the provisions of article 2177, and of

TITLE 1: Obligations the pertinent provisions of Chapter 2,

Preliminary Title, on Human Relations,
Chapter 1: General Provisions
and of Title XVIII of this Book,
ARTICLE 1156. An obligation is a regulating damages. (1092a)
juridical necessity to give, to do or not ARTICLE 1162. Obligations derived
to do. (n) from quasi-delicts shall be governed
ARTICLE 1157. Obligations arise from: by the provisions of Chapter 2, Title
(1) Law; XVII of this Book, and by special laws.
(2) Contracts; (1093a)
(3) Quasi-contracts;
(4) Acts or omissions punished by law; Chapter 2: Nature and Effect of
and Obligations
(5) Quasi-delicts. (1089a) ARTICLE 1163. Every person obliged
ARTICLE 1158. Obligations derived to give something is also obliged to
from law are not presumed. Only those take care of it with the proper diligence
expressly determined in this Code or in of a good father of a family, unless the
special laws are demandable, and law or the stipulation of the parties
shall be regulated by the precepts of requires another standard of care.
the law which establishes them; and (1094a)
as to what has not been foreseen, by ARTICLE 1164. The creditor has a
the provisions of this Book. (1090) right to the fruits of the thing from the
ARTICLE 1159. Obligations arising time the obligation to deliver it arises.
from contracts have the force of law However, he shall acquire no real right
between the contracting parties and over it until the same has been
should be complied with in good faith. delivered to him. (1095)
(1091a) ARTICLE 1165. When what is to be
ARTICLE 1160. Obligations derived delivered is a determinate thing, the
from quasi-contracts shall be subject creditor, in addition to the right granted
to the provisions of Chapter 1, Title him by article 1170, may compel the
XVII, of this Book. (n) debtor to make the delivery.
ARTICLE 1161. Civil obligations If the thing is indeterminate or generic,
arising from criminal offenses shall be he may ask that the obligation be
governed by the penal laws, subject to
complied with at the expense of the However, the demand by the creditor
debtor. shall not be necessary in order that
If the obligor delays, or has promised delay may exist:
to deliver the same thing to two or (1) When the obligation or the law
more persons who do not have the expressly so declare; or
same interest, he shall be responsible (2) When from the nature and the
for any fortuitous event until he has circumstances of the obligation it
effected the delivery. (1096) appears that the designation of the
ARTICLE 1166. The obligation to give time when the thing is to be delivered
a determinate thing includes that of or the service is to be rendered was a
delivering all its accessions and controlling motive for the
accessories, even though they may establishment of the contract; or
not have been mentioned. (1097a) (3) When demand would be useless,
ARTICLE 1167. If a person obliged to as when the obligor has rendered it
do something fails to do it, the same beyond his power to perform.
shall be executed at his cost. In reciprocal obligations, neither party
This same rule shall be observed if he incurs in delay if the other does not
does it in contravention of the tenor of comply or is not ready to comply in a
the obligation. Furthermore, it may be proper manner with what is incumbent
decreed that what has been poorly upon him. From the moment one of the
done be undone. (1098) parties fulfills his obligation, delay by
ARTICLE 1168. When the obligation the other begins. (1100a)
consists in not doing, and the obligor ARTICLE 1170. Those who in the
does what has been forbidden him, it performance of their obligations are
shall also be undone at his expense. guilty of fraud, negligence, or delay,
(1099a) and those who in any manner
ARTICLE 1169. Those obliged to contravene the tenor thereof, are liable
deliver or to do something incur in for damages. (1101)
delay from the time the obligee ARTICLE 1171. Responsibility arising
judicially or extrajudicially demands from fraud is demandable in all
from them the fulfillment of their obligations. Any waiver of an action for
obligation. future fraud is void. (1102a)
ARTICLE 1172. Responsibility arising
from negligence in the performance of
every kind of obligation is also shall give rise to the presumption that
demandable, but such liability may be said interest has been paid.
regulated by the courts, according to The receipt of a later installment of a
the circumstances. (1103) debt without reservation as to prior
ARTICLE 1173. The fault or installments, shall likewise raise the
negligence of the obligor consists in presumption that such installments
the omission of that diligence which is have been paid. (1110a)
required by the nature of the obligation ARTICLE 1177. The creditors, after
and corresponds with the having pursued the property in
circumstances of the persons, of the possession of the debtor to satisfy
time and of the place. When their claims, may exercise all the rights
negligence shows bad faith, the and bring all the actions of the latter for
provisions of articles 1171 and 2201, the same purpose, save those which
paragraph 2, shall apply. are inherent in his person; they may
If the law or contract does not state the also impugn the acts which the debtor
diligence which is to be observed in may have done to defraud them.
the performance, that which is (1111)
expected of a good father of a family ARTICLE 1178. Subject to the laws, all
shall be required. (1104a) rights acquired in virtue of an
ARTICLE 1174. Except in cases obligation are transmissible, if there
expressly specified by the law, or when has been no stipulation to the contrary.
it is otherwise declared by stipulation, (1112)
or when the nature of the obligation
requires the assumption of risk, no Chapter 3: Different Kinds of
person shall be responsible for those Obligations
events which could not be foreseen, or
Section 1: Pure and Conditional
which, though foreseen, were
Obligations
inevitable. (1105a)
ARTICLE 1179. Every obligation
ARTICLE 1175. Usurious transactions
whose performance does not depend
shall be governed by special laws. (n)
upon a future or uncertain event, or
ARTICLE 1176. The receipt of the
upon a past event unknown to the
principal by the creditor, without
parties, is demandable at once.
reservation with respect to the interest,
Every obligation which contains a The condition not to do an impossible
resolutory condition shall also be thing shall be considered as not having
demandable, without prejudice to the been agreed upon. (1116a)
effects of the happening of the event. ARTICLE 1184. The condition that
(1113) some event happen at a determinate
ARTICLE 1180. When the debtor binds time shall extinguish the obligation as
