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    Title V. - PRESCRIPTION

    CHAPTER 1GENERAL PROVISIONSArt. 1106.By prescription, one acquiresOWNERSHIPand other REAL RIGHTSthrough theLAPSE OF TIMEin themanner and under the conditions laid down by law.In the same way, rights and conditions are lost byprescription. (1930a)

    Art. 1107.PERSONS WHO ARE CAPABLE OF ACQUIRINGPROPERTY OR RIGHTS BY THE OTHER LEGAL MODES mayacquire the same by means o prescription.!inors and other incapacitated persons may acquireproperty or rights by prescription, either personally orthrough their parents, guardians or legalrepresentati"es. (1931a)

    Art. 1108. #rescription, both acquisiti"e ande$tincti"e, runs against%

    (1) MINORSand other incapacitated personswho ha"e parents, guardians or other legalrepresentati"es&

    (') ABSENTEESwho ha"e administrators, eitherappointed by them beore theirdisappearance, or appointed by the courts&(3) PERSONS LIVING ABROAD, who ha"e managersor administrators&() JURIDICAL PERSONS, e$cept the tate and itssubdi"isions.#ersons who are disquali*ed romadministering their property ha"e a right toclaim damages rom their legalrepresentati"es whose negligence has beenthe cause o prescription. (193'a)

    Art. 1109.#rescriptionDOES NOT RUNbetweenHUSBAND

    AND WIFE, e"en though there be a separation oproperty agreed upon in the marriage settlements orby +udicial decree.either does prescription run between PARENTS ANDCHILDREN, during the minority or insanity o the latter,and between GUARDIANAND WARDduring thecontinuance o the guardianship. (n)

    Art. 1110. #rescription, acquisiti"e and e$tincti"e,runs in a"or o, or against a married woman. (n)

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

    RENUNCIATION OF PRESCRIPTION

    Art. 1112.#ersons with capacity to alienate propertymay renounce prescription already obtained, but notthe right to prescribe in the uture.

    #rescription is deemed to ha"e beenTACITLY RENOUNCEDwhen the renunciation results rom acts which i!"# th$

    a%a&'(&$&t o the right acquired. (193)

    Art. 1113./ll things which are within the commerceo men are susceptible o prescription, unlessotherwise pro"ided. #roperty o the tate or any o itssubdi"isions not patrimonial in character shall not bethe ob+ect o prescription. (193a)

    Art. 1114.reditors and all other persons interestedin ma2ing the prescription eecti"e may a"ailthemsel"es thereo notwithstanding the e$press ortacit renunciation by the debtor or proprietor. (1934)

    Art. 111.5he pro"isions o the present 5itle are

    understood to be without pre+udice to what in thisode or in special laws is established with respect tospeci*c cases o prescription.(1936)

    Art. 1116. #rescription already running beore theeecti"ity o this ode shall be go"erned by lawspre"iously in orce& but i since the time this odetoo2 eect the entire period herein required orprescription should elapse, the present ode shall beapplicable, e"en though by the ormer laws a longerperiod might be required. (1939)

    CHAPTER 2PRESCRIPTION O! O"NERSHIP AN# OTHER

    REAL RIGHTSArt. 1117. /cquisiti"e prescription o dominion andother real rights may be ordinary or e$traordinary.7rdinary acquisiti"e prescription requires possessiono things in good aith and with +ust title or the time*$ed by law. (190a)

    Art. 1118. #ossession has to be in the concept o anowner, public, peaceul and uninterrupted. (191)

    Art. 1119./cts o possessory character e$ecuted in"irtue o license or by mere tolerance o the ownershall not be a"ailable or the purposes o possession.(19')

    Art. 1120.#ossession is interrupted or the purposeso prescription, naturally or ci"illy. (193)Art. 1121.#ossession is naturally interrupted whenthrough any cause it should cease or more than one

    year.5he old possession is not re"i"ed i a new possessionshould be e$ercised by the same ad"erse claimant.(19a)

    Art. 1122. I the natural interruption is or only oneyear or less, the time elapsed shall be counted ina"or o the prescription. (n)

    Art. 1123.i"il interruption is produced by +udicialsummons to the possessor. (19a)Art. 1124.8udicial summons shall be deemed not toha"e been issued and shall not gi"e rise tointerruption%

    (1) I it should be "oid or lac2 o legalsolemnities&(') I the plainti should desist rom thecomplaint or should allow the proceedings tolapse&(3) I the possessor should be absol"ed romthe complaint.In all these cases, the period o theinterruption shall be counted or theprescription. (19a)

    Art. 112./ny e$press or tacit recognition which thepossessor may ma2e o the owners right alsointerrupts possession. (196)

    Art. 1126. /gainst a title recorded in the :egistry o#roperty, ordinary prescription o ownership or realrights shall not ta2e place to the pre+udice o a thirdperson, e$cept in "irtue o another title also recorded&and the time shall begin to run rom the recording othe latter./s to lands registered under the ;and :egistration/ct, the pro"isions o that special law shall go"ern.(199a)

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    Art. 1127.5he good aith o the possessor consists inthe reasonable belie that the person rom whom herecei"ed the thing was the owner thereo, and couldtransmit his ownership. (190a)

    Art. 1128.5he conditions o good aith required orpossession in /rticles ', '4, '6, and '9 o thisode are li2ewise necessary or the determination ogood aith in the prescription o ownership and otherreal rights. (191)

    Art. 1129.

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    Art. 111.5he time or the prescription o actionswhich ha"e or their ob+ect the enorcement oobligations to pay principal with interest or annuityruns rom the last payment o the annuity or o theinterest. (1940a)

    Art. 112.5he period or prescription o actions todemand the ul*llment o obligation declared by a+udgment commences rom the time the +udgment

    became *nal. (1941)

    Art. 113.5he period or prescription o actions todemand accounting runs rom the day the personswho should render the same cease in their unctions.5he period or the action arising rom the result o theaccounting runs rom the date when said result wasrecogni=ed by agreement o the interested parties.(194')Art. 114.5he period during which the obligee waspre"ented by a ortuitous e"ent rom enorcing hisright is not rec2oned against him. (n)

    Art. 11.5he prescription o actions is interrupted

    when they are *led beore the court, when there is awritten e$tra+udicial demand by the creditors, andwhen there is any written ac2nowledgment o thedebt by the debtor. (1943a)

    BOO. IVOBLIGATIONS AND CONTRACTS

    Tit"$/ I/ 0 OBLIGATIONSCHAPTER 1

    GENERAL PROVISIONS

    Art. 116. /n obligation is a +uridical necessity togi"e, to do or not to do.

    Art. 117. 7bligations arise rom%(1) ;aw&(') ontracts&

    (3) Duasi-contracts&() /cts or omissions punished by law& and() Duasi-delicts. (1069a)

    Art. 118.7bligations deri"ed rom law are notpresumed. 7nly those e$pressly determined in thisode or in special laws are demandable, and shall beregulated by the precepts o the law which establishesthem& and as to what has not been oreseen, by thepro"isions o this Boo2. (1090)

    CONTRACTArt. 119.7bligations arising rom contracts ha"ethe orce o law between the contracting parties andshould be complied with in good aith. (1091a)$%ASI-CONTRACT

    Art. 1160.7bligations deri"ed rom quasi-contractsshall be sub+ect to the pro"isions o hapter 1, 5itleEFII, o this Boo2. (n)#ELICT

    Art. 1161.i"il obligations arising rom criminaloenses shall be go"erned by the penal laws, sub+ectto the pro"isions o /rticle '144, and o the pertinentpro"isions o hapter ', #reliminary 5itle, on @uman:elations, and o 5itle EFIII o this Boo2, regulatingdamages. (109'a)

    $%ASI-#ELICTArt. 1162.7bligations deri"ed rom quasi-delictsshall be go"erned by the pro"isions o hapter ', 5itleEFII o this Boo2, and by special laws. (1093a)@/#5G: '/5?:G /C Ghen demand would be useless, as whenthe obligor has rendered it beyond his powerto perorm.

    In reciprocal obligations, neither party incurs in delayi the other does not comply or is not ready to complyin a proper manner with what is incumbent upon him.

