codal - OBLICON

Title V. - PRESCRIPTION CHAPTER 1 GENERAL PROVISIONS Art. 1106. By prescription, one acquires  OWNERSHIP and other REAL RIGHTS through the LAPSE OF TIME  in the manner and under the conditions laid down by law. In the same way, rights and conditions are lost by prescription. (1930a) Art. 1107. PERSONS WHO ARE CAPABLE OF ACQUIRING PROPERTY OR RIGHTS BY THE OTHER LEGAL MODES  may acquire the same by means o prescription. !inors and other incapacitated persons may acquire property or rights by prescription, either personally or through their parents, guardians or legal representati"es. representati"es. (1931a) Art. 1108. #rescription, both acquisiti"e and e$tincti"e, runs against% (1) MINORS  and other incapacitated persons who ha"e parents, guardians or other legal representati"es& (') ABSENTEES  who ha"e administrators, either appointed by them beore their disappearance, or appointed by the courts& (3) PERSONS LIVING ABROAD, who ha"e managers or administrators& () JURIDICAL PERSONS, e$cept the tate and its subdi"isions. #ersons who are disquali*ed rom administering their property ha"e a right to claim damages rom their legal representati"es representati"es whose negligence has been the cause o prescription. (193'a) Art. 1109. #rescription DOES NOT RUN between HUSBAND AND WIFE, e"en though there be a separation o property agreed upon in the marriage settlements or by +udicial decree. either does prescription run between PARENTS AND CHILDREN , during the minority or insanity o the latter, and between GUARDIAN GUARDIAN AND  AND WARD  during the continuance o the guardianship. (n) Art. 1110. #rescription, acquisiti"e and e$tincti"e, runs in a"or o, or against a married woman. (n)

Art. 1111. #rescription obtained by a co-proprietor or a co-owner shall bene*t the others. (1933) RENUNCIATION OF PRESCRIPTION

Art. 1112. #ersons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the uture. #rescription is deemed to ha"e been  TACITLY RENOUNCED when the renunciation results rom acts which i!"# th$ a%a&'(&$&t o the right acquired. (193)

Art. 1113. /ll things which are within the commerce o men are susceptible o prescription, unless otherwise pro"ided. #roperty o the tate or any o its subdi"isions not patrimonial in character shall not be the ob+ect o prescription. (193a) Art. 1114. reditors and all other persons interested in ma2ing the prescription eecti"e may a"ail themsel"es thereo notwithstanding the e$press or tacit renunciation by the debtor or proprietor. (1934) Art. 111. 5he pro"isions o the present 5itle are understood to be without pre+udice to what in this ode or in special laws is established with respect to speci*c cases o prescription. (1936) Art. 1116. #rescription already running beore the eecti"ity o this ode shall be go"erned by laws pre"iously in orce& but i since the time this ode too2 eect the entire period herein required or prescription should elapse, the present ode shall be applicable, e"en though by the ormer laws a longer period might be required. (1939) CHAPTER 2 PRESCRIPTION O! O"NERSHIP AN# OTHER REAL RIGHTS Art. 1117. /cquisiti"e prescription o dominion and other real rights may be ordinary or e$traordinary. 7rdinary acquisiti"e prescription requires possession o things in good aith and with +ust title or the time *$ed by law. (190a) Art. 1118. #ossession has to be in the concept o an owner, public, peaceul and uninterrupted. (191)

Art. 1119. /cts o possessory character e$ecuted in "irtue o license or by mere tolerance o the owner shall not be a"ailable or the purposes o possession. (19') Art. 1120. #ossession is interrupted or the purposes o prescription, naturally or ci"illy. ci"illy. (193) Art. 1121. #ossession is naturally interrupted when through any cause it should cease or more than one year.  5he old possession is not re"i"ed re"i"ed i a new possession should be e$ercised by the same ad"erse claimant. (19a) Art. 1122. I the natural interruption is or only one year or less, the time elapsed shall be counted in a"or o the prescription. (n) Art. 1123. i"il interruption is produced by +udicial summons to the possessor. possessor. (19a) Art. 1124. 8udicial summons shall be deemed not to ha"e been issued and shall not gi"e rise to interruption% (1) I it should be "oid or lac2 o legal solemnities& (') I the plainti should desist rom the complaint or should allow the proceedings proceedings to lapse& (3) I the possessor should be absol"ed rom the complaint. In all these cases, the period o the interruption shall be counted or the prescription. (19a) Art. 112. /ny e$press or tacit recognition which the possessor may ma2e o the owners right also interrupts possession. (196) Art. 1126. /gainst a title recorded in the :egistry o #roperty, ordinary prescription o ownership or real rights shall not ta2e place to the pre+udice o a third person, e$cept in "irtue o another title also recorded& and the time shall begin to run rom the recording o the latter. /s to lands registered under the ;and :egistration /ct, the pro"isions o that special law shall go"ern. (199a)

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possessor consists in Art. 1127.  5he good aith o the possessor the reasonable belie that the person rom whom he recei"ed the thing was the owner thereo, and could transmit his ownership. (190a)

Art. 1128. 5he conditions o good aith required or possession in /rticles ', '4, '6, and '9 o this ode are li2ewise necessary or the determination o good aith in the prescription o ownership and other real rights. (191) Art. 1129. hen demand would be useless, as when the obligor has rendered it beyond his power to perorm. In reciprocal obligations, neither party incurs in delay i the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. hen the conditions ha"e been i mposed with the intention o suspending the eAcacy o an obligation to gi"e, the ollowing rules shall be obser"ed in case o the impro"ement, loss or deterioration o the thing during the pendency o the condition% (1) I the thing is "(st without the fault of the DEBTOR, the obligation shall be extinguished & (') I the thing is "(st through the fault of the DEBTOR, he shall be obliged to pay damages& it is understood that the thing is lost when it

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perishes, or goes out o commerce, or disappears in such a way that its e$istence is un2nown or it cannot be reco"ered& (3) >hen the thing '$t$,i(,at$s without the fault of the DEBTOR , the impairment is to be borne by the creditor & () I it '$t$,i(,at$s through the fault of the DEBTOR , the creditor may choose between the rescission of the  or obligation and its fulfillment, with indemnity  or damages in either case&

 5his is understood to be without pre+udice pre+udice to the rights o third persons who ha"e acquired the thing, in accordance with /rticles 136 and 1366 and the !ortgage ;aw. (11') BOTH PARTIES GUILTY OF BREACH

Art. 1192. In case both parties ha"e committed a breach o the obligation, the "ia%i"it# (> th$ >i,st i&>,act(, shall be equitably tempered by the courts. I it ',&&t e )eteri&e) which o the parties *rst "iolated the contract, the sa$ sha"" %$ '$$$' extinguished , and $ach sha"" %$a, his (w& 'aa3$s. (n) SECTION 2. - Oli,ti&* WITH A PERIOD

() I the thing is i!,(=$' by its nature, or by time, the impro"ement shall inure to the benefit of the creditor & () I it is i!,(=$' at the expense of the DEBTOR , he shall ha"e no other right than that granted to the usufructuary . (11'') EFFECTS OF FULFILLMENT OF RESOLUTORY COND

Art. 1190. >hen the conditions ha"e or their purpose the e$tinguishment o an obligation to gi"e, the parties, upon the ul*llment o said conditions, shall return to each other what they ha"e recei"ed. In case o the loss, deterioration or impro"ement o the thing, the pro"isions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who i s bound to return. /s or the obligations to do and not to do, the pro"isions o the second paragraph o /rticle 1164 shall be obser"ed as regards the eect o the e$tinguishment o the obligation. (11'3) RESCISSION IN RECIPROCAL OBLI VS/ 12

Art. 1191. 5he POWER to RESCIND obligations is implied in re'i5r',l ones, in case one o the obligors should not comply with what is incumbent upon him.  5he in+ured party may choose choose between the ul*llment ul*llment and the rescission o the obligation, with the payment o damages in either case. @e may also see2 rescission, e"en ater he has chosen ul*llment, i the latter should become impossible.  5he court shall decree decree the rescission claimed, unless there be +ust cause authori=ing the *$ing o a period.

