Civ Reviewer.docx

Essential requisites of Marriage 1. Legal capacity of contracting parties who must be male and female 2. consent freely given in presence of solemnizing officer  ABSENCE OF ANY: void ab initio  Defect: voidable FORMAL REQUISITES 1. Authority of solemnizing officer 2. Valid marriage license  Issued by local civil registrar of city/municipality where either party habitually resides  Notice posted for 10 consecutive days on bulletin board outside office of registrar  VALID FOR 120 DAYS from date of issue  If either or both parties are foreigner, must submit certificate of legal capacity issued by diplomatic/consular official  Stateless persons/refugees to submit affidavit showing capacity 3. Marriage ceremony (personal declaration, atleast two witnesses)  ABSENCE OF ANY: void ab initio  Irregularity: parties responsible to be civilly, criminally and administratively liable SOLEMNIZING OFFICERS ALLOWED: 1. incumbent mem of judiciary within court’s jurisdiction 2. any priest, rabbi, imam or minister  Duly authorized by his church/religious sect  Registered with civil registrar general  Acting within limits of written authority  Atleast one of the parties belongs to the officer’s church 3. ship captain/airplane chief (articulo mortis)  Not only when the ship is at sea or plane is in flight  During stopovers at ports of calls too 4. military commander of unit (articulo mortis)  Chaplain is absent  During military operation 5. consul-general, consul, vice-consul

  

Marriages b/n Filipinos abroad To issue marriage license Do duties of local civil registrar

PARENT’S CONSENT  Between 18-21 PARENT’S ADVICE  Between 21-25  If none, marriage license not be issued till after 3 months o Plus marriage counseling. If none, suspend issuance of license for 3 months from completion of publication of application ART. 26. Marriages solemnized outside Philippines if valid = also valid in the Phil except those prohibited:  Below 18  Bigamous/polygamous marriage  Contracted thru mistake as to identity of the other  Subsequent marriages that are void under art 53 (failure to comply with requirements like judgment of annulment, partition, delivery of presumptive legitimes to be recorded)  Psychologically incapacitated (36)  Incestuous marriages (37) o b/n ascendants and descendants (any degree) o b/n brothers and sisters (full or half-blood)  Public policy (38) o Bn collateral relatives up to 4th civil degree (legit or not) o Bn step-parents and step-children o Parents in law and children in law o Adopting parent and adopted child o Surviving spouse of adopting parent and adopted child o Surviving spouse of adopted child and adopter o Adopted child and legitimate child of adopter o Adopted children of same adopter o Killed another person’s spouse or his/her own spouse with intention to marry the other

Marriage b/n Filipino and foreigner  If validly celebrated and alien spouse obtained divorce abroad capacitating him/her to remarry = Filipino spouse capacitated too (art 26) 

A Filipino citizen has the capacity to remarry under Philippine law after initiating a divorce proceeding abroad and obtaining a favorable judgment against his or her alien spouse who is capacitated to remarry (Republic v Manalo)



to include cases involving parties who, at the time of the celebration of the marriage were Filipino citizens, but later on, one of them becomes naturalized as a foreign citizen and obtains a divorce decree. The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to remarry. (Orbecido ruling)

Art. 27. EXEMPTED FROM MARRIAGE LICENSE  either or both at point of death (articulo mortis)  residence is where there’s no means of transportation  Muslims or mems of ethnic cultural communities in accordance with their customs, rites, practices  Atleast 5 year cohabitation o lived together as husband and wife and o without legal impediment to marry each other VOID MARRIAGES (Art. 35) 1. below 18 2. solemnized by person not legally authorize to perform marriage  unless, either or both parties believed in gf that he had legal authority 3. no license 4. bigamous or polygamous marriages  not so if spouse absent for 4 consecutive years and spouse present has well-founded belief that the absent spouse was already dead. If danger of death, 2 yrs is sufficient.



Present spouse to institute summary proceeding to declare presumptive death of absentee. Such to automatically terminate upon recording of affidavit of reappearance o Termination of subsequent marriage due to reappearance:  Children conceived prior to termination are legit  Absolute community or conjugal partnership be dissolved and liquidated but if one is in bf, his share be forfeited in favor of common children  Donations by reason of marriage = valid. If done in bf, revoked by operation of law.  Innocent spouse may revoke spouse (bf) as beneficiary  Spouse (bf)) disqualified to inherit from innocent spouse by testate & intestate succession  If both in BF, marriage is void ab initio, all donations revoked 5. contracted thru mistake of party as to identity of the other 6. void subsequent marriages 7. psychologically incapacitated at time of celeb (36) VOIDABLE MARRIAGES (ART. 45) 1. 18 years or over but below 21 and without parent’s consent  Ratified: after attaining age 21, party freely cohabited with the other and both lived as H and W  Can be filed by party whose parent didn’t give consent within 5 yrs after 21  Can be filed by parent anytime before party reached 21 2. either is of unsound mind (Anytime before death of either)  Filed by sane spouse who had no knowledge of insanity or  By person in charge of insane or  By insane spouse during lucid interval 3. consent obtained by fraud (filed within 5 yrs after discovery)  Nondisclosure of previous conviction by final judgment of crime (moral turpitude)



Concealment by wife that she was pregnant by another man at time of marriage  Concealment of STD, regardless of nature, at time of marriage  Concealment of drug addiction, habitual alcoholism or homosexuality/lesbianism existing at time of marriage 4. consent obtained by force, intimidation or undue influence (within 5 yrs from time such ceases)  Ratified by cohabitation as h and w 5. physically incapable of consummating marriage and incapacity continues and appears to be incurable (within 5 yrs after marriage)  Can’t be ratified 6. afflicted with sexually transmitted disease(serious and incurable)  Can’t be ratified  Within 5 yrs after marriage Children conceived or born before final judgment of annulment/absolute nullity under 36 and under 53 = legitimate LEGAL SEPARATION (ART 55) 1. Repeated physical violence/grossly abusive conduct against petitioner, common child, P’s child 2. physical violence or moral pressure to change religious/political affiliation 3. attempt to corrupt or induce petitioner, common child or child to engage in prostitution or connivance in such 4. final judgment of imprisonment of more than 6 yrs even if pardoned 5. drug addiction/habitual alcoholism 6. lesbianism or homosexuality of respondent 7. subsequent bigamous marriage 8. sexual infidelity or perversion 9. attempt against life of petitioner 10. abandonment w/o justifiable cause for more than 1 yr Be denied if: condone, consented to commission, connivance, both gave grounds, collusion, and prescription

WHEN: within 5 yrs from time of occurrence of the cause. Can’t be tried before 6 mos since filing. Court to take steps toward reconciliation of sps. PROPERTY RELATIONS  Marriage settlements before marriage – modifications valid if before celeb. If made by 18-21 party, parent’s consent needed to be valid. o Absolute community (default)  If not, can’t donate more than 1/5 to each other  Commences at precise moment M is celeb  Consists of all the property owned by the sps at time of celeb or acquired thereafter  EXCLUDE  Property acquired during M by gratuitous title + fruits and income  For personal and exclusive use except jewelry  Acquired before M by one who has legitimate descendants by former M  LIABLE: support, debts and oblig for benefit of community, taxes  Except: antenuptial debts not for benefit of family, support of illegit, liabilities due to crime/quasi-delict  DISSOLVE: death, legal sep, annulment/nullity, judicial separation of property during M o Conjugal partnership  Common fund of proceeds, products, fruits and income from their separate properties and those acquired thru efforts/chance to be divided equally upon dissolution  Acquired by onerous title during M at expense of common fund  Obtained from labor, industry, work

Fruits received during M from common and exclusive property  Share in hidden treasure  Acquired thru occupation (fishing, hunting)  Livestock in excess of which was brought to M  Acquired by chance  EXCLUSIVE PROPERTY  Brought to M as his/her own  Acquired during M by gratuitous title  Acquired by right of redemption, barter or exchange with property belonging to only one spouse  Purchased with exclusive money of H or W o Complete separation Code Local customs 

 

Governed by Phil laws except of both sps are aliens, property situated outside Phil and executed where it is located (extrinsic validity), situated in outside requiring diff. formalities DONATIONS BY REASON OF MARRIAGE  Made before celeb  In consideration of M  In favor of one/both future sps  May be REVOKED o Marriage not celeb or void ab initio o Marriage is without consent of parents o Marriage is annulled and donee acted in bf o Legal separation, donee is guilty spouse o Resolutory condition complied o Donee committed act of ingratitude ART. 118. Property bought on installments  from exclusive and conjugal funds o if full ownership vested

 

before M: Belongs to buyer during M: conjugal partnership

JUDICIAL SEPARATION OF PROPERTY  Spouse sentenced to penalty with civil interdiction  Judicially declared an absentee  Loss of parental authority decreed by court  Abandoned or failed to comply family oblig  Abused power of administration granted  Separated in fact for atleast 1 yr & reconciliation is highly improbable ART. 147 PROPERTY REGIME OF UNION WITHOUT MARRIAGE  Capacitated to marry each other  Live exclusively with each other as H and W  Without M or void M  Wages and salaries owned in equal shares  Property acquired thru their work under rules on co-ownership  Party who didn’t participate in acquisition deemed to contribute jointly if efforts consisted in care and maintenance of family and household o Other cohabitation, only properties acquired thru actual joint contri be owned by them in proportion to their respective contri.  If married to another (adultery), his/her share accrues to absolute community or conjugal of valid M FAMILY HOME  Exempted from execution, forced sale, attachment  EXCEPT o Taxes o Debts prior to constitution of family home o Debts secured by mortgages o Debts due to laborers to construct bldg.

LEGITIMATE  Conceived or born during M  Impugned if (within 1 yr from knowledge of birth) o Physically impossible for h to have sexual intercourse with w o As proved by biological/scientific reasons o Written authorization/ratification for artificial insemination obtained thru mistake, fraud, etc  If born before 180 days after M = conceived during former M o If after 180 days = conceived during M LEGITIMATED  Conceived and born outside of wedlock of parents who weren’t disqualified by impediment to marry each other or disqualified only because below 18 y/o  Take place after subsequent valid marriage ADOPTION  Only minors may be adopted except if allowed  Adopter must be atleast 16 yrs older than person to be adopted o Unless parent by nature of adopted or spouse of legitimate parent of adoptee  Cannot adopt o Guardian-ward prior to approval of final accounts o Convicted of crime of moral turpitude o Alien except:  Former Filipino citizen to adopt a relative by consanguinity  Adopt legitimate child of his/her Filipino spouse  Married to Filipino and to adopt jointly a relative by consanguinity of the spouse  Must adopt jointly except o To adopt his own illegitimate child o To adopt legitimate child of spouse

SUCCESSION  Mode of acquisition  Property, rights, oblig transmitted thru his death to another  By will or operation of law Art. 777. OPENING OF SUCCESSION. Rights transmitted from moment of death of decedent. TESTAMENTARY CAPACITY  Not under 18  Sound mind (presumed) o Not necessary to fully possessed all his reasoning faculties o Sufficient: know nature of estate to dispose, proper objects of bounty, character of testamentary act FORMS OF WILLS  In writing  Language/dialect known to testator  Subscribed at the end by testator o Or testator’name written by other person in his presence and by his express direction  Attested (# of pages, testator signed, presence of witnesses and such signed) and subscribed by 3 or more credible witnesses in presence of testator and of another DEAF TESTATOR – Personally read will or two persons to read & communicate contents to him BLIND TESTATOR – read will twice: witness and notary public HOLOGRAPHIC WILL  Entirely written, dated, signed by hand of testator.  No form  May be made in or out of Phil  Need not be witnessed

 

To probate, atleast one witness who knows handwriting and signature of testator Any insertion, cancellation, erasure be authenticated by full signature

Art 815. LEX LOCI CELEBRATIONIS  Filipino abroad is authorized to make will in any form allowed by country where may be. May be probated in the Phil. Art 816. Will of alien abroad produces effect in the Phil if  Made with formalities of place in which he resides (domiciliary law)  Observed in his country (national law)  In conformity which this Code prescribes (Phil law, where he executed the will – Art. 17 Art. 817. Will of alien made in Phil is as if executed accdg to Phil law  If made according to his country (national law) JOINT WILL PROHIBITED and not valid in Phil even if authorized in country where it was executed WITNESSES TO WILLS  Sound mind  18 y/o  not blind, deaf or dumb  able to read and write  DISQUALIFIED o Not domiciled in Phil o Convicted of falsification of doc, perjury, false testimony DEVISE/LEGACY IS VOID if the witness (or spouse, parent or child) to its execution is the recipient  Unless there are other 3 competent witnesses  Continues to be a witness

