OBLICON-Reviewer (Article Per Article)

8/20/2019 OBLICON-Reviewer (Article Per Article)

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OBLIGATIONS AND CONTRACTSREVIEWER

TITLE I – OBLIGATIONS

CHAPTER 1

GENERAL PROVISIONS

1156. An obligation is a j!i"i#al n$#$ssit% to gi&$' to "o' o! not to "o.

JURIDICAL NECESSITY – juridical tie; connotes that in case of nonco!liance" there #ill $e le%al sanctions&

• An obligation is nothin% ore than the dut' of a !erson (o$li%or) to satisf' a s!ecific deanda$le clai of another !erson

(o$li%ee) #hich" if $reached" is enforcea$le in court&

• A contract necessaril' %i*es rise to an o$li%ation $ut an o$li%ation does not al#a's need to ha*e a contract&

+INDS ,- ,.LI/ATI,NA& -ro the *ie#!oint of 0sanction1 2

(a) CI3IL ,.LI/ATI,N – that defined in Article 4456; an o$li%ation" if not fulfilled #hen it $ecoes due and

deanda$le" a' $e enforced in court throu%h action; $ased on la#; the sanction is judicial due process

(b) NATURAL ,.LI/ATI,N – defined in Article 4789; a s!ecial :ind of o$li%ation #hich cannot $e enforced in court $ut

#hich authories the retention of the *oluntar' !a'ent or !erforance ade $' the de$tor; $ased on e If a Catholic

!roises to hear ass for 4? consecuti*e Sunda's in order to recei*e @4"???" this o$li%ation $ecoes a ci*ilone&)

.& -ro the *ie#!oint of su$ject atter 2

(a) REAL ,.LI/ATI,N – the o$li%ation to %i*e($) @ERS,NAL ,.LI/ATI,N – the o$li%ation to do or not to do (e&%& the dut' to !aint a house" or to refrain fro

coittin% a nuisance)

C& -ro the affirati*eness and ne%ati*eness of the o$li%ation 2(a) @,SITI3E ,R A--IR=ATI3E ,.LI/ATI,N – the o$li%ation to %i*e or to do

($) NE/ATI3E ,.LI/ATI,N – the o$li%ation not to do (#hich naturall' inludes not to %i*e)

D& -ro the *ie#!oint of !ersons o$li%ed 2 0sanction1 2

(a) UNILATERAL – #here onl' one of the !arties is $ound (e&%& @lato o#es Socrates @4"???& @lato ust !a' Socrates&)($) .ILATERAL – #here $oth !arties are $ound (e&%& In a contract of sale" the $u'er is o$li%ed to deli*er)

2 a' $e>

($&4) reci!rocal($&8) non2reci!rocal – #here !erforance $' one is non2de!endent u!on !erforance $' the other

ELE=ENTS ,- ,.LI/ATI,Na) ACTI3E SU.JECT – (Creditor ,$li%ee) the !erson #ho is deandin% the !erforance of the o$li%ation;

$) @ASSI3E SU.JECT – (De$tor ,$li%or) the one $ound to !erfor the !restation or to fulfill the o$li%ation or dut';

c) @RESTATI,N – (to %i*e" to do" or not to do) o$ject; su$ject atter of the o$li%ation; conduct re


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• INJURY – #ron%ful act or oission #hich causes loss or har to another

• DA=A/E – result of injur' (loss" hurt" har)

115). Obligation a!is$s *!o+ – ,1- la/ ,0- #ont!a#ts/ ,- 2asi3#ont!a#ts/ ,4- a#ts o! o+issions nis$" b% la/ ,5-

2asi3"$li#ts.

,1- LA7 (,$li%ation eB le%e) – i!osed $' la# itself; ust $e eB!ressl' or i!liedl' set forth and cannot $e !resued

2 See Article 1158

,0- CONTRACTS (,$li%ation eB contractu) – arise fro sti!ulations of the !arties> eetin% of the inds foral a%reeent

2 ust $e co!lied #ith in %ood faith $ecause it is the 0la#1 $et#een !arties; neither !art' a' unilaterall' e*ade his o$li%ation

in the contract" unless>a) contract authories it

$) other !art' assents

Note:

Parties may freely enter into any stipulations pro!ided t"ey are not contrary to law morals good customs public order or public

policy

# $See Article 115%

,- 89ASI3CONTRACTS (,$li%ation eB


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• In the e'es of la#" a *oid contract does not eBist and no o$li%ation #ill arise fro it&

,.LI/ATI,NS ARISIN/ -R,= C,NTRACTS – !riaril' %o*erned $' the sti!ulations" clauses" ters and conditions of their

a%reeents&

• If a contracts !restation is unconsciona$le (unfair) or unreasona$le" e*en if it does not *iolate orals" la#" etc&" it a'

not $e enforced totall'&

• Inter!retation of contract in*ol*es a


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UASI2DELICT (cul!a a the o$li%or cannot ta:e care of the #hole class%enus

DUTIES ,- DE.T,R>

• @reser*e or ta:e care of the thin%s due&

DILI/ENCE ,- A /,,D -ATGER – a %ood father does not a$andon his fail'" he is al#a's read' to !ro*ide and

!rotect his fail'; ordinar' care #hich an a*era%e and reasona$l' !rudent an #ould do&

2 Defined in the ne%ati*e in Article 44F9 AN,TGER STANDARD ,- CARE – eBtraordinar' dili%ence !ro*ided in the sti!ulation of !arties&

-ACT,RS T, .E C,NSIDERED – dili%ence de!ends on the nature of o$li%ation and corres!onds #ith the

circustances of the !erson" tie" and !lace&

KK De$tor is not lia$le if his failure to deli*er the thin% is due to fortuitous e*ents or force ajeure #ithout ne%li%ence or fault inhis !art&

• Deli*er the fruits of a thin%

• Deli*er the accessionsaccessories

• Deli*er the thin% itself

• Ans#er for daa%es in case of non2fulfillent or $reach

1164. T$ #!$"ito! as a !igt to t$ *!its o* t$ ting *!o+ t$ ti+$ t$ obligation to "$li&$! it a!is$s. Ho$&$!' $

sall a#2i!$ no !$al !igt o&$! it ntil t$ sa+$ as b$$n "$li&$!$" to i+.

REAL RI/GT (jus in re) – ri%ht !ertainin% to !erson o*er a s!ecific thin%" #ithout a !assi*e su$ject indi*iduall' deterineda%ainst #ho such ri%ht a' $e !ersonall' enforced&

page 4 [dioryRabajante]


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− a ri%ht enforcea$le a%ainst the #hole #orld

@ERS,NAL RI/GT (jus ad re) – a ri%ht !ertainin% to a !erson to deand fro another" as a definite !assi*e su$ject" the

fulfillent of a !restation to %i*e" to do or not to do&

− a ri%ht enforcea$le onl' a%ainst a definite !erson or %rou! of !ersons&

• .efore the deli*er'" the creditor" in o$li%ations to %i*e" has erel' a !ersonal ri%ht a%ainst the de$tor – a ri%ht to as: for

deli*er' of the thin% and the fruits thereof&• ,nce the thin% and the fruits are deli*ered" then he ac a thin% is deterinate #hen it is !articularl' desi%nated and !h'sicall' se%re%ated fro all others of the

sae class&INDETER=INATE TGIN/

soethin% that has reference onl' to a class or %enus;

o$li%ation to deli*er is not so eBtin%uished $' fortuitous e*ents&

RE=EDIES -,R -AILURE ,- DELI3ERY (deterinate thin%)

4& Co!laint for s!ecific !erforance – an action to co!el the fulfillent of the o$li%ation&8& Co!laint for rescission of the o$li%ation – action to rescind

9& Co!laint for daa%es – action to clai for co!ensation of daa%es suffered

• As a %eneral rule" 0no !erson shall $e res!onsi$le for those e*ents #hich could not $e foreseen" or #hich" thou%h

foreseen" are ine*ita$le" eBce!t>

4& in cases eB!ressl' s!ecified $' the la#8& #hen it is sti!ulated $' the !arties

9& #hen the nature of the o$li%ation re


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ACCESS,RIES – thin%s included #ith the !rinci!al for the latters e$ellishent" $etter use" or co!letion

+"en does rig"t to fruits ariseM – fro the tie the o$li%ation to deli*er arises

Conditional – fro the oent the condition ha!!ens

ith a ter!eriod – u!on the eB!iration of the ter!eriod Si!le – fro the !erfection of the contract

116). I* a $!son oblig$" to "o so+$ting *ails to "o it' t$ sa+$ sall b$ $=$#t$" at is #ost. Tis sa+$ !l$ sall

b$ obs$!&$" i* $ "o$s it in #ont!a&$ntion o* t$ t$no! o* t$ obligation it +a% b$ "$#!$$" tat at as b$$n

oo!l% "on$ b$ n"on$.

K This !ro*ision a!!lies to an o$li%ation to do&

TGREE SITUATI,NS>a) De$tors failure to !erfor an o$li%ation

creditor a' do the o$li%ation" or $' another" at the eB!ense of the de$tor;

reco*er daa%es

$) @erforance #as contrar' to the ters a%reed u!on order of the court to undo the sae at the eB!ense of the de$tor

c) @erforance in a !oor anner order of the court to undo the sae at the eB!ense of the de$tor

116


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$) DORA ACCIPIEN:I – dela' on the !art of the creditor to acce!t the !erforance of the o$li%ation;

Effects>

4& creditor – lia$le for daa%es8& creditor – $ears the ris: of loss of the thin%

9& de$tor – not lia$le for interest fro the tie of creditors dela'7& de$tor – release hiself fro the o$li%ation

c) CODPENSATIO DORAE – dela' of the o$li%ors in reci!rocal o$li%ation&

Effect> the default of one co!ensates the default of the other; their res!ecti*e lia$ilities shall $e offset e


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NATURE ,- NE/LI/ENCE Direct" su$stanti*e and inde!endent Incidental to the !erforance of the o$li%ation&

/,,D -ATGER ,- TGE-A=ILY DE-ENSE

Co!lete and !ro!er defense (!arents"%uardian" e!lo'ers)

Not co!lete and !ro!er defense in the selectionof e!lo'ees&

@RESU=@TI,N ,-NE/LI/ENCE

No !resu!tion – injured !art' ust!ro*e ne%li%ence of the defendant&

There is !resu!tion – defendant ust !ro*ethat there #as no ne%li%ence in the carr'in% out

of the ters of the contract&

11). T$ *alt o! n$glig$n#$ o* t$ obligo! #onsists in t$ o+ission o* tat "ilig$n#$ i# is !$2i!$" b% t$ nat!$

o* t$ obligation an" #o!!$son"s it t$ #i!#+stan#$s o* t$ $!sons' o* $ ti+$ an" o* t$ la#$ I* t$ la o!

#ont!a#t "o$s not stat$ t$ "ilig$n#$ i# is to b$ obs$!&$" in t$ $!*o!+an#$' tat i# is $=$#t$" i* a goo"

*at$! o* a *a+il% sall b$ !$2i!$".

2 This !ro*ision !ro*ides for a ne%ati*e definition of 0!ro!er dili%ence of a %ood father of a fail'1

-RAUD distin%uished fro NE/LI/ENCE

RA9: NEGLIGENCE

There is deli$erate intention to cause daa%e& There is no deli$erate intention to cause daa%e&

Lia$ilit' cannot $e iti%ated& Lia$ilit' a' $e iti%ated&

ai*er for future fraud is *oid& ai*er for future ne%li%ence a' $e allo#ed in certain cases>

DILI/ENCE – the attention and care re


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K see Article 4749

USURY – contractin% for or recei*in% interest in eBcess of the aount allo#ed $' la# for the loan or use of one'" %oods" etc&

USURY LA – a:es the usurers criinall' lia$le if the interest char%ed on loans are ore that the liit !rescri$ed $' la#&

• This la# is re!ealed – Circular No& P?5 of the Central .an: has eB!ressl' reo*ed the interest ceilin%s !rescri$ed $' theUSURY LA&

11)6. T$ !$#$it o* t$ !in#ial b% t$ #!$"ito! itot !$s$!&ation it !$s$#t to t$ int$!$st' sall gi&$ !is$ to

t$ !$s+tion tat sai" int$!$st as b$$n ai".

