Oblicon Codal Provisions

8/18/2019 Oblicon Codal Provisions

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BOOK IV

Obligations and Contracts

TITLE IObligations

CHAPTER 1General Provisions

Article 115! An obligation is a juridical necessity

to give, to do or not to do. (n)

Article 115"! Obligations arise from:

(1) Law;

() !ontracts;

(") #uasi$contracts;

(%) Acts or omissions &unis'ed by law; and

() #uasi$delicts. (1*+a)

Article 115#! Obligations derived from law arenot &resumed. Only t'ose e&ressly determined in

t'is !ode or in s&ecial laws are demandable, ands'all be regulated by t'e &rece&ts of t'e law w'ic'establis'es t'em; and as to w'at 'as not beenforeseen, by t'e &rovisions of t'is -oo. (1+)

Article 115$! Obligations arising from contracts'ave t'e force of law between t'e contracting&arties and s'ould be com&lied wit' in good fait'.(1+1a)

Article 11%! Obligations derived from /uasi$contracts s'all be subject to t'e &rovisions of!'a&ter 1, 0itle 233, of t'is -oo. (n)

Article 111! !ivil obligations arising fromcriminal offenses s'all be governed by t'e &enallaws, subject to t'e &rovisions of article 144, andof t'e &ertinent &rovisions of !'a&ter ,

5reliminary 0itle, on 6uman 7elations, and of0itle 2333 of t'is -oo, regulating damages.(1+a)

Article 11&! Obligations derived from /uasi$

delicts s'all be governed by t'e &rovisions of

!'a&ter , 0itle 233 of t'is -oo, and by s&ecial

laws. (1+"a)

CHAPTER &

'at(re and E))ect o) Obligations

Article 11*! 8very &erson obliged to givesomet'ing is also obliged to tae care of it wit' t'e&ro&er diligence of a good fat'er of a family, unlesst'e law or t'e sti&ulation of t'e &arties re/uires

anot'er standard of care. (1+%a)

Article 11+! 0'e creditor 'as a rig't to t'e fruitsof t'e t'ing from t'e time t'e obligation to deliverit arises. 6owever, 'e s'all ac/uire no real rig't

over it until t'e same 'as been delivered to 'im.(1+)

Article 115! 9'en w'at is to be delivered is adeterminate t'ing, t'e creditor, in addition to t'e

rig't granted 'im by article 114, may com&el t'edebtor to mae t'e delivery.

3f t'e t'ing is indeterminate or generic, 'e may as

t'at t'e obligation be com&lied wit' at t'e e&enseof t'e debtor.

3f t'e obligor delays, or 'as &romised to deliver t'esame t'ing to two or more &ersons w'o do not

'ave t'e same interest, 'e s'all be res&onsible forany fortuitous event until 'e 'as effected t'e

delivery. (1+)

Article 11! 0'e obligation to give a determinate

t'ing includes t'at of delivering all its accessionsand accessories, even t'oug' t'ey may not 'ave been mentioned. (1+4a)

Article 11"! 3f a &erson obliged to do somet'ing

fails to do it, t'e same s'all be eecuted at 'is cost.

0'is same rule s'all be observed if 'e does it incontravention of t'e tenor of t'e obligation.urt'ermore, it may be decreed t'at w'at 'as been

&oorly done be undone. (1+*)

Article 11#! 9'en t'e obligation consists in notdoing, and t'e obligor does w'at 'as been

forbidden 'im, it s'all also be undone at 'ise&ense. (1++a)


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Article 11$! 0'ose obliged to deliver or to do

somet'ing incur in delay from t'e time t'e obligee judicially or etrajudicially demands from t'emt'e fulfillment of t'eir obligation.

6owever, t'e demand by t'e creditor s'all not be

necessary in order t'at delay may eist:

(1) 9'en t'e obligation or t'e law e&ressly sodeclare; or

() 9'en from t'e nature and t'e circumstancesof t'e obligation it a&&ears t'at t'e designation oft'e time w'en t'e t'ing is to be delivered or t'eservice is to be rendered was a controlling motivefor t'e establis'ment of t'e contract; or

(") 9'en demand would be useless, as w'en t'e

obligor 'as rendered it beyond 'is &ower to&erform.

3n reci&rocal obligations, neit'er &arty incurs indelay if t'e ot'er does not com&ly or is not readyto com&ly in a &ro&er manner wit' w'at isincumbent u&on 'im. rom t'e moment one of t'e

&arties fulfills 'is obligation, delay by t'e ot'er begins. (11a)

Article 11"%! 0'ose w'o in t'e &erformance oft'eir obligations are guilty of fraud, negligence, or

delay, and t'ose w'o in any manner contravenet'e tenor t'ereof, are liable for damages. (111)

Article 11"1! 7es&onsibility arising from fraud isdemandable in all obligations. Any waiver of an

action for future fraud is void. (11a)

Article 11"&! 7es&onsibility arising fromnegligence in t'e &erformance of every ind ofobligation is also demandable, but suc' liability

may be regulated by t'e courts, according to t'ecircumstances. (11")

Article 11"*! 0'e fault or negligence of t'e

obligor consists in t'e omission of t'at diligence w'ic' is re/uired by t'e nature of t'e obligationand corres&onds wit' t'e circumstances of t'e

&ersons, of t'e time and of t'e &lace. 9'ennegligence s'ows bad fait', t'e &rovisions of

articles 1141 and 1, &aragra&' , s'all a&&ly.

3f t'e law or contract does not state t'e diligence w'ic' is to be observed in t'e &erformance, t'at

w'ic' is e&ected of a good fat'er of a family s'all

be re/uired. (11%a)

Article 11"+! 8ce&t in cases e&ressly s&ecified

by t'e law, or w'en it is ot'erwise declared bysti&ulation, or w'en t'e nature of t'e obligation

re/uires t'e assum&tion of ris, no &erson s'all beres&onsible for t'ose events w'ic' could not beforeseen, or w'ic', t'oug' foreseen, wereinevitable. (11a)

Article 11"5!


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Article 11#%! 9'en t'e debtor binds 'imself to

&ay w'en 'is means &ermit 'im to do so, t'eobligation s'all be deemed to be one wit' a &eriod,subject to t'e &rovisions of article 11+4. (n)

Article 11#1! 3n conditional obligations, t'e

ac/uisition of rig'ts, as well as t'e etinguis'mentor loss of t'ose already ac/uired, s'all de&endu&on t'e 'a&&ening of t'e event w'ic' constitutest'e condition. (111%)

Article 11#&! 9'en t'e fulfillment of t'econdition de&ends u&on t'e sole will of t'e debtor,t'e conditional obligation s'all be void. 3f itde&ends u&on c'ance or u&on t'e will of a t'ird

&erson, t'e obligation s'all tae effect inconformity wit' t'e &rovisions of t'is !ode. (111)

Article 11#*! 3m&ossible conditions, t'osecontrary to good customs or &ublic &olicy and

t'ose &ro'ibited by law s'all annul t'e obligation w'ic' de&ends u&on t'em. 3f t'e obligation isdivisible, t'at &art t'ereof w'ic' is not affected byt'e im&ossible or unlawful condition s'all be valid.

0'e condition not to do an im&ossible t'ing s'all be considered as not 'aving been agreed u&on.(111a)

Article 11#+! 0'e condition t'at some event

'a&&en at a determinate time s'all etinguis' t'eobligation as soon as t'e time e&ires or if it 'as become indubitable t'at t'e event will not tae

&lace. (1114)

Article 11#5! 0'e condition t'at some event willnot 'a&&en at a determinate time s'all render t'eobligation effective from t'e moment t'e timeindicated 'as ela&sed, or if it 'as become evident

t'at t'e event cannot occur.

3f no time 'as been fied, t'e condition s'all bedeemed fulfilled at suc' time as may 'ave&robably been contem&lated, bearing in mind t'e

nature of t'e obligation. (111*)

Article 11#! 0'e condition s'all be deemed

fulfilled w'en t'e obligor voluntarily &revents itsfulfillment. (111+)

Article 11#"! 0'e effects of a conditionalobligation to give, once t'e condition 'as beenfulfilled, s'all retroact to t'e day of t'econstitution of t'e obligation. >evert'eless, w'en

t'e obligation im&oses reci&rocal &restations u&on

t'e &arties, t'e fruits and interests during t'e&endency of t'e condition s'all be deemed to 'ave been mutually com&ensated. 3f t'e obligation is

unilateral, t'e debtor s'all a&&ro&riate t'e fruitsand interests received, unless from t'e nature and

circumstances of t'e obligation it s'ould beinferred t'at t'e intention of t'e &ersonconstituting t'e same was different.

3n obligations to do and not to do, t'e courts s'all

determine, in eac' case, t'e retroactive effect oft'e condition t'at 'as been com&lied wit'. (11)

Article 11##! 0'e creditor may, before t'e

fulfillment of t'e condition, bring t'e a&&ro&riateactions for t'e &reservation of 'is rig't.

0'e debtor may recover w'at during t'e same time'e 'as &aid by mistae in case of a sus&ensive

condition. (111a)

Article 11#$! 9'en t'e conditions 'ave beenim&osed wit' t'e intention of sus&ending t'eefficacy of an obligation to give, t'e following rules

s'all be observed in case of t'e im&rovement, lossor deterioration of t'e t'ing during t'e &endencyof t'e condition:

(1) 3f t'e t'ing is lost wit'out t'e fault of t'e

debtor, t'e obligation s'all be etinguis'ed;

() 3f t'e t'ing is lost t'roug' t'e fault of t'e

debtor, 'e s'all be obliged to &ay damages; it isunderstood t'at t'e t'ing is lost w'en it &eris'es,

or goes out of commerce, or disa&&ears in suc' a way t'at its eistence is unnown or it cannot berecovered;

(") 9'en t'e t'ing deteriorates wit'out t'e faultof t'e debtor, t'e im&airment is to be borne by t'ecreditor;

(%) 3f it deteriorates t'roug' t'e fault of t'e

debtor, t'e creditor may c'oose between t'erescission of t'e obligation and its fulfillment, wit'indemnity for damages in eit'er case;

() 3f t'e t'ing is im&roved by its nature, or by

time, t'e im&rovement s'all inure to t'e benefit oft'e creditor;


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() 3f it is im&roved at t'e e&ense of t'e debtor,

'e s'all 'ave no ot'er rig't t'an t'at granted tot'e usufructuary. (11)

Article 11$%! 9'en t'e conditions 'ave for t'eir&ur&ose t'e etinguis'ment of an obligation to

give, t'e &arties, u&on t'e fulfillment of saidconditions, s'all return to eac' ot'er w'at t'ey'ave received.

3n case of t'e loss, deterioration or im&rovement

of t'e t'ing, t'e &rovisions w'ic', wit' res&ect tot'e debtor, are laid down in t'e &receding articles'all be a&&lied to t'e &arty w'o is bound toreturn.