Art. 1197. I the obligation does not *$ a period, but 1 r it* &,t(re ,&) t+e 'ir'(*t,&'e* 'ir'(*t,&'e* it ',& e i&erre) t+,t , 5eri) ,* i&te&)e), the courts may *$ the duration thereo.

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Art. 1193. 7bligations or whose ul*llment a day certain has been *$ed, shall be demandable only when that day comes. 7bligations with a resolutory period ta2e eect at once, but terminate upon arri"al o the day certain. / day certain is understood to be that which must necessarily come, although it may not be 2nown when. I the uncertainty consists in whether the day will come or not, the obligation is conditional, and it shall be regulated by the rules o the preceding ection. USUFRUCTUARY  – enabling a holde !o dei"e #o$i! o bene$i! $o% (11'a) #o#e!& !ha! ei!he i' !i!led i'  !i!led !o ano!he #e'on INURE  – !a(e e$$e)! ONEROUS < $?c$ssi=$"# %5,'$&s($: t,(5%"$s($

Art. 1194. In case o loss, deterioration or impro"ement o the thing beore the arri"al o the day certain, the rules in /rticle 1169 shall be obser"ed. (n) PAYMENT BEFORE ARRIVAL OF PERIOD

Art. 119. /nything paid or deli"ered beore the arri"al o the period, the obligor being unaware of the  or believing that the obligation has become due and  period  or demandable, a# %$ ,$c(=$,$' it+ t+e r(it* ,&) i&tere*t*. (11'a) Art. 1196. >hene"er in an obligation a period is designated, it is presumed to ha"e been established or the bene*t o both the creditor and the debtor, unless rom the tenor o the same or other circumstances it should appear that the period has been established in a"or o one or o the other. (11'4)

 5he courts shall also *$ the duration duration o the period when it 2 )e5e&)* (5& t+e ill  t+e )etr. In e"ery case, the courts shall determine such period as may under the circumstances ha"e been probably contemplated by the parties. 7nce *$ed by the courts, the period cannot be changed by them. (11'6a)  when DEBTOR LOSES A RIGHT TO A PERIOD-OBLI DEMANDABLE B4 LAPSE OF PERIOD

Art. 1198.  5he DEBTOR shall l*e e/er ri+t t ,e (*e  t+e 5eri)% (1) >hen ater the obligation has been contracted, he becomes INSOLVENT, unless he gi"es a guaranty or security or the debt& (') >hen he does not urnish to the creditor the guaranties or securities which he has promised& (3) >hen by his own acts he has impaired said guaranties or securities ater their establishment, and when through a ortuitous e"ent they disappear, unless he immediately gi"es new ones equally satisactory& () >hen the debtor "iolates any  UNDERTA.ING, in consideration o which the creditor agreed to the period& () >hen the debtor ATTEMPTS  to abscond. (11'9a) SECTION 3. - ALTERNATIVE Oli,ti&* 1177018

Art. 1199. / person alternati"ely bound by dierent prestations shall completely perorm one o them.  5he creditor cannot be compelled to receive part of one and part of the other undertaking. (1131) Art. 1200.  5he ,i3ht (> ch(ic$ %$"(&3s t( t h$ DEBTOR, unless it has been e$pressly granted to the creditor. creditor.  5he debtor shall ha"e no right to choose choose those prestations which are impossible, unlawul or which could not ha"e been the ob+ect o the obligation. (113') Art. 1201. 5he choice shall produce no eect e$cept rom the ti$ it has %$$& c(5&icat$'. (1133)

WHEN COURTS SHALL FI; ' PERIOD J5'icia" P$,i(' < 8 STEP PROCESS

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Art. 1202. 5he debtor shall lose the right o choice when among the prestations whereby he is alternati"ely bound, only one is practicable. (113) 182 < 18- Righ! o$ *hoi)e+  DEBTOR

Art. 1203. I through the creditors acts the debtor cannot ma2e a choice according to the terms o the obligation, the latter may rescind the contract with damages. (n) Art. 1204. 5he creditor shall ha"e a right to indemnity or damages when, through the ault o the debtor, all the things which are alternati"ely the ob+ect o the obligation ha"e been lost, or the compliance o the obligation has become impossible.  5he indemnity shall be *$ed *$ed ta2ing as a basis the "alue o the last thing which disappeared, or that o the ser"ice which last became impossible. Camages other than the "alue o the last thing or ser"ice may also be awarded. (113a) Righ! o$ *hoi)e+ CREDITOR

Art. 120. >hen the choice has been $?!,$ss"# 3i=$& t( th$ CREDITOR, the obligation shall cease to be alternati"e rom the 'a# wh$& th$ s$"$cti(& has %$$& c(5&icat$' t( th$ '$%t(,/ ?ntil then the responsibility o the debtor shall be go"erned by the ollowing rules% (1) I one of the things is lost  through a ORT!"TO!# E$E%T , he shall perorm the obligation by delivering that which the creditor should choose from among the remainder , or that which remains i only one subsists&

(') I the loss of one of the things occurs through the fault of the debtor , the creditor may claim any of those subsisting, or the price of that which, through the fault of the former, has disappeared , with a right to damages& (3) I all the things are lost through the fault of the debtor , the choice by the creditor shall  fall upon the price of any one of them, also with indemnity for damages&  5he same rules shall be applied to obligations obligations to do or not to do in case one, some or all o the prestations should become impossible. (113a) FACULTATIVE

Art. 1206. >hen only one prestation has been agreed upon, but the obligor may render another in substitution, the obligation is called acultati"e.

 5he loss or deterioration o the thing thing intended as a substitute, through the negligence o the obligor, does not render him liable. But once the substitution has been made, the obligor is liable or the loss o the substitute on account o his delay, negligence or raud. (n)

SECTION 4. - JOINT ,&) SOLIDARY  Oli,ti&* Art. 1207. 5he concurrence o two or more creditors or of two or more debtors in one and the same obligation does not imply that each one o the ormer has a right to demand, or that each one o the latter is bound to render, entire compliance with the prestation. 5here is a solidary liability only when the obligation e$pressly so states, or when the law or the nature o the obligation requires solidarity. (1134a) JOINT DIVISIBLE OBLIGTN

Art. 1208. I rom the law, or the nature or the wording o the obligations to which the preceding article reers the contrary does not appear, the credit or debt shall be presumed to be di"ided into as many shares as there are creditors or debtors, the credits or debts being considered distinct rom one another, sub+ect to the :ules o ourt go"erning the multiplicity o suits. (1136a) JOINT INDIVISIBLE OBLIGTN

Art. 1209. I the di"ision is impossible, the right o the creditors may be pre+udiced only by their collecti"e acts, and the debt can be enorced only by proceeding against all the debtors. I one o the latter should be insol"ent, the others shall not be liable or his share. (1139) INDIVISIBILITY VS/ SOLIDARITY

Art. 1210. 5he indi"isibility o an obligation does not necessarily gi"e rise to soli darity. darity. or does solidarity o itsel imply indi"isibility. indi"isibility. (n) Art. 1211. olidarity may e$ist although the creditors and the debtors may not be bound in the same manner and by the same periods and conditions. (110) Art. 1212. Gach one o the solidary creditors may do whate"er may be useul to the others, but not anything which may be pre+udicial to the latter. latter. (111a)

Art. 1213. / solidary creditor cannot assign his rights without the consent o the others. (n) any one o the Art. 1214.  5he debtor may pay any solidary creditors& but i any demand, +udicial or e$tra+udicial, has been made by one o them, payment should be made to him. (11'a)

