Professional Documents
Culture Documents
FINAL - Crombonds Oblicon Finals Reviewer
FINAL - Crombonds Oblicon Finals Reviewer
OBLIGATIONS
Chapter
2:
Nature
and
Effect
of
Obligations
17
Chapter
3:
Different
Kinds
of
Obligations
22
SECTION
1.
-‐
Pure
and
Conditional
Obligations
22
SECTION
2.
-‐
Obligations
with
a
Period
28
AND
SECTION
3.
-‐
Alternative
Obligations
31
SECTION
4.
-‐
Joint
and
Solidary
Obligations
33
SECTION
5.
-‐
Divisible
and
Indivisible
Obligations
37
SECTION
6.
-‐
Obligations
with
a
Penal
Clause
38
CONTRACTS
Chapter
4:
Extinguishment
of
Obligations
40
GENERAL
PROVISIONS
40
SECTION
1.
-‐
Payment
or
Performance
40
Title
II
–
CONTRACTS
59
Chapter
1:
General
Provisions
59
CROMBONDS
2011-‐2012
Chapter
4:
Reformation
of
Instruments
78
Chapter
5:
Interpretation
of
Contracts
80
Chapter
6:
Rescissible
Contracts
83
Chapter
7:
Voidable
Contracts
86
Chapter
8:
Unenforceable
Contracts
89
Chapter
9:
Void
and
Inexistent
Contracts
92
Title
III
–
NATURAL
OBLIGATIONS
97
Title
IV
–
ESTOPPEL
98
Title
V
–
TRUSTS
Chapter
1:
General
Provisions
100
101
Chapter
2:
Express
Trusts
Chapter
3:
Implied
Trusts
102
102
Title
XVII
–
EXTRA-‐CONTRACTUAL
OBLIGATIONS
104
Chapter
1:
Quasi-‐Contracts
104
Section
1
–
Negotiorum
Gestio
105
Section
2
–
Solutio
Indebiti
107
Section
3
–
Other
Quasi-‐Contracts
108
CODAL
MEMORY
AID
111
1
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Prescription
and
Laches
compared:
TITLE.
IV.
–
PRESCRIPTION
o
PRESCRIPTION
LACHES
Concerned
with
fact
of
delay
Concerned
with
effect
of
delay
A
matter
of
time
A
question
of
inequity
Chapter
1:
General
Provisions
Statutory
Not
provided
by
statutes
Based
on
Law
Based
on
equity
Prescribes
a
fixed
time
No
fixed
time
Art.
1106
–
Prescription
Defined
By
prescription,
one
acquires
ownership
and
other
real
rights
through
the
lapse
of
ZE
Lotho,
Inc.
v.
Ice
and
Cold
Storage
–
where
the
complainant
time
in
the
manner
and
under
the
conditions
laid
down
by
law.
only
filed
a
suit
after
9
years
despite
having
knowledge
of
the
defendant’s
violative
practice,
and
where
the
material
records
In
the
same
way,
rights
and
actions
are
lost
by
prescription.
(1930a)
were
already
lost
making
it
difficult
for
the
defendant
to
controvert
claims
for
damages,
the
case
was
dismissed
on
the
•Object
of
Prescription
–
to
suppress
fraudulent
and
stale
claims
from
ground
of
laches.
Laches
can
bar
the
filing
or
the
prosecution
of
springing
at
great
distances
of
time
and
surprising
the
parties
or
their
the
suit.
representatives
when
the
facts
have
become
obscure,
or
evidences
or
Catholic
Bishop
of
Balanga
v.
CA
–
although
prescription
does
not
witnesses
might
already
be
lost.
Sinaoan
v.
Sorongan
apply
to
registered
property,
a
registered
landowner
may
lose
his
• 2
Kinds
of
Prescription
right
to
recover
the
possession
of
his
registered
property
by
Prescription does not
1. Acquisitive
–
acquisition
of
a
right
or
property
by
the
lapse
of
reason
of
laches.
apply to registered
property but a registered time;
also
known
as
adverse
possession
and
usucapcion
owner may lose the right 2. Extinctive
–
rights
and
actions
are
lost
by
the
lapse
of
time;
also
Art.
1107
–
Acquisition
by
Capable
Persons
and
Minors
to recover is possession known
as
limitation
of
action
Morales
v.
CFI
of
Misamis
Occidental
Persons
who
are
capable
of
acquiring
property
or
rights
by
other
legal
modes
may
due to LACHES. • Laches
–
doctrine
of
stale
demands;
defendant
becomes
the
offended
acquire
the
same
by
means
of
prescription.
party
due
to
the
complainant’s
inaction
for
an
unreasonable
and
unexplained
length
of
time;
founded
on
some
change
during
the
property
Minors
and
other
incapacitated
persons
may
acquire
property
or
rights
by
or
the
relations
between
the
parties
during
the
lapse
of
time.
prescription,
either
personally
or
through
their
parents,
guardians
or
legal
o Requisites:
(C.D.L.I.)
subject of the complainant's remedy representatives.
(1931a)
1. Conduct
on
the
part
of
the
defendant
of
which
complaint
is
made
to
seek
remedy
• Who
may
acquire
property
or
rights
through
prescription:
2. Delay
in
asserting
the
complainant’s
rights,
having
had
1. Persons
of
majority
age
–
qualified
to
do
all
civil
acts
of
life
knowledge
or
notice
of
the
defendant’s
conduct,
and
having
2. Minors
and
other
incapacitated
persons
been
afforded
opportunity
to
file
a
suit
o Annullable
or
voidable
–
when
acquisition
is
made
without
3. Lack
of
knowledge
or
notice
on
the
part
of
the
defendant
that
the
assistance
of
parents
or
guardians
the
complainant
would
assert
right
on
which
he
bases
his
suit
o Ratified
–
when
such
minor
attains
majority
age
of
18
years
4. Injury
or
prejudice
to
the
defendant
in
the
event
relief
is
(emancipation)
accorded
to
the
complainant
o Completely
valid
–
when
acquisition
is
made
through
parents
or
guardians
2
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1108
–
Persons
Exempt
from
Prescription
corporation
whose
causes
of
action
are
subject
to
the
statute
of
Prescription,
both
acquisitive
and
extinctive,
runs
against:
limitation.
(1) Minors
and
other
incapacitated
persons
who
have
parents,
guardians
or
other
legal
representatives;
Art.
1109
–
Between
Husband
and
Wife,
Children
and
Guardian
(2) Absentees
who
have
other
administrators,
either
appointed
by
them
Prescription
does
not
run
between
husband
and
wife,
even
though
there
be
a
before
their
disappearance,
or
appointed
by
the
courts;
separation
of
property
agreed
upon
in
the
marriage
settlements
or
by
juridical
(3) Persons
living
abroad,
who
have
managers
or
administrators;
decree.
(4) Juridical
persons,
except
the
State
and
its
subdivisions
Neither
does
prescription
run
between
parents
and
children,
during
the
minority
or
Persons
who
are
disqualified
from
administering
their
property
have
a
right
to
claim
insanity
of
the
latter;
and
between
guardian
and
ward
during
the
continuance
of
damages
from
their
legal
representatives
whose
negligence
has
been
the
cause
of
the
guardianship.
(n)
prescription.
(1932a)
General
rule
–
Prescription
does
not
run:
General
rule
–
Prescription
does
not
run
against:
(M.A.A.J.)
• Between
husband
and
wife
o Pacio
v.
Billion
–
where
the
first
wife
claims
that
possession
of
the
1. Minors
and
other
incapacitated
persons
–
unless
they
have
parents,
property
for
29
years
is
equivalent
to
a
title,
it
was
held
that
guardians
or
other
legal
representatives.
prescription
by
adverse
possession
cannot
exist
between
husband
and
• Vda.
De
Alberto
v.
CA
–
an
illegitimate
child
who
still
has
a
living
wife.
c
parent,
his
mother
who
actually
filed
the
suit,
cannot
claim
exemption
• Between
parent
and
child
–
during
the
child’s
minority
or
insanity;
based
from
prescription.
on
natural
bond
of
filiation
2. Absentees
–
unless
they
have
administrators.
• Between
guardian
and
ward
–
during
the
continuance
of
the
guardianship;
• Administrator
may
be
appointed
by
the
absentees
before
their
based
on
fiduciary
relationship
disappearance
or
by
the
courts
(Art.
381
of
the
Civil
Code).
• Absentees
must
be
absent
for
at
least
2
years
and
must
prove
that
Exception
–
When
the
law
so
provides
that
prescription
shall
apply.
they
cannot
go
back
to
their
domicile.
Ex.
1.
Legal
separation
must
be
filed
within
5
years
from
the
occurrence
of
the
• If
they
can
go
back
but
intentionally
do
not
want
to
return,
cause
(Art.
57,
Family
Code)
prescription
will
lie
against
them.
2. Annulment
on
the
ground
of
impotency
must
be
filed
within
5
years
3. Persons
living
abroad
–
unless
they
have
managers
or
administrators.
from
the
marriage
ceremony
(Art.
47,
Family
Code)
• It
must
be
shown
that
they
cannot
return
to
their
domicile
within
the
3. Husband
may
impugn
the
legitimacy
of
the
child
within
1
year,
2
years
or
period
which
prescription
should
have
run.
3
years
from
his
knowledge
of
the
birth
of
the
child,
depending
on
his
4. The
State
and
its
subdivisions
–
unless
not
acting
in
their
sovereign
residence
and
the
place
of
birth
of
the
child
(Art.
170,
Family
Code)
capacity
or
juridical
persons.
includes the AFP acting as an instrumentality of the RP.
• Juridical
persons
are
endowed
by
law
of
the
attributes
of
a
natural
Art.
1110
–
Married
Woman
person
to
acquire
and
lose
properties
and
rights.
Prescription,
acquisitive
and
extinctive,
runs
in
favor
of
or
against
a
married
woman.
• Republic
v.
PNB
–
if
the
political
subdivision
(AFP)
is
acting
in
its
proprietary
character,
or
if
the
government
instrumentality
is
not
• Presupposes
a
situation
involving
a
married
woman
and
another
person
acting
in
a
sovereign
capacity,
prescription
will
lie
against
it.
not
her
husband.
Prescription
shall
run
for
or
against
a
married
woman.
• National
Development
Co.
v.
Tobia
–
upheld
the
applicability
of
prescription
against
petitioner,
acting
in
its
proprietary
character,
who
like
all
other
corporations
capitalized
by
the
government,
is
a
business
3
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1111
–
Co-‐Proprietor
or
Co-‐owner
• Excludes
property
of
the
State
and
its
subdivisions
not
patrimonial
in
Prescription
obtained
by
a
co-‐proprietor
or
a
co-‐owner
shall
benefit
the
others.
character,
things
within
commerce
of
men
but
prohibited
by
law:
(1933)
Ex.
1.
Movables
possessed
through
a
crime
can
never
be
acquired
by
prescription
by
the
offender
(Art.
1133)
o Co-‐ownership
–
exists
when
the
ownership
of
an
undivided
thing
or
right
2.
Lands
covered
by
Torrens
Title
belongs
to
different
persons.
3.
Properties
of
spouses,
parents
and
children,
wards
and
guardians
under
the
restrictions
imposed
by
law
(Art.
1109)
o There
could
be
valid
acquisition
by
all
owners
even
though
only
one
or
a
few
are
in
actual
possession.
• Dir.
of
Forest
Administration
v.
Fernandez
–
forest
lands
of
public
domain
cannot
be
acquired
by
prescription
and
its
possession
however
long
cannot
ripen
into
private
ownership.
Art.
1112
–
Renunciation
• Lovina
v.
Moreno
–
a
navigable
stream
or
any
of
its
bed
is
not
acquired
by
Persons
with
capacity
to
alienate
property
may
renounce
prescription
already
prescription.
obtained,
but
not
the
right
to
prescribe
in
the
future.
• Republic
v.
CA
–
[1]
area
adjacent
to
bay
which
was
covered
with
water
Prescription
is
deemed
to
have
been
tacitly
renounced
when
the
renunciation
due
to
rain
is
not
land
of
public
domain.
“Highest
ordinary
depth”
is
results
from
acts
which
imply
the
abandonment
of
the
right
acquired.
(1935)
defined
as
the
regular,
common,
natural
depth,
which
occurs
most
of
the
time
during
the
year.
[2]
Having
established
his
registerable
title
(Torrens
title
does
not
grant
acquisition),
applicant
may
avail
of
a
judicial
When
a
debt
is
already
barred
by
prescription,
it
cannot
be
enforced
by
•
the
creditor.
confirmation
of
imperfect
title
which
may
be
availed
by:
those
who,
by
themselves
or
through
their
predecessors-‐in-‐interest,
have
been
in
the
o Statutory
limitation
merely
bars
the
remedy
but
does
not
open,
continuous,
exclusive,
and
notorious
possession
and
occupation
of
discharge
the
debt.
agricultural
lands
of
the
public
domain,
under
bona
fide
claim
of
• Renunciation
–
a
waiver
of
one’s
right
to
the
prescriptive
period.
It
is
ownership,
for
at
least
30
years
immediately
preceding
the
filing
of
the
unilateral,
hence
does
not
require
the
approval
of
the
person
benefited
by
application
for
confirmation
of
title.
it.
1. Express
renunciation
–
made
by
a
person
capacitated
to
alienate
property.
Art.
1114
–
Right
to
Enforce
Prescription
2. Implied
renunciation
–
deduced
from
acts
which
imply
the
Creditors
and
all
other
persons
interested
in
making
the
prescription
effective
may
abandonment
of
right
acquired.
avail
themselves
thereof
notwithstanding
the
express
or
tacit
renunciation
by
the
• Development
Bank
of
the
Philippines
v.
Adil
–
where
the
debtor
issued
a
debtor
or
proprietor.
(1937)
The statutory
limitation bars new
promissory
note
recognizing
his
indebtedness,
promises
to
pay
and
the remedy agrees
to
the
foreclosure
of
a
mortgage
should
he
fail
to
do
so,
such
• Persons
interested
–
may
be
the
creditor,
guarantor,
sureties
or
other
but does NOT debtor
effectively
and
expressly
renounced
his
right
to
prescription
third
persons
discharge the debt. covering
t he
f irst
p romissory
n ote.
• May
ask
the
enforcement
of
prescription
even
though
it
has
been
waived
by
the
debtor
Art.
1113
–
Subjects
of
Prescription
All
things
which
are
within
the
commerce
of
men
are
susceptible
of
prescription,
unless
otherwise
provided.
Property
of
the
State
or
any
of
its
subdivisions
not
patrimonial
in
character
shall
not
be
the
object
or
prescription.
(1936a)
• Includes
all
things
within
the
commerce
(with
commercial
value)
of
man
4
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1115
–
Special
Laws
Chapter
2:
Prescription
of
Ownership
and
Other
Real
The
provisions
of
the
present
Title
are
understood
to
be
without
prejudice
to
what
Rights
in
this
Code
or
in
special
laws
is
established
with
respect
to
specific
cases
of
prescription.
(1938)
Art.
1117
–
Acquisitive
Prescription
• In
case
of
conflict
between
the
period
provided
in
this
Title
and
in
another
Acquisitive
prescription
of
dominion
and
other
real
rights
may
be
ordinary
and
portion
of
the
Civil
Code
or
special
laws:
the
more
specific
provision
will
extraordinary.
prevail.
Ordinary
acquisitive
prescription
requires
possession
of
things
in
good
faith
and
• If
different
statutes
are
providing
for
different
prescriptive
periods,
and
the
with
just
title
for
the
time
fixed
by
law.
(1940a)
cause
of
action
contemplated
by
them
are
apparently
conflicting,
they
do
not
exclude
each
other
from
being
availed
of
by
the
aggrieved
party.
Kinds
of
Acquisitive
Prescription:
A statute of limitation Ex.
Callanta
v.
Carnation
Philippines
Inc.
–
although
Labor
Code
extinguishes the remedy 1. Ordinary
–
requires
uninterrupted
possession
during
the
required
ONLY. Though the remedy provides
that
money
claims
prescribe
in
3
years,
the
aggrieved
to enforce a right may be party
in
illegal
dismissal
case
may
avail
of
the
4-‐year
prescriptive
statutory
period,
good
faith
(Art.
1128)
and
just
title
(Art.
1129)
barred, the right may be Ex.
Godinez
v.
CA
–
property
was
acquired
after
adverse,
enforced by some other period
for
“injury
to
rights”
under
Article
1146
of
the
Civil
Code.
available remedy which is continuous
and
notorious
possession
for
more
than
50
years
with
not barred. corrected
decree
of
registration
and
good
faith
on
the
part
of
the
Art.
1116
–
Transition
buyers.
Prescription
already
running
before
the
effectivity
of
this
Code
shall
be
governed
by
2. Extraordinary
–
requires
uninterrupted
possession
for
the
required
laws
previously
in
force;
but
if
since
the
time
this
Code
took
effect
the
entire
period
statutory
period
without
need
of
good
faith
and
just
title
herein
required
for
prescription
should
elapse,
the
present
Code
shall
be
applicable,
even
though
by
the
former
laws,
a
longer
period
might
be
required.
(1939)
Art.
1118
–
Possession
Possession
has
to
be
in
the
concept
of
an
owner,
public,
peaceful
and
1. Prescriptive
period
under
the
old
law
has
lapsed
before
the
effectivity
of
uninterrupted.
(1941)
the
1950
Civil
Code
—
old
law
shall
apply
2. Prescriptive
period
under
the
old
law
is
still
running
upon
the
effectivity
of
Characteristics
of
Possession:
(O.P.P.U.)
the
new
Code:
a. New
code
provides
for
a
different
period
for
the
same
situation
— 1. In
the
concept
of
an
Owner
New
code
shall
apply
if
the
prescriptive
period
it
provides
has
• possessor
asserts
dominion
over
the
property
to
the
exclusion
of
all
already
lapsed
even
though
under
the
old
law,
the
period
has
not
others.
yet
lapsed.
• must
be
adverse/concepto
de
dueno
(as
to
claim
title)
b. The
remaining
balance
of
the
prescription
period
in
the
old
law
• Ramirez
v.
CA
–
antichretic
creditor
(debtor
hands
over
his
property,
since
the
effectivity
of
the
new
code
is
shorter
than
that
provided
allowing
the
use
thereof,
for
the
interest
on
the
money
lent)
cannot
in
the
latter
—
old
law
will
apply
acquire
the
land
by
prescription
because
such
property
was
not
given
to
• The
law
which
provides
the
shorter
prescription
period
shall
apply.
him
as
the
new
owner.
• Republic
v.
CA
–
prescription
does
not
apply
where
possession
of
property
was
for
recreational
purposes
only.
• Ramos
v.
CA
–
paying
taxes
does
not
evidence
title
but
it
is
a
strong
evidence
of
possession.
5
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
2. Public
Consequences
of
Natural
Interruption:
• must
be
a
notorious
holding
of
the
property
known
to
the
community.
• Old
possession
is
not
revived
and
lapse
of
time
shall
begin
to
run
from
the
• must
not
be
of
a
surreptitious
character.
beginning
should
possession
be
claimed
by
the
same
adverse
claimant.
3.
Peaceful
• If
the
natural
interruption
is
for
only
one
year
or
less,
the
time
elapsed
• there
must
be
no
valid
interference
from
others
claiming
or
asserting
their
shall
be
counted
in
favor
of
the
prescription.
rights
to
the
property.
4. Uninterrupted
Art.
1123
–
Civil
Interruption
• possession
during
the
required
period
must
be
continuous.
Civil
interruption
is
produced
by
the
judicial
summons
to
the
possessor.
(1945a)
Art.
1119
–
Possession
through
License
or
Tolerance
Art.
1124
–
Judicial
Summons
Acts
of
possessory
character
executed
in
virtue
of
license
or
by
mere
tolerance
of
Judicial
summons
shall
be
deemed
not
to
have
been
issued
and
shall
not
give
rise
to
the
owner
shall
not
be
available
for
the
purposes
of
possession.
(1942)
interruption:
(1) If
it
should
be
void
for
lack
of
legal
solemnities;
(2) It
the
plaintiff
should
desist
from
the
complaint
or
should
allow
the
• Possession
by
license
or
tolerance
produces
no
effect
with
respect
to
proceedings
to
lapse;
possession
or
prescription
because
such
possession
acknowledges
that
(3) If
the
possessor
should
be
absolved
from
the
complaint.
somebody
else
owns
the
property.
• Coronado
v.
CA
–
being
allowed
to
enter
and
reap
produce
on
said
In
all
these
cases,
the
period
of
the
interruption
shall
be
counted
for
prescription.
property
is
not
sufficient
possession
in
the
concept
of
an
owner.
(1946a)
Art.
1120
–
Interruption
No
civil
interruption
in
the
following
cases:
(S.A.D.)
Possession
is
interrupted
for
the
purposes
of
prescription,
naturally
or
civilly.
(1943)
1. Lack
of
legal
solemnities
• May
consist
error
or
irregularity
in
the
form
or
process
required
to
• Uninterrupted
possession
strengthens
the
adverse
right
of
the
possessor.
acquire
such
summon.
• 2
Kinds
of
Interruption:
Ex.
Judicial
summons
have
been
served
by
a
person
not
1. Natural
—
through
any
cause
it
should
cease
for
more
than
1
year.
authorized
by
the
court.
2. Civil
—
produced
by
judicial
summons
to
the
possessor.
2. Desistance
from
plaintiff
• Desistance—
voluntarily
having
the
case
dismissed.
Art.
1121
–
Natural
Interruption
• Allowing
the
proceeding
to
lapse—manifests
the
lack
of
interest
Possession
is
naturally
interrupted
when
through
any
cause
it
should
cease
for
to
prosecute
the
case.
more
than
one
year.
3. Possessor
is
absolved
• Absolution—the
complaint
has
not
been
fully
substantiated
to
The
old
possession
is
not
revived
if
a
new
possession
should
be
exercised
by
the
support
any
adverse
claim
by
the
complainant.
same
adverse
claimant.
(1944a)
• The
possessor
is
always
presumed
to
be
in
good
faith.
Art.
1122
–
One
Year
or
Less
Art.
1125
–
Possessor’s
Recognition
of
Owner’s
Right
If
the
natural
interruption
is
for
only
one
year
or
less,
the
time
elapsed
shall
be
Any
express
or
tacit
recognition
which
the
possessor
may
make
of
the
owner’s
right
counted
in
favor
of
the
prescription.
(n)
also
interrupts
possession.
(1948)
6
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Corpus
v.
Padilla
–
one
cannot
recognize
the
right
of
another
and
at
the
Art.
1127
–
Good
Faith
same
time
claim
adverse
possession
which
can
ripen
to
ownership,
thru
The
good
faith
of
the
possessor
consists
in
the
reasonable
belief
that
the
person
acquisitive
prescription.
from
whom
he
received
the
thing
was
the
owner
thereof,
and
could
transmit
his
The buyer's act of
entering into a • Dinoso
v.
CA
-‐
where
the
seller
and
buyer
executed
a
contract
of
sale
giving
ownership
(1950a)
contract of sale w/ the
seller
the
right
to
repurchase
property
after
10
years,
the
sale
is
a right to repurchase
subject
to
the
owner’s
right
of
redemption.
The
purchaser’s
possession
has
is a recognition of the Art.
1128
–
Other
Conditions
of
Good
Faith
seller's superior right.
Thus, the buyer's been
held
in
subordination
to
the
title
of
the
owner
prior
to
the
expiration
The
conditions
of
good
faith
required
for
possession
in
Articles
526,
527,
528
and
possession during the of
the
redemption
period.
529
of
this
Code
are
likewise
necessary
for
the
determination
of
good
faith
in
the
redemption period cannot
be counted for prescription. prescription
of
ownership
and
other
real
rights.
(1951)
Art.
1126
–
Titles
Against
a
title
recorded
in
the
Registry
of
Property,
ordinary
prescription
of
• Conditions
of
Good
Faith:
ownership
or
real
rights
shall
not
take
place
to
the
prejudice
of
a
third
person,
o Art.
526
–
not
aware
that
there
exists
any
flaw
which
invalidates
his
except
in
virtue
of
another
title
also
recorded;
and
the
time
shall
begin
to
run
from
title
or
mode
of
acquisition
the
recording
of
the
latter.
o Art.
527
–
good
faith
is
always
presumed
o Art.
528
–
possession
acquired
in
good
faith
does
not
lose
this
As
to
lands
registered
under
the
Land
Registration
Act,
the
provisions
of
that
special
character
law
shall
govern.
(1949a)
o Art.
529
–
it
is
presumed
that
possession
continues
to
be
enjoyed
in
the
same
character
in
which
it
was
acquired
General
rule
–
Torrens
title
recorded
in
the
Registry
of
Property
is
never
• • Negrete
v.
CFI
of
Marinduque
–
good
faith
is
not
complied
with
when
a
subject
of
prescription
to
the
prejudice
of
a
third
person.
person
claims
a
property
through
ordinary
acquisitive
prescription
based
o However,
it
can
be
challenged
by
a
claim
of
laches
on
a
deed
of
sale
which
he
knew
involved
a
different
property.
o Or
when
another
title
is
also
recorded.
Prescription
will
begin
to
• Reyes
v.
CA
–
knowingly
using
a
forged
document
to
base
one’s
just
title
run
from
the
recording
of
such
title
for
the
purposes
of
acquisitive
prescription
is
an
act
of
bad
faith.
• Dimayuga
v.
CA
–
no
title
to
registered
land
in
derogation
of
the
registered
• Magtira
v.
CA
–
good
faith
cannot
be
invoked
if
the
claimant
has
actual
or
owner
shall
be
acquired
by
prescription
or
adverse
possession.
constructive
notice
of
the
legal
and
valid
rights
of
possession
of
another
• Reyes
v.
CA
–
where
petitioners
forged
a
document
and
claimed
during
the
prescriptive
period.
Registration of an instrument with the Register of Deeds
is constructive notice to the world.
acquisition,
their
title
cannot
defeat
the
real
rights
of
private
respondents
who
stepped
into
the
shoes
of
their
father
as
successors-‐in-‐interest.
Art.
1129
–
Just
Title
• Catholic
Bishop
of
Balanga
v.
CA
–
although
prescription
will
not
apply
to
For
the
purposes
of
prescription,
there
is
just
title
when
the
adverse
claimant
came
Imprescriptability registered
property,
the
doctrine
of
laches
is
applicable.
A
registered
into
possession
of
the
property
through
one
of
the
modes
recognized
by
law
for
the
or indefeasibility
of a Torrens Title landowner
may
lose
his
right
to
recover
possession
of
his
registered
acquisition
of
ownership
or
other
real
rights,
but
the
grantor
was
not
the
owner
or
property
by
reason
of
laches.
could
not
transmit
any
right.
(n)
7
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Just
title
–
constitutes
such
title
when
the
possession
of
a
property
is
• • Dira
v.
Tanega
–
after
8
years,
the
active
partner,
who
took
over
of
the
obtained
through
one
of
the
modes
recognized
by
law
for
acquisition
(Art.
shares
of
the
delinquent
partner
in
a
printing
business,
acquired
the
shares
712)
but
the
grantor
was
not
the
owner,
or
has
no
power
to
transmit
of
stock
of
the
latter
(personal
property)
through
acquisitive
prescription.
rights.
The
just
title
is
intended
to
transfer
ownership
and
could
have
Since then, there was no longer any basis for any allegation of trust relation between the 2.
actually
transmitted
such
had
the
grantor
been
the
true
owner.
Possession
Recovery
of
Property:
from
a
just
title
can
ripen
into
ownership
if
the
other
elements
of
• Art.
559—the
possession
of
movable
property
acquired
in
good
faith
is
prescription
are
present.
equivalent
to
a
title.
If
the
possessor
lost
or
of
which
the
owner
has
been
• Doliendo
v.
Biarnesa
–
where
a
person
bought
a
property
from
a
public
unlawfully
deprived,
has
acquired
it
in
good
faith
at
a
public
sale,
the
auction
and
took
possession
for
more
than
10
years
but
there
was
a
first
owner
cannot
obtain
its
return
without
reimbursing
the
price
paid.
A person who bought purchaser,
such
document
from
the
public
sale
constituted
a
just
title,
• Art.
1505
–
when
goods
are
sold
by
a
person
who
is
not
the
owner,
the
property from a valid public
auction who was able hence
to the
person
acquired
the
property
through
prescription.
buyer
gets
no
better
title
to
the
goods
than
the
seller
had,
unless
the
• of Solis
prove the holding such v.
CA
–
a
donacion
propter
nuptias
is
sufficient
to
constitute
just
title.
owner
of
the
goods
is
precluded
from
denying
the
seller’s
authority
to
sell.
public auction, from which
Even
a
void
donation
may
ripen
into
title
by
prescription.
A
better
title
may
he based his just title, However,
nothing
in
the
title
shall
affect:
and who possessedbe
thebarred
by
that
adverse
possession.
1. laws
which
enable
the
apparent
owner
to
dispose
of
goods
as
his
property for more than 10
years, acquired it by o “Titulo
Colorado”
–
such
title
where,
although
there
was
a
mode
own
acquisitive prescription of
transferring
ownership,
still
something
is
wrong
because
the
2. the
validity
of
any
contract
of
sale
under
the
order
of
the
court
against a purchaser of the
property previous to the grantor
is
not
the
owner.
This
is
enough
to
constitute
just
title.
3. purchases
made
from
the
merchant
in
accordance
with
the
Code
public auction. of
Commerce
and
special
laws
Art.
1132
–
Acquisition
of
Movables
or
Personal
Property
The
ownership
of
movables
prescribes
through
uninterrupted
possession
for
four
Art.
1133
–
Movables
from
Crime
years
in
good
faith.
Movables
possessed
through
a
crime
can
never
be
acquired
through
prescription
by
the
offender.
(1956a)
The
ownership
of
personal
property
also
prescribes
through
uninterrupted
possession
for
eight
years,
without
need
of
any
other
condition.
• The
benefits
of
prescription
are
denied
to
the
offender.
With
regard
to
the
right
of
the
owner
to
recover
personal
property
lost
or
of
which
Ex.
A
thief
cannot
acquire
title
for
a
stolen
car
even
if
the
owner
did
not
he
has
been
illegally
deprived,
as
well
as
with
respect
to
movables
acquired
in
a
make
a
demand
and
the
prescriptive
period
has
already
lapsed.
public
sale,
fair,
or
market,
or
from
a
merchant’s
store
the
provisions
of
Articles
559
• Tan
v.
CA
–
however,
if
the
thing
was
in
the
meanwhile
passed
to
a
and
1505
of
this
Code
shall
be
observed.
(1955a)
subsequent
holder,
prescription
begins
to
run
4
or
8
years
(depending
on
the
existence
of
good
faith).
SUMMARY:
ACQUISITION
THROUGH
PRESCRIPTION
Movables
(witho
Immovables
Immovables
Art.
1134
–
Acquisition
of
Immovables
Requisites
Movables
other
conditions)
(Ordinary)
(Extraordinary)
Ownership
and
other
rights
over
immovable
property
are
acquired
by
ordinary
Years
4
8
10
30
prescription
through
possession
of
ten
years.
(1957a)
Uninterrupted
Possession
Good
Faith
• Ordinary
acquisitive
prescription
of
immovables
–
must
be
by
virtue
of
a
Just
Title
just
title,
good
faith
and
possession
(in
the
concept
of
an
owner,
Art.
1132
Art.
1132
Art.
1134
Art.
1137
uninterrupted,
adverse
and
public).
8
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1135
–
Mistake
in
Area
(2) It
is
presumed
that
the
present
possessor
who
was
also
the
possessor
at
a
In
case
the
adverse
claimant
possesses
by
mistake
an
area
greater;
or
less,
than
that
previous
time,
has
continued
to
be
in
possession
during
the
intervening
expressed
in
his
title,
prescription
shall
be
based
on
the
possession.
(n)
time,
unless
there
is
proof
to
the
contrary;
(3) The
first
day
shall
be
excluded
and
the
last
day
included.
(1960a)
• The
extent
of
property
subject
to
the
prescription
shall
be
the
one
actually
possessed
or
held
by
the
claimant
regardless
of
the
size
indicated
or
1. The
present
possessor
may
complete
the
period
necessary
for
prescription
described
in
the
title.
by
tacking
his
possession
to
that
of
his
grantor
or
predecessor
in
interest
• “Grantor”
and
“predecessor
in
interest”
–
connote
a
transfer
in
a
manner
provided
by
law
of
property
from
one
person
to
another.
Art.
1136
–
Wartime
• Tacking
–
possession
is
allowed
only
when
there
is
a
privity
of
contract
Possession
in
wartime,
when
the
civil
courts
are
not
open,
shall
not
be
counted
in
or
relationship
between
the
previous
and
present
possessors.
South
favor
of
the
adverse
claimant.
(n)
City
Homes,
Inc.
v.
Republic
o Tacking
is
not
allowed
if
the
predecessor
in
interest
has
not
• The
possession
of
the
adverse
claimant
during
that
time
shall
not
be
satisfied
the
requirements
of
prescription.
Otherwise,
there
counted
where
it
must
be
observed
that
the
civil
courts
must
be
closed.
can
be
no
continuity
in
the
nature
of
the
possession.
• If
it
is
functioning,
even
during
wartime,
the
possession
may
be
counted
in
2. It
is
presumed
that
the
present
possessor
who
was
also
the
possessor
at
a
his
favor.
previous
time,
has
continued
to
be
in
possession
during
the
intervening
time,
unless
there
is
proof
to
the
contrary.
Art.
1137
–
Extraordinary
Prescription
of
Immovables
• The
presumption
proceeds
from
a
set
of
facts.
Ownership
and
other
real
rights
over
immovables
also
prescribe
through
• For
the
presumption
to
exist,
there
must
be
a
prior
showing
of
the
fact
uninterrupted
adverse
possession
thereof
for
thirty
years,
without
need
of
title
or
that
the
person
presently
possessing
the
property
was
also
the
one
in
of
good
faith.
possession
of
the
same
before
the
intervening
time.
3. The
first
day
shall
be
excluded
and
the
last
day
included.
• Parcotilo
v.
Parcotilo
–
where
a
person’s
adverse
possession
of
a
property
for
38
years
ripened
into
a
title
by
extraordinary
prescription
although
all
***Other
notes:
the
requisites
of
a
valid
will
were
not
executed.
What
is
the
rule
to
follow
when
the
character
of
the
possession
of
the
predecessor
is
• Heirs
of
Celso
Amarante
v.
CA
–
acquisitive
prescription
has
set
in
when
different
from
that
of
the
present
possessor?
alienable
public
land
was
under
the
adverse
possession
of
a
person
prior
to
• The
law
does
not
provide
any
solution
to
such
kind
of
contingency.
Thus,
the
war
although
the
titles
have
not
been
perfected.
The
possessor
may
sound
judgment
must
be
resorted
to.
apply
for
the
confirmation
of
his
claims
to
the
proper
courts.
A.
If
the
predecessor
was
in
good
faith
but
the
successor
is
in
bad
faith:
Art.
1138
–
Computation
of
Prescription
• There
are
different
views.
Some
writers
say
there
must
be
no
tacking.
In
the
computation
of
time
necessary
for
prescription
the
following
rules
shall
be
Others
say,
the
good
faith
of
the
predecessor
should
not
be
set
at
naught.
observed:
The
second
is
the
better
view.
The
computation
of
the
periods
to
be
tacked
(1) The
present
possessor
may
complete
the
period
necessary
for
prescription
should
be
proportionate,
that
is,
in
the
proportion
of
what
the
period
of
by
tacking
his
possession
to
that
of
his
guarantor
or
predecessor
in
possession
in
good
faith
bears
to
the
period
of
extraordinary
prescription.
interest;
So
it
is
in
the
proportion
of
2:1
as
regards
movables
and
3:1
for
immovables.
9
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
B.
If
the
possession
of
the
predecessor
was
in
bad
faith
and
the
possession
of
the
SUMMARY:
PRESCRIPTION
OF
ACTIONS
successor
is
in
good
faith,
should
there
be
tacking
of
possession:
Art.
1140
Movables
8
years
• Possession
of
the
predecessor
in
bad
faith
cannot
be
counted
and
added
to
Art.
1141
Immovables
30
years
that
of
the
present
possessor.
Here,
the
possession
of
the
predecessor
Art.
1142
Mortgages
10
years
cannot
be
considered
in
ordinary
prescription
because
such
requires
good
Art.
1143
Right
of
way,
public
or
private
nuisance
None
faith
all
throughout
the
period
fixed
by
law.
Written
contracts,
obligations
created
by
Art.
1144
10
years
law,
judgment
However,
for
purposes
of
extraordinary
prescription,
the
possession
in
bad
faith
of
Art.
1145
Oral
contract,
quasi-‐contract
6
years
the
predecessor
can
be
tacked
to
the
possession
in
bad
faith
of
the
successor
where
Art.
1146
Injury
to
the
rights,
quasi-‐delict
4
years
there
are
no
prohibitions
provided.
Art.
1147
Forcible
entry
and
detainer,
defamation
1
year
Art.
1149
All
other
actions
with
no
fixed
periods
5
years
o Art.
1140-‐1142,
1144-‐1147
are
without
prejudice
to
those
specified
in
Chapter
3:
Prescription
of
Actions
other
parts
of
this
Code,
in
the
Code
of
Commerce,
and
in
special
laws.
(Art.
1148)
Art.
1139
–
Lapse
of
Time
Actions
prescribe
by
the
mere
lapse
of
time
fixed
by
law.
(1961)
WHEN
PRESCRIPTION
SHALL
BEGIN
TO
RUN
All
kinds
of
actions
when
no
From
the
day
they
may
be
Art.
1150
• Prescription
of
actions
=
limitation
of
actions
provision
provides
otherwise
brought
o Actions
to
enforce
or
preserve
a
right
or
claim
must
be
brought
Art.
1151
Enforcement
of
obligation
to
pay
From
the
time
of
last
payment
within
a
certain
period
of
time.
From
the
time
judgment
became
Art.
1152
Enforcement
of
judgment
final
• When
the
government
is
the
real
party
in
interest
and
is
proceeding
mainly
From
the
time
the
person
to
assert
its
own
rights
and
recover
its
own
property,
there
can
be
no
Demand
accounting
responsible
ceases
to
perform
defense
on
the
ground
of
laches
or
limitation.
Art.
1153
From
the
day
result
was
o Prescription
of
action
does
not
run
against
the
government.
Bring
action
from
the
result
of
recognized
by
agreement
of
accounting
interested
parties
Elements
of
a
cause
of
action:
(R.O.A)
1. A
right
in
favor
of
the
plaintiff
by
whatever
means
and
under
whatever
law
Art.
1140
–
Prescription
of
Movables
it
arises
or
is
created
must
be
present
Actions
to
recover
movables
shall
prescribe
eight
years
from
the
time
the
2. An
obligation
on
the
part
of
the
defendant
to
respect
such
right
possession
thereof
is
lost,
unless
the
possessor
has
acquired
the
ownership
by
3. An
act
or
omission
on
the
part
of
such
defendant
violative
of
the
right
of
prescription
for
a
less
period,
according
to
Article
1132,
and
without
prejudice
to
the
plaintiff
the
provisions
of
Articles
559,
1505,
and
1133.
(1962a)
• It
is
the
legal
possibility
of
bringing
the
action
that
determines
the
starting
point
for
the
computation
of
the
period
of
prescription,
that
• This
refers
to
the
period
of
extraordinary
prescription
of
8
years
for
is,
only
upon
the
happening
of
the
third
requisite
when
it
can
be
said
movables
to
bring
an
action
to
recover.
that
a
cause
of
action
has
arisen.
Espanol
v.
Philippine
Veterans
o However,
action
shall
not
prosper
if
it
is
brought
when
the
Administration(Art.
1144)
possessor
has
already
acquired
title
by
ordinary
acquisitive
prescription
within
4
years.
10
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o “Without
prejudice”
–
if
a
possessor
has
acquired
ownership
no
Art.
1142
–
Prescription
of
Mortgages
action
to
recover
may
be
filed
even
though
there
may
still
be
A
mortgage
action
prescribes
after
ten
years.
(1964a)
several
years
remaining
in
the
prescribed
8
years.
• If
possessor
acquired
the
movable
in
good
faith
at
a
public
sale,
owner
• Mortgage
–
an
accessory
contract
constituted
to
secure
a
debt
so
that
if
cannot
obtain
its
return
without
reimbursing
the
price
paid
therefore.
(Art.
the
debtor
fails
to
pay
the
principal
obligation,
the
creditor
can
foreclose
559)
on
the
mortgage
by
selling
it
in
a
public
sale
and
use
the
proceeds
to
pay
• In
certain
cases,
owner
is
precluded
from
recovery
without
right
to
off
the
debt.
reimbursement
although
the
action
has
not
yet
prescribed.
(Art.
1505)
• Development
Bank
of
the
Philippines
v.
Tomeldan
–
a
suit
for
the
recovery
• Movables
possessed
through
a
crime
cannot
be
acquired
through
of
the
deficiency
after
foreclosure
of
a
mortgage
is
in
the
nature
of
prescription
by
offender
(Art.
1133)
mortgage
action
which
prescribes
in
10
years.
• Tan
v.
CA
–
where
petitioner
claims
that,
through
bad
faith
and
fraud,
he
was
led
to
assign
his
shares
of
stocks,
it
was
held
that
the
action
had
Art.
1143
–
Rights
Not
Extinguished
by
Prescription
already
prescribed,
hence
the
corporate
entities
have
acquired
such
The
following
rights,
among
others
specified
elsewhere
in
this
Code,
are
not
personal
property
after
possession
of
more
than
8
years
(without
need
of
extinguished
by
prescription:
good
faith).
(1) To
demand
a
right
of
way,
regulated
in
Article
649;
• Dira
v.
Tanega
–
in
a
printing
partnership,
it
was
held
that
the
active
(2) To
bring
an
action
to
abate
a
public
or
private
nuisance.
(n)
partner
has
acquired
the
shares
of
the
delinquent
partner
through
extraordinary
prescription
of
8
years,
regardless
of
bad
faith.
• To
demand
a
right
of
way
(Art.
649)
–
the
owner
by
virtue
of
a
real
right
Art.
1141
–
Prescription
of
Immovables
may
use
any
immovable
surrounded
by
other
immovables
owned
by
other
Real
actions
over
immovables
prescribe
after
thirty
years.
persons
and
without
access
to
a
public
highway,
is
entitled
to
demand
a
right
of
way
across
the
neighboring
estates,
after
payment
of
the
proper
This
provision
is
without
prejudice
to
what
is
established
for
acquisition
of
indemnity.
ownership
and
other
real
rights
by
prescription.
(1963)
o However,
this
easement
is
not
compulsory
if
the
isolation
of
the
immovable
is
due
to
the
proprietor's
own
acts.
• This
refers
to
extraordinary
acquisitive
prescription
of
immovables
of
30
• To
abate
a
public
or
private
nuisance
–
involves
a
person,
thing,
or
years
in
adverse
possession.
The
right
to
sue
prescribes
after
acquisition
of
circumstance
causing
inconvenience
or
annoyance;
unlawful
interference
the
title.
with
the
use
and
enjoyment
of
a
person's
land.
o However,
if
within
the
30-‐year
period,
all
the
requisites
of
Other
rights
not
barred
by
prescription:
ordinary
acquisitive
prescription
are
present,
the
possessor
1. To
demand
partition
of
a
co-‐ownership
as
long
as
the
co-‐ownership
is
acquires
ownership
after
10
years
of
uninterrupted
possession,
expressly
or
impliedly
recognized
just
title
and
good
faith.
2. To
enforce
an
express
trust
• In
case
of
fraud:
3. To
demand
easement
of
light
and
view
o If
action
is
based
on
fraud,
action
prescribes
in
4
years
from
the
discovery
of
fraud
and
such
discovery
is
deemed
to
have
taken
4. To
declare
the
inexistence
of
a
contract
or
the
nullity
of
a
void
judgment
or
place
upon
the
issuance
of
the
certificate
of
title
over
the
of
a
void
title
property.
5. To
compel
a
trustee
to
reconvey
property
registered
in
his
name
for
the
o If
based
on
implied
or
constructive
trust,
in
10
years
from
the
benefit
of
the
cestui
que
trust
alleged
fraudulent
registration
or
date
of
issuance
of
certificate
of
6. To
compel
reconveyance
of
land
registered
in
bad
faith
provided
it
has
not
title
over
the
property.
yet
passed
to
an
innocent
purchaser
for
value
11
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
7. To
quiet
title
brought
by
a
person
in
possession
of
the
property
b. Such
positive
acts
of
repudiation
have
been
made
known
to
the
8. To
recover
real
property
or
its
value
where
the
property
was
taken
by
the
cestui
que
trust.
government
for
public
use
without
first
acquiring
title
thereto
c. The
evidence
thereon
is
clear
and
conclusive.
9. To
seek
issuance
of
a
writ
of
possession
o Such
repudiation
shall
be
the
reckoning
point
of
the
cause
of
10. To
probate
a
will
action.
11. To
recover
by
the
State
non-‐registrable
land
Art.
1145
–
6
Years
The
following
actions
must
be
commenced
within
six
years:
Art.
1144
–
10
Years
(1) Upon
an
oral
contract;
The
following
actions
must
be
brought
within
ten
years
from
the
time
the
right
of
(2) Upon
a
quasi-‐contract.
(n)
action
accrues:
1. Oral
contract
(1) Upon
a
written
contract;
• Action
upon
an
oral
contract
of
tenancy
to
compel
the
reinstatement
(2) Upon
an
obligation
created
by
law;
of
a
tenant
comes
under
the
provision.
(3) Upon
a
judgment.
(n)
2. Quasi-‐contract
• Certain
lawful,
voluntary
and
unilateral
acts
give
rise
to
the
juridical
1. Written
contracts
relation
of
quasi-‐contracts
to
the
end
that
no
one
shall
be
unjustly
• agreement
must
be
in
writing.
enriched
or
benefited
at
the
expense
of
another.
• a
promissory
note,
a
check
or
a
ticket
issued
for
transportation
is
a
• Solutio
indebiti
–
quasi
contract
provided
in
the
Civil
Code
which
written
contract.
occurs
if
something
is
received
when
there
is
no
right
to
demand
it,
2. Obligations
created
by
law
and
it
has
been
delivered
by
mistake,
the
obligation
to
return
arises.
• obligation
of
the
possessor
to
reconvey
to
the
true
owner
real
• Municipality
of
Opon
v.
Caltex
–
right
to
recover
taxes
illegally
property
arising
from
a
constructive
or
implied
trust.
collected
upon
a
quasi-‐contract.
• obligation
of
the
lessor
to
indemnify
the
lessee
in
good
faith
for
useful
improvements
on
the
property
leased.
Art.
1146
–
4
Years
• obligation
of
the
husband
and
wife,
parents
and
children,
and
brothers
The
following
actions
must
be
instituted
within
four
years:
and
sisters
to
support
each
other.
(1) Upon
an
injury
to
the
rights
of
the
plaintiff;
3. Judgment—judgment
that
is
final
and
executory
(2) Upon
a
quasi-‐delict.
(n)
• under
the
Rules
of
Court,
judgment
may
be
executed
on
motion
within
5
years
from
the
date
of
its
entry
or
from
the
date
it
becomes
final
and
1. Injury
to
the
rights
of
the
plaintiff
executory.
After
the
lapse
of
such
time,
it
may
be
enforced
by
ordinary
• Purpose
of
an
action
or
suit
and
the
law
to
govern
it,
including
the
action
within
10
years.
period
of
prescription,
are
to
be
determined
by
the
complaint
itself,
its
• Espanol
v.
Philippine
Veterans
Administration
–
right
of
action
accrues
allegations
and
prayer
for
relief.
when
there
exists
a
cause
of
action
which
in
this
case
is
the
• Action
for
recovery
of
damages
for
taking
or
retaining
personal
declaration
of
the
Court
that
the
company’s
administrative
policy
is
property,
or
incident
to
trespass
upon
real
estate
prescribes
within
4
invalid.
years.
• Huang
v.
CA
–
an
implied
trust
is
normally
not
subject
to
prescription,
• Virgilio
Callanta
v.
Carnation
Phil.
Inc.
–
petition
for
illegal
dismissal,
unless
the
trustee
openly
and
adversely
repudiates
the
trust
by:
reinstatement
and
backwages
was
illegally
dismissed
because
a. performing
unequivocal
acts
amounting
to
an
ouster
of
the
cestui
although
the
Labor
Code
provides
3
years
for
such
claims,
the
case
que
trust
(French
for
the
beneficiary
of
a
trust).
involved
the
profession
of
the
plaintiff
which
is
a
property
right,
hence
12
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
was
predicated
“upon
injury
to
the
rights
of
the
plaintiff”
which
• The
provisions
of
Title
V
on
Prescription
have
suppletory
application
to
prescribes
in
4
years.
(In
relation
to
Art.
1148)
specific
cases
of
prescription
found
elsewhere
in
the
Civil
Code
and
in
2. Quasi-‐delict
special
laws.
• When
there
is
no
pre-‐existing
relations
between
parties,
whoever
by
• Virgilio
Callanta
v.
Carnation
Phil.
Inc.
–
where
a
petition
upon
injury
to
the
act
or
omission
causes
damage
to
another
with
fault
or
negligence,
is
rights
of
the
plaintiff
was
found
with
merit,
it
was
held
that
a
statute
of
obliged
to
pay
damages.
(Art.2176)
limitation
(pertaining
to
prescription
for
claims
under
the
Labor
Code)
• Dicosa
v.
Sarabia
–
prescriptive
period
is
counted
from
the
day
the
extinguishes
the
remedy
only.
Although
the
remedy
to
enforce
a
right
may
quasi-‐delict
occurred
or
was
committed.
be
barred,
that
right
may
be
enforced
by
some
other
available
remedy
• Liability
of
manufacturers
for
any
death
or
injuries
caused
by
noxious
(pertaining
to
Art.
1146
regarding
injury
upon
the
rights
of
the
plaintiff).
or
harmful
substances
used,
although
no
contractual
relations
exist.
• Coca-‐Cola
Bottlers
Philippines
Inc.
v.
CA
–
where
soft
drinks
sold
Art.
1149
–
No
Fixed
Period
=
5
Years
contained
fiber-‐like
matter
and
other
foreign
substances
which
caused
All
other
actions
whose
periods
are
not
fixed
in
this
Code
or
in
other
laws
must
be
sickness
to
students.
brought
within
five
years
from
the
time
the
right
of
action
accrues.
(n)
• Kramer
Jr.
v.
CA
–
collision
of
two
vessels
is
a
quasi-‐delict.
• Allied
Banking
Corp.
v.
CA
-‐
action
against
the
Central
Bank
for
tortious
• The
right
of
action
or
cause
of
action
accrues
from
the
moment
of
inference,
in
closing
and
liquidating
a
bank.
commission
or
omission
of
an
act
by
a
party
in
violation
of
his
duty
to,
or
of
the
right,
of
another.
Art.
1147
–
1
Year
• Essential
elements
are:
(R.O.A.)
The
following
must
be
filed
within
one
year:
1. Right
in
favor
of
a
person
(obligee)
(1) For
forcible
entry
and
detainer;
2. A
correlative
obligation
on
the
part
of
another
(obligor)
(2) For
defamation.
(n)
3. An
act
or
omission
in
violation
of
said
right
1. Forcible
entry
and
detainer
Espanol
v.
Philippine
Veterans
Administration
• A
summary
proceeding
to
recover
possession
of
land
that
is
instituted
• Tolentino
v.
CA
–
action
to
prevent
the
former
spouse
from
using
the
by
one
who
has
been
wrongfully
ousted
from,
or
deprived
of,
petitioner’s
husband’s
surname
prescribes
in
5
years
counted
from
the
day
possession.
such
action
might
be
brought.
• Vda.
De
Borromeo
v.
Pogoy
–
the
1-‐year
prescriptive
period
is
• Other
Ex.s:
sufficient
time
for
complainant
to
file
a
case
and
this
period
is
counted
o Action
to
impugn
the
recognition
of
a
natural
child
(Art.
296)
from
demand
to
vacate
the
premises.
o Action
to
impugn
the
legitimation
of
a
child
(Art.
275)
2. Defamation
o Action
to
reduce
inofficious
donations
to
be
counted
from
the
• Any
intentional
false
communication,
either
written
or
spoken,
that
death
of
the
donor
(Vide
Art.
772,
Civil
Code).
harms
a
person's
reputation.
Art.
1148
–
Code
of
Commerce
and
Special
Laws
Art.
1150
–
When
to
Count
Prescriptive
Periods
The
limitations
of
action
mentioned
in
Articles
1140
to
1142,
and
1144
to
1147
are
The
time
for
prescription
for
all
kinds
of
actions,
when
there
is
no
special
provision
without
prejudice
to
those
specified
in
other
parts
of
this
Code,
in
the
Code
of
which
ordains
otherwise,
shall
be
counted
from
the
day
they
may
be
brought.
Commerce,
and
in
special
laws.
(n)
(1969)
13
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Quasi-‐delict
–
prescriptive
period
for
actions
based
on
quasi-‐delict
shall
• There
is
no
difference
between
actions
for
accounting
and
reliquidation
begin
to
run
from
the
day
the
action
may
be
brought,
that
is,
from
the
day
since
both
involve
the
determination,
adjustment
and
settlement
of
what
the
quasi-‐delict
was
committed.
is
due
to
the
parties
under
the
law
• Criminal
action
–
unless
otherwise
provided,
the
statutory
limitation
for
• Dira
v.
Tanega
–
the
delinquent
partner’s
action
for
accounting,
filed
after
period
for
filing
a
criminal
action
begins
to
run
on
the
commission
of
the
14
years,
had
already
prescribed.
offense.
• Separate
civil
action
-‐
where
offended
party
expressly
reserves
his
right
to
Art.
1154
–
Fortuitous
Event
institute
a
separate
civil
action,
prescription
runs
from
the
date
reservation
The
period
during
which
the
obligee
was
prevented
by
a
fortuitous
event
from
is
made
up
to
the
time
the
civil
action
is
actually
filed
in
court.
enforcing
his
right
is
not
reckoned
against
him.
(n)
Art.
1151
–
Prescription
for
Actions
regarding
Payment
• Provident
Savings
Bank
v.
CA
–
when
prescription
is
interrupted
by
a
The
time
for
the
prescription
of
actions
which
have
for
their
object
the
enforcement
fortuitous
event,
all
the
benefits
acquired
so
far
from
the
possession
will
of
obligations
to
pay
principal
with
interest
or
annuity
runs
from
the
last
payment
cease
and
when
prescription
starts
anew,
it
will
be
entirely
a
new
one.
of
the
annuity
or
of
the
interest.
(1970a)
• Tan
v.
CA
–
the
petitioner’s
arrest
and
detention
during
the
Marcos
regime
was
not
considered
as
a
fortuitous
event
which
could
have
interrupted
the
• This
refers
to
obligations
where
payment
of
which
is
due
at
stipulated
prescription
for
his
right
of
action.
intervals.
o If
the
debt
is
not
yet
due,
payment
of
interest
or
annuity
will
not
start
the
running
of
the
period.
Art.
1155
–
Interruption
of
Prescription
for
Actions
The
prescription
of
actions
is
interrupted
when
they
are
filed
before
the
court,
Art.
1152
–
Prescription
of
Actions
declared
by
Judgment
when
there
is
a
written
extrajudicial
demand
by
the
creditors,
and
when
there
is
The
period
for
prescription
of
actions
to
demand
the
fulfilment
of
obligations
any
written
acknowledgment
of
the
debt
by
the
debtor.
(1973a)
declared
by
a
judgment
commences
from
the
time
the
judgment
became
final.
(1971)
• Ledesma
v.
CA
–
this
means
that
the
period
of
prescription
begins
to
run
anew,
and
whatever
time
of
limitation
might
have
already
elapsed
is
• Prescriptive
period
is
counted
not
from
the
time
the
judgment
was
thereby
negated
and
rendered
inefficacious.
The
effect
is
to
renew
the
rendered
but
from
the
time
it
became
final.
obligation
and
to
make
prescription
run
again
from
the
date
of
• Philippine
National
Bank
v.
Bondoc
–
regarding
judgment
creditors,
the
interruption.
purpose
of
the
revival
judgment
is
to
give
a
creditor
a
new
right
of
enforcement
from
the
date
of
revival
for
the
creditor’s
protection.
1.
Filing
of
an
action
in
court
• Cabrera
v.
Tiano
–
civil
actions
are
deemed
commenced
from
the
Art.
1153
–
Prescription
for
Accounting
date
of
the
filing
and
docketing
of
the
complaint
with
the
Clerk
of
The
period
for
prescription
of
actions
to
demand
accounting
runs
from
the
day
the
Court.
persons
who
should
render
the
same
cease
in
their
functions.
• Interruption
lasts
during
the
pendency
of
the
action.
• Olympia
International
Inc.
v.
CA
–
if
the
plaintiff
desists
from
The
period
for
the
action
arising
from
the
result
of
the
accounting
runs
from
the
prosecuting
the
action
to
its
final
conclusion,
the
action
is
deemed
date
when
said
result
was
recognized
by
agreement
of
the
interested
abandoned
and
as
if
it
has
never
been
instituted.
parties.
(1972)
2. Written
extrajudicial
demand
by
the
creditor
14
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
•
Any
written
notice
given
by
the
creditor
to
the
debtor
to
enforce
Art.
1157
-‐
Sources
of
Obligations
the
delivery
or
payment
of
an
obligation.
Obligations
arise
from:
3. Written
acknowledgement
of
the
debt
by
the
debtor
(1)
Law;
• Written
offer
of
payment
works
as
a
renewal
of
the
obligation
(2)
Contracts;
• Philippine
National
Bank
v.
Osete
–
not
all
acts
of
(3)
Quasi-‐contracts;
acknowledgment
of
a
debt
interrupt
prescription.
To
produce
an
(4)
Acts
or
omissions
punished
by
law;
and
effect,
it
must
be
written.
(5)
Quasi-‐delicts.
(1089a)
• Ramos
v.
Condez
–
although
actions
regarding
written
contracts
prescribe
after
10
years,
such
was
interrupted
when
the
• Serves
as
the
juridical
tie
of
the
obligation.
defendant
submitted
a
letter
acknowledging
the
validity
of
the
• Enumeration
is
exclusive.
The
following
are
the
only
sources
of
obligations:
deed
of
absolute
sale
and
promising
to
comply
with
the
terms.
(L.C.D.Q
2)
BOOK
IV:
OBLIGATIONS
AND
CONTRACTS
1. Law
–
imposed
by
the
law
itself.
Ex.
Obligation
to
pay
taxes,
support
one’s
family
(Art.
291)
TITLE.
I.
-‐
OBLIGATIONS
2. Contracts
–
from
the
stipulation
of
the
parties
Ex.
Obligation
to
repay
a
loan
or
indebtedness
by
virtue
of
Chapter
1:
General
Provisions
an
agreement
3. Quasi-‐contracts
–
from
lawful,
voluntary
and
unilateral
acts
which
are
enforceable
to
the
end
that
no
one
shall
be
unjustly
enriched
or
benefited
Art.
1156
–
Definition
at
the
expense
of
another.
An
obligation
is
a
juridical
necessity
to
give,
to
do
or
not
to
do.
(n)
Ex.
Obligation
to
return
money
paid
by
mistake
or
which
is
not
due
• “Juridical
necessity”
–
in
case
of
non-‐compliance,
the
courts
may
be
called
4. Delicts
(Crimes)
–
from
civil
liability
which
is
the
consequence
of
a
criminal
upon
by
the
aggrieved
party
to
enforce
its
fulfilment
offense.
• Obligation
–
a
legal
bond
whereby
constraint
is
laid
upon
a
person
or
Ex.
Obligation
to
return
a
car
stolen
group
of
persons
to
act
or
forbear
on
behalf
of
another
person
or
group
of
Obligation
of
a
killer
to
indemnify
the
heirs
of
his
victim
persons.
