Obli Codal

7/28/2019 Obli Codal

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TITLE VPRESCRIPTION

CHAPTER 1General Provisions

Article 1106.By prescription, one acquires ownership and other realrights through the lapse of time in the manner and under theconditions laid down by law.

In the same way, rights and conditions are lost by prescription.(1930a

Article 1107.!ersons who are capable of acquiring property orrights by the other legal modes may acquire the same by means ofprescription.

"inors and other incapacitated persons may acquire property orrights by prescription, either personally or through their parents,guardians or legal representati#es. (1931a

Article 110. !rescription, both acquisiti#e and e$tincti#e, runsagainst%

(1 "inors and other incapacitated persons who ha#eparents, guardians or other legal representati#es&

(' bsentees who ha#e administrators, either appointedby them before their disappearance, or appointed by thecourts&

(3 !ersons li#ing abroad, who ha#e managers oradministrators&

() *uridical persons, e$cept the +tate and its subdi#isions.

!ersons who are disqualified from administering their property ha#ea right to claim damages from their legal representati#es whosenegligence has been the cause of prescription. (193'a

Article 110!.!rescription does not run between husband and wife,e#en though there be a separation of property agreed upon in themarriage settlements or by udicial decree.

-either does prescription run between parents and children, duringthe minority or insanity of the latter, and between guardian and wardduring the continuance of the guardianship. (n

Article 1110.!rescription, acquisiti#e and e$tincti#e, runs in fa#orof, or against a married woman. (n

Article 1111.!rescription obtained by a coproprietor or a coownershall benefit the others. (1933

Article 111". !ersons with capacity to alienate property mayrenounce prescription already obtained, but not the right to prescribein the future.

!rescription is deemed to ha#e been tacitly renounced when therenunciation results from acts which imply the abandonment of theright acquired. (193/

Article 111#.ll things which are within the commerce of men aresusceptible of prescription, unless otherwise pro#ided. !roperty othe +tate or any of its subdi#isions not patrimonial in character shalnot be the obect of prescription. (193a

Article 111$.reditors and all other persons interested in ma2ingthe prescription effecti#e may a#ail themsel#es thereonotwithstanding the e$press or tacit renunciation by the debtor orproprietor. (193

Article 111%.4he pro#isions of the present 4itle are understood tobe without preudice to what in this ode or in special laws isestablished with respect to specific cases of prescription. (1935

Article 1116.!rescription already running before the effecti#ity ofthis ode shall be go#erned by laws pre#iously in force& but if sincethe time this ode too2 effect the entire period herein required foprescription should elapse, the present ode shall be applicablee#en though by the former laws a longer period might be required(1939

CHAPTER "Prescri&tion o' O(ners)i& an* Ot)er Real Ri+)ts

Article 1117.cquisiti#e prescription of dominion and other rearights may be ordinary or e$traordinary.

6rdinary acquisiti#e prescription requires possession of things ingood faith and with ust title for the time fi$ed by law. (19)0a

Article 111.!ossession has to be in the concept of an ownerpublic, peaceful and uninterrupted. (19)1

Article 111!.cts of possessory character e$ecuted in #irtue olicense or by mere tolerance of the owner shall not be a#ailable fo

the purposes of possession. (19)'

Article 11"0. !ossession is interrupted for the purposes oprescription, naturally or ci#illy. (19)3

Article 11"1.!ossession is naturally interrupted when through anycause it should cease for more than one year.

4he old possession is not re#i#ed if a new possession should bee$ercised by the same ad#erse claimant. (19))a


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Article 11"".If the natural interruption is for only one year or less,the time elapsed shall be counted in fa#or of the prescription. (n

Article 11"#.i#il interruption is produced by udicial summons tothe possessor. (19)/a

Article 11"$.*udicial summons shall be deemed not to ha#e beenissued and shall not gi#e rise to interruption%

(1 If it should be #oid for lac2 of legal solemnities&

(' If the plaintiff should desist from the complaint orshould allow the proceedings to lapse&

(3 If the possessor should be absol#ed from thecomplaint.