As for t'e obligations to do and not to do, t'e&rovisions of t'e second &aragra&' of article 11*4

s'all be observed as regards t'e effect of t'eetinguis'ment of t'e obligation. (11")

Article 11$1! 0'e &ower to rescind obligations isim&lied in reci&rocal ones, in case one of t'eobligors s'ould not com&ly wit' w'at isincumbent u&on 'im.

0'e injured &arty may c'oose between t'efulfillment and t'e rescission of t'e obligation, wit' t'e &ayment of damages in eit'er case. 6emay also see rescission, even after 'e 'as c'osen

fulfillment, if t'e latter s'ould become im&ossible.

0'e court s'all decree t'e rescission claimed,

unless t'ere be just cause aut'ori?ing t'e fiing ofa &eriod.

0'is is understood to be wit'out &rejudice to t'erig'ts of t'ird &ersons w'o 'ave ac/uired t'et'ing, in accordance wit' articles 1"* and 1"**

and t'e @ortgage Law. (11%)

Article 11$&! 3n case bot' &arties 'avecommitted a breac' of t'e obligation, t'e liabilityof t'e first infractor s'all be e/uitably tem&ered by

t'e courts. 3f it cannot be determined w'ic' of t'e&arties first violated t'e contract, t'e same s'all bedeemed etinguis'ed, and eac' s'all bear 'is own

damages. (n)

-ECTIO' &Obligations .it/ a Period

Article 11$*! Obligations for w'ose fulfillment a

day certain 'as been fied, s'all be demandableonly w'en t'at day comes.

Obligations wit' a resolutory &eriod tae effect atonce, but terminate u&on arrival of t'e day certain.

A day certain is understood to be t'at w'ic' mustnecessarily come, alt'oug' it may not be nown w'en.

3f t'e uncertainty consists in w'et'er t'e day willcome or not, t'e obligation is conditional, and its'all be regulated by t'e rules of t'e &receding=ection. (11a)

Article 11$+! 3n case of loss, deterioration orim&rovement of t'e t'ing before t'e arrival of t'e

day certain, t'e rules in article 11*+ s'all beobserved. (n)

Article 11$5! Anyt'ing &aid or delivered beforet'e arrival of t'e &eriod, t'e obligor being unawareof t'e &eriod or believing t'at t'e obligation 'as become due and demandable, may be recovered,

wit' t'e fruits and interests. (11a)

Article 11$! 9'enever in an obligation a &eriodis designated, it is &resumed to 'ave beenestablis'ed for t'e benefit of bot' t'e creditor and

t'e debtor, unless from t'e tenor of t'e same orot'er circumstances it s'ould a&&ear t'at t'e&eriod 'as been establis'ed in favor of one or of

t'e ot'er. (114)

Article 11$"! 3f t'e obligation does not fi a&eriod, but from its nature and t'e circumstancesit can be inferred t'at a &eriod was intended, t'ecourts may fi t'e duration t'ereof.

0'e courts s'all also fi t'e duration of t'e &eriod w'en it de&ends u&on t'e will of t'e debtor.

3n every case, t'e courts s'all determine suc'

&eriod as may under t'e circumstances 'ave been&robably contem&lated by t'e &arties. Once fied by t'e courts, t'e &eriod cannot be c'anged by

t'em. (11*a)

Article 11$#! 0'e debtor s'all lose every rig't tomae use of t'e &eriod:


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(1) 9'en after t'e obligation 'as been contracted,

'e becomes insolvent, unless 'e gives a guarantyor security for t'e debt;

() 9'en 'e does not furnis' to t'e creditor t'eguaranties or securities w'ic' 'e 'as &romised;

(") 9'en by 'is own acts 'e 'as im&aired saidguaranties or securities after t'eir establis'ment,and w'en t'roug' a fortuitous event t'eydisa&&ear, unless 'e immediately gives new ones

e/ually satisfactory;

(%) 9'en t'e debtor violates any undertaing, inconsideration of w'ic' t'e creditor agreed to t'e&eriod;

() 9'en t'e debtor attem&ts to abscond. (11+a)

-ECTIO' * Alternative Obligations

A703!L8 11++. A &erson alternatively bound bydifferent &restations s'all com&letely &erform oneof t'em.

0'e creditor cannot be com&elled to receive &art of one and &art of t'e ot'er undertaing. (11"1)

Article 1&%%! 0'e rig't of c'oice belongs to t'e

debtor, unless it 'as been e&ressly granted to t'ecreditor.

0'e debtor s'all 'ave no rig't to c'oose t'ose&restations w'ic' are im&ossible, unlawful or

w'ic' could not 'ave been t'e object of t'eobligation. (11")

Article 1&%1! 0'e c'oice s'all &roduce no effectece&t from t'e time it 'as been communicated.

(11"")

Article 1&%&! 0'e debtor s'all lose t'e rig't ofc'oice w'en among t'e &restations w'ereby 'e isalternatively bound, only one is &racticable. (11"%)

Article 1&%*! 3f t'roug' t'e creditors acts t'edebtor cannot mae a c'oice according to t'eterms of t'e obligation, t'e latter may rescind t'econtract wit' damages. (n)

Article 1&%+! 0'e creditor s'all 'ave a rig't toindemnity for damages w'en, t'roug' t'e fault of

t'e debtor, all t'e t'ings w'ic' are alternatively

t'e object of t'e obligation 'ave been lost, or t'ecom&liance of t'e obligation 'as becomeim&ossible.

0'e indemnity s'all be fied taing as a basis t'e

value of t'e last t'ing w'ic' disa&&eared, or t'atof t'e service w'ic' last became im&ossible.

Bamages ot'er t'an t'e value of t'e last t'ing orservice may also be awarded. (11"a)

Article 1&%5! 9'en t'e c'oice 'as been e&ressly given to t'e creditor, t'e obligation s'all cease to be alternative from t'e day w'en t'e selection 'as been communicated to t'e debtor.


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Article 1&%"! 0'e concurrence of two or more

creditors or of two or more debtors in one and t'esame obligation does not im&ly t'at eac' one oft'e former 'as a rig't to demand, or t'at eac' one

of t'e latter is bound to render, entire com&liance wit' t'e &restation. 0'ere is a solidary liability

only w'en t'e obligation e&ressly so states, or w'en t'e law or t'e nature of t'e obligationre/uires solidarity. (11"4a)

Article 1&%#! 3f from t'e law, or t'e nature or t'e

wording of t'e obligations to w'ic' t'e &recedingarticle refers t'e contrary does not a&&ear, t'ecredit or debt s'all be &resumed to be divided intoas many s'ares as t'ere are creditors or debtors,

t'e credits or debts being considered distinct fromone anot'er, subject to t'e 7ules of !ourtgoverning t'e multi&licity of suits. (11"*a)

Article 1&%$! 3f t'e division is im&ossible, t'erig't of t'e creditors may be &rejudiced only byt'eir collective acts, and t'e debt can be enforcedonly by &roceeding against all t'e debtors. 3f one of t'e latter s'ould be insolvent, t'e ot'ers s'all not be liable for 'is s'are. (11"+)

Article 1&1%! 0'e indivisibility of an obligationdoes not necessarily give rise to solidarity. >ordoes solidarity of itself im&ly indivisibility. (n)

Article 1&11! =olidarity may eist alt'oug' t'ecreditors and t'e debtors may not be bound in t'esame manner and by t'e same &eriods andconditions. (11%)

Article 1&1&! 8ac' one of t'e solidary creditorsmay do w'atever may be useful to t'e ot'ers, butnot anyt'ing w'ic' may be &rejudicial to t'elatter. (11%1a)

Article 1&1*! A solidary creditor cannot assign'is rig'ts wit'out t'e consent of t'e ot'ers. (n)

Article 1&1+! 0'e debtor may &ay any one of t'e

solidary creditors; but if any demand, judicial oretrajudicial, 'as been made by one of t'em,&ayment s'ould be made to 'im. (11%a)

Article 1&15! >ovation, com&ensation, confusion

or remission of t'e debt, made by any of t'esolidary creditors or wit' any of t'e solidarydebtors, s'all etinguis' t'e obligation, wit'out&rejudice to t'e &rovisions of article 11+.

0'e creditor w'o may 'ave eecuted any of t'ese

acts, as well as 'e w'o collects t'e debt, s'all beliable to t'e ot'ers for t'e s'are in t'e obligationcorres&onding to t'em. (11%")

Article 1&1! 0'e creditor may &roceed against

any one of t'e solidary debtors or some or all oft'em simultaneously. 0'e demand made againstone of t'em s'all not be an obstacle to t'ose w'ic'may subse/uently be directed against t'e ot'ers,so long as t'e debt 'as not been fully collected.

(11%%a)

Article 1&1"! 5ayment made by one of t'esolidary debtors etinguis'es t'e obligation. 3f two

or more solidary debtors offer to &ay, t'e creditormay c'oose w'ic' offer to acce&t.

6e w'o made t'e &ayment may claim from 'is co$debtors only t'e s'are w'ic' corres&onds to eac',

wit' t'e interest for t'e &ayment already made. 3ft'e &ayment is made before t'e debt is due, nointerest for t'e intervening &eriod may bedemanded.

9'en one of t'e solidary debtors cannot, becauseof 'is insolvency, reimburse 'is s'are to t'e debtor&aying t'e obligation, suc' s'are s'all be borne byall 'is co$debtors, in &ro&ortion to t'e debt ofeac'. (11%a)

Article 1&1#! 5ayment by a solidary debtor s'allnot entitle 'im to reimbursement from 'is co$

debtors if suc' &ayment is made after t'eobligation 'as &rescribed or become illegal. (n)

Article 1&1$! 0'e remission made by t'e creditorof t'e s'are w'ic' affects one of t'e solidarydebtors does not release t'e latter from 'is

res&onsibility towards t'e co$debtors, in case t'edebt 'ad been totally &aid by anyone of t'em before t'e remission was effected. (11%a)

Article 1&&%! 0'e remission of t'e w'ole

obligation, obtained by one of t'e solidary debtors,does not entitle 'im to reimbursement from 'isco$debtors. (n)

Article 1&&1! 3f t'e t'ing 'as been lost or if t'e

&restation 'as become im&ossible wit'out t'e faultof t'e solidary debtors, t'e obligation s'all beetinguis'ed.


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3f t'ere was fault on t'e &art of any one of t'em,

all s'all be res&onsible to t'e creditor, for t'e &riceand t'e &ayment of damages and interest, wit'out&rejudice to t'eir action against t'e guilty or

negligent debtor.