5. Quasi-‐delicts
(Torts)
–
from
damages
caused
to
another
through
an
act
or
• Requirements:
(J.O.S.)
omission,
there
being
fault
or
negligence,
but
no
contractual
relations
1. Juridical
tie
–
efficient
cause
established
by
sources
of
obligations.
between
the
parties.
2. Object
or
Prestation
–
conduct
required
to
be
observed
by
the
debtor.
Ex.
Obligation
of
the
possessor
of
an
animal
to
pay
for
the
It
may
be
to
give,
to
do
or
not
to
do.
damage
which
it
may
have
caused
3. Subject-‐persons
–
may
refer
to
both
natural
and
juridical
persons.
• Obligations
are
civil
or
natural.
May
be
either:
1. Civil
obligation
–
gives
a
right
of
action
to
compel
their
performance.
a. Active
(obligee/creditor)
–
person
entitled
to
demand
2. Natural
Obligations
–
not
based
on
positive
law
but
on
equity
and
fulfilment;
he
who
has
the
right.
natural
law.
These
do
not
grant
a
right
of
action
to
enforce
their
b. Passive
(obligor/debtor)
–
person
who
is
bound
to
the
performance,
but
after
voluntary
fulfilment
by
the
obligor,
they
fulfilment
of
the
obligation;
he
who
has
the
duty.
authorize
retention
of
what
has
been
delivered
or
rendered
by
reason
Ang
Yu
Asuncion
v.
CA
thereof.
(Art.
1423)
15
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1158
–
Obligations
from
Law
contract
which
states
the
insurer’s
liabilities,
whenever
the
intentions
of
Obligations
derived
from
law
are
not
presumed.
Only
those
expressly
determined
in
the
parties
are
clear
and
the
essential
requirements
for
the
validity
of
such
this
Code
or
in
special
laws
are
demandable,
and
shall
be
regulated
by
the
precepts
contract
exist.
of
the
law
which
establishes
them;
and
as
to
what
has
not
been
foreseen,
by
the
provisions
of
this
Book.
(1090)
Art.
1160
–
Obligations
from
Quasi
Contracts
Obligations
derived
from
quasi-‐contracts
shall
be
subject
to
the
provisions
of
• Legal
Obligation
–
the
law
is
the
most
important
source
of
obligation.
Chapter
1,
Title
XVII,
of
this
Book.
(n)
o It
does
not
depend
upon
the
will
of
the
parties.
o Imposed
by
the
State
and
is
generally
imbued
with
some
public
• Quasi
Contract
-‐
certain
lawful,
voluntary
and
unilateral
acts
give
rise
to
policy
considerations.
the
juridical
relation
of
quasi-‐contract
to
the
end
that
no
one
shall
be
o The
basis
of
the
obligation
must
be
clear.
unjustly
enriched
or
benefited
at
the
expense
of
the
other.
(Art.
2142)
o It
cannot
be
presumed.
• 2
Kinds
of
Quasi-‐contracts:
• Existing
law
enters
into
and
forms
part
of
a
valid
contract
without
need
for
1. Solutio
Indebiti
–
the
juridical
relation
which
is
created
when
the
parties
expressly
making
reference
thereto.
something
is
received
when
there
is
no
right
to
demand
it
and
it
was
o The
provisions
of
a
contract
are
not
only
limited
to
what
we
see,
unduly
delivered
through
mistake.
but
is
understood
to
include
what
is
prescribed
by
law.
Ex.
X
owes
Y
₱1,000.
X
paid
Y
₱2,000
by
mistake.
Y
is
obliged
to
return
• Special
laws
–
refers
to
all
other
laws
not
contained
in
the
Civil
Code
like
the
excess
of
₱1,000.
the
Corporation
Code,
Negotiable
Instruments
Law,
Insurance
Code,
2. Negotiorum
gestio
–
the
voluntary
management
of
the
property
or
National
Internal
Revenue
Code,
Revised
Penal
Code,
Labor
Code,
etc.
affairs
of
another
without
the
knowledge
or
consent
of
the
latter.
(Art.
2144)
Ex.
While
X
was
out
of
town,
a
fire
broke
out
near
his
house.
Through
Art.
1159
–
Obligations
from
Contracts
the
effort
of
Y,
X’s
house
was
spared
from
being
burned.
X
has
the
Obligations
arising
from
contracts
have
the
force
of
law
between
the
contracting
obligation
to
reimburse
Y
of
all
expenses
incurred
in
saving
the
parties
and
should
be
complied
with
in
good
faith.
(1091a)
house.
• Implied
contract
–
a
contract
which
is
implied
in
fact
is
one
in
which
the
• Contract
–
a
meeting
of
minds
between
two
persons
whereby
one
binds
himself,
with
respect
to
the
other,
to
give
something
or
to
render
some
circumstances
imply
that
parties
have
reached
an
agreement
even
though
service.
(Art.
1305)
they
have
not
done
so
expressly.
• Binding
force
–
a
contract
is
the
law
between
the
parties.
Ex.
By
going
to
a
doctor,
a
patient
agrees
that
he
will
pay
a
fair
price
o Upon
perfection
of
the
contract,
the
parties
are
bound
to
fulfill
for
the
service.
If
he
refuses
to
pay
after
being
examined,
he
has
what
has
been
stipulated
including
consequences
should
there
be
breached
a
contract
implied
in
fact.
a
breach
in
good
faith,
usage,
or
the
law.
o Stipulations
should
not
be
contrary
to
law,
morals,
good
customs,
Art.
1161
–
Obligations
from
Crimes
or
Delicts
public
policy
or
public
order.
Civil
obligations
arising
from
criminal
offenses
shall
be
governed
by
the
penal
laws,
• Compliance
in
good
faith
–
performance
in
accordance
with
the
subject
to
the
provisions
of
Article
2177,
and
of
the
pertinent
provisions
of
Chapter
stipulations
or
terms
of
the
contract
or
agreement.
2,
Preliminary
Title,
on
Human
Relations,
and
of
Title
XVIII
of
this
Book,
regulating
• A
contract
may
involve
mutual
and
reciprocal
obligations
and
duties
damages.
(1092a)
between
and
among
the
parties.
• Perla
Compania
de
Seguros
Inc.
v.
CA
–
the
trial
court
cannot
disregard
and
• Civil
liability
-‐
attaches
to
an
individual
who
is
found
to
be
criminally
liable.
substitute
their
own
interpretation
of
the
stipulations
in
an
insurance
16
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• The
extent
of
the
civil
liability
arising
from
crimes
is
governed
by
the
o Indeterminate
or
generic
object
–
any
object
which
belongs
to
the
Revised
Penal
Code
which
includes:
restitution,
reparation
and
same
kind.
The
debtor
can
give
anything
of
the
same
class
as
long
as
it
indemnification.
is
of
the
same
kind.
Ex.
X
stole
the
car
of
Y.
If
X
is
convicted,
the
court
will
order
X:
Ex.
a
sum
of
₱1,000
1)
to
return
the
car
or
pay
its
value
a
1995
Toyota
car
2)
to
pay
for
any
damage
caused
to
the
car
a
cavan
of
rice
3)
to
pay
such
other
damages
suffered
by
Y
as
a
consequence
of
• Diligence
of
a
good
father
of
a
family
(ordinary)
–
if
there
is
no
stipulation
the
crime
(like
moral
or
exemplary
damages)
as
to
the
diligence
which
should
be
observed,
that
which
is
expected
of
a
good
father
of
a
family
is
required.
Art.
1162
–
Obligations
from
Quasi-‐delicts
• Another
standard
of
care
(extraordinary)
–
if
the
law
or
stipulation
of
the
Obligations
derived
from
quasi-‐delicts
shall
be
governed
by
the
provisions
of
parties
provides
for
another
standard
of
care,
said
law
or
stipulation
shall
Chapter
2,
Title
XVII
of
this
Book,
and
by
special
laws.
(1093a)
prevail.
o In
case
of
a
contrary
stipulation
of
the
parties,
such
should
not
be
one
contemplating
relinquishment
or
waiver
of
the
most
ordinary
• Quasi-‐delict
or
Torts
–
an
act
or
omission
which
causes
damage
to
another
diligence
person,
there
being
fault
or
negligence,
but
no
pre-‐existing
contractual
o Common
carriers—persons,
corporations,
firms
or
associations
relation
between
the
parties.
(Art.
2176)
engaged
in
the
business
of
carrying
or
transporting
passengers
or
Ex.
Obligation
of
the
possessor
of
an
animal
to
pay
for
the
goods
or
both,
by
land,
water,
or
air,
for
compensation,
offering
damage
which
it
may
have
caused
their
services
to
the
public.
They
are
bound
to
observe
extraordinary
diligence.
Chapter
2:
Nature
and
Effect
of
Obligations
• Factors
to
be
considered
–
the
diligence
required
depends
on
the
nature
of
the
person,
time
and
place.
(Art.
1173)
Art.
1163
–
Required
Diligence
• Cases
of
presumed
negligence
–
substitute
parental
authority
of
schools,
Every
person
obliged
to
give
something
is
also
obliged
to
take
care
of
it
with
the
common
carriers
proper
diligence
of
a
good
father
of
a
family,
unless
the
law
or
the
stipulation
of
the
parties
requires
another
standard
of
care.
(1094a)
Art.
1164
–
Right
Over
Fruits
The
creditor
has
a
right
to
the
fruits
of
the
thing
from
the
time
the
obligation
to
• Involves
the
prestation
“to
give”
deliver
it
arises.
However,
he
shall
acquire
no
real
right
over
it
until
the
same
has
• “Something”
–
connotes
a
determinate
object
been
delivered
to
him.
(1095)
o Determinate
object
–
definite,
known
and
has
already
been
distinctly
decided
and
particularly
specified
as
the
matter
to
be
given
from
• Involves
the
prestation
“to
give”
among
the
same
things
belonging
to
the
same
kind.
The
debtor
cannot
• Kinds
of
Fruits:
(N.I.C.)
substitute
it
with
another
although
the
latter
is
of
the
same
kind
and
1. Natural
fruits
–
spontaneous
products
of
soil
and
the
young
or
quality
without
the
consent
of
the
creditor.
(Art.
1244)
other
products
of
animals
Ex.
the
house
at
x
address
Ex.
grass,
trees,
puppies
the
Toyota
car
with
plate
number
xxx
2. Industrial
fruits
–
produced
by
lads
of
any
kind
through
cultivation
this
cavan
of
rice
or
labor
the
money
I
gave
you
Ex.
sugar
cane,
vegetables,
rice
3. Civil
fruits
–
derived
by
virtue
of
a
juridical
relation
Ex.
rent,
interest,
and
other
similar
income
17
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Real
right—the
right
or
power
of
a
person
over
a
specific
thing
(like
In
such
cases,
obligor
may
be
compelled
to
effect
ownership,
possession,
mortgage),
without
a
definite
passive
subject
delivery
and
give
the
necessary
damages
(Art.
1170)
against
whom
such
right
may
be
personally
enforced.
o Enforceable
against
the
whole
world
and
will
prejudice
anybody
claiming
the
same
object
of
the
prestation
Art.
1166
–
Accessions
and
Accessories
o Accrues
when
the
thing
or
object
of
the
prestation
is
delivered
to
The
obligation
to
give
a
determinate
thing
includes
that
of
delivering
all
its
the
creditor
accessions
and
accessories,
even
though
they
may
not
have
been
mentioned.
• Personal
right—the
right
or
power
of
a
person
(creditor)
to
demand
of
(1097a)
another
(debtor),
as
a
definite
passive
subject,
the
fulfillment
of
a
prestation
to
give,
to
do,
or
not
to
do.
• Involves
the
prestation
“to
give”
o Can
be
defeated
by
a
third
person
in
good
faith
who
has
• Accessions
–
fruits,
additions
to,
or
improvements
upon
a
thing
(principal),
innocently
acquired
the
property
prior
to
the
scheduled
delivery
which
are
not
necessary
to
the
principal
thing.
regardless
of
whether
or
not
such
third
person
acquired
the
Ex.
house
or
trees
on
a
land,
profits
or
dividends
accruing
from
property
after
the
right
to
the
delivery
of
the
thing
has
accrued
in
shares
of
stocks
favor
of
the
creditor
• Accessories
–
things
joined
to
or
included
with
the
principal
thing
for
embellishment,
better
use
or
completion.
The
accessory
and
the
principal
Art.
1165
–
Delivery
of
a
Determinate
or
Indeterminate
Thing
thing
must
go
together
When
what
is
to
be
delivered
is
a
determinate
thing,
the
creditor,
in
addition
to
the
Ex.
frame
of
a
picture,
bracelet
of
a
watch,
charger
of
an
iPad
right
granted
him
by
Article
1170,
may
compel
the
debtor
to
make
the
delivery.
• Both
accessions
and
accessories
can
exist
only
in
relation
to
the
principal.
If
the
thing
is
indeterminate
or
generic,
he
may
ask
that
the
obligation
be
complied
Art.
1167
–
Obligation
To
Do
with
at
the
expense
of
the
debtor.
If
a
person
obliged
to
do
something
fails
to
do
it,
the
same
shall
be
executed
at
his
If
the
obligor
delays,
or
has
promised
to
deliver
the
same
thing
to
two
or
more
cost.
persons
who
do
not
have
the
same
interest,
he
shall
be
responsible
for
any
This
same
rule
shall
be
observed
if
he
does
it
in
contravention
of
the
tenor
of
the
fortuitous
event
until
he
has
effected
the
delivery.
(1096)
obligation.
Furthermore,
it
may
be
decreed
that
what
has
been
poorly
done
be
undone.
(1098)
• Involves
the
prestation
“to
give”
• Remedies
of
a
creditor
in
a
real
obligation:
• Involves
the
prestation
“to
do”
a. Non-‐delivery
of
a
determinate
thing
–
to
file
an
action
to
compel
• Remedies
of
the
creditor:
the
debtor
to
make
the
delivery,
also
known
as
specific
a. Debtor
fails
to
perform
an
obligation
to
do
–
to
have
the
performance
obligation
performed
by
himself
or
by
another
at
the
debtor’s
b. Non-‐delivery
of
an
indeterminate
or
generic
thing
–
the
creditor
expense
and
recover
damages
(Art.
1170)
may
have
it
accomplished
or
delivered
in
any
reasonable
and
legal
Unlike
obligations
to
give,
a
specific
performance
in
way
charging
all
expenses
to
the
debtor
obligations
to
do
may
not
be
ordered
as
this
may
amount
c. Non-‐delivery
due
to
fortuitous
event
(Art.
1174)
–
general
rule:
to
involuntary
servitude.
Feasible
remedy
is
damages.
obligor
is
not
liable
for
fortuitous
event
b. Debtor
performs
the
obligation
but
contrary
to
the
terms
or
in
a
Except
when
the
obligor
delays
(Art.
1169)
or
has
poor
manner
–
in
addition
to
remedy
preciously
mentioned,
it
promised
the
same
thing
to
2
or
more
persons
with
may
be
ordered
(by
the
court)
that
it
be
undone
if
it
is
still
different
interests
possible.
18
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Chaves
v.
Gonzales
–
owner
of
the
typewriter
was
entitled
to
the
cost
of
Requisites:
the
execution
of
the
obligation
plus
damages
when
the
repairer
of
the
1. obligation
is
demandable
and
liquidated
typewriter
returned
it
with
missing
parts
and
without
having
it
repaired.
2. debtor
delays
performance
3. creditor
demands
performance
Art.
1168
–
Obligation
Not
To
Do
SSS
v.
Moonwalk
Development
and
Housing
Corp.
When
the
obligation
consists
in
not
doing,
and
the
obligor
does
what
has
been
• General
rule
–
default
begins
from
the
moment
demand
is
made
by
the
forbidden
him,
it
shall
also
be
undone
at
his
expense.
(1099a)
creditor
judicially
or
extrajudicially.
Commencement
of
a
suit
is
sufficient
demand.
• Involves
the
prestation
“not
to
do”
o Except
in
3
cases:
(U.T.L.)
Ex.
X
bought
a
land
from
Y
where
it
was
agreed
upon
that
Y
would
not
1. When
the
obligation
or
the
law
so
provides
construct
a
fence
on
certain
portions
of
the
land.
Should
Y
2. When
time
is
of
the
essence
construct
a
fence,
the
same
may
be
removed
at
Y’s
expense.
3. When
demand
would
be
useless
• Reciprocal
Obligations
–
the
obligation
of
one
is
a
resolutory
condition
of
the
other,
the
non-‐fulfillment
of
which
entitles
the
other
party
to
rescind
Art.
1169
-‐
Delay
the
contract.
Those
obliged
to
deliver
or
to
do
something
incur
in
delay
from
the
time
the
obligee
o If
one
of
the
parties
fails
to
deliver,
the
other
cannot
insist
upon
judicially
or
extrajudicially
demands
from
them
the
fulfillment
of
their
obligation.
its
performance.
Legally,
there
is
no
default
or
delay
on
the
part
of
However,
the
demand
by
the
creditor
shall
not
be
necessary
in
order
that
delay
both
parties.
may
exist:
o If
both
parties
incur
delay,
the
liability
of
the
first
infractor
shall
be
(1)
When
the
obligation
or
the
law
expressly
so
declare;
or
equitably
tempered
by
the
courts.
If
it
cannot
be
determined,
(2)
When
from
the
nature
and
the
circumstances
of
the
obligation
it
appears
that
each
shall
bear
his
own
damages.
(Art.
1192)
the
designation
of
the
time
when
the
thing
is
to
be
delivered
or
the
service
is
to
be
• 2
cases
where
Extrajudicial
Demand
is
necessary
before
filing
a
civil
suit:
rendered
was
a
controlling
motive
for
the
establishment
of
the
contract;
or
1. Ejectment
(3)
When
demand
would
be
useless,
as
when
the
obligor
has
rendered
it
beyond
his
2. Consignment
power
to
perform.
• Extrajudicial
demand
–
necessary
so
that
the
courts
will
have
a
basis
on
when
to
start
computing
damages
In
reciprocal
obligations,
neither
party
incurs
in
delay
if
the
other
does
not
comply
• Delay
in
the
payment
of
money
–
Art.
2209
provides
that
unless
otherwise
or
is
not
ready
to
comply
in
a
proper
manner
with
what
is
incumbent
upon
him.
stipulated,
legal
interest
for
delay
in
payment
is
6%
per
annum.
From
the
moment
one
of
the
parties
fulfills
his
obligation,
delay
by
the
other
o However,
damages
shall
only
begin
to
run
after
judicial
or
begins.
(1100a)
extrajudicial
demand.
• Barzaga
v.
CA
–
demand
was
not
necessary
where
a
contract
entered
into
• Delay
–
understood
as
legal
delay
or
default;
failure
to
perform
or
deliver
for
the
construction
of
a
niche
for
the
wife
of
the
aggrieved
party
who
on
time
which
constitutes
a
breach
of
an
obligation.
It
must
be
either
expressly
wished
that
she
be
buried
before
Christmas
day.
malicious
or
negligent,
the
absence
of
which,
the
obligor
shall
not
be
liable
• Binalbagan
Tech
Inc.
v.
CA
–
through
no
fault
of
the
seller,
the
buyer
could
under
Art.
1170.
not
take
possession
of
the
property
because
such
buyer
was
evicted
by
a
o Kinds
of
Delay:
third
party
through
a
court
order.
Hence,
the
seller
cannot
rescind
the
a. Mora
accipiendi
–
delay
on
the
part
of
the
creditor
to
accept.
contract
for
the
buyer’s
non-‐payment
of
the
balance
of
a
property.
the
debtor
may
release
himself
from
the
obligation
by
• Agcaoili
v.
GSIS
–
respondent
had
no
right
to
rescind
the
contract
where
consignation
(Art.
1256)
petitioner
failed
to
immediately
occupy
the
house
built
by
petitioner
b. Mora
solvendi
–
delay
on
the
part
of
the
debtor
to
deliver.
because
the
house
was
in
a
state
of
incompleteness.
Neither
party
incurs
19
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
in
delay
if
the
other
does
not
comply
or
is
not
ready
to
comply
in
a
proper
• The
fraud
or
dolo
necessarily
involves
a
valid
agreement
but,
in
the
manner
with
what
is
incumbent
upon
him.
performance
of
the
same,
fraud
is
committed.
• Tanguilig
v.
CA
–
the
respondent
may
not
be
compelled
to
pay
for
the
• A
waiver
of
an
action
for
future
fraud
produces
no
effect.
balance
and
damages
where
the
petitioner
built
windmills
which
collapsed
due
to
defects
in
the
construction.
Art.
1172
–
Responsibility
from
Negligence
Responsibility
arising
from
negligence
in
the
performance
of
every
kind
of
Art.
1170
–
Sources
of
Liabilities
obligation
is
also
demandable,
but
such
liability
may
be
regulated
by
the
courts,
Those
who
in
the
performance
of
their
obligations
are
guilty
of
fraud,
negligence,
or
according
to
the
circumstances.
(1103)
delay,
and
those
who
in
any
manner
contravene
the
tenor
thereof,
are
liable
for
damages.
(1101)
• Liability
can
be
regulated
by
the
courts
depending
on
the
circumstances.
20
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Samson
v.
CA
–
bad
faith
is
a
state
of
mind
of
ill
will
and
it
does
e. given
the
opportunity
to
save
either
the
loaned
not
simply
connote
bad
judgment
or
negligence.
It
is
synonymous
thing
or
a
personal
property,
he
chose
the
latter
with
fraud
and
involves
a
design
to
mislead
or
deceive
another.
provisions
of
other
codes
2. When
declared
by
the
stipulation
of
the
parties
Art.
1174
–
Fortuitous
Events
3. When
the
nature
of
the
obligation
so
requires
the
assumption
of
Except
in
cases
expressly
specified
by
the
law,
or
when
it
is
otherwise
declared
by
risk
stipulation,
or
when
the
nature
of
the
obligation
requires
the
assumption
of
risk,
no
• Tanguilig
v.
CA
–
destruction
of
the
windmills
by
a
typhoon
was
not
person
shall
be
responsible
for
those
events
which
could
not
be
foreseen,
or
which,
considered
a
fortuitous
event
because
of
the
windmills’
inherent
defect
th
though
foreseen,
were
inevitable.
(1105a)
attributable
to
the
petitioners.
4
element
of
fortuitous
event
was
not
present.
• Fortuitous
Event
–
any
event
which
cannot
be
foreseen,
or
which
though
• Dioquino
v.
Laureano
–
throwing
of
a
stone
directed
at
the
car
of
the
foreseen,
is
inevitable;
force
majeur.
plaintiff
was
considered
a
fortuitous
event.
o Act
of
man
–
war,
fire,
robbery,
murder,
accident
• Sia
v.
CA
–
fortuitous
event
was
not
considered
when
a
bank
failed
to
o Act
of
God
–
earthquake,
flood,
shipwreck
volcanic
eruption
notify
its
client
of
the
flooding
of
its
safety
box
which
resulted
to
the
•
2
Requisites
of
a
fortuitous
event:
(U.F.I .)
destruction
of
the
client’s
stamp
collection.
1. Independent
of
the
will
of
the
debtor
• Victoria
Planters
Association
Inc.
v.
Victoria’s
Milling
Co.
–
the
obligee
2. Event
must
be
unforeseeable
or
unavoidable
cannot
demand
the
fulfillment
of
the
delivery
of
an
obligation
after
6
years
3. Event
must
be
such
as
to
render
it
impossible
for
the
debtor
to
fulfill
due
to
a
fortuitous
event,
for
such
will
be
an
extension
of
the
contract.
A
his
obligation
in
a
normal
manner
fortuitous
event
relieves
the
obligor
from
performance.
4. The
debtor
must
be
free
from
any
participation
therein,
or
aggravation
o However,
should
the
obligee
choose
to
enforce
his
right
which
of
the
injury
was
prevented
by
a
fortuitous
event,
the
prescription
for
such
Nakpil
v.
CA
action
will
start
anew.
(Art.
1154)
• General
rule
–
an
obligor
cannot
be
liable
for
a
fortuitous
event
except:
• Ace-‐Agro
Development
Corp.
v.
CA
–
suspension
of
the
employee’s
1. When
expressly
specified
by
law
contract
was
brought
by
a
fortuitous
event
(burning),
hence
does
not
obligor
promises
the
same
thing
to
2
or
more
persons
of
justify
the
extension
of
such
contract.
The
contract
was
subject
to
a
different
interests
(Art.
1165)
resolutory
period
which
relieved
the
parties
from
their
obligations,
but
did
fraud,
negligence,
delay
or
violation
by
a
person
concurs
with
not
stop
the
running
of
the
period
of
their
contract.
an
act
of
God
in
producing
a
loss,
such
person
is
not
exempt
• Republic
v.
Luzon
Stevedoring
–
extraordinary
diligence
is
required
of
a
from
liability
(Art.
1170)
towed
barge.
object
of
prestation
is
generic
even
if
the
object
is
wiped
out
by
a
fortuitous
event
(Art.
1263)
Art.
1175
–
Usurious
Transactions
Ex.
delivery
of
money
Usurious
transactions
shall
be
governed
by
special
laws.
(n)
obligation
to
deliver
arises
from
a
crime
(Art.
1268)
bailee
in
commodatum
–
agreement
to
lend
• The
law
does
not
prohibit
usurious
contracts.
a. uses
the
thing
for
a
different
purpose
• Usury
–
contracting
for
or
receiving
interest
in
excess
of
the
amount
b. keeps
it
longer
than
what
was
agreed
allowed
by
law
for
the
loan
or
use
of
money,
goods
etc.
c. thing
loaned
was
delivered
with
appraisal
of
its
value
d. lends
of
leases
the
thing
to
a
third
person
21
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
The
receipt
of
a
later
installment
of
a
debt
without
reservation
as
to
prior
• In
general,
rights
growing
out
of
an
obligation
are
transmissible.
installments,
shall
likewise
raise
the
presumption
that
such
installments
have
been
o However,
the
person
who
transmits
the
right
cannot
transfer
paid.
(1110a)
greater
rights
than
he
himself
has
by
virtue
of
the
obligation,
and
vice
versa.
• A
presumption
must
always
arise
from
a
fact
or
a
set
of
facts.
• The
transmissibility
of
rights
may
be
limited,
or
altogether
prohibited
by
o Presumption
can
be
rebutted
by
strong
evidence
to
the
contrary.
stipulation
of
the
parties.
• To
have
probative
value,
the
creation
of
the
presumption
must
be
• Transmission
must
be
subject
to
pertinent
laws.
provided
by
law.
• Manila
Trading
&
Suppy
Co.
v.
Medina
–
receipts
must
clearly
show
evidence
of
partial
payment.
Chapter
3:
Different
Kinds
of
Obligations
Art.
1177
–
Rights
of
the
Creditor
The
creditors,
after
having
pursued
the
property
in
possession
of
the
debtor
to
SECTION
1.
-‐
Pure
and
Conditional
Obligations
satisfy
their
claims,
may
exercise
all
the
rights
and
bring
all
the
actions
of
the
latter
for
the
same
purpose,
save
those
which
are
inherent
in
his
person;
they
may
also
impugn
the
acts
which
the
debtor
may
have
done
to
defraud
them.
(1111)
Art.
1179
–
Pure
Obligations
Every
obligation
whose
performance
does
not
depend
upon
a
future
or
uncertain
Remedies
of
creditors
to
satisfy
their
claims
(in
particular
order):
event,
or
upon
a
past
event
unknown
to
the
parties,
is
demandable
at
once.
1. Exhaust
the
properties
of
the
debtor
through
levying
by
attachment
and
Every
obligation
which
contains
a
resolutory
condition
shall
also
be
demandable,
execution
upon
all
the
property
of
the
debtor,
except
such
as
are
exempt
without
prejudice
to
the
effects
of
the
happening
of
the
event.
(1113)
by
law
from
execution
Ex.
exempt
property
-‐
family
home
2. Exercise
all
the
rights
and
actions
of
the
debtor,
save
those
personal
to
• Pure
obligation
–
an
unqualified
obligation
which
is
demandable
him
(accion
subrogatoria)
immediately.
Ex.
enforceable
rights
–
right
to
collect
from
a
debtor’s
debtor
o Pay
v.
Vda.
De
Palanca
–
an
action
filed
after
15
years
to
execute
a
promissory
note
which
contains
an
obligation
immediately
personal
rights
-‐
right
to
receive
legal
support
demadable
may
no
longer
prosper,
considering
that
the
3. Seek
rescission
of
the
contracts
executed
by
the
debtor
in
fraud
of
their
prescription
of
written
documents
is
10
years.
rights
(accion
pauliana)
• Conditional
obligation
–
an
obligation
subject
to
the
fulfillment
of
a
o Adorable
v.
CA
–
unless
a
debtor
acted
in
fraud,
the
creditor
condition
which
may
be
a
future
and
uncertain
event,
or
past
event
cannot
order
rescission
of
a
contract
between
the
debtor
and
a
unknown
to
the
parties.
third
party
on
the
ground
that
such
sale
will
prejudice
the
o Condition
–
an
act
or
event,
other
than
a
lapse
of
time,
which,
creditor’s
right
to
collect
from
the
debtor.
unless
the
condition
is
excused,
must
occur
before
a
duty
to
perform
a
promise
in
the
agreement
arises
or
which
discharges
a
duty
of
performance
that
has
already
risen.
Future
and
uncertain
22
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Past
but
unknown
• Javier
v.
CA
–
when
a
contract
is
subject
to
a
suspensive
condition,
its
birth
Kinds
of
Conditions:
or
effectivity
can
take
place
only
if
and
when
the
event
constitutes
the
a. Suspensive
condition
(condition
precedent)
–
the
fulfillment
of
which
will
condition
happens
or
is
fulfilled.
give
rise
to
the
performance
of
an
obligation.
The
demandability
of
the
obligation
is
suspended
until
the
fulfillment
of
the
condition.
Ex.
Contract
to
sell
–
when
the
buyer
pays
the
last
installment,
the
Art.
1180
–
Payment
Depends
on
Debtor’s
Means
title
of
the
property
shall
be
transferred
to
him
When
the
debtor
binds
himself
to
pay
when
his
means
permit
him
to
do
so,
the
o Art.
1182
–
potestative,
casual
conditions
obligation
shall
be
deemed
to
be
one
with
a
period,
subject
to
the
provisions
of
b. Resolutory
condition
(condition
subsequent)
–
operates
to
discharge
a
Article
1197.
(n)
duty
of
performance
that
has
already
arisen.
The
obligation
is
extinguished
by
operation
of
law.
When
duration
of
the
period
depends
upon
the
will
of
the
debtor:
Ex.
X
binds
himself
to
give
Y
₱1,000
allowance
until
Y
graduates
from
• Debtor
–
law
presumes
that
the
debtor
really
intends
to
pay.
college.
• Creditor
–
the
problem
is,
the
creditor
is
left
to
speculate
and
payment
o Reciprocal
obligations
–
the
obligation
of
one
is
a
resolutory
could
be
an
uncertain
event.
condition
of
the
obligation
of
the
other,
the
non-‐fulfillment
of
• Remedy
of
the
law
–
to
balance
the
presumed
intent
of
the
debtor
to
pay
which
entitles
the
other
to
rescind
the
contract.
and
the
interest
of
the
creditor
by
classifying
the
obligation
as
one
with
a
• Coronel
v.
CA
–
period.
CONTRACT
TO
SELL
CONDITIONAL
CONTRACT
OF
SALE
o Art.
1197
–
The
courts
may
fix
a
period.
Suspensive
Promise
to
sell
upon
the
happening
of
The
seller
reserves
title
to
the
o Period
–
a
future
and
certain
event
upon
the
arrival
of
which
the
Condition
the
suspensive
condition
(payment
of
property
until
the
suspensive
obligation
subject
to
it
arises
or
is
extinguished.
(Art.
1193)
the
final
installment).
condition
(full
payment)
is
fulfilled.
Ownership
Ownership
will
not
automatically
Ownership
thereto
automatically
Art.
1181
–
Conditional
Obligations
transfer
to
the
buyer
although
the
transfers
to
the
buyer
by
operation
In
conditional
obligations,
the
acquisition
of
rights,
as
well
as
the
extinguishment
or
property
may
have
been
previously
of
law
without
any
further
act
loss
of
those
already
acquired,
shall
depend
upon
the
happening
of
the
event
which
delivered
to
him.
having
to
be
performed
by
the
constitutes
the
condition.
(1114)
seller.
rd
Third
A
3
person
buying
such
property
Prospective
buyer
can
seek
relief
Persons
despite
the
fulfillment
of
the
of
reconveyance
of
the
property.
• Suspensive
condition
(condition
precedent)
–
a
condition
which
must
be
suspensive
condition,
cannot
be
fulfilled
before
the
obligation
may
be
demandable.
deemed
a
buyer
in
bad
faith.
o Acquisition
of
rights
Prospective
buyer
cannot
seek
relief
of
• Resolutory
condition
(condition
subsequent)
–
operates
to
extinguish
an
reconveyance
of
the
property
(only
a
already
existing
obligation.
promise
to
sell).
o Loss
of
rights
already
acquired
Status
of
There
is
already
a
contract
from
the
If
the
suspensive
condition
is
not
the
beginning
hence,
if
the
suspensive
fulfilled,
the
perfection
of
the
Obligation
condition
is
not
fulfilled,
the
seller
may
contract
is
abated.
Art.
1182
–
Potestative
and
Casual
Conditions
rescind
the
contract.
When
the
fulfillment
of
the
condition
depends
upon
the
sole
will
of
the
debtor,
the
The
prospective
seller
still
has
to
conditional
obligation
shall
be
void.
If
it
depends
upon
chance
or
upon
the
will
of
a
convey
title
to
the
prospective
buyer
by
third
person,
the
obligation
shall
take
effect
in
conformity
with
the
provisions
of
entering
into
a
contract
of
sale
this
Code.
(1115)
23
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
•“When
fulfillment
of
a
condition”
–
connotes
a
suspensive
character
of
the
C. Mixed
obligation
–
depends
not
only
upon
the
will
of
the
debtor
but
also
prestation
upon
chance
and
some
other
factors.
Ex.
Conditions
contemplated
in
this
provision:
1. Romero
v.
CA
–
downpayment
from
the
buyer
shall
be
A. Potestative
condition
–
fulfillment
depends
upon
the
sole
will
of
the
returned
if
the
seller
(will
of
the
vendor)
shall
not
be
rd
debtor,
then
it
is
essentially
a
condition
because
whether
the
debtor
will
or
able
to
remove
the
squatters
(will
of
3
persons)
from
will
not
fulfill
the
obligation
is
a
future
and
uncertain
event,
which
is
void.
the
property.
Ex.
2. Naga
Telephone
Co.
Inc.
v.
CA
–
petitioner
can
use
the
1. Lao
Lim
v.
CA
–
the
lease
contract
shall
subsist
for
so
long
as
the
electrical
posts
of
the
respondent
as
long
as
it
needed
defendant
needed
the
premises.
The
birth
of
the
new
lease
the
posts
and
the
contract
shall
terminate
when
the
contract
depended
on
the
sole
will
of
the
lessee,
which
is
void.
respondent
is
forced
to
stop
its
operation
as
a
public
rd
2. Trillana
v.
Quezon
College
–
full
payment
of
the
shares
in
a
school
service
(dependent
on
chance,
hazard
and
3
persons).
was
to
be
made
only
after
the
obligor
had
harvested
fish.
• A
condition
at
once
facultative
and
resolutory
may
be
valid
even
though
o However,
if
the
potestative
condition
is
imposed
not
on
the
birth
the
condition
is
made
to
depend
upon
the
will
of
the
obligor
of
the
obligation
but
on
its
fulfillment,
only
the
condition
is
avoided,
leaving
unaffected
the
obligation
itself.
This
happens
when
the
obligation
is
pre-‐existing.
Ex.
Art.
1183
–
Void
Conditions
1. X
borrowed
₱10,000
from
Y
payable
within
2
months.
Impossible
conditions,
those
contrary
to
good
customs
or
public
policy
and
those
Subsequently,
X
promised
to
pay
Y
after
X
sells
his
car
prohibited
by
law
shall
annul
the
obligation
which
depends
upon
them.
If
the
to
which
Y
agreed.
In
this
case,
only
the
condition
is
obligation
is
divisible,
that
part
thereof
which
is
not
affected
by
the
impossible
or
void
but
not
the
X’s
pre-‐existing
obligation
to
pay
Y.
unlawful
condition
shall
be
valid.
2. Osmena
v.
Ramos
–
where
in
a
promissory
note
the
obligor
promised
to
pay
after
the
house
is
sold,
the
The
condition
not
to
do
an
impossible
thing
shall
be
considered
as
not
having
been
condition
is
void
but
the
obligation
to
pay
subsists.
agreed
upon.
(1116a)
3. Security
Bank
and
Trust
Company
v.
CA
–
where
upon
stipulation
of
the
parties,
the
owner
shall
equitably
• Impossible
conditions
–
render
the
obligation
dependent
upon
them
as
make
appropriate
adjustments
was
void,
hence
the
legally
ineffective.
The
condition
annuls
the
prestation.
bank
was
ordered
to
pay
the
obligation
in
full.
1. Physically
impossible
conditions
–
when
such
conditions
cannot
exist
o Patente
v.
Omega
–
when
the
condition
is
void
and
the
obligation
or
cannot
be
done
in
the
nature
of
things.
subsists,
such
obligation
is
not
converted
into
one
which
is
pure
Ex.
If
it
will
not
rain
in
the
Philippines
for
one
year
and
unconditional.
An
arraignment
might
be
enforced
which
is
If
you
can
carry
20
cavans
of
palay
on
your
shoulder
not
within
the
contemplation
of
the
parties.
The
best
solution
is
2. Legally
impossible
conditions
–
when
they
are
contrary
to
law,
to
consider
the
parties
having
intended
a
period,
and
ask
the
morals,
good
customs,
public
order
or
public
policy.
court
to
fix
a
period.
Ex.
If
you
kill
Z
(against
the
law)
B. Casual
condition
–
depends
on
chance,
hazard,
or
the
will
of
a
third
person
If
you
slap
your
father
(against
good
customs)
o A
resolutory
condition
that
depends
upon
the
will
of
a
third
If
you
overthrow
the
government
(against
public
order)
person
is
not
void.
Ex.
Ducusin
v.
CA
–
agreement
shall
be
terminated
when
the
lessor’s
children
need
the
premises.
24
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1184
–
Positive
Condition
• Constructive
fulfillment
–
the
obligor
voluntarily
prevents
the
fulfillment
The
condition
that
some
event
happen
at
a
determinate
time
shall
extinguish
the
of
the
condition
in
an
obligation
where
the
law
states
that
the
obligation
obligation
as
soon
as
the
time
expires
or
if
it
has
become
indubitable
that
the
event
shall
be
deemed
fulfilled.
will
not
take
place.
(1117)
o Tayag
v.
CA
–
as
a
condition
of
a
contract
of
sale,
the
buyer
was
required
to
pay
the
balance
of
a
particular
loan
and
where
the
vendors
prematurely
paid
the
loan,
thereby
preventing
the
buyer
• Positive
condition
–
the
happening
of
an
event
at
a
determinate
time
to
fulfill
the
condition,
there
was
constructive
fulfillment.
extinguishes
the
obligation.
Ex.
X
obliges
to
give
Y
₱10,000
if
B
will
marry
C
before
B
reaches
the
• Reciprocal
obligation
–
both
parties
are
mutually
obligors
and
also
obligees,
and
any
of
the
contracting
parties
may,
upon
non-‐fulfillment
by
age
of
23.
the
other
party
of
his
part
of
the
prestation,
rescind
the
contract
or
seek
X
is
liable
if
B
marries
C
before
B
turns
23.
fulfillment.
X
is
not
liable
if
B
marries
C
when
B
turns
23
or
after
B
turns
23.
If
C
dies
when
B
is
22,
it
has
become
indubitable
that
the
Art.
1187
–
Retroactive
Effects
of
the
Fulfillment
of
a
Suspensive
Condition
condition
shall
happen.
Hence,
the
obligation
of
X
is
The
effects
of
a
conditional
obligation
to
give,
once
the
condition
has
been
fulfilled,
extinguished.
shall
retroact
to
the
day
of
the
constitution
of
the
obligation.
Nevertheless,
when
the
obligation
imposes
reciprocal
prestations
upon
the
parties,
the
fruits
and
Art.
1185
–
Negative
Condition
interests
during
the
pendency
of
the
condition
shall
be
deemed
to
have
been
The
condition
that
some
event
will
not
happen
at
a
determinate
time
shall
render
mutually
compensated.
If
the
obligation
is
unilateral,
the
debtor
shall
appropriate
the
fruits
and
interests
received,
unless
from
the
nature
and
circumstances
of
the
the
obligation
effective
from
the
moment
the
time
indicated
has
elapsed,
or
if
it
has
obligation
it
should
be
inferred
that
the
intention
of
the
person
constituting
the
become
evident
that
the
event
cannot
occur.
same
was
different.
If
no
time
has
been
fixed,
the
condition
shall
be
deemed
fulfilled
at
such
time
as
may
have
probably
been
contemplated,
bearing
in
mind
the
nature
of
the
In
obligations
to
do
and
not
to
do,
the
courts
shall
determine,
in
each
case,
the
retroactive
effect
of
the
condition
that
has
been
complied
with.
(1120)
obligation.
(1118)
• Negative
condition
–
if
the
event
does
not
happen
at
a
determinate
time,
• Presupposes
the
happening
of
a
suspensive
condition.
the
obligation
shall
become
effective
and
binding.
• The
effect
of
a
conditional
obligation
to
give‖
retroacts
to
the
day
of
the
Ex.
X
will
give
Y
₱10,000
if
Y
does
not
fail
any
of
his
exams
at
the
end
constitution
of
the
obligation.
of
the
semester.
o The
efficacy
of
the
obligation
is
merely
suspended
or
held
in
abeyance
until
the
condition
is
fulfilled.
• Resolutory
condition
–
the
fulfillment
of
the
event
extinguishes
the
Art.
1186
–
Constructive
Fulfillment
obligation;
hence
retroactivity
is
not
relevant.
The
condition
shall
be
deemed
fulfilled
when
the
obligor
voluntarily
prevents
its
fulfillment.
(1119)
Situations
contemplated:
1. Reciprocal
obligations
–
the
fruits
and
interests
during
the
pendency
of
• The
good
faith-‐obligation
of
the
parties
includes
an
implied
term
on
the
the
condition
shall
be
deemed
to
have
been
mutually
compensated.
part
of
the
said
parties
not
to
impede,
hinder,
obstruct
or
prevent
the
• Fruits
on
the
object
of
prestation
(from
debtor)
and
the
interest
fulfillment
of
the
obligation.
on
the
payment
(from
creditor)
incurred
during
the
pendency
of
the
condition
need
not
be
delivered.
25
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
2. Unilateral
obligations
–
the
debtor
or
obligor
shall
appropriate
the
fruits
(5)
If
the
thing
is
improved
by
its
nature,
or
by
time,
the
improvement
shall
inure
to
and
interests
received,
unless
from
the
nature
and
circumstances
of
the
the
benefit
of
the
creditor;
obligation
it
should
be
inferred
that
the
intention
of
the
person
(6)
If
it
is
improved
at
the
expense
of
the
debtor,
he
shall
have
no
other
right
than
constituting
the
same
is
different.
that
granted
to
the
usufructuary.
(1122)
• Any
fruits
or
interests
incurred
by
the
object
of
prestation
shall
belong
to
the
obligor,
prior
to
the
fulfillment
of
the
condition.
• Involves
the
prestation
to
give
a
determinate
thing
which
is
subject
to
a
3. Obligations
not
to
do
–
courts
shall
determine
the
retroactive
effect
of
the
suspensive
condition
fulfilled
condition.
o In
the
case
of
resolutory
conditions,
Art.
1170,
1173
and
1174
shall
apply.
Art.
1188
–
Rights
Pending
Fulfillment
of
Suspensive
Condition
• Definitions:
The
creditor
may,
before
the
fulfillment
of
the
condition,
bring
the
appropriate
1. Loss
-‐
when
a
thing
perishes
(physical
loss),
goes
out
of
commerce
actions
for
the
preservation
of
his
right.
(legal
loss)
or
when
a
thing
disappears
in
such
a
way
that
its
existence
is
unknown
(civil
loss).
The
debtor
may
recover
what
during
the
same
time
he
has
paid
by
mistake
in
case
2. Deterioration
–
a
thing
deteriorates
when
its
value
is
reduced
or
of
a
suspensive
condition.
(1121a)
impaired
with
or
without
the
fault
of
the
debtor.
The
choice
of
the
remedies
to
be
pursued,
whether
1. Creditor
-‐
can
file
an
injunction
suit
to
stop
the
debtor
from
alienating
his
rescission
plus
damages
or
fulfillment
plus
damages,
property
which
is
supposed
to
be
given
to
the
creditor
once
a
particular
belongs
to
the
creditor
regardless
of
the
degree
of
condition
is
fulfilled.
deterioration
caused
by
the
debtor.
2. Debtor
-‐
can
recover
what
has
been
paid
by
mistake
when
the
obligation
is
If
the
deterioration
caused
by
the
debtor
is
so
grave
that
not
yet
due
and
demandable.
the
object
goes
out
of
commerce,
it
can
be
considered
o A
case
of
solutio
indebiti
lost
and
the
creditor
can
seek
damages
from
the
debtor.
3. Improvement
–
a
thing
is
improved
when
its
value
is
increased
or
Art.
1189
–
Loss,
Deterioration
or
Improvement
Pending
the
Condition
enhanced
by
nature
or
by
time,
or
at
the
expense
of
the
debtor
or
When
the
conditions
have
been
imposed
with
the
intention
of
suspending
the
creditor.
efficacy
of
an
obligation
to
give,
the
following
rules
shall
be
observed
in
case
of
the
Usufruct
–
gives
a
right
to
enjoy
the
property
of
another
improvement,
loss
or
deterioration
of
the
thing
during
the
pendency
of
the
with
the
obligation
of
preserving
its
form
and
substance
condition:
unless
the
title
constituting
it
or
the
law
otherwise
provides.
(1)
If
the
thing
is
lost
without
the
fault
of
the
debtor,
the
obligation
shall
be
extinguished;
(2)
If
the
thing
is
lost
through
the
fault
of
the
debtor,
he
shall
be
obliged
to
pay
damages;
it
is
understood
that
the
thing
is
lost
when
it
perishes,
or
goes
out
of
commerce,
or
disappears
in
such
a
way
that
its
existence
is
unknown
or
it
cannot
be
recovered;
(3)
When
the
thing
deteriorates
without
the
fault
of
the
debtor,
the
impairment
is
to
be
borne
by
the
creditor;
(4)
If
it
deteriorates
through
the
fault
of
the
debtor,
the
creditor
may
choose
between
the
rescission
of
the
obligation
and
its
fulfillment,
with
indemnity
for
damages
in
either
case;
26
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Rules
in
case
of
loss,
deterioration
or
improvement
of
the
thing
during
rescission,
even
after
he
has
chosen
fulfillment,
if
the
latter
should
become
pendency
of
suspensive
condition:
impossible.
Without
fault/participation
With
fault/participation
The
court
shall
decree
the
rescission
claimed,
unless
there
be
just
cause
authorizing
of
the
debtor
of
the
debtor
the
fixing
of
a
period.
Obligation
is
extinguished
LOSS
Debtor
shall
pay
damages
This
is
understood
to
be
without
prejudice
to
the
rights
of
third
persons
who
have
(fortuitous
event)
Creditor
may
choose
acquired
the
thing,
in
accordance
with
Articles
1385
and
1388
and
the
Mortgage
Creditor
shall
bear
rescission
of
the
obligation
Law.
(1124)
DETERIORATION
impairment
or
its
fulfillment,
plus
damages
• Reciprocal
obligations
–
the
obligation
of
one
is
a
resolutory
condition
of
Creditor
shall
enjoy
the
Debtor
shall
only
have
the
other,
the
non-‐fulfillment
of
which
entitles
the
other
to
rescind
the
IMPROVEMENT
contract.
Songcua
v.
IAC
benefits
usufructuary
rights
• Remedies
–
fulfillment
of
the
obligation
or
rescission
plus
damages.
o The
injured
party
may
also
seek
rescission
even
after
he
has
Art.
1190
–
Effects
of
Fulfillment
of
a
Resolutory
Condition
chosen
fulfillment.
When
the
conditions
have
for
their
purpose
the
extinguishment
of
an
obligation
to
o Areola
v.
CA
–
the
aggrieved
party
who
opted
for
the
fulfillment
of
give,
the
parties,
upon
the
fulfillment
of
said
conditions,
shall
return
to
each
other
the
obligation
was
also
entitled
to
damages.
what
they
have
received.
o Ayson
Simon
v.
Adamos
–
where
both
heirs
of
the
deceased
owner
and
a
buyer
of
a
property
won
cases
against
a
seller,
and
In
case
of
the
loss,
deterioration
or
improvement
of
the
thing,
the
provisions
which,
both
filed
for
the
delivery
of
such
property,
the
buyer’s
action
for
with
respect
to
the
debtor,
are
laid
down
in
the
preceding
article
shall
be
applied
to
rescission
and
damages
was
proper
considering
that
the
heirs
the
party
who
is
bound
to
return.
already
had
possession
of
the
property.
As
for
the
obligations
to
do
and
not
to
do,
the
provisions
of
the
second
paragraph
of
o Siy
v.
CA
–
the
law
does
not
authorize
the
injured
party
to
rescind
Article
1187
shall
be
observed
as
regards
the
effect
of
the
extinguishment
of
the
the
obligation
and
at
the
same
time
seek
its
partial
fulfillment
obligation.
(1123)
instead
of
collecting
damages.
Once
a
resolutory
condition
is
fulfilled,
the
obligation
is
extinguished
and
Rescission
–
to
declare
the
contract
void
at
its
inception
and
to
put
an
end
to
it
as
there
must
be
restitution
of
what
has
been
obtained.
though
it
never
was.‖
In
the
case
of
loss,
deterioration
or
improvement
of
the
thing
during
the
• Predicated
on
the
breach
of
faith
by
any
of
the
parties
to
a
contract
that
pendency
of
the
resolutory
condition,
Art.
1189
shall
apply.
violates
the
reciprocity
between
them.
In
obligations
to
do
and
not
to
do,
the
courts
shall
determine
the
effect
of
• The
power
to
rescind
is
not
absolute
and
must
be
based
on
a
serious
or
the
extinguishment
of
the
obligation.
substantial
breach
of
an
obligation
as
to
defeat
the
object
of
the
parties
in
making
the
agreement.
Art.
1191
–
Remedies
in
Reciprocal
Obligations
o A
mere
casual
breach
does
not
justify
rescission
of
the
contract.
The
power
to
rescind
obligations
is
implied
in
reciprocal
ones,
in
case
one
of
the
o The
question
of
whether
a
breach
of
a
contract
is
substantial
obligors
should
not
comply
with
what
is
incumbent
upon
him.
depends
upon
the
attendant
circumstances.
The
injured
party
may
choose
between
the
fulfillment
and
the
rescission
of
the
obligation,
with
the
payment
of
damages
in
either
case.
He
may
also
seek
27
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Cases:
rescission
made
is
not
the
revocatory
act
of
rescission
but
merely
o Philippine
Amusement
Enterprises
Inc.
v.
Natividad
–
that
“there
declaratory
or
an
affirmation
of
the
revocation.
were
times”
when
the
jukebox
did
not
work
did
not
constitute
the
o Palay
Inc.
v.
Clave
–
stipulation
which
states
that
the
seller
may
substantial
breach
sufficient
to
effect
a
rescission.
declare
the
contract
cancelled
without
notice
is
void.
o Tan
v.
CA
–
private
respondents
have
substantially
complied
with
o Jison
v.
CA
–
sending
a
notice
to
the
buyer
is
an
indispensable
act.
the
obligation.
Time
not
being
of
essence,
a
slight
delay
on
the
Notice
–
revocatory
act
in
express
stipulation
to
rescind.
part
of
the
private
respondent
is
not
sufficient
ground
for
the
resolution
of
the
agreement.
Art.
1192
–
Breach
by
Both
Parties
o Velarde
v.
CA
–
although
a
slight
delay
in
payment
of
1
month
may
In
case
both
parties
have
committed
a
breach
of
the
obligation,
the
liability
of
the
be
a
casual
breach
considering
that
time
is
not
of
the
essence,
first
infractor
shall
be
equitably
tempered
by
the
courts.
If
it
cannot
be
determined
pre-‐conditions
to
pay
by
the
debtor
left
the
creditor
with
no
which
of
the
parties
first
violated
the
contract,
the
same
shall
be
deemed
choice
but
to
opt
for
rescission.
extinguished,
and
each
shall
bear
his
own
damages.
(n)
o Santos
v.
CA
–
if
the
contract
involved
is
a
contract
to
sell,
the
termination
is
not
a
rescission
under
Art.
1191,
but
an
• First
infractor
known
–
subsequently,
the
other
also
violated
his
part
of
enforcement
of
the
contract.
the
obligation.
The
liability
of
the
first
infractor
should
be
equitably
reduced.
Forms
of
power
to
rescind:
• First
infractor
cannot
be
determined
–
obligation
shall
be
deemed
a. Implied
power
to
rescind
-‐
can
only
be
enforced
through
court
action,
in
extinguished
and
shall
bear
his
own
damages.
the
absence
of
stipulation
to
the
contrary.
o The
decision
of
the
court
is
the
revocatory
act
of
rescission
o Court
shall
decree
the
rescission
claimed
unless
there
is
just
cause
to
authorize
fixing
a
period.
Roman
v.
CA
–
if
the
buyer
paid
within
60
days
according
SECTION
2.
-‐
Obligations
with
a
Period
to
the
terms,
there
would
have
been
just
cause
to
grant
an
extension.
Central
Philippine
University
v.
CA
–
no
just
cause;
fixing
of
a
period
would
be
a
mere
technicality
and
formality
Art.
1193
–
Obligations
with
a
Period
that
would
serve
no
purpose
than
to
delay
or
lead
to
an
Obligations
for
whose
fulfillment
a
day
certain
has
been
fixed,
shall
be
demandable
unnecessary
and
expensive
multiplication
of
suits.
only
when
that
day
comes.
b. Express
unilateral
extrajudicial
stipulation
to
rescind
–
power
to
rescind
need
not
be
implied
in
all
cases.
Obligations
with
a
resolutory
period
take
effect
at
once,
but
terminate
upon
arrival
o Parties
may
stipulate
that
the
violation
of
the
terms
of
the
of
the
day
certain.
contract
shall
cause
the
cancellation,
termination
or
rescission
thereof
even
without
court
intervention
A
day
certain
is
understood
to
be
that
which
must
necessarily
come,
although
it
o University
of
the
Philippines
v.
De
Los
Angeles
–
stipulation
is
may
not
be
known
when.
always
provisional,
subject
to
scrutiny
and
review
by
the
proper
court.
Notice
must
always
be
given
to
the
defaulter
before
If
the
uncertainty
consists
in
whether
the
day
will
come
or
not,
the
obligation
is
rescission
can
take
effect
conditional,
and
it
shall
be
regulated
by
the
rules
of
the
preceding
Section.
(1125a)
o De
Luna
v.
Abrigo
–
when
there
is
an
express
stipulation
to
rescission,
any
court
decision
validating
the
propriety
of
the
28
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Period
–
a
future
and
certain
event
upon
the
arrival
of
which
the
obligation
o Natural
fruits
–
spontaneous
products
of
soil
and
the
young
or
subject
to
it
either
arises
or
is
terminated.
It
is
a
day
which
must
other
products
of
animals
necessarily
come
(like
next
Christmas),
although
it
may
not
be
known
o Industrial
fruits
–
produced
by
lads
of
any
kind
through
cultivation
when
(like
the
death
of
a
person).
or
labor
• Obligation
with
a
period
–
an
obligation
constituted
at
a
much
earlier
date
o Civil
fruits
–
derived
by
virtue
of
a
juridical
relation
but
its
effectivity
only
commences
on
a
certain
future
period
of
time.
• Suspensive
period
–
gives
rise
to
the
effectivity
of
the
obligation.
Art.
1196
–
Period
Benefits
Both
Creditor
and
Debtor
o Gaite
v.
Fonacier
–
where
the
balance
was
to
be
paid
from
and
Whenever
in
an
obligation
a
period
is
designated,
it
is
presumed
to
have
been
out
of
the
first
letter
of
credit
covering
the
first
shipment
of
iron
established
for
the
benefit
of
both
the
creditor
and
the
debtor,
unless
from
the
derived
from
the
local
sale
of
iron
by
the
client,
the
stipulation
is
a
tenor
of
the
same
or
other
circumstances
it
should
appear
that
the
period
has
been
suspensive
period
not
a
suspensive
condition.
established
in
favor
of
one
or
of
the
other.
(1127)
o A
suspensive
condition
is
comparatively
more
onerous
than
a
suspensive
period.
• General
rule
–
the
presumption
of
the
law
is
that
the
period
is
for
the
• Resolutory
period
–
gives
rise
to
the
extinguishment
of
the
obligation.
benefit
of
both
debtor
and
creditor.
o Fernandez
v.
CA
–
a
contract
of
lease
is
a
reciprocal
contract.
The
period
of
lease
must
be
deemed
to
have
been
agreed
upon
for
Art.
1194
–
Loss,
Deterioration
or
Improvement
before
Day
Certain
the
benefit
of
both
parties.
In
case
of
loss,
deterioration
or
improvement
of
the
thing
before
the
arrival
of
the
• Exception
–
when
the
nature
of
the
obligation
or
stipulation
of
the
parties
day
certain,
the
rules
in
Article
1189
shall
be
observed.
(n)
shows
that
the
period
was
for
the
benefit
of
either
party.
• The
benefit
of
the
period
may
be
waived
by
the
person
in
whose
favor
it
The
same
rules
in
Article
1189
shall
apply
in
obligations
subject
to
a
suspensive
or
a
was
constituted.
resolutory
period.
o Abesamis
v.
Woodcraft
Works
Inc.
–
where
the
obligor
informed
the
obligee
that
he
will
make
an
early
delivery
of
the
subject
Art.
1195
–
Debtor
May
Recover
Payment
portions
of
shipment,
the
obligor
was
made
liable
for
failure
to
Anything
paid
or
delivered
before
the
arrival
of
the
period,
the
obligor
being
make
such
delivery.
Use
of
the
period
was
effectively
waived.
unaware
of
the
period
or
believing
that
the
obligation
has
become
due
and
demandable,
may
be
recovered,
with
the
fruits
and
interests.
(1126a)
Art.
1197
–
Court
May
Fix
a
Period
If
the
obligation
does
not
fix
a
period,
but
from
its
nature
and
the
circumstances
it
• Applies
only
to
obligations
to
give
can
be
inferred
that
a
period
was
intended,
the
courts
may
fix
the
duration
thereof.
o The
provision
may
not
be
applied
in
obligations
to
do
or
not
to
do
The
courts
shall
also
fix
the
duration
of
the
period
when
it
depends
upon
the
will
of
because
it
is
physically
impossible
to
recover
a
service
rendered.
the
debtor.
• Similar
to
Art.
1188
paragraph
2
where
a
creditor
cannot
unjustly
enrich
himself
by
retaining
payment
which
is
not
due.
In
every
case,
the
courts
shall
determine
such
period
as
may
under
the
• Burden
of
proof
of
paying
by
mistake
is
on
the
debtor.
Debtor
is
presumed
circumstances
have
been
probably
contemplated
by
the
parties.
Once
fixed
by
the
to
be
aware
of
the
period.
courts,
the
period
cannot
be
changed
by
them.
(1128a)
• If
the
obligor
delivered
the
object
before
the
arrival
of
the
period,
and
upon
arrival
of
the
period,
the
obligee
is
in
the
possession
of
the
object,
Related
articles:
the
obligor
can
only
recover
the
fruits
and
interests
accruing
from
the
time
• Art.