Art. 121. o"ation, compensation, conusion or remission o the debt, made by any o the solidary creditors or with any o the solidary debtors, shall e$tinguish the obligation, without pre+udice to the pro"isions o /rticle 1'19.  5he creditor who may may ha"e e$ecuted e$ecuted any o these acts, as well as he who collects the debt, shall be liable to the others or the share in the obligation corresponding corresponding to them. (113)

Art. 1216. 5he creditor may proceed against any one o the solidary debtors or some or all o them simultaneously. simultaneously. 5he demand made against one o them shall not be an obstacle to those which may subsequently be directed against the others, so l ong as the debt has not been ully collected. (11a) Art. 1217. #ayment made by one o the solidary debtors e$tinguishes the obligation. I two or more solidary debtors oer to pay, the creditor may choose which oer to accept. @e who made the payment may claim rom his codebtors only the share which corresponds to each, with the interest or the payment already made. I the payment is made beore the debt i s due, no interest or the inter"ening period may be demanded. >hen one o the solidary debtors cannot, because o his insol"ency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt o each. (11a)

Art. 1218. #ayment by a solidary debtor shall not entitle him to reimbursement rom his co-debtors i such payment is made ater the obligation has prescribed or become illegal. (n)

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Art. 1219. 5he remission made by the creditor o the share which aects one o the solidary debtors does not release the latter rom his responsibility towards the co-debtors, in case the debt had been totally paid by anyone o them beore the remission was eected. (11a) Art. 1220. 5he remission o the whole obligation, obtained by one o the s olidary debtors, does not entitle him to reimbursement rom his co-debtors. (n) Art. 1221. I the thing has been lost or i the prestation has become impossible without the ault o the solidary debtors, the obligation shall be e$tinguished. I there was ault on the part o any one o them, all shall be responsible to the creditor, or the price and the payment o damages and interest, without pre+udice to their action against the guilty or negligent debtor. I through a ortuitous e"ent, the thing is lost or the perormance has become impossible ater one o the solidary debtors has incurred in delay through the  +udicial or e$tra+udicial demand upon upon him by the creditor, the pro"isions o the preceding paragraph shall apply. (114a)

Art. 1222. / solidary debtor may, in actions *led by the creditor, a"ail himsel o all deenses which are deri"ed rom the nature o the obligation and o those which are personal to him, or pertain to his own share. >ith respect to those which personally belong to the others, he may a"ail himsel thereo only as regards that part o the debt or which the latter are responsible. (116a) SECTION . - DIVISIBLE ,&) INDIVISIBLE Oli,ti&* Art. 1223.  5he di"isibility or indi"isibility o the things that are the ob+ect o obligations in which there is only one debtor and only one creditor does not alter or modiy the pro"isions o hapter ' o this 5itle. (119)

Art. 1224. / +oint indi"isible obligation gi"es rise to indemnity or damages rom the time anyone o the debtors does not comply with his underta2ing. 5he debtors who may ha"e been ready to ul*ll their promises shall not contribute to the indemnity beyond the corresponding portion o the price o the thing or o the "alue o the ser"ice in which the obligation consists. (110)

ater the creditor has decided to require the ul*llment o the obligation, the perormance thereo should become impossible without his ault, the penalty may be enorced. (113a)

Art. 1228. #roo o actual damages suered by the creditor is not necessary in order that the penalty may be demanded. (n)

Art. 122. hen the obligation has or i ts ob+ect the e$ecution o  a certain number o days o wor2, the accomplishment o wor2 by metrical units, or analogous things which by their nature are susceptible o partial perormance, it shall be di"isible. @owe"er, e"en though the ob+ect or ser"ice may be physically di"isible, an obligation is indi"isible i so pro"ided by law or intended by the parties.

Art. 1229. 5he +udge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. G"en i there has been no perormance, the penalty may also be reduced by the courts i it is iniquitous or unconscionable. (11a) Art. 1230. 5he nullity o the penal clause does not carry with it that o the principal obligation.  5he nullity o the principal obligation carries carries with it that o the penal clause. (11)

CHAPTER 4 E;TINGUISHMENT  O! O:LIGATIONS GENERAL PROVISIONS Art. 1231. 7bligations are e$tinguished% (1) By PAYMENT or PERFORMANCE %

In obligations not to do, di"isibility or indi"isibility shall be determined by the character o the prestation in each particular case. (111a) PLCCCN ARFP

SECTION 6. - Oli,ti&* W9 A PENAL CLAUSE Art. 1226. In obligations with a penal clause, the penalty shall substitute the indemnity or damages and the payment o interests in case o noncompliance, i there is no stipulation to the contrary. e"ertheless, damages shall be paid i the obligor reuses to pay the penalty or is guilty o raud in the ul*llment o the obligation.  5he penalty may be enorced enorced only when it is demandable in accordance with the pro"isions o this ode. (11'a) Art. 1227. 5he debtor cannot e$empt himsel rom the perormance o the obligation by paying the penalty, sa"e in the case where this right has been e$pressly reser"ed or him. either can the creditor demand the ul*llment o the obligation and the satisaction o the penalty at the same time, unless this right has been clearly granted him. @owe"er, i

"ist NOT $?c"5si=$

(') By the LOSS OF THE THING DUE % (3) By the CONDONATION or REMISSION o the debt& () By the CONFUSION  or MERGER  o the rights o creditor and debtor& () By COMPENSATION & () By NOVATION.

7ther causes o e$tinguishment o obligations, such as annulment, rescission, ul*llment o a resolutory condition, and prescription, are go"erned elsewhere in this ode. (11a)

SECTION 1. - PAYMENT r PERFORMANCE Art. 1232. #ayment means not only the deli"ery o money but also the perormance, in any other manner, o an obligation. (n) DEBT CONSIDERED PAID

Art. 1233. / debt shall not be understood to ha"e been paid unless the thing or ser"ice in which the obligation consists has been completely delivered or rendered , as the case may be. (114)

4

GOOD FAITH REQS 1/ S5%sta&tia" P$,>(,a&c$ 8/ G((' Faith

Art. 1234. I the obligation has been substantially perormed in good aith, the obligor may reco"er as though there had been a strict and complete ul*llment, less damages suered by the obligee. (n) QUALIFIED PERFORMANCE

Art. 123. >hen the 1 obligee ,''e5t* t+e 5err,&'e, &(wi&3 its i&c(!"$t$&$ss or i,,$35"a,it#, and 2 with(5t $?!,$ssi&3 a&# !,(t$st or (%4$cti(&, the obligation is deemed ully complied with. (n) PAYMENT BY 2 ,' PERSON 1/ W9 .&(w"$'3$  C(&s$&t )'$%t(,+ it t( th$ c,$'it(, &$$' &(t %$ !,(=$' i& th$ >(""(wi&3 cas$s (1) I ater the payment, the third person acquires the creditors rights& 0 SUBROGATION OF PAYER IN CREDITORS RYTS

(') I the creditor rati*es the payment to the third person& 0RATIFICATION BY CREDITOR (3) I by the creditors conduct, the debtor has been led to belie"e that the third person had authority to recei"e the payment. th$ c,$'it  shall release the debtor. (11) CRE#IT herehere-any orm &eti,le orm  &eti,le i&*tr(e&t 5,,le t :EARER

Art. 1243. #ayment made to the creditor by the debtor ater the latter has been + udicially ordered to retain the debt shall not be "alid. (11)

RYT OF 2 ,' PERSON TO SUBROGATE

Art. 1237. >hoe"er pays on behal o the debtor without the 2nowledge or against the will o the latter, cannot compel the creditor to subrogate him in his rights, such as those arising rom a mortgage, guaranty, or penalty. (119a)

Art. 1244. 5he debtor o a thing cannot compel the creditor to recei"e a dierent one, although the latter may be o the same "alue as, or more "aluable than that which is due.

