OBLIGATIONS AND CONTRACTS
REVIEWER
TITLE I – OBLIGATIONS CHAPTER 1 GENERAL PROVISIONS 1156. An obligation is a j!i"i#al n$#$ssit% to gi&$' to "o' o! not to "o.
JURIDICAL NECESSITY – juridical tie; connotes that in case of nonco!liance" there #ill $e le%al sanctions& •
•
An obligation is nothin% ore than the dut' of a !erson (o$li%or) to satisf' a s!ecific deanda$le clai of another !erson (o$li%ee) #hich" if $reached" is enforcea$le in court& A contract necessaril' %i*es rise to an o$li%ation $ut an o$li%ation does not al#a's need to ha*e a contract&
+INDS ,- ,.LI/AT ,.LI/ATI,N I,N A& -ro the *ie#!oint of 0sanction1 2 (a) CI3IL ,.LI/ATI,N – that defined in Article 4456; an o$li%ation" if not fulfilled #hen it $ecoes due and process deanda$le" a' $e enforced in court throu%h action; $ased on la#; the sanction is judicial due process ,.LI/ATI,N – defined in Article 4789; a s!ecial :ind of o$li%ation #h ich cannot $e enforced in court $ut (b) NATURAL ,.LI/ATI,N #hich authories the retention of the *oluntar' !a'ent or !erforance ade $' the de$tor; $ased on e
If a Catholic !roises to hear ass for 4? consecuti*e Sunda's in order to recei*e @4"???" this o$li%ation $ecoes a ci*il one&) .& -ro the *ie#!oint of su$ject atter 2 (a) REAL ,.LI/A ,.LI/ATI, TI,N N – the o$li%atio o$li%ation n to %i*e ($) @ERS,NAL ,.LI/ATI,N ,.LI/ATI,N – the o$li%ation o$li%ation to do or not to do (e&%& the dut' to !aint a house" or to refrain refrain fro coittin% a nuisance) C& -ro the affirati*eness and ne%ati*eness of the o$li%ation 2 (a) @,SITI @,SITI3E 3E ,R A--IR=ATI A--IR=ATI3E 3E ,.LI/ATI ,.LI/ATI,N ,N – the o$li%ation o$li%ation to %i*e or to do ($) NE/ATI3E ,.LI/ATI,N ,.LI/ATI,N – the o$li%ation o$li%ation not to do do (#hich naturall' inludes inludes not to %i*e) D& -ro the *ie#!oint of !ersons o$li%ed 2 0sanction1 2 (a) UNILATERAL – #here onl' one of the !arties is $ound (e&%& @lato o#es Socrates @4"???& @lato ust !a' Socrates&) Socrates&) ($) .ILATERAL – #here $oth !arties are $ound (e&%& In a contract of sale" the $u'er is o$li%ed o$li%ed to deli*er) 2 a' $e> ($&4) reci!rocal ($&8) non2reci!rocal – #here !erforance $' one is non2de!endent u!on !erforance $' the other ELE=ENTS ,- ,.LI/ATI, ,.LI/ATI,N N a) ACTI3E SU.JEC SU.JECT T – (Creditor (Creditor ,$li ,$li%ee) %ee) the the !erson !erson #ho is deand deandin% in% the !erfor !erforance ance of of the o$li% o$li%ation; ation; $) @ASSI3E @ASS I3E SU.JECT SU.JECT – (De$tor (De$tor ,$li%or ,$li%or)) the one $ound $ound to !erfor !erfor the the !restation !restation or to fulfil fulfilll the o$li%ation o$li%ation or dut'; dut'; c) @RESTAT @REST ATI,N I,N – (to %i*e" %i*e" to do" or not to do) do) o$ject; su$ject su$ject atter atter of the o$li%at o$li%ation; ion; conduct conduct re
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INJURY – #ron%ful act or oission #hich causes loss or har to another DA=A/E – result of injur' (loss" hurt" har)
115). Obligation a!is$s *!o+ – ,1- la/ ,0- #ont!a#ts/ ,- 2asi3#ont!a#ts/ 2asi3#ont!a#ts/ ,4- a#ts o! o+issions nis$" b% la/ ,52asi3"$li#ts.
forth and cannot $e !resued ,1- LA7 (,$li%ation eB le%e) – i!osed $' la# itself; ust $e eB!ressl' or i!liedl' set forth 2 See Article 1158 ,0- CONTRACTS (,$li%ation eB contractu) – arise fro sti!ulations of the !arties> eetin% of the inds foral a%reeent 2 ust $e co!lied #ith in %ood faith $ecause it is the 0la#1 $et#een !arties; n either !art' a' unilaterall' e*ade his o$li%ation in the contract" unless> a) co contr ntrac actt au autho thori rie es s it $) ot othe herr !ar !art' t' as asse sent nts s Note: Parties may freely enter into any stipulations pro!ided t"ey are not contrary to law morals good customs public order or public policy # $See Article 115% ,- 89ASI3CONT 89ASI3CONTRACTS RACTS (,$li%ation eB a& Ne%oti Ne%otioru oru %estio %estio 2 unauthoried unauthoried ana%eent; ana%eent; This This ta:es !lace !lace #hen a !erson !erson *oluntaril' *oluntaril' ta:es ta:es char%e of anothers anothers a$andoned $usiness or !ro!ert' #ithout the o#ners authorit' $& Soluti Solutio o inde$iti inde$iti 2 undue !a'ent; !a'ent; This ta:es ta:es !lace #hen #hen soethin% soethin% is recei*ed recei*ed #hen #hen there is no ri%ht ri%ht to deand it" it" and it #as undul' deli*ered thru ista:e 2 See Article 11&' ,4- :ELICTS (,$li%ation eB aleficio or eB delicto) – arise fro ci*il lia$ilit' #hich is the conse 4& @erti @ertinent nent !ro*isio !ro*isions ns of the R@C R@C and other other !enal la#s la#s su$ject su$ject to Art 84FF 84FF Ci*il Ci*il Code Art 4??" R@C – E*er' !erson criinall' criinall' lia$le for a felon' is also ci*ill' lia$le 8& Cha!ter 8" @relii @reliinar' nar' title" title" on Guan Relat Relations ions ( Ci*il Code ) 9& Tit Title le 4H of of .oo: .oo: I3 of of the Ci*i Ci*ill Code Code – on daa% daa%es es 2 See Article 11&1 ,5- 89ASI3:ELICTS ; TORTS (,$li%ation eB
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Unless such o$li%ations are E@RESSLY !ro*ided $' la#" the' are not deanda$le and enforcea$le" and cannot $e !resued to eBist& The Ci*il Code can $e a!!lica$le su!!letoril' to o$li%ations arisin% fro la#s other than t he Ci*il Code itself& S!ecial la#s – refer to all other la#s not contained in the Ci*il Code&
115>. Obligations a!ising *!o+ #ont!a#ts a&$ t$ *o!#$ o* la b$t$$n t$ #ont!a#ting a!ti$s an" sol" b$ #o+li$" it in goo" *ait.
C,NTRACT – eetin% of inds $et#een t#o !ersons #here$' one $inds hiself" #ith res!ect to the other" to %i*e" to do soethin% or to render soe ser*ice; %o*erned !riaril' $' the a%reeent of th e contractin% !arties& 3ALID C,NTRACT – it should not $e a%ainst t he la#" contrar' to orals" %ood custos" !u$lic order" and !u$lic !olic'&
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INJURY – #ron%ful act or oission #hich causes loss or har to another DA=A/E – result of injur' (loss" hurt" har)
115). Obligation a!is$s *!o+ – ,1- la/ ,0- #ont!a#ts/ ,- 2asi3#ont!a#ts/ 2asi3#ont!a#ts/ ,4- a#ts o! o+issions nis$" b% la/ ,52asi3"$li#ts.
forth and cannot $e !resued ,1- LA7 (,$li%ation eB le%e) – i!osed $' la# itself; ust $e eB!ressl' or i!liedl' set forth 2 See Article 1158 ,0- CONTRACTS (,$li%ation eB contractu) – arise fro sti!ulations of the !arties> eetin% of the inds foral a%reeent 2 ust $e co!lied #ith in %ood faith $ecause it is the 0la#1 $et#een !arties; n either !art' a' unilaterall' e*ade his o$li%ation in the contract" unless> a) co contr ntrac actt au autho thori rie es s it $) ot othe herr !ar !art' t' as asse sent nts s Note: Parties may freely enter into any stipulations pro!ided t"ey are not contrary to law morals good customs public order or public policy # $See Article 115% ,- 89ASI3CONT 89ASI3CONTRACTS RACTS (,$li%ation eB a& Ne%oti Ne%otioru oru %estio %estio 2 unauthoried unauthoried ana%eent; ana%eent; This This ta:es !lace !lace #hen a !erson !erson *oluntaril' *oluntaril' ta:es ta:es char%e of anothers anothers a$andoned $usiness or !ro!ert' #ithout the o#ners authorit' $& Soluti Solutio o inde$iti inde$iti 2 undue !a'ent; !a'ent; This ta:es ta:es !lace #hen #hen soethin% soethin% is recei*ed recei*ed #hen #hen there is no ri%ht ri%ht to deand it" it" and it #as undul' deli*ered thru ista:e 2 See Article 11&' ,4- :ELICTS (,$li%ation eB aleficio or eB delicto) – arise fro ci*il lia$ilit' #hich is the conse 4& @erti @ertinent nent !ro*isio !ro*isions ns of the R@C R@C and other other !enal la#s la#s su$ject su$ject to Art 84FF 84FF Ci*il Ci*il Code Art 4??" R@C – E*er' !erson criinall' criinall' lia$le for a felon' is also ci*ill' lia$le 8& Cha!ter 8" @relii @reliinar' nar' title" title" on Guan Relat Relations ions ( Ci*il Code ) 9& Tit Title le 4H of of .oo: .oo: I3 of of the Ci*i Ci*ill Code Code – on daa% daa%es es 2 See Article 11&1 ,5- 89ASI3:ELICTS ; TORTS (,$li%ation eB
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Unless such o$li%ations are E@RESSLY !ro*ided $' la#" the' are not deanda$le and enforcea$le" and cannot $e !resued to eBist& The Ci*il Code can $e a!!lica$le su!!letoril' to o$li%ations arisin% fro la#s other than t he Ci*il Code itself& S!ecial la#s – refer to all other la#s not contained in the Ci*il Code&
115>. Obligations a!ising *!o+ #ont!a#ts a&$ t$ *o!#$ o* la b$t$$n t$ #ont!a#ting a!ti$s an" sol" b$ #o+li$" it in goo" *ait.
C,NTRACT – eetin% of inds $et#een t#o !ersons #here$' one $inds hiself" #ith res!ect to the other" to %i*e" to do soethin% or to render soe ser*ice; %o*erned !riaril' $' the a%reeent of th e contractin% !arties& 3ALID C,NTRACT – it should not $e a%ainst t he la#" contrar' to orals" %ood custos" !u$lic order" and !u$lic !olic'&
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In the e'es of la#" a *oid contract does not eBist and no o$li%ation #ill arise fro it&
,.LI/ATI,NS ARISIN/ -R,= C,NTRACTS – !riaril' %o*erned $' the sti!ulations" clauses" ters and conditions of their ,.LI/ATI,NS a%reeents& •
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If a contracts !restation is unconsciona$le (unfair) or unreasona$le" e*en if it does not *iolate orals" la#" etc&" it a' not $e enforced tota ll'& Inter!retation of contract in*ol*es a
C,=@LIANCE IN /,,D -AITG – co!liance or !erforance in accordance #ith the sti!ulations or ters of the contract or a%reeent& -ALSI-ICATI,N ,- A 3ALID C,NTRACT – onl' the unauthoried insertions #ill $e disre%arded; the ori%inal ters and sti!ulations should $e considered *alid and su$sistin% for the !artied to fulfill& 116?. Obligations "$!i&$" *!o+ 2asi3#ont!a#ts 2asi3#ont!a#ts sall b$ sbj$#t to t$ !o&isions o* #at$! 1' titl$ 1) o* tis boo@.
UASI2C,NTRACT – juridical relation resultin% fro la#ful" *oluntar' and unilateral acts $' *irtue of #hich" $oth !arties $ecoe $ound to each other" to the end that no one #ill $e unjustl' enriched or $enefited at the eB!ense of t he other& (See Article 8478) (4) NE/,TI,RU= /ESTI, – juridical relation #hich ta:es !lace #hen soe$od' *oluntaril' ana%es the !ro!ert' affairs of another #ithout the :no#led%e or consent of the latter; o#ner shall rei$urse the %estor for necessar' and useful eB!enses incurred $' the latter for the !erforance of his function as %estor& (8) S,LUTI, INDE.ITI – soethin% is recei*ed #hen #hen there is no ri%ht to deand deand it and it #as undul' deli*ered throu%h ista:e; o$li%ation to return the thin% arises on the !art of the reci!ient& (e&%& If I let a store:ee!er chan%e ' @5?? $ill and $' error he %i*es e @56?" I ha*e the dut' to return the eBtra @6?) 1161. Ci&il obligations a!ising *!o+ #!i+inal o**$ns$s sall b$ go&$!n$" b% t$ $nal las' sbj$#t to t$ !o&isions o* A!ti#l$ 01))' an" o* t$ $!tin$nt !o&isions o* Cat$! 0' P!$li+ina!% in H+an R$lations' an" o* Titl$ 1< o* tis boo@' !$glating "a+ag$s.
/o*ernin% rules> 4& @erti @ertinent nent !ro*isio !ro*isions ns of the R@C R@C and other other !enal la#s la#s su$ject su$ject to Art 84FF 84FF Ci*il Ci*il Code Art 4??" R@C – E*er' !erson criinall' criinall' lia$le for a felon' is also ci*ill' lia$le 8& Cha!ter 8" @relii @reliinar' nar' title" title" on Guan Relat Relations ions ( Ci*il Code ) 9& Tit Title le 4H of of .oo: .oo: I3 of of the Ci*i Ci*ill Code Code – on daa% daa%es es •
E*er' !erson criinall' lia$le for a felon' is a lso criinall' lia$le (art& 4??" R@C)
CRI=INAL LIA.ILITY INCLUDES> (a) RESTITUTI,N – restoration of !ro!ert' !re*iousl' !re*iousl' ta:en a#a'; the thin% itself shall $e restored" e*en thou%h it $e found in the !ossession of a third !erson #ho has ac !rice of a thin%" sentiental *alue" etc& (c) INDE=NI-ICATI,N -,R C,NSEUENTIAL DA=A/ES – includes daa%es suffered $' the fail' fail' of the injured !art' or $' a third !erson $' reason of the crie& ffect of ac*uittal in criminal case: case : a& #hen ac
1160. Obligations "$!i&$" *!o+ 2asi3"$li#ts sall b$ go&$!n$" b% t$ !o&isions o* #at$! 0' titl$ 1) o* tis boo@'
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an" b% s$#ial las.
UASI2DELICT (cul!a a a& oission $& ne%li%ence c& da daa a%e %e ca caus used ed to to the the !la !lain inti tiff ff d& direc directt relation relation of oissi oission" on" $ein% $ein% the cause" cause" and the daa%e" daa%e" $ein% $ein% the effect effect e& no !re2eBi !re2eBisti stin% n% contrac contractual tual relat relation ions s $et#een $et#een !arties !arties -ault or Ne%li%ence – consists in the oission of that dili%ence #hich is re
:ELICTS Criinal alicious Affects @U.LIC interest Criinal and ci*il lia$ilities @ur!ose – !unishent Cannot $e co!roised @ro*ed $e'ond reasona$le dou$t
89ASI3:ELICTS Ne%li%ence Affects @RI3ATE interest Ci*il lia$ilit' Indenification Can $e co!roised @re!onderance of e*idence
CHAPTER 0 NAT9RE AN: EECT O OBLIGATIONS 116. E&$!% $!son oblig$" to gi&$ so+$ting is also oblig$" to ta@$ #a!$ o* it it t$ !o$! "ilig$n#$ "ilig$n#$ o* a goo" *at$! o* a *a+il%' nl$ss t$ la o! t$ stilation o* t$ a!ti$s !$2i!$s anot$! stan"a!" o* #a!$. •
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S!ea:s of an o$li%ation to care of a DETER=INATE thin% (that is one #hich is s!ecific; a th in% identified $' its indi*idualit') #hich an o$li%or is su!!osed to deli*er to anoth er& Reason> the o$li%or cannot ta:e care of the #hole class%enus
DUTIES ,- DE.T,R> •
@reser*e or ta:e care of the thin%s due& DILI/ENCE ,- A /,,D -ATGER – a %ood father does not a$andon his fail'" he is al#a's read' to !ro*ide and !rotect his fail'; ordinar' care #hich an a*era%e and reasona$l' !rudent an #ould do& 2 Defi De fined ned in th the e ne% ne%at ati* i*e e in Ar Arti ticl cle e 44F 44F9 9 AN,TGER STANDARD ,- CARE – eBtraordinar' dili%ence !ro*ided in the sti!ulation of !arties& -ACT,RS T, .E C,NSIDERED – dili%ence dili%ence de!ends on the natu re of o$li%ation and corres!onds #ith the circustances of the !erson" tie" and !lace&
KK De$tor is not lia$le if his failure to deli*er the thin% is due to fortuitous e *ents or force ajeure #ithout ne%li%ence or fault in his !art& • • • •
Deli*er the fruits of a thin% Deli*er the accessionsaccessories Deli*er the thin% itself Ans#er for daa%es in case of non2fulfillent or $reach
1164. T$ #!$"ito! as a !igt to t$ *!its o* t$ ting *!o+ t$ ti+$ t$ obligation to "$li&$! it a!is$s. Ho$&$!' $
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sall a#2i!$ no !$al !igt o&$! it ntil t$ sa+$ as b$$n "$li&$!$" to i+.
REAL RI/GT (jus in re) – ri%ht !ertainin% to !erson o*er a s!ecific thin%" #ithout a !assi*e su$ject indi*iduall' deterined a%ainst #ho such ri%ht a' $e !ersonall' en forced& a ri%ht enforcea$le a%ainst the #hole #orld − @ERS,NAL RI/GT (jus ad re) – a ri%ht !erta inin% to a !erson to deand fro another" as a definite !assi*e su$ject" the fulfillent of a !restation to %i*e" to do or not to do& a ri%ht enforcea$le onl' a%ainst a definite !erson or %rou! of !ersons& − •
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.efore the deli*er'" the creditor" creditor" in o$li%ations to %i*e" has erel' a !ersonal ri%ht a%ainst the de$tor – a ri%ht to as: for deli*er' of the thin% and the fruits thereof& ,nce the thin% and the fruits are deli*ered" then he ac
� ACTUAL DELI3ERY – actual deli*er' of a thin% fro the hand of the %rantor to the hand of the %rantee (!resonall')" or anifested $' certain !ossessor' acts eBecuted $' the %rantee #ith the consent of the %rantor (realt')& -RUITS> 4& NAT NATURAL URAL – s!ontaneou s!ontaneous s !roducts !roducts of the the soil" soil" the 'oun% and and other !roduc !roducts ts of anials; anials; 8& INDUST INDUSTRIAL RIAL – !roduced !roduced $' lands lands of of an' culti* culti*ation ation or la$or; la$or; 9& CI3 CI3IL IL – those those deri*e deri*ed d $' *irtue *irtue of jurid juridica icall relatio relation& n& KK SEE Article 4467 (retroacti*it' of the effects of conditional o$li%ation to %i*e once the condition has $een fulfilled)
1165. 7$n at is to b$ "$li&$!$" is a "$t$!+inat$ ting' t$ #!$"ito! +a% #o+$l t$ "$bto! to +a@$ "$li&$!%. I* t$ ting is in"$t$!+ina in"$t$!+inat$ t$ o! g$n$!i#' $ +a% as@ tat t$ obligation b$ #o+li$" it at t$ $=$ns$ o* t$ "$bto!. I* t$ obligo! "$la%s o! as !o+is$" to "$li&$! t$ sa+$ ting to to o! +o!$ $!sons o "o not a&$ t$ sa+$ int$!$st' $ sall b$ !$sonsibl$ *o! an% *o!titos $&$nt ntil $ as $**$#t$" t$ "$li&$!%.
KThis !ro*ision a!!lies to an o$li%ation to %i*e& DETER=INATE TGIN/ soethin% #hich is susce!ti$le of !articular desi%nation or s!ecification; o$li%ation is eBtin%uished if the thin% is lost due to fortuitous e*ents& Article 476?> a thin% is deterinate #hen it is !articularl' desi%nated and !h'sicall' se%re%ated fro all others o f the sae class& INDETER=INATE TGIN/ soethin% that has reference onl' to a class or %enus; o$li%ation to deli*er is not so eBtin%uished $' fortuitous e*ents& RE=EDIES -,R -AILURE ,- DELI3ERY (deterinate thin%) 4& Co!l Co!laint aint for s!ecifi s!ecific c !erforance !erforance – an an action to co! co!el el the fulf fulfillen illentt of the o$li%atio o$li%ation& n& 8& Co!l Co!laint aint for for rescissio rescission n of the o$li%atio o$li%ation n – action action to resci rescind nd 9& Co!l Co!laint aint for daa%es daa%es – action action to clai clai for co!e co!ensatio nsation n of daa%es daa%es su suffered ffered •
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As a %eneral rule" 0no !erson sh all $e res!onsi$le for those e*ents #hich could not $e foreseen" or #hich" thou%h foreseen" are ine*ita$le" eBce!t> 4& in case cases s eB!re eB!ressl ssl' ' s!eci s!ecifie fied d $' the la# 8& #he #hen n it is sti! sti!ula ulated ted $' the !ar !artie ties s 9& #hen the the nature nature of the o$li%a o$li%ation tion re
1166. T$ obligation to gi&$ a "$t$!+inat$ ting in#l"$s tat o* "$li&$!ing all its a##$ssions an" a##$sso!i$s' $&$n
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tog t$% +a% not a&$ b$$n +$ntion$".
ACCESSI,NS – fruits of the thin% or additions to or i!ro*eents u!on the !rinci!al those #hich are naturall' or artificiall' attached to the thin% − ACCESS,RIES – thin%s included #ith the !rinci!al for the latters e$ellishent" $etter use" or co!letion +"en does rig"t to fruits arise M – fro the tie the o$li%ation to deli*er arises Conditional – fro the oent the condition ha!!ens ith a ter!eriod – u!on the eB!iration of the ter!eriod Si!le – fro the !erfection of the contract 116). I* a $!son oblig$" to "o so+$ting *ails to "o it' t$ sa+$ sall b$ $=$#t$" at is #ost. Tis sa+$ !l$ sall b$ obs$!&$" i* $ "o$s it in #ont!a&$ntion o* t$ t$no! o* t$ obligation it +a% b$ "$#!$$" tat at as b$$n oo!l% "on$ b$ n"on$.
K This !ro*ision a!!lies to an o$li%ation to do& TGREE SITUATI,NS> a) De$tors failure to !erfor an o$li%ation creditor a' do the o$li%ation" or $' another" at the eB!ense of the de$tor; reco*er daa%es $) @erforance #as contrar' to the ters a%reed u!on order of the court to undo the sae at the eB!ense of the de$tor c) @erforance in a !oor anner order of the court to undo the sae at the eB!ense of the de$tor 116<. 7$n t$ obligation #onsists in NOT :OING an" t$ obligo! "o$s at as b$$n *o!bi""$n i+' it sall also b$ n"on$ at is $=$ns$.
K This !ro*ision a!!lies to an o$li%ation not to do& 116>. Tos$ oblig$" to "$li&$! o! to "o so+$ting in#! in "$la% *!o+ t$ ti+$ t$ oblig$$ j"i#iall% o! $=t!aj"i#iall% "$+an"s *!o+ t$+ t$ *l*ill+$nt o* t$i! obligation. Ho$&$!' t$ "$+an" b% t$ #!$"ito! sall not b$ n$#$ssa!% in o!"$! tat "$la% +a% $=ists( • • • • •
7$n t$ la o! obligation so $=!$ssl% "$#la!$s/ 7$n *!o+ t$ nat!$ o* t$ #ont!a#t' ti+$ s t$ $ss$n#$ an" +oti&ating *a#to! *o! its $stablis+$nt/ 7$n "$+an" ol" b$ s$l$ss ,!$station is i+ossibl$-/ In !$#i!o#al obligations' *!o+ t$ +o+$nt on$ o* t$ a!ti$s *l*ills is obligation/ 7$n t$ "$bto! a"+its $ is in "$*alt
,RDINARY DELAY – ere failure to !erfor an o$li%ation at the a!!ointed tie& LE/AL DELAY (DE-AULT) – tantaount to non2fulfillent of the o$li%ation and a rises after an eBtrajudicial or judicial deand #as ade u!on the de$tor& IN:S O :EA9LT> a) DORA SOLVEN:I – dela' on the !art of the de$tor to fulfill his o$li%ation; REUISITES> 4& failure of the o$li%or to !erfor o$li%ation on the DATE a%reed u!on; 8& deand (judicialeBtrajudicial) $' the creditor; 9& failure to co!l' #ith such deand
E--ECTS> 4) 8)
de$tor – lia$le for daa%es and interests de$tor – lia$le for the loss of a thin% due to a fortuitous e*ent
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+INDS> 4) 8)
ora sol*endi eB re – default in real o$li%ations (to %i*e) ora sol*endi eB !ersona – default in !ersonal o$li%ations (to do)
$)
DORA ACCIPIEN:I – dela' on the !art of the creditor to acce!t the !erforance of the o$li%ation;
Effects> 4& creditor – lia$le for daa%es 8& creditor – $ears the ris: of loss of the thin% 9& de$tor – not lia$le for interest fro the tie of creditors dela' 7& de$tor – release hiself fro the o$li%ation c) CODPENSATIO DORAE – dela' of the o$li%ors in reci!rocal o$li%ation& Effect> the default of one co!ensates the default of the other; their res!ecti*e lia$ilities sha ll $e offset e
Default Dela' in ne%ati*e o$li%ation is not !ossi$le& (In ne%ati*e o$li%ation" onl' fulfillent and *iolation are !ossi$le)
11)?. Tos$ o in t$ $!*o!+an#$ o* t$i! obligations a!$ gilt% o* *!a"' n$glig$n#$' o! "$la%' an" tos$ o in an% +ann$! #ont!a&$n$ t$ t$no! t$!$o*' a!$ liabl$ *o! "a+ag$s.