1180
–
when
the
debtor
binds
himself
to
pay
when
his
means
permit
of
the
delivery
up
to
the
arrival
of
the
period.
him
to
do
so
• Kinds
of
Fruits:
(N.I.C.)
29
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Art.
1191
par.
3
–
instead
of
issuing
a
decree
of
rescission,
the
court
may
1. When
debtor
becomes
insolvent
authorize
the
fixing
of
a
period
when
there
is
just
cause
o Unless
he
gives
a
guaranty
or
security
for
the
debt
–
a
debtor
may
ask
a
third
person
to
guarantee
his
debt
or
put
up
his
house
as
Presumption
–
the
court
is
generally
without
power
to
fix
a
period.
If
the
obligation
collateral.
does
not
state
a
period
and
no
period
is
intended,
the
court
is
not
authorized
to
fix
o Insolvency
need
not
be
judicially
declared.
a
period
because
it
has
no
right
to
make
contracts
for
parties.
2. When
debtor
does
not
furnish
the
guaranties
or
securities
promised
o Securities
can
take
the
form
of
real-‐estate
mortgages
or
pledges
• Gregorio
Araneta,
Inc.
v.
Phil.
Sugar
Estates
Development
Co.
Ltd.
3. When
guaranties
or
securities
given
have
been
impaired
or
have
2-‐step
process:
disappeared
through
the
debtor’s
acts
1. The
court
must
first
determine
that
the
obligation
does
not
fix
a
o Unless
he
immediately
gives
new
ones
equally
satisfactory.
period
or
that
a
period
is
made
to
depend
upon
the
will
of
the
o Gaite
v.
Fonacier
–
because
of
the
company’s
failure
to
renew
the
debtor,
but
from
the
nature
and
circumstances
it
can
be
inferred
bond
of
a
surety
or
else
replace
it
with
an
equivalent
guarantee,
that
a
period
was
intended.
the
debtor
has
forfeited
it
right
to
the
period
making
the
2. The
court
must
decide
what
period
was
probably
contemplated
obligation
immediately
demandable.
by
the
parties.
o The
debtor
loses
the
benefit
of
the
period
even
if
the
guaranties
• Radiowealth
Finance
Company
v.
Del
Rosario
–
the
fact
that
the
due
date
and
securities
disappear
through
a
fortuitous
event.
was
left
blank
does
not
necessarily
mean
that
payment
was
left
on
the
sole
4. When
the
debtor
violates
any
undertaking,
in
consideration
of
which
the
will
of
the
debtor.
The
promissory
note
indicated
that
the
debt
should
be
creditor
agrees
to
the
period
amortized
monthly
in
installments.
o Allen
v.
Province
of
Albay
Constructive
waiver
of
period
–
when
the
owner
prevents
the
Art.
1198
–
When
Debtor
Cannot
Make
Use
of
the
Period
period
from
arriving.
Hence,
the
obligor
shall
be
allowed
to
The
debtor
shall
lose
every
right
to
make
use
of
the
period:
furnish
the
obligation
within
reasonable
time.
5. When
the
debtor
attempts
to
abscond
(1) When
after
the
obligation
has
been
contracted,
he
becomes
insolvent,
o A
mere
attempt
by
the
debtor
to
flee
from
his
obligations,
or
to
unless
he
gives
a
guaranty
or
security
for
the
debt;
move
away
to
evade
payment
of
his
indebtedness,
is
sufficient
(2) When
he
does
not
furnish
to
the
creditor
the
guaranties
or
securities
ground
to
demand
from
him
immediately.
which
he
has
promised;
(3) When
by
his
own
acts
he
has
impaired
said
guaranties
or
securities
after
their
establishment,
and
when
through
a
fortuitous
event
they
disappear,
unless
he
immediately
gives
new
ones
equally
satisfactory;
(4) When
the
debtor
violates
any
undertaking,
in
consideration
of
which
the
creditor
agreed
to
the
period;
(5) When
the
debtor
attempts
to
abscond.
(1129a)
2
When
debtor
cannot
make
use
of
the
period:
(G.A.V.I .)
30
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
SECTION
3.
-‐
Alternative
Obligations
Ex.
• A
owes
B
₱30,000.
He
can
either
pay
by
giving
B
his
horse,
his
piano,
or
₱30,000
in
cash.
A
has
two
horses,
one
worth
₱30,000
and
another
crap
Art.
1199
–
Alternative
Obligations
one
worth
₱5,000.
He
cannot
choose
the
₱5,000
horse
A
person
alternatively
bound
by
different
prestations
shall
completely
perform
one
because
it
could
not
have
been
the
object
of
the
of
them.
obligation.
The
creditor
cannot
be
compelled
to
receive
part
of
one
and
part
of
the
other
undertaking.
(1131)
Art.
1201
–
Choice
Communicated
The
choice
shall
produce
no
effect
except
from
the
time
it
has
been
communicated.
• “Different
Prestations”
–
refers
to
both
strict
and
loose
sense
of
the
word.
(1133)
o Either
different
kinds
of
prestations
(1
to
give,
and
1
to
do)
o Or
merely
different
objects
(give
a
car,
or
give
a
boat)
• Creditor
is
entitled
to
be
notified
of
the
choice.
• Partial
Performance
of
different
prestations
does
not
fulfill
the
obligation,
• Mode
of
communication
may
vary
–
it
is
also
the
debtor’s
choice
unless
the
creditor
accepts
such
partial
performance
as
complete
• Choice
is
given
effect
only
upon
communication
to
the
creditor.
performance.
o Debtor
must
choose
complete
performance
of
one
or
the
other.
• Creditor
has
no
right
to
oppose
the
choice,
provided
such
choice
of
prestation
is
not
unlawful,
impossible,
or
outside
what
the
parties
wanted.
• If
all
but
one
of
the
alternatives
becomes
legally
impossible,
obligation
becomes
simple.
o Loan
payable
in
Pesos
or
USD,
alternative
obligation
ceased
to
Art.
1202
–
Only
One
Choice
is
Practicable
exist
when
USD
was
illegal
(Japanese
time)
The
debtor
shall
lose
the
right
of
choice
when
among
the
prestations
whereby
he
is
alternatively
bound,
only
one
is
practicable.
(1134)
Art.
1200
–
Debtor’s
Right
of
Choice
The
right
of
choice
belongs
to
the
debtor,
unless
it
has
been
expressly
granted
to
• Right
of
choice
is
given
to
the
debtor
–
according
to
law
the
creditor.
o This
right
implies
that
the
debtor
can
destroy/impair
all
other
choices
as
long
as
one
remains
The
debtor
shall
have
no
right
to
choose
those
prestations
which
are
impossible,
• Practicable
–
capable
of
being
done;
feasible.
unlawful
or
which
could
not
have
been
the
object
of
the
obligation.
(1132)
o Thus,
when
only
one
of
the
choices
is
practicable,
the
debtor
loses
his
right
of
choice.
• Any
doubt
as
to
whom
the
choice
is
given
as
to
which
prestation
to
comply
o A
prestation
can
be
possible
and
lawful,
but
not
practicable.
with
is
always
construed
in
favor
of
the
debtor.
Ex.
Kissing
a
highly
contagious
leper
–
possible,
and
not
• General
rule
–
debtor
always
has
choice.
illegal,
but
impracticable
and
thus
cannot
be
chosen
by
o Exception
–
when
such
choice
is
expressly
granted
to
the
creditor.
debtor.
• Restriction
on
Debtor’s
Power
of
Choice
–
the
law,
the
intention
of
the
parties,
and
the
realm
of
possibility.
Art.
1203
–
Debtor
Cannot
Choose
due
to
Creditor’s
Acts
• Debtor
has
no
right
to
choose
those
prestations
which
are:
If
through
the
creditor's
acts
the
debtor
cannot
make
a
choice
according
to
the
o Impossible
–
Ex.
fly
to
the
moon,
turn
water
into
wine,
terms
of
the
obligation,
the
latter
may
rescind
the
contract
with
damages.
(n)
o Unlawful
–
Ex.
steal
a
car,
deal
drugs
o Could
not
have
been
the
object
of
the
obligation
• Creditor
cannot
stop
the
debtor
from
fulfilling
his
obligation.
31
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• If
creditor’s
own
acts
result
in
the
loss
of
a
choice,
the
debtor
can
(he
is
not
Art.
1205
–
Choice
Given
to
Creditor
bound
to
do
so)
rescind
with
a
right
to
damages.
When
the
choice
has
been
expressly
given
to
the
creditor,
the
obligation
shall
cease
Ex.
A
can
pay
his
debt
to
B
by
giving
a
certain
cellphone,
giving
a
to
be
alternative
from
the
day
when
the
selection
has
been
communicated
to
the
certain
horse,
or
dancing
in
a
show.
debtor.
o If
the
creditor
through
his
own
acts
makes
any
of
these
choices
impossible:
Until
then
the
responsibility
of
the
debtor
shall
be
governed
by
the
following
rules:
Kills
horse
Destroys
phone
(1)
If
one
of
the
things
is
lost
through
a
fortuitous
event,
he
shall
perform
the
Burns
club
obligation
by
delivering
that
which
the
creditor
should
choose
from
among
the
o Debtor
has
the
option
to
rescind
with
damages.
remainder,
or
that
which
remains
if
only
one
subsists;
• As
long
as
the
creditor
makes
one
of
the
choices
impossible,
the
debtor
may
rescind.
(contrast
this
with
next
article)
(2)
If
the
loss
of
one
of
the
things
occurs
through
the
fault
of
the
debtor,
the
creditor
may
claim
any
of
those
subsisting,
or
the
price
of
that
which,
through
the
fault
of
the
former,
has
disappeared,
with
a
right
to
damages;
Art.
1204
–
Through
Debtor’s
Fault,
All
Choices
are
Lost
The
creditor
shall
have
a
right
to
indemnity
for
damages
when,
through
the
fault
of
(3)
If
all
the
things
are
lost
through
the
fault
of
the
debtor,
the
choice
by
the
the
debtor,
all
the
things
which
are
alternatively
the
object
of
the
obligation
have
creditor
shall
fall
upon
the
price
of
any
one
of
them,
also
with
indemnity
for
been
lost,
or
the
compliance
of
the
obligation
has
become
impossible.
damages.
The
indemnity
shall
be
fixed
taking
as
a
basis
the
value
of
the
last
thing
which
The
same
rules
shall
be
applied
to
obligations
to
do
or
not
to
do
in
case
one,
some
disappeared,
or
that
of
the
service
which
last
became
impossible.
or
all
of
the
prestations
should
become
impossible.
(1136a)
Damages
other
than
the
value
of
the
last
thing
or
service
may
also
be
awarded.
(1135a)
• Conferment
of
right
of
choice
to
the
creditor
must
always
be
express.
• Obligation
ceases
to
be
alternative
when
choice
is
communicated
to
the
debtor.
• Debtor
will
not
be
liable
for
loss
of
choices,
even
if
obligation
ceases
to
become
alternative
and
becomes
simple.
• Until
communication
is
done,
law
provides
rules
as
to
the
debtor’s
o He
has
the
right
of
choice,
after
all,
and
the
creditor
cannot
responsibility:
complain.
o One
of
the
things
is
lost
through
a
fortuitous
event
Debtor
delivers
what
creditor
chooses
from
the
• However,
when
all
of
the
alternative
prestations
are
rendered
impossible,
the
creditor
is
entitled
to
damages.
remainder,
or
the
only
one
remaining.
o Loss
of
one
of
the
things
occurs
through
fault
of
the
debtor
• The
value
of
the
damages
will
be
based
on
the
value
of
the
last
choice
to
be
lost/rendered
impossible,
be
it
a
service
or
a
thing
to
give.
• Creditor
may
claim
any
of
the
remaining
options.
• Creditor
may
claim
the
price
of
the
thing
which
• Contrast
with
previous
provision:
o Creditor
only
needs
to
render
impossible
at
least
one
of
the
disappeared.
prestations.
• Regardless
of
what
the
creditor
picks,
he
has
a
right
to
o Debtor
must
impair
all
of
the
prestations
damages.
o If
all
things
are
lost
through
fault
of
the
debtor
• Creditor
chooses
the
price
of
any
one
of
them.
• Also
with
an
indemnity
for
damages.
32
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1206
–
Facultative
Obligations
o “Individually
has
the
same
meaning
as
“collectively”,
“separately”,
When
only
one
prestation
has
been
agreed
upon,
but
the
obligor
may
render
“distinctly”,
etc.
another
in
substitution,
the
obligation
is
called
facultative.
Ex.
An
agreement
(where
the
parties
agree)
to
be”
individiaully
liable”
creates
a
several
obligation.
The
loss
or
deterioration
of
the
thing
intended
as
a
substitute,
through
the
o Other
words/phrases
denoting
several
obligation
negligence
of
the
obligor,
does
not
render
him
liable.
But
once
the
substitution
has
• Juntos
o
sepadaramente
been
made,
the
obligor
is
liable
for
the
loss
of
the
substitute
on
account
of
his
• Mancomun
o
insolidum
delay,
negligence
or
fraud.
(n)
o When
a
contract
says
“I
promise”
(singular)
and
is
signed
by
two
or
more
promisors
• Facultative
Obligation
–
only
one
prestation
has
been
agreed
upon,
but
obligor
may
render
another
in
substitution
Art.
1208
–
Joint
Obligations
Ex.
“I
will
give
you
my
piano,
but
I
may
give
you
my
TV
as
a
substitute.
If
from
the
law,
or
the
nature
or
the
wording
of
the
obligations
to
which
the
Thus,
only
the
piano
is
due
and
only
the
loss
of
this
piano
makes
me
preceding
article
refers
the
contrary
does
not
appear,
the
credit
or
debt
shall
be
liable
for
damages.”
presumed
to
be
divided
into
as
many
shares
as
there
are
creditors
or
debtors,
the
• Creditor
cannot
refuse
the
substitute,
unless
such
is
unlawful.
credits
or
debts
being
considered
distinct
from
one
another,
subject
to
the
Rules
of
• Once
substitution
has
been
made,
obligor
is
liable
for
its
loss.
Court
governing
the
multiplicity
of
suits.
(1138a)
• Presumption
of
law
–
obligation
is
always
a
joint
one.
SECTION
4.
-‐
Joint
and
Solidary
Obligations
o Un
Pak
Leung
v.
Negorra
–
in
the
absence
of
facts
that
the
defendants
made
themselves
individually
liable
for
the
whole
amount,
they
are
only
liable
for
their
share
in
the
debt.
• Joint
Obligation
–
an
obligation
where
the
debtors
are
only
bound
to
pay
Art.
1207
–
Solidary
Obligations
their
share
and
the
creditors
can
only
claim
their
share.
The
concurrence
of
two
or
more
creditors
or
of
two
or
more
debtors
in
one
and
the
Ex.
A
and
B
owe
C
and
D
₱1000.
same
obligation
does
not
imply
that
each
one
of
the
former
has
a
right
to
demand,
o C
can
collect
₱250
each
from
A
and
B.
or
that
each
one
of
the
latter
is
bound
to
render,
entire
compliance
with
the
o D
can
also
collect
₱250
each
from
A
and
B.
prestation.
There
is
a
solidary
liability
only
when
the
obligation
expressly
so
states,
o But
if
A
owns
only
1/3
of
the
indebtedness,
and
C
only
1/5
of
or
when
the
law
or
the
nature
of
the
obligation
requires
solidarity.
(1137a)
the
credit:
o Creditors
and
debtors
shall
collect
and
pay
only
in
• Solidary
Obligation
–
a
situation
where
there
are
debts
incurred
by
2
or
proportion
to
what
they
own
and
owe.
more
debtors
in
favor
of
2
or
more
creditors,
and
the
right
is
given
to
o In
this
case,
A
only
pays
1/3
of
the
₱1000,
split
such
that
anyone,
some
or
all
of
creditors,
to
demand
the
satisfaction
of
the
TOTAL
C
gets
1/5
and
D
gets
4/5.
obligation
from
anyone,
some,
or
all
of
the
debtors.
o Anyone
of
the
creditors
may
demand
fulfillment
of
the
entire
Art.
1209
–
When
Division
is
Impossible
obligation
from
any
one
of
the
debtor,
not
just
for
the
share
of
If
the
division
is
impossible,
the
right
of
the
creditors
may
be
prejudiced
only
by
that
debtor.
their
collective
acts,
and
the
debt
can
be
enforced
only
by
proceeding
against
all
the
o Only
exists
when
it
is
expressly
stated,
or
when
law
or
nature
of
debtors.
If
one
of
the
latter
should
be
insolvent,
the
others
shall
not
be
liable
for
his
obligation
so
requires.
share.
(1139)
• Ronquillo
v.
CA
–
the
following
terms
indicate
a
solidary
obligation:
Art.
1210
–
Indivisibility
and
Solidarity
33
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
The
indivisibility
of
an
obligation
does
not
necessarily
give
rise
to
solidarity.
Nor
• D
can
collect
the
whole
amount
from
anyone,
BUT
the
does
solidarity
of
itself
imply
indivisibility.
(n)
debtor
can
only
pay
the
balance
of
the
debts
that
have
already
matured.
• If
division
of
the
obligation
is
impossible,
and
the
obligation
is
joint,
the
2. A
due
on
Monday,
B
on
Tues,
C
on
Wed.
creditors
must
act
collectively
• D
can
collect
from
any
one
of
them,
but
can
only
collect
o One
creditor
cannot
undertake
an
act
which
will
prejudice
the
₱5,000
on
Monday
(since
only
A’s
debt
has
matured)
others,
unless
he
is
authorized
by
the
others
to
undertake
such
an
act.
• If
several
debtors
are
obliged
to
give
an
indivisible
obligation
(like
a
house)
Art.
1212
–
Acts
of
Solidary
Creditors
all
of
them
must
be
sued
if
they
renege
on
their
obligation.
Each
one
of
the
solidary
creditors
may
do
whatever
may
be
useful
to
the
others,
but
o So
if
one
of
the
debtors
refuses
to
deliver
the
house,
the
not
anything
which
may
be
prejudicial
to
the
latter.
(1141a)
obligation
is
turned
into
a
claim
for
damages.
o A
joint
indivisible
obligation
becomes
a
claim
for
damages
the
• As
mentioned
before,
solidary
creditors
may
not
do
anything
which
may
moment
any
one
of
the
debtors
does
not
comply
with
the
prejudice
the
others.
undertaking.
Ex.
Refusing
payment
when
debtors
are
ready
to
pay
is
prejudicial
to
the
o How
will
the
damages
be
divided?
others
creditors.
• Those
debtors
who
were
ready
to
fulfill
the
obligation
Thus,
the
other
creditors
can
ask
for
damages.
are
only
liable
for
their
corresponding
portion.
• They
can,
however,
do
things
that
may
be
useful
for
the
others.
Ex.
3
debtors
must
give
a
house,
and
one
refuses.
In
Ex.
Quisumbing
v.
CA
–
one
of
the
solidary
creditors
filed
a
suit
for
the
following
claim
for
damages,
the
2
debtors
collection
against
the
solidary
debtors.
This
was
held
to
be
a
useful
who
were
going
to
deliver
the
house
are
each
act,
and
thus
could
be
done
just
by
one
of
the
creditors.
only
liable
for
1/3
the
price
of
the
house.
• The
debtor
who
is
responsible
for
the
damages
claim
Art.
1213
–
Mutual
Trust
among
Solidary
Creditors
may
be
liable
for
the
additional
damages.
A
solidary
creditor
cannot
assign
his
rights
without
the
consent
of
the
others.
(n)
o Debtors
shall
not
be
responsible
for
another
debtor
who
becomes
insolvent.
• The
relationship
between
the
solidary
creditors
should
be
one
of
mutual
• Solidarity
does
not
mean
indivisibility
and
vice
versa.
trust.
o Solidary
refers
to
nature
of
the
obligors
and
obligees
• To
preserve
this
–
a
solidary
creditor
cannot
assign
his
rights
to
others
o Indivisibility
refers
to
nature
of
the
prestation
without
consent
of
the
others.
(they
might
not
know
the
new
co-‐creditor
as
well,
for
Ex.
–
the
trust
may
be
lost)
Art.
1211
–
Not
Bound
in
the
Same
Manner
Solidarity
may
exist
although
the
creditors
and
the
debtors
may
not
be
bound
in
the
Art.
1214
–
Judicial
or
Extrajudicial
Demand
by
a
Solidary
Creditor
same
manner
and
by
the
same
periods
and
conditions.
(1140)
The
debtor
may
pay
any
one
of
the
solidary
creditors;
but
if
any
demand,
judicial
or
extrajudicial,
has
been
made
by
one
of
them,
payment
should
be
made
to
him.
• Solidarity
can
still
exist
even
if
creditors
and
debtors
are
bound
in
different
(1142a)
manners,
or
have
different
conditions/periods.
Ex.
1.
A,
B
and
C
are
solidarily
indebted
to
D
for
₱15,000.
• General
Rule
-‐
debtor
may
pay
any
of
the
solidary
creditors.
o However,
when
demand
(judicial
or
extrajudicial)
is
made
by
one
of
the
creditors,
payment
should
be
made
to
he
who
demanded.
34
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Payment
to
another
creditor
–
the
obligation
will
not
be
extinguished,
• This
reiterates
the
rule
that
any
one
or
some
or
all
of
the
solidary
debtors
payment
is
invalid
insofar
as
the
share
of
the
demanding
creditor,
in
case
may
be
made
to
pay
the
debt,
so
long
as
it
has
not
been
fully
collected.
the
other
creditor
does
not
give
it.
• Thus,
proceedings
against
one
of
the
debtors
will
not
be
a
bar
to
any
Ex.
A
is
liable
to
pay
B
and
C
₱10,000.
If
B
demands
from
A,
A
must
further
proceedings
against
another,
provided
that
the
debt
is
still
pay
to
B.
subsisting
(at
the
end
of
the
day,
if
the
debtors
still
owe
something,
then
If
A
pays
C,
B
is
still
entitled
to
his
share
from
A
in
case
C
they
must
pay
it
–
and
since
the
obligation
is
solidary,
the
creditor
can
does
not
give
B
his
share.
claim
from
anyone.)
• Atty.
Mel
disagrees
with
this
interpretation
–
collecting
payment
is
• Solidary
creditor
has
a
right
to
refuse
partial
payment
–
however,
if
he
beneficial
to
the
other
creditors
and
thus
should
be
allowed.
does
accept
partial
payment
from
one
debtor,
this
does
not
bar
him
from
• If
there
are
2
or
more
debtors,
only
the
debtor
upon
whom
demand
is
demanding
from
the
others
the
rest
of
the
obligation.
made
is
bound
to
pay
to
the
specific
creditor
who
made
the
demand.
Art.
1217
–
Payment
by
Solidary
Debtors
Payment
made
by
one
of
the
solidary
debtors
extinguishes
the
obligation.
If
two
or
Art.
1215
–
Extinguishment
by
a
Solidary
Creditor
more
solidary
debtors
offer
to
pay,
the
creditor
may
choose
which
offer
to
accept.
Novation,
compensation,
confusion
or
remission
of
the
debt,
made
by
any
of
the
solidary
creditors
or
with
any
of
the
solidary
debtors,
shall
extinguish
the
obligation,
He
who
made
the
payment
may
claim
from
his
co-‐debtors
only
the
share
which
without
prejudice
to
the
provisions
of
Article
1219.
corresponds
to
each,
with
the
interest
for
the
payment
already
made.
If
the
payment
is
made
before
the
debt
is
due,
no
interest
for
the
intervening
period
may
The
creditor
who
may
have
executed
any
of
these
acts,
as
well
as
he
who
collects
be
demanded.
the
debt,
shall
be
liable
to
the
others
for
the
share
in
the
obligation
corresponding
to
them.
(1143)
When
one
of
the
solidary
debtors
cannot,
because
of
his
insolvency,
reimburse
his
share
to
the
debtor
paying
the
obligation,
such
share
shall
be
borne
by
all
his
co-‐
• These
are
modes
of
extinguishing
obligations,
to
be
discussed
in
the
next
debtors,
in
proportion
to
the
debt
of
each.
(1145a)
title.
Briefly,
they
are:
1. Novation
–
change
of
creditors,
debtors,
or
principal
condition.
• This
article
deals
with
the
effect
of
payment
by
solidary
debtors,
with
2. Compensation
–
two
persons
are
creditors
and
debtors
of
each
regard
to
several
relationships.
other.
3. Confusion
–
creditor
and
debtor
are
merged
in
the
same
person.
1. Between
solidary
debtors
and
creditor(s)
4. Remission
–
condonation
of
an
obligation.
• Payment
made
by
one
of
the
solidary
debtors
(payment
in
full)
• Any
of
the
solidary
debtors
can
undertake
these
options
with
any
of
the
extinguishes
the
obligation.
solidary
debtors,
and
thus
the
obligation
will
be
extinguished.
However,
he
• Creditor
is
given
a
right
to
choose
which
offer
to
accept,
if
there
who
does
these
acts
will
be
liable
to
his
fellow
creditors
for
their
share
in
are
more
than
one
debtors
offering
to
pay.
the
obligation.
2. Among
the
solidary
debtors
• He
who
paid
the
debt
can
demand
reimbursement
from
his
co-‐
Art.
1216
–
Rights
of
Creditor
Against
Solidary
Debtors
debtors
for
their
proportionate
shares
(with
legal
interest
from
The
creditor
may
proceed
against
any
one
of
the
solidary
debtors
or
some
or
all
of
the
time
that
he
paid).
them
simultaneously.
The
demand
made
against
one
of
them
shall
not
be
an
• When
one
of
the
debtors
cannot
reimburse
because
he
is
obstacle
to
those
which
may
subsequently
be
directed
against
the
others,
so
long
as
insolvent,
the
other
debtors
will
pay
his
share,
in
proportion
with
the
debt
has
not
been
fully
collected.
(1144a)
their
respective
debts.
3. Among
the
solidary
creditors
35
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o The
receiving
creditor
(the
person
who
was
paid)
is
jointly
liable
If
payment
was
made
BEFORE
remission,
A
is
liable
to
B
to
the
others
for
their
corresponding
shares.
for
₱500
because
the
remission
had
no
effect.
Art.
1221
–
Loss
or
Impossibility
of
Prestation
in
Relation
to
Solidary
Art.
1218
–
When
Payment
has
Prescribed
or
become
Illegal
Debtors
Payment
by
a
solidary
debtor
shall
not
entitle
him
to
reimbursement
from
his
co-‐ If
the
thing
has
been
lost
or
if
the
prestation
has
become
impossible
without
the
debtors
if
such
payment
is
made
after
the
obligation
has
prescribed
or
become
fault
of
the
solidary
debtors,
the
obligation
shall
be
extinguished.
illegal.
(n)
If
there
was
fault
on
the
part
of
any
one
of
them,
all
shall
be
responsible
to
the
• If
a
debtor
pays
after
the
obligation
is
prescribed
or
has
become
illegal,
creditor,
for
the
price
and
the
payment
of
damages
and
interest,
without
prejudice
essentially,
he
is
paying
a
non-‐existent
debt.
to
their
action
against
the
guilty
or
negligent
debtor.
o Prescription
means
that
the
cause
of
action
has
already
lapsed
and
ceased
to
exist.
If
through
a
fortuitous
event,
the
thing
is
lost
or
the
performance
has
become
impossible
after
one
of
the
solidary
debtors
has
incurred
in
delay
through
the
• Thus,
he
cannot
demand
that
his
co-‐debtors
reimburse
him
for
their
judicial
or
extrajudicial
demand
upon
him
by
the
creditor,
the
provisions
of
the
shares.
preceding
paragraph
shall
apply.
(1147a)
Art.
1219
–
Remission
of
a
Solidary
Debtor’s
Liability
• This
article
provides
rules
for
when
the
thing
to
be
delivered
is
lot,
or
when
The
remission
made
by
the
creditor
of
the
share
which
affects
one
of
the
solidary
the
prestation
becomes
impossible
to
comply
with.
debtors
does
not
release
the
latter
from
his
responsibility
towards
the
co-‐debtors,
1. Loss
is
without
fault
of
debtors,
and
without
delay
–
obligation
is
in
case
the
debt
had
been
totally
paid
by
anyone
of
them
before
the
remission
was
extinguished.
effected.
(1146a)
2. If
with
fault
of
any
of
the
debtors
–
all
shall
be
liable
for
damages
with
Art.
1220
–
Remission
of
the
Whole
Obligation
interest
without
prejudice
innocent
debtors
actions
against
the
guilty
or
The
remission
of
the
whole
obligation,
obtained
by
one
of
the
solidary
debtors,
the
negligent
debtor.
3. Loss
is
due
to
fault
of
a
solidary
debtor
does
not
entitle
him
to
reimbursement
from
his
co-‐debtors.
(n)
Ex.
A,
B,
and
C
are
obliged
to
deliver
a
truck
worth
₱15,000
to
D
If
it
is
lost
through
the
fault
of
C,
A
and
B
are
still
• When
a
creditor
remits
the
debt
of
one
of
the
solidary
debtors,
the
effects
responsible
to
D
for
the
price
of
the
truck
as
well
as
depend
on
when
such
remission
was
done.
damages.
(in
solidary
obligations,
the
fault/delay
of
one
o If
the
creditor
remits
the
whole
debt
before
payment
was
made,
of
the
debtors
is
the
fault/delay
of
all)
the
person
who
convinced
the
creditor
to
remit
cannot
claim
A
and
B
can
recover
from
C
damages.
anything
from
his
co-‐debtors,
because
he
hasn’t
paid
anything.
4. Loss
is
without
fault
but
after
delay
o If
debt
had
been
paid
already,
and
the
creditor
is
convinced
to
o D
can
recover
damages
from
the
innocent
debtors,
and
the
condone
the
debt,
this
has
no
effect.
However,
the
debtor
who
innocent
debtors
have
the
same
action
against
the
offending
paid
can
still
go
after
his
other
co-‐debtors
for
their
share.
debtor
as
mentioned
in
the
previous
number.
• This
article
is
only
applicable
when
there
is
one
creditor.
o Because
one
of
them
was
in
default,
all
of
them
now
are
Ex.
A
and
B
are
solidarily
liable
to
C
for
₱1,000.
responsible
even
for
a
fortuitous
event.
C
remits
A’s
share.
If
B
pays
C
₱1,000,
he
cannot
go
after
A
for
₱500.
C,
however,
has
to
return
₱500
to
B.
36
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1222
–
Solidary
Debtor’s
Defenses
• Divisible
obligation
–
an
obligation
whose
object,
in
its
delivery
or
A
solidary
debtor
may,
in
actions
filed
by
the
creditor,
avail
himself
of
all
defenses
performance,
is
capable
of
partial
fulfillment
which
are
derived
from
the
nature
of
the
obligation
and
of
those
which
are
• Indivisible
Obligation
–
not
capable
of
partial
fulfillment
personal
to
him,
or
pertain
to
his
own
share.
With
respect
to
those
which
• Test
–
not
the
possibility
or
impossibility
of
partial
performance,
but
personally
belong
to
the
others,
he
may
avail
himself
thereof
only
as
regards
that
rather,
the
purpose
of
the
obligation
or
the
intention
of
the
parties
part
of
the
debt
for
which
the
latter
are
responsible.
(1148a)
o The
object/service
may
be
physically
divisible,
but
if
the
parties/law
say
it
should
be
indivisible,
it’s
indivisible.
• Defenses
available
to
a
solidary
debtor
o However,
if
physically
indivisible,
it’s
always
indivisible.
1. Derived
from
the
nature
of
the
obligation
• This
article
says
that
the
“Nature
and
Effect
of
Obligations”
(arts
1163-‐
1178)
are
also
applicable
to
these
kinds
of
obligations,
even
if
there
is
only
Ex.
A
and
B
are
solidarily
liable
to
C
for
₱4,000.
D
pays
this
one
debtor
or
creditor.
entire
debt.
If
C
sues
A,
A
can
raise
the
defense
of
payment.
Art.
1224
-‐
Liabilities
in
Joint
Indivisible
Obligations
This
is
a
complete
defense
–
because
the
A
joint
indivisible
obligation
gives
rise
to
indemnity
for
damages
from
the
time
obligation
is
nullified
and
extinguished
anyone
of
the
debtors
does
not
comply
with
his
undertaking.
The
debtors
who
may
o Other
examples:
have
been
ready
to
fulfill
their
promises
shall
not
contribute
to
the
indemnity
Prescription
beyond
the
corresponding
portion
of
the
price
of
the
thing
or
of
the
value
of
the
Remission
service
in
which
the
obligation
consists.
(1150)
Fraud
• Joint
Debtors
–
only
bound
to
perform
their
respective
portion.
In
2. Personal
to
debtor
sued
divisible,
this
is
easy
o Insanity
at
the
time
the
obligation
was
contracted
(only
• If
obligation
is
indivisible,
each
debtor
must
coordinate
with
his
co-‐debtors
with
respect
to
the
specific
insane
debtor)
for
the
fulfillment
of
the
obligation.
o Incapacity
• A,
B,
and
C
are
required
to
give
a
computer
worth
₱30,000
to
D,
but
when
o Mistake
D
demands
payment,
only
C
unjustly
refuses
to
deliver.
o Violence
o Obligation
is
then
turned
into
a
claim
for
damages,
as
well
as
the
3. Personal
to
other
solidary
debtors
amount
of
the
computer.
o A
and
B
are
liable
for
their
share
in
the
value
of
the
PC
(₱10,000
each).
o But
only
C
shall
be
liable
for
all
damages.
SECTION
5.
-‐
Divisible
and
Indivisible
Obligations
Art.
1225
–
Divisible
and
Indivisible
Obligations
For
the
purposes
of
the
preceding
articles,
obligations
to
give
definite
things
and
those
which
are
not
susceptible
of
partial
performance
shall
be
deemed
to
be
Art.
1223
–
Nature
and
Effect
of
Divisible
and
Indivisible
Obligations
indivisible.
The
divisibility
or
indivisibility
of
the
things
that
are
the
object
of
obligations
in
which
there
is
only
one
debtor
and
only
one
creditor
does
not
alter
or
modify
the
When
the
obligation
has
for
its
object
the
execution
of
a
certain
number
of
days
of
provisions
of
Chapter
2
of
this
Title.
(1149)
work,
the
accomplishment
of
work
by
metrical
units,
or
analogous
things
which
by
their
nature
are
susceptible
of
partial
performance,
it
shall
be
divisible.
37
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
However,
even
though
the
object
or
service
may
be
physically
divisible,
an
Indivisible
–
A
promises
not
to
sell
cigarettes
for
one
year
–
the
obligation
is
indivisible
if
so
provided
by
law
or
intended
by
the
parties.
performance
is
continuous.
Divisible
–
A
promises
not
to
sell
cigarettes
during
Sundays
and
In
obligations
not
to
do,
divisibility
or
indivisibility
shall
be
determined
by
the
holidays
–
performance
is
NOT
continuous
character
of
the
prestation
in
each
particular
case.
(1151a)
o Generally,
“to
do”
and
“not
to
do”
are
indivisible
(except
“to
do”
mentioned
above).
• This
article
deems
some
obligations
indivisible,
and
others,
divisible.
It
lays
down
the
general
rule.
• Again,
the
purpose
of
the
obligation
is
the
controlling
circumstance.
SECTION
6.
-‐
Obligations
with
a
Penal
Clause
A. Obligations
deemed
indivisible:
1. Obligations
to
give
definite
things
–
a
particular
electric
fan
2. Obligations
which
are
not
susceptible
of
partial
performance
–
Art.
1226
–
Definition
of
Oblig
with
Penal
Clause
to
sing
a
song,
to
dance
a
dance
In
obligations
with
a
penal
clause,
the
penalty
shall
substitute
the
indemnity
for
3. Obligations
provided
by
law
to
be
indivisible
–
payment
of
taxes
damages
and
the
payment
of
interests
in
case
of
noncompliance,
if
there
is
no
4. Obligations
intended
by
parties
to
be
indivisible,
even
if
the
thing
stipulation
to
the
contrary.
Nevertheless,
damages
shall
be
paid
if
the
obligor
is
physically
divisible:
refuses
to
pay
the
penalty
or
is
guilty
of
fraud
in
the
fulfillment
of
the
obligation.
“Pay
me
₱2,000
on
January
5.”
The
intention
is
clear
–
the
₱2,000
should
be
delivered
at
The
penalty
may
be
enforced
only
when
it
is
demandable
in
accordance
with
the
one
time
and
as
a
whole
provisions
of
this
Code.
(1152a)
De
Leon:
Suppose
there
are
2
debtors,
is
the
obligation
still
indivisible?
YES
• SSS
v.
Moonwalk
–
a
penal
clause
is
“an
accessory
obligation
which
the
o It
is
divisible
as
to
the
two
debtors,
because
they
parties
attach
to
a
principal
obligation
for
the
purpose
of
insuring
the
can
deliver
it
in
parts
performance
thereof
by
imposing
on
the
debtor
a
special
prestation
o However,
as
far
as
creditor
is
concerned,
the
(generally
consisting
in
the
payment
of
money)
in
case
the
obligation
is
not
money
should
be
delivered
as
a
whole
and
is
fulfilled
or
irregularly
or
inadequately
fulfilled.
thus
indivisible
–
intention
of
the
parties
is
• Obligation
with
a
penal
clause
–
is
one
which
contains
an
accessory
controlling
undertaking
to
pay
a
previously
stipulated
indemnity
in
case
of
breach
of
B. Obligations
deemed
divisible:
the
principal
prestation,
intended
primarily
to
induce
its
fulfillment.
o Obligations
which
have
for
their
object
the
execution
of
a
certain
• Purposes
of
penal
clauses:
number
of
days
of
work
–
“Paint
my
house
and
finish
within
10
o To
insure
performance
days.”
o To
substitute
a
penalty
for
the
indemnity
of
damages/payment
of
o Obligations
which
have
for
their
object
the
accomplishment
of
interest
work
by
metrical
units.
–
“Make
a
table
3
feet
wide
and
5
feet
o To
punish
the
debtor
long”
• Kinds
of
Penal
Clause:
o Obligations
which
by
their
nature
are
susceptible
of
partial
a. As
to
Origin
performance
–
Obligation
to
render
3
song
numbers,
obligation
to
1. Legal
penal
Clause
–
provided
by
law
pay
money
in
installments.
2. Conventional
Penal
Clause
–
provided
for
by
stipulation
C. Divisibility/Indivisiblity
of
obligations
not
to
do
of
the
parties
o Character
of
the
prestation
in
the
particular
case
shall
determine
b. As
to
Purpose
38
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
1. Compensatory
–
penalty
takes
place
of
damages
Art.
1228
–
Proof
is
Not
Necessary
2. Punitive
–
imposed
as
a
penalty/punishment
for
breach
Proof
of
actual
damages
suffered
by
the
creditor
is
not
necessary
in
order
that
the
c. As
to
demandability/effect
penalty
may
be
demanded.
(n)
1. Subsidiary/Alternative
–
only
the
penalty
can
be
enforced
Art.
1229
–
Court
Intervention
2. Joint/Cumulative
–
both
principal
obligation
and
penalty
The
judge
shall
equitably
reduce
the
penalty
when
the
principal
obligation
has
been
can
be
enforced
partly
or
irregularly
complied
with
by
the
debtor.
Even
if
there
has
been
no
• General
Rule
–
in
obligations
with
a
penal
clause,
the
penalty
takes
the
performance,
the
penalty
may
also
be
reduced
by
the
courts
if
it
is
iniquitous
or
place
of
damages
and
the
payment
of
interest
in
case
of
non-‐compliance.
unconscionable.
(1154a)
• Thus,
proof
of
actual
damage
suffered
is
not
necessary
to
enforce
the
penalty
as
long
as
there
is
non-‐compliance.
• One
of
the
cases
where
the
court
steps
in
between
the
parties.
• Creditor
may
recover
damages
in
addition
to
the
penalty:
• If
the
penalty
is
so
unconscionable,
then
the
court
may
temper,
reduce,
or
1. When
so
stipulated
delete
it.
2. When
obligor
refuses
to
pay
the
penalty
• If
penalty
clause
is
so
unconscionable
that
its
enforcement
would
3. When
obligor
is
guilty
of
fraud
in
the
fulfillment
of
the
obligation
–
constitute
an
undue
deprivation
or
confiscation
of
property,
the
courts
can
creditor
can
recover
damages
caused
by
such
fraud.
strike
it
down
as
invalid.
Art.
1227
–
Penalty
and
Fulfillment
Art.
1230
–
Nullity
of
the
Penal
Clause
The
debtor
cannot
exempt
himself
from
the
performance
of
the
obligation
by
The
nullity
of
the
penal
clause
does
not
carry
with
it
that
of
the
principal
obligation.
paying
the
penalty,
save
in
the
case
where
this
right
has
been
expressly
reserved
for
him.
Neither
can
the
creditor
demand
the
fulfillment
of
the
obligation
and
the
The
nullity
of
the
principal
obligation
carries
with
it
that
of
the
penal
clause.
(1155)
satisfaction
of
the
penalty
at
the
same
time,
unless
this
right
has
been
clearly
granted
him.
However,
if
after
the
creditor
has
decided
to
require
the
fulfillment
of
• If
the
penal
clause
is
null,
the
original
obligation
still
persists.
the
obligation,
the
performance
thereof
should
become
impossible
without
his
• If
the
original
obligation
is
null,
the
penal
clause
is
null
as
well.
fault,
the
penalty
may
be
enforced.
(1153a)
39
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Chapter
4:
Extinguishment
of
Obligations
o Receipt
of
principal
without
reservation
as
to
interest
gives
rise
to
presumption
of
payment
of
interest.
o Receipt
of
a
later
instalment
without
reservation
as
to
a
prior
GENERAL
PROVISIONS
installment
gives
rise
to
the
presumption
of
payment
of
the
prior
installment.
• Burden
of
proof
to
show
payment,
once
debt
is
established,
is
on
the
debtor.
• Payment
and
performance
are
synonymous.
Art.
1231
–
Modes
of
Extinguishment
Obligations
are
extinguished:
Art.
1233
-‐
Payment
must
be
Complete
(1)
By
payment
or
performance:
A
debt
shall
not
be
understood
to
have
been
paid
unless
the
thing
or
service
in
(2)
By
the
loss
of
the
thing
due:
which
the
obligation
consists
has
been
completely
delivered
or
rendered,
as
the
(3)
By
the
condonation
or
remission
of
the
debt;
case
may
be.
(1157)
(4)
By
the
confusion
or
merger
of
the
rights
of
creditor
and
debtor;
(5)
By
compensation;
• Payment
–
full
satisfaction
of
the
debt/obligation
(6)
By
novation.
o everything
that
is
necessary
to
satisfy
the
obligation,
consistent
with
the
object
of
the
same.
Other
causes
of
extinguishment
of
obligations,
such
as
annulment,
rescission,
• Anything
less
than
complete
performance
may
be
considered
to
be
a
fulfillment
of
a
resolutory
condition,
and
prescription,
are
governed
elsewhere
in
breach.
this
Code.
(1156a)
Art.
1234
–
Substantial
Performance
in
Good
Faith
• Provides
modes
by
which
obligations
can
be
extinguished.
If
the
obligation
has
been
substantially
performed
in
good
faith,
the
obligor
may
• Death
does
not
extinguish
an
obligation
unless
such
is
personal
or
recover
as
though
there
had
been
a
strict
and
complete
fulfillment,
less
damages
intransmissible
suffered
by
the
obligee.
(n)
• First
Exception
–
substantial
performance
o Generally,
anything
less
than
complete
=
breach
SECTION
1.
-‐
Payment
or
Performance
• In
this
case,
there
is
substantial
fulfillment
–
the
breach
is
not
material
enough
to
compel
the
creditor
to
rescind.
o Thus,
the
unperformed
part
should
not
destroy
the
value/purpose
of
the
contract.
Art.
1232
–
Payment
Defined
• Debtor
may
recover
as
if
there
had
been
a
strict
and
complete
fulfillment,
Payment
means
not
only
the
delivery
of
money
but
also
the
performance,
in
any
less
damages
suffered
by
creditor.
other
manner,
of
an
obligation.
(n)
o Creditor
is
benefitted
by
the
substantial
performance,
so
the
obligor
should
be
allowed
to
recover.
• Payment
is
not
exclusively
limited
to
giving
of
money
o The
damages
are
compensation
for
the
relative
breach
committed
• Payment
is
any
manner
of
performing
the
obligation
with
the
end
in
view
by
obligor.
of
extinguishing
it.
• Pagsibigan
v.
CA
–
the
debtor,
because
of
high
interest
rate
and
several
• Certain
presumptions
are
made
in
favor
of
payment
penalty
charges,
had
effectively
paid
more
than
the
original
amount
of
the
40
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
loan.
–
SC
ruled
that
there
was
substantial
compliance.
Thus,
debtor
was
Art.
1237
–
No
Subrogation
released
from
his
mortgage
–
“debtor
may
recover
as
if…”
Whoever
pays
on
behalf
of
the
debtor
without
the
knowledge
or
against
the
will
of
the
latter,
cannot
compel
the
creditor
to
subrogate
him
in
his
rights,
such
as
those
Art.
1235
–
Creditor
Accepts
Incompleteness
or
Irregularity
arising
from
a
mortgage,
guaranty,
or
penalty.
(1159a)
When
the
obligee
accepts
the
performance,
knowing
its
incompleteness
or
irregularity,
and
without
expressing
any
protest
or
objection,
the
obligation
is
Art.
1238
-‐
Donation
deemed
fully
complied
with.
(n)
Payment
made
by
a
third
person
who
does
not
intend
to
be
reimbursed
by
the
debtor
is
deemed
to
be
a
donation,
which
requires
the
debtor's
consent.
But
the
• Second
Exception
–
the
creditor
waives
the
damages
arising
from
the
payment
is
in
any
case
valid
as
to
the
creditor
who
has
accepted
it.
(n)
breach
of
contract
resulting
in
the
incompleteness/irregularity.
• He
must
express
his
objection,
because
if
not,
he
accepts
the
performance
• People
whose
payment
the
creditor
is
bound
to
accept:
as
fully
complied
with.
1. The
debtor
Esguerra
v.
Villanueva
2. Any
person
who
has
an
interest
in
the
obligation
(ex.
Guarantor)
o Debtor
said
that
since
creditor
received
partial
payments,
he
3. A
third
person
uninterested
in
the
obligation,
WHEN
STIPULATED.
rd
accepted
partial
performance
and
thus
the
obligation
should
be
• Payment
by
a
3
person
–
several
situations
may
arise.
These
will
considered
complied
with
determine
whether
the
third
person
becomes
a
creditor
as
to
the
original
o SC:
“receipt”
is
not
equivalent
to
“acceptance.”
debtor.
o Mere
receipt
is
not
enough
to
constitute
acceptance
–
in
fact,
1. Third
person
pays
without
knowledge
or
against
the
will
of
the
creditor
actually
manifested
their
dissatisfaction
debtor
o No
particular
manner
prescribed
for
the
creditor’s
objection
–
so
o The
third
person
can
only
recover
from
the
debtor
to
the
long
as
the
acts
of
the
creditor
at
the
time
of
the
irregular
extent
that
the
debtor
is
benefitted.
payment
show
that
the
former
is
not
satisfied.
o What
is
beneficial
to
the
debtor
is
determined
by
law
and
not
Tayag
v.
CA
the
will
of
the
debtor.
o Sellers
accepted
numerous
payments
in
installment
after
the
due
Ex.
A
owed
B
₱500,000
secured
by
a
mortgage.
date,
without
any
protest,
it
was
even
the
buyers
(debtors)
who
C
pays
B
without
knowledge/against
the
will
of
A.
filed
a
case
for
performance
of
the
sale
–
SC
held
that
these
acts
C
can
recover
the
₱500,000,
but
he
does
not
acquire
were
clearly
a
waiver
of
the
right
to
rescind
the
right
to
the
mortgage
–
he
cannot
foreclose
on
the
property.
Art.
1236
–
Payment
by
a
Third
Person
2. Third
person
pays
with
knowledge,
but
against
the
will
of
the
The
creditor
is
not
bound
to
accept
payment
or
performance
by
a
third
person
who
debtor
–
same
as
above
has
no
interest
in
the
fulfillment
of
the
obligation,
unless
there
is
a
stipulation
to
3. Third
person
pays
with
knowledge
and
consent
of
the
debtor
the
contrary.
o Third
person
can
recover
the
amount
he
paid
to
the
creditor.
o He
may
also
compel
the
creditor
to
transfer
to
him
any
Whoever
pays
for
another
may
demand
from
the
debtor
what
he
has
paid,
except
mortgage,
guaranty
or
penalty
that
if
he
paid
without
the
knowledge
or
against
the
will
of
the
debtor,
he
can
o There
is
legal
subrogation
here.
recover
only
insofar
as
the
payment
has
been
beneficial
to
the
debtor.
(1158a)
4. Creditor
accepts
payment
from
third
person,
because
its
stipulated
–
same
as
previous,
because
obviously
the
debtor
agrees
with
such
payment.
5. Third
person
pays
creditor
without
intending
to
be
reimbursed
by
the
debtor
41
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Obligation
is
extinguished,
regardless
of
the
debtor’s
Art.
1241
–
Payment
to
Incapacitated
or
Third
Persons
consent.
Payment
to
a
person
who
is
incapacitated
to
administer
his
property
shall
be
valid
if
o It’s
treated
as
a
donation.
he
has
kept
the
thing
delivered,
or
insofar
as
the
payment
has
been
beneficial
to
him.
Art.
1239
–
Payment
by
an
Incapacitated
Person
In
obligations
to
give,
payment
made
by
one
who
does
not
have
the
free
disposal
of
Payment
made
to
a
third
person
shall
also
be
valid
insofar
as
it
has
redounded
to
the
thing
due
and
capacity
to
alienate
it
shall
not
be
valid,
without
prejudice
to
the
the
benefit
of
the
creditor.
Such
benefit
to
the
creditor
need
not
be
proved
in
the
provisions
of
Article
1427
under
the
Title
on
"Natural
Obligations."
(1160a)
following
cases:
(1)
If
after
the
payment,
the
third
person
acquires
the
creditor's
rights;
• “Free
Disposal
of
the
Thing”
–
the
thing
must
not
be
subject
to
any
claim
(2)
If
the
creditor
ratifies
the
payment
to
the
third
person;
or
lien
or
encumbrance
of
a
third
person.
(3)
If
by
the
creditor's
conduct,
the
debtor
has
been
led
to
believe
that
the
third
• “Capacity
to
alienate”
–
person
is
not
incapacitated
to
enter
into
contracts
person
had
authority
to
receive
the
payment.
(1163a)
and
to
make
a
disposition
of
the
thing
due.
• Thus,
payments
by
any
person
not
possessing
these
qualities
is
invalid.
• Effect
of
payment
to
an
incapacitated
person
o Exception:
People
17
years
old
and
below
who
enter
into
a
o not
valid,
unless
such
person
keeps
the
thing
paid
or
delivered,
or
contract
without
the
consent
of
their
parent/guardian,
and
who
was
benefitted
by
the
payment
pay
voluntarily
to
fulfill
the
obligation
have
no
right
to
recover
Ex.
If
A
gives
to
B,
a
minor,
1000
in
payment
of
the
debt,
and
C
from
the
creditor
who
has
spent
it
in
good
faith.
(based
on
Art.
loses
700
because
of
negligence
–
the
payment
should
be
1427
of
Civil
Code
and
234
and
236
of
the
Family
Code)
considered
made
only
to
the
extent
of
300.
If
B
keeps
the
money,
or
spent
it
on
purposes
useful
to
him
–
Art.
1240
–
To
Whom
Payment
Should
be
Made
payment
shall
be
valid
Payment
shall
be
made
to
the
person
in
whose
favor
the
obligation
has
been
• Effect
of
payment
to
a
third
person
constituted,
or
his
successor
in
interest,
or
any
person
authorized
to
receive
it.
o Not
valid,
except
insofar
as
it
has
redounded
to
the
benefit
of
the
(1162a)
creditor.
o Thus
benefit
is
not
presumed
and
must
be
proven
by
evidence.
• Payment
should
only
be
paid
to
o Exceptions
–
when
it
need
not
be
proven
(S.R.E.)
o The
creditor
1. Subrogation
-‐
If
after
the
payment,
the
3rd
person
acquires
o His
successors
in
interest
the
creditor’s
rights
o Any
person
authorized
to
receive
it.
• A
owed
B
1000.
He
does
not
pay
on
due
date,
so
B
Authorized
by
the
creditor
adds
100
as
interest.
Authorized
by
the
law
• A
pays
X,
a
third
person,
the
1000.
• Payment
made
to
a
third
person,
even
if
through
error
and
good
faith
does
• If
B
empowers
X
to
collect
the
P100
interest
for
himself
not
release
debtor
of
obligation
to
pay.
Creditor
can
still
demand
payment.
(X),
then
the
benefit
to
the
creditor
need
not
be
o If
it
becomes
impossible
to
recover,
any
loss
shall
be
borne
by
the
proven.
deceived
debtor
2. Ratification
by
the
creditor
3. Estoppel
on
the
part
of
the
creditor
• B
tells
A
that
he
can
pay
X
the
indebtedness.
• B
cannot
disclaim
the
payment
to
X.
•
42
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1242
–
Payment
to
Possessor
of
Credit
3. There
must
be
an
agreement
between
creditor
and
debtor
that
Payment
made
in
good
faith
to
any
person
in
possession
of
the
credit
shall
release
the
obligation
is
immediately
extinguished.
the
debtor.
(1164)
• If
thing
is
of
less
value
–
for
example,
the
piano
o The
debt
is
extinguished
to
the
extent
of
the
value
of
the
thing.
o Unless
the
parties
agree
that
the
whole
obligation
is
extinguished.
• A
person
in
possession
of
the
credit
is
presumed
to
own
the
credit.
• The
examples
about
“to
bearer”
checks
fall
under
this
article.
• Debtor
has
no
choice
in
the
payment
except
to
give
what
is
agreed
upon.
Art.
1247
–
Extrajudicial
Expenses
o Unless
the
obligation
is
facultative/alternative.
Unless
it
is
otherwise
stipulated,
the
extrajudicial
expenses
required
by
the
payment
shall
be
for
the
account
of
the
debtor.
With
regard
to
judicial
costs,
the
Rules
of
Court
shall
govern.
(1168a)
Art.
1245
–
Dation
in
Payment
Dation
in
payment,
whereby
property
is
alienated
to
the
creditor
in
satisfaction
of
a
• Principal
behind
this
is
that
the
creditor
usually
is
the
beneficiary
of
the
debt
in
money,
shall
be
governed
by
the
law
of
sales.
(n)
obligation
• Thus,
it
is
the
debtor
who
does
service,
and
must
bear
any
extra-‐judicial
• Dation
in
payment
/
dacion
en
pago
–
conveyance
of
ownership
of
a
thing
costs
in
his
performance.
as
an
accepted
equivalent
or
performance.
Ex.
D
owes
C
₱30,000.
To
fulfill
this
obligation,
D,
with
consent
of
C,
delivers
a
piano.
Art.
1248
–
Partial
Receipt
and
Payment
Unless
there
is
an
express
stipulation
to
that
effect,
the
creditor
cannot
be
• Requisites
of
dation
in
payment:
(P.D.A.)
compelled
partially
to
receive
the
prestations
in
which
the
obligation
consists.
1. The
performance
of
the
prestation
in
lieu
of
payment
Neither
may
the
debtor
be
required
to
make
partial
payments.
Delivery
of
a
realy
thing,
or
a
real
right,
or
a
credit
2. There
must
be
some
difference
between
the
prestation
due
and
that
given
in
substitution
43
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
However,
when
the
debt
is
in
part
liquidated
and
in
part
unliquidated,
the
creditor
• Legal
Tender
–
that
currency
which
a
debtor
can
legally
compel
a
creditor
may
demand
and
the
debtor
may
effect
the
payment
of
the
former
without
waiting
to
accept
in
payment
of
a
debt
in
money
when
tendered
by
debtor
in
the
for
the
liquidation
of
the
latter.
(1169a)
right
amount.
o Debts
in
money
shall
be
paid
in
the
currency
stipulated.
• This
contemplates
obligations
where
there
is
only
one
creditor
and
only
o If
impossible
to
deliver
such
currency,
or
in
the
absence
of
one
debtor.
stipulation,
the
default
is
that
payment
shall
be
made
in
the
currency
which
is
legal
tender
in
the
Philippines.
(all
coins
and
• General
rule
–
payment
must
be
in
full
in
order
to
extinguish
an
obligation.
o Creditor
may
accept
partial
performance,
but
he
may
not
be
notes
issued
by
the
Bangko
Sentral
ng
Pilipinas)
compelled
to.
• Payment
by
means
of
instruments
of
credits
–
do
not
extinguish
the
o Debtor
should
fulfill
the
obligation,
but
he
cannot
be
required
to
obligation
until:
make
partial
payments.
o They
have
been
cashed.
o They
have
been
impaired
through
the
fault
of
the
creditor.
• When
is
partial
performance
allowed:
rd
1. Express
stipulation
in
the
obligation
Applicable
only
to
instruments
executed
by
3
persons
and
2. Debt
is
part
liquidated
(computed)
and
in
part
unliquidated
delivered
by
debtor
to
creditor
Does
not
apply
to
instruments
executed
by
debtor
himself
and
Ex.
The
obligation
is
to
deliver
₱1,000,
and
whatever
debtor
gets
from
his
father’s
estate.
delivered
to
creditor
He
can
give
the
₱1,000
first
without
waiting
for
the
• Bill
of
exchange
–
unconditional
order
in
writing
addressed
by
one
person
determination
of
his
inheritance.
to
another,
signed
by
the
person
giving
it,
requiring
the
addresee
to
pay
on
3. If
creditor
accept
such
payment
and
benefits
from
it
demand
a
sum
certain
in
money
to
the
bearer.
4. When
the
different
prestations
in
which
the
obligation
consists
o A
check
is
a
bill
of
exchange
addressed
to
the
bank,
payable
on
are
subject
to
different
terms
or
conditions
which
affect
some
of
demand.
them.
If
payment
is
tendered
by
way
of
check,
and
the
obligee
Ex.
Obligation
to
pay
debt
in
installments
accepts,
such
obligee
is
estopped
from
questioning
the
efficacy
Prestations
(each
installment)
need
not
be
given
of
such
tender
simultaneously.
Art.
1250
–
Inflation
or
Deflation
In
case
an
extraordinary
inflation
or
deflation
of
the
currency
stipulated
should
Art.
1249
–
Currency
and
Legal
Tender
supervene,
the
value
of
the
currency
at
the
time
of
the
establishment
of
the
The
payment
of
debts
in
money
shall
be
made
in
the
currency
stipulated,
and
if
it
is
obligation
shall
be
the
basis
of
payment,
unless
there
is
an
agreement
to
the
not
possible
to
deliver
such
currency,
then
in
the
currency
which
is
legal
tender
in
contrary.
(n)
the
Philippines.
• Extraodrinary
Inflation
–
a
decrease
or
increase
in
the
purchasing
power
of
The
delivery
of
promissory
notes
payable
to
order,
or
bills
of
exchange
or
other
the
Philippine
currency
which
is
unusual
or
beyond
the
common
mercantile
documents
shall
produce
the
effect
of
payment
only
when
they
have
fluctuation
of
the
value
of
the
said
currency,
and
such
decrease
or
increase
been
cashed,
or
when
through
the
fault
of
the
creditor
they
have
been
impaired.
could
not
have
been
foreseen,
or
was
beyond
contemplation
of
the
parties.
In
the
meantime,
the
action
derived
from
the
original
obligation
shall
be
held
in
the
o Cannot
be
applied
without
an
official
declaration
from
competent
abeyance.
(1170)
authorities.
o Applies
only
to
cases
where
a
contract/agreement
is
involved.
o Does
not
apply
when
obligation
to
pay
is
derived
from
law.
