incapacitated. If only one party is
incapacitated, it is voidable contract. If both parties
*si innocent person na hindi nabalik yung object,
are capacitated it is valid contract provided na hindi
pwede syang magask ng annulment pero need nya
illegal ang object at cause.
nalang bayaran yung value ng object pero wala ng
interest. UNAUTHORIZED CONTRACTS (Articles 1317,
1403, and 1404)
CHAPTER 8 UNENFORCEABLE CONTRACTS
(eto na yung malapit sa walang force and walang – Those entered into in the name of another person
effect, unlike in a void contract never syang by one who has been given no authority or legal
magkakaeffect, eto may chance) representation or who has acted beyond his powers.
*Ang papasok sa contract hindi yung mayari ng
UNENFORCEABLE CONTRACTS – Although
property, hindi yung magrerender ng service but a
valid, they are unenforceable in court unless they are
different person, that different person will enter into
cured or ratified. Thus, it is as if they have no effect
a contract sa pangalan ng mayari ng property or
yet. Once ratified, these contracts may then be
magrerender ng service. Etong tao na tohh na
enforceable and they can have in such a case the
papasok sa contract in representation of another
effect of valid contracts. In one sense, therefore, they
person may not be authorized, if authorized yung
may be called validable.* They are valid contracts
action ng different person is beyond his authority.
dahil may cause, object and consent. Kahit na may
Example: Kapitbahay nyo binenta nya yung selpon
essential elements, it has no force or effects. There
mo, then one day kinukuha na yung selpon mo, sya
is a contract existing wala syang force and effect pero
daw ang buyer, the kapitbahay entered in a contract
pwede siyang magkaroon ng force and effect if the
with a 3rd person involving your property, that
contract is ratified (with respect to ratification, in
kapitbahay is not authorized to enter in that contract,
recissible contract hindi pwedeng iratify, sa voidable
wala syang authority na ibenta yung selpon mo. available for the defendant. Here, with respect to the
Example (Acted beyond hid power): Kapitbahay is agreements enumerated in the law, pwede mo sana
really authorized to sell your phone, pinapabenta mo silang iproved by verbal evidence, may usapan
ng 500 pesos cash, yun yung authority na binigay mo, talagang ganyan, maraming chismosang nakarinig na
so the kapitbahay will become the agent. So pwede mo silang ipresent sa court as a witnesses, but
nakahapan si kapitbahay ng buyer, binenta nya in 300 statute exempt that kind of evidence and will only
pesos installment. Even the seller is authorized but admit evidence in writing (written instrument) which
he exceeded his authority. Now with respect sa will reflect the agreement of the parties, kung wala
mayari ng phone, this contract is not enforceable etong law na tohh, sana yung mga contracts na
against to you, pag pumunta yung buyer sayo wala nakaenumerate sa statute pwedeng iproved ng oral
kang obligation na irecognized yung kanyang right.. evidence but because of this rule which is the rule of
exclusion, written lang tatanggapin ng court and if
– Such contract must be ratified to become effective
you cannot prove the existence of your contract using
against the person allegedly represented. Without
written instrument hindi pwedeng ienforce yung
ratification, the “agent” assumes personal liability.
contracr. Also it is a defense, if you are the defendant
The ratification must be clear and express so as not
or ikaw yung person against whom the contract is
to admit of any doubt of vagueness. * Pwedeng
being enforce, you are the person made liable under
magakaroon ng effect and force pag niratify ng
the enforceable contract, defense mo tohh, kunayri
mayari ng phone, if without ratification the agent will
nag prepresent na si plaintiff ng oral evidence pwede
assume personal liability
mong sabihin na hindi pwede yan.