3f t'roug' a fortuitous event, t'e t'ing is lost ort'e &erformance 'as become im&ossible after oneof t'e solidary debtors 'as incurred in delayt'roug' t'e judicial or etrajudicial demand u&on'im by t'e creditor, t'e &rovisions of t'e

&receding &aragra&' s'all a&&ly. (11%4a)

Article 1&&&! A solidary debtor may, in actionsfiled by t'e creditor, avail 'imself of all defenses

w'ic' are derived from t'e nature of t'e obligationand of t'ose w'ic' are &ersonal to 'im, or &ertainto 'is own s'are. 9it' res&ect to t'ose w'ic'&ersonally belong to t'e ot'ers, 'e may avail

'imself t'ereof only as regards t'at &art of t'edebt for w'ic' t'e latter are res&onsible. (11%*a)

-ECTIO' 5,ivisible and Indivisible Obligations

Article 1&&*! 0'e divisibility or indivisibility oft'e t'ings t'at are t'e object of obligations in w'ic' t'ere is only one debtor and only onecreditor does not alter or modify t'e &rovisions of!'a&ter of t'is 0itle. (11%+)

Article 1&&+! A joint indivisible obligation givesrise to indemnity for damages from t'e time

anyone of t'e debtors does not com&ly wit' 'isundertaing. 0'e debtors w'o may 'ave beenready to fulfill t'eir &romises s'all not contributeto t'e indemnity beyond t'e corres&onding&ortion of t'e &rice of t'e t'ing or of t'e value oft'e service in w'ic' t'e obligation consists. (11)

Article 1&&5! or t'e &ur&oses of t'e &recedingarticles, obligations to give definite t'ings andt'ose w'ic' are not susce&tible of &artial&erformance s'all be deemed to be indivisible.

9'en t'e obligation 'as for its object t'eeecution of a certain number of days of wor, t'eaccom&lis'ment of wor by metrical units, or

analogous t'ings w'ic' by t'eir nature aresusce&tible of &artial &erformance, it s'all bedivisible.

6owever, even t'oug' t'e object or service may be

&'ysically divisible, an obligation is indivisible if so&rovided by law or intended by t'e &arties.

3n obligations not to do, divisibility or indivisibility

s'all be determined by t'e c'aracter of t'e&restation in eac' &articular case. (111a)

-ECTIO' Obligations .it/ a Penal Cla(se

Article 1&&! 3n obligations wit' a &enal clause,t'e &enalty s'all substitute t'e indemnity fordamages and t'e &ayment of interests in case ofnoncom&liance, if t'ere is no sti&ulation to t'e

contrary. >evert'eless, damages s'all be &aid ift'e obligor refuses to &ay t'e &enalty or is guilty offraud in t'e fulfillment of t'e obligation.

0'e &enalty may be enforced only w'en it is

demandable in accordance wit' t'e &rovisions oft'is !ode. (11a)

Article 1&&"! 0'e debtor cannot eem&t 'imself

from t'e &erformance of t'e obligation by &ayingt'e &enalty, save in t'e case w'ere t'is rig't 'as been e&ressly reserved for 'im. >eit'er can t'ecreditor demand t'e fulfillment of t'e obligationand t'e satisfaction of t'e &enalty at t'e same

time, unless t'is rig't 'as been clearly granted'im. 6owever, if after t'e creditor 'as decided tore/uire t'e fulfillment of t'e obligation, t'e&erformance t'ereof s'ould become im&ossible wit'out 'is fault, t'e &enalty may be enforced.

(11"a)

Article 1&! 5roof of actual damages suffered by

t'e creditor is not necessary in order t'at t'e&enalty may be demanded. (n)

Article 1&&$! 0'e judge s'all e/uitably reducet'e &enalty w'en t'e &rinci&al obligation 'as been&artly or irregularly com&lied wit' by t'e debtor.

8ven if t'ere 'as been no &erformance, t'e &enalty may also be reduced by t'e courts if it is ini/uitousor unconscionable. (11%a)

Article 1&*%! 0'e nullity of t'e &enal clause does

not carry wit' it t'at of t'e &rinci&al obligation.

0'e nullity of t'e &rinci&al obligation carries wit'

it t'at of t'e &enal clause. (11)

CHAPTER +E2ting(is/3ent o) Obligations

General Provisions


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Article 1&*1! Obligations are etinguis'ed:

(1) -y &ayment or &erformance;

() -y t'e loss of t'e t'ing due;

(") -y t'e condonation or remission of t'e debt;

(%) -y t'e confusion or merger of t'e rig'ts ofcreditor and debtor;

() -y com&ensation;

() -y novation.

Ot'er causes of etinguis'ment of obligations,suc' as annulment, rescission, fulfillment of a

resolutory condition, and &rescri&tion, aregoverned elsew'ere in t'is !ode. (11a)

-ECTIO' 1

Pa3ent or Per)or3ance

Article 1&*&! 5ayment means not only t'edelivery of money but also t'e &erformance, in any ot'er manner, of an obligation. (n)

Article 1&**! A debt s'all not be understood to'ave been &aid unless t'e t'ing or service in w'ic't'e obligation consists 'as been com&letelydelivered or rendered, as t'e case may be. (114)

Article 1&*+! 3f t'e obligation 'as beensubstantially &erformed in good fait', t'e obligormay recover as t'oug' t'ere 'ad been a strict andcom&lete fulfillment, less damages suffered by t'e

obligee. (n)

Article 1&*5! 9'en t'e obligee acce&ts t'e&erformance, nowing its incom&leteness orirregularity, and wit'out e&ressing any &rotest or

objection, t'e obligation is deemed fully com&lied wit'. (n)

Article 1&*! 0'e creditor is not bound to acce&t

&ayment or &erformance by a t'ird &erson w'o'as no interest in t'e fulfillment of t'e obligation,unless t'ere is a sti&ulation to t'e contrary.

9'oever &ays for anot'er may demand from t'e

debtor w'at 'e 'as &aid, ece&t t'at if 'e &aid wit'out t'e nowledge or against t'e will of t'e

debtor, 'e can recover only insofar as t'e &ayment

'as been beneficial to t'e debtor. (11*a)

Article 1&*"! 9'oever &ays on be'alf of t'e

debtor wit'out t'e nowledge or against t'e will of t'e latter, cannot com&el t'e creditor to subrogate

'im in 'is rig'ts, suc' as t'ose arising from amortgage, guaranty, or &enalty. (11+a)

Article 1&*#! 5ayment made by a t'ird &erson w'o does not intend to be reimbursed by t'e

debtor is deemed to be a donation, w'ic' re/uirest'e debtors consent. -ut t'e &ayment is in anycase valid as to t'e creditor w'o 'as acce&ted it.(n)

Article 1&*$! 3n obligations to give, &aymentmade by one w'o does not 'ave t'e free dis&osal

of t'e t'ing due and ca&acity to alienate it s'all not be valid, wit'out &rejudice to t'e &rovisions of

article 1%4 under t'e 0itle on C>aturalObligations.D (11a)

Article 1&+%! 5ayment s'all be made to t'e&erson in w'ose favor t'e obligation 'as been

constituted, or 'is successor in interest, or any&erson aut'ori?ed to receive it. (11a)

Article 1&+1! 5ayment to a &erson w'o isinca&acitated to administer 'is &ro&erty s'all be

valid if 'e 'as e&t t'e t'ing delivered, or insofaras t'e &ayment 'as been beneficial to 'im.

5ayment made to a t'ird &erson s'all also be validinsofar as it 'as redounded to t'e benefit of t'e

creditor. =uc' benefit to t'e creditor need not be&roved in t'e following cases:

(1) 3f after t'e &ayment, t'e t'ird &erson ac/uires

t'e creditors rig'ts;

() 3f t'e creditor ratifies t'e &ayment to t'e t'ird&erson;

(") 3f by t'e creditors conduct, t'e debtor 'as been led to believe t'at t'e t'ird &erson 'adaut'ority to receive t'e &ayment. (11"a)

Article 1&+&! 5ayment made in good fait' to any

&erson in &ossession of t'e credit s'all release t'edebtor. (11%)


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Article 1&+*! 5ayment made to t'e creditor by

t'e debtor after t'e latter 'as been judiciallyordered to retain t'e debt s'all not be valid. (11)

Article 1&++! 0'e debtor of a t'ing cannotcom&el t'e creditor to receive a different one,

alt'oug' t'e latter may be of t'e same value as, ormore valuable t'an t'at w'ic' is due.

3n obligations to do or not to do, an act orforbearance cannot be substituted by anot'er act

or forbearance against t'e obligees will. (11a)

Article 1&+5! Bation in &ayment, w'ereby&ro&erty is alienated to t'e creditor in satisfactionof a debt in money, s'all be governed by t'e law of

sales. (n)

Article 1&+! 9'en t'e obligation consists in t'edelivery of an indeterminate or generic t'ing,

w'ose /uality and circumstances 'ave not beenstated, t'e creditor cannot demand a t'ing ofsu&erior /uality. >eit'er can t'e debtor deliver at'ing of inferior /uality. 0'e &ur&ose of t'eobligation and ot'er circumstances s'all be taen

into consideration. (114a)

Article 1&+"! eit'er may t'edebtor be re/uired to mae &artial &ayments.

6owever, w'en t'e debt is in &art li/uidated andin &art unli/uidated, t'e creditor may demand andt'e debtor may effect t'e &ayment of t'e former wit'out waiting for t'e li/uidation of t'e latter.(11+a)

Article 1&+$! 0'e &ayment of debts in moneys'all be made in t'e currency sti&ulated, and if it is

not &ossible to deliver suc' currency, t'en in t'ecurrency w'ic' is legal tender in t'e 5'ili&&ines.

0'e delivery of &romissory notes &ayable to order,or bills of ec'ange or ot'er mercantile documentss'all &roduce t'e effect of &ayment only w'en t'ey

'ave been cas'ed, or w'en t'roug' t'e fault of t'e

creditor t'ey 'ave been im&aired.

3n t'e meantime, t'e action derived from t'e

original obligation s'all be 'eld in t'e abeyance.(114)

Article 1&5%! 3n case an etraordinary inflationor deflation of t'e currency sti&ulated s'ouldsu&ervene, t'e value of t'e currency at t'e time oft'e establis'ment of t'e obligation s'all be t'e

basis of &ayment, unless t'ere is an agreement tot'e contrary. (n)

Article 1&51! 5ayment s'all be made in t'e &lacedesignated in t'e obligation.

0'ere being no e&ress sti&ulation and if t'e

undertaing is to deliver a determinate t'ing, t'e&ayment s'all be made w'erever t'e t'ing mig't

be at t'e moment t'e obligation was constituted.

3n any ot'er case t'e &lace of &ayment s'all be t'edomicile of t'e debtor.

3f t'e debtor c'anges 'is domicile in bad fait' orafter 'e 'as incurred in delay, t'e additionale&enses s'all be borne by 'im.

0'ese &rovisions are wit'out &rejudice to venue

under t'e 7ules of !ourt. (1141a)

-4B-ECTIO' 1! Alication o) Pa3ents

Article 1&5&! 6e w'o 'as various debts of t'e

same ind in favor of one and t'e same creditor,may declare at t'e time of maing t'e &ayment, to w'ic' of t'em t'e same must be a&&lied.


