PART I - OBLIGATION - An obligation is a juridical necessity to give, to do or not to do ELEMENTS: 1.

Active subject ( obligee/creditor ) the one in whose favor the obligation is constituted 2. assive subject ( obligor/debtor ) the one who has the duty of giving, doing or not doing !. "bject #restation$ the conduct which has to be observed by the debtor/obligor %. &inculu' (uris juridical/legal tie ). *ausa (causa debendi/causa obligationes) - why obligation e+ists Requisites of Object: a. licit - if illicit, it is void b. #ossible - if i'#ossible, it is void c. deter'inate or deter'inable - or else, void d. #ecuniary value SOURCES OF OBLIGATION: 1. LAW OBLIGATION EX LEGE ) - ,ust be e+#ressly or i'#liedly set forth and cannot be #resu'ed 2. CONTRACT ( OBLIGATION EX CONTRACTU ) - ,ust be co'#lied with in good faith because it is the -law. between #arties$ neither #arty 'ay unilaterally evade his obligation in the contract, unless/ a) contract authori0es it b) other #arty assents Parties may freely enter into any stipulations, provided they are not contrary to law, morals, good customs, public order or public policy !. !UASI-CONTRACT ( OBLIGATION EX QUASI-CONTRACTU ) - 1hat juridical relation resulting fro' a lawful, voluntary and unilateral act, and which has for its #ur#ose, the #ay'ent of inde'nity to the end that no one shall be unjustly enriched or benefited at the e+#ense of another 2 2inds/ a. Ne"otio#u$ "estio - unauthori0ed 'anage'ent$ 1his ta2es #lace when a #erson voluntarily ta2es charge of another3s abandoned business or #ro#erty without the owner3s authority b. So%utio i&'ebiti - undue #ay'ent $ 1his ta2es #lace when so'ething is received when there is no right to de'and it, and it was unduly delivered thru 'ista2e %. (ELICTS ( OBLIGATION EX MALEFICIO OR EX DELICTO ) 4overning rules/ 1. ertinent #rovisions of the 5 * and other #enal laws subject to Art 2166 *ivil *ode Art 177, 5 * 8very #erson cri'inally liable for a felony is also civilly liable 2. *ha#ter 2, reli'inary title, on 9u'an 5elations ( *ivil *ode ) !. 1itle 1: of ;oo2 <& of the *ivil *ode on da'ages What civil liability a i!i"# $ %& a c i&' i"cl()'!* a. restitution b. re#aration of da'age caused c. inde'nity for conse=uential da'ages E$$'ct %$ ac+(ittal i" c i&i"al ca!'* when ac=uittal is due to reasonable doubt no civil liability when ac=uittal is due to e+e'#ting circu'stances there is civil liability when there is #re#onderance of evidence there is civil liability

). !UASI-(ELICT)TORTS ( OBLIGATION E* !UASI-(ELICTO o# E* !UASI MALEFICIO ) - <t is a fault or act of negligence ( or o'ission of care ) which causes da'age to another, there being no #re-e+isting contractual relations between the #arties E%e$e&ts: a) 1here 'ust be fault or negligence attributable to the #erson charged b) 1here 'ust be da'age or injury c) 1here 'ust be a direct relation of cause and effect between the fault or negligence on the one hand and the da'age or injury on the other hand ( #ro+i'ate cause ) N%t'* Th' SC i" Sa# a)a v, Nacc%c% i&-li') that th' !%( c'! %$ %bli#ati%" i" A t ../0 i! '1cl(!iv', Ma"y c%&&'"tat% ! b'li'v'2 h%3'v' that it !h%(l) "%t b', At - '!'"t2 th' ' i! %"' &% ' -%!!ibl' !%( c' %$ %bli#ati%"! - 4UBLIC OFFER (4(blic O$$' i! i" $act a !%( c' %$ %bli#ati%" i" th' G' &a" Civil C%)'5 EFFECTS OF OBLIGATION 1. "bligation to give - obligation to deliver the thing agreed u#on 2. "bligation to do/not to do - obligation to do/not to do the service agreed u#on ACCESSOR+ OBLIGATIONS: ,- E.e#cise 'i%i"e&ce ) P#ese#/e t0e t0i&" standard of care/ that of a good father of a fa'ily unless the law or sti#ulation re=uires another standard of care 1- (e%i/e#2 of f#uits >hen does the right begin to e+ist / fro' the ti'e to deliver arises a) when there is no ter'/condition fro' the #erfection of the contract b) when there is a ter'/condition fro' the 'o'ent the ter' or condition arises !. (e%i/e#2 of 3ccesso#ies 4 3ccessio&s ( obligation to deliver deter'inate thing, even if the sti#ulation does not 'ention delivery of accessories ? accessions) Accessories - those joined to or included with the #rinci#al for the latter3s better use, #erfection or enjoy'ent Accessions additions to or i'#rove'ents u#on a thing >hen does right to fruits arise@ fro' the ti'e the obligation to deliver arises a) *onditional fro' the 'o'ent the condition ha##ens b) >ith a ter'/#eriod u#on the e+#iration of the ter'/#eriod c) Ai'#le fro' the #erfection of the contract FAILURE TO COMPL+ WIT5 PERFORMANCE)REME(IES: 6 7i&'s of Pe#fo#$3&ce: ,- SPECIFIC PERFORMANCE - #erfor'ance of the #restation itself 1- SUBSTITUTE PERFORMANCE - so'eone else #erfor's or so'ething else is #erfor'ed at the e+#ense of debtor 6- E!UI8ALENT PERFORMANCE - da'ages Ob%i"3tio& to "i/e Re3% Ob%i"3tio&9 S:ecific "e&e#ic
* D D D

Re$e'ies A 8*<B<* 85B"5,AC*8 8EF<&AG8C1 85B"5,AC*8

Ob%i"3tio&s to 'o Pe#so&3% Ob%i"3tio&9 To 'o Not to 'o undo the D already done *an only be de'anded if obligation is not very D #ersonal

things

AF;A1<1F18 85B"5,AC*8 58A*<AA<"C/ *AC*8GGA1<"C D

Fndo the things already done at debtorHs e+#ense

IRREGULARIT+ OF PERFORMANCE)BREAC5 A- CAUSES ATTRIBUTABLE TO (EBTOR ,- Co&t#3/e&tio& of te&o# 2. (e%32) Mo#3 - Con #erfor'ance with res#ect to ti'e Mo#3 so%/e&'i default on the #art of the debtor$ 2 2inds/ (1) ,ora Aolvendi 8+ re default in real obligations (2) ,ora Aolvendi 8+ #ersona default in #ersonal obligations E%e$e&ts: (1) 1he obligation 'ust be due, enforceable and already li=uidated or deter'inate in a'ount (2) 1here 'ust be non-#erfor'ance (!) 1here 'ust be a de'and, unless de'and is not re=uired W0e& 'e$3&' is &ot &ecess3#2: (1) >hen law declares (2) >hen obligation e+#ressly declares (!) >hen designation of ti'e of delivery or rendering the service was a controlling 'otive (%) >hen de'and would be useless as when debtor has rendered it beyond his #owers to #erfor' Effects: a. if deter'inate thing - debtor bears ris2 of loss (even when there is fortuitous event) b. debtor liable for da'ages/interest c. resolution (art 1167, in #ro#er cases) !. F#3u' ) (o%o &oluntary e+ecution of a wrongful act or willful o'ission, 2nowing and intending the effects which naturally and necessarily arise fro' such act or o'ission a. *ausante ( causal ) - 'a2es contract voidable b. incidente ( incidental ) - fraud in #erfor'ance of obligation$ does not affect validity of obligations Re$e'ies of Pe#so& i& f#3u' u&'e# ob%i"3tio&s 3#e: a. insist on s#ecific #erfor'ance (art 12!!) b. resolve contract (art 11I1) c. clai' da'ages, in either case %. Ne"%i"e&ce )Cu%:3 - absence of due diligence E%e$e&ts: a) "'ission of diligence re=uired b) Jiligence re=uired #er nature of obligation, circu'stances of #ersons, ti'e and #lace FRAU( (ISTINGUIS5E( FROM NEGLIGENCE FRAU( NEGLIGENCE 1here is deliberate intention to cause 1here is no deliberate intention to cause da'age. da'age. Giability cannot be 'itigated. Giability 'ay be 'itigated. >aiver for future fraud is void. >aiver for future negligence 'ay be allowed in certain cases/ a) gross can never be e+cused in