STATUTE OF FRAUDS AND PERJURIES
RULES OF APPLICATION OF THE STATUTE
– It has been enacted not only to prevent fraud but OF FRAUDS
also to guard against the mistakes of honest mistake
A. The Statute of Frauds is not applicable in actions
by requiring that certain agreements specified that
which are neither for damages because of a violation
are susceptible to fraud must be in writing; otherwise
of a contract, nor for the specific performance
they are unenforceable by action in court. * yung
thereof. *The statute of frauds is applicable only to
mga nakaenumerate na agreement kailangan may
actions for damages or for specific performance.
writing, kung walang writing, if you go to court you
There are 2 instances where statute of fraud can be
cannot prove it, pagdating kasi sa court , the court
apply: kapag manghihingi ka nalang ng damages
will require a written instrument. They are
dahil hindi na natupad yung agreement, or
unenforceable by court action, there is no way court
dinemanda ka for specific performace.
will recognized verbal contract.
B. It is applicable only to executory contracts and not
– They are ratified by the failure to object to the
to contracts which are totally or partially performed.
presentation of oral evidence to prove the same, or
*executory contracts is a contracts na wala pang
by acceptance of benefits under them. * They can be
nangyari, wala pang naperform. Kabaliktaran naman
ratified, nagprepresent na yung plaintiff ng verbal
neto is executed contract- there is a full performance
evidence sa court edi diba bawal yun, pero ikaw na
and satisfactory performance. Some contracts may
defendant you do not object to the presentation of
be performed partially, there is a performance in a
verbal evidence to prove the existence of the
one party, no performace on the side of one party.
agreement, the agreement it is waiver of the coverage
of the statute of frauds. C. It is not applicable where the contract is admitted
expressly, or impliedly by the failure to deny
(Article 1405) – It is a Rule of Exclusion, that is, oral
specifically its existence, no further evidence thereof
evidence might be relevant to the agreements
being required in such case. *Kapag inadmit naman
enumerated therein and might therefore be
yung agreement which is verbal, hindi na sya
admissible were it not for the fact that the law or the
nalalaglag sa statute of frauds. Inadmit kasi ng
statute excludes said oral evidence. *It is a defense
defendant na that there is such an agreement. Hindi sumama sayo nun tapos nagobject yung atty ni coco
na kailangan iprove ng plaintiff yan. martin because the contract is one of the contracts
covered by the statute of frauds because it is an
D. It is applicable only to agreements enumerated
agreement not to be performed within a year, in short
therein. *The enumeration is exclusive if it is not one
yung performance is after 1 year, tapos sabi ng
of the agreements enumerated under the statute.
statute there must be some kind of writing.Parol
E. It is not applicable where a writing does not eveidence is same with oral evidence. Example:
express the true agreement of the parties. *This refers same situation, nasa hiring na ulit, prinsent ng atty.
to relative simulation, relative simulation (disguise Mo yung mga marites , tapos hindi nagobject si coco
contract) there is a real agreement however the martin, the contract is ratified by failure to object. So
written agreement is different. If the real agreement coco martin will be liable for damages. Same also
is not covered into the statute of frauds kahit hindi na when coco martin admitted na meron talagang
in writing. contract. Example: Nagpunta nga kayo kasama ng
mga marites, nakita nila na nagdownpayment ka,
F. It does not declare that contracts infringing it are tapos may resibo. Fast forward: nasa court na nakita
void but merely unenforceable. *Pag nagviolate ng na may payment, if you proven payment kahit na
statute of frauds, hindi naman viod yung contract. It magobject yung atty. Ni Coco martin hindi na pwede
is a unenforceable dahil pwede syang maratify. because the contract is partially executed because
G. The defense of the Statute of Frauds is personal to there is a performance by one of the parties. Partial
the parties and cannot be interposed by strangers to performance removes the contracts from the
the contract. *Personal sa kanya yung defense na yan coverage of statute of frauds even if its to be
performed after 1 yr and it can be proven by oral
STATUTE OF FRAUDS AND PERJURIES evidence. Example: eto balak mong may bday
AGREEMENTS WITHIN THE SCOPE OF THE concert hindi Dec. 5 2021 kaya dec. 20, 2021 nalang.