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Article 1&5+! 9'en t'e &ayment cannot be

a&&lied in accordance wit' t'e &receding rules, orif a&&lication can not be inferred from ot'ercircumstances, t'e debt w'ic' is most onerous to

t'e debtor, among t'ose due, s'all be deemed to'ave been satisfied.

3f t'e debts due are of t'e same nature and burden, t'e &ayment s'all be a&&lied to all of t'em&ro&ortionately. (114%a)

-4B-ECTIO' &! Pa3ent b Cession

Article 1&55! 0'e debtor may cede or assign 'is&ro&erty to 'is creditors in &ayment of 'is debts.0'is cession, unless t'ere is sti&ulation to t'e

contrary, s'all only release t'e debtor fromres&onsibility for t'e net &roceeds of t'e t'ing

assigned. 0'e agreements w'ic', on t'e effect oft'e cession, are made between t'e debtor and 'is

creditors s'all be governed by s&ecial laws. (114a)

-4B-ECTIO' *! Tender o) Pa3ent andConsignation

Article 1&5! 3f t'e creditor to w'om tender of&ayment 'as been made refuses wit'out just causeto acce&t it, t'e debtor s'all be released fromres&onsibility by t'e consignation of t'e t'ing orsum due.

!onsignation alone s'all &roduce t'e same effectin t'e following cases:

(1) 9'en t'e creditor is absent or unnown, or

does not a&&ear at t'e &lace of &ayment;

() 9'en 'e is inca&acitated to receive t'e&ayment at t'e time it is due;

(") 9'en, wit'out just cause, 'e refuses to give arecei&t;

(%) 9'en two or more &ersons claim t'e samerig't to collect;

() 9'en t'e title of t'e obligation 'as been lost.(114a)

Article 1&5"! 3n order t'at t'e consignation of

t'e t'ing due may release t'e obligor, it must first be announced to t'e &ersons interested in t'efulfillment of t'e obligation.

0'e consignation s'all be ineffectual if it is not

made strictly in consonance wit' t'e &rovisions w'ic' regulate &ayment. (1144)

Article 1&5#! !onsignation s'all be made byde&ositing t'e t'ings due at t'e dis&osal of judicial

aut'ority, before w'om t'e tender of &ayments'all be &roved, in a &ro&er case, and t'eannouncement of t'e consignation in ot'er cases.

0'e consignation 'aving been made, t'e interested

&arties s'all also be notified t'ereof. (114*)

Article 1&5$! 0'e e&enses of consignation, w'en&ro&erly made, s'all be c'arged against t'ecreditor. (114+)

Article 1&%! Once t'e consignation 'as been

duly made, t'e debtor may as t'e judge to ordert'e cancellation of t'e obligation.

-efore t'e creditor 'as acce&ted t'e consignation,or before a judicial declaration t'at t'econsignation 'as been &ro&erly made, t'e debtormay wit'draw t'e t'ing or t'e sum de&osited,

allowing t'e obligation to remain in force. (11*)

Article 1&1! 3f, t'e consignation 'aving beenmade, t'e creditor s'ould aut'ori?e t'e debtor to wit'draw t'e same, 'e s'all lose every &reference

w'ic' 'e may 'ave over t'e t'ing. 0'e co$debtors,guarantors and sureties s'all be released. (11*1a)

-ECTIO' &Loss o) t/e T/ing ,(e

Article 1&&! An obligation w'ic' consists in t'edelivery of a determinate t'ing s'all beetinguis'ed if it s'ould be lost or destroyed wit'out t'e fault of t'e debtor, and before 'e 'as

incurred in delay.

9'en by law or sti&ulation, t'e obligor is liableeven for fortuitous events, t'e loss of t'e t'ing

does not etinguis' t'e obligation, and 'e s'all beres&onsible for damages. 0'e same rule a&&lies w'en t'e nature of t'e obligation re/uires t'e

assum&tion of ris. (11*a)

Article 1&*! 3n an obligation to deliver a generict'ing, t'e loss or destruction of anyt'ing of t'esame ind does not etinguis' t'e obligation. (n)


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Article 1&+! 0'e courts s'all determine

w'et'er, under t'e circumstances, t'e &artial lossof t'e object of t'e obligation is so im&ortant as toetinguis' t'e obligation. (n)

Article 1&5! 9'enever t'e t'ing is lost in t'e

&ossession of t'e debtor, it s'all be &resumed t'att'e loss was due to 'is fault, unless t'ere is &roofto t'e contrary, and wit'out &rejudice to t'e&rovisions of article 11. 0'is &resum&tion doesnot a&&ly in case of eart'/uae, flood, storm, or

ot'er natural calamity. (11*"a)

Article 1&! 0'e debtor in obligations to dos'all also be released w'en t'e &restation becomes

legally or &'ysically im&ossible wit'out t'e fault of t'e obligor. (11*%a)

Article 1&"! 9'en t'e service 'as become sodifficult as to be manifestly beyond t'e

contem&lation of t'e &arties, t'e obligor may also be released t'erefrom, in w'ole or in &art. (n)

Article 1&#! 9'en t'e debt of a t'ing certainand determinate &roceeds from a criminal offense,

t'e debtor s'all not be eem&ted from t'e&ayment of its &rice, w'atever may be t'e causefor t'e loss, unless t'e t'ing 'aving been offered by 'im to t'e &erson w'o s'ould receive it, t'elatter refused wit'out justification to acce&t it.

(11*)

Article 1&$! 0'e obligation 'aving been

etinguis'ed by t'e loss of t'e t'ing, t'e creditors'all 'ave all t'e rig'ts of action w'ic' t'e debtormay 'ave against t'ird &ersons by reason of t'eloss. (11*)

-ECTIO' *

Condonation or Re3ission o) t/e ,ebt

Article 1&"%! !ondonation or remission isessentially gratuitous, and re/uires t'e acce&tance by t'e obligor. 3t may be made e&ressly or

im&liedly.

One and t'e ot'er ind s'all be subject to t'e rules

w'ic' govern inofficious donations. 8&resscondonation s'all, furt'ermore, com&ly wit' t'e

forms of donation. (11*4)

Article 1&"1! 0'e delivery of a &rivate documentevidencing a credit, made voluntarily by t'e

creditor to t'e debtor, im&lies t'e renunciation of

t'e action w'ic' t'e former 'ad against t'e latter.

3f in order to nullify t'is waiver it s'ould be

claimed to be inofficious, t'e debtor and 'is 'eirsmay u&'old it by &roving t'at t'e delivery of t'e

document was made in virtue of &ayment of t'edebt. (11**)

Article 1&"&! 9'enever t'e &rivate document in w'ic' t'e debt a&&ears is found in t'e &ossession

of t'e debtor, it s'all be &resumed t'at t'e creditordelivered it voluntarily, unless t'e contrary is&roved. (11*+)

Article 1&"*! 0'e renunciation of t'e &rinci&al

debt s'all etinguis' t'e accessory obligations; butt'e waiver of t'e latter s'all leave t'e former in

force. (11+)

Article 1&"+! 3t is &resumed t'at t'e accessoryobligation of &ledge 'as been remitted w'en t'et'ing &ledged, after its delivery to t'e creditor, isfound in t'e &ossession of t'e debtor, or of a t'ird&erson w'o owns t'e t'ing. (11+1a)

-ECTIO' +Con)(sion or 6erger o) Rig/ts

Article 1&"5! 0'e obligation is etinguis'ed from

t'e time t'e c'aracters of creditor and debtor aremerged in t'e same &erson. (11+a)

Article 1&"! @erger w'ic' taes &lace in t'e&erson of t'e &rinci&al debtor or creditor benefits

t'e guarantors. !onfusion w'ic' taes &lace in t'e&erson of any of t'e latter does not etinguis' t'eobligation. (11+")

Article 1&""! !onfusion does not etinguis' a

joint obligation ece&t as regards t'e s'arecorres&onding to t'e creditor or debtor in w'omt'e two c'aracters concur. (11+%)

-ECTIO' 5Co3ensation

Article 1&"#! !om&ensation s'all tae &lace w'en two &ersons, in t'eir own rig't, are creditors

and debtors of eac' ot'er. (11+)

Article 1&"$! 3n order t'at com&ensation may be&ro&er, it is necessary:


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(1) 0'at eac' one of t'e obligors be bound

&rinci&ally, and t'at 'e be at t'e same time a&rinci&al creditor of t'e ot'er;

() 0'at bot' debts consist in a sum of money, or if t'e t'ings due are consumable, t'ey be of t'e same

ind, and also of t'e same /uality if t'e latter 'as been stated;

(") 0'at t'e two debts be due;

(%) 0'at t'ey be li/uidated and demandable;

() 0'at over neit'er of t'em t'ere be anyretention or controversy, commenced by t'ird&ersons and communicated in due time to t'e

debtor. (11+)

Article 1%! >otwit'standing t'e &rovisions oft'e &receding article, t'e guarantor may set u&com&ensation as regards w'at t'e creditor may

owe t'e &rinci&al debtor. (11+4)

Article 1! !om&ensation may be total or&artial. 9'en t'e two debts are of t'e same

amount, t'ere is a total com&ensation. (n)

Article 1&! 0'e &arties may agree u&on t'ecom&ensation of debts w'ic' are not yet due. (n)

Article 1*! 3f one of t'e &arties to a suit overan obligation 'as a claim for damages against t'e

ot'er, t'e former may set it off by &roving 'is rig'tto said damages and t'e amount t'ereof. (n)

Article 1+! 9'en one or bot' debts arerescissible or voidable, t'ey may be com&ensatedagainst eac' ot'er before t'ey are judiciallyrescinded or avoided. (n)

Article 1! 0'e debtor w'o 'as consented tot'e assignment of rig'ts made by a creditor infavor of a t'ird &erson, cannot set u& against t'eassignee t'e com&ensation w'ic' would &ertain to'im against t'e assignor, unless t'e assignor was

notified by t'e debtor at t'e time 'e gave 'isconsent, t'at 'e reserved 'is rig't to t'ecom&ensation.

3f t'e creditor communicated t'e cession to 'im but t'e debtor did not consent t'ereto, t'e lattermay set u& t'e com&ensation of debts &revious tot'e cession, but not of subse/uent ones.

3f t'e assignment is made wit'out t'e nowledge

of t'e debtor, 'e may set u& t'e com&ensation ofall credits &rior to t'e same and also later onesuntil 'e 'ad nowledge of t'e assignment. (11+*a)

Article 1! !om&ensation taes &lace by

o&eration of law, even t'oug' t'e debts may be&ayable at different &laces, but t'ere s'all be anindemnity for e&enses of ec'ange ortrans&ortation to t'e &lace of &ayment. (11++a)

Article 1"! !om&ensation s'all not be &ro&er w'en one of t'e debts arises from a de&ositum orfrom t'e obligations of a de&ositary or of a baileein commodatum.