himself to pay when his means permit soon as the time expires or if it has
him to do so, the obligation shall be become indubitable that the event will
deemed to be one with a period, not take place. (1117)
subject to the provisions of article ARTICLE 1185. The condition that
1197. (n) some event will not happen at a
ARTICLE 1181. In conditional determinate time shall render the
obligations, the acquisition of rights, as obligation effective from the moment
well as the extinguishment or loss of the time indicated has elapsed, or if it
those already acquired, shall depend has become evident that the event
upon the happening of the event which cannot occur.
constitutes the condition. (1114) If no time has been fixed, the condition
ARTICLE 1182. When the fulfillment of shall be deemed fulfilled at such time
the condition depends upon the sole as may have probably been
will of the debtor, the conditional contemplated, bearing in mind the
obligation shall be void. If it depends nature of the obligation. (1118)
upon chance or upon the will of a third ARTICLE 1186. The condition shall be
person, the obligation shall take effect deemed fulfilled when the obligor
in conformity with the provisions of this voluntarily prevents its fulfillment.
Code. (1115) (1119)
ARTICLE 1183. Impossible conditions, ARTICLE 1187. The effects of a
those contrary to good customs or conditional obligation to give, once the
public policy and those prohibited by condition has been fulfilled, shall
law shall annul the obligation which retroact to the day of the constitution of
depends upon them. If the obligation is the obligation. Nevertheless, when the
divisible, that part thereof which is not obligation imposes reciprocal
affected by the impossible or unlawful prestations upon the parties, the fruits
condition shall be valid. and interests during the pendency of
the condition shall be deemed to have
been mutually compensated. If the thing is lost when it perishes, or goes
obligation is unilateral, the debtor shall out of commerce, or disappears in
appropriate the fruits and interests such a way that its existence is
received, unless from the nature and unknown or it cannot be recovered;
circumstances of the obligation it (3) When the thing deteriorates without
should be inferred that the intention of the fault of the debtor, the impairment
the person constituting the same was is to be borne by the creditor;
different. (4) If it deteriorates through the fault of
In obligations to do and not to do, the the debtor, the creditor may choose
courts shall determine, in each case, between the rescission of the
the retroactive effect of the condition obligation and its fulfillment, with
that has been complied with. (1120) indemnity for damages in either case;
ARTICLE 1188. The creditor may, (5) If the thing is improved by its
before the fulfillment of the condition, nature, or by time, the improvement
bring the appropriate actions for the shall inure to the benefit of the creditor;
preservation of his right. (6) If it is improved at the expense of
The debtor may recover what during the debtor, he shall have no other right
the same time he has paid by mistake than that granted to the usufructuary.
in case of a suspensive condition. (1122)
(1121a) ARTICLE 1190. When the conditions
ARTICLE 1189. When the conditions have for their purpose the
have been imposed with the intention extinguishment of an obligation to give,
of suspending the efficacy of an the parties, upon the fulfillment of said
obligation to give, the following rules conditions, shall return to each other
shall be observed in case of the what they have received.
improvement, loss or deterioration of In case of the loss, deterioration or
the thing during the pendency of the improvement of the thing, the
condition: provisions which, with respect to the
(1) If the thing is lost without the fault debtor, are laid down in the preceding
of the debtor, the obligation shall be article shall be applied to the party who
extinguished; is bound to return.
(2) If the thing is lost through the fault As for obligations to do and not to do,
of the debtor, he shall be obliged to the provisions of the second paragraph
pay damages; it is understood that the of article 1187 shall be observed as
regards the effect of the ARTICLE 1193. Obligations for whose
extinguishment of the obligation. fulfillment a day certain has been fixed,
(1123) shall be demandable only when that
ARTICLE 1191. The power to rescind day comes.
obligations is implied in reciprocal Obligations with a resolutory period
ones, in case one of the obligors take effect at once, but terminate upon
should not comply with what is arrival of the day certain.
incumbent upon him. A day certain is understood to be that
The injured party may choose between which must necessarily come,
the fulfillment and the rescission of the although it may not be known when.
obligation, with the payment of If the uncertainty consists in whether
damages in either case. He may also the day will come or not, the obligation
seek rescission, even after he has is conditional, and it shall be regulated
chosen fulfillment, if the latter should by the rules of the preceding Section.
become impossible. (1125a)
The court shall decree the rescission ARTICLE 1194. In case of loss,
claimed, unless there be just cause deterioration or improvement of the
authorizing the fixing of a period. thing before the arrival of the day
This is understood to be without certain, the rules in article 1189 shall
prejudice to the rights of third persons be observed. (n)
who have acquired the thing, in ARTICLE 1195. Anything paid or
accordance with articles 1385 and delivered before the arrival of the
1388 and the Mortgage Law. (1124) period, the obligor being unaware of
ARTICLE 1192. In case both parties the period or believing that the
have committed a breach of the obligation has become due and
obligation, the liability of the first demandable, may be recovered, with
infractor shall be equitably tempered the fruits and interests. (1126a)
by the courts. If it cannot be ARTICLE 1196. Whenever in an
determined which of the parties first obligation a period is designated, it is
violated the contract, the same shall presumed to have been established for
be deemed extinguished, and each the benefit of both the creditor and the
shall bear his own damages. (n) debtor, unless from the tenor of the
same or other circumstances it should
Section 2: Obligations with a Period appear that the period has been
established in favor of one or of the (5) When the debtor attempts to
other. (1127) abscond. (1129a)
ARTICLE 1197. If the obligation does
not fix a period, but from its nature and Section 3: Alternative Obligations