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    Art. 1171. :esponsibility arising rom raud isdemandable in all obligations. /ny ,i/er ,&,'ti&or FUTURE FRAUDisVOID. (110'a)Art. 1172.:esponsibility arising rom negligence inthe perormance o e"ery 2ind o obligation is alsodemandable, but such liability may be regulated bythe courts, according to the circumstances. (1103)

    Art. 1173.5he ault or negligence o the obligorconsists in the omission o that diligence which is

    required by the nature o the obligation andcorresponds with the circumstances o the persons, othe time and o the place. >hen negligence showsbad aith, the pro"isions o /rticles 1141 and ''01,paragraph ', shall apply.I the law or contract does not state the diligencewhich is to be obser"ed in the perormance, thatwhich is e$pected o a good ather o a amily shall berequired. (110a)FORTUITOUS EVENT

    Art. 1174.G$cept in cases e$pressly speci*ed by thelaw, or when it is otherwise declared by stipulation, orwhen the nature o the obligation requires theassumption o ris2, no person shall be responsible orthose e"ents which could not be oreseen, or which,though oreseen, were ine"itable. (110a)

    Art. 117.?surious transactions shall be go"ernedby special laws. (n)

    Art. 1176.5he receipt o the principal by the creditorwithout reser"ation with respect to the interest, shallgi"e rise to the presumption that said interest hasbeen paid.5he receipt o a later installment o a debt withoutreser"ation as to prior installments, shall li2ewiseraise the presumption that such installments ha"ebeen paid. (1110a):ecissory /ction /cion #aulianaJ

    Art. 1177.5he creditors, ater ha"ing pursued theproperty in possession o the debtor to satisy theirclaims, may e$ercise all the rights and bring all theactions o the latter or the same purpose, sa"e thosewhich are inherent in his person& they may alsoimpugn the acts which the debtor may ha"e done toderaud them. (1111)

    Art. 1178.ub+ect to the laws, all rights acquired in"irtue o an obligation are transmissible, i there has

    been no stipulation to the contrary. (111')

    @/#5G: 3CI M5t5a"it#

    Art. 1182. >hen the ul*llment o the conditiondepends upon the sole will o the debtor, theconditional obligation shall be "oid. I it depends uponchance or upon the will o a third person, theobligation shall ta2e eect in conormity with thepro"isions o this ode. (111)SUSPENSIVE COND < i!( $?ist$' @ ti$ (%"i wasc(&stit5t$'

    Art. 1183. Impossible conditions, those contrary togood customs or public policy and those prohibited bylaw shall annul the obligation which depends uponthem. I the obligation is di"isible, that part thereowhich is not aected by the impossible or unlawul

    condition shall be "alid.5he condition not to do an impossible thing shall beconsidered as not ha"ing been agreed upon. (111a)POSITIVE )SUSPENSIVE + COND/

    Art. 1184.5he condition that some e"ent happen ata determinate time shall e$tinguish the obligation assoon as the time e$pires or i it has becomeindubitable that the e"ent will not ta2e place. (1114)NEGATIVE COND/

    Art. 118.5he condition that some e"ent will nothappen at a determinate time shall render the

    obligation eecti"e rom the moment the timeindicated has elapsed, or i it has become e"ident thatthe e"ent cannot occur.

    I no time has been *$ed, the condition shall bedeemed ul*lled at such time as may ha"e probablybeen contemplated, bearing in mind the nature o theobligation. (1116)CONSTRUCTIVE 9 PRESUMED FULFILLMENT

    Art. 1186.5he condition shall be deemed ul*lled

    when the obligor "oluntarily pre"ents its ul*llment.(1119)

    Art. 1187.5he eects o a conditional obligation togi"e, once the condition has been ul*lled, shallretroact to the day o the constitution o theobligation. e"ertheless, when the obligation imposesreciprocal prestations upon the parties, the ruits andinterests during the pendency o the condition shallbe deemed to ha"e been mutually compensated. Ithe obligation is unilateral, the debtor shallappropriate the ruits and interests recei"ed, unlessrom the nature and circumstances o the obligation itshould be inerred that the intention o the personconstituting the same was dierent.

    In obligations to do and not to do, the courts shalldetermine, in each case, the retroacti"e eect o thecondition that has been complied with. (11'0)

    Art. 1188.5he creditor may, beore the ul*llment othe condition, bring the appropriate actions or thepreser"ation o his right.5he debtor may reco"er what during the same timehe has paid by mista2e in case o a suspensi"econdition. (11'1a)DURING PENDENCY OF AN OBLI

    Art. 1189.>hen the conditions ha"e been imposed

    with the intention o suspending the eAcacy o anobligation to gi"e, the ollowing rules shall beobser"ed in case o the impro"ement, loss ordeterioration o the thing during the pendency o thecondition%

    (1) I the thing is "(stwithout the fault of the DEBTOR,the obligation shall be extinguished&

    (') I the thing is "(stthrough the fault of theDEBTOR, he shall be obliged to pay damages& it isunderstood that the thing is lost when it

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    perishes, or goes out o commerce, ordisappears in such a way that its e$istence isun2nown or it cannot be reco"ered&

    (3) >hen the thing '$t$,i(,at$swithout thefaultof the DEBTOR, theimpairment is to be borne bythe creditor&

    () I it '$t$,i(,at$sthrough the fault of the DEBTOR,the creditor maychoose between the rescission of the

    obligation and its fulfillment, with indemnityordamages in either case&

    () I the thing is i!,(=$'by its nature, or bytime, the impro"ement shallinure to the benefit ofthe creditor&() I it isi!,(=$'at the expense of the DEBTOR, heshall ha"e no other right than that granted tothe usufructuary. (11'')

    EFFECTS OF FULFILLMENT OF RESOLUTORY COND

    Art. 1190.>hen the conditions ha"e or theirpurpose the e$tinguishment o an obligation to gi"e,the parties, upon the ul*llment o said conditions,shall return to each other what they ha"e recei"ed.

    In case o the loss, deterioration or impro"ement othe thing, the pro"isions which, with respect to thedebtor, are laid down in the preceding article shall beapplied to the party who is bound to return.

    /s or the obligations to do and not to do, thepro"isions o the second paragraph o /rticle 1164shall be obser"ed as regards the eect o thee$tinguishment o the obligation. (11'3)RESCISSION IN RECIPROCAL OBLI VS/ 12

    Art. 1191.5he POWERto RESCINDobligations isimplied in re'i5r',l ones, in case one o theobligors should not comply with what is incumbent

    upon him.

    5he in+ured party may choose between the ul*llmentand the rescission o the obligation, with the paymento damages in either case. @e may also see2rescission, e"en ater he has chosen ul*llment, i thelatter should become impossible.

    5he court shall decree the rescission claimed, unlessthere be +ust cause authori=ing the *$ing o a period.

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

    Art. 1192.In case both parties ha"e committed abreach o the obligation, the"ia%i"it# (> th$ >i,st i&>,act(,shall be equitably tempered by the courts. I it',&&t e )eteri&e)which o the parties *rst"iolated the contract, the sa$ sha"" %$ '$$$' extinguished,

    and $ach sha"" %$a, his (w& 'aa3$s. (n)

    SECTION 2. - Oli,ti&* WITH A PERIOD11720 117

    Art. 1193.7bligations or whose ul*llment a daycertain has been *$ed, shall be demandable onlywhen that day comes.

    7bligations with a resolutory period ta2e eect atonce, but terminate upon arri"al o the day certain.

    / day certain is understood to be that which mustnecessarily come, although it may not be 2nownwhen.

    I the uncertainty consists in whether the day willcome or not, the obligation is conditional, and it shallbe regulated by the rules o the preceding ection.(11'a)

    Art. 1194.In case o loss, deterioration orimpro"ement o the thing beore the arri"al o the daycertain, the rules in /rticle 1169 shall be obser"ed. (n)PAYMENT BEFORE ARRIVAL OF PERIOD

    Art. 119./nything paid or deli"ered beore thearri"al o the period, the obligor beingunaware of the

    periodor believing that the obligation has become due and

    demandable, a# %$ ,$c(=$,$' it+ t+e r(it* ,&)i&tere*t*. (11'a)

    Art. 1196.>hene"er in an obligation a period isdesignated, it is presumed to ha"e been establishedor the bene*t o both the creditor and the debtor,unless rom the tenor o the same or othercircumstances it should appear that the period hasbeen established in a"or o one or o the other.(11'4)WHEN COURTS SHALL FI; ' PERIOD J5'icia" P$,i(' < 8 STEP PROCESS

    Art. 1197.I the obligation does not *$ a period, but1r it* &,t(re ,&) t+e 'ir'(*t,&'e* it ',&e i&erre) t+,t , 5eri) ,* i&te&)e), thecourts may *$ the duration thereo.

    5he courts shall also *$ the duration o the periodwhen it 2)e5e&)* (5& t+e ill t+e )etr.