-RAUD (dolo) – deli$erate intentional e*asion of the faithful fulfillent of an o$li%ation; NE/LI/ENCE (cul!a or fault) – *oluntar' act or oission of dili%ence" there $ein% no alice" #hich !re*ents the noral fulfillent of an o$li%ation; DELAY (ora) – default or tardiness in the !erforance of an o$li%ation after it has $een due and deanda$le; C,NTRA3ENTI,N ,- TER=S ,- ,.LI/ATI,N (*iolation)– *iolation of ters and conditions sti!ulated in the o$li%ation; this ust not $e due to a fortuitous e*ent&
11)1. R$sonsibilit% a!ising *!o+ *!a" is "$+an"abl$ in all obligations. An% ai&$! o* an a#tion *o! *t!$ *!a" is &oi". • • •
To allo# such #ai*er #ill necessaril' ren der the o$li%ator' force of contracts illusor'& The la# does not !rohi$it #ai*er of an action for daa%es $ased on fraud alread' coitted& An' deli$erate de*iation fro the noral #a' of fulfillin% the o$li%ation a' $e a !ro!er $asis for clai for daa%es a%ainst the %uilt' !art'&
INCIDENTAL -RAUD (a!!lica$le !ro*isions are Arts& 44F? O 4977) – coitted in the !erforance of an o$li%ation alread' eBistin% $ecause of a contract; incidental fraud o$li%es the !erson e!lo'in% it to !a' daa%es& CAUSAL -RAUD – (Art& 499H) e!lo'ed in the eBecution of contract in order to secure consent; reed' is annulent $ecause of *itiation of consent& 11)0. R$sonsibilit% a!ising *!o+ n$glig$n#$ in t$ $!*o!+an#$ o* $&$!% @in" o* obligation is also "$+an"abl$' bt s# liabilit% +a% b$ !$glat$" b% t$ #o!ts' a##o!"ing to #i!#+stan#$s.
Courts discretion $ecause> (a) ne%li%ence de!ends u!on the circustances of a case – %ood or $ad faith of the o$li%or a' $e considered as #ell as the conduct or isconduct of the o$li%ee; ($) it is not as serious as fraud& Ne%li%ence – lac: of foresi%ht or :no#led%e I!rudence – lac: of s:ill or !recaution TEST ,- NE/LI/ENCE Did the defendant" in doin% the alle%ed ne%li%ent act" use the reasona$le care and caution #hich an ordinar' !rudent an #ould ha*e used in the sae situationM
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T, TY@ES ,- NE/LI/ENCE> Basis
DE-INITI,N NATURE ,- NE/LI/ENCE /,,D -ATGER ,- TGE -A=ILY DE-ENSE @RESU=@TI,N ,NE/LI/ENCE
1. Cla A2iliana ,8asi3"$li#tNe%li%ence $et#een !arties not so related $' !re2eBistin% contract Direct" su$stanti*e and inde!endent Co!lete and !ro!er defense (!arents" %uardian" e!lo'ers) No !resu!tion – injured !art' ust !ro*e ne%li%ence of the defendant&
0. Cla Cont!a#tal ,B!$a# o* #ont!a#tNe%li%ence in the !erforance of contractual o$li%ation Incidental to the !erforance of the o$li%ation& Not co!lete and !ro!er defense in the selection of e!lo'ees& There is !resu!tion – defendant ust !ro*e that there #as no ne%li%ence in the carr'in% out of the ters of the contract&
11). T$ *alt o! n$glig$n#$ o* t$ obligo! #onsists in t$ o+ission o* tat "ilig$n#$ i# is !$2i!$" b% t$ nat!$ o* t$ obligation an" #o!!$son"s it t$ #i!#+stan#$s o* t$ $!sons' o* $ ti+$ an" o* t$ la#$ I* t$ la o! #ont!a#t "o$s not stat$ t$ "ilig$n#$ i# is to b$ obs$!&$" in t$ $!*o!+an#$' tat i# is $=$#t$" i* a goo" *at$! o* a *a+il% sall b$ !$2i!$". 2 This !ro*ision !ro*ides for a ne%ati*e definition of 0!ro!er dili%ence of a %ood father of a fail'1
-RAUD distin%uished fro NE/LI/ENCE RA9: There is deli$erate intention to cause daa%e& Lia$ilit' cannot $e iti%ated& ai*er for future fraud is *oid&
NEGLIGENCE There is no deli$erate intention to cause daa%e& Lia$ilit' a' $e iti%ated& ai*er for future ne%li%ence a' $e allo#ed in certain cases>
DILI/ENCE – the attention and care re 4& DILI/ENCE ,- A /,,D -ATGER – a %ood father does not a$andon his fail'" he is al#a's read' to !ro*ide and !rotect his fail'; ordinar' care #hich an a*era%e and reasona$l' !rudent an #ould do& 8& Dili%ence re
-,RTUIT,US E3ENT – an occurrence or ha!!enin% #hich could not $e foreseen or e*en if foreseen" is ine*ita$le; a$solutel' inde!endent of huan inter*ention; act of /od& -,RCE =AJEURE 2 an e*ent caused $' the le%itiate or ille%itiate acts of !ersons other than the o$li%or; there is huan inter*ention&
REUISITES 4& 8& 9& 7&
,- -,RTUIT,US E3EN T> I93I Inde!endent of the huan #ill (or at least of the o$li%ors) 9nforeseen or una*oida$le ,f such character as to render it i!ossi$le for the o$li%or to co!l' #ith his o$li%ation in a n oral anner ,$li%or – * ree fro an' !artici!ationa%%ra*ation of the injur' to th e o$li%ee (no ne%li%ence or i!rudence)
EE@TI,NS> 4& hen it is eB!ressl' sti!ulated that he shall $e lia$le e*en if non2!erforance of the o$li%ation is due to fortuitous e*ents; 8& hen the nature of the o$li%ation re
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9& 7& 5& 6&
hen the hen the hen the hen the
o$li%or is in dela'; o$li%or has !roised the sae thin% to t#o or ore !ersons #ho do not ha*e the sae interest; !ossessor is in $ad faith and the thin% lost or deteriorated due to fortuitous e*ent; o$li%or contri$uted to the loss of the thin%&
11)5. 9s!ios t!ansa#tions sall b$ go&$!n$" b% s$#ial las. K see Article 4749
USURY – contractin% for or recei*in% interest in eBcess of the aount allo#ed $' la# for the loan or use of one'" %oods" etc& USURY LA – a:es the usurers criinall' lia$le if the interest char%ed on loans are ore that the liit !rescri$ed $' la#& This la# is re!ealed – Circular No& P?5 of the Central .an: has eB!ressl' reo*ed the interest ceilin%s !rescri$ed $' the USURY LA& •
11)6. T$ !$#$it o* t$ !in#ial b% t$ #!$"ito! itot !$s$!&ation it !$s$#t to t$ int$!$st' sall gi&$ !is$ to t$ !$s+tion tat sai" int$!$st as b$$n ai". T$ !$#$it o* a lat$! install+$nt o* a "$bt itot !$s$!&ation as to !io! install+$nts' sall li@$is$ !ais$ t$ !$s+tion tat s# install+$nts a&$ b$$n ai". • •
These are ere !resu!tions& To $e sure – #rite the interest and the dates co*ered $' such !a'ent in th e recei!t&
11)). T$ #!$"ito!s' a*t$! a&ing !s$" t$ !o$!t% in oss$ssion o* t$ "$bto! to satis*% t$i! #lai+s' +a% $=$!#is$ all t$ !igts an" b!ing all t$ a#tions o* t$ latt$! *o! t$ sa+$ !os$' sa&$ tos$ i# a!$ in$!$nt in is $!son/ t$% +a% also i+gn t$ a#ts i# t$ "$bto! +a% a&$ "on$ to "$*!a" t$+.
RE=EDIES A3AILA.LE T, CREDIT,RS -,R TGE SATIS-ACTI,N ,- TGEIR CLAI=S> 4& EBact fulfillent #ith ri%ht to daa%es 8& EBhaustion of the de$tors !ro!erties still in his !ossession – #rit of attachent ($efore jud%ent) or #rit of eBecution (for final jud%ent not 'et eBecuted) 9& ACCI,N SU.R,/AT,RIA – an action #here the creditor #hose clais had not $een full' satisfied" a' %o after the de$tors (9rd !erson) of the defendant de$tor& 7& ACCI,N @AULIANA – an action #here the creditor files an action in court for the RESCISSI,N of acts or contracts entered into $' the de$tor desi%ned to defraud the forer& 11)<. Sbj$#t to t$ las' all !igts a#2i!$" in &i!t$ o* an obligation a!$ t!ans+issibl$' i* t$!$ as b$$n no stilation to t$ #ont!a!%.
ECE@TI,NS> a) Those not transissi$le $' their nature li:e !urel' !ersonal ri%hts; $) Those not transissi$le $' !ro*ision of la#; c) Those not transissi$le $' sti!ulation of !arties&
CHAPTER :IERENT IN:S O OBLIGATIONS Section 1 – Pure and Conditional Obligations 11)>. E&$!% obligation os$ $!*o!+an#$ "o$s not "$$n" on a *t!$ o! n#$!tain $&$nt' o! on a ast $&$nt n@non to t$ a!ti$s' is "$+an"abl$ at on#$. E&$!% obligation i# #ontains a !$solto!% #on"ition sall also b$ "$+an"abl$' itot !$j"i#$ to t$ $**$#ts o* t$ a$ning o* t$ $&$nt.
@URE ,.LI/ATI,N – an o$li%ation #hich does not contain an' condition or ter u!on #h ich the fulfillent is ade to de!end; iediatel' deanda$le $' the creditors and the de$tor cannot $e eBcused fro not co!l'in% #ith his !restation& C,NDITI,NAL ,.LI/ATI,N – an o$li%ation #hich de!ends u!on a future or uncertain e*ent" or u!on a !ast e*ent un:no#n to the
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contractin% !arties& – an o$li%ation su$ject to a condition& a) Sus!ensi*e ,$li%ation – its fulfillent %i*es rise to an o$li%ation; the deanda$ilit' of the o$li%ation or the effecti*it' of the contract can ta:e !lace onl' after the condition has $een fulfilled& $) Resolutor' ,$li%ation – its ha!!enin% eBtin%uishes the o$li%ation #hich is alread' eBistin%; 11).
@ERI,D – a future and certain e*ent u !on the arri*al of #hich" the o$li%ation su$ject to it either arises or is eBtin%uished& INDICATI,NS ,- A TER= ,R @ERI,D> hen the de$tor $inds hiself to !a' – #hen his eans !erit hi to do so little $' little as soon as !ossi$le fro tie to tie as soon as I ha*e the one' in !artial !a'ent #hen in the !osition to !a' • • • • • • •
11<1. In #on"itional obligations' t$ a#2isition o* !igts' as $ll as t$ $=tingis+$nt o! loss o* tos$ al!$a"% a#2i!$"' sall "$$n" on t$ a$ning o* t$ $&$nt i# #onstitt$s t$ #on"ition.
Sus!ensi*e Condition – the ac
A!!lies onl' to sus!ensi*e conditions&
9 +INDS ,- C,NDITI,NS UNDER TGIS ARTICLE> 4& @,TESTATI3E – a sus!ensi*e condition #hich de!ends u!on the #ill of one of the contractin% !arties Q if at the sole #ill of the de$tor" it is *oid; if at the creditors" still *alid& this is to !re*ent the esta$lishent of illusor' o$li%ations& 8& CASUAL – the condition de!ends u!on chance or the #ill of a third !erson;(e&%& cell!hone #arrant') 9& =IED – the condition de!ends !artl' u!on the #ill of the !arties and !artl' u!on chance or the #ill of a third !erson; (eBa!le ni Att'& De Cha*e> !assin% the $ar) 11<. I+ossibl$ #on"itions' tos$ #ont!a!% to goo" #sto+s o! bli# oli#% an" tos$ !oibit$" b% la sall annl t$ obligation i# "$$n"s on t$+. I* t$ obligation is "i&isibl$' tat a!t t$!$o* i# is not a**$#t$" b% t$ i+ossibl$ o! nla*l #on"ition sall b$ &ali". T$ #on"ition not to "o an i+ossibl$ ting sall b$ #onsi"$!$" as not a&ing b$$n ag!$$" on.
@,SSI.LE C,NDITI,N – if it is ca!a$le of realiation or actualiation accordin% to nature" la#" !u$lic !olic' or %ood custos& 8 +INDS ,- I=@,SSI.LE C,NDITI,NS> 4& @h'sicall' I!ossi$le – cannot eBist or cannot $e done in its nature; 8& Le%all' I!ossi$le – contrar' to la#" %ood custos" or !u$lic !olic'&
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,nl' the affected o$li%ation is *oid" if the o$li%ation is di*isi$le" and the !art thereof not affected $' the i!ossi$le condition is *alid& ,nl' the condition is *oid if there is alread' a !re2eBistin% o$li%ation and it does not de!end u!on the fulfillent of the condition #hich is i!ossi$le& 11<4. T$ #on"ition tat so+$ $&$nt a$n at a "$t$!+inat$ ti+$ sall $=tingis t$ obligation as soon as t$ ti+$ $=i!$s o! i* it as b$#o+$ in"bitabl$ tat t$ $&$nt ill not ta@$ la#$.
@ositi*e condition – refers to the fulfillent of an e*ent or !erforance of an act Ne%ati*e condition – refers to the non2fulfillent or non2!erforance of an act& @,SITI3E SUS@ENSI3E C,NDITI,N The o$li%ation is eBtin%uished> 4& As soon as the TI=E E@IRES #ithout the e*ent ta:in% !lace; 8& As soon as it has $ecoe certain that the E3ENT ILL N,T TA+E @LACE althou%h the tie s!ecified has not 'et eB!ired& 11<5. T$ #on"ition tat so+$ $&$nt ill not a$n at a "$t$!+inat$ ti+$ sall !$n"$! t$ obligation $**$#ti&$ *!o+ t$ +o+$nt t$ ti+$ in"i#at$" as $las$"' o! i* it as b$#o+$ $&i"$nt tat t$ $&$nt #annot o##!. I* no ti+$ as b$$n *i=$"' t$ #on"ition sall b$ "$$+$" *l*ill$" at s# ti+$ as +a% a&$ !obabl% b$$n #ont$+lat$"' b$a!ing in +in" t$ nat!$ o* t$ obligation.
KK This is a condition of non2ha!!enin% of a future e*ent& The o$li%ation shall $ecoe effecti*e and $indin%> a) -ro the oent the tie indicated has ela!sed #ithout the e*ent ta:in% !lace; $) -ro the oent it has $ecoe e*ident that the e*ent cannot occur" althou%h the tie indicated has not 'et ela!sed& 44H7 2*s2 44H5 11<4 ,POSITIVE S9SPENSIVE ,ose obliges "imself to gi!e t"e pregnant woman -aria P5''' if s"e would gi!e birt" on or before .ecember /'0 a& Jose is LIA.LE if =aria %i*es $irth on or $efore Dece$er 9?& $& Jose is N,T LIA.LE if =aria %i*es $irth after Dece$er 9?&
c& If =aria #ould ha*e a iscarria%e $efore Dece$er 9?" the o$li%ation is ETIN/UISGED&
11<5 ,NEGATIVE S9SPENSIVE ,ose obliges "imself to gi!e t"e pregnant woman -aria P5''' if s"e would N2 gi!e birt" on .ecember /'0 a& Jose is N,T LIA.LE if =aria %i*es $irth on Dece$er 9?&
$& Jose is LIA.LE if =aria DID N,T %i*e $irth on Dece$er 9? – if =aria %i*es $irth .E-,RE or A-TER Dece$er 9?& c& If =aria #ould ha*e a iscarria%e $efore Dece$er 9?" the o$li%ation is deeed -UL-ILLED&
11<6. T$ #on"ition sall b$ "$$+$" *l*ill$" $n t$ obligo! &olnta!il% !$&$nts its *l*ill+$nt. This !ro*ision s!ea:s of the D,CTRINE ,- C,NSTRUCTI3E -UL-ILL=ENT − −
Co!are #ith Art& 48?9
2 REUISITES> 4& The condition is SUS@ENSI3E; 8& The o$li%or ACTUALLY @RE3ENTS the fulfillent of the condition; 9& Ge acts 3,LUNTARILY& • •
=alice or fraud is not re
11<). T$ $**$#ts o* a #on"itional obligation to gi&$' on#$ t$ #on"ition as b$$n *l*ill$"' sall !$t!oa#t to t$ "a% o* t$ #onstittion o* t$ obligation. N$&$!t$l$ss' $n t$ obligation i+os$s !$#i!o#al !$stations on t$ a!ti$s'
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t$ *!its an" int$!$sts "!ing t$ $n"$n#% o* t$ #on"ition sall b$ "$$+$" to a&$ b$$n +tall% #o+$nsat$". I* t$ obligation is nilat$!al' t$ "$bto! sall a!o!iat$ t$ *!its an" int$!$sts !$#$i&$"' nl$ss *!o+ t$ nat!$ an" #i!#+stan#$s o* t$ obligation it sol" b$ in*$!!$" tat t$ int$ntion o* t$ $!son #onstitting t$ sa+$ as "i**$!$nt. In obligations to "o an" not to "o' t$ #o!ts sall "$t$!+in$' in $a# #as$' t$ !$t!oa#ti&$ $**$#t o* t$ #on"ition tat as b$$n #o+li$" it. • • •
•
•
•
A!!lies onl' to fulfilled sus!ensi*e conditions& Retroacti*e statute The effects of the o$li%ation is deeed to coence not fro the fulfillent of the o$li%ation $ut fro the da' of its constitution (siilar to the le%itiation of a natural child) hen the o$li%ation is unilateral" the de$tor shall a!!ro!riate the fruits and interests recei*ed $ecause he does not recei*e an' e
11<<. T$ #!$"ito! +a%' b$*o!$ t$ *l*ill+$nt o* t$ #on"ition' b!ing t$ a!o!iat$ a#tions *o! t$ !$s$!&ation o* is !igt. T$ "$bto! +a% !$#o&$! at "!ing t$ sa+$ ti+$ $ as ai" b% +ista@$ in #as$ o* a ss$nsi&$ #on"ition.
Actions a*aila$le to the creditor> Action for !rohi$ition restrainin% the alienat ion of the thin% !endin% the ha!!enin% of the sus!ensi*e condition; Action to deand securit' if the de$tor has $ecoe insol*ent; Action to set aside alienations ade $' the de$tor in fraud of creditors; Actions a%ainst ad*erse !ossessors to interru!t the runnin% !rescri!ti*e !eriod& To ha*e his ri%hts annotated in the re%istr'& Ri%hts of the DE.T,R – entitled to reco*er #hat has $een !aid $' ista:e !rior to the ha!!enin% of the sus!ensi*e condition& 11<>. 7$n t$ #on"itions a&$ b$$n i+os$" it t$ int$ntion o* ss$n"ing t$ $**i#a#% o* an obligation to gi&$' t$ *olloing !l$s sall b$ obs$!&$" in #as$ o* t$ i+!o&$+$nt' loss o! "$t$!io!ation o* t$ ting "!ing t$ $n"$n#% o* t$ #on"ition(
L,SS (4) de$tor #ithout fault – o$li%ation is eBtin%uished (8) de$tor #ith fault – o$li%ation to !a' daa%es DETERI,RATI,N (4) de$tor #ithout fault – i!airent is to $e $orne $' the creditor (8) de$tor #ith fault – creditor chooses> rescission of o$li%ation" fulfillent" indenit' I=@R,3E=ENT (4) $' nature or tie – i!ro*eent> inure to the $enefit of the creditor (8) at the eB!ense of the de$tor – %ranted to the usufructuar' 11>?. 7$n t$ #on"itions a&$ *o! t$i! !os$ t$ $=tingis+$nt o* an obligation to gi&$' t$ a!ti$s' on t$ *l*ill+$nt o* sai" #on"itions' sall !$t!n to $a# ot$! at t$% a&$ !$#$i&$". In #as$ o* t$ loss' "$t$!io!ation o! i+!o&$+$nt o* t$ ting' t$ !o&isions i#' it !$s$#t to t$ "$bto!' a!$ lai" "on in t$ !$#$"ing a!ti#l$ sall b$ ali$" to t$ a!t% o is bon" to !$t!n. As *o! t$ obligations to "o an" not to "o' t$ !o&isions o* t$ s$#on" a!ag!a o* A!ti#l$ 11<) sall b$ obs$!&$" as !$ga!"s t$ $**$#t o* t$ $=tingis+$nt o* t$ obligation. •
Refers to the fulfillent of a resolutor' condition&
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• • • • •
hen the resolutor' condition ha!!ened" the o$li%ation is considered as if it did not eBist& The !arties are $ound to return or restore #hate*er the' ha*e recei*ed fro each other – 0reci!rocal restitution1 Donation $' reason of arria%e – if the arria%e does not ha!!en" such donation should $e returned to the donor& Loss" deterioration and i!ro*eent – %o*erned $' 44HP& In o$li%ations to do and not to do" the courts shall deterine" in each ca se" the retroacti*e effect of the condition th at has $een co!lied #ith&
11>1. T$ o$! to !$s#in" obligations is i+li$" in !$#i!o#al on$s' in #as$ on$ o* t$ obligo!s sol" not #o+l% it at is in#+b$nt on i+. T$ inj!$" a!t% +a% #oos$ b$t$$n t$ *l*ill+$nt an" t$ !$s#ission o* t$ obligation' it t$ a%+$nt o* "a+ag$s in $it$! #as$. H$ +a% also s$$@ !$s#ission' $&$n a*t$! $ as #os$n *l*ill+$nt' i* t$ latt$! sol" b$#o+$ i+ossibl$. T$ #o!t sall "$#!$$ t$ !$s#ission #lai+$"' nl$ss t$!$ b$ jst #as$ ato!iing t$ *i=ing o* a $!io". Tis is n"$!stoo" to b$ itot !$j"i#$ to t$ !igts o* ti!" $!sons o a&$ a#2i!$" t$ ting' in a##o!"an#$ it A!ti#l$s 1<5 an" 1<< an" t$ Do!tgag$ La.
K This reed' should $e tered as 0resolution"1 not rescission (@aras)& K This !ro*ision is not a!!lica$le to contracts of !artnershi! (%o*erned $' Arts& 4FH6 O 4FHH)" and sales of real and !ersonal !ro!erties $' installents (%o*erned $' =aceda and Recto la#s) RECI@R,CAL – each is a de$tor and creditor of the other RESCISSI,N – resolution or cancellation of the contract A!!lies onl' to reci!rocal o$li%ations #here t#o !art ies are utuall' de$tor and creditor of ea ch other in the sae transaction& The cause ust $e identical ad the o$li%ations ust arise siultaneousl'& The !art' #ho can deand rescission should $e the !art' #ho is read'" #illin%" and a$le to co!l' #ith his o#n o$li%ations #hile the other is not ca!a$le to !erfor his o#n& •
•
RE=EDIES> 4& 8&
S!ecific !erforance or fulfillent of o$li%ation #ith daa%es; Rescission of contract #ith daa%es&
Effect of rescission> the !arties ust surrender #hate*er the' ha*e recei*ed fro the other" and the o$li%ation to !a' is eBtin%uished& If there is an eB!ress sti!ulation of automatic rescission $et#een !arties – such resolution shall ta:e !lace onl' after the creditor has notified the de$tor of his choice of rescission su$ject to judicial scrutin'& 11>0. In #as$ bot a!ti$s a&$ #o++itt$" a b!$a# o* t$ obligation' t$ liabilit% o* t$ *i!st in*!a#to! sall b$ $2itabl% t$+$!$" b% t$ #o!ts. I* it #annot b$ "$t$!+in$" i# o* t$ a!ti$s *i!st &iolat$" t$ #ont!a#t' t$ sa+$ sall b$ "$$+$" $=tingis$"' an" $a# sall b$a! is on "a+ag$s.
-IRST IN-RACT,R +N,N The lia$ilit' of the first infractor should $e e. Obligations *o! os$ *l*ill+$nt a "a% #$!tain as b$$n *i=$"' sall b$ "$+an"abl$ onl% $n tat "a% #o+$s. Obligations it a !$solto!% $!io" ta@$ $**$#t at on#$' bt t$!+inat$ on a!!i&al o* t$ "a% #$!tain. A "a% #$!tain is n"$!stoo" to b$ tat i# +st n$#$ssa!il% #o+$' altog it +a% not b$ @non $n. I* t$ n#$!taint% #onsists in $t$! t$ "a% ill #o+$ o! not' t$ obligation is #on"itional' an" it sall b$ !$glat$" b% t$ !l$s o* t$ !$#$"ing S$#tion.