the circumstances it can be inferred ARTICLE 1199. A person alternatively

that a period was intended, the courts bound by different prestations shall
may fix the duration thereof. completely perform one of them.
The courts shall also fix the duration of The creditor cannot be compelled to
the period when it depends upon the receive part of one and part of the
will of the debtor. other undertaking. (1131)
In every case, the courts shall ARTICLE 1200. The right of choice
determine such period as may under belongs to the debtor, unless it has
the circumstances have been probably been expressly granted to the creditor.
contemplated by the parties. Once The debtor shall have no right to
fixed by the courts, the period cannot choose those prestations which are
be changed by them. (1128a) impossible, unlawful or which could not
ARTICLE 1198. The debtor shall lose have been the object of the obligation.
every right to make use of the period: (1132)
(1) When after the obligation has been ARTICLE 1201. The choice shall
contracted, he becomes insolvent, produce no effect except from the time
unless he gives a guaranty or security it has been communicated. (1133)
for the debt; ARTICLE 1202. The debtor shall lose
(2) When he does not furnish to the the right of choice when among the
creditor the guaranties or securities prestations whereby he is alternatively
which he has promised; bound, only one is practicable. (1134)
(3) When by his own acts he has ARTICLE 1203. If through the
impaired said guaranties or securities creditor’s acts the debtor cannot make
after their establishment, and when a choice according to the terms of the
through a fortuitous event they obligation, the latter may rescind the
disappear, unless he immediately contract with damages. (n)
gives new ones equally satisfactory; ARTICLE 1204. The creditor shall
(4) When the debtor violates any have a right to indemnity for damages
undertaking, in consideration of which when, through the fault of the debtor,
the creditor agreed to the period;
all the things which are alternatively creditor shall fall upon the price of any
the object of the obligation have been one of them, also with indemnity for
lost, or the compliance of the damages.
obligation has become impossible. The same rules shall be applied to
The indemnity shall be fixed taking as obligations to do or not to do in case
a basis the value of the last thing one, some or all of the prestations
which disappeared, or that of the should become impossible. (1136a)
service which last became impossible. ARTICLE 1206. When only one
Damages other than the value of the prestation has been agreed upon, but
last thing or service may also be the obligor may render another in
awarded. (1135a) substitution, the obligation is called
ARTICLE 1205. When the choice has facultative.
been expressly given to the creditor, The loss or deterioration of the thing
the obligation shall cease to be intended as a substitute, through the
alternative from the day when the negligence of the obligor, does not
selection has been communicated to render him liable. But once the
the debtor. substitution has been made, the
Until then the responsibility of the obligor is liable for the loss of the
debtor shall be governed by the substitute on account of his delay,
following rules: negligence or fraud. (n)
(1) If one of the things is lost through a
fortuitous event, he shall perform the Section 4: Joint and Solidary

obligation by delivering that which the Obligations

creditor should choose from among ARTICLE 1207. The concurrence of

the remainder, or that which remains if two or more creditors or of two or more
only one subsists; debtors in one and the same obligation
(2) If the loss of one of the things does not imply that each one of the
occurs through the fault of the debtor, former has a right to demand, or that
the creditor may claim any of those each one of the latter is bound to
subsisting, or the price of that which, render, entire compliance with the
through the fault of the former, has prestation. There is a solidary liability
disappeared, with a right to damages; only when the obligation expressly so
(3) If all the things are lost through the states, or when the law or the nature of
fault of the debtor, the choice by the
the obligation requires solidarity. anything which may be prejudicial to
(1137a) the latter. (1141a)
ARTICLE 1208. If from the law, or the ARTICLE 1213. A solidary creditor
nature or the wording of the obligations cannot assign his rights without the
to which the preceding article refers consent of the others. (n)
the contrary does not appear, the ARTICLE 1214. The debtor may pay
credit or debt shall be presumed to be any one of the solidary creditors; but if
divided into as many shares as there any demand, judicial or extrajudicial,
are creditors or debtors, the credits or has been made by one of them,
debts being considered distinct from payment should be made to him.
one another, subject to the Rules of (1142a)
Court governing the multiplicity of ARTICLE 1215. Novation,
suits. (1138a) compensation, confusion or remission
ARTICLE 1209. If the division is of the debt, made by any of the
impossible, the right of the creditors solidary creditors or with any of the
may be prejudiced only by their solidary debtors, shall extinguish the
collective acts, and the debt can be obligation, without prejudice to the
enforced only by proceeding against provisions of article 1219.
all the debtors. If one of the latter The creditor who may have executed
should be insolvent, the others shall any of these acts, as well as he who
not be liable for his share. (1139) collects the debt, shall be liable to the
ARTICLE 1210. The indivisibility of an others for the share in the obligation
obligation does not necessarily give corresponding to them. (1143)
rise to solidarity. Nor does solidarity of ARTICLE 1216. The creditor may
itself imply indivisibility. (n) proceed against any one of the
ARTICLE 1211. Solidarity may exist solidary debtors or some or all of them
although the creditors and the debtors simultaneously. The demand made
may not be bound in the same manner against one of them shall not be an
and by the same periods and obstacle to those which may
conditions. (1140) subsequently be directed against the
ARTICLE 1212. Each one of the others, so long as the debt has not
solidary creditors may do whatever been fully collected. (1144a)
may be useful to the others, but not ARTICLE 1217. Payment made by one
of the solidary debtors extinguishes
the obligation. If two or more solidary him to reimbursement from his
debtors offer to pay, the creditor may co-debtors. (n)
choose which offer to accept. ARTICLE 1221. If the thing has been
He who made the payment may claim lost or if the prestation has become
from his co-debtors only the share impossible without the fault of the
which corresponds to each, with the solidary debtors, the obligation shall be
interest for the payment already made. extinguished.
If the payment is made before the debt If there was fault on the part of any
is due, no interest for the intervening one of them, all shall be responsible to
period may be demanded. the creditor, for the price and the
When one of the solidary debtors payment of damages and interest,
cannot, because of his insolvency, without prejudice to their action against
reimburse his share to the debtor the guilty or negligent debtor.
paying the obligation, such share shall If through a fortuitous event, the thing
be borne by all his co-debtors, in is lost or the performance has become
proportion to the debt of each. (1145a) impossible after one of the solidary
ARTICLE 1218. Payment by a solidary debtors has incurred in delay through
debtor shall not entitle him to the judicial or extrajudicial demand
reimbursement from his co-debtors if upon him by the creditor, the
such payment is made after the provisions of the preceding paragraph
obligation has prescribed or become shall apply. (1147a)
illegal. (n) ARTICLE 1222. A solidary debtor may,
ARTICLE 1219. The remission made in actions filed by the creditor, avail
by the creditor of the share which himself of all defenses which are
affects one of the solidary debtors derived from the nature of the
does not release the latter from his obligation and of those which are
responsibility towards the co-debtors, personal to him, or pertain to his own
in case the debt had been totally paid share. With respect to those which
by anyone of them before the personally belong to the others, he
remission was effected. (1146a) may avail himself thereof only as
ARTICLE 1220. The remission of the regards that part of the debt for which
whole obligation, obtained by one of the latter are responsible. (1148a)
the solidary debtors, does not entitle
Section 5: Divisible and Indivisible However, even though the object or
Obligations service may be physically divisible, an

ARTICLE 1223. The divisibility or obligation is indivisible if so provided

indivisibility of the things that are the by law or intended by the parties.

object of obligations in which there is In obligations not to do, divisibility or

only one debtor and only one creditor indivisibility shall be determined by the

does not alter or modify the provisions character of the prestation in each

of Chapter 2 of this Title. (1149) particular case. (1151a)