>eit'er can com&ensation be set u& against acreditor w'o 'as a claim for su&&ort due by

gratuitous title, wit'out &rejudice to t'e &rovisionsof &aragra&' of article "1. (1a)

Article 1#! >eit'er s'all t'ere becom&ensation if one of t'e debts consists in civilliability arising from a &enal offense. (n)

Article 1$! 3f a &erson s'ould 'ave against 'imseveral debts w'ic' are susce&tible ofcom&ensation, t'e rules on t'e a&&lication of&ayments s'all a&&ly to t'e order of t'ecom&ensation. (11)

Article 1&$%! 9'en all t'e re/uisites mentionedin article 14+ are &resent, com&ensation taes

effect by o&eration of law, and etinguis'es bot'debts to t'e concurrent amount, even t'oug' t'e

creditors and debtors are not aware of t'ecom&ensation. (1a)

-ECTIO'

'ovation

Article 1&$1! Obligations may be modified by:

(1) !'anging t'eir object or &rinci&al conditions;

() =ubstituting t'e &erson of t'e debtor;

(") =ubrogating a t'ird &erson in t'e rig'ts of t'ecreditor. (1")

Article 1&$&! 3n order t'at an obligation may beetinguis'ed by anot'er w'ic' substitute t'esame, it is im&erative t'at it be so declared in


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une/uivocal terms, or t'at t'e old and t'e new

obligations be on every &oint incom&atible wit'eac' ot'er. (1%)

Article 1&$*! >ovation w'ic' consists insubstituting a new debtor in t'e &lace of t'e

original one, may be made even wit'out t'enowledge or against t'e will of t'e latter, but not wit'out t'e consent of t'e creditor. 5ayment byt'e new debtor gives 'im t'e rig'ts mentioned inarticles 1" and 1"4. (1a)

Article 1&$+! 3f t'e substitution is wit'out t'enowledge or against t'e will of t'e debtor, t'enew debtors insolvency or non$fulfillment of t'e

obligations s'all not give rise to any liability on t'e&art of t'e original debtor. (n)

Article 1&$5! 0'e insolvency of t'e new debtor, w'o 'as been &ro&osed by t'e original debtor and

acce&ted by t'e creditor, s'all not revive t'e actionof t'e latter against t'e original obligor, ece&t w'en said insolvency was already eisting and of&ublic nowledge, or nown to t'e debtor, w'ent'e delegated 'is debt. (1a)

Article 1&$! 9'en t'e &rinci&al obligation isetinguis'ed in conse/uence of a novation,accessory obligations may subsist only insofar ast'ey may benefit t'ird &ersons w'o did not give

t'eir consent. (14)

Article 1&$"! 3f t'e new obligation is void, t'e

original one s'all subsist, unless t'e &artiesintended t'at t'e former relation s'ould beetinguis'ed in any event. (n)

Article 1&$#! 0'e novation is void if t'e originalobligation was void, ece&t w'en annulment may

be claimed only by t'e debtor or w'en ratification validates acts w'ic' are voidable. (1*a)

Article 1&$$! 3f t'e original obligation wassubject to a sus&ensive or resolutory condition, t'e

new obligation s'all be under t'e same condition,unless it is ot'erwise sti&ulated. (n)

Article 1*%%! =ubrogation of a t'ird &erson int'e rig'ts of t'e creditor is eit'er legal or

conventional. 0'e former is not &resumed, ece&tin cases e&ressly mentioned in t'is !ode; t'elatter must be clearly establis'ed in order t'at itmay tae effect. (1+a)

Article 1*%1! !onventional subrogation of a t'ird

&erson re/uires t'e consent of t'e original &artiesand of t'e t'ird &erson. (n)

Article 1*%&! 3t is &resumed t'at t'ere is legalsubrogation:

(1) 9'en a creditor &ays anot'er creditor w'o is&referred, even wit'out t'e debtors nowledge;

() 9'en a t'ird &erson, not interested in t'e

obligation, &ays wit' t'e e&ress or tacit a&&rovalof t'e debtor;

(") 9'en, even wit'out t'e nowledge of t'edebtor, a &erson interested in t'e fulfillment of t'e

obligation &ays, wit'out &rejudice to t'e effects ofconfusion as to t'e latters s'are. (11a)

Article 1*%*! =ubrogation transfers to t'e&ersons subrogated t'e credit wit' all t'e rig'ts

t'ereto a&&ertaining, eit'er against t'e debtor oragainst t'ird &erson, be t'ey guarantors or&ossessors of mortgages, subject to sti&ulation in aconventional subrogation. (11a)

Article 1*%+! A creditor, to w'om &artial&ayment 'as been made, may eercise 'is rig't fort'e remainder, and 'e s'all be &referred to t'e&erson w'o 'as been subrogated in 'is &lace in

virtue of t'e &artial &ayment of t'e same credit.(11")

TITLE IICO'TRACT-


Article 1*%5! A contract is a meeting of minds

between two &ersons w'ereby one binds 'imself, wit' res&ect to t'e ot'er, to give somet'ing or torender some service. (1%a)

Article 1*%! 0'e contracting &arties may

establis' suc' sti&ulations, clauses, terms andconditions as t'ey may deem convenient, &rovidedt'ey are not contrary to law, morals, goodcustoms, &ublic order, or &ublic &olicy. (1a)


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Article 1*%"! 3nnominate contracts s'all be

regulated by t'e sti&ulations of t'e &arties, by t'e&rovisions of 0itles 3 and 33 of t'is -oo, by t'erules governing t'e most analogous nominate

contracts, and by t'e customs of t'e &lace. (n)

Article 1*%#! 0'e contract must bind bot'contracting &arties; its validity or com&liancecannot be left to t'e will of one of t'em. (1a)

Article 1*%$! 0'e determination of t'e

&erformance may be left to a t'ird &erson, w'osedecision s'all not be binding until it 'as beenmade nown to bot' contracting &arties. (n)

Article 1*1%! 0'e determination s'all not be

obligatory if it is evidently ine/uitable. 3n suc'case, t'e courts s'all decide w'at is e/uitable

under t'e circumstances. (n)

Article 1*11! !ontracts tae effect only betweent'e &arties, t'eir assigns and 'eirs, ece&t in case w'ere t'e rig'ts and obligations arising from t'econtract are not transmissible by t'eir nature, or by sti&ulation or by &rovision of law. 0'e 'eir is

not liable beyond t'e value of t'e &ro&erty 'ereceived from t'e decedent.

3f a contract s'ould contain some sti&ulation infavor of a t'ird &erson, 'e may demand its

fulfillment &rovided 'e communicated 'isacce&tance to t'e obligor before its revocation. Amere incidental benefit or interest of a &erson is

not sufficient. 0'e contracting &arties must 'aveclearly and deliberately conferred a favor u&on at'ird &erson. (14a)

Article 1*1&! 3n contracts creating real rig'ts,t'ird &ersons w'o come into &ossession of t'e

object of t'e contract are bound t'ereby, subject tot'e &rovisions of t'e @ortgage Law and t'e Land7egistration Laws. (n)

Article 1*1*! !reditors are &rotected in cases of

contracts intended to defraud t'em. (n)

Article 1*1+! Any t'ird &erson w'o induces

anot'er to violate 'is contract s'all be liable fordamages to t'e ot'er contracting &arty. (n)

Article 1*15! !ontracts are &erfected by mereconsent, and from t'at moment t'e &arties are bound not only to t'e fulfillment of w'at 'as beene&ressly sti&ulated but also to all t'e

conse/uences w'ic', according to t'eir nature,

may be in ee&ing wit' good fait', usage and law.(1*)

Article 1*1! 7eal contracts, suc' as de&osit,&ledge and commodatum, are not &erfected until

t'e delivery of t'e object of t'e obligation. (n)

Article 1*1"! >o one may contract in t'e name ofanot'er wit'out being aut'ori?ed by t'e latter, orunless 'e 'as by law a rig't to re&resent 'im.

A contract entered into in t'e name of anot'er byone w'o 'as no aut'ority or legal re&resentation,or w'o 'as acted beyond 'is &owers, s'all beunenforceable, unless it is ratified, e&ressly or

im&liedly, by t'e &erson on w'ose be'alf it 'as been eecuted, before it is revoed by t'e ot'er

contracting &arty. (1+a)

CHAPTER &Essential Re7(isites o) Contracts

General Provisions

Article 1*1#! 0'ere is no contract unless t'efollowing re/uisites concur:

(1) !onsent of t'e contracting &arties;

() Object certain w'ic' is t'e subject matter oft'e contract;

(") !ause of t'e obligation w'ic' is establis'ed.(11)

-ECTIO' 1Consent

Article 1*1$! !onsent is manifested by t'e

meeting of t'e offer and t'e acce&tance u&on t'et'ing and t'e cause w'ic' are to constitute t'econtract. 0'e offer must be certain and t'eacce&tance absolute. A /ualified acce&tanceconstitutes a counter$offer.

Acce&tance made by letter or telegram does not bind t'e offerer ece&t from t'e time it came to 'isnowledge. 0'e contract, in suc' a case, is&resumed to 'ave been entered into in t'e &lace

w'ere t'e offer was made. (1a)


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Article 1*&%! An acce&tance may be e&ress or

im&lied. (n)

Article 1*&1! 0'e &erson maing t'e offer may fi

t'e time, &lace, and manner of acce&tance, all of w'ic' must be com&lied wit'. (n)

Article 1*&&! An offer made t'roug' an agent isacce&ted from t'e time acce&tance iscommunicated to 'im. (n)

Article 1*&*! An offer becomes ineffective u&ont'e deat', civil interdiction, insanity, or insolvency of eit'er &arty before acce&tance is conveyed. (n)

Article 1*&+! 9'en t'e offerer 'as allowed t'e

offeree a certain &eriod to acce&t, t'e offer may be wit'drawn at any time before acce&tance by

communicating suc' wit'drawal, ece&t w'en t'eo&tion is founded u&on a consideration, as

somet'ing &aid or &romised. (n)

Article 1*&5!