STATUTE OF FRAUDS (Article 1403) Fast forward dun sa Dec 20, 2021 na tapos as in wala
A. An agreement that by its terms is not to be kang binayaran na downpayment. Habang
performed within a year from the making thereof. pinepresent mo yung mga witnesses mo, hindi
*From the time of contracting walang mangyayari pwedeng magobject yung atty. ni Coco martin
hanggang next year, so pag nag1 year nan a hindi sya because defense is not available within 1 year and it
napeperform, ang performance here sometime in the is not covered by statute of frauds. (August 8 – Dec.
future after 1 year. 1 year and 1 day pasok na sa 20, 2021)
statute of frauds, it means na para maging What the law does not includes, it excludes.
enforceable ang mga agreements na tohh na after 1 (inclusion unios es exclusio alterios)
year ipeperform kailangan ng in writing or in some
form of memorandum. Kailangan syang nakasulat. B. A special promise to answer for the debt, default,
Example: bday mo decemeber 5, this year ayaw or miscarriage of another. *Eto yung pagiging surety
mong maghanda, next year nalang which is bongga or guarantor, kung gusto mong maging guarantor or
(bday concert), so kukuha ka ng magaling na singer surety sa utang ng iba, you promise to pay for their
(coco martin), pumunta ka sa manila kasama mo mga debt, that agreement must be in writing or else it is
kapitbahay na marites na gustong Makita si coco unenforceable against the guarantor.
martin, tapos nagkita kayo ayun pumayag na kakanta C. An agreement made in consideration of marriage,
sab day mo next year. Tapos next year na, andun other than a mutual promise to marry. *Agreements
lahat ng chismosa, lahat lahat ng kilala mo tapos that will be entered by the future husband or wife
hindi dumating si coco martin, tapos gusto mong *Kapag pinakasalan mo ako papatayuan kita ng
magdemanda, ang pwede mo lang ifile is action for bahay, nung kinasal na kayo hinahanap nya na yung
damages, for specific performance. Wala kang bahay, pero ikaw na nagpromise pwede mo syang
evidence to prove yung evidence tapos naisipin mo takasan dahil the agreement is not in writing.
meron palang witness which is mga marites na
D. An agreement for the sale of goods, chattels or enforceable, if there is already a full payment it is
things in action, at a price not less than five hundred enforceable it is taken out to the coverage of SOF.
pesos, unless the buyer accept and receive part of
F. A representation as to the credit of a third person.
such goods and chattels, or the evidences, or some of
*you represent that he his solvent, so ngayon hindi
them, of such things in action or pay at the time some
ito in writing, tapos etong 3rd person na ito wala
part of the purchase money; but when a sale is made
naman palang pera, creditor cannot ask for damages.
by auction and entry is made by the auctioneer in his
Dapat it is in writing para makaask for damages su
sales book, at the time of the sale, of the amount and
creditor.
kind of property sold, terms of sale, price, names of
the purchasers and person on whose account the sale MODES OF RATIFICATION OF A CONTRACT
is made, it is a sufficient memorandum. *If it is a sale COVERED BY THE STATUTE OF FRAUDS AND
of goods, chattels or things with a price of 500 or PERJURIES (Article 1405)
more, it needs to be in writing. Example: the
agreement is to sell a specifc car with a price of 500k, A. By failure to object to the presentation of oral
the sale is in 2 weeks tapos si seller ayaw nya ng evidence to prove the contract. The failure to so
ibenta, tapos nagdemanda si buyer, dahil walang object amounts to a waiver and makes the contract as
written agreement and it cannot be proved with oral binding as if it has been reduced to writing. *Kung
or witnesses. *If the contract is fully executed, inallow mo yung mga witnesses, hindi ka nagobject,
nadeliver at nabayaran na kahit wala ng written it is a waiver of the defense on the SOF.
agreement. *If meron partial payment or B. By acceptance of benefits under the contract. In
performance pwedeng magproved using oral this case, the contact is no longer executory and
evidence. *In case of sale made by auction,sufficient therefore, the Statute does not apply.*Fully executed
ng writing yung record ng sale book ng auctioneer thus contract is taken out to the coverage of SOF so
even no payment has been made yet. The contract is it can be proven by verbal evidence.