ARTICLE 1224. A joint indivisible

Section 6: Obligations with a Penal
obligation gives rise to indemnity for
Clause
damages from the time anyone of the
debtors does not comply with his ARTICLE 1226. In obligations with a

undertaking. The debtors who may penal clause, the penalty shall

have been ready to fulfill their substitute the indemnity for damages

promises shall not contribute to the and the payment of interests in case of

indemnity beyond the corresponding noncompliance, if there is no

portion of the price of the thing or of stipulation to the contrary.

the value of the service in which the Nevertheless, damages shall be paid if

obligation consists. (1150) the obligor refuses to pay the penalty

ARTICLE 1225. For the purposes of or is guilty of fraud in the fulfillment of

the preceding articles, obligations to the obligation.

give definite things and those which The penalty may be enforced only

are not susceptible of partial when it is demandable in accordance

performance shall be deemed to be with the provisions of this Code.

indivisible. (1152a)

When the obligation has for its object ARTICLE 1227. The debtor cannot

the execution of a certain number of exempt himself from the performance

days of work, the accomplishment of of the obligation by paying the penalty,

work by metrical units, or analogous save in the case where this right has

things which by their nature are been expressly reserved for him.

susceptible of partial performance, it Neither can the creditor demand the

shall be divisible. fulfillment of the obligation and the

satisfaction of the penalty at the same
time, unless this right has been clearly (3) By the condonation or remission of
granted him. However, if after the the debt;
creditor has decided to require the (4) By the confusion or merger of the
fulfillment of the obligation, the rights of creditor and debtor;
performance thereof should become (5) By compensation;
impossible without his fault, the (6) By novation.
penalty may be enforced. (1153a) Other causes of extinguishment of
ARTICLE 1228. Proof of actual obligations, such as annulment,
damages suffered by the creditor is not rescission, fulfillment of a resolutory
necessary in order that the penalty condition, and prescription, are
may be demanded. (n) governed elsewhere in this Code.
ARTICLE 1229. The judge shall (1156a)
equitably reduce the penalty when the
principal obligation has been partly or Section 1: Payment or Performance

irregularly complied with by the debtor. ARTICLE 1232. Payment means not
Even if there has been no only the delivery of money but also the
performance, the penalty may also be performance, in any other manner, of
reduced by the courts if it is iniquitous an obligation. (n)
or unconscionable. (1154a) ARTICLE 1233. A debt shall not be
ARTICLE 1230. The nullity of the understood to have been paid unless
penal clause does not carry with it that the thing or service in which the
of the principal obligation. obligation consists has been
The nullity of the principal obligation completely delivered or rendered, as
carries with it that of the penal clause. the case may be. (1157)
(1155) ARTICLE 1234. If the obligation has
been substantially performed in good
Chapter 4: Extinguishment of faith, the obligor may recover as
Obligations though there had been a strict and

General Provisions complete fulfillment, less damages

ARTICLE 1231. Obligations are suffered by the obligee. (n)

extinguished: ARTICLE 1235. When the obligee

(1) By payment or performance; accepts the performance, knowing its

(2) By the loss of the thing due; incompleteness or irregularity, and

without expressing any protest or valid, without prejudice to the
objection, the obligation is deemed provisions of article 1427 under the
fully complied with. (n) Title on “Natural Obligations.” (1160a)
ARTICLE 1236. The creditor is not ARTICLE 1240. Payment shall be
bound to accept payment or made to the person in whose favor the
performance by a third person who obligation has been constituted, or his
has no interest in the fulfillment of the successor in interest, or any person
obligation, unless there is a stipulation authorized to receive it. (1162a)
to the contrary. ARTICLE 1241. Payment to a person
Whoever pays for another may who is incapacitated to administer his
demand from the debtor what he has property shall be valid if he has kept
paid, except that if he paid without the the thing delivered, or insofar as the
knowledge or against the will of the payment has been beneficial to him.
debtor, he can recover only insofar as Payment made to a third person shall
the payment has been beneficial to the also be valid insofar as it has
debtor. (1158a) redounded to the benefit of the
ARTICLE 1237. Whoever pays on creditor. Such benefit to the creditor
behalf of the debtor without the need not be proved in the following
knowledge or against the will of the cases:
latter, cannot compel the creditor to (1) If after the payment, the third
subrogate him in his rights, such as person acquires the creditor’s rights;
those arising from a mortgage, (2) If the creditor ratifies the payment
guaranty, or penalty. (1159a) to the third person;
ARTICLE 1238. Payment made by a (3) If by the creditor’s conduct, the
third person who does not intend to be debtor has been led to believe that the
reimbursed by the debtor is deemed to third person had authority to receive
be a donation, which requires the the payment. (1163a)
debtor’s consent. But the payment is in ARTICLE 1242. Payment made in
any case valid as to the creditor who good faith to any person in possession
has accepted it. (n) of the credit shall release the debtor.
ARTICLE 1239. In obligations to give, (1164)
payment made by one who does not ARTICLE 1243. Payment made to the
have the free disposal of the thing due creditor by the debtor after the latter
and capacity to alienate it shall not be
has been judicially ordered to retain ARTICLE 1248. Unless there is an
the debt shall not be valid. (1165) express stipulation to that effect, the
ARTICLE 1244. The debtor of a thing creditor cannot be compelled partially
cannot compel the creditor to receive a to receive the prestations in which the
different one, although the latter may obligation consists. Neither may the
be of the same value as, or more debtor be required to make partial
valuable than that which is due. payments.
In obligations to do or not to do, an act However, when the debt is in part
or forbearance cannot be substituted liquidated and in part unliquidated, the
by another act or forbearance against creditor may demand and the debtor
the obligee’s will. (1166a) may effect the payment of the former
ARTICLE 1245. Dation in payment, without waiting for the liquidation of the
whereby property is alienated to the latter. (1169a)
creditor in satisfaction of a debt in ARTICLE 1249. The payment of debts
money, shall be governed by the law of in money shall be made in the
sales. (n) currency stipulated, and if it is not
ARTICLE 1246. When the obligation possible to deliver such currency, then
consists in the delivery of an in the currency which is legal tender in
indeterminate or generic thing, whose the Philippines.
quality and circumstances have not The delivery of promissory notes
been stated, the creditor cannot payable to order, or bills of exchange
demand a thing of superior quality. or other mercantile documents shall
Neither can the debtor deliver a thing produce the effect of payment only
of inferior quality. The purpose of the when they have been cashed, or when
obligation and other circumstances through the fault of the creditor they
shall be taken into consideration. have been impaired.
(1167a) In the meantime, the action derived
ARTICLE 1247. Unless it is otherwise from the original obligation shall be
stipulated, the extrajudicial expenses held in abeyance. (1170)
required by the payment shall be for ARTICLE 1250. In case an
the account of the debtor. With regard extraordinary inflation or deflation of
to judicial costs, the Rules of Court the currency stipulated should
shall govern. (1168a) supervene, the value of the currency at
the time of the establishment of the
obligation shall be the basis of made as to debts which are not yet
payment, unless there is an agreement due.
to the contrary. (n) If the debtor accepts from the creditor
ARTICLE 1251. Payment shall be a receipt in which an application of the
made in the place designated in the payment is made, the former cannot
obligation. complain of the same, unless there is
There being no express stipulation and a cause for invalidating the contract.
if the undertaking is to deliver a (1172a)
determinate thing, the payment shall ARTICLE 1253. If the debt produces
be made wherever the thing might be interest, payment of the principal shall
at the moment the obligation was not be deemed to have been made
constituted. until the interests have been covered.
In any other case the place of payment (1173)
shall be the domicile of the debtor. ARTICLE 1254. When the payment
If the debtor changes his domicile in cannot be applied in accordance with
bad faith or after he has incurred in the preceding rules, or if application
delay, the additional expenses shall be can not be inferred from other
borne by him. circumstances, the debt which is most
These provisions are without prejudice onerous to the debtor, among those
to venue under the Rules of Court. due, shall be deemed to have been
(1171a) satisfied.
If the debts due are of the same nature
Subsection 1: Application of and burden, the payment shall be
Payments applied to all of them proportionately.
ARTICLE 1252. He who has various (1174a)
debts of the same kind in favor of one
and the same creditor, may declare at Subsection 2: Payment by Cession