T$ !$#$it o* a lat$! install+$nt o* a "$bt itot !$s$!&ation as to !io! install+$nts' sall li@$is$ !ais$ t$

!$s+tion tat s# install+$nts a&$ b$$n ai".

• These are ere !resu!tions&

• To $e sure – #rite the interest and the dates co*ered $' such !a'ent in the recei!t&

11)). T$ #!$"ito!s' a*t$! a&ing !s$" t$ !o$!t% in oss$ssion o* t$ "$bto! to satis*% t$i! #lai+s' +a%

$=$!#is$ all t$ !igts an" b!ing all t$ a#tions o* t$ latt$! *o! t$ sa+$ !os$' sa&$ tos$ i# a!$ in$!$nt in

is $!son/ t$% +a% also i+gn t$ a#ts i# t$ "$bto! +a% a&$ "on$ to "$*!a" t$+.

RE=EDIES A3AILA.LE T, CREDIT,RS -,R TGE SATIS-ACTI,N ,- TGEIR CLAI=S>4& EBact fulfillent #ith ri%ht to daa%es8& EBhaustion of the de$tors !ro!erties still in his !ossession – #rit of attachent ($efore jud%ent) or #rit of eBecution

(for final jud%ent not 'et eBecuted)

9& ACCI,N SU.R,/AT,RIA – an action #here the creditor #hose clais had not $een full' satisfied" a' %o after thede$tors (9rd !erson) of the defendant de$tor&

7& ACCI,N @AULIANA – an action #here the creditor files an action in court for the RESCISSI,N of acts or contracts entered

into $' the de$tor desi%ned to defraud the forer&

11)

a) Those not transissi$le $' their nature li:e !urel' !ersonal ri%hts;

$) Those not transissi$le $' !ro*ision of la#;c) Those not transissi$le $' sti!ulation of !arties&

CHAPTER

:IERENT IN:S O OBLIGATIONS

Section 1 – Pure and Conditional Obligations

11)>. E&$!% obligation os$ $!*o!+an#$ "o$s not "$$n" on a *t!$ o! n#$!tain $&$nt' o! on a ast $&$nt

n@non to t$ a!ti$s' is "$+an"abl$ at on#$.

E&$!% obligation i# #ontains a !$solto!% #on"ition sall also b$ "$+an"abl$' itot !$j"i#$ to t$ $**$#ts o*

t$ a$ning o* t$ $&$nt.

@URE ,.LI/ATI,N – an o$li%ation #hich does not contain an' condition or ter u!on #hich the fulfillent is ade to de!end;

iediatel' deanda$le $' the creditors and the de$tor cannot $e eBcused fro not co!l'in% #ith his !restation&

C,NDITI,NAL ,.LI/ATI,N – an o$li%ation #hich de!ends u!on a future or uncertain e*ent" or u!on a !ast e*ent un:no#n to thecontractin% !arties&

– an o$li%ation su$ject to a condition&a) Sus!ensi*e ,$li%ation – its fulfillent %i*es rise to an o$li%ation; the deanda$ilit' of the o$li%ation or the

effecti*it' of the contract can ta:e !lace onl' after the condition has $een fulfilled&

$) Resolutor' ,$li%ation – its ha!!enin% eBtin%uishes the o$li%ation #hich is alread' eBistin%;



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11


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11


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• A!!lies onl' to fulfilled sus!ensi*e conditions&

• Retroacti*e statute

• The effects of the o$li%ation is deeed to coence not fro the fulfillent of the o$li%ation $ut fro the da' of its

constitution (siilar to the le%itiation of a natural child)

• hen the o$li%ation is unilateral" the de$tor shall a!!ro!riate the fruits and interests recei*ed $ecause he does notrecei*e an' e rescission of o$li%ation" fulfillent" indenit'

I=@R,3E=ENT

(4) $' nature or tie – i!ro*eent> inure to the $enefit of the creditor

(8) at the eB!ense of the de$tor – %ranted to the usufructuar'

11>?. 7$n t$ #on"itions a&$ *o! t$i! !os$ t$ $=tingis+$nt o* an obligation to gi&$' t$ a!ti$s' on t$

*l*ill+$nt o* sai" #on"itions' sall !$t!n to $a# ot$! at t$% a&$ !$#$i&$".

In #as$ o* t$ loss' "$t$!io!ation o! i+!o&$+$nt o* t$ ting' t$ !o&isions i#' it !$s$#t to t$ "$bto!' a!$

lai" "on in t$ !$#$"ing a!ti#l$ sall b$ ali$" to t$ a!t% o is bon" to !$t!n.

As *o! t$ obligations to "o an" not to "o' t$ !o&isions o* t$ s$#on" a!ag!a o* A!ti#l$ 11


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11>1. T$ o$! to !$s#in" obligations is i+li$" in !$#i!o#al on$s' in #as$ on$ o* t$ obligo!s sol" not #o+l%

it at is in#+b$nt on i+.

T$ inj!$" a!t% +a% #oos$ b$t$$n t$ *l*ill+$nt an" t$ !$s#ission o* t$ obligation' it t$ a%+$nt o*

"a+ag$s in $it$! #as$. H$ +a% also s$$@ !$s#ission' $&$n a*t$! $ as #os$n *l*ill+$nt' i* t$ latt$! sol"

b$#o+$ i+ossibl$.T$ #o!t sall "$#!$$ t$ !$s#ission #lai+$"' nl$ss t$!$ b$ jst #as$ ato!iing t$ *i=ing o* a $!io".

Tis is n"$!stoo" to b$ itot !$j"i#$ to t$ !igts o* ti!" $!sons o a&$ a#2i!$" t$ ting' in a##o!"an#$

it A!ti#l$s 1

a) E DIE SUS@ENSI3E @ERI,D – fro a da' certain %i*e rise to the o$li%ation; sus!ensi*e effect&

$) IN DIE= RES,LUT,RY @ERI,D – arri*al of a ter certain terinated the o$li%ation; resolutor' effect&



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Ter – len%th of tie sure to coe

Condition – fact or e*ent uncertain to coe

Basis P$!io";T$!+ Con"ition4& TI=E Al#a's refers to -UTURE Can refer to !ast e*ents un:no#n to the

!arties

8& -UL-ILL=ENT Sure to ha!!en at an eBact date or

indefinite tie $ut sure to coe&

=a' or a' not ha!!en&

9& IN-LUENCE =erel' fiBes the tie for the

deanda$ilit' or !erforance of

o$li%ation&

=a' cause the arisin% or cessation of the

o$li%ation&

11>4. In #as$ o* loss' "$t$!io!ation o! i+!o&$+$nt o* t$ ting b$*o!$ t$ a!!i&al o* t$ "a% #$!tain' t$ !l$s in

A!ti#l$ 11 sall b$ obs$!&$".

11>5. An%ting ai" o! "$li&$!$" b$*o!$ t$ a!!i&al o* t$ $!io"' t$ obligo! b$ing naa!$ o* t$ $!io" o!

b$li$&ing tat t$ obligation as b$#o+$ "$ an" "$+an"abl$' +a% b$ !$#o&$!$"' it t$ *!its an" int$!$sts.

If he #as not a#are of the !eriod or he $elie*es that the o$li%ation has $ecoe due and deanda$le – he can

reco*er #hat he !aid or deli*ered includin% fruits and interests; If he #as a#are and he !aid *oluntaril' – he cannot reco*er the deli*er' ade; it is deeed a #ai*er of the

$enefit of the ter and the o$li%ation is considered alread' atured&

• The !resu!tion is that the de$tor :ne# that the de$t #as not 'et due& Ge has the $urden of !ro*in% that he #as

una#are of the !eriod&

11>6. 7$n$&$! in an obligation a $!io" is "$signat$"' it is !$s+$" to a&$ b$$n $stablis$" *o! t$ b$n$*it o*

bot t$ #!$"ito! an" t$ "$bto!' nl$ss *!o+ t$ t$no! o* t$ sa+$ o! ot$! #i!#+stan#$s it sol" a$a! tat t$

$!io" as b$$n $stablis$" in *a&o! o* on$ o! o* t$ ot$!.

• @RESU=@TI,N> ,$li%ation #ith a !eriod is for the $enefit of $oth the creditor and de$tor&

• ECE@TI,N> #hen it a!!ears that the !eriod is for the $enefit of one or the other

• The $enefit of the ter a' $e the su$ject of sti!ulation of the !arties&

4& Ter is for the $enefit of the de$tor alone – he cannot $e co!elled to !a' !reaturel'" $ut he can if he desiresto do so&

2 EBa!le> A o$li%es hiself to !a' . #ithin 5 'ears& A cannot $e co!elled to !a' !reaturel'" $ut he can !a' an'tie #ithin 5

'ears (A #ill $enefit $ecause he can !a' an'tie he #ants as lon% as it is #ithin 5 'ears; . #ill not $enefit fro the interests if A

decides to !a' earl')&8& Ter is for the $enefit of the creditor – Ge a' deand fulfillent e*en $efore the arri*al of the ter $ut the

de$tor cannot re). I* t$ obligation "o$s not *i= a $!io"' bt *!o+ its nat!$ an" t$ #i!#+stan#$s it #an b$ in*$!!$" tat a

$!io" as int$n"$"' t$ #o!ts +a% *i= t$ "!ation t$!$o*.

T$ #o!ts sall also *i= t$ "!ation o* t$ $!io" $n it "$$n"s on t$ ill o* t$ "$bto!.

In $&$!% #as$' t$ #o!ts sall "$t$!+in$ s# $!io" as +a% n"$! t$ #i!#+stan#$s a&$ b$$n !obabl%



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#ont$+lat$" b% t$ a!ti$s. On#$ *i=$" b% t$ #o!ts' t$ $!io" #annot b$ #ang$" b% t$+.

JUDICIAL @ERI,D – !eriod desi%nated $' the court&

C,NTRACTUAL @ERI,D – !eriod fiBed $' the !arties in their contract&

Court #ill fiB a !eriod>4& hen no !eriod is entioned" $ut it is infera$le fro the nature and circustances of the o$li%ation that a !eriod #as

intended $' the !arties&8& hen the !eriod is de!endent u!on the #ill of the de$tor&

• If the o$li%ation does not state and intend a !eriod" the court is not authoried to fiB a !eriod&

• The court ust fiB the duration of the !eriod to !re*ent the !ossi$ilit' that the o$li%ation a' ne*er $e fulfilled or to cure

a defect in a contract #here$' it is ade to de!end solel' u!on the #ill of one of the !arties&

Court cannot fiB the !eriod>

4& If there is a !eriod a%reed u!on $' the !arties and it has alread' la!sed or eB!ired&8& -ro the *er' oent the !arties %i*e their acce!tance and consent to the !eriod fiBed $' the court" it

$ecoes a la# %o*ernin% their contract&

11> IGIVA

• FI hen de$tor $ecoes insol*ent;

• The insol*enc' need not $e judiciall' declared& It is sufficient that de$tor could not !a' his de$ts due to lac: of

one' or funds&• FG hen the de$tor does not furnish g uaranties or securities;

• FI hen %uaranties or securities %i*en ha*e $een i!aired or ha*e disa!!eared;

If securit' #as lost throu%h de$tors fault 2 impairment

If securit' #as lost throu%h fortuitous e*ent 2 disappearance

• FV hen de$tor & iolates an underta:in%;

If such underta:in% is the reason for the creditor to a%ree #ith such !eriod&• FA hen de$tor atte!ts to a $scond (esca!e)&

=ere atte!t to a$scond is sufficient& It is an indication of $ad faith&

Section 3 – Alternative Obligations

11>>. A $!son alt$!nati&$l% bon" b% "i**$!$nt !$stations sall #o+l$t$l% $!*o!+ on$ o* t$+.

T$ #!$"ito! #annot b$ #o+$ll$" to !$#$i&$ a!t o* on$ an" a!t o* t$ ot$! n"$!ta@ing.