@ERI,D TER= – consists in a s!ace or len%th of tie u!on the arri*al of #hich" the demandability or the e3tinguis"ment of an o$li%ation is determined ; it a' $e definite (eBact date or tie is :no#n) or indefinite (arri*al of date is u n:no#n $ut sure to
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coe)& 2 -uture Certain e*ent /ENERAL CLASSI-ICATI,NS> a) E DIE SUS@ENSI3E @ERI,D – fro a da' certain %i*e rise to the o$li%ation; sus!ensi*e effect& $) IN DIE= RES,LUT,RY @ERI,D – arri*al of a ter certain terinated the o$li%ation; resolutor' effect&
Ter – len%th of tie sure to coe Condition – fact or e*ent uncertain to coe Basis
4& TI=E 8& -UL-ILL=ENT 9& IN-LUENCE
P$!io";T$!+ Al#a's refers to -UTURE
Sure to ha!!en at an eBact date or indefinite tie $ut sure to coe& =erel' fiBes the tie for the deanda$ilit' or !erforance of o$li%ation&
Con"ition Can refer to !ast e*ents un:no#n to the !arties =a' or a' not ha!!en&
=a' cause the arisin% or cessation of the o$li%ation&
11>4. In #as$ o* loss' "$t$!io!ation o! i+!o&$+$nt o* t$ ting b$*o!$ t$ a!!i&al o* t$ "a% #$!tain' t$ !l$s in A!ti#l$ 11<> sall b$ obs$!&$". 11>5. An%ting ai" o! "$li&$!$" b$*o!$ t$ a!!i&al o* t$ $!io"' t$ obligo! b$ing naa!$ o* t$ $!io" o! b$li$&ing tat t$ obligation as b$#o+$ "$ an" "$+an"abl$' +a% b$ !$#o&$!$"' it t$ *!its an" int$!$sts.
•
If he #as not a#are of the !eriod or he $elie*es that the o$li%ation has $ecoe due and deanda$le – he can reco*er #hat he !aid or deli*ered includin% fruits and interests; If he #as a#are and he !aid *oluntaril' – he cannot reco*er the deli*er' ade; it is deeed a #ai*er of the $enefit of the ter and the o$li%ation is considered alread' atured&
The !resu!tion is that the de$tor :ne# that the de$t #as not 'et due& Ge has the $urden of !ro*in% that he #as una#are of the !eriod&
11>6. 7$n$&$! in an obligation a $!io" is "$signat$"' it is !$s+$" to a&$ b$$n $stablis$" *o! t$ b$n$*it o* bot t$ #!$"ito! an" t$ "$bto!' nl$ss *!o+ t$ t$no! o* t$ sa+$ o! ot$! #i!#+stan#$s it sol" a$a! tat t$ $!io" as b$$n $stablis$" in *a&o! o* on$ o! o* t$ ot$!. • •
@RESU=@TI,N> ,$li%ation #ith a !eriod is for the $enefit of $oth the creditor and de$tor& ECE@TI,N> #hen it a!!ears that the !eriod is for the $enefit of one or the other
The $enefit of the ter a' $e the su$ject of sti!ulation of the !arties& 4& Ter is for the $enefit of the de$tor alone – he cannot $e co!elled to !a' !reaturel'" $ut he can if he desires to do so& 2 EBa!le> A o$li%es hiself to !a' . #ithin 5 'ears& A cannot $e co!elled to !a' !reaturel'" $ut he can !a' an'tie #ithin 5 'ears (A #ill $enefit $ecause he can !a' an'tie he #ants as lon% as it is #ithin 5 'ears; . #ill not $enefit fro the interests if A decides to !a' earl')& 8& Ter is for the $enefit of the creditor – Ge a' deand fulfillent e*en $efore the arri*al of the ter $ut the de$tor cannot re A $orro#s one' fro . and is o$li%ed to a:e the !a'ent on Dece$er 5& . a' co!el A to a:e the !a'ent $efore Dece$er 5" $ut A a' not co!el . to recei*e the !a'ent $efore Dece$er 5 (. #ill $enefit fro the interests that #ill accrue $efore Dece$er 5)& •
•
The creditor a' ha*e reasons other than the aturit' of interest" thats #h'" unless the creditor consents" the de$tor has no ri%ht to accelerate the tie of !a'ent e*en if the !reature tender includes an offer to !a' the !rinci!al and
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interest in full& 11>). I* t$ obligation "o$s not *i= a $!io"' bt *!o+ its nat!$ an" t$ #i!#+stan#$s it #an b$ in*$!!$" tat a $!io" as int$n"$"' t$ #o!ts +a% *i= t$ "!ation t$!$o*. T$ #o!ts sall also *i= t$ "!ation o* t$ $!io" $n it "$$n"s on t$ ill o* t$ "$bto!. In $&$!% #as$' t$ #o!ts sall "$t$!+in$ s# $!io" as +a% n"$! t$ #i!#+stan#$s a&$ b$$n !obabl% #ont$+lat$" b% t$ a!ti$s. On#$ *i=$" b% t$ #o!ts' t$ $!io" #annot b$ #ang$" b% t$+.
JUDICIAL @ERI,D – !eriod desi%nated $' the court& C,NTRACTUAL @ERI,D – !eriod fiBed $' the !arties in their contract& Court #ill fiB a !eriod> 4& hen no !eriod is entioned" $ut it is infera$le fro the nature and circustances of the o$li%ation that a !eriod #as intended $' the !arties& 8& hen the !eriod is de!endent u!on the #ill of the de$tor& • •
If the o$li%ation does not state and intend a !eriod" the court is n ot authoried to fiB a !eriod& The court ust fiB the duration of the !eriod to !re*ent the !ossi$ilit' that the o$li%ation a' ne*er $e fulfilled or to cure a defect in a contract #here$' it is ade to de!end solel' u!on the #ill of one of the !arties&
Court cannot fiB the !eriod> 4& If there is a !eriod a%reed u!on $' the !arties and it has alread' la!sed or eB!ired& 8& -ro the *er' oent the !arties %i*e their acce!tance and consent to the !eriod fiBed $' the court" it $ecoes a la# %o*ernin% their contract& 11><. T$ "$bto! sall los$ $&$!% !igt to +a@$ s$ o* t$ $!io"( ,1- 7$n a*t$! t$ obligation as b$$n #ont!a#t$"' $ b$#o+$s insol&$nt' nl$ss $ gi&$s a ga!ant% o! s$#!it% *o! t$ "$bt/ ,0- 7$n $ "o$s not *!nis to t$ #!$"ito! t$ ga!anti$s o! s$#!iti$s i# $ as !o+is$"/ ,- 7$n b% is on a#ts $ as i+ai!$" sai" ga!anti$s o! s$#!iti$s a*t$! t$i! $stablis+$nt' an" $n t!og a *o!titos $&$nt t$% "isa$a!' nl$ss $ i++$"iat$l% gi&$s n$ on$s $2all% satis*a#to!%/ ,4- 7$n t$ "$bto! &iolat$s an% n"$!ta@ing' in #onsi"$!ation o* i# t$ #!$"ito! ag!$$" to t$ $!io"/ ,5- 7$n t$ "$bto! att$+ts to abs#on".
The !eriod is disre%arded and the o$li%ation $ecoes !ure and iediatel' deanda$le> IGIVA FI hen de$tor $ecoes insol*ent; The insol*enc' need not $e judiciall' declared& It is sufficient that de$tor could not !a' his de$ts due to lac: of one' or funds& FG hen the de$tor does not furnish g uaranties or securities; FI hen %uaranties or securities %i*en ha*e $een i!aired or ha*e disa!!eared; If securit' #as lost throu%h de$tors fault 2 impairment If securit' #as lost throu%h fortuitous e*ent 2 disappearance FV hen de$tor & iolates an underta:in%; If such underta:in% is the reason for the creditor to a%ree #ith such !eriod& FA hen de$tor atte!ts to a $scond (esca!e)& =ere atte!t to a$scond is sufficient& It is an indication of $ad faith& •
•
• •
•
•
Section 3 – Alternative Obligations 11>>. A $!son alt$!nati&$l% bon" b% "i**$!$nt !$stations sall #o+l$t$l% $!*o!+ on$ o* t$+. T$ #!$"ito! #annot b$ #o+$ll$" to !$#$i&$ a!t o* on$ an" a!t o* t$ ot$! n"$!ta@ing.
,.LI/ATI,NS ITG @LURAL @RESTATI,NS> 4& C,NJUNCTI3EC,=@,UND ,.LI/ATI,N 2 an o$li%ation #here the de$tor has to !erfor ALL the se*eral !restations in the contract to eBtin%uish the o$li%ation& 8& ALTERNATI3E ,.LI/ATI,N – an o$li%ation #here the de$tor is re
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9&
eBtin%uish the o$li%ation& -ACULTATI3E ,.LI/ATI,N – an o$li%ation #here the de$tor is $ound to !erfor ,NLY ,NE !restation" #ith a reser*ed ri%ht to choose another !restation as SU.STITUTE for the !rinci!al&
10??. T$ !igt o* #oi#$ b$longs to t$ "$bto!' nl$ss it as b$$n $=!$ssl% g!ant$" to t$ #!$"ito!. T$ "$bto! sall a&$ no !igt to #oos$ tos$ !$stations i# a!$ i+ossibl$' nla*l o! i# #ol" not a&$ b$$n t$ obj$#t o* t$ obligation.
I!lied %rant to the creditor is not allo#ed& If it does not a!!ear on the a%reeent as to #ho aon% the has the ri%ht to choose" it is the de$tor #ho can choose& 10?1. T$ #oi#$ sall !o"#$ no $**$#t $=#$t *!o+ t$ ti+$ it as b$$n #o++ni#at$".
The choice shall not !roduce an' le%al effect until it has $een dul' counicated to the other !art'& It can $e done in #ritin%" *er$all'" i!liedl'" or an' une The o$li%ation is no# LI=ITED onl' to the @RESTATI,N CG,SEN" #ith all the natural conse
4& 8& • •
•
The !erforance of !restation #ithout announcin% the choice to the creditor is N,T .INDIN/& The consent of the other !art ' is N,T REUIRED in a:in% the choice – that #ill in effect frustrate the clear intention of the la# and the nature of the alternati*e o$li%ation& If there is dela' in the a:in% of choice – !unish the one #ho is su!!osed to eBercise the ri%ht of choice for the dela' he caused – court a' order the de$tor to a:e a choice" or creditor to a:e the choice #ithin certain !eriod" or court a:es the choice&
10?0. T$ "$bto! sall los$ t$ !igt o* #oi#$ $n a+ong t$ !$stations $!$b% $ is alt$!nati&$l% bon"' onl% on$ is !a#ti#abl$.
There $ein% $ut one !restation a*aila$le" this !restation $ecoes a si!le o$li%ation&
10?. I* t!og t$ #!$"ito!s a#ts t$ "$bto! #annot +a@$ a #oi#$ a##o!"ing to t$ t$!+s o* t$ obligation' t$ latt$! +a% !$s#in" t$ #ont!a#t it "a+ag$s.
(4) If the de$tor could not a:e a choice due to the creditors act of a:in% the !restations i!ossi$le" de$tor a' RESCIND the contract #ith daa%es 2 rescission ta:es !lace at the initiati*e of the de$tor& (8) If the de$tor is $ein% !re*ented to choose onl' a !articular !restation" and there are others a*aila$le" he is free to choose fro the" after notif'in% the creditor of his decision& 10?4. T$ #!$"ito! sall a&$ a !igt to in"$+nit% *o! "a+ag$s $n' t!og t$ *alt o* t$ "$bto!' all t$ tings i# a!$ alt$!nati&$l% t$ obj$#t o* t$ obligation a&$ b$$n lost' o! t$ #o+lian#$ o* t$ obligation as b$#o+$ i+ossibl$. T$ in"$+nit% sall b$ *i=$" ta@ing as a basis t$ &al$ o* t$ last ting i# "isa$a!$"' o! tat o* t$ s$!&i#$ i# last b$#a+$ i+ossibl$. :a+ag$s ot$! tan t$ &al$ o* t$ last ting o! s$!&i#$ +a% also b$ aa!"$".
If the i!ossi$ilit' of all the o$jects of the alternati*e o$li%ation is caused $' the de$tor" the creditor is entitled to daa%es& If such i!ossi$ilit' is caused $' a fortuitous e*ent" the o$li%ation is eBtin%uished and the de$tor is released fro res!onsi$ilit'" unless the contrar' is sti!ulated $' the !arties& The creditor cannot clai for daa%es if the de$tor can still !erfor the reainin% !restations& The daa%es that a' $e reco*ered is $ased on the last thin% #hich disa!!eared or the ser*ice #hich $ecae i!ossi$le& This last one is con*erted into a si!le o$li%ation&
10?5. 7$n t$ #oi#$ as b$$n $=!$ssl% gi&$n to t$ #!$"ito!' t$ obligation sall #$as$ to b$ alt$!nati&$ *!o+ t$ "a% $n t$ s$l$#tion as b$$n #o++ni#at$" to t$ "$bto!. 9ntil t$n t$ !$sonsibilit% o* t$ "$bto! sall b$ go&$!n$" b% t$ *olloing !l$s(
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A& .& C&
D&
onl' one thin% lost – fortuitous e*ent – creditor chooses fro the reainder – de$tor deli*ers the choice to creditor; onl' one reains – de$tor deli*ers the sae to the creditor; onl' one thin% lost – fault of the de$tor 4& creditor a' choose an' one of the reainders; 8& creditor a' choose the !rice or *alue of the one #hich #as lost; 9& a' choose 4 or 8 !lus daa%es all thin%s lost – fault of the de$tor – creditor a' choose the !rice of ANY,NE of the thin%s" #ith daa%es if #arranted&
T$ sa+$ !l$s sall b$ ali$" to obligations to "o o! not to "o in #as$ on$' so+$ o! all o* t$ !$stations sol" b$#o+$ i+ossibl$.
This article a!!lies onl' #hen the ri%ht of choice has $een eB!ressl' %ranted to the creditor&
10?6. 7$n onl% on$ !$station as b$$n ag!$$" on' bt t$ obligo! +a% !$n"$! anot$! in sbstittion' t$ obligation is #all$" *a#ltati&$. T$ loss o! "$t$!io!ation o* t$ ting int$n"$" as a sbstitt$' t!og t$ n$glig$n#$ o* t$ obligo!' "o$s not !$n"$! i+ liabl$. Bt on#$ t$ sbstittion as b$$n +a"$' t$ obligo! is liabl$ *o! t$ loss o* t$ sbstitt$ on a##ont o* is "$la%' n$glig$n#$ o! *!a".
If loss or deterioration ha!!ened $efore su$stitution is ade" o$li%or is not lia$le; after su$stitution is counicated" he is lia$le for loss (throu%h dela'" ne%li%ence or fraud)
Section 4 – Joint and Solidary Obligations 10?). T$ #on#!!$n#$ o* to o! +o!$ #!$"ito!s o! o* to o! +o!$ "$bto!s in on$ an" t$ sa+$ obligation "o$s not i+l% tat $a# on$ o* t$ *o!+$! as a !igt to "$+an"' o! tat $a# on$ o* t$ latt$! is bon" to !$n"$!' $nti!$ #o+lian#$ it t$ !$station. T$!$ is a soli"a!% liabilit% onl% $n t$ obligation $=!$ssl% so stat$s' o! $n t$ la o! t$ nat!$ o* t$ obligation !$2i!$s soli"a!it%.
K In case of concurrence of t#o or ore creditors or t#o or ore de$tors in one o$li%ation" the !resu!tion is that the o$li%ation is joint" and not solidar'& INDI3IDUAL ,.LI/ATI,N – one de$tor and one creditor C,LLECTI3E ,.LI/ATI,N – t#o or ore de$tors and t#o or ore creditors 4& 8&
J,INT – entire o$li%ation is to $e !aid or !erfored proportionately $' the de$tors; S,LIDARY – eac" one of the de$tors are o$li%ed to !a' the entire obligation" each one of the creditors has the ri%ht to deand fro an' of the de$tors" th e fulfillent of the entire o$li%ation; A& @assi*e Solidarit' – solidarit' on the !art of the DE.T,RS .& Acti*e Solidarit' – solidarit' on the !art of the CREDIT,RS& S,LIDARITY SG,ULD .E E@RESSED – la#" sti!ulation" nature of o$li%ation& hen the o$li%ation is a$i%uous" it ust $e considered as joint o$li%ation&
C,NSEUENCES ,- S,LIDARITY> 4& @assi*e Solidarit' – full !a'ent ade $' an'one of the solidar' de$tors eBtin%uishes the o$li%ation& The one #ho !aid can clai rei$urseent fro his co2de$tors as re%ards their corres!ondin% shares in the o$li%ation& A" ." O C are solidar' de$tors of D in the su of @P??& D can deand !a'ent of the entire o$li%ation #hen it $ecoes due" fro an' one of the de$tors or fro all of the at the sae tie& If C !aid the #hole @P?? to D" he a' clai rei$urseent fro A an d .& 8&
Acti*e Solidarit' – full !a'ent to an' of the creditors eBtin%uishes the o$li%ation& The creditor #ho recei*ed the entire aount #ill $e lia$le to !a' the corres!ondin% shares of his co2creditors in accordance #ith their internal a%reeent& /arfield o#es the su of @7?"??? to =ic:e'" =innie" Donald" and @luto" #h o are solidar' creditors& /arfield can !a' an'one of the& If =ic:e' recei*ed the @7?"???" he is lia$le to !a' the corres!ondin% shares of his co2creditors&
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=IED S,LIDARITY a& Solidar' De$tors" Joint Creditors @P"???&?? – total de$t :$bto!s ,Soli"a!%C!$"ito!s ,ointAida !a's @7"5??&?? John Q @ 7"5??&?? Lorna !a's @7"5??&?? =arsha @ 7"5??&?? -e
$& Joint De$tors" Solidar' Creditors @ P"???&?? – total de$t :$bto!s ,ointC!$"ito!s ,Soli"a!%Aida (@ 9"???&??) John (can clai fro de$tors) Lorna (@ 9"???&??) =arsha (2sae2) -e (@ 9"???&??)
10?<. I* *!o+ t$ la' o! t$ nat!$ o! t$ o!"ing o* t$ obligations to i# t$ !$#$"ing a!ti#l$ !$*$!s t$ #ont!a!% "o$s not a$a!' t$ #!$"it o! "$bt sall b$ !$s+$" to b$ "i&i"$" into as +an% sa!$s as t$!$ a!$ #!$"ito!s o! "$bto!s' t$ #!$"its o! "$bts b$ing #onsi"$!$" "istin#t *!o+ on$ anot$!' sbj$#t to t$ Rl$s o* Co!t go&$!ning t$ +ltili#it% o* sits.
This !ro*ision s!ea:s of J,INT DI3ISI.LE ,.LI/ATI,N&
hen there is a concurren ce of se*eral creditors or of se*eral de$tors in one and in the sae o$li%ation" there is a !resu!tion that the o$li%ation is joint& Each of the creditors shall $e entitled to deand onl' the !a'ent of his !ro!ortionate share of the credit& Each of the de$tors a' $e co!elled to !a' onl' his !ro!ortionate share of the de$t& The credits or de$ts shall $e considered distinct fro one another&
C,NSEUENCES ,- J,INT ,.LI/ATI,N> 4& Each de$tor – lia$le for a !ro!ortionate !art of the entire de$t; Thales" Socrates" @lato" O Aristotle o#e @4?? to .ruce Lee Q 7 de$tors and 4 creditor Each of the o#es .ruce Lee @85 .ruce Lee cannot collect the entire @4?? fro an' one of the& 8& Each creditor – entitled to a !ro!ortionate !art of the credit; @i%%' o#es @4?? to -ro%%' and -ish' Q 4 de$tor and 8 creditors -ro%%' can onl' collect 5? fro @i%%'" Sae #ith -ish' 9& Deand ade $' one creditor u!on one de$tor !roduces the effects of default onl' as $et#een the" $ut not #ith res!ect to the others; .u$$les deanded !a'ent fro .uttercu!; .uttercu! #as in default& This does not ean that the others are in default too $ecause .u$$les did not deand fro the& 7& The interru!tion of !rescri!tion caused $' the deand ade $' one creditor u!on one de$tor #ill not $enefit the co2 creditors; itt%enstein eBtended the !eriod in #hich Tars:i should ha*e !aid his de$t to hi& This does not ean that the sae eBtension a!!lies to Tars:is de$t to Da*idson& 5& The insol*enc' of one de$tor #ill not increase the lia$ilit' of his co2de$tors" nor #ill it allo# a creditor to deand an'thin% fro the co2creditors& If Gusserl and =erleau2@ont' are de$tors of Sartre for @4"???"???&?? and Gusserl $ecoes insol*ent" the lia$ilit' of =erleau2 @ont' #ill onl' $e @5??"???&?? re!resentin% his !ro!ortional share of in the #hole o$li%ation&
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10?>. I* t$ "i&ision is i+ossibl$' t$ !igt o* t$ #!$"ito!s +a% b$ !$j"i#$" onl% b% t$i! #oll$#ti&$ a#ts' an" t$ "$bt #an b$ $n*o!#$" onl% b% !o#$$"ing against all t$ "$bto!s. I* on$ o* t$ latt$! sol" b$ insol&$nt' t$ ot$!s sall not b$ liabl$ *o! is sa!$.
J,INT INDI3ISI.LE ,.LI/ATI,N – an o$li%ation #here solidarit' is n ot !ro*ided and the !restation or o$ject is not susce!ti$le of di*ision; its fulfillent re
The act of one is not $indin% (others ust concur)
101?. T$ in"i&isibilit% o* an obligation "o$s not n$#$ssa!il% gi&$ !is$ to soli"a!it%. No! "o$s soli"a!it% o* its$l* i+l% in"i&isibilit%.
Solidarit' is eB!ressed in the sti!ulations of the !art'" la# %o*ernin% the o$li%ation" or the nature of the o$li%ation&
INDI3ISI.LE ,.LI/ATI,N – an o$li%ation #here the !restation or o$ject to $e deli*ered cannot $e !erfored $' !arts #ithout alterin% its essence or su$stance& .asis 4& Nature
Indi*isi$ilit' Refers to the prestation of the contract
8& Nu$er of su$jects !arties 9& Effect of $reach of o$li%ation
Does not re
Solidarit' Refers to the tie eBistin% $et#een !arties of the o$li%ation (#ho is lia$le) Re
1011. Soli"a!it% +a% $=ist altog t$ #!$"ito!s an" t$ "$bto!s +a% not b$ bon" in t$ sa+$ +ann$! an" b% t$ sa+$ $!io"s an" #on"itions.
The solidarit' of the de$tors is not affected e*en if different ters and conditions are ade a!!lica$le to t he& Enforceent of the ters and conditions a' $e ade at different ties& The o$li%ations #hich ha*e atured can $e enforced #hile those still undue #ill ha*e to $e a#aited& Enforceent can $e ade a%ainst an' one of the solidar' de$tors althou%h it can ha!!en that a !articular o$li%ation char%ea$le to a !articular de$tor is not 'et due& Ge #ill $e ans#era$le for all the !restations #hich fall due althou%h char%ea$le to the other co2de$tors&
Sad -ace" Ga!!'" and -ann' %ot a loan of @45? fro Sile'& The' si%ned a !roissor' note solidaril' $indin% thesel*es to !a' Sile' under the follo#in% ters> Sad -ace #ill !a' @5? #ith 9 on Dece$er 9?" 8??6 Ga!!' #ill !a' @5? #ith 7 on Dece$er 9?" 8??F -ann' #ill !a' @5? #ith 5 on Dece$er 9?" 8??H ,n Dece$er 94" 8??6" Sile' can collect his @5? #ith 9 fro an' one of the de$tors" $ut not the #hole @45? $ecause it is not 'et entirel' due& The aturit' of the other aounts should still $e a #aited& If aturit' coes" Sile' can collect fro an' of the de$tors" $ecause the' are eB!ressl' solidar' in lia$ilities" and not affected $' the secondar' sti!ulations& 1010. Ea# on$ o* t$ soli"a!% #!$"ito!s +a% "o at$&$! +a% b$ s$*l to t$ ot$!s' bt not an%ting i# +a% b$ !$j"i#ial to t$ latt$!.
E*er' solidar' creditor is $enefited $' the useful acts of an' one of the& If a solidar' creditor !erfors an act #hich is not fair to his co2creditors" the act a' ha*e *alid le%al effects or the o$li%ation of the de$tor due to the a' $e eBtin%uished" $ut the !erforin% creditor shall $e lia$le to his co2creditors&
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8$stion> =a' solidar' creditors !erfor an act that is $eneficial to othersM
101. A soli"a!% #!$"ito! #annot assign is !igts itot t$ #ons$nt o* t$ ot$!s.
Assi%n – transfer of ri%ht
The assi%nee does not $ecoe a solidar' creditor" and an' !a'ent ade u!on hi $' the de$tor does not eBtin%uish the o$li%ation& Ge is considered a STRAN/ER" and his acts are not $indin% to the solidarit'&
D,CTRINE ,- =UTUAL A/ENCY 2 In solidar' o$li%ations" the act of one is act of the others& EBce!tions to the doctrine> 4& Art& 4848 – a creditor a' not !erfor an act !rejudicial to other creditors 8& Art& 4849 – a creditor cannot transfer his ri%ht #ithout consent
1014. T$ "$bto! +a% a% an% on$ o* t$ soli"a!% #!$"ito!s/ bt i* an% "$+an"' j"i#ial o! $=t!aj"i#ial' as b$$n +a"$ b% on$ o* t$+' a%+$nt sol" b$ +a"$ to i+.