DONATION

Art. 1238. #ayment made by a third person who does not intend to be reimbursed by the debtor is deemed to be a DONATION, which requires the debtors consent. But the payment is in any case "alid as to the creditor who has accepted it. (n) Art. 1239. In obligations to gi"e, payment made by one who does not ha"e the free disposal of the thing due and capacity to alienate it shall not be "alid, without pre+udice to the pro"isions o /rticle 1-86 under the 5itle on LNatural LNatural Obligations Obligations.L .L (110a) Art. 1240. #ayment shall be made to the person in whose a"or the obligation has been constituted, or his successor in interest, or any person authori=ed to recei"e it/ 0 )BY LAW+ (11'a) RD

VALID PAYMENT TO INCAPACITATED 9 2  PERSON

Art. 1241. 1241 . Pa#$&t t( a !$,s(& wh( is "%'()('"T(TED to administer his property shall be "alid i he +,* e5t t+e t+i& )eli/ere), or insoar as the payment has ee& e&e;'i,l t +i.

In obligations to do or not to do, an act or orbearance cannot be substituted by another act or orbearance against the obligees will. (11a) PAYMENT YMENT , whereby property is Art. 124. DATION IN PA alienated to the creditor in satisaction o a debt in money, shall be go"erned by the law o sales. (n) PRIN OF E,IT. 9 RULE OF MEDIUM QUALITY

Art. 1246. >hen the obligation consists in the deli"ery o an INDETERMINATE  or GENERIC thing, whose quality and circumstances ha"e not been stated, the c,$'it(, ca&&(t '$a&' a thi&3 (> s5!$,i(, K5a"it#. either can the '$%t(, '$"i=$, a thi&3 (> i&>$,i(, K5a"it#. 5he purpose o the obligation and other circumstances shall be ta2en into consideration. (114a) E?t,a45'icia"" E?!$&s$s DEBTOR #a&' $o E?t,a45'icia

Art. 1247. ?nless it is otherwise stipulated, the E+TR(!D"'"(- E+)E%#E# required by the payment shall be or the account o the DEBTOR. >ith regard to +udicial costs, the :ules o ourt shall go"ern. (116a)  when PARTIAL PARTIAL PERFORMAN*E a""(w$'

Art. 1248. !nless there is an express stipulation to that eect, the c,$'it(, ca&&(t %$ c(!$""$' !a,tia""# t( ,$c$i=$ the

prestations in which the obligation consists. either may the debtor be required to ma2e partial payments. @owe"er, when the debt is in part liquidated and in part unliquidated, the creditor may demand and the debtor may eect the payment o the ormer without waiting or the liquidation o the latter. (119a)

Art. 1249. 5he payment o debts in money shall be MADE IN THE CURRENCY STIPULATED , and i it is not possible to deli"er such currency, then in the currency currency which is legal tender in the #hilippines.  5he deli"ery o promissory notes notes payable to order, order, or bills o e$change or other mercantile documents shall 5r)('e t+e ehen he is incapacitated to recei"e the payment at the time it is due&

Art. 1260. 7nce the consignation has been duly made, the debtor may as2 the +udge to order the cancellation o the obligation.

Art. 1261. I, the consignation ha"ing been made, the creditor should authori=e the debtor to withdraw the same, he shall lose e"ery preerence which he may ha"e o"er the thing. 5he co-debtors, guarantors and sureties shall be released. (1161a) SECTION 2. - LOSS  t+e THING DUE

Art. 1262. /n obligation which consists in the deli"ery o a DETERMINATE thi&3  shall be E;TINGUISHED  i it should be lost or destroyed WITHOUT THE FAULT OF THE DEBTOR, and %$>(,$ h$ has i&c5,,$' i& '$"a#. >hen by law or stipulation, the obligor is liable e"en or ortuitous e"ents, the loss o the thing does not e$tinguish the obligation, and he shall be responsible or damages. 5he same rule applies when the nature o the obligation requires the assumption o ris2. (116'a) GENERIC THING

Art. 1263. In an obligation to deli"er a generic thing, the loss or destruction o anything o the same 2ind does not e$tinguish the obligation. (n) PARTIAL LOSS < C(5,t D$ci'$s

determine whether, under Art. 1264.  5he courts shall determine the circumstances, the partial loss o the ob+ect o the obligation is so important as to e$tinguish the obligation. (n) PRESUMPTION OF FAULT: DEBTOR i& his !(ss$ssi(& LOST THING

Art. 126. >hene"er the thing is lost in the possession o the debtor, it shall be presumed that the loss was due to his ault, unless there is proo to the contrary, and without pre+udice to the pro"isions o article 11. 5his presumption does not apply in case o earthqua2e, Mood, storm, or other natural calamity. (1163a) TO DO: EFFECT OF IMPOSSIBLITY OF PERFORMANCE: S5!$,=$&i&3 I!(ssi%i"it#

Art. 1266. 5he debtor in obligations to do shall also be released when the prestation becomes legally or physically impossible without the ault o the obligor. (116a) DOCTRIINE DOCTRIIN E OF UNFORSEE UNFORSEEN N EVENTS: Di>>ic5"t t( P$,>(,

Art. 1267. >hen the ser"ice has become so diAcult as to be maniestly beyond the contemplation o the parties, the obligor may also be released thererom, in whole or in part. (n) Art. 1268. >hen the debt o a thing certain and determinate proceeds proceeds rom a criminal oense, the debtor shall not be e$empted rom the payment o its price, whate"er may be the cause or the loss, unless the thing ha"ing been oered by him to the person who should recei"e it, the l atter reused without  +usti*cation to accept it. (116) Art. 1269. 5he obligation ha"ing been e$tinguished by the loss o the thing, the creditor shall ha"e all the rights o action which the debtor may ha"e against

DETERMINATE THING

9

third persons by reason o the loss. (116)

SECTION 3. - CONDONATION r REMISSION OF THE DEBT Art. 1270. ondonation or remission is essentially gratuitous, and requires the acceptance by the obligor. obligor. It may be made e$pressly or impliedly. impliedly. 7ne and the other 2ind shall be sub+ect to the rules which go"ern inoAcious donations. G$press condonation shall, urthermore, comply with the orms o donation. (1164) document Art. 1271.  5he deli"ery o a pri"ate document e"idencing a credit, made "oluntarily by the creditor to the debtor, implies the renunciation o the action which the ormer had against the latter. I in order to nulliy this wai"er it should be claimed to be inoAcious, the debtor and his heirs may uphold it by pro"ing that the deli"ery o the document was made in "irtue o payment o the debt. (1166)

Art. 1272. >hene"er the pri"ate document in which the debt appears is ound in the possession o the debtor, it shall be presumed that the creditor deli"ered it "oluntarily, unless the contrary is pro"ed. (1169) Art. 1273. 5he renunciation o the principal debt shall e$tinguish the accessory obligations& but the wai"er o the latter shall lea"e the ormer in orce. (1190) Art. 1274. It is presumed that the accessory obligation o pledge has been remitted when the thing pledged, ater its deli"ery to the creditor, is ound in the possession o the debtor, or o a third person who owns the thing. (1191a)

A!TER =I#TER=S SECTION 4. - CONFUSION r MERGER OF RIGHTS Art. 127. 5he 127. 5he obligation is e$tinguished rom the time the characters o creditor and

debtor are merged in the same person. (119'a) Art. 1276. !erger 1276. !erger which ta2es place in the person o the principal debtor or creditor bene*ts the guarantors. onusion which ta2es place in the person o any o the latter does not e$tinguish the obligation. obligation. (1193)

Art. 1280. otwithstanding 1280. otwithstanding the pro"isions o the preceding article, the guarantor may set up compensation as regards what the creditor may owe the principal debtor. (1194) Art. 1281. ompensation may be total or partial. >hen the two debts are o the same amount, there is a total compensation. (n)

Art. 1277. onusion does not e$tinguish a  +oint obligation obligation e$cept e$cept as regards regards the share share corresponding to the creditor or debtor in whom the two characters concur. (119)