b)

advance$ against #ublic #olicy si'#le 'ay be e+cused in certain cases

B- CAUSES NOT ATTRIBUTABLE TO (EBTOR 1. (e%32) Mo#3 - non fulfill'ent with res#ect to ti'e Mo#3 3cce:ie&'i default on #art of creditor$ *reditor is guilty of default when he unjustifiably refuses to acce#t #ay'ent or #erfor'ance at the ti'e #ay'ent/#erfor'ance can be done Effects: (1) res#onsibility of debtor is reduced to fraud and gross negligence (2) debtor is e+e'#ted fro' ris2 of loss of thing / creditor bears ris2 of loss (!) e+#enses by debtor for #reservation of thing after delay is chargeable to creditor (%) if obligation bears interest, debtor does not have to #ay fro' ti'e of delay ()) creditor liable for da'ages (K) debtor 'ay relieve hi'self of obligation by consigning the thing Co$:e&s3tio $o#3e both #arties are in default (in reci#rocal obligations)$ the effect/ is as if there is no default 2. Fo#tuitous E/e&ts - event which could not be foreseen, or which though foreseen, were inevitable RE!UIREMENTS (Ca2#il ? Aons vs. *A)/ 1. 1he cause of the breach of the obligation 'ust be inde#endent of the will of the debtor 2. 1he event 'ust be either unforeseeable or unavoidable !. 1he event 'ust be such as to render it i'#ossible for the debtor to fulfill his obligation in a nor'al 'anner %. 1he debtor 'ust be free fro' any #artici#ation in, or aggravation of injury to the creditor Ru%e o& Fo#tuitous E/e&t: 1. 4eneral 5ule no liability for fortuitous event 2. 8+e'#tion a) when e+#ressly declared by law ( bad faith, subject 'atter is generic, debtor is in delay ) b) when e+#ressly declared by sti#ulation or contract c) when nature of obligation re=uires assu'#tion of ris2 REME(IES OF CRE(ITORS - generally trans'issible (e+ce#t/ law, sti#ulation, #ersonal obligation)/ 1. 8+act #erfor'ance - s#ecific, substitute, e=uivalent 2. Attach and e+ecute debtorHs #ro#erty which is not e+e'#t (art 22!K) !. Accion subrogatoria (art 1161) Requisites: a. *reditor 'ust have right of return against debtor b. 1he debt is due and de'andable c. 1here is a failure of the debtor to collect his own debt fro' !rd #ersons either through 'alice or negligence d. JebtorHs assets are insufficient e. 1he right of account is not #urely #ersonal %. Accion directa (arts 162I ? 1K)2) ). Accion #auliana Requisites: a. 1here is a credit in favor of #laintiff

b. 1he debtor has #erfor'ed an act subse=uent to the contract, giving advantage to other #ersons c. 1he creditor is #rejudiced by the debtorHs act which are in favor of !rd #arties and rescission will benefit the creditor d. 1he creditor has no other legal re'edy e. 1he debtorHs acts are fraudulent (IFFERENT ;IN(S OF OBLIGATIONS CATEGORIES: a. Je'andability - #ure, conditional or with a ter' b. lurality of object - si'#le, alternative or facultative c. lurality of subject - si'#le, joint or solidary d. erfor'ance - divisible or indivisible e. Aanctions for breach - with or without a #enal clause ,9 Pu#e de'andable at once, no ter', no condition 19 Co&'itio&3% - A condition is a future and an uncertain event un2nown to the #arties ;i&'s: i- Sus:e&si/e ha##ening of condition gives rise to obligation 8ffects/ 1. effectivity is retroactive 2. no retroactivity with reference to fruits or interest ? #rescri#tion !. creditor 'ay #reserve rights %. debtor recovery of #ay'ent by 'ista2e or even w/o 'ista2e Ru%es o& %oss< i$:3i#$e&t< i$:#o/e$e&t of t0e subject $3tte# :e&'i&" t0e 03::e&i&" of sus:e&si/e co&'itio&) te#$ Loss) I$:3i#$e&t I$:#o/e$e&t w/ fault or at e+#ense of <nde'nity ? da'ages obligor/ usufructuary s#ecific #erfor'ance rescission ? da'ages <f it i'#roved at the e+#ense of the debtor, he shall have no other right than that granted to the usufructuary. (art 11:I) *reditor to bear da'ages *reditor gets it or a #ast event

w/o fault or not e+#ense of obligor

at

8+tinguished

RE!UISITES FOR T5E AFOREMENTIONE( RULE: 1. 1here is a sus#ensive condition 2. 1here is an obligation to deliver a deter'inate thing !. 1here is loss, deterioration or i'#rove'ent before the ha##ening of the condition %. 1he condition ha##ens ii- Reso%uto#2 ha##ening of condition e+tinguishes obligation 8ffects/ 1. no retroactive effect 2. obligation e+tinguished !. restore to each other what was received #lus interest/fruits iii- Potest3ti/e de#endent on sole will of 1 #arty$ if on #art of debtor ? sus#ensive - void i/- C3su3% de#endent on chance or ha0ard /- Mi.e' chance, or any of #arties /i- Wit0 te#$ 39 Positi/e e+tinguished if ti'e e+#ires or indubitable of condition to

ha##en b9 Ne"3ti/e effective fro' 'o'ent of ti'e ela#sed or evident it canHt ha##en /ii- I$:ossib%e 3&' i%%e"3% (1) 1o do - both the condition and the obligation are void (2) Cot to do disregard the condition, the obligation is still valid Impossible condition physically not feasible Illegal condition prohibited by law, good custom, public policy and morals 69 Wit0 3 :e#io' future ? certain, #ast ? uncertain, #ayable when able >hen sti#ulation says -#ayable when able - it is with a #eriod, re'edy/ a) agree'ent a'ong #arties b) court shall fi+ #eriod of #ay'ent when #arties unable to agree ;i&'s: 3- Reso%uto#2 ( in die' ) ta2es effect at once but ter'inate u#on arrival of the day certain$ Day certain that which must necessarily come, although it may not be known when b- Sus:e&si/e ( e+ die ) ta2es effect on the day sti#ulated W5EN COURTS MA+ FI* PERIO(: a) art 11I6 b) art 11I6, 2nd #aragra#h c) art 11I1, !rd #aragra#h d) art 1K:6, 2nd, !rd, %th sentence e) art 11:7 W5EN (EBTOR LOSES RIG5T TO PERIO(: a. insolvency of debtor, unless security #rovided b. did not deliver security c. i'#aired security- thru fault or fortuitous event d. violate underta2ing in consideration of e+tension of #eriod e. atte'#ts to abscond =9- F3cu%t3ti/e only one #restation has been agreed u#on but another 'ay be given in substitution Effect of %oss o# 'ete#io#3tio& t0#u &e"%i"e&ce< 'e%32 o# f#3u' of ob%i"o#: a) of thing intended as substitute - no liability b) of the substitute after substitution is 'ade with liability >9- A%te#&3ti/e bound by different #restations but only one is due 5ight of choice/ 4eneral rule/ right of choice belongs to debtor 3- t0e c0oice is ?it0 'ebto# (1) <f only 1 is left either because of fortuitous events or due to debtorHs acts, #erfor' what is left. 1he effect is that the debtor loses the right of choice (2) if the choice is li'ited because of the creditorHs acts, the debtor has the right of resolution and da'ages (!) if all are lost due to debtor, the creditor is entitled to da'ages (%) if so'e are lost, the debtor can choose fro' the re'aining b- t0e c0oice is ?it0 c#e'ito# (1) if one or so'e are lost due to fortuitous event, the creditor chooses the re'ainder (2) if one or so'e is lost because of the fault of debtor, the creditor 'ay choose either the re'ainder or the value of any which disa##eared, and da'ages in either case