In all these cases, the period of the interruption shall be counted forthe prescription. (19)a

Article 11"%.ny e$press or tacit recognition which the possessormay ma2e of the owner7s right also interrupts possession. (19)5

Article 11"6.gainst a title recorded in the 8egistry of !roperty,ordinary prescription of ownership or real rights shall not ta2e placeto the preudice of a third person, e$cept in #irtue of another titlealso recorded& and the time shall begin to run from the recording ofthe latter.

s to lands registered under the and 8egistration ct, thepro#isions of that special law shall go#ern. (19)9a

Article 11"7. 4he good faith of the possessor consists in thereasonable belief that the person from whom he recei#ed the thing

was the owner thereof, and could transmit his ownership. (19/0a

Article 11".4he conditions of good faith required for possession inarticles /', /', /'5, and /'9 of this ode are li2ewise necessaryfor the determination of good faith in the prescription of ownershipand other real rights. (19/1

Article 11"!.:or the purposes of prescription, there is ust titlewhen the ad#erse claimant came into possession of the propertythrough one of the modes recogni;ed by law for the acquisition ofownership or other real rights, but the grantor was not the owner orcould not transmit any right. (n

Article 11#0.4he title for prescription must be true and #alid. (19/3

Article 11#1.:or the purposes of prescription, ust title must bepro#ed& it is ne#er presumed. (19/)a

Article 11#". 4he ownership of mo#ables prescribes throughuninterrupted possession for four years in good faith.

4he ownership of personal property also prescribes throughuninterrupted possession for eight years, without need of any othecondition.


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Article 11$1.8eal actions o#er immo#ables prescribe after thirtyyears.

4his pro#ision is without preudice to what is established for theacquisition of ownership and other real rights by prescription. (193

Article 11$". mortgage action prescribes after ten years. (19)a

Article 11$#. 4he following rights, among others specifiedelsewhere in this ode, are not e$tinguished by prescription%

(1 4o demand a right of way, regulated in article )9&

(' 4o bring an action to abate a public or pri#ate nuisance.(n

Article 11$$.4he following actions must be brought within ten yearsfrom the time the right of action accrues%

(1 =pon a written contract&

(' =pon an obligation created by law&

(3 =pon a udgment. (n

Article 11$%.4he following actions must be commenced within si$years%

(1 =pon an oral contract&

(' =pon a quasicontract. (n

Article 11$6.4he following actions must be instituted within fouryears%

(1 =pon an inury to the rights of the plaintiff&

(' =pon a quasidelict&

>owe#er, when the action arises from or out of any act, acti#ity, orconduct of any public officer in#ol#ing the e$ercise of powers orauthority arising from "artial aw including the arrest, detentionand?or trial of the plaintiff, the same must be brought within one (1year. (s amended by !@ -o. 1//, @ec. '), 1950.

Article 11$7.4he following actions must be filed within one year%

(1 :or forcible entry and detainer&

(' :or defamation. (n

Article 11$.4he limitations of action mentioned in articles 11)0 to11)', and 11)) to 11) are without preudice to those specified inother parts of this ode, in the ode of ommerce, and in speciallaws. (n

Article 11$!.ll other actions whose periods are not fi$ed in thisode or in other laws must be brought within fi#e years from thetime the right of action accrues. (n

Article 11%0.4he time for prescription for all 2inds of actions, whenthere is no special pro#ision which ordains otherwise, shall becounted from the day they may be brought. (199

Article 11%1.4he time for the prescription of actions which ha#e fotheir obect the enforcement of obligations to pay principal withinterest or annuity runs from the last payment of the annuity or of theinterest. (190a

Article 11%".4he period for prescription of actions to demand thefulfillment of obligation declared by a udgment commences from thetime the udgment became final. (191

Article 11%#. 4he period for prescription of actions to demandaccounting runs from the day the persons who should render thesame cease in their functions.

4he period for the action arising from the result of the accountingruns from the date when said result was recogni;ed by agreementof the interested parties. (19'

Article 11%$.4he period during which the obligee was pre#ented bya fortuitous e#ent from enforcing his right is not rec2oned againshim. (n

Article 11%%.4he prescription of actions is interrupted when theyare filed before the court, when there is a written e$traudiciademand by the creditors, and when there is any writtenac2nowledgment of the debt by the debtor. (193a

,OO- IVOli+ations an* Contracts

TITLE IOli+ations

CHAPTER 1General Provisions

Article 11%6.n obligation is a uridical necessity to gi#e, to do ornot to do. (n

Article 11%7.6bligations arise from%

(1 aw&

(' ontracts&

(3 Auasicontracts&


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() cts or omissions punished by law& and

(/ Auasidelicts. (1059a

Article 11%.6bligations deri#ed from law are not presumed. 6nlythose e$pressly determined in this ode or in special laws aredemandable, and shall be regulated by the precepts of the law

which establishes them& and as to what has not been foreseen, by

the pro#isions of this Boo2. (1090

Article 11%!.6bligations arising from contracts ha#e the force oflaw between the contracting parties and should be complied with ingood faith. (1091a

Article 1160. 6bligations deri#ed from quasicontracts shall besubect to the pro#isions of hapter 1, 4itle CII, of this Boo2. (n