The de$tor can !a' an' one of the solidar' creditors& Such !a'ent #hen acce!ted $' a n' of the solidar' creditors #ill eBtin%uish the o$li%ation& To a*oid confusion on the !a'ent of the o$li%ation" t he de$tor is re
1015. No&ation' #o+$nsation' #on*sion o! !$+ission o* t$ "$bt' +a"$ b% an% o* t$ soli"a!% #!$"ito!s o! it an% o* t$ soli"a!% "$bto!s' sall $=tingis t$ obligation' itot !$j"i#$ to t$ !o&isions o* A!ti#l$ 101>. T$ #!$"ito! o +a% a&$ $=$#t$" an% o* t$s$ a#ts' as $ll as $ o #oll$#ts t$ "$bt' sall b$ liabl$ to t$ ot$!s *o! t$ sa!$ in t$ obligation #o!!$son"ing to t$+.
N,3ATI,N – o$li%ations are odified $'> 4& Chan%in% their o$ject or !rinci!al conditions; 8& Su$stitutin% the !erson of the de$tor; and 9& Su$ro%atin% (!lacin%) a third !erson in the ri%hts of the creditor& Art& 48P4 C,=@ENSATI,N – ta:es !lace #hen t #o !ersons" in their o#n ri%ht" $ecoe creditors and de$tors of each other the aount of one is co*ered $' the aount of the other − Era! $orro#ed @4?? fro -ernando& -ernando $orro#ed @F5 fro Era!& Era!s o$li%ation to -ernando is no# @85 onl'" $ecause the ori%inal o$li%ation #as offset $' -ernandos su!!osed2to2$e o$li%ation to Era!& C,N-USI,N – ta:es !lace #hen the characters of creditor an d de$tor are er%ed in the sae !erson& Tito !a's his de$t to 3ic #ith a chec: !a'a$le to 0cash1& 3ic !aid his de$t to Joe' #ith the sae chec:& Joe' !aid his de$t to Tito" #ith the sae chec: Tito issued to 3ic& Tito $ecoes !aid $' his o#n chec:& Ge $ecoes the de$tor and the creditor of hiself at the sae tie& RE=ISSI,N – the %ratuitous a$andonent $' the creditor of his ri%ht; acce!tance of the o$li%or is necessar'&
These 7 odes of eBtin%uishin% o$li%ations are acts !rejudicial to the other solidar' co2creditors $ecause these ha*e the effect of eBtin%uishin% the de$t or o$li%ation #hich is due to all of the& The onl' recourse of the co2creditors is to let the one #ho eBecuted an' of those acts $e lia$le for the shares corres!ondin% to all his co2creditors (in their internal a%reeent)&
1016. T$ #!$"ito! +a% !o#$$" against an% on$ o* t$ soli"a!% "$bto!s o! so+$ o! all o* t$+ si+ltan$osl%. T$ "$+an" +a"$ against on$ o* t$+ sall not b$ an obsta#l$ to tos$ i# +a% sbs$2$ntl% b$ "i!$#t$" against t$ ot$!s' so long as t$ "$bt as not b$$n *ll% #oll$#t$".
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hen there is !assi*e solidarit'" the creditor can !roceed a%ainst> An' of the solidar' de$tors; Soe of the solidar' de$tors; All of the solidar' de$tors" siultaneousl'&
EBtrajudicial deands 2 first deand shall not !re*ent su$se
@a'ent – consists in the deli*er' of the thin% or the rendition (renderin%) of the ser*ice #hish is t he o$ject of the o$li%ation& Interest – co!ensation for the use of $orro#ed one' @artial !a'ent – the solidar' de$tor #ho ade the !artial !a'ent is entitles to $e rei$ursed onl' for such aount of one' #hich he had !aid and #hich eBceeds his o#n share in the o$li%ation& If one of the de$tors is insol*ent and could n ot !a' his share in the o$li%ation" all solidar' de$tors includin% the !a'in% de$tor shall share !ro!ortionatel' in the settleent of the corres!ondin% share of the insol*ent de$tor& In short" his co2de$tors #ill sa*e his ass& 101<. Pa%+$nt b% a soli"a!% "$bto! sall not $ntitl$ i+ to !$i+b!s$+$nt *!o+ is #o3"$bto!s i* s# a%+$nt is +a"$ a*t$! t$ obligation as !$s#!ib$" o! b$#o+$ ill$gal.
No rei$urseent if>
4& ,$li%ation @RESCRI.ES The creditor did not a:e an' deand for ore than 4? 'ears& 8& ,$li%ation $ecoes ILLE/AL La# has $een !assed" a:in% such !restation ille%al&
101>. T$ !$+ission +a"$ b% t$ #!$"ito! o* t$ sa!$ i# a**$#ts on$ o* t$ soli"a!% "$bto!s "o$s not !$l$as$ t$ latt$! *!o+ is !$sonsibilit% toa!"s t$ #o3"$bto!s' in #as$ t$ "$bt a" b$$n totall% ai" b% an%on$ o* t$+ b$*o!$ t$ !$+ission as $**$#t$".
Att' De Cha*e> Ito a' !ro*ision sa tan%a&&& (si'e!re" !a% na%$a'ad na" #ala nan% o$li%ation" #ala na din% ire2 reit&&&)
An' $elated (dela'ed) reission $' the creditor of the share of an' of the de$tor has no effect on the internal relationshi! of the co2de$tors&
Payment before remission > A" ." and C solidaril' o#e D @4"5??&??& . !aid the entire o$li%ation& After #hich" D reitted the share of C& . can collect @5??&?? each fro A and C e*en if the share of C in the o$li%ation had $een reitted& 4emission before payment > A" ." and C solidaril' o#e D @4"5??&??& D reitted the share of C& Thereafter" . !aid the entire o$li%ation& . can collect @5??&?? fro A $ut not fro C& Go#e*er" . a' as: D to %i*e $ac: @5??" #hich is the su!!osed2to2$e share of C&
After the !rior !a'ent of the ent ire o$li%ation" there is nothin% to reit $ecause the o$li%ation had $een eBtin%uished&
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100?. T$ !$+ission o* t$ ol$ obligation' obtain$" b% on$ o* t$ soli"a!% "$bto!s' "o$s not $ntitl$ i+ to !$i+b!s$+$nt *!o+ is #o3"$bto!s.
There is nothin% to $e rei$ursed $ecause h e did not s!end an' one'" the reission $ein% a %ratuitous act&
1001. I* t$ ting as b$$n lost o! i* t$ !$station as b$#o+$ i+ossibl$ itot t$ *alt o* t$ soli"a!% "$bto!s' t$ obligation sall b$ $=tingis$". I* t$!$ as *alt on t$ a!t o* an% on$ o* t$+' all sall b$ !$sonsibl$ to t$ #!$"ito!' *o! t$ !i#$ an" t$ a%+$nt o* "a+ag$s an" int$!$st' itot !$j"i#$ to t$i! a#tion against t$ gilt% o! n$glig$nt "$bto!. I* t!og a *o!titos $&$nt' t$ ting is lost o! t$ $!*o!+an#$ as b$#o+$ i+ossibl$ a*t$! on$ o* t$ soli"a!% "$bto!s as in#!!$" in "$la% t!og t$ j"i#ial o! $=t!aj"i#ial "$+an" on i+ b% t$ #!$"ito!' t$ !o&isions o* t$ !$#$"ing a!ag!a sall al%.
Loss of the thin% or i!ossi$ilit' of !restation – 4& N, -AULT – solidar' de$tors – o$li%ation is eBtin%uished 8& -AULT of an' one of the – all are lia$le $ecause of their utual a%enc' 9& -,RTUIT,US E3ENT – dela' on the !art of the de$tors – all #ill $e lia$le
If the thin% due #as not lost" $ut there is erel' a dela'" fraud or ne%li%ence on the !art of one of the solidar' de$tors" all (includin% the innocent) de$tors #ill share in the !a'ent of the @RINCI@AL !restation& The daa%es and interest i!osed #ill $e $orne $' the %uilt' de$tor& ,$li%ation to deli*er is con*erted into an o$li%ation to !a' indenit' #hen there us loss or i!ossi$ilit' of !erforance&
1000. A soli"a!% "$bto! +a%' in a#tions *il$" b% t$ #!$"ito!' a&ail i+s$l* o* all "$*$ns$s i# a!$ "$!i&$" *!o+ t$ nat!$ o* t$ obligation an" o* tos$ i# a!$ $!sonal to i+' o! $!tain to is on sa!$. 7it !$s$#t to tos$ i# $!sonall% b$long to t$ ot$!s' $ +a% a&ail i+s$l* t$!$o* onl% as !$ga!"s tat a!t o* t$ "$bt *o! i# t$ latt$! a!$ !$sonsibl$.
DE-ENSES ,- A S ,LIDARY DE.T,R> 4& 8& 9&
Defense arisin% fro the nature of the o$li%ation – such as !a'ent" !rescri!tion" reission" statute of frauds" !resence of *ices of consent" etc& Defenses #hich are !ersonal to hi or #hich !ertains to his o#n share alone – such as inorit'" insanit' and others !urel' !ersonal to hi& Defenses !ersonal to the other solidar' creditors $ut onl' as re%ards that !art of the de$t for #hich the other creditors are lia$le&
Section – !ivisible and "ndivisible Obligations 100. T$ "i&isibilit% o! in"i&isibilit% o* t$ tings tat a!$ t$ obj$#t o* obligations in i# t$!$ is onl% on$ "$bto! an" onl% on$ #!$"ito! "o$s not alt$! o! +o"i*% t$ !o&isions o* Cat$! 0 o* tis Titl$.
DI3ISI.ILITY – refers to the susce!ti$ilit' of an o$li%ation to $e !erfored !artiall'& ,$li%ation to deli*er 4?? sac:s of rice or a !articular t'!e INDI3ISI.ILITY – refers to the non2susce!ti$ilit' of an o$li%ation to !artial !erforance& ,$li%ation to deli*er a !articular co!uter set If a thin% could $e di*ided into !arts an d as di*ided" its *alue is i!aired dis!ro!ortionatel'" that thin% is INDI3ISI.LE& 1004. A joint in"i&isibl$ obligation gi&$s !is$ to in"$+nit% *o! "a+ag$s *!o+ t$ ti+$ an%on$ o* t$ "$bto!s "o$s not #o+l% it is n"$!ta@ing. T$ "$bto!s o +a% a&$ b$$n !$a"% to *l*ill t$i! !o+is$s sall not #ont!ibt$ to t$ in"$+nit% b$%on" t$ #o!!$son"ing o!tion o* t$ !i#$ o* t$ ting o! o* t$ &al$ o* t$ s$!&i#$ in i# t$ obligation #onsists.
K Relate this !ro*ision to Articles 4465" 48?H and 48?P& J,INT INDI3ISI.LE ,.LI/ATI,N – the o$ject is indi*isi$le $ut the lia$ilit' of the !arties is joint&
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The unfulfilled underta:in% (dut') is con*erted into a onetar' o$li%ation #hich is not di*isi$le& The %uilt' de$tor is lia$le for daa%es&
1005. o! t$ !os$s o* t$ !$#$"ing a!ti#l$s' obligations to gi&$ "$*init$ tings an" tos$ i# a!$ not ss#$tibl$ o* a!tial $!*o!+an#$ sall b$ "$$+$" to b$ in"i&isibl$. 7$n t$ obligation as *o! its obj$#t t$ $=$#tion o* a #$!tain n+b$! o* "a%s o* o!@' t$ a##o+lis+$nt o* o!@ b% +$t!i#al nits' o! analogos tings i# b% t$i! nat!$ a!$ ss#$tibl$ o* a!tial $!*o!+an#$' it sall b$ "i&isibl$. Ho$&$!' $&$n tog t$ obj$#t o! s$!&i#$ +a% b$ %si#all% "i&isibl$' an obligation is in"i&isibl$ i* so !o&i"$" b% la o! int$n"$" b% t$ a!ti$s. In obligations not to "o' "i&isibilit% o! in"i&isibilit% sall b$ "$t$!+in$" b% t$ #a!a#t$! o* t$ !$station in $a# a!ti#la! #as$.
The follo#in% are considered INDI3ISI.LE o$li%ations> 4& ,$li%ation to %i*e definite thin%s 8& ,$li%ations #hich are not susce!ti$le of !artial !erforance 9& E*en thou%h the o$ject or ser*ice a' $e !h'sicall' di*isi$le" it is indi*isi$le if> a& the la# so !ro*ides $& #hen the !arties intended it to $e indi*isi$le The follo#in% o$li%ations are deeed DI3ISI.LE> 4& hen the o$ject of the o$li%ation is the eBecution of a certain nu$er of da's of #or: 8& hen the o$ject of the o$li%ation is the acco!lishent of #or: easured in units 9& hen the o$ject of the o$li%ation is susce!ti$le of !artial co!liance 7& hen the o$ject of the o$li%ation is such that the de$tor is re
If the contract is di*isi$le" and a !art of it is ille%al" the ille%al !art is *oid" and the rest shall $e *alid and enforcea$le& If the contract is indi*isi$le" and a !a rt of it is ille%al" the ent ire contract is *oid& @artial !erforance of an indi*isi$le o$li%ation is tantaount to non2!erforance&
Section # – Obligations with a Penal Clause 1006. In obligations it a $nal #las$' t$ $nalt% sall sbstitt$ t$ in"$+nit% *o! "a+ag$s an" t$ a%+$nt o* int$!$sts in #as$ o* non#o+lian#$' i* t$!$ is no stilation to t$ #ont!a!%. N$&$!t$l$ss' "a+ag$s sall b$ ai" i* t$ obligo! !$*s$s to a% t$ $nalt% o! is gilt% o* *!a" in t$ *l*ill+$nt o* t$ obligation. T$ $nalt% +a% b$ $n*o!#$" onl% $n it is "$+an"abl$ in a##o!"an#$ it t$ !o&isions o* tis Co"$.
K An o$li%ation #ith a !ena l clause a' $e defined as one to #hich a n accessor' underta:in% is attached for t he !ur!ose of insurin% its !erforance $' *irtue of #hich the o$li%or is $ound to !a' a sti!ulated indenit' or !erfor a sti!ulated !restation in case of $reach&
@ur!oses> 4& uncion coerciti!a o de garantia – to insure the !erforance of the o$li%ation 8& uncion li*uidatoria – to li
This is an accessory obligation attached to the !rinci!al o$li%ation" #hich i!oses an additional lia$ilit' in case of $reach of the !rinci!al o$li%ation& It !ushes the de$tor to !erfor his o$li%ation faith full' and #ithout dela' – #ithin the !eriod a%reed u!on" or else" he suffers a fiBed ci*il !enalt' #ithout need of !ro*in% t he daa%es of the other !art'&
The !enalt' i!osa$le is a su$stitute for th e indenit' for> a& daa%es $& !a'ent of interest in case of $reach of o$li%ation
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2unless the contrar' is sti!ulatedV ECE@TI,NS – additional daa%es a' $e reco*ered fro the follo#in% acts> If the de$tor refuses to !a' the !enalt' If the de$tor is %uilt' of fraud in the fulfillent of the o$li%ation If there is eB!ress sti!ulation that the other daa%es or interests are deanda$le to the !enalt' in the !enal clause 100). T$ "$bto! #annot $=$+t i+s$l* *!o+ t$ $!*o!+an#$ o* t$ obligation b% a%ing t$ $nalt%' sa&$ in t$ #as$ $!$ tis !igt as b$$n $=!$ssl% !$s$!&$" *o! i+. N$it$! #an t$ #!$"ito! "$+an" t$ *l*ill+$nt o* t$ obligation an" t$ satis*a#tion o* t$ $nalt% at t$ sa+$ ti+$' nl$ss tis !igt as b$$n #l$a!l% g!ant$" i+. Ho$&$!' i* a*t$! t$ #!$"ito! as "$#i"$" to !$2i!$ t$ *l*ill+$nt o* t$ obligation' t$ $!*o!+an#$ t$!$o* sol" b$#o+$ i+ossibl$ itot is *alt' t$ $nalt% +a% b$ $n*o!#$".
A de$tor cannot e*ade fro !a'ent of his !rinci!al o$li%ation $' choosin% to !a' the !enalt' sti!ulated" eBce!t #hen the de$tor is E@RESSLY %ranted #ith the ri%ht to su$stitute the !enalt' for the !rinci!al o$li%ation& – an o$li%ation #ith !enalt' clause cannot $e turned t o facultati*e o$li%ation unless eB!ressl' sti!ulated in the contract& The creditor cannot deand the sti!ulated fulfillent of the !rinci!al o$li%ation and the !enalt' at the sae tie" eBce!t a& #hen the creditor #as clearl' %i*en the ri%ht to enforce $oth the !rinci!al o$li%ation and !enalt'; $& #hen the creditor has deanded fulfillent of the o$li%ation $ut cannot $e fulfilled due to the 4& de$tors fault – creditor a' deand for !enalt' 8& creditors fault – he cannot clai the !enalt' 9& fortuitous e*ent – !rinci!al o$li%ation and !enalt' are eBtin%uished
100<. P!oo* o* a#tal "a+ag$s s**$!$" b% t$ #!$"ito! is not n$#$ssa!% in o!"$! tat t$ $nalt% +a% b$ "$+an"$". • • •
As lon% as the a%reeent or contract is $reached& The ere non2fulfillent of the !rinci!al o$li%ation entitles the creditor to the !enalt' sti!ulated& The !ur!ose of the !enalt' clause is !recisel' to a*oid !ro*in% daa%es&
100>. T$ j"g$ sall $2itabl% !$"#$ t$ $nalt% $n t$ !in#ial obligation as b$$n a!tl% o! i!!$gla!l% #o+li$" it b% t$ "$bto!. E&$n i* t$!$ as b$$n no $!*o!+an#$' t$ $nalt% +a% also b$ !$"#$" b% t$ #o!ts i* it is ini2itos o! n#ons#ionabl$.
JUDICIAL REDUCTI,N ,- @ENALTY @rinci!al o$li%ation – !artl' co!lied #ith $' the de$tor ($ut not in indi*isi$le o$li%ation" $ecause it is t antaount to non2co!liance) @rinci!al o$li%ation – co!lied not in accordance #ith the tenor of the a%reeent (refers to irre%ular !erforance) @enalt' – ini
Jud%es !o#er to reduce !enalties are liited to !ri*ate contracts&
INIUIT,US ,R UNC,NSCI,NA.LE – #hen it is re*oltin% to the conscience or coon sense; %rossl' dis!ro!ortionate to the daa%es suffered& @ENALTY N,T EN-,RCEA.LE> 4& I!ossi$le !erforance of !rinci!al o$li%ation due to fortuitous e*ents 8& Creditor !re*ented the de$tor fro fulfillin% the o$li%ation 9& @enalt' is contrar' to %ood orals or %ood custos 7& .oth !arties are %uilt' of $reach of contract 5& .reach of contract $' the creditor 6& None of the !arties coitted an' #illful or cul!a$le *iolation of the a%reeent 10?. T$ nllit% o* t$ $nal #las$ "o$s not #a!!% it it tat o* t$ !in#ial obligation. T$ nllit% o* t$ !in#ial obligation #a!!i$s it it tat o* t$ $nal #las$.