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em&loyed by a t'ird &erson w'o did not tae &art

in t'e contract. (1*)

Article 1**"! 0'ere is undue influence w'en a

&erson taes im&ro&er advantage of 'is &ower overt'e will of anot'er, de&riving t'e latter of a

reasonable freedom of c'oice. 0'e followingcircumstances s'all be considered: t'econfidential, family, s&iritual and ot'er relations between t'e &arties, or t'e fact t'at t'e &ersonalleged to 'ave been unduly influenced was

suffering from mental weaness, or was ignorantor in financial distress. (n)

Article 1**#! 0'ere is fraud w'en, t'roug'

insidious words or mac'inations of one of t'econtracting &arties, t'e ot'er is induced to enterinto a contract w'ic', wit'out t'em, 'e would not'ave agreed to. (1+)

Article 1**$! ailure to disclose facts, w'en t'ereis a duty to reveal t'em, as w'en t'e &arties are bound by confidential relations, constitutes fraud.(n)

Article 1*+%! 0'e usual eaggerations in trade, w'en t'e ot'er &arty 'ad an o&&ortunity to nowt'e facts, are not in t'emselves fraudulent. (n)

Article 1*+1! A mere e&ression of an o&inion

does not signify fraud, unless made by an e&ertand t'e ot'er &arty 'as relied on t'e formerss&ecial nowledge. (n)

Article 1*+&! @isre&resentation by a t'ird

&erson does not vitiate consent, unless suc'misre&resentation 'as created substantial mistaeand t'e same is mutual. (n)

Article 1*+*! @isre&resentation made in goodfait' is not fraudulent but may constitute error. (n)

Article 1*++! 3n order t'at fraud may mae acontract voidable, it s'ould be serious and s'ould

not 'ave been em&loyed by bot' contracting&arties.

3ncidental fraud only obliges t'e &erson em&loyingit to &ay damages. (14)

Article 1*+5! =imulation of a contract may beabsolute or relative. 0'e former taes &lace w'ent'e &arties do not intend to be bound at all; t'e

latter, w'en t'e &arties conceal t'eir true

agreement. (n)

Article 1*+! An absolutely simulated or

fictitious contract is void. A relative simulation, w'en it does not &rejudice a t'ird &erson and is

not intended for any &ur&ose contrary to law,morals, good customs, &ublic order or &ublic&olicy binds t'e &arties to t'eir real agreement. (n)

-ECTIO' &

Ob8ect o) Contracts

Article 1*+"! All t'ings w'ic' are not outside t'ecommerce of men, including future t'ings, may bet'e object of a contract. All rig'ts w'ic' are not

intransmissible may also be t'e object of contracts.

>o contract may be entered into u&on futurein'eritance ece&t in cases e&ressly aut'ori?ed by

law.

All services w'ic' are not contrary to law, morals,good customs, &ublic order or &ublic &olicy mayliewise be t'e object of a contract. (141a)

Article 1*+#! 3m&ossible t'ings or servicescannot be t'e object of contracts. (14)

Article 1*+$! 0'e object of every contract must

be determinate as to its ind. 0'e fact t'at t'e/uantity is not determinate s'all not be an

obstacle to t'e eistence of t'e contract, &rovidedit is &ossible to determine t'e same, wit'out t'eneed of a new contract between t'e &arties. (14")

-ECTIO' *Ca(se o) Contracts

Article 1*5%! 3n onerous contracts t'e cause is

understood to be, for eac' contracting &arty, t'e&restation or &romise of a t'ing or service by t'eot'er; in remuneratory ones, t'e service or benefit w'ic' is remunerated; and in contracts of &ure

beneficence, t'e mere liberality of t'e benefactor.(14%)

Article 1*51! 0'e &articular motives of t'e &artiesin entering into a contract are different from t'e

cause t'ereof. (n)

Article 1*5&! !ontracts wit'out cause, or wit'unlawful cause, &roduce no effect w'atever. 0'ecause is unlawful if it is contrary to law, morals,


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good customs, &ublic order or &ublic &olicy.

(14a)

Article 1*5*! 0'e statement of a false cause in

contracts s'all render t'em void, if it s'ould not be&roved t'at t'ey were founded u&on anot'er cause

w'ic' is true and lawful. (14)

Article 1*5+! Alt'oug' t'e cause is not stated int'e contract, it is &resumed t'at it eists and islawful, unless t'e debtor &roves t'e contrary.

(144)

Article 1*55! 8ce&t in cases s&ecified by law,lesion or inade/uacy of cause s'all not invalidate acontract, unless t'ere 'as been fraud, mistae or

undue influence. (n)

CHAPTER *9or3 o) Contracts

Article 1*5! !ontracts s'all be obligatory, in w'atever form t'ey may 'ave been entered into,&rovided all t'e essential re/uisites for t'eir validity are &resent. 6owever, w'en t'e law

re/uires t'at a contract be in some form in ordert'at it may be valid or enforceable, or t'at acontract be &roved in a certain way, t'atre/uirement is absolute and indis&ensable. 3n suc'cases, t'e rig't of t'e &arties stated in t'e

following article cannot be eercised. (14*a)

Article 1*5"! 3f t'e law re/uires a document or

ot'er s&ecial form, as in t'e acts and contractsenumerated in t'e following article, t'e

contracting &arties may com&el eac' ot'er toobserve t'at form, once t'e contract 'as been&erfected. 0'is rig't may be eercisedsimultaneously wit' t'e action u&on t'e contract.

(14+a)

Article 1*5#! 0'e following must a&&ear in a&ublic document:

(1) Acts and contracts w'ic' 'ave for t'eir objectt'e creation, transmission, modification oretinguis'ment of real rig'ts over immovable

&ro&erty; sales of real &ro&erty or of an interestt'erein are governed by articles 1%", >o. , and

1%;

() 0'e cession, re&udiation or renunciation of'ereditary rig'ts or of t'ose of t'e conjugal&artners'i& of gains;

(") 0'e &ower to administer &ro&erty, or any ot'er

&ower w'ic' 'as for its object an act a&&earing or w'ic' s'ould a&&ear in a &ublic document, ors'ould &rejudice a t'ird &erson;

(%) 0'e cession of actions or rig'ts &roceeding

from an act a&&earing in a &ublic document.

All ot'er contracts w'ere t'e amount involvedeceeds five 'undred &esos must a&&ear in writing, even a &rivate one. -ut sales of goods,

c'attels or t'ings in action are governed byarticles, 1%", >o. and 1%. (1*a)

CHAPTER +Re)or3ation o) Instr(3ents (n)

Article 1*5$! 9'en, t'ere 'aving been a meeting

of t'e minds of t'e &arties to a contract, t'eir trueintention is not e&ressed in t'e instrument

&ur&orting to embody t'e agreement, by reason ofmistae, fraud, ine/uitable conduct or accident,one of t'e &arties may as for t'e reformation oft'e instrument to t'e end t'at suc' true intentionmay be e&ressed.

3f mistae, fraud, ine/uitable conduct, or accident'as &revented a meeting of t'e minds of t'e&arties, t'e &ro&er remedy is not reformation oft'e instrument but annulment of t'e contract.

Article 1*%! 0'e &rinci&les of t'e general law ont'e reformation of instruments are 'ereby ado&ted

insofar as t'ey are not in conflict wit' t'e&rovisions of t'is !ode.

Article 1*1! 9'en a mutual mistae of t'e&arties causes t'e failure of t'e instrument todisclose t'eir real agreement, said instrument may

be reformed.

Article 1*&! 3f one &arty was mistaen and t'eot'er acted fraudulently or ine/uitably in suc' a way t'at t'e instrument does not s'ow t'eir true

intention, t'e former may as for t'e reformationof t'e instrument.

Article 1**! 9'en one &arty was mistaen andt'e ot'er new or believed t'at t'e instrument did

not state t'eir real agreement, but concealed t'atfact from t'e former, t'e instrument may bereformed.


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Article 1*+! 9'en t'roug' t'e ignorance, lac

of sill, negligence or bad fait' on t'e &art of t'e&erson drafting t'e instrument or of t'e cler orty&ist, t'e instrument does not e&ress t'e true

intention of t'e &arties, t'e courts may order t'att'e instrument be reformed.

Article 1*5! 3f two &arties agree u&on t'emortgage or &ledge of real or &ersonal &ro&erty, but t'e instrument states t'at t'e &ro&erty is soldabsolutely or wit' a rig't of re&urc'ase,

reformation of t'e instrument is &ro&er.

Article 1*! 0'ere s'all be no reformation int'e following cases:

(1) =im&le donations inter vivos w'erein nocondition is im&osed;

() 9ills;

(") 9'en t'e real agreement is void.

Article 1*"! 9'en one of t'e &arties 'as broug't an action to enforce t'e instrument, 'e

cannot subse/uently as for its reformation.

Article 1*#! 7eformation may be ordered at t'einstance of eit'er &arty or 'is successors ininterest, if t'e mistae was mutual; ot'erwise,

u&on &etition of t'e injured &arty, or 'is 'eirs andassigns.

Article 1*$! 0'e &rocedure for t'e reformationof instrument s'all be governed by rules of court to

be &romulgated by t'e =u&reme !ourt.

CHAPTER 5Interretation o) Contracts

Article 1*"%! 3f t'e terms of a contract are clearand leave no doubt u&on t'e intention of t'econtracting &arties, t'e literal meaning of itssti&ulations s'all control.

3f t'e words a&&ear to be contrary to t'e evident

intention of t'e &arties, t'e latter s'all &revail overt'e former. (1*1)

Article 1*"1! 3n order to judge t'e intention of

t'e contracting &arties, t'eir contem&oraneousand subse/uent acts s'all be &rinci&allyconsidered. (1*)

Article 1*"&! 6owever general t'e terms of a

contract may be, t'ey s'all not be understood tocom&re'end t'ings t'at are distinct and cases t'atare different from t'ose u&on w'ic' t'e &arties

intended to agree. (1*")

Article 1*"*! 3f some sti&ulation of any contracts'ould admit of several meanings, it s'all beunderstood as bearing t'at im&ort w'ic' is mostade/uate to render it effectual. (1*%)

Article 1*"+! 0'e various sti&ulations of acontract s'all be inter&reted toget'er, attributingto t'e doubtful ones t'at sense w'ic' may resultfrom all of t'em taen jointly. (1*)

Article 1*"5! 9ords w'ic' may 'ave differentsignifications s'all be understood in t'at w'ic' is

most in ee&ing wit' t'e nature and object of t'econtract. (1*)

Article 1*"! 0'e usage or custom of t'e &laces'all be borne in mind in t'e inter&retation of t'eambiguities of a contract, and s'all fill t'eomission of sti&ulations w'ic' are ordinarily

establis'ed. (1*4)

Article 1*""! 0'e inter&retation of obscure wordsor sti&ulations in a contract s'all not favor t'e&arty w'o caused t'e obscurity. (1**)

Article 1*"#! 9'en it is absolutely im&ossible tosettle doubts by t'e rules establis'ed in t'e

&receding articles, and t'e doubts refer toincidental circumstances of a gratuitous contract,

t'e least transmission of rig'ts and interests s'all&revail. 3f t'e contract is onerous, t'e doubt s'all be settled in favor of t'e greatest reci&rocity ofinterests.