enforceable as long as it is recorded on the sales book
of auctioneer. What if may binebenta na necklace a INCAPACITY OF CONTRACTING PARTIES
450 pesos, walang writing, and sale to be performed RATIFICATION OF AN UNENFORCEABLE
on dec, 5, 2021. Later on, dinedemand na ng buyer CONTRACT DUE TO THE INCAPACITY OF
yung necklace, and seller refuses to sell now, pwede THE CONTRACTING PARTIES (Article 1407)
bang patunayan ng buyer yung existence ng contract A. WHEN AN UNENFORCEABLE CONTRACT
by verbal evidence, the price 450 pesos is not BECOMES A VOIDABLE CONTRACT - If the
covered by SOF but the agreement which not to be parent or guardian, as the case may be, of either
performed within 1 year needs to be in writing. The party, or if one of the parties after attaining or
contract cannot be proved by parol or verbal regaining capacity, ratifies the contract, it becomes
evidence. voidable. *If ratification is made only by 1 party, it
E. An agreement of the leasing for a longer period becomes voidable contract,
than one year, or for the sale of real property or of an B. WHEN AN UNENFORCEABLE CONTRACT
interest therein. * Kung mangungupahan, at higit 1 BECOMES A VALID CONTRACT - If the
year yung upa, there must be an agreement in writing ratification is made by the parents or guardians, as
na kayo ay mangungupahan within that certain the case may be, of both contracting parties, or by
amount of time para maging enforceable. Kung later both contracting parties after attaining or regaining
on wala kayong writing tapos nagdedemand na lessor capacity, the contract is validated and its validity
na ipaupa nya na yung lupa tapos tumanggi sya, retroacts to the time it was entered into. If ratification
remember if the contract is more than 1 year you is made by both parties the contract is valid and it
cannot proved the existing contract by using verbal retroact to the time it was made. Valid sya mula nung
evidence. Same as pag magbebenta ka ng lupa, kung pinasukan mo yung contract.
walang agreement in writing, the contract is
 Voidable contract- annulment (may effect yung
contract onset, ipapanullify mo tatanggalan mo sya
CHAPTER 9 VOID CONTRACTS *The most
ng effect.)
defective because they do not produce effect
Void Contract- petition for declaration of nullity.
VOID CONTRACTS – Those which, because of
(from the beginning hindi na sya nageexist, ngayon
certain defects, generally produces no effect at all.
kailangan mong pumunta sa court, court will declare
They are considered as inexistent from its inception
your contract as nulled or void for convenience. Only
or from the very beginning.
court can declare your contract as nulled or void.)
SPECIAL CLASSIFICATIONS OF VOID
E. The defense of illegality is not available to third
CONTRACTS – In the case of Liguez v. Lopez, 102
persons whose interests are not directly affected.
Phil. 577, the Supreme Court, stated that there are
(Article 1421) *If you are directly affected by a void
two kinds of VOID contracts:
contract, pwede mong gamitin yung defense ng
*Juris Prudence- cases decided by the court illegality.

A. INEXISTENT CONTRACT - Agreements which F. It cannot give rise to a valid contract. (Article
lack one or some or all of the elements or do not 1422) *Void contract cannot be novated dahil wala
comply with formalities which are essential for the namang contract from onset. *May obligation na
existence of a contract.*walang object, walang magbabayad ng 500 for shabu, tapos gustong palitan
cause, walang consent or wala lahat *Example of ng kaldero nalang. Hindi pwedeng palitan yung
formal contracts are donation, in donation of object ng void contract or it cannot be novated but
property must be in writing unless it is a void parties may enter into a new contract.
donation. Donation must be in public instrument.