,.LI/ATI,NS ITG @LURAL @RESTATI,NS>

4& C,NJUNCTI3EC,=@,UND ,.LI/ATI,N 2 an o$li%ation #here the de$tor has to !erfor ALL the se*eral !restations inthe contract to eBtin%uish the o$li%ation&

8& ALTERNATI3E ,.LI/ATI,N – an o$li%ation #here the de$tor is re


16/54


b$$n t$ obj$#t o* t$ obligation.

I!lied %rant to the creditor is not allo#ed& If it does not a!!ear on the a%reeent as to #ho aon% the has the ri%ht to

choose" it is the de$tor #ho can choose&

10?1. T$ #oi#$ sall !o"#$ no $**$#t $=#$t *!o+ t$ ti+$ it as b$$n #o++ni#at$".

The choice shall not !roduce an' le%al effect until it has $een dul' counicated to the other !art'&

It can $e done in #ritin%" *er$all'" i!liedl'" or an' une


17/54


9& a' choose 4 or 8 !lus daa%esD& all thin%s lost – fault of the de$tor – creditor a' choose the !rice of ANY,NE of the thin%s" #ith daa%es if #arranted&

T$ sa+$ !l$s sall b$ ali$" to obligations to "o o! not to "o in #as$ on$' so+$ o! all o* t$ !$stations sol"

b$#o+$ i+ossibl$.

This article a!!lies onl' #hen the ri%ht of choice has $een eB!ressl' %ranted to the creditor&

10?6. 7$n onl% on$ !$station as b$$n ag!$$" on' bt t$ obligo! +a% !$n"$! anot$! in sbstittion' t$

obligation is #all$" *a#ltati&$.

T$ loss o! "$t$!io!ation o* t$ ting int$n"$" as a sbstitt$' t!og t$ n$glig$n#$ o* t$ obligo!' "o$s not !$n"$!

i+ liabl$. Bt on#$ t$ sbstittion as b$$n +a"$' t$ obligo! is liabl$ *o! t$ loss o* t$ sbstitt$ on a##ont o*

is "$la%' n$glig$n#$ o! *!a".

If loss or deterioration ha!!ened $efore su$stitution is ade" o$li%or is not lia$le; after su$stitution is counicated" he

is lia$le for loss (throu%h dela'" ne%li%ence or fraud)

Section 4 – Joint and Solidary Obligations

10?). T$ #on#!!$n#$ o* to o! +o!$ #!$"ito!s o! o* to o! +o!$ "$bto!s in on$ an" t$ sa+$ obligation "o$s not

i+l% tat $a# on$ o* t$ *o!+$! as a !igt to "$+an"' o! tat $a# on$ o* t$ latt$! is bon" to !$n"$!' $nti!$#o+lian#$ it t$ !$station. T$!$ is a soli"a!% liabilit% onl% $n t$ obligation $=!$ssl% so stat$s' o! $n t$

la o! t$ nat!$ o* t$ obligation !$2i!$s soli"a!it%.

K In case of concurrence of t#o or ore creditors or t#o or ore de$tors in one o$li%ation" the !resu!tion is that the o$li%ationis joint" and not solidar'&

INDI3IDUAL ,.LI/ATI,N – one de$tor and one creditor

C,LLECTI3E ,.LI/ATI,N – t#o or ore de$tors and t#o or ore creditors

4& J,INT – entire o$li%ation is to $e !aid or !erfored proportionately $' the de$tors;

8& S,LIDARY – eac" one of the de$tors are o$li%ed to !a' the entire obligation" each one of the creditors has the

ri%ht to deand fro an' of the de$tors" the fulfillent of the entire o$li%ation;A& @assi*e Solidarit' – solidarit' on the !art of the DE.T,RS

.& Acti*e Solidarit' – solidarit' on the !art of the CREDIT,RS& S,LIDARITY SG,ULD .E E@RESSED – la#" sti!ulation" nature of o$li%ation&

hen the o$li%ation is a$i%uous" it ust $e considered as joint o$li%ation&

C,NSEUENCES ,- S,LIDARITY>

4& @assi*e Solidarit' – full !a'ent ade $' an'one of the solidar' de$tors eBtin%uishes the o$li%ation& The one #ho !aidcan clai rei$urseent fro his co2de$tors as re%ards their corres!ondin% shares in the o$li%ation&

A" ." O C are solidar' de$tors of D in the su of @P??&

D can deand !a'ent of the entire o$li%ation #hen it $ecoes due" fro an' one of the de$tors or fro all of the at the sae

tie&If C !aid the #hole @P?? to D" he a' clai rei$urseent fro A and .&

8& Acti*e Solidarit' – full !a'ent to an' of the creditors eBtin%uishes the o$li%ation& The creditor #ho recei*ed the entireaount #ill $e lia$le to !a' the corres!ondin% shares of his co2creditors in accordance #ith their internal a%reeent&

/arfield o#es the su of @7?"??? to =ic:e'" =innie" Donald" and @luto" #ho are solidar' creditors& /arfield can !a' an'one of

the& If =ic:e' recei*ed the @7?"???" he is lia$le to !a' the corres!ondin% shares of his co2creditors&

=IED S,LIDARITY

a& Solidar' De$tors" Joint Creditors

@P"???&?? – total de$t

:$bto!s ,Soli"a!%- C!$"ito!s ,oint-



18/54


Aida !a's @7"5??&?? John Q @ 7"5??&??

Lorna !a's @7"5??&?? =arsha @ 7"5??&??

-e

$& Joint De$tors" Solidar' Creditors

@ P"???&?? – total de$t

:$bto!s ,oint- C!$"ito!s ,Soli"a!%-

Aida (@ 9"???&??) John (can clai fro de$tors)

Lorna (@ 9"???&??) =arsha (2sae2)

-e (@ 9"???&??)

10?. I* t$ "i&ision is i+ossibl$' t$ !igt o* t$ #!$"ito!s +a% b$ !$j"i#$" onl% b% t$i! #oll$#ti&$ a#ts' an" t$

"$bt #an b$ $n*o!#$" onl% b% !o#$$"ing against all t$ "$bto!s. I* on$ o* t$ latt$! sol" b$ insol&$nt' t$ ot$!s

sall not b$ liabl$ *o! is sa!$.

J,INT INDI3ISI.LE ,.LI/ATI,N – an o$li%ation #here solidarit' is not !ro*ided and the !restation or o$ject is not susce!ti$le of

di*ision; its fulfillent re


19/54


.atan and Ro$in jointl' o$li%ed thesel*es to deli*er a $rand ne# To'ota -ortuner #orth @4"5??"???&?? to Su!eran& Theo$ject" a *ehicle" is indi*isi$le& The' ust deli*er the thin% jointl'& In case of $reach" the o$li%ation is con*erted into onetar'

o$li%ation for indenit' for daa%es& .atan and Ro$in #ill $e lia$le onl' for @ F5?"???&?? each&

The act of one is not $indin% (others ust concur)

101?. T$ in"i&isibilit% o* an obligation "o$s not n$#$ssa!il% gi&$ !is$ to soli"a!it%. No! "o$s soli"a!it% o* its$l* i+l%

in"i&isibilit%.

Solidarit' is eB!ressed in the sti!ulations of the !art'" la# %o*ernin% the o$li%ation" or the nature of the o$li%ation&

INDI3ISI.LE ,.LI/ATI,N – an o$li%ation #here the !restation or o$ject to $e deli*ered cannot $e !erfored $' !arts #ithoutalterin% its essence or su$stance&

.asis Indi*isi$ilit' Solidarit'

4& Nature Refers to the prestation of the contract Refers to the tie eBistin% $et#een !artiesof the o$li%ation (#ho is lia$le)

8& Nu$er of

su$jects !arties

Does not re


20/54


the o$li%ation& Ge is considered a STRAN/ER" and his acts are not $indin% to the solidarit'&

D,CTRINE ,- =UTUAL A/ENCY 2 In solidar' o$li%ations" the act of one is act of the others&

EBce!tions to the doctrine>

4& Art& 4848 – a creditor a' not !erfor an act !rejudicial to other creditors

8& Art& 4849 – a creditor cannot transfer his ri%ht #ithout consent

1014. T$ "$bto! +a% a% an% on$ o* t$ soli"a!% #!$"ito!s/ bt i* an% "$+an"' j"i#ial o! $=t!aj"i#ial' as b$$n

+a"$ b% on$ o* t$+' a%+$nt sol" b$ +a"$ to i+.

The de$tor can !a' an' one of the solidar' creditors& Such !a'ent #hen acce!ted $' an' of the solidar' creditors #ill

eBtin%uish the o$li%ation&

To a*oid confusion on the !a'ent of the o$li%ation" the de$tor is re


21/54


$een re

4& ,$li%ation @RESCRI.ES

The creditor did not a:e an' deand for ore than 4? 'ears&

8& ,$li%ation $ecoes ILLE/AL

La# has $een !assed" a:in% such !restation ille%al&

101>. T$ !$+ission +a"$ b% t$ #!$"ito! o* t$ sa!$ i# a**$#ts on$ o* t$ soli"a!% "$bto!s "o$s not !$l$as$ t$

latt$! *!o+ is !$sonsibilit% toa!"s t$ #o3"$bto!s' in #as$ t$ "$bt a" b$$n totall% ai" b% an%on$ o* t$+

b$*o!$ t$ !$+ission as $**$#t$".

Att' De Cha*e> Ito a' !ro*ision sa tan%a&&& (si'e!re" !a% na%$a'ad na" #ala nan% o$li%ation" #ala na din% ire2reit&&&)

An' $elated (dela'ed) reission $' the creditor of the share of an' of the de$tor has no effect on the internal

relationshi! of the co2de$tors&

Payment before remission> A" ." and C solidaril' o#e D @4"5??&??& . !aid the entire o$li%ation& After #hich" D reitted the shareof C& . can collect @5??&?? each fro A and C e*en if the share of C in the o$li%ation had $een reitted&

4emission before payment > A" ." and C solidaril' o#e D @4"5??&??& D reitted the share of C& Thereafter" . !aid the entireo$li%ation& . can collect @5??&?? fro A $ut not fro C& Go#e*er" . a' as: D to %i*e $ac: @5??" #hich is the su!!osed2to2$e

share of C&

After the !rior !a'ent of the entire o$li%ation" there is nothin% to reit $ecause the o$li%ation had $een eBtin%uished&

100?. T$ !$+ission o* t$ ol$ obligation' obtain$" b% on$ o* t$ soli"a!% "$bto!s' "o$s not $ntitl$ i+ to!$i+b!s$+$nt *!o+ is #o3"$bto!s.

There is nothin% to $e rei$ursed $ecause he did not s!end an' one'" the reission $ein% a %ratuitous act&

1001. I* t$ ting as b$$n lost o! i* t$ !$station as b$#o+$ i+ossibl$ itot t$ *alt o* t$ soli"a!% "$bto!s'

t$ obligation sall b$ $=tingis$".



22/54


I* t$!$ as *alt on t$ a!t o* an% on$ o* t$+' all sall b$ !$sonsibl$ to t$ #!$"ito!' *o! t$ !i#$ an" t$

a%+$nt o* "a+ag$s an" int$!$st' itot !$j"i#$ to t$i! a#tion against t$ gilt% o! n$glig$nt "$bto!.

I* t!og a *o!titos $&$nt' t$ ting is lost o! t$ $!*o!+an#$ as b$#o+$ i+ossibl$ a*t$! on$ o* t$ soli"a!%

"$bto!s as in#!!$" in "$la% t!og t$ j"i#ial o! $=t!aj"i#ial "$+an" on i+ b% t$ #!$"ito!' t$ !o&isions o*

t$ !$#$"ing a!ag!a sall al%.