(!) if all is lost due to the debtorHs fault, the creditor 'ay choose the value of any if so'e is lost due to debtorHs fault, the creditor chooses the re'ainder (%) if all is lost due to fortuitous event, obligation is e+tinguished ()) if all is lost due to creditorHs fault, the obligation is e+tinguished Requisites fo# $37i&" t0e c0oice: a) ,ade #ro#erly so that creditor or his agent will actually 2now b) ,ade with full 2nowledge that a selection is indeed being 'ade c) ,ade voluntarily and freely d) ,ade in due ti'e before or u#on 'aturity e) ,ade to all #ro#er #ersons f) ,ade w/o conditions unless agreed by the creditor g) ,ay be waived, e+#ressly or i'#liedly (ISTINCTIONS BETWEEN ALTERNATI8E AN( FACULTATI8E OBLIGATIONS ALTERNATI8E FACULTATI8E a) &arious things are due but the giving a) "nly one thing is due but a substitute 'ay be #rinci#ally of one is sufficient given to render #ay'ent/fulfill'ent easy b) <f one of #restations is illegal, others b) <f #rinci#al obligations is void and there is no 'ay be valid but obligation re'ains necessity of giving the substitute$ nullity of carries with it nullity of A c) <f it is i'#ossible to give all e+ce#t c) <f it is i'#ossible to give the #rinci#al, the one, the last one 'ust still be given substitute does not have to be given$ if it is i'#ossible to give the substitute, the #rinci#al 'ust still be given d) 5ight to choose 'ay be given either d) 1he right of choice is given only to the debtor to debtor or creditor (K) @oi&t #resu'#tion when 2 or 'ore creditors or 2 or 'ore debtors concur in one and the sa'e obligation Effects: a. Je'and on one #roduces delay only with res#ect to the debt b. <nterru#tion in #ay'ent by one does not benefit or #rejudice the other c. &ices of one debtor to creditor has no effect on the others d. <nsolvency of one debtor does not affect other debtors (6) So%i'3#2 'ust be e+#ressed in sti#ulation or #rovided by law or by nature of obligation a. Acti/e on the #art of creditor or obligee 8ffects/ 1. Jeath of 1 solidary creditor trans'its share to heirs (but collectively) 2. 8ach creditor re#resents the other in the act of recovery of #ay'ent !. *redit is divided e=ually between creditors as a'ong the'selves %. Jebtor 'ay #ay any of the solidary creditors b. P3ssi/e on the #art of debtors or obligors 8ffects/ 1. 8ach debtor 'ay be re=uested to #ay whole obligation with right to recover fro' co-debtors 2. <nterru#tion of #rescri#tion to one creditor affects all !. <nterest fro' delay on 1 debtor is borne by all c. Mi.e' A on the #art of the obligors and obligees, or the #art of the debtors and the creditors d. Co&/e&tio&3% agreed u#on by the #arties e. Le"3% i'#osed by law I&st3&ces ?0e#e %3? i$:oses so%i'3#2 ob%i"3tio&:

1. obligations arising fro' tort 2. obligations arising fro' =uasi-contracts !. legal #rovisions regrading obligation of devisees and legatees %. liability of #rinci#als, acco'#lices, and accessories of a felony ). bailees in co''odatu' 8ffects/ a. #ay'ent 'ade before debt is due, no interest can be charged, otherwise interest can be charged b. insolvency of one others are liable for share #ro-rata c. if different ter's ? conditions collect only what is due, later on collect fro' any d. no rei'burse'ent if #ay'ent is 'ade after #rescri#tion or beca'e illegal d. re'ission 'ade after #ay'ent is 'ade co-debtor still entitled to rei'burse'ent e. effect of insolvency or death of co-debtor still liable for whole a'ount f. fault of any debtor every one is res#onsible #rice, da'age ? interest g. co'#lete/ #ersonal defense total or #artial ( u# to a'ount of share only ) if not #ersonal to hi' 8ffect of loss or i'#ossibility of the #restation/ a. if without fault no liability b. if with fault there is liability (also for da'age and interest) c. loss due to fortuitous event after default there is liability (because of default) (:) (i/isib%e A obligation that is ca#able of #artial #erfor'ance a. e+ecution of certain no of days wor2 b. e+#ressed by 'etrical units c. nature of obligation susce#tible of #artial fulfill'ent (I) I&'i/isib%e one not ca#able of #artial #erfor'ance a. to give definite things b. not susce#tible of #artial #erfor'ance c. #rovided by law d. intention of #arties (17) Wit0 :e&3% c%3use - an accessory underta2ing to assu'e greater liability in case of breach$ C5ARACTERISTICS OF PENAL CLAUSES 1. Aubsidiary - As a general rule, only #enalty can be de'anded, #rinci#al cannot be de'anded, e+ce#t/ enalty is joint or cu'ulative 2. 8+clusive - ta2es #lace of da'age, da'age can only be de'anded in the ff. cases/ a. Ati#ulation granting right b. refusal to #ay #enalty c. with dolo ( not of creditor ) C3uses fo# #e'uctio& of :e&3%t2: a. #artial/irregular #erfor'ance b. #enalty #rovided is ini=uitous/unconscionable E*TINGUIS5MENT OF OBLIGATIONS Mo'es of E.ti&"uis0$e&t of Ob%i"3tio&: 1. ay'ent or #erfor'ance 2. Goss of the thing due !. *ondonation or re'ission of debt %. *onfusion or 'erger of rights ). *o'#ensation K. Covation 6. Annul'ent :. 5escission I. Bulfill'ent of resolutory condition

,- PA+MENT OR PERFORMANCE delivery of 'oney and #erfor'ance, in any other 'anner of the obligation RE!UISITES FOR 8ALI( PA+MENT)PERFORMANCE A. >ith res#ect to #restation itself/ (1) identity (2) integrity or co'#leteness (!) indivisibility ;. >ith res#ect to #arties - 'ust be 'ade by #ro#er #arty to #ro#er #arty (1) ayor (a) ayor - the one #erfor'ing, he can be the debtor hi'self or his heirs or assigns or his agent, or anyone interested in the fulfill'ent of the obligation$ can be anyone as long as it is with the creditorHs consent (b) !5J #erson #ays/#erfor's - only the creditorHs consent$ <f #erfor'ance is done also with debtorHs consent - he ta2es the #lace of the debtor. 1here is subrogation e+ce#t if the !rd #erson intended it to be a donation (c) !rd #erson #ays/#erfor's with consent of creditor but not with debtorHs consent, the re#ay'ent is only to the e+tent that the #ay'ent has been beneficial to debtor (2) ayee (a) #ayee - creditor or obligee or successor in interest of transferee, or agent (b) !rd #erson - if any of the ff. concur/ i. it 'ust have redounded to the obligeeHs benefit and only to the e+tent of such benefit ii. it falls under art 12%1, #ar 1,2,! - the benefit is total so, #erfor'ance is total (c) anyone in #ossession of the credit - but will a##ly only if debt has not been #reviously garnished PA+MENT MA(E TO AN INCAPACITATE( PERSON < 8ALI( IF: 1. <nca#acitated #erson 2e#t the thing delivered, or 2. <nsofar as the #ay'ent has been beneficial to hi' PA+MENT TO A 6R( PART+ NOT AUT5ORIBE(< 8ALI( IF PRO8E( 4 ONL+ TO T5E E*TENT OF BENEFITC PRESUME( IF: 1. After #ay'ent, !rd #erson ac=uires the creditor3s rights 2. *reditor ratifies #ay'ent to !rd #erson !. ;y creditor3s conduct, debtor has been led to 'a2e the #ay'ent (esto##el) PA+MENT MA(E IN GOO( FAIT5 TO A PERSON IN POSSESSION OF CRE(IT S5ALL RELEASE (EBTOR< Requisites: 1. ay'ent by debtor 'ust be 'ade in good faith 2. *reditor 'ust be in #ossession of the credit ? not 'erely the evidence of indebtedness *. >ith res#ect to ti'e and #lace of #ay'ent - 'ust be according to the obligation >here #ay'ent should be 'ade/ 1. <n the #lace designated in the obligation 2. <f there is no e+#ress sti#ulation and the underta2ing is to deliver a s#ecific thing at the #lace where the thing 'ight be at the 'o'ent the obligation was constituted !. <n other case in the #lace of the do'icile of the debtor 1i'e of #ay'ent - ti'e sti#ulated Effect of payment extinguish obligation Except: order to retain debt SUBSTANTIAL PERFORMANCE

1. 2. !. %.