    In e"ery case, the courts shall determine such periodas may under the circumstances ha"e been probablycontemplated by the parties. 7nce *$ed by thecourts, the period cannot be changed by them.(11'6a)

    when DEBTOR LOSES A RIGHT TO A PERIOD-OBLI DEMANDABLE B4 LAPSE OF PERIOD

    Art. 1198.5he DEBTORshall l*e e/er ri+t t,e (*e t+e 5eri)%(1) >hen ater the obligation has been contracted, hebecomes INSOLVENT, unless he gi"es a guaranty orsecurity or the debt&(') >hen he does not urnish to the creditor theguaranties or securities which he has promised&(3) >hen by his own acts he has impaired saidguaranties or securities ater their establishment, andwhen through a ortuitous e"ent they disappear,

    unless he immediately gi"es new ones equallysatisactory&() >hen the debtor "iolates any UNDERTA.ING, inconsideration o which the creditor agreed to theperiod&() >hen the debtor ATTEMPTSto abscond. (11'9a)

    SECTION 3. - ALTERNATIVE Oli,ti&*1177018

    Art. 1199./ person alternati"ely bound by dierentprestations shall completely perorm one o them.5he creditor cannot be compelled to receive part of one and part ofthe other undertaking. (1131)

    Art. 1200.5he ,i3ht (> ch(ic$ %$"(&3s t( t h$ DEBTOR, unlessit has been e$pressly granted to the creditor.5he debtor shall ha"e no right to choose thoseprestations which are impossible, unlawul or whichcould not ha"e been the ob+ect o the obligation.(113')

    Art. 1201.5he choice shall produce no eect e$ceptrom the ti$ it has %$$& c(5&icat$'. (1133)

    USUFRUCTUARY enabling a holde !o dei"e #o$i! o bene$i! $o%#o#e!& !ha! ei!he i'!i!led !o ano!he #e'on

    INURE !a(e e$$e)!ONEROUS < $?c$ssi=$"# %5,'$&s($: t,(5%"$s($

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    Art. 1202.5he debtor shall lose the right o choicewhen among the prestations whereby he isalternati"ely bound, only one is practicable. (113)182 < 18- Righ! o$ *hoi)e+DEBTOR

    Art. 1203.I through the creditors acts the debtorcannot ma2e a choice according to the terms o theobligation, the latter may rescind the contract withdamages. (n)Art. 1204.5he creditor shall ha"e a right toindemnity or damages when, through the ault o the

    debtor, all the things which are alternati"ely theob+ect o the obligation ha"e been lost, or thecompliance o the obligation has become impossible.

    5he indemnity shall be *$ed ta2ing as a basis the"alue o the last thing which disappeared, or that othe ser"ice which last became impossible.Camages other than the "alue o the last thing orser"ice may also be awarded. (113a)Righ! o$ *hoi)e+ CREDITOR

    Art. 120.>hen the choice has been $?!,$ss"# 3i=$& t(th$ CREDITOR, the obligation shall cease to bealternati"e rom the 'a# wh$& th$ s$"$cti(& has %$$&c(5&icat$' t( th$ '$%t(,/?ntil then the responsibility o the debtor shall be

    go"erned by the ollowing rules%(1) I one of the things is lostthroughaORT!"TO!#E$E%T, he shall perorm the obligation bydelivering that which the creditor should choose fromamong the remainder, or that which remains i onlyone subsists&

    (') I the loss of one of the thingsoccurs throughthe fault of the debtor, the creditor may claim any ofthose subsisting, or the price of that which, through thefault of the former, has disappeared, witha right todamages&

    (3) I all the things are lost through the fault of the debtor,the choice by the creditor shall fall upon the priceof any one of them, also with indemnity for damages&

    5he same rules shall be applied to obligations to do ornot to do in case one, some or all o the prestationsshould become impossible. (113a)FACULTATIVE

    Art. 1206. >hen only one prestation has beenagreed upon, but the obligor may render another insubstitution, the obligation is called acultati"e.

    5he loss or deterioration o the thing intended as asubstitute, through the negligence o the obligor, doesnot render him liable. But once the substitution hasbeen made, the obligor is liable or the loss o thesubstitute on account o his delay, negligence orraud. (n)

    SECTION 4. - JOINT,&) SOLIDARYOli,ti&*Art. 1207.5he concurrence o two or more creditors or oftwo or more debtorsin one and the same obligation does

    not imply that each one o the ormer has a right todemand, or that each one o the latter is bound torender, entire compliance with the prestation. 5here isa solidary liability only when the obligation e$presslyso states, or when the law or the nature o theobligation requires solidarity. (1134a)

    JOINT DIVISIBLE OBLIGTN

    Art. 1208.I rom the law, or the nature or thewording o the obligations to which the precedingarticle reers the contrary does not appear, the creditor debt shall be presumed to be di"ided into as manyshares as there are creditors or debtors, the credits ordebts being considered distinct rom one another,sub+ect to the :ules o ourt go"erning themultiplicity o suits. (1136a)JOINT INDIVISIBLE OBLIGTN

    Art. 1209.I the di"ision is impossible, the right othe creditors may be pre+udiced only by theircollecti"e acts, and the debt can be enorced only byproceeding against all the debtors. I one o the lattershould be insol"ent, the others shall not be liable orhis share. (1139)INDIVISIBILITY VS/ SOLIDARITY

    Art. 1210.5he indi"isibility o an obligation does notnecessarily gi"e rise to solidarity. or does solidarityo itsel imply indi"isibility. (n)

    Art. 1211.olidarity may e$ist although the creditors

    and the debtors may not be bound in the samemanner and by the same periods and conditions.(110)

    Art. 1212. Gach one o the solidary creditors may dowhate"er may be useul to the others, but notanything which may be pre+udicial to the latter.(111a)

    Art. 1213./ solidary creditor cannot assign his rightswithout the consent o the others. (n)

    Art. 1214.5he debtor may pay any one o thesolidary creditors& but i any demand, +udicial ore$tra+udicial, has been made by one o them,payment should be made to him. (11'a)

    Art. 121.o"ation, compensation, conusion orremission o the debt, made by any o the solidarycreditors or with any o the solidary debtors, shalle$tinguish the obligation, without pre+udice to thepro"isions o /rticle 1'19.

    5he creditor who may ha"e e$ecuted any o theseacts, as well as he who collects the debt, shall beliable to the others or the share in the obligationcorresponding to them. (113)

    Art. 1216.5he creditor may proceed against any oneo the solidary debtors or some or all o themsimultaneously. 5he demand made against one othem shall not be an obstacle to those which may

    subsequently be directed against the others, so longas the debt has not been ully collected. (11a)

    Art. 1217.#ayment made by one o the solidarydebtors e$tinguishes the obligation. I two or moresolidary debtors oer to pay, the creditor may choosewhich oer to accept.

    @e who made the payment may claim rom his co-debtors only the share which corresponds to each,with the interest or the payment already made. I thepayment is made beore the debt is due, no interestor the inter"ening period may be demanded.

    >hen one o the solidary debtors cannot, because ohis insol"ency, reimburse his share to the debtorpaying the obligation, such share shall be borne by allhis co-debtors, in proportion to the debt o each.(11a)

    Art. 1218.#ayment by a solidary debtor shall notentitle him to reimbursement rom his co-debtors isuch payment is made ater the obligation hasprescribed or become illegal. (n)

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    Art. 1219.5he remission made by the creditor o theshare which aects one o the solidary debtors doesnot release the latter rom his responsibility towardsthe co-debtors, in case the debt had been totally paidby anyone o them beore the remission was eected.(11a)

    Art. 1220.5he remission o the whole obligation,obtained by one o the solidary debtors, does notentitle him to reimbursement rom his co-debtors. (n)

    Art. 1221.I the thing has been lost or i theprestation has become impossible without the ault othe solidary debtors, the obligation shall bee$tinguished.

    I there was ault on the part o any one o them, allshall be responsible to the creditor, or the price andthe payment o damages and interest, withoutpre+udice to their action against the guilty ornegligent debtor.

    I through a ortuitous e"ent, the thing is lost or the

    perormance has become impossible ater one o thesolidary debtors has incurred in delay through the+udicial or e$tra+udicial demand upon him by thecreditor, the pro"isions o the preceding paragraphshall apply. (114a)

    Art. 1222./ solidary debtor may, in actions *led bythe creditor, a"ail himsel o all deenses which arederi"ed rom the nature o the obligation and o thosewhich are personal to him, or pertain to his own share.>ith respect to those which personally belong to theothers, he may a"ail himsel thereo only as regardsthat part o the debt or which the latter areresponsible. (116a)

    SECTION . -DIVISIBLE,&) INDIVISIBLE Oli,ti&*Art. 1223.5he di"isibility or indi"isibility o thethings that are the ob+ect o obligations in which thereis only one debtor and only one creditor does not alteror modiy the pro"isions o hapter ' o this 5itle.(119)

    Art. 1224. / +oint indi"isible obligation gi"es rise toindemnity or damages rom the time anyone o thedebtors does not comply with his underta2ing. 5hedebtors who may ha"e been ready to ul*ll theirpromises shall not contribute to the indemnity beyondthe corresponding portion o the price o the thing oro the "alue o the ser"ice in which the obligationconsists. (110)

    Art. 122.hen the obligation has or i ts ob+ect the e$ecution oa certain number o days o wor2, theaccomplishment o wor2 by metrical units, oranalogous things which by their nature aresusceptible o partial perormance, it shall bedi"isible.

    @owe"er, e"en though the ob+ect or ser"ice may bephysically di"isible, an obligation is indi"isible i sopro"ided by law or intended by the parties.