Art. 828. WILL IS REVOCABLE any time before his death.  Valid when done outside Phil and not domiciled here if o According to where will was made o Or where testator had his domicile  REVOKED BY o Implication of law o Will, codicil o Burning, tearing, cancelling, with intention to revoke REVOCATION IN SUBSEQUENT WILL  Inoperative due to incapacity of heirs, devisees or legatees or by renunciation = 1st will remains revoked  If 2nd will is void, 1st will is valid DISALLOWANCE OF WILL (839)  Formalities not complied (due execution)  Testator is insane or mentally incapable  Executed thru force, duress or fear, threats  Procured by undue and improper pressure and influence  Testator’s signature procured by fraud  Testator acted by mistake VALID WILL EVEN IF  Doesn’t contain institution of heir  Such doesn’t comprise entire estate  Person instituted doesn’t accept the inheritance or incapacitated o Testamentary dispositions be complied with and o Remainder of estate pass to legal heirs DISTRIBUTION  Without designation = equal parts  Those collectively designated = considered individually instituted  For full and half brothers and sisters = equally  Person and his children = instituted simultaneously and not successively

ART. 854 PRETERITION  Omission of one, some or all  Compulsory heirs in direct line  WON living at time of execution of will or born after death of testator  Annul the institution of heir  But devises and legacies are valid if not inofficious o Donations given to children charged to their legitime ART. 856. NO RIGHT TO HEIRS  Compulsory heir dies before testator (predeceased)  Incapacitated  Renounces inheritance SUBSTITUTION – Another heir in default of heir originally instituted.  In case such heir dies before him, doesn’t accept or incapacitated  FIDEICOMMISSARY o 1st heir/fiduciary inherits as usufructuary. Obligation to preserve and transmit inheritance to 2nd heir o doesn’t go beyond one degree from heir originally instituted o 1st and 2nd heir are living at time of death of testator  2nd heir still acquires even if dies before 1st heir. Pass to his heirs. o Not to take effect if o Not made expressly or imposing absolute oblig to deliver property to 2nd heir o Perpetual prohibition to alienate/ go beyond 1 degree from original heir instituted o Heir to pay to various persons successively income/pension o According to secret instructions by testator INALIENABILITY OF ESTATE = Not to exceed 20 yrs IMPOSSIBLE CONDITIONS = deemed not imposed

COMPULSORY HEIRS o Legitimate children and descendants o Legitimate parents and ascendants (if both of equal degree of paternal and maternal lines survive, divide equally b/n both lines) o Widow/er o Illegitimate children RESERVA TRONCAL o Ascendant inherits from descendant by operation of law and o must reserve property for benefit of relatives within 3rd degree and belong to line from which property came o Descendant acquired such property by gratuitous title from another ascendant or brother/sister ART. 915. DISINHERITANCE o May be deprived of his legitimes o Effected only thru a will o Not valid if o No specified cause o Cause not proved if contradicted  Shall annul institution of heirs insofar it prejudices the disinherited 919. CAUSES TO DISINHERIT CHILDREN AND DESCENDANTS o Convicted of attempt against life of testator, spouse, D and A o Accused testator of crime prescribing imprisonment for 6 yrs or more and found groundless o Convicted of adultery or concubinage with testator’s spouse o Cause testator to make will by fraud, violence, intimidation, undue influence o Refusal to support without justifiable cause o Maltreatment of testator (word or deed) o Leads a dishonorable/disgraceful life o Conviction of crime with penalty of civil interdiction DISINHERIT PARENTS OR ASCENDANTS

o Abandoned children or induced to live corrupt/immoral life o Convicted of attempt against life of testator, spouse, D, or A o Accused testator of crime prescribing imprisonment for 6 yrs or more and found false o Convicted of adultery or concubinage with testator’s spouse o Cause testator to make will by fraud, violence, intimidation, undue influence o Loss of parental authority o Refusal to support without justifiable cause o Attempt by one parent against life of the other o Unless there’s reconciliation DISINHERIT A SPOUSE o Convicted of attempt against life of testator, D and A o Accused testator of crime prescribing imprisonment for 6 yrs or more and found false o Cause testator to make will by fraud, violence, intimidation, undue influence o Gave cause for legal separation o Repeated physical abuse/grossly abusive conduct o Physical abuse/moral pressure to change religious/political belief o Engage in prostitution o Convicted of imprisonment of more than 6 yrs o Drug addiction, habitual alcoholism o Homosexuality, lesbianism o Subsequent bigamous marriage o Sexual infidelity o Attempt against life o Abandonment for more than 1yr w/o justifiable cause  Grounds for loss of parental authority  Unjustifiable refusal to support children 923. RIGHT OF REPRESENTATION for persons disinherited (only compulsory heirs); renounced inheritance, predeceased. Doesn’t apply to those who repudiated their share.  Called by law and not by person represented

   



Succeed the one whom the person represented would have succeeded and not the person represented Always in direct descending line Collateral line – in favor of children of brothers/sisters PER STIRPES – “share equal to that of the indiv they’re representing” (division of estate) o Rep not to inherit more than what the person they represent would inherit PER CAPITA - if a member of the identified group is

deceased, then a share won’t be created for the deceased member and all of the shares of the other members will be increased accordingly. (art. 987) 

May represent one who renounced his inheritance

IF ESTATE NOT SUFFICIENT TO COVER ALL LEGACIES AND DEVISES:  Remuneratory l or d  Declared by testator to be preferential  Support  Education  Specific, determinate thing  All others pro rata LEGAL/INTESTATE SUCCESSION  Dies without will  Void will  Subsequently lost its validity  Will doesn’t institute an heir or dispose all property  Suspensive condition doesn’t happen  Heir dies before testator  Repudiates inheritance and no substitution and no accretion  Incapable of succeeding  Relatives in same degree = equal shares 992. ILLEGITIMATE CHILDREN (iron curtain rule)  Absolute separation between legitimate and illegitimate

 

Illegitimate child can’t inherit by intestacy from legitimate children +relatives of his father and mother Legitimate children and relatives can’t inherit from illegitimate child

COLLATERAL RELATIVES  To succeed if no D, A, Illegitimate children, spouse  If brothers, sisters survive with nephews and nieces, former to inherit per capita and latter per stirpes  Right to inherit ab intestato not to extend beyond the 5th degree of relationship in collateral line RIGHT OF ACCRETION (RIP)  Part assigned to one who renounces or can’t receive or dies before testator, is added to co-heir-devisees-legatees.  2 or more persons called to the same inheritance 1027. INCAPABLE OF SUCCEEDING:  Priest who heard confession of testator/spiritual aid during his last illness  Relatives of priest within 4th degree, church to which he belong  Guardian before final accounts of guardianship approved  Attesting witness to execution of will, spouse, parent, children  Physician, nurse who took care of T during his last illness  Indivs, assoc not permitted by law to inherit  DUE TO UNWORTHINESS (1032) o Parents who abandoned their children or induced to lead corrupt/immoral life o Convicted of attempt against life of T, spouse, D, A o Accused T of crime of 6 yrs or more imprisonment if groundless o Heir of full age with knowledge of violent death of T and failed to report to officer within a monh o Convicted of adultery/concubinage with spouse of T o Cause T to make will by fraud, violence, I, UE

 

Or prevents one from making a will or from revoking, or supplants, alters will Falsifies/forges will

1039. CAPACITY TO SUCCEED governed by law of nation of decedent 1050. Inheritance deemed accepted  Heir sells, donates, assigns right to stranger, co-heir  Heir renounces for benefit of co-heirs  Renounces for a price in favor of co-heirs COLLATION  Every compulsory heir to bring into mass estate any property/right he received from decedent by donation or any gratuitous title  To determine legitimes of each heir PARTITION  Every co-heir has right to demand division of estate UNLESS testator expressly forbids such (not to exceed 20 yrs) ORDINARY ACQUISITIVE PRESCRIPTION  Possession in gf and with just title  Possession in the concept of owner, public, peaceful and uninterrupted  If by mere tolerance, not counted as possession  Express or tacit recognition of owner’s right interrupts possession  Possession of 10 yrs EXTRAORDINARY ACQUISITIVE PRESCRIPTION  Uninterrupted adverse possession for 30yrs  No need for title or gf PRESCRIPTION  To recover movable = 8yrs

   

  

Immovable = 30yrs Mortgage action = 10yrs Demand right of way and abate public/private nuisance = no prescription 10 yrs o written contract o obligation created by law o judgment 6yrs o oral contract o quasi-contract 4yrs o injury to plaintiff’s rights o quasi-delict 1 yrs o forcible entry and detainer o defamation

PROPERTY  public dominion o for public use (canals, roads, bridges, ports, shores) o belong to the State, for public service or development of national wealth o patrimonial property – belongs to the State but not for public use or service  private ownership OWNERSHIP  right to enjoy and dispose  right of action to recover o rely on strength of his title and not on weakness of d’s claim  right to exclude EXPROPRIATION  deprive property by

o competent authority o for public use o just compensation POLICE POWER  property condemned/seized by o competent authority o for health, safety, security o no compensation 438. HIDDEN TREASURE  hidden and unknown deposit of money, jewelry, precious objects, lawful ownership of w/c doesn’t appear  belongs to owner of land, bldg., property on which it is found  if found on property of another or State and by chance o ½ to finder (not a trespasser) o ½ to owner  if of interest to science/arts, State may acquire at just price RIGHT OF ACCESSION  produced, incorporated or attached  natural fruits – spontaneous products  industrial – cultivation and labor  civil – rents, leases BUILT, PLANTED, SOWN  GR: belong to owner of land and presumed made by him at his expense  Owner uses materials of another: pay their value and owner of materials can remove them if he can w/o injury to work o If in bf: reparation of damages; may remove in any event  BUILDER IN GF: o landowner can appropriate as his own after paying indemnity o or oblige builder to pay price of land and sower, rent

but if value of land is considerably more than that of bldg. or trees, pay reasonable rent BUILDER IN BF o Loses what is built, p or s without indemnity o Landowner  may demand demolition/removal at expense of builder or (+damages)  compel builder or planter to pay price of land and sower, proper rent +damages LANDOWNER (knowledge and w/o opposition) AND BUILDER IN BF o As though both acted in gf 





457. ACCRETION  Belongs to owners of lands adjoining banks of rivers  Gradually receive  from effects of current of waters NO ACCRETION  Owners of estates adjoining ponds/lagoons  Don’t acquire land left dry  By natural decrease of waters o Doesn’t lose that inundated by extraordinary floods Portion of land  Segregated by current of river, creek or torrent  Transferred to another estate  Ownership retained but must remove within 2yrs

 

Belong to owners whose lands are occupied by new course in proportion to area lost Owners of adjoining old beds have right to acquire by paying value

BELONG TO STATE  Islands formed o On seas within jurisdiction of Phil o On lakes o On navigable or floatable rivers  Except if in non-navigable and non-floatable rivers  Owners of margins/banks nearest to each of them PRINCIPAL  That to which the other has been united as ornament  Greater value and if equal, greater volume Owner of accessory in BF  Lose thing incorporated  Indemnify owner of principal for damages OWNER OF PRINCIPAL IN BF  Owner of accessory can choose o Principal to pay him its value o Thing be separated even if principal thing is destroyed  Plus damages

Trees uprooted  Carried away by current of waters  Must be claimed within 6mos o If not, belong to owner of land

MIXTURE BY WILL OR BY CHANCE  If not separable without injury o Each owner has proportional right to part belonging to him  If bad faith, lose thing belonging to him + damages

River beds abandoned  Thru natural change in course of waters

QUIET TITLE  Cloud on title to real property/interest



Instrument, record, claim, encumbrance, proceeding o Apparently valid but is in truth and in fact invalid, ineffective, voidable or unenforceable o Prejudicial to said title

CO-OWNERSHIP  Preservation repairs – notify other co-owners if practicable  MAJORITY (co-owners who represent controlling interest) o Improve/embellish thing o Administration and better enjoyment  ALL o Make alterations  Full ownership of his part o May alienate, assign or mortgage o Limited to portion which may be allotted to him in division upon termination of co-ownership  Agreement to keep thing undivided o Max of 10yrs. To extend by new agreement o If donor/testator: 20 yrs max POSSESSION  IN GF: not aware that there exists in his title/mode of acquisition any flaw which invalidates it  No possession (prescription purposes): o acts merely tolerated o without knowledge of possessor of thing o by violence  question as to possession o present possessor preferred o two possessor, one longer in possession o date the same: title  NECESSARY EXPENSES o Refunded to every possessor (gf or bf) o If gf, retain thing til reimbursed  EXPENSES FOR LUXURY/MERE PLEASURE o No refund to possessor in gf but may remove if no injury