.ecause the !enal clause is onl' an accessor' to the !rinci!al o$li%ation" it cannot e Bist alone&
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If the !enal clause is *oid" the !rinci!al o$li%ation reains enforcea$le& 2"e nullity of penal clause does not mean t"e nullity of t"e principal0 -or eBa!le> In case of non2!a'ent of @4?"???" @4"??? !er da' as !enalt' shall $e i!osed& It is a *oid contract $ut it is not an eBcuse that 'ou dont ha*e to !a' the !rinci!al #hich is @4?"???& CHAPTER 4 EJTINHG9ISHDENT O OBLIGATIONS GENERAL PROVISIONS 101. Obligations a!$ $=tingis$"( 5. b% a%+$nt o! $!*o!+an#$ 6. b% loss o* t$ ting "$ ). b% #on"onation o! !$+ission <. b% #on*sion o! +$!g$! o* t$ !igts o* #!$"ito! an" "$bto! >. b% #o+$nsation 1?. b% no&ation Ot$! #as$s o* $=tingis+$nt o* obligations' s# as annl+$nt' !$s#ission' *l*ill+$nt o* a !$solto!% #on"ition' an" !$s#!ition' a!$ go&$!n$" $ls$$!$ in tis Co"$. 100. Pa%+$nt +$ans not onl% t$ "$li&$!% o* +on$% bt also t$ $!*o!+an#$' in an% ot$! +ann$! o* an obligation. Payment means not only deli!ery of money but also t"e performance0 •
• •
• •
10 0
It is the fulfillent of the !restation due that eBtin%uishes the o$li%ation $' the realiation of the !ur!oses for #hich it #as constituted It is a juridical act #hich is *oluntar'" licit and ade #ith the intent to eBtin%uish an o$li%ation Re 4& !erson #ho !a's 8& the !erson to #ho !a'ent is ade 9& the thin% to $e !aid 7& the anner" tie and !lace of !a'ent etc The !a'in% as #ell as the one recei*in% should ha*e the re noral –#hen the de$tor *oluntaril' !erfors the !restation sti!ulated a$noral – #hen he is forced $' eans of a judicial !roceedin% either to co!l' #ith !restation or to !a' indemnity
10. A "$bt sall not b$ n"$!stoo" to a&$ b$$n ai" nl$ss t$ ting o! s$!&i#$ in i# t$ oligatoin #onsists as b$$n #o+l$t$l% "$li&$!$" o! !$n"$!$"' as t$ #as$ +a% b$. •
•
•
•
States 8 re a&) identit' of !restation 2 the *er' thin% or ser*ice due ust $e deli*ered or released $&) inte%rit' – !restation ust $e fulfilled co!letel' Tie of !a'ent – the !a'ent or !erforance ust $e on the date sti!ulated (a' $e ade e*en on Sunda's or on an' holida'" althou%h soe" li:e the Ne%otia$le Instruents La#" states that !a'ent in such case a' $e ade on the neBt succeedin% $usiness da') The $urden of !ro*in% that the o$li%ation has $een eBtin%uished $' !a'ent de*ol*es u!on the de$tor #ho offers such a defense to the clai of the !laintiff creditor The issuance of a recei!t is a conse
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104. I* t$ obligation as b$$n sbstantiall% $!*o!+$" in goo" *ait' t$ obligo! +a% !$#o&$! as tog t$!$ a" b$$n a st!i#t an" #o+l$t$ *l*ill+$nt' l$ss "a+ag$s s**$!$" b% t$ oblig$$. In order that there a' $e su$stantial !erforance of an o$li%ation" there ust ha*e $een an atte!t in %ood faith to • !erfor" #ithout an' #illful or intentional de!arture therefro • The non2!erforance of a aterial !art of a contract #ill !re*ent the !erforance fro aountin% to a su$stantial co!liance •
•
•
A !art' #ho :no#in%l' and #illfull' fails to !erfor his contract in an' res!ect" or oits to !erfor a aterial !art of it cannot $e !eritted under the !rotection of this rule to co!el the other !art' to !erfor; and the trend of the ore recent decisions is to hold that the !ercenta%e of oitted or irre%ular !erforance a' in and of itself $e sufficient to sho# that there has not $een a su$stantial !erforance The !art' #ho has su$stantiall' !erfored a' enforce s!ecific !erforance of the o$li%ation of the other !art' or a' reco*er daa%es for their $reach u!on an a lle%ation of !erforance" #ithout !roof of co!lete fulfillent& The other !art'" on the other hand" a' $' an inde!endent action $efore he is sued" or $' a counterclai after coenceent of a suit a%ainst hi" reco*er fro the first !art' the daa%es #hich he has sustained $' the latters failure to co!letel' fulfill his o$li%ation
105 – 7$n t$ oblig$ a##$ts t$ $!*o!+an#$' @noing its in#o+l$t$n$ss o! i!!$gla!it%' an" itot $=!$ssing an% !ot$st o! obj$#tion' t$ obligation is "$$+$" *ll% #o+li$" it A !erson enterin% into a contract has a ri%ht to insist on its !erforance in all !articulars" accordin% to its eanin% and s!irit& .ut if he chooses to #ai*e an' of the ters introduced for his o#n $enefit" he a' do so& .ut he is not o$li%ed to acce!t an'thin% else in !lace of that #hich he has contracted for and if he does not #ai*e this ri%ht" the other !art' cannot reco*er a%ainst hi #ithout !erforin% all the sti!ulations on is !art To constitute a #ai*er" there ust $e an intentional relin #hene*er a third !erson !a's there is a odification of the !restation that is due& /enerall'" the 9rd !erson #ho !aid anothers de$t is entitled to reco*er the full aount he !aid& The la#" ho#e*er liits his reco*er' to the aount $' #hich the de$tor has $een $enefited" if the de$tor has no :no#led%e of" or has eB!ressed his o!!osition to such !a'ent If the de$t has $een reitted" !aid co!ensated or !rescri$ed" a !a'ent $' a third !erson #ould constitute a !a'ent of #hat is not due; his reed' #ould $e a%ainst the !erson #ho recei*ed the !a'ent under such conditions and not a%ainst the de$tor #ho did not $enefit fro the !a'ent !a'ent a%ainst de$tors #ill – e*en if !a'ent of the third !art' is a%ainst the #ill of the de$tor" u!on !a'ent $' the third !art'" the o$li%ation $et#een the de$tor and creditor is alread' eBtin%uished 10). 7o$&$! a%s on b$al* o* t$ "$bto! itot t$ @nol$"g$ o! against t$ ill o* t$ latt$!' #annot #o+$l t$ #!$"ito! to sb!ogat$ i+ in is !igts' s# as tos$ a!ising *!o+ a +o!tgag$' ga!ant% o! $nalt% • This article %i*es to the third !erson #ho !aid onl' a si!le !ersonal action for rei$urseent" #ithout the securities" %uaranties and other ri%hts reco%nied in th e creditor" #hich are eBtin%uished $' the !a'ent 10<. Pa%+$nt +a"$ b% a ti!" $!son o "o$s not int$n" to b$ !$i+b!s$" b% t$ "$bto! is "$$+$" to b$ a "onation' i# !$2i!$s t$ "$bto!Ks #ons$nt; bt t$ a%+$nt is in an% #as$ &ali" as to t$ #!$"ito! o as a##$t$" it ART 10>. In obligations to gi&$' a%+$nt +a"$ b% on$ o "o$s not a&$ t$ *!$$ "isosal o* t$ ting "$ an" #aa#it% to ali$nat$ it sall not b$ &ali$"' itot !$j"i#$ to t$ !o&isions o* a!ti#l$ 140) n"$! t$ Titl$ on Nat!al ObligationsM consi%nation #ill not $e !ro!er here& In case the creditor acce!ts the !a'ent" the !a'ent #ill not $e *alid eBce!t in the case !ro*ided in article 478F
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104?. Pa%+$nt sall b$ +a"$ to t$ $!son in os$ *a&o! t$ obligation as b$$n #onstitt$"' o! is s##$sso! in int$!$st' o! an% $!son ato!i$" to !$#$i&$ it the authorit' of a !erson to recei*e !a'ent for the creditor a' $e a&) le%al – conferred $' la# (e&%&"%uardian of the inca!acitated" adinistrator of the estate of the deceased) $&) con*entional – #hen the authorit' has $een %i*en $' the creditor hiself (e&%&" a%ent #ho is a!!ointed to collect fro the de$tor •
!a'ent ade $' the de$tor to a #ron% !art' does not eBtin%uish the o$li%ation as to the creditor (*oid)" if there is no fault or ne%li%ence #hich can $e i!uted to the latter (e*en #hen the de$tor acted in utost %ood faith" or throu%h error induced $' the fraud of the 9rd !erson)& It does not !rejudice the creditor and the accrual of interest is not sus!ended $' it
1041. Pa%+$nt to a $!son o is in#aa#itat$" to a"+inist$! is !o$!t% sall b$ &ali" i* $ as @$t t$ ting "$li&$!$"' o! inso*a! as t$ a%+$nt as b$$n b$n$*i#ial to i+. Pa%+$nt +a"$ to a ti!" $!son sall also b$ &ali" inso*a! as it as !$"on"$" to t$ b$n$*it o* t$ #!$"ito!. S# b$n$*it to t$ #!$"ito! n$$" not b$ !o&$" in t$ *olloing #as$s( ,1- I* a*t$! t$ a%+$nt' t$ ti!" $!son a#2i!$s t$ #!$"ito!s !igts/ ,0- I* t$ #!$"ito! !ati*i$s t$ a%+$nt to t$ ti!" $!son/ ,- I* b% t$ #!$"ito!s #on"#t' t$ "$bto! as b$$n l$" to b$li$&$ tat t$ ti!" $!son a" ato!it% to !$#$i&$ t$ a%+$nt. ,116a !a'ent shall $e considered as ha*in% $enefited the inca!acitated !erson if he ade an intelli%ent and reasona$le use thereof" for !ur!oses necessar' or useful to hi" such as that #hich his le%al re!resentati*e #ould ha*e or could ha*e done under siilar circustances" e*en if at the tie of the co!laint the effect of such use no lon%er eBists (e&%&" taBes on creditors !ro!ert'" one' to eBtin%uish a ort%a%e on creditors !ro!ert') the de$tor is not released fro lia$ilit' $' a !a'ent to one #ho is not the creditor nor one authoried to recei*e the !a'ent" e*en if the de$tor $elie*ed in %ood faith that he is the creditor" eBce!t to the eBtent th at the !a'ent inured t o the $enefit of the creditor in addition to those entioned a$o*e" !a'ent to a third !erson releases the de$tor> a&) #hen" #ithout notice of the assi%nent of credit" he !a's to the ori%inal creditor $&) #hen in %ood faith he !a's to one in !ossession of the credit e*en #hen the creditor recei*es no $enefit fro the !a'ent to a third !erson" he cannot deand !a'ent ane#" if the ista:e of the de$tor #as due to the fault of the creditor 1040. Pa%+$nt +a"$ in goo" *ait to an% $!son in oss$ssion o* t$ #!$"it sall !$l$as$ t$ "$bto!. ,1164 the !erson in !ossession of the credit is neither the creditor nor one authoried $' hi to recei*e !a'ent" $ut a!!ears under the circustances of the case" to $e the creditor& Ge a!!ears to $e the o#ner of the credit" althou%h in realit'" he a' not $e the o#ner (e&%&" an heir #ho enters u!on the hereditar' estate and collects the credits thereof" $ut #ho is later de!ri*ed of the inheritance $ecause of inca!acit' to succeed) it is necessar' not onl' that the !ossession of the credit $e le%al" $ut a lso that the !a'ent $e in %ood faith 104. Pa%+$nt +a"$ to t$ #!$"ito! b% t$ "$bto! a*t$! t$ latt$! as b$$n j"i#iall% o!"$!$" to !$tain t$ "$bt sall not b$ &ali". ,1165•
•
the !a'ent to the creditor after the credit has $een attached or %arnished is *oid as to the !art' #ho o$tained the attachent or %arnishent" to th e eBtent of the aount of the jud%ent in his fa*or& The de$tor u!on #ho %arnishent order is ser*ed can al#a's de!osit the one' in court $' #a' of consi%nation and thus relie*e hiself fro further lia$ilit'
1044. T$ "$bto! o* a ting #annot #o+$l t$ #!$"ito! to !$#$i&$ a "i**$!$nt on$' altog t$ latt$! +a% b$ o* t$ sa+$ &al$ as' o! +o!$ &alabl$ tan tat i# is "$. In obligations to "o o! not to "o' an a#t o! *o!b$a!an#$ #annot b$ sbstitt$" b% anot$! a#t o! *o!b$a!an#$ against t$ oblig$$s ill. ,1166aU!on a%reeent of consent of the creditor" the de$tor a' deli*er a different thin% or !erfor a different !restation in • lieu of that sti!ulated& In this case there a' $e dation in !a'ent or no*ation •
The defects of the thin% deli*ered a' $e #ai*ed $' the creditor" if he eB!ressl' so declares or if" #ith :no#led%e thereof" he acce!ts the thin% #ithout !rotest or dis!oses of it or consues it
1045. :ation in a%+$nt' $!$b% !o$!t% is ali$nat$" to t$ #!$"ito! in satis*a#tion o* a "$bt in +on$%' sall b$
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go&$!n$" b% t$ la o* sal$s. ,n-
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This is the deli*er' and transission of o#nershi! of a thin% $' the de$tor to the creditor as an acce!ted e
•
Considered as a no*ation $' chan%e of the o$ject
•
here the de$t is one'" the la# on sale shall %o*ern; in this case" the act is deeed to $e a sale #ith the aount of the o$li%ation to the eBtent that it is eBtin%uished $ein% considered as !rice Difference $et#een Dation and Cession (see Art& 4855)
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1046. 7$n t$ obligation #onsists in t$ "$li&$!% o* an in"$t$!+inat$ o! g$n$!i# ting' os$ 2alit% an" #i!#+stan#$s a&$ not b$$n stat$"' t$ #!$"ito! #annot "$+an" a ting o* s$!io! 2alit%. N$it$! #an t$ "$bto! "$li&$! a ting o* in*$!io! 2alit%. T$ !os$ o* t$ obligation an" ot$! #i!#+stan#$s sall b$ ta@$n into #onsi"$!ation. ,116)a If there is disa%reeent $et#een the de$tor and the creditor as to the a The creditor #ho refuses to acce!t !artial !restations does not incur dela' eBce!t #hen there is a$use of ri%ht or if %ood faith re. T$ a%+$nt o* "$bts in +on$% sall b$ +a"$ in t$ #!!$n#% stilat$"' an" i* it is not ossibl$ to "$li&$! s# #!!$n#%' t$n in t$ #!!$n#% i# is l$gal t$n"$! in t$ Piliin$s. T$ "$li&$!% o* !o+isso!% not$s a%abl$ to o!"$!' o! bills o* $=#ang$ o! ot$! +$!#antil$ "o#+$nts sall !o"#$ t$ $**$#t o* a%+$nt onl% $n t$% a&$ b$$n #as$"' o! $n t!og t$ *alt o* t$ #!$"ito! t$% a&$ b$$n i+ai!$". In t$ +$anti+$' t$ a#tion "$!i&$" *!o+ t$ o!iginal obligation sall b$ $l" in t$ ab$%an#$. ,11)? LE/AL TENDER 2 eans such currenc' #hich in a %i*en jurisdiction can $e used for the !a'ent of de$ts" !u$lic and !ri*ate" and #hich cannot $e refused $' the creditor 2 That #hich a de$tor a' co!el a creditor to acce!t in !a'ent of de$t& so lon% as the notes #ere le%al tender at the tie the' #ere !aid or deli*ered" the !erson acce!tin% the ust suffer the loss if thereafter the' $ecae *alueless the !ro*isions of the !resent article ha*e $een odified $' RA No& 58P #hich states that !a'ents of all onetar' o$li%ations should no# $e ade in currenc' #hich is le%al tender in the @hils& A stipulation pro!iding payment in a foreign currency is null and !oid but it does not in!alidate t"e entire contract " and R&A& 74??& A chec:" #hether a ana%ers chec: or an ordinar' chec: is not le%al tender and an offer of the chec: in !a'ent of de$t is not a *alid tender of !a'ent 105?. In #as$ an $=t!ao!"ina!% in*lation o! "$*lation o* t$ #!!$n#% stilat$" sol" s$!&$n$' t$ &al$ o* t$ #!!$n#% at t$ ti+$ o* t$ $stablis+$nt o* t$ obligation sall b$ t$ basis o* a%+$nt' nl$ss t$!$ is an ag!$$+$nt to t$ #ont!a!%. ,nA!!lies onl' #here a contract or a%reeent is in*ol*ed& It does not a!!l' #here the o$li%ation to !a' arises fro la#" • inde!endent of contracts
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EBtraordinar' inflation of deflation a' $e said to $e that #hich is unusual or beyond t"e common fluctuations in t"e !alue of t"e currency " #hich !arties could not ha*e reasona$l' foreseen or #hich #as anifestl' $e'ond their conte!lation at the tie #hen the o$li%ation #as constituted
1051. Pa%+$nt sall b$ +a"$ in t$ la#$ "$signat$" in t$ obligation. T$!$ b$ing no $=!$ss stilation an" i* t$ n"$!ta@ing is to "$li&$! a "$t$!+inat$ ting' t$ a%+$nt sall b$ +a"$ $!$&$! t$ ting +igt b$ at t$ +o+$nt t$ obligation as #onstitt$". In an% ot$! #as$ t$ la#$ o* a%+$nt sall b$ t$ "o+i#il$ o* t$ "$bto!. •
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If the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" the additional eB!enses shall $e $orne $' hi& These !ro*isions are #ithout !rejudice to *enue under the Rules of Court&(44F4a) Since the la# fiBes the !lace of !a'ent at the doicile of the de$tor" it is the dut' of the creditor to %o there and recei*e !a'ent; he should $ear the eB!enses in this case $ecause the de$tor cannot $e ade to shoulder the eB!enses #hich the creditor incurs in !erforin% a dut' i!osed $' la# and #hich is for his $enefit& .ut if the de$tor chan%es his doicile in $ad faith or after he has incurred in dela'" then the additional eB!enses shall $e $orne $' hi hen the de$tor has $een re
S9BSECTION 1 APPLICATION O PADENTS 1050. H$ o as &a!ios "$bts o* t$ sa+$ @in" in *a&o! o* on$ an" t$ sa+$ #!$"ito!' +a% "$#la!$ at t$ ti+$ o* +a@ing t$ a%+$nt' to i# o* t$+ t$ sa+$ +st b$ ali$". 9nl$ss t$ a!ti$s so stilat$' o! $n t$ ali#ation o* a%+$nt is +a"$ b% t$ a!t% *o! os$ b$n$*it t$ t$!+ as b$$n #onstitt$"' ali#ation sall not b$ +a"$ as to "$bts i# a!$ not %$t "$. I* t$ "$bto! a##$ts *!o+ t$ #!$"ito! a !$#$it in i# an ali#ation o* t$ a%+$nt is +a"$' t$ *o!+$! #annot #o+lain o* t$ sa+$' nl$ss t$!$ is a #as$ *o! in&ali"ating t$ #ont!a#t. ,11)0a•
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•
Re 4& 4 de$tor and 4 creditor onl' 8& 8 or ore de$ts of the sae :ind 9& all de$ts ust $e due 7& aount !aid $' the de$tor ust not $e sufficient to co*er the total aount of all the de$ts It is necessar' that the o$li%ations ust all $e due& E Bce!tions> (4) #he there is a sti!ulation to the contrar'; and (8) the a!!lication of !a'ent is ade $' the !art' for #hose $enefit the ter or !eriod has $een constituted (relate to Art& 44P6)& It is also necessar' that all the de$ts $e for the sae :ind" %enerall' of a onetar' character& This includes o$li%ations #hich #ere not ori%inall' of a onetar' character" $ut at the tie of a!!lication of !a'ent" had $een con*erted into an o$li%ation to !a' daa%es $' reason of $reach or non!erforance& If the de$tor a:es a !ro!er a!!lication of !a'ent $ut the creditor refuses to acce!t it $ecause he #ants to a!!l' it to another de$t" such creditor #ill incur in dela' RI/GT ,- DE.T,R T, =A+E A@@LICATI,N& If at the tie of !a'ent" the de$tor does not eBercise his ri%ht to a!!l' it to an' of his de$ts" the a!!lication shall $e understood as !ro*ided $' la#" unless the creditor a:es the a!!lication an d his decision is acce!ted $' the de$tor& This a!!lication of !a'ent can $e ade $' the creditor onl' in the recei!t issued at the tie of !a'ent (althou%h the a!!lication ade $' creditor a' $e contested $' the de$tor if the latters assent to such a!!lication #as *itiated $' such causes as ista:e" *iolence" intiidation" fraud" etc) The de$tor and the creditor $' a%reeent" can *alidl' chan%e the a!!lication of !a'ent alread' ade #ithout !rejudice to the ri%hts of third !ersons ac
105. I* t$ "$bt !o"#$s int$!$st' a%+$nt o* t$ !in#ial sall not b$ "$$+$" to a&$ b$$n +a"$ ntil t$ int$!$sts a&$ b$$n #o&$!$". ,11)Interest !aid first $efore !rinci!al • •
•
A!!lies $oth to co!ensator' interest (that sti!ulated as earnin%s of the aount due under the o$li%ation) and to interest due $ecause of dela' or ora on the !art of the de$tor SC held that this !ro*ision a!!lies onl' in the a$sence of a *er$al or #ritten a%reeent to the contrar' (erel' director'" not andator')
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1054. 7$n t$ a%+$nt #annot b$ ali$" in a##o!"an#$ it t$ !$#$"ing !l$s' o! i* ali#ation #an not b$ in*$!!$" *!o+ ot$! #i!#+stan#$s' t$ "$bt i# is +ost on$!os to t$ "$bto!' a+ong tos$ "$' sall b$ "$$+$" to a&$ b$$n satis*i$". I* t$ "$bts "$ a!$ o* t$ sa+$ nat!$ an" b!"$n' t$ a%+$nt sall b$ ali$" to all o* t$+ !oo!tionat$l%. ,11)4a As to #hich of 8 de$ts is ore onerous is fundaentall' a 4& ,ldest are ore onerous than ne# ones 8& ,ne $earin% interest ore onerous than one that does not 9& secured de$t ore onerous than unsecured one 7& !rinci!al de$t ore onerous than %uarant' 5& solidar' de$tor ore onerous than sole de$tor 6& share in a solidar' o$li%ation ore onerous to a solidar' de$tor F& li de$tor o#es his creditor se*eral de$ts" all of the due" to #it> (4) unsecured de$t" (8) a de$t secured #ith ort%a%e of the de$tors !ro!ert'" (9) a de$t #ith interest" (7) a de$t in #hich the de$tor is solidaril' lia$le #ith another& @artial !a'ent #as ade $' the de$tor" #ithout s!ecification as to #hich the !a'ent should $e a!!lied& The ost onerous is (7)" follo#ed $' (8)" then (9)" then (4)& Conse
•
Cession is a s!ecial for of !a'ent #here$' the de$tor a$andons or assi%ns all of his !ro!ert' for the $enefit of his creditors so that the latter a' o$tain !a'ent of their credits fro the !roceeds of the !ro!ert'& Re 4& !luralit' of de$ts 8& !artial or relati*e insol*enc' of the de$tor 9& acce!tance of cession $' the creditors +inds of Cession> 4& Contractual (Art& 4855) 8& Judicial (Insol*enc' La#) =ust $e initiated $' de$tors
•
Re
•
Such assi%nent does not ha*e the effect of a:in% the creditors the o#ners of the !ro!ert' of the de$tor unless there is an a%reeent to that effect
•
Difference $et#een Dation and Cession
•
•
•
DATI,N
CESSI,N
a' $e 4 creditor
an' creditors
does not re
re
deli*er' of a thin%
deli*er' of all the !ro!ert'
transfer of o#nershi! of the !ro!ert'
no transfer of o#nershi! (onl' of !ossession and adinistration)
a no*ation !a'ent eBtin%uishes o$li%ation (to the eBtent of the *alue of the thin% deli*ered)
the effect is erel' to release de$tor fro the n et !roceeds of the !ro!ert'; hence" !artial eBtin%uishent of
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o$li%ation& S9BSECTION TEN:ER O PADENT AN: CONSIGNATION 1056. I* t$ #!$"ito! to o+ t$n"$! o* a%+$nt as b$$n +a"$ !$*s$s itot jst #as$ to a##$t it' t$ "$bto! sall b$ !$l$as$" *!o+ !$sonsibilit% b% t$ #onsignation o* t$ ting o! s+ "$. Consignation alon$ sall !o"#$ t$ sa+$ $**$#t in t$ *olloing #as$s( ,1- 7$n t$ #!$"ito! is abs$nt o! n@non' o! "o$s not a$a! at t$ la#$ o* a%+$nt/ ,0- 7$n $ is in#aa#itat$" to !$#$i&$ t$ a%+$nt at t$ ti+$ it is "$/ ,- 7$n' itot jst #as$' $ !$*s$s to gi&$ a !$#$it/ ,4- 7$n to o! +o!$ $!sons #lai+ t$ sa+$ !igt to #oll$#t/ ,5- 7$n t$ titl$ o* t$ obligation as b$$n lost. ,11)6a• T$n"$! o* a%+$nt > anifestation ade $' the de$tor to the creditor of his desire to co!l' #ith his o$li%ation; The act of the de$tor of offerin% to the creditor the thin% or aount due •
Consignation > De!osit of the o$ject or the aount due #ith the !ro!er court after refusal or ina$ilit' of the creditor to acce!t the tender of !a'ent
•
Tender of !a'ent $' certified chec: is *alid; a ere chec: #ould also $e *alid for tender of !a'ent if the creditor a:es no !ro!t o$jection" $ut this does not esto! the latter fro later deandin% !a'ent in cash hen a tender of !a'ent is ade in such a for that the creditor could ha*e iediatel' realied !a'ent if he had acce!ted the tender" follo#ed $' a !ro!t atte!t of the de$tor to de!osit the eans of !a'ent in court $' #a' of consi%nation" the accrual of interest on the o$li%ation #ill $e sus!ended fro the date of such tender& .ut #hen the tender of !a'ent is not acco!anied $' the eans of !a'ent" and the de$tor did not ta:e an' iediate ste! to a:e a consi%nation" then the interest is not sus!ended fro the tie of such tender&
•
/ENERAL REUISITES ,- 3ALID C,NSI/NATI,N *s S@ECIAL REUISITES /eneral Re< > relati*e to !a'ent (Arts& 4898 2 4854) S!ecial Re< > *er' nature of consi%nation (Arts& 4856 – 485H)
S!ecial Re F:LN3:N F: There #as a "e$t due FL The consi%nation of the o$li%ation #as ade $ecause of soe le%al cause !ro*ided in the !resent article FN That !re*ious notice of the consi%nation has $een %i*en to !ersons interested in the !erforance of the o$li%ation F: The aount or thin% due #as !laced at the "is!osal of the court FN After the consi%nation had $een ade the !ersons interested had $een notified thereof
4& 8& 9& 7& 5&
4& 8& 9& 7&
4& 8& 9& 7& 5&
If the reason for consi%nation is the unjust refusal of the creditor to acce!t !a'ent" it ust $e sho#n> That there #as !re*ious tender of !a'ent" #ithout #hich the consi%nation is ineffecti*e That the tender of !a'ent #as of the *er' thin% due" or in case of one' o$li%ations that le%al tender currenc' #as offered That the tender of !a'ent #as unconditional and That the creditor refused to acce!t !a'ent #ithout just cause EBce!tion to re FAIR3TT FA hen creditor is a$sent or un:no#n or does not a !!ear at !lace of !a'ent FI hen he is inca!acitated to recei*e !a'ent FR hen he refuses to %i*e !ecei!t" #ithout just cause FT hen t#o or ore !ersons clai sae ri%ht to collect FT hen title of the o$li%ation has $een lost
The 4st and 8nd S!ecial Re (a) the tender of !a'ent ust ha*e $een ade prior to t"e consignation (b) that it ust ha*e $een unconditional e&%& #here the de$tor tendered a chec: for @9"85? to the creditor as !a'ent of a de$t conditioned u!on the si%nin% $' the latter of a otion to disiss a co!laint for le%al se!aration" such tender of