44
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1251
–
Place
of
Payment
• These
apply
to
a
person
who
has
several
debts
of
the
same
kind
to
a
single
Payment
shall
be
made
in
the
place
designated
in
the
obligation.
creditor.
• When
a
person
pays,
he
is
given
the
choice
to
which
debt
the
payment
is
There
being
no
express
stipulation
and
if
the
undertaking
is
to
deliver
a
determinate
applied.
thing,
the
payment
shall
be
made
wherever
the
thing
might
be
at
the
moment
the
• The
payments
must
still
conform
to
the
rules
given
in
the
previous
articles
obligation
was
constituted.
o Creditor
can
refuse
if
the
payment
is
applied
to
a
debt
that
would
only
be
partially
fulfilled
In
any
other
case
the
place
of
payment
shall
be
the
domicile
of
the
debtor.
• Application
of
payments
cannot
be
made
on
debts
which
are
not
yet
due.
1. Unless
parties
agree
If
the
debtor
changes
his
domicile
in
bad
faith
or
after
he
has
incurred
in
delay,
the
2. Payment
is
made
by
the
party
for
whose
benefit
the
term
has
additional
expenses
shall
be
borne
by
him.
been
constituted
Ex.
A
owes
B
₱1,000
pesos,
and
such
debt
will
not
incur
These
provisions
are
without
prejudice
to
venue
under
the
Rules
of
Court.
(1171a)
interest
before
a
certain
date,
the
term
is
constituted
for
the
debtor’s
benefit.
• Provides
where
to
pay
in
order
to
ensure
certainty
in
payment.
3. If
the
debtor
receives
and
accepts
a
receipt
for
the
application
he
1. If
there
is
a
stipulated
place,
then
it
shall
be
made
there.
cannot
complain
about
where
it
was
applied.
2. If
there
is
no
stipulation,
and
the
thing
is
determinate,
payment
shall
be
made
where
the
thing
was
at
the
time
of
the
perfection
of
the
contract
Art.
1253
-‐
Interest
If
the
debt
produces
interest,
payment
of
the
principal
shall
not
be
deemed
to
have
3. No
stipulation,
generic
thing
–
domicile
of
the
debtor
Domicile
–
a
person’s
place
of
habitual
residence;
true
fixed
been
made
until
the
interests
have
been
covered.
(1173)
permanent
home;
he
has
the
intention
of
returning
Costs
shall
be
borne
by
by
the
creditor
in
going
to
the
domicile,
• This
is
only
directory
and
not
mandatory.
unless
such
has
been
changed
in
bad
faith,
or
unless
debtor
is
in
• Payment
of
both
interest
and
principal
–
two
payments
by
the
debtor.
delay
• This
article
is
why
the
presumption
of
payment
of
interest
arises
when
the
principal
is
received
by
the
creditor.
SUBSECTION
1.
-‐
Application
of
Payments
• Right
to
apply
payment
to
interest
first
can
be
waived.
Art.
1254
–
Most
Onerous
Debt
Art.
1252
–
Application
of
Payments
When
the
payment
cannot
be
applied
in
accordance
with
the
preceding
rules,
or
if
He
who
has
various
debts
of
the
same
kind
in
favor
of
one
and
the
same
creditor,
application
cannot
be
inferred
from
other
circumstances,
the
debt
which
is
most
may
declare
at
the
time
of
making
the
payment,
to
which
of
them
the
same
must
onerous
to
the
debtor,
among
those
due,
shall
be
deemed
to
have
been
satisfied.
be
applied.
Unless
the
parties
so
stipulate,
or
when
the
application
of
payment
is
made
by
the
party
for
whose
benefit
the
term
has
been
constituted,
application
If
the
debts
due
are
of
the
same
nature
and
burden,
the
payment
shall
be
applied
to
shall
not
be
made
as
to
debts
which
are
not
yet
due.
all
of
them
proportionately.
(1174a)
If
the
debtor
accepts
from
the
creditor
a
receipt
in
which
an
application
of
the
• If
there
is
no
indication
as
to
which
debt
the
payment
goes
to
–
it
goes
to
payment
is
made,
the
former
cannot
complain
of
the
same,
unless
there
is
a
cause
the
most
onerous,
provided
it
is
due.
for
invalidating
the
contract.
(1172a)
o “Onerous”
–
indebtedness
which
exacts
the
heaviest
burden
45
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Ex.
A
debt
with
interest
is
more
onerous
than
one
without
• Effect
of
Cession
interest.
o Unless
otherwise
stipulated,
creditors
do
now
become
owners.
• Same
nature
and
burden
-‐
there
is
no
“most
onerous”
o Debtor
is
only
released
up
to
the
net
proceeds
of
the
sale.
o Payment
shall
be
applied
to
all
proportionally.
If
his
properties,
when
sold,
don’t
raise
enough
money,
he
still
Ex.
A
owes
B
three
debts
totalling
₱30,000,
and
he
gives
₱9,000
has
a
debt
to
pay
without
saying
where
it
will
go.
Each
debt
will
be
reduced
by
₱3,000.
Ex.
A
owes
B
₱10,000,
20K,
and
₱30,000.
He
pays
₱6,000
–
the
SUBSECTION
3.
-‐
Tender
of
Payment
and
Consignation
proportion
is
1:2:3.
₱1,000
applied
to
the
₱10,000
debt,
₱2,000
to
the
₱20,000,
and
₱3,000
to
the
₱30,000.
Art.
1256
–
Tender
of
Payment
and
Consignment
If
the
creditor
to
whom
tender
of
payment
has
been
made
refuses
without
just
cause
to
accept
it,
the
debtor
shall
be
released
from
responsibility
by
the
consignation
of
the
thing
or
sum
due.
SUBSECTION
2.
-‐
Payment
by
Cession
Consignation
alone
shall
produce
the
same
effect
in
the
following
cases:
Art.
1255
-‐
Cession
(1)
When
the
creditor
is
absent
or
unknown,
or
does
not
appear
at
the
place
of
The
debtor
may
cede
or
assign
his
property
to
his
creditors
in
payment
of
his
debts.
payment;
This
cession,
unless
there
is
stipulation
to
the
contrary,
shall
only
release
the
debtor
(2)
When
he
is
incapacitated
to
receive
the
payment
at
the
time
it
is
due;
from
responsibility
for
the
net
proceeds
of
the
thing
assigned.
The
agreements
(3)
When,
without
just
cause,
he
refuses
to
give
a
receipt;
which,
on
the
effect
of
the
cession,
are
made
between
the
debtor
and
his
creditors
(4)
When
two
or
more
persons
claim
the
same
right
to
collect;
(5)
When
the
title
of
the
obligation
has
been
lost.
(1176a)
shall
be
governed
by
special
laws.
(1175a)
Art.
1257
-‐
Announcement
• Payment
by
Cession
In
order
that
the
consignation
of
the
thing
due
may
release
the
obligor,
it
must
first
o Special
form
of
payment
be
announced
to
the
persons
interested
in
the
fulfillment
of
the
obligation.
o Assignment/abandonment
of
all
the
properties
of
the
debtor
for
the
benefit
of
his
creditors.
The
consignation
shall
be
ineffectual
if
it
is
not
made
strictly
in
consonance
with
the
Only
the
properties
which
are
susceptible
and
not
exempted
by
provisions
which
regulate
payment.
(1177)
law
from
being
alienated
(example
family
home)
o Such
that
the
latter
may
sell
the
same
and
apply
the
proceeds
to
Art.
1258
–
Consignation
Process
the
satisfaction
of
their
credits
Consignation
shall
be
made
by
depositing
the
things
due
at
the
disposal
of
judicial
Only
the
proceeds
–
no
right
of
creditors
as
to
ownership
of
the
authority,
before
whom
the
tender
of
payment
shall
be
proved,
in
a
proper
case,
properties
ceded.
and
the
announcement
of
the
consignation
in
other
cases.
• Requisites
of
Cession
1. Two
or
more
creditors
The
consignation
having
been
made,
the
interested
parties
shall
also
be
notified
2. Debtor
(partially)
insolvent
thereof.
(1178)
3. Cession
must
be
accepted
by
creditors
Creditors
must
agree
which
debt
will
be
paid
first,
or
the
proportioning.
46
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Tender
of
payment
o Expenses
are
chargeable
to
the
debtor
if
the
consignation
is
not
o Act
on
the
part
of
the
debtor
properly
made.
o Offering
to
the
creditor
the
thing
or
the
amount
due
• Proper
consignation:
o Debtor
must
show
that
he
has
the
thing/money
in
his
possession
1. When
creditor
accepts
the
thing
or
sum
deposited,
without
o Must
be
made
in
lawful
currency
objection,
as
payment
of
the
obligation
o Extrajudicial
2. When
creditor
questions
the
validity
of
consignation,
and
court
o Requisites
for
valid
tender
of
payment
deems
it
valid
1. Must
comply
with
the
rules
on
payment
(Arts
1256-‐1258)
3. When
creditor
neither
accepts
or
questions
validity,
and
court
2. Must
be
unconditional
and
for
the
whole
amount
orders
cancellation
of
the
obligation
3. It
must
actually
be
made
• Consignation
Art.
1260
–
Judicial
Declaration
o Act
of
depositing
the
thing
or
amount
due
with
the
proper
court
Once
the
consignation
has
been
duly
made,
the
debtor
may
ask
the
judge
to
order
o When
the
creditor
does
not
desire
or
cannot
receiev
it
the
cancellation
of
the
obligation.
o Consignation
is
judicial
–
generally
requires
a
prior
tender
of
payment
Before
the
creditor
has
accepted
the
consignation,
or
before
a
judicial
declaration
o Requisites
of
a
valid
consignation
–
in
order
that
debtor
may
be
that
the
consignation
has
been
properly
made,
the
debtor
may
withdraw
the
thing
released
(V.T.R.P.A.S.)
or
the
sum
deposited,
allowing
the
obligation
to
remain
in
force.
(1180)
1. Existence
of
a
valid
debt,
which
is
due
2. Tender
of
payment
by
debtor
• Once
consignation
is
deemed
proper,
debtor
should
be
released
from
the
3. Refusal
without
justifiable
reason
by
creditor
obligation
4. Previous
notice
of
consignation
to
persons
interested
in
o Court
order
to
that
effect
the
fulfillment
of
the
obligation
o Court
orders
creditor
to
accept
the
money/thing
5. Actual
consignation
of
the
thing/sum
due/the
amount
is
• Consignation
is
retroactive.
placed
at
the
disposal
of
the
court
o Payment
deemed
to
have
been
made
at
the
time
of
the
deposit
of
6. Subsequent
notice
to
interested
parties
the
money/when
the
thing
was
placed
at
the
disposal
of
the
court
• When
consignation
produce
the
same
effect
(Ex.
even
without
tender
of
• Creditor
may
accept
either
unconditionally
or
with
reservation.
payment)
–
five
cases
(A.I.G.T.T.)
o Reservation
does
not
completely
extinguish
obligation.
1. Creditor
is
absent/unknown/does
not
appear
at
the
place
of
• Withdrawal
of
thing/sum
by
debtor
–
debtor
may
withdraw
the
thing
or
payment
sum
deposited.
2. Creditor
is
incapacitated
to
receive
payment
at
the
time
it
is
due.
o Before
creditor
has
accepted
the
consignation
3. Creditor
refuses
without
just
cause
to
give
a
receipt.
o Before
a
judicial
declaration
that
the
consignation
has
been
4. Two
or
more
persons
claim
the
same
right
to
collect
properly
made
5. Title
of
the
obligation
has
been
lost
o This
is
because
he
is
still
the
owner
of
the
thing
o Obligation
shall
continue
to
remain
in
force
Art.
1259
–
Expenses
Borne
by
the
Creditor
o Expenses
paid
by
debtor
The
expenses
of
consignation,
when
properly
made,
shall
be
charged
against
the
creditor.
(1178)
Art.
1261
–
Creditor
Authorizes
Debtor
to
Withdraw
Ex.
If
he
is
in
delay
If,
the
consignation
having
been
made,
the
creditor
should
authorize
the
debtor
to
o When
stipulated
by
parties
withdraw
the
same,
he
shall
lose
every
preference
which
he
may
have
over
the
o When
nature
of
obligation
requires
the
assumption
of
risk
thing.
The
co-‐debtors,
guarantors
and
sureties
shall
be
released.
(1181a)
o When
obligation
to
deliver
a
specific
thing
arises
from
a
crime
• Contemplates
a
situation
where
there
has
already
been
a
finding
by
the
court
that
the
consignation
is
valid.
Art.
1263
–
Loss
of
a
Generic
Thing
o In
this
case,
it
is
incumbent
on
the
creditor
to
obtain
from
the
In
an
obligation
to
deliver
a
generic
thing,
the
loss
or
destruction
of
anything
of
the
court
the
thing
deposited.
same
kind
does
not
extinguish
the
obligation.
(n)
o However,
if
the
debtor
withdraws
the
thing,
with
the
creditor’s
consent
–
nothing
to
retrieve
• Generic
thing
cannot
really
be
lost
unless
the
whole
class
of
the
said
thing
Essentially
reviving
the
indebtedness
is
destroyed
–
hence,
obligation
persists.
However,
the
creditor
loses
any
preference
to
the
thing
deposited
–
anyone
can
now
go
after
it
Art.
1264
–
Partial
Loss
SECTION
2.
-‐
Loss
of
the
Thing
Due
The
courts
shall
determine
whether,
under
the
circumstances,
the
partial
loss
of
the
object
of
the
obligation
is
so
important
as
to
extinguish
the
obligation.
(n)
Art.
1262
-‐
Loss
• Partial
Loss
–
the
courts
may
consider
it
as
a
complete
loss
which
An
obligation
which
consists
in
the
delivery
of
a
determinate
thing
shall
be
extinguishes
the
obligation.
extinguished
if
it
should
be
lost
or
destroyed
without
the
fault
of
the
debtor,
and
• This
happens
if
the
loss
is
so
important
that
it
affects
the
whole
object
of
before
he
has
incurred
in
delay.
the
obligation.
Ex.
Obligation
to
give
a
specific
computer
with
a
specialized
When
by
law
or
stipulation,
the
obligor
is
liable
even
for
fortuitous
events,
the
loss
keyboard
and
monitor,
such
that
the
parts
are
dependent
on
each
of
the
thing
does
not
extinguish
the
obligation,
and
he
shall
be
responsible
for
other.
damages.
The
same
rule
applies
when
the
nature
of
the
obligation
requires
the
Loss
of
the
keyboard,
though
only
partial,
renders
the
whole
assumption
of
risk.
(1182a)
thing
useless.
• Debtor
may
go
to
court
and
declare
that
this
partial
loss
has
extinguished
• When
a
thing
is
considered
lost
the
obligation.
o When
it
perishes
o Goes
out
of
commerce
Art.
1265
–
Loss
of
Thing
in
the
Possession
of
the
Debtor
o Disappears
in
a
way
such
that
its
existence
is
unknown
or
it
Whenever
the
thing
is
lost
in
the
possession
of
the
debtor,
it
shall
be
presumed
that
cannot
be
recovered
the
loss
was
due
to
his
fault,
unless
there
is
proof
to
the
contrary,
and
without
• When
does
loss
of
a
thing
extinguish
an
obligation
to
give
prejudice
to
the
provisions
of
article
1165.
This
presumption
does
not
apply
in
case
o Obligation
is
to
deliver
a
specific
or
determinate
thing
of
earthquake,
flood,
storm,
or
other
natural
calamity.
(1183a)
o Loss
of
the
thing
occurs
without
fault
of
the
debtor
o Debtor
is
not
guilty
of
delay
• If
debtor
is
not
in
possession
of
the
thing
when
it
is
lost,
the
presumption
• When
does
loss
NOT
extinguish?
does
not
arise.
o When
law
so
provides
48
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Debtor
must
prove
that
he
is
not
at
fault,
or
that
loss
was
because
of
a
• Requisites
of
Rebus
Sic
Stantibus
fortuitous
event.
1. Prestation
has
become
so
difficult
to
render
• Presumption
does
not
apply
in
case
of
natural
calamities.
2. Service
has
become
manifestly
beyond
contemplation
of
the
parties
Art.
1266
–
Legal
or
Physical
Impossibility
The
debtor
in
obligations
to
do
shall
also
be
released
when
the
prestation
becomes
Art.
1268
–
Proceeds
from
a
Criminal
Offense
legally
or
physically
impossible
without
the
fault
of
the
obligor.
(1184a)
When
the
debt
of
a
thing
certain
and
determinate
proceeds
from
a
criminal
offense,
the
debtor
shall
not
be
exempted
from
the
payment
of
its
price,
whatever
• This
involves
obligations
“to
do.”
may
be
the
cause
for
the
loss,
unless
the
thing
having
been
offered
by
him
to
the
o Without
debtor’s
fault,
obligation
becomes
legally
or
physically
person
who
should
receive
it,
the
latter
refused
without
justification
to
accept
it.
impossible
(1185)
• Effect
of
impossibility
of
performance
o Impossibility
extinguishes
the
obligation
• Another
instance
where
a
fortuitous
event
does
not
extinguish
the
o This
impossibility
must
take
place
after
the
constitution
of
the
obligation
obligation
Ex
.
A
stole
a
watch
from
B,
and
was
charged
for
it.
If
the
watch
is
• Kinds
of
Impossibility
lost
through
a
fortuitous
event,
A
must
still
pay
the
price
of
the
1. Physical
Impossibility
–
in
purely
personal
obligations
(obligations
watch.
where
personal
qualifications
are
involved)
death
or
physical
• EXCEPTION
–
if
the
creditor
refuses
to
accept
the
thing
when
offered
to
incapacity
results
in
physical
impossibility
him
by
the
debtor
Ex.
A
is
obliged
to
paint
B’s
house.
Two
days
later,
A
is
attacked
by
a
shark
and
loses
both
his
arms.
He
is
thus
released.
Art.
1269
–
Creditor’s
Right
of
Action
2. Legal
Impossibility
–
Obligation
cannot
be
performed
because
it
is
The
obligation
having
been
extinguished
by
the
loss
of
the
thing,
the
creditor
shall
rendered
impossible
by
provision
of
law
have
all
the
rights
of
action
which
the
debtor
may
have
against
third
persons
by
reason
of
the
loss.
(1186)
Art.
1267
–
Difficult
Beyond
Contemplation
When
the
service
has
become
so
difficult
as
to
be
manifestly
beyond
the
• Designed
to
protect
interests
of
the
creditor
contemplation
of
the
parties,
the
obligor
may
also
be
released
therefrom,
in
whole
• He
is
given
right
to
proceed
against
a
third
person
responsible
for
the
loss
or
in
part.
(n)
Ex.
A
is
obliged
to
give
B
a
specific
horse.
The
horse
is
lost
through
the
fault
of
C.
A’s
obligation
is
extinguished,
but
B
is
allowed
to
• Difficulty
alone
does
not
excuse
the
debtor.
go
after
C
to
recover
the
price
of
the
horse,
with
damages.
• What
must
happen
is
that
the
service
is
so
difficult
as
to
be
manifestly
beyond
the
contemplation
of
the
parties.
• This
is
the
principal
of
rebus
sic
stantibus
o Where
the
parties
stipulate
in
the
light
of
certain
conditions
o When
these
conditions
cease
to
exist,
the
contract
also
ceases
to
exist
• This
is
one
case
where
the
court
can
enter
into
a
contract
and
judge
whether
it’s
the
performance
is
still
within
what
the
parties
contemplated
49
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
SECTION
3.
-‐
Condonation
or
Remission
of
the
Debt
Ex.
Promissory
note
–
if
the
creditor
gives
the
debtor
his
promissory
note,
it
implies
that
he
is
no
longer
interested
in
the
debt.
• This
waiver
can
be
nullified
by
showing
that
it
is
inofficious.
Art.
1270
–
Condonation
Defined
o What
the
debtor
can
do
is
show
that
the
delivery
of
the
document
Condonation
or
remission
is
essentially
gratuitous,
and
requires
the
acceptance
by
was
made
because
of
payment,
and
not
because
of
remission.
the
obligor.
It
may
be
made
expressly
or
impliedly.
One
and
the
other
kind
shall
be
subject
to
the
rules
which
govern
inofficious
Art.
1272
–
Presumption
when
Credit
is
in
the
Possession
of
the
Debtor
donations.
Express
condonation
shall,
furthermore,
comply
with
the
forms
of
Whenever
the
private
document
in
which
the
debt
appears
is
found
in
the
donation.
(1187)
possession
of
the
debtor,
it
shall
be
presumed
that
the
creditor
delivered
it
voluntarily,
unless
the
contrary
is
proved.
(1189)
• Condonation
:
an
act
of
liberality
• Creditor
decides
not
to
enforce
the
debtor’s
prestation
• If
the
debtor
has
the
document
and
it
is
not
known
where
he
got
it,
the
o In
effect,
a
donation
of
the
obligee’s
credit
in
favor
of
the
debtor
presumption
is
that
it
was
voluntarily
given
by
the
creditor
• It
requires
the
implied/express
consent
of
the
debtor
•
“It
is
believed”
that
presumption
of
voluntary
delivery
presumption
of
• Governed
by
the
rules
of
Inofficious
donation
payment,
not
remission.
Only
when
it
is
known
that
there
is
no
payment
o Inofficious
–
the
amount
remitted
encroaches
on
the
should
there
be
a
presumption
of
remission.
legitime/successional
rights
of
the
heirs
of
the
condoning
creditor
o Ex.
Creditor
condones
debt
worth
50K
Art.
1273
–
Extinguishment
of
Accessory
Obligations
o Creditor
gives
birth
to
a
child,
when
her
properties
are
only
worth
The
renunciation
of
the
principal
debt
shall
extinguish
the
accessory
obligations;
but
₱10,000
(thus,
with
remitted
debt,
the
overall
estate
is
60K)
the
waiver
of
the
latter
shall
leave
the
former
in
force.
(1190)
o Child
has
½
of
this
as
his
legitime.
Hence,
free
portion
is
only
₱30,000.
The
remission
will
only
be
₱30,000.
• Accessory
follows
the
principal
–
existence
of
the
accessory
obligation
• Other
rules
on
donation
are
provided
in
the
Civil
Code
depends
on
the
existence
of
the
principal
obligation.
• When
principal
is
waived,
the
accessory
is
waived
as
well.
Art.
1271
–
Delivery
of
a
Credit
to
the
Debtor
• But
when
accessory
is
waived,
principal
remains
in
force.
The
delivery
of
a
private
document
evidencing
a
credit,
made
voluntarily
by
the
creditor
to
the
debtor,
implies
the
renunciation
of
the
action
which
the
former
had
Art.
1274
–
Accessory
Obligation
of
Pledge
against
the
latter.
It
is
presumed
that
the
accessory
obligation
of
pledge
has
been
remitted
when
the
thing
pledged,
after
its
delivery
to
the
creditor,
is
found
in
the
possession
of
the
If
in
order
to
nullify
this
waiver
it
should
be
claimed
to
be
inofficious,
the
debtor
debtor,
or
of
a
third
person
who
owns
the
thing.
(1191a)
and
his
heirs
may
uphold
it
by
proving
that
the
delivery
of
the
document
was
made
in
virtue
of
payment
of
the
debt.
(1188)
• Pledge
–
a
contract
where
the
debtor
gives
to
the
creditor
or
a
third
person
a
movable
or
instrument
evidencing
incorporeal
rights
in
order
to
• This
article
creates
a
presumption
:
If
a
private
document
evidencing
credit
secure
the
fulfillment
of
a
principal
obligation,
such
that
when
the
is
given
by
the
creditor
to
the
debtor,
it
implies
that
he
is
condoning
the
obligation
is
fulfilled,
the
thing
delivered
shall
be
returned
with
all
its
fruits
debt.
and
accessories.
50
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• If
the
thing
pledged
is
found
in
the
possession
of
the
debtor,
then
there
is
a
There
is
merger
in
persons
of
X
and
C.
presumption
that
the
obligation
has
been
remitted.
Obligation
is
extinguished
as
to
the
₱1,000
share
of
C,
but
not
to
the
rest.
A
and
B
still
owe
₱1,000
each.
SECTION
4.
-‐
Confusion
or
Merger
of
Rights
• If
solidary
–
merger
in
C
and
X
extinguishes
the
obligation.
o If
A
pays
the
₱3,000
to
X
before
the
merger,
A
can
collect
from
X
and
B
their
respective
shares
in
the
indebtedness
(₱1,000
each)
Art.
1275
–
When
Obligation
is
Extinguished
The
obligation
is
extinguished
from
the
time
the
characters
of
creditor
and
debtor
are
merged
in
the
same
person.
(1192a)
SECTION
5.
–
Compensation
Ex.
A
son
owes
his
father
₱10,000,
and
his
father
dies,
leaving,
among
others,
₱10,000
owed
by
the
son
to
his
dad.
In
this
Art.
1278
–
Compensation
Defined
case,
there
is
a
merger.
Compensation
shall
take
place
when
two
persons,
in
their
own
right,
are
creditors
• Chittick
v.
CA
–
wife
filed
a
complaint
against
her
father
for
support
in
and
debtors
of
each
other.
(1195)
arrears.
She
died,
and
her
children
continued
the
case.
The
father
died.
SC
held
that
since
the
children
are
also
heirs
of
their
grandfather,
the
• Compensation
–
extinguishment
to
the
concurrent
amount
of
the
debts
of
obligation
had
been
extinguished.
two
persons,
who,
in
their
own
right,
are
debtors
and
creditors
of
each
other.
Art.
1276
–
Effect
on
Guarantors
o The
simultaneous
balancing
of
2
obligations
in
order
to
extinguish
Merger
which
takes
place
in
the
person
of
the
principal
debtor
or
creditor
benefits
them
to
the
extent
in
which
the
amount
of
one
is
covered
by
that
the
guarantors.
Confusion
which
takes
place
in
the
person
of
any
of
the
latter
does
of
the
other.
not
extinguish
the
obligation.
(1193)
• Kinds
of
compensation
a. As
to
effect/extent
• Indebtedness
guaranteed
by
a
third
person
is
also
extinguished
if
there
is
1. Total
–
both
obligations
are
of
the
same
amount,
and
confusion/merger.
thus
are
entirely
extinguished.
• Thus,
guarantor
is
benefitted
because
the
accessory
obligation
of
the
2. Partial
–
two
obligations
are
of
different
amounts
and
a
guarantee
is
extinguished.
balance
remains.
(partial
only
as
to
the
larger
debt)
o Merger
of
persons
of
guarantor
and
creditor
only
extinguishes
b. As
to
cause/origin
accessory
obligation,
not
the
whole
thing.
1. Legal
–
takes
place
by
operation
of
law,
even
without
o Merger
of
debtor
and
guarantor
only
extinguishes
the
accessory.
knowledge
of
the
parties
2. Voluntary/Conventional
–
takes
place
by
agreement
of
the
parties
Art.
1277
–
Confusion
in
Joint
Obligations
3. Judicial
–
takes
place
by
order
from
a
court
in
litigation
Confusion
does
not
extinguish
a
joint
obligation
except
as
regards
the
share
4. Facultative
–
can
be
set
up
by
only
one
of
the
parties
corresponding
to
the
creditor
or
debtor
in
whom
the
two
characters
concur.
(1194)
51
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
(1)
That
each
one
of
the
obligors
be
bound
principally,
and
that
he
be
at
the
same
Ex.
A
owes
B
₱1,000,
due
on
Jan
1.
B
owes
A
₱1,000,
due
on
Jan.
21.
time
a
principal
creditor
of
the
other;
Third
person
C
filed
suit
against
A,
and
was
able
to
obtain
a
(2)
That
both
debts
consist
in
a
sum
of
money,
or
if
the
things
due
are
consumable,
resolution
garnishing
all
money
and
credits
of
A
(including
the
they
be
of
the
same
kind,
and
also
of
the
same
quality
if
the
latter
has
been
stated;
indebtedness
of
B
in
A’s
favor).
(3)
That
the
two
debts
be
due;
If
B
only
found
out
about
the
garnishment
on
Feb.
1,
then
(4)
That
they
be
liquidated
and
demandable;
compensation
would
have
set
in
already,
and
C
cannot
make
(5)
That
over
neither
of
them
there
be
any
retention
or
controversy,
commenced
by
use
of
these
credits
to
satisfy
A’s
debt
to
C.
third
persons
and
communicated
in
due
time
to
the
debtor.
(1196)
If
B
found
out
about
the
garnishment
on
Jan
15,
then
no
compensation
sets
in.
Requisites
of
Compensation:
Art.
1280
–
Set-‐up
by
Guarantor
1. Mutual
principal
creditors
and
debtors
–
each
one
of
the
obligors
is
bound
Notwithstanding
the
provisions
of
the
preceding
article,
the
guarantor
may
set
up
principally,
and
that
each
of
them
be
at
the
same
time
a
principal
creditor
compensation
as
regards
what
the
creditor
may
owe
the
principal
debtor.
(1197)
of
the
other.
2. Both
in
money,
or
same
kind
–
both
debts
consist
in
a
sum
of
money,
or
if
• Guarantor
-‐
a
person
who
promises
to
pay
the
creditor
in
case
the
the
things
due
are
consumable,
they
be
of
the
same
kind,
and
also
of
the
principal
debtor
cannot
pay
the
indebtedness.
same
quality.
• Before
a
creditor
can
go
after
the
guarantor,
he
must
exhaust
all
possible
o Consumable
–
“fungible”;
susceptible
of
substitution
ways
to
collect
debt
from
principal
debtor.
o Ong
v.
Court
of
Appeals
–
no
compensation
could
take
place
o Unless
guarantor
is
bound
solidarily.
because
one
party
owed
money,
and
the
other
owed
zippers.
• A
possible
defense
of
a
guarantor
is
that
compensation
had
set
in
between
3. Both
debts
are
due
the
creditor
and
the
principal
debtor.
o Debts
need
not
be
contracted
at
the
same
time
o This
is
the
case
when
the
guarantor
“sets
up”
compensation
o Parties,
however,
can
agree
that
compensation
can
be
made
even
between
the
two
parties.
if
debts
are
not
yet
due.
o PNB
Madecor
v.
Uy
–
one
of
the
debts
was
payable
upon
demand,
Art.
1281
–
Total
or
Partial
Compensation
and
no
demand
was
made.
There
is
no
compensation,
because
Compensation
may
be
total
or
partial.
When
the
two
debts
are
of
the
same
the
debts
were
not
yet
due.
amount,
there
is
a
total
compensation.
(n)
4. Liquidated
and
demandable
o Debts
must
be
determined
and
certain.
• Total
Compensation
–
when
both
debts
are
equal,
and
both
are
o Compensation
cannot
take
place
where
one
of
the
debts
is
not
extinguished.
liquidated.
o Compania
Maritima
v.
CA
–
since
legal
interest
was
still
accruing
• Partial
Compensation
–
one
of
the
debts
is
bigger;
the
smaller
debt
is
deducted
from
the
bigger
debt.
on
the
debt,
it
was
not
liquidated.
Thus,
no
compensation
Ex.
A
owes
B
2000.
B
owes
A
₱1,500.
A
will
still
owe
B
₱500.
o Miailhe
v.
Halili
–
no
compensation
because
a
certain
amount
was
still
under
litigation,
and
thus,
not
being
liquidated
and
certain.
5. No
controversy
from
third
persons
–
Over
neither
of
them
be
any
Art.
1282
–
Debts
Not
Due
retention
or
controversy
commenced
by
third
persons
and
communicated
The
parties
may
agree
upon
the
compensation
of
debts
which
are
not
yet
due.
(n)
in
due
time
to
the
debtor.
o “Due
Time”
–
period
before
legal
compensation
was
supposed
to
• This
is
an
exception
to
the
general
rule
that
debts
should
be
due
for
take
place
compensation
to
set
in.
52
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• An
example
of
contractual
compensation.
If
the
assignment
is
made
without
the
knowledge
of
the
debtor,
he
may
set
up
the
compensation
of
all
credits
prior
to
the
same
and
also
later
ones
until
he
had
knowledge
of
the
assignment.
(1198a)
Art.
1283
–
Judicial
Set-‐off
Situations
when
a
creditor
gives
his
credit
to
a
third
person:
If
one
of
the
parties
to
a
suit
over
an
obligation
has
a
claim
for
damages
against
the
other,
the
former
may
set
it
off
by
proving
his
right
to
said
damages
and
the
1. Debtor
has
consented
to
the
assignment
of
rights
to
a
third
person
-‐
amount
thereof.
(n)
cannot
set
up
compensation
against
the
assignee,
which
would
pertain
to
the
debtor
against
the
original
creditor.
• Contemplates
a
situation
of
a
judicial
set-‐off.
o Exception:
when
debtor
reserves
this
right.
• Essentially,
compensation
when
it
comes
to
damages.
Ex.
A
owes
B
₱1,000,
due
on
Jan
1.
B
owes
A
₱1,000
due
on
Feb
2.
Ex.
A
files
a
collection
case
against
B
for
₱1,000.
B
can
file
a
On
Jan
3,
B
assignes
his
credit
to
C,
with
consent
of
A,
and
without
counterclaim
for
₱1,000,
claiming
damages
arising
from
the
same
reservation
as
to
right
of
compensation
against
B.
transaction
C
demands
payment
from
A
on
Feb
5,
and
A
cannot
claim
that
the
B
requests
the
court
to
off-‐set
the
damages.
debts
have
been
extinguished
because
of
compensation
If
court
agrees,
there
can
be
compensation.
If
A
told
B
that
he
was
reserving
his
right
to
compensation,
he
can
• Ong
v.
CA
–
amount
of
damages
must
be
duly
proven
in
order
for
judicial
validly
invoke
that
the
debts
had
been
extinguished.
set-‐off
to
apply.
2. Debtor
did
not
consent
to
the
assignment
of
rights
–
debtor
can
set
up
compensation
of
debts
prior
to
the
cession,
but
not
of
subsequent
ones.
Ex.
A
has
two
debts
to
B.
Art.
1284
–
Compensation
of
Voidable
Debts
before
Voided
Debt
1
is
due
on
Jan
1.
Debt
2
is
due
on
Feb
1.
When
one
or
both
debts
are
rescissible
or
voidable,
they
may
be
compensated
B
owes
A
in
the
same
amounts.
Debt
1
is
due
on
March
1.
Debt
2
against
each
other
before
they
are
judicially
rescinded
or
avoided.
(n)
is
due
on
March
3.
On
March
2,
B
gives
all
his
credits
to
C.
A
does
not
consent.
• These
are
valid
until
voided.
A
can
say
that
Debt
1
is
extinguished
due
to
compensation,
• Thus,
if
all
requisites
to
a
valid
compensation
are
present
before
contract
is
because
they
became
due
before
the
cession.
voided,
then
compensation
can
take
place.
He
cannot
say
that
Debt
2
has
been
extinguished,
because
it
became
due
after
the
cession.
Art.
1285
–
Assignment
of
the
Creditor’s
Rights
to
a
Third
Person
3. Assignment
is
made
without
the
knowledge
of
the
debtor
The
debtor
who
has
consented
to
the
assignment
of
rights
made
by
a
creditor
in
o Debtor
can
claim
compensation
for
debts
prior
to
the
cession
favor
of
a
third
person,
cannot
set
up
against
the
assignee
the
compensation
which
o Debtor
can
claim
compensation
for
debts
after
the
cession,
as
would
pertain
to
him
against
the
assignor,
unless
the
assignor
was
notified
by
the
long
as
he
has
no
knowledge
of
the
cession.
debtor
at
the
time
he
gave
his
consent,
that
he
reserved
his
right
to
the
o When
he
finds
out,
he
can
no
longer
claim
compensation
for
compensation.
debts
coming
after
that
point.
If
the
creditor
communicated
the
cession
to
him
but
the
debtor
did
not
consent
Art.
1286
–
Different
Places
thereto,
the
latter
may
set
up
the
compensation
of
debts
previous
to
the
cession,
Compensation
takes
place
by
operation
of
law,
even
though
the
debts
may
be
but
not
of
subsequent
ones.
payable
at
different
places,
but
there
shall
be
an
indemnity
for
expenses
of
exchange
or
transportation
to
the
place
of
payment.
(1199a)
53
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Once
all
requisites
are
present,
compensation
takes
place
by
operation
of
Ex.
If
B
borrows
the
PS3
of
A,
he
cannot
refuse
to
return
it
on
law
(legal
compensation).
the
ground
that
A
owes
him
something.
• Parties
need
not
notify
each
other
that
they
want
to
have
their
debts
3. Duty
to
support
compensated.
• Compensation
cannot
arise
if
the
other
obligation
is
of
support
• The
indemnity
for
transportation
in
this
article
only
applies
in
a
case
of
• A
father
cannot
refuse
to
support
his
son
on
the
ground
that
the
partial
compensation.
son
owes
him
money
Ex.
A
owes
B
₱1,000,
due
in
CBTL
Rockwell.
B
owes
A
₱500,
due
in
• “Without
prejudice
to
the
provisions”
–
refers
to
the
fact
that
CBTL
Katipunan.
support
in
arrears
can
be
compensated.
If
B
has
to
commute
to
Rockwell
to
receive
the
balance
of
₱500,
of
doubtful
application,
because
the
Family
Code
has
deleted
he
should
be
reimbursed
by
A,
the
debtor.
the
provision
mentioned.
Art.
1247
–
extrajudicial
expenses
to
be
borne
by
debtor
4. Civil
liability
arising
from
a
penal
offense
Ex.
A
owes
B
1000.
B
stole
the
ring
of
D
worth
1000.
B
cannot
claim
compensation
Art.
1287
–
No
Compensation
But
A,
the
offended
party,
can
claim
compensation
Compensation
shall
not
be
proper
when
one
of
the
debts
arises
from
a
depositum
Prohibition
only
applies
to
the
accused
or
from
the
obligations
of
a
depositary
or
of
a
bailee
in
commodatum.
Art.
1289
–
Several
Debts
Neither
can
compensation
be
set
up
against
a
creditor
who
has
a
claim
for
support
If
a
person
should
have
against
him
several
debts
which
are
susceptible
of
due
by
gratuitous
title,
without
prejudice
to
the
provisions
of
paragraph
2
of
Article
compensation,
the
rules
on
the
application
of
payments
shall
apply
to
the
order
of
301.
(1200a)
the
compensation.
(1201)
Art.
1288
–
Civil
Liability
• See
Arts
1252-‐1254.
Neither
shall
there
be
compensation
if
one
of
the
debts
consists
in
civil
liability
arising
from
a
penal
offense.
(n)
Art.
1290
–
By
Operation
of
Law
4
Cases
where
Legal
Compensation
is
not
allowed:
When
all
the
requisites
mentioned
in
Article
1279
are
present,
compensation
takes
effect
by
operation
of
law,
and
extinguishes
both
debts
to
the
concurrent
amount,
1. Depositum,
or
from
the
obligations
of
a
depository
even
though
the
creditors
and
debtors
are
not
aware
of
the
compensation.
(1202a)
• Deposit
–
constituted
from
the
moment
a
person
receives
a
thing
belonging
to
another
with
the
obligation
of
safely
keeping
it
and
returning
it.
• Compensation
takes
place
by
mere
operation
of
law
Ex.
A
owes
B
₱1,000.
Previously,
A
deposited
with
B
for
o From
the
moment
all
requisites
concur,
compensation
takes
place
safekeeping
₱1,000.
automatically.
There
is
no
compensation,
because
B’s
obligation
to
give
A
the
o Even
without
the
agreement
of
parties.
₱1000
arises
from
the
obligations
of
a
depository.
o Retroactive
–
from
the
day
the
requisites
concurred.
2. Bailee
in
Commodatum
• Full
legal
capacity
–
not
required
o Because
of
the
fact
that
it
takes
place
by
operation
of
law.
• A
bailee
in
commodatum
acquires
the
use
of
the
thing
loaned,
but
not
its
fruits.
• Bailee
cannot
retain
the
thing
loaned
just
because
the
bailor
(true
owner
of
the
thing)
owes
him
something
54
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
SECTION
6.
-‐
Novation
Art.
1292
–
Express
and
Implied
Novation
In
order
that
an
obligation
may
be
extinguished
by
another
which
substitute
the
same,
it
is
imperative
that
it
be
so
declared
in
unequivocal
terms,
or
that
the
old
Art.
1291
–
Kinds
of
Novation
and
the
new
obligations
be
on
every
point
incompatible
with
each
other.
(1204)
Obligations
may
be
modified
by:
(1)
Changing
their
object
or
principal
conditions;
• Requisites
of
Novation:
(V.E.I.N.)
(2)
Substituting
the
person
of
the
debtor;
1. A
previous
valid
obligation
(3)
Subrogating
a
third
person
in
the
rights
of
the
creditor.
(1203)
2. Capacity
and
intention
of
parties
to
modify/extinguish
the
obligation
• Novation
–
extinction
of
an
obligation
through
the
creation
of
a
new
one
3. Modification/Extinguishment
which
substitutes
it.
4. Creation
of
a
new
valid
obligation
o The
Civil
Code
refers
to
extinctive
novation
and
not
modificatory
• All
parties
must
consent
or
be
made
parties
to
the
new
contract.
novation.
• Novation
is
never
presumed.
2
indications
of
the
presence
of
novation:
• Kinds
of
Novation:
1. Novation
is
explicitly
stated
and
declared
in
unequivocal
terms.
a. According
to
Origin
2. Old
and
new
obligations
are
incompatible
on
every
point.
1. Legal
–
takes
place
by
operation
of
law.
Test
–
whether
or
not
the
two
obligations
can
stand
together,
2. Conventional
–
takes
place
by
agreement
of
the
parties.
each
one
having
its
independent
existence.
b. According
to
how
Constituted
If
they
cannot,
then
they
are
incompatible
and
the
latter
1. Express
–
declared
in
unequivocal
terms.
novates
the
first
one.
2. Implied
–
old
and
new
obligation
are
essentially
incompatible
with
each
other.
Art.
1293
–
Substituting
a
New
Debtor
c. According
to
Extent
or
Effect
Novation
which
consists
in
substituting
a
new
debtor
in
the
place
of
the
original
1. Total/Extinctive
–
old
obligation
is
completely
extinguished.
one,
may
be
made
even
without
the
knowledge
or
against
the
will
of
the
latter,
but
2. Partial/Modificatory
–
old
obligation
is
merely
modified.
not
without
the
consent
of
the
creditor.
Payment
by
the
new
debtor
gives
him
the
d. According
to
Subject
rights
mentioned
in
Articles
1236
and
1237.
(1205a)
1. Real
or
Objective
–
the
objective,
cause,
or
principal
conditions
of
the
obligation
are
changed.
• Substituting
a
new
debtor
may
be
made
without
the
knowledge
and
• Ajax
v.
CA
–
to
effect
an
objective
novation,
there
must
consent
of
the
original
debtor.
be
express
declaration
that
old
obligation
is
• Creditor
must
always
consent
and
have
knowledge
of
the
replacement.
extinguished,
or
that
the
new
obligation
be
on
every
point
incompatible
with
the
new
one.
Art.
1294
–
Insolvency
of
the
New
Debtor
in
Expromision
2. Personal
or
Subjective
–
when
the
person
of
the
debtor
is
If
the
substitution
is
without
the
knowledge
or
against
the
will
of
the
debtor,
the
substituted/third
person
is
subrogated
in
rights
of
the
creditor
new
debtor's
insolvency
or
non-‐fulfillment
of
the
obligations
shall
not
give
rise
to
• Ibid
–
To
effect
a
subjective
novation
in
the
person
of
any
liability
on
the
part
of
the
original
debtor.
(n)
the
debtor,
it
is
necessary
that
old
debtor
be
expressly
released
from
the
obligation.
• Substitution
–
person
of
the
debtor
is
substituted.
3. Mixed
–
a
combination
of
real
and
personal
novation.
• Subrogation
–
a
third
person
is
subrogated
in
the
rights
of
the
creditor.
• Kinds
of
Personal
Novation
55
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
1. Expromision
–
a
third
person
of
his
own
initiative
and
without
• In
both
cases,
the
creditor
must
not
have
knowledge
of
such
insolvency.
knowledge
or
against
the
will
of
the
original
debtor
assumes
the
o If
he
has
knowledge,
he
cannot
claim
the
benefits
of
these
latter’s
obligation
with
consent
of
creditor
exceptions.
o Creditor
must
consent.
• In
both
cases,
the
insolvency
must
have
existed
at
the
time
of
the
o Right
of
new
debtor
who
pays
-‐
right
to
beneficial
delegation.
reimbursement
(Art.
1236)
o Insolvency
of
new
debtor
shall
not
give
rise
to
an
action
Art.
1296
–
Effect
on
Accessory
Obligations
against
the
old
debtor
When
the
principal
obligation
is
extinguished
in
consequence
of
a
novation,
Ex.
A
owes
B
₱1,000.
Without
knowledge
or
consent
of
accessory
obligations
may
subsist
only
insofar
as
they
may
benefit
third
persons
A,
C
commits
to
pay
B.
who
did
not
give
their
consent.
(1207)
Novation
occurs
only
if
B
agrees
to
release
A
from
his
obligation.
• General
Rule
–
accessory
follows
the
principal.
Thus,
if
C
only
pays
B
partially,
B
cannot
go
after
o If
principal
is
extinguished,
accessories
are
extinguished
A
anymore.
Ex.
Mortgage,
guarantee,
pledge
C
can
go
after
A
for
reimbursement
to
the
• Exception
–
accessory
obligations
persist
only
insofar
as
they
may
benefit
extent
C
was
benefited.
third
persons
who
do
not
give
consent
to
the
novation.
2. Delegacion
–
creditor
accepts
a
third
person
to
take
the
place
of
the
Ex.
A
owes
B
₱2,000,
with
interest
of
14%.
debtor,
at
the
suggestion
of
the
latter.
B
owes
C
₱280.
o Creditor
must
consent
IT
was
agreed
that
A
would
pay
the
interest
of
₱280
to
C.
o Right
of
new
debtor
who
pays
–
reimbursement
and
This
is
a
stipulation
in
favor
of
C,
a
third
person.
subrogation
(Art.
1237)
Later,
A
and
B
novate
the
obligation,
and
A
is
now
obliged
to
• Bangayan
v.
CA
–
assignment
of
a
lease
contract
by
the
lessee
needs
give
a
TV
set
in
payment
of
the
loan.
consent
of
lessor,
because
assignment
involves
transfer
of
obligations.
It
Inspite
of
the
novation,
the
accessory
obligation
to
give
C
₱280
constitutes
novation
by
substitution.
subsists,
unless
C
gives
his
consent
to
the
novation.
Art.
1297
–
New
Obligation
is
Void,
Old
one
shall
subsist
Art.
1295
-‐
Insolvency
of
the
New
Debtor
in
Delegacion
If
the
new
obligation
is
void,
the
original
one
shall
subsist,
unless
the
parties
The
insolvency
of
the
new
debtor,
who
has
been
proposed
by
the
original
debtor
intended
that
the
former
relation
should
be
extinguished
in
any
event.
(n)
and
accepted
by
the
creditor,
shall
not
revive
the
action
of
the
latter
against
the
original
obligor,
except
when
said
insolvency
was
already
existing
and
of
public
• A
void
obligation
intended
to
novate
an
old
one
has
no
legal
effect.
knowledge,
or
known
to
the
debtor,
when
the
delegated
his
debt.
(1206a)
• General
Rule
–
when
new
obligation
is
void,
old
obligation
subsists.
• Exception
–
when
the
parties
stipulate
that
in
any
event,
the
old
obligation
• General
Rule
–
in
delegacion,
when
accepted
by
the
creditor,
the
original
shall
be
extinguished.
debtor’s
obligation
is
completely
extinguished.
Thus,
creditor
cannot
go
after
old
debtor
in
case
of
insolvency
of
the
new
debtor
• Exceptions:
Art.
1298
–
Original
Obligation
was
Void
1. Insolvency
of
new
debtor
has
already
been
existing
and
of
public
The
novation
is
void
if
the
original
obligation
was
void,
except
when
annulment
may
knowledge
when
the
old
debtor
delegated
the
debt.
be
claimed
only
by
the
debtor
or
when
ratification
validates
acts
which
are
2. Insolvency
of
the
new
debtor
is
known
to
the
old
debtor
when
he
voidable.
(1208a)
delegates
the
debt.
56
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Novation
presupposes
an
original
valid
obligation.
Art.
1301
–
Conventional
Subrogation
• If
original
obligation
is
void,
a
subsequent
obligation
to
novate
it
is
also
Conventional
subrogation
of
a
third
person
requires
the
consent
of
the
original
void.
parties
and
of
the
third
person.
(n)
o Unless
it
is
clear
that
the
subsequent
one
can
stand
on
itself
and
without
any
reference
to
the
old
one
• Consent
of
all
parties
is
required
–
this
is
a
contractual
subrogation.
• If
original
is
voidable,
it
is
valid
until
annulled.
o Thus,
it
can
be
novated
before
it
is
annulled.
Art.
1302
–
When
Legal
Subrogation
is
Presumed
Ex.
Through
force
and
intimidation,
A
was
obliged
togive
B
a
It
is
presumed
that
there
is
legal
subrogation:
car.
Later,
also
through
force,
prestation
was
novated
to
a
house.
(1)
When
a
creditor
pays
another
creditor
who
is
preferred,
even
without
the
In
such
a
way
that
only
A,
the
debtor,
can
file
a
case
to
annul
it.
debtor's
knowledge;
He
does
not
annul
it.
(2)
When
a
third
person,
not
interested
in
the
obligation,
pays
with
the
express
or
This
novation
may
be
given
effect.
tacit
approval
of
the
debtor;
o Also,
if
by
A’s
acts
the
obligation
is
ratified,
it
is
valid
as
well.
(3)
When,
even
without
the
knowledge
of
the
debtor,
a
person
interested
in
the
fulfillment
of
the
obligation
pays,
without
prejudice
to
the
effects
of
confusion
as
to
Art.
1299
–
Subject
to
a
Suspensive
or
Resolutory
Condition
the
latter's
share.
(1210a)
If
the
original
obligation
was
subject
to
a
suspensive
or
resolutory
condition,
the
new
obligation
shall
be
under
the
same
condition,
unless
it
is
otherwise
stipulated.
• 3
cases
where
legal
subrogation
is
presumed
(subrogation
happens
by
(n)
operation
of
law):
1. Creditor
pays
another
creditor
who
is
preferred,
even
without
• General
Rule
–
new
prestation
is
also
subject
to
the
same
suspensive
or
knowledge
of
debtor
resolutory
condition.
o Preferred
Creditor
–
a
creditor
who
is
preferred
because
of
the
• Exception
–
unless
otherwise
stipulated.
stipulation
of
law
Ex.
A
owes
B
1000,
secured
by
a
first
mortgage.
A
owes
C
Art.
1300
–
Kinds
of
Subrogation
2000,
which
is
unsecured.
Under
the
law,
B
is
a
preferred
Subrogation
of
a
third
person
in
the
rights
of
the
creditor
is
either
legal
or
creditor.
If
C
pays
the
debt
of
A
to
B,
then
C
will
be
conventional.
The
former
is
not
presumed,
except
in
cases
expressly
mentioned
in
subrogated
in
B’s
right
–
he
can
then
foreclose
on
the
this
Code;
the
latter
must
be
clearly
established
in
order
that
it
may
take
effect.
mortgage
of
A.
(1209a)
2. When
a
third
person
not
interested
in
the
obligation
pays
with
the
express/tacit
approval
of
the
debtor
• Subrogation
–
substitution
of
one
person
in
the
place
of
a
creditor
with
o Debtor
agrees
to
the
payment.
reference
to
a
lawful
claim
or
right,
giving
the
former
all
the
rights
of
the
Ex.
A
owes
B
1000.
C
pays
B
with
express/implied
consent
of
latter,
including
rights
to
employ
all
remedies
to
enforce
payment
A.
C
will
be
subrogated
in
the
rights
of
B.
• Kinds
of
Subrogation:
3. Third
person
interested
in
the
obligation
pays
weven
without
1. Conventional
–
Expressly
agreed
upon
by
original
parties
and
the
knowledge
of
the
debtor
new
creditor.
o “person
interested”
–
one
who
will
be
affected
by
the
payment
2. Legal
–
takes
place
by
operation
of
law
(Art.
1302)
Ex.
Suppose
in
above
example,
C
is
guarantor
of
A
(he
is
interested
in
the
fulfillment
of
obligation).
If
C,
the
guarantor,
pays
B,
even
without
the
knowledge
of
A,
C
is
subrogated
in
the
rights
of
B.
57
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Confusion
takes
place
in
person
of
C.
Guaranty
is
extinguished,
but
principal
obligation
subsists.
Art.
1303
–
General
Effect
of
Subrogation
Subrogation
transfers
to
the
persons
subrogated
the
credit
with
all
the
rights
thereto
appertaining,
either
against
the
debtor
or
against
third
person,
be
they
guarantors
or
possessors
of
mortgages,
subject
to
stipulation
in
a
conventional
subrogation.
(1212a)
58
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Stages
of
Contracts:
Title
II
–
CONTRACTS
1.
Negotiation
–
covers
the
period
from
the
time
the
prospective
contracting
parties
indicate
interest
in
the
contract
to
the
time
the
contract
is
Chapter
1:
General
Provisions
concluded
(perfected).
2.
Perfection
–
takes
place
upon
the
concurrence
of
the
essential
elements
of
Art.
1305
–
Contracts
Defined
the
contract.
A
contract
is
a
meeting
of
minds
between
two
persons
whereby
one
binds
himself,
o A
contract
which
is
consensual
as
to
perfection
is
so
established
upon
with
respect
to
the
other,
to
give
something
or
to
render
some
service.
(1254a)
a
mere
meeting
of
the
minds
i.e.
the
concurrence
of
offer
and
acceptance,
on
the
object
and
on
the
cause
thereof.
3.
Consummation
–
begins
when
the
parties
perform
their
respective
Contract:
undertakings
under
the
contract
culminating
in
the
extinguishment
• a
source
of
obligation
and
it
can
also
be
defined
as
a
legally
enforceable
thereof.
agreement.
• A
juridical
convention
manifested
in
legal
form,
by
virtue
of
which
one
or
Kinds
of
Contracts:
more
persons
bind
themselves
in
favor
of
another
or
others,
or
1. Real
contract
–
a
contract
which
requires,
in
addition
to
the
above,
the
reciprocally,
to
the
fulfillment
of
a
prestation
to
give,
to
do
or
not
to
do.
delivery
of
the
object
of
the
agreement,
as
in
a
pledge
or
commodatum
• An
agreement
whereby
at
least
one
of
the
parties
acquires
a
right,
either
in
2. Solemn
contract
–
compliance
with
certain
formalities
prescribed
by
law
is
rem
or
in
personam,
in
relation
to
some
person,
thing,
act
or
forbearance.
essential
in
order
to
make
the
act
valid,
the
prescribed
form
being
thereby
• Agreements
falling
under
the
Statute
of
Frauds
are
useless
contracts
for
an
essential
element
thereof.
they
cannot
be
implemented
which,
in
effect,
negates
the
existence
of
a
3. Auto-‐contracts
–
one
person
contracts
himself.
As
a
general
rule,
it
is
contract.
accepted
in
our
law.
The
existence
of
a
contract
does
not
depend
on
the
number
of
persons
but
on
the
number
of
parties.
There
is
no
general
Characteristics
of
Contracts:
prohibition
against
auto-‐contracts;
hence,
it
should
be
held
valid.
1. Essential
elements
–
without
the
following
there
is
no
contract
(COC):
4. Contracts
of
Adhesion
–
contracts
prepared
by
another,
containing
a. Consent
provisions
that
he
desires,
and
asks
the
other
party
to
agree
to
them
if
he
b. Object
wants
to
enter
into
a
contract.
c. Cause
Ex.
Transportation
tickets
–
other
party
can
reject
it
entirely
2. Natural
elements
–
exist
as
part
of
the
contract
even
if
the
parties
do
not
provide
for
them,
because
the
law,
as
suppletory
to
the
contract,
creates
Other
Terms:
them.
• Perfect
promise
–
distinguished
from
a
contract,
in
that
the
latter
3. Accidental
elements
–
those
which
are
agreed
by
the
parties
and
which
establishes
and
determines
the
obligations
arising
therefrom;
while
the
cannot
exist
without
being
stipulated.
former
tends
only
to
assure
and
pave
the
way
for
the
celebration
of
a
contract
in
the
future.
Number
of
Parties:
• Imperfect
Promise
–
mere
unaccepted
offer
• The
Code
states
“two
persons”
but
what
is
meant
actually
is
two
parties.
• Pact
–
a
special
part
of
the
contract,
sometimes
incidental
and
separable
• For
a
contract
to
exist,
there
must
be
at
least
two
parties.
A
party
can
be
for
the
principal
agreement.
one
or
more
persons.
• Stipulation
–
similar
to
a
pact;
when
the
contract
is
an
instrument,
it
refers
Ex.
Husband
&
Wife
–
cannot
sell
to
each
other
as
a
protection
of
the
to
the
essential
and
dispositive
part,
as
distinguished
from
the
exposition
conjugal
partnership.
They
can
however
enter
into
a
contract
of
of
the
facts
and
antecedents
upon
which
it
is
based.
agency.
59
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1306
–
Guarantee
of
Freedom
to
Contract
countenance
disrespect
for
or
failure
to
observe
a
legal
prescription.
The
contracting
parties
may
establish
such
stipulations,
clauses,
terms
and
The
Statute
takes
precedence.
conditions
as
they
may
deem
convenient,
provided
they
are
not
contrary
to
law,
o Only
laws
existing
at
the
time
of
the
execution
of
a
contract
are
morals,
good
customs,
public
order,
or
public
policy.
(1255a)
applicable
thereto
and
that
later
statutes
do
not
govern
said
contract
unless
the
latter
is
specifically
intended
to
have
a
retroactive
effect.
Autonomous
Nature
of
Contracts:
Ortigas
v.
CA
–
construction
of
a
commercial
edifice
was
• Freedom
to
stipulate
terms
and
conditions
–
essence
of
the
contractual
proper
provided
that
the
area
was
reclassified
from
a
system
provided
such
stipulations
are
not
contrary
to
law,
morals,
good
residential
to
a
commercial
zone.
customs,
public
order,
or
public
policy.
o Prohibits
a
party
from
coercing
or
intimidating
or
unduly
o Non-‐impairment
of
contracts
or
vested
rights
clauses
–
must
to
influencing
another
to
enter
into
a
contract.
yield
to
the
superior
and
legitimate
exercise
by
the
State
of
police
o Azcuna
Jr.
v.
CA
–
there
is
nothing
immoral
or
illegal
in
a
provision
power
to
promote
the
health,
morals,
peace,
education,
good
stating
that
the
lessee
shall
be
charged
₱1000/day
if
the
lessee
order,
safety
and
general
welfare
of
the
people.
shall
not
vacate
the
premises
on
the
due
date.
Ex.
o Manila
Bay
Club
Corporation
v.
CA
–
termination
of
a
lease
is
valid
Pakistan
International
Airlines
v.
Ople
–
contractual
when
it
is
due
to
the
failure
of
the
lessee
to
comply
with
the
stipulations
contravening
provisions
of
law
designed
to
insurance
clause
of
the
contract.
Contracts
are
respected
as
the
protect
laborers
and
employees
are
not
valid.
law
between
the
contracting
parties.
stipulations
to
pay
usurious
interests
• Teves
v.
People’s
Homesite
and
Housing
Corp.
–
in
the
absence
of
express
agreement
to
declare
valid
a
law
or
ordinance
legislation
or
constitutional
prohibition,
a
court
may
declare
a
contract
2. Contrary
to
Morals
-‐
morals
mean
those
generally
accepted
principles
void
as
against
public
policy
when:
of
morality
which
have
received
some
kind
of
social
and
practical
1.
It
has
a
tendency
to
injure
the
public.
confirmation.
Ex.
2.
It
is
against
the
public
good.
Philippine
American
General
Insurance
v.
Mutuc
–
a
provision
that
3.