USUFRUCT  Right to enjoy with obligation to preserve form and substance  Stranger as to hidden treasure  Entitled to fruits (natural and industrial, civil)  Ordinary repairs o Wear and tear due to natural use o For preservation o Usufructuary to pay  Taxes and lien on fruits  Extraordinary repairs o Owner’s expense  Taxes imposed directly on capital  EXTINGUISH o Death of usufructuary  If in favor of several UYs, not extinguish til death of last survivor o Expiration of period/fulfillment of resolutory condition o Merger of U and O o Renunciation of U o Total loss  If partial loss, continue on remaining part o Termination of right o Prescription  GR: number of yrs specified to subsist even if 3rd person dies before period expires o Exc: expressly granted only in consideration of existence of such person  Usufruct on LAND AND BUILDING o If bldg. gets destroyed, UY has right to land and materials EASEMENTS/SERVITUDES  Encumbrance upon an immovable for the benefit of another immovable (diff owner) o Dominant estate- whom easement is made  Choose most convenient time and manner  Cause least inconvenience to servient











o Servient – subject to easement CHARACTERISTICS o Continuous – use is incessant without intervention of any man’s act o Discontinuous – used at intervals and depends upon man’s acts o Apparent – made known & continually kept in view by external signs o Non-apparent – show no external indication of existence  Continuous + apparent = acquired by title or 10yrs prescription (e.g. aqueduct)  Continuous + non-apparent = title only  Discontinuous (a or not)= title only EXTINGUISH o Merger of D and S owners o Non-use for 10yrs o Estates fall into condition where easement can’t be used o Expiration of term/fulfillment of condition o Renunciation of D o Redemption agreed b/n d and s WATERS o Lower estates to receive waters descending from higher estates o Banks of rivers and streams – zone of 3meters along their margins to public use RIGHT OF WAY o Immovable surrounded by other immovable o Without adequate outlet to public highway  If permanent  Indemnify value of land occupied  Amount of damage o Least prejudicial to servient + shortest distance from dominant estate to public highway AGAINST NUISANCE o Noise, offensive odor, smoke, heat, dust, etc



o Factories and shops allowed provided least annoyance is caused to the neighborhood LATERAL AND SUBJACENT SUPPORT o Excavations causing danger to adjacent land = void

NUISANCE  Act, omission, establishment, condition of property or o Injures/endangers health or safety of others o Annoys/offends senses o Shocks, defies decency/morality o Obstructs with free passage of public highway/street/body of water o Hinders/impairs use of property  Remedies o Prosecution o Civil action o Abatement w/o judicial proceedings  By private person  Demand first upon owner/possessor  Demand is rejected  Abatement approved by health office  Value of destruction doesn’t exceed 3k VOID DONATION  B/n persons guilty of adultery or concubinage  Guilty of such offense, in consideration thereof  Public officer or wife, d, a by reason of his office  To incapacitated persons DONATION  Donee must accept o During lifetime of donor and donee  Movable – orally or in writing o Oral required simultaneous delivery o If exceeds 5k, donation and acceptance = in writing. If not, void.



Immovable o Public document

REVOKE OR REDUCE DONATION (exceeds portion that may be freely disposed) ---prescribes after 4 yrs  After donation, donor has legit, legitimated or illegitimate children (even though posthumous)  Donor’s child turn out be alive (believed to be dead)  Donor subsequently adopt minor child DONOR MAY REVOKE (DUE TO INGRATITUDE)  Commits offense against person, honor, property of donor, wife, children under his parental authority  Imputes to donor any criminal offense/act of moral turpitude even if proven o Unless if against donee and family  Unduly refuses him support o Prescribes in 1 yr from time donor had knowledge of fact

SALES  Contract of sale – perfected upon mtng of minds upon thing (object and price) o Transfer ownership and deliver determinate thing Goods procured for general market  If manufactured specially and not for general market, contract for piece of work. Not contract of sale. o Pay price certain in money/equivalent  If not fix, inefficacious  Simulated price = void  Sale of vain hope or expectancy is void.  Gross inadequacy of price allowed except if it indicates defect in consent  CONTRACT TO SELL (1478)

 

o Stipulation that ownership in thing shall not pass to purchaser til he has fully paid the price Accepted unilateral promise to buy or sell o Binding upon promissor if supported by consideration distinct from price EARNEST MONEY o Part of price and proof of perfection of contract of sale

1483. RECTO LAW  Contract of sale of personal property  Payable in installments  Vendor may o Exact fulfillment if vendee fails to pay o Cancel sale for vendee’s failure to pay 2 or more installments o Foreclose chattel mortgage for vendee’s failure to pay 2 or more installments (RECTO)  Can’t recover unpaid balance of price DISQUALIFIED TO ACQUIRE BY PURCHASE  Guardians  Agents  Executors and administrators  Public officers and employees  Justices, judges, prosecuting attys SELLER’S RISK  Until ownership is transferred to buyer BUYER’S RISK  Ownership is transferred WON there’s actual delivery  Ownership retained by seller merely to secure performance by buyer BUYER ACQUIRES NO BETTER TITLE THAN THE SELLER  If seller is not the owner or no authority to sell  Except

o Apparent owner of goods as if true owner o Under statutory power of sale or order of court o Made in merchant’s store, in fairs or markets CONTRACT RATE  Deliver quantity of goods less than he contracted to sell o Buyer may reject o Buyer may accept/retain knowing seller isn’t going to perform in full  Pay contract rate FAIR VALUE  Buyer uses goods before knowing that seller can’t perform in full o Pay fair value only of goods received UNPAID SELLER  Lien on goods/right to retain  Right of stopping of goods in transit after he has parted with possession o May resume possession  Right of resale  To rescind the sale 1544. DOUBLE SALE  Same thing sold to different vendees o Movable property  Owned by the one who first took possession in GF o Immovable property o Owned by one who first recorded it in Registry of Property in GF  If no inscription o First to take possession in gf and if not o One who presents oldest title in gf EXTINGUISHMENT OF SALE  Conventional redemption



o Vendor reserves right to repurchase thing sold Legal redemption o Right to be subrogated upon same terms and conditions in contract in place of one who acquires it by onerous title

1602. PRESUMED EQUITABLE MORTGAGE  Price of sale with right to repurchase is unusually inadequate  Vendor remains in possession as lessee  Extending period of redemption/new period after expiration of right to repurchase  Purchaser retains part of purchase price  Vendor binds himself to pay taxes  Real intention is secure payment of debt LEASE  Lessee can’t assign lease without consent of lessor o Unless stipulation to contrary  Lessee may sublet thing leased (whole or part) o Unless there’s express prohibition o Sublessee bound to lessor for use and preservation of thing leased  Subsidiarily liable to lessor for rent due from lessee  IMPLIED NEW LEASE o Lessee continues to enjoy thing leased for 15 days at end of contract with acquiescence of lessor PARTNERSHIP  To contribute money, property, industry to common fund to divide profits among themselves.  Juridical personality separate and distinct from partners  Share of losses and profits as to agreement o If none, in proportion to what he may have contributed o Industrial partner not liable for losses

Receive share as may be just and equitable under the circumstances Stipulation which excludes one or more partners from share in profits or losses is void (1799) 



AGENCY  Binds himself to render service or do something in representation/behalf of another with consent/authority of another  Sale of land o Authority be in writing. Otherwise, void sale (1874) GUARANTY  Binds himself to creditor o Fulfill obligation of principal debtor  If bind solidarily, suretyship  GR: Exhaust all property of debtor first and resort to all legal remedies against debtor before compelling guarantor to pay o EXC: (NO EXCUSSION)  Guarantor expressly renounced it  Bound solidarily with debtor  Debtor’s insolvency  Absconded/can’t be sued  Execution wouldn’t satisfy oblig PLEDGE & MORTGAGE  Secure fulfillment of principal oblig  Pledger/mortgagor – absolute owner  Free disposal of their property QUASI-DELICTS  Act/omission causes damage to another  Fault or negligence o Entirely separate and distinct from civil liability arising from negligence under Penal Code  Pay for the damages



No pre-existing contract

2180. Demandable not only for one’s own acts but also for those persons whom one is responsible  Father—mother(if father is dead or incapacitated)= minor children who live in their company  Guardians=minors/incapacitated under their authority and live in their company  Owners/managers of establishment = employees in service  Employers = employees and household helpers acting within scope of assigned tasks  State if it acts thru special agent  Teachers/heads of establishments of arts and trades = pupils, students, apprentices as long as they remain in custody Provinces, cities, mun  Liable for damages for death/injury  Due to defective condition of roads, streets, bridges, public works under their control or supervision 1156. An Obligation is a juridical necessity to give, to do or not to do. 1157. Obligations arise from law, contracts, quasi-contracts, acts or omissions punished by law and quasi-delicts. 1158. LAW Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable and shall be regulated by the precepts of the law which established them and as to what has not been foreseen, by the provisions of this Book. 1159. CONTRACTS Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 1160. QUASI-CONTRACTS Obligations derived from quasi-contracts shall be subject to the provisions of Chapter 2, Title 17 (Extra-contractual obligations)

1161. CRIMES Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to Art. 2177 (Quasi-delicts) 

Responsibility for fault or negligence under the preceding article (quasi-delict) is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant.

and of human relations provisions and Title 18 regulating damages. 1162. QUASI-DELICT Obligations derived from quasi-delicts shall be governed by Chapter 2, Title 17 and by special laws. 1163. STANDARD OF CARE Every person obliged to give something is also obliged to take care of it with the proper diligence of a good father of a family, unless the law or the stipulation of the parties requires another standard of care. 1164. RIGHT TO THE FRUITS The creditor has a right to the fruits of the thing from the time the obligation to deliver it arises. However, he shall acquire no real right over it until the same has been delivered to him.

1165. DETERMINATE THING When what is to be delivered is a determinate thing, the creditor (aside from right to damages-Art. 1170) may compel the debtor to make the delivery. INDETERMINATE THING If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor. If the obligor DELAYS or has promised to deliver the same thing to TWO or MORE PERSONS who do not have the same interest, he shall be responsible for fortuitous event until he has effected the delivery. 1166. ACCESSIONS and ACCESSORIES

The obligation to give a determinate thing includes that of delivering all it accessions and accessories, even though they may not have been mentioned. 1167. POORLY DONE BE UNDONE If a person obliged to do something fails to do it, the same shall be executed at his cost. Same rule shall be observed if he does it in contravention of the tenor of the obligation. May be decreed that what has been poorly done be undone. 1168. DOES A FORBIDDEN ACT When the obligation consists in not doing, and obligor does what has been forbidden him, it shall also be undone at his expense. 1169. DELAY from time of DEMAND Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. DEMAND NOT NECESSARY = DELAY However, demand by the creditor shall not be necessary for delay to exist: 1. Obligation or law expressly so declares 2. From the nature and the circumstances of the obligation it appears that the designation of TIME when the thing is to be delivered or service is to be rendered was a CONTROLLING MOTIVE for the establishment of the contract 3. Demand would be useless, as the obligor has rendered it beyond his power to perform. RECIPROCAL OBLIGATIONS In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by the other begins. 1170. FRAUD, NEGLIGENCE, DELAY Those who in the performance of their obligations are guilty of fraud, negligence or delay and those who in any manner contravene the tenor thereof, are liable for damages.

1171. FRAUD Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for future fraud is void.

Receipt of a later installment of a debt without reservation as to prior installments shall give rise to the presumption that such installments have been paid.

1172. NEGLIGENCE Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances.

1177. TO SATISFY CREDITOR’S CLAIMS The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them.

1173. OMISSION OF DILIGENCE Fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, 1171 (fraud) and par. 2, 2201 shall apply: 

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation.

DILIGENCE REQUIRED If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. 1174. NOT RESPONSIBLE for UNFORSEEN No person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. EXCEPT: -in cases expressly specified by law, or -when it is otherwise declared by stipulation -when nature of the obligation requires the assumption of risk 1175. USURIOUS TRANSACTIONS shall be governed by special laws. 1176. PRESUMPTION OF PAID INTEREST Receipt of the principal by the creditor, without reservation with respect to the interest, shall give rise to the presumption that said interest has been paid. PRESUMPTION OF PAID INSTALLMENTS

1178. TRANSMISSIBLE RIGHTS All rights acquired in virtue of an obligation are transmissible, if there has been no stipulation to the contrary and subject to the laws. 1179. PURE OBLIGATION Every obligation whose performance does not depend upon a future or uncertain event, or upon a past event unknown to the parties, is demandable at once. Every obligation which contains a RESOLUTORY CONDITION shall also be demandable, without prejudice to the effects of the happening of the event. 1180. OBLIGATION WITH A PERIOD When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to 1197. 