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!a'ent is in*alid& (c) that the creditor ust ha*e refused to acce!t the !a'ent wit"out just cause it is not necessar' for the court #here the thin% or the aount is de!osited to deterine #hether the refusal of the creditor to acce!t the sae #as #ith or #ithout just cause& The
The lac: of notice does not in*alidate the consi%nation $ut si!l' a:es the de$tor lia$le for the eB!enses
•
The tender of !a'ent and the notice of consi%nation sent to the creditor a' $e ade in the sae act& In case of a$sent or un:no#n creditors" the notice a' $e ade $' !u$lication
•
4st !ara%ra!h of this article – !ertains to the 9rd S!ecial Re the forer is a friendl' and !ri*ate act anifested onl' to the creditor; the latter is anifested also to other !ersons interested in the fulfillent of the o$li%ation& 8nd !ara%ra!h of this article – !ertains to the /eneral Re
•
105<. Consignation sall b$ +a"$ b% "$ositing t$ tings "$ at t$ "isosal o* j"i#ial ato!it%' b$*o!$ o+ t$ t$n"$! o* a%+$nt sall b$ !o&$"' in a !o$! #as$' an" t$ annon#$+$nt o* t$ #onsignation in ot$! #as$s. T$ #onsignation a&ing b$$n +a"$' t$ int$!$st$" a!ti$s sall also b$ noti*i$" t$!$o*. ,11). T$ $=$ns$s o* #onsignation' $n !o$!l% +a"$' sall b$ #a!g$" against t$ #!$"ito!. ,11)>The consi%nation is !ro!erl' ade #hen> • 4&) after the thin% has $een de!osited in court" the creditor acce!ts the consi%nation #ithout o$jection and #ithout an' reser*ation of his ri%ht to contest it $ecause of failure to co!l' #ith an' of the re
Kin these cases" the creditor $ears the eB!enses of the consi%nation 106?. On#$ t$ #onsignation as b$$n "l% +a"$' t$ "$bto! +a% as@ t$ j"g$ to o!"$! t$ #an#$llation o* t$ obligation. B$*o!$ t$ #!$"ito! as a##$t$" t$ #onsignation' o! b$*o!$ a j"i#ial "$#la!ation tat t$ #onsignation as b$$n !o$!l% +a"$' t$ "$bto! +a% it"!a t$ ting o! t$ s+ "$osit$"' alloing t$ obligation to !$+ain in *o!#$. ,11
•
The effects of consi%nation are> 4&) the de$tor is released in the sae anner as if he had !erfored the o$li%ation at the tie of the consi%nation $ecause this !roduces the sae effect as a *alid !a'ent" 8&) the accrual of interest on the o$li%ation is sus!ended fro the oent of consi%nation" 9&) the deteriorations or loss of the thin% or aount consi%ned occurrin% #ithout fault of the de$tor ust $e $orne $' the creditor" $ecause the ris:s of the thin% are transferred to the creditor fro the oent of de!osit 7&) an' increent or increase in *alue of the thin% after the consi%nation inures to the $enefit of the creditor& hen the aount consi%ned does not co*er the entire o$li%ation" the creditor a' acce!t it" reser*in% his ri%ht to the $alance& If no reser*ations are ade" the acce!tance $' the creditor of the aount consi%ned a' $e re%arded as a #ai*er of further clais under the contract
1061. I*' t$ #onsignation a&ing b$$n +a"$' t$ #!$"ito! sol" ato!i$ t$ "$bto! to it"!a t$ sa+$' $ sall los$ $&$!% !$*$!$n#$ i# $ +a% a&$ o&$! t$ ting. T$ #o3"$bto!s' ga!anto!s an" s!$ti$s sall b$
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!$l$as$". ,11<1a hen the consi%nation has alread' $een ade and the creditor has acce!ted it or it has $een judiciall' declared as !ro!er" the de$tor cannot #ithdra# the thin% or aount de!osited unless the creditor consents thereto& If the creditor authories the de$tor to #ithdra# the sae" there is a re*i*al of the o$li%ation" #hich has alread' $een eBtin%uished $' the consi%nation" and the relationshi! of de$tor and creditor is restored to the condition in #hich it #as $efore the consi%nation& .ut third !ersons" solidar' co2de$tors" %uarantors and sureties #ho are $enefited $' the consi%nation are not !rejudiced $' the re*i*al of the o$li%ation $et#een the de$tor and the creditor SECTION 0 LOSS O THE THING :9E 1060. An obligation i# #onsists in t$ "$li&$!% o* a "$t$!+inat$ ting sall b$ $=tingis$" i* it sol" b$ lost o! "$st!o%$" itot t$ *alt o* t$ "$bto!' an" b$*o!$ $ as in#!!$" in "$la%. 7$n b% la o! stilation' t$ obligo! is liabl$ $&$n *o! *o!titos $&$nts' t$ loss o* t$ ting "o$s not $=tingis t$ obligation an" $ sall b$ !$sonsibl$ *o! "a+ag$s. T$ sa+$ !l$ ali$s $n t$ nat!$ o* t$ obligation !$2i!$s t$ ass+tion o* !is@. 106( In an obligation to "$li&$! a g$n$!i# ting' t$ loss o! "$st!#tion o* an%ting o* t$ sa+$ @in" "o$s not $=tingis t$ obligation. ,n1064. T$ #o!ts sall "$t$!+in$ $t$!' n"$! t$ #i!#+stan#$s' t$ a!tial loss o* t$ obj$#t o* t$ obligation is so i+o!tant as to $=tingis t$ obligation. ,n1065. 7$n$&$! t$ ting is lost in t$ oss$ssion o* t$ "$bto!' it sall b$ !$s+$" tat t$ loss as "$ to is *alt' nl$ss t$!$ is !oo* to t$ #ont!a!%' an" itot !$j"i#$ to t$ !o&isions o* a!ti#l$ 1165. Tis !$s+tion "o$s not al% in #as$ o* $a!t2a@$' *loo"' sto!+' o! ot$! nat!al #ala+it%. ,11<a
9rd !ara%ra!h of Art& 4465> #he the o$li%or dela's" or has !roised to deli*er the sae thin% to t#o or ore !ersons #ho do not ha*e the sae interest" he shall $e lia$le for an' fortuitious e *ent until he has effected the deli*er' Gence" in cases #here Art& 4465" !ar& 9 is a!!lica$le" e*en if the de$tor can !ro*e that the loss of the thin% in his !ossession #as not throu%h his fault or that it #as throu%h a fortuitous e*ent" he shall still $e lia$le to the creditor for daa%es&
1066. T$ "$bto! in obligations to "o sall also b$ !$l$as$" $n t$ !$station b$#o+$s l$gall% o! %si#all% i+ossibl$ itot t$ *alt o* t$ obligo!. ,11<4a-
LE/AL I=@,SSI.ILITY > a' either $e 2 4& direct (#hen the la# !rohi$its the !erforance or eBecution of the #or: a%reed u!on" i&e& #hen it is ioral or dan%erous) 8& indirect (the la# i!oses duties of a su!erior character u!on the o$li%or #hich are inco!ati$le #ith the #or: a%reed u!on" althou%h the latte r a' $e !erfectl' licit" as #here the o$li%or is drafted for ilitar' ser*ice or for a ci*il function) @GYSICAL I=@,SSI.ILTY > eBa!les – death of the de$tor; #hen there is an accident&&& 106). 7$n t$ s$!&i#$ as b$#o+$ so "i**i#lt as to b$ +ani*$stl% b$%on" t$ #ont$+lation o* t$ a!ti$s' t$ obligo! +a% also b$ !$l$as$" t$!$*!o+' in ol$ o! in a!t. ,n-
D,CTRINE ,- UN-,RESEEN E3ENT D,CTRINE ,- RELATI3E I=@,SSI.ILITY (re$us sic stanti$us) It refers to o$li%ation Wto doW (!ersonal o$li%ation) @arties are !resued to ha*e the ris: It does not a!!l' to aleator' contracts (insurance contract) EBcludes hi%hl' s!eculati*e $usiness (stoc: eBchan%e) =onator' o$li%ations are also eBcluded (%o*erned $' 495F) Re 4& e*ent or chan%e in the circustances could ha*e $een foreseen of the tie of the eBecution contract 8& it a:es the !erforance of the contract eBtreel' difficult $ut not i!ossi$le 9& the e*ent ust not $e due to the act of an' of the !arties
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7&
the contract is for a future !restation& If the contract is of iediate fulfillent" the %ross ine
106<. 7$n t$ "$bt o* a ting #$!tain an" "$t$!+inat$ !o#$$"s *!o+ a #!i+inal o**$ns$' t$ "$bto! sall not b$ $=$+t$" *!o+ t$ a%+$nt o* its !i#$' at$&$! +a% b$ t$ #as$ *o! t$ loss' nl$ss t$ ting a&ing b$$n o**$!$" b% i+ to t$ $!son o sol" !$#$i&$ it' t$ latt$! !$*s$" itot jsti*i#ation to a##$t it. ,11<5106>. T$ obligation a&ing b$$n $=tingis$" b% t$ loss o* t$ ting' t$ #!$"ito! sall a&$ all t$ !igts o* a#tion i# t$ "$bto! +a% a&$ against ti!" $!sons b% !$ason o* t$ loss. ,11<610)?. Con"onation o! !$+ission is $ss$ntiall% g!atitos' an" !$2i!$s t$ a##$tan#$ b% t$ obligo!. It +a% b$ +a"$ $=!$ssl% o! i+li$"l%. On$ an" t$ ot$! @in" sall b$ sbj$#t to t$ !l$s i# go&$!n ino**i#ios "onations. E=!$ss #on"onation sall' *!t$!+o!$' #o+l% it t$ *o!+s o* "onation. ,11<)10)1. T$ "$li&$!% o* a !i&at$ "o#+$nt $&i"$n#ing a #!$"it' +a"$ &olnta!il% b% t$ #!$"ito! to t$ "$bto!' i+li$s t$ !$nn#iation o* t$ a#tion i# t$ *o!+$! a" against t$ latt$!. I* in o!"$! to nlli*% tis ai&$! it sol" b$ #lai+$" to b$ ino**i#ios' t$ "$bto! an" is $i!s +a% ol" it b% !o&ing tat t$ "$li&$!% o* t$ "o#+$nt as +a"$ in &i!t$ o* a%+$nt o* t$ "$bt. ,11<<10)0. 7$n$&$! t$ !i&at$ "o#+$nt in i# t$ "$bt a$a!s is *on" in t$ oss$ssion o* t$ "$bto!' it sall b$ !$s+$" tat t$ #!$"ito! "$li&$!$" it &olnta!il%' nl$ss t$ #ont!a!% is !o&$". ,11<>10). T$ !$nn#iation o* t$ !in#ial "$bt sall $=tingis t$ a##$sso!% obligations/ bt t$ ai&$! o* t$ latt$! sall l$a&$ t$ *o!+$! in *o!#$. ,11>?10)4. It is !$s+$" tat t$ a##$sso!% obligation o* l$"g$ as b$$n !$+itt$" $n t$ ting l$"g$"' a*t$! its "$li&$!% to t$ #!$"ito!' is *on" in t$ oss$ssion o* t$ "$bto!' o! o* a ti!" $!son o ons t$ ting. ,11>1a-
K Aticles 48F4 – 48F7> eBa!les of i!lied reission SECTION 4 CON9SION OR DERGER O RIGHTS 10)5. T$ obligation is $=tingis$" *!o+ t$ ti+$ t$ #a!a#t$!s o* #!$"ito! an" "$bto! a!$ +$!g$" in t$ sa+$ $!son. ,11>0a=er%er or confusion is the eetin% in one !erson of the
•
Re (4) It ust ta:e !lace $et#een the creditor and the !rinci!al de$tor" (8) the *er' sae o$li%ation ust $e in*ol*ed" for if the de$tor ac
10)6. D$!g$! i# ta@$s la#$ in t$ $!son o* t$ !in#ial "$bto! o! #!$"ito! b$n$*its t$ ga!anto!s. Con*sion i# ta@$s la#$ in t$ $!son o* an% o* t$ latt$! "o$s not $=tingis t$ obligation. ,11>•
The eBtin%uishent of the !rinci!al o$li%ation throu%h confusion releases the %uarantors $ecause the o$li%ation of the latter is erel' accessor'& hen the er%er ta:es !lace in the !erson of a %uarantor" the o$li%ation is not eBtin%uished&
10)). Con*sion "o$s not $=tingis a joint obligation $=#$t as !$ga!"s t$ sa!$ #o!!$son"ing to t$ #!$"ito! o! "$bto! in o+ t$ to #a!a#t$!s #on#!. ,11>4SECTION 5 CODPENSATION
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10)<. Co+$nsation sall ta@$ la#$ $n to $!sons' in t$i! on !igt' a!$ #!$"ito!s an" "$bto!s o* $a# ot$!. ,11>5 Co!ensation is a ode of eBtin%uishin% to the concurrent aount" the o$li%ations of those !ersons #ho in their o#n ri%ht are reci!rocall' de$tors and creditors of each other& It is the offsettin% of t#o o$li%ations #hich are reci!rocall' eBtin%uished if the' are of e
+inds of Co!ensation> •
•
■ ■ ■ ■
As to their effects •
co!ensation a' $e total (#hen the t#o o$li%ations are of the sae aount); or
•
!artial (#hen the aounts are not e
As to ori%in 4& it a' $e le%al; 8& faculta ti*e; 9& con*entional; 7& or judicia l& It is le%al #hen it ta:es !lace $' o!eration of la# $ecause all re
Co+$nsation &s. Pa%+$nt( In co!ensation" there can $e !artial eBtin%uishent of the o$li%ation; in !a'ent" the !erforance ust $e co!leter" unless #ai*ed $' the creditor& @a'ent in*ol*es deli*er' of action" #hile co!ensation (le%al co!ensation) ta:es !lace $' o!eration of la# #ithout siultaneous deli*er'& Co+$nsation &s. D$!g$!( In co!ensation" there are at least t#o !ersons #ho stand as !rinci!al creditors and de$tor of each other" in er%er" there is onl' one !erson in*ol*ed in #ho the characters of creditor and de$tor are er%ed& In er%er" there is onl' one o$li%ation" #hile in co!ensation" there are t#o o$li%ations in*ol*ed& 10)>. In o!"$! tat #o+$nsation +a% b$ !o$!' it is n$#$ssa!%( ,1- Tat $a# on$ o* t$ obligo!s b$ bon" !in#iall%' an" tat $ b$ at t$ sa+$ ti+$ a !in#ial #!$"ito! o* t$ ot$!/ ,0- Tat bot "$bts #onsist in a s+ o* +on$%' o! i* t$ tings "$ a!$ #ons+abl$' t$% b$ o* t$ sa+$ @in"' an" also o* t$ sa+$ 2alit% i* t$ latt$! as b$$n stat$"/ ,- Tat t$ to "$bts b$ "$/ ,4- Tat t$% b$ li2i"at$" an" "$+an"abl$/ ,5- Tat o&$! n$it$! o* t$+ t$!$ b$ an% !$t$ntion o! #ont!o&$!s%' #o++$n#$" b% ti!" $!sons an" #o++ni#at$" in "$ ti+$ to t$ "$bto!. ,11>6 -or co!ensation to ta:e !lace" the !arties ust $e utuall' de$tors and creditors (4) in their o#n ri%ht" and (8) as !rinci!als& here there is no relationshi! of utual creditors and de$tors" there can $e no co!ensation& .ecause the 4st re (4) #hen there is a !eriod #hich has not 'et arri*ed" includin% the cases #hen one !art' is in a state of sus!ension of !a'ents; (8) #hen there is a sus!ensi*e condition that has not 'et ha!!ened; (9) #hen the o$li%ation cannot $e sued u!on" as in natural o$li%ation& A de$t is li
K The *i&$ !$2isit$s o* a l$gal #o+$nsation are enuerated in the Article& All re
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4&
8&
9&
7&
5&
That each of the o$li%ators $e $ound !rinci!all' and that he $e at the sae tie a !rinci!al creditor of the other& The !arties ust $e utual creditor and de$tor of each other and their relationshi! is a !rinci!al one" that is" the' are !rinci!al de$tor and creditor of each other& That $oth de$ts consist in such a su of one'" or if the thin%s due are consua$le" the' $e of the sae :ind" and also of the sae
10) The lia$ilit' of the %uarantor is onl' su$sidiar'; it is accessor' to the !rinci!al o$li%ation of the de$tor& If the !rinci!al de$tor has a credit a%ainst the creditor" #hich can $e co!ensated" it #ould ean the eBtin%uishent of the %uaranteed de$t" either totall' or !artiall'& This eBtin%uishent $enefits the %uarantor" for he can $e held lia$le onl' to the sae eBtent as the de$tor& E=#$tion to t$ Rl$ On Co+$nsation( Ri%ht of /uarantor to In*o:e Co!ensation A%ainst Creditor& The %eneral rule is that for co!ensation to o!erate" the !arties ust $e related reci!rocall' as !rinci!al creditors and de$tors of each other& Under the !resent Article" the %uarantor is allo#ed to set u! co!ensation a%ainst the creditor& 10<1. Co+$nsation +a% b$ total o! a!tial. 7$n t$ to "$bts a!$ o* t$ sa+$ a+ont' t$!$ is a total #o+$nsation. ,nTotal Co!ensationZde$ts are of the sae aount& • •
@artial Co!ensationZDe$ts are not of the sae aount; o!erati*e onl' u! to the concurrent aount&
10<0. T$ a!ti$s +a% ag!$$ on t$ #o+$nsation o* "$bts i# a!$ not %$t "$. ,n• 3oluntar' co!ensation is not liited to o$li%ations #hich are not 'et due& The !arties a' co!ensate $' a%reeent an' o$li%ations" in #hich the o$jecti*e re
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I* t$ #!$"ito! #o++ni#at$" t$ #$ssion to i+ bt t$ "$bto! "i" not #ons$nt t$!$to' t$ latt$! +a% s$t t$ #o+$nsation o* "$bts !$&ios to t$ #$ssion' bt not o* sbs$2$nt on$s. I* t$ assign+$nt is +a"$ itot t$ @nol$"g$ o* t$ "$bto!' $ +a% s$t t$ #o+$nsation o* all #!$"its !io! to t$ sa+$ an" also lat$! on$s ntil $ a" @nol$"g$ o* t$ assign+$nt. ,11>
•
•
•
Assignment after 6ompensation> hen co!ensation has alread' ta:en !lace $efore the assi%nent" inasuch as it ta:es !lace i!so jure" there has alread' $een an eBtin%uishent of one of the other of the o$li%ations& A su$se
.ut if the de$tor #as notified of the assi%nent" $ut he did not consent" and the credit assi%ned to a third !erson atures after that #hich !ertains to the de$tor" the latter a' set u! co!ensation #hen the assi%nee atte!ts to enforce the assi%ned credit" !ro*ided that the credit of the de$tor $ecae due $efore the assi%nent& .ut it f the assi%ned credit atures earlier than that of the de$tor" the assi%nee a' iediatel' enforce it" and the de$tor cannot set u! co!ensation" $ecause the credit is not 'et due& If the de$tor did not ha*e :no#led%e of the assi%nent" he a' set u! $' #a' of co!ensation all credits aturin% $efore he is notified thereof& Gence" if the assi%nent is concealed" and the assi%nor still contracts ne# o$li%ation in fa*or of the de$tor" such o$li%ation aturin% $efore the latter learns of the assi%nent #ill still $e allo#a$le $' #a' of co!ensation& The assi%nee in such case #ould ha*e a !ersonal action a%ainst the assi%nor&
10<6. Co+$nsation ta@$s la#$ b% o$!ation o* la' $&$n tog t$ "$bts +a% b$ a%abl$ at "i**$!$nt la#$s' bt t$!$ sall b$ an in"$+nit% *o! $=$ns$s o* $=#ang$ o! t!anso!tation to t$ la#$ o* a%+$nt. ,11>>a This article a!!lies to le%al co!ensation and not to *oluntar' co!ensation& 10<). Co+$nsation sall not b$ !o$! $n on$ o* t$ "$bts a!is$s *!o+ a "$osit+ o! *!o+ t$ obligations o* a "$osita!% o! o* a bail$$ in #o++o"at+. N$it$! #an #o+$nsation b$ s$t against a #!$"ito! o as a #lai+ *o! so!t "$ b% g!atitos titl$' itot !$j"i#$ to t$ !o&isions o* a!ag!a 0 o* A!ti#l$ ?1. ,10??aE& The !rohi$ition of co!ensation #hen one of the de$ts arises fro a de!ositu (a contract $' *irtue of #hich a !erson de!ositar' recei*es !ersonal !ro!ert' $elon%in% to another de!ositor" #ith the o$li%ation of safel' :ee!in% it and returnin% the sae) or coodatu (a %ratuitous contract $' *irtue of #hich one of the !arties deli*ers to the other a non2consua$le !ersonal !ro!ert' so that the latter a' use it for a certain tie and return it) is $ased on justice& A de!osit of coodatu is %i*en on the $asis of confidence in the de!ositar' of the $orro#er& It is therefore" a atter of oralit'" the de!ositar' or $orro#er !erfors his o$li%ation& •
ith res!ect to future su!!ort" to allo# its eBtin%uishent $' co!ensation #ould defeat its eBe!tion fro attachent and eBecution& " and a' eB!ose the reci!ient to iser' and star*ation& Coon huanit' and !u$lic !olic' for$id this conse
10<<. N$it$! sall t$!$ b$ #o+$nsation i* on$ o* t$ "$bts #onsists in #i&il liabilit% a!ising *!o+ a $nal o**$ns$. ,n If one of the de$ts consists in ci*il lia$ilit' arisin% fro a !enal offense" co!ensation #ould $e i!ro!er and inad*isa$le $ecause the satisfaction of such o$li%ation is i!erati*e&
The !erson #ho has the ci*il lia$ilit' arisin% fro crie is the onl' !art' #ho cannot set u! the co!ensation; $ut the offended !art' entitled to the indenit' can set u! his clai in co!ensation of his de$t& A!t. 10<>. I* a $!son sol" a&$ against i+ s$&$!al "$bts i# a!$ ss#$tibl$ o* #o+$nsation' t$ !l$s on t$ ali#ation o* a%+$nts sall al% to t$ o!"$! o* t$ #o+$nsation. ,10?1It can ha!!en that a de$tor a' ha*e se*eral de$ts to a creditor& And *ice *ersa& Under these circustances" Articles • 4858 to 4857 shall a!!l'& •
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10>?. 7$n all t$ !$2isit$s +$ntion$" in A!ti#l$ 10)> a!$ !$s$nt' #o+$nsation ta@$s $**$#t b% o$!ation o* la' an" $=tingis$s bot "$bts to t$ #on#!!$nt a+ont' $&$n tog t$ #!$"ito!s an" "$bto!s a!$ not aa!$ o* t$ #o+$nsation. Le%al co!ensation ta:es !lace fro the oent that the re
3oluntar' of con*entional co!ensation ta:es effect u!on the a%reeent of the !arties&
•
-acultati*e co!ensation ta:es !lace #hen the creditor declares his o!tion to set it u!&
•
Judicial co!ensation ta:es !lace u!on final jud%ent&
Effects of Co!ensation> (4) .oth de$ts are eBtin%uished to the concurrent aount; (8) interests sto! accruin% on the eBtin%uished o$li%ation of the !art eBtin%uished; (9) the !eriod of !rescri!tion sto!s #ith res!ect to the o$li%ation or !art eBtin%uished; (7) all accessor' o$li%ations of the !rinci!al o$li%ation #hich has $een eBtin%uished are also eBtin%uished& • Renunciation of Co!ensation& Co!ensation can $e renounces" either at the tie an o$li%ation is contracted or after#ards& Co!ensation rests u!on a !otestati*e ri%ht" and a unilateral decision of the de$tor #ould $e sufficient renunciation& Co!ensation can $e renounced eB!ressl' of i!liedl'& • No Co!ensation& E*en #hen all the re (4) hen there is renunciation of the effects of co!ensation $' a !art'; and (8) #hen the la# !rohi$its co!ensation& (Unless other#ise indicated" coentaries are sourced fro the Ci*il Code $oo: I3 $' Tolentino)& •
SECTION 6 NOVATION HO7 OBLIGATIONS ARE DO:IIE: 10>1. Obligations +a% b$ +o"i*i$" b%( ,1- Canging t$i! obj$#t o! !in#ial #on"ition ,0- Sbstitting t$ $!son o* t$ "$bto! ,- Sb!ogating a ti!" $!son in t$ !igts o* a #!$"ito! No*ation is the eBtin%uishent of an o$li%ation $' a su$stitution or chan%e of the o$li%ation $' a su$se 4& chan%in% the o$ject or !rinci!al conditions 8& $' su$stitutin% the !erson of the de$tor 9& su$ro%atin% a third !erson in the ri%hts of the creditor No*ation is a juridical act of dual funct ion& At the tie it eBtin%uishes an o$li%ation it creates a ne# o ne in lieu of the old •
Classification of No*ation •
•
as to nature 4& Su$jecti*e or !ersonal – either !assi*e or acti*e& @assi*e if there is su$stitution of the de$tor& Acti*e if a third !erson is su$ro%ated in the ri%hts of the creditor& 8& ,$jecti*e or real – su$stitution of the o$ject #ith another or chan%in% the !rinci!al conditions 9& =iBed – Co$ination of su$jecti*e and o$jecti*e as to for
•
EB!ress – !arties declare that the old o$li%ation is su$stituted $' the ne#
•
I!lied – an inco!ati$ilit' eBists $et#een the old and the ne# o$li%ation that cannot stand to%ether
•
as to effect 4& @artial – #hen there is onl' a odification or chan%e in soe !rinci!al conditions of the o$li%ation 8& Total – #hen the old o$li%ation is co!letel' eBtin%uished Re 4& A !re*ious &ali" o$li%ation 8& A %ree ent of all a!ti$s 9& EBtin%uishent of the old contract – a' $e eB!ress of i!lied
•
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7&
Vali"it% of the ne# one
TITLE II. CONTRACTS CHAPTER 1 GENERAL PROVISIONS GENERAL PROVISIONS A!t. 1?5. A #ont!a#t is a +$$ting o* t$ +in"s b$t$$n to $!sons $!$b% on$ bin"s i+s$l*' it !$s$#t to t$ ot$! to gi&$ so+$ting o! to !$n"$! so+$ s$!&i#$. K relate to Art& 445P of CC
C,NTRACT 2 a juridical con*ention anifested in le%al for" $' *irtue of #hich one or ore !ersons $ind thesel*es in fa*or of another or others" or reci!rocall'" to the fulfillent of a !restation to %i*e" to do or not to do& K ,ther Ters> @erfect !roise – distin%uished fro a contract" in that the latter esta$lishes and deterines the o$li%ations arisin% therefro; #hile the forer tends onl' to assure and !a*e the #a' for the cele$ration of a contract in the future& I!erfect @roise – ere unacce!ted offer @act – a s!ecial !art of the contract" soeties incidental and se!ara$le for the !rinci!al a%reeent Sti!ulation – siilar to a !act; #hen the contract is an instruent" it refers to the essential and dis!ositi*e !art" a s distin%uished fro the eB!osition of the facts and antecedents u!on #hich it is $ased& K Nu$er of @arties> The Code states 0t#o !ersons1; #hat is eant actuall' is 0t#o !arties1& -or a contract to eBist" there ust $e t#o !arties& A !art' can $e one or ore !ersons& K Gus$and O ife> Gus$ands and #i*es cannot sell to each other as a !rotection of the conju%al !artnershi!& The' can ho#e*er enter into a contract of a%enc'& K Auto2contracts> It eans one !erson contracts hiself& As a %eneral rule" it is acce!ted in our la#& The eBistence of a contract does not de!end on the nu$er of !ersons $ut on the n u$er of !arties& There is no %eneral !rohi$ition a%ainst auto2contracts; hence" it should $e held *alid& K Contracts of Adhesion> Contracts !re!ared $' another" containin% !ro*isions that he desires" a nd as:s the other !art' to a%ree to the if he #ants to enter into a contract& 2 EBa!le> trans!ortation tic:ets& It is *alid contract accordin% to Tolentino $ecause the other !art' can reject it entirel'& K Characteristics of Contracts> 9 eleents> 4& Essential eleents – #ithout #hich there is no contract; the' are> a) consent $) su$ject atter; and c) cause 8& Natural eleents – eBist as !art of the contract e*en if the !arties do not !ro*ide for t he" $ecause the la#" as su!!letor' to the contract" creates the 9& Accidental eleents – those #hich are a%reed $' the !arties and #hich ca nnot eBist #ithout sti!ulated $ Stages o% a Contract: 9 sta%es>
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4& @re!aration" /eneration or @olicitacion – !eriod of ne%otiation and $ar%ainin%" endin% at the oent of a%reeent of the !arties 8& @erfection or .irth of the contract – the oent #hen t he !arties coe to a%ree on the t ers of the contract 9& Consuation or Death – the fulfillent or !erforance of the ters a%reed u!on in an' contract 1?6. T$ #ont!a#ting a!ti$s +a% $stablis s# stilations' #las$s' t$!+s #on"itions as t$% +a% "$$+ #on&$ni$nt' !o&i"$" t$% a!$ not #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$!' o! bli# oli#%.