It
contravenes
some
established
interest
of
society.
a
bond
may
be
extended
without
notification
is
not
necessarily
4.
It
is
inconsistent
with
sound
policy
and
good
morals
which
tends
contrary
to
law
or
morals
as
to
render
the
stipulation
null
and
to
undermine
the
security
of
individual
rights,
whether
of
void.
personal
liability
or
of
private
property.
De
Leon
v.
CA
–
agreement
by
the
husband
and
wife
to
terminate
their
relations
is
contrary
to
law,
Filipino
morals
and
public
policy.
Principle
of
Autonomy:
The
termination
of
a
marriage
by
the
parties
cannot
be
done
on
• Freedom
to
contract
–
any
person
has
the
liberty
to
enter
into
a
contract
their
own
and
without
legal
basis.
so
long
as
they
are
not
contrary
to
law,
morals,
good
customs,
public
order
a
promise
to
marry
or
not
to
marry,
to
secure
legal
separation,
or
or
public
policy.
The
legislature,
under
the
constitution,
is
prohibited
from
to
adopt
a
child
enacting
laws
to
prescribe
the
terms
of
a
legal
contract.
a
promise
to
change
citizenship,
profession,
religion
or
domicile
• Validity
of
Stipulations
–
any
and
all
stipulations
not
contrary
to
law,
a
promise
not
to
hold
public
office
or
which
limits
the
morals,
good
customs,
public
order
or
public
policy
is
valid.
performance
of
official
duties
1. Contrary
to
law
–
freedom
of
contract
is
restricted
by
law
for
the
good
a
promise
to
enter
a
particular
political
party
or
separate
from
it
of
the
public.
It
is
fundamental
postulate
that
however
broad
the
3. Contrary
to
Public
Order
–
if
the
court
finds
that
the
contract
as
to
the
freedom
of
the
contracting
parties
may
be,
it
does
not
go
so
far
as
to
consideration
or
the
thing
to
be
done,
contravenes
some
established
60
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
interest
of
society,
or
is
inconsistent
with
sound
policy
and
good
obligatory
and
it
must
be
proved
as
a
fact
according
to
morals,
or
tends
to
undermine
the
security
of
individual
rights.
the
rules
of
evidence
Ex.
Common
carrier
cannot
stipulate
for
exemption
for
liability
unless
Innominate
Contracts
according
to
Kind
of
Prestation:
such
exemption
is
justifiable
and
reasonable
and
the
contract
is
1.
do
ut
des
(I
give
that
you
may
give)
–
An
agreement
in
which
A
will
give
freely
and
fairly
made.
one
thing
to
B,
so
that
B
will
give
another
thing
to
A.
Payment
to
intermediaries
in
securing
import
licenses
or
quota
2.
do
ut
facias
(I
give
that
you
may
do)
–
An
agreement
under
which
A
will
allocations
give
something
to
B,
so
that
B
may
do
something
for
A.
Contract
of
scholarship
stipulating
that
the
student
must
remain
3.
facio
ut
facias
(I
do
that
you
may
do)
–
An
agreement
under
which
A
does
in
the
same
school
and
that
he
waives
his
right
to
transfer
to
something
for
B,
so
that
B
may
render
some
other
service
for
A.
another
school
without
refunding
the
school
4.
facio
ut
des
(I
do
that
you
may
give)
–
An
agreement
under
which
A
does
something
for
B,
so
that
B
may
give
something
to
A.
Art.
1307
–
Innominate
Contracts
Cases:
Innominate
contracts
shall
be
regulated
by
the
stipulations
of
the
parties,
by
the
• Dizon
v.
Gaborro
–
a
contract
where
respondent
shall
pay
for
the
provisions
of
Titles
I
and
II
of
this
Book,
by
the
rules
governing
the
most
analogous
obligations
of
the
petitioner,
and
the
petitioner
grants
possession,
nominate
contracts,
and
by
the
customs
of
the
place.
(n)
enjoyment
and
the
use
of
certain
lands
until
full
reimbursement,
partakes
the
nature
of
an
antichresis.
Innominate
Contracts:
• Corpus
v.
CA
–
contract
between
lawyer
and
client
is
analogous
to
a
• Those
which
are
not
specifically
governed
by
any
provision
in
the
Civil
Code
contract
of
agency.
or
special
law
but
which
likewise
involve
the
fulfillment
or
accomplishment
of
some
prestations
• They
are
actually
not
extraordinary
contracts.
Such
contracts
are
common
Art.
1308
–
Mutuality
of
Contracts
and
frequently
encountered.
The
contract
must
bind
both
contracting
parties;
its
validity
or
compliance
cannot
Ex.
contract
to
translate
a
book,
contract
to
model,
be
left
to
the
will
of
one
of
them.
(1256a)
contract
between
lawyer
and
client
• They
are
governed
by
the
following
(SLAC):
Mutuality
of
Contracts:
a. Stipulation
of
the
parties
• In
order
that
obligations
arising
from
contracts
may
have
the
force
of
law
b. Law
–
provisions
of
obligations
and
contracts
under
Title
I
and
between
the
parties,
there
must
be
mutuality
between
the
parties
based
II
of
the
Civil
Code
on
their
essential
equality.
A
contract
containing
a
condition
which
makes
c. Rules
governing
the
most
analogous
nominate
contracts
its
fulfillment
dependent
upon
the
exclusive
will
of
the
contracting
parties
Sale,
barter
or
exchange,
lease,
partnership,
agency,
is
void.
PNB
v.
CA
loan,
deposit,
aleatory,
contracts,
compromises,
• Garcia
v.
Rita
Legarda
Inc.
–
a
contract
expressly
giving
to
one
party
the
guaranty,
pledge,
mortgage,
and
antichresis
right
to
cancel
the
same
if
a
resolutory
condition
therefor
agreed
upon
is
Governed
by
special
laws:
insurance,
real
estate
not
fulfilled,
is
valid,
the
reason
being
that
when
the
contract
is
thus
mortgage,
and
charter
party
cancelled,
the
agreement
of
the
parties
is
in
reality
being
fulfilled.
d. Customs
of
the
place
• Allied
Banking
Corp.
v.
CA
–
a
stipulation
which
states
that
a
contract
may
o Custom
–
a
rule
of
conduct
formed
by
repetition
of
acts
be
renewed
for
a
like
term
at
the
option
of
the
lessee
is
valid
since
such
uniformly
observed
as
a
social
rule,
legally
binding
and
right
of
the
lessee
is
part
of
the
consideration
in
the
contract.
61
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Contract
of
adhesion
–
wherein
a
party,
usually
a
corporation,
prepares
Art.
1310
–
When
Determination
is
Inequitable
the
stipulations
in
the
contract,
while
the
other
party
merely
affixes
his
The
determination
shall
not
be
obligatory
if
it
is
evidently
inequitable.
In
such
case,
signature
or
his
adhesion‖
thereto.
Serra
v.
CA
the
courts
shall
decide
what
is
equitable
under
the
circumstances.
(n)
o Not
per
se
void.
o Binding
as
ordinary
contracts
because
the
party
who
adheres
to
Exception
to
Mutuality
of
Contracts
(Art.
1308)
the
contract
is
free
to
reject
it
entirely.
• Qualifies
determination
in
Art.
1309
• When
the
decision
cannot
be
arrived
due
to
inequity,
the
courts
shall
Cancellation
by
One
Party:
decide
what
is
equitable
for
the
parties
involved.
• Unilateral
Cancellation
–
just
as
nobody
can
be
forced
to
enter
into
a
contract,
in
the
same
manner
once
a
contract
is
entered
into,
no
party
can
renounce
it
unilaterally
or
without
the
consent
of
the
other.
Art.
1311
–
Stipulation
Pour
Atrui
o Nobody
is
allowed
to
enter
into
a
contract,
and
while
the
contract
Contracts
take
effect
only
between
the
parties,
their
assigns
and
heirs,
except
in
is
in
effect,
leaves,
denounces
or
disavows
the
contract
to
the
case
where
the
rights
and
obligations
arising
from
the
contract
are
not
prejudice
of
the
other.
transmissible
by
their
nature,
or
by
stipulation
or
by
provision
of
law.
The
heir
is
not
• Upon
Stipulation
–
however,
when
the
contract
so
stipulates
that
one
may
liable
beyond
the
value
of
the
property
he
received
from
the
decedent.
terminate
the
contract
upon
a
reasonable
period
is
valid.
o Judicial
action
for
the
rescission
of
the
contract
is
no
longer
If
a
contract
should
contain
some
stipulation
in
favor
of
a
third
person,
he
may
necessary
when
the
contract
so
stipulates
that
it
may
be
revoked
demand
its
fulfillment
provided
he
communicated
his
acceptance
to
the
obligor
before
its
revocation.
A
mere
incidental
benefit
or
interest
of
a
person
is
not
and
cancelled
for
the
violation
of
any
of
its
terms
and
conditions.
sufficient.
The
contracting
parties
must
have
clearly
and
deliberately
conferred
a
This
right
of
rescission
may
be
waived.
favor
upon
a
third
person.
(1257a)
Relativity
of
Contracts
(General
Rule):
Art.
1309
–
Determination
of
Performance
by
a
Third
Person
• Between
Principals
(parties)
–
contracts
take
effect
only
between
parties
The
determination
of
the
performance
may
be
left
to
a
third
person,
whose
to
the
same.
A
stranger
cannot
invoke
the
contract
of
another
for
his
own
decision
shall
not
be
binding
until
it
has
been
made
known
to
both
contracting
interest
or
for
a
source
of
an
alleged
prejudice.
parties.
(n)
o Integrated
Packaging
Corp.
v.
CA
–
supplier
private
respondent
is
not
a
party
to
the
agreement,
hence
cannot
be
held
liable
for
any
Exception
to
Mutuality
of
Contracts
(Art.
1308)
breach
between
the
contracting
parties.
• A
third
person
may
be
called
upon
to
decide
whether
or
not
performance
• Transmissibility
to
Assigns
and
Heirs
–
the
law
operates
to
effect
the
has
been
done
for
the
fulfillment
of
the
contract.
Such
decision
becomes
transfer
of
a
chosen
of
action
from
one
person
to
another
without
any
binding
when
communicated
to
the
parties.
concurring
act
on
the
part
of
the
parties
or
indeed
without
their
assent.
Ex.
A
sold
his
parcel
of
land
to
B.
It
was
agreed
that
C,
a
real
estate
o Heirs
are
not
third
persons
because
there
is
privity
of
interest
appraiser,
would
be
the
one
to
determine
the
reasonable
price
of
between
them
and
their
predecessor.
the
land.
C,
then
fixed
the
price
after
considering
all
the
o Transfer
of
an
interest
in
land
may
be
by
marriage,
and
by
death.
circumstances
affecting
the
value
of
the
land.
C
must
make
known
o DKH
Holdings
Corp.
v.
CA
–
upon
acquiring
the
property,
the
heir
his
decision
to
A
and
B
who
will
be
bound
by
the
same.
has
acquired
all
the
rights
and
obligations
of
the
deceased
lessor
with
respect
to
the
property.
o Transmission
of
rights
and
obligations
in
a
contract
may
be
agreed
upon
by
the
parties.
62
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o The
heir
may
not
be
held
liable
beyond
the
value
of
the
property
Stipulation
Pour
Autrui
Cases:
received.
• Marmont
Resort
Hotel
v.
Guiang
–
spouses
may
be
held
liable
as
Marmont
o 3
cases
where
contracts
cannot
take
effect
with
respect
to
the
hotel
is
a
third
party
who
is
benefitted
upon
the
second
memorandum
of
heirs
or
assigns
(SNL):
agreement
which
the
spouses
executed
with
Maris
Trading.
1.
Nature
–
of
the
contract
does
not
allow
transmission
• Coquia
v.
Fieldman’s
Insurance
Co.
Inc.
–
insurance
contract
is
contract
Where
acts
stipulated
in
a
contract
require
the
exercise
pour
autrui.
Any
authorized
driver
of
the
insured
taxi
company
has
a
right
of
special
knowledge,
genius,
skill,
taste,
ability,
of
claim
in
case
of
a
death
or
bodily
injury
suffered
through
an
accident.
experience,
judgment,
discretion,
integrity,
or
other
• Mandarin
Villa,
Inc.
v.
CA
–
in
a
transaction
between
a
restaurant,
bank
personal
qualification
of
one
or
both
parties,
the
and
a
credit
card
holder,
the
card
holder’s
offer
to
pay
by
means
of
his
agreement
is
of
a
personal
nature,
and
terminates
on
the
credit
card
constitutes
not
only
an
acceptance
of
the
said
stipulation
but
death
of
the
party
who
is
required
to
render
such
service
also
an
explicit
communication
of
his
acceptance
to
the
obligor.
2.
Stipulation
–
that
no
transmission
of
rights
shall
be
allowed
• Young
v.
CA
–
when
given
a
right
of
first
refusal,
the
sale
of
subject
3.
Law
–
provides
non-‐transmission
property
to
some
other
person
constitutes
a
revocation
of
such
right.
4
Exceptions
to
the
Relativity
of
Contracts:
1. Contracts
Pour
Autrui
(Art.
1311
par.
2)
–
enforcement
of
which
may
be
Art.
1312
–
Contracts
Creating
Real
Rights
Bind
Third
Persons
demanded
by
a
third
party
for
whose
benefit
it
has
been
made,
although
In
contracts
creating
real
rights,
third
persons
who
come
into
possession
of
the
not
a
party
to
the
contract,
before
the
stipulation
in
his
favor
has
been
object
of
the
contract
are
bound
thereby,
subject
to
the
provisions
of
the
Mortgage
revoked
by
the
contracting
parties.
There
must
be
a
clear
intent
to
benefit
Law
and
the
Land
Registration
Laws.
(n)
the
third
party.
It
is
insufficient
that
the
third
party
be
merely
incidentally
benefited.
Real
Rights
in
Property:
o Requisites
of
a
Stipulation
Pour
Autrui
(SPCLA):
• A
real
right
directly
affects
property
subject
to
it.
a. There
must
be
a
stipulation
in
favor
of
a
third
person
(who
is
• Whoever
is
in
possession
of
such
property
must
respect
that
real
right.
not
necessarily
named)
Ex.
If
the
lessor
terminates
the
lease
contract
for
a
valid
cause,
the
b. The
stipulation
must
be
a
part,
not
the
whole
of
the
contract
sublessee
can
be
ejected
from
the
leased
premises
even
if
he
is
c. The
contracting
parties
must
have
clearly
and
deliberately
not
a
party
to
the
lease
contract.
conferred
a
favor
upon
a
third
person,
not
a
mere
incidental
benefit
or
interest
d. Neither
of
the
contracting
parties
bears
the
legal
Art.
1313
–
Right
of
Creditors
to
Impugn
Fraudulent
Contracts
representation
or
authorization
of
the
third
party
Creditors
are
protected
in
cases
of
contracts
intended
to
defraud
them.
(n)
e. The
favored
party
must
have
communicated
his
acceptance
of
the
stipulation
to
the
obligor
before
its
revocation
• Art.
1381(3)
–
provides
that
a
contract
shall
be
rescissible
if
it
is
2. Contracts
creating
Real
Rights
(Art.
1312)
undertaken
in
fraud
of
creditors
when
the
latter
cannot
in
any
other
3. Right
of
Creditors
to
Impugn
Fraudulent
Contracts
(Art.
1313)
manner
collect
the
claim
due
them.
4. Person
who
Induces
Another
to
Violate
a
Contract
(Art.
1314)
• Even
if
the
creditor
is
not
a
party
to
the
contract
intended
to
defraud
him,
he
is
given
legal
personality
by
law
to
terminate
the
contract.
63
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1314
–
Liability
of
Third
Persons
Responsible
for
Breach
of
Contract
Art.
1315
–
Perfection
of
Contracts
and
Implied
Terms
Any
third
person
who
induces
another
to
violate
his
contract
shall
be
liable
for
Contracts
are
perfected
by
mere
consent,
and
from
that
moment
the
parties
are
damages
to
the
other
contracting
party.
(n)
bound
not
only
to
the
fulfillment
of
what
has
been
expressly
stipulated
but
also
to
all
the
consequences
which,
according
to
their
nature,
may
be
in
keeping
with
good
• A
stranger
owes
to
the
parties
to
the
agreement
a
duty
not
to
interfere
faith,
usage
and
law.
(1258)
with
its
performance.
o This
covers
every
case
where
one
person
maliciously
persuades
• Implied
terms
–
obligations
not
stipulated
in
a
contract
but
includes
all
another
to
break
any
contract
with
a
third
person.
consequences
that
may
be
in
keeping
with
good
faith,
usage
and
law.
• Malicious
act
–
if
the
persuasion
be
used
for
the
indirect
purpose
of
Ex.
observance
of
proper
diligence
injuring
the
plaintiff,
or
benefiting
the
defendant,
at
the
expense
of
the
delivery
includes
all
accessions
and
accessories
plaintiff.
provisions
on
fortuitous
events
o Lack
of
malice
precludes
damages.
But
it
does
not
relieve
petitioner
of
the
legal
liability
for
entering
into
contracts
and
Art.
1316
–
Real
Contracts
are
Perfected
upon
Delivery
causing
breach
of
existing
ones.
Real
contracts,
such
as
deposit,
pledge
and
Commodatum,
are
not
perfected
until
• The
party
guilty
of
such
breach
may,
nevertheless,
recover
against
the
one
the
delivery
of
the
object
of
the
obligation.
(n)
who
induces
him
to
violate
his
contract
when
the
latter,
by
such
acts
and
persuasion,
intended
to
injure
the
other
contracting
party
or
to
coerce
him
• General
Rule
–
contracts
are
perfected
by
mere
consent
of
the
parties.
into
adopting
a
line
of
business
against
his
will
and
judgment
o Exceptions:
• Damage
–
the
loss,
hurt,
or
harm
which
results
from
injury
and
damages
1.
Contract
of
Sale
–
ownership
over
the
object
is
transferred
only
are
the
recompense
or
compensation
awarded
for
the
damage
suffered.
upon
actual
or
constructive
delivery.
Song
Pin
Bun
v.
CA
2.
Real
Contracts
o One
becomes
liable
in
an
action
for
damages
for
a
non-‐ a. Deposit
–
constituted
from
the
moment
a
person
trespassory
invasion
of
another’s
interest
in
the
private
use
and
receives
a
thing
belonging
to
another
for
the
purpose
of
enjoyment
of
asset
if
(RILS):
safely
keeping
it
and
returning
the
same.
(Art.
1962)
1.
The
other
has
property
rights
and
privileges
with
respect
b. Pledge
–
constituted
by
the
owner
of
the
object
to
to
the
use
or
enjoyment
interfered
with.
secure
a
loan.
It
is
indispensable
that
the
thing
pledged
2.
The
invasion
is
substantial.
be
in
possession
of
the
creditor.
3.
The
defendant’s
conduct
is
a
legal
cause
of
the
invasion.
c. Commodatum
–
bailee
in
commodatum
acquires
the
use
4.
The
invasion
is
either
intentional
and
unreasonable
or
of
the
thing
loaned.
unintentional
and
actionable
under
general
negligence
rules.
o Elements
of
Tort
Interference
(EKI):
Art.
1317
–
Unauthorized
Contracts
are
Unenforceable
1.
Existence
of
a
valid
contract
No
one
may
contract
in
the
name
of
another
without
being
authorized
by
the
latter,
2.
Knowledge
on
the
part
of
the
third
person
of
the
existence
of
or
unless
he
has
by
law
a
right
to
represent
him.
contract
A
contract
entered
into
in
the
name
of
another
by
one
who
has
no
authority
or
3.
Interference
of
the
third
person
is
without
legal
justification
legal
representation,
or
who
has
acted
beyond
his
powers,
shall
be
unenforceable,
or
excuse
unless
it
is
ratified,
expressly
or
impliedly,
by
the
person
on
whose
behalf
it
has
been
executed,
before
it
is
revoked
by
the
other
contracting
party.
(1259a)
64
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• General
rule
–
no
person
may
contract
in
the
name
of
another.
• “Concur”
–
all
the
three
requisites
must
be
present.
Absence
of
one
o Exception
–
if
such
person
has
by
law
a
right
to
represent
him.
negates
the
existence
of
a
contract.
Ex.
Parents
exercising
parental
authority
have
the
right
and
• The
rule
on
pari
delicto
–
when
both
parties
are
equally
at
fault.
duty
to
represent
their
unemancipated
child.
o Void
and
inexistent
contracts
–
when
any
of
the
elements
are
• Contract
of
Agency
–
a
person
binds
himself
to
render
some
service
or
to
absent
pari
delicto
shall
not
apply.
do
something
in
representation
or
on
behalf
of
another,
with
the
consent
o Ostensible
contracts
–
when
the
elements
are
all
present
but
the
or
authority
of
the
latter.
contract
is
void,
pari
delicto
shall
apply.
o The
principal
of
the
agent
must
comply
with
all
the
obligations
Ex.
purchase
and
delivery
of
drugs
which
the
agent
may
have
contracted
with
the
scope
of
his
authority.
Section
1
–
Consent
o Wherein
the
agent
has
exceeded
his
power,
the
principal
is
not
bound
except
when
he
ratifies
it
expressly
or
tacitly.
o When
the
agent
exceeded
his
authority,
the
principal
is
solidarily
Art.
1319
–
Consent
Defined
liable
with
the
agent
if
the
former
allowed
the
latter
to
act
as
Consent
is
manifested
by
the
meeting
of
the
offer
and
the
acceptance
upon
the
though
he
had
full
powers.
thing
and
the
cause
which
are
to
constitute
the
contract.
The
offer
must
be
certain
o When
a
sale
of
a
piece
of
land
or
any
interest
therein
is
through
and
the
acceptance
absolute.
A
qualified
acceptance
constitutes
a
counter-‐offer.
an
agent,
the
authority
of
the
latter
shall
be
in
writing,
or
else,
the
Acceptance
made
by
letter
or
telegram
does
not
bind
the
offerer
except
from
the
sale
shall
be
void.
time
it
came
to
his
knowledge.
The
contract,
in
such
a
case,
is
presumed
to
have
• Yao
Ka
Sin
v.
CA
–
if
a
private
corporation
intentionally
or
negligently
been
entered
into
in
the
place
where
the
offer
was
made.
(1262a)
clothes
its
officers
or
agents
with
apparent
power
to
perform
acts
for
it,
the
corporation
cannot
deny
that
the
existence
of
such
authority,
as
to
• Consent
–
the
concurrence
of
the
wills
of
the
offerer
and
acceptor
as
to
innocent
third
persons
dealing
in
good
faith
with
such
officers
or
agents.
the
thing
and
the
cause
which
constitute
a
contract.
• Regal
Films
v.
Concepcion
–
such
an
agreement
is
void
where
the
agent
o Requisites
of
Consent:
was
no
longer
acting
on
behalf
of
the
movie
actor.
1.
Consent
must
be
manifested
by
the
concurrence
of
the
offer
and
the
acceptance
(Arts.
1319-‐1326)
2.
Contracting
parties
must
possess
the
necessary
legal
capacity
(Arts.
1327-‐1329)
3.
Consent
must
be
intelligent,
free,
spontaneous
and
real
Chapter
2:
Essential
Requisites
of
Contracts
(Arts.
1330-‐1346)
General
Provisions
• Offer
–
a
manifestation
of
a
willingness
to
enter
into
a
bargain
so
made
as
to
justify
another
person
in
understanding
that
his
assent
to
that
bargain
is
invited
and
will
conclude
it.
Art.
1318
–
Elements
of
a
Contract
o Making
an
offer
means
inviting
an
acceptance
which,
if
given,
will
There
is
no
contract
unless
the
following
requisites
concur:
finally
create
a
contract.
o It
must
be
so
complete
that
its
acceptance
will
form
an
agreement
(1)
Consent
of
the
contracting
parties;
containing
all
the
terms
necessary
and
intended
by
the
parties,
for
(2)
Object
certain
which
is
the
subject
matter
of
the
contract;
it
is
obvious
that
there
can
be
no
agreement
until
its
terms
are
(3)
Cause
of
the
obligation
which
is
established.
(1261)
settled,
and
that
an
offer
which
is
not
complete
is
merely
a
step
in
the
negotiations.
65
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o The
following
relations,
until
a
contract
is
perfected,
are
not
other
party
options
and/or
remedies
to
protect
considered
binding
commitments,
and
if
withdrawn,
such
interests.
withdrawal
is
effective
immediately
after
its
manifestation
such
as
o Person
making
the
offer
must
have
actual
knowledge
of
the
by
its
mailing
and
not
necessarily
when
the
offeree
learns
of
the
acceptance.
withdrawal:
1.
Negotiation
–
is
formally
initiated
by
an
offer
Art.
1321
–
Offerer
Fixes
Manner,
Time
and
Place
of
Acceptance
2.
Imperfect
promise
(policitacion)
–
is
merely
an
offer
The
person
making
the
offer
may
fix
the
time,
place,
and
manner
of
acceptance,
all
3.
Public
advertisements
or
solicitations
–
are
ordinarily
of
which
must
be
complied
with.
(n)
construed
as
mere
invitations
to
make
offers
or
only
as
proposals.
• General
rule
–
offerer
will
not
be
bound
by
an
acceptance
made
by
the
acceptor
in
any
other
manner
than
that
specified
by
the
offerer.
Art.
1320
-‐
Acceptance
o Exception
–
when
the
offerer
acquiesces
in
the
change.
An
acceptance
may
be
express
or
implied.
(n)
• Matias
v.
CA
–
a
lessee
may
not
compel
the
subsequent
owner
of
a
property
to
sell
it
in
an
amount
which
the
lessee
feels
reasonable.
• Acceptance
–
must
exist
to
establish
concurrence
of
the
wills
of
the
• Contract
of
sale
–
the
manner
of
payment
of
the
purchase
price
is
an
parties,
otherwise
there
is
no
consent
to
form
a
contract.
essential
element
before
a
valid
and
binding
contract
of
sale
can
exist.
Salonga
v.
Farrales
–
where
the
defendant
merely
offered
the
property
but
which
offer
was
not
accepted,
there
was
no
consent.
Art.
1322
–
Communication
of
Acceptance
to
Agent
An
offer
made
through
an
agent
is
accepted
from
the
time
acceptance
is
o Must
be
absolute
–
it
may
be
express
or
implied.
Adelfa
Properties
Inc.
v.
CA
–
except
where
formal
communicated
to
him.
(n)
acceptance
is
required,
it
may
be
shown
by
acts,
conduct
or
words
of
the
accepting
party
that
clearly
manifest
a
• Contract
of
Agency
–
a
person
binds
himself
to
render
some
service
or
to
present
intention
or
determination
to
accept
the
offer
to
do
something
in
representation
or
on
behalf
of
another
with
the
consent
buy
or
sell.
or
authority
of
the
latter.
o Must
be
unconditional
–
it
must
be
identical
to
the
terms
of
the
• When
a
sale
of
a
piece
of
land
or
any
interest
therein
is
through
an
agent,
offer.
the
authority
of
the
latter
shall
be
in
writing,
otherwise
the
sale
is
void.
It
must
not
vary
from
the
proposal
by
way
of
omission,
addition
or
alteration.
Art.
1323
–
When
Offer
Becomes
Ineffective
Counter-‐offer
–
a
qualified
acceptance
which
binds
An
offer
becomes
ineffective
upon
the
death,
civil
interdiction,
insanity,
or
neither
of
the
parties.
insolvency
of
either
party
before
acceptance
is
conveyed.
(n)
Jardine
Davies
v.
CA
–
when
the
acceptance
of
a
construction
bid
was
subject
to
certain
basic
terms
and
• “Before
acceptance
is
conveyed”
–
before
acceptance
has
come
to
the
conditions,
it
was
not
tantamount
to
a
qualified
actual
knowledge
of
the
offeror.
acceptance.
As
to
conditions:
• When
an
offer
becomes
ineffective,
nothing
can
be
accepted.
• Condition
imposed
on
the
perfection
of
a
• Villanueva
v.
CA
–
an
offer
became
ineffective
when
a
bank
became
contract
–
failure
to
comply
results
in
the
failure
insolvent
and
was
placed
under
receivership
before
its
acceptance
of
the
of
a
contract.
purchase
of
a
certain
foreclosed
property
was
communicated
to
the
seller.
• Condition
imposed
merely
on
the
performance
Hence,
no
contract
was
created.
of
an
obligation
–
failure
to
comply
gives
the
66
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o However,
it
is
not
the
giving
of
the
earnest
money
per
se,
but
the
Art.
1324
–
Contract
of
Option,
Option
Period,
Option
Money
proof
of
the
concurrence
of
all
the
essential
elements
of
the
When
the
offerer
has
allowed
the
offeree
a
certain
period
to
accept,
the
offer
may
contract
of
sale
which
establishes
the
existence
of
a
perfected
be
withdrawn
at
any
time
before
acceptance
by
communicating
such
withdrawal,
sale.
except
when
the
option
is
founded
upon
a
consideration,
as
something
paid
or
promised.
(n)
Art.
1325
–
Business
Advertisements
Unless
it
appears
otherwise,
business
advertisements
of
things
for
sale
are
not
• Option
—
a
contract
granting
a
privilege
to
buy
or
sell
at
a
determined
definite
offers,
but
mere
invitations
to
make
an
offer.
(n)
price
within
an
agreed
time.
• Option
period
—
when
the
offerer
has
allowed
the
offeree
a
certain
period
• General
Rule
—
advertisements
of
things
for
sale
are
mere
invitations
to
to
accept
the
offer.
make
an
offer.
• Ang
Yu
Asuncion
v.
CA
—
rules
on
option
period:
o Exception
―
unless
it
appears
otherwise
or
where
such
PERIOD
NOT
FOUND
ON
A
PERIOD
HAS
A
SEPARATE
advertisement
may
constitute
an
offer
which
is
certain.
CONSIDERATION
CONSIDERATION
The
offerer
is
still
free
and
has
the
A
contract
of
―option‖
is
deemed
Art.
1326
–
Advertisements
for
Bidders
right
to
withdraw
the
offer
before
perfected
and
it
would
be
a
breach
Advertisements
for
bidders
are
simply
invitations
to
make
proposals,
and
the
its
acceptance
or
if
an
acceptance
of
that
contract
to
withdraw
the
advertiser
is
not
bound
to
accept
the
highest
or
lowest
bidder,
unless
the
contrary
was
made,
before
the
offeror’s
offer
during
the
agreed
period.
appears.
(n)
coming
to
know
of
such
fact,
by
communicating
that
withdrawal
to
If
the
optioner-‐offeror
withdraws
the
offer
before
its
acceptance
by
• Jardine
Davies
Inc.
v.
CA
—
when
a
company
starts
the
process
of
a
bidding
the
offeree.
and
disseminates
the
document
denominated
the
“Terms
Conditions
of
The
right
to
withdraw
must
not
be
the
optionee-‐offeree,
the
latter
the
Bidding”‖to
the
bidders,
the
dissemination
of
the
said
documents
exercised
whimsically
or
arbitrarily;
may
not
sue
for
specific
constitutes
an
advertisement‖
to
bid
in
the
project.
The
bid
proposals
or
otherwise,
it
could
give
rise
to
a
performance
on
the
proposed
quotations
submitted
by
the
prospective
suppliers
are
the
offers.
The
damage
claim
under
Art.
19
of
the
contract
since
it
has
failed
to
reach
its
own
stage
of
perfection.
favorable
reply
of
the
company
to
one
of
the
prospective
suppliers
is
the
Civil
Code.
The
optioner-‐offeror
renders
acceptance.
himself
liable
for
damages
for
breach
of
the
option.
Art.
1327
–
Persons
who
Cannot
Give
Consent
• Serra
v.
CA
—
an
optional
contract
is
a
privilege
existing
only
in
one
party— The
following
cannot
give
consent
to
a
contract:
the
buyer.
(1)
Unemancipated
minors;
o He
is
given
the
right
to
decide
to
purchase
or
not,
a
certain
merchandise
or
property,
at
any
time
within
the
agreed
period,
at
(2)
Insane
or
demented
persons,
and
deaf-‐mutes
who
do
not
know
how
to
write.
a
fixed
price.
(1263a)
• Consideration
—
in
an
option
contract,
may
be
anything
of
value,
unlike
in
sale
where
it
must
be
the
price
certain
in
money
or
its
equivalent.
• Persons
who
are
capable
cannot
allege
the
incapacity
of
those
with
whom
• Earnest
money
—
considered
part
of
the
price
in
a
contract
of
sale
and
can
they
contracted
to
annul
the
contract.
be
a
proof
of
the
perfection
of
the
contract
of
sale.
67
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Unemancipated
Minors:
Deaf-‐mutes:
• Emancipation
takes
place
by
the
attainment
of
majority
age
which
• Being
deaf-‐mute
is
not
by
itself
alone
a
disqualification
for
giving
consent.
commences
at
the
age
of
18
years.
• The
law
refers
to
the
deaf-‐mute
who
does
not
know
how
to
write.
• Any
contract
entered
into
by
an
unemancipated
person
is
annullable
or
voidable.
Art.
1328
–
Lucid
Intervals,
Drunkenness,
Hypnotic
Spell
o Unless
they
ratify
the
same
upon
reaching
the
age
of
majority.
Contracts
entered
into
during
a
lucid
interval
are
valid.
Contracts
agreed
to
in
a
• Only
the
minor
can
invoke
the
ground
that
a
contract
is
annullable
state
of
drunkenness
or
during
a
hypnotic
spell
are
voidable.
(n)
because,
at
the
time
it
was
entered
into,
he
was
still
a
minor.
• Misrepresentation
by
a
Minor:
Lucid
Interval:
a. Braganza
v.
De
Villa
Abrille
(passive
misrepresentation)
—
where
• Lucid
interval
—
that
period
of
time
when
an
insane
person
acts
with
minors
signed
a
promissory
note
without
telling
the
creditor
their
reasonable
understanding,
comprehension
and
discernment
with
respect
ages,
and
where
the
creditor
sought
to
enforce
the
promissory
note
to
what
he
is
doing.
against
them,
it
was
held
that
the
minors
can
set
up
the
defense
of
• Lunacy
may
be
intermittent
in
character,
but
when
one
is
shown
to
have
minority
to
resist
claim.
been
mentally
deranged
at
a
recent
period
anterior
to
the
execution
of
the
o Minors
have
no
juridical
duty
to
disclose
their
inability
or
age.
contract,
that
condition
is
presumed
to
continue
and
the
burden
is
on
the
o Even
if
the
written
contract
is
unenforceable
because
of
non-‐ other
party
to
show
that
the
agreement
was
entered
into
during
a
lucid
age,
they
shall
make
restitution
to
the
extent
that
they
may
interval.
have
profited
by
the
money
they
received.
b. Mercado
v.
Espiritu
(active
misrepresentation)
—
document
signed
by
Drunkenness
or
Hypnotic
Spell:
the
minor
specifically
stated
he
was
of
age.
The
minor
is
estopped
• Intoxication
—
must
be
such
a
character
as
to
perpetuate
an
undue
from
setup
the
defense
of
minority.
advantage
over
the
drunken
person.
o It
must
render
the
person
incapable
of
intelligent
assent
and
Insane
or
Demented
Persons:
deprived
of
the
power
to
know
what
he
is
doing.
• Contracts
entered
into
by
insane
or
demented
persons
are
annullable,
not
o Anything
short
of
this
will
not
invalidate
the
contract.
void
ab
initio.
o An
agreement
made
by
a
person
when
so
drunk,
is
voidable
at
the
o Valid
up
to
the
time
they
are
rendered
ineffective
by
the
courts.
intoxicated
person’s
option
under
any
of
the
following
(OFC):
o Insanity
of
the
other
party
at
the
time
of
the
perfection
of
the
1.
When
it
appears
that
the
drunkenness
was
brought
about
by
contract
must
be
proven.
the
opposite
party
o When
the
insane
is
not
under
a
guardian
and
the
other
2.
That
a
fraudulent
advantage
was
taken
of
it
contracting
party
has
no
reasonable
cause
to
believe
him
3.
That
the
drunkenness
was
so
complete
as
to
deprive
the
otherwise
insane,
the
agreement
is
valid
if
equitable
and
party
of
his
reason
of
an
agreeing
mind
beneficial
to
such
insane
person.
• Hypnosis
—
an
artificially
induced
state,
resembling
sleep,
but
• 3
classes
of
mental
incapacity:
characterized
by
exaggerated
suggestibility
and
continued
responsiveness
1.
Idiot
—
one
who
has
been
insane
from
birth.
to
the
voice
of
the
hypnotist.
2.
Lunatic
—
one
who
was
at
one
time
sane,
but
who
from
some
cause
or
other
has
lost
use
of
his
reason.
Art.
1329
–
Incapacity
Subject
to
Modifications
3.
Mentally
Weak
—
not
totally
incapable
of
transacting
business
or
The
incapacity
declared
in
Article
1327
is
subject
to
the
modifications
determined
managing
affairs.
by
law,
and
is
understood
to
be
without
prejudice
to
special
disqualifications
established
in
the
laws.
(1264)
68
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• The
Rules
of
Court
provide
a
list
of
incompetents
who
need
guardianship:
• Annulment
of
contract
on
the
ground
of
error
is
limited
to
cases
in
which
it
o persons
suffering
from
the
penalty
of
civil
interdiction
may
reasonably
be
said
that
without
such
error
the
consent
would
not
o hospitalized
lepers
have
been
given.
o prodigals
• For
mistake
to
make
a
contract
voidable
or
annullable,
the
law
states
that
o deaf
and
dumb
who
are
unable
to
write
and
read
the
consent
must
either
refer
to
the
(SC):
o those
of
unsound
mind
(even
though
they
have
lucid
intervals)
1. Substance
of
the
thing
which
is
the
object
of
the
contract
o persons
not
being
of
unsound
mind
but
by
reason
of
age,
disease,
2. Conditions
which
principally
moved
the
parties
to
enter
into
a
weak
mind,
and
other
similar
causes
cannot,
without
outside
aid,
contract
take
care
of
themselves
and
manage
their
property—becoming
an
Unilateral
mistake
—
of
which
the
other
party
is
entirely
easy
prey
for
deceit
and
exploitation.
ignorant
and
to
which
he
in
no
way
contributes,
will
not
• The
incapacity
to
give
consent
(Arts.
1327
&
1328)
to
contracts
renders
the
affect
the
agreement
or
afford
ground
for
its
avoidance
contract
merely
voidable,
while
special
disqualification
(Art.
1329)
makes
it
or
rescission,
unless
it
is
such
a
mistake
as
goes
to
the
void.
substance
of
the
agreement
itself.
Identity
or
qualifications
—
even
when
there
is
no
error
as
to
person,
is
a
cause
vitiating
consent,
if
such
Art.
1330
–
Characteristics
of
Consent
qualifications
have
been
the
principal
cause
of
the
A
contract
where
consent
is
given
through
mistake,
violence,
intimidation,
undue
contract.
influence,
or
fraud
is
voidable.
(1265a)
Motive
—
does
not
affect
the
contract
unless
such
motive
was
a
condition
of
the
consent
given,
because
an
• Meeting
of
the
minds
must
be
free,
voluntary,
willful
and
with
reasonable
accidental
element
is,
by
the
will
of
the
parties,
understanding
of
the
various
obligations
the
parties
intend
to
be
bound.
converted
into
a
substantial
element.
• Mistake,
intimidation,
violence,
undue
influence,
fraud
—
grounds
to
• Spouses
Heinzrich
Theis
and
Betty
Theis
v.
CA
—
Mistake
involves
either:
annul
a
contract
because
there
is
no
real
assent
to
the
contract.
1. Ignorance
—
absence
of
knowledge
which
respect
to
a
thing.
• Intimidation,
violence,
undue
influence
—
acts
of
duress
where
the
2. Mistake
properly
speaking
—
a
wrong
conception
about
said
coerced
party
is
compelled
to
execute
the
contract
against
his
will.
thing
or
a
belief
in
the
existence
of
some
circumstance,
fact
or
• A
contract
obtained
through
duress
or
mistake
is
voidable
or
annullable
event
which
in
reality
does
not
exist.
under
Art.
1390.
• A
simple
mistake
of
account
shall
give
rise
to
its
correction
—
it
does
not
go
into
the
essentials
of
a
contract.
Art.
1331
–
Mistake
or
Error
In
order
that
mistake
may
invalidate
consent,
it
should
refer
to
the
substance
of
the
thing
which
is
the
object
of
the
contract,
or
to
those
conditions
which
have
Art.
1332
–
Burden
of
Proof
in
case
of
Fraud
or
Mistake
principally
moved
one
or
both
parties
to
enter
into
the
contract.
When
one
of
the
parties
is
unable
to
read,
or
if
the
contract
is
in
a
language
not
understood
by
him,
and
mistake
or
fraud
is
alleged,
the
person
enforcing
the
Mistake
as
to
the
identity
or
qualifications
of
one
of
the
parties
will
vitiate
consent
contract
must
show
that
the
terms
thereof
have
been
fully
explained
to
the
former.
only
when
such
identity
or
qualifications
have
been
the
principal
cause
of
the
(n)
contract.
A
simple
mistake
of
account
shall
give
rise
to
its
correction.
(1266a)
• Presumption
—
when
entering
into
a
contract,
the
parties
are
presumed
to
have
understood
the
terms
of
the
contract
they
voluntarily
signed
especially
when
there
is
proof
that
they
are
educated.
Mistake:
69
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o May
be
rebutted
by
evidence
that
the
person
invoking
the
same
Art.
1335
–
Violence
or
Force
has
either
of
these
conditions:
There
is
violence
when
in
order
to
wrest
consent,
serious
or
irresistible
force
is
Inability
to
read
employed.
Inability
to
understand
the
language
of
the
contract
• Burden
of
proof
shifts
to
the
one
enforcing
the
contract
to
show
that
the
There
is
intimidation
when
one
of
the
contracting
parties
is
compelled
by
a
terms
have
been
explained
to
the
other
party.
reasonable
and
well-‐grounded
fear
of
an
imminent
and
grave
evil
upon
his
person
• The
fact
of
not
understanding
is
not
enough;
it
must
be
coupled
with
fraud.
or
property,
or
upon
the
person
or
property
of
his
spouse,
descendants
or
• Lustan
v.
CA
—
a
deed
of
definite
sale
was
ruled
to
be
an
equitable
ascendants,
to
give
his
consent.
mortgage
where
an
illiterate
woman
was
made
to
believe
that
what
she
signed
evidenced
an
indebtedness
to
the
creditor.
To
determine
the
degree
of
intimidation,
the
age,
sex
and
condition
of
the
person
• Lim
v.
CA
—
where
a
contract
was
written
in
English
signed
by
an
elderly
shall
be
borne
in
mind.
woman
who
claimed
that
she
did
not
understand
it,
was
upheld
because
fraud
was
not
proven.
A
threat
to
enforce
one's
claim
through
competent
authority,
if
the
claim
is
just
or
• Arriola
v.
Mahilum
—
upheld
the
cause
of
an
illiterate
where
her
sister
legal,
does
not
vitiate
consent.
(1267a)
fraudulently
had
her
sign
a
document
including
the
partition
of
her
own
property.
• Violence
–
refers
to
physical
force
or
compulsion.
o There
is
total
absence
of
free
will
in
case
a
person
is
compelled
to
enter
into
a
contract
through
violence.
Art.
1333
–
Knowledge
of
Risk
o Requisites
of
violence:
There
is
no
mistake
if
the
party
alleging
it
knew
the
doubt,
contingency
or
risk
1. that
the
physical
force
employed
must
be
irresistible
or
of
affecting
the
object
of
the
contract.
(n)
such
degree
that
the
victim
has
no
other
course,
under
the
circumstances,
but
to
submit.
• If
the
parties
are
conscious
of
their
ignorance
as
to
the
existence
of
some
2. that
such
force
is
the
determining
cause
in
giving
the
consent
facts,
the
non-‐existence
of
such
facts
is
of
no
consequence.
to
the
contract.
• Wood
v.
Boynton
—
contract
cannot
be
annulled
where
a
Topaz
turned
out
• Intimidation
–
refers
to
moral
force
or
compulsion.
to
be
actually
a
Diamond
because
there
was
conscious
uncertainty
and
o It
is
necessary
that
the
threats
and
circumstances
be
of
a
both
parties
took
the
risk.
character
as
to
excite
the
reasonable
apprehensions
of
a
person
of
ordinary
courage,
and
that
the
agreement
be
made
under
the
Art.
1334
–
Mistake
of
Law
May
Vitiate
Consent
influence
of
such
threats
or
menace.
Mutual
error
as
to
the
legal
effect
of
an
agreement
when
the
real
purpose
of
the
o Threat
must
be
tangible
and
direct
parties
is
frustrated,
may
vitiate
consent.
(n)
o Requisites
of
intimidation:
1. that
the
intimidation
must
be
the
determining
cause
of
the
contract,
or
must
have
caused
the
consent
to
be
given.
• General
rule
—
A
unilateral
mistake
of
law
as
to
the
legal
effect
of
an
2. that
the
threatened
act
be
unjust
or
unlawful.
agreement
is
not
a
ground
to
annul
a
contract.
3. that
the
threat
be
real
and
serious,
there
being
an
evident
o Exception
—
when
the
following
requisites
concur:
disproportion
between
the
evil
and
the
resistance
which
all
1. The
mistake
as
to
the
legal
effect
of
the
agreement
must
be
men
can
offer.
mutual.
2. Such
mutual
mistake
frustrates
the
real
purpose
of
the
4. that
it
produces
a
reasonable
and
well-‐grounded
fear
from
parties.
the
fact
that
the
person
from
whom
it
comes
has
the
necessary
means
or
ability
to
inflict
the
threatened
injury.
70
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
De
Leon
v.
CA
been
unduly
influenced
was
suffering
from
mental
weakness,
or
was
ignorant
or
in
• Duress
–
that
degree
of
constraint
or
danger
either
actually
inflicted
financial
distress.
(n)
(violent)
or
threatened
and
impending
(intimidation),
sufficient
to
overcome
the
mind
and
will
of
a
person
of
ordinary
firmness.
• Annulling
a
contract
based
on
undue
influence
―is
based
upon
principles
o Vda.
De
Lacson
v.
Granada
–
the
duress
or
intimidation
must
be
of
highest
morality,
it
reaches
every
case
and
grants
relief
where
influence
more
than
the
“general
feeling
of
fear.”
is
acquired
and
abused,
or
where
confidence
is
reposed
and
betrayed.‖
There
must
be
specific
acts
or
instances
of
such
nature
• “Undue”‖—
unrighteous,
illegal
and
designed
to
perpetrate
a
wrong.
and
magnitude
as
to
have,
of
themselves,
inflicted
fear
or
o It
must
amount
to
fraud
or
coercion.
terror
upon
the
subject
thereof
that
his
execution
of
the
• “Due
influence”
—
solicitation,
importunity,
argument
and
persuasion
questioned
deed
or
act
cannot
be
considered
voluntary.
used
by
one
party
as
means
to
the
consent
of
the
other.
Mere
threat
to
bring
a
good
faith
action,
maintainable
at
o Banez
v.
CA
–
influence
obtained
by
persuasion
or
argument
or
by
law,
does
not
amount
to
duress.
appeals
to
the
affections
is
not
prohibited
either
in
law
or
morals
o Laperal
v.
Rogers
–
where
fearing
for
his
life
and
that
of
his
family,
and
is
not
obnoxious
even
in
courts
of
equity.
he
sold
the
house,
it
was
held
that
the
contract
can
be
annulled
as
o Marubeni
Corporation
v.
Lirag
–
an
agreement
entered
into
the
consent
was
coerced
by
direct
intimidation.
because
of
the
actual
or
supposed
influence...which
contemplates
o Legal
actions
which
amount
to
duress:
the
use
of
personal
influence
and
solicitation
rather
than
appeal
A
threatened
civil
action
where
the
parties
are
not
on
an
to
the
judgment
of
the
official
on
the
merits
of
the
object
sought
equal
footing.
is
contrary
to
public
policy.
Threats
made
against
a
person
of
inferior
intellect,
or
an
aged
weakened
in
body
and
mind
to
the
effect
that
certain
civil
proceedings
will
be
instituted.
Art.
1338
–
Causal
Fraud
Threatening
litigation
while
the
defendant
is
ill,
or
to
There
is
fraud
when,
through
insidious
words
or
machinations
of
one
of
the
continue
litigation
when
the
circumstances
are
contracting
parties,
the
other
is
induced
to
enter
into
a
contract
which,
without
oppressive.
them,
he
would
not
have
agreed
to.
(1269)
Art.
1336
–
Violence
or
Intimidation
by
a
Third
Person
• Fraud
—
a
false
representation
of
a
material
fact
made
by
word
or
conduct
Violence
or
intimidation
shall
annul
the
obligation,
although
it
may
have
been
with
knowledge
of
its
falsehood
or
in
reckless
disregard
of
its
truth,
in
employed
by
a
third
person
who
did
not
take
part
in
the
contract.
(1268)
order
to
induce
and
actually
inducing
another
to
act
thereon
to
his
injury.
o There
must
be
always
be
damage
or
injury
in
case
of
fraud.
Ex.
If
A
is
coerced
to
enter
into
a
contract
with
X
because
G
threatens
to
kill
all
o Fraud
is
every
kind
of
deception,
whether
in
the
form
of
insidious
the
children
of
A
if
he
does
not
do
so,
such
contract
may
be
annulled
machinations,
manipulations,
concealments,
or
whether
or
not
X
knew
of
the
intimidation.
misrepresentations,
for
the
purpose
of
leading
another
party
into
error
and
thus
executing
a
particular
act.
o Fraud
produces
qualified
error;
it
induces
in
the
other
party
an
Art.
1337
–
Undue
Influence
inexact
notion
of
facts.
The
will
of
another
is
maliciously
misled
by
There
is
undue
influence
when
a
person
takes
improper
advantage
of
his
power
means
of
false
appearance
of
reality.
over
the
will
of
another,
depriving
the
latter
of
a
reasonable
freedom
of
choice.
The
o Insidious
words
or
machinations‖
include
false
promises;
following
circumstances
shall
be
considered:
the
confidential,
family,
spiritual
and
exaggeration
of
hopes
or
benefits;
abuse
of
confidence;
and
other
relations
between
the
parties,
or
the
fact
that
the
person
alleged
to
have
fictitious
names,
qualifications,
or
authority.
o The
result
of
fraud
is
error
on
the
part
of
the
victim.
71
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Kinds
of
fraud:
• If
a
party
is
induced
by
such
exaggerations,
there
may
be
fraud
amounting
1. Dolo
causante
(Art.
1338)
—
which
determines
or
is
the
essential
to
active
misrepresentation.
cause
of
the
consent;
fraud
in
the
perfection
of
contract;
can
be
a
• If
it
is
within
the
means
of
the
other
party
to
investigate
and
he
does
not
ground
for
annulment.
do
so,
there
will
be
no
fraud
despite
the
exaggerations.
2. Dolo
incidente
(Arts.
1344
&
1170)
—
which
does
not
have
such
a
• Tolerated
fraud
–
includes
minimizing
the
defects
of
the
thing,
decisive
influence
and
by
itself
cannot
cause
the
giving
of
consent,
exaggeration
of
its
good
qualities,
and
giving
it
qualities
that
it
does
not
but
refers
only
to
some
particular
or
accident
of
the
obligation;
have.
This
is
lawful
misrepresentation
known
as
dolus
bonus.
This
is
also
cannot
be
a
ground
for
annulment.
called
lawful
astuteness.
• Requisites
of
fraud:
o These
misrepresentations
are
usually
encountered
in
fairs,
1. Employed
by
one
contracting
party
upon
the
other
markets,
and
almost
all
commercial
transactions.
They
do
not
give
2. Induced
the
other
party
to
enter
into
the
contract
rise
to
an
action
for
damages,
either
because
of
their
3. Serious
insignificance
or
because
the
victim’s
gullibility
is
the
real
cause
of
4. Resulted
in
damage
or
injury
to
the
party
seeking
annulment
his
loss.
• Rivero
v.
CA
–
it
was
held
that
consent
of
the
old
woman
was
obtained
through
fraudulent
misrepresentation
of
her
nephew
when
she
was
made
Art.
1341
–
Expert
Opinion
to
believe
that
the
contract
was
a
mortgage
when
in
fact
it
was
a
sale.
A
mere
expression
of
an
opinion
does
not
signify
fraud,
unless
made
by
an
expert
and
the
other
party
has
relied
on
the
former's
special
knowledge.
(n)
Art.
1339
–
Fraud
by
Concealment
Failure
to
disclose
facts,
when
there
is
a
duty
to
reveal
them,
as
when
the
parties
• General
Rule
—
Opinions
are
not
regarded
as
representation
of
facts
are
bound
by
confidential
relations,
constitutes
fraud.
(n)
• Hence,
if
it
turns
out
to
be
wrong,
it
is
not
considered
legally
deceitful
insidiously
inducing
a
party
to
enter
into
a
contract.
• The
mere
fact
that
one
of
the
parties
has
superior
knowledge
of
the
value
o Exception
—
an
opinion
of
an
expert
is
like
a
statement
of
fact,
of
the
property
subject
of
the
transaction
does
not
per
se
constitute
fraud.
and
if
false,
may
be
considered
a
fraud
giving
rise
to
annulment.
o There
is
only
fraud
when,
under
the
special
and
peculiar
circumstances
of
each
case,
a
legal
or
equitable
duty
is
imposed
upon
the
dominant
party
to
reveal
certain
facts
material
to
the
Art.
1342
–
Fraud
by
a
Third
Person
transaction
or
when
there
is
a
confidential
relationship
between
Misrepresentation
by
a
third
person
does
not
vitiate
consent,
unless
such
the
parties.
misrepresentation
has
created
substantial
mistake
and
the
same
is
mutual.
(n)
• Silence
or
concealment
–
by
itself,
does
not
constitute
fraud,
unless
there
is
a
special
duty
to
disclose
certain
facts,
or
unless
according
to
good
faith
• A
contract
may
be
annulled
on
the
ground
of
vitiated
consent
if
deceit
by
a
and
the
usages
of
commerce,
the
communication
should
be
made
third
person,
even
without
connivance
or
complicity
with
one
of
the
o The
innocent
non-‐disclosure
of
a
fact
does
not
affect
the
contracting
parties,
resulted
in
mutual
error
on
the
part
of
the
parties
to
formation
of
the
contract
or
operate
to
discharge
the
parties
from
the
contract.
their
agreement.
• General
rule
—
is
that
the
fraud
employed
by
a
third
person
upon
one
of
the
parties
does
not
vitiate
consent
and
cause
the
nullity
of
a
contract.
Art.
1340
–
Usual
Exaggerations
in
Trade
o Exception
—
If
one
of
the
parties
is
in
collusion
with
the
third
The
usual
exaggerations
in
trade,
when
the
other
party
had
an
opportunity
to
know
person,
or
knows
of
the
fraud
by
the
third
person,
and
he
is
the
facts,
are
not
in
themselves
fraudulent.
(n)
benefited
thereby,
he
may
be
considered
as
an
accomplice
to
the
fraud,
and
the
contract
becomes
voidable.
72
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Rural
Bank
of
Caloocan
v.
CA
–
there
was
misrepresentation
where
a
• When
both
parties
use
fraud
reciprocally,
neither
one
has
an
action
against
person
induced
an
elderly
woman
to
co-‐sign
a
promissory
note
as
a
co-‐ the
other;
the
fraud
of
one
compensates
that
of
the
other.
Neither
party
debtor
and
such
person
claimed
false
qualifications
to
get
a
loan
from
a
can
ask
for
the
annulment
of
the
contract.
bank.
Art.
1343
–
Misrepresentation
Made
in
Good
Faith
Art.
1345
–
Simulation
of
a
Contract
Misrepresentation
made
in
good
faith
is
not
fraudulent
but
may
constitute
error.
Simulation
of
a
contract
may
be
absolute
or
relative.
The
former
takes
place
when
(n)
the
parties
do
not
intend
to
be
bound
at
all;
the
latter,
when
the
parties
conceal
their
true
agreement.
(n)
• Misrepresentation
–
inclusive
of
the
term
fraud.
o Practically,
every
fraud
is
a
misrepresentation
but
not
every
• Absolute
simulation
—
renders
the
contract
null
and
void
when
the
parties
misrepresentation
is
fraudulent.
do
not
intend
to
be
bound
at
all
by
the
same.
Umali
v.
CA
• Misrepresentations
may
be
made
without
the
knowledge
of
its
falsity
and
o The
basic
characteristic
of
this
type
of
simulation
of
contract
is
the
therefore
completely
done
in
good
faith.
fact
that
the
apparent
contract
is
not
really
desired
or
intended
to
o In
such
case,
it
may
constitute
merely
an
error.
either
produce
legal
effects
or
in
any
way
alter
the
juridical
o Hence,
breach
of
contracts
need
not
always
be
in
good
faith
as
it
situation
of
the
parties.
Umali
v.
CA
could
be
the
due
to
an
honest
mistake.
• Simulation
–
the
declaration
of
a
fictitious
will,
deliberately
made
by
agreement
of
the
parties,
in
order
to
produce,
for
the
purposes
of
deception,
the
appearance
of
a
juridical
act
which
does
not
exist
or
is
Art.
1344
–
Causal
Fraud
may
make
a
Contract
Voidable
different
from
that
which
was
really
executed.
In
order
that
fraud
may
make
a
contract
voidable,
it
should
be
serious
and
should
not
have
been
employed
by
both
contracting
parties.
Art.
1346
–
Absolute
and
Relative
Simulation
of
Contracts
Incidental
fraud
only
obliges
the
person
employing
it
to
pay
damages.
(1270)
An
absolutely
simulated
or
fictitious
contract
is
void.
A
relative
simulation,
when
it
does
not
prejudice
a
third
person
and
is
not
intended
for
any
purpose
contrary
to
• The
fraudulent
act
must
be
serious
law,
morals,
good
customs,
public
order
or
public
policy
binds
the
parties
to
their
o There
must
be
an
intention
to
injure
and
that
damage
or
injury
in
real
agreement.
(n)
fact
resulted.
o It
must
not
be
dolo
incidente—accidental
and
collateral
fraud— • Javier
v.
CA
–
assignee
should
be
held
liable
considering
that
the
which
does
not
necessarily
bear
on
the
decision
of
the
party
assignment
was
a
relatively
simulated
contract
which,
though
containing
a
defrauded
to
enter
into
the
contract.
false
consideration,
was
not
null
and
void
per
se.
o It
must
be
dolo
causante—which
refers
to
the
very
cause
why
the
• JR
Blanco
v.
Quasha
–
simulation
of
contracts
may
be
absolute
or
relative.
other
party
entered
into
the
contract.
a. Absolute
simulation
–
there
is
color
of
a
contract,
without
any
• Fraud
is
serious
when
it
is
sufficient
to
impress,
or
to
lead
an
ordinarily
substance
thereof,
the
parties
not
having
any
intention
to
be
prudent
person
into
error;
that
which
cannot
deceive
a
prudent
person
bound.
cannot
be
a
ground
for
nullity.
b. Relative
simulation
–
the
parties
have
an
agreement
which
they
• Besides
being
serious,
the
fraud
must
be
the
determining
cause
of
the
conceal
under
the
guise
of
another
contract.
contract.
It
must
be
dolo
causante.
Ex.
a
deed
of
sale
executed
to
conceal
donation.
73
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Pua
v.
CA
—
where
it
was
proven
that
the
person
who
allegedly
entered
• Within
the
commerce
of
man
–
any
property
or
service
can
be
the
object
into
the
contract
was
not
even
conceived
at
the
time
the
contract
was
of
a
contract
provided
that
it
is
within
the
commerce
of
man.
executed,
the
SC
said
that
the
contract
was
definitely
absolutely
simulated.
o Maneclang
v.
IAC
–
a
creek
cannot
be
converted
into
a
fishpond
• Velasquez
v.