If the obligation does not fix a period, but from its nature and circumstances it can be inferred that a period was intended, the courts may fix the duration thereof. Courts shall also fix the duration of the period when it depends upon the will of the debtor. Courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, period cannot be changed by them.

1181. CONDITIONAL OBLIGATION

In conditional obligations, the acquisition of rights as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. 1182. SOLE WILL OF DEBTOR When fulfillment of condition depends upon sole will of the debtor, conditional obligation is void. If it depends upon chance or upon will of 3rd person, obligation shall take effect in conformity with this Code. 1183. IMPOSSIBLE CONDITION Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall ANNUL the obligation which depends upon them. If obligation is divisible, the part not affected by the impossible/unlawful condition shall be valid. Condition not to do an impossible thing shall be considered as not having been agreed upon. 1184. CONDITION: EVENT TO HAPPEN The condition that some event happen at a determinate time shall extinguish the obligation as soon as the time expires or it has become indubitable that the event will not take place. 1185. CONDITION: EVENT NOT TO HAPPEN The condition that some event will not happen at a determinate time shall render the obligation effective from the moment the time indicated has elapsed, or it has become evident that the event cannot occur. NO TIME FIXED If no time has been fixed, the condition shall be deemed fulfilled at such time as may have probably been contemplated, bearing in mind the nature of the obligation. 1186. DEEMED FULFILLED The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. 1187.EFFECTS OF CONDITIONAL OBLIGATION

The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. RECIPROCAL PRESTATIONS Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. UNILATERAL OBLIGATION If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different. In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. 1188. CREDITOR PRESERVES HIS RIGHT The creditor may, before the fulfillment of the condition, bring the appropriate actions for the preservation of his right. RECOVER MONEY PAID BY MISTAKE Debtor may recover what during the same time he has paid by mistake in case of a suspensive condition. 1189.IMPROVEMENT,LOSS,DETERIORATION When conditions have been imposed with the intention of suspending the efficacy of an obligation to give, ff. rules shall be observed in case of improvement, loss or deterioration of the thing during pendency of the condition: LOSS 1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished 2. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is lost when  It perishes  Goes out of commerce  Disappears in such a way that its existence is unknown or it cannot be recovered.

DETERIORATION 3. When the thing deteriorates without the fault of the debtor, impairment is to be borne by the creditor. 4. If is deteriorates through the fault of the debtor, creditor may choose between the rescission of the obligation and its fulfillment, with indemnity for damages in either case. IMPROVEMENT 5. If the thing is improved by nature or by time, improvement shall inure to the benefit of the creditor. 6. If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary1. 1190. RESOLUTORY CONDITION When the conditions have for their purpose the extinguishment of an obligation to give, the parties upon the fulfillment of the conditions, shall return to each other what they have received. In case of Loss, Deterioration, or Improvement of the thing, 1189 with respect to the debtor shall be applied to the party who is bound to return. For obligations to do and not to do, par. 2 of 1187(courts to determine retroactive effect of conditions complied with) shall be observed as to the effect of the extinguishment of the obligation

Court shall decree rescission claimed, unless there be just cause authorizing the fixing of a period. This is without prejudice to the rights of 3rd persons who have acquired the thing, in accordance with 1385 (no rescission is 3rd person legally possessed it in good faith) and 1388 (if in bad faith, indemnify creditors for damages) and the Mortgage Law. 1192. BOTH BREACHED THE OBLIGATION In case both parties have committed a breached of the obligation, the liability of the first infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first violated the contract, same shall be deemed extinguished and each shall bear his own damages. 1193. OBLIGATIONS WITH A PERIOD Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when that day comes. Obligations with a RESOLUTORY PERIOD take effect at once, but terminate upon arrival of the day certain. A DAY CERTAIN is understood to be that which must necessarily come although it may not be known when.

1191. RECIPROCAL OBLIGATIONS The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.

If the uncertainty consists in whether the day will come or not, obligation is conditional and shall be regulated by the rules of preceding section (Conditional obligations).

FULFILLMENT OR RESCISSION Injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission even after he has chosen fulfillment, if the latter should become impossible.

1194. Loss, deterioration or improvement of the thing BEFORE THE ARRIVAL OF THE DAY CERTAIN, 1189 shall be observed.

legal right of using and enjoying the fruits/profits of something belonging to another 1

1195. EARLY PAYMENT OR DELIVERY Anything paid or delivered before the arrival of the period, obligor being unaware of the period or believing that the obligation has become due and demandable, may be recovered with fruits and interests. 1196. PRESUMED TO BENEFIT BOTH C and D

Whenever in an obligation a period is designated, it is presumed to have been established for the benefit of both the creditor and the debtor, UNLESS from the tenor of the same or other circumstances it should appear that the period has been established in favor of one or of the other. 1197. COURTS TO FIX DURATION If the obligation does not fix a period, but from its nature and circumstances it can be inferred that a period was intended, the courts may fix the duration thereof.

A person alternatively bound by different prestations shall completely perform one of them. Creditor cannot be compelled to receive part of one and part of the other undertaking. 1200. RIGHT OF CHOICE BELONGS TO DEBTOR The right of choice belongs to the debtor UNLESS it has been expressly granted to the creditor.

Courts shall also fix the duration of the period when it depends upon the will of the debtor.

Debtor shall have no right to choose those prestations which are impossible, unlawful or which could not have been the object of the obligation.

Courts shall determine such period as may under the circumstances have been probably contemplated by the parties. Once fixed by the courts, period cannot be changed by them.

1201. CHOICE NEEDS TO BE COMMUNICATED The choice shall produce no effect except from the time it has been communicated.

1198. LOSE RIGHT TO USE PERIOD The debtor shall lose every right to make use of the period:

1202. LOSE RIGHT OF CHOICE Debtor shall lose right of choice when among the prestations whereby he is alternatively bound, only one is practicable.

1. When after the obligation has been contracted, he becomes INSOLVENT, unless he gives a guaranty or security for the debt. 2. He DOESN’T FURNISH to the creditor the GUARANTIES or SECURITIES which he has promised. 3. When by his own acts he has IMPAIRED said GUARANTIES/SECURITIES after their establishment and when through a fortuitous event they disappear, unless he immediately gives new ones equally satisfactory. 4. Debtor VIOLATES ANY UNDERTAKING, in consideration of which the creditor agreed to the period 5. Debtor ATTEMPTS TO ABSCOND.

1203. WHEN DEBTOR CAN’T MAKE CHOICE If through the creditor’s acts the debtor cannot make a choice according to the terms of the obligation, debtor may rescind the contract with damages. 1204. CREDITOR’S RIGHT TO DAMAGES The creditor shall have a right to indemnity for damages, when through the fault of the debtor, which are all things alternatively the object of the obligation have been LOST, or compliance of obligation has become IMPOSSIBLE. BASIS OF INDEMNITY Indemnity shall be fixed taking as a basis the value of the last thing which disappeared or that of the service which last became impossible.

ALTERNATIVE OBLIGATIONS

Damages other than the value of the last thing or service may also be awarded.

1199.COMPLETELY PERFORM ONE OF THEM

1205. CHOICE EXPRESSLY GIVEN TO CREDITOR

When choice has been expressly given to the creditor, obligation shall CEASE to be ALTERNATIVE from the day selection has been communicated to the debtor. Until then the RESPONSIBILITY of the DEBTOR shall be governed by the ff. rules: DELIVER WHICH CREDITOR CHOOSES 1. If one of the things is lost thru fortuitous event, he shall perform the obligation by delivering that which the creditor should choose from among the remainder or that which remains if only one subsists. PAY PRICE OF THING LOST and DAMAGES 2. If loss of one of the things is thru the fault of the debtor, creditor may claim any of those subsisting or the price of that which, thru fault of debtor, has disappeared with right to damages. PAY PRICE OF ANY and DAMAGES 3. If all things are lost thru fault of debtor, choice by the creditor shall fall upon the price of any one of them, also with indemnity for damages. Same rules apply to obligations to do or not to do in case one, some or all prestations become impossible. 1206. FACULTATIVE OBLIGATION When only one prestation has been agreed upon, but the obligor may render another in substitution, obligation is called facultative. WHEN SUBSTITUTION IS MADE, LOSS OF IT Loss or deterioration of the thing intended as substitute, thru negligence of the obligor, doesn’t render him liable. But once the substitution has been made, obligor is liable for the loss of the substitute on account of his delay, negligence or fraud. 1207. JOINT OBLIGATION PRESUMED The concurrence of 2 or more creditors or 2 or more debtors in one and the same obligation does not imply that each one of the creditor has a right to demand, or that each one of the debtor is bound to render entire compliance with the prestation.

SOLIDARY LIABILITY = EXPRESSLY STATED There is solidary liability only when the obligation expressly so states or when the law or nature of the obligation requires solidarity. 1208. PRESUMED TO BE DIVIDED If from the law, or nature/ wording of the obligations do not require solidarity, credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors, credits or debts being distinct from one another subject to RoC governing multiplicity of suits. 1209. DIVISION IS IMPOSSIBLE If division is impossible, right of creditors may be prejudiced only by their collective acts and debt can be enforced only by proceeding against all the debtors. If one of the debtors should be insolvent, the others shall not be liable for his share. 1210. INDIVISIBILITY DOESN’T ALWAYS IMPLY SOLIDARITY The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does solidarity of itself imply indivisibility. 1211. SOLIDARITY = MAY BE BOUND DIFFERENTLY Solidarity may exist although the creditors and debtors may not be bound in the same manner and by the same periods and conditions 1212. CAN DO ONLY WHAT IS USEFUL Each one of the solidary creditors may do whatever may be useful to the others, but not anything which may be prejudicial to the others. 1213. CAN’T ASSIGN RIGHTS W/O CONSENT A solidary creditor cannot assign his rights without the consent of the others. 1214. MAY PAY ANY SOLIDARY CREDITOR Debtor may pay any one of the solidary creditors but if any demand, judicial or extrajudicial, has been made by one of them, payment should be made to him 1215. NC (3)

Novation, compensation, confusion or remission/condonation of the debt, made by any of the solidary debtors, shall extinguish the obligation without prejudice to 1219. 

Remission by the creditor of the share which affects one of the solidary debtors doesn’t release the latter from his responsibility towards co-debtors, in case the debt had been totally paid by anyone of them before remission was effected. (Remission of debtor doesn’t release him from responsibility towards co-debtors)

Creditor who may have executed any of these acts, as well as he who collects the debt, shall be liable to the others for the share in the obligation corresponding to them. 1216. 1 or ALL of THEM SIMULTANEOUSLY Creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. Demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. 1217. MAY CHOOSE w/c OFFER TO ACCEPT Payment made by one of the solidary debtors extinguishes the obligation. If 2 or more solidary debtors offer to pay, creditor may choose which offer to accept. He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If payment is made before debt is due, no interest for the intervening period may be demanded. When one of the solidary debtors cannot reimburse his share to the debtor paying the obligation due to INSOLVENCY, such share shall be borne by all his co-debtors, in proportion to the debt of each. 1218. NOT ENTITLED TO REIMBURSEMENT Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors if such payment is made after obligation has PRESCRIBED or become ILLEGAL.

1219. (Remission of debtor doesn’t release him from responsibility towards co-debtors) 1220. NOT ENTITLED TO REIMBURSEMENT Remission of whole obligation, obtained by one of the solidary debtors, doesn’t entitle him to reimbursement from his co-debtors. 1221. WITHOUT FAULT OF DEBTORS If the thing has been lost or if the prestation has become impossible without the fault of the solidary debtors, obligation shall be extinguished. THERE’S FAULT=PAY DAMAGES & INTEREST If there was fault on the part of any one of them, all shall be responsible to the creditor, for the price and payment of damages and interest, without prejudice to their action against the guilty or negligent debtor. FORTUITOUS EVENT If through a fortuitous event, thing is lost or performance has become impossible after one of the solidary debtors incurred in delay through judicial/extrajudicial demand upon him by creditor, prior par applies (all be responsible to creditor). 1222. DEFENSES OF SOLIDARY DEBTOR A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are derived from  The nature of the obligation  Those personal to him or pertain to his own share  Those which personally belong to others only as regards that part of the debt for which others are responsible. 1223. DIVISIBLE and INDIVISIBLE OBLIG Divisibility and indivisibility of things which are the object of the obligations in which there is only one debtor and only one creditor doesn’t alter/modify nature and effects of obligation. 1224. JOINT INDIVISIBLE OBLIGATION A joint indivisible obligation gives rise to indemnity for damages from the time anyone of the debtors doesn’t comply with his undertaking. Debtors who may have been ready to fulfill their promises shall not contribute to

indemnity beyond the corresponding portion of price of the thing or value of service in which the obligation consists. 1225. INDIVISIBLE Obligations to give definite things and those which are not susceptible of partial performance shall be deemed to be indivisible. DIVISIBLE When the obligation has for its object the execution of a certain number of days of work, accomplishment of work by metrical units, or analogous things which by their nature are susceptible of partial performance, it shall be divisible. PHYSICALLY DIVISIBLE BUT INDIVISIBLE Even though the object or service may by physically divisible, an obligation is indivisible if so provided by law or intended by the parties. CHARACTER OF PRESTATION In obligations to do, divisibility or indivisibility shall be determined by the character of the prestation in each particular case. 1226. PENALTY SUBSTITUTES INDEMNITY for DAMAGES + INTERESTS In obligations with a penal clause, penalty shall substitute indemnity for damages and payment of interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay penalty or is guilty of fraud in fulfillment of obligation. Penalty may be enforced only when demandable according to this Code. 1227. PAYING PENALTY NOT ENOUGH Debtor cannot exempt himself from the performance of the obligation by paying the penalty, except where this right has been expressly reserved for him. Neither can creditor demand fulfillment of obligation and satisfaction of penalty at the same time, unless this right has been clearly granted him. However, if after creditor has decided to require fulfillment of obligation, performance should become impossible without his fault, penalty may be enforced.