the time of making the payment, to ARTICLE 1255. The debtor may cede
which of them the same must be or assign his property to his creditors
applied. Unless the parties so in payment of his debts. This cession,
stipulate, or when the application of unless there is stipulation to the
payment is made by the party for contrary, shall only release the debtor
whose benefit the term has been from responsibility for the net proceeds
constituted, application shall not be of the thing assigned. The agreements
which, on the effect of the cession, are with the provisions which regulate
made between the debtor and his payment. (1177)
creditors shall be governed by special ARTICLE 1258. Consignation shall be
laws. (1175a) made by depositing the things due at
the disposal of judicial authority, before
Subsection 3: Tender of Payment whom the tender of payment shall be
and Consignation proved, in a proper case, and the
ARTICLE 1256. If the creditor to whom announcement of the consignation in
tender of payment has been made other cases.
refuses without just cause to accept it, The consignation having been made,
the debtor shall be released from the interested parties shall also be
responsibility by the consignation of notified thereof. (1178)
the thing or sum due. ARTICLE 1259. The expenses of
Consignation alone shall produce the consignation, when properly made,
same effect in the following cases: shall be charged against the creditor.
(1) When the creditor is absent or (1179)
unknown, or does not appear at the ARTICLE 1260. Once the consignation
place of payment; has been duly made, the debtor may
(2) When he is incapacitated to receive ask the judge to order the cancellation
the payment at the time it is due; of the obligation.
(3) When, without just cause, he Before the creditor has accepted the
refuses to give a receipt; consignation, or before a judicial
(4) When two or more persons claim declaration that the consignation has
the same right to collect; been properly made, the debtor may
(5) When the title of the obligation has withdraw the thing or the sum
been lost. (1176a) deposited, allowing the obligation to
ARTICLE 1257. In order that the remain in force. (1180)
consignation of the thing due may ARTICLE 1261. If, the consignation
release the obligor, it must first be having been made, the creditor should
announced to the persons interested in authorize the debtor to withdraw the
the fulfillment of the obligation. same, he shall lose every preference
The consignation shall be ineffectual if which he may have over the thing. The
it is not made strictly in consonance co-debtors, guarantors and sureties
shall be released. (1181a)
Section 2: Loss of the Thing Due earthquake, flood, storm or other

ARTICLE 1262. An obligation which natural calamity. (1183a)

consists in the delivery of a ARTICLE 1266. The debtor in

determinate thing shall be obligations to do shall also be released

extinguished if it should be lost or when the prestation becomes legally

destroyed without the fault of the or physically impossible without the

debtor, and before he has incurred in fault of the obligor. (1184a)

delay. ARTICLE 1267. When the service has

When by law or stipulation, the obligor become so difficult as to be manifestly

is liable even for fortuitous events, the beyond the contemplation of the

loss of the thing does not extinguish parties, the obligor may also be

the obligation, and he shall be released therefrom, in whole or in part.

responsible for damages. The same (n)

rule applies when the nature of the ARTICLE 1268. When the debt of a

obligation requires the assumption of thing certain and determinate

risk. (1182a) proceeds from a criminal offense, the

ARTICLE 1263. In an obligation to debtor shall not be exempted from the

deliver a generic thing, the loss or payment of its price, whatever may be

destruction of anything of the same the cause for the loss, unless the thing

kind does not extinguish the obligation. having been offered by him to the

(n) person who should receive it, the latter

ARTICLE 1264. The courts shall refused without justification to accept

determine whether, under the it. (1185)

circumstances, the partial loss of the ARTICLE 1269. The obligation having

object of the obligation is so important been extinguished by the loss of the

as to extinguish the obligation. (n) thing, the creditor shall have all the

ARTICLE 1265. Whenever the thing is rights of action which the debtor may

lost in the possession of the debtor, it have against third persons by reason

shall be presumed that the loss was of the loss. (1186)

due to his fault, unless there is proof to

Section 3: Condonation or
the contrary, and without prejudice to
Remission of the Debt
the provisions of article 1165. This
presumption does not apply in case of
ARTICLE 1270. Condonation or been remitted when the thing pledged,
remission is essentially gratuitous, and after its delivery to the creditor, is
requires the acceptance by the obligor. found in the possession of the debtor,
It may be made expressly or impliedly. or of a third person who owns the
One and the other kinds shall be thing. (1191a)
subject to the rules which govern
inofficious donations. Express Section 4: Confusion or Merger of