K This article e$odies the Principle of Autonomy of 6ontracts K -reedo to contract> An' !erson has the li$ert' to enter into a contract so lon% as the' a re not contrar' to la#" orals" %ood custos" !u$lic order or !u$lic !olic'& The le%islature" under the constitution" is !rohi$ited fro enactin% la#s to !rescri$e the ters of a le%al contract& K 3alidit' of Sti!ulations> An' and all sti!ulations not contrar' to la#" orals" %ood custos" !u$lic order or !u$lic !olic' is *alid
K Contrar' to la#> -reedo of contract is restricted $' la# for the %ood of the !u$lic& It is fundaental !ostulate that ho#e*er $road the freedo of the contractin% !arties a' $e" it does not %o so far as to countenance disres!ect for or failure to o$ser*e a le%al !rescri!tion& The Statute ta:es !recedence& 2 EBa!les> A !roissor' note #hich re!resents a %a$lin% de$t is unenforcea$le in the hands of the assi%nee& Sti!ulations to !a' usurious interests are *oid& A contract $et#een to !u$lic ser*ice co!anies to di*ide the t erritor' is *oid $ecause it i!airs the control of th e @u$lic Ser*ice Coission& A%reeent to declare *alid a la# or ordinance is *oid& K Contrar' to =orals> =orals ean those %enerall' acce!ted !rinci!les of oralit' #hich ha*e recei*ed soe :ind of social and !ractical confiration& 2 EBa!les> a !roise to arr' or nor to arr'" to secure le%al se!aration" or to ado!t a child a !roise to chan%e citienshi!" !rofession" reli%ion or doicile a !roise not to hold !u$lic office or #hich liits the !erforance of official duties a !roise to enter a !articular !olitical !art' or se!arate fro it contracts #hich liit in an eBcessi*e anner the !ersonal or econoic freedo of a !erson to a:e an act de!endent on one' or soe !ecuniar' *alue" #hen it is of such a nature that it should not de!end thereon; !a'ent to :ill another& K Contrar' to @u$lic ,rder> @u$lic order eans the !u$lic #eal or !u$lic !olic'& It re!resents the !u$lic" social" and le%al interest in !ri*ate la# that #hich is !eranent and essential in institut ions" #hich" e*en if fa*orin% soe indi*idual to #ho th e ri%ht !ertains" cannot $e left to his o#n #ill& A contract is said to $e a%ainst !u$lic order if the court finds th at the contract as to the consideration or the thin% to $e done" contra*enes soe esta$lished interest of societ'" or is inconsistent #ith sound !olic' and %ood orals" or tends clearl' to underine the securit' of indi*idual ri%hts& 2 EBa!les> Coon carrier cannot sti!ulate for eBe!tion for lia$ilit' unless such eBe!tion is justifia$le and reasona$le and the contract is freel' and fairl' ade& @a'ent to interediaries in securin% i!ort licenses or
INN,=INATE C,NTRACTS – those #hich lac: indi*idualit' and are not re %ulated $' s!ecial !ro*isions of la#& K Innoinate Contracts> do ut des (I %i*e that 'ou a' %i*e) – An a %reeent in #hich A #ill %i*e one t hin% to ." so that . #ill %i*e another thin% to A& do ut facias (I %i*e that 'ou a' do) – An a %reeent under #hich A #ill %i*e soethin% to ." so that . a' do soethin% for A&
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facio ut facias (I do that 'ou a' do) – An a%reeent under #hich A does soethin% for ." so that . a' render soe other ser*ice for A& facio ut des (I do that 'ou a' %i*e) – An a %reeent under #hich A does soethin% for ." so tha t . a' %i*e soethin% to A& K Analo%ous contracts> Innoinate contracts" in the a$sence of sti!ulations and s!ecific !ro*isions of la# on the atter" are to $e %o*erned $' rules a!!lica$le to the ost analo%ous contracts& A!t. 1?<. T$ #ont!a#t +st bin" bot #ont!a#ting a!ti$s/ its &ali"it% o! #o+lian#$ #annot b$ l$*t to t$ ill o* on$ o* t$+.
K Principle of -utuality of 6ontract > The $indin% effect of contract on $oth !arties is $a sed on the !rinci!les> 2 that o$li%ations arisin% fro contracts ha*e the force of la# $et#een the contractin% !arties 2 that there ust $e utualit' $et#een the !arties $ased on their essential e Just as no$od' can $e forced to enter into a contract" in the sae anner once a contract is entered into" no !art' can renounce it unilaterall' or #ithout the consent of the other& No$od' is allo#ed to enter into a contract" and #hile the contract is in effect" lea*es" denounces or disa*o#s the contract to the !rejudice of the oth er& K hen Sti!ulated> Go#e*er" #hen the contract so sti!ulates that one a' terinate the contract u!on a reasona$le !eriod is *alid& Judicial action for the rescission of the contract is no lon%er necessar' #hen the contract so sti!ulates that it a' $e re*o:ed and cancelled for the *iolation of an' of its t ers and conditions& This ri%ht of rescission a' $e #ai*ed&
A!t. 1?>. T$ "$t$!+ination o* t$ $!*o!+an#$ +a% b$ l$*t to a ti!" $!son' os$ "$#ision sall not b$ bin"ing ntil it as b$$n +a"$ @non to bot #ont!a#ting a!ti$s.
K EBce!tion to Art& 49?H (=utualit' of Contract) A third !erson a' $e called u!on to decide #hether or not !erforance has $een done for the fulfillent of the contract& Such decision $ecoes $indin% #hen the contractin% !arties ha*e $een infored of it& •
A!t. 11?. T$ "$t$!+ination sall b$ obligato!% i* it is $&i"$ntl% in$2itabl$. In s# #as$' t$ #o!ts sall "$#i"$ at is $2itabl$ n"$! t$ #i!#+stan#$s.
K EBce!tion to Art& 49?H (=utualit' of Contract) Go#e*er" #hen the decision cannot $e arri*ed due to ine
•
4st !ara%ra!h of this article e$odies the Principle of 4elati!ity of 6ontract -our eBce!tional instances #here a contract a' !roduce effect on third !ersons (sti!ulation !our autrui)> Art& 4944" !ar&8 – 4947
K @arties $ound $' contract> /enerall'" onl' the !arties that a%reed on the contracts are $ound $' the contract& Transission is !ossi$le to the heirs or assi%nees if so sti!ulated and in certain contracts&
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K Third !ersons not $ound> It is a %eneral rule that third !arties are not $ound $' the acts of another& A contract cannot $e $indin% u!on and cann ot $e enforced a%ainst one #ho is n ot a !art' to it" e*en if he has :no#led%e of such contract and has acted #ith :no#led%e thereof& K Enforceent of contract> ,nl' a !art' to the contract can aintain an action to enforce the o$li%ations arisin% under said contract& K Contracts $ind heirs> Ri%hts and o$li%ations under a contract are transissi$le to heirs& Geirs are not third !ersons $ecause there is !ri*it' of interest $et#een the and their !redecessor&
A!t 110. In #ont!a#ts #!$ating !$al !igts' ti!" $!sons o #o+$ into oss$ssion o* t$ obj$#t o* t$ #ont!a#t a!$ bon" t$!$b%' sbj$#t to t$ !o&isions o* t$ Do!tgag$ La an" t$ Lan" R$gist!ation las.
K Real Ri%hts in @ro!ert' A real ri%ht directl' affects !ro!ert' su$ject to it; hence" #hoe*er is in !ossession of such !ro!ert' ust res!ect that real ri%ht& A!t 11. C!$"ito!s a!$ !ot$#t$" in #as$s o* #ont!a#ts int$n"$" to "$*!a" t$+.
K Contracts in -raud of Creditors hen a de$tor enters into a contract in fraud of his creditors" such as #hen he alienated !ro!ert' %ratuitousl' #ithout lea*in% enou%h for his creditors (article 49HF)" the creditor a' as: for its r escission& K see Arts& 44FF and 49H? A!t 114. An% ti!" $!son o in"#$s anot$! to &iolat$ is #ont!a#t sall b$ liabl$ *o! "a+ag$s to t$ ot$! #ont!a#ting a!t%.
K Interference of Third @ersons> If a third !erson induced a !art' to *iolate his side of the contract" the other !art' a' sue the third !erson for daa%es& Re 4& the eBistence of a *alid contract 8& :no#led%e $' the third !erson of the eBistence of a contract 9& interference $' the third !erson in the contractual relation #ithout le%al justification •
Juris!rudential doctrine> K=anila Railroad Co& *s& Co!a[ia Transatlantica The !rocess ust $e acco!lished $' distin%uishin% clearl' $et#een the ri%ht of action arisin% fro the i!ro!er interference #ith the contract $' a stran%er thereto" considered as an inde!endent act %enerati*e of ci*il lia$ilit'" and the ri%ht of action eB contractu a%ainst a !art' to the contract resultin% for the $reach thereof&
A!t 115. Cont!a#ts a!$ $!*$#t$" b% +$!$ #ons$nt' an" *!o+ tat +o+$nt t$ a!ti$s a!$ bon" not onl% to t$ *l*ill+$nt o* at as b$$n $=!$ssl% stilat$" bt also to all t$ #ons$2$n#$s i#' a##o!"ing to t$i! nat!$' +a% b$ in @$$ing it goo" *ait' sag$ an" la.
K e$odies the Principle of 6onsensuality > A!t 116. R$al #ont!a#ts' s# as "$osit' l$"g$ o! #o++o"at+' a!$ not $!*$#t$" ntil t$ "$li&$!% o* t$ obj$#t o* t$ obligation.
K EBce!tion to Art& 4945 or @rinci!le of Consensualit' K @erfection of real contracts> Real contract is not !erfect $' ere consent& The deli*er' of the thin% is re
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A!t 11). No on$ +a% #ont!a#t in t$ na+$ o* anot$! itot b$ing ato!i$" b% t$ latt$!' o! nl$ss $ as b% la a !igt to !$!$s$nt i+. A #ont!a#t $nt$!$" into in t$ na+$ o* anot$! b% on$ o as no ato!it% o! l$gal !$!$s$ntation' o! o as a#t$" b$%on" is o$!s' sall b$ n$n*o!#$abl$' nl$ss it is !ati*i$"' $=!$ssl% o! i+li$"l%' b% t$ $!son on os$ b$al* it as b$$n $=$#t$"' b$*o!$ it is !$&o@$" b% t$ ot$! #ont!a#ting a!t%.
K Ratification necessar'> A contract entered into in $ehalf of another #ho has not authoried it is not *alid or $indin% on hi unless he ratifies the transaction& hen ratified" he is esto!!ed to 4& eB!ress 8& i!lied CHAPTER 0 ESSENTIAL RE89ISITES O CONTRACTS GENERAL PROVISIONS A!t. 11<. T$!$ is no #ont!a#t nl$ss t$ *olloing !$2isit$s #on#!( ,1- Cons$nt o* t$ #ont!a#ting a!ti$s/ ,0- Obj$#t #$!tain i# is t$ sbj$#t +att$! o* t$ #ont!a#t/ ,- Cas$ o* t$ obligation i# is $stablis$". ,1061-
COC SECTION 1 CONSENT A!t. 11>. Cons$nt is +ani*$st$" b% t$ +$$ting o* t$ o**$! an" t$ a##$tan#$ on t$ ting an" t$ #as$ i# a!$ to #onstitt$ t$ #ont!a#t. T$ o**$! +st b$ #$!tain an" t$ a##$tan#$ absolt$. A 2ali*i$" a##$tan#$ #onstitt$s a #ont$!3o**$!. A##$tan#$ +a"$ b% l$tt$! o! t$l$g!a+ "o$s not bin" t$ o**$!$! $=#$t *!o+ t$ ti+$ it #a+$ to is @nol$"g$. T$ #ont!a#t' in s# a #as$' is !$s+$" to a&$ b$$n $nt$!$" into in t$ la#$ $!$ t$ o**$! as +a"$. ,1060a•
•
C,NSENT (as a!!lied to contracts) > concurrence of the #ills of the contractin% !arties #ith res!ect to t he o$ject and the cause #hich shall constitute the contract Re 4& consent ust $e anifested $' the concurrence of the offer and the acce!tance (Arts& 494P24986); 8& contractin% !arties ust !ossess the necessar' le%al ca!acit' (Arts& 498F2498P); and 9& consent ust $e intelli%ent" free" s!ontaneous and real (Arts& 499?24976)
K-ors> Consent a' either $e eB!ress or i!lied& There is also a !resu!ti*e consent" #hich is the $asis of Consent is anifested $' the concurrence of offer a nd acce!tance #ith res!ect to the o$ject and the cause of the contract& ,nce there is such a anifestation" the !eriod or sta%e of ne%otiation is t erinated& If consensual" the contract is !erfected& KA unilateral !ro!osition ust $e definite (distin%uished fro ere counications)" co!lete (statin% the essential and non2 essential conditions desired $' the offeror)" and intentional (serious) #hen acce!ted $' anoth er !art' for such !ro!osition to for a *alid contract& Go#e*er" a unilateral !roise is not reco%nied $' our Code a s ha*in% o$li%ator' force& To $e so" there ust $e an acce!tance that shall con*ert it into a contract& K=ental reser*ationZ#hen a !art' a:es a declaration $ut secretl' does n ot desire the effects of such declaration& The ental reser*ation of the offeror" un:no#n to the other" cannot affect the *alidit' of the offer&
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A!t. 10?. An a##$tan#$ +a% b$ $=!$ss o! i+li$". ,nI!lied acce!tance a' arise fro acts or facts #hich re*eal th e intent to acce!t" such as the consu!tion of the thin%s sent to the offeree" or the fact of iediatel' carr'in% out of the contract offered& A!t. 101. T$ $!son +a@ing t$ o**$! +a% *i= t$ ti+$' la#$' an" +ann$! o* a##$tan#$' all o* i# +st b$ #o+li$" it. ,nThe offer #ith a !eriod la!ses u!on the terination of the !eriod& Thus the acce!tance" to $ecoe effecti*e" ust $e :no#n to the offeror $efore the !eriod la!ses& A!t. 100. An o**$! +a"$ t!og an ag$nt is a##$t$" *!o+ t$ ti+$ a##$tan#$ is #o++ni#at$" to i+. ,nAn interediar' #ho has no !o#er to $ind either the offeror or t he offeree is not an a%ent; h is situation is siilar to that of a letter carrier& A!t. 10. An o**$! b$#o+$s in$**$#ti&$ on t$ "$at' #i&il int$!"i#tion' insanit%' o! insol&$n#% o* $it$! a!t% b$*o!$ a##$tan#$ is #on&$%$". ,n-
A!t. 104. 7$n t$ o**$!$! as allo$" t$ o**$!$$ a #$!tain $!io" to a##$t' t$ o**$! +a% b$ it"!an at an% ti+$ b$*o!$ a##$tan#$ b% #o++ni#ating s# it"!aal' $=#$t $n t$ otion is *on"$" on a #onsi"$!ation' as so+$ting ai" o! !o+is$". ,nIt is not the oent of sendin% $ut the tie of recei!t of the re*ocation or acce!tance #hich is controllin%& The dela' in transission is at the ris: of the sender" $ecause he is the one #ho selects the tie and the anner of a:in% the transission& Contract of ,!tion> This is a !re!arator' contract in #hich one !art' %rants to the other" for a fiBed !eriod and under s!ecified conditions" the !o#er to decide #hether or not to enter into a !rinci!al contract& It ust $e su!!orted $' an inde!endent consideration" and the %rant ust $e eBclusi*e& A!t. 105. 9nl$ss it a$a!s ot$!is$' bsin$ss a"&$!tis$+$nts o* tings *o! sal$ a!$ not "$*init$ o**$!s' bt +$!$ in&itations to +a@$ an o**$!. ,nA!t. 106. A"&$!tis$+$nts *o! bi""$!s a!$ si+l% in&itations to +a@$ !oosals' an" t$ a"&$!tis$! is not bon" to a##$t t$ ig$st o! lo$st bi""$!' nl$ss t$ #ont!a!% a$a!s. ,nA!t. 10). T$ *olloing #annot gi&$ #ons$nt to a #ont!a#t( ,1- 9n$+an#iat$" +ino!s/ ,0- Insan$ o! "$+$nt$" $!sons' an" "$a*3+t$s o "o not @no o to !it$. ,106a-
K see Art& 9H K Uneanci!ated inors cannot enter into *alid contracts" and contracts entered into $' the are not $indin% u!on the" unless u!on reachin% ajorit' the' ratif' the sae& K Insane !ersons> It is not necessar' that there $e a !re*ious of declaration of ental inca!acit' in order that a contract ent ered into $' a entall' defecti*e !erson a' $e annulled; it is enou%h that the insanit' eBisted at the tie the contract #as ade& K .ein% deaf2ute is not $' itself alone a dis. T$ in#aa#it% "$#la!$" in A!ti#l$ 10) is sbj$#t to t$ +o"i*i#ations "$t$!+in$" b% la' an" is n"$!stoo" to b$ itot !$j"i#$ to s$#ial "is2ali*i#ations $stablis$" in t$ las. ,1064-
K The Rules of Court !ro*ide a list of inco!etents #h o need %uardianshi!> !ersons sufferin% fro the !enalt' of ci*il interdiction" hos!italied le!ers" !rodi%als" deaf and du$ #ho are u na$le to #rite and read" those of unsound ind (e*en thou%h the' h a*e lucid inter*als)" and !ersons not $ein% of unsound ind $ut $' reason of a%e" disease" #ea: ind" and other siilar causes
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cannot" #ithout outside aid" t a:e care of thesel*es and ana%e their !ro!ert'Z$ecoin% an eas' !re' for deceit a nd eB!loitation& K The inca!acit' to %i*e consent (Arts& 498F O 498H) to contracts renders the contract erel' *oida$le" #h ile s!ecial dis
K I%norance and error are 8 different states of ind& I%norance eans the co!lete a$sence of an' notion a$out a !articular atter" #hile error or ista:e eans a #ron% or false notion a$out such atter& K Annulent of contract on the %round of e rror is liited to cases in #hich it a' re asona$l' $e said that #ithout such error the consent #ould not ha*e $een %i*en& K An error as to the !erson #ill in*alidate consent #hen the consideration of the !erson has $een the !rinci!al cause of the sae& K =ista:e as to 4) the error ust $e as to the le%al effect of an a%reeent; 8) it ust $e utual; and 9) the real !ur!ose of the !arties is frustrated& K The le%al effects include the ri%hts a nd o$li%ations of the !arties" not as sti!ulated in the contract" $ut as !ro*ided $' the la#& The ista:e as to these effects" therefore" eans an error as to #hat the la# !ro*ides should s!rin% as conse
KRe 4) That the !h'sical force e!lo'ed ust $e irresisti$le or of such de%ree t hat the *icti has no other course" under the
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circustances" $ut to su$it; and 8) that such force is the deterinin% cause in %i*in% the consent to the contract& K Re 4) that the intiidation ust $e the deterinin% cause of the contract" or ust ha*e caused t he consent to $e %i*en; 8) that the threatened act $e unjust or unla#ful; 9) that the threat $e real and serious" there $ein% an e*ident dis!ro!ortion $et#een the e*il and the resistance #hich all en can offer; and 7) that it !roduces a reasona$le and #ell2%rounded fear fro the fact that the !erson fro #ho it coes has the necessar' eans or a$ilit' to inflict the threatened injur'& A!t. 16. Viol$n#$ o! inti+i"ation sall annl t$ obligation' altog it +a% a&$ b$$n $+lo%$" b% a ti!" $!son o "i" not ta@$ a!t in t$ #ont!a#t. ,106
K In intiidation" there ust $e an unla#ful or unjust act #hich is threatened and #hich causes consent to $e %i*en" #hile in undue influence there need not $e an unjust or unla#ful act& In $oth cases" there is oral coercion& K=oral coercion a' $e effected throu%h threats" eB!ressed or i!lied" or throu%h harassin% tactics& KUndue influence is an' eans e!lo'ed u!on a !art' #h ich" under the circustances" he could not #ell resist" and #hich controlled his *olition and induced hi to %i*e his consent to the contractZ#hich other#ise he #ould not h a*e entered into&
A!t. 1<. T$!$ is *!a" $n' t!og insi"ios o!"s o! +a#inations o* on$ o* t$ #ont!a#ting a!ti$s' t$ ot$! is in"#$" to $nt$! into a #ont!a#t i#' itot t$+' $ ol" not a&$ ag!$$" to. ,106>-
K-raud is e*er' :ind of dece!tion" #hether in t he for of insidious achinations" ani!ulations" concealents" or isre!resentations" for the !ur!ose of leadin% another !art' into error and thus eBecutin% a !articular act& K -raud !roduces 4) dolo causante (Art& 499H) Z #hich deterines or is the essential cause of the consent; fraud in the !erfection of contract 8) dolo incidenteZ (Arts& 4977 O 44F?) #hich does not ha*e such a decisi*e influence and $' itself cannot cause the %i*in% of consent" $ut refers onl' to soe !articular or accident of the o$li%ation& KDolo causante can $e a %round for ann ulent; dolo incident cannot $e a %round for annulent& KThe result of fraud is error on the !art of the *icti& KRe 4) it ust ha*e $een e!lo'ed $' one contractin% !art' u!on the other; 8) it ust ha*e induced the other !art' to enter into the contract; 9) it ust ha*e $een serious; 7) and it ust ha*e resulted in daa%e or injur' to the !art' see:in% annulent& A!t. 1>. ail!$ to "is#los$ *a#ts' $n t$!$ is a "t% to !$&$al t$+' as $n t$ a!ti$s a!$ bon" b% #on*i"$ntial !$lations' #onstitt$s *!a". ,nKSilence or concealent" $' itself" does not constitute fraud" unless there is a s!ecial dut' to disclose certain facts" or unless accordin% to %ood faith and the usa%es of coerce" the counication should $e ade& KThus" the innocent non2disclosure of a fact does not affect the foration of the contract or o!erate to dischar%e the !arties fro
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their a%reeent& A!t. 14?. T$ sal $=agg$!ations in t!a"$' $n t$ ot$! a!t% a" an oo!tnit% to @no t$ *a#ts' a!$ not in t$+s$l&$s *!a"l$nt. ,nKTolerated fraud includes iniiin% the defects of the thin%" e Ba%%eration of its %ood If one of the !arties is in collusion #ith the third !erson" or :no#s of the fraud $' the third !erson" and he is $enefited there$'" he a' $e considered as an acco!lice to the fraud" and the contract $ecoes *oida$le& A!t. 14. Dis!$!$s$ntation +a"$ in goo" *ait is not *!a"l$nt bt +a% #onstitt$ $!!o!. ,nA!t. 144. In o!"$! tat *!a" +a% +a@$ a #ont!a#t &oi"abl$' it sol" b$ s$!ios an" sol" not a&$ b$$n $+lo%$" b% bot #ont!a#ting a!ti$s. In#i"$ntal *!a" onl% oblig$s t$ $!son $+lo%ing it to a% "a+ag$s. ,10)?K-raud is serious #hen it is sufficient to i!ress" or to lead an ordinaril' !rudent !erson int o error; that #hich cannot decei*e a !rudent !erson cannot $e a %round for nullit'& K.esides $ein% serious" the fraud ust $e the deterinin% cause of the contract& It ust $e dolo causante& Khen $oth !arties use fraud reci!rocall'" neither one has an action a%ainst the other; the fraud of one co!ensates that of the other& Neither !art' can as: for the a nnulent of the contract& A!t. 145. Si+lation o* a #ont!a#t +a% b$ absolt$ o! !$lati&$. T$ *o!+$! ta@$s la#$ $n t$ a!ti$s "o not int$n" to b$ bon" at all/ t$ latt$!' $n t$ a!ti$s #on#$al t$i! t!$ ag!$$+$nt. ,nK Siulation is the declaration of a fictitious #ill" deli$eratel' ade $' a%reeent of the !arties" in order to !roduce" for the !ur!oses of dece!tion" the a!!earance of a juridical a ct #hich does not eBist or is different fro th at #hich #as reall' eBecuted& A!t. 146. An absolt$l% si+lat$" o! *i#titios #ont!a#t is &oi". A !$lati&$ si+lation' $n it "o$s not !$j"i#$ a ti!" $!son an" is not int$n"$" *o! an% !os$ #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#% bin"s t$ a!ti$s to t$i! !$al ag!$$+$nt. ,nKIn a$solute siulation" there is color o f a contract" #ithout an' su$stance thereof" the !arties not ha*in% an' intention to $e $ound& KIn relati*e siulation" the !arties ha*e an a%reeent #hich the' conceal under the %uise of another contract& EBa!le> a deed of sale eBecuted to conceal donation& SECTION 0. 3 Obj$#t o* Cont!a#ts •