Article 1161.i#il obligations arising from criminal offenses shall bego#erned by the penal laws, subect to the pro#isions of article '1,and of the pertinent pro#isions of hapter ', !reliminary 4itle, on

>uman 8elations, and of 4itle CIII of this Boo2, regulatingdamages. (109'a

Article 116". 6bligations deri#ed from quasidelicts shall bego#erned by the pro#isions of hapter ', 4itle CII of this Boo2, andby special laws. (1093a

CHAPTER "

Nat/re an* E''ect o' Oli+ations

Article 116#.D#ery person obliged to gi#e something is also obligedto ta2e care of it with the proper diligence of a good father of afamily, unless the law or the stipulation of the parties requiresanother standard of care. (109)a

Article 116$.4he creditor has a right to the fruits of the thing fromthe time the obligation to deli#er it arises. >owe#er, he shall acquireno real right o#er it until the same has been deli#ered to him. (109/

Article 116%.


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If the law or contract does not state the diligence which is to beobser#ed in the performance, that which is e$pected of a goodfather of a family shall be required. (110)a

Article 117$.D$cept in cases e$pressly specified by the law, orwhen it is otherwise declared by stipulation, or when the nature ofthe obligation requires the assumption of ris2, no person shall beresponsible for those e#ents which could not be foreseen, or which,

though foreseen, were ine#itable. (110/a

Article 117%. =surious transactions shall be go#erned by speciallaws. (n

Article 1176.4he receipt of the principal by the creditor withoutreser#ation with respect to the interest, shall gi#e rise to thepresumption that said interest has been paid.

4he receipt of a later installment of a debt without reser#ation as toprior installments, shall li2ewise raise the presumption that suchinstallments ha#e been paid. (1110a

Article 1177.4he creditors, after ha#ing pursued the property inpossession of the debtor to satisfy their claims, may e$ercise all therights and bring all the actions of the latter for the same purpose,sa#e those which are inherent in his person& they may also impugnthe acts which the debtor may ha#e done to defraud them. (1111

Article 117.+ubect to the laws, all rights acquired in #irtue of anobligation are transmissible, if there has been no stipulation to thecontrary. (111'

CHAPTER #i''erent -in*s o' Oli+ations

SECTION 1P/re an* Con*itional Oli+ations

Article 117!.D#ery obligation whose performance does not dependupon a future or uncertain e#ent, or upon a past e#ent un2nown tothe parties, is demandable at once.

D#ery obligation which contains a resolutory condition shall also bedemandable, without preudice to the effects of the happening of thee#ent. (1113

Article 110.


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(1 If the thing is lost without the fault of the debtor, theobligation shall be e$tinguished&

(' If the thing is lost through the fault of the debtor, heshall be obliged to pay damages& it is understood that thething is lost when it perishes, or goes out of commerce, ordisappears in such a way that its e$istence is un2nown orit cannot be reco#ered&

(3


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('


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latter should be insol#ent, the others shall not be liable for his share.(1139

Article 1"10.4he indi#isibility of an obligation does not necessarilygi#e rise to solidarity. -or does solidarity of itself imply indi#isibility.(n

Article 1"11.+olidarity may e$ist although the creditors and the

debtors may not be bound in the same manner and by the sameperiods and conditions. (11)0

Article 1"1".Dach one of the solidary creditors may do whate#ermay be useful to the others, but not anything which may bepreudicial to the latter. (11)1a

Article 1"1#. solidary creditor cannot assign his rights without theconsent of the others. (n

Article 1"1$.4he debtor may pay any one of the solidary creditors&but if any demand, udicial or e$traudicial, has been made by one of

them, payment should be made to him. (11)'a

Article 1"1%.-o#ation, compensation, confusion or remission of thedebt, made by any of the solidary creditors or with any of thesolidary debtors, shall e$tinguish the obligation, without preudice tothe pro#isions of article 1'19.

4he creditor who may ha#e e$ecuted any of these acts, as well ashe who collects the debt, shall be liable to the others for the share inthe obligation corresponding to them. (11)3

Article 1"16. 4he creditor may proceed against any one of thesolidary debtors or some or all of them simultaneously. 4he demandmade against one of them shall not be an obstacle to those whichmay subsequently be directed against the others, so long as thedebt has not been fully collected. (11))a

Article 1"17. !ayment made by one of the solidary debtorse$tinguishes the obligation. If two or more solidary debtors offer topay, the creditor may choose which offer to accept.

>e who made the payment may claim from his codebtors only theshare which corresponds to each, with the interest for the paymentalready made. If the payment is made before the debt is due, nointerest for the inter#ening period may be demanded.