    In obligations not to do, di"isibility or indi"isibilityshall be determined by the character o the prestationin each particular case. (111a)

    SECTION 6. - Oli,ti&* W9 A PENAL CLAUSEArt. 1226.In obligations with a penal clause, thepenalty shall substitute the indemnity or damagesand the payment o interests in case ononcompliance, i there is no stipulation to thecontrary. e"ertheless, damages shall be paid i theobligor reuses to pay the penalty or is guilty o raudin the ul*llment o the obligation.

    5he penalty may be enorced only when it isdemandable in accordance with the pro"isions o thisode. (11'a)

    Art. 1227.5he debtor cannot e$empt himsel romthe perormance o the obligation by paying thepenalty, sa"e in the case where this right has beene$pressly reser"ed or him. either can the creditordemand the ul*llment o the obligation and thesatisaction o the penalty at the same time, unlessthis right has been clearly granted him. @owe"er, i

    ater the creditor has decided to require the ul*llmento the obligation, the perormance thereo shouldbecome impossible without his ault, the penalty maybe enorced. (113a)

    Art. 1228.#roo o actual damages suered by thecreditor is not necessary in order that the penalty maybe demanded. (n)

    Art. 1229.5he +udge shall equitably reduce the

    penalty when the principal obligation has been partlyor irregularly complied with by the debtor. G"en ithere has been no perormance, the penalty may alsobe reduced by the courts i it is iniquitous orunconscionable. (11a)

    Art. 1230.5he nullity o the penal clause does notcarry with it that o the principal obligation.5he nullity o the principal obligation carries with itthat o the penal clause. (11)

    CHAPTER 4E;TINGUISHMENT O! O:LIGATIONS

    GENERAL PROVISIONSArt. 1231.7bligations are e$tinguished%

    (1) By PAYMENTorPERFORMANCE%

    (') By theLOSS OF THE THING DUE%

    (3) By theCONDONATIONorREMISSIONo the debt&

    () By the CONFUSIONor MERGERo the rights o

    creditor and debtor&

    () ByCOMPENSATION&

    () By NOVATION.

    7ther causes o e$tinguishment o obligations, suchas annulment, rescission, ul*llment o a resolutorycondition, and prescription, are go"erned elsewhere in

    this ode. (11a)

    SECTION 1. - PAYMENTr PERFORMANCEArt. 1232.#ayment means not only the deli"ery omoney but also the perormance, in any othermanner, o an obligation. (n)DEBT CONSIDERED PAID

    Art. 1233./ debt shall not be understood to ha"ebeen paid unless the thing or ser"ice in which theobligation consists has been completely delivered orrendered, as the case may be. (114)

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    o them the same must be applied. ?nless the partiesso stipulate, or when the application o payment ismade by the party or whose bene*t the term hasbeen constituted, application shall not be made as todebts which are not yet due.

    I the debtor accepts rom the creditor a receipt inwhich an application o the payment is made, theormer cannot complain o the same, unless there is acause or in"alidating the contract. (114'a)

    Art. 123.I the debt produces interest, payment othe principal shall not be deemed to ha"e been madeuntil the interests ha"e been co"ered. (1143)PAYMENT TO MORE ONEROUS DEBTS

    Art. 124.>hen the payment cannot be applied inaccordance with the preceding rules, or i applicationcan not be inerred rom other circumstances, thedebt which is most onerous to the debtor, amongthose due, shall be deemed to ha"e been satis*ed.I the debts due are o the same nature and burden,the payment shall be applied to all o themproportionately. (114a)

    S%:SECTION 2. - P,e&t CESSIONCESSION

    Art. 12.5he debtor may cede or assign hisproperty to his creditors in payment o his debts. 5hiscession, unless there is stipulation to the contrary,shall only release the debtor rom responsibility orthe net proceeds o the thing assigned. 5heagreements which, on the eect o the cession, aremade between the debtor and his creditors shall bego"erned by special laws. (114a)

    S%:SECTION 3. - TENDER OF PAYMENT,&)CONSIGNATIONArt. 126.I the creditor to whom tender o payment

    has been made reuses without +ust cause to acceptit, the debtor shall be released rom responsibility bythe consignation o the thing or sum due.

    CONSIGNATIONalone shall produce the same eect inthe ollowing cases%

    (1) >hen the creditor is absent or un2nown,or does not appear at the place o payment&(') >hen he is incapacitated to recei"e thepayment at the time it is due&

    (3) >hen, without +ust cause, he reuses togi"e a receipt&() >hen two or more persons claim the sameright to collect&() >hen the title o the obligation has beenlost. (114a)

    Art. 127.In order that the consignation o the thingdue may release the obligor, it must *rst beannounced to the persons interested in the ul*llment

    o the obligation.

    5he consignation shall be ineectual i it is not madestrictly in consonance with the pro"isions whichregulate payment. (1144)

    Art. 128.onsignation shall be made by depositingthe things due at the disposal o +udicial authority,beore whom the tender o payment shall be pro"ed,in a proper case, and the announcement o theconsignation in other cases.

    5he consignation ha"ing been made, the interested

    parties shall also be noti*ed thereo. (1146)

    Art. 129.5he e$penses o consignation, whenproperly made, shall be charged against the creditor.(1146)

    Art. 1260. 7nce the consignation has been dulymade, the debtor may as2 the +udge to order thecancellation o the obligation.

    Beore the creditor has accepted the consignation, orbeore a +udicial declaration that the consignation hasbeen properly made, the debtor may withdraw the

    thing or the sum deposited, allowing the obligation toremain in orce. (1160)

    Art. 1261. I, the consignation ha"ing been made,the creditor should authori=e the debtor to withdrawthe same, he shall lose e"ery preerence which hemay ha"e o"er the thing. 5he co-debtors, guarantorsand sureties shall be released. (1161a)

    SECTION 2. -LOSS t+eTHING DUEDETERMINATE THING

    Art. 1262./n obligation which consists in thedeli"ery o a DETERMINATE thi&3shall be E;TINGUISHED i itshould be lost or destroyed WITHOUT THE FAULT OF THEDEBTOR, and %$>(,$ h$ has i&c5,,$' i& '$"a#.>hen by law or stipulation, the obligor is liable e"en orortuitous e"ents, the loss o the thing does note$tinguish the obligation, and he shall be responsibleor damages. 5he same rule applies when the natureo the obligation requires the assumption o ris2.(116'a)

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

    Art. 1264.5he courts shall determine whether, underthe circumstances, the partial loss o the ob+ect o theobligation is so important as to e$tinguish theobligation. (n)PRESUMPTION OF FAULT: DEBTOR i& his !(ss$ssi(& LOST THING

    Art. 126.>hene"er the thing is lost in thepossession o the debtor, it shall be presumed thatthe loss was due to his ault, unless there is proo tothe contrary, and without pre+udice to the pro"isionso article 11. 5his presumption does not apply in

    case o earthqua2e, Mood, storm, or other naturalcalamity. (1163a)TO DO: EFFECT OF IMPOSSIBLITY OF PERFORMANCE: S5!$,=$&i&3 I!(ssi%i"it#

    Art. 1266.5he debtor in obligations to do shall alsobe released when the prestation becomes legally orphysically impossible without the ault o the obligor.(116a)DOCTRIINE OF UNFORSEEN EVENTS: Di>>ic5"t t( P$,>(,

    Art. 1267. >hen the ser"ice has become so diAcultas to be maniestly beyond the contemplation o theparties, the obligor may also be released thererom, inwhole or in part. (n)

    Art. 1268.>hen the debt o a thing certain anddeterminate proceeds rom a criminal oense, thedebtor shall not be e$empted rom the payment o itsprice, whate"er may be the cause or the loss, unlessthe thing ha"ing been oered by him to the personwho should recei"e it, the latter reused without+usti*cation to accept it. (116)

    Art. 1269.5he obligation ha"ing been e$tinguishedby the loss o the thing, the creditor shall ha"e all therights o action which the debtor may ha"e against

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    third persons by reason o the loss. (116)

    SECTION 3. - CONDONATIONr REMISSION OF THE DEBTArt. 1270.ondonation or remission is essentiallygratuitous, and requires the acceptance by theobligor. It may be made e$pressly or impliedly.7ne and the other 2ind shall be sub+ect to the ruleswhich go"ern inoAcious donations. G$presscondonation shall, urthermore, comply with the ormso donation. (1164)

    Art. 1271.5he deli"ery o a pri"ate documente"idencing a credit, made "oluntarily by the creditorto the debtor, implies the renunciation o the actionwhich the ormer had against the latter.