Atte'#t in 4ood Baith to #erfor' without willful or intentional de#arture Jeviation is slight "'ission/Jefect is technical or uni'#ortant ,ust not be so 'aterial that intention of #arties is not attained

Effect of Subst3&ti3% :e#fo#$3&ce i& "oo' f3it0 1. "bligor 'ay recover as though there has been strict and co'#lete fulfill'ent, less da'ages suffered by the obligee 2. 5ight to rescind cannot be used for slight breach SPECIAL RULES)FORMS OF PA+MENT - S:eci3% Fo#$s: a. A::%ic3tio& of P32$e&ts the designation of the debt which #ay'ent shall be 'ade, out of 2 or 'ore debts owing the sa'e creditor/ sti#ulation or a##lication of #arty given benefit of #eriod "L$ to be valid/ 'ust be debtor3s choice or w/ consent of debtor Requisites fo# t0e A::%ic3tio& of :32$e&t: 1. &arious debts of the sa'e 2ind 2. Aa'e debtor !. Aa'e creditor %. All debts 'ust be due 8+ce#tion/ there 'ay be a##lication of #ay'ent even if all debts are not yet due if/ a) #arties so sti#ulate b) when a##lication of #ay'ent is 'ade by the #arty for whose benefit the ter' has been constituted ). ay'ent is not enough to e+tinguish all debts 5OW APPLICATION IS MA(E: 1. Jebtor 'a2es the designation 2. <f not, creditor 'a2es it by so stating in the recei#t that he issues unless there is cause for invalidating the contract !. <f neither the debtor nor creditor has 'ade the a##lication or if the a##lication is not valid, then a##lication, is 'ade by o#eration of law W5O MA;ES APPLICATION: 4eneral 5ule/ Jebtor 8+ce#tion/ *reditor a) Jebtor without #rotest acce#ts recei#t in which creditor s#ecified e+#ressly and un'ista2ably the obligation to which such #ay'ent was to be a##lied debtor in this case renounced the right of choice b) >hen 'onthly state'ents were 'ade by the ban2 s#ecifying the a##lication and the debtor signed said state'ents a##roving the status of her account as thus sent to her 'onthly by the ban2 IN CASE NO APPLICATION 5AS BEEN MA(E 1. A##ly #ay'ent to the 'ost onerous 2. <f debts are of the sa'e nature and burden, a##lication shall be 'ade to all #ro#ortionately b. (3cio& e& P3"o 'ode of e+tinguishing an obligation whereby the debtor alienates in favor of the creditor #ro#erty for the satisfaction of 'onetary debt$ e+tinguish u# to a'ount of #ro#erty unless w/ contrary sti#ulation$ A s#ecial for' of #ay'ent because 1 ele'ent of #ay'ent is 'issing/ <J8C1<1M 4overned by law on sales *onditions for a valid dacion/ 1) <f creditor consents, for a sale #resu##oses the consent of both #arties 2) <f dacion will not #rejudice the other creditors !) <f debtor is not judicially declared insolvent

c. Cessio&)Assi"&$e&t i& F3/o# of c#e'ito#s the #rocess by which debtor transfer all the #ro#erties not subject to e+ecution in favor of creditors is that the latter 'ay sell the' and thus, a##ly the #roceeds to their credits$ e+tinguish u# to a'ount of net #roceeds ( unless w/ contrary sti#ulation ) ;i&'s: 1. Gegal governed by the insolvency law 2. &oluntary agree'ent of creditors RE!UISITES FOR 8OLUNTAR+ ASSIGNMENT a) ,ore than 1 debt b) ,ore than 1 creditor c) *o'#lete or #artial insolvency of debtor d) Abandon'ent of all debtor3s #ro#erty not e+e'#t fro' e+ecution e) Acce#tance or consent on the #art of the creditors EFFECTS: a) *reditors do not beco'e the owner$ they are 'erely assignees with authority to sell b) Jebtor is released u# to the a'ount of the net #roceeds of the sale, unless there is a sti#ulation to the contrary c) *reditors will collect credits in the order of #reference agreed u#on, or in default of agree'ent, in the order ordinarily established by law d. Co&si"&3tio& T'")' -the act of offering the creditor what is due hi' together with a de'and that the creditor acce#t the sa'e (>hen creditor refuses w/o just cause to acce#t #ay'ent, he beco'es in 'ora acce#iendi ? debtor is released fro' res#onsibility if he consigns the thing or su' due) C%"!i#"ati%" the act of de#ositing the thing due with the court or judicial authorities whenever the creditor cannot acce#t or refuses to acce#t #ay'ent$ generally re=uires #rior tender of #ay'ent RE!UISITES OF 8ALI( CONSIGNATION: (1) 8+istence of valid debt (2) *onsignation was 'ade because of so'e legal cause - #revious valid tender was unjustly refused or circu'stances 'a2ing #revious tender e+e'#t (!) rior Cotice of *onsignation had been given to the #erson interested in #erfor'ance of obligation (1st notice) (%) actual de#osit/*onsignation with #ro#er judicial authorities ()) subse=uent notice of *onsignation (2nd notice) Effects: E.ti&"uis0$e&t of ob%i"3tio& (1) Jebtor 'ay as2 judge to order cancellation of obligation (2) 5unning of interest is sus#ended (!) ;efore creditor acce#ts or before judge declares consignation has been #ro#erly 'ade, obligation re'ains ( debtor bears ris2 of loss at the 'eanti'e, after acce#tance by creditor or after judge declares that consignation has been #ro#erly 'ade ris2 of loss is shifted to creditor) Co&si"&3tio& ?)o :#io# te&'e# A 3%%o?e' i&: 1. creditor absent or un2nown/ does not a##ear at the #lace of #ay'ent 2. inca#acitated to receive #ay'ent at the ti'e it is due !. refuses to issue recei#t w/o just cause %. 2 or 'ore creditor clai'ing the sa'e right to collect ). title of obligation has been lost 1-LOSS OF T5E T5ING (UE #artial or total/ includes i'#ossibility of #erfor'ance W5EN IS T5ERE A LOSS:

1) >hen the object #erishes (#hysically) 2) >hen it goes out of co''erce !) >hen it disa##ears in such a way that/ its e+istence is un2nown or it cannot be recovered W5EN IS T5ERE IMPOSSIBILIT+ OF PERFORMANCE 1) hysical i'#ossibility 2) Gegal i'#ossibility / (a) Jirectly caused as when #rohibited by law (b) <ndirectly caused as when debtor is re=uired to enter a 'ilitary draft OBLIGATION TO (ELI8ER A SPECIFIC T5ING 4eneral 5ule/ 8+tinguished 8+ce#tions/ a) Jebtor is at fault b) Jebtor is 'ade liable for fortuitous event because of a #rovision of law, contractual sti#ulation or the nature of the obligation re=uires assu'#tion of ris2 on #art of debtor OBLIGATION TO (ELI8ER A GENERIC T5ING 4eneral 5ule/ Cot e+tinguished 8+ce#tions/ a) if the generic thing is deli'ited b) if the generic thing has already been segregated c) 'onetary obligation OBLIGATION TO (O 4eneral 5ule/ Jebtor is released when #restation beco'es legally or #hysically i'#ossible without fault on #art of debtor EFFECT OF PARTIAL LOSS ( judicial deter'ination of e+tent is necessary) a) when loss is significant 'ay be enough to e+tinguish obligation b) when loss insignificant not enough to e+tinguish obligation W5EN T5ING IS LOST IN T5E POSSESSION OF T5E (EBTOR resu'#tion/ Goss due to debtor3s fault ( dis#utable ) 8+ce#tion/ natural cala'ity, earth=ua2e, flood, stor' 6- REBUS SIC STANTIBUS - agree'ent is valid only if the sa'e conditions #revailing at ti'e of contracting continue to e+ist at the ti'e of #erfor'ance EFFECT OF (IFFICULT+ BE+ON( PARTIESD CONTEMPLATION 5ule/ "bligor 'ay be released in whole or in #art RE!UISITES: (a) 1he event or change could not have been forseen at the ti'e of the e+ecution of the contract (b) 1he #erfor'ance is e+tre'ely difficult, but not i'#ossible (because if it is i'#ossible, it is e+tinguished by i'#ossibility) (c) 1he event was not due to the act of any of the #arties (d) 1he contract is for a future #restation =- CON(ONATION)REMISSION OF T5E (EBT A gratuitous abandon'ent of debt$ right to clai'$ donation$ rules of donation a##lies$ e+#ress or i'#lied RE!UISITES: a. 1here 'ust be an agree'ent b. 1here 'ust be a subject 'atter (object of the re'ission, otherwise there would be nothing to condone) c. *ause of consideration 'ust be liberality (8ssentially gratuitous, an act of liberality )

d.