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>owe#er, e#en though the obect or ser#ice may be physicallydi#isible, an obligation is indi#isible if so pro#ided by law or intendedby the parties.

In obligations not to do, di#isibility or indi#isibility shall be determinedby the character of the prestation in each particular case. (11/1a

SECTION 6

Oli+ations (it) a Penal Cla/se

Article 1""6. In obligations with a penal clause, the penalty shallsubstitute the indemnity for damages and the payment of interests incase of noncompliance, if there is no stipulation to the contrary.-e#ertheless, damages shall be paid if the obligor refuses to paythe penalty or is guilty of fraud in the fulfillment of the obligation.

4he penalty may be enforced only when it is demandable inaccordance with the pro#isions of this ode. (11/'a

Article 1""7. 4he debtor cannot e$empt himself from the

performance of the obligation by paying the penalty, sa#e in thecase where this right has been e$pressly reser#ed for him. -eithercan the creditor demand the fulfillment of the obligation and thesatisfaction of the penalty at the same time, unless this right hasbeen clearly granted him. >owe#er, if after the creditor has decidedto require the fulfillment of the obligation, the performance thereofshould become impossible without his fault, the penalty may beenforced. (11/3a

Article 1"".!roof of actual damages suffered by the creditor is notnecessary in order that the penalty may be demanded. (n

Article 1""!.4he udge shall equitably reduce the penalty when the

principal obligation has been partly or irregularly complied with bythe debtor. D#en if there has been no performance, the penalty mayalso be reduced by the courts if it is iniquitous or unconscionable.(11/)a

Article 1"#0.4he nullity of the penal clause does not carry with itthat of the principal obligation.

4he nullity of the principal obligation carries with it that of the penalclause. (11//

CHAPTER $

E3tin+/is)4ent o' Oli+ations

General Provisions

Article 1"#1.6bligations are e$tinguished%

(1 By payment or performance&

(' By the loss of the thing due&

(3 By the condonation or remission of the debt&

() By the confusion or merger of the rights of creditor anddebtor&

(/ By compensation&

( By no#ation.

6ther causes of e$tinguishment of obligations, such as annulment

rescission, fulfillment of a resolutory condition, and prescription, arego#erned elsewhere in this ode. (11/a

SECTION 1Pa24ent or Per'or4ance

Article 1"#".!ayment means not only the deli#ery of money butalso the performance, in any other manner, of an obligation. (n

Article 1"##. debt shall not be understood to ha#e been paidunless the thing or ser#ice in which the obligation consists has beencompletely deli#ered or rendered, as the case may be. (11/

Article 1"#$.If the obligation has been substantially performed ingood faith, the obligor may reco#er as though there had been a stricand complete fulfillment, less damages suffered by the obligee. (n

Article 1"#%.


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Article 1"$1. !ayment to a person who is incapacitated toadminister his property shall be #alid if he has 2ept the thingdeli#ered, or insofar as the payment has been beneficial to him.

!ayment made to a third person shall also be #alid insofar as it hasredounded to the benefit of the creditor. +uch benefit to the creditorneed not be pro#ed in the following cases%

(1 If after the payment, the third person acquires thecreditor7s rights&

(' If the creditor ratifies the payment to the third person&

(3 If by the creditor7s conduct, the debtor has been led tobelie#e that the third person had authority to recei#e thepayment. (113a

Article 1"$". !ayment made in good faith to any person inpossession of the credit shall release the debtor. (11)

Article 1"$#.!ayment made to the creditor by the debtor after thelatter has been udicially ordered to retain the debt shall not be #alid.(11/

Article 1"$$.4he debtor of a thing cannot compel the creditor torecei#e a different one, although the latter may be of the same #alueas, or more #aluable than that which is due.

In obligations to do or not to do, an act or forbearance cannot besubstituted by another act or forbearance against the obligee7s will.(11a

Article 1"$%.@ation in payment, whereby property is alienated tothe creditor in satisfaction of a debt in money, shall be go#erned bythe law of sales. (n

Article 1"$6.owe#er, when the debt is in part liquidated and in part unliquidated,the creditor may demand and the debtor may effect the payment ofthe former without waiting for the liquidation of the latter. (119a

Article 1"$!.4he payment of debts in money shall be made in thecurrency stipulated, and if it is not possible to deli#er such currencythen in the currency which is legal tender in the !hilippines.

4he deli#ery of promissory notes payable to order, or bills oe$change or other mercantile documents shall produce the effect opayment only when they ha#e been cashed, or when through thefault of the creditor they ha#e been impaired.