CA
–
contract
was
clearly
simulated
to
facilitate
the
because
it
is
a
property
belonging
to
the
public
domain
which
is
transaction
with
the
bank
as
there
was
absolutely
no
consideration
at
all
not
susceptible
to
private
appropriation
and
acquisitive
and
the
parties
clearly
did
not
intend
to
be
bound
by
the
deed
of
sale
and
prescription.
its
accompanying
documents.
o Things
which
are
outside
the
commerce
of
man:
• Francisco
v.
Francisco-‐Alfonso
–
when
two
illegitimate
daughters
claimed
Services
which
imply
an
absolute
submission
by
those
they
bought
property
but
it
was
shown
that
they
could
not
have
possibly
who
render
them,
sacrificing
their
liberty,
their
acquired
the
same
given
that
they
had
no
income,
the
contract
of
sale
was
independence
or
beliefs,
or
disregarding
in
any
manner
void
for
being
simulated
because
there
was
no
consideration
for
the
same.
the
equality
and
dignity
of
persons,
such
as
perpetual
servitude
or
slavery;
Personal
rights,
such
as
marital
authority,
the
status
and
capacity
of
a
person,
and
honorary
titles
and
distinctions;
Section
2
–
Object
of
Contracts
Public
offices,
inherent
attributes
of
the
public
authority,
and
political
rights
of
individuals,
such
as
the
right
of
Art.
1347
–
Object
of
a
Contract
suffrage;
All
things
which
are
not
outside
the
commerce
of
men,
including
future
things,
may
Property,
while
they
pertain
to
the
public
dominion,
such
be
the
object
of
a
contract.
All
rights
which
are
not
intransmissible
may
also
be
the
as
the
roads,
plazas,
squares,
and
rivers;
object
of
contracts.
Sacred
things,
common
things,
like
the
air
and
the
sea,
and
res
nullius,
as
long
as
they
have
not
been
No
contract
may
be
entered
into
upon
future
inheritance
except
in
cases
expressly
appropriated.
authorized
by
law.
Even
future
things
can
be
the
object
of
contracts,
as
long
All
services
which
are
not
contrary
to
law,
morals,
good
customs,
public
order
or
as
they
have
the
possibility
or
potentiality
of
coming
into
public
policy
may
likewise
be
the
object
of
a
contract.
(1271a)
existence.
• Future
things
that
can
be
reasonably
ascertained
can
be
the
object
of
a
contract.
• The
object
of
a
contract
is
its
subject
matter.
It
is
the
thing,
right,
or
service
which
is
the
subject-‐matter
of
the
obligation
arising
from
the
contract.
• Rights
may
likewise
be
the
object
of
contracts
provided
they
are
• Requisites
(CILID):
transmissible.
1. within
the
commerce
of
man;
• Future
inheritance
—
any
property
or
right
not
in
existence
or
capable
of
2. not
intransmissible
determination
at
the
time
of
the
contract,
that
a
person
may
in
the
future
3. must
be
licit,
or
not
contrary
to
law,
morals,
good
customs,
public
acquire
by
possession.
policy,
or
public
order;
• Blas
v.
Santos
—
where
the
wife
agreed
to
give
whatever
her
share
in
the
4. not
an
impossible
thing
or
service;
and
conjugal
partnership
property
to
her
heirs
once
the
husband
dies,
the
SC
5. it
must
be
determinate
as
to
its
kind.
said
that
such
agreement
does
not
involve
future
inheritance.
o The
document
refers
to
existing
properties
which
she
will
receive
Art.
1348
–
Impossible
Things
or
Services
by
operation
of
law
on
the
death
of
her
husband,
because
it
is
her
Impossible
things
or
services
cannot
be
the
object
of
contracts.
(1272)
share
in
the
conjugal
assets.
74
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• The
law,
however,
generally
does
not
allow
contracts
on
future
• Consideration
–
the
reason,
motive,
or
inducement
by
which
a
man
is
inheritance.
A
contract
entered
into
by
a
fideicommissary
heir
with
respect
moved
to
bind
himself
by
an
agreement.
to
his
eventual
rights
would
be
valid
provided
that
the
testator
has
already
• The
contact
is
the
law
between
the
parties.
When
the
words
of
a
contract
died.
The
right
of
a
fideicommissary
heir
comes
from
the
testator
and
not
are
plain
and
readily
understandable,
there
is
no
room
for
construction.
from
the
fiduciary.
• Dihiansan
v.
CA
–
the
consideration
was
the
private
respondent’s
preferential
right
to
buy
the
property
from
the
owner.
Art.
1349
–
Quantity
Need
Not
be
Determinate
The
object
of
every
contract
must
be
determinate
as
to
its
kind.
The
fact
that
the
Cause
of
contracts:
quantity
is
not
determinate
shall
not
be
an
obstacle
to
the
existence
of
the
1. Onerous
contract
—
for
each
contracting
party,
the
prestation
or
promise
contract,
provided
it
is
possible
to
determine
the
same,
without
the
need
of
a
new
of
a
thing
or
service
by
the
other
contract
between
the
parties.
(1273)
o The
cause
need
not
be
adequate
or
an
exact
equivalent
in
point
of
actual
value,
especially
in
dealing
with
objects
which
have
a
• The
object
must
be
one
that
can
be
ascertained
with
reasonable
certainty
rapidly
fluctuating
price.
There
are
equal
considerations.
as
to
its
kind.
2. Reciprocal
contracts
—
the
obligation
or
promise
of
each
party.
o Hence,
a
contract
engaging
a
certain
person
to
perform
a
deed,
o Republic
v.
Cloribel
–
in
a
compromise
agreement
designed
to
without
specifying
what
deed
it
is,
does
not
make
the
service
terminate
the
case,
the
cause
of
the
compromise
was
the
mutual
determinable
and
is
therefore
void.
waiver
and
abandonment
of
the
parties
of
their
claims
against
each
other.
3. Remuneratory
contracts
—
the
service
or
benefit
which
is
remunerated
Section
3
–
Cause
of
Contracts
o Where
a
party
gives
something
to
another
because
of
some
service
or
benefit
given
or
rendered
by
the
latter
to
the
former,
Art.
1350
–
Cause
Defined
where
such
service
or
benefit
was
not
due
as
a
legal
obligation.
In
onerous
contracts
the
cause
is
understood
to
be,
for
each
contracting
party,
the
The
consideration
of
one
is
greater
than
the
other‘s.
prestation
or
promise
of
a
thing
or
service
by
the
other;
in
remuneratory
ones,
the
4. Contracts
of
pure
beneficence
—
mere
liberality
of
the
benefactor
service
or
benefit
which
is
remunerated;
and
in
contracts
of
pure
beneficence,
the
o It
does
not
involve
any
material
thing
but
rather
it
involves
only
mere
liberality
of
the
benefactor.
(1274)
the
generosity
of
the
benefactor.
• Cause
of
the
contract
—
the
essential
or
more
proximate
purpose
which
Art.
1351
–
Motive
Defined
the
contracting
parties
have
in
view
at
the
time
of
entering
into
the
The
particular
motives
of
the
parties
in
entering
into
a
contract
are
different
from
contract
the
cause
thereof.
(n)
o It
may
or
may
not
be
tangible
o It
can
take
different
forms:
• Cause
—
essential
reason
for
the
contract.
Prestation
or
promise
of
a
thing
or
service
by
another
• Motive‖—
particular
reason
for
a
contracting
party
which
does
not
affect
Giving
of
a
sum
of
money,
an
object
the
other
party
and
which
does
not
preclude
the
existence
of
a
different
Expectation
of
profits
from
a
subdivision
project
consideration.
• The
cause
as
to
each
party
is
the
undertaking
or
prestation
to
be
o Motivation
of
the
parties
is
independent
from
the
cause
of
the
performed
by
the
other.
The
object
of
the
contract
is
the
subject
matter
contract
and
therefore
does
not
form
an
essential
part
of
it.
thereof
• General
rule
—
motive
or
particular
purpose
of
a
party
in
entering
into
a
Ex.
the
land
which
is
sold
in
a
sales
contract
contract
does
not
affect
the
validity
nor
existence
of
the
contract.
75
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Exception
—
when
the
realization
of
such
motive
or
particular
Art.
1353
–
False
Cause
purpose
has
been
made
a
condition
upon
which
the
contract
is
The
statement
of
a
false
cause
in
contracts
shall
render
them
void,
if
it
should
not
made
to
depend.
Philippine
National
Construction
Corp.
v.
CA
be
proved
that
they
were
founded
upon
another
cause
which
is
true
and
lawful.
• No
judicial
action
is
necessary
for
the
annulment
of
a
void
contract.
Any
(1276)
such
action
would
be
merely
declaratory.
• Cause
is
the
objective,
intrinsic,
and
juridical
reason
for
the
existence
of
• General
rule
—
false
cause
stated
in
a
contract
makes
the
contract
void.
the
contract
itself,
while
motive
is
the
psychological,
individual,
or
personal
o Exception
—
when
a
contract,
though
stating
a
false
purpose
of
a
party
to
the
contract.
consideration,
has
in
fact
a
real
consideration,
the
contract
is
not
• General
principle
—
the
motives
of
a
party
do
not
affect
the
validity
or
void
existence
of
a
contract.
• The
contract
is
at
least
a
relatively
simulated
one.
o Exceptions
—
When
motive
predetermines
the
purpose
of
the
contract,
such
as:
When
the
motive
of
a
debtor
in
alienating
property
is
to
Art.
1354
–
Cause
Presumed
to
Exist
and
Lawful
defraud
his
creditors,
the
alienation
is
rescissible;
Although
the
cause
is
not
stated
in
the
contract,
it
is
presumed
that
it
exists
and
is
When
the
motive
of
a
person
in
giving
his
consent
is
to
lawful,
unless
the
debtor
proves
the
contrary.
(1277)
avoid
a
threatened
injury,
as
in
the
case
of
intimidation,
the
contract
is
voidable;
and
• Unless
the
contrary
is
proved,
a
contract
is
presumed
to
have
a
good
and
When
the
motive
of
a
person
induced
him
to
act
on
the
sufficient
consideration.
basis
of
fraud
or
misrepresentation
by
the
other
party,
• This
presumption
applies
when
no
cause
is
stated
in
the
contract.
the
contract
is
voidable.
• Liam
v.
Olympic
Sawmill
Co.
–
defendants
had
not
proven
that
the
• E.
Razon
v.
Philippine
Ports
Authority
–
contract
with
an
illegal
cause
is
obligation
was
illegal
hence,
it
subsists.
void.
• Uy
v.
CA
–
where
the
NHA
purchased
lots
and
cancelled
because
the
lots
Art.
1355
–
Lesion
Defined
turned
out
to
be
unsuitable
for
its
housing
project,
the
cancellation
was
Except
in
cases
specified
by
law,
lesion
or
inadequacy
of
cause
shall
not
invalidate
a
valid
as
it
was
based
on
the
negation
of
the
cause
which
is
to
use
the
land
contract,
unless
there
has
been
fraud,
mistake
or
undue
influence.
(n)
for
housing.
• A
valuable
consideration,
however
small
or
nominal,
if
given
or
stipulated
Art.
1352
–
Absence
of
Cause
in
good
faith
is,
in
the
absence
of
fraud,
sufficient.
Penaco
v.
Ruava
Contracts
without
cause,
or
with
unlawful
cause,
produce
no
effect
whatever.
The
• In
case
of
lesion
or
inadequacy
of
cause:
cause
is
unlawful
if
it
is
contrary
to
law,
morals,
good
customs,
public
order
or
o General
rule
—
the
contract
is
not
subject
to
annulment.
public
policy.
(1275a)
Exception
—
in
cases
provided
by
law,
however,
such
as
those
mentioned
in
Art
1381,
the
lesion
is
a
ground
for
• Absence
of
the
cause,
being
one
of
the
essential
elements
of
a
contract,
do
rescission
of
the
contract.
not
create
a
contract
as
there
can
be
no
meeting
of
the
minds.
• Gross
inadequacy
naturally
suggests
fraud
and
is
evidence
thereof,
so
that
it
may
be
sufficient
to
show
it
when
taken
in
connection
with
other
circumstances.
• Auyong
Hian
v.
Court
of
Tax
Appeals
–
petitioner
has
not
shown
that
the
instant
sale
is
a
cause
exempted
by
law
from
the
operation
of
Art.
1355.
76
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Chapter
3:
Form
of
Contracts
• A
party
who
wishes
to
have
his
contract
reduced
to
the
particular
form
required
by
law
may
file
an
action
to
compel
the
other
party
to
comply
with
such
form.
Art.
1356
–
Form
of
Contracts
• If
requirement
is
merely
directory
–
no
impact
on
the
validity
or
Contracts
shall
be
obligatory,
in
whatever
form
they
may
have
been
entered
into,
enforceability.
provided
all
the
essential
requisites
for
their
validity
are
present.
However,
when
o Parties
may
enforce
the
contract.
the
law
requires
that
a
contract
be
in
some
form
in
order
that
it
may
be
valid
or
o Demand
that
it
be
reduced
in
the
form
required
by
law.
enforceable,
or
that
a
contract
be
proved
in
a
certain
way,
that
requirement
is
• Zaide
v.
CA
–
unregistered
contract
of
sale
was
assailed
as
invalid,
SC
ruled
absolute
and
indispensable.
In
such
cases,
the
right
of
the
parties
stated
in
the
in
favor
of
validity.
following
article
cannot
be
exercised.
(1278a)
o The
deed
of
sale
was
defective
as
to
render
it
unregisterable
–
no
name
of
the
vendee’s
husband.
Form
of
Contracts:
o However,
such
defect
does
not
invalidate
the
deed.
• General
Rule
–
contracts
are
binding
from
perfection
in
whatever
form,
o Though
defective
in
form,
the
sale
was
valid.
provided
the
three
requisites
exist:
o Thus,
the
parties
may
compel
each
other
to
do
what
is
needed
to
1. Consent
make
the
document
of
sale
registerable.
2. Object
3. Cause
Art.
1358
–
Contracts
Which
Must
Appear
in
a
Public
Document
• 1356
establishes
Exceptions
–
where
form
is
required
for
validity.
The
following
must
appear
in
a
public
document:
1. Contracts
which
law
itself
requires
that
they
be
in
some
particular
form
(1)
Acts
and
contracts
which
have
for
their
object
the
creation,
transmission,
2. Donation
of
immovable
property
must
be
in
a
public
instrument
modification
or
extinguishment
of
real
rights
over
immovable
property;
sales
of
real
such
that
the
donation
may
be
valid
property
or
of
an
interest
therein
a
governed
by
Articles
1403,
No.
2,
and
1405;
Donation
of
movables
worth
more
than
P
5,000
3. Contracts
that
law
requires
to
be
proven
by
some
writing
of
its
(2)
The
cession,
repudiation
or
renunciation
of
hereditary
rights
or
of
those
of
the
terms
conjugal
partnership
of
gains;
Statute
of
Frauds
• Cenido
v.
Apacionado
–the
purposes
of
prescribing
form:
(3)
The
power
to
administer
property,
or
any
other
power
which
has
for
its
object
1. Validity
–
non-‐observance
of
form
renders
contract
void
an
act
appearing
or
which
should
appear
in
a
public
document,
or
should
prejudice
2. Enforceability
–
non-‐compliance
with
form
will
not
permit
the
a
third
person;
contract
to
be
proved
or
enforced
3. Greater
efficacy
–
if
not
done,
would
not
adversely
affect
validity
(4)
The
cession
of
actions
or
rights
proceeding
from
an
act
appearing
in
a
public
or
enforceability
of
the
contract
between
the
parties
themselves
document.
All
other
contracts
where
the
amount
involved
exceeds
five
hundred
pesos
must
Art.
1357
–
Form
for
the
Convenience
of
the
Parties
appear
in
writing,
even
a
private
one.
But
sales
of
goods,
chattels
or
things
in
action
If
the
law
requires
a
document
or
other
special
form,
as
in
the
acts
and
contracts
are
governed
by
Articles,
1403,
No.
2
and
1405.
(1280a)
enumerated
in
the
following
article,
the
contracting
parties
may
compel
each
other
to
observe
that
form,
once
the
contract
has
been
perfected.
This
right
may
be
Failure
to
put
in
a
public
or
private
document
of
matters
enumerated
:
exercised
simultaneously
with
the
action
upon
the
contract.
(1279a)
• Does
not
render
the
agreement
void.
Compulsion
to
follow
form
:
77
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Agreement
is
still
valid
between
the
parties.
The
written
instrument
does
not
express
the
true
agreement
or
o
• Requirement
is
only
for
purpose
of:
intention
of
the
parties.
1. Greater
efficacy
o Failure
to
express
the
true
intention
is
due
to
mistake,
fraud,
inequitable
conduct,
or
accident.
2. Convenience
o The
facts
upon
relief
by
way
of
reformation
of
the
instrument
is
3. Binding
of
third
persons
sought
are
put
in
issue
by
the
pleadings.
• Dalion
v..
CA
–
requirement
under
1358
is
only
for
convenience,
not
a
o There
is
clear
and
convincing
evidence
(more
than
a
preponderance)
requisite
for
validity
or
enforceability.
of
the
mistake,
fraud,
inequitable
conduct,
or
accident.
• Reformation
distinguished
from
annulment:
Chapter
4:
Reformation
of
Instruments
o Reformation
–
there
is
a
meeting
of
the
minds:
a
contract
exists.
The
deficiency
lies
in
the
written
instrument
embodying
such
contract.
o Annulment
–
there
was
no
valid
contract
perfected.
Art.
1359
-‐
Reformation
Art.
1360
–
Principles
of
the
General
Law
on
Reformation
When,
there
having
been
a
meeting
of
the
minds
of
the
parties
to
a
contract,
their
The
principles
of
the
general
law
on
the
reformation
of
instruments
are
hereby
true
intention
is
not
expressed
in
the
instrument
purporting
to
embody
the
adopted
insofar
as
they
are
not
in
conflict
with
the
provisions
of
this
Code.
agreement,
by
reason
of
mistake,
fraud,
inequitable
conduct
or
accident,
one
of
the
parties
may
ask
for
the
reformation
of
the
instrument
to
the
end
that
such
true
Art.
1361
–
Mutual
Mistake
as
Basis
of
Reformation
intention
may
be
expressed.
When
a
mutual
mistake
of
the
parties
causes
the
failure
of
the
instrument
to
If
mistake,
fraud,
inequitable
conduct,
or
accident
has
prevented
a
meeting
of
the
disclose
their
real
agreement,
said
instrument
may
be
reformed.
minds
of
the
parties,
the
proper
remedy
is
not
reformation
of
the
instrument
but
annulment
of
the
contract.
Mutual
Mistake
as
Basis
for
Reformation:
• Mutual
Mistake
–
mistake
of
fact
that
is
common
to
both
parties
which
causes
• Reformation
–
defined:
the
failure
of
the
instrument
to
express
true
intention.
o That
remedy
by
means
of
which
a
written
instrument
is
amended
or
• Gonzales
Mondragon
v.
Santos
–
contracts
solemnly
and
deliberately
entered
rectified…
into
may
not
be
overturned
by
inconclusive
proof
or
by
reason
of
mistake
of
o As
to
express
or
conform
to
the
real
agreement
or
intention
of
the
one
of
the
parties
to
which
the
other
in
no
way
has
contributed.
parties,
when…
• The
following
requisites
must
concur
to
justify
reformation
under
this
article
o By
reason
of
mistake,
fraud,
inequitable
conduct,
or
accident…
(FCMC):
o The
instrument
fails
to
express
such
agreement
or
intention.
1. Mistake
must
be
of
fact
.
• Reason
–
equity
2. Such
mistake
proved
by
clear
and
convincing
evidence.
o Courts
do
not
attempt
to
make
a
new
contract
3. Mistake
must
be
mutual
–
common
to
both
parties.
o Reformation
is
based
on
the
doctrine
that
it
would
be
unjust
and
4. Mistake
must
cause
the
failure
of
the
instrument
to
express
true
inequitable
to
allow
the
enforcement
of
a
written
instrument
which
intention.
does
not
reflect
or
disclose
the
real
meeting
of
the
minds
of
the
• If
the
mutual
mistake
is
one
of
law
–
the
remedy
is
annulment.
parties.
• Requisites
of
Reformation
–
(ME-‐MFIA-‐FC)
o There
is
a
meeting
of
the
minds
of
the
parties
to
the
contract.
78
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1362
–Mistaken,
Fraud
and
Inequitable
Conduct
o Lack
of
skill
If
one
party
was
mistaken
and
the
other
acted
fraudulently
or
inequitably
in
such
a
o Negligence/bad
faith
way
that
the
instrument
does
not
show
their
true
intention,
the
former
may
ask
for
• Such
mistake
will
be
deemed
mutual,
and
either
party
may
ask
for
reformation
the
reformation
of
the
instrument.
–
this
is
because
neither
party
is
responsible.
• The
right
to
ask
for
reformation
is
given
to
the
party
whose
mistake
was
in
Art.
1365
–
Mortgage
or
Pledge
Stated
as
a
Sale
good
faith.
If
two
parties
agree
upon
the
mortgage
or
pledge
of
real
or
personal
property,
but
• It
must
be
shown
that
the
other
party
has
acted
fraudulently
or
inequitably
the
instrument
states
that
the
property
is
sold
absolutely
or
with
a
right
of
and
such
act
resulted
in
the
drafting
of
a
document
that
does
not
correspond
repurchase,
reformation
of
the
instrument
is
proper.
to
the
actual
agreement
• General
Rule
–
mistake
of
law
cannot
result
in
reformation
• Situation
contemplated
:
the
real
agreement
is
mortgage
or
pledge,
but
the
o Exception
–
where,
on
account
of
misplaced
confidence,
and
because
instrument
says
that
such
property
is
sold
absolutely.
of
some
artifice
or
deception
fraudulently
practiced
upon
him
by
the
• Reformation
in
this
case
will
be
proper.
other
party,
a
material
part
of
the
contract
was
omitted
from
the
• Palileo
v.
Cosio
–
parties
to
a
contract
intended
that
a
house
was
to
be
writing,
or
he
was
otherwise
misled,
equity
will
decree
a
reformation.
collateral
for
a
previous
loan.
Agreement
apparently
stated
that
the
house
was
subject
of
a
conditional
sale.
It
was
held
that
the
courts
do
not
make
another
Art.
1363
–
Concealment
of
Mistake
by
the
Other
Party
contract…
they
merely
inquire
into
the
intention
of
the
parties,
and,
having
When
one
party
was
mistaken
and
the
other
knew
or
believed
that
the
instrument
found
it,
reform
the
written
instrument
(not
the
contract)
in
order
that
it
may
did
not
state
their
real
agreement,
but
concealed
that
fact
from
the
former,
the
express
the
real
intention.”
instrument
may
be
reformed.
Art.
1366
–Cases
when
Reformation
Not
Allowed
• Concealment
of
mistake
of
other
party
There
shall
be
no
reformation
in
the
following
cases:
o Remedy
of
reformation
may
be
availed
of
the
party
who
acted
in
good
(1)
Simple
donations
inter
vivos
wherein
no
condition
is
imposed;
faith.
(2)
Wills;
o The
concealment
of
mistake
constitutes
fraud.
(3)
When
the
real
agreement
is
void.
• Knowledge
by
one
party
of
the
other’s
mistake
regarding
the
expression
of
the
agreement
is
equivalent
to
a
mutual
mistake.
Art.
1367
–
Party
who
Brought
Action
to
Enforce
Cannot
Reform
o Injured
party
may
seek
reformation.
When
one
of
the
parties
has
brought
an
action
to
enforce
the
instrument,
he
cannot
subsequently
ask
for
its
reformation.
Art.
1364
–Ignorance,
etc.
on
the
Part
of
Third
Person
When
through
the
ignorance,
lack
of
skill,
negligence
or
bad
faith
on
the
part
of
the
When
is
reformation
not
allowed
–
DWEV
:
person
drafting
the
instrument
or
of
the
clerk
or
typist,
the
instrument
does
not
express
the
true
intention
of
the
parties,
the
courts
may
order
that
the
instrument
• Simple
donations
inter
vivos
where
no
condition
is
involved
be
reformed.
o Donation
–
an
act
of
liberality
whereby
a
person
disposes
gratuitously
of
a
thing
or
right
in
favor
of
another.
• Situation
contemplated:
If
person
drafting
or
typing
the
instrument
is
unable
o Inter
vivos
–
a
donation
intended
to
take
place
during
the
donor’s
to
come
up
with
a
correct
written
document
that
embodies
the
will
of
the
lifetime
parties,
because
of:
o Since
act
is
essentially
gratuitous,
donee
has
no
just
cause
for
o Ignorance
complaint
79
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Donor
is
not
bound
to
correct
mistakes
in
deed
of
donation
If
the
words
appear
to
be
contrary
to
the
evident
intention
of
the
parties,
the
latter
Donor
may
ask
for
reformation.
shall
prevail
over
the
former.
(1281)
o Donations
do
not
involve
a
meeting
of
the
minds.
o If
donation
is
onerous
in
character
or
involves
a
condition,
the
deed
• Purpose
of
interpretation
–
to
be
able
to
know
the
intent
of
the
parties,
so
that
may
be
reformed
so
that
the
true
conditions
imposed
by
the
donor
the
contract
can
be
properly
implemented.
may
be
expressed.
o Making
intelligible
what
was
not
before
understood,
ambiguous,
or
• Will
–
an
act
whereby
a
person
is
permitted,
with
formalities
of
law,
to
control
not
obvious.
to
a
certain
degree
the
disposition
of
his
estate,
to
take
effect
after
his
death.
o The
meaning
of
language
is
ascertained.
o It
is
a
strictly
personal
and
free
act.
• Rules
in
statutory
construction
can
likewise
be
applied.
• Where
the
real
agreement
is
void
o Finman
General
Assurance
Corp
v.
CA
–
the
statcon
rule
“expressio
o When
the
real
agreement
is
void,
there
is
nothing
to
reform.
unius
exclusio
alterius”
was
applied
in
deciding
the
case
• When
one
party
has
brought
an
action
to
enforce
the
instrument
(Art
1367)
• Generally,
intention
of
parties
is
reflected
in
the
wordings
–
Thus,
the
general
o Based
on
estoppel.
rule
is
that
the
literal
meaning
of
stipulations
shall
control.
o When
a
party
brings
an
action
to
enforce
a
contract,
he
admits
its
o Adelfa
Properties
Inc
v.
CA
–
the
important
task
in
contract
validity
and
that
it
expresses
the
true
intention
of
the
parties.
interpretation
is
the
ascertainment
of
the
intention
of
the
parties.
And
that
task
is
to
be
discharged
by
looking
to…all
the
words,
not
just
a
Art.
1368
–
Party
Entitled
to
Reformation
particular
word
or
two,
and
words
in
context,
not
words
in
isolation.
Reformation
may
be
ordered
at
the
instance
of
either
party
or
his
successors
in
o
Conde
v.
CA
–
if
the
contract
is
plain
and
unequivocal
in
its
terms,
he
is
interest,
if
the
mistake
was
mutual;
otherwise,
upon
petition
of
the
injured
party,
or
ordinarily
bound
thereby.
It
is
the
duty
of
every
contracting
party
to
his
heirs
and
assigns.
learn
and
know
its
contents
before
he
signs.
Thus,
parties
must
every
contract
they
enter
into
very
carefully.
• This
article
gives
the
persons
who
are
given
legal
standing
to
initiate
an
action
o Santi
v.
CA
–
lease
contract
provided:
20
year
period
of
lease
being
for
reformation:
extendable
for
another
period
of
20
years.
Lower
court
interpreted
1. Either
of
parties,
if
mistake
is
mutual
(Arts.
1361,
1364,
1365)
this
as
automatic
renewal.
It
was
held
that
we
must
look
at
literal
2. In
all
other
cases,
the
injured
party
(Arts
1362
–
1365)
meaning
when
the
terms
are
clear
and
unequivocal.
There
is
no
3. Heirs
or
successors
in
interest,
in
lieu
of
the
party
entitled
reason
to
construe
these
terms
in
a
different
meaning.
If
they
wanted
• Effect
of
reformation
is
retroactive
from
the
time
of
the
execution
of
the
automatic
extension,
they
could
have
just
provided
for
a
period
of
40
original
contract.
years.
o Universal
Textile
Mills,
Inc.
v.
NLRC
-‐-‐
NLRC
misread
and
misapplied
provisions
of
a
CBA.
It
was
held
that
the
NLRC
cannot
remake
a
Art.
1369
–
Procedure
for
Reformation
contract
by
eviscerating
it,
by
deleting
words
placed
there
by
the
The
procedure
for
the
reformation
of
instrument
shall
be
governed
by
rules
of
court
parties.
No
court,
interpreter,
or
applier
of
a
contract
has
such
to
be
promulgated
by
the
Supreme
Court.
prerogative.
The
interpretation
or
construction
of
a
contract
does
not
Chapter
5:
Interpretation
of
Contracts
include
its
modification
or
creation
of
a
new
and
different
one.
Art.
1370
–
Interpretation
of
Contracts
Defined
Whatever
interpretation
the
court
will
make
should
be
within
If
the
terms
of
a
contract
are
clear
and
leave
no
doubt
upon
the
intention
of
the
the
realm
of
what
the
parties
intended.
contracting
parties,
the
literal
meaning
of
its
stipulations
shall
control.
They
cannot
revise
or
modify.
80
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1371
–
Contemporaneous
and
Subsequent
Acts
Determine
Intent
o It
should
not
include
S’s
refrigerator,
which
is
distinct
from
In
order
to
judge
the
intention
of
the
contracting
parties,
their
contemporaneous
furniture.
and
subsequent
acts
shall
be
principally
considered.
(1282)
Art.
1373
–
Interpretation
of
Stipulation
with
Several
Meanings
• An
interpreter
must
look
at
the
reasons
and
surrounding
circumstances
behind
If
some
stipulation
of
any
contract
should
admit
of
several
meanings,
it
shall
be
a
contract’s
execution
–
This
is
so
he
may
place
himself
in
the
situation
understood
as
bearing
that
import
which
is
most
adequate
to
render
it
effectual.
occupied
by
the
parties
concerned
at
the
time
of
the
writing.
(1284)
• Pingol
v.
CA
–
there
was
a
dispute
as
to
whether
the
purchase
agreement
was
a
contract
to
sell,
or
an
absolute
sale.
The
court
looked
at
the
contemporaneous
• Basic
Rule
:
Terms
in
a
construct
must
be
given
a
construction
as
will
give
effect
and
subsequent
acts
of
the
parties.
Pursuant
to
the
deed,
the
vendor
delivered
to
them.
actual
and
constructive
possession
of
the
property
to
the
vendee.
Vendee
Ex.
S
sells
“his
parcel
of
land”
to
B.
occupied
and
took
such
possession,
constructed
a
building
thereon.
These
acts
S
owns
2
lands
–
one
owned
by
him
absolutely,
and
another
are
demonstrative
that
the
vendor,
since
the
sale,
recognized
the
vendee
as
that
he
co-‐owns
with
C.
C
did
not
give
consent.
the
absolute
owner
of
the
property.
Thus,
it
was
a
contract
of
absolute
sale.
We
must
interpret
it
as
referring
to
the
land
owned
by
him
• Rapanut
v.
CA
–
the
controversy
was
about
the
interpretation
of
a
provision
on
alone,
as
this
would
give
the
contract
effect.
the
application
of
interest.
Significant
is
the
fact
that
private
respondent
• Lao
Lim
v.
CA
–
where
the
instrument
is
susceptible
of
two
interpretations,
one
accepted
the
payments
petitioner
religiously
made
for
four
years.
Thus,
the
which
will
make
it
invalid
and
illegal,
and
another
which
will
make
it
valid
and
acts
of
the
respondent
made
the
application
of
the
provision
clearer
–
it
was
legal,
the
latter
interpretation
should
be
interpreted.
that
interest
that
was
applicable.
Since
there
was
no
objection
or
rescission,
• Ridjo
Tape
and
Chemical
Corp
v.
CA
–
construction
resulting
in
impairment
or
respondent
was
now
estopped.
loss
of
right
is
not
favored.
• Carceller
v.
CA
–
analysis
and
construction
should
not
be
limited
to
the
words
o Conservation
and
preservation,
not
waiver,
forfeiture,
or
used
in
the
contract,
as
they
may
not
accurately
reflect
the
parties’
true
intent.
abandonment
of
a
right
is
the
rule.
Reasonableness
of
the
result
obtained
ought
to
be
considered.
Contracts
should
not
be
interpreted
in
a
harsh
and
iniquitous
way.
Art.
1374
–
Interpretation
of
Various
Stipulations
The
various
stipulations
of
a
contract
shall
be
interpreted
together,
attributing
to
Art.
1372
–
Special
Intent
Prevails
Over
General
Intent
the
doubtful
ones
that
sense
which
may
result
from
all
of
them
taken
jointly.
(1285)
However
general
the
terms
of
a
contract
may
be,
they
shall
not
be
understood
to
comprehend
things
that
are
distinct
and
cases
that
are
different
from
those
upon
• Provisions
of
a
contract
must
be
read
as
a
whole,
and
not
in
isolation.
which
the
parties
intended
to
agree.
(1283)
• Each
provision
must
be
related
to
each
other
to
clearly
know
the
total
import
and
application
of
the
law.
Two
latin
maxims
are
in
the
purview
of
this
article
:
Ex.
R
leased
his
house
to
E.
• Noscitur
a
sociis
The
contract
said
that
E
should
not
sublease
the
house
o General
and
unlimited
terms
are
restrained
and
limited
without
the
written
consent
of
R.
o By
the
particular
terms
that
follow.
Another
stipulation
said
that
E
should
pay
P1000
as
additional
• Ejusdem
generis
rent
a
month,
should
he
violate
the
condition.
o A
general
term
joined
with
a
specific
one
will
be
deemed
to
include
E
subleased
the
house
without
consent
of
R.
only
things
that
are
like,
of
the
same
genus
as,
the
specific
one.
R
has
no
right
to
eject
E,
because
of
the
clause
stating
the
Ex.
S
sells
his
house
“including
all
the
furniture
therein.”
penalty
for
the
violation
of
the
condition.
o “all”
only
modifies
“furniture”
81
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Ruiz
v.
Sherriff
of
Manila
–
controversy
involving
a
mortgage
contract,
and
Art.
1377
–
Interpretation
of
Obscure
Words
foreclosure.
Its
entirety
must
be
taken
into
account,
and
not
merely
its
last
two
The
interpretation
of
obscure
words
or
stipulations
in
a
contract
shall
not
favor
the
sentences.
A
reading
of
the
entire
provision
will
readily
show
that
appellants
party
who
caused
the
obscurity.
(1288)
were
allowed
to
amortize
their
loan.
This
illustrates
that
like
statutory
construction,
meaning
can
be
found
by
reading
all
of
the
provisions,
as
a
• Words
or
stipulations
that
cause
ambiguity
in
application
shall
be
construed
whole.
against
the
person
who
chose
to
use
such
language.
o This
is
the
contra
preferentem
rule.
Art.
1375
–
Interpretation
of
Words
with
Different
Significations
o Against
the
profferer
–
he
who
drafted
the
documents
Words
which
may
have
different
significations
shall
be
understood
in
that
which
is
o Reason
for
this
is
that
the
one
who
drafted
the
contract
had
better
most
in
keeping
with
the
nature
and
object
of
the
contract.
(1286)
opportunity
to
prevent
mistake
or
ambiguity
• This
rule
is
generally
applied
to
contracts
of
adhesion
Ex.
R
leased
to
E
a
roof
for
the
purpose
of
erecting
an
advertising
sign.
o Those
contracts
which
do
not
result
in
negotiation
o Contract
provides
for
termination
of
the
lease
by
E
if
a
“building”
should
o Prepared
by
one
party
to
which
the
other
may
“adhere
to”
if
he
be
constructed
on
the
adjoining
property
that
would
obscure
E’s
sign.
wishes,
but
which
he
cannot
change
–
a
“take
it
or
leave
it”
contract
o There
was
erected
on
the
roof
of
an
adjoining
building
a
sign
that
• Capitol
Insurance
v..
Sadang
–
ambiguity
in
the
mortgage
contract
drafted
by
obstructed
the
view
of
E’s
sign.
lawyer
of
insurance
company
led
to
ambiguity
in
application.
The
court
ruled
o The
term
“building”
may
be
included
as
to
include
the
obstructing
sign,
that
the
doubt
must
be
resolved
against
Capitol,
whose
lawyer
prepared
the
having
in
mind
the
nature
and
object
of
the
contract
–
that
situation
document.
where
E’s
sign
was
obscured.
Art.
1378
–
Rules
in
Case
Doubts
are
Impossible
to
Settle
When
it
is
absolutely
impossible
to
settle
doubts
by
the
rules
established
in
the
Art.
1376
–
Usage
or
Custom
as
aid
in
Interpretation
preceding
articles,
and
the
doubts
refer
to
incidental
circumstances
of
a
gratuitous
The
usage
or
custom
of
the
place
shall
be
borne
in
mind
in
the
interpretation
of
the
contract,
the
least
transmission
of
rights
and
interests
shall
prevail.
If
the
contract
is
ambiguities
of
a
contract,
and
shall
fill
the
omission
of
stipulations
which
are
onerous,
the
doubt
shall
be
settled
in
favor
of
the
greatest
reciprocity
of
interests.
ordinarily
established.
(1287)
If
the
doubts
are
cast
upon
the
principal
object
of
the
contract
in
such
a
way
that
it
Ex.
X
rendered
services
to
Y,
but
the
contract
did
not
state
the
amount
of
cannot
be
known
what
may
have
been
the
intention
or
will
of
the
parties,
the
compensation
to
be
paid.
In
this
case,
the
amount
must
be
determined
by
the
contract
shall
be
null
and
void.
(1289)
rate
customarily
paid
in
the
place
where
the
services
where
rendered.
• Situation
contemplated
:
after
application
of
all
the
preceding
rules,
there
are
• It
is
necessary
to
prove
the
existence
of
usage
or
custom
–
burden
of
proof
on
still
doubts
that
exist.
he
who
alleges
it.
• This
article
gives
supplementary
rules,
depending
on
what
kind
of
contract
it
is,
• Usage
or
custom
cannot
supersede
or
vary
the
plain
and
literal
terms
of
a
and
where
the
doubts
lie.
contract.
o Gratuitous
Contract
–
such
interpretation
should
be
made
which
o The
proper
office
of
a
custom
or
usage
in
trade
is
to
ascertain
and
would
result
in
the
least
transmission
of
rights
and
interests.
explain
the
meaning
and
intention
of
the
parties.
It
does
not
go
Ex.
R
gave
his
car
to
E.
It
is
not
clear
whether
contract
is
a
beyond
this,
and
is
used
as
a
mode
of
interpretation
on
the
theory
donation
or
a
commodatum.
that
the
parties
knew
of
its
existence
and
contracted
with
reference
The
contract
is
presumed
to
be
a
mere
commodatum
to
it.
because
that
transmits
less
rights.
82
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Onerous
Contract
–
doubts
should
be
settled
in
favor
of
the
greatest
• Requisites
of
Rescission:
reciprocity
of
interests.
1. Contract
validly
agreed
upon
Ex.
D
borrows
from
C
P5,000
at
12%
interest.
2. Pecuniary
prejudice
to
one
of
the
parties
or
a
third
person
It
cannot
be
determined
whether
the
loan
is
payable
in
6
3. Rescission
must
be
based
on
a
case
provided
by
law
months
or
one
year.
4. No
other
legal
remedy
It
must
be
assumed
that
the
period
agreed
upon
is
one
year
5. Party
asking
for
rescission
must
be
able
to
return
what
he
is
which
results
in
greater
reciprocity,
since
D
can
use
the
obliged
to
restore
money
for
one
year,
and
C
can
earn
interest
due
for
one
year
6. Object
of
the
contract
must
not
be
legally
in
the
possession
of
a
rd
instead
of
just
6
months.
3
person
who
acquired
it
in
good
faith
A
contract
for
sale
is
generally
onerous
–
thus,
if
doubt
is
7. Period
for
filing
has
not
prescribed.
(De
Leon)
between
a
suspensive
condition
or
a
suspensive
period
for
• Rescissible
contracts
are
valid,
but
may
be
terminated
upon
legal
grounds.
the
payment
of
a
price,
the
doubt
shall
be
resolved
in
favor
of
o Rescissibility
predicated
not
on
breach
of
trust,
but
on
economic
the
latter.
Gaite
v.
Fonacier
damage
as
a
result
of
inequitable
conduct
by
a
party.
o Principal
object
of
the
contract
–
doubt
refers
to
the
principal
object
• Dilag
v.
CA
–
Contract
in
fraud
of
creditors
but
completely
simulated
is
void
of
the
contract,
leaving
the
intention
of
the
parties
to
be
unknown,
ab
initio.
then
the
contract
shall
be
null
and
void.
Art.
1381
–
Cases
of
Rescissible
Contracts
Ex.
S
sold
to
B
his
land.
S
has
many
lands,
and
it
cannot
be
The
following
contracts
are
rescissible:
determined
which
land
was
intended.
This
contract
is
null
and
void.
(1)
Those
which
are
entered
into
by
guardians
whenever
the
wards
whom
they
represent
suffer
lesion
by
more
than
one-‐fourth
of
the
value
of
the
things
which
are
the
object
thereof;
Art.
1379
–
Rules
of
Court
Applicable
The
principles
of
interpretation
stated
in
Rule
123
of
the
Rules
of
Court
shall
(2)
Those
agreed
upon
in
representation
of
absentees,
if
the
latter
suffer
the
lesion
likewise
be
observed
in
the
construction
of
contracts.
(n)
stated
in
the
preceding
number;
(3)
Those
undertaken
in
fraud
of
creditors
when
the
latter
cannot
in
any
other
• It
is
now
contained
in
Rule
130.
manner
collect
the
claims
due
them;
• The
sections
are
reproduced
in
the
book.
(4)
Those
which
refer
to
things
under
litigation
if
they
have
been
entered
into
by
Chapter
6:
Rescissible
Contracts
the
defendant
without
the
knowledge
and
approval
of
the
litigants
or
of
competent
judicial
authority;
Art.
1380
–
Rescissible
Contracts
Defined
(5)
All
other
contracts
specially
declared
by
law
to
be
subject
to
rescission.
(1291a)
Contracts
validly
agreed
upon
may
be
rescinded
in
the
cases
established
by
law.
(1290)
• Entered
into
by
guardians
whenever
the
wards
whom
they
represent
suffer
lesion
by
more
than
one-‐fourth
of
the
value
of
the
things
which
are
the
object
• Rescissible
Contracts
are
those
validly
agreed
upon
because
al
the
thereof.
essential
elements
exist,
and
therefore,
legally
effective,
but
in
the
cases
o Lesion
–
economic
damage.
established
by
law,
the
remedy
of
rescission
is
granted
in
the
interest
of
o Act
of
ownership
by
guardian
on
behalf
of
his
ward,
with
respect
to
equity.
ward’s
property,
without
court
approval
is
void.
83
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o What
is
contemplated
here
is
a
transaction
with
court
approval
–
Debtor
collateralized
his
property
to
secure
such
•
which
is
valid.
loan
o If
by
guardian’s
act
of
ownership
however,
causes
ward
to
suffer
• Failure
of
debtor
to
recognize/implement
the
economic
damage
–
more
than
one-‐fourth
of
the
value
of
the
things
of
stipulated
right
of
first
refusal
of
the
creditor
will
the
object
of
the
contract
–
the
contract
can
be
rescinded.
make
any
sale
of
the
property
to
a
third
person
• Those
agreed
upon
in
representation
of
absentees,
if
the
latter
suffer
the
lesion
rescissible
stated
in
the
preceding
number.
• All
other
contracts
specially
declared
by
law
to
be
subject
to
rescission
o Provisional
absence
–
person
disappears
from
his
domicile,
whereabouts
unknown,
without
leaving
an
agent
–
judge
can
appoint
Art.
1382
–
Payments
Made
in
State
of
Insolvency
an
administrator
at
the
instance
of
an
interested
party,
relative,
or
Payments
made
in
a
state
of
insolvency
for
obligations
to
whose
fulfillment
the
friend.
debtor
could
not
be
compelled
at
the
time
they
were
effected,
are
also
rescissible.
o How
is
absence
declared
–
court
may
declare
a
person
absent
when:
(1292)
Absence
for
more
than
two
years
without
news
Absence
for
five
years
(if
person
has
left
administrator)
• Insolvency
–
when
a
debtor
has
liabilities
in
excess
of
his
assets
and
can
barely
o Same
rule
as
in
the
previous
number
applies
pay
off
his
debts.
• Those
undertaken
in
fraud
of
creditors
when
the
latter
cannot
in
any
other
• If
he
pay
a
creditor
whose
credit
is
not
yet
due,
such
payment
can
be
rescinded
manner
collect
the
claims
due
them.
• Prior
judicial
declaration
of
insolvency
not
required.
o Contract
entered
to
in
bad
faith.
o Designed
to
evade
the
due
obligations
in
favor
of
creditors,
who
have
no
other
way
of
collecting
their
debts.
Art.
1383
–
Nature
of
Action
for
Rescission
o Bobis
v.
Provincial
Sheriff
of
Camarines
Norte
–
it
is
essential
to
prove
The
action
for
rescission
is
subsidiary;
it
cannot
be
instituted
except
when
the
party
that
both
contracting
parties
have
acted
maliciously
and
with
fraud
in
suffering
damage
has
no
other
legal
means
to
obtain
reparation
for
the
same.
order
to
prejudice
creditors.
(1294)
This
refers
only
to
actual
creditors
of
the
debtor
Marsman
Investment
Ltd
v..
Philippine
Abaca
Development
• Action
for
rescission
can
only
be
made
in
a
proper
and
direct
action
filed
for
Company
–
plaintiff
corporations
had
ceased
to
be
the
that
purpose,
and
not
on
a
mere
motion
incidental
to
another
case.
creditors
of
transferer
PADCO
as
of
1959,
and
were
• Air
France
v.
CA
–
Action
for
rescission
may
not
be
raised
or
set
up
in
a
thereafter
deprived
of
any
interest
in
assailing
the
validity
of
summary
proceeding
through
a
motion,
but
in
a
an
independent
civil
action
the
transfer
of
its
properties
to
Marsman.
and
only
after
a
full
blown
trial.
• Those
which
refer
to
things
under
litigation
if
they
have
been
entered
into
by
• It
must
also
be
the
last
remedy.
Other
means
to
claim
reparation
must
be
the
defendant
without
the
knowledge
and
approval
of
the
litigants
or
of
availed
of
first
–
included
here
is
the
filing
of
a
court
case.
competent
judicial
authority
• Khe
Hong
Cheng
v.
CA
–
presuppositions
for
an
accion
pauliana,
or
action
for
Ex.
In
a
suit
for
replevin
wherein
plaintiff
seeks
to
recover
personal
rescission
that
highlight
the
point
that
it
has
to
be
the
last
remedy.
property
from
the
defendant
1. A
judgment
Defendant
cannot
in
bad
faith
sell
the
property
being
2. Issuance
by
trial
court
of
a
writ
of
execution
for
satisfaction
of
the
liquidated
to
any
third
person
judgment
If
he
does,
and
the
third
person
is
in
bad
faith
as
well,
such
3. Failure
of
sheriff
to
enforce
and
satisfy
court’s
judgment
contract
is
rescissible
Litonjua
v.
LR
Corporation
Art.
1384
–
Extent
of
Rescission
• Creditor
lent
money
to
debtor
Rescission
shall
be
only
to
the
extent
necessary
to
cover
the
damages
caused.
(n)
84
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Rescission
presupposes
a
valid
contract.
Art.
1387
–
When
Alienation
Presumed
in
Fraud
of
Creditors
o It
need
not
be
rescinded
totally
–
rescission
shall
only
be
up
to
the
All
contracts
by
virtue
of
which
the
debtor
alienates
property
by
gratuitous
title
are
extent
needed
to
cover
the
damage.
presumed
to
have
been
entered
into
in
fraud
of
creditors,
when
the
donor
did
not
• Recall
:
Rescission
is
based
on
economic
damage
as
a
result
of
inequitable
reserve
sufficient
property
to
pay
all
debts
contracted
before
the
donation.
conduct.
Alienations
by
onerous
title
are
also
presumed
fraudulent
when
made
by
persons
Art.
1385
–
Rescission
Creates
Obligation
of
Mutual
Restitution
against
whom
some
judgment
has
been
issued.
The
decision
or
attachment
need
Rescission
creates
the
obligation
to
return
the
things
which
were
the
object
of
the
not
refer
to
the
property
alienated,
and
need
not
have
been
obtained
by
the
party
contract,
together
with
their
fruits,
and
the
price
with
its
interest;
consequently,
it
seeking
the
rescission.
can
be
carried
out
only
when
he
who
demands
rescission
can
return
whatever
he
may
be
obliged
to
restore.
In
addition
to
these
presumptions,
the
design
to
defraud
creditors
may
be
proved
in
any
other
manner
recognized
by
the
law
of
evidence.
(1297a)
Neither
shall
rescission
take
place
when
the
things
which
are
the
object
of
the
contract
are
legally
in
the
possession
of
third
persons
who
did
not
act
in
bad
faith.
• This
article
provides
rebuttable
presumptions.
o It
creates
the
presumption
that
acts
have
been
done
in
fraud
of
In
this
case,
indemnity
for
damages
may
be
demanded
from
the
person
causing
the
creditors
loss.
(1295)
o However,
all
these
presumptions
may
be
rebutted
by
strong
evidence
that
the
contract
was
not
in
fraud
of
creditors.
• Objective
of
restitution
is
to
restore
their
parties
to
their
original
(pre-‐contract)
• First
–
debtor
alienates
property
by
gratuitous
title,
when
donor
did
not
position.
reserve
sufficient
property
to
pay
all
debts
contracted
before
such
donation
• Upon
rescission,
parties
must
return:
o Ex.
B
owes
a
total
of
P30,000
to
several
creditors
1. The
object
of
the
contract
o He
has
P60,000
in
the
bank
2. Fruits
and
interests
of
such
object,
if
any
o He
donates
P55,000
to
X
–
donation
is
presumed
to
be
fraudulent
• If
object
cannot
be
restored
because
of
loss
–
damages
may
be
claimed.
o Maturity
of
debts
immaterial
• Rescission
cannot
take
place
if
the
object
of
the
contract
is
legally
in
possession
• Second
–
Alienation
by
onerous
title
is
made
by
persons
against
whom
some
of
a
third
party
in
good
faith.
judgment
has
been
issued
o Good
faith
is
presumed
unless
contrary
evidence
is
adduced.
o This
refers
to
a
person
against
whom
a
writ
of
attachment
has
already
been
issued
Art.
1386
–
Contracts
Approved
by
the
Courts
o Mere
alienation
during
pendency
of
suit
does
not
create
the
Rescission
referred
to
in
Nos.
1
and
2
of
Article
1381
shall
not
take
place
with
presumption
respect
to
contracts
approved
by
the
courts.
(1296a)
o Alienation
need
not
refer
to
property
attached
Ex.
A
obtains
a
writ
of
attachment
against
debtor
B,
with
respect
to
a
• Numbers
1
and
2:
property
in
Mandaluyong.
o Guardian
with
respect
to
ward’s
property
If
B
sells
his
property
in
Laguna
the
presumption
arises,
even
o Administrator
–
absentee
if
it
is
not
the
property
attached
• Contracts
entered
into
by
these
people,
once
judicially
approved,
cannot
be
subject
of
rescission.
Art.
1388
–
Liability
of
Purchaser
in
Bad
Faith
o Approval
implies
that
the
contract
was
justified
already
in
the
eyes
of
Whoever
acquires
in
bad
faith
the
things
alienated
in
fraud
of
creditors,
shall
the
court.
indemnify
the
latter
for
damages
suffered
by
them
on
account
of
the
alienation,
whenever,
due
to
any
cause,
it
should
be
impossible
for
him
to
return
them.
85
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
If
there
are
two
or
more
alienations,
the
first
acquirer
shall
be
liable
first,
and
so
on
These
contracts
are
binding,
unless
they
are
annulled
by
a
proper
action
in
court.
successively.
(1298a)
They
are
susceptible
of
ratification.
(n)
• Buyer
who
knows
that
conveyance
has
been
made
in
fraud
of
creditors
shall
be
• Voidable
or
annullable
contracts
–
those
which
possess
all
the
essential
liable
for
damages
to
the
creditor,
should
it
be
impossible
to
return
the
requisites,
but
one
of
the
parties.
property.
a. Is
incapable
of
giving
consent.
• If
he
can,
he
has
obligation
to
return
what
has
been
transferred
to
him
in
bad
b. Has
his
consent
vitiated
by
mistake,
violence,
undue
influence
or
faith.
fraud.
• They
may
be
cured
by
the
aggrieved
party
–
ratification
Art.
1389
–
Period
for
Filing
Action
for
Rescission
• Lim
Tay
v.
CA
–
annulment
operates
prospectively,
and
does
not
retroact.
The
action
to
claim
rescission
must
be
commenced
within
four
years.
Art.
1391
–
Period
for
Filing
Action
for
Annulment
For
persons
under
guardianship
and
for
absentees,
the
period
of
four
years
shall
The
action
for
annulment
shall
be
brought
within
four
years.
not
begin
until
the
termination
of
the
former's
incapacity,
or
until
the
domicile
of
the
latter
is
known.
(1299)
This
period
shall
begin:
In
cases
of
intimidation,
violence
or
undue
influence,
from
the
time
the
defect
of
When
the
four
year
period
begins
:
the
consent
ceases.
• Generally,
when
the
aggrieved
party
has
unsuccessfully
exhausted
all
possible
remedies
to
enforce
the
obligation
or
to
recover
what
has
been
In
case
of
mistake
or
fraud,
from
the
time
of
the
discovery
of
the
same.
lost
o Persons
under
guardianship
–
from
the
time
the
incapacity
And
when
the
action
refers
to
contracts
entered
into
by
minors
or
other
terminates
incapacitated
persons,
from
the
time
the
guardianship
ceases.
(1301a)
o For
absentees
–
from
the
time
he
learns
of
the
contract
o Defrauded
creditors
–
from
the
time
the
fraud
is
discovered
• Prescriptive
period
to
annul
a
contract
is
four
years.
o Things
under
litigation
–
from
the
time
of
knowledge
of
the
• Starting
point
depends
on
the
ground
invoked.
transaction
1. Intimidation,
violence,
undue
influence
–
when
such
defect
ceases.
Ex.
A
intimidates
B
with
bodily
harm
in
order
to
enter
into
a
lease
Chapter
7:
Voidable
Contracts
contract.
The
moment
A
reforms
and
stops
the
threats,
the
four
year
period
begins
counting.
Art.
1390
–
Voidable
Contracts
Defined
2. Mistake
or
Fraud
–
from
the
discovery
of
such
defect
The
following
contracts
are
voidable
or
annullable,
even
though
there
may
have
Ex.
A
fools
B
into
thinking
that
a
jewel
is
made
of
diamond,
when
in
been
no
damage
to
the
contracting
parties:
fact
it
is
made
of
glass.
Once
B
discovers
the
fraud,
the
period
begins
running.
(1)
Those
where
one
of
the
parties
is
incapable
of
giving
consent
to
a
contract;
3. Contracts
entered
into
by
minors
or
other
incapacitated
persons
-‐
from
the
moment
guardianship
ends
(2)
Those
where
the
consent
is
vitiated
by
mistake,
violence,
intimidation,
undue
Ex.
If
A’s
guardian
fraudulently
transfers
his
property
to
a
influence
or
fraud.
third
party,
A
must
wait
until
the
guardianship
ceases
to
file
the
case,
and
from
there,
the
period
will
begin
running.
86
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1392
–
Effect
of
Ratification
Art.
1395
–
Conformity
of
Guilty
Party
to
Ratification
Not
Required
Ratification
extinguishes
the
action
to
annul
a
voidable
contract.
(1309a)
Ratification
does
not
require
the
conformity
of
the
contracting
party
who
has
no
right
to
bring
the
action
for
annulment.
(1312)
Art.
1393
–
Forms
of
Ratification
Ratification
may
be
effected
expressly
or
tacitly.
It
is
understood
that
there
is
a
tacit
• Ratification
–
unilateral
act
ratification
if,
with
knowledge
of
the
reason
which
renders
the
contract
voidable
• Consent
of
injuring
party
is
not
required.
and
such
reason
having
ceased,
the
person
who
has
a
right
to
invoke
it
should
execute
an
act
which
necessarily
implies
an
intention
to
waive
his
right.
(1311a)
Art.
1396
–
Retroactive
Effect
of
Ratification
Ratification
cleanses
the
contract
from
all
its
defects
from
the
moment
it
was
• Ratification
–
the
act
of
curing
the
defect
which
made
the
contract
annullable
–
constituted.
(1313)
it
extinguishes
the
action
to
annul
• May
be
express
or
tacit:
• Ratification
retroacts
to
the
day
the
contract
was
entered
into.
A. Express
–
after
coercion
ceases,
A
tells
B
that
he
will
continue
to
pay
• It
makes
the
contract
valid
from
its
inception,
subject
to
the
prior
rights
of
third
the
lease
payments
persons.
B. Tacit
–
After
coercion
ceases,
A
merely
continues
to
pay
the
rentals
for
o “prior”
–
means
prior
to
ratification
the
property
Requisites:
1. Knowledge
of
reason
which
renders
contrct
voidable
Art.
1397
–
Party
Entitled
to
Bring
an
Action
to
Annul
2. Such
reason
ceases
The
action
for
the
annulment
of
contracts
may
be
instituted
by
all
who
are
thereby
3. Injured
party
executes
an
act
which
implies
an
obliged
principally
or
subsidiarily.
However,
persons
who
are
capable
cannot
allege
intention
to
waive
his
right
the
incapacity
of
those
with
whom
they
contracted;
nor
can
those
who
exerted
o In
both
cases,
the
defect
is
cured
whuch
erases
the
infirmity
in
the
intimidation,
violence,
or
undue
influence,
or
employed
fraud,
or
caused
mistake
contract.
base
their
action
upon
these
flaws
of
the
contract.
(1302a)
• Yao
Ka
Sin
Trading
v.
CA
–
no
ratification
by
a
corporation
of
acts
performed
by
an
officer
if
he
has
no
authority
from
such
corporation,
or
if
such
acts
are
not
• General
rule
–
only
parties
to
the
contract
may
bring
an
action
for
its
later
validated.
annulment.
• Requisites
for
capacity
to
annul:
1. Must
be
interested
in
the
contract
Art.
1394
–
Who
May
Ratify
2. The
victim
is
the
one
who
must
assert
the
same
(in
other
words,
the
Ratification
may
be
effected
by
the
guardian
of
the
incapacitated
person.
(n)
person
who
caused
the
defect
cannot
be
the
one
to
bring
the
action
for
annulment)
• Guardian
–
takes
with
the
administration
of
person
and
properties
of
the
ward
Capacitated
persons
may
not
allege
the
incapacity
of
the
• A
contract
entered
into
by
an
incapacitated
person
may
be
ratified
by:
other
party
in
order
to
annul
A. Guardian
However,
in
case
the
incapacity
involved
is
minority,
the
B. Injured
party
himself,
once
capacitated
capacitated
party
may
file
a
case
for
enforcement,
provided
No
longer
insane,
for
example
that
the
misrepresentation
of
majority
was
active
Reaches
age
of
majority
Users
of
intimidation,
etc
cannot
annul
the
contract
based
on
• In
case
contract
is
voidable
on
ground
of
mistake,
etc
–
ratification
can
be
these
acts.
made
by
party
whose
consent
is
vitiated.
87
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• Exceptions:
However,
since
as
a
general
rule,
capacitated
persons
may
1. A
person
who
is
not
a
party…may
exercise
an
action
for
the
nullity
of
not
allege
incapacity
in
order
to
annul.
A
may
only
recover
the
contract
if
he
is
prejudiced
in
his
rights
with
respect
to
one
of
the
upon
an
action
for
annulment
filed
by
B
when
he
reaches
contracting
parties…
majority
2. …and
can
show
the
detriment
which
would
positively
result
to
him
from
the
said
contract.