Loss of the thin% or i!ossi$ilit' of !restation –

4& N, -AULT – solidar' de$tors – o$li%ation is eBtin%uished8& -AULT of an' one of the – all are lia$le $ecause of their utual a%enc'

9& -,RTUIT,US E3ENT – dela' on the !art of the de$tors – all #ill $e lia$le

If the thin% due #as not lost" $ut there is erel' a dela'" fraud or ne%li%ence on the !art of one of the solidar' de$tors"

all (includin% the innocent) de$tors #ill share in the !a'ent of the @RINCI@AL !restation& The daa%es and interest

i!osed #ill $e $orne $' the %uilt' de$tor&

,$li%ation to deli*er is con*erted into an o$li%ation to !a' indenit' #hen there us loss or i!ossi$ilit' of !erforance&

1000. A soli"a!% "$bto! +a%' in a#tions *il$" b% t$ #!$"ito!' a&ail i+s$l* o* all "$*$ns$s i# a!$ "$!i&$" *!o+ t$

nat!$ o* t$ obligation an" o* tos$ i# a!$ $!sonal to i+' o! $!tain to is on sa!$. 7it !$s$#t to tos$

i# $!sonall% b$long to t$ ot$!s' $ +a% a&ail i+s$l* t$!$o* onl% as !$ga!"s tat a!t o* t$ "$bt *o! i#

t$ latt$! a!$ !$sonsibl$.

DE-ENSES ,- A S,LIDARY DE.T,R>

4& Defense arisin% fro the nature of the o$li%ation – such as !a'ent" !rescri!tion" reission" statute of frauds" !resence

of *ices of consent" etc&8& Defenses #hich are !ersonal to hi or #hich !ertains to his o#n share alone – such as inorit'" insanit' and others

!urel' !ersonal to hi&

9& Defenses !ersonal to the other solidar' creditors $ut onl' as re%ards that !art of the de$t for #hich the other creditorsare lia$le&

Section – !ivisible and "ndivisible Obligations

100. T$ "i&isibilit% o! in"i&isibilit% o* t$ tings tat a!$ t$ obj$#t o* obligations in i# t$!$ is onl% on$ "$bto!

an" onl% on$ #!$"ito! "o$s not alt$! o! +o"i*% t$ !o&isions o* Cat$! 0 o* tis Titl$.

DI3ISI.ILITY – refers to the susce!ti$ilit' of an o$li%ation to $e !erfored !artiall'& ,$li%ation to deli*er 4?? sac:s of rice or a !articular t'!e

INDI3ISI.ILITY – refers to the non2susce!ti$ilit' of an o$li%ation to !artial !erforance&

,$li%ation to deli*er a !articular co!uter set

If a thin% could $e di*ided into !arts and as di*ided" its *alue is i!aired dis!ro!ortionatel'" that thin% is INDI3ISI.LE&

1004. A joint in"i&isibl$ obligation gi&$s !is$ to in"$+nit% *o! "a+ag$s *!o+ t$ ti+$ an%on$ o* t$ "$bto!s "o$s not

#o+l% it is n"$!ta@ing. T$ "$bto!s o +a% a&$ b$$n !$a"% to *l*ill t$i! !o+is$s sall not #ont!ibt$ to

t$ in"$+nit% b$%on" t$ #o!!$son"ing o!tion o* t$ !i#$ o* t$ ting o! o* t$ &al$ o* t$ s$!&i#$ in i# t$

obligation #onsists.

K Relate this !ro*ision to Articles 4465" 48?H and 48?P&

J,INT INDI3ISI.LE ,.LI/ATI,N – the o$ject is indi*isi$le $ut the lia$ilit' of the !arties is joint&

The unfulfilled underta:in% (dut') is con*erted into a onetar' o$li%ation #hich is not di*isi$le&

The %uilt' de$tor is lia$le for daa%es&

1005. o! t$ !os$s o* t$ !$#$"ing a!ti#l$s' obligations to gi&$ "$*init$ tings an" tos$ i# a!$ not

ss#$tibl$ o* a!tial $!*o!+an#$ sall b$ "$$+$" to b$ in"i&isibl$.

7$n t$ obligation as *o! its obj$#t t$ $=$#tion o* a #$!tain n+b$! o* "a%s o* o!@' t$ a##o+lis+$nt o*



23/54


o!@ b% +$t!i#al nits' o! analogos tings i# b% t$i! nat!$ a!$ ss#$tibl$ o* a!tial $!*o!+an#$' it sall b$

"i&isibl$.

Ho$&$!' $&$n tog t$ obj$#t o! s$!&i#$ +a% b$ %si#all% "i&isibl$' an obligation is in"i&isibl$ i* so !o&i"$" b%

la o! int$n"$" b% t$ a!ti$s.

In obligations not to "o' "i&isibilit% o! in"i&isibilit% sall b$ "$t$!+in$" b% t$ #a!a#t$! o* t$ !$station in $a#

a!ti#la! #as$.

The follo#in% are considered INDI3ISI.LE o$li%ations>4& ,$li%ation to %i*e definite thin%s

8& ,$li%ations #hich are not susce!ti$le of !artial !erforance

9& E*en thou%h the o$ject or ser*ice a' $e !h'sicall' di*isi$le" it is indi*isi$le if>a& the la# so !ro*ides

$& #hen the !arties intended it to $e indi*isi$le

The follo#in% o$li%ations are deeed DI3ISI.LE>

4& hen the o$ject of the o$li%ation is the eBecution of a certain nu$er of da's of #or:

8& hen the o$ject of the o$li%ation is the acco!lishent of #or: easured in units9& hen the o$ject of the o$li%ation is susce!ti$le of !artial co!liance

7& hen the o$ject of the o$li%ation is such that the de$tor is re


24/54


100). T$ "$bto! #annot $=$+t i+s$l* *!o+ t$ $!*o!+an#$ o* t$ obligation b% a%ing t$ $nalt%' sa&$ in t$

#as$ $!$ tis !igt as b$$n $=!$ssl% !$s$!&$" *o! i+. N$it$! #an t$ #!$"ito! "$+an" t$ *l*ill+$nt o* t$

obligation an" t$ satis*a#tion o* t$ $nalt% at t$ sa+$ ti+$' nl$ss tis !igt as b$$n #l$a!l% g!ant$" i+.

Ho$&$!' i* a*t$! t$ #!$"ito! as "$#i"$" to !$2i!$ t$ *l*ill+$nt o* t$ obligation' t$ $!*o!+an#$ t$!$o* sol"

b$#o+$ i+ossibl$ itot is *alt' t$ $nalt% +a% b$ $n*o!#$".

A de$tor cannot e*ade fro !a'ent of his !rinci!al o$li%ation $' choosin% to !a' the !enalt' sti!ulated" eBce!t #hen

the de$tor is E@RESSLY %ranted #ith the ri%ht to su$stitute the !enalt' for the !rinci!al o$li%ation& – an o$li%ation #ith

!enalt' clause cannot $e turned to facultati*e o$li%ation unless eB!ressl' sti!ulated in the contract&

The creditor cannot deand the sti!ulated fulfillent of the !rinci!al o$li%ation and the !enalt' at the sae tie" eBce!t

a& #hen the creditor #as clearl' %i*en the ri%ht to enforce $oth the !rinci!al o$li%ation and !enalt';$& #hen the creditor has deanded fulfillent of the o$li%ation $ut cannot $e fulfilled due to the

4& de$tors fault – creditor a' deand for !enalt'

8& creditors fault – he cannot clai the !enalt'9& fortuitous e*ent – !rinci!al o$li%ation and !enalt' are eBtin%uished

100

4& I!ossi$le !erforance of !rinci!al o$li%ation due to fortuitous e*ents8& Creditor !re*ented the de$tor fro fulfillin% the o$li%ation

9& @enalt' is contrar' to %ood orals or %ood custos

7& .oth !arties are %uilt' of $reach of contract5& .reach of contract $' the creditor

6& None of the !arties coitted an' #illful or cul!a$le *iolation of the a%reeent

10?. T$ nllit% o* t$ $nal #las$ "o$s not #a!!% it it tat o* t$ !in#ial obligation.

T$ nllit% o* t$ !in#ial obligation #a!!i$s it it tat o* t$ $nal #las$.

.ecause the !enal clause is onl' an accessor' to the !rinci!al o$li%ation" it cannot eBist alone&

If the !enal clause is *oid" the !rinci!al o$li%ation reains enforcea$le&

2"e nullity of penal clause does not mean t"e nullity of t"e principal0

-or eBa!le>

In case of non2!a'ent of @4?"???" @4"??? !er da' as !enalt' shall $e i!osed& It is a *oid contract $ut it is not an eBcuse that

'ou dont ha*e to !a' the !rinci!al #hich is @4?"???&



25/54


CHAPTER 4

EJTINHG9ISHDENT O OBLIGATIONS

GENERAL PROVISIONS

101. Obligations a!$ $=tingis$"(5. b% a%+$nt o! $!*o!+an#$

6. b% loss o* t$ ting "$

). b% #on"onation o! !$+ission


26/54


• A !art' #ho :no#in%l' and #illfull' fails to !erfor his contract in an' res!ect" or oits to !erfor a aterial !art of it

cannot $e !eritted under the !rotection of this rule to co!el the other !art' to !erfor; and the trend of the ore

recent decisions is to hold that the !ercenta%e of oitted or irre%ular !erforance a' in and of itself $e sufficient to

sho# that there has not $een a su$stantial !erforance

• The !art' #ho has su$stantiall' !erfored a' enforce s!ecific !erforance of the o$li%ation of the other !art' or a'

reco*er daa%es for their $reach u!on an alle%ation of !erforance" #ithout !roof of co!lete fulfillent&

• The other !art'" on the other hand" a' $' an inde!endent action $efore he is sued" or $' a counterclai after

coenceent of a suit a%ainst hi" reco*er fro the first !art' the daa%es #hich he has sustained $' the latters

failure to co!letel' fulfill his o$li%ation

105 – 7$n t$ oblig$ a##$ts t$ $!*o!+an#$' @noing its in#o+l$t$n$ss o! i!!$gla!it%' an" itot

$=!$ssing an% !ot$st o! obj$#tion' t$ obligation is "$$+$" *ll% #o+li$" it

A !erson enterin% into a contract has a ri%ht to insist on its !erforance in all !articulars" accordin% to its eanin% and

s!irit& .ut if he chooses to #ai*e an' of the ters introduced for his o#n $enefit" he a' do so& .ut he is not o$li%ed to acce!t an'thin% else in !lace of that #hich he has contracted for and if he does not #ai*e this

ri%ht" the other !art' cannot reco*er a%ainst hi #ithout !erforin% all the sti!ulations on is !art To constitute a #ai*er" there ust $e an intentional relin. In obligations to gi&$' a%+$nt +a"$ b% on$ o "o$s not a&$ t$ *!$$ "isosal o* t$ ting "$ an"

#aa#it% to ali$nat$ it sall not b$ &ali$"' itot !$j"i#$ to t$ !o&isions o* a!ti#l$ 140) n"$! t$ Titl$ on

Nat!al ObligationsM

consi%nation #ill not $e !ro!er here& In case the creditor acce!ts the !a'ent" the !a'ent #ill not $e *alid eBce!t in

the case !ro*ided in article 478F

104?. Pa%+$nt sall b$ +a"$ to t$ $!son in os$ *a&o! t$ obligation as b$$n #onstitt$"' o! is s##$sso! in

int$!$st' o! an% $!son ato!i$" to !$#$i&$ it

the authorit' of a !erson to recei*e !a'ent for the creditor a' $e

a&) le%al – conferred $' la# (e&%&"%uardian of the inca!acitated" adinistrator of the estate of the deceased)

$&) con*entional – #hen the authorit' has $een %i*en $' the creditor hiself (e&%&" a%ent #ho is a!!ointed to collect fro the

de$tor



27/54


• !a'ent ade $' the de$tor to a #ron% !art' does not eBtin%uish the o$li%ation as to the creditor (*oid)" if there is no

fault or ne%li%ence #hich can $e i!uted to the latter (e*en #hen the de$tor acted in utost %ood faith" or throu%h error

induced $' the fraud of the 9rd !erson)& It does not !rejudice the creditor and the accrual of interest is not sus!ended $'

it

1041. Pa%+$nt to a $!son o is in#aa#itat$" to a"+inist$! is !o$!t% sall b$ &ali" i* $ as @$t t$ ting"$li&$!$"' o! inso*a! as t$ a%+$nt as b$$n b$n$*i#ial to i+. Pa%+$nt +a"$ to a ti!" $!son sall also b$ &ali"

inso*a! as it as !$"on"$" to t$ b$n$*it o* t$ #!$"ito!. S# b$n$*it to t$ #!$"ito! n$$" not b$ !o&$" in t$