In the meantime, the action deri#ed from the original obligation shalbe held in the abeyance. (110

Article 1"%0. In case an e$traordinary inflation or deflation of thecurrency stipulated should super#ene, the #alue of the currency athe time of the establishment of the obligation shall be the basis ofpayment, unless there is an agreement to the contrary. (n

Article 1"%1.!ayment shall be made in the place designated in theobligation.

4here being no e$press stipulation and if the underta2ing is todeli#er a determinate thing, the payment shall be made where#erthe thing might be at the moment the obligation was constituted.

In any other case the place of payment shall be the domicile of thedebtor.

If the debtor changes his domicile in bad faith or after he hasincurred in delay, the additional e$penses shall be borne by him.

4hese pro#isions are without preudice to #enue under the 8ules ofourt. (111a

S5,SECTION 1. A&&lication o' Pa24ents

Article 1"%".>e who has #arious debts of the same 2ind in fa#or ofone and the same creditor, may declare at the time of ma2ing thepayment, to which of them the same must be applied. =nless theparties so stipulate, or when the application of payment is made bythe party for whose benefit the term has been constitutedapplication shall not be made as to debts which are not yet due.

If the debtor accepts from the creditor a receipt in which anapplication of the payment is made, the former cannot complain ofthe same, unless there is a cause for in#alidating the contract

(11'a

Article 1"%#.If the debt produces interest, payment of the principashall not be deemed to ha#e been made until the interests ha#ebeen co#ered. (113

Article 1"%$.


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If the debts due are of the same nature and burden, the paymentshall be applied to all of them proportionately. (11)a

S5,SECTION ". Pa24ent 2 Cession

Article 1"%%.4he debtor may cede or assign his property to hiscreditors in payment of his debts. 4his cession, unless there isstipulation to the contrary, shall only release the debtor from

responsibility for the net proceeds of the thing assigned. 4heagreements which, on the effect of the cession, are made betweenthe debtor and his creditors shall be go#erned by special laws.(11/a

S5,SECTION #. Ten*er o' Pa24ent an* Consi+nation

Article 1"%6.If the creditor to whom tender of payment has beenmade refuses without ust cause to accept it, the debtor shall bereleased from responsibility by the consignation of the thing or sumdue.

onsignation alone shall produce the same effect in the followingcases%

(1


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SECTION #Con*onation or Re4ission o' t)e et

Article 1"70. ondonation or remission is essentially gratuitous,and requires the acceptance by the obligor. It may be madee$pressly or impliedly.

6ne and the other 2ind shall be subect to the rules which go#ern

inofficious donations. D$press condonation shall, furthermore,comply with the forms of donation. (115

Article 1"71. 4he deli#ery of a pri#ate document e#idencing acredit, made #oluntarily by the creditor to the debtor, implies therenunciation of the action which the former had against the latter.

If in order to nullify this wai#er it should be claimed to be inofficious,the debtor and his heirs may uphold it by pro#ing that the deli#ery ofthe document was made in #irtue of payment of the debt. (1155

Article 1"7".


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Article 1"7.ompensation shall not be proper when one of thedebts arises from a depositum or from the obligations of adepositary or of a bailee in commodatum.

-either can compensation be set up against a creditor who has aclaim for support due by gratuitous title, without preudice to thepro#isions of paragraph ' of article 301. (1'00a

Article 1". -either shall there be compensation if one of thedebts consists in ci#il liability arising from a penal offense. (n

Article 1"!. If a person should ha#e against him se#eral debtswhich are susceptible of compensation, the rules on the applicationof payments shall apply to the order of the compensation. (1'01

Article 1"!0.


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Article 1#0%. contract is a meeting of minds between two personswhereby one binds himself, with respect to the other, to gi#esomething or to render some ser#ice. (1'/)a

Article 1#06. 4he contracting parties may establish suchstipulations, clauses, terms and conditions as they may deemcon#enient, pro#ided they are not contrary to law, morals, goodcustoms, public order, or public policy. (1'//a

Article 1#07. Innominate contracts shall be regulated by thestipulations of the parties, by the pro#isions of 4itles I and II of thisBoo2, by the rules go#erning the most analogous nominatecontracts, and by the customs of the place. (n

Article 1#0. 4he contract must bind both contracting parties& its#alidity or compliance cannot be left to the will of one of them.(1'/a

Article 1#0!.4he determination of the performance may be left to athird person, whose decision shall not be binding until it has beenmade 2nown to both contracting parties. (n

Article 1#10. 4he determination shall not be obligatory if it ise#idently inequitable. In such case, the courts shall decide what isequitable under the circumstances. (n

Article 1#11.ontracts ta2e effect only between the parties, theirassigns and heirs, e$cept in case where the rights and obligationsarising from the contract are not transmissible by their nature, or bystipulation or by pro#ision of law. 4he heir is not liable beyond the#alue of the property he recei#ed from the decedent.