Banez
v.
CA
Art.
1400
–
Effect
of
Loss
of
Thing
to
be
Returned
Thus,
a
stranger
to
the
contract
must
show:
Whenever
the
person
obliged
by
the
decree
of
annulment
to
return
the
thing
can
1. Prejudice
to
his
rights
not
do
so
because
it
has
been
lost
through
his
fault,
he
shall
return
the
fruits
2. Detriment
that
would
result
received
and
the
value
of
the
thing
at
the
time
of
the
loss,
with
interest
from
the
same
date.
(1307a)
Art.
1398
–
Duty
of
Mutual
Restitution
upon
Annulment
An
obligation
having
been
annulled,
the
contracting
parties
shall
restore
to
each
Effect
of
Loss
of
Thing
to
be
Returned:
other
the
things
which
have
been
the
subject
matter
of
the
contract,
with
their
fruits,
and
the
price
with
its
interest,
except
in
cases
provided
by
law.
• If
lost
without
the
fault
of
person
obliged:
o No
more
obligation
to
return
such
thing.
In
obligations
to
render
service,
the
value
thereof
shall
be
the
basis
for
damages.
o The
other
party
cannot
be
compelled
to
restore
what
he
had
received.
(1303a)
• If
lost
through
fault
of
person
obliged:
o Obligation
converted
into
a
claim
for
damages
• Parties,
as
a
general
rule,
must
restore
to
each
other,
upon
annulment:
o Damages
–
value
of
the
thing
at
the
time
of
the
loss,
with
interest
1. Subject
matter
of
the
contract,
with
fruits
from
the
same
date,
and
fruits
received
from
the
thing.
2. Price
thereof,
with
legal
interest
• Like
in
rescission,
the
purpose
is
to
restore
the
parties
to
their
original
position.
Ex.
S
sold
his
plow
and
carabao
to
B.
On
petition
of
S,
contract
was
• In
personal
obligations,
where
service
had
already
been
rendered,
the
value
annulled.
However,
carabao
died
through
fault
of
B.
thereof
with
interest
is
the
basis
for
damages.
B
must
pay
value
of
carabao
at
the
time
of
its
death,
with
interest
from
the
same
date.
Art.
1399
–
Restitution
by
an
Incapacitated
Person
If
carabao
had
given
birth,
the
baby
carabao
would
be
When
the
defect
of
the
contract
consists
in
the
incapacity
of
one
of
the
parties,
the
delivered
to
S
as
a
fruit.
incapacitated
person
is
not
obliged
to
make
any
restitution
except
insofar
as
he
has
been
benefited
by
the
thing
or
price
received
by
him.
(1304)
Art.
1401
–
Extinguishment
of
Action
for
Annulment
The
action
for
annulment
of
contracts
shall
be
extinguished
when
the
thing
which
is
• When
defect
consists
in
incapacity,
the
incapacitated
person
is
not
obliged
to
the
object
thereof
is
lost
through
the
fraud
or
fault
of
the
person
who
has
a
right
to
make
any
restitution
except
insofar
as
he
has
been
benefited
by
the
thing
or
institute
the
proceedings.
price
received
by
him.
Ex.
A
loans
B,
a
minor,
money.
If
the
right
of
action
is
based
upon
the
incapacity
of
any
one
of
the
contracting
parties,
the
loss
of
the
thing
shall
not
be
an
obstacle
to
the
success
of
the
action,
If
B
spends
it
uselessly,
A
cannot
recover
even
if
court
unless
said
loss
took
place
through
the
fraud
or
fault
of
the
plaintiff.
(1314a)
declares
the
obligation
annulled.
If
B
spends
it
on
things
beneficial
to
him,
such
as
tuition
for
school,
A
may
recover.
88
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Extinguishment
of
Action
for
Annulment:
subscribed
by
the
party
charged,
or
by
his
agent;
evidence,
therefore,
of
the
agreement
cannot
be
received
without
the
writing,
or
a
secondary
evidence
of
its
• No
one
can
come
to
court
with
unclean
hands.
contents:
• If
the
person
who
had
a
right
to
institute
an
action
for
annulment
is
unable
to
restore
the
thing
he
would
be
obliged
to
return,
because
such
thing
is
lost
(a)
An
agreement
that
by
its
terms
is
not
to
be
performed
within
a
year
from
the
through
his
fault,
the
right
to
annul
is
extinguished.
making
thereof;
o If
A
coerces
B
to
sell
him
a
car,
B
can
seek
annulment.
o However,
if
B
loses
the
car
by
intentionally
destroying
it,
his
right
to
(b)
A
special
promise
to
answer
for
the
debt,
default,
or
miscarriage
of
another;
file
the
action
would
be
extinguished.
(c)
An
agreement
made
in
consideration
of
marriage,
other
than
a
mutual
promise
• Right
of
action
based
on
incapacity
–
the
rule
is
the
same.
to
marry;
o Generally,
if
an
incapacitated
person
loses
the
object,
there
is
no
bar
to
the
action
for
annulment.
(d)
An
agreement
for
the
sale
of
goods,
chattels
or
things
in
action,
at
a
price
not
This
is
because
he
is
only
obliged
to
restore
to
the
extent
of
less
than
five
hundred
pesos,
unless
the
buyer
accept
and
receive
part
of
such
how
he
was
benefited.
goods
and
chattels,
or
the
evidences,
or
some
of
them,
of
such
things
in
action
or
If
the
object
was
lost,
he
could
not
have
benefited.
pay
at
the
time
some
part
of
the
purchase
money;
but
when
a
sale
is
made
by
o However,
if
he
loses
it
through
his
own
fault,
the
case
for
annulment
auction
and
entry
is
made
by
the
auctioneer
in
his
sales
book,
at
the
time
of
the
will
be
dismissed.
sale,
of
the
amount
and
kind
of
property
sold,
terms
of
sale,
price,
names
of
the
purchasers
and
person
on
whose
account
the
sale
is
made,
it
is
a
sufficient
Art.
1402
–
Effect
where
a
Party
Cannot
Restore
Object
memorandum;
As
long
as
one
of
the
contracting
parties
does
not
restore
what
in
virtue
of
the
decree
of
annulment
he
is
bound
to
return,
the
other
cannot
be
compelled
to
(e)
An
agreement
of
the
leasing
for
a
longer
period
than
one
year,
or
for
the
sale
of
comply
with
what
is
incumbent
upon
him.
(1308)
real
property
or
of
an
interest
therein;
• When
a
contract
is
annulled,
a
reciprocal
obligation
of
restitution
is
created.
(f)
A
representation
as
to
the
credit
of
a
third
person.
• Return
by
one
party
of
what
he
is
obliged
to
restore
is
regarded
as
a
condition
(3)
Those
where
both
parties
are
incapable
of
giving
consent
to
a
contract.
to
the
fulfillment
of
the
other’s
obligation
to
return.
• Thus,
if
a
party
cannot
return
what
he
has
received,
the
other
may
not
be
Unenforceable
Contracts
:
compelled
to
return
what
he
has
received.
• Those
that
cannot
be
enforced
in
court
or
sued
upon
by
reason
of
certain
Chapter
8:
Unenforceable
Contracts
defects
provided
by
law.
o Even
if
they
have
all
the
requisites
for
perfection.
Art.
1403
–
Uneforceable
Contracts
Defined
• Until
and
unless
they
are
ratified
according
to
law.
The
following
contracts
are
unenforceable,
unless
they
are
ratified:
• Binding
force
–
none
until
they
are
ratified.
(1)
Those
entered
into
in
the
name
of
another
person
by
one
who
has
been
given
Kinds
of
Unenforceable
Contracts
:
no
authority
or
legal
representation,
or
who
has
acted
beyond
his
powers;
1. Unauthorized
contracts
–
those
entered
into
in
the
name
of
another
by
one
(2)
Those
that
do
not
comply
with
the
Statute
of
Frauds
as
set
forth
in
this
number.
without,
OR
acting
in
excess
of,
authority.
In
the
following
cases
an
agreement
hereafter
made
shall
be
unenforceable
by
o Governed
by
Article
1317
action,
unless
the
same,
or
some
note
or
memorandum,
thereof,
be
in
writing,
and
2. Those
that
do
not
comply
with
the
Statute
of
Frauds
89
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
3. Those
where
both
parties
are
incapable
of
giving
consent
to
a
contract.
o The
defense
of
the
SoF
is
personal
to
the
parties
–
cannot
be
interposed
by
strangers
to
the
contract
The
Statute
of
Frauds
–
in
General:
o No
particular
form
of
language
or
instrument
needed
to
constitute
a
memorandum
or
note
in
writing
under
the
SoF
• Purpose:
Need
not
be
contained
in
a
single
document
1. Prevent
fraud
2
or
more
writings
properly
connected
may
serve
as
the
2. Guard
against
mistakes
by
honest
men
required
memorandum
3. By
requiring
certain
agreements
that
are
susceptible
to
fraud
must
be
Ex.
Limketkai
Sons
Milling
Inc
V.
CA
in
writing
• “While
there
was
no
written
contract
of
sale…
there
4. For
certain
executory
contracts
to
be
enforceable
in
a
court
of
law,
the
are
abundant
notes
and
memoranda
extant
in
the
only
evidence
that
can
prove
such
contract
is
a
written
proof
of
the
records
of
this
case
evidencing
the
elements
of
a
agreement.
perfected
contract.
• Application
(some
fundamental
principles
relative
to
the
Statute
of
Frauds)
• Note
–
when
we
say
“applicable,”
it
means
that
such
contracts
must
be
The
Statute
of
Frauds
–
Agreements
within
its
Scope:
reduced
to
writing.
If
“not
applicable,”
it’s
okay
that
it’s
not
in
writing
o SoF
not
applicable
in
actions
that
are
not
for…
• Agreement
not
to
be
performed
within
one
year
from
the
making
thereof
Damages
because
of
violation
of
contract
Ex.
On
Oct
10,
2007,
S
entered
into
an
oral
contract
with
B
for
the
Specific
performance
of
a
contract.
construction
of
B’s
house
to
begin
on
October
20,
2008.
–
Such
o SoF
applicable
only
to
executory
contracts
(that
is,
where
no
contract
must
be
in
writing
performance
has
yet
to
be
made
by
either
party)
For
such
contract
to
fall
under
the
SoF,
it
must
appear
that
Not
to
contracts
which
are
totally
or
partially
performed
the
parties
intended
when
they
made
the
contract
that
it
Why?
–
Performance,
like
writing,
furnishes
reliable
evidence
should
not
be
performed
within
a
year.
of
the
intention
of
the
parties
or
the
existence
of
the
contract
o If
a
contract
stipulates
that
a
certain
type
of
activity
shall
be
Ex.
Contract
of
sale
of
real
property
in
installment
not
within
commenced
within
the
year,
but
can
only
be
finished
after
one
year,
the
Statute,
if
the
first
installment
has
already
been
paid.
–
the
SoF
will
apply.
this
constitutes
partial
performance
Ex.
On
March
21,
2012,
A
enters
into
a
contract
with
B
that
B
Babao
v.
Perez
–
oral
contract
partially
performed
must
be
will
construct
a
skyscraper,
to
commence
on
June
30,
2012.
proven
clearly
in
court.
Obviously,
such
contract
cannot
be
finished
by
March
2012,
Partial
performance
can
also
be
manifested
when
so
it
must
be
in
writing.
improvements
are
made
on
property,
rentals
are
paid,
etc
–
o If
a
party
fully
paid
the
boulder
of
the
building
for
the
complete
in
general,
acts
of
partial
performance
remove
the
contract
construction
of
the
same
six
months
after
the
making
of
the
contract,
from
the
SoF
it
does
not
come
within
the
statute.
o SoF
not
applicable
when
the
contract
is
admitted
expressly,
or
Babeo
v.
Perez
–
contracts
which
y
their
terms
are
not
to
be
impliedly
by
the
failure
to
deny
specifically
its
existence.
performed
within
one
year
may
be
taken
out
of
the
statute
o SoF
applicable
only
to
the
agreements
enumerate
therein
by
performance
of
one
party
thereto.
o SoF
not
applicable
where
a
writing
does
not
express
the
true
• “All
that
is
required…is
complete
performance
agreement
of
the
parties.
within
one
year
of
one
party,
however
many
years
o It
does
not
declare
contracts
void.
elapse
before
agreement
is
performed
by
another
o The
defense
of
the
SoF
may
be
waived.
party.”
90
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• “…nothing
less
than
full
performance
by
one
party
oOther
examples
will
suffice,
and
it
has
been
held
that
if
anything
Marriage
settlements
remains
to
be
done
after
expiration
of
the
year,
Donations
propter
nuptias
besides
the
mere
payment
of
money,
the
statute
will
• Agreement
for
sale
of
goods,
at
a
price
not
less
that
P500.
apply.”
Ex.
S
and
B
mutually
promised
to
sell
and
buy
a
piano
worth
P12,000.
• Promise
to
answer
for
the
debt,
default,
or
miscarriage
of
another
This
agreement
must
be
in
writing
to
be
enforceable
against
Ex.
D
owes
C
P
10,000,
with
G
as
guarantor.
either
party
G
promises
to
answer
for
the
debt
of
D
in
case
D
fails.
Unless
there
is
already
delivery
or
partial/full
payment.
This
agreement
(between
G
and
D)
is
unenforceable
unless
it
• Agreement
for
leasing
for
a
longer
period
than
one
year.
is
in
writing
signed
by
G.
Ex.
R
agreed
to
lease
his
house
to
E
for
two
years.
o The
promise
here
is
merely
subsidiary
or
collateral
to
the
promise
of
Must
be
in
writing,
unless
partially
executed.
another
(original
debtor,
D)
• Agreement
for
sale
of
real
property
or
of
an
interest
therein.
o If
the
promise
is
an
original
or
independent
one,
the
promise
is
not
Ex.
B
orally
sold
his
land
or
his
right
of
usufruct
in
said
land
to
B.
within
the
SoF
and
thus
may
be
proven
by
oral
evidence.
Such
agreement
is
unenforceable,
unless
it
has
been
partially
o “Special
promise”
–
express
and
tacit
promises
in
fact
made.
executed.
Does
not
apply
in
cases
where
duties
are
created
by
law
• Representation
as
to
the
credit
of
a
third
person
without
any
promissory
assent.
Ex.
D
is
seeking
a
loan
from
C.
o “Debt,
default,
miscarriage”
–
includes
all
legal
obligations
under
T
represents
to
C
that
D
is
solvent
and
has
a
good
credit
which
a
person
can
come,
contractual
or
non-‐contractual,
requiring
a
reputation.
money
payment
or
any
other
kind
of
performance.
Such
representation
must
be
in
writing.
o If
obligation
is
joint
–
no
special
promise
“one
is
not
considered
as
promising…within
the
meaning
of
Art.
1404
–
Rules
Governing
Unauthorized
Contracts
the
statute…
where
his
performance
will
also
extinguish
the
Unauthorized
contracts
are
governed
by
Article
1317
and
the
principles
of
agency
in
promisor’s
own
debt.”
Title
X
of
this
Book.
o If
obligation
is
solidary
–
depends
on
whether
or
not
the
promisor
knew
that
only
one
of
the
solidary
debtors
would
truly
be
benefited
Art.
1405
–
Modes
of
Ratification
under
Statutes
of
Fraud
by
payment.
Contracts
infringing
the
Statute
of
Frauds,
referred
to
in
No.
2
of
Article
1403,
are
“But
if
one
of
several
promisors
is
to
have
the
purchased
ratified
by
the
failure
to
object
to
the
presentation
of
oral
evidence
to
prove
the
goods
or
the
borrowed
money,
the
others
lending
their
credit
same,
or
by
the
acceptance
of
benefit
under
them.
as
security,
the
latter
are
“answering
for
the
debt
of
another
within
the
statute.”
Modes
of
Ratification
under
the
SoF
:
• Agreement
in
consideration
of
marriage
other
than
promise
to
marry
Ex.
M
agrees
to
build
a
house
worth
P1M
for
W,
if
W
marries
M.
• Failure
to
object
to
the
presentation
of
oral
evidence
to
prove
the
contract
Applicable
even
when
promise
to
build
the
house
is
made
by
o This
amounts
to
a
waiver
of
the
SoF.
a
third
person
to
W.
o Makes
the
contract
as
binding
as
if
it
had
been
reduced
to
writing.
o Mutual
promise
to
marry
between
M
and
W
need
not
be
in
writing.
o Limketkai
Sons
Milling
v.
CA
–
contacts
infringing
the
SoF
are
ratified
Note
–
law
states
no
period
to
performance,
unlike
number
1
when
the
defense
fails
to
object,
or
asks
questions
on
cross-‐
An
oral
mutual
promise
to
marry
may
be
proved
by
parol
examination.”
evidence,
even
if
marriage
is
to
be
celebrated
beyond
one
“as
no
timely
objection
or
protest
was
made
to
the
admission
year
of
the
testimony
of
the
plaintiff
with
respect
to
the
contract…
91
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
[defendants]
tacitly
waived
there
right
to
have
it
stricken
o They
are
not
parties
to
the
contract.
out.”
• Acceptance
of
benefits
under
the
contract.
o In
this
case,
the
contract
is
no
longer
executory.
Ex.
A
sold
to
G
a
particular
real
property,
and
A
benefited
from
the
Chapter
9:
Void
and
Inexistent
Contracts
transaction
by
already
obtaining
the
purchase
price
.
Articles
1409
and
1422
provide
for
the
instances
where
contracts
are
Contract
of
sale
can
be
enforced,
even
if
not
in
writing.
deemed
void
or
inexistent.
It
must
be
noted
that
where
contracts
are
divisible
and
the
illegal
terms
can
be
separated,
the
legal
ones
may
be
enforced
(1420).
Art.
1406
–
Right
of
a
Party
where
Contract
Enforceable
The
defense
against
the
nullity
of
void
contracts
does
not
prescribe
(1410)
When
a
contract
is
enforceable
under
the
Statute
of
Frauds,
and
a
public
document
rd
and
this
defense
may
even
be
raised
by
a
3
person
provided
that
his
interest
is
is
necessary
for
its
registration
in
the
Registry
of
Deeds,
the
parties
may
avail
directly
affected
(1421).
themselves
of
the
right
under
Article
1357.
Usually,
when
parties
enter
into
a
contract
that
is
contrary
to
law,
the
parties
are
not
in
good
faith.
Thus,
Articles
1411
to
1419
talk
about
pari
delicto.
• When
the
agreements
in
the
SoF
are
in
writing
and
thus
enforceable,
and
the
Generally,
parties
who
are
in
pari
delicto
may
not
recover
what
has
been
given
nor
law
requires
that
such
document
should
be
transformed
into
a
pbulic
compel
the
other
to
comply
with
what
has
been
agreed
upon
(1411
-‐1412)
document
for
registration.
However,
the
law
provides
some
exceptions
to
this
rule
and
gives
instances
when
• Contracting
parties
may
compel
each
other
to
observe
the
form
once
the
recovery
may
be
made
(1413
–
1419).
contract
has
been
perfected.
Art.
1409
–
Instances
of
void
or
inexistent
contracts
Art.
1407
–
When
Uneforceable
Contract
becomes
Voidable
The
following
contracts
are
inexistent
and
void
from
the
beginning:
In
a
contract
where
both
parties
are
incapable
of
giving
consent,
express
or
implied
ratification
by
the
parent,
or
guardian,
as
the
case
may
be,
of
one
of
the
contracting
(1)
Those
whose
cause,
object
or
purpose
is
contrary
to
law,
morals,
good
customs,
parties
shall
give
the
contract
the
same
effect
as
if
only
one
of
them
were
public
order
or
public
policy;
incapacitated.
(2)
Those
which
are
absolutely
simulated
or
fictitious;
(3)
Those
whose
cause
or
object
did
not
exist
at
the
time
of
the
transaction;
If
ratification
is
made
by
the
parents
or
guardians,
as
the
case
may
be,
of
both
(4)
Those
whose
object
is
outside
the
commerce
of
men;
contracting
parties,
the
contract
shall
be
validated
from
the
inception.
(5)
Those
which
contemplate
an
impossible
service;
(6)
Those
where
the
intention
of
the
parties
relative
to
the
principal
object
of
the
• If
both
parties
have
no
guardian,
for
example,
then
it
is
unenforceable.
contract
cannot
be
ascertained;
• If
there
is
one
guardian,
or
if
one
of
the
parties
upon
gaining
capacity
ratiies
it,
(7)
Those
expressly
prohibited
or
declared
void
by
law.
it
becomes
voidable.
• If
ratification
is
made
by
guardians,
or
by
both
parties
upon
attaining
capacity,
These
contracts
cannot
be
ratified.
Neither
can
the
right
to
set
up
the
defense
of
this
bevcomed
valid.
illegality
be
waived.
Art.
1408
–
Right
of
Third
Persons
to
Assail
an
Unforceable
Contract
What
are
void
and
inexistent
contracts?
Unenforceable
contracts
cannot
be
assailed
by
third
persons.
• Void
Contracts
–
those
which,
because
of
certain
defects
generally
• Third
persons
cannot
assail
unenforceable
contracts.
produce
no
effect
at
all.
It
is
no
contract
at
all.
o They
cannot
be
executed
anyway.
92
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Exception
–
see
Art
1411-‐1412
where
illegal
contracts
may
protect
a
party
was
held
as
absolutely
simulated
and
therefore
produce
effects
where
parties
are
not
of
equal
guilt.
null
and
void.
(See
Art.
1345
and
1346
for
more
examples)
• Inexistent
Contracts
–
agreements
which
lack
one
or
some
or
all
of
the
3. Contracts
without
cause
or
object
elements
or
do
not
comply
with
formalities
which
are
essential
for
the
• The
phrase
”did
not
exist
at
the
time
of
the
transaction”
does
not
existence
of
contracts.
apply
to
a
future
thing
which
may
legally
be
the
object
of
a
contract
(De
Leon).
Characteristics
of
a
void
or
inexistent
contract:
• See
Art.
1347,
1352,
and
1353
for
examples
and
comments.
4. Contracts
whose
object
is
outside
the
commerce
of
men
1. Generally
produces
no
effect
• See
comments
and
examples
under
Art.
1347
and
1348.
2. It
cannot
be
ratified
(Art
1409,
Par
2)
5. Contracts
which
contemplate
an
impossible
service
3. The
right
to
set
up
the
defense
of
illegality
cannot
be
waived
• See
comments
and
examples
under
Art.
1347
and
1348
4. The
action
or
defense
for
the
declaration
of
its
inexistence
does
not
6. Contracts
where
the
intention
of
the
parties
relative
to
the
object
cannot
prescribe
(Art.
1410)
rd be
ascertained
5. The
defense
of
illegality
is
not
available
to
3
persons
whose
interest
are
• See
comments
and
examples
under
Art.
1378,
par.
2
not
directly
affected
(Art.
1421)
7. Contracts
expressly
prohibited
or
declared
void
by
law
6. It
cannot
give
rise
to
a
valid
contract
(Art.
1422)
Ex.
Instances
of
void
or
inexistent
contracts:
a. A
stipulation
prohibiting
a
mortgagor
to
sell
property
mortgaged
is
void
for
being
contrary
to
the
express
1. Contracts
whose
cause,
object
or
purpose
is
contrary
to
law,
etc.
provision
of
Art.
2130
of
the
Civil
Code
• De
Leon
v.
CA
–
A
contract
whose
consideration
is
the
termination
b. Contracts
upon
future
inheritance
except
those
expressly
of
the
marriage
by
the
parties
is
void
for
being
contrary
to
law
and
authorized
by
law
(Art.
1347)
Filipino
morals
and
public
policy.
c. Sale
of
property
between
husband
and
wife
except
when
• Prudential
bank
v.
Panis
–
Mortgage
contract
entered
into
by
the
there
is
separation
of
property
(Art.
1490)
grantee
within
the
prohibited
period
provided
by
the
Public
Land
d. Donation
between
spouses
(Art.
87,
FC)
Act
is
null
and
void.
The
defect
in
a
void
contract
is
permanent
and
incurable:
• Maharlika
Publishing
Co.
v.
Tagle
–A
contract
of
sale
in
a
public
beidding
entered
into
by
a
wife
acting
in
behalf
of
her
husband,
• Chavez
v.
PCGG
–
A
void
agreement
will
not
be
rendered
operative
by
the
an
influential
public
official,
was
declared
void
for
being
violative
parties’
alleged
partial
or
full
performance
of
their
respective
prestations.
of
public
policy/order.
It
produces
no
legal
effect.
• Cui
v.
Arellano
University
–
A
contract
that
provides
a
refund
of
• Arsenal
v.
IAC
–
Neither
can
an
infirmity
be
cured
by
equity.
scholarship
grant
as
a
precondition
to
a
student’s
transfer
is
void
• Acierto
v.
De
Los
Santos
–
The
pari
delicto
doctrine
may
not
be
invoked
in
for
being
contrary
to
public
policy
and
morals.
void
contracts
that
run
contrary
to
state
policy.
a. Public
Policy
–
court
must
find
that
the
contract
• 19
Am.
Jur.
802
–
it
is
generally
considered
that
as
between
parties
to
a
contravenes
some
established
interest
of
society,
or
contract,
validity
cannot
be
given
to
it
by
estoppel
if
it
is
prohibited
by
law
inconsistent
with
sound
policy
and
good
morals
or
tends
or
against
public
policy.
to
undermine
the
security
of
individual
rights.
(See
Art.
• Eugenio
v.
Perfido
–
the
mere
lapse
of
time
cannot
give
efficacy
to
1306
and
1416
for
more
examples)
contracts
that
are
null
and
void.
2. Contracts
which
are
absolutely
simulated
or
fictitious.
• Gardner
v.
CA
–
a
contract
purporting
a
sale
of
land
was
really
without
consideration
and
was
actually
intended
merely
to
93
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1410
–
Action
or
Defense
is
Imprescriptible
A
has
no
action
against
B
if
B
does
not
give
the
car
even
if
the
The
action
or
defense
for
the
declaration
of
the
inexistence
of
a
contract
does
not
former
succeeded
in
kidnapping
X.
The
same
rule
applies
if
B
prescribe.
complies
and
A
does
not.
This
rule
shall
be
applicable
when
only
one
of
the
parties
is
guilty;
but
the
innocent
(1)
When
the
fault
is
on
the
part
of
both
contracting
parties,
neither
may
recover
one
may
claim
what
he
has
given,
and
shall
not
be
bound
to
comply
with
his
what
he
has
given
by
virtue
of
the
contract,
or
demand
the
performance
of
the
promise.
(1305)
other's
undertaking;
(2)
When
only
one
of
the
contracting
parties
is
at
fault,
he
cannot
recover
what
he
NOTE:
Articles
1411
and
1412
embody
the
general
principle
that
the
law
refuse
has
given
by
reason
of
the
contract,
or
ask
for
the
fulfillment
of
what
has
been
remedy
when
parties
are
in
pari
delicto.
Some
exceptions
to
this
rule
are
contained
promised
him.
The
other,
who
is
not
at
fault,
may
demand
the
return
of
what
he
in
Articles
1413
to
1419.
has
given
without
any
obligation
to
comply
his
promise.
(1306)
Rules
where
contract
is
illegal
and
the
act
constitutes
an
illegal
offense:
• Where
both
parties
are
in
pari
delicto
(NPC)
Rules
where
the
contract
is
illegal
but
the
act
does
not
constitute
a
criminal
offense:
a. The
parties
shall
have
no
action
against
each
other.
• Where
both
parties
are
in
pari
delicto
b. Both
shall
be
prosecuted.
1. Neither
party
may
recover
what
he
has
given
by
virtue
of
the
c. The
things
or
the
price
of
the
contract,
as
effects
or
instruments
contract.
of
the
crime
shall
be
confiscated
in
favour
of
the
Government.
2. Neither
party
may
demand
the
performance
of
the
other’s
undertaking.
Ex.
A
and
B
enter
into
a
contract
where
A
will
kidnap
X
and
bring
• Where
only
one
party
is
guilty
him
to
B.
In
return,
B
will
give
the
car
used
to
kidnap
X
to
A.
1. The
guilty
party
loses
what
he
has
given
by
reason
of
the
contract.
94
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
2. The
guilty
party
cannot
ask
for
the
fulfilment
of
the
other’s
Art.
1415
–
Recovery
by
an
Incapacitated
Person
undertaking.
Where
one
of
the
parties
to
an
illegal
contract
is
incapable
of
giving
consent,
the
3. The
innocent
party
may
demand
the
return
of
what
he
has
given.
courts
may,
if
the
interest
of
justice
so
demands
allow
recovery
of
money
or
4. The
innocent
party
cannot
be
compelled
to
comply
with
his
property
delivered
by
the
incapacitated
person.
promise.
• This
rule
is
within
the
discretion
of
the
court
hence
it
may
issue
an
order
Art.
1413
–
Recovery
of
Usurious
Interest
allowing
or
disallowing
recover
of
money.
Interest
paid
in
excess
of
the
interest
allowed
by
the
usury
laws
may
be
recovered
by
the
debtor,
with
interest
thereon
from
the
date
of
the
payment.
Ex.
A,
a
minor,
enters
into
a
contract
with
B
for
the
purchase
of
illegal
drugs
worth
₱10,000.
The
court
may
allow
the
minor
to
recover
the
₱10,000
• Payment
of
usurious
interest
is
void.
pesos
if
it
finds
that
the
interest
of
justice
so
demands.
• Angel
Jose
v.
Chelda
Enterprise
–
the
phrase
“interest
paid
in
excess
of
the
interest
allowed
by
law”
means
the
whole
interest
paid.
Art.
1416
–
Recovery
where
Contract
is
Not
Illegal
per
se
Ex.
In
a
loan
of
₱1,000,
with
interest
of
20%
per
annum
(w/c
is
a
When
the
agreement
is
not
illegal
per
se
but
is
merely
prohibited,
and
the
usurious
rate)
or
₱200
per
year,
if
the
borrower
pays
said
₱200,
prohibition
by
the
law
is
designated
for
the
protection
of
the
plaintiff,
he
may,
if
the
whole
₱200
is
the
usurious
interest.
The
borrower
may
public
policy
is
thereby
enhanced,
recover
what
he
has
paid
or
delivered.
recover
the
whole
₱200
and
not
just
the
part
which
is
in
excess
of
the
interest
allowed
by
law.
When
is
recovery
permitted?
1. The
agreement
is
not
illegal
per
se
but
is
merely
prohibited
Art.
1414
–
Recovery
where
Contract
Entered
Into
for
Illegal
Purpose
2. The
prohibition
is
designed
for
the
protection
of
the
plaintiff
When
money
is
paid
or
property
delivered
for
an
illegal
purpose,
the
contract
may
3. Public
policy
would
be
enhanced
by
allowing
the
plaintiff
to
recover
what
be
repudiated
by
one
of
the
parties
before
the
purpose
has
been
accomplished,
or
he
has
paid
or
delivered.
before
any
damage
has
been
caused
to
a
third
person.
In
such
case,
the
courts
may,
if
the
public
interest
will
thus
be
subserved,
allow
the
party
repudiating
the
contract
Ex.
Ras
v.
Sua
–
The
Supreme
Court
allowed
repossession
of
a
certain
land
to
to
recover
the
money
or
property.
the
owner
who
acquired
the
same
pursuant
to
a
law
designed
to
give
land
to
the
landless
even
when
the
said
owner
leased,
in
violation
of
the
spirit
Recovery
where
contract
entered
into
for
illegal
purpose:
of
the
law,
the
said
land
to
another
person
who
later
refused
to
return
the
1. The
contract
is
for
an
illegal
purpose.
same
despite
demand
of
the
owner
and
even
after
the
former
violated
the
2. The
contract
is
repudiated
before
the
purpose
has
been
accomplished
or
lease
agreement
on
the
ground
of
pari
delicto
before
any
damage
has
been
caused
to
a
third
person.
3. The
court
considers
that
public
interest
will
be
subserved
by
allowing
Art.
1417
–
Recovery
of
Amount
Paid
in
Excess
of
Ceiling
Price
recover.
When
the
price
of
any
article
or
commodity
is
determined
by
statute,
or
by
Ex.
De
leon
v.
Court
of
Appeals
–
the
Supreme
Court
allowed
the
authority
of
law,
any
person
paying
any
amount
in
excess
of
the
maximum
price
recovery
of
₱380,
000
pesos
paid
by
the
husband’s
mother
who
allowed
may
recover
such
excess.
resisted
the
wife’s
attempt
to
enforce
the
other
provisions
of
the
void
contract
(as
its
consideration
is
the
termination
of
marital
• It
is
illegal
to
charge
a
price
higher
than
the
statutory
ceiling.
Any
payment
status
between
the
husband
and
the
wife).
in
excess
of
such
may
be
recovered.
95
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1418
–
Recovery
of
Additional
Compensation
Ex.
An
annual
subscription
to
a
weekly
magazine
where
X
pays
₱1,000
is
a
When
the
law
fixes,
or
authorizes
the
fixing
of
the
maximum
number
of
hours
of
divisible
obligation
(for
the
publisher)
but
is
an
indivisible
contract
of
labor,
and
a
contract
is
entered
into
whereby
a
laborer
undertakes
to
work
longer
subscription.
than
the
maximum
thus
fixed,
he
may
demand
additional
compensation
for
service
rendered
beyond
the
time
limit.
If
the
agreement
is
that
the
publisher
will
deliver
magazine
every
week
and
X
will
pay
₱20
upon
delivery,
the
contract
is
divisible.
• If
a
contract
provides
that
an
employee
shall
work
only
for
8
hours
at
a
certain
legal
rate,
any
work
done
beyond
the
8
hour
period
should
be
paid
Art.
1421
–
Persons
Entitled
to
Raise
Defense
of
Illegality
or
Nullity
for
extra
time.
The
defense
of
illegality
of
contract
is
not
available
to
third
persons
whose
interests
• Articles
1418
and
1419
are
general
provisions
on
labor.
The
Labor
Code
of
are
not
directly
affected.
the
Philippines
(PD.
442)
provides
for
the
specific
rights
and
remedies
of
employees.
• General
Rule
–
Only
parties
to
the
void
contract
can
raise
the
defense
of
illegality
or
nullity
because
contracts
are
mutual
obligations
between
the
Art.
1419
–
Recovery
of
Amount
of
Wage
Less
than
Minimum
Fixed
parties.
rd
When
the
law
sets,
or
authorizes
the
setting
of
a
minimum
wage
for
laborers,
and
a
o Exception
–
3
persons
are
may
avail
the
defense
of
illegality
or
contract
is
agreed
upon
by
which
a
laborer
accepts
a
lower
wage,
he
shall
be
set
up
its
nullity
as
long
as
his
interest
is
directly
affected
by
the
entitled
to
recover
the
deficiency.
contract.
Ex.
A
sold
a
parcel
of
land,
which
he
does
not
own,
to
B.
X,
the
owner
of
• If
an
employee
receives
less
than
the
minimum
wage
rate,
s/he
can
still
the
land
which
is
encroached
by
said
illegal
sale,
may
go
to
court
and
recover
the
deficiency
with
legal
interest
(PD.
442).
seek
nullification
of
the
contract.
96
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Title
III
–
NATURAL
OBLIGATIONS
• If
a
third
person
pays
the
prescribed
debt
of
the
debtor
without
his
knowledge
or
against
his
will,
the
latter
is
not
legally
bound
to
pay
him
(Art.
1236,
par.
2).
But
the
debtor
cannot
recover
what
he
has
paid
in
case
he
voluntarily
reimburses
the
third
person.
Art.
1423
–
Concept
of
Natural
Obligations
Obligations
are
civil
or
natural.
Civil
obligations
give
a
right
of
action
to
compel
their
Ex.
A
debt
has
already
prescribed
but
X,
a
third
person,
pays
the
debt,
and
performance.
Natural
obligations,
not
being
based
on
positive
law
but
on
equity
later
on,
the
original
debtor
pays
X,
such
payment
shall
be
considered
valid
and
natural
law,
do
not
grant
a
right
of
action
to
enforce
their
performance,
but
and
original
debtor
cannot
recover
such
amount
from
the
creditor
on
the
after
voluntary
fulfillment
by
the
obligor,
they
authorize
the
retention
of
what
has
ground
that
X
should
not
have
paid
him.
been
delivered
or
rendered
by
reason
thereof.
Some
natural
obligations
are
set
forth
in
the
following
articles.
Art.
1426
–
Restitution
by
Minor
After
Annulment
of
Contract
When
a
minor
between
eighteen
and
twenty-‐one
years
of
age
who
has
entered
into
Concept
of
Natural
Obligations:
a
contract
without
the
consent
of
the
parent
or
guardian,
after
the
annulment
of
• These
obligations
rest
upon
morality
and
are
recognized
in
leading
civil
the
contract
voluntarily
returns
the
whole
thing
or
price
received,
notwithstanding
codes.
the
fact
the
he
has
not
been
benefited
thereby,
there
is
no
right
to
demand
the
• It
is
based
on
equity
and
natural
law.
thing
or
price
thus
returned.
Ex.
If
a
minor
sold
his
car
for
₱100,000
without
consent
of
his
parent
but
the
Art.
1424
–
Performance
After
Civil
Obligation
has
Prescribed
minor
lost
₱30,000
due
to
negligence
but
was
able
to
deposit
the
rest
in
a
When
a
right
to
sue
upon
a
civil
obligation
has
lapsed
by
extinctive
prescription,
the
bank,
he
is
legally
obliged
to
return
only
₱70,000
in
case
the
contract
is
obligor
who
voluntarily
performs
the
contract
cannot
recover
what
he
has
delivered
later
annulled.
However,
if
he
returns
the
whole
₱100,000
amount,
there
is
or
the
value
of
the
service
he
has
rendered.
no
right
to
demand
the
same.
Ex.
If
a
debtor,
despite
the
lapse
of
the
prescriptive
period
and
knowing
that
Art.
1427
–
Delivery
by
Minor
of
Money
or
Fungible
Thing
the
debt
had
already
prescribed,
pays
the
creditor,
such
debtor
can
no
When
a
minor
between
eighteen
and
twenty-‐one
years
of
age,
who
has
entered
longer
recover
such
payment.
into
a
contract
without
the
consent
of
the
parent
or
guardian,
voluntarily
pays
a
sum
of
money
or
delivers
a
fungible
thing
in
fulfillment
of
the
obligation,
there
shall
be
no
right
to
recover
the
same
from
the
obligee
who
has
spent
or
consumed
it
in
good
faith.
(1160A)
Art.
1425
–
Reimbursement
of
Third
Person
for
Prescribed
Debt
When
without
the
knowledge
or
against
the
will
of
the
debtor,
a
third
person
pays
a
• After
annulment,
the
parties
are
generally
obliged
to
make
mutual
debt
which
the
obligor
is
not
legally
bound
to
pay
because
the
action
thereon
has
restitution
(Art.
1398).
However,
the
obligee
who
spent
or
consumed
in
prescribed,
but
the
debtor
later
voluntarily
reimburses
the
third
person,
the
obligor
good
faith
the
money
or
consumable
thing
voluntarily
paid
or
delivered
by
cannot
recover
what
he
has
paid.
the
minor,
is
not
bound
to
make
restitution.
97
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
• This
article
refers
not
only
to
fungible
things
but
also
to
things
that
are
therefore
void
as
such
should
be
wholly
hand-‐written
by
the
testator.
If
non-‐consumable.
despite
this,
N’s
heir,
Y,
still
voluntarily
gives
the
legacy
of
the
ab-‐roller
to
J,
it
shall
be
valid
and
cannot
be
revoked
anymore.
Art.
1428
–
Performance
After
Action
to
Enforce
Civil
Obligation
Failed
When,
after
an
action
to
enforce
a
civil
obligation
has
failed
the
defendant
voluntarily
performs
the
obligation,
he
cannot
demand
the
return
of
what
he
has
delivered
or
the
payment
of
the
value
of
the
service
he
has
rendered.
Title
IV
–
ESTOPPEL
Ex.
A
is
indebted
to
B
for
₱50,000
and
a
civil
suit
is
filed
to
collect
the
amount
but
such
is
dismissed,
A
is
not
legally
obliged
to
pay
the
said
amount
Art.
1431
–
Estoppel
Defined
because
he
won.
However,
if
he
voluntarily
makes
payment,
he
can
no
Through
estoppel
an
admission
or
representation
is
rendered
conclusive
upon
the
longer
recover
such
payment.
person
making
it,
and
cannot
be
denied
or
disproved
as
against
the
person
relying
thereon.
Art.
1429
–
Payment
by
Heir
of
Debt
Exceeding
Value
of
Property
Inherited
When
a
testate
or
intestate
heir
voluntarily
pays
a
debt
of
the
decedent
exceeding
General
Rule
–
Doctrine
of
Estoppel
applies
to
any
particular
case
and
its
the
value
of
the
property
which
he
received
by
will
or
by
the
law
of
intestacy
from
applicability
depends
largely
on
the
special
circumstances
of
the
case
(Beronilla
the
estate
of
the
deceased,
the
payment
is
valid
and
cannot
be
rescinded
by
the
v.
GSIS)
after
careful
consideration
of
the
material
facts
in
order
to
avoid
payer.
injustice
(Kalalo
v.
Luz).
• The
heir
is
not
liable
beyond
the
value
of
the
property
he
received
from
Exceptions
(G-‐P-‐Q):
the
decedent
(Art.
1311,
par.
1).
But
if
he
pays
the
difference
voluntarily,
1. Estoppel
is
not
applicable
against
the
government
suing
in
its
payment
is
valid
and
cannot
be
rescinded
by
him.
capacity
as
sovereign
or
asserting
governmental
rights
It
follows
that
the
government
cannot
be
estopped
by
Ex.
A
is
indebted
to
X
for
₱10,000.
A
later
dies,
with
B
as
his
heir
who
is
the
mistake
and
errors
of
its
officers
(Collector
of
Internal
entitled
only
to
₱5,000
from
the
estate
of
A.
If
B
voluntarily
pays
X
Revenue
v.
McGrath).
P10,000,
B
can
no
longer
recover
such
an
amount.
2. If
law
and
public
policy
will
be
violated,
there
is
no
estoppel
(Republic
v.
Go
Bon
Lee).
Art.
1430
–
Payment
of
Legacy
After
Will
has
been
Declared
Void
3. Estoppel
does
not
apply
to
questions
of
law,
as
it
applies
only
to
When
a
will
is
declared
void
because
it
has
not
been
executed
in
accordance
with
questions
of
fact
the
formalities
required
by
law,
but
one
of
the
intestate
heirs,
after
the
settlement
In
Kalalo
v.
Luz,
if
the
act,
conduct,
or
misrepresentation
of
the
debts
of
the
deceased,
pays
a
legacy
in
compliance
with
a
clause
in
the
of
party
sought
to
be
estopped
is
due
to
ignorance
defective
will,
the
payment
is
effective
and
irrevocable.
founded
on
an
innocent
mistake,
estoppels
will
not
arise.
• Legacy
–
the
act
of
disposition
by
the
testator
in
separating
from
the
• Estoppel
is
characterized
as
harsh
and
odious,
and
not
favoured
in
law.
It
inheritance
for
definite
purposes,
things,
rights
or
a
definite
portion
of
his
can
only
be
sustained
by
clear
and
convincing
evidence.
property.
Its
purpose
is
to
reward
friends,
servants,
and
others
for
services
they
rendered,
etc.
Ex.
N
provided
in
his
holographic
will
that
his
ab-‐roller
shall
go
to
his
friend
J.
Later,
the
holographic
will
turns
out
to
be
partly
type-‐written
and
98
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1432
–
Application
of
Estoppel
Art.
1434
–
Sale
by
Person
not
the
Owner
The
principles
of
estoppel
are
hereby
adopted
insofar
as
they
are
not
in
conflict
When
a
person
who
is
not
the
owner
of
a
thing
sells
or
alienates
and
delivers
it,
and
with
the
provisions
of
this
Code,
the
Code
of
Commerce,
the
Rules
of
Court
and
later
the
seller
or
grantor
acquires
title
thereto,
such
title
passes
by
operation
of
special
laws.
law
to
the
buyer
or
grantee.
Art.
1433
–
Kinds
of
Estoppel
Ex.
A,
who
without
authority
of
the
owner,
sold
B’s
car
to
C.
This
sale
is
Estoppel
may
be
in
pais
or
by
deed.
unenforceable
because
A
is
not
the
owner.
If
later
on
A
buys
the
car
of
B,
A
can
no
longer
claim
the
property
as
his
own
on
the
ground
that
when
he
Kinds
of
Estoppel:
sold
it
to
C,
he
was
not
the
owner
of
the
same.
1. Estoppel
by
Deed
–
A
bar
which
precludes
one
party
to
a
deed
and
his
privies
from
asserting
as
against
the
other
party
and
his
privies
any
right
or
Art.
1435
–
Sale
by
a
Person
Representing
Another
title
in
derogation
of
the
deed,
or
from
denying
the
truth
of
any
material
If
a
person
in
representation
of
another
sells
or
alienates
a
thing,
the
former
cannot
facts
asserted
in
it.
subsequently
set
up
his
own
title
as
against
the
buyer
or
grantee.
• It
is
technical
in
nature
and
such
an
estoppel
may
conclude
a
party
without
reference
to
the
moral
equities
of
his
conduct.
Ex.
A
constituted
B
as
his
agent
to
sell
a
car
and
the
car
was
in
fact
sold
by
B.
A
• It
is
generally
limited
to
an
action
on
the
deed
itself;
in
a
collateral
cannot
later
on
claim
that
he
was
the
owner
to
invalidate
the
transaction.
action,
there
is
ordinarily
no
estoppel
(28
Am
Jur
2d
602
–
603)
• Requisites:
(RKIA)
Art.
1436
–
Lessee
or
Bailee
Estopped
from
Asserting
Title
1. There
must
have
been
a
representation
or
concealment
A
lessee
or
a
bailee
is
estopped
from
asserting
title
to
the
thing
leased
or
received,
of
material
facts
as
against
the
lessor
or
bailor.
2. The
representation
must
have
been
with
knowledge
of
the
facts
• Both
the
lessee
and
the
bailee
are
not
the
owner.
They
merely
enjoy
3. The
party
to
whom
it
was
made
must
have
been
ignorant
possession
of
the
property
or
thing
leased
or
loaned.
of
the
truth
of
the
matter
4. It
must
have
been
made
with
the
intention
that
the
other
Art.
1437
–
Estoppel
in
Contracts
where
One
Party
is
Mislead
party
would
act
upon
it
When
in
a
contract
between
third
persons
concerning
immovable
property,
one
of
2. Equitable
Estoppel
or
Estoppel
in
pais
–
situation
where
the
party
is
them
is
misled
by
a
person
with
respect
to
the
ownership
or
real
right
over
the
real
denied
the
right
to
plead
or
prove
a
fact
because
of
his
own
act
or
estate,
the
latter
is
precluded
from
asserting
his
legal
title
or
interest
therein,
omission
provided
all
these
requisites
are
present:
• Rests
on
the
facts
and
circumstance
of
the
case
in
which
it
is
urged
(1)
There
must
be
fraudulent
representation
or
wrongful
concealment
of
facts
• Requisites:
(CIK)
known
to
the
party
estopped;
1. Conduct
amounting
to
false
representation
or
(2)
The
party
precluded
must
intend
that
the
other
should
act
upon
the
facts
as
concealment
of
material
facts
or
at
least
calculated
to
misrepresented;
convey
the
impression
that
the
party
subsequently
(3)
The
party
misled
must
have
been
unaware
of
the
true
facts;
and
attempts
to
assert
(4)
The
party
defrauded
must
have
acted
in
accordance
with
the
misrepresentation.
2. Intent,
or
at
least
expectation
that
this
conduct
shall
be
acted
upon,
or
at
least
influenced
by
the
other
party
Ex.
A
leased
the
apartment
of
B.
Said
contract
of
lease
gave
A
preferential
3. Knowledge,
actual
or
constructive,
of
the
actual
facts
right
to
buy
the
apartment
in
case
B
decides
to
sell.
99
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
A
approaches
X
and
misrepresented
that
the
former
has
already
exercised
his
preferential
right
to
buy
and
that
another
person,
Y,
is
interested
in
Title
V
–
TRUSTS
What
is
a
Trust?
buying
although
in
fact
there
is
none.
A
proposes
a
scheme
where
X
will
purchase
said
apartment
from
A
and
then
sell
the
same
to
Y
for
a
higher
• Trust
in
its
technical
legal
sense,
it
is
the
right
enforceable
solely
in
equity,
price.
Because
A
is
a
great
broker,
X
agrees
to
purchase.
B,
the
owner
to
the
beneficial
enjoyment
of
property,
the
legal
title
of
which
is
vested
in
ratified
the
sale.
another.
Later
on,
A
cannot
assert
a
claim
on
the
property
contending
that
the
sale
• It
is
a
fiduciary
relationship
with
respect
to
property,
subjecting
the
person
is
unenforceable
for
not
having
the
consent
of
the
true
owner,
B.
holding
it
to
deal
with
the
property
for
the
benefit
of
another
100
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
but
is
a
mere
construction
of
Kinds
of
Trust:
Acceptance
of
Trust
equity.
1. Express
Trust
–
those
which
are
created
by
the
direct
and
positive
acts
of
A. Trustee:
Not
necessary,
unless
the
o Prescription
may
supervene.
the
parties,
by
some
writing
or
deed,
or
will,
or
by
words
either
expressly
appointment
of
such
trustee
is
o Substantially
an
appropriate
or
impliedly
evincing
an
intention
to
create
a
trust.
material
and
is
provided
in
the
remedy
against
unjust
2. Implied
Trust
–
those
which,
without
being
expressed,
are
deducible
from
instrument
constituting
the
trust.
In
enrichment.
the
nature
of
the
transaction
as
matters
of
intent,
or
which
are
case
the
trustee
refuses
to
accept,
superinduced
on
the
transaction
by
operation
of
law
as
matters
of
equity,
the
court
will
appoint
a
trustee
• Examples
of
implied
trust
in
the
independently
of
the
particular
intention
to
create
a
trust;
two
kinds:
provisions
below
are
not
exclusive.
a. Resulting
Trust
–
a
trust
raised
by
implication
of
law
and
B. Beneficiary:
It
is
necessary.
Such
• Also,
even
if
a
trust
takes
the
form
presumed
always
to
have
been
contemplated
by
the
parties,
the
acceptance
will
be
presumed
in
of
any
of
the
provisions
under
intention
as
to
which
is
to
be
found
in
the
nature
of
their
cases
where
the
trust
imposes
no
implied
trust,
it
will
be
considered
transaction,
but
not
expressed
in
the
deed
or
instrument
of
onerous
condition
to
the
an
express
trust
if
there
is
express
conveyance.
beneficiary.
intention
of
the
trustor
to
create
a
o Simply,
it
is
imposed
by
law
to
carry
out
the
actual
or
trust.
presumed
intent
of
the
parties,
where
the
express
trust
fails.
o Articles
1448
–
1455
are
Resulting
trusts.
b. Constructive
Trust
–
trusts
arising
from
the
construction
of
law,
or
Chapter
1:
General
Provisions
arising
by
operation
of
law.
It
is
established
by
law,
regardless
of
intention
of
parties,
in
order
to
prevent
fraud,
oppression
or
unjust
enrichment.
Art.
1440
–
Trustor,
Trustee
and
Beneficiary
A
person
who
establishes
a
trust
is
called
the
trustor;
one
in
whom
confidence
is
Rules
on
Prescription
of
Express
Trust:
reposed
as
regards
property
for
the
benefit
of
another
person
is
known
as
the
• Express
trusts
do
not
prescribe
because
possession
of
trustee
is
not
trustee;
and
the
person
for
whose
benefit
the
trust
has
been
created
is
referred
to
adverse.
Thus:
as
the
beneficiary.
o A
trustee
cannot
acquire
by
prescription
the
ownership
of
property
entrusted
to
him
• Trustor
–
person
who
establishes
a
trust
o There
is
no
prescription
on
an
action
to
compel
a
trustee
to
• Trustee
–
person
in
whom
confidence
is
reposed
for
the
benefit
of
another
convey
property
registered
in
his
name
in
trust
for
the
benefit
of
person
the
beneficiary
• Beneficiary
–
person
for
whose
benefit
the
trust
has
been
created.
Also
o No
prescription
in
an
action
to
recover
property
held
by
a
person
called
cestui
que
trust
in
trust
for
the
benefit
of
another
o Property
held
in
trust
can
be
recovered
by
the
beneficiary
Art.
1441
–
Kinds
of
Trusts
regardless
of
the
laps
of
time
Trusts
are
either
express
or
implied.
Express
trusts
are
created
by
the
intention
of
• However,
acquisitive
prescription
may
bar
the
action
of
the
beneficiary
the
trustor
or
of
the
parties.
Implied
trusts
come
into
being
by
operation
of
law.
against
the
trustee
in
an
express
trust
for
the
recovery
of
the
property
held
in
trust
where:
o The
trustee
has
performed
unequivocal
acts
of
repudiation
amounting
to
an
ouster
of
the
beneficiary
101
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Such
positive
acts
of
repudiation
have
been
made
known
to
the
Art.
1445
–
When
Trustee
Declines
Designation
beneficiary
No
trust
shall
fail
because
the
trustee
appointed
declines
the
designation,
unless
o The
evidence
thereon
is
clear
and
conclusive
the
contrary
should
appear
in
the
instrument
constituting
the
trust.
Rules
on
Prescription
of
Implied
Trust:
• For
Resulting
Trust,
imprescriptibility
may
apply
as
long
as
the
trustee
has
• In
case
of
refusal
to
accept
the
trust
by
the
trustee,
the
court
will
appoint
a
not
repudiated
the
trust.
trustee.
• Constructive
Trust
prescribes.
• If
the
appointment
of
the
trustee
is
a
material
provision,
the
trustor
can
provide
that
a
refusal
of
the
trustee
to
accept
the
trust
shall
result
in
the
• The
enforcement
of
both
may,
however,
be
barred
by
laches.
failure
or
nullification
of
the
same.
Art.
1442
–
Application
of
the
Principles
of
the
General
Law
of
Trusts
The
principles
of
the
general
law
of
trusts,
insofar
as
they
are
not
in
conflict
with
Art.
1446
–
Acceptance
by
the
Beneficiary
Acceptance
by
the
beneficiary
is
necessary.
Nevertheless,
if
the
trust
imposes
no
this
Code,
the
Code
of
Commerce,
the
Rules
of
Court
and
special
laws
are
hereby
onerous
condition
upon
the
beneficiary,
his
acceptance
shall
be
presumed,
if
there
adopted.
is
no
proof
to
the
contrary.
Chapter
2:
Express
Trusts
• If
there
is
no
onerous
condition,
the
law
presumes
acceptance
unless
there
is
proof
to
the
contrary.
Art.
1443
–
Immovable
Cannot
be
Proven
by
Parol
Evidence
o Thus,
when
the
beneficiary
is
required
to
perform
something
to
No
express
trusts
concerning
an
immovable
or
any
interest
therein
may
be
proved
make
the
trust
effective,
there
is
an
onerous
condition.
by
parol
evidence.
Beneficiary
needs
to
accept.
o If
there
is
no
such
condition,
the
trust
is
a
liberality
or
gratuity
• Parole
evidence
refers
to
oral
evidence
and
acceptance
is
presumed.
• Pascual
v.
Meneses
–
To
prove
an
express
trust
over
immovable
properties
This
presumption
is
rebuttable
by
proof
to
the
contrary.
or
any
interest
therein,
there
must
be
a
showing
of
some
document
proving
the
same.
Chapter
3:
Implied
Trusts
• Ramos
v.
Ramos
–
A
trust
may
be
proven
by
clear,
satisfactory,
and
convincing
evidence.
Art.
1447
–
Application
of
Implied
Trusts
Enumerated
The
enumeration
of
the
following
cases
of
implied
trust
does
not
exclude
others
Art.
1444
–
No
Words
Required
established
by
the
general
law
of
trust,
but
the
limitation
laid
down
in
Article
1442
No
particular
words
are
required
for
the
creation
of
an
express
trust,
it
being
shall
be
applicable.
sufficient
that
a
trust
is
clearly
intended.
• The
situations
giving
rise
to
implied
trust
provided
under
this
chapter
are
• Cuaycong
v.
Cuaycong
–
No
form
is
required,
for
as
long
as
the
intent
to
not
exclusive.
establish
trust
is
very
clear
from
the
proofs,
whether
by
some
writing
or
• Even
if
the
situation
falls
under
any
of
the
provisions
of
this
chapter,
it
will
deed
or
will
or
by
words.
be
considered
an
express
trust
if
there
is
an
express
intention
of
the
trustor
to
create
a
trust.
• An
implied
trust
is
not
created
when
the
purpose
is
to
evade
the
law.
102
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
o Saltiga
v.
CA
–
trust
will
not
be
created
when
for
the
purpose
of
of
the
debt,
a
trust
arises
by
operation
of
law
in
favor
of
the
person
to
whom
the
evading
the
law
prohibiting
one
from
taking
real
property,
he
money
is
loaned
or
for
whom
its
is
paid.
The
latter
may
redeem
the
property
and
rd
takes
conveyance
thereof
in
the
name
of
a
3
person.
compel
a
conveyance
thereof
to
him.
• The
principles
of
general
law
of
trust,
in
so
far
as
they
are
not
contrary
to
the
Civil
Code,
Code
of
Commerce,
Rules
of
Court,
and
special
laws
are
Ex.
A
wants
to
buy
land
from
B
but
A
has
no
money.
So
A
asks
C
to
pay
for
the
applicable
as
limitations
to
implied
trust.
land.
The
land
is
then
given
in
C’s
name.
This
is
supposed
to
be
C’s
security
o Policarpio
v.
CA
–
an
implied
trust
is
created
when
a
until
the
debt
of
A
is
paid.
Here,
an
implied
trust
is
created.
C
is
a
trustee
representative
is
tasked
to
negotiate
the
sale
of
an
apartment
on
and
the
beneficiary
is
A.
When
A
has
the
money,
he
may
redeem
the
behalf
of
the
tenants.
When
such
representative
buys
the
property
from
C
and
compel
a
conveyance
to
A
apartment
for
himself
to
the
detriment
of
the
tenants,
the
implied
trust
is
breached.
NOTE:
This
is
not
the
same
as
mortgage.
Mortgage
is
when
A
borrows
money
from
C
and
A
later
buys
land
in
his
own
name.
A
then
executes
a
mortgage
Art.
1448
–
When
a
Third
Party
Pays
for
a
Property
on
the
land
in
favor
of
C.
This
is
not
an
implied
trust.
There
is
an
implied
trust
when
property
is
sold,
and
the
legal
estate
is
granted
to
one
party
but
the
price
is
paid
by
another
for
the
purpose
of
having
the
beneficial
Art.
1451
–
When
Land
Passes
by
Succession
interest
of
the
property.
The
former
is
the
trustee,
while
the
latter
is
the
When
land
passes
by
succession
to
any
person
and
he
causes
the
legal
title
to
be
beneficiary.
However,
if
the
person
to
whom
the
title
is
conveyed
is
a
child,
put
in
the
name
of
another,
a
trust
is
established
by
implication
of
law
for
the
legitimate
or
illegitimate,
of
the
one
paying
the
price
of
the
sale,
no
trust
is
implied
benefit
of
the
true
owner.
by
law,
it
being
disputably
presumed
that
there
is
a
gift
in
favor
of
the
child.
Ex.
B
is
the
only
compulsory
heir
of
M
who
dies.
After
payment
of
the
debts
of
Ex.
A
sold
his
share
of
stock
to
B.
While
it
is
in
the
name
of
B,
it
is
X
who
pays
M,
the
net
estate
will
go
to
B.
However,
if
B
causes
the
title
to
the
estate
to
for
the
stocks
such
that
X
is
the
one
who
receives
the
dividends.