arties 'ust be ca#acitated and 'ust consent$ re=uires acce#tance by obligor$ i'#lied in 'ortis causa ? e+#ressed inter vivos e. Bor'alities of a donation are re=uired in the case of an e+#ress re'ission f. 5evocable subject to rule on inofficious donation ( e+cessive, legiti'e is i'#aired ) ? ingratitude ? condition not followed g. "bligation re'itted 'ust have been de'andable at the ti'e of re'ission h. >aivers or re'ission are not to be #resu'ed generally Fo#$s: E.te&t: a. 8+#ress for'alities a. total of donation b. <'#lied conduct is b. #artial sufficient a. ;i&'s: rinci#al accessory also condoned

b. accessory #rinci#al still outstanding c. accessory oblig. "f #ledge condoned$ #resu'#tion only, rebuttable

Requisites of I$:%ie': 1. voluntary delivery #resu'#tion$ when evidence of indebtedness is w/ debtor #resu'ed voluntarily delivery by creditor$ rebuttable 2. effect of delivery of evidence of indebtedness is conclusion that debt is condoned already conclusion$ voluntary delivery of #rivate docu'ent a. if in hands of joint debtor only his share is condoned b. if in hands of solidary debtor - whole debt is condoned c. 1acit voluntary destruction of instru'ent by creditor$ 'ade to #rescribe w/o de'anding >- CONFUSION OR MERGER OF RIG5TSA character of debtor ? creditor is 'erged in sa'e #erson with res#ect to sa'e obligation RE!UISITES: a. <t 'ust ta2e #lace between #rinci#al debtor ? #rinci#al creditor only b. ,erger 'ust be clear ? definite c. 1he obligation involved 'ust be sa'e ? identical one obligation only d. 5evocable, if reason for confusion ceases, the obligation is revived E- COMPENSATION Aet off$ it is a 'ode of e+tinguish'ent to the concurrent a'ount the obligation of #ersons who are in their own right reci#rocally debtors or creditors RE!UISITES: a. ;oth #arties 'ust be 'utually creditors and debtors - in their own right and as #rinci#als b. ;oth debts 'ust consist in su' of 'oney or if consu'able , of the sa'e 2ind or =uality c. ;oth debts are due d. ;oth debts are li=uidated ? de'andable (deter'ined) e. Ceither debt 'ust be retained in a controversy co''enced by ! rd #erson ? co''unicated w/ debtor (neither debt is garnished) ;i&'s: a. legal by o#eration of law$ as long as ) re=uisites concur- even if un2nown to #arties ? if #ayable in diff #laces$ inde'nity for e+#ense of e+changes$ even if not e=ual debts only u# to concurring a'ount b. conventional agree'ent of #arties is enough, forget other re=uire'ent as long as both consented c. facultative one #arty has choice of clai'ing/o##osing one who has benefit of #eriod 'ay choose to co'#ensate - not all re=uisites are #resent - de#ositu'$ co''odatu'$ cri'inal offense$ clai' for future su##ort$ ta+es d. judicial set off$ u#on order of the court$ needs #leading ? #roof$ all re=uire'ents 'ust concur e+ce#t li=uidation e. total when 2 debts are of the sa'e a'ount f. #artial when 2 debts are not of the sa'e a'ount

Effect of 3ssi"&$e&t of c#e'it to 6#' :e#so&C c3& t0e#e sti%% be co$:e&s3tio& a. if 'ade after co'#ensation too2 #lace no effect$ co'#ensation already #erfected b. if 'ade before co'#ensation too2 #lace de#ends 1. with consent of debtor debtor is esto##ed unless he reserves his right ? gave notice to assignee 2. with 2nowledge but w/o consent of debtor co'#ensation 'ay be set u# as to debts 'aturing #rior to assign'ent !. w/o 2nowledge co'#ensation 'ay be set-u# on all debts #rior to his 2nowledge F- NO8ATION e+tinguish'ent of obligation by creating/ substituting a new one in its #lace a. changing object or #rinci#al conditions b. substituting #erson of debtor c. subrogating !rd #erson in right of creditor RE!UISITES: a. valid obligation b. intent to e+tinguish old obligation e+#ressed or i'#lied/ co'#letely/substantially inco'#atible old and new obligation on every #oint c. ca#acity ? consent of #arties to the new obligation d. valid new obligation EFFECT OF NO8ATION: a. e+tinguish'ent of #rinci#al carries accessory, e+ce#t/ - sti#ulation to contrary - sti#ulation #our autri unless beneficiary consents - 'odificatory novation only$ obliged to w/c is less onerous - old obligation is void b. old obligation subsists if/ - new obligation is void or voidable but annulled already ( e+ce#t/ intention of #arties ) c. if old obligation has condition - if 5esolutory ? it occurred old obligation already e+tinguished$ no new obligation since nothing to novate - if sus#ensive ? it never occurred as if no obligation$ also nothing to novate d. if old obligation has condition, 'ust be co'#atible with the new obligation$ if new is w/o condition dee'ed attached to new e. if new obligation has condition - if resolutory/ valid - if sus#ensive ? did not 'ateriali0e/ old obligation is enforced ;IN(S: a. REAL)OB@ECTI8E change object, cause/consideration or #rinci#al condition b- PERSONAL)SUB@ECTI8E 1. substituting #erson of debtor ( #assive ) E*PROMISION$ initiative is fro' !rd #erson or new debtor$ new debtor ? creditor to consent$ old debtor released fro' obligation$ subject to full rei'burse'ent ? subrogation if 'ade w/ consent of old debtor$ if w/o consent or against will , only beneficial rei'burse'ent$ if new debtor is insolvent, not res#onsible since w/o his consent (ELEGACION$ initiative of old debtor$ all #arties to consent$ full rei'burse'ent$ if insolvent new debtor not res#onsible old debtor because obligation e+tinguished by valid novation unless/ insolvency already e+isting ? of #ublic 2nowledge or 2now to hi' at ti'e of delegacion a. Jelegante old debtor b. Jelegatario - creditor c. Jelegado new debtor

2. subrogating !rd #erson to rights of creditor ( active ) a. conventional- agree'ent ? consent of all #arties$ clearly established b. legal- ta2es #lace by o#eration of law$ no need for consent$ not #resu'ed e+ce#t as #rovided for in law/ #resu'ed when1. creditor #ays another #referred creditor even w/o debtor3s 2nowledge 2. !rd #erson not interested in obligation #ays w/ a##roval of debtor !. #erson interested in fulfill'ent of obligation #ays debt even w/o 2nowledge of debtor Jifference fro' #ay'ent by !rd #erson 1. debtor is not nec. 5eleased fro' debt 2. can be done w/o consent of creditor !. 1 obligation %. !rd #erson has no oblig. to #ay if insolvent *hange of debtor 1. debtor is released 2. needs consent of creditor e+#ress or i'#lied !. 2 obligations$ 1 is e+tinguished ? new one created %. new debtor is obliged to #ay