*olloing #as$s(

,1- I* a*t$! t$ a%+$nt' t$ ti!" $!son a#2i!$s t$ #!$"ito!s !igts/

,0- I* t$ #!$"ito! !ati*i$s t$ a%+$nt to t$ ti!" $!son/

,- I* b% t$ #!$"ito!s #on"#t' t$ "$bto! as b$$n l$" to b$li$&$ tat t$ ti!" $!son a" ato!it% to !$#$i&$ t$

a%+$nt. ,116a-

!a'ent shall $e considered as ha*in% $enefited the inca!acitated !erson if he ade an intelli%ent and reasona$le use

thereof" for !ur!oses necessar' or useful to hi" such as that #hich his le%al re!resentati*e #ould ha*e or could ha*e

done under siilar circustances" e*en if at the tie of the co!laint the effect of such use no lon%er eBists (e&%&" taBes

on creditors !ro!ert'" one' to eBtin%uish a ort%a%e on creditors !ro!ert') the de$tor is not released fro lia$ilit' $' a !a'ent to one #ho is not the creditor nor one authoried to recei*e the

!a'ent" e*en if the de$tor $elie*ed in %ood faith that he is the creditor" eBce!t to the eBtent that the !a'ent inured to

the $enefit of the creditor

in addition to those entioned a$o*e" !a'ent to a third !erson releases the de$tor> a&) #hen" #ithout notice of the assi%nent of credit" he !a's to the ori%inal creditor

$&) #hen in %ood faith he !a's to one in !ossession of the credit e*en #hen the creditor recei*es no $enefit fro the !a'ent to a third !erson" he cannot deand !a'ent ane#" if the

ista:e of the de$tor #as due to the fault of the creditor

1040. Pa%+$nt +a"$ in goo" *ait to an% $!son in oss$ssion o* t$ #!$"it sall !$l$as$ t$ "$bto!. ,1164- the !erson in !ossession of the credit is neither the creditor nor one authoried $' hi to recei*e !a'ent" $ut a!!ears

under the circustances of the case" to $e the creditor& Ge a!!ears to $e the o#ner of the credit" althou%h in realit'" he

a' not $e the o#ner (e&%&" an heir #ho enters u!on the hereditar' estate and collects the credits thereof" $ut #ho is

later de!ri*ed of the inheritance $ecause of inca!acit' to succeed) it is necessar' not onl' that the !ossession of the credit $e le%al" $ut also that the !a'ent $e in %ood faith

104. Pa%+$nt +a"$ to t$ #!$"ito! b% t$ "$bto! a*t$! t$ latt$! as b$$n j"i#iall% o!"$!$" to !$tain t$ "$bt sall

not b$ &ali". ,1165-

• the !a'ent to the creditor after the credit has $een attached or %arnished is *oid as to the !art' #ho o$tained the

attachent or %arnishent" to the eBtent of the aount of the jud%ent in his fa*or&

• The de$tor u!on #ho %arnishent order is ser*ed can al#a's de!osit the one' in court $' #a' of consi%nation and

thus relie*e hiself fro further lia$ilit'

1044. T$ "$bto! o* a ting #annot #o+$l t$ #!$"ito! to !$#$i&$ a "i**$!$nt on$' altog t$ latt$! +a% b$ o* t$

sa+$ &al$ as' o! +o!$ &alabl$ tan tat i# is "$. In obligations to "o o! not to "o' an a#t o! *o!b$a!an#$

#annot b$ sbstitt$" b% anot$! a#t o! *o!b$a!an#$ against t$ oblig$$s ill. ,1166a-

• U!on a%reeent of consent of the creditor" the de$tor a' deli*er a different thin% or !erfor a different !restation in

lieu of that sti!ulated& In this case there a' $e dation in !a'ent or no*ation

• The defects of the thin% deli*ered a' $e #ai*ed $' the creditor" if he eB!ressl' so declares or if" #ith :no#led%e thereof"

he acce!ts the thin% #ithout !rotest or dis!oses of it or consues it

1045. :ation in a%+$nt' $!$b% !o$!t% is ali$nat$" to t$ #!$"ito! in satis*a#tion o* a "$bt in +on$%' sall b$

go&$!n$" b% t$ la o* sal$s. ,n-

• This is the deli*er' and transission of o#nershi! of a thin% $' the de$tor to the creditor as an acce!ted e


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the o$li%ation to the eBtent that it is eBtin%uished $ein% considered as !rice

• Difference $et#een Dation and Cession (see Art& 4855)

1046. 7$n t$ obligation #onsists in t$ "$li&$!% o* an in"$t$!+inat$ o! g$n$!i# ting' os$ 2alit% an"

#i!#+stan#$s a&$ not b$$n stat$"' t$ #!$"ito! #annot "$+an" a ting o* s$!io! 2alit%. N$it$! #an t$ "$bto!

"$li&$! a ting o* in*$!io! 2alit%. T$ !os$ o* t$ obligation an" ot$! #i!#+stan#$s sall b$ ta@$n into#onsi"$!ation. ,116)a-

If there is disa%reeent $et#een the de$tor and the creditor as to the a-

The creditor #ho refuses to acce!t !artial !restations does not incur dela' eBce!t #hen there is a$use of ri%ht or if %ood

faith re


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• If the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" the additional eB!enses shall $e $orne $'

hi& These !ro*isions are #ithout !rejudice to *enue under the Rules of Court&(44F4a)

• Since the la# fiBes the !lace of !a'ent at the doicile of the de$tor" it is the dut' of the creditor to %o there and

recei*e !a'ent; he should $ear the eB!enses in this case $ecause the de$tor cannot $e ade to shoulder the eB!enses#hich the creditor incurs in !erforin% a dut' i!osed $' la# and #hich is for his $enefit&

• .ut if the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" then the additional eB!enses shall $e

$orne $' hi

• hen the de$tor has $een re (4) #he there is a sti!ulation to the contrar'; and (8) the

a!!lication of !a'ent is ade $' the !art' for #hose $enefit the ter or !eriod has $een constituted (relate to Art&

44P6)&

• It is also necessar' that all the de$ts $e for the sae :ind" %enerall' of a onetar' character& This includes o$li%ations

#hich #ere not ori%inall' of a onetar' character" $ut at the tie of a!!lication of !a'ent" had $een con*erted into ano$li%ation to !a' daa%es $' reason of $reach or non!erforance&

• If the de$tor a:es a !ro!er a!!lication of !a'ent $ut the creditor refuses to acce!t it $ecause he #ants to a!!l' it to

another de$t" such creditor #ill incur in dela'

• RI/GT ,- DE.T,R T, =A+E A@@LICATI,N& If at the tie of !a'ent" the de$tor does not eBercise his ri%ht to a!!l' it to

an' of his de$ts" the a!!lication shall $e understood as !ro*ided $' la#" unless the creditor a:es the a!!lication and hisdecision is acce!ted $' the de$tor& This a!!lication of !a'ent can $e ade $' the creditor onl' in the recei!t issued at

the tie of !a'ent (althou%h the a!!lication ade $' creditor a' $e contested $' the de$tor if the latters assent tosuch a!!lication #as *itiated $' such causes as ista:e" *iolence" intiidation" fraud" etc)

• The de$tor and the creditor $' a%reeent" can *alidl' chan%e the a!!lication of !a'ent alread' ade #ithout !rejudice

to the ri%hts of third !ersons ac


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De$ts are not of the sae $urden (4st !ar&)– Rules>

4& ,ldest are ore onerous than ne# ones

8& ,ne $earin% interest ore onerous than one that does not

9& secured de$t ore onerous than unsecured one

7& !rinci!al de$t ore onerous than %uarant'

5& solidar' de$tor ore onerous than sole de$tor6& share in a solidar' o$li%ation ore onerous to a solidar' de$tor

F& li (4) unsecured de$t" (8) a de$t secured #ith

ort%a%e of the de$tors !ro!ert'" (9) a de$t #ith interest" (7) a de$t in #hich the de$tor is solidaril' lia$le #ith another&

@artial !a'ent #as ade $' the de$tor" #ithout s!ecification as to #hich the !a'ent should $e a!!lied&The ost onerous is (7)" follo#ed $' (8)" then (9)" then (4)& Conse


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sall b$ !$l$as$" *!o+ !$sonsibilit% b% t$ #onsignation o* t$ ting o! s+ "$.

Consignation alon$ sall !o"#$ t$ sa+$ $**$#t in t$ *olloing #as$s(

,1- 7$n t$ #!$"ito! is abs$nt o! n@non' o! "o$s not a$a! at t$ la#$ o* a%+$nt/

,0- 7$n $ is in#aa#itat$" to !$#$i&$ t$ a%+$nt at t$ ti+$ it is "$/

,- 7$n' itot jst #as$' $ !$*s$s to gi&$ a !$#$it/

,4- 7$n to o! +o!$ $!sons #lai+ t$ sa+$ !igt to #oll$#t/,5- 7$n t$ titl$ o* t$ obligation as b$$n lost. ,11)6a-

• T$n"$! o* a%+$nt > anifestation ade $' the de$tor to the creditor of his desire to co!l' #ith his o$li%ation; The

act of the de$tor of offerin% to the creditor the thin% or aount due

• Consignation > De!osit of the o$ject or the aount due #ith the !ro!er court after refusal or ina$ilit' of the creditor to

acce!t the tender of !a'ent

• Tender of !a'ent $' certified chec: is *alid; a ere chec: #ould also $e *alid for tender of !a'ent if the creditor

a:es no !ro!t o$jection" $ut this does not esto! the latter fro later deandin% !a'ent in cash

• hen a tender of !a'ent is ade in such a for that the creditor could ha*e iediatel' realied !a'ent if he had

acce!ted the tender" follo#ed $' a !ro!t atte!t of the de$tor to de!osit the eans of !a'ent in court $' #a' of

consi%nation" the accrual of interest on the o$li%ation #ill $e sus!ended fro the date of such tender& .ut #hen the

tender of !a'ent is not acco!anied $' the eans of !a'ent" and the de$tor did not ta:e an' iediate ste! toa:e a consi%nation" then the interest is not sus!ended fro the tie of such tender&

/ENERAL REUISITES ,- 3ALID C,NSI/NATI,N *s S@ECIAL REUISITES/eneral Re< > relati*e to !a'ent (Arts& 4898 2 4854)S!ecial Re< > *er' nature of consi%nation (Arts& 4856 – 485H)

S!ecial Re F:LN3:N

4& F: There #as a "e$t due

8& FL The consi%nation of the o$li%ation #as ade $ecause of soe le%al cause !ro*ided in the !resent article

9& FN That !re*ious notice of the consi%nation has $een %i*en to !ersons interested in the !erforance of the o$li%ation7& F: The aount or thin% due #as !laced at the "is!osal of the court

5& FN After the consi%nation had $een ade the !ersons interested had $een notified thereof

If the reason for consi%nation is the unjust refusal of the creditor to acce!t !a'ent" it ust $e sho#n>

4& That there #as !re*ious tender of !a'ent" #ithout #hich the consi%nation is ineffecti*e

8& That the tender of !a'ent #as of the *er' thin% due" or in case of one' o$li%ations that le%al tender currenc' #as

offered

9& That the tender of !a'ent #as unconditional and7& That the creditor refused to acce!t !a'ent #ithout just cause

EBce!tion to re


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$!sons int$!$st$" in t$ *l*ill+$nt o* t$ obligation.