    I in order to nulliy this wai"er it should be claimed tobe inoAcious, the debtor and his heirs may uphold itby pro"ing that the deli"ery o the document wasmade in "irtue o payment o the debt. (1166)

    Art. 1272.>hene"er the pri"ate document in whichthe debt appears is ound in the possession o the

    debtor, it shall be presumed that the creditordeli"ered it "oluntarily, unless the contrary is pro"ed.(1169)

    Art. 1273.5he renunciation o the principal debtshall e$tinguish the accessory obligations& but thewai"er o the latter shall lea"e the ormer in orce.(1190)

    Art. 1274.It is presumed that the accessoryobligation o pledge has been remitted when the thingpledged, ater its deli"ery to the creditor, is ound inthe possession o the debtor, or o a third person whoowns the thing. (1191a)

    A!TER =I#TER=S

    SECTION 4. - CONFUSIONr MERGER OFRIGHTSArt. 127.5he obligation is e$tinguishedrom the time the characters o creditor and

    debtor are merged in the same person.(119'a)

    Art. 1276.!erger which ta2es place in theperson o the principal debtor or creditorbene*ts the guarantors. onusion whichta2es place in the person o any o the latterdoes not e$tinguish the obligation. (1193)

    Art. 1277. onusion does not e$tinguish a+oint obligation e$cept as regards the sharecorresponding to the creditor or debtor inwhom the two characters concur. (119)

    SECTION . -COMPENSATIONArt. 1278.ompensation shall ta2e placewhen two persons, in their own right, arecreditors and debtors o each other. (119)

    Art. 1279. In order that compensation may

    be proper, it is necessary%(1) 5hat each one o the obligors bebound principally, and that he be atthe same time a principal creditor othe other&

    (') 5hatboth debts consist in a sum ofmoney, or i the things due are'&*(,le, they be o the *,ei&), and also o the *,e >(,litithe latter has been stated&

    (3) 5hat the t )et* e )(e&() 5hat they be li>(i),te) and)e,&),le&() 5hat o"er neither o them there beany retention or contro"ersy,commenced by third persons andcommunicated in due time to thedebtor. (119)

    Art. 1280.otwithstanding the pro"isionso the preceding article, the guarantor mayset up compensation as regards what thecreditor may owe the principal debtor.(1194)Art. 1281. ompensation may be total orpartial. >hen the two debts are o the sameamount, there is a total compensation. (n)

    Art. 1282.5he parties may agree upon thecompensation o debts which are not yetdue. (n)

    Art. 1283.I one o the parties to a suito"er an obligation has a claim or damagesagainst the other, the ormer may set it oby pro"ing his right to said damages andthe amount thereo. (n)

    Art. 1284.>hen one or both debts arerescissible or "oidable, they may becompensated against each other beorethey are +udicially rescinded or a"oided. (n)

    Art. 128.5he debtor who has consentedto the assignment o rights made by acreditor in a"or o a third person, cannotset up against the assignee thecompensation which would pertain to himagainst the assignor, unless the assignorwas noti*ed by the debtor at the time he

    ga"e his consent, that he reser"ed his rightto the compensation.I the creditor communicated the cession tohim but the debtor did not consent thereto,the latter may set up the compensation odebts pre"ious to the cession, but not osubsequent ones.I the assignment is made without the2nowledge o the debtor, he may set up the

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    compensation o all credits prior to thesame and also later ones until he had2nowledge o the assignment. (1196a)

    Art. 1286.ompensation ta2es place byoperation o law, e"en though the debtsmay be payable at dierent places, butthere shall be an indemnity or e$penses o

    e$change or transportation to the place opayment. (1199a)

    Art. 1287. ompensation shall not beproper when one o the debts arises rom adepositum or rom the obligations o adepositary or o a bailee in commodatum.either can compensation be set up againsta creditor who has a claim or support dueby gratuitous title, without pre+udice to thepro"isions o paragraph ' o /rticle 301.(1'00a)

    Art. 1288. either shall there becompensation i one o the debts consists inci"il liability arising rom a penal oense. (n)

    Art. 1289.I a person should ha"e againsthim se"eral debts which are susceptible ocompensation, the rules on the applicationo payments shall apply to the order o thecompensation. (1'01)

    Art. 1290. >hen all the requisitesmentioned in /rticle 1'49 are present,compensation ta2es eect by operation olaw, and e$tinguishes both debts to theconcurrent amount, e"en though thecreditors and debtors are not aware o thecompensation. (1'0'a)

    SECTION 6. - NOVATION

    Art. 1291. 7bligations may be MODIFIEDby%

    (1) hanging their ob+ect or principalconditions&SUBSTITUTION

    (') ubstituting the person o thedebtor&(3) ubrogating a third person in therights

    o the creditor. (1'03)REQS/ OF NOVATION < PAEN

    Art. 1292. In order that an obligation maybe e$tinguished by another which substitutethe same, it is imperati"e that it be sodeclared in unequi"ocal terms, or that theold and the new obligations be on e"erypoint incompatible with each other.(1'0)SUBSTITUTION < E;PROMISION : DELEGACION

    Art. 1293.o"ation which consists insubstituting a new debtor in the place o theoriginal one, may be made e"en without the

    2nowledge or against the will o the latter,but not without the consent o the creditor.#ayment by the new debtor gi"es him therights mentioned in /rticles 1'3 and 1'34.(1'0a)INSOLVENCY E;PROMISION

    Art. 1294. I the substitution is without the2nowledge or against the will o the debtor,the new debtors insol"ency or non-ul*llment o the obligations shall not gi"erise to any liability on the part o the originaldebtor. (n)INSOLVENCY DELEGACIONArt. 129. 5he insol"ency o the newdebtor, who has been proposed by theoriginal debtor and accepted by thecreditor, shall not re"i"e the action o thelatter against the original obligor, e$ceptwhen said insol"ency was already e$istingand o public 2nowledge, or 2nown to the

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

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

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

    Art. 1298.5he no"ation is "oid i theoriginal obligation was "oid, e$cept whenannulment may be claimed only by thedebtor or when rati*cation "alidates actswhich are "oidable. (1'06a)

    Art. 1299.I the original obligation was

    sub+ect to a suspensi"e or resolutorycondition, the new obligation shall be underthe same condition, unless it is otherwisestipulated. (n).INDS OF SUBROGATION < LEGAL : CONVENTIONAL

    Art. 1300.ubrogation o a third person inthe rights o the creditor is either legal orcon"entional. 5he ormer is not presumed,e$cept in cases e$pressly mentioned in thisode& the latter must be clearly establishedin order that it may ta2e eect. (1'09a)

    Art. 1301.on"entional subrogation o athird person requires the consent o theoriginal parties and o the third person. (n)

    Art. 1302. It is presumed that there is legalsubrogation% WHEN SUBROGATION PRODUCED FR PAYMENT

    (1) >hen a creditor pays anothercreditorwho is preerred, e"en

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    WITHOUTthe debtors 2nowledge&(') >hen a third person,

    NOT interested in the obligation,pays with the e$press or tacitappro"al o the debtor&

    (3) >hen, e"en WITHOUTthe 2nowledgeothe debtor, a person interested in

    the ul*llment o the obligationpays, without pre+udice to theeects o conusion as to thelatters share. (1'10a)

    LEGAL SUBROGATION 0 EFFECT

    Art. 1303. ubrogation transers to thepersons subrogated the credit with all therights thereto appertaining, either againstthe debtor or against third person, be theyguarantors or possessors o mortgages,sub+ect to stipulation in a con"entionalsubrogation. (1'1'a)PARTIAL SUBROGATION 0 EFFECT

    Art. 1304./ creditor, to whom partialpayment has been made, may e$ercise hisright or the remainder, and he shall bepreerred to the person who has beensubrogated in his place in "irtue o thepartial payment o the same credit. (1'13)

    Tit"$ II/ 0CONTRACTSCHAPTER 1GENERAL PROVISIONSArt. 130. / contract is a$$ti&3 (> i&'s%$tw$$& tw( !$,s(&swhereby(&$ %i&'s his$">

    with ,$s!$ct t( th$ (th$,t( 3i=$ s($thi&3ort( ,$&'$, s($ s$,=ic$. (1'a)

    F,$$'( 9 A5t(&(# (> Wi""

    Art. 1306.5he contracting parties mayestablish such stipulations, clauses, termsand conditions as they may deemcon"enient, pro"ided they are not contraryto law, morals, good customs, public order,

    or public policy.

    Art. 1307. INNOMINATE CONTRACTSshall beregulated by the stipulations o the parties,by the pro"isions o 5itles I and II o thisBoo2, by the rules go"erning the mostanalogous nominate contracts, and by thecustoms o the place. (n)

    PRIN OF MUTUALITY OF CONTRACTS M5t5a"it#

    Art. 1308. 5he contract must bind bothcontracting parties& its "alidity orcompliance cannot be let to the will o oneo them. (1'a)

    M5t5a"it#

    Art. 1309.5he determination o theperormance may be let to a .rd person,whose decision shall not be binding 5&ti" it has%$$& a'$ &(w& t( %(th c(&t,acti&3 !a,ti$s. (n)DETERMINATION INEQUITABLE EFFECT M5t5a"it#

    Art. 1310.5he determination shall not beobligatory i it is e"idently inequitable. Insuch case, the courts shall decide what isequitable under the circumstances. (n)

    PERSONS AFFECTED BY A CONTRACT R$"ati=it#

    Art. 1311. ontracts ta2e eect onlybetween the parties, their assignsand heirs,e$cept in case where the rights andobligations arising rom the contract are not

    transmissible by their nature, or bystipulation or by pro"ision o law. 5he heir isnot liable beyond the "alue o the propertyhe recei"ed rom the decedent.