Art. 1282. 5he 1282. 5he parties parties may agree agree upon the compensation o debts which are not yet due. (n)

SECTION . - COMPENSATION Art. 1278. ompensation 1278. ompensation shall ta2e place when two persons, in their own right, are creditors and debtors o each other. (119)

Art. 1283. I 1283. I one o the parties to a suit o"er an obligation has a claim or damages against the other, the ormer may set it o by pro"ing his right to said damages and the amount thereo. (n)

Art. 1279. 1279. In order that compensation may be proper, it is necessary% (1) 5hat each one o the obligors be bound principally, and that he be at the same time a principal creditor o the other& (') 5hat both debts consist in a sum of money , or i the things due are '&*(,le, '&*(,le, they be o the *,e i&), i&), and also o the *,e >(,lit i  >(,lit i  the latter has been stated& )(e& (3) 5hat the t )et* e )(e& () 5hat they be li>(i),te) and )e,&),le& )e,&),le& () 5hat o"er neither o them there be any retention or contro"ersy, commenced by third persons and communicated in due time to the debtor. (119)

Art. 1284. >hen 1284. >hen one or both debts are rescissible or "oidable, they may be compensated against each other beore they are +udicially rescinded or a"oided. (n) Art. 128. 5he 128. 5he debtor who has consented to the assignment o rights made by a creditor in a"or o a third person, cannot set up against the assignee the compensation which would pertain to him against the assignor, unless the assignor was noti*ed by the debtor at the time he ga"e his consent, that he reser"ed his right to the compensation. compensation. I the creditor communicated the cession to him but the debtor did not consent thereto, the latter may set up the compensation compensation o debts pre"ious to the cession, but not o subsequent subsequent ones. I the assignment is made without the 2nowledge o the debtor, he may set up the 10

compensation o all credits prior to the same and also later ones until he had 2nowledge 2nowledge o the assignment. (1196a) Art. 1286. ompensation 1286. ompensation ta2es place by operation o law, e"en though the debts may be payable at dierent places, but there shall be an indemnity or e$penses o e$change or transportation to the place o payment. (1199a) Art. 1287. 1287. ompensation shall not be proper when one o the debts arises rom a depositum or rom the obligations o a depositary or o a bailee in commodatum. either can compensation be set up against a creditor who has a claim or support due by gratuitous title, without pre+udice to the pro"isions o paragraph ' o /rticle 301. (1'00a) Art. 1288. either shall there be compensation i one o the debts consists in ci"il liability arising rom a penal oense. (n) Art. 1289. I 1289. I a person should ha"e against him se"eral debts which are susceptible o compensation, the rules on the application o payments shall apply to the order o the compensation. (1'01) Art. 1290. >hen all the requisites mentioned in /rticle 1'49 are present, compensation ta2es eect by operation o law, and e$tinguishes both debts to the concurrent amount, e"en though the creditors and debtors are not aware o the compensation. (1'0'a) SECTION 6. - NOVATION

Art. 1291. 1291. 7bligations may be MODIFIED  by% (1) hanging their ob+ect ob+ect or principal conditions& SUBSTITUTION

(') ubstituting the person o the debtor& (3) ubrogating a third person in the rights o the creditor. (1'03) REQS/ OF NOVATION <  PAEN 

Art. 1292. 1292. In order that an obligation may be e$tinguished by another which substitute the same, it is imperati"e that it be so declared in unequi"ocal terms, or that the old and the new obligations be on e"ery point incompatible with each other.  (1'0)

SUBSTITUTION < E;PROMISION : DELEGACION

Art. 1293. o"ation 1293. o"ation which consists in substituting a new debtor in the place o the original one, may be made e"en without the 2nowledge or against the will o the latter, but not without the consent o the creditor. #ayment by the new debtor gi"es him the rights mentioned in /rticles 1'3 and 1'34. (1'0a) INSOLVENCY E;PROMISION

Art. 1294. 1294. I the substitution is without the 2nowledge or against the will o the debtor, the new debtors insol"ency or nonul*llment o the obligations shall not gi"e rise to any liability on the part o the original debtor. (n) INSOLVENCY DELEGACION

Art. 129. 129. 5he insol"ency o the new debtor, who has been proposed by the original debtor and accepted by the creditor, shall not re"i"e the action o the latter against the original obligor, e$cept when said insol"ency was already e$isting and o public 2nowledge, or 2nown to the

debtor, when the delegated his debt. (1'0a) EFFECT ON ACCESSORY OBLI

Art. 1296. >hen 1296. >hen the principal obligation is e$tinguished in consequence o a no"ation, accessory obligations may subsist only insoar as they may bene*t third persons who did not gi"e their consent. (1'04) EFFECT IF NEW OBLI VOID

Art. 1297. I 1297. I the new obligation is "oid, the original one shall subsist, unless the parties intended that the ormer relation should be e$tinguished e$tinguished in any e"ent. (n) EFFECT IF OLD OBLI VOID 9 VOIDABLE

Art. 1298. 5he 1298. 5he no"ation is "oid i the original obligation was "oid, e$cept when annulment may be claimed only by the debtor or when rati*cation "alidates acts which are "oidable. (1'06a) Art. 1299. I 1299. I the original obligation was sub+ect to a suspensi"e or resolutory condition, the new obligation shall be under the same condition, unless it is otherwise stipulated. (n) .INDS OF SUBROGATION < LEGAL : CONVENTIONAL

Art. 1300. ubrogation 1300. ubrogation o a third person in the rights o the creditor is either legal or con"entional. 5he ormer is not presumed, e$cept in cases e$pressly mentioned in this ode& the latter must be clearly established in order that it may ta2e eect. (1'09a) Art. 1301. on"entional 1301. on"entional subrogation o a third person requires the consent o the original parties and o the third person. (n) Art. 1302. 1302. It is presumed that there is legal subrogation% WHEN SUBROGATION PRODUCED FR PAYMENT (1) >hen a creditor creditor pays another creditor who is preerred, e"en 11

WITHOUT the debtors 2nowledge& (') >hen a third third person, NOT interested in the obligation, pays with the e$press or tacit appro"al o the debtor& (3) >hen, >hen, e"en WITHOUT the 2nowledge o the debtor, a person interested in the ul*llment o the obligation pays, without pre+udice to the eects o conusion as to the latters share. (1'10a)

LEGAL SUBROGATION 0 EFFECT

Art. 1303. ubrogation transers to the persons subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors o mortgages, sub+ect to stipulation in a con"entional subrogation. (1'1'a)

 with ,$s!$ct t( th$ (th$, t( 3i=$ s($thi&3  or t( ,$&'$, s($ s$,=ic$ .

(1'a)

F,$$'( 9 A5t(&(# (> Wi""

Art. 1306. 5he 1306. 5he contracting parties may establish such stipulations, clauses, terms and conditions as they may deem con"enient, pro"ided they are not contrary to law, morals, good customs, public order, or public policy. Art. 1307. INNOMINATE CONTRACTS shall be regulated by the stipulations o the parties, by the pro"isions o 5itles I and II o this Boo2, by the rules go"erning the most analogous nominate contracts, and by the customs o the place. (n) PRIN OF MUTUALITY OF CONTRACTS

M5t5a"it#

Art. 1308. 1308. 5he contract must bind both contracting parties& its "alidity or compliance cannot be let to the will o one o them. (1'a)

PARTIAL SUBROGATION 0 EFFECT

Art. 1304. / 1304. / creditor, to whom partial payment has been made, may e$ercise his right or the remainder, and he shall be preerred to the person who has been subrogated in his place in "irtue o the partial payment o the same credit. (1'13)

M5t5a"it#

Art. 1309. 5he 1309. 5he determination determination o o the perormance may be let to a .rd person, whose decision shall not be binding 5&ti" it has %$$& a'$ &(w& t( %(th c(&t,acti&3 !a,ti$s . (n) DETERMINATION INEQUITABLE EFFECT