T$ #onsignation sall b$ in$**$#tal i* it is not +a"$ st!i#tl% in #onsonan#$ it t$ !o&isions i# !$glat$

a%+$nt. ,11))-

• The lac: of notice does not in*alidate the consi%nation $ut si!l' a:es the de$tor lia$le for the eB!enses

• The tender of !a'ent and the notice of consi%nation sent to the creditor a' $e ade in the sae act& In case of

a$sent or un:no#n creditors" the notice a' $e ade $' !u$lication

• 4st !ara%ra!h of this article – !ertains to the 9rd S!ecial Re. T$ $=$ns$s o* #onsignation' $n !o$!l% +a"$' sall b$ #a!g$" against t$ #!$"ito!. ,11)>-

• The consi%nation is !ro!erl' ade #hen>

4&) after the thin% has $een de!osited in court" the creditor acce!ts the consi%nation #ithout o$jection and #ithout an'reser*ation of his ri%ht to contest it $ecause of failure to co!l' #ith an' of the re


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SECTION 0

LOSS O THE THING :9E

1060. An obligation i# #onsists in t$ "$li&$!% o* a "$t$!+inat$ ting sall b$ $=tingis$" i* it sol" b$ lost o!

"$st!o%$" itot t$ *alt o* t$ "$bto!' an" b$*o!$ $ as in#!!$" in "$la%. 7$n b% la o! stilation' t$ obligo! is liabl$ $&$n *o! *o!titos $&$nts' t$ loss o* t$ ting "o$s not $=tingist$ obligation an" $ sall b$ !$sonsibl$ *o! "a+ag$s. T$ sa+$ !l$ ali$s $n t$ nat!$ o* t$ obligation!$2i!$s t$ ass+tion o* !is@.

106( In an obligation to "$li&$! a g$n$!i# ting' t$ loss o! "$st!#tion o* an%ting o* t$ sa+$ @in" "o$s not$=tingis t$ obligation. ,n-

1064. T$ #o!ts sall "$t$!+in$ $t$!' n"$! t$ #i!#+stan#$s' t$ a!tial loss o* t$ obj$#t o* t$ obligation isso i+o!tant as to $=tingis t$ obligation. ,n-

1065. 7$n$&$! t$ ting is lost in t$ oss$ssion o* t$ "$bto!' it sall b$ !$s+$" tat t$ loss as "$ to is*alt' nl$ss t$!$ is !oo* to t$ #ont!a!%' an" itot !$j"i#$ to t$ !o&isions o* a!ti#l$ 1165. Tis !$s+tion"o$s not al% in #as$ o* $a!t2a@$' *loo"' sto!+' o! ot$! nat!al #ala+it%. ,11 #he the o$li%or dela's" or has !roised to deli*er the sae thin% to t#o or ore !ersons

#ho do not ha*e the sae interest" he shall $e lia$le for an' fortuitious e*ent until he has effected the deli*er' Gence" in cases #here Art& 4465" !ar& 9 is a!!lica$le" e*en if the de$tor can !ro*e that the loss of the thin% in his

!ossession #as not throu%h his fault or that it #as throu%h a fortuitous e*ent" he shall still $e lia$le to the creditor fordaa%es&

1066. T$ "$bto! in obligations to "o sall also b$ !$l$as$" $n t$ !$station b$#o+$s l$gall% o! %si#all%i+ossibl$ itot t$ *alt o* t$ obligo!. ,11 a' either $e 24& direct (#hen the la# !rohi$its the !erforance or eBecution of the #or: a%reed u!on" i&e& #hen it is ioral or

dan%erous)8& indirect (the la# i!oses duties of a su!erior character u!on the o$li%or #hich are inco!ati$le #ith the #or: a%reed

u!on" althou%h the latter a' $e !erfectl' licit" as #here the o$li%or is drafted for ilitar' ser*ice or for a ci*il function)

@GYSICAL I=@,SSI.ILTY > eBa!les – death of the de$tor; #hen there is an accident&&&

106). 7$n t$ s$!&i#$ as b$#o+$ so "i**i#lt as to b$ +ani*$stl% b$%on" t$ #ont$+lation o* t$ a!ti$s' t$obligo! +a% also b$ !$l$as$" t$!$*!o+' in ol$ o! in a!t. ,n-

D,CTRINE ,- UN-,RESEEN E3ENT D,CTRINE ,- RELATI3E I=@,SSI.ILITY(re$us sic stanti$us) It refers to o$li%ation Wto doW (!ersonal o$li%ation) @arties are !resued to ha*e the ris: It does not a!!l' to aleator' contracts (insurance contract) EBcludes hi%hl' s!eculati*e $usiness (stoc: eBchan%e) =onator' o$li%ations are also eBcluded (%o*erned $' 495F) Re

4& e*ent or chan%e in the circustances could ha*e $een foreseen of the tie of the eBecution contract8& it a:es the !erforance of the contract eBtreel' difficult $ut not i!ossi$le9& the e*ent ust not $e due to the act of an' of the !arties

7& the contract is for a future !restation& If the contract is of iediate fulfillent" the %ross ine


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106>. T$ obligation a&ing b$$n $=tingis$" b% t$ loss o* t$ ting' t$ #!$"ito! sall a&$ all t$ !igts o* a#tioni# t$ "$bto! +a% a&$ against ti!" $!sons b% !$ason o* t$ loss. ,11


35/54


• As to their effects

• co!ensation a' $e total (#hen the t#o o$li%ations are of the sae aount); or

• !artial (#hen the aounts are not e (4) #hen there is a !eriod #hich has not 'et arri*ed" includin%

the cases #hen one !art' is in a state of sus!ension of !a'ents; (8) #hen there is a sus!ensi*e condition that has not'et ha!!ened; (9) #hen the o$li%ation cannot $e sued u!on" as in natural o$li%ation&

A de$t is li


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hen the de$t consist of thin%s" it is necessar' that the thin%s are consua$le #hich ust $e understood as fun%i$le and therefore susce!ti$le of su$stitution& =ore than that the' ust $e of the sae :ind& If the


37/54


hen co!ensation has alread' ta:en !lace $efore the assi%nent" inasuch as it ta:es !lace i!so jure" there hasalread' $een an eBtin%uishent of one of the other of the o$li%ations& A su$se a!$ !$s$nt' #o+$nsation ta@$s $**$#t b% o$!ation o* la'

an" $=tingis$s bot "$bts to t$ #on#!!$nt a+ont' $&$n tog t$ #!$"ito!s an" "$bto!s a!$ not aa!$ o* t$

#o+$nsation.



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• Le%al co!ensation ta:es !lace fro the oent that the re4& chan%in% the o$ject or !rinci!al conditions

8& $' su$stitutin% the !erson of the de$tor

9& su$ro%atin% a third !erson in the ri%hts of the creditor

No*ation is a juridical act of dual function& At the tie it eBtin%uishes an o$li%ation it creates a ne# one in lieu of the old

• Classification of No*ation

• as to nature

4& Su$jecti*e or !ersonal – either !assi*e or acti*e& @assi*e if there is su$stitution of the de$tor& Acti*e if athird !erson is su$ro%ated in the ri%hts of the creditor&

8& ,$jecti*e or real – su$stitution of the o$ject #ith another or chan%in% the !rinci!al conditions

9& =iBed – Co$ination of su$jecti*e and o$jecti*e

• as to for

• EB!ress – !arties declare that the old o$li%ation is su$stituted $' the ne#

• I!lied – an inco!ati$ilit' eBists $et#een the old and the ne# o$li%ation that cannot stand to%ether

• as to effect

4& @artial – #hen there is onl' a odification or chan%e in soe !rinci!al conditions of the o$li%ation

8& Total – #hen the old o$li%ation is co!letel' eBtin%uished

• Re

4& A !re*ious &ali" o$li%ation

8& A%reeent of all a!ti$s 9& EBtin%uishent of the old contract – a' $e eB!ress of i!lied

7& Vali"it% of the ne# one

TITLE II.CONTRACTS



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CHAPTER 1GENERAL PROVISIONS

GENERAL PROVISIONS

A!t. 1?5. A #ont!a#t is a +$$ting o* t$ +in"s b$t$$n to $!sons $!$b% on$ bin"s i+s$l*' it !$s$#t to t$ot$! to gi&$ so+$ting o! to !$n"$! so+$ s$!&i#$. K relate to Art& 445P of CC

C,NTRACT 2 a juridical con*ention anifested in le%al for" $' *irtue of #hich one or ore !ersons $ind thesel*es in fa*or ofanother or others" or reci!rocall'" to the fulfillent of a !restation to %i*e" to do or not to do&K ,ther Ters>

@erfect !roise – distin%uished fro a contract" in that the latter esta$lishes and deterines the o$li%ations arisin% therefro;#hile the forer tends onl' to assure and !a*e the #a' for the cele$ration of a contract in the future&

I!erfect @roise – ere unacce!ted offer

@act – a s!ecial !art of the contract" soeties incidental and se!ara$le for the !rinci!al a%reeent

Sti!ulation – siilar to a !act; #hen the contract is an instruent" it refers to the essential and dis!ositi*e !art" as distin%uishedfro the eB!osition of the facts and antecedents u!on #hich it is $ased&

K Nu$er of @arties>The Code states 0t#o !ersons1; #hat is eant actuall' is 0t#o !arties1& -or a contract to eBist" there ust $e t#o !arties& A !art'can $e one or ore !ersons&

K Gus$and O ife> Gus$ands and #i*es cannot sell to each other as a !rotection of the conju%al !artnershi!& The' can ho#e*erenter into a contract of a%enc'&

K Auto2contracts>It eans one !erson contracts hiself& As a %eneral rule" it is acce!ted in our la#& The eBistence of a contract does not de!end onthe nu$er of !ersons $ut on the nu$er of !arties& There is no %eneral !rohi$ition a%ainst auto2contracts; hence" it should $eheld *alid&

K Contracts of Adhesion>Contracts !re!ared $' another" containin% !ro*isions that he desires" and as:s the other !art' to a%ree to the if he #ants toenter into a contract&

2 EBa!le> trans!ortation tic:ets& It is *alid contract accordin% to Tolentino $ecause the other !art' can reject itentirel'&

K Characteristics of Contracts>9 eleents>4& Essential eleents – #ithout #hich there is no contract; the' are>

a) consent$) su$ject atter; andc) cause

8& Natural eleents – eBist as !art of the contract e*en if the !arties do not !ro*ide for the" $ecause the la#" as su!!letor' tothe contract" creates the9& Accidental eleents – those #hich are a%reed $' the !arties and #hich cannot eBist #ithout sti!ulated

$ Stages o% a Contract:9 sta%es>

4& @re!aration" /eneration or @olicitacion – !eriod of ne%otiation and $ar%ainin%" endin% at the oent of a%reeent of the!arties8& @erfection or .irth of the contract – the oent #hen the !arties coe to a%ree on the ters of the contract9& Consuation or Death – the fulfillent or !erforance of the ters a%reed u!on in an' contract



40/54


1?6. T$ #ont!a#ting a!ti$s +a% $stablis s# stilations' #las$s' t$!+s #on"itions as t$% +a% "$$+#on&$ni$nt' !o&i"$" t$% a!$ not #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$!' o! bli# oli#%.