    STIPULATION POUR AUTRI < Sti! i&>a=(, (> 2 ,'P$,s(&

    I a contract should contain some stipulationin a"or o a third person, he may demandits ul*llment pro"ided he communicated hisacceptance to the obligor beore its

    re"ocation. / mere incidental bene*t orinterest o a person is not suAcient. 5hecontracting parties must ha"e clearly anddeliberately conerred a a"or upon a thirdperson.

    2,'PERSONS BOUND BY CONTRACTS CREATING REAL RIGHTS

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

    Art. 1313.reditors are protected in caseso contracts intended to deraud them. (n)2,'PERSON LIABILITY RESPONSIBLE FOR BREACH < Q5asi D$"ict

    Art. 1314./ny third person who inducesanother to "iolate his contract shall be liableor damages to the other contracting party.(n)

    GEN RULE P$,>$ct$' %# MERE CONSENT O%"i3at(,i&$ss: C(&s$&s5a"it#

    Art. 131. ontracts are PERFECTEDby MERECONSENT, and rom that moment the partiesare bound not only to the ul*llment o whathas been e$pressly stipulated but also to allthe consequences which, according to theirnature, may be in 2eeping with good aith,usage and law.E;CEPTION (> 121

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

    1'

    CHARACTERISTICGEN

    RULE

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    UNAUTHORIED CONTRACTS UNENFOREABLE

    Art. 1317. o one may contract in thename o another with(5t %$i&3 a5th(,i$' %# th$"att$,, or unlesshe has %# "aw a ,i3ht t( ,$!,$s$&thi.

    / contract entered into in the name oanother by one who has no authority orlegal representation, or who has acted

    beyond his powers, shall be UNENFORCEABLE,unlessit isRATIFIED, expresslyor impliedly, by theperson on whose behal it has beene$ecuted, %$>(,$ it is ,$=($' %# th$ (th$, c(&t,acti&3!a,t#.

    CHAPTER 2ESSENTIAL REQUISITESOF CONTRACTSGENERAL PROVISIONSArt. 1318.5here is no contract unless the

    ollowing requisites concur%(1) CONSENTo the contracting parties&(') OBJECTcertain which is the

    sub/ect mattero the contract&(3) CAUSEo the obligation which is

    established. (1'1)

    SECTION 1. - CONSENTArt. 1319.onsent is maniested by the

    $$ti&3 (> th$ (>>$,andthe acc$!ta&c$ 5!(& th$ thi&3N the ca5s$

    which are to constitute the contract.OFFER must be certainandACCEPTANCEabsolute.QUALIFIED ACCEPTANCEconstitutes a counter0

    offer.THEORY OF COGNITION 9 INFORMATION

    ACCEPTANCE MADE BY LETTER OR TELEGRAMdoes NOT bind the oerer exceptrom thetime it came to his knowledge.

    5he contract, in such a case, is presumed toha"e been entered into in the place wherethe oer was made.

    Art. 1320./n acceptance may be expressorimplied. (n)

    Art. 1321.5he person ma2ing the oer

    may *$ the time, place, and manner oacceptance, all o which must be compliedwith. (n)

    Art. 1322./n oer made through an agentis accepted rom the time acceptance iscommunicated to him. (n)

    Art. 1323. /n oer becomes ineecti"eupon the death, ci"il interdiction, insanity,or insol"ency o either party beoreacceptance is con"eyed. (n)

    Art. 1324.>hen the oerer has allowedthe oeree a certain period to accept, theoer may be withdrawn at any time beoreacceptance by communicating suchwithdrawal, e$cept when the option isounded upon a consideration, as somethingpaid or promised. (n)

    Art. 132. ?nless it appears otherwise,business

    ad"ertisements o things or sale are notde*nite oers, but mere in"itations to ma2ean oer. (n)

    Art. 1326./d"ertisements or bidders aresimply in"itations to ma2e proposals, andthe ad"ertiser is not bound to accept thehighest or lowest bidder, unless thecontrary appears. (n)

    Art. 1327.5he ollowing cannot gi"econsent to a contract%

    (1) ?nemancipated minors&(') Insane or demented persons, and

    dea-mutes who do not 2now howto write. (1'3a)

    Art. 1328.ontracts entered into during alucid inter"al are "alid. ontracts agreed toin a state o drun2enness or during ahypnotic spell are "oidable. (n)

    Art. 1329.5he incapacity declared in/rticle 13'4 is sub+ect to the modi*cationsdetermined by law, and is understood to bewithout pre+udice to special disquali*cationsestablished in the laws. (1')

    Art. 1330./ contract where consent is

    gi"en through mista2e, "iolence,intimidation, undue inMuence, or raud is"oidable. (1'a)

    Art. 1331.In order that mista2e mayin"alidate consent, it should reer to thesubstance o the thing which is the ob+ect othe contract, or to those conditions whichha"e principally mo"ed one or both partiesto enter into the contract.

    !ista2e as to the identity or quali*cations oone o the parties will "itiate consent onlywhen such identity or quali*cations ha"ebeen the principal cause o the contract./ simple mista2e o account shall gi"e riseto its correction. (1'a)

    Art. 1332.>hen one o the parties isunable to read, or i the contract is in a

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    language not understood by him, andmista2e or raud is alleged, the personenorcing the contract must show that theterms thereo ha"e been ully e$plained tothe ormer. (n)

    Art. 1333.5here is no mista2e i the partyalleging it 2new the doubt, contingency or

    ris2 aecting the ob+ect o the contract. (n)

    Art. 1334.!utual error as to the legaleect o an agreement when the realpurpose o the parties is rustrated, may"itiate consent. (n)

    Art. 133.5here is "iolence when in orderto wrest consent, serious or irresistible orceis employed.5here is intimidation when one o thecontracting parties is compelled by a

    reasonable and well-grounded ear o animminent and gra"e e"il upon his person orproperty, or upon the person or property ohis spouse, descendants or ascendants, togi"e his consent.5o determine the degree o intimidation, theage, se$ and condition o the person shallbe borne in mind.

    / threat to enorce ones claim throughcompetent authority, i the claim is +ust orlegal, does not "itiate consent. (1'4a)

    Art. 1336. Fiolence or intimidation shallannul the obligation, although it may ha"ebeen employed by a third person who didnot ta2e part in the contract. (1'6)

    Art. 1337.5here is undue inMuence when aperson ta2es improper ad"antage o his

    power o"er the will o another, depri"ing thelatter o a reasonable reedom o choice.5he ollowing circumstances shall beconsidered% the con*dential, amily, spiritualand other relations between the parties, orthe act that the person alleged to ha"ebeen unduly inMuenced was suering rommental wea2ness, or was ignorant or in

    *nancial distress. (n)

    Art. 1338.5here is raud when, throughinsidious words or machinations o one othe contracting parties, the other is inducedto enter into a contract which, withoutthem, he would not ha"e agreed to. (1'9)

    Art. 1339.

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    Art. 1348.Impossible things or ser"icescannot be the ob+ect o contracts. (1'4')

    Art. 1349.5he ob+ect o e"ery contractmust be determinate as to its 2ind. 5he actthat the quantity is not determinate shallnot be an obstacle to the e$istence o thecontract, pro"ided it is possible to

    determine the same, without the need o anew contract between the parties. (1'43)

    SECTION 3. - CAUSEo$ *on!a)!'Art. 130. In onerous contracts the causeis understood to be, or each contractingparty, the prestation or promise o a thing orser"ice by the other& in remuneratory ones,the ser"ice or bene*t which is remunerated&and in contracts o pure bene*cence, themere liberality o the beneactor. (1'4)

    Art. 131.5he particular moti"es o theparties in entering into a contract aredierent rom the cause thereo. (n)

    Art. 132. ontracts without cause, or withunlawul cause, produce no eect whate"er.5he cause is unlawul i it is contrary to law,morals, good customs, public order or publicpolicy. (1'4a)

    Art. 133.5he statement o a alse causein contracts shall render them "oid, i itshould not be pro"ed that they wereounded upon another cause which is trueand lawul. (1'4)

    Art. 134./lthough the cause is not statedin the contract, it is presumed that it e$ists

    and is lawul, unless the debtor pro"es thecontrary. (1'44)

    Art. 13. G$cept in cases speci*ed by law,lesion or inadequacy o cause shall notin"alidate a contract, unless there has beenraud, mista2e or undue inMuence. (n)

    CHAPTER 2FORMOF CONTRACTSArt. 136.ontracts shall be obligatory, inwhate"er orm they may ha"e been enteredinto, pro"ided all the essential requisites ortheir "alidity are present. @owe"er, whenthe law requires that a contract be in someorm in order that it may be "alid orenorceable, or that a contract be pro"ed ina certain way, that requirement is absoluteand indispensable. In such cases, the right

    o the parties stated in the ollowing articlecannot be e$ercised. (1'46a)

    Art. 137.I the law requires a documentor other special orm, as in the acts andcontracts enumerated in the ollowingarticle, the contracting parties may compeleach other to obser"e that orm, once thecontract has been perected. 5his right maybe e$ercised simultaneously with the actionupon the contract. (1'49a)

    Art. 138.5he ollowing must appear in apublic document%

    (1) /cts and contracts which ha"e ortheir ob+ect the creation,transmission, modi*cation ore$tinguishment o real rights o"erimmo"able property& sales o realproperty or o an interest therein a

    go"erned by /rticles 103, o. ',and 10&

    (') 5he cession, repudiation orrenunciation o hereditary rightsor o those o the con+ugalpartnership o gains&

    (3) 5he power to administer property,or any other power which has orits ob+ect an act appearing orwhich should appear in a publicdocument, or should pre+udice athird person&

    () 5he cession o actions or rightsproceeding rom an act appearingin a public document.