M5t5a"it#

Art. 1310. 5he 1310. 5he determination shall not be obligatory i it is e"idently inequitable. In such case, the courts shall decide what is equitable under the circumstances. (n) Tit"$ II/ 0 CONTRACTS CHAPTER 1 GENERAL PROVISIONS

CHARACTERISTIC

Art. 130. 130. / contract is a $$ti&3 (> i&'s %$tw$$& tw( !$,s(&s whereby (&$ %i&'s his$">

GEN RULE

;PN  1211 )8+ 1218 1212 121- 1166

PERSONS AFFECTED BY A CONTRACT

R$"ati=it#

Art. 1311. ontracts ta2e eect only between the  parties, their assigns and heirs, e$cept in case where the rights and obligations arising rom the contract are not

transmissible by their nature, or by stipulation or by pro"ision o law. 5he heir is not liable beyond the "alue o the property he recei"ed rom the decedent. STIPULATION STIPULA TION POUR AUTRI < Sti! i&>a=(, (> 2 ,' P$,s(&

I a contract should contain some stipulation in a"or o a third person, he may demand its ul*llment pro"ided he communicated his acceptance to the obligor beore its re"ocation. / mere incidental bene*t or interest o a person is not suAcient. 5he contracting parties must ha"e clearly and deliberately conerred a a"or upon a third person. 2,' PERSONS BOUND BY CONTRACTS CREATING REAL RIGHTS

Art. 1312. In CONTRACTS CREATING REAL RIGHTS, third persons who come into possession o the ob+ect o the contract are bound thereby, sub+ect to the pro"isions o the !ortgage ;aw and the ;and :egistration ;aws. (n) CREDITORS RYT TO IMPUGN CONTRACTS < DEFRAUD THEM

Art. 1313. reditors 1313. reditors are protected in cases o contracts intended to deraud them. (n) 2,' PERSON LIABILITY RESPONSIBLE FOR BREACH < Q5asi D$"ict

Art. 1314. /ny 1314. /ny third person who induces another to "iolate his contract shall be liable or damages to the other contracting party. (n) GEN RULE P$,>$ct$' %# MERE CONSENT

O%"i3at(,i&$ss: O%"i3at(,i&$s s: C(&s$&s5a C(&s$&s5a"it# "it#

Art. 131. ontracts are PERFECTED  by MERE CONSENT, and rom that moment the parties are bound not only to the ul*llment o what has been e$pressly stipulated but also to all the consequences which, according to their nature, may be in 2eeping with good aith, usage and law. E;CEPTION (> 121

Art. 1316. REAL CONTRACTS, such as deposit, pledge and ommodatum, are &(t !$,>$ct$' until  the  the '$"i=$,# (> th$ (%4$ct o the (%"i3ati(&. (n) 1'

UNAUTHORIED CONTRACTS UNENFOREABLE

Art. 1317. o one may contract in the name o another  with(5t %$i&3 a5th(,i$' %# th$ "att$,, or unless he has %# "aw a ,i3ht t( ,$!,$s$&t hi. / contract entered into in the name o another by one who has no authority or legal representation, or who has acted beyond his powers, shall be UNENFORCEABLE, unless it is RATIFIED , expressly  or  or impliedly , by the person on whose behal it has been e$ecuted, %$>(,$ it is ,$=($' %# th$ (th$, c(&t,acti&3 !a,t#. CHAPTER 2 ESSENTIAL REQUISITES OF REQUISITES  OF CONTRACTS GENERAL PROVISIONS Art. 1318. 5here 1318. 5here is no contract contract unless the the ollowing requisites concur% (1) CONSENT o the contracting parties& (') OBJECT certain which is the sub/ect matter  o  o the contract& (3) CAUSE o the obligation which is established.  (1'1)

SECTION 1. - CONSENT Art. 1319. onsent 1319. onsent is maniested by the $$ti&3 (> th$ (>>$,  and the acc$!ta&c$ 5!(& th$ thi&3 N the ca5s$ which are to constitute the contract. OFFER must be certain and ACCEPTANCE absolute. QUALIFIED ACCEPTANCE constitutes a counter0 offer . THEORY OF COGNITION 9 INFORMATION

ACCEPTANCE MADE BY LETTER OR TELEGRAM

does NOT bind the oerer except  rom the time it came to his knowledge.

 5he contract, contract, in such a case, is presumed presumed to ha"e been entered into in the place where the oer was made. Art. 1320. /n 1320. /n acceptance may be express or implied . (n) Art. 1321. 5he 1321. 5he person person ma2ing the oer may *$ the time, place, and manner o acceptance, all o which must be complied with. (n) Art. 1322. /n 1322. /n oer made through an agent is accepted rom the time acceptance is communicated communicated to him. (n) Art. 1323. 1323. /n oer becomes ineecti"e upon the death, ci"il interdiction, insanity, or insol"ency o either party beore acceptance acceptance is con"eyed. (n) Art. 1324. >hen 1324. >hen the oerer has allowed the oeree a certain period to accept, the oer may be withdrawn at any time beore acceptance by communicating such withdrawal, e$cept when the option is ounded upon a consideration, as something paid or promised. (n) Art. 132. ?nless it appears otherwise, business ad"ertisements o things or sale are not de*nite oers, but mere in"itations to ma2e an oer. (n) Art. 1326. /d"ertisements 1326. /d"ertisements or bidders are simply in"itations to ma2e proposals, and the ad"ertiser is not bound to accept the highest or lowest bidder, unless the contrary appears. (n)

Art. 1327. 5he 1327. 5he ollowing ollowing cannot cannot gi"e consent to a contract% (1) ?nemancipated ?nemancipated minors& minors& (') Insane or demented demented persons, and dea-mutes who do not 2now how to write. (1'3a) Art. 1328. ontracts 1328. ontracts entered into during a lucid inter"al are "alid. ontracts agreed to in a state o drun2enness or during a hypnotic spell are "oidable. (n) Art. 1329. 5he 1329. 5he incapacity declared in /rticle 13'4 is sub+ect to the modi*cations determined by law, and is understood to be without pre+udice to special disquali*cations established established in the laws. (1') Art. 1330. / 1330. / contract where consent is gi"en through mista2e, "iolence, intimidation, undue inMuence, or raud is "oidable. (1'a) Art. 1331. In 1331. In order that mista2e may in"alidate consent, it should reer to the substance o the thing which is the ob+ect o  the contract, or to those conditions which ha"e principally mo"ed one or both parties to enter into the contract. !ista2e as to the identity or quali*cations o  one o the parties will "itiate consent only when such identity or quali*cations ha"e been the principal cause o the contract. / simple mista2e o account shall gi"e rise to its correction. (1'a) Art. 1332. >hen 1332. >hen one o the parties is unable to read, or i the contract is in a 13

language not understood by him, and mista2e or raud is alleged, the person enorcing the contract must show that the terms thereo ha"e been ully e$plained to the ormer. (n) Art. 1333. 5here 1333. 5here is no mista2e mista2e i the party party alleging it 2new the doubt, contingency or ris2 aecting the ob+ect o the contract. (n) Art. 1334. !utual 1334. !utual error as to the legal eect o an agreement when the real purpose o the parties is rustrated, may "itiate consent. (n) Art. 133. 5here 133. 5here is "iolence when in order to wrest consent, serious or irresistible orce is employed.  5here is intimidation intimidation when one o the contracting parties is compelled by a reasonable and well-grounded ear o an imminent and gra"e e"il upon his person or property, or upon the person or property o his spouse, descendants or ascendants, to gi"e his consent.  5o  5o determine determine the degree degree o intimidation, intimidation, the age, se$ and condition o the person shall be borne in mind. / threat to enorce ones claim through competent authority, i the claim is +ust or legal, does not "itiate consent. (1'4a) Art. 1336. Fiolence or intimidation shall annul the obligation, although it may ha"e been employed by a third person who did not ta2e part in the contract. (1'6) Art. 1337. 5here 1337. 5here is undue inMuence when a person ta2es improper ad"antage o his