There
is
be
placed
in
the
name
of
X,
an
implied
trust
is
created
for
the
benefit
of
B.
an
implied
trust;
B
is
the
trustee
and
X
is
the
beneficiary.
Art.
1452
–
When
Legal
Title
is
Named
after
One
of
Many
Purchasers
If
B
is
the
legitimate
or
illegitimate
child
of
X,
no
trust
is
implied
by
law,
it
If
two
or
more
persons
agree
to
purchase
property
and
by
common
consent
the
being
disputably
presumed
that
a
gift
has
been
made
to
B
by
X.
legal
title
is
taken
in
the
name
of
one
of
them
for
the
benefit
of
all,
a
trust
is
created
by
force
of
law
in
favor
of
the
others
in
proportion
to
the
interest
of
each.
Art.
1449
–
When
a
Donation
is
Made
but
Donee
has
Partial
Interest
There
is
also
an
implied
trust
when
a
donation
is
made
to
a
person
but
it
appears
Ex.
A,
B
and
C
are
co-‐owners
of
a
particular
land
with
a
clubhouse
in
equal
that
although
the
legal
estate
is
transmitted
to
the
donee,
he
nevertheless
is
either
parts
but,
by
agreement
of
all
of
them,
the
whole
of
the
property
is
to
have
no
beneficial
interest
or
only
a
part
thereof.
registered
under
the
name
only
of
C.
In
this
case,
C
is
the
trustee
of
the
respective
1/3
shares
of
A
and
B.
C
is
the
trustee
for
the
other
co-‐owners.
Ex.
A
donated
to
B
a
lot
and
the
apartment
on
it.
Despite
this,
B
still
has
to
pay
Thus
when
the
clubhouse
is
rented,
C
is
obliged
to
make
proper
accounting
rentals
to
for
the
apartment
to
A.
This
is
an
implied
trust
where
the
trustee
for
profit
sharing
as
he
is
merely
a
trustee.
is
the
donee
and
the
beneficiary
is
the
donor.
Art.
1453
–
When
Property
is
Conveyed
to
Hold
or
Transfer
Art.
1450
–
When
a
Person
Acquires
Property
through
a
Loan
When
property
is
conveyed
to
a
person
in
reliance
upon
his
declared
intention
to
If
the
price
of
a
sale
of
property
is
loaned
or
paid
by
one
person
for
the
benefit
of
hold
it
for,
or
transfer
it
to
another
or
the
grantor,
there
is
an
implied
trust
in
favor
another
and
the
conveyance
is
made
to
the
lender
or
payor
to
secure
the
payment
of
the
person
whose
benefit
is
contemplated.
103
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Ex.
A
told
B
(the
seller)
that
the
property
should
be
in
his
(A)
name
because
he
Art.
1457
–
May
be
Proved
by
Oral
Evidence
shall
only
hold
it
for
the
benefit
of
X,
the
real
owner.
An
implied
trust
is
An
implied
trust
may
be
proved
by
oral
evidence.
created
in
favour
of
X.
• Because
it
is
deducible
from
the
nature
of
the
transaction
as
matters
of
Art.
1454
–
When
Property
is
Conveyed
to
Fulfill
an
Obligation
intent
or
which
are
superinduced
on
the
transaction
by
operation
of
law,
If
an
absolute
conveyance
of
property
is
made
in
order
to
secure
the
performance
independently
of
the
particular
intention
of
the
parties.
of
an
obligation
of
the
grantor
toward
the
grantee,
a
trust
by
virtue
of
law
is
established.
If
the
fulfillment
of
the
obligation
is
offered
by
the
grantor
when
it
becomes
due,
he
may
demand
the
reconveyance
of
the
property
to
him.
Title
XVII
–
EXTRA-‐CONTRACTUAL
OBLIGATIONS
Ex.
A
is
indebted
to
B.
A
conveyed
a
particular
property
to
B
to
secure
such
indebtedness.
B
holds
the
property
only
in
trust
for
A.
B
is
the
trustee.
Upon
payment
by
A,
he
can
demand
that
the
property
be
returned.
Chapter
1:
Quasi-‐Contracts
Art.
1455
–
When
Trust
Fund
is
Used
to
Purchase
Property
When
any
trustee,
guardian
or
other
person
holding
a
fiduciary
relationship
uses
Art.
2142
–
Quasi-‐Contracts
Defined
trust
funds
for
the
purchase
of
property
and
causes
the
conveyance
to
be
made
to
Certain
lawful,
voluntary
and
unilateral
acts
give
rise
to
the
juridical
relation
of
him
or
to
a
third
person,
a
trust
is
established
by
operation
of
law
in
favor
of
the
quasi-‐contract
to
the
end
that
no
one
shall
be
unjustly
enriched
or
benefited
at
the
person
to
whom
the
funds
belong.
expense
of
another.
(n)
Ex.
X
created
a
trust
fund
for
the
benefit
of
A
of
which,
Y
is
the
trustee.
If
Y
• A
quasi-‐contract
is
not
an
implied
contract.
uses
the
fund
to
purchase
a
property
and
places
it
under
his
name
or
• It
is
not
properly
a
contract
at
all
because
there
is
no
meeting
of
minds.
under
the
name
of
Z
(a
third
person),
an
implied
trust
is
created
and
the
• A
juridical
relation
is
created
by
a
quasi-‐contract
so
that
nobody
shall
trustee
is
either
X
or
Z
and
the
trust
is
in
favor
of
Z.
enrich
himself
at
the
expense
of
another.
NOTE:
Acquisition
by
an
agent
inures
to
the
benefit
of
the
principal.
Severino
v.
Art.
2143
–
Other
Quasi-‐Contracts
Severino
The
provisions
for
quasi-‐contracts
in
this
Chapter
do
not
exclude
other
quasi-‐
contracts
which
may
come
within
the
purview
of
the
preceding
article.
(n)
Art.
1456
–
When
Property
is
Acquired
through
Mistake
or
Fraud
If
property
is
acquired
through
mistake
or
fraud,
the
person
obtaining
it
is,
by
force
• This
article
provides
that
the
number
of
quasi-‐contracts
is
indefinite
and
of
law,
considered
a
trustee
of
an
implied
trust
for
the
benefit
of
the
person
from
not
only
confined
to
the
two
kinds
specified
by
the
Civil
Code
in
Section
1
whom
the
property
comes.
and
2
of
this
Chapter.
Ex.
X
fraudulently
made
Y
sign
an
alleged
loan
agreement
which
actually
• Two
obligations
treated
in
the
chapter
devoted
to
Quasi-‐contracts:
turned
out
to
be
an
absolute
sale
of
X’s
property.
The
sale
is
voidable
and
a
1. Negotiorum
Gestio
–
the
voluntary
management
of
the
property
or
trust
is
deemed
created
by
force
of
law.
The
trustee
is
X
and
is
merely
affairs
of
another
without
the
knowledge
or
consent
of
the
latter.
holding
the
property
for
the
benefit
of
X.
2. Solutio
Indebiti
–
the
juridical
relation
which
is
created
when
something
is
received
when
there
is
no
right
to
demand
it
and
it
was
NOTE:
This
refers
to
mistake
by
a
third
person
and
fraud
is
extra-‐contractual
unduly
delivered
through
mistake.
104
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Section
1
–
Negotiorum
Gestio
The
courts
may,
however,
increase
or
moderate
the
indemnity
according
to
the
circumstances
of
each
case.
(1889a)
Art.
2144
–
Negotiorum
Gestio
Defined
and
Its
Exceptions
• An
officious
manager
is
in
a
sense
an
intruder
in
the
business
or
that
Whoever
voluntarily
takes
charge
of
the
agency
or
management
of
the
business
or
property
of
the
owner.
property
of
another,
without
any
power
from
the
latter,
is
obliged
to
continue
the
• However,
if
his
intrusion
is
with
the
objective
of
preserving,
managing,
and
same
until
the
termination
of
the
affair
and
its
incidents,
or
to
require
the
person
taking
care
of
the
property
without
any
intent
to
gain,
a
quasi-‐contract
is
concerned
to
substitute
him,
if
the
owner
is
in
a
position
to
do
so.
This
juridical
created.
relation
does
not
arise
in
either
of
these
instances:
• Ordinary
diligence
is
required
by
law;
once
quasi-‐contract
is
created,
he
(1)
When
the
property
or
business
is
not
neglected
or
abandoned;
cannot
escape
liability
if
the
owner
suffers
damages
due
to
negligence
or
(2)
If
in
fact
the
manager
has
been
tacitly
authorized
by
the
owner.
fault.
In
the
first
case,
the
provisions
of
Articles
1317,
1403,
No.
1,
and
1404
regarding
Art.
2146
–
Liability
of
Officious
Manager
upon
Delegation
unauthorized
contracts
shall
govern.
If
the
officious
manager
delegates
to
another
person
all
or
some
of
his
duties,
he
shall
be
liable
for
the
acts
of
the
delegate,
without
prejudice
to
the
direct
obligation
In
the
second
case,
the
rules
on
agency
in
Title
X
of
this
Book
shall
be
applicable.
of
the
latter
toward
the
owner
of
the
business.
(1888a)
The
responsibility
of
two
or
more
officious
managers
shall
be
solidary,
unless
the
• Negotiorum
Gestio
–
a
quasi-‐contract
which
should
not
be
performed
for
management
was
assumed
to
save
the
thing
or
business
from
imminent
danger.
profit
(1890a)
• Circumstances
under
which
one
may
undertake
to
carry
out
a
business
matter
for
another:
• The
liability
of
two
or
more
officious
managers
is
solidary;
the
owner
may
1. They
relate
to
determined
things
or
affairs,
and
that
there
be
no
seek
full
payment
of
damages
from
anyone
of
them.
administrator
or
representative
of
the
owner
who
is
charged
with
the
management
thereof.
Art.
2147
–
When
Officious
Manager
shall
be
Liable
for
Fortuitous
Event
2. That
it
be
foreign
to
all
idea
of
express
or
tacit
mandate
on
the
The
officious
manager
shall
be
liable
for
any
fortuitous
event:
part
of
the
owner,
for
it
very
often
may
happen
even
without
his
knowledge.
(1)
If
he
undertakes
risky
operations
which
the
owner
was
not
accustomed
to
3. That
the
actor
be
inspired
by
the
beneficent
idea
of
averting
embark
upon;
losses
and
damages
to
the
owner
or
to
the
interested
party
(2)
If
he
has
preferred
his
own
interest
to
that
of
the
owner;
through
abandonment
of
the
things
that
belong
to
him
or
of
the
(3)
If
he
fails
to
return
the
property
or
business
after
demand
by
the
owner;
business
in
which
he
may
be
interested,
that
is,
the
administration
(4)
If
he
assumed
the
management
in
bad
faith.
(1891a)
is
not
for
profit.
Art.
2148
–
Liability
for
Fortuitous
Event
as
to
Manager’s
Capacity
Art.
2145
–
Diligence
Required
of
an
Officious
Manager
Except
when
the
management
was
assumed
to
save
property
or
business
from
The
officious
manager
shall
perform
his
duties
with
all
the
diligence
of
a
good
father
imminent
danger,
the
officious
manager
shall
be
liable
for
fortuitous
events:
of
a
family,
and
pay
the
damages
which
through
his
fault
or
negligence
may
be
(1)
If
he
is
manifestly
unfit
to
carry
on
the
management;
suffered
by
the
owner
of
the
property
or
business
under
management.
(2)
If
by
his
intervention
he
prevented
a
more
competent
person
from
taking
up
the
management.
(n)
105
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
General
Rule
–
No
person
shall
be
liable
in
case
of
fortuitous
event.
Art.
2150
–
Officious
Manager
Entitled
to
Reimbursement
Exception
–
(1)
ARTICLE
2147
Although
the
officious
management
may
not
have
been
expressly
ratified,
the
1. First
case:
The
business
is
simply
providing
a
warehouse
for
owner
of
the
property
or
business
who
enjoys
the
advantages
of
the
same
shall
be
dolls,
the
officious
manger
stored
highly
flammable
materials
liable
for
obligations
incurred
in
his
interest,
and
shall
reimburse
the
officious
2. Second
case:
same
business,
but
the
officious
manager
also
manager
for
the
necessary
and
useful
expenses
and
for
the
damages
which
the
stored
some
of
his
goods
in
the
warehouse.
During
a
flood,
latter
may
have
suffered
in
the
performance
of
his
duties.
he
chose
to
save
his
goods
first
before
that
of
the
owner,
the
officious
manager
will
be
liable
for
the
loss
The
same
obligation
shall
be
incumbent
upon
him
when
the
management
had
for
3. Third
case:
same
business,
but
the
officious
manager
did
not
its
purpose
the
prevention
of
an
imminent
and
manifest
loss,
although
no
benefit
return
the
warehouse
despite
demand
by
owner.
The
may
have
been
derived.
(1893)
warehouse
is
destroyed
by
an
earthquake
and
so
the
officious
manager
will
be
held
liable
for
his
act
of
unduly
retaining
Art.
2151
–
Reimbursement
when
there
is
No
Benefit
or
Danger
what
is
not
his.
Even
though
the
owner
did
not
derive
any
benefit
and
there
has
been
no
imminent
4. Fourth
case:
same
business,
but
the
officious
manager
took
and
manifest
danger
to
the
property
or
business,
the
owner
is
liable
as
under
the
over
in
bad
faith
such
as
when
he
does
so
to
get
the
clients
of
first
paragraph
of
the
preceding
article,
provided:
the
owner
for
his
(officious
manager’s)
own
warehousing
business.
(1)
The
officious
manager
has
acted
in
good
faith,
and
(2)
ARTICLE
2148
(2)
The
property
or
business
is
intact,
ready
to
be
returned
to
the
owner.
(n)
1. First
case:
A
farmer
takes
over
a
Nuclear
Power
plant
business
of
another
General
Rule
–
Reimbursement
is
required
when
(Art.
2150):
2. Second
case:
Such
farmer
prevents
another
person
who
is
a
1. When
owner
is
benefited
by
officious
management
of
property
or
business
nuclear
scientist
from
taking
over
the
Nuclear
Power
plant
Ex.
The
manager
pays
taxes
on
the
property
so
that
it
will
not
be
business.
foreclosed,
owner
must
reimburse
payment
made
by
officious
o EXC
to
2148:
When
management
was
assumed
to
manager.
save
property
or
business
from
imminent
danger
2. When
officious
management
is
made
to
prevent
loss
such
as
when
the
farmer
enters
the
Nuclear
Plant
in
Ex.
A
is
the
neighbor
of
B.
One
day,
B’s
kitchen
was
on
fire.
A
entered
order
to
avert
a
meltdown.
the
house
and
extinguished
the
fire
using
his
(A’s)
fire
extinguisher.
B
is
obliged
to
reimburse
A
for
the
fire
price
of
the
fire
extinguisher
used.
Exception:
Benefit
or
imminent
danger
is
not
required
when
the
manager
Art.
2149
–
Ratification
of
Owner
results
to
Agency
acted
in
good
faith
and
the
business
is
intact,
ready
to
be
returned
to
the
The
ratification
of
the
management
by
the
owner
of
the
business
produces
the
owner
(Art.
2151).
effects
of
an
express
agency,
even
if
the
business
may
not
have
been
successful.
(1892a)
Art.
2152
–Officious
Manager
as
to
Contracts
with
Third
Persons
The
officious
manager
is
personally
liable
for
contracts
which
he
has
entered
into
• When
the
owner
ratifies
management,
the
manager
becomes
the
agent
with
third
persons,
even
though
he
acted
in
the
name
of
the
owner,
and
there
shall
and
all
the
defects
made
by
the
latter
are
cured.
be
no
right
of
action
between
the
owner
and
third
persons.
These
provisions
shall
not
apply:
(1) If the owner has expressly or tacitly ratified the management, or
106
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
(2)
When
the
contract
refers
to
things
pertaining
to
the
owner
of
the
business.
(n)
• Prescriptive
period
is
6
years.
rd
General
Rule
-‐-‐
Officious
manager
is
liable
for
contracts
entered
with
3
persons.
Art.
2155
–
Applicable
to
Doubtful
or
Difficult
Question
of
Law
Thus,
when
the
manager
buys
a
photocopying
machine,
he
is
liable.
Payment
by
reason
of
a
mistake
in
the
construction
or
application
of
a
doubtful
or
difficult
question
of
law
may
come
within
the
scope
of
the
preceding
article.
(n)
Exceptions
–
(1)
When
the
owner
ratifies
management
in
which
case
manager
becomes
agent
and
(2)
When
the
contract
refers
to
things
Genearal
Rule
–
Solutio
Indebiti
involves
only
a
mistake
of
fact
pertaining
to
the
business.
Thus,
where
the
owner
is
engaged
in
photocopying
business,
the
purchase
of
photocopying
machine
must
be
Exception
–
A
mistake
of
law
is
allowed
if
the
mistake
is
brought
about
by
shouldered
by
the
owner.
the
construction
or
application
of
a
doubtful
or
difficult
question
of
law
• Puyat
v.
Manila
–
There
is
solutio
indebiti
when
tax
is
paid
by
mistake
due
Art.
2154
–
The
management
is
extinguished:
to
complicated
correlation
and
application
of
various
municipal
and
(1)
When
the
owner
repudiates
it
or
puts
an
end
thereto;
national
laws.
Voluntariness
is
incompatible
with
protest
and
mistake.
(2)
When
the
officious
manager
withdraws
from
the
management,
subject
to
the
provisions
of
Article
2144;
Art.
2156
–
Doubt
on
whether
the
Debt
was
Due
(3)
By
the
death,
civil
interdiction,
insanity
or
insolvency
of
the
owner
or
the
If
the
payer
was
in
doubt
whether
the
debt
was
due,
he
may
recover
if
he
proves
officious
manager.
(n)
that
it
was
not
due.
(n)
Ex.
A
debtor
can
recover
what
he
has
paid
prior
to
the
due
date
provided
that
1. Benedicto
v.
Board
of
Administrators
–
The
PCGG
may
not
lawfully
the
demand
for
reimbursement
is
not
made
after
the
debt
has
become
intervene
and
participate
in
the
management
of
a
private
mass
media
due.
where
the
owner
demands
the
return
of
the
same.
2. The
officious
manager
can
withdraw
from
the
property
only
after
substitution,
otherwise
he
may
only
withdraw
upon
termination
of
the
Art.
2157
–
Solidary
Responsibility
of
Two
or
More
Payees
affair
and
its
incidents
pursuant
to
Article
2144.
The
responsibility
of
two
or
more
payees,
when
there
has
been
payment
of
what
is
3. Death,
civil
interdiction,
insanity
or
insolvency
incapacitates
the
officious
not
due,
is
solidary.
(n)
manager
or
owner.
Ex.
A
owes
B
and
C
₱2,000
who
are
solidary
creditors.
A
pays
B
₱2,000
before
Section
2
–
Solutio
Indebiti
due
date.
A
can
recover
from
B
or
C
the
amount
he
has
paid
(even
if
C
has
not
yet
received
his
share
of
the
₱2,000)
provided
demand
is
made
before
debt
becomes
due.
Art.
2154
–
Solutio
Indebiti
Defined
If
something
is
received
when
there
is
no
right
to
demand
it,
and
it
was
unduly
Art.
2158
–
Property
or
Money
Delivered
Belongs
to
Third
Person
delivered
through
mistake,
the
obligation
to
return
it
arises.
(1895)
When
the
property
delivered
or
money
paid
belongs
to
a
third
person,
the
payee
shall
comply
with
the
provisions
of
article
1984.
(n)
• Requisites
(N-‐M):
o That
he
who
paid
was
not
under
obligation
to
do
so
Art.
2159
–
Acceptance
of
Undue
Payment
in
Bad
Faith
o That
payment
was
made
by
reason
of
an
essential
mistake
of
fact
• Principles
of
equity
cannot
be
applied
if
there
is
a
provision
of
law
specifically
applicable
to
a
case.
107
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Whoever
in
bad
faith
accepts
an
undue
payment,
shall
pay
legal
interest
if
a
sum
of
Ex.
A
is
indebted
to
B
in
the
amount
of
₱1,000.
It
is
an
oral
contract
which
money
is
involved,
or
shall
be
liable
for
fruits
received
or
which
should
have
been
prescribes
in
6
years.
X
is
the
guarantor
of
the
loan
and
is
liable
to
pay
the
received
if
the
thing
produces
fruits.
₱1,000
only
when
B
has
exhausted
all
means
to
collect
from
A.
th
He
shall
furthermore
be
answerable
for
any
loss
or
impairment
of
the
thing
from
Believing
that
he
is
principally
liable,
X
pays
on
the
5
year
and
B
accepts
any
cause,
and
for
damages
to
the
person
who
delivered
the
thing,
until
it
is
the
payment
in
good
faith.
After
the
lapse
of
the
6
year
prescriptive
period,
recovered.
(1896a)
X
may
not
recover
from
B
what
he
has
paid
by
mistake.
Instead,
X
can
only
recover
from
A
the
₱1,000
who
was
the
original
debtor.
Ex.
If
the
creditor
knows
that
payment
is
not
yet
due,
yet
he
accepted
such
without
informing
the
debtor
that
it
is
not
yet
due,
he
is
therefore
in
bad
Art.
2163
–
Presumed
Mistake
faith
and
shall
be
liable
for
interest
from
the
time
he
accepts
payment
up
It
is
presumed
that
there
was
a
mistake
in
the
payment
if
something
which
had
to
the
time
he
returns
it
upon
demand
of
the
debtor.
never
been
due
or
had
already
been
paid
was
delivered;
but
he
from
whom
the
return
is
claimed
may
prove
that
the
delivery
was
made
out
of
liberality
or
for
any
Art.
2160
–
Acceptance
of
Undue
Payment
in
Good
Faith
other
just
cause.
(1901)
He
who
in
good
faith
accepts
an
undue
payment
of
a
thing
certain
and
determinate
shall
only
be
responsible
for
the
impairment
or
loss
of
the
same
or
its
accessories
Ex.
The
person
to
whom
the
payment
has
been
made
can
show
that
such
and
accessions
insofar
as
he
has
thereby
been
benefited.
If
he
has
alienated
it,
he
payment
is
a
gift
or
a
donation
by
showing
the
proper
evidence
like
a
valid
shall
return
the
price
or
assign
the
action
to
collect
the
sum.
(1897)
deed
of
donation.
Ex.
A
is
obliged
to
give
B
a
house
on
Dec.
1.
Believing
it
was
due
on
July,
A
Section
3
–
Other
Quasi-‐Contracts
delivered
the
house.
B
likewise
did
not
know
that
the
house
is
only
due
on
Dec.
1
and
accepted
it.
On
Sept.,
the
house
was
rented
but
the
kitchen
was
Art.
2164
–
Support
Given
by
a
Stranger
accidently
burned.
On
Nov.,
A
discovered
that
the
delivery
was
not
yet
due
When,
without
the
knowledge
of
the
person
obliged
to
give
support,
it
is
given
by
a
and
demandable
for
its
return.
B
can
return
the
house
and
pay
the
amount
stranger,
the
latter
shall
have
a
right
to
claim
the
same
from
the
former,
unless
it
of
the
Kitchen
which
has
been
impaired,
because
B
has
been
benefited
by
appears
that
he
gave
it
out
of
piety
and
without
intention
of
being
repaid.
(1894a)
the
house
when
it
had
been
rented.
This
is
under
Article
206
of
the
Family
Code:
• When,
without
the
knowledge
of
the
person
obliged
to
give
support,
it
is
Art.
2161
–
Reimbursement
for
Improvements
and
Expenses
given
by
a
stranger,
the
latter
shall
have
a
right
to
claim
the
same
from
the
As
regards
the
reimbursement
for
improvements
and
expenses
incurred
by
him
former,
unless
it
appears
that
he
gave
it
without
the
intention
of
being
who
unduly
received
the
thing,
the
provisions
of
Title
V
of
Book
II
shall
govern.
reimbursed.
(1898)
• De
Marcaida
v.
Redfern
–
For
one
to
recover
under
this,
it
must
be
alleged
and
proved
that:
Art.
2162
–
Exemption
from
Obligation
to
Restore
1. Support
has
been
furnished
a
dependent
of
one
bound
to
give
He
shall
be
exempt
from
the
obligation
to
restore
who,
believing
in
good
faith
that
support
but
who
fails
to
do
so
the
payment
was
being
made
of
a
legitimate
and
subsisting
claim,
destroyed
the
2. The
support
was
supplied
by
a
stranger
document,
or
allowed
the
action
to
prescribe,
or
gave
up
the
pledges,
or
cancelled
3. The
support
was
given
without
the
knowledge
of
the
person
the
guaranties
for
his
right.
He
who
paid
unduly
may
proceed
only
against
the
true
charged
with
the
duty
debtor
or
the
guarantors
with
regard
to
whom
the
action
is
still
effective.
(1899)
108
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
2165
–
Funeral
Expenses
Borne
by
a
Third
Person
refuses
to
support
or
fails
to
give
support
to
the
child
when
urgently
When
funeral
expenses
are
borne
by
a
third
person,
without
the
knowledge
of
needed.
those
relatives
who
were
obliged
to
give
support
to
the
deceased,
said
relatives
shall
reimburse
the
third
person,
should
the
latter
claim
reimbursement.
(1894a)
Art.
2167
–
Services
Given
by
a
Physician
in
an
Accident
When
through
an
accident
or
other
cause
a
person
is
injured
or
becomes
seriously
The
following
are
obliged
to
support
each
other:
ill,
and
he
is
treated
or
helped
while
he
is
not
in
a
condition
to
give
consent
to
a
1. Spouses
contract,
he
shall
be
liable
to
pay
for
the
services
of
the
physician
or
other
person
2. Legitimate
ascendants
and
descendants
aiding
him,
unless
the
service
has
been
rendered
out
of
pure
generosity.
3. Parents
and
their
legitimate
children,
and
the
legitimate
and
illegitimate
children
of
the
latter
Ex.
X
was
a
victim
of
a
hit-‐and-‐run
incident
and
is
seriously
injured.
He
is
4. Parents
and
their
illegitimate
children,
and
the
legitimate
and
illegitimate
brought
to
the
hospital
and
needs
operation.
However
he
is
in
a
coma
and
children
of
the
latter
cannot
give
consent.
Dr.
House
nevertheless
treats
his
injuries
lest
it
5. Legitimate
brothers
and
sisters,
whether
full
or
half
blood
becomes
more
serious.
When
X
recovers,
he
has
the
obligation
to
pay
Dr.
House
unless
the
latter
does
not
want
to
be
paid.
Whenever
two
or
more
persons
are
obliged
to
give
support,
the
liability
shall
devolve
upon
the
following
persons
in
the
following
order:
Art.
2168
–
Property
is
Saved
from
Fire,
Flood,
Storm
or
Calamity
1. Spouses
When
during
a
fire,
flood,
storm,
or
other
calamity,
property
is
saved
from
2. Descendants
in
the
nearest
degree
destruction
by
another
person
without
the
knowledge
of
the
owner,
the
latter
is
3. Ascendants
in
the
nearest
degree
bound
to
pay
the
former
just
compensation.
4. Brothers
and
sisters
Ex.
During
Ondoy,
The
village
where
X’s
house
is
located
began
flooding.
X
was
Ex.
A
was
the
son
of
X
and
Y.
A
died.
Z
shouldered
the
cost
of
the
funeral.
If
Z
did
abroad
during
the
typhoon.
When
the
flood
reached
X’s
house,
Y
pushed
this
as
an
act
of
charity,
X
and
Y
need
not
reimburse
him.
Otherwise,
Z
can
the
car
of
the
former
to
higher
grounds
such
that
it
was
saved
from
demand
payment
from
X
and
Y.
destruction.
X
is
bound
to
pay
Y
just
compensation
unless
Y
does
not
wasn’t
to
accept
it.
Art.
2166
–
Support
Given
to
an
Orphan,
Insane
or
Indigent
Person
When
the
person
obliged
to
support
an
orphan,
or
an
insane
or
other
indigent
Art.
2169
–
Government
Work
regarding
Health
and
Safety
Regulations
person
unjustly
refuses
to
give
support
to
the
latter,
any
third
person
may
furnish
When
the
government,
upon
the
failure
of
any
person
to
comply
with
health
or
support
to
the
needy
individual,
with
right
of
reimbursement
from
the
person
safety
regulations
concerning
property,
undertakes
to
do
the
necessary
work,
even
obliged
to
give
support.
The
provisions
of
this
article
apply
when
the
father
or
over
his
objection,
he
shall
be
liable
to
pay
the
expenses.
mother
of
a
child
under
eighteen
years
of
age
unjustly
refuses
to
support
him.
Ex.
An
ordinance
requires
residents
to
segregate
trash
into
recyclable
and
This
has
been
adopted
by
Article
207
of
the
Family
Code:
non-‐recyclable.
Mr.
X
refuses
to
comply
with
this
ordinance
and
throws
all
When
the
person
obliged
to
support
another
unjustly
refuses
or
fails
to
his
trash
in
one
plastic
bag.
The
city
government
may
segregate
his
trash
give
support
when
urgently
needed
by
the
latter,
any
third
person
may
and
provide
him
with
two
trash
cans
at
his
own
expense.
furnish
support
of
the
needy
individual
with
a
right
of
reimbursement
from
the
person
obliged
to
give
support.
This
article
shall
apply
particularly
when
the
father
or
the
mother
of
a
child
under
the
age
of
majority
unjustly
109
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
2170
–
Rules
of
Co-‐Ownership
in
Accident
or
Fortuitous
Event
Article
1237.
Whoever
pays
on
behalf
of
the
debtor
without
the
knowledge
or
When
by
accident
or
other
fortuitous
event,
movables
separately
pertaining
to
two
against
the
will
of
the
latter
cannot
compel
the
creditor
to
subrogate
him
in
his
or
more
persons
are
commingled
or
confused,
the
rules
on
co-‐ownership
shall
be
rights,
such
as
those
arising
from
a
mortgage,
guaranty
or
penalty.
applicable.
Art.
2174
–
Measures
for
Protection
Against
Lawlessness
Ex.
Brothers
X
and
Y
each
bought
a
black
32Gb
Ipad3.
Upon
reaching
their
When
in
a
small
community
a
nationality
of
the
inhabitants
of
age
decide
upon
a
home
and
after
opening
the
boxes,
a
magnitude
8.7
earthquake
hit
their
measure
for
protection
against
lawlessness,
fire,
flood,
storm
or
other
calamity,
any
locality.
Luckily
both
of
them
survived
but
their
home
was
completely
one
who
objects
to
the
plan
and
refuses
to
contribute
to
the
expenses
but
is
destroyed.
In
the
rubble,
they
found
two
Ipad3’s
but
not
knowing
which
benefited
by
the
project
as
executed
shall
be
liable
to
pay
his
share
of
said
belongs
to
whom,
the
rules
on
co-‐ownership
will
apply.
expenses.
Art.
2171
–
Finder
of
Lost
Property
Ex.
People
of
Barrio
X
decided
to
engage
in
a
security
force
to
protect
their
The
rights
and
obligations
of
the
finder
of
lost
personal
property
shall
be
governed
community.
For
this
reason,
the
people
of
X
agreed
to
contribute
for
the
by
Articles
719
and
720.
expenses
of
this
security
force.
Mr.
K
however
refused
to
make
any
contribution.
In
the
event
the
security
force
apprehends
robbers
intending
to
rob
the
house
of
Mr.
K,
he
should
pay
his
share
in
the
expenses
for
the
Article
719.
Whoever
finds
a
movable,
which
is
not
treasure,
must
return
it
to
its
community’s
engagement
of
the
security
force
to
protect
the
people.
previous
possessor.
Article
720.
If
the
owner
should
appear
in
time,
he
shall
be
obliged
to
pay
as
reward
Art.
2175
–
Person
Paying
for
Taxes
of
Another
to
the
finder,
1/10
of
the
sum
or
of
the
price
of
the
thing
found.
Any
person
who
is
constrained
to
pay
the
taxes
of
another
shall
be
entitled
to
reimbursement
from
the
latter.
Ex.
X
who
pays
the
real
estate
taxes
of
G
(whose
land
will
be
forfeited
if
he
Art.
2172
–
Right
to
Reimbursement
of
Possessor
in
Good
Faith
fails
to
pay
taxes)
must
be
reimbursed
by
the
latter.
The
right
of
every
possessor
in
good
faith
to
reimbursement
for
necessary
and
useful
expenses
is
governed
by
Article
546.
Art.
2173
–
Third
Person
Paying
a
Debt
When
a
third
person,
without
the
knowledge
of
the
debtor,
pays
the
debt,
the
rights
of
the
former
are
governed
by
Articles
1236
and
1237.
110
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1139
–
Lapse
of
Time
CODAL
MEMORY
AID
Art.
1140
–
Prescription
of
Movables
Art.
1141
–
Prescription
of
Immovables
TITLE.
IV.
–
PRESCRIPTION
Art.
1142
–
Prescription
of
Mortgages
Chapter
1:
General
Provisions
Art.
1143
–
Rights
Not
Extinguished
by
Prescription
Art.
1106
–
Prescription
Defined
Art.
1144
–
10
Years
Art.
1107
–
Acquisition
by
Capable
Persons
and
Minors
Art.
1145
–
6
Years
Art.
1108
–
Persons
Exempt
from
Prescription
Art.
1146
–
4
Years
Art.
1109
–
Between
Husband
and
Wife,
Children
and
Guardian
Art.
1147
–
1
Year
Art.
1110
–
Married
Woman
Art.
1148
–
Code
of
Commerce
and
Special
Laws
Art.
1111
–
Co-‐Proprietor
or
Co-‐owner
Art.
1149
–
No
Fixed
Period
=
5
Years
Art.
1112
–
Renunciation
Art.
1150
–
Prescription
for
All
Kinds
of
Actions
Art.
1113
–
Subjects
of
Prescription
Art.
1151
–
Prescription
for
Actions
regarding
Payment
Art.
1114
–
Right
to
Enforce
Prescription
Art.
1152
–
Prescription
of
Actions
declared
by
Judgment
Art.
1115
–
Special
Laws
Art.
1153
–
Prescription
for
Accounting
Art.
1116
–
Transition
Art.
1154
–
Fortuitous
Event
Chapter
2:
Prescription
of
Ownership
and
Other
Real
Rights
Art.
1155
–
Interruption
of
Prescription
for
Actions
Art.
1117
–
Acquisitive
Prescription
Art.
1118
–
Possession
TITLE.
I.
-‐
OBLIGATIONS
Art.
1119
–
Possession
through
License
or
Tolerance
Chapter
1:
General
Provisions
Art.
1120
–
Interruption
Art.
1156
–
Definition
Art.
1121
–
Natural
Interruption
Art.
1157
–
Sources
of
Obligations
Art.
1122
–
One
Year
or
Less
Art.
1158
–
Obligations
from
Law
Art.
1123
–
Civil
Interruption
Art.
1159
–
Obligations
from
Contracts
Art.
1124
–
Judicial
Summons
Art.
1160
–
Obligations
from
Quasi
Contracts
Art.
1125
–
Possessor’s
Recognition
of
Owner’s
Right
Art.
1161
–
Obligations
from
Crimes
or
Delicts
Art.
1126
–
Titles
Art.
1162
–
Obligations
from
Quasi-‐delicts
Art.
1127
–
Good
Faith
Chapter
2:
Nature
and
Effect
of
Obligations
Art.
1128
–
Other
Conditions
of
Good
Faith
Art.
1163
–
Required
Diligence
Art.
1129
–
Just
Title
Art.
1164
–
Right
Over
Fruits
Art.
1130
–
True
and
Valid
Title
Art.
1165
–
Delivery
of
a
Determinate
or
Indeterminate
Thing
Art.
1131
–
Just
Title
Must
Be
Proved
Art.
1166
–
Accessories
Art.
1132
–
Acquisition
of
Movables
or
Personal
Property
Art.
1167
–
Obligation
To
Do
Art.
1133
–
Movables
from
Crime
Art.
1168
–
Obligation
Not
To
Do
Art.
1134
–
Acquisition
of
Immovables
Art.
1169
–
Delay
Art.
1135
–
Mistake
in
Area
Art.
1170
–
Sources
of
Liabilities
Art.
1136
–
Wartime
Art.
1171
–
Responsibility
from
Fraud
Art.
1137
–
Extraordinary
Prescription
of
Immovables
Art.
1172
–
Responsibility
from
Negligence
Art.
1138
–
Computation
of
Prescription
Art.
1173
–
Fault
or
Negligence
Art.
1174
–
Fortuitous
Events
Chapter
3:
Prescription
of
Actions
111
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1175
–
Usurious
Transactions
Art.
1207
–
Solidary
Obligations
Art.
1176
–
Presumption
in
Payment
Art.
1208
–
Joint
Obligations
Art.
1177
–
Rights
of
the
Creditor
Art.
1209
–
When
Division
is
Impossible
Art.
1178
–
Transmissibility
Art.
1210
–
Indivisibility
and
Solidarity
Chapter
3:
Different
Kinds
of
Obligations
Art.
1211
–
Not
Bound
in
the
Same
Manner
SECTION
1.
-‐
Pure
and
Conditional
Obligations
Art.
1212
–
Acts
of
Solidary
Creditors
Art.
1179
–
Pure
Obligations
Art.
1213
–
Mutual
Trust
among
Solidary
Creditors
Art.
1180
–
Payment
Depends
on
Debtor’s
Means
Art.
1214
–
Judicial
or
Extrajudicial
Demand
by
a
Solidary
Creditor
Art.
1181
–
Conditional
Obligations
Art.
1215
–
Extinguishment
by
a
Solidary
Creditor
Art.
1182
–
Potestative
and
Casual
Conditions
Art.
1216
–
Rights
of
Creditor
Against
Solidary
Debtors
Art.
1183
–
Void
Conditions
Art.
1217
–
Payment
by
Solidary
Debtors
Art.
1184
–
Positive
Condition
Art.
1218
–
When
Payment
has
Prescribed
or
become
Illegal
Art.
1185
–
Negative
Condition
Art.
1219
–
Remission
of
a
Solidary
Debtor’s
Liability
Art.
1186
–
Constructive
Fulfillment
Art.
1220
–
Remission
of
the
Whole
Obligation
Art.
1187
–
Retroactive
Effects
of
the
Fulfillment
of
a
Suspensive
Art.
1221
–
Loss
or
Impossibility
of
Prestation
in
Relation
to
Condition
Solidary
Debtors
Art.
1188
–
Rights
Pending
Fulfillment
of
Suspensive
Condition
Art.
1222
–
Solidary
Debtor’s
Defenses
Art.
1189
–
Loss,
Deterioration
or
Improvement
Pending
the
SECTION
5.
-‐
Divisible
and
Indivisible
Obligations
Condition
Art.
1223
–
Nature
and
Effect
of
Divisible
and
Indivisible
Art.
1190
–
Effects
of
Fulfillment
of
Resolutory
Condition
Obligations
Art.
1191
–
Remedies
in
Reciprocal
Obligations
Art.
1224
–
Liabilities
in
Joint
Indivisible
Obligations
Art.
1192
–
Breach
by
Both
Parties
Art.
1225
–
Divisible
and
Indivisible
Obligations
SECTION
2.
-‐
Obligations
with
a
Period
SECTION
6.
-‐
Obligations
with
a
Penal
Clause
Art.
1193
–
Obligations
with
a
Period
Art.
1226
–
Penalties
Art.
1194
–
Loss,
Deterioration
or
Improvement
before
Day
Art.
1227
–
Penalty
and
Fulfillment
Certain
Art.
1228
–
Proof
is
Not
Necessary
Art.
1195
–
Debtor
May
Recover
Payment
Art.
1229
–
Court
Intervention
Art.
1196
–
Period
Benefits
Both
Creditor
and
Debtor
Art.
1230
–
Nullity
of
the
Penal
Clause
Art.
1197
–
Court
May
Fix
a
Period
Chapter
4:
Extinguishment
of
Obligations
Art.
1198
–
When
Debtor
Cannot
Make
Use
of
the
Period
GENERAL
PROVISIONS
SECTION
3.
-‐
Alternative
Obligations
Art.
1231
–
Modes
of
Extinguishment
Art.
1199
–
Alternative
Obligations
SECTION
1.
-‐
Payment
or
Performance
Art.
1200
–
Debtor’s
Right
of
Choice
Art.
1232
–
Payment
Defined
Art.
1201
–
Choice
Communicated
Art.
1233
–
Payment
must
be
Complete
Art.
1202
–
Only
One
Choice
is
Practicable
Art.
1234
–
Substantial
Performance
Art.
1203
–
Debtor
Cannot
Choose
due
to
Creditor’s
Acts
Art.
1235
–
Creditor
Accepts
Incompleteness
or
Irregularity
Art.
1204
–
Through
Debtor’s
Fault,
All
Choices
are
Lost
Art.
1236
–
Payment
by
a
Third
Person
Art.
1205
–
Choice
Given
to
Creditor
Art.
1237
–
No
Subrogation
Art.
1206
–
Facultative
Obligations
Art.
1238
–
Donation
SECTION
4.
–
Joint
and
Solidary
Obligations
Art.
1239
–
Payment
by
an
Incapacitated
Person
112
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1240
–
To
Whom
Payment
Should
be
Made
Art.
1274
–
Accessory
Obligation
of
Pledge
Art.
1241
–
Payment
to
Incapacitated
or
Third
Persons
SECTION
4.
-‐
Confusion
or
Merger
of
Rights
Art.
1242
–
Payment
to
Possessor
of
Credit
Art.
1275
–
When
Obligation
is
Extinguished
Art.
1243
–
Judicial
Order
to
Retain
the
Debt
Art.
1276
–
Effect
on
Guarantors
Art.
1244
–
Creditor
Cannot
be
Compelled
to
Receive
a
Different
Thing
Art.
1277
–
Confusion
in
Joint
Obligations
Art.
1245
–
Dation
in
Payment
SECTION
5.
-‐
Compensation
Art.
1246
–
Delivery
of
a
Generic
Thing
Art.
1278
–
Compensation
Defined
Art.
1247
–
Extrajudicial
Expenses
Art.
1279
–
Requisites
of
Compensation
Art.
1248
–
Partial
Receipt
and
Payment
Art.
1280
–
Set-‐up
by
Guarantor
Art.
1249
–
Currency
Art.
1281
–
Total
or
Partial
Compensation
Art.
1250
–
Inflation
or
Deflation
Art.
1282
–
Debts
Not
Due
Art.
1251
–
Place
of
Payment
Art.
1283
–
Claim
for
Damages
SUBSECTION
1.
-‐
Application
of
Payments
Art.
1284
–
Voidable
Debts
Art.
1252
–
Application
of
Payments
Art.
1285
–
Assignment
of
the
Creditor’s
Rights
to
a
Third
Person
Art.
1253
–
Interest
Art.
1286
–
Different
Places
Art.
1254
–
Most
Onerous
Debt
Art.
1287
–
No
Compensation
SUBSECTION
2.
-‐
Payment
by
Cession
Art.
1288
–
Civil
Liability
Art.
1255
–
Cession
Art.
1289
–
Several
Debts
SUBSECTION
3.
–
Tender
of
Payment
and
Consignation
Art.
1290
–
By
Operation
of
Law
Art.
1256
–
Tender
of
Payment
and
Consignment
SECTION
6.
-‐
Novation
Art.
1257
–
Announcement
Art.
1291
–
Kinds
of
Novation
Art.
1258
–
Consignation
Process
Art.
1292
–
Express
and
Implied
Novation
Art.
1259
–
Expenses
Borne
by
the
Creditor
Art.
1293
–
Substituting
a
New
Debtor
Art.
1260
–
Judicial
Declaration
Art.
1294
–
Insolvency
of
the
New
Debtor
in
Expromision
Art.
1261
–
Creditor
Authorizes
Debtor
to
Withdraw
Art.
1295
–
Insolvency
of
the
New
Debtor
in
Delegacion
SECTION
2.
-‐
Loss
of
the
Thing
Due
Art.
1296
–
Effect
on
Accessory
Obligations
Art.
1262
–
Loss
Art.
1297
–
New
Obligation
is
Void
Art.
1263
–
Loss
of
a
Generic
Thing
Art.
1298
–
Original
Obligation
was
Void
Art.
1264
–
Partial
Loss
Art.
1299
–
Subject
to
a
Suspensive
or
Resolutory
Condition
Art.
1265
–
Loss
of
Thing
in
the
Possession
of
the
Debtor
Art.
1300
–
Legal
or
Conventional
Subrogation
Art.
1266
–
Legal
or
Physical
Impossibility
Art.
1301
–
Conventional
Subrogation
Art.
1267
–
Difficult
Beyond
Contemplation
Art.
1302
–
When
Legal
Subrogation
is
Presumed
Art.
1268
–
Proceeds
from
a
Criminal
Offense
Art.
1303
–
Rights
Transferred
Upon
Subrogation
Art.
1269
–
Creditor’s
Right
of
Action
Art.
1304
–
Partial
Payment
and
Preference
SECTION
3.
-‐
Condonation
or
Remission
of
the
Debt
Title
II
–
CONTRACTS
Art.
1270
–
Condonation
Defined
Chapter
1:
General
Provisions
Art.
1271
–
Delivery
of
a
Credit
to
the
Debtor
Art.
1305
–
Contracts
Defined
Art.
1272
–
Presumption
when
Credit
is
in
the
Possession
of
the
Art.
1306
–
Guarantee
of
Freedom
to
Contract
Debtor
Art.
1307
–
Innominate
Contracts
Art.
1273
–
Extinguishment
of
Accessory
Obligations
Art.
1308
–
Mutuality
of
Contracts
113
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1309
–
Determination
of
Performance
by
a
Third
Person
Art.
1346
–
Absolute
and
Relative
Simulation
of
Contracts
Art.
1310
–
When
Determination
is
Inequitable
Section
2
–
Object
of
Contracts
Art.
1311
–
Stipulation
Pour
Atrui
Art.
1347
–
Object
of
a
Contract
Art.
1312
–
Contracts
Creating
Real
Rights
Bind
Third
Persons
Art.
1348
–
Impossible
Things
or
Services
Art.
1313
–
Right
of
Creditors
to
Impugn
Fraudulent
Contracts
Art.
1349
–
Quantity
Need
Not
be
Determinate
Art.
1314
–
Liability
of
Third
Persons
Responsible
for
Breach
of
Contract
Section
3
–
Cause
of
Contracts
Art.
1315
–
Perfection
of
Contracts
and
Implied
Terms
Art.
1350
–
Cause
Defined
Art.
1316
–
Real
Contracts
are
Perfected
upon
Delivery
Art.
1351
–
Motive
Defined
Art.
1317
–
Unauthorized
Contracts
are
Unenforceable
Art.
1352
–
Absence
of
Cause
Chapter
2:
Essential
Requisites
of
Contracts
Art.
1353
–
False
Cause
General
Provisions
Art.
1354
–
Cause
Presumed
to
Exist
and
Lawful
Art.
1318
–
Elements
of
a
Contract
Art.
1355
–
Lesion
Defined
Section
1
–
Consent
Chapter
3:
Form
of
Contracts
Art.
1319
–
Consent
Defined
Art.
1356
–
Form
of
Contracts
Art.
1320
-‐
Acceptance
Art.
1357
–
Form
for
the
Convenience
of
the
Parties
Art.
1321
–
Offerer
Fixes
Manner,
Time
and
Place
of
Acceptance
Art.
1358
–
Contracts
Which
Must
Appear
in
a
Public
Document
Art.
1322
–
Communication
of
Acceptance
to
Agent
Chapter
4:
Reformation
of
Instruments
Art.
1323
–
When
Offer
Becomes
Ineffective
Art.
1359
-‐
Reformation
Art.
1324
–
Contract
of
Option,
Option
Period,
Option
Money
Art.
1360
–
Principles
of
the
General
Law
on
Reformation
Art.
1325
–
Business
Advertisements
Art.
1361
–
Mutual
Mistake
as
Basis
of
Reformation
Art.
1326
–
Advertisements
for
Bidders
Art.
1362
–Mistaken,
Fraud
and
Inequitable
Conduct
Art.
1327
–
Persons
who
Cannot
Give
Consent
Art.
1363
–
Concealment
of
Mistake
by
the
Other
Party
Art.
1328
–
Lucid
Intervals,
Drunkenness,
Hypnotic
Spell
Art.
1364
–Ignorance,
etc.
on
the
Part
of
Third
Person
Art.
1329
–
Incapacity
Subject
to
Modifications
Art.
1365
–
Mortgage
or
Pledge
Stated
as
a
Sale
Art.
1330
–
Characteristics
of
Consent
Art.
1366
–Cases
when
Reformation
Not
Allowed
Art.
1331
–
Mistake
or
Error
Art.
1367
–
Party
who
Brought
Action
to
Enforce
Cannot
Reform
Art.
1332
–
Burden
of
Proof
in
case
of
Fraud
or
Mistake
Art.
1368
–
Party
Entitled
to
Reformation
Art.
1333
–
Knowledge
of
Risk
Art.
1369
–
Procedure
for
Reformation
Art.
1334
–
Mistake
of
Law
May
Vitiate
Consent
Chapter
5:
Interpretation
of
Contracts
Art.
1335
–
Violence
or
Force
Art.
1370
–
Interpretation
of
Contracts
Defined
Art.
1336
–
Violence
or
Intimidation
by
a
Third
Person
Art.
1371
–
Contemporaneous
and
Subsequent
Acts
Determine
Intent
Art.
1337
–
Undue
Influence
Art.
1372
–
Special
Intent
Prevails
Over
General
Intent
Art.
1338
–
Causal
Fraud
Art.
1373
–
Interpretation
of
Stipulation
with
Several
Meanings
Art.
1339
–
Fraud
by
Concealment
Art.
1374
–
Interpretation
of
Various
Stipulations
Art.
1340
–
Usual
Exaggerations
in
Trade
Art.
1375
–
Interpretation
of
Words
with
Different
Significations
Art.
1341
–
Expert
Opinion
Art.
1376
–
Usage
or
Custom
as
Aid
in
Interpretation
Art.
1342
–
Fraud
by
a
Third
Person
Art.
1377
–
Interpretation
of
Obscure
Words
Art.
1343
–
Misrepresentation
Made
in
Good
Faith
Art.
1378
–
Rules
in
Case
Doubts
are
Impossible
to
Settle
Art.
1344
–
Causal
Fraud
may
make
a
Contract
Voidable
Art.
1379
–
Rules
of
Court
Applicable
Art.
1345
–
Simulation
of
a
Contract
Chapter
6:
Rescissible
Contracts
114
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1380
–
Rescissible
Contracts
Defined
Art.
1417
–
Recovery
of
Amount
Paid
in
Excess
of
Ceiling
Price
Art.
1381
–
Cases
of
Rescissible
Contracts
Art.
1418
–
Recovery
of
Additional
Compensation
Art.
1382
–
Payments
Made
in
State
of
Insolvency
Art.
1419
–
Recovery
of
Amount
of
Wage
Less
than
Minimum
Fixed
Art.
1383
–
Nature
of
Action
for
Rescission
Art.
1420
–
Effect
of
Illegality
where
Contract
is
Indivisible/Divisible
Art.
1384
–
Extent
of
Rescission
Art.
1421
–
Persons
Entitled
to
Raise
Defense
of
Illegality
or
Nullity
Art.
1385
–
Rescission
Creates
Obligation
of
Mutual
Restitution
Art.
1422
–
Void
Contract
Cannot
be
Novated
Art.
1386
–
Contracts
Approved
by
the
Courts
Art.
1387
–
When
Alienation
Presumed
in
Fraud
of
Creditors
Title
III
–
NATURAL
OBLIGATIONS
Art.
1388
–
Liability
of
Purchaser
in
Bad
Faith
Art.
1423
–
Concept
of
Natural
Obligations
Art.
1389
–
Period
for
Filing
Action
for
Rescission
Art.
1424
–
Performance
After
Civil
Obligation
has
Prescribed
Chapter
7:
Voidable
Contracts
Art.
1425
–
Reimbursement
of
Third
Person
for
Prescribed
Debt
Art.
1390
–
Voidable
Contracts
Defined
Art.
1426
–
Restitution
by
Minor
After
Annulment
of
Contract
Art.
1391
–
Period
for
Filing
Action
for
Annulment
Art.
1427
–
Delivery
by
Minor
of
Money
or
Fungible
Thing
Art.
1392
–
Effect
of
Ratification
Art.
1428
–
Performance
After
Action
to
Enforce
Civil
Obligation
Failed
Art.
1393
–
Forms
of
Ratification
Art.
1429
–
Payment
by
Heir
of
Debt
Exceeding
Value
of
Property
Inherited
Art.
1394
–
Who
May
Ratify
Art.
1430
–
Payment
of
Legacy
After
Will
has
been
Declared
Void
Art.
1395
–
Conformity
of
Guilty
Party
to
Ratification
Not
Required
Art.
1396
–
Retroactive
Effect
of
Ratification
Title
IV
–
ESTOPPEL
Art.
1397
–
Party
Entitled
to
Bring
an
Action
to
Annul
Art.
1431
–
Estoppel
Defined
Art.
1398
–
Duty
of
Mutual
Restitution
upon
Annulment
Art.
1432
–
Application
of
Estoppel
Art.
1399
–
Restitution
by
an
Incapacitated
Person
Art.
1433
–
Kinds
of
Estoppel
Art.
1400
–
Effect
of
Loss
of
Thing
to
be
Returned
Art.
1434
–
Sale
by
Person
not
the
Owner
Art.
1401
–
Extinguishment
of
Action
for
Annulment
Art.
1435
–
Sale
by
a
Person
Representing
Another
Art.
1402
–
Effect
where
a
Party
Cannot
Restore
Object
Art.
1436
–
Lessee
or
Bailee
Estopped
from
Asserting
Title
Chapter
8:
Unenforceable
Contracts
Art.
1437
–
Estoppel
in
Contracts
where
One
Party
is
Mislead
Art.
1403
–
Unenforceable
Contracts
Defined
Art.
1438
–
Estoppel
where
Personal
Property
is
Pledged
Art.
1404
–
Rules
Governing
Unauthorized
Contracts
Art.
1439
–
Between
Parties
and
Successors
in
Interest
Art.
1405
–
Modes
of
Ratification
under
Statutes
of
Fraud
Art.
1406
–
Right
of
a
Party
where
Contract
Enforceable
Title
V
–
TRUSTS
Art.
1407
–
When
Uneforceable
Contract
becomes
Voidable
Chapter
1:
General
Provisions
Art.
1408
–
Right
of
Third
Persons
to
Assail
an
Unforceable
Contract
Art.
1440
–
Trustor,
Trustee
and
Beneficiary
Chapter
9:
Void
and
Inexistent
Contracts
Art.
1441
–
Forms
of
Trusts
Art.
1409
–
Void
Contracts
Defined
Art.
1442
–
Application
of
the
Principles
of
the
General
Law
of
Trusts
Art.
1410
–
Action
or
Defense
is
Imprescriptible
Chapter
2:
Express
Trusts
Art.
1411
–
Rules
where
Contract
is
Illegal
and
Act
is
Criminal
Offense
Art.
1443
–
Immovable
Cannot
be
Proven
by
Parol
Evidence
Art.
1412
–
Rules
where
Contract
is
Illegal
but
Act
is
not
Criminal
Offense
Art.
1444
–
No
Words
Required
Art.
1413
–
Recovery
of
Usurious
Interest
Art.
1445
–
When
Trustee
Declines
Designation
Art.
1414
–
Recovery
where
Contract
Entered
Into
for
Illegal
Purpose
Art.
1446
–
Acceptance
by
the
Beneficiary
Art.
1415
–
Recovery
by
an
Incapacitated
Person
Chapter
3:
Implied
Trusts
Art.
1416
–
Recovery
where
Contract
is
Not
Illegal
per
se
Art.
1447
–
Application
of
Implied
Trusts
Enumerated
115
OBLIGATIONS
AND
CONTRACTS
REVIEWER
ATTY.
MEL
STA.
MARIA
CROMBONDS
2011-‐2012
Art.
1448
–
When
a
Third
Party
Pays
for
a
Property
Art.
2167
–
Services
Given
by
a
Physician
in
an
Accident
Art.
1449
–
When
a
Donation
is
Made
but
Donee
has
Partial
Interest
Art.
2168
–
Property
is
Saved
from
Fire,
Flood,
Storm
or
Calamity
Art.
1450
–
When
a
Person
Acquires
Property
through
a
Loan
Art.
2169
–
Government
Work
regarding
Health
and
Safety
Regulations
Art.
1451
–
When
Land
Passes
by
Succession
Art.
2170
–
Rules
of
Co-‐Ownership
in
Accident
or
Fortuitous
Event
Art.
1452
–
When
Legal
Title
is
Named
after
One
of
Many
Purchasers
Art.
2171
–
Finder
of
Lost
Property
Art.
1453
–
When
Property
is
Conveyed
to
Hold
or
Transfer
Art.
2172
–
Right
to
Reimbursement
of
Possessor
in
Good
Faith
Art.
1454
–
When
Property
is
Conveyed
to
Fulfill
an
Obligation
Art.
2173
–
Third
Person
Paying
a
Debt
Art.
1455
–
When
Trust
Fund
is
Used
to
Purchase
Property
Art.
2174
–
Measures
for
Protection
Against
Lawlessness
Art.
1456
–
When
Property
is
Acquired
through
Mistake
or
Fraud
Art.
2175
–
Person
Paying
for
Taxes
of
Another
Art.
1457
–
May
be
Proved
by
Oral
Evidence
Title
XVII
–
EXTRA-‐CONTRACTUAL
OBLIGATIONS
Chapter
1:
Quasi-‐Contracts
SOURCES
Art.
2142
–
Quasi-‐Contracts
Defined
• Sta.
Maria,
Obligations
and
Contracts
(2003)
Art.
2143
–
Other
Quasi-‐Contracts
• De
Leon,
The
Law
on
Obligations
and
Contracts
(2008)
Section
1
–
Negotiorum
Gestio
• Salanga
RA,
Obligations
and
Contracts
Reviewer
Art.
2144
–
Negotiorum
Gestio
Defined
and
Its
Exceptions
• Civil
Law
Obligations
and
Contracts
Reviewer
Art.
2145
–
Diligence
Required
of
an
Officious
Manager
• http://legal-‐dictionary.thefreedictionary.com/
Art.
2146
–
Liability
of
Officious
Manager
upon
Delegation
Art.
2147
–
When
Officious
Manager
shall
be
Liable
for
Fortuitous
Event
Art.
2148
–
Liability
for
Fortuitous
Event
as
to
Manager’s
Capacity
Art.
2149
–
Ratification
of
Owner
results
to
Agency
Art.
2150
–
Officious
Manager
Entitled
to
Reimbursement
Art.
2151
–
Reimbursement
when
there
is
No
Benefit
or
Danger
Art.
2152
–Officious
Manager
as
to
Contracts
with
Third
Persons
Section
2
–
Solutio
Indebiti
Art.
2154
–
Solutio
Indebiti
Defined
Art.
2155
–
Applicable
to
Doubtful
or
Difficult
Question
of
Law
Art.
2156
–
Doubt
on
whether
the
Debt
was
Due
Art.
2157
–
Solidary
Responsibility
of
Two
or
More
Payees
Art.
2158
–
Property
or
Money
Delivered
Belongs
to
Third
Person
Art.
2159
–
Acceptance
of
Undue
Payment
in
Bad
Faith
Art.
2160
–
Acceptance
of
Undue
Payment
in
Good
Faith
Art.
2161
–
Reimbursement
for
Improvements
and
Expenses
Art.
2162
–
Exemption
from
Obligation
to
Restore
Art.
2163
–
Presumed
Mistake
Section
3
–
Other
Quasi-‐Contracts
Art.
2164
–
Support
Given
by
a
Stranger
Art.
2165
–
Funeral
Expenses
Borne
by
a
Third
Person
Art.
2166
–
Support
Given
to
an
Orphan,
Insane
or
Indigent
Person
116