    /ll other contracts where the amount

    in"ol"ed e$ceeds *"e hundred pesos mustappear in writing, e"en a pri"ate one. Butsales o goods, chattels or things in actionare go"erned by /rticles, 103, o. ' and10. (1'60a)

    CHAPTER 4REFORMATION OF INSTRUMENTS&Art. 139. >hen, there ha"ing been ameeting o the minds o the parties to acontract, their true intention is note$pressed in the instrument purporting toembody the agreement, by reason omista2e, raud, inequitable conduct oraccident, one o the parties may as2 or thereormation o the instrument to the endthat such true intention may be e$pressed.

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    I mista2e, raud, inequitable conduct, oraccident has pre"ented a meeting o theminds o the parties, the proper remedy isnot reormation o the instrument butannulment o the contract.

    Art. 1360.5he principles o the general lawon the reormation o instruments are

    hereby adopted insoar as they are not inconMict with the pro"isions o this ode.

    Art. 1361.>hen a mutual mista2e o theparties causes the ailure o the instrumentto disclose their real agreement, saidinstrument may be reormed.

    Art. 1362.I one party was mista2en andthe other acted raudulently or inequitablyin such a way that the instrument does notshow their true intention, the ormer may

    as2 or the reormation o the instrument.

    Art. 1363.>hen one party was mista2enand the other 2new or belie"ed that theinstrument did not state their realagreement, but concealed that act rom theormer, the instrument may be reormed.

    Art. 1364.>hen through the ignorance,lac2 o s2ill, negligence or bad aith on thepart o the person drating the instrument oro the cler2 or typist, the instrument doesnot e$press the true intention o the parties,the courts may order that the instrument bereormed.

    Art. 136.I two parties agree upon themortgage or pledge o real or personalproperty, but the instrument states that theproperty is sold absolutely or with a right o

    repurchase, reormation o the instrument isproper.

    Art. 1366.5here shall be no reormation inthe ollowing cases%

    (1) imple donations inter "i"oswherein no condition is imposed&

    (') >ills&

    (3) >hen the real agreement is "oid.

    Art. 1367.>hen one o the parties hasbrought an action to enorce the instrument,he cannot subsequently as2 or itsreormation.

    Art. 1368.:eormation may be ordered atthe instance o either party or hissuccessors in interest, i the mista2e wasmutual& otherwise, upon petition o thein+ured party, or his heirs and assigns.

    Art. 1369.5he procedure or thereormation o instrument shall be go"ernedby rules o court to be promulgated by theupreme ourt.

    CHAPTER INTERPRETATIONOF CONTRACTSArt. 1370.I the terms o a contract areclear and lea"e no doubt upon the intentiono the contracting parties, the literalmeaning o its stipulations shall control.I the words appear to be contrary to thee"ident intention o the parties, the lattershall pre"ail o"er the ormer. (1'61)

    Art. 1371.In order to +udge the intention othe contracting parties, their

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

    Art. 1372.@owe"er general the terms o acontract may be, they shall not beunderstood to comprehend things that aredistinct and cases that are dierent romthose upon which the parties intended to

    agree. (1'63)

    Art. 1373.I some stipulation o anycontract should admit o se"eral meanings,it shall be understood as bearing thatimport which is most adequate to render iteectual. (1'6)Art. 1374.5he "arious stipulations o acontract shall be interpreted together,attributing to the doubtul ones that sensewhich may result rom all o them ta2en+ointly. (1'6)

    Art. 137.>ords which may ha"e dierentsigni*cations shall be understood in thatwhich is most in 2eeping with the natureand ob+ect o the contract. (1'6)

    Art. 1376.5he usage or custom o theplace shall be borne in mind in theinterpretation o the ambiguities o acontract, and shall *ll the omission ostipulations which are ordinarily established.(1'64)

    Art. 1377.5he interpretation o obscurewords or stipulations in a contract shall nota"or the party who caused the obscurity.(1'66)

    Art. 1378.>hen it is absolutely impossibleto settle doubts by the rules established in

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    the preceding articles, and the doubts reerto incidental circumstances o a gratuitouscontract, the least transmission o rightsand interests shall pre"ail. I the contract isonerous, the doubt shall be settled in a"oro the greatest reciprocity o interests.I the doubts are cast upon the principalob+ect o the contract in such a way that it

    cannot be 2nown what may ha"e been theintention or will o the parties, the contractshall be null and "oid. (1'69)

    Art. 1379.5he principles o interpretationstated in :ule 1'3 o the :ules o ourt shallli2ewise be obser"ed in the construction ocontracts. (n)

    CHAPTER 6RESCISSI:LE CONTRACTSArt. 1380.ontracts "alidly agreed upon

    may be rescinded in the cases establishedby law. (1'90)

    Art. 1381.5he ollowing contracts arerescissible%

    (1) 5hose which are entered into byguardians whene"er the wardswhom they represent suer lesionby more than one-ourth o the"alue o the things which are theob+ect thereo&

    (') 5hose agreed upon inrepresentation o absentees, i thelatter suer the lesion stated inthe preceding number&

    (3) 5hose underta2en in raud ocreditors when the latter cannot in

    any other manner collect theclaims due them&

    () 5hose which reer to things underlitigation i they ha"e beenentered into by the deendantwithout the 2nowledge andappro"al o the litigants or o

    competent +udicial authority&

    () /ll other contracts speciallydeclared by law to be sub+ect torescission. (1'91a)

    Art. 1382.#ayments made in a state oinsol"ency or obligations to whoseul*llment the debtor could not becompelled at the time they were eected,are also rescissible. (1'9')

    Art. 1383.5he action or rescission issubsidiary& it cannot be instituted e$ceptwhen the party suering damage has noother legal means to obtain reparation orthe same. (1'9)

    Art. 1384.:escission shall be only to thee$tent necessary to co"er the damagescaused. (n)

    Art. 138.:escission creates the obligationto return the things which were the ob+ect othe contract, together with their ruits, andthe price with its interest& consequently, itcan be carried out only when he whodemands rescission can return whate"er hemay be obliged to restore.either shall rescission ta2e place when thethings which are the ob+ect o the contract

    are legally in the possession o third personswho did not act in bad aith.In this case, indemnity or damages may bedemanded rom the person causing the loss.(1'9)

    Art. 1386.:escission reerred to in os. 1and ' o /rticle 1361 shall not ta2e place

    with respect to contracts appro"ed by thecourts. (1'9a)

    Art. 1387./ll contracts by "irtue o whichthe debtor alienates property by gratuitoustitle are presumed to ha"e been enteredinto in raud o creditors, when the donordid not reser"e suAcient property to pay alldebts contracted beore the donation.

    /lienations by onerous title are alsopresumed raudulent when made by

    persons against whom some +udgment hasbeen issued. 5he decision or attachmentneed not reer to the property alienated,and need not ha"e been obtained by theparty see2ing the rescission.In addition to these presumptions, thedesign to deraud creditors may be pro"edin any other manner recogni=ed by the lawo e"idence. (1'94a)

    Art. 1388.>hoe"er acquires in bad aiththe things alienated in raud o creditors,shall indemniy the latter or damagessuered by them on account o thealienation, whene"er, due to any cause, itshould be impossible or him to return them.I there are two or more alienations, the *rstacquirer shall be liable *rst, and so onsuccessi"ely. (1'96a)

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    Art. 1389.5he action to claim rescissionmust be commenced within our years.hen the deect o the contractconsists in the incapacity o one o theparties, the incapacitated person is notobliged to ma2e any restitution e$ceptinsoar as he has been bene*ted by thething or price recei"ed by him. (130)Art. 1400.>hene"er the person obliged bythe decree o annulment to return the thingcan not do so because it has been lostthrough his ault, he shall return the ruits

    recei"ed and the "alue o the thing at thetime o the loss, with interest rom the samedate. (1304a)

    Art. 1401.5he action or annulment ocontracts shall be e$tinguished when thething which is the ob+ect thereo is lostthrough the raud or ault o the person whohas a right to institute the proceedings.