If a contract should contain some stipulation in fa#or of a third

person, he may demand its fulfillment pro#ided he communicatedhis acceptance to the obligor before its re#ocation. mere incidentalbenefit or interest of a person is not sufficient. 4he contractingparties must ha#e clearly and deliberately conferred a fa#or upon athird person. (1'/a

Article 1#1".In contracts creating real rights, third persons whocome into possession of the obect of the contract are boundthereby, subect to the pro#isions of the "ortgage aw and the and8egistration aws. (n

Article 1#1#.reditors are protected in cases of contracts intended

to defraud them. (n

Article 1#1$.ny third person who induces another to #iolate hiscontract shall be liable for damages to the other contracting party.(n

Article 1#1%.ontracts are perfected by mere consent, and fromthat moment the parties are bound not only to the fulfillment of whathas been e$pressly stipulated but also to all the consequences

which, according to their nature, may be in 2eeping with good faith,usage and law. (1'/5

Article 1#16. 8eal contracts, such as deposit, pledge andcommodatum, are not perfected until the deli#ery of the obect of theobligation. (n

Article 1#17.-o one may contract in the name of another withoubeing authori;ed by the latter, or unless he has by law a right torepresent him.

contract entered into in the name of another by one who has noauthority or legal representation, or who has acted beyond hispowers, shall be unenforceable, unless it is ratified, e$pressly orimpliedly, by the person on whose behalf it has been e$ecutedbefore it is re#o2ed by the other contracting party. (1'/9a

CHAPTER "Essential Re/isites o' Contracts

General Provisions

Article 1#1.4here is no contract unless the following requisites

concur%

(1 onsent of the contracting parties&

(' 6bect certain which is the subect matter of thecontract&

(3 ause of the obligation which is established. (1'1

SECTION 1Consent

Article 1#1!.onsent is manifested by the meeting of the offer andthe acceptance upon the thing and the cause which are to constitutethe contract. 4he offer must be certain and the acceptance absolute qualified acceptance constitutes a counteroffer.

cceptance made by letter or telegram does not bind the offeree$cept from the time it came to his 2nowledge. 4he contract, in sucha case, is presumed to ha#e been entered into in the place wherethe offer was made. (1''a

Article 1#"0.n acceptance may be e$press or implied. (n

Article 1#"1.4he person ma2ing the offer may fi$ the time, place,and manner of acceptance, all of which must be complied with. (n

Article 1#"".n offer made through an agent is accepted from thetime acceptance is communicated to him. (n

Article 1#"#.n offer becomes ineffecti#e upon the death, ci#iinterdiction, insanity, or insol#ency of either party before acceptanceis con#eyed. (n

Article 1#"$.


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acceptance by communicating such withdrawal, e$cept when theoption is founded upon a consideration, as something paid orpromised. (n

Article 1#"%.=nless it appears otherwise, business ad#ertisementsof things for sale are not definite offers, but mere in#itations to ma2ean offer. (n

Article 1#"6. d#ertisements for bidders are simply in#itations toma2e proposals, and the ad#ertiser is not bound to accept thehighest or lowest bidder, unless the contrary appears. (n

Article 1#"7.4he following cannot gi#e consent to a contract%

(1 =nemancipated minors&

(' Insane or demented persons, and deafmutes who donot 2now how to write. (1'3a

Article 1#".ontracts entered into during a lucid inter#al are #alid.

ontracts agreed to in a state of drun2enness or during a hypnoticspell are #oidable. (n

Article 1#"!.4he incapacity declared in article 13' is subect tothe modifications determined by law, and is understood to be withoutpreudice to special disqualifications established in the laws. (1')

Article 1##0. contract where consent is gi#en through mista2e,#iolence, intimidation, undue influence, or fraud is #oidable. (1'/a

Article 1##1.In order that mista2e may in#alidate consent, it shouldrefer to the substance of the thing which is the obect of the contract,

or to those conditions which ha#e principally mo#ed one or bothparties to enter into the contract.

"ista2e as to the identity or qualifications of one of the parties will#itiate consent only when such identity or qualifications ha#e beenthe principal cause of the contract.

simple mista2e of account shall gi#e rise to its correction. (1'a

Article 1##".