INSTANCES OF VOID CONTRACTS
B. ILLEGAL OR ILLICIT CONTRACT - May
A. Contracts whose cause, object, or purpose is
produce effects under certain circumstances where
contrary to law, etc. (Articles 1306 and 1416) *illegal
the parties are not of equal guilt. *
cause (illicit sexual intercourse)
CHARACTERISTICS OF A VOID OR
B. Contracts which are absolutely simulated or
INEXISTENT CONTRACT
fictitious. (Articles 1345 and 1346) *there is a lack
A. Generally, it produces no force and effect of essential element.
whatsoever. *walang rights ang parties
C. Contracts without cause or object. (Articles 1347,
B. It cannot be ratified. (Article 1409) 1352, and 1353) *lack of element

C. The right to set up the defense of illegality cannot D. Contracts whose object is outside the commerce
be waived. *Pinagdedeliver ka ng shabu, ayaw mong of men. (Articles 1347 and 1348) *they cannot be the
ideliver tapos dinemanda ka pa, you always has a subject of transactions. Because they are usually
defense that contract is illegal. govt. property like sidewalks, mayon volcano.

D. The action or defense for the declaration of its E. Contracts which contemplate an impossible
inexistence does not prescribe. (Article 1410) *If you service. (Articles 1347 and 1348) *magbuhat ng
want to file an action to declare the void contract is eroplano, pumatay ng tao
void, yung file of action mo will not prescribed but it
F. Contracts where the intention of the parties
can barred by latches (failure or neglect for an
relative to the object cannot be ascertained. (Article
unreasonable time to file a declaration a petition for
1378) *hindi maintindihan kung ano yung object
an action for declaration of nullity of a contract, dahil
*kung malinaw yung contract wag maginterpret,
sa sobra sobrang tagal, unreasonable na). Unlike
kung Malabo dun ka lang mag interpret *kahit anong
annulment, it prescribed for 4 yrs general rule,
gawin mong interpretation wala pa rin it is a void
contract
G. Contracts expressly prohibited or declared void by onerous contracts, or made through an intermediary
law. shall be void. (Article 1031) *eto yung mga provision
sa isang last will, binibigyan mo ng mana yung isang
VOID CONTRACTS CONTRACTS EXPRESSLY
disqualified person (attesting witness), yunf mga
PROHIBITED OR DECLARED VOID BY LAW
witness sa will mo, hindi mo sila pwedeng
A. Contracts upon future inheritance except in cases pamanahan. A testery testamentary provisions in
expressly authorized by law. (Article 1347) favor of the attesting witnesses to your will shall be
*property is not yours, unless expressly authorized invalidate your own provision
by law. Hindi ka naman sure na sayo ibibigay, malay
F. Any stipulation that household service shall be
mo ibenta during the lifetime of your parents.
without compensation is void. (Article 1689)
B. Sale of property between husband and wife except *because it is involuntary servitude.
when there is a separation of property (sop). (Article
G. Members of congress are prohibited from being
1490) *pwede naman kung nung kinasal kayo kung
financially interested, directly or indirectly, in any
yung property regeme nyo is csp or complete
contract with the government or any subdivision or
separation of property, pero you go to court and ask
instrumentality thereof. (Articles 1782, 1874, 2035,
for judicial separation of property in which case
2088, and 2130 and Section 14, Article VI, The
pwede ng payagan yung husband and wife. *Bawal
Constitution of the Republic of the Philippines,
talaga in order to protect the creditors.
February 2, 1987) *mga member ng congress bawal
C. Purchase of property by persons who are specially makipagdeal sa govt. There is a conflict of interest
disqualified by law because of their position or
ILLEGAL AND CRIMINAL CONTRACTS
relation with the person or property under their care.
RULES WHERE CONTRACT IS ILLEGAL AND
(Article 1491)
THE ACT CONSTITUTES A CRIMINAL
*B and C is a relative in capacity some people are OFFENSE (Article 1411) *Act is illegal and criminal
absolutely incapacitated to enter into contracts, now
A. WHERE BOTH PARTIES ARE IN PARI
in relative incapacity they are otherwise qualified in
DELICTO *both parties are equally guilty example:
relation to a particular person, particular transaction.
contract to buy and sell pirated DVDs. It is a criminal
A husband is capacitated to contract but if the
offense
contract is with the wife it is a void contract. Same as
purchase of property by persons who are specially 1. The parties shall have no action against each other.