PART II - CONTRACTS -'eeting of 'inds bet 2 #arties whereby one binds hi'self with res#ect to other to give so'ething or render so'e service PRINCIPAL C5ARACTERISTICS: 1. Auto&o$2 of ?i%%s #arties 'ay sti#ulate anything as long as not illegal, i''oral, etc. 2. Mutu3%it2 A #erfor'ance or validity binds both #arties$ not left to will of one of #arties !. Ob%i"3to#2 Fo#ce #arties are bound fro' #erfection of contract/ a. fulfill what has been e+#ressly sti#ulated b. all conse=uences w/c 'ay be in 2ee#ing with good faith, usage ? law %. Re%3ti/it2 binding only between the #arties, their assigns, heirs$ strangers cannot de'and enforce'ent E*CEPTION TO RELATI8IT+: a. Accion #auliana b. Accion directa c. Ati#ulation #our autrui RE!UISITES OF STIPULATION POUR AUTRUI (1) arties 'ust have clearly and deliberately conferred a favor u#on a ! rd #erson (2) 1he sti#ulation in favor of a !rd #erson should be a #art of, not the whole contract (!) 1hat the favorable sti#ulation should not be conditioned or co'#ensated by any 2ind of obligation whatsoever (%) Ceither of the contracting #arties bears the legal re#resentation or authori0ation of !rd #arty ()) 1he third #erson co''unicates his acce#tance before revocation by the original #arties d. Art 1!12 e. Art 1!1% RE!UISITES OF ART ,6,1: (1) 8+istence of a valid contract (2) Lnowledge of the contract by a !rd #erson (!) <nterference by the !rd #erson ;IN(S OF CONTRACTS As to :e#fectio& o# fo#$3tio&: 1. consensual #erfected by agree'ent of #arties 2. real #erfected by delivery ( co''odatu', #ledge, de#osit ) !. for'al/sole'n #erfected by confor'ity to essential for'alities ( donation )

As to c3use 1. "nerous with valuable consideration 2. 4ratuitous founded on liberality !. 5e'unerative #restation is given for service #reviously rendered not as obligation As to i$:o#t3&ce o# 'e:e&'e&ce of o&e u:o& 3&ot0e# 1. #rinci#al contract 'ay stand alone 2. accessory de#ends on another contract for its e+istence$ 'ay not e+ist on its own !. re#aratory not an end by itself$ a 'eans through which future contracts 'ay be 'ade As to :3#ties ob%i"e': 1. Fnilateral only one of the #arties has an obligation 2. ;ilateral both #arties are re=uired to render reci#rocal #restations As to &3$e o# 'esi"&3tio&: 1. Co'inate 2. <nno'inate a) Jo ut des < give that you 'ay give b) Jo ut facias < give that you 'ay do c) Bacio ut des < do that you 'ay give d) Bacio ut facias < do that you 'ay do STAGES IN A CONTRACT: 1. re#aration - negotiation 2. #erfection/birth !. consu''ation #erfor'ance ESSENTIAL ELEMENTS: 1. Co&se&t 'eeting of 'inds between #arties on subject 'atter ? cause of contract$ concurrence of offer ? acce#tance 5e=uire'ents/ a. lurality of subject b. *a#acity c. <ntelligence and free will d. ,anifestation of intent of #arties e. *ognition by the other #arty f. *onfor'ity of 'anifestation and cognition N%t'* W' $%ll%3 th' th'% y %$ c%#"iti%" a") "%t th' th'% y %$ &a"i$'!tati%", U")' %( civil la32 th' %$$' a") acc'-ta"c' c%"c( %"ly 3h'" th' %$$' % c%&'! t% 6"%32 a") "%t 3h'" th' %$$' '' &' 'ly &a"i$'!t! hi! acc'-ta"c' ELEMENTS OF 8ALI( OFFER a. definite b. co'#lete c. intentional ELEMENTS OF 8ALI( ACCEPTANCE a. une=uivocal b. unconditional

W5EN OFFER BECOMES INEFFECTI8E: 1. death, civil interdiction, insanity or insolvency of either #arty before acce#tance is conveyed 2. e+#ress or i'#lied revocation of the offer by the offeree !. =ualified or conditional acce#tance of the offer %. subject 'atter beco'es illegal or i'#ossible before acce#tance is co''unicated PERIO( FOR ACCEPTANCE 1. stated fi+ed #eriod in the offer 2. no stated fi+ed #eriod a) offer is 'ade to a #erson #resent acce#tance 'ust be 'ade i''ediately

b) offer is 'ade to a #erson absent acce#tance 'ay be 'ade within such ti'e that, under nor'al circu'stances, an answer can be received fro' hi' OPTION - o#tion 'ay be withdrawn anyti'e before acce#tance is co''unicated but not when su##orted by a consideration other than #urchase #rice/ o#tion 'oney N%t'* A"# 7( v, CA (.8895 !tat'! that a ("ilat' al - %&i!' t% b(y % !'ll2 i$ "%t !(--% t') by a )i!ti"ct c%"!i)' ati%"2 &ay b' 3ith) a3" b(t &ay "%t b' )%"' 3hi&!ically % a bit a ily: th' i#ht %$ th' # a"t'' h' ' i! )a&a#'! a") "%t !-'ci$ic -' $% &a"c': E+(at% ial v, May$ai (;<9 SCRA 9=>5 h'l) that a" %-ti%" cla(!' i" % )' t% b' vali) a") '"$% c'abl' &(!t i")icat' th' )'$i"it' - ic' at 3hich th' -' !%" # a"ti"# th' %-ti%" i! 3illi"# t% !'ll2 c%"t act ca" b' '"$% c') a") "%t %"ly )a&a#'!: 4a a"a+(' ?i"#! @ CA (.8805 !tat'! that i#ht %$ $i !t '$(!al &ay b' '"$% c') by !-'ci$ic -' $% &a"c', PERSONS W5O CANNOT GI8E CONSENT TO A CONTRACT: 1. ,inors 2. <nsane or de'ented #ersons !. <lliterates/ deaf-'utes who do not 2now how to write %. <nto+icated and under hy#notic s#ell ). Art 1!!1 - #erson under 'ista2e$ 'ista2e 'ay de#rive intelligence K. Art 1!!: - #erson induced by fraud (dolo causante) N%t'* D%l(! b%"(! ((!(al '1a##' ati%"! i" t a)'5 a ' "%t i" th'&!'lv'! $ a()(l'"t RULE ON CONTRACTS ENTERE( INTO B+ MINORS 4eneral 5ule/ &"<JA;G8 8D*8 1<"CA/ 1. F#on reaching age of 'ajority they ratify the sa'e 2. 1hey were entered unto by a guardian and the court having jurisdiction had a##roved the sa'e !. 1hey were contracts for necessities such as food, but here the #ersons who are bound to give the' su##ort should #ay therefor %. ,inor is esto##ed for having 'isre#resented his age and 'isled the other #arty (when age is close to age of 'ajority as in the ,ercado v 8s#iritu ? Aia Auan v Alcantara cases) N%t'* I" th' Sia S(a" v Alca"ta a ca!'2 th' ' i! a !t %"# )i!!'"t by A,4a)illa t% th' '$$'ct that th' &i"% ca""%t b' '!t%--') i$ h' i! t%% y%("# t% #iv' c%"!'"t: %"' that i! t%% y%("# t% #iv' c%"!'"t i! t%% y%("# t% b' '!t%--'), S(b!'+('"tly2 i" B a#a"Ba v @illa-Ab ill'2 th' )i!!'"t b'ca&' th' (li"#, Mi"% ! c%(l) "%t b' '!t%--') (IS!UALIFIE( TO ENTER INTO CONTRACTS: co&t#3cts e&te#e' i&to 3#e /oi' 9 1. those under civil interdiction 2. hos#itali0ed le#ers !. #rodigals %. deaf and du'b who are unable to read and write ). those who by reason of age, disease, wea2 'ind and other si'ilar causes, cannot without outside aid, ta2e care of the'selves and 'anage their #ro#erty, beco'ing an easy #rey for deceit and e+#loitation CAUSES W5IC5 8ITIATE FREE(OM 1. violence 58EF<A<18/ a. <rresistable #hysical force b. Auch force is the deter'ining cause for giving consent 2. <nti'idation