condonation shall, furthermore, comply Rights

with the forms of donation. (1187) ARTICLE 1275. The obligation is

ARTICLE 1271. The delivery of a extinguished from the time the
private document evidencing a credit, characters of creditor and debtor are
made voluntarily by the creditor to the merged in the same person. (1192a)
debtor, implies the renunciation of the ARTICLE 1276. Merger which takes
action which the former had against place in the person of the principal
the latter. debtor or creditor benefits the
If in order to nullify this waiver it should guarantors. Confusion which takes
be claimed to be inofficious, the debtor place in the person of any of the latter
and his heirs may uphold it by proving does not extinguish the obligation.
that the delivery of the document was (1193)
made in virtue of payment of the debt. ARTICLE 1277. Confusion does not
(1188) extinguish a joint obligation except as
ARTICLE 1272. Whenever the private regards the share corresponding to the
document in which the debt appears is creditor or debtor in whom the two
found in the possession of the debtor, characters concur. (1194)
it shall be presumed that the creditor
delivered it voluntarily, unless the Section 5: Compensation
contrary is proved. (1189) ARTICLE 1278. Compensation shall
ARTICLE 1273. The renunciation of take place when two persons, in their
the principal debt shall extinguish the own right, are creditors and debtors of
accessory obligations; but the waiver each other. (1195)
of the latter shall leave the former in ARTICLE 1279. In order that
force. (1190) compensation may be proper, it is
ARTICLE 1274. It is presumed that the necessary:
accessory obligation of pledge has
(1) That each one of the obligors be right to said damages and the amount
bound principally, and that he be at the thereof. (n)
same time a principal creditor of the ARTICLE 1284. When one or both
other; debts are rescissible or voidable, they
(2) That both debts consist in a sum of may be compensated against each
money, or if the things due are other before they are judicially
consumable, they be of the same kind, rescinded or avoided. (n)
and also of the same quality if the ARTICLE 1285. The debtor who has
latter has been stated; consented to the assignment of rights
(3) That the two debts be due; made by a creditor in favor of a third
(4) That they be liquidated and person, cannot set up against the
demandable; assignee the compensation which
(5) That over neither of them there be would pertain to him against the
any retention or controversy, assignor, unless the assignor was
commenced by third persons and notified by the debtor at the time he
communicated in due time to the gave his consent, that he reserved his
debtor. (1196) right to the compensation.
ARTICLE 1280. Notwithstanding the If the creditor communicated the
provisions of the preceding article, the cession to him but the debtor did not
guarantor may set up compensation as consent thereto, the latter may set up
regards what the creditor may owe the the compensation of debts previous to
principal debtor. (1197) the cession, but not of subsequent
ARTICLE 1281. Compensation may be ones.
total or partial. When the two debts are If the assignment is made without the
of the same amount, there is a total knowledge of the debtor, he may set
compensation. (n) up the compensation of all credits prior
ARTICLE 1282. The parties may agree to the same and also later ones until
upon the compensation of debts which he had knowledge of the assignment.
are not yet due. (n) (1198a)
ARTICLE 1283. If one of the parties to ARTICLE 1286. Compensation takes
a suit over an obligation has a claim place by operation of law, even though
for damages against the other, the the debts may be payable at different
former may set it off by proving his places, but there shall be an indemnity
for expenses of exchange or
transportation to the place of payment. ARTICLE 1291. Obligations may be
(1199a) modified by:
ARTICLE 1287. Compensation shall (1) Changing their object or principal
not be proper when one of the debts conditions;
arises from a depositum or from the (2) Substituting the person of the
obligations of a depositary or of a debtor;
bailee in commodatum. (3) Subrogating a third person in the
Neither can compensation be set up rights of the creditor. (1203)
against a creditor who has a claim for ARTICLE 1292. In order that an
support due by gratuitous title, without obligation may be extinguished by
prejudice to the provisions of another which substitute the same, it is
paragraph 2 of article 301. (1200a) imperative that it be so declared in
ARTICLE 1288. Neither shall there be unequivocal terms, or that the old and
compensation if one of the debts the new obligations be on every point
consists in civil liability arising from a incompatible with each other. (1204)
penal offense. (n) ARTICLE 1293. Novation which
ARTICLE 1289. If a person should consists in substituting a new debtor in
have against him several debts which the place of the original one, may be
are susceptible of compensation, the made even without the knowledge or
rules on the application of payments against the will of the latter, but not
shall apply to the order of the without the consent of the creditor.
compensation. (1201) Payment by the new debtor gives him
ARTICLE 1290. When all the the rights mentioned in articles 1236
requisites mentioned in article 1279 and 1237. (1205a)
are present, compensation takes effect ARTICLE 1294. If the substitution is
by operation of law, and extinguishes without the knowledge or against the
both debts to the concurrent amount, will of the debtor, the new debtor’s
even though the creditors and debtors insolvency or non-fulfillment of the
are not aware of the compensation. obligation shall not give rise to any
(1202a) liability on the part of the original
debtor. (n)
Section 6: Novation ARTICLE 1295. The insolvency of the
new debtor, who has been proposed
by the original debtor and accepted by
the creditor, shall not revive the action Code; the latter must be clearly
of the latter against the original obligor, established in order that it may take
except when said insolvency was effect. (1209a)
already existing and of public ARTICLE 1301. Conventional
knowledge, or known to the debtor, subrogation of a third person requires
when he delegated his debt. (1206a) the consent of the original parties and
ARTICLE 1296. When the principal of the third person. (n)
obligation is extinguished in ARTICLE 1302. It is presumed that
consequence of a novation, accessory there is legal subrogation:
obligations may subsist only insofar as (1) When a creditor pays another
they may benefit third persons who did creditor who is preferred, even without
not give their consent. (1207) the debtor’s knowledge;
ARTICLE 1297. If the new obligation is (2) When a third person, not interested
void, the original one shall subsist, in the obligation, pays with the express
unless the parties intended that the or tacit approval of the debtor;
former relation should be extinguished (3) When, even without the knowledge
in any event. (n) of the debtor, a person interested in
ARTICLE 1298. The novation is void if the fulfillment of the obligation pays,
the original obligation was void, except without prejudice to the effects of
when annulment may be claimed only confusion as to the latter’s share.
by the debtor, or when ratification (1210a)
validates acts which are voidable. ARTICLE 1303. Subrogation transfers
(1208a) to the person subrogated the credit
ARTICLE 1299. If the original with all the rights thereto appertaining,
obligation was subject to a suspensive either against the debtor or against
or resolutory condition, the new third persons, be they guarantors or
obligation shall be under the same possessors of mortgages, subject to
condition, unless it is otherwise stipulation in a conventional
stipulated. (n) subrogation. (1212a)
ARTICLE 1300. Subrogation of a third ARTICLE 1304. A creditor, to whom
person in the rights of the creditor is partial payment has been made, may
either legal or conventional. The exercise his right for the remainder,
former is not presumed, except in and he shall be preferred to the person
cases expressly mentioned in this who has been subrogated in his place
in virtue of the partial payment of the ARTICLE 1309. The determination of
same credit. (1213) the performance may be left to a third
person, whose decision shall not be
binding until it has been made known
to both contracting parties. (n)
ARTICLE 1310. The determination
TITLE 2: Contracts
shall not be obligatory if it is evidently
Chapter 1: General Provisions inequitable. In such case, the courts