disqualified by law because their position or relation
2. Both shall be prosecuted.
with the person Example: Guardian cannot buy the
property of the ward, guardian is capacitated. Ang 3. The things or the price of the contract, as the
prinoprotect ng law is the fiduciary relationship effects or instruments of the crime, shall be
between ward and guardian (trust and confidence confiscated in favor of the government.
relationship between ward and guardian)
B. WHERE ONLY ONE PARTY IS GUILTY (in
D. Donation between the spouses during their delicto, but bot in pari delicto)*hindi moa lam na
marriage except moderate gifts on the occasion of illegal yung halaman, tapos binayaran mo tapos di
any family rejoicing. (Article 87, Family Code of the dineliver, wala kang liability
Philippines, Executive Order No. 209 as amended,
December 13, 1989) *to protect the weaker spouse 1. The guilty party will be prosecuted.
baka kasi magtake advantage yung stronger spouse, 2. The instrument of the crime or object of the
pwede naman yung donation na moderate gifts contract will be confiscated.
during occasions like bdays, anniversary.
3. The innocent one may claim what he has given; or
E. A testamentary provision in favor of a disqualified if he has not yet given anything, he shall not be bound
person even though made under the guise of an
to comply with his promise. *minor can recover his RECOVERY RULES FOR RECOVERY
money.
A. RECOVERY OF EXCESSIVE INTEREST
ILLEGAL BUT NOT CRIMINAL CONTRACTS (Article 1413) – The entire interest agreed upon may
RULES WHERE CONTRACT IS ILLEGAL BUT be recovered, not merely that in excess of those
THE ACT DOES NOT CONSTITUTE A allowed by law. *If the interest is excessive, the
CRIMINAL OFFENSE (Article 1412) *The act is debtor who paid for the interest can recover not only
illegal but there is no crime committed what is in excess is of allowed by law but can recover
the entire interest. Example: interest allowed by law
A. WHERE BOTH PARTIES ARE IN PARI
around 6% per annum pero ginawang 10%, hindi nya
DELICTO *x and y agrred to live as common law
lang marerecover yung 4% excess, pero marerecover
wife, mahlilive in sila , pag nakipaglive in daw si x
nya yung buong 10% interest. *Accoradance with
bibigyan daw sya ni y ng parcel of land, here the
juris prudence- decision of sumpreme court which
consideration is immoral but there is no criminal act
become a part of law, 2.5 or 3% interest in a short
here
term loan. But the legal interest is 6% per annum.
1. Neither party may recover what he has given by
B. RECOVERY WHERE CONTRACT ENTERED
virtue of the contract. *if nabigay na yung donation,
INTO FOR ILLEGAL PURPOSE (Article 1414) -
y cannot recover anymore
Provided the contract is repudiated before the
2. Neither party may demand the performance of the purpose has been accomplished or before any
other’s undertaking. *If hindi pa nadeliver, neither damage has been caused to a third person. The court
party may demand performance of other undertaking considers that public interest will be subserved by
allowing recovery. *Pwede mong irecover yung
B. WHERE ONLY ONE PARTY IS GUILTY binayad mo sa illegal contract provided na hindi
*minor lives in with a married man for a price, a natuloy ang iyong pinagusapan sa contract. Example:
married man promise to give a house and hot *Minor A ask B to kill C for a price, si A binayaran na si B,
is innocent any time bago pa mapatay ni B si C nagbago na yung isip ni A
tapos nirefugate nya yung contract tapos cinancel
1. The guilty party loses what he has given by reason nya yung contract, if there is no damage to a 3rd
of the contract. *If the married man gives the house person , purposes does not accomplish, A can recover
and lot , he will loss what he has given his money if public interest will be serve thereby.