58EF<A<18/ a. Jeter'ining cause for the contract b. 1hreatened act is unjust and unlawful c. 5eal and serious d. roduces a well grounded fear that the #erson 'a2ing it will carry it over !. undue influence SIMULATE( CONTRACTS a. absolute no intention to be bound at all, fictitious only void fro' beginning b. relative there is intention to be bound but concealed$ concealed contract binds/ 1. no #rejudice to !rd #ersons 2. not contrary to law, 'orals, etc. 2. OB@ECT 1he #restation RE!UISITES: a) >ithin the co''erce of 'an - either e+isting or in #otency b) Gicit or not contrary to law, good custo's c) ossible d) Jeter'inate as to its 2ind or deter'inable w/o need to enter into a new contract e) 1rans'issible !. CAUSA reason why #arties enter into contract RE!UISITES: a) <t 'ust e+ist b) <t 'ust be true c) <t 'ust be licit MOTI8E - #urely #rivate reason$ illegality does not invalidate contract e+ce#t when it #redeter'ines #ur#ose of contract$ when 'erged into one A;A8C*8 "B *AFAA <GG84AG<1M "B *AFAA BAGA<1M "B *AFAA &"<J - #roduce no legal effect &"<J - #roduce no legal effect &"<JA;G8 #arty 'ust #rove that cause is untruthful$ #resu'#tion of validity but rebuttable *AFAA C"1 A1A18J <C 58AF,8J 1" 8D<A1 - burden of #roof is on the #erson *"C15A*1 assailing its e+istence <CAJ8EFA*M "B *AFAA J"8A C"1 <C&AG<JA18 *"C15A*1 85 A8 8+ce#tions/ 1. fraud 2. 'ista2e !. undue influence %. cases s#ecified by law - contracts entered when ward suffers lesion of 'ore than 2)N %. FORM in so'e 2ind of contracts only as contracts are generally consensual$ for' is a 'anner in which a contract is e+ecuted or 'anifested a. <nfor'al 'ay be entered into whatever for' as long as there is consent, object ? cause b. Bor'al re=uired by law to be in certain s#ecified for' such as/ donation of real #ro#erty, sti#ulation to #ay interest, transfer of large cattle, sale of land thru agent, contract of antichresis, contract of #artnershi#, registration of chattel 'ortgage, donation of #ersonal #ro# in e+cess of ),777 c. 5eal creation of real rights over i''ovable #ro# 'ust be written W5EN FORM IS IMPORTANT: 1) for validity (for'al/sole'n contracts) 2) for enforceability (statute of frauds)

!) for convenience Ge&e#3% Ru%e/ contract is valid ? binding in whatever for' #rovided that ! essential re=uisites concur E.ce:tio&: a. Gaw re=uires contract to be in so'e for' for validity - donation ? acce#tance of real #ro#erty b. Gaw re=uires contract to be in so'e for' to be enforceable - Atatute of Brauds$ contract is valid but right to enforce cannot be e+ercised$ need ratification to be enforceable c. Gaw re=uires contract to be in so'e for' for convenience - contract is valid ? enforceable, needed only to bind !rd #arties - e+/ #ublic docu'ents needed for the ff/ 1. contracts w/c object is creation, trans'ission or refor'ation of real rights over i''ovables 2. cession, re#udiation, renunciation of hereditary rights/* 4 !. #ower to ad'inister #ro#erty for another %. cession of action of rights #roceeding fro' an act a##earing in a #ublic inst. ). all other docs where a'ount involved is in e+cess of )77 ( 'ust be written even #rivate docs ) REFORMATION OF CONTRACTS re'edy to confor' to real intention of #arties due to 'ista2e, fraud, ine=uitable conduct, accident CAUSES)GROUN(S: a. 'utual/ instru'ent includes so'ething w/c should not be there or o'it what should be there 'utual 'ista2e of fact clear ? convincing #roof causes failure of instru'ent to e+#ress true intention b. unilateral one #arty was 'ista2en other either acted fraudulently or ine=uitably or 2new but concealed #arty in good faith 'ay as2 for refor'ation c. 'ista2e by !rd #ersons due to ignorance, lac2 of s2ill, negligence , bad faith of drafter, cler2, ty#ist d. others s#ecified by law to avoid frustration of true intent RE!UISITES: 1. there is a written instru'ent 2. there is 'eeting of 'inds !. true intention not e+#ressed in instru'ent %. clear ? convincing #roof ). facts #ut in issue in #leadings N%t'* - '!c ib'! i" .C y'a ! $ %& )at' %$ '1'c(ti%" %$ i"!t (&'"t W5EN NOT A8AILABLE: a. si'#le donation inter vivos b. wills c. when real agree'ent is void d. esto##el$ when #arty has brought suit to enforce it ;IN(S OF (EFECTI8E CONTRACTS: 1. RESCISSIBLE CONTRACTS 1hose which have caused a #articular econo'ic da'age either to one of the #arties or to a !rd #erson and which 'ay be set aside

even if valid. <t 'ay be set aside in whole or in #art, to the e+tent of the da'age causedH RE!UISITES: a. *ontract 'ust be rescissible (1) Fnder art 1!:1/ i. *ontracts entered into by #ersons e+ercising fiduciary ca#acity (a) 8ntered into by guardian whenever ward suffers da'age by 'ore than 1/% of value of object (b) Agreed u#on in re#resentation of absentees, if absentee suffers lesion by 'ore than O of value of #ro#erty (c) *ontracts where rescission is based on fraud co''itted on creditor (accion #auliana) (d) "bjects of litigation$ contract entered into by defendant w/o 2nowledge or a##roval of litigants or judicial authority (e) ay'ent by an insolvent on debts w/c are not yet due$ #rejudices clai' of others (f) rovided for by law - art 1)2K, 1)!%, 1)!:, 1)!I, 1)%2, 1))K, 1)K7, 1)K6 and 1K)I ii.Fnder art 1!:2 - ay'ents 'ade in a state of insolvency b. laintiff has no other 'eans to obtain re#aration b. laintiff 'ust be able to return whatever he 'ay be obliged to return due to rescission c. 1he things 'ust not have been #assed to !rd #arties who did not act in bad faith d. <t 'ust be 'ade within the #rescribed #eriod OBLIGATION CREATE( B+ T5E RESCISSION OF T5E CONTRACT: Mutu3% Restitutio& 1. 1hings w/c are the objects of the contract ? their fruits 2. rice with interest N%t'* M(t(al '!tit(ti%" N,A, 3h'"* ., c ')it% )i) "%t 'c'iv' a"ythi"# $ %& c%"t act ;, thi"# al 'a)y i" -%!!'!!i%" %$ -a ty i" #%%) $aith: !(bD'ct t% i")'&"ity %"ly: i$ th' ' a ' ; % &% ' ali'"ati%"! E liability %$ .!t i"$ act% 2. 8OI(ABLE CONTRACTS intrinsic defect$ valid until annulled$ defect is due to vice of consent or legal inca#acity C5ARACTERISTICS: a. 8ffective until set aside b. ,ay be assailed or attac2ed only in an action for that #ur#ose c. *an be confir'ed ( N%t'* CONFIRMATION IS TFE 4RO4ER TERM FOR CURING TFE DEFECT OF A @OIDABLE CONTRACT ) d. *an be assailed only by the #arty whose consent was defective or his heirs or assigns W5AT CONTRACTS ARE 8OI(ABLE: 3- T5OSE W5ERE ONE OF T5E PARTIES IS INCAPABLE OF GI8ING CONSENT TO A CONTRACT %e"3% i&c3:3cit29 (1) 'inors ( below 1: ) (2) insane unless acted in lucid interval (!) deaf 'ute who can3t read or write (%) #ersons s#ecially dis=ualified/ civil interdiction ()) in state of drun2enness (K) in state of hy#notic s#ell b- T5OSE W5ERE T5E CONSENT IS 8ITIATE( B+ MISTA;E< 8IOLENCE< INTIMI(ATION< UN(UE INFLUENCE OR FRAU( /ice of co&se&t9 ,9 $ist37e false belief into so'ething