1228. ACTUAL DAMAGES NOT NECESSARY Proof of actual damages suffered by the creditor is not necessary in order that penalty may be demanded. 1229. PENALTY MAY BE REDUCED The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there had been no performance, penalty may also be reduced by the courts it is INIQUITOUS or UNCONSCIONABLE. 1230. NULLITY OF PENAL CLAUSE doesn’t carry with it that of the principal obligation. NULLITY OF PRINCIPAL obligation carries with it that of the penal clause.

EXTINGUISHMENT OF OBLIGATIONS 1231. OBLIGATIONS EXTINGUISHED BY: 1. Payment or Performance 2. Loss of the thing due 3. Condonation or Remission of debt 4. Confusion or Merger of rights of Creditor and Debtor 5. Compensation 6. Novation Other causes of extinguishment:  Annulment  Rescission  Fulfillment of a resolutory condition  Prescription 1232. PAYMENT = PAY OR PERFORM Payment means not only the delivery of money but also the performance, in any other manner of an obligation. 1233. MUST BE COMPLETELY DELIVERED

A debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered as the case may be. 1234. SUBSTANTIAL COMPLIANCE in GFaith If the obligation has been substantially performed in good faith, obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by obligee. 1235. ACCEPT = DEEMED FULLY COMPLIED When the obligee accepts the performance, knowing its incompleteness or irregularity, and without expressing any protest or objection, obligation is deemed fully complied with. 1236. 3rd PERSON WITH NO INTEREST Creditor is not bound to accept payment or performance by a 3rd person who has no interest in the fulfillment of the obligation unless there is a stipulation to the contrary. REIMBURSEMENT Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. 1237. AGAINST KNOWLEDGE/ WILL OF Debtor Whoever pays on behalf of the debtor without the knowledge or against the will of the debtor, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guaranty or penalty. 1238. DONATION=D’s CONSENT REQUIRED Payment by a 3rd person who does not intend to be reimbursed by the debtor is deemed to be a donation, which requires the debtor’s consent. But payment is in any case valid as to the creditor who has accepted it. 1239. HAS NO FREE DISPOSAL OF THING In obligations to give, payment made by one who does not have the free disposal of the thing due and capacity to alienate it shall NOT BE VALID, without prejudice to 1427



When a minor between 18 ad 21 yrs. old, who has entered into a contract without the consent of the parent/guardian, voluntarily pays sum of money or delivers a fungible thing in fulfillment of the obligation – NO RIGHT TO RECOVER the same from obligee who has spent or consumed it in good faith.

1240. PAY IN WHOSE FAVOR OBLIGATION WAS MADE Payment shall be made to the person in whose favor obligation was constituted, or his successor in interest, or any person authorized to receive it. 1241. VALID AS TO WHAT WAS BENEFICIAL Payment made to person who is incapacitated to administer his property shall be valid if he has kept the thing delivered or insofar as the payment has been beneficial to him. REDOUNDED TO BENEFIT OF CREDITOR Payment made to a 3rd person shall also be valid insofar as it has redounded to the benefit of the creditor. Such benefit NEED NOT BE PROVED in the ff. cases: 1. If after payment, 3rd person acquires creditor’s rights 2. If creditor ratifies the payment to 3rd person 3. If by creditor’s conduct, debtor has been led to believe that the 3rd person has authority to receive payment. 1242. RELEASE DEBTOR Payment made in good faith to any person in possession of credit shall release the debtor. 1243. DEBTOR PAYS EVEN IF ORDERED NOT Payment made to the creditor by the debtor after the debtor has been judicially ordered to retain the debt shall not be valid. 1244. CANNOT COMPEL TO RECEIVE DIFF. 1 Debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value as or more valuable than that which is due. In obligations to do or not to do, an act or forbearance cannot be substituted by another act or forbearance against the obligee’s will.

1245. DATION IN PAYMENT Dation in payment, where the property is alienated to the creditor in satisfaction of a debt in money, shall be governed by the law of sales. 1246. DELIVERY OF GENERIC THING When the obligation consists in the delivery of an indeterminate or generic thing, whose quality and circumstances have not been stated, creditor cannot demand a thing of superior quality. Neither can debtor deliver a thing of inferior quality. Purpose of obligation and other circumstances shall be taken into consideration. 1247. EXTRAJUDICIAL EXPENSES ON ACCOUNT OF DEBTOR Unless it is otherwise stipulated, extrajudicial expenses required by the payment shall be for the account of the debtor. Judicial costs to be governed by RoC. 1248. CAN’T COMPEL TO RECEIVE PARTIALLY Unless there is n express stipulation to that effect, creditor can’t be compelled partially to receive the prestation in which the obligation consists. Neither may debtor be required to make partial payments. However, when debt is in part liquidated and in part unliquidated, creditor may demand and the debtor may effect the payment of the former without waiting for liquidation of the latter. 1249. BE MADE IN CURRENCY STIPULATED Payment of debts in money shall be made in currency stipulated, and it if is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. CONDSIDERED PAID ONLY WHEN CASHED or IMPAIRED THRU CREDITOR’S FAULT The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment ONLY when they have been CASHED, or when through the fault of the creditor they have been IMPAIRED. In the meantime, the action derived from the original obligation shall be held in abeyance. 1250. VALUE OF CURRENCY

In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the BASIS OF PAYMENT, unless there is an agreement to the contrary. 1251. PLACE OF PAYMENT Payment shall be made in the PLACE DESIGNATED in the obligation. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made WHEREVER THE THING MIGHT BE at the moment the obligation was constituted. In any other case the place of payment shall be the DOMICILE of the DEBTOR. If the debtor changes his domicile in bad faith or after he has incurred in delay, additional expenses shall be borne by him. Without prejudice to venue under RoC. 1252. VARIOUS DEBTS = SAME CREDITOR He who has various debs of the same kind in favor of one and the same creditor, may declare at the time of making the payment, to which of them the same must be applied. Unless the parties so stipulate, or when the application of payment is made by the party for whose benefit term has been constituted, application shall not be made as to debts which are not yet due. If debtor accepts from creditor a receipt in which an application of payment is made, debtor cannot complain of the same, unless there is a cause for invalidating the contract. 1253.PAY INTERESTS 1ST B4 PRINCIPAL If debt produces interest, payment of principal shall not be deemed to have been made until the interests have been covered. 1254. DEBT MOST ONEROUS TO DEBTOR When payment can’t be applied under preceding rules or can’t be inferred from other circumstances, the debt which is most onerous to the debtor, among those due, shall be DEEMED to have been SATISFIED.

If debts due are of the same nature and burden, payment be applied to all of them PROPORTIONATELY.

NOTIFY INTERESTED PARTIES AFTER C After consignation has been made, interested parties shall be notified thereof.

1255. PAYMENT BY CESSION Debtor may cede or assign his property to his creditors in payment of his debts. This cession shall only release debtor from responsibility from net proceeds of thing assigned UNLESS there is stipulation to the contrary.

1259. EXPENSES AGAINST CREDITOR Expenses of consignation, when properly made, shall be charged against the creditor.

With regard to effect of cession, agreements made between debtor and his creditors shall be governed by special laws.

1260. ORDER TO CANCEL OBLIGATION Once consignation has been duly made, debtor may ask the judge to order the cancellation of the obligation.

1256. TENDER OF PAYMENT If creditor to whom tender of payment has been made refuses without just cause to accept it, debtor shall be released from responsibility by consignation of the thing or sum due.

DEBTOR MAY WITHDRAW IT Before creditor has accepted the consignation, or before a judicial declaration that consignation has been properly made, debtor may withdraw the thing or sum deposited, allowing obligation to remain in force.

CONSIGNATION ALONE produces same effect: 1. Creditor is absent or unknown, or doesn’t appear at the place of payment

1261.C AUTHORIZES WITHDRAWAL If after consignation, creditor should authorize debtor to withdraw the same, he shall lose every preference which he may have over the thing. Co-debtors, guarantors and sureties shall be released.

2. Creditor is incapacitated to receive payment at the time it is due 3. Creditor refuses to give a receipt without just cause. 4. Two or more persons claim the same right to collect 5. Title of the obligation has been lost. REQUIREMENTS FOR VALID CONSIGNATION 1257. PERSONS INTERESTED To release obligor, must first be announced to the persons interested in the fulfillment of obligation. Consignation be ineffectual if not made strictly in consonance with provisions which regulated payment. 1258. DEPOSIT THING DUE Depositing the things due at the disposal of judicial authority, before whom tender of payment shall be proved in a proper case and announcement of consignation in other cases.

1262. LOSS OF DETERMINATE THING An obligation which consists in the delivery of a determinate thing shall be EXTINGUISHED if it should be LOST or DESTROYED without fault of the debtor and before he has incurred in delay. LIABLE EVEN FOR FORTUITOUS EVENTS When by law or stipulation, obligor is liable even for fortuitous events, loss of thing DOESN’T EXTINGUISH the obligation, and obligor shall be responsible for damages. Same rule applies when nature of obligation requires assumption of risk. 1263. LOSS OF GENERIC THING In an obligation to deliver a generic thing, loss of destruction of anything of the same kind DOESN’T EXTINGUISH the obligation. 1264. PARTIAL LOSS Courts shall determine whether under the circumstances, partial loss of the obligation is so important as to extinguish the obligation.

1265. PRESUMPTION OF FAULT OF DEBTOR Whenever the thing is lost in the possession of the debtor, it shall be presumed that the loss was due to his fault unless there is proof to the contrary and without prejudice to 1165. Presumption doesn’t apply: earthquake, flood, storm or other natural calamity. 1266. LEGALLY/ PHYSICALLY IMPOSSIBLE The debtor in obligations to do shall also be released when PRESTATION becomes legally or physically impossible without fault of obligor. 1267. SERVICE BECOMES SO DIFFICULT When service has become so difficult as to be manifestly beyond the contemplation of the parties, obligor may also be released in whole or in part. 1268. DEBT FROM CRIMINAL OFFENSE When debt of a thing certain and determinate proceeds from a criminal offense, debtor shall NOT BE EXEMPTED from payment of its price whatever may be the cause for the loss, unless the person who should receive it refused without justification to accept it after the thing has been offered by debtor. 1269. CREDITOR HAS ALL RIGHTS OF ACTION When obligation has been extinguished by loss of the thing, creditor shall have all the rights of action which debtor may have against 3rd persons by reason of the loss. 1270. CONDONATION/REMISSION Essentially gratuitous and requires acceptance by the obligor. May be made expressly or impliedly. One and other kinds shall be subject to rules governing inofficious documents. Express condonation shall comply with forms of donation. 1271. IMPLIES RENUNCIATION OF DEBT Delivery of private document evidencing a credit, made voluntarily by creditor to debtor, implies renunciation of action by creditor against debtor.

If creditor claimed it to be inofficious to nullify the waiver, debtor and his heirs may uphold it by proving that delivery of document was made in virtue of payment of debt.