•
The o$ject of a contract is its su$ject atter& It is the thin%" ri%ht" or ser*ice #hich is the su$ject2atter of the o$li%ation arisin% fro the contract& Re FCILI: 4) C #ithin the #oerce of an; 8) I not intransissi$le 9) L ust $e licit" or not contrar' to la#" orals" %ood custos" !u$lic !olic'" or !u$lic order; 9) Inot an i!ossi$le thin% or ser*ice; and 7) D it ust $e "eterinate as to its :ind&
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A!t. 14). All tings i# a!$ not otsi"$ t$ #o++$!#$ o* +$n' in#l"ing *t!$ tings' +a% b$ t$ obj$#t o* a #ont!a#t. All !igts i# a!$ not int!ans+issibl$ +a% also b$ t$ obj$#t o* #ont!a#ts. No #ont!a#t +a% b$ $nt$!$" into on *t!$ in$!itan#$ $=#$t in #as$s $=!$ssl% ato!i$" b% la. All s$!&i#$s i# a!$ not #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#% +a% li@$is$ b$ t$ obj$#t o* a #ont!a#t. ,10)1aK Thin%s #hich are outside the coerce of an> Ser*ices #hich i!l' an a$solute su$ission $' those #ho render the" sacrificin% their li$ert'" their inde!endence or $eliefs" or disre%ardin% in an' anner the e
• • • • •
•
A!t. 14<. I+ossibl$ tings o! s$!&i#$s #annot b$ t$ obj$#t o* #ont!a#ts. ,10)0KThin%s are i!ossi$le #hen the' are not susce!ti$le of eBistin%" or the' are outside the coerce of an& @ersonal acts or ser*ices i!ossi$le #hen the' $e'ond the ordinar' stren%th or !o#er of an& KThe i!ossi$ilit' ust $e actual and conte!oraneous #ith the a:in% of the contract" and not su$se. T$ obj$#t o* $&$!% #ont!a#t +st b$ "$t$!+inat$ as to its @in". T$ *a#t tat t$ 2antit% is not "$t$!+inat$ sall not b$ an obsta#l$ to t$ $=ist$n#$ o* t$ #ont!a#t' !o&i"$" it is ossibl$ to "$t$!+in$ t$ sa+$' itot t$ n$$" o* a n$ #ont!a#t b$t$$n t$ a!ti$s. ,10)KThe thin% ust ha*e definite liits" not uncertain or ar$itrar'& KThe
KThe cause of the contract is the 0#h' of the contract"1 the iediate and ost !roBiate !ur!ose of the contract" the essential reason #hich i!els the contractin% !arties to enter into it and #hich eB!lains and justifies the creation of the o$li%ation throu%h such contract& KThe cause as to each !art' is the underta:in% or !restation to $e !erfored $' the other& The o$ject of the contract is the su$ject atter thereof (e&%&" the land #hich is sold in a sales contract)& Consideration" ean#hile" is the reason" oti*e" or induceent $' #hich a an is o*ed to $ind hiself $' an a%reeent& KRe 4) it ust eBist; 8) it ust $e true; and 9) it ust $e licit& A!t. 15?. In on$!os #ont!a#ts t$ #as$ is n"$!stoo" to b$' *o! $a# #ont!a#ting a!t%' t$ !$station o! !o+is$ o* a ting o! s$!&i#$ b% t$ ot$!/ in !$+n$!ato!% on$s' t$ s$!&i#$ o! b$n$*it i# is !$+n$!at$"/ an" in #ont!a#ts o* !$ b$n$*i#$n#$' t$ +$!$ lib$!alit% o* t$ b$n$*a#to!. ,10)4K In onerous contracts" the cause need not $e ade
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K Cause is the o$jecti*e" intrinsic" and juridical reason for the eBistence of the contract itself" #hile oti*e is the !s'cholo%ical" indi*idual" or !ersonal !ur!ose of a !art' to the contract& K As a %eneral !rinci!le" the oti*es of a !art' do not affect the *alidit' or eBistence of a contract& EBce!tions> hen oti*e !redeterines the !ur!ose of the contract" such as> Khen the oti*e of a de$tor in alienat in% !ro!ert' is to defraud his creditors" the aliena tion is rescissi$le; K hen the oti*e of a !erson in %i*in% his consent is to a*oid a threatened injur'" as in the case of intiidation" the contract is *oida$le; and Khen the oti*e of a !erson induced hi to act on the $asis of fraud or isre!resentation $' the other !art'" the contract is *oida$le& A!t. 150. Cont!a#ts itot #as$' o! it nla*l #as$' !o"#$ no $**$#t at$&$!. T$ #as$ is nla*l i* it is #ont!a!% to la' +o!als' goo" #sto+s' bli# o!"$! o! bli# oli#%. ,10)5aA!t. 15. T$ stat$+$nt o* a *als$ #as$ in #ont!a#ts sall !$n"$! t$+ &oi"' i* it sol" not b$ !o&$" tat t$% $!$ *on"$" on anot$! #as$ i# is t!$ an" la*l. ,10)6here the cause stated in the contract is false" the latter a' ne*ertheless $e sustained $' !roof of another licit cause& A!t. 154. Altog t$ #as$ is not stat$" in t$ #ont!a#t' it is !$s+$" tat it $=ists an" is la*l' nl$ss t$ "$bto! !o&$s t$ #ont!a!%. ,10))Unless the contrar' is !ro*ed" a contract is !resued to ha*e a %ood and sufficient consideration& This !resu!tion a!!lies #hen no cause is stated in the contract& A!t. 155. E=#$t in #as$s s$#i*i$" b% la' l$sion o! ina"$2a#% o* #as$ sall not in&ali"at$ a #ont!a#t' nl$ss t$!$ as b$$n *!a"' +ista@$ o! n"$ in*l$n#$. ,nK In case of lesion or inade
K /ross inade injur' or daa%e to one of the !arties or to third !ersons /A-LAI – Arts& 49H4 – 49H8
VOI:ABLE 3alid and enforcea$le until annulled; The defect is ore or less intrinsic
9NENORCEABLE 3alida$le transaction; Cannot $e enforce unless ratified
VOI: INEJISTENT Does not and cannot !roduce le%al effect
Causes> (Art& 49P?) 2 le%al inca!acit' of one !art'; or 2 *itiation of consent
Cured $' !rescri!tion Need not $e ratified Can $e assailed $' the injured or daa%ed !art' or injured or daa%ed third !erson
Cured $' !rescri!tion Can $e ratified Can $e assailed $' a contractin% !art' (Art& 49PF)
Causes> (Art& 47?9) 2 contract is entered into in eBcess or #ithout authorit' 2 non2co!liance #ith Stature of -rauds Le%al inca!acit' of $oth Not cured $' !rescri!tion Can $e ratified Can $e assailed $' a contractin% !art' (Art& 47?H)
Assailed directl' onl' ,utline of !ro*isions> 49H?> Nature of rescissi$le contract 49H4249H8> t'!es of rescissi$le contract 49H9> su$sidiar' character 49H7> eBtent of rescission 49H5> utual restitution; no rescission #hen the thin% is
Assailed directl' or collaterall' ,utline of !ro*isions> 49P?> *oida$le contracts a' $e annulla$le e*en if there is no daa%e to !arties; t'!es of *oida$le contracts; $indin% character unless annulled; susce!ti$ilit' to ratification 49P4> !rescri!ti*e !eriod
Assailed directl' or collaterall' ,utline of !ro*isions> 47?9> t'!es of unenforcea$le contracts 47?5> ratification of contracts infrin%in% statute of frauds 47?F> eB!ress or i!lied ratification $' the !arent or %uardian of one (#hen $oth are inca!acitated) – sae
Causes> (*oid) illicit" !rohi$ited or declared $' la# as *oid (ineBistent) lac:s one or all of the re t'!es of *oid or ineBistent contracts 474?> i!rescri!ti$ilit' 4744> contracts that are $oth ille%al and criinal – $oth !arties ha*e no action a%ainst each other and shall $e !rosecuted 4748> contracts that are ille%al
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le%all' !ossessed $' a third !erson 49H6> no rescission in case of 49H4 (4) and (8) #hen the contract is a!!ro*ed $' court 49HF> !reseu!tion (eBistence of fraud); alienation $' %ratuitous title; alienation $' onerous title 49HH> ac !rescri!ti*e !eriod
49P8249PF> ratification 49PH247?8> =utual restitution 49PH> utual restitution 49PP> eBce!tion to utual restitution – defect is the inca!acit' of one 47??> loss of the thin% throu%h faultfraud of !art' o$li%ed to return the thin% $ut has no ri%ht to institute !roceedin%" he shall return the fruits and the *alue of the thin% 47?4> loss of the thin% throu%h faultfraud of the !erson #ho a' institute the !roceedin% (action for annulent is eBtin%uished) 47?8> one does not restore – the other cannot $e co!elled to co!l'
effect as if onl' one is inca!acitated; Ratification $' !arent or %uardian of $oth – contract is *alidated fro ince!tion 47?H> cannot $e assailed $' third !ersons&
$ut do not constitute criinal offense 47492474P> eBce!tions to in !ari delicto rule
RESCISSIBLE CONTRACTS A!t. 1?A!t. 1<1. T$ *olloing #ont!a#ts a!$ !$s#issibl$( ,1- Tos$ i# a!$ $nt$!$" into b% ga!"ians $n$&$! t$ a!"s o+ t$% !$!$s$nt s**$! l$sion b% +o!$ tan on$3*o!t o* t$ &al$ o* t$ tings i# a!$ t$ obj$#t t$!$o*/ ,0- Tos$ ag!$$" on in !$!$s$ntation o* abs$nt$$s' i* t$ latt$! s**$! t$ l$sion stat$" in t$ !$#$"ing n+b$!/ ,- Tos$ n"$!ta@$n in *!a" o* #!$"ito!s $n t$ latt$! #annot in an% ot$! +ann$! #oll$#t t$ #lai+s "$ t$+/ ,4- Tos$ i# !$*$! to tings n"$! litigation i* t$% a&$ b$$n $nt$!$" into b% t$ "$*$n"ant itot t$ @nol$"g$ an" a!o&al o* t$ litigants o! o* #o+$t$nt j"i#ial ato!it%/ ,5- All ot$! #ont!a#ts s$#iall% "$#la!$" b% la to b$ sbj$#t to !$s#ission. ,10>1aA!t. 1<0. Pa%+$nts +a"$ in a stat$ o* insol&$n#% *o! obligations to os$ *l*ill+$nt t$ "$bto! #ol" not b$ #o+$ll$" at t$ ti+$ t$% $!$ $**$#t$"' a!$ also !$s#issibl$. ,10>0A!t. 1<. T$ a#tion *o! !$s#ission is sbsi"ia!%/ it #annot b$ institt$" $=#$t $n t$ a!t% s**$!ing "a+ag$ as no ot$! l$gal +$ans to obtain !$a!ation *o! t$ sa+$. ,10>4A!t. 1<4. R$s#ission sall b$ onl% to t$ $=t$nt n$#$ssa!% to #o&$! t$ "a+ag$s #as$". ,nA!t. 1<5. R$s#ission #!$at$s t$ obligation to !$t!n t$ tings i# $!$ t$ obj$#t o* t$ #ont!a#t' tog$t$! it t$i! *!its' an" t$ !i#$ it its int$!$st/ #ons$2$ntl%' it #an b$ #a!!i$" ot onl% $n $ o "$+an"s !$s#ission #an !$t!n at$&$! $ +a% b$ oblig$" to !$sto!$. N$it$! sall !$s#ission ta@$ la#$ $n t$ tings i# a!$ t$ obj$#t o* t$ #ont!a#t a!$ l$gall% in t$ oss$ssion o* ti!" $!sons o "i" not a#t in ba" *ait. In tis #as$' in"$+nit% *o! "a+ag$s +a% b$ "$+an"$" *!o+ t$ $!son #asing t$ loss. ,10>5A!t. 1<6. R$s#ission !$*$!!$" to in Nos. 1 an" 0 o* A!ti#l$ 1<1 sall not ta@$ la#$ it !$s$#t to #ont!a#ts a!o&$" b% t$ #o!ts. ,10>6aA!t. 1<). All #ont!a#ts b% &i!t$ o* i# t$ "$bto! ali$nat$s !o$!t% b% g!atitos titl$ a!$ !$s+$" to a&$ b$$n $nt$!$" into in *!a" o* #!$"ito!s' $n t$ "ono! "i" not !$s$!&$ s**i#i$nt !o$!t% to a% all "$bts #ont!a#t$" b$*o!$ t$ "onation. Ali$nations b% on$!os titl$ a!$ also !$s+$" *!a"l$nt $n +a"$ b% $!sons against o+ so+$ j"g+$nt as
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b$$n iss$". T$ "$#ision o! atta#+$nt n$$" not !$*$! to t$ !o$!t% ali$nat$"' an" n$$" not a&$ b$$n obtain$" b% t$ a!t% s$$@ing t$ !$s#ission. In a""ition to t$s$ !$s+tions' t$ "$sign to "$*!a" #!$"ito!s +a% b$ !o&$" in an% ot$! +ann$! !$#ogni$" b% t$ la o* $&i"$n#$. ,10>)aA!t. 1<<. 7o$&$! a#2i!$s in ba" *ait t$ tings ali$nat$" in *!a" o* #!$"ito!s' sall in"$+ni*% t$ latt$! *o! "a+ag$s s**$!$" b% t$+ on a##ont o* t$ ali$nation' $n$&$!' "$ to an% #as$' it sol" b$ i+ossibl$ *o! i+ to !$t!n t$+. I* t$!$ a!$ to o! +o!$ ali$nations' t$ *i!st a#2i!$! sall b$ liabl$ *i!st' an" so on s##$ssi&$l%. ,10>. T$ a#tion to #lai+ !$s#ission +st b$ #o++$n#$" itin *o! %$a!s. o! $!sons n"$! ga!"iansi an" *o! abs$nt$$s' t$ $!io" o* *o! %$a!s sall not b$gin ntil t$ t$!+ination o* t$ *o!+$!s in#aa#it%' o! ntil t$ "o+i#il$ o* t$ latt$! is @non. ,10>>Voi"abl$ Cont!a#ts Voi"abl$ Cont!a#ts K Contracts that are *oida$le or annulla$le> 4& hen either !art' is inca!a$le of %i*in% consent to a contract 8& hen consent is *itiated $' ista:e" *iolence" intiidation" undue influence" fraud
K.indin%" unless annulled $' a !ro!er court action KRatifia$le (Art& 49P?) K@rescri!tion for action of annulent> 7 'ears to $e%in> #hen *ice is due to intiidation" *iolence or undue influence – fro the tie defect of consent ceases ista:e or fraud – fro th e tie of disco*er' entered into $' inors or those inca!a$le of %i*in% consent – the oent %uardianshi! ceases (Art& 49P4) KRatification eBtin%uishes action for annulent (Art& 49P8) a' $e eB!ress or tacit (Art& 49P9) tacit ratification – the eBecution of an act #hich necessaril' i!lies an intention to #ai*e his ri%ht $' the !art'" #ho" :no#in% of the reason #hich renders the contract *oida$le" has a ri%ht to in*o:e annulent& 2a' $e effected $' the %uardian of the inca!acitated !erson (Art& 49P7) 2 does not re K@ersons ca!a$le #annot all$g$ t$ in#aa#it% of those #ith #ho the' contracted K@ersons #ho eBerted *iolence" undue influence" #ho e!lo'ed fraud or caused ista:e – action for annulent cannot $e $ased on these fla#s K/i*es rise to the res!onsi$ilit' of restorin% to each other thin%s su$ject atter of the contract" #ith fruits" !rice #ith its interest" eBce!t in cases !ro*ided $' la# (Art& 49PH) Ser*ice – *alue thereof #ill ser*e as the $asis for daa%es KInca!acitated !ersons not o$li%ed to a:e restitutions eBce!t insofar as he has $een $enefited $' the thin% or !rice recei*ed $' hi (Art& 49PP) KIf o$jects cannot $e returned $ecause these #ere lost throu%h his fault" he shall return the fruits recei*ed and the *alue of the thin% at the tie of the loss" #ith interests fro the sae date (Art& 47??) KAs lon% as one of the contractin% !arties does not restore #hat in *irtue of the annulent decree he is $ound t o return" the other cannot $e co!elled to co!l' #ith #hat is incu$ent u !on hi& (Art& 47?8)
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KEBtin%uishent of action (Art& 47?4) if o$ject is lost throu%h the fau lt or fraud of !erson #ho has the ri%ht to institute the !roceedin%s if action $ased on inca!acit' of an' one of contractin% !arties" loss of thin% shall not $e an o$stacle to the success of action" unless loss or fraud too: !lace throu%h the !laintiffs fault • •
9NENORCEABLE CONTRACTS A!t. 14?. T$ *olloing #ont!a#ts a!$ n$n*o!#$abl$' nl$ss t$% a!$ !ati*i$"( ,1- Tos$ $nt$!$" into in t$ na+$ o* anot$! $!son b% on$ o as b$$n gi&$n no ato!it% o! l$gal !$!$s$ntation' o! o as a#t$" b$%on" is o$!s/ ,0- Tos$ tat "o not #o+l% it t$ Statt$ o* !a"s as s$t *o!t in tis n+b$!. In t$ *olloing #as$s an ag!$$+$nt $!$a*t$! +a"$ sall b$ n$n*o!#$abl$ b% a#tion' nl$ss t$ sa+$' o! so+$ not$ o! +$+o!an"+' t$!$o*' b$ in !iting' an" sbs#!ib$" b% t$ a!t% #a!g$"' o! b% is ag$nt/ $&i"$n#$' t$!$*o!$' o* t$ ag!$$+$nt #annot b$ !$#$i&$" itot t$ !iting' o! a s$#on"a!% $&i"$n#$ o* its #ont$nts( ,a- An ag!$$+$nt tat b% its t$!+s is not to b$ $!*o!+$" itin a %$a! *!o+ t$ +a@ing t$!$o*/ ,b- A s$#ial !o+is$ to ans$! *o! t$ "$bt' "$*alt' o! +is#a!!iag$ o* anot$!/ ,#- An ag!$$+$nt +a"$ in #onsi"$!ation o* +a!!iag$' ot$! tan a +tal !o+is$ to +a!!%/ ,"- An ag!$$+$nt *o! t$ sal$ o* goo"s' #att$ls o! tings in a#tion' at a !i#$ not l$ss tan *i&$ n"!$" $sos' nl$ss t$ b%$! a##$t an" !$#$i&$ a!t o* s# goo"s an" #att$ls' o! t$ $&i"$n#$s' o! so+$ o* t$+' o* s# tings in a#tion o! a% at t$ ti+$ so+$ a!t o* t$ !#as$ +on$%/ bt $n a sal$ is +a"$ b% a#tion an" $nt!% is +a"$ b% t$ a#tion$$! in is sal$s boo@' at t$ ti+$ o* t$ sal$' o* t$ a+ont an" @in" o* !o$!t% sol"' t$!+s o* sal$' !i#$' na+$s o* t$ !#as$!s an" $!son on os$ a##ont t$ sal$ is +a"$' it is a s**i#i$nt +$+o!an"+/ ,$- An ag!$$+$nt o* t$ l$asing *o! a long$! $!io" tan on$ %$a!' o! *o! t$ sal$ o* !$al !o$!t% o! o* an int$!$st t$!$in/ ,*- A !$!$s$ntation as to t$ #!$"it o* a ti!" $!son. ,- Tos$ $!$ bot a!ti$s a!$ in#aabl$ o* gi&ing #ons$nt to a #ont!a#t.
KUnenforcea$le contracts cannot $e enforced unless it is first ratified in the anner !ro*ided $' la#& An unenforcea$le contract does not !roduce an' effect unless it is ratified& Unenforcea$le contracts cannot $e sued u!on unless ratified (@aras" 8??9)& KThere are 9 :inds of unenforcea$le contracts> a) unauthoried contracts; $) those that fail to co!l' #ith the Statute of -rauds; c) those #here $oth !arties are inca !a$le of %i*in% consent to a contract& UNAUTG,RI\ED C,NTRACTS hen a !erson enters into a contract for and in the nae of the another" #ithout authorit' to do so" the contract does not $ind the latter" unless he ratifies the sae& The a%ent" #ho has entered into the contract in the nae of the !ur!orted !rinci!al" $ut #ithout authorit' fro hi" is lia$le to third !ersons u!on the contract; it ust ha*e $een the intention of the !arties to $ind soeone" and" as the !rinci!al #as not $ound" the a%ent should $e& EB> ithout ' authorit'" ' $rother sold ' car" in ' nae to & The contract is unauthoried and cannot affect e unless I ratif' the sae eB!ressl' or i!licitl'" as $' acce!tin% the !roceeds of the sale& (@aras) =ere la!se of tie" no atter ho# lon%" is not the ratification re descri!ti*e of statutes #hich re to !re*ent fraud and !erjur' in the enforceent of o$li%ations de!endin% for their e*idence u!on the unassisted eor' of #itnesses $' re This statute does not de!ri*e the !arties the ri%ht to contract #ith res!ect to atters therein in*ol*ed" $ut erel' re%ulates the foralities of the contract necessar' to render it unenforcea$le& The statute of frauds" ho#e*er" si!l' !ro*ides for the anner in #hich contracts under it shall $e !ro*ed& It does not atte!t to a:e such contracts in*alid if not eBecuted in #ritin% $ut onl' a:es ineffecti*e the action for s!ecific !erforance& The statute of frauds is not a!!lica$le to contracts #hich are either totall' or !artiall' !erfored" on the theor' that there is a #ide field for the coission of frauds in eBecutor' contracts #hich can onl' $e !re*ented $' re
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A note or eorandu is e*idence of the a%reeent" and is used to sho# the intention of the !arties& No !articular for of lan%ua%e or instruent is necessar' to constitute a eorandu or note as a #ritin% under the Statute of -rauds& K/eneral Rules of A!!lication (ainl' @aras)> Applies only to e3ecutory contracts& .ut it is not enou%h for a !art' to alle%e !artial !erforance in order to render the Statute ina!!lica$le; such !artial !erforance ust $e dul' !ro*ed" $' either docuentar' or oral e*idence; Cannot a!!l' if the action is neither for daa%es $ecause of the *iolation of an a%reeent nor for the s!ecific !erforance of said a%reeeent; KEBclusi*e" i&e& it a!!lies onl' to the a%reeents or contracts enuerated herein; KDefense of the Statute a' $e #ai*ed; K@ersonal defense" i&e& a contract infrin%in% it cannot $e assailed $' third !ersons; Kcontracts infrin%in% the Statute are not *oid; the' are erel' unenforcea$le; KThe Statute of -rauds is a rule of eBclusion" i&e& oral e*idence i%ht $e rele*ant to the a%reeents enuerated therein and i%ht therefore $e adissi$le #ere it not for t he fact that the la# or the statute eBcludes oral e*idence; KThe Statute does not deterine th e credi$ilit' or #ei%ht of e*idence& It erel' concerns itself #ith the adissi$ilit' thereof; KThe Statute does not a!!l' if it is claied that the contract does not eB!ress the true a%reeent of the !arties& As lon% as true or real a%reeent is not co*ered $' the Statute" it is !ro*a$le $' oral e*idence& INCA@ACITATED @ARTIES Ratification $' one !art' con*erts the contract into a *oida$le contract2 *oida$le at the o!tion of the !art' #ho has not ratified& A!t. 14?4. 9nato!i$" #ont!a#ts a!$ go&$!n$" b% A!ti#l$ 11) an" t$ !in#il$s o* ag$n#% in Titl$ J o* tis Boo@. KArt& 494F& No one a' contract in the nae of another #ithout $ein% authoried $' the latter" or unless he has $' la# a ri%ht to re!resent hi& KA contract entered into in the nae of another $' one #ho has no authorit' or le%al re!resentation" or #ho has acted $e'ond his !o#ers" shall $e unenforcea$le" unless it is ratified" eB!ressl' or i!liedl'" $' the !erson on #hose $ehalf it has $een eBecuted" $efore it is re*o:ed $' the other contractin% !art'& (485Pa) KRe a) he ust $e dul' authoried (eB!ressl' or i!liedl') or $) he ust ha*e $' la# a ri%ht to re!resent hi (li:e the %uardian" or the adinistrator) or c) the contract ust $e su$se a) failure to o$ject to the !resentation of oral e*idence; $) acce!tance of $enefits under the" since the Statute does not a!!l' to contracts #hich are !artiall' eBecuted& Cross eBaination of the #itnesses testif'in% orall' on the contract aounts to a #ai*er or to a failure to o$ject& A!t. 14?6. 7$n a #ont!a#t is $n*o!#$abl$ n"$! t$ Statt$ o* !a"s' an" a bli# "o#+$nt is n$#$ssa!% *o! its !$gist!ation in t$ R$gist!% o* :$$"s' t$ a!ti$s +a% a&ail t$+s$l&$s o* t$ !igt n"$! A!ti#l$ 15). KArt& 495F& If the la# re
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