    I the right o action is based upon theincapacity o any one o the contractingparties, the loss o the thing shall not be anobstacle to the success o the action, unlesssaid loss too2 place through the raud orault o the plainti. (131a)

    Art. 1402./s long as one o thecontracting parties does not restore what in"irtue o the decree o annulment he is

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    bound to return, the other cannot becompelled to comply with what isincumbent upon him. (1306)

    CHAPTER 8UNENFORCEABLE CONTRACTS&Art. 1403.5he ollowing contracts are

    unenorceable, unless they are rati*ed%(1) 5hose entered into in the name oanother person by one who hasbeen gi"en no authority or legalrepresentation, or who has actedbeyond his powers&

    (') 5hose that do not comply with thetatute o

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    (3) 5hose whose cause or ob+ect didnot e$ist at the time o thetransaction&

    () 5hose whose ob+ect is outside thecommerce o men&

    () 5hose which contemplate animpossible ser"ice&

    () 5hose where the intention o theparties relati"e to the principalob+ect o the contract cannot beascertained&

    (4) 5hose e$pressly prohibited ordeclared "oid by law.

    5hese contracts cannot be rati*ed. eithercan the right to set up the deense oillegality be wai"ed.

    Art. 1410.5he action or deense or thedeclaration o the ine$istence o a contractdoes not prescribe.

    Art. 1411.>hen the nullity proceeds romthe illegality o the cause or ob+ect o thecontract, and the act constitutes a criminaloense, both parties being in pari delicto,they shall ha"e no action against eachother, and both shall be prosecuted.!oreo"er, the pro"isions o the #enal oderelati"e to the disposal o eects orinstruments o a crime shall be applicable tothe things or the price o the contract.5his rule shall be applicable when only oneo the parties is guilty& but the innocent onemay claim what he has gi"en, and shall notbe bound to comply with his promise.(130)

    Art. 1412.I the act in which the unlawulor orbidden cause consists does not

    constitute a criminal oense, the ollowingrules shall be obser"ed%

    (1) >hen the ault is on the part oboth contracting parties, neither mayreco"er what he has gi"en by "irtueo the contract, or demand theperormance o the othersunderta2ing&(') >hen only one o the contractingparties is at ault, he cannot reco"erwhat he has gi"en by reason o thecontract, or as2 or the ul*llment owhat has been promised him. 5heother, who is not at ault, maydemand the return o what he hasgi"en without any obligation tocomply his promise. (130)

    Art. 1413.Interest paid in e$cess o theinterest allowed by the usury laws may be

    reco"ered by the debtor, with interestthereon rom the date o the payment.

    Art. 1414.>hen money is paid or propertydeli"ered or an illegal purpose, the contractmay be repudiated by one o the partiesbeore the purpose has been accomplished,or beore any damage has been caused to athird person. In such case, the courts may, ithe public interest will thus be subser"ed,allow the party repudiating the contract toreco"er the money or property.

    Art. 141.>here one o the parties to anillegal contract is incapable o gi"ingconsent, the courts may, i the interest o+ustice so demands allow reco"ery o moneyor property deli"ered by the incapacitatedperson.

    Art. 1416.>hen the agreement is notillegal per se but is merely prohibited, andthe prohibition by the law is designated orthe protection o the plainti, he may, ipublic policy is thereby enhanced, reco"erwhat he has paid or deli"ered.

    Art. 1417.>hen the price o any article orcommodity is determined by statute, or byauthority o law, any person paying anyamount in e$cess o the ma$imum priceallowed may reco"er such e$cess.

    Art. 1418.>hen the law *$es, orauthori=es the *$ing o the ma$imumnumber o hours o labor, and a contract isentered into whereby a laborer underta2esto wor2 longer than the ma$imum thus*$ed, he may demand additionalcompensation or ser"ice rendered beyond

    the time limit.

    Art. 1419.>hen the law sets, or authori=esthe setting o a minimum wage or laborers,and a contract is agreed upon by which alaborer accepts a lower wage, he shall beentitled to reco"er the de*ciency.

    Art. 1420.In case o a di"isible contract, ithe illegal terms can be separated rom thelegal ones, the latter may be enorced.

    Art. 1421.5he deense o illegality ocontract is not a"ailable to third personswhose interests are not directly aected.

    Art. 1422./ contract which is the directresult o a pre"ious illegal contract, is also"oid and ine$istent.

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    Title III. - NAT%RAL O:LIGATIONSArt. 1423.7bligations are ci"il or natural.i"il obligations gi"e a right o action tocompel their perormance. aturalobligations, not being based on positi"e lawbut on equity and natural law, do not granta right o action to enorce theirperormance, but ater "oluntary ul*llmentby the obligor, they authori=e the retentiono what has been deli"ered or rendered byreason thereo. ome natural obligations areset orth in the ollowing articles.

    Art. 1424.>hen a right to sue upon a ci"ilobligation has lapsed by e$tincti"eprescription, the obligor who "oluntarilyperorms the contract cannot reco"er whathe has deli"ered or the "alue o the ser"icehe has rendered.

    Art. 142.>hen without the 2nowledge oragainst the will o the debtor, a third personpays a debt which the obligor is not legallybound to pay because the action thereonhas prescribed, but the debtor later"oluntarily reimburses the third person, theobligor cannot reco"er what he has paid.

    Art. 1426.>hen a minor between eighteenand twenty-one years o age who hasentered into a contract without the consento the parent or guardian, ater theannulment o the contract "oluntarilyreturns the whole thing or price recei"ed,notwithstanding the act the he has notbeen bene*ted thereby, there is no right todemand the thing or price thus returned.

    Art. 1427.>hen a minor between eighteenand twenty-one years o age, who hasentered into a contract without the consento the parent or guardian, "oluntarily pays asum o money or deli"ers a ungible thing inul*llment o the obligation, there shall beno right to reco"er the same rom theobligee who has spent or consumed it ingood aith. (110/)

    Art. 1428.>hen, ater an action to enorcea ci"il obligation has ailed the deendant"oluntarily perorms the obligation, hecannot demand the return o what he hasdeli"ered or the payment o the "alue o theser"ice he has rendered.

    Art. 1429.>hen a testate or intestate heir"oluntarily pays a debt o the decedente$ceeding the "alue o the property which

    he recei"ed by will or by the law o intestacyrom the estate o the deceased, thepayment is "alid and cannot be rescindedby the payer.

    Art. 1430.>hen a will is declared "oidbecause it has not been e$ecuted inaccordance with the ormalities required bylaw, but one o the intestate heirs, ater thesettlement o the debts o the deceased,pays a legacy in compliance with a clause inthe deecti"e will, the payment is eecti"eand irre"ocable.

    Title IV. - ESTOPPEL &Art. 1431.5hrough estoppel an admissionor representation is rendered conclusi"eupon the person ma2ing it, and cannot be

    denied or dispro"ed as against the personrelying thereon.

    Art. 1432.5he principles o estoppel arehereby adopted insoar as they are not inconMict with the pro"isions o this ode, theode o ommerce, the :ules o ourt andspecial laws.

    Art. 1433.Gstoppel may be in paisor bydeed.

    Art. 1434.>hen a person who is not theowner o a thing sells or alienates anddeli"ers it, and later the seller or grantoracquires title thereto, such title passes byoperation o law to the buyer or grantee.Art. 143.I a person in representation oanother sells or alienates a thing, the ormercannot subsequently set up his own title as

    against the buyer or grantee.

    Art. 1436./ lessee or a bailee is estoppedrom asserting title to the thing leased orrecei"ed, as against the lessor or bailor.

    Art. 1437.>hen in a contract betweenthird persons concerning immo"ableproperty, one o them is misled by a personwith respect to the ownership or real righto"er the real estate, the latter is precludedrom asserting his legal title or interesttherein, pro"ided all these requisites arepresent%

    (1) 5here must be raudulentrepresentation or wrongulconcealment o acts 2nown to theparty estopped&

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    (') 5he party precluded must intendthat the other should act upon theacts as misrepresented&(3) 5he party misled must ha"e beenunaware o the true acts& and() 5he party derauded must ha"eacted in accordance with themisrepresentation.

    Art. 1438.7ne who has allowed another toassume apparent ownership o personalproperty or the purpose o ma2ing anytranser o it, cannot, i he recei"ed the sumor which a pledge has been constituted, setup his own title to deeat the pledge o theproperty, made by the other to a pledgeewho recei"ed the same in good aith and or"alue.

    Art. 1439.Gstoppel is eecti"e only as

    between the parties thereto or theirsuccessors in interest.

    ''