1272. PRESUMED DELIVERED VOLUNTARILY When private document where debt appears is found in the possession of debtor, it shall be presumed that creditor delivered it voluntarily unless contrary is proved. 1273. EXTINGUISH ACCESSORY OBLIG Renunciation of principal debt shall extinguish accessory obligations but waiver of accessory obligations shall leave the principal debt in force. 1274. ACCESSORY PRESUMED REMITTED It’s presumed that the accessory obligation of pledge has been remitted when thing pledged is found in possession of debtor or 3rd person who owns the thing after its delivery to the creditor. 1275. CONFUSION/ MERGER OF RIGHTS Obligation is extinguished from the time characters of creditor and debtor are merged in the same person. 1276. MERGER Merger which takes place in the person of principal debtor or creditor benefits the guarantors. CONFUSION Confusion which takes place in the person of any of the guarantors doesn’t extinguish obligation. 1277. JOINT OBLIGATION Confusion doesn’t extinguish joint obligation except as regards the share corresponding to creditor or debtor in whom the two characters concur. 1278. COMPENSATION (C & D of each other) Compensation shall take place when 2 persons, in their own right, are creditors and debtors of each other.

1279. VALID COMPENSATION REQUIRES 1. Each one of the obligors be bound principally and that he be at the same time a principal creditor of the other; 2. Both debts consist in a sum of money or if the things due are consumable, they be of the same kind and of the same quality if quality has been stated; 3. Two debts be due 4. They be liquidated and demandable 5. No retention or controversy over either of them was commenced by 3rd persons and communicated in due time to the debtor.

1280. DEPENDS ON CREDITOR’S DEBT Guarantor may set up compensation as regards what the creditor may owe the principal debtor. 1281. TOTAL COMPENSATION Compensation may be total or partial. When 2 debts are of the same amount, there is total compensation. 1282. DEBTS NOT YET DUE Parties may agree upon the compensation of debts which are not yet due. 1283. CLAIM FOR DAMAGES If one of the parties to a suit over an obligation has a claim for damages against the other, the former may set it off by proving his right to said damages and the amount thereof. 1284. BEFORE JUDICIALLY RESCINDED When one or both debts are rescissible or voidable, they may be compensated against each other before they are judicially rescinded or avoided.

would pertain to him against assignor, unless assignor was notified by debtor at the time he gave his consent that he reserved his right to compensation. DEBTOR DID NOT CONSENT If creditor communicated the cession to him but debtor did not consent, debtor may set up the compensation of debts previous to the cession but not of subsequent ones. WITHOUT KNOWLEDGE OF DEBTOR If assignment is made without knowledge of debtor, he may set up the compensation of all credits prior to the assignment and also later ones until he had knowledge of the assignment. 1286. BY OPERATION OF LAW Compensation takes place by operation of law even though debts may be payable at different places, but there shall be indemnity for expenses of exchange or transportation to the place of payment. 1287. COMPENSATION NOT PROPER When one of the debts arises from a depositum or from obligations of a depositary or of a bailee in commodatum. Also, when a creditor has a claim for support by gratuitous title, without prejudice to 301. If one of the debts consist in civil liability arising from a penal offense. (1288) 1289. ORDER OF COMPENSATION If a person should have against him several debts which are susceptible of compensation, rules on application of payment apply to order of compensation.

1285. ASSIGNMENT OF RIGHTS by CREDITOR

1290. ALL REQUISITES PRESENT Compensation takes effect by operation of law, & extinguishes both debts to the concurrent amount, even though the creditors and debtors are not aware of the compensation.

DEBTOR CONSENTED Debtor who has consented to assignment of rights made by creditor in favor of 3rd person cannot set up against the assignee the compensation which

1291. NOVATION Obligations may be modified by: 1. Changing their object or principal conditions

2. Substituting the person of the debtor 3. Subrogating a 3rd person in the rights of the creditor 1292. TO EXTINGUISH OBLIGATION For an obligation to be extinguished by another which substitutes the same, it is imperative that it be so declared in UNEQUIVOCAL TERMS or that the old and new obligations be on every point INCOMPATIBLE with each other. 1293. CREDITOR’S CONSENT REQUIRED Novation which consists in substituting a new debtor in the place of the original one may be made even without the knowledge or against the will of the original debtor BUT not without the consent of the creditor. Payment by new debtor gives him rights mentioned in 1236 – he can recover only insofar as payment has been beneficial to original debtor 1237 – he cannot compel the creditor to subrogate him in his rights such as those arising from mortgage, guaranty or penalty. 1294. ORIGINAL DEBTOR NOT LIABLE If the substitution is without the knowledge or against the will of the debtor, new debtor’s insolvency or non-fulfillment of obligation shall not give rise to any liability on original debtor’s part. 1295. INSOLVENCY EXISTED OR KNOWN Insolvency of new debtor who has been proposed by the original debtor and accepted by creditor, shall not revive the action of creditor against the original debtor EXCEPT when insolvency was already existing and of public knowledge or known to the debtor when he delegated his debt. 1296. ACCESSORY OBLIGATIONS SUBSISTS When principal obligation is extinguished due to novation, accessory obligations may subsist only insofar as they may benefit 3rd persons who didn’t give their consent. 1297. ORIGINAL OBLIGATION SUBSISTS If new obligation is void, original one shall subsist UNLESS parties intended the former relation should be extinguished in any event.

1298. NOVATION = VOID if ORIGINAL = VOID Novation is void if original obligation was void, EXCEPT when annulment may be claimed only by the debtor or when ratification validates acts which are voidable. 1299. UNDER THE SAME CONDITION If original obligation was subject to a suspensive or resolutory condition, new obligation shall be under the same condition, unless otherwise stipulated. 1300LEGAL,CONVENTIONAL,SUBROGATION Subrogation of a 3rd person in the rights of creditor is either legal or conventional. The former (legal) is not presumed except when expressly mentioned in this Code and latter (conventional) must be clearly established in order that it may take effect 1301. CONSENT of ORIGINAL & 3rd PERSON Conventional subrogation of a 3rd person requires consent of the original parties and of 3rd person. 1302. LEGAL SUBROGATION Presumed that there is legal subrogation: 1. Creditor pays another creditor who is preferred even without the knowledge of the debtor. 2. 3rd person, not interested in the obligation, pays with express or tacit approval of debtor 3. Person interested in the fulfillment of the obligation pays even without the knowledge of the debtor and without prejudice to the effects of confusion as to debtor’s share. 1303. CREDIT TRANSFERRED Subrogation transfers to the person subrogated the credit with all the rights appertaining thereto, either against the debtor or against 3rd persons, be they guarantors or possessors of mortgages, subject to stipulation in a conventional obligation. 1304. Creditor PARTIALLY PAID PREFERRED

A creditor to whom partial payment was made may exercise his right for the remainder and shall be preferred to the person subrogated in his place in virtue of partial payment of the same credit.

If contract contains stipulation in favor of a 3rd person, he may demand its fulfillment provided he communicated his acceptance to obligor before its revocation. Mere incidental benefit or interest of a person is not sufficient.

CONTRACTS 1305. MEETING OF MINDS Contract is a meeting of minds between 2 persons whereby one binds himself with respect to the other, to give something or to render some service.

Contracting parties must have clearly and deliberately conferred a favor upon 3rd person.

1306. NOT CONTRARY TO L, M, GC, PO, PP Contracting parties may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. 1307. INNOMINATE CONTRACTS Shall be regulated by: - Stipulations of the parties - Obligations and Contracts - Rules governing the most analogous nominate contracts - Customs of the place. 1308. MUTUALITY OF CONTRACT Contracts must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. 1309. 3rd PERSON’S DECISION Determination of the performance may be left to a 3rd person, whose decision shall not be binding until made known to both contracting parties. 1310. DECIDE WHAT IS EQUITABLE Determination shall not be obligatory if it is evidently inequitable. In such case, court shall decide what is equitable under the circumstances. 1311. ONLY B/N PARTIES, ASSIGNS & HEIRS Contracts take effect only between parties, assigns and heirs except in case where the rights and obligations arising from the contract are not transmissible by their nature, stipulation or law. The heir is not liable beyond the property he received from the decedent. FAVOR UPON 3RD PERSON

1312. CONTRACTCS WITH REAL RIGHTS In contracts creating real rights, 3rd persons who come into possession of the object of the contract are bound thereby, subject to Mortgage Law and Land Registration laws. 1313. CREDITORS PROTECTED Creditors are protected in cases of contracts intended to defraud them. 1314. LIABLE FOR DAMAGES Any 3rd person who induces another to violate his contract shall be liable for damages to the other contracting party. 1315. PERFECTED BY MERE CONSENT Contracts are perfected by mere consent and from that moment parties are bound not only to the fulfillment of what has been expressly stipulated but also to all consequences which according to their nature may be in keeping with good faith, usage and law. 1316. REAL CONTRACTS Such as: -deposit -pledge -commodatum are not perfected until the delivery of the object of the obligation. 1317. MUST BE AUTHORIZED No one may contract in the name of another without being authorized by the latter or unless he has by law a right to represent him. UNENFORCEABLE UNLESS RATIFIED A contract entered into the name of another by one who has no authority or legal representation or has acted beyond his powers shall be unenforceable

unless ratified, expressly or impliedly by the person on whose behalf it has been executed and before it is revoked by the other contracting party. 1318. ESSENTIAL REQUISITES 1. CONSENT of the contracting parties 2. OBJECT certain which is the subject matter of contract 3. CAUSE of obligation which is established. 1319. MEETING of OFFER & ACCEPTANCE Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. OFFER must be certain and ACCEPTANCE absolute. A qualified acceptance constitutes a counter-offer. (original offerer must accept) Acceptance made by letter or telegram doesn’t bind the offerer except from time it came to his knowledge. Contract is presumed to have been entered into in the place where the offer was made. 1320. Acceptance may be express or implied. 1321. TIME, PLACE, MANNER Person making the offer may fix the time, place and manner of acceptance, all of which must be complied with.

1325. BUSINESS ADVERTISEMENTS Business advertisements of things for sale are not definite offers but mere invitations to make an offer unless it appears otherwise. 1326. ADVERTISER NOT BOUND TO ACCEPT Advertisements for bidders are simply invitations to make proposals and advertiser is not bound to accept highest or lowest bidder unless contrary appears. 1327. CANNOT GIVE CONSENT: 1. Unemancipated minors 2. Insane or demented persons and deaf-mutes who don’t know how to write 1328. LUCID INTERVAL Contracts entered during lucid interval are valid. Contracts agreed to in a state of drunkenness or during hypnotic spell are voidable. 1329. Incapacity in 1327 is without prejudice to special disqualifications in laws. 1330. VOIDABLE CONTRACT Contract where consent is given thru mistake, violence, intimidation, undue influence or fraud is voidable.

1322. OFFER THRU AN AGENT Offer made through and agent is accepted from the time acceptance is communicated to him.

1331. MISTAKE For mistake to invalidate consent, must refer to substance of the thing which is the object of the contract or to conditions which have principally moved one or both parties to enter into the contract.

1323.DEATH,CIVIL I., INSANITY,INSOLVENCY Offer becomes ineffective upon death, civil interdiction, insanity or insolvency of either party before acceptance is conveyed.

IDENTITY/ QUALIFICATIONS Mistake as to identity or qualifications of one of the parties will vitiate consent ONLY when such I or Q have been the principal cause of the contract.

1324. WITHDRAWAL BEFORE ACCEPTANCE When offerer has allowed offeree a certain period to accept, offer may be withdrawn anytime before acceptance by communicating such withdrawal, EXCEPT when option is founded upon a consideration as something paid or promises.

Simple mistake of account shall give rise to its correction. 1332. MUST FULLY EXPLAIN THE TERMS When one of the parties is unable to read or if contract is in a language not understood by him and mistake or fraud is alleged, person enforcing the contract must show that terms have been fully explained to the person unable

to

read

or

understand

the

language.

1333. DOUBT, CONTINGENCY, RISK KNOWN No mistake if party alleging it knew the doubt, contingency or risk affecting the object of the contract. 1334. MUTUAL ERROR Mutual error as to legal effect of an agreement when real purpose of parties is frustrated may vitiate consent. 1335. VIOLENCE When in order to wrest consent, serious or irresistible force is employed. INTIMIDATION When one of the contracting parties is compelled by a reasonable and wellgrounded fear of an imminent and grave evil upon his person or property, or upon person or property of his spouse, descendants/ ascendants, to give his consent. DEGREE OF INTIMIDATION Age, sex, condition of the person shall be borne in mind. A threat to enforce one’s claim through competent authority if claim is just or legal, doesn’t vitiate consent. 1336. ANNUL THE OBLIGATION Violence or intimidation shall annul the obligation although it may have been employed by a 3rd person who didn’t take part in the contract. 1337. UNDUE INFLUENCE When person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. Circumstances to consider: confidential, family, spiritual and other relation between parties or the fact that person alleged to have been unduly influenced was suffering from mental weakness, ignorant or in financial distress. 1338. FRAUD

Through words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. 1339. DUTY TO REVEAL FACTS Failure to disclose facts when there is a duty to reveal them as when parties are bound by confidential relations, constitutes fraud. 1340. OPPORTUNITY TO KNOW FACTS Usual exaggerations in trade when the other party had the opportunity to know the facts are not in themselves fraudulent. 1341. MERE OPINION = NO FRAUD Mere expression of an opinion doesn’t signify fraud unless made by an expert and the other party has relied on the expert’s special knowledge. 1342. SUBSTANTIAL MISTAKE Misrepresentation by 3rd person doesn’t vitiate consent unless such misrepresentation created substantial mistake and the same is mutual. 1343. ERROR ONLY Misrepresentation made in good faith is not fraudulent but may constitute error. 1344. SERIOUS FRAUD = VOIDABLE For fraud to make a contract voidable, should be serious and not have been employed by both contracting parties. INCIDENTAL FRAUD = obliges person employing it to pay damages. 1345. ABSOLUTE or RELATIVE SIMULATION Simulation of contract may be absolute or relative. - ABSOLUTE = parties do not intend to be bound at all. -

RELATIVE = parties conceal their true agreement.