ARTICLE 1305. A contract is a shall decide what is equitable under

meeting of minds between two the circumstances. (n)

persons whereby one binds himself, ARTICLE 1311. Contracts take effect

with respect to the other, to give only between the parties, their assigns

something or to render some service. and heirs, except in case where the

(1254a) rights and obligations arising from the

ARTICLE 1306. The contracting contract are not transmissible by their

parties may establish such nature, or by stipulation or by provision

stipulations, clauses, terms and of law. The heir is not liable beyond the

conditions as they may deem value of the property he received from

convenient, provided they are not the decedent.

contrary to law, morals, good customs, If a contract should contain some

public order, or public policy. (1255a) stipulation in favor of a third person, he

ARTICLE 1307. Innominate contracts may demand its fulfillment provided he

shall be regulated by the stipulations of communicated his acceptance to the

the parties, by the provisions of Titles I obligor before its revocation. A mere

and II of this Book, by the rules incidental benefit or interest of a

governing the most analogous person is not sufficient. The

nominate contracts, and by the contracting parties must have clearly

customs of the place. (n) and deliberately conferred a favor

ARTICLE 1308. The contract must upon a third person. (1257a)

bind both contracting parties; its ARTICLE 1312. In contracts creating

validity or compliance cannot be left to real rights, third persons who come

the will of one of them. (1256a) into possession of the object of the
contract are bound thereby, subject to
the provisions of the Mortgage Law Chapter 2: Essential Requisites of
and the Land Registration Laws. (n) Contracts
ARTICLE 1313. Creditors are
ARTICLE 1318. There is no contract
protected in cases of contracts
unless the following requisites concur:
intended to defraud them. (n) emmrum
dstwmi
ARTICLE 1314. Any third person who
(1) Consent of the contracting parties;
induces another to violate his contract
(2) Object certain which is the subject
shall be liable for damages to the other
matter of the contract;
contracting party. (n)
(3) Cause of the obligation which is
ARTICLE 1315. Contracts are
established. (1261)
perfected by mere consent, and from
that moment the parties are bound not Section 1: Consent
only to the fulfillment of what has been
ARTICLE 1319. Consent is manifested
expressly stipulated but also to all the
by the meeting of the offer and the
consequences which, according to
acceptance upon the thing and the
their nature, may be in keeping with
cause which are to constitute the
good faith, usage and law. (1258)
contract. The offer must be certain and
ARTICLE 1316. Real contracts, such
the acceptance absolute. A qualified
as deposit, pledge and commodatum,
acceptance constitutes a counter-offer.
are not perfected until the delivery of
Acceptance made by letter or telegram
the object of the obligation. (n)
does not bind the offerer except from
ARTICLE 1317. No one may contract
the time it came to his knowledge. The
in the name of another without being
contract, in such a case, is presumed
authorized by the latter, or unless he
to have been entered into in the place
has by law a right to represent him.
where the offer was made. (1262a)
A contract entered into in the name of
ARTICLE 1320. An acceptance may
another by one who has no authority
be express or implied. (n)
or legal representation, or who has
ARTICLE 1321. The person making
acted beyond his powers, shall be
the offer may fix the time, place, and
unenforceable, unless it is ratified,
manner of acceptance, all of which
expressly or impliedly, by the person
must be complied with. (n)
on whose behalf it has been executed,
ARTICLE 1322. An offer made through
before it is revoked by the other
an agent is accepted from the time
contracting party. (1259a)
acceptance is communicated to him. Contracts agreed to in a state of
(n) drunkenness or during a hypnotic spell
ARTICLE 1323. An offer becomes are voidable. (n)
ineffective upon the death, civil ARTICLE 1329. The incapacity
interdiction, insanity, or insolvency of declared in article 1327 is subject to
either party before acceptance is the modifications determined by law,
conveyed. (n) and is understood to be without
ARTICLE 1324. When the offerer has prejudice to special disqualifications
allowed the offeree a certain period to established in the laws. (1264)
accept, the offer may be withdrawn at ARTICLE 1330. A contract where
any time before acceptance by consent is given through mistake,
communicating such withdrawal, violence, intimidation, undue influence,
except when the option is founded or fraud is voidable. (1265a)
upon a consideration, as something ARTICLE 1331. In order that mistake
paid or promised. (n) may invalidate consent, it should refer
ARTICLE 1325. Unless it appears to the substance of the thing which is
otherwise, business advertisements of the object of the contract, or to those
things for sale are not definite offers, conditions which have principally
but mere invitations to make an offer. moved one or both parties to enter into
(n) the contract.
ARTICLE 1326. Advertisements for Mistake as to the identity or
bidders are simply invitations to make qualifications of one of the parties will
proposals, and the advertiser is not vitiate consent only when such identity
bound to accept the highest or lowest or qualifications have been the
bidder, unless the contrary appears. principal cause of the contract.
(n) A simple mistake of account shall give
ARTICLE 1327. The following cannot rise to its correction. (1266a)
give consent to a contract: ARTICLE 1332. When one of the
(1) Unemancipated minors; parties is unable to read, or if the
(2) Insane or demented persons, and contract is in a language not
deaf-mutes who do not know how to understood by him, and mistake or
write. (1263a) fraud is alleged, the person enforcing
ARTICLE 1328. Contracts entered into the contract must show that the terms
during a lucid interval are valid.
thereof have been fully explained to ARTICLE 1337. There is undue
the former. (n) influence when a person takes
ARTICLE 1333. There is no mistake if improper advantage of his power over
the party alleging it knew the doubt, the will of another, depriving the latter
contingency or risk affecting the object of a reasonable freedom of choice.
of the contract. (n) The following circumstances shall be
ARTICLE 1334. Mutual error as to the considered: the confidential, family,
legal effect of an agreement when the spiritual and other relations between
real purpose of the parties is the parties, or the fact that the person
frustrated, may vitiate consent. (n) alleged to have been unduly
ARTICLE 1335. There is violence influenced was suffering from mental
when in order to wrest consent, weakness, or was ignorant or in
serious or irresistible force is financial distress. (n)
employed. ARTICLE 1338. There is fraud when,
There is intimidation when one of the through insidious words or
contracting parties is compelled by a machinations of one of the contracting
reasonable and well-grounded fear of parties, the other is induced to enter
an imminent and grave evil upon his into a contract which, without them, he
person or property, or upon the person would not have agreed to. (1269)
or property of his spouse, descendants ARTICLE 1339. Failure to disclose
or ascendants, to give his consent. facts, when there is a duty to reveal
To determine the degree of them, as when the parties are bound
intimidation, the age, sex and condition by confidential relations, constitutes
of the person shall be borne in mind. fraud. (n)
A threat to enforce one’s claim through ARTICLE 1340. The usual
competent authority, if the claim is just exaggerations in trade, when the other
or legal, does not vitiate consent. party had an opportunity to know the
(1267a) facts, are not in themselves fraudulent.
ARTICLE 1336. Violence or (n)
intimidation shall annul the obligation, ARTICLE 1341. A mere expression of
although it may have been employed an opinion does not signify fraud,
by a third person who did not take part unless made by an expert and the
in the contract. (1268) other party has relied on the former’s
special knowledge. (n)
ARTICLE 1342. Misrepresentation by ARTICLE 1347. All things which are
a third person does not vitiate consent, not outside the commerce of men,
unless such misrepresentation has including future things, may be the
created substantial mistake and the object of a contract. All rights which
same is mutual. (n) are not intransmissible may also be
ARTICLE 1343. Misrepresentation the object of contracts.
made in good faith is not fraudulent but No contract may be entered into upon
may constitute error. (n) future inheritance except in cases
ARTICLE 1344. In order that fraud expressly authorized by law.
may make a contract voidable, it All services which are not contrary to
should be serious and should not have law, morals, good customs, public
been employed by both contracting order or public policy may likewise be
parties. the object of a contract. (1271a)
Incidental fraud only obliges the ARTICLE 1348. Impossible things or
person employing it to pay damages. services cannot be the object of
(1270) contracts. (1272)
ARTICLE 1345. Simulation of a ARTICLE 1349. The object of every
contract may be absolute or relative. contract must be determinate as to its
The former takes place when the kind. The fact that the quantity is not
parties do not intend to be bound at all; determinate shall not be an obstacle to
the latter, when the parties conceal the existence of the contract, provided
their true agreement. (n) it is possible to determine the same,
ARTICLE 1346. An absolutely without the need of a new contract
simulated or fictitious contract is void. between the parties. (1273)
A relative simulation, when it does not
prejudice a third person and is not Section 3: Cause of Contracts