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Article 1#$%.+imulation of a contract may be absolute or relati#e.4he former ta2es place when the parties do not intend to be boundat all& the latter, when the parties conceal their true agreement. (n

Article 1#$6.n absolutely simulated or fictitious contract is #oid. relati#e simulation, when it does not preudice a third person and isnot intended for any purpose contrary to law, morals, good customs,public order or public policy binds the parties to their real

agreement. (n

SECTION "O8ect o' Contracts

Article 1#$7.ll things which are not outside the commerce of men,including future things, may be the obect of a contract. ll rights

which are not intransmissible may also be the obect of contracts.

-o contract may be entered into upon future inheritance e$cept incases e$pressly authori;ed by law.

ll ser#ices which are not contrary to law, morals, good customs,public order or public policy may li2ewise be the obect of a contract.(1'1a

Article 1#$.Impossible things or ser#ices cannot be the obect ofcontracts. (1''

Article 1#$!.4he obect of e#ery contract must be determinate asto its 2ind. 4he fact that the quantity is not determinate shall not bean obstacle to the e$istence of the contract, pro#ided it is possible todetermine the same, without the need of a new contract betweenthe parties. (1'3

SECTION #Ca/se o' Contracts

Article 1#%0.In onerous contracts the cause is understood to be,for each contracting party, the prestation or promise of a thing orser#ice by the other& in remuneratory ones, the ser#ice or benefit

which is remunerated& and in contracts of pure beneficence, themere liberality of the benefactor. (1')

Article 1#%1.4he particular moti#es of the parties in entering into acontract are different from the cause thereof. (n

Article 1#%". ontracts without cause, or with unlawful cause,produce no effect whate#er. 4he cause is unlawful if it is contrary tolaw, morals, good customs, public order or public policy. (1'/a

Article 1#%#. 4he statement of a false cause in contracts shallrender them #oid, if it should not be pro#ed that they were foundedupon another cause which is true and lawful. (1'

Article 1#%$.lthough the cause is not stated in the contract, it ispresumed that it e$ists and is lawful, unless the debtor pro#es thecontrary. (1'

Article 1#%%.D$cept in cases specified by law, lesion or inadequacyof cause shall not in#alidate a contract, unless there has been fraudmista2e or undue influence. (n

CHAPTER #9or4 o' Contracts

Article 1#%6.ontracts shall be obligatory, in whate#er form they

may ha#e been entered into, pro#ided all the essential requisites fotheir #alidity are present. >owe#er, when the law requires that acontract be in some form in order that it may be #alid or enforceableor that a contract be pro#ed in a certain way, that requirement isabsolute and indispensable. In such cases, the right of the partiesstated in the following article cannot be e$ercised. (1'5a

Article 1#%7.If the law requires a document or other special formas in the acts and contracts enumerated in the following article, thecontracting parties may compel each other to obser#e that form,once the contract has been perfected. 4his right may be e$ercisedsimultaneously with the action upon the contract. (1'9a

Article 1#%.4he following must appear in a public document%

(1 cts and contracts which ha#e for their obect thecreation, transmission, modification or e$tinguishment oreal rights o#er immo#able property& sales of real propertyor of an interest therein are go#erned by articles 1)03, -o', and 1)0/&

(' 4he cession, repudiation or renunciation of hereditaryrights or of those of the conugal partnership of gains&

(3 4he power to administer property, or any other power

which has for its obect an act appearing or which shouldappear in a public document, or should preudice a thirdperson&

() 4he cession of actions or rights proceeding from an acappearing in a public document.

ll other contracts where the amount in#ol#ed e$ceeds fi#ehundred pesos must appear in writing, e#en a pri#ate oneBut sales of goods, chattels or things in action arego#erned by articles, 1)03, -o. ' and 1)0/. (1'50a

CHAPTER $Re'or4ation o' Instr/4ents(n

Article 1#%!.


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If mista2e, fraud, inequitable conduct, or accident has pre#ented ameeting of the minds of the parties, the proper remedy is notreformation of the instrument but annulment of the contract.

Article 1#60.4he principles of the general law on the reformation ofinstruments are hereby adopted insofar as they are not in conflict

with the pro#isions of this ode.

Article 1#61. owe#er general the terms of a contract may be, theyshall not be understood to comprehend things that are distinct andcases that are different from those upon which the parties intendedto agree. (1'53

Article 1#7#. If some stipulation of any contract should admit ofse#eral meanings, it shall be understood as bearing that impor

which is most adequate to render it effectual. (1'5)

Article 1#7$. 4he #arious stipulations of a contract shall beinterpreted together, attributing to the doubtful ones that sensewhich may result from all of them ta2en ointly. (1'5/

Article 1#7%.