1346. ABSOLUTELY SIMULATED/ fictitious contract is void. Relative simulation, when it doesn’t prejudice a 3rd person and not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement.

1347. MAY BE THE OBJECT OF CONTRACT  All things which are not outside the commerce of men, including future things.  All rights which are not intransmissible.  All services which are not contrary to law, morals, good customs, public order or public policy. No contract may be entered into upon future inheritance except in cases expressly authorized by law. 1348. IMPOSSIBLE things or services cannot be the object of contracts. 1349. OBJECT MUST BE DETERMINATE Object of every contract must be determinate as to its kind. The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract provided it is possible to determine the same, without the need of a new contract between the parties. 1350. CAUSE OF CONTRACT Onerous contracts – prestation or promise of a thing or service by the other Remuneratory ones – service or benefit which is remunerated Contracts of pure beneficence – mere liberality of the benefactor 1351. MOTIVE DIFFERENT FROM CAUSE Particular motives of the parties in entering into a contract are different from the cause 1352. WITHOUT CAUSE/ UNLAWFUL CAUSE Contracts without a cause or with unlawful cause produce NO EFFECT whatever. Cause is unlawful if contrary to law, morals, good customs, public order or public policy. 1353. FALSE CAUSE = VOID CONTRACT Statement of false cause in contracts shall render them void if it should not be proved that they were founded upon another cause which is true and lawful. 1354. PRESUMED TO EXIST & LAWFUL

Although the cause is not stated in the contract, it is presumed that is exists and is lawful unless the debtor proves the contrary. 1355. LESION/INADEQUACY = STILL VALID Lesion or inadequacy of cause doesn’t invalidate a contract UNLESS there has been fraud, mistake or undue influence. 1356. WHATEVER FORM ALLOWED Contracts shall be obligatory in whatever form they may have been entered into provided all the essential requisites for their validity are present. WHEN CERTAIN FORM IS REQUIRED However, when a law requires a contract to be in some form for it to be valid and enforceable, requirement is absolute and indispensable. 1357. COMPEL TO OBSERVE FORM If law requires a document or other special form, contracting parties may compel each other to observe that form once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract. 1358. MUST APPEAR IN PUBLIC DOCUMENT 1. Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Statute of Frauds (1403, par 2 and 1405) 2. Cession, repudiation or renunciation of hereditary rights or those of the conjugal partnership of gains. 3. Power to administer property or any other power which has for its object an act appearing or which should appear in a public document or should prejudice a 3rd person. 4. Cession of actions or rights proceeding from an act appearing in a public document. All other contracts where the amount involved exceeds P500.00 must appear in writing, even a private one. But sales of goods, chattels or things in action are governed by Statute of Frauds.

REFORMATION OF INSTRUMENTS 1359. TRUE INTENTION NOT EXPRESSED  Meeting of minds of parties in a contract  True intention is not expressed in the instrument to embody the agreement,  By reason of mistake, fraud, inequitable conduct or accident  One of the parties may ask for the reformation of the instrument so that the true intention may be expressed. NO MEETING OF MINDS If mistake, fraud, inequitable conduct or accident prevented the meeting of the minds of the parties, proper remedy is not reformation of instrument but annulment of contract. 1360. Principles of general law on reformation of instruments adopted.

If 2 parties agree upon the mortgage or pledge of real or personal property but the instrument states that the property is sold absolutely or with a right to repurchase, reformation of instrument is proper. 1366. NO REFORMATION 1. Simple donations inter vivos where no condition is imposed. 2. Wills 3. Real agreement is void 1367. ACTION TO ENFORCE INSTRUMENT When one of the parties brought an action to enforce the instrument, he cannot subsequently ask for its reformation. 1368. EITHER PARTY or INJURED PARTY Reformation may be ordered at the instance of either party or his successors in interest if the mistake was mutual; otherwise upon petition of injured party or his heirs and assigns.

1361. DIDN’T DISCLOSE REAL AGREEMENT When mutual mistake of the parties causes the failure of the instrument to disclose real agreement, instrument may be reformed.

1369. PROCEDURE be governed by RoC to be promulgated by SC.

1362. OTHER ACTED FRAUDULENTLY If the other party was mistaken and the other acted fraudulently or inequitably in such a way that the instrument does not show their true intention, the former (who was mistaken) may ask for the reformation of the instrument.

INTERPRETATION OF THE CONTRACTS

1363. OTHER KNEW THE MISTAKE When one party is mistaken and other knew or believed that the instrument did not state their real agreement, but concealed the fact from the former, instrument may be reformed. 1364. FAULT ON THE PERSON DRAFTING When through the ignorance, lack of skill, negligence or bad faith on the part of the person drafting the instrument or of the clerk or typist, instrument doesn’t express true intention of the parties, courts may order the instrument to be reformed. 1365. MORTGAGE ONLY BUT STATED AS SALE

1370. LITERAL MEANING SHALL CONTROL If the terms of a contract are clear and leave no doubt upon intention of the contracting parties, literal meaning of its stipulation shall control. INTENTION PREVAILS OVER WORDS If the words appear to be contrary to the evident intention of the parties, intention shall prevail over the words. 1371. ACTS CONSIDERED To judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. 1372. THINGS DISTINCT FROM INTENTION

However general the terms of a contract may be, they shall not be understood to comprehend things that are distinct and cases that are different from those upon which the parties intended to agree. 1373. SEVERAL MEANINGS If some stipulation of any contract has several meanings, it shall be understood as to which it is most adequate to render it effectual. 1374. INTERPRETED TOGETHER Various stipulations of a contract shall be interpreted together, attributing to the doubtful ones as which may result from all of them taken jointly. 1375. MOST KEEPING w/ NATURE & OBJECT Words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract. 1376. AMBIGUITIES OF A CONTRACT Usage or custom of the place shall be borne in mind in interpreting ambiguities of a contract and shall fill the omission of stipulations which are ordinarily established. 1377. OBSCURE WORDS Interpretation of obscure words/ stipulations in a contract shall not favor the party who caused the obscurity. 1378. LEAST TRANSMISSION OF RIGHTS When it is absolutely impossible to settle doubts and doubts refer to incidental circumstances of a gratuitous contract, least transmission of rights and interests shall prevail. If onerous contract, doubt shall be settled in favor of the greatest reciprocity of interests. INTENTION CANNOT BE KNOWN If doubts are upon the principal object of contract where it cannot be known what the intention or will of the parties are, contract shall be null and void. 1379. Principles of interpretation in Rule 123 of RoC shall be observed in construction of contracts. 1380. RESCISSIBLE CONTRACTS

Contracts validly agreed upon may be rescinded in cases established by law. 1381. EX OF RESCISSIBLE CONTRACTS 1. Those which are entered by guardians whenever the wards whom they represent suffer lesion by more than ¼ of the value of the object of the contract. 2. Those agreed upon in representation of absentees, if the absentee suffer lesion by more than ¼ of the value of the object. 3. Those undertaken in fraud of creditors when the creditors cannot collect in any other manner the claims due them. 4. Things under litigation if they have been entered into by the defendant without the knowledge or approval of the litigants or of competent judicial authority. 5. All other contracts specially declared by law to be subject to rescission. 1382. INSOLVENT PAYS DEBT NOT YET DUE Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected are rescissible. 1383. RESCISSION IS SUBSIDIARY Action for rescission is subsidiary and cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same. 1384. ONLY TO EXTENT NECESSARY Rescission shall be only to the extent necessary to cover the damages caused. 1385.RETURN FRUITS & PRICE w INTERESTS Rescission creates the obligation to return things which were the object of the contract, together with their fruits and price with interests; consequently, can be carried out only when he who demands rescission can return whatever he may be obliged to restore.

No rescission allowed when the object of the contract is legally in the possession of 3rd person who didn’t act in bad faith. Indemnity for damages may be demanded from the person causing the loss. 1386. No rescission allowed in # 1 (lesion of wards) and 2 (lesion of absentees) with respect to contracts approved by the courts. 1387. PRESUMED FRAUDULENT All contracts where debtor alienates property by gratuitous title are presumed to be in fraud of creditors when the donor didn’t reserve sufficient property to pay all debts contracted before donation. Alienations by onerous title are also presumed fraudulent when made by persons against whom judgment has been rendered or some writ of attachment has been issued. Decision or attachment need not refer to the property alienated and need not have been obtained by the party seeking the rescission. Defrauding creditors may be proved in any other manner recognized by law of evidence. 1388. INDEMNITY FOR DAMAGES Whoever acquires in bad faith the things alienated in fraud of creditors shall indemnify the creditors for damages suffered by them due to of alienation if it should be impossible for him to return them. 1st ACQUIRER = LIABLE 1ST If there are 2 or more alienations, 1st acquirer shall be liable 1st and so on successively. 1389. PRESCRIPTION: 4 YEARS Action to claim rescission must be commenced within 4 yrs. For persons under guardianship and for absentees: 4 years shall not begin until termination of former’s incapacity or until the domicile of the absentee is known.

1. One of the parties is incapable of giving consent. 2. Consent is vitiated by mistake, violence, intimidation, undue influence or fraud (MVIUF). These contracts are binding unless annulled by proper action in court. Susceptible of ratification. 1391. PRESCRIPTION: 4 YEARS Action for annulment shall be brought within 4 years. DEFECT OF CONSENT CEASES This period shall begin in cases of intimidation, violence or undue influence from the time the defect of the consent ceases. TIME OF DISCOVERY In case of mistake for fraud, from time of discovery of the same. TIME GUARDIANSHIP CEASES For contracts entered into minors or other incapacitated persons, from time the guardianship ceases. 1392. RATIFICATION extinguished action to annul a voidable contract. 1393. RATIFICATION: EXPRESS or TACIT Ratification may be effected expressly or tacitly. There’s tacit ratification if the person who has a right to invoke it should execute an act which necessarily implies intention to waive his right even if he knew that the cause that renders contract voidable has ceased. 1394. EFFECTED BY GUARDIAN Ratification may be effected by the guardian of the incapacitated person. 1395. NO NEED TO CONFORM Ratification doesn’t require the conformity of the contracting party who has no right to bring action for annulment.