power o"er the will o another, depri"ing the latter o a reasonable reedom o choice.  5he ollowing ollowing circumstances circumstances shall be considered% the con*dential, amily, spiritual and other relations between the parties, or the act that the person alleged to ha"e been unduly inMuenced was suering rom mental wea2ness, or was ignorant or in *nancial distress. (n) Art. 1338. 5here 1338. 5here is is raud when, when, through through insidious words or machinations o one o the contracting parties, the other is induced to enter into a contract which, without them, he would not ha"e agreed to. (1'9) Art. 1339. hen 1361. >hen a mutual mista2e o the parties causes the ailure o the instrument to disclose their real agreement, said instrument may be reormed. Art. 1362. I 1362. I one party was mista2en and the other acted raudulently or inequitably in such a way that the instrument instrument does not show their true intention, the ormer may as2 or the reormation o the instrument. Art. 1363. >hen 1363. >hen one party was mista2en and the other 2new or belie"ed that the instrument did not state their real agreement, but concealed that act rom the ormer, the instrument may be reormed. Art. 1364. >hen 1364. >hen through the ignorance, lac2 o s2ill, negligence or bad aith on the part o the person drating the instrument or o the cler2 or typist, the instrument does not e$press the true intention o the parties, the courts may order that the instrument be reormed. Art. 136. I 136. I two parties agree upon the mortgage or pledge o real or personal property, property, but the instrument states that the property is sold absolutely or with a right o

repurchase, reormation o the instrument is proper.

contemporaneous and subsequent acts shall be principally considered. (1'6')

Art. 1366. 5here 1366. 5here shall be no reormation in the ollowing cases% (1) imple donations donations inter "i"os wherein no condition is imposed& (') >ills& (3) >hen the real agreement is "oid.

Art. 1372. @owe"er 1372. @owe"er general the terms o a contract may be, they shall not be understood to comprehend things that are distinct and cases that are dierent rom those upon which the parties intended to agree. (1'63)

Art. 1367. >hen 1367. >hen one o the parties has brought an action to enorce the instrument, he cannot subsequently as2 or its reormation.

Art. 1373. I 1373. I some stipulation o any contract should admit o se"eral meanings, it shall be understood as bearing that import which is most adequate to render it eectual. (1'6) Art. 1374. 5he 1374. 5he "arious stipulations o a contract shall be interpreted together, attributing to the doubtul ones that sense which may result rom all o them ta2en  +ointly. (1'6)

Art. 1368. :eormation 1368. :eormation may be ordered at the instance o either party or his successors in interest, i the mista2e was mutual& otherwise, upon petition o the in+ured party, or his heirs and assigns. Art. 1369. 5he 1369. 5he procedure or the reormation o instrument shall be go"erned by rules o court to be promulgated by the upreme ourt.

Art. 137. >ords 137. >ords which may ha"e dierent signi*cations shall be understood in that which is most in 2eeping with the nature and ob+ect o the contract. (1'6)

CHAPTER  INTERPRETATION OF INTERPRETATION  OF CONTRACTS

Art. 1376. 5he 1376. 5he usage or custom o the place shall be borne in mind in the interpretation o the ambiguities o a contract, and shall *ll the omission o stipulations which are ordinarily established. (1'64)

Art. 1370. I 1370. I the terms o a contract are clear and lea"e no doubt upon the intention o the contracting parties, the literal meaning o its stipulations shall control. I the words appear to be contrary to the e"ident intention o the parties, the latter shall pre"ail o"er the ormer. (1'61) Art. 1371. In 1371. In order to +udge the intention o  the contracting parties, their

Art. 1377. 5he 1377. 5he interpretation o obscure words or stipulations in a contract shall not a"or the party who caused the obscurity. (1'66) Art. 1378. >hen 1378. >hen it is absolutely impossible to settle doubts by the rules established in 1

the preceding articles, and the doubts reer to incidental circumstances o a gratuitous contract, the least transmission o rights and interests shall pre"ail. I the contract is onerous, the doubt shall be settled in a"or o the greatest reciprocity o interests. I the doubts are cast upon the principal ob+ect o the contract in such a way that it cannot be 2nown what may ha"e been the intention or will o the parties, the contract shall be null and "oid. (1'69) Art. 1379. 5he 1379. 5he principles o interpretation stated in :ule 1'3 o the :ules o ourt shall li2ewise be obser"ed in the construction o contracts. contracts. (n) CHAPTER 6 RESCISSI:LE CONTRACTS Art. 1380. ontracts 1380. ontracts "alidly agreed upon may be rescinded in the cases established by law. (1'90) Art. 1381. 5he 1381. 5he ollowing contracts are rescissible% (1) 5hose which are are entered into by guardians whene"er the wards whom they represent suer lesion by more than one-ourth o the "alue o the things which are the ob+ect thereo& (') 5hose agreed agreed upon in representation o absentees, i the latter suer the lesion stated in the preceding number& (3) 5hose underta2en underta2en in raud raud o creditors when the latter cannot in

any other manner collect the claims due them& () 5hose which reer reer to things under litigation i they ha"e been entered into by the deendant without the 2nowledge and appro"al o the litigants or o competent +udicial authority& () /ll other contracts contracts specially declared by law to be sub+ect to rescission. (1'91a)

Art. 1382. #ayments 1382. #ayments made in a state o insol"ency or obligations to whose ul*llment the debtor could not be compelled at the time they were eected, are also rescissible. (1'9') Art. 1383. 5he 1383. 5he action or rescission is subsidiary& it cannot be instituted e$cept when the party suering damage has no other legal means to obtain reparation or the same. (1'9) Art. 1384. :escission 1384. :escission shall be only to the e$tent necessary to co"er the damages caused. (n) Art. 138. :escission 138. :escission creates the obligation to return the things which were the ob+ect o  the contract, together with their ruits, and the price with its interest& consequently, it can be carried out only when he who demands rescission can return whate"er he may be obliged to restore. either shall rescission ta2e place when the things which are the ob+ect o the contract

are legally in the possession o third persons who did not act in bad aith. In this case, indemnity or damages may be demanded rom the person causing the loss. (1'9) Art. 1386. :escission 1386. :escission reerred to in os. 1 and ' o /rticle 1361 shall not ta2e place with respect to contracts appro"ed by the courts. (1'9a) Art. 1387. /ll 1387. /ll contracts by "irtue o which the debtor alienates property by gratuitous title are presumed to ha"e been entered into in raud o creditors, when the donor did not reser"e suAcient property to pay all debts contracted beore the donation. /lienations by onerous title are also presumed raudulent when made by persons against whom some +udgment has been issued. 5he decision or attachment need not reer to the property alienated, and need not ha"e been obtained by the party see2ing the rescission. In addition to these presumptions, the design to deraud creditors may be pro"ed in any other manner recogni=ed by the law o e"idence. (1'94a) Art. 1388. >hoe"er 1388. >hoe"er acquires in bad aith the things alienated in raud o creditors, shall indemniy the latter or damages suered by them on account o the alienation, whene"er, due to any cause, it should be impossible or him to return them. I there are two or more alienations, the *rst acquirer shall be liable *rst, and so on successi"ely. (1'96a) 14