K This article e$odies the Principle of Autonomy of 6ontractsK -reedo to contract>

An' !erson has the li$ert' to enter into a contract so lon% as the' are not contrar' to la#" orals" %ood custos" !u$lic order or!u$lic !olic'& The le%islature" under the constitution" is !rohi$ited fro enactin% la#s to !rescri$e the ters of a le%al contract&K 3alidit' of Sti!ulations>An' and all sti!ulations not contrar' to la#" orals" %ood custos" !u$lic order or !u$lic !olic' is *alid

K Contrar' to la#>-reedo of contract is restricted $' la# for the %ood of the !u$lic& It is fundaental !ostulate that ho#e*er $road the freedo ofthe contractin% !arties a' $e" it does not %o so far as to countenance disres!ect for or failure to o$ser*e a le%al!rescri!tion& The Statute ta:es !recedence&

2 EBa!les>A !roissor' note #hich re!resents a %a$lin% de$t is unenforcea$le in the hands of the assi%nee&Sti!ulations to !a' usurious interests are *oid&A contract $et#een to !u$lic ser*ice co!anies to di*ide the territor' is *oid $ecause it i!airs the control of the @u$licSer*ice Coission&A%reeent to declare *alid a la# or ordinance is *oid&

K Contrar' to =orals>=orals ean those %enerall' acce!ted !rinci!les of oralit' #hich ha*e recei*ed soe :ind of social and !ractical confiration&

2 EBa!les>a !roise to arr' or nor to arr'" to secure le%al se!aration" or to ado!t a childa !roise to chan%e citienshi!" !rofession" reli%ion or doicilea !roise not to hold !u$lic office or #hich liits the !erforance of official dutiesa !roise to enter a !articular !olitical !art' or se!arate fro itcontracts #hich liit in an eBcessi*e anner the !ersonal or econoic freedo of a !ersonto a:e an act de!endent on one' or soe !ecuniar' *alue" #hen it is of such a nature that it should not de!endthereon; !a'ent to :ill another&

K Contrar' to @u$lic ,rder>@u$lic order eans the !u$lic #eal or !u$lic !olic'& It re!resents the !u$lic" social" and le%al interest in !ri*ate la# that #hich is!eranent and essential in institutions" #hich" e*en if fa*orin% soe indi*idual to #ho the ri%ht !ertains" cannot $e left to hiso#n #ill& A contract is said to $e a%ainst !u$lic order if the court finds that the contract as to the consideration or the thin% to $edone" contra*enes soe esta$lished interest of societ'" or is inconsistent #ith sound !olic' and %ood orals" or tends clearl' tounderine the securit' of indi*idual ri%hts&

2 EBa!les>Coon carrier cannot sti!ulate for eBe!tion for lia$ilit' unless such eBe!tion is justifia$le and reasona$le and thecontract is freel' and fairl' ade&@a'ent to interediaries in securin% i!ort licenses or

do ut des (I %i*e that 'ou a' %i*e) – An a%reeent in #hich A #ill %i*e one thin% to ." so that . #ill %i*e another thin% to A&do ut facias (I %i*e that 'ou a' do) – An a%reeent under #hich A #ill %i*e soethin% to ." so that . a' do soethin% for A&facio ut facias (I do that 'ou a' do) – An a%reeent under #hich A does soethin% for ." so that . a' render soe otherser*ice for A&facio ut des (I do that 'ou a' %i*e) – An a%reeent under #hich A does soethin% for ." so that . a' %i*e soethin% to A&

K Analo%ous contracts>



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Innoinate contracts" in the a$sence of sti!ulations and s!ecific !ro*isions of la# on the atter" are to $e %o*erned $' rulesa!!lica$le to the ost analo%ous contracts&

A!t. 1?The $indin% effect of contract on $oth !arties is $ased on the !rinci!les>

2 that o$li%ations arisin% fro contracts ha*e the force of la# $et#een the contractin% !arties2 that there ust $e utualit' $et#een the !arties $ased on their essential eJust as no$od' can $e forced to enter into a contract" in the sae anner once a contract is entered into" no !art' can renounceit unilaterall' or #ithout the consent of the other&No$od' is allo#ed to enter into a contract" and #hile the contract is in effect" lea*es" denounces or disa*o#s the contract to the!rejudice of the other&

K hen Sti!ulated>Go#e*er" #hen the contract so sti!ulates that one a' terinate the contract u!on a reasona$le !eriod is *alid&

Judicial action for the rescission of the contract is no lon%er necessar' #hen the contract so sti!ulates that it a' $e re*o:ed andcancelled for the *iolation of an' of its ters and conditions& This ri%ht of rescission a' $e #ai*ed&

A!t. 1?>. T$ "$t$!+ination o* t$ $!*o!+an#$ +a% b$ l$*t to a ti!" $!son' os$ "$#ision sall not b$ bin"ingntil it as b$$n +a"$ @non to bot #ont!a#ting a!ti$s.

K EBce!tion to Art& 49?H (=utualit' of Contract)• A third !erson a' $e called u!on to decide #hether or not !erforance has $een done for the fulfillent of the

contract& Such decision $ecoes $indin% #hen the contractin% !arties ha*e $een infored of it&

A!t. 11?. T$ "$t$!+ination sall b$ obligato!% i* it is $&i"$ntl% in$2itabl$. In s# #as$' t$ #o!ts sall "$#i"$at is $2itabl$ n"$! t$ #i!#+stan#$s.

K EBce!tion to Art& 49?H (=utualit' of Contract)Go#e*er" #hen the decision cannot $e arri*ed due to ine

/enerall'" onl' the !arties that a%reed on the contracts are $ound $' the contract& Transission is !ossi$le to the heirs orassi%nees if so sti!ulated and in certain contracts&

K Third !ersons not $ound>It is a %eneral rule that third !arties are not $ound $' the acts of another&A contract cannot $e $indin% u!on and cannot $e enforced a%ainst one #ho is not a !art' to it" e*en if he has :no#led%e of suchcontract and has acted #ith :no#led%e thereof&



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K Enforceent of contract>,nl' a !art' to the contract can aintain an action to enforce the o$li%ations arisin% under said contract&

K Contracts $ind heirs>

Ri%hts and o$li%ations under a contract are transissi$le to heirs& Geirs are not third !ersons $ecause there is !ri*it' of interest$et#een the and their !redecessor&

A!t 110. In #ont!a#ts #!$ating !$al !igts' ti!" $!sons o #o+$ into oss$ssion o* t$ obj$#t o* t$ #ont!a#t a!$bon" t$!$b%' sbj$#t to t$ !o&isions o* t$ Do!tgag$ La an" t$ Lan" R$gist!ation las.

K Real Ri%hts in @ro!ert'A real ri%ht directl' affects !ro!ert' su$ject to it; hence" #hoe*er is in !ossession of such !ro!ert' ust res!ect that real ri%ht&

A!t 11. C!$"ito!s a!$ !ot$#t$" in #as$s o* #ont!a#ts int$n"$" to "$*!a" t$+.

K Contracts in -raud of Creditorshen a de$tor enters into a contract in fraud of his creditors" such as #hen he alienated !ro!ert' %ratuitousl' #ithout lea*in%enou%h for his creditors (article 49HF)" the creditor a' as: for its rescission&K see Arts& 44FF and 49H?

A!t 114. An% ti!" $!son o in"#$s anot$! to &iolat$ is #ont!a#t sall b$ liabl$ *o! "a+ag$s to t$ ot$!#ont!a#ting a!t%.

K Interference of Third @ersons>If a third !erson induced a !art' to *iolate his side of the contract" the other !art' a' sue the third !erson for daa%es&

• Re

4& the eBistence of a *alid contract8& :no#led%e $' the third !erson of the eBistence of a contract9& interference $' the third !erson in the contractual relation #ithout le%al justification

Juris!rudential doctrine>

K=anila Railroad Co& *s& Co!a[ia TransatlanticaThe !rocess ust $e acco!lished $' distin%uishin% clearl' $et#een the ri%ht of action arisin% fro the i!ro!er interference#ith the contract $' a stran%er thereto" considered as an inde!endent act %enerati*e of ci*il lia$ilit'" and the ri%ht of action eBcontractu a%ainst a !art' to the contract resultin% for the $reach thereof&

A!t 115. Cont!a#ts a!$ $!*$#t$" b% +$!$ #ons$nt' an" *!o+ tat +o+$nt t$ a!ti$s a!$ bon" not onl% to t$*l*ill+$nt o* at as b$$n $=!$ssl% stilat$" bt also to all t$ #ons$2$n#$s i#' a##o!"ing to t$i! nat!$'

+a% b$ in @$$ing it goo" *ait' sag$ an" la.

K e$odies the Principle of 6onsensuality >

A!t 116. R$al #ont!a#ts' s# as "$osit' l$"g$ o! #o++o"at+' a!$ not $!*$#t$" ntil t$ "$li&$!% o* t$ obj$#to* t$ obligation.

K EBce!tion to Art& 4945 or @rinci!le of Consensualit'

K @erfection of real contracts>

Real contract is not !erfect $' ere consent& The deli*er' of the thin% is re


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b$al* it as b$$n $=$#t$"' b$*o!$ it is !$&o@$" b% t$ ot$! #ont!a#ting a!t%.

K Ratification necessar'>A contract entered into in $ehalf of another #ho has not authoried it is not *alid or $indin% on hi unless he ratifies thetransaction& hen ratified" he is esto!!ed to Consent a' either $e eB!ress or i!lied& There is also a !resu!ti*e consent" #hich is the $asis of Consent is anifested $' the concurrence of offer and acce!tance #ith res!ect to the o$ject and the cause of thecontract& ,nce there is such a anifestation" the !eriod or sta%e of ne%otiation is terinated& If consensual" the contract is!erfected&

KA unilateral !ro!osition ust $e definite (distin%uished fro ere counications)" co!lete (statin% the essential and non2essential conditions desired $' the offeror)" and intentional (serious) #hen acce!ted $' another !art' for such !ro!osition to fora *alid contract& Go#e*er" a unilateral !roise is not reco%nied $' our Code as ha*in% o$li%ator' force& To $e so" there ust $ean acce!tance that shall con*ert it into a contract&

K=ental reser*ationZ#hen a !art' a:es a declaration $ut secretl' does not desire the effects of such declaration& The ental

reser*ation of the offeror" un:no#n to the other" cannot affect the *alidit' of the offer&

A!t. 10?. An a##$tan#$ +a% b$ $=!$ss o! i+li$". ,n-I!lied acce!tance a' arise fro acts or facts #hich re*eal the intent to acce!t" such as the consu!tion of the thin%s sent tothe offeree" or the fact of iediatel' carr'in% out of the contract offered&



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A!t. 101. T$ $!son +a@ing t$ o**$! +a% *i= t$ ti+$' la#$' an" +ann$! o* a##$tan#$' all o* i# +st b$#o+li$" it. ,n-The offer #ith a !eriod la!ses u!on the terination of the !eriod& Thus the acce!tance" to $ecoe effecti*e" ust $e :no#n tothe offeror $efore the !eriod la!ses&

A!t. 100. An o**$! +a"$ t!og an ag$nt is a##$t$" *!o+ t$ ti+$ a##$tan#$ is #o++ni#at$" to i+. ,n-An interediar' #ho has no !o#er to $ind either the offeror or the offeree is not an a%ent; his situation is siilar to that of aletter carrier&

A!t. 10. An o**$! b$#o+$s in$**$#ti&$ on t$ "$at' #i&il int$!"i#tion' insanit%' o! insol&$n#% o* $it$! a!t%b$*o!$ a##$tan#$ is #on&$%$". ,n-

A!t. 104. 7$n t$ o**$!$! as allo$" t$ o**$!$$ a #$!tain $!io" to a##$t' t$ o**$! +a% b$ it"!an at an%

ti+$ b$*o!$ a##$tan#$ b% #o++ni#ating s# it"!aal' $=#$t $n t$ otion is *on"$" on a#onsi"$!ation' as so+$ting ai" o! !o+is$". ,n-It is not the oent of sendin% $ut the tie of recei!t of the re*ocation or acce!tance #hich is controllin%&The dela' in transission is at the ris: of the sender" $ecause he is the one #ho selects the tie and the anner of a:in% thetransission&Contract of ,!tion> This is a !re!arator' contract in #hich one !art' %rants to the other" for a fiBed !eriod and under s!ecifiedconditions" the !o#er to decide #hether or not to enter into a !rinci!al contract& It ust $e su!!orted $' an inde!endent

consideration" and the %rant ust $e eBclusi*e&

A!t. 105. 9nl$ss it a$a!s ot$!is$' bsin$ss a"&$!tis$+$nts o* tings *o! sal$ a!$ not "$*init$ o**$!s' bt +$!$in&itations to +a@$ an o**$!. ,n-

A!t. 106. A"&$!tis$+$nts *o! bi""$!s a!$ si+l% in&itations to +a@$ !oosals' an" t$ a"&$!tis$! is not bon" toa##$t t$ ig$st o! lo$st bi""$!' nl$ss t$ #ont!a!% a$a!s. ,n-

A!t. 10). T$ *olloing #annot gi&$ #ons$nt to a #ont!a#t(,1- 9n$+an#iat$" +ino!s/,0- Insan$ o! "$+$nt$" $!sons' an" "$a*3+t$s o "o not @no o to !it$. ,106a-

K see Art& 9H

K Uneanci!ated inors cannot enter into *alid contracts" and contracts entered into $' the are not $indin% u!on the" unlessu!on reachin% ajorit' the' ratif' the sae&K Insane !ersons> It is not necessar' that there $e a !re*ious of declaration of ental inca!acit' in order that a contract enteredinto $' a entall' defecti*e !erson a' $e annulled; it is enou%h that the insanit' eBisted at the tie the contract #as ade&K .ein% deaf2ute is not $' itself alone a dis !ersons sufferin% fro the !enalt' of ci*il interdiction"

hos!italied le!ers" !rodi%als" deaf and du$ #ho are una$le to #rite and read" those of unsound ind (e*en thou%h the' ha*elucid inter*als)" and !ersons not $ein% of unsound ind $ut $' reason of a%e" disease" #ea: ind" and other siilar causescannot" #ithout outside aid" ta:e care of thesel*es and ana%e their !ro!ert'Z$ecoin% an eas' !re' for deceit andeB!loitation&

K The inca!acit' to %i*e consent (Arts& 498F O 498H) to contracts renders the contract erel' *oida$le" #hile s!ecialdis


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A!t. 1?. A #ont!a#t $!$ #ons$nt is gi&$n t!og +ista@$' &iol$n#$' inti+i"ation' n"$ in*l$n#$' o! *!a" is&oi"abl$. ,1065a-

A!t. 11. In o!"$! tat +ista@$ +a% in&ali"at$ #ons$nt' it sol" !$*$! to t$ sbstan#$ o* t$ ting i# is t$

obj$#t o* t$ #ont!a#t' o! to tos$ #on"itions i# a&$ !in#iall% +o&$" on$ o! bot a!ti$s to $nt$! into t$#ont!a#t.Dista@$ as to t$ i"$ntit% o! 2ali*i#ations o* on$ o* t$ a!ti$s ill &itiat$ #ons$nt onl% $n s# i"$ntit% o!