VOIDABLE/ ANNULABLE CONTRACTS

1396. CLEANSES ALL DEFECTS Ratification cleanses contract from all its defects from the moment it was constituted.

1390. VOIDABLE EVEN IF NO DAMAGE

1397. OBLIGED PRINCIPALL|SUBSIDIARILY

Action for annulment of contract may be instituted by all who are obliged principally or subsidiarily. UNCLEAN HANDS CAN’T COME TO COURT Persons who are capable cannot allege incapacity of those with whom they contracted nor can those who exerted intimidation, violence, undue influence or employed fraud or caused mistake base their action upon these flaws of the contract. 1398. RESTORE OBJECT, FRUITS & PRICE w I An obligation having been annulled, contracting parties shall restore to each other things which have been the subject matter of contract with their fruits and price with its interests, except in cases provided by law. In obligations to render service, its value shall be the basis for damages. 1399. INCAPACITATED not obliged to RETURN When defect of the contract is the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution except insofar as he has been benefited by the thing or price received by him. 1400. CAN’T RETURN DUE TO ONE’S OWN FAULT When the person obliged by decree of annulment to return the thing cannot do so because it has been lost thru his fault, he shall return the fruits received and value of the thing at the time of the loss with interest from same date. 1401. OBJECT LOST THRU FRAUD/FAULT Action for annulment shall be extinguished when the object of contract is lost thru fraud or fault of the person who has a right to institute annulment. If right of action is based on incapacity of any one of the contracting parties, loss of the thing shall not be an obstacle to the success of action unless loss took place thru fraud or fault of plaintiff. 1402. RECIPROCITY IN RETURNING As long as one of the parties doesn’t restore what he is bound to return, the other cannot be compelled to comply with what is incumbent upon him. UNENFORCEABLE CONTRACTS

1403. Unenforceable contracts unless ratified: 1. Those entered into in the name of another person by one who has NO AUTHORITY or legal representation or who has acted beyond his powers. 2. Those that don’t comply with STATUE of FRAUDS. In the ff. cases an agreement made shall be unenforceable unless the agreement or some note or memorandum shall be in writing and subscribed by party charged or by his agent. Evidence of agreement cannot be received without writing or a secondary evidence of its contents: a. Agreement that by its term is not to be performed within a year from making b. Special promise to answer for debt, default or miscarriage of another c. Agreement made in consideration of marriage, other than a mutual promise to marry d. Agreement for sale of goods, chattels or things in action at a price of not less than 500.00 UNLESS buyer accept or receive part of such goods or chattels or evidence or pay at the time some part of the purchase money. SUFFICIENT MEMORANDUM Sale is made by auction and entry of amount and kind of property sold, terms of sale, price, names of purchasers and buyers is made by auctioneer in his sales book at time of sale. e. Agreement for leasing for a longer period than 1 yr. or sale of real property or of an interest therein f. Representation as to credit of a 3rd person 3. Both parties are incapable of giving consent to contract. 1404. UNAUTHORIZED CONTRACTS governed by 1317 and principles of agency (Title X). 1405. DEEMED RATIFIED

Contracts infringing Statute of Frauds (# 2 of 1403) are ratified by failure to object to presentation of oral evidence to prove the same or by acceptance of benefits.

When nullity is due to illegality of cause or object of contract and the act constitutes a criminal offense, both parties being in pari delicto, they shall have NO ACTION AGAINST EACH OTHER and both shall be prosecuted.

1406. COMPEL each other to OBSERVE FORM When contract is unenforceable under the Statute of Frauds and public document is necessary for the registration in the Registry of Deeds, parties may compel each other to observe that form (1357).

Penal Code relative to disposal of effects of instruments of crime shall be applicable to the things or price of contract.

1407. BOTH ARE INCAPACITATED Where both parties are unable to give consent, express of implied ratification by parent, or guardian of one of the contracting parties shall give the contract the effect as if only one of them were incapacitated (becomes voidable). If ratification is made by parents or guardians of both parties, contract shall be validated from inception. 1408. Unenforceable contracts CANNOT BE ASSAILED BY 3RD PERSONS. VOID/ INEXISTENT CONTRACTS 1409. Contracts that are inexistent and void from the beginning: 1. Cause, object or purpose is contrary to law, morals, good customs, public order or public policy 2. Absolutely simulated or fictitious 3. Cause or object didn’t exist at the time of transaction (future things) 4. Object is outside the commerce of men. 5. Impossible service. 6.Intention of the parties relative to the principal object of contract cannot be ascertained. 7. Expressly prohibited or declared void by law. These contracts cannot be ratified. Defense of illegality cannot be waived. 1410. NO PRESCRIPTION Action or defense for declaration of inexistence of contract doesn’t prescribe. 1411. ACT IS CRIMINAL OFFENSE

ONLY ONE PARTY IS GUILTY Applicable when only one of the parties is guilty but the innocent one may claim what he has given and not be bound to comply with his promise. 1412. UNLAWFUL ACT BUT NOT CRIMINAL If the unlawful or forbidden cause of the act doesn’t constitute a criminal offense, ff. rules apply: 1. Fault on both contracting parties: neither may recover what he has given or demand performance of other’s undertaking. 2. Only one contracting party is at fault: he cannot recover what he has given or ask for fulfillment of what has been promised him. The other who is not at fault may demand the return of what he has given without any obligation to comply with his promise. 1413. EXCESS INTEREST MAY BE RECOVERED Interest paid in excess of the interest allowed by usury laws may be recovered by debtor, with interest thereon from date of payment. 1414. REPUDIATE DUE TO ILLEGAL PURPOSE When money is paid or property delivered for an illegal purpose, contract may be repudiated by one of the parties before purpose is accomplished or before damage is caused to 3rd person. Courts may, if public interest will be served, allow the party repudiating the contract to recover the money or property. 1415. ILLEGAL CONTRACT When one of the parties to an illegal contract is incapable of giving consent, courts may allow recovery of money or property delivered by incapacitated person if interest of justice so demands.

1416. NOT ILLEGAL PER SE When agreement is not illegal per se but merely prohibited and prohibition by law is to protect the plaintiff, he may recover what he has paid or delivered if public policy is enhanced.

NATURAL OBLIGATIONS: do not grant a right of action to enforce their performance for not being based on positive law but on equity and natural law.

1417. RECOVER AMOUNT IN EXCESS When price of any article or commodity is determined by statute or by authority of law, any person paying any amount in excess of the maximum price allowed may recover such excess.

But after voluntary fulfillment by obligor, they authorize the retention of what has been delivered or rendered. 1424. VOLUNTARILY PERFORMS When right to sue upon a civil obligation has lapsed by extinctive prescription, obligor who voluntarily performs contract cannot recover what he has delivered or the value of the service he has rendered.

1418. HOURS OF LABOR When the law fixes or authorizes fixing of max # of hours of labor, and contract is entered where a laborer works longer than the maximum fixed, he may demand additional compensation for service rendered beyond the time limit.

1425. VOLUNTARILY REIMBURSES When without the knowledge or against the will of debtor, 3rd person pays debt which the debtor is not legally bound to pay because action has prescribed BUT debtor voluntarily reimburses 3rd person, debtor cannot recover what he has paid.

1419. WAGE OF LABORER When law sets or authorizes the setting of minimum wage for laborers and contract is agreed upon where laborer accepts a lower wage, he shall be entitled to recover the deficiency.

1426. VOLUNTARILY RETURNS THING/PRICE When a minor between 18-21 who has entered into a contract without consent of parent or guardian voluntarily returns the whole thing or price received after annulment of contract, even if he has not been benefited, there is no right to demand the thing or price returned.

1420. DIVISIBLE CONTRACT For divisible contract, if the illegal terms can be separated from the legal ones, legal ones may be enforced 1421. DEFENSE OF ILLEGALITY of CONTRACTS Not available to 3rd persons whose interests are not directly affected. 1422. PREVIOUS ILLEGAL CONTRACT Contract which is the direct result of the previous illegal contract is also void and inexistent. NATURAL OBLIGATIONS 1423. CIVIL & NATURAL OBLIGATIONS Obligations are civil and natural. CIVIL OBLIGATIONS: give a right of action to compel their performance.

1427. VOLUNTARILY PAYS A SUM OF MONEY A minor (18-21) who entered into a contract without the consent of parent or guardian, voluntarily pays a sum of money or delivers a fungible thing to fulfill obligation, no right to recover the same from obligee who has spent or consumed it in good faith. 1428. VONLUNTARILY PERFORMS OBLIG After an action to enforce civil obligation has failed, defendant voluntarily performs the obligation – he cannot demand the return of what he has delivered or payment of value of service he has rendered. 1429. HEIR VOLUNTARILY PAYS DEBT When a testate or intestate heir voluntarily pays debt of the decedent exceeding the value of the property which he received by will or by law of intestacy from estate of deceased, payment is valid and cannot be rescinded by payer.

1430. HEIR PAYS LEGACY When a will is void because it wasn’t executed in accordance with formalities required by law BUT one of the intestate heirs, after settlement of debts of deceased, pays a legacy to comply with a clause in the defective will, payment is effective and irrevocable. ESTOPPEL 1431. RENDERED CONCLUSIVE Through estoppel an admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against person relying thereon. 1432. PRINCIPLES OF ESTOPPEL adopted insofar as they aren’t in conflict with this Code, Code of Commerce, RoC and special laws. 1433. Estoppel may be IN PAIS or BY DEED. 1434. TITLE PASSES TO BUYER/GRANTEE When a person who is not the owner of a thing sells or alienates and delivers it and later the seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee. 1435. BARRED FROM SETTING UP OWN TITLE If a person representing another sells or alienates a thing, the representative cannot subsequently set up his own title as against the buyer or grantee. 1436. CLAIMING TITLE TO THING LEASED A lessee or bailee is estopped from asserting title to thing leased or received as against the lessor or bailor. 1437. MISLED AS TO OWNERSHIP When in a contract between 3rd persons concerning immovable property, one of them is misled by a person regarding ownership or real rights over real estate, one who misleads is precluded from asserting his legal title or interest, provided ALL these requisites are present: 1. Fraudulent representation or wrongful concealment of facts known to the party estopped.

2. Party precluded must intend that the other should act upon facts as misrepresented. 3. Party misled must have been unaware of the true facts 4. Party defrauded must have acted in accordance with the misrepresentation. 1438.ESTOPPED - ACCEPTANCE of BENEFITS One who has allowed another to assume apparent ownership of personal property to make any transfer of it, cannot set up his own title to defeat the pledge of the property made by the other to a pledgee who received the same in good faith and for value IF he received the sum for which a pledge has been constituted. 1439. ONLY B/N PARTIES OR SUCCESSORS Estoppel is effective only as between parties or their successors in interest. TRUSTS 1440. TRUSTOR, TRUSTEE, BENEFICIARY Trustor: a person who establishes a trust Trustee: one in whom confidence is reposed as regards property for the benefit of another person Beneficiary: the person for whose benefit the trust has been created 1441. EXPRESS or IMPLIED TRUSTS Trusts are either express of implied. EXPRESS trusts are created by intention of the trustor or parties. IMPLIED trusts come into being by operation of law. 1442. PRINCIPLES OF GENERAL LAW OF TRUSTS as not in conflict with this Code, Code of Commerce, RoC and special laws are adopted. EXPRESS TRUSTS 1443. CAN’T BE PROVED BY PAROL EVIDENCE No express trusts concerning immovable property or any interest may be proved by parol evidence. 1444. CLEAR INTENTION SUFFICIENT

No particular words are required for creation of an express trust, it is sufficient that a trust is clearly intended. 1445. TRUSTEE DECLINES DESIGNATION No trust shall fail because trustee declines designation unless contrary should appear in the instrument constituting the trust. 1446. BENEFICIARY MUST ACCEPT TRUST Acceptance by the beneficiary is necessary. Acceptance shall be presumed if trust imposes no onerous condition upon the beneficiary and no proof to the contrary. IMPLIED TRUSTS 1447. Enumeration doesn’t exclude others established by general law of trust subject to 1442 (Code of Commerce, RoC, special laws) 1448. GRANTED TO ONE, PAID BY ANOTHER There’s implied trust when property is sold and legal estate is granted to one party (trustee) but price is paid by another (beneficiary) to have the beneficial interest of the property.

When land passes by succession to any person and he causes legal title to be put in the name of another, trust is established by implication of law for the benefit of true owner. 1452. LEGAL TITLE FOR BENEFIT OF ALL If 2 or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, trust is created by force of law in favor of the others in proportion to interest of each. 1453. DECLARED INTENTION TO HOLD IT FOR When property is conveyed to a person in reliance upon his declared intention to hold it for or transfer it to another or the grantor, there’s implied trust in favor of the person whose benefit is contemplated. 1454. CONVEYANCE to SECURE PEFORMANCE If an absolute conveyance of property is made to secure performance of obligation of grantor toward grantee, trust is established by virtue of law. If fulfillment of obligation is offered by grantor when it becomes due, grantor may demand reconveyance of property to him.

NO IMPLIED TRUST However, if person to whom title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child.

1455. TRUST in favor of whom FUNDS BELONG When any trustee, guardian or other person holding fiduciary relationship uses trust funds for purchase of property and causes conveyance to be made to him or to 3rd person, trust is established by operation of law in favor of person to whom the funds belong.

1449. DONEE HAS NO BENEFICIAL INTEREST There is implied trust when donation is made to a person but it appears that although the legal estate is transmitted to the done, he has no beneficial interest or only a part thereof.

1456. MISTAKE OR FRAUD If property is acquired thru mistake or fraud, person obtaining it is by force of law a trustee of an implied trust for the benefit of the person from whom property comes.

1450.TO SECURE PAYMENT OF DEBT If price of sale of property is loaned or paid by one person (trustor) for the benefit of another and conveyance is made to the lender or payor to secure payment of debt, trust arises by operation of law in favor of the person to whom money is loaned or for whom it is paid (beneficiary). Beneficiary may redeem the property and compel conveyance to him.

1457. ORAL EVIDENCE ALLOWED Implied trust may be proved by oral evidence.

1451. BENEFIT OF TRUE OWNER