RE!UISITES: 1. 5efers to the subject of the thing which is the object of the contract 2. 5efers to the nature of the contract !. 5efers to the #rinci#al conditions in an agree'ent %. 8rror as to #erson - when it is the #rinci#al consideration of the contract ). 8rror as to legal effect - when 'ista2e is 'utual and frustrates the real #ur#ose of #arties 19 /io%e&ce serious or irresistible force is e'#loyed to wrest consent 69 i&ti$i'3tio& one #arty is co'#elled by a reasonable ? well-grounded fear of an i''inent ? grave danger u#on #erson ? #ro#erty of hi'self, s#ouse, ascendants or descendants ('oral coercion) =9 u&'ue i&f%ue&ce #erson ta2es i'#ro#er advantage of his #ower over will of another de#riving latter of reasonable freedo' of choice >9 f#3u' thru insidious words or 'achinations of contracting #arties, other is induced to enter into contract w/o w/c he will not enter (dolo causante) PERIO( TO BRING ACTION FOR ANNULMENT <nti'idation, violence, undue influence % years fro' ti'e defect of consent ceases ,ista2e, fraud % years fro' ti'e of discovery <nca#acity fro' ti'e guardianshi# ceases EFFECTS OF ANNULMENT: 1. "bligation to give 'utual restitution 2. "bligation to do value of service PRESCRIPTION IN ACTION FOR ANNULMENT OF 8OI(ABLE CONTRACTS: <nti'idation/&iolence/undue <nfluence % years fro' ti'e defect of consent ceases ,ista2e/Braud % years fro' ti'e of discovery *ontracts entered into by % years fro' ti'e guardianshi# ceases 'inors/inca#acitated #ersons !. UNENFORCEABLE CONTRACT valid but cannot co'#el its e+ecution unless ratified$ e+trinsic defect$ #roduce legal efefcts only after ratified ;IN(S)8ARIETIES: 1. Fnauthori0ed/Co sufficient authority entered into in the na'e of another when/ a. no authority conferred b. in e+cess of authority conferred ( ultra vires ) N%t'* C( abl' by RATIFICATION 2. ;oth #arties inca#able of giving consent -2 'inor or 2 insane #ersons N%t'* C( abl' by AC?NOWLEDGEMENT !. Bailure to co'#ly with Atatute of Brauds a. Agree'ent to be #erfor'ed within a year after 'a2ing contract b. A#ecial #ro'ise to answer for debt, default or 'iscarriage of another c. Agree'ent 'ade in consideration of #ro'ise to 'arry d. Agree'ent for sale of goods, chattels or things in action at #rice not less than )77$ e+ce#tion/ auction when recorded sale in sales boo2 e. Agree'ent for lease of #ro#erty for 'ore than 1 year ? sale of real #ro#erty regardless of #rice f. 5e#resentation as to credit of another 1 WA+S OF CURING UNENFORCEABLE CONTRACTS: 1. Bailure of defendant to object in ti'e, to the #resentation of #arole evidence in court, the defect of unenforceability is cured

2. Acce#tance of benefits under the contract. <f there is #erfor'ance in either #art and there is acce#tance of #erfor'ance, it ta2es it out of unenforceable contracts$ also esto##el sets in by acce#ting #erfor'ance, the defect is waived %. 8OI( OR INE*ISTENT of no legal effect C5ARACTERISTICS: a. <t #roduces no effect whatsoever either against or in favor of anyone b. 1here is no action for annul'ent necessary as such is i#so jure. A judicial declaration to that effect is 'erely a declaration c. <t cannot be confir'ed, ratified or cured d. <f #erfor'ed, restoration is in order, e+ce#t if #ari delicto will a##ly e. 1he right to set u# the defense of nullity cannot be waived f. <'#rescri#tible g. Anyone 'ay invo2e the nullity of the contract whenever its juridical effects are asserted against hi' ;IN(S OF 8OI( CONTRACT: 1) T0ose %3c7i&" i& esse&ti3% e%e$e&ts/ no consent, no object, no cause (ine+istent ones) essential for'alities are not co'#lied with ( e+/ donation #ro#ter nu#tias should confor' to for'alities of a donation to be valid ) (a) 1hose w/c are absolutely si'ulated or fictitious no cause (b) 1hose which cause or object did not e+ist at the ti'e of the transaction no cause/object (c) 1hose whose object is outside the co''erce of 'an no object (d) 1hose w/c conte'#late an i'#ossible service no object (e) 1hose w/c intention of #arties relative to #rinci#al object of the contract cannot be ascertained 19 P#o0ibite' b2 %3? (f) 1hose e+#ressly #rohibited or declared void by law - *ontracts w/c violate any legal #rovision, whether it a'ounts to a cri'e or not !) I%%e"3%)I%%icit o&es 1hose whose cause, object or #ur#ose is contrary to law, 'orals, good custo's, #ublic order or #ublic #olicy $ 8+/ *ontract to sell 'arijuana ;IN(S OF ILLEGAL CONTRACTS *"C15A*1 *"CA1<1F18 *"C15A*1 J"8A C"1 *5<,<CAG "BB8CA8 *"CA1<1F18 *5<,<CAG "BB8CA8 ;F1 <A <GG84AG "5 FCGA>BFG 85 A8 arties are in Co action for s#ecific Co action for s#ecific #ari delicto #erfor'ance #erfor'ance Co action for restitution on Co action for restitution on either side. 1he law will leave either side. 1he law will leave you where you are you where you are ;oth shall be #rosecuted Co confiscation 1hing/#rice to be confiscated in favor of govern'ent "nly one #arty Co action for s#ecific Co action for s#ecific is guilty #erfor'ance #erfor'ance <nnocent #arty is entitled to <nnocent #arty is entitled to restitution restitution 4uilty #arty is not entitled to 4uilty #arty is not entitled to restitution restitution 4uilty #arty will be #rosecuted <nstru'ent of cri'e will be confiscated in favor of govt

PARI (ELICTO (OCTRINE -both #arties are guilty, no action against each other$ those who co'e in e=uity 'ust co'e with clean hands$ a##lies only to illegal contracts ? not to ine+istent contracts$ does not a##ly when a su#erior #ublic #olicy intervenes E*CEPTION TO PARI (ELICTO RULE 1. <f #ur#ose has not yet been acco'#lished ? <f da'age has not been caused to any !rd #erson 5e=uisites/ a) contract is for an illegal #ur#ose b) contract 'ust be re#udiated by any of the #arties before #ur#ose is acco'#lished or da'age is caused to !rd #arties c) court believes that #ublic interest will be served by allowing recovery (discretionary u#on the court ) based on re'orse$ illegality is acco'#lished when #arties entered into contract$ before it ta2es effect #arty w/c is re'orseful #revents it 2. >here laws are issued to #rotect certain sectors/ consu'er #rotection, labor, usury law a) *onsu'er #rotection if #rice of co''odity is deter'ined by statute, any #erson #aying an a'ount in e+cess of the 'a+i'u' #rice allowed 'ay recover such e+cess b) Gabor if law sets the 'ini'u' wage for laborers, any laborer who agreed to receive less 'ay still be entitled to recover the deficiency$ if law set 'a+ wor2ing hours ? laborer who underta2es to wor2 longer 'ay de'and additional co'#ensation c) <nterest #aid in e+cess of the interest allowed by the usury law 'ay be recovered by debtor with interest fro' date of #ay'ent !. <f one #arty is inca#acitated, courts 'ay allow recovery of 'oney, #ro#erty delivered by inca#acitated #erson in the interest of justice$ #ari delicto cannot a##ly because an inca#acitated #erson does not 2now what he is entering into$ unable to understand the conse=uences of his own action %. <f agree'ent is not illegal #er se but 'erely #rohibited ? #rohibition is designated for the #rotection of the #laintiff 'ay recover what he has #aid or delivered by virtue of #ublic #olicy MUTUAL RESTITUTION IN 8OI( CONTRACTS Ge&e#3% Ru%e/ #arties should return to each other what they have given by virtue of the void contract in case where nullity arose fro' defect in essential ele'ents 1. return object of contract ? fruits 2. return #rice #lus interest E.ce:tio&/ Co recovery can be had in cases where nullity of contract arose fro' illegality of contract where #arties are in #ari delicto$ e+ce#t/ a. inca#acitated not obliged to return what he gave but 'ay recover what he has given b. other #arty is less guilty or not guilty