2ali*i#ations a&$ b$$n t$ !in#ial #as$ o* t$ #ont!a#t.A si+l$ +ista@$ o* a##ont sall gi&$ !is$ to its #o!!$#tion. ,1066a-

K I%norance and error are 8 different states of ind& I%norance eans the co!lete a$sence of an' notion a$out a !articularatter" #hile error or ista:e eans a #ron% or false notion a$out such atter&K Annulent of contract on the %round of error is liited to cases in #hich it a' reasona$l' $e said that #ithout such error theconsent #ould not ha*e $een %i*en&K An error as to the !erson #ill in*alidate consent #hen the consideration of the !erson has $een the !rinci!al cause of the sae&K =ista:e as to


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8) that the threatened act $e unjust or unla#ful;9) that the threat $e real and serious" there $ein% an e*ident dis!ro!ortion $et#een the e*il and the resistance #hich all en canoffer; and7) that it !roduces a reasona$le and #ell2%rounded fear fro the fact that the !erson fro #ho it coes has the necessar'eans or a$ilit' to inflict the threatened injur'&

A!t. 16. Viol$n#$ o! inti+i"ation sall annl t$ obligation' altog it +a% a&$ b$$n $+lo%$" b% a ti!" $!sono "i" not ta@$ a!t in t$ #ont!a#t. ,1064) dolo causante (Art& 499H) Z #hich deterines or is the essential cause of the consent; fraud in the !erfection of contract8) dolo incidenteZ (Arts& 4977 O 44F?) #hich does not ha*e such a decisi*e influence and $' itself cannot cause the %i*in% ofconsent" $ut refers onl' to soe !articular or accident of the o$li%ation&

KDolo causante can $e a %round for annulent; dolo incident cannot $e a %round for annulent&KThe result of fraud is error on the !art of the *icti&

KRe4) it ust ha*e $een e!lo'ed $' one contractin% !art' u!on the other;8) it ust ha*e induced the other !art' to enter into the contract;9) it ust ha*e $een serious;7) and it ust ha*e resulted in daa%e or injur' to the !art' see:in% annulent&

A!t. 1>. ail!$ to "is#los$ *a#ts' $n t$!$ is a "t% to !$&$al t$+' as $n t$ a!ti$s a!$ bon" b%#on*i"$ntial !$lations' #onstitt$s *!a". ,n-KSilence or concealent" $' itself" does not constitute fraud" unless there is a s!ecial dut' to disclose certain facts" or unless

accordin% to %ood faith and the usa%es of coerce" the counication should $e ade&KThus" the innocent non2disclosure of a fact does not affect the foration of the contract or o!erate to dischar%e the !arties frotheir a%reeent&

A!t. 14?. T$ sal $=agg$!ations in t!a"$' $n t$ ot$! a!t% a" an oo!tnit% to @no t$ *a#ts' a!$ not int$+s$l&$s *!a"l$nt. ,n-KTolerated fraud includes iniiin% the defects of the thin%" eBa%%eration of its %ood


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not ha*e& This is la#ful isre!resentation :no#n as dolus $onus& This is also called la#ful astuteness&KThese isre!resentations are usuall' encountered in fairs" ar:ets" and alost all coercial transactions& The' do not %i*erise to an action for daa%es" either $ecause of their insi%nificance or $ecause the stu!idit' of the *icti is the real cause of hisloss&KThe thin:in% is that #here the eans of :no#led%e are at hand and e If one of the !arties is in collusion #ith the third !erson" or :no#s of the fraud $' the third !erson" and he is$enefited there$'" he a' $e considered as an acco!lice to the fraud" and the contract $ecoes *oida$le&

A!t. 14. Dis!$!$s$ntation +a"$ in goo" *ait is not *!a"l$nt bt +a% #onstitt$ $!!o!. ,n-

A!t. 144. In o!"$! tat *!a" +a% +a@$ a #ont!a#t &oi"abl$' it sol" b$ s$!ios an" sol" not a&$ b$$n

$+lo%$" b% bot #ont!a#ting a!ti$s.In#i"$ntal *!a" onl% oblig$s t$ $!son $+lo%ing it to a% "a+ag$s. ,10)?-K-raud is serious #hen it is sufficient to i!ress" or to lead an ordinaril' !rudent !erson into error; that #hich cannot decei*e a!rudent !erson cannot $e a %round for nullit'&K.esides $ein% serious" the fraud ust $e the deterinin% cause of the contract& It ust $e dolo causante&Khen $oth !arties use fraud reci!rocall'" neither one has an action a%ainst the other; the fraud of one co!ensates that of theother& Neither !art' can as: for the annulent of the contract&

A!t. 145. Si+lation o* a #ont!a#t +a% b$ absolt$ o! !$lati&$. T$ *o!+$! ta@$s la#$ $n t$ a!ti$s "o notint$n" to b$ bon" at all/ t$ latt$!' $n t$ a!ti$s #on#$al t$i! t!$ ag!$$+$nt. ,n-K Siulation is the declaration of a fictitious #ill" deli$eratel' ade $' a%reeent of the !arties" in order to !roduce" for the!ur!oses of dece!tion" the a!!earance of a juridical act #hich does not eBist or is different fro that #hich #as reall' eBecuted&

A!t. 146. An absolt$l% si+lat$" o! *i#titios #ont!a#t is &oi". A !$lati&$ si+lation' $n it "o$s not !$j"i#$ ati!" $!son an" is not int$n"$" *o! an% !os$ #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#%bin"s t$ a!ti$s to t$i! !$al ag!$$+$nt. ,n-KIn a$solute siulation" there is color of a contract" #ithout an' su$stance thereof" the !arties not ha*in% an' intention to $e$ound&KIn relati*e siulation" the !arties ha*e an a%reeent #hich the' conceal under the %uise of another contract& EBa!le> a deedof sale eBecuted to conceal donation&

SECTION 0. 3 Obj$#t o* Cont!a#ts

• The o$ject of a contract is its su$ject atter& It is the thin%" ri%ht" or ser*ice #hich is the su$ject2atter of the o$li%ation

arisin% fro the contract&

• Re FCILI:

4) C #ithin the #oerce of an;8) I not intransissi$le9) L ust $e licit" or not contrar' to la#" orals" %ood custos" !u$lic !olic'" or !u$lic order;9) Inot an i!ossi$le thin% or ser*ice; and

7) D it ust $e "eterinate as to its :ind&

A!t. 14). All tings i# a!$ not otsi"$ t$ #o++$!#$ o* +$n' in#l"ing *t!$ tings' +a% b$ t$ obj$#t o* a#ont!a#t. All !igts i# a!$ not int!ans+issibl$ +a% also b$ t$ obj$#t o* #ont!a#ts.

No #ont!a#t +a% b$ $nt$!$" into on *t!$ in$!itan#$ $=#$t in #as$s $=!$ssl% ato!i$" b% la.All s$!&i#$s i# a!$ not #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#% +a% li@$is$ b$ t$obj$#t o* a #ont!a#t. ,10)1a-



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K Thin%s #hich are outside the coerce of an>• Ser*ices #hich i!l' an a$solute su$ission $' those #ho render the" sacrificin% their li$ert'" their inde!endence or

$eliefs" or disre%ardin% in an' anner the e


49/54


K hen the oti*e of a !erson in %i*in% his consent is to a*oid a threatened injur'" as in the case of intiidation" thecontract is *oida$le; andKhen the oti*e of a !erson induced hi to act on the $asis of fraud or isre!resentation $' the other !art'" thecontract is *oida$le&

A!t. 150. Cont!a#ts itot #as$' o! it nla*l #as$' !o"#$ no $**$#t at$&$!. T$ #as$ is nla*l i* it is#ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#%. ,10)5a-A!t. 15. T$ stat$+$nt o* a *als$ #as$ in #ont!a#ts sall !$n"$! t$+ &oi"' i* it sol" not b$ !o&$" tat t$%

$!$ *on"$" on anot$! #as$ i# is t!$ an" la*l. ,10)6-here the cause stated in the contract is false" the latter a' ne*ertheless $e sustained $' !roof of another licit cause&

A!t. 154. Altog t$ #as$ is not stat$" in t$ #ont!a#t' it is !$s+$" tat it $=ists an" is la*l' nl$ss t$"$bto! !o&$s t$ #ont!a!%. ,10))-Unless the contrar' is !ro*ed" a contract is !resued to ha*e a %ood and sufficient consideration& This !resu!tion a!!lies #henno cause is stated in the contract&

A!t. 155. E=#$t in #as$s s$#i*i$" b% la' l$sion o! ina"$2a#% o* #as$ sall not in&ali"at$ a #ont!a#t' nl$ss t$!$as b$$n *!a"' +ista@$ o! n"$ in*l$n#$. ,n- K In case of lesion or inade (Art& 49P?)2 le%al inca!acit' of one !art';or2 *itiation of consent

Causes> (Art& 47?9)2 contract is entered into ineBcess or #ithout authorit'2 non2co!liance #ith Stature

of -raudsLe%al inca!acit' of $oth

Causes>(*oid) illicit" !rohi$ited ordeclared $' la# as *oid(ineBistent) lac:s one or all of

the re49H?> Nature of rescissi$lecontract49H4249H8> t'!es ofrescissi$le contract49H9> su$sidiar' character49H7> eBtent of rescission

49H5> utual restitution; norescission #hen the thin% isle%all' !ossessed $' a third!erson49H6> no rescission in case of49H4 (4) and (8) #hen thecontract is a!!ro*ed $' court

,utline of !ro*isions>49P?> *oida$le contracts a'$e annulla$le e*en if there isno daa%e to !arties;t'!es of *oida$le contracts;$indin% character unlessannulled;

susce!ti$ilit' to ratification49P4> !rescri!ti*e !eriod49P8249PF> ratification49PH247?8> =utual restitution

49PH> utual restitution49PP> eBce!tion to utualrestitution – defect is the

,utline of !ro*isions>47?9> t'!es of unenforcea$lecontracts47?5> ratification of contractsinfrin%in% statute of frauds47?F> eB!ress or i!liedratification $' the !arent or

%uardian of one (#hen $othare inca!acitated) – saeeffect as if onl' one isinca!acitated;Ratification $' !arent or%uardian of $oth – contract is*alidated fro ince!tion

47?P> t'!es of *oid orineBistent contracts474?> i!rescri!ti$ilit'4744> contracts that are $othil

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