3f t'e doubts are cast u&on t'e &rinci&al object oft'e contract in suc' a way t'at it cannot be nown w'at may 'ave been t'e intention or will of t'e&arties, t'e contract s'all be null and void. (1*+)

Article 1*"$! 0'e &rinci&les of inter&retationstated in 7ule 1" of t'e 7ules of !ourt s'all

liewise be observed in t'e construction ofcontracts. (n)

CHAPTER Rescissible Contracts


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Article 1*#%! !ontracts validly agreed u&on may

be rescinded in t'e cases establis'ed by law.(1+)

Article 1*#1! 0'e following contracts arerescissible:

(1) 0'ose w'ic' are entered into by guardians w'enever t'e wards w'om t'ey re&resent sufferlesion by more t'an one$fourt' of t'e value of t'et'ings w'ic' are t'e object t'ereof;

() 0'ose agreed u&on in re&resentation ofabsentees, if t'e latter suffer t'e lesion stated int'e &receding number;

(") 0'ose undertaen in fraud of creditors w'ent'e latter cannot in any ot'er manner collect t'e

claims due t'em;

(%) 0'ose w'ic' refer to t'ings under litigation if

t'ey 'ave been entered into by t'e defendant wit'out t'e nowledge and a&&roval of t'elitigants or of com&etent judicial aut'ority;

() All ot'er contracts s&ecially declared by law to be subject to rescission. (1+1a)

Article 1*#&! 5ayments made in a state ofinsolvency for obligations to w'ose fulfillment t'e

debtor could not be com&elled at t'e time t'ey were effected, are also rescissible. (1+)

Article 1*#*! 0'e action for rescission issubsidiary; it cannot be instituted ece&t w'en t'e

&arty suffering damage 'as no ot'er legal means toobtain re&aration for t'e same. (1+%)

Article 1*#+! 7escission s'all be only to t'eetent necessary to cover t'e damages caused. (n)

Article 1*#5! 7escission creates t'e obligation toreturn t'e t'ings w'ic' were t'e object of t'econtract, toget'er wit' t'eir fruits, and t'e &rice wit' its interest; conse/uently, it can be carried

out only w'en 'e w'o demands rescission canreturn w'atever 'e may be obliged to restore.

>eit'er s'all rescission tae &lace w'en t'e t'ings

w'ic' are t'e object of t'e contract are legally int'e &ossession of t'ird &ersons w'o did not act in bad fait'.

3n t'is case, indemnity for damages may be

demanded from t'e &erson causing t'e loss. (1+)

Article 1*#! 7escission referred to in >os. 1 and

of article 1"*1 s'all not tae &lace wit' res&ect tocontracts a&&roved by t'e courts. (1+a)

Article 1*#"! All contracts by virtue of w'ic' t'edebtor alienates &ro&erty by gratuitous title are&resumed to 'ave been entered into in fraud ofcreditors, w'en t'e donor did not reserve

sufficient &ro&erty to &ay all debts contracted before t'e donation.

Alienations by onerous title are also &resumedfraudulent w'en made by &ersons against w'om

some judgment 'as been rendered in any instanceor some writ of attac'ment 'as been issued. 0'e

decision or attac'ment need not refer to t'e&ro&erty alienated, and need not 'ave been

obtained by t'e &arty seeing t'e rescission.

3n addition to t'ese &resum&tions, t'e design todefraud creditors may be &roved in any ot'ermanner recogni?ed by t'e law of evidence. (1+4a)

Article 1*##! 9'oever ac/uires in bad fait' t'et'ings alienated in fraud of creditors, s'allindemnify t'e latter for damages suffered by t'emon account of t'e alienation, w'enever, due to any

cause, it s'ould be im&ossible for 'im to returnt'em.

3f t'ere are two or more alienations, t'e firstac/uirer s'all be liable first, and so on

successively. (1+*a)

Article 1*#$! 0'e action to claim rescission must be commenced wit'in four years.

or &ersons under guardians'i& and for absentees,t'e &eriod of four years s'all not begin until t'etermination of t'e formers inca&acity, or until t'edomicile of t'e latter is nown. (1++)

CHAPTER " Voidable Contracts

Article 1*$%! 0'e following contracts are

voidable or annullable, even t'oug' t'ere may'ave been no damage to t'e contracting &arties:

(1) 0'ose w'ere one of t'e &arties is inca&able ofgiving consent to a contract;


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() 0'ose w'ere t'e consent is vitiated by mistae,

violence, intimidation, undue influence or fraud.

0'ese contracts are binding, unless t'ey are

annulled by a &ro&er action in court. 0'ey aresusce&tible of ratification. (n)

Article 1*$1! 0'e action for annulment s'all be broug't wit'in four years.

0'is &eriod s'all begin:

3n cases of intimidation, violence or undueinfluence, from t'e time t'e defect of t'e consentceases.

3n case of mistae or fraud, from t'e time of t'ediscovery of t'e same.

And w'en t'e action refers to contracts enteredinto by minors or ot'er inca&acitated &ersons,

from t'e time t'e guardians'i& ceases. (1"1a)

Article 1*$&! 7atification etinguis'es t'e actionto annul a voidable contract. (1"+a)

Article 1*$*! 7atification may be effectede&ressly or tacitly. 3t is understood t'at t'ere is atacit ratification if, wit' nowledge of t'e reason w'ic' renders t'e contract voidable and suc'

reason 'aving ceased, t'e &erson w'o 'as a rig'tto invoe it s'ould eecute an act w'ic'

necessarily im&lies an intention to waive 'is rig't.(1"11a)

Article 1*$+! 7atification may be effected by t'eguardian of t'e inca&acitated &erson. (n)

Article 1*$5! 7atification does not re/uire t'econformity of t'e contracting &arty w'o 'as no

rig't to bring t'e action for annulment. (1"1)

Article 1*$! 7atification cleanses t'e contractfrom all its defects from t'e moment it wasconstituted. (1"1")

Article 1*$"! 0'e action for t'e annulment ofcontracts may be instituted by all w'o are t'erebyobliged &rinci&ally or subsidiarily. 6owever,&ersons w'o are ca&able cannot allege t'e

inca&acity of t'ose wit' w'om t'ey contracted;nor can t'ose w'o eerted intimidation, violence,or undue influence, or em&loyed fraud, or caused

mistae base t'eir action u&on t'ese flaws of t'e

contract. (1"a)

Article 1*$#! An obligation 'aving been

annulled, t'e contracting &arties s'all restore toeac' ot'er t'e t'ings w'ic' 'ave been t'e subject

matter of t'e contract, wit' t'eir fruits, and t'e&rice wit' its interest, ece&t in cases &rovided bylaw.

3n obligations to render service, t'e value t'ereof

s'all be t'e basis for damages. (1""a)

Article 1*$$! 9'en t'e defect of t'e contractconsists in t'e inca&acity of one of t'e &arties, t'einca&acitated &erson is not obliged to mae any

restitution ece&t insofar as 'e 'as been benefited by t'e t'ing or &rice received by 'im. (1"%)

Article 1+%%! 9'enever t'e &erson obliged by

t'e decree of annulment to return t'e t'ing cannot do so because it 'as been lost t'roug' 'is fault,'e s'all return t'e fruits received and t'e value oft'e t'ing at t'e time of t'e loss, wit' interest fromt'e same date. (1"4a)

Article 1+%1! 0'e action for annulment ofcontracts s'all be etinguis'ed w'en t'e t'ing w'ic' is t'e object t'ereof is lost t'roug' t'e fraudor fault of t'e &erson w'o 'as a rig't to institute

t'e &roceedings.

3f t'e rig't of action is based u&on t'e inca&acity

of any one of t'e contracting &arties, t'e loss of t'et'ing s'all not be an obstacle to t'e success of t'e

action, unless said loss too &lace t'roug' t'efraud or fault of t'e &laintiff. (1"1%a)

Article 1+%&! As long as one of t'e contracting

&arties does not restore w'at in virtue of t'edecree of annulment 'e is bound to return, t'eot'er cannot be com&elled to com&ly wit' w'at isincumbent u&on 'im. (1"*)

CHAPTER #4nen)orceable Contracts (n)

Article 1+%*! 0'e following contracts areunenforceable, unless t'ey are ratified:

(1) 0'ose entered into in t'e name of anot'er&erson by one w'o 'as been given no aut'ority orlegal re&resentation, or w'o 'as acted beyond 'is&owers;


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() 0'ose t'at do not com&ly wit' t'e =tatute of

rauds as set fort' in t'is number. 3n t'e followingcases an agreement 'ereafter made s'all beunenforceable by action, unless t'e same, or some

note or memorandum, t'ereof, be in writing, andsubscribed by t'e &arty c'arged, or by 'is agent;

evidence, t'erefore, of t'e agreement cannot bereceived wit'out t'e writing, or a secondaryevidence of its contents:

(a) An agreement t'at by its terms is not to be

&erformed wit'in a year from t'e maing t'ereof;

(b) A s&ecial &romise to answer for t'e debt,default, or miscarriage of anot'er;

E An agreement made in consideration ofmarriage, ot'er t'an a mutual &romise to marry;

(d) An agreement for t'e sale of goods, c'attels or

t'ings in action, at a &rice not less t'an five'undred &esos, unless t'e buyer acce&t and receive&art of suc' goods and c'attels, or t'e evidences,or some of t'em, of suc' t'ings in action or &ay att'e time some &art of t'e &urc'ase money; but

w'en a sale is made by auction and entry is made by t'e auctioneer in 'is sales boo, at t'e time oft'e sale, of t'e amount and ind of &ro&erty sold,terms of sale, &rice, names of t'e &urc'asers and&erson on w'ose account t'e sale is made, it is a

sufficient memorandum;

(e) An agreement for t'e leasing for a longer

&eriod t'an one year, or for t'e sale of real&ro&erty or of an interest t'erein;

( f ) A re&resentation as to t'e credit of a t'ird&erson.

(") 0'ose w'ere bot' &arties are inca&able ofgiving consent to a contract.

Article 1+%+! o. of article 1%", areratified by t'e failure to object to t'e &resentation

of oral evidence to &rove t'e same, or by t'eacce&tance of benefit under t'em.

Article 1+%! 9'en a contract is enforceableunder t'e =tatute of rauds, and a &ublic

document is necessary for its registration in t'e

7egistry of Beeds, t'e &arties may avail t'emselvesof t'e rig't under Article 1"4.

Article 1+%"! 3n a contract w'ere bot' &arties areinca&able of giving consent, e&ress or im&lied

ratification by t'e &arent, or guardian, as t'e casemay be, of one of t'e contracting &arties s'all givet'e contract t'e same effect as if only one of t'em were inca&acitated.

3f ratification is made by t'e &arents or guardians,as t'e case may be, of bot' contracting &arties, t'econtract s'all be validated from t'e ince&tion.

Article 1+%#!


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Article 1+1%! 0'e action or defense for t'e

declaration of t'e ineistence of a contract doesnot &rescribe.