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Article 1#0.ontracts #alidly agreed upon may be rescinded in thecases established by law. (1'90

Article 1#1.4he following contracts are rescissible%

(1 4hose which are entered into by guardians whene#erthe wards whom they represent suffer lesion by more thanonefourth of the #alue of the things which are the obect

thereof&

(' 4hose agreed upon in representation of absentees, ifthe latter suffer the lesion stated in the preceding number&

(3 4hose underta2en in fraud of creditors when the lattercannot in any other manner collect the claims due them&

() 4hose which refer to things under litigation if they ha#ebeen entered into by the defendant without the 2nowledgeand appro#al of the litigants or of competent udicialauthority&

(/ ll other contracts specially declared by law to besubect to rescission. (1'91a

Article 1#".!ayments made in a state of insol#ency for obligationsto whose fulfillment the debtor could not be compelled at the timethey were effected, are also rescissible. (1'9'

Article 1##.4he action for rescission is subsidiary& it cannot beinstituted e$cept when the party suffering damage has no other legalmeans to obtain reparation for the same. (1'9)

Article 1#$.8escission shall be only to the e$tent necessary toco#er the damages caused. (n

Article 1#%.8escission creates the obligation to return the thingswhich were the obect of the contract, together with their fruits, andthe price with its interest& consequently, it can be carried out only

when he who demands rescission can return whate#er he may beobliged to restore.

-either shall rescission ta2e place when the things which are theobect of the contract are legally in the possession of third persons

who did not act in bad faith.

In this case, indemnity for damages may be demanded from theperson causing the loss. (1'9/

Article 1#6.8escission referred to in -os. 1 and ' of article 1351shall not ta2e place with respect to contracts appro#ed by thecourts. (1'9a

Article 1#7.ll contracts by #irtue of which the debtor alienatesproperty by gratuitous title are presumed to ha#e been entered intoin fraud of creditors, when the donor did not reser#e sufficientproperty to pay all debts contracted before the donation.

lienations by onerous title are also presumed fraudulent whenmade by persons against whom some udgment has been renderedin any instance or some writ of attachment has been issued. 4hedecision or attachment need not refer to the property alienated, andneed not ha#e been obtained by the party see2ing the rescission.

In addition to these presumptions, the design to defraud creditorsmay be pro#ed in any other manner recogni;ed by the law of

e#idence. (1'9a

Article 1#.


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Article 1#!".8atification e$tinguishes the action to annul a #oidablecontract. (1309a

Article 1#!#.8atification may be effected e$pressly or tacitly. It isunderstood that there is a tacit ratification if, with 2nowledge of thereason which renders the contract #oidable and such reason ha#ingceased, the person who has a right to in#o2e it should e$ecute anact which necessarily implies an intention to wai#e his right. (1311a

Article 1#!$.8atification may be effected by the guardian of theincapacitated person. (n

Article 1#!%.8atification does not require the conformity of thecontracting party who has no right to bring the action for annulment.(131'

Article 1#!6.8atification cleanses the contract from all its defectsfrom the moment it was constituted. (1313

Article 1#!7.4he action for the annulment of contracts may be

instituted by all who are thereby obliged principally or subsidiarily.>owe#er, persons who are capable cannot allege the incapacity ofthose with whom they contracted& nor can those who e$ertedintimidation, #iolence, or undue influence, or employed fraud, orcaused mista2e base their action upon these flaws of the contract.(130'a

Article 1#!.n obligation ha#ing been annulled, the contractingparties shall restore to each other the things which ha#e been thesubect matter of the contract, with their fruits, and the price with itsinterest, e$cept in cases pro#ided by law.

In obligations to render ser#ice, the #alue thereof shall be the basis

for damages. (1303a

Article 1#!!.


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Article 1$0$.=nauthori;ed contracts are go#erned by article 131and the principles of agency in 4itle of this Boo2.

Article 1$0%.ontracts infringing the +tatute of :rauds, referred toin -o. ' of article 1)03, are ratified by the failure to obect to thepresentation of oral e#idence to pro#e the same, or by theacceptance of benefit under them.

Article 1$06.


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thus fi$ed, he may demand additional compensation for ser#icerendered beyond the time limit.

Article 1$1!.


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Article 1$#.6ne who has allowed another to assume apparentownership of personal property for the purpose of ma2ing anytransfer of it, cannot, if he recei#ed the sum for which a pledge hasbeen constituted, set up his own title to defeat the pledge of theproperty, made by the other to a pledgee who recei#ed the same ingood faith and for #alue.

Article 1$#!. Dstoppel is effecti#e only as between the parties

thereto or their successors in interest.

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