2. The guilty party cannot ask for the fulfillment of Court may also allow recovery dahil nagbago naman
the other’s undertaking. *Kung hindi pa nafulfill ng isip nya.
innocent party, hindi pwedeng idemand ng guilty C. RECOVERY BY INCAPACITATED PERSON
party ‘yung fulfillment ng obligation nung innocent (Article 1415) - Recovery can be allowed if one of
party. the parties is incapacitated and the interest of justice
3. The innocent party may demand the return of what so demands. *Ang kakontrata ng legal age ditto is a
he has given. *If it is possible to ask for return, minor , an insane person. The law allows recovery if
innocent may ask for return for what he has given the interest of justice so demands. *Ex: Baliw
under the contract. binayaran ka niya para patayin mo yung magulang
nya, pwede nya ulit makuha yung pera if the interest
4. The innocent party cannot be compelled to comply jutice so demands. It depends on the court wether or
with his promise. *Guilty party cannot demand not napatay mo yung magulang or the pupose is
fulfillment of the promise of innocent party, innocent accomplish, does not matter, it is not required for
party cannot be force to perform the promise. recovery
*Innocent party can always keep what he has already D. RECOVERY WHERE CONTRACT IS NOT
received under the contract ILLEGAL PER SE (Article 1416) - Prohibition is
designed for the protection of the plaintiff. Public
policy would be enhanced by allowing the plaintiff EFFECT OF ILLEGALITY EFFECT OF
to recover what he has paid or delivered. *Ang mga ILLEGALITY WHERE CONTRACT
contracts which is illegal per se are contracts na kahit INDIVISIBLE OR DIVISIBLE (Article 1420)
anong gawin mo ay void. Contract na pumatay ng tao
A. When the consideration is entire and single, the
is illegal per se. Ang contract na kabaliktaran ng
contract is indivisible so that if part of such
illegal per se contracts which involves, acts which is
consideration is illegal, the whole contract is void.
illegal for accidens, it is not illegal by themselves but
*Example: Shabu plus kotse for 100,000, the whole
because there is a law prohibiting them they become
contract is void but if you can separate the
illegal contract example: Filipino will sell a land to
consideration para sa shabu 500 para sa kotse 99,500,
an alien /foreigner, bawal sa batas. Selling is not a
the part which pertains to car will remain valid
illegal per se but if you sell it yo alien it become
contract because the contract there is divisible.
illegal. If ikaw nagtinda sa alien, the law will permit
recovery because epublic policy will enhance. B. Where the contract is divisible as when the
consideration is made up of several parts, and the
E. RECOVERY OF AMOUNT PAID IN EXCESS
illegal ones can be separated from the legal portions,
OF CEILING PRICE (Article 1417) - Recovery of
the latter may be enforced. The rule is subject to the
any amount paid in excess of the ceiling price is
contrary intention of the parties. *Kung yung shabu
allowed to curb the evils of profiteering or black-
is 500 and yung kotse is 99,500 the contract may be
marketing. *ceiling law is a statute which will fix the
enforce with respect to legal provisions.
ceiling rpice for a basic commodities. Example:
Kung ang ceiling price ng alcohol noong pandemic
ay 500 per galloon pero nung binenta 600, the price
become excess on ceiling price, pwede mong
irecover yung excess (100) hindi na yung full dahil
nakarecieve ka naman na ng alcohol bale bayad nay
un.
F. RECOVERY OF ADDITIONAL
COMPENSATION FOR SERVICES RENDERED
BEYOND TIME LIMIT (Article 1418) - The normal
hours of work of any employee shall not exceed eight
hours a day. The law allows recovery of overtime pay
in case work exceeds eight hours. *The maximum
work hrs for employees are 8 hrs, if they work for
more than 8 hrs, you can recover overtime pay in
excess in 8 hrs. Idadagdag nila sa wages or kikitain
mo kung ilang overtime.
G. RECOVERY OF AMOUNT OF WAGE LESS
THAN MINIMUM FIXED (Article 1419) - If an
employee receives less than minimum wage rate, he
can still recover the deficiency with legal interest and
the employer shall be criminally liable. *example:
minimum wages is 440 tapos hindi mo narecieve
yang 440 na yan pero nareceive mo 200 lang, you can
recover the balance na 240 plus interest and
employer will be criminally liable.