Article 1+11! 9'en t'e nullity &roceeds from t'eillegality of t'e cause or object of t'e contract, and

t'e act constitutes a criminal offense, bot' &arties being in &ari delicto, t'ey s'all 'ave no actionagainst eac' ot'er, and bot' s'all be &rosecuted.@oreover, t'e &rovisions of t'e 5enal !oderelative to t'e dis&osal of effects or instruments of

a crime s'all be a&&licable to t'e t'ings or t'e&rice of t'e contract.

0'is rule s'all be a&&licable w'en only one of t'e

&arties is guilty; but t'e innocent one may claim w'at 'e 'as given, and s'all not be bound tocom&ly wit' 'is &romise. (1")

Article 1+1&! 3f t'e act in w'ic' t'e unlawful or

forbidden cause consists does not constitute acriminal offense, t'e following rules s'all beobserved:

(1) 9'en t'e fault is on t'e &art of bot'

contracting &arties, neit'er may recover w'at 'e'as given by virtue of t'e contract, or demand t'e&erformance of t'e ot'ers undertaing;

() 9'en only one of t'e contracting &arties is at

fault, 'e cannot recover w'at 'e 'as given byreason of t'e contract, or as for t'e fulfillment of w'at 'as been &romised 'im. 0'e ot'er, w'o is

not at fault, may demand t'e return of w'at 'e 'asgiven wit'out any obligation to com&ly 'is&romise. (1")

Article 1+1*! 3nterest &aid in ecess of t'einterest allowed by t'e usury laws may be

recovered by t'e debtor, wit' interest t'ereonfrom t'e date of t'e &ayment.

Article 1+1+! 9'en money is &aid or &ro&ertydelivered for an illegal &ur&ose, t'e contract may

be re&udiated by one of t'e &arties before t'e&ur&ose 'as been accom&lis'ed, or before anydamage 'as been caused to a t'ird &erson. 3n suc'case, t'e courts may, if t'e &ublic interest will t'us

be subserved, allow t'e &arty re&udiating t'econtract to recover t'e money or &ro&erty.

Article 1+15! 9'ere one of t'e &arties to anillegal contract is inca&able of giving consent, t'e

courts may, if t'e interest of justice so demands

allow recovery of money or &ro&erty delivered by

t'e inca&acitated &erson.

Article 1+1! 9'en t'e agreement is not illegal

&er se but is merely &ro'ibited, and t'e&ro'ibition by t'e law is designed for t'e

&rotection of t'e &laintiff, 'e may, if &ublic &olicyis t'ereby en'anced, recover w'at 'e 'as &aid ordelivered.

Article 1+1"! 9'en t'e &rice of any article or

commodity is determined by statute, or byaut'ority of law, any &erson &aying any amount inecess of t'e maimum &rice allowed may recoversuc' ecess.

Article 1+1#! 9'en t'e law fies, or aut'ori?est'e fiing of t'e maimum number of 'ours of

labor, and a contract is entered into w'ereby alaborer undertaes to wor longer t'an t'e

maimum t'us fied, 'e may demand additionalcom&ensation for service rendered beyond t'etime limit.

Article 1+1$! 9'en t'e law sets, or aut'ori?es t'e

setting of a minimum wage for laborers, and acontract is agreed u&on by w'ic' a laborer acce&tsa lower wage, 'e s'all be entitled to recover t'edeficiency.

Article 1+&%! 3n case of a divisible contract, if t'eillegal terms can be se&arated from t'e legal ones,t'e latter may be enforced.

Article 1+&1! 0'e defense of illegality of contract

is not available to t'ird &ersons w'ose interestsare not directly affected.

Article 1+&&! A contract w'ic' is t'e direct result

of a &revious illegal contract, is also void andineistent.

TITLE III'AT4RAL OBLIGATIO'-

Article 1+&*! Obligations are civil or natural.!ivil obligations give a rig't of action to com&el

t'eir &erformance. >atural obligations, not being based on &ositive law but on e/uity and natural

law, do not grant a rig't of action to enforce t'eir&erformance, but after voluntary fulfillment by t'eobligor, t'ey aut'ori?e t'e retention of w'at 'as been delivered or rendered by reason t'ereof.


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=ome natural obligations are set fort' in t'e

following articles.

Article 1+&+! 9'en a rig't to sue u&on a civil

obligation 'as la&sed by etinctive &rescri&tion,t'e obligor w'o voluntarily &erforms t'e contract

cannot recover w'at 'e 'as delivered or t'e valueof t'e service 'e 'as rendered.

Article 1+&5! 9'en wit'out t'e nowledge oragainst t'e will of t'e debtor, a t'ird &erson &ays a

debt w'ic' t'e obligor is not legally bound to &ay because t'e action t'ereon 'as &rescribed, but t'edebtor later voluntarily reimburses t'e t'ird&erson, t'e obligor cannot recover w'at 'e 'as

&aid.

Article 1+&! 9'en a minor between eig'teen

and twenty$one years of age w'o 'as entered into acontract wit'out t'e consent of t'e &arent or

guardian, after t'e annulment of t'e contract voluntarily returns t'e w'ole t'ing or &ricereceived, notwit'standing t'e fact t'at 'e 'as not been benefited t'ereby, t'ere is no rig't todemand t'e t'ing or &rice t'us returned.

Article 1+&"! 9'en a minor between eig'teenand twenty$one years of age, w'o 'as entered intoa contract wit'out t'e consent of t'e &arent orguardian, voluntarily &ays a sum of money or

delivers a fungible t'ing in fulfillment of t'eobligation, t'ere s'all be no rig't to recover t'esame from t'e obligee w'o 'as s&ent or consumedit in good fait'. (11A)

Article 1+! 9'en, after an action to enforce acivil obligation 'as failed t'e defendant voluntarily &erforms t'e obligation, 'e cannot demand t'ereturn of w'at 'e 'as delivered or t'e &ayment of

t'e value of t'e service 'e 'as rendered.

Article 1+&$! 9'en a testate or intestate 'eir voluntarily &ays a debt of t'e decedent eceedingt'e value of t'e &ro&erty w'ic' 'e received by will

or by t'e law of intestacy from t'e estate of t'edeceased, t'e &ayment is valid and cannot berescinded by t'e &ayer.

Article 1+*%! 9'en a will is declared void because it 'as not been eecuted in accordance wit' t'e formalities re/uired by law, but one of t'eintestate 'eirs, after t'e settlement of t'e debts oft'e deceased, &ays a legacy in com&liance wit' a

clause in t'e defective will, t'e &ayment is effectiveand irrevocable.

TITLE IV

E-TOPPEL (n)

Article 1+*1! 0'roug' esto&&el an admission or

re&resentation is rendered conclusive u&on t'e&erson maing it, and cannot be denied or

dis&roved as against t'e &erson relying t'ereon.

Article 1+*&! 0'e &rinci&les of esto&&el are'ereby ado&ted insofar as t'ey are not in conflict wit' t'e &rovisions of t'is !ode, t'e !ode of

!ommerce, t'e 7ules of !ourt and s&ecial laws.

Article 1+**! 8sto&&el may in &ais or by deed.

Article 1+*+! 9'en a &erson w'o is not t'e

owner of a t'ing sells or alienates and delivers it,and later t'e seller or grantor ac/uires title

t'ereto, suc' title &asses by o&eration of law to t'e buyer or grantee.

Article 1+*5! 3f a &erson in re&resentation ofanot'er sells or alienates a t'ing, t'e formercannot subse/uently set u& 'is own title as againstt'e buyer or grantee.

Article 1+*! A lessee or a bailee is esto&&edfrom asserting title to t'e t'ing leased or received,as against t'e lessor or bailor.

Article 1+*"! 9'en in a contract between t'ird&ersons concerning immovable &ro&erty, one of

t'em is misled by a &erson wit' res&ect to t'eowners'i& or real rig't over t'e real estate, t'elatter is &recluded from asserting 'is legal title or

interest t'erein, &rovided all t'ese re/uisites are&resent:

(1) 0'ere must be fraudulent re&resentation or wrongful concealment of facts nown to t'e &arty

esto&&ed;

() 0'e &arty &recluded must intend t'at t'e ot'ers'ould act u&on t'e facts as misre&resented;

(") 0'e &arty misled must 'ave been unaware oft'e true facts; and

(%) 0'e &arty defrauded must 'ave acted in

accordance wit' t'e misre&resentation.

Article 1+*#! One w'o 'as allowed anot'er toassume a&&arent owners'i& of &ersonal &ro&erty


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for t'e &ur&ose of maing any transfer of it,

cannot, if 'e received t'e sum for w'ic' a &ledge'as been constituted, set u& 'is own title to defeatt'e &ledge of t'e &ro&erty, made by t'e ot'er to a

&ledgee w'o received t'e same in good fait' andfor value.

Article 1+*$! 8sto&&el is effective only as between t'e &arties t'ereto or t'eir successors ininterest.

TITLE V TR4-T- (n)


Article 1++%! A &erson w'o establis'es a trust is

called t'e trustor; one in w'om confidence isre&osed as regards &ro&erty for t'e benefit of

anot'er &erson is nown as t'e trustee; and t'e&erson for w'ose benefit t'e trust 'as been createdis referred to as t'e beneficiary.

Article 1++1! 0rusts are eit'er e&ress or im&lied.

8&ress trusts are created by t'e intention of t'etrustor or of t'e &arties. 3m&lied trusts come into being by o&eration of law.

Article 1++&! 0'e &rinci&les of t'e general law of

trusts, insofar as t'ey are not in conflict wit' t'is!ode, t'e !ode of !ommerce, t'e 7ules of !ourtand s&ecial laws are 'ereby ado&ted.

CHAPTER &

E2ress Tr(sts

Article 1++*! >o e&ress trusts concerning animmovable or any interest t'erein may be &roved by &arol evidence.

Article 1+++! >o &articular words are re/uiredfor t'e creation of an e&ress trust, it beingsufficient t'at a trust is clearly intended.

Article 1++5! >o trust s'all fail because t'etrustee a&&ointed declines t'e designation, unlesst'e contrary s'ould a&&ear in t'e instrumentconstituting t'e trust.

Article 1++! Acce&tance by t'e beneficiary isnecessary. >evert'eless, if t'e trust im&oses noonerous condition u&on t'e beneficiary, 'is

acce&tance s'all be &resumed, if t'ere is no &roof

to t'e contrary.

CHAPTER *

I3lied Tr(sts

Article 1++"! 0'e enumeration of t'e followingcases of im&lied trust does not eclude ot'ersestablis'ed by t'e general law of trust, but t'elimitation laid down in article 1%% s'all bea&&licable.

Article 1++#! 0'ere is an im&lied trust w'en&ro&erty is sold, and t'e legal estate is granted toone &arty but t'e &rice is &aid by anot'er for t'e&ur&ose of 'aving t'e beneficial interest of t'e

&ro&erty. 0'e former is t'e trustee, w'ile t'e latteris t'e beneficiary. 6owever, i

Oblicon Codal Provisions

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Transcript of Oblicon Codal Provisions