Art. 1389. 5he 1389. 5he action to claim rescission must be commenced within our years. hene"er 1400. >hene"er the person obliged by the decree o annulment to return the thing can not do so because it has been lost through his ault, he shall return the ruits recei"ed and the "alue o the thing at the time o the loss, with interest rom the same date. (1304a) Art. 1401. 5he 1401. 5he action or annulment o contracts shall be e$tinguished when the thing which is the ob+ect thereo is lost through the raud or ault o the person who has a right to institute the proceedings. I the right o action is based upon the incapacity o any one o the contracting parties, the loss o the thing shall not be an obstacle to the success o the action, unless said loss too2 place through the raud or ault o the plainti. (131a) Art. 1402. /s 1402. /s long as one o the contracting parties does not restore what in "irtue o the decree o annulment he is 16

bound to return, the other cannot be compelled to comply with what is incumbent upon him. (1306) CHAPTER 8 UNENFORCEABLE CONTRACTS & Art. 1403. 5he 1403. 5he ollowing ollowing contracts contracts are are unenorceable, unless they are rati*ed% (1) 5hose entered entered into in the name o another person by one who has been gi"en no authority or legal representation, or who has acted beyond his powers& (') 5hose that do not not comply with the tatute o hen 1411. >hen the nullity proceeds rom the illegality o the cause or ob+ect o the contract, and the act constitutes a criminal oense, both parties being in pari delicto, they shall ha"e no action against each other, and both shall be prosecuted. !oreo"er, the pro"isions o the #enal ode relati"e to the disposal o eects or instruments o a crime shall be applicable to the things or the price o the contract.  5his rule shall be applicable applicable when only only one o the parties is guilty& but the innocent one may claim what he has gi"en, and shall not be bound to comply with his promise. (130) Art. 1412. I 1412. I the act in which the unlawul or orbidden cause consists does not

constitute a criminal oense, the ollowing rules shall be obser"ed% (1) >hen the ault is on the part o both contracting parties, neither may reco"er what he has gi"en by "irtue o the contract, or demand the perormance o the others underta2ing& (') >hen only one o the contracting parties is at ault, he cannot reco"er what he has gi"en by reason o the contract, or as2 or the ul*llment o what has been promised him. 5he other, who is not at ault, may demand the return o what he has gi"en without any obligation to comply his promise. (130) Art. 1413. Interest 1413. Interest paid in e$cess o the interest allowed by the usury laws may be reco"ered by the debtor, with interest thereon rom the date o the payment. Art. 1414. >hen 1414. >hen money is paid or property deli"ered or an illegal purpose, the contract may be repudiated by one o the parties beore the purpose has been accomplished, or beore any damage has been caused to a third person. In such case, the courts may, i  the public interest will thus be subser"ed, allow the party repudiating the contract to reco"er the money or property. Art. 141. >here 141. >here one o the parties to an illegal contract is incapable o gi"ing consent, the courts may, i the interest o  +ustice so demands demands allow allow reco"ery reco"ery o money money or property deli"ered by the incapacitated person.

Art. 1416. >hen 1416. >hen the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designated or the protection o the plainti, he may, i public policy is thereby enhanced, reco"er what he has paid or deli"ered. Art. 1417. >hen 1417. >hen the price o any article or commodity is determined by statute, or by authority o law, any person paying any amount in e$cess o the ma$imum price allowed may reco"er such e$cess. Art. 1418. >hen 1418. >hen the law *$es, or authori=es the *$ing o the ma$imum number o hours o labor, and a contract is entered into whereby a laborer underta2es to wor2 longer than the ma$imum thus *$ed, he may demand additional compensation or ser"ice rendered beyond the time limit. Art. 1419. >hen 1419. >hen the law sets, or authori=es the setting o a minimum wage or laborers, and a contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to reco"er the de*ciency. Art. 1420. In 1420. In case o a di"isible contract, i the illegal terms can be separated rom the legal ones, the latter may be enorced. Art. 1421. 5he 1421. 5he deense deense o illegality illegality o contract is not a"ailable to third persons whose interests are not directly aected. Art. 1422. / 1422. / contract which is the direct result o a pre"ious illegal contract, is also "oid and ine$istent. '0

Title III. - NAT%RAL O:LIGATIONS Art. 1423. 7bligations 1423. 7bligations are ci"il or natural. i"il obligations gi"e a right o action to compel their perormance. atural obligations, not being based on positi"e law but on equity and natural law, do not grant a right o action to enorce their perormance, but ater "oluntary ul*llment by the obligor, they authori=e the retention o what has been deli"ered or rendered by reason thereo. ome natural obligations are set orth in the ollowing articles. Art. 1424. >hen 1424. >hen a right to sue upon a ci"il obligation has lapsed by e$tincti"e prescription, the obligor who "oluntarily perorms the contract cannot reco"er what he has deli"ered or the "alue o the ser"ice he has rendered. Art. 142. >hen 142. >hen without the 2nowledge or against the will o the debtor, a third person pays a debt which the obligor is not legally bound to pay because the action thereon has prescribed, but the debtor later "oluntarily reimburses the third person, the obligor cannot reco"er what he has paid. Art. 1426. >hen 1426. >hen a minor between eighteen and twenty-one years o age who has entered into a contract without the consent o the parent or guardian, ater the annulment o the contract "oluntarily returns the whole thing or price recei"ed, notwithstanding the act the he has not been bene*ted thereby, there is no right to demand the thing or price thus returned.

Art. 1427. >hen 1427. >hen a minor between eighteen and twenty-one years o age, who has entered into a contract without the consent o the parent or guardian, "oluntarily pays a sum o money or deli"ers a ungible thing in ul*llment o the obligation, there shall be no right to reco"er the same rom the obligee who has spent or consumed it in good aith. (110/) Art. 1428. >hen, 1428. >hen, ater an action to enorce a ci"il obligation has ailed the deendant "oluntarily perorms the obligation, he cannot demand the return o what he has deli"ered or the payment o the "alue o the ser"ice he has rendered. Art. 1429. >hen 1429. >hen a testate or intestate heir "oluntarily pays a debt o the decedent e$ceeding the "alue o the property which he recei"ed by will or by the law o intestacy rom the estate o the deceased, the payment is "alid and cannot be rescinded by the payer. Art. 1430. >hen 1430. >hen a will is declared "oid because it has not been e$ecuted in accordance with the ormalities required by law, but one o the intestate heirs, ater the settlement o the debts o the deceased, pays a legacy in compliance with a clause in the deecti"e will, the payment is eecti"e and irre"ocable. Title IV. - ESTOPPEL & Art. 1431. 5hroug 1431. 5hrough h estoppel an admission admission or representation is rendered conclusi"e upon the person ma2ing it, and cannot be

denied or dispro"ed as against the person relying thereon. Art. 1432. 5he 1432. 5he principles o estoppel are hereby adopted insoar as they are not in conMict with the pro"isions o this ode, the ode o ommerce, the :ules o ourt and special laws. Art. 1433. Gstoppel 1433. Gstoppel may be in pais or pais or by deed. Art. 1434. >hen 1434. >hen a person who is not the owner o a thing sells or alienates and deli"ers it, and later the seller or grantor acquires title thereto, such title passes by operation o law to the buyer or grantee. Art. 143. I 143. I a person in representation o another sells or alienates a thing, the ormer cannot subsequently set up his own title as against the buyer or grantee. Art. 1436. / 1436. / lessee or a bailee is estopped rom asserting title to the thing leased or recei"ed, as against the lessor or bailor. Art. 1437. >hen 1437. >hen in a contract between third persons concerning immo"able property, one o them is misled by a person with respect to the ownership or real right o"er the real estate, the latter is precluded rom asserting his legal title or interest therein, pro"ided all these requisites are present% (1) 5here must be raudulent representation or wrongul concealment o acts 2nown to the party estopped&

'1

(') 5he party precluded must intend that the other should act upon the acts as misrepresented& (3) 5he party misled must ha"e been unaware o the true acts& and () 5he party derauded must ha"e acted in accordance with the misrepresentation. Art. 1438. 7ne 1438. 7ne who has allowed another to assume apparent ownership o personal property or the purpose o ma2ing any transer o it, cannot, i he recei"ed the sum or which a pledge has been constituted, set up his own title to deeat the pledge o the property, made by the other to a pledgee who recei"ed the same in good aith and or "alue. Art. 1439. Gstoppel 1439. Gstoppel is eecti"e only as between the parties thereto or their successors in interest.

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