intended for any purpose contrary to ARTICLE 1350. In onerous contracts

law, morals, good customs, public the cause is understood to be, for each
order or public policy binds the parties contracting party, the prestation or
to their real agreement. (n) promise of a thing or service by the
other; in remuneratory ones, the
Section 2: Object of Contracts service or benefit which is
remunerated; and in contracts of pure
beneficence, the mere liberality of the are present. However, when the law
benefactor. (1274) requires that a contract be in some
ARTICLE 1351. The particular motives form in order that it may be valid or
of the parties in entering into a contract enforceable, or that a contract be
are different from the cause thereof. proved in a certain way, that
(n) requirement is absolute and
ARTICLE 1352. Contracts without indispensable. In such cases, the right
cause, or with unlawful cause, produce of the parties stated in the following
no effect whatever. The cause is article cannot be exercised. (1278a)
unlawful if it is contrary to law, morals, ARTICLE 1357. If the law requires a
good customs, public order or public document or other special form, as in
policy. (1275a) the acts and contracts enumerated in
ARTICLE 1353. The statement of a the following article, the contracting
false cause in contracts shall render parties may compel each other to
them void, if it should not be proved observe that form, once the contract
that they were founded upon another has been perfected. This right may be
cause which is true and lawful. (1276) exercised simultaneously with the
ARTICLE 1354. Although the cause is action upon the contract. (1279a)
not stated in the contract, it is ARTICLE 1358. The following must
presumed that it exists and is lawful, appear in a public document:
unless the debtor proves the contrary. (1) Acts and contracts which have for
(1277) their object the creation, transmission,
ARTICLE 1355. Except in cases modification or extinguishment of real
specified by law, lesion or inadequacy rights over immovable property; sales
of cause shall not invalidate a contract, of real property or of an interest therein
unless there has been fraud, mistake are governed by articles 1403, No. 2,
or undue influence. (n) and 1405;
(2) The cession, repudiation or
Chapter 3: Form of Contracts renunciation of hereditary rights or of
those of the conjugal partnership of
ARTICLE 1356. Contracts shall be
gains;
obligatory, in whatever form they may
(3) The power to administer property,
have been entered into, provided all
or any other power which has for its
the essential requisites for their validity
object an act appearing or which
should appear in a public document, or instruments are hereby adopted
should prejudice a third person; insofar as they are not in conflict with
(4) The cession of actions or rights the provisions of this Code.
proceeding from an act appearing in a ARTICLE 1361. When a mutual
public document. mistake of the parties causes the
All other contracts where the amount failure of the instrument to disclose
involved exceeds five hundred pesos their real agreement, said instrument
must appear in writing, even a private may be reformed.
one. But sales of goods, chattels or ARTICLE 1362. If one party was
things in action are governed by mistaken and the other acted
articles 1403, No. 2 and 1405. (1280a) fraudulently or inequitably in such a
way that the instrument does not show
Chapter 4: Reformation of their true intention, the former may ask
Instruments (n) for the reformation of the instrument.
ARTICLE 1363. When one party was
ARTICLE 1359. When, there having
mistaken and the other knew or
been a meeting of the minds of the
believed that the instrument did not
parties to a contract, their true
state their real agreement, but
intention is not expressed in the
concealed that fact from the former,
instrument purporting to embody the
the instrument may be reformed.
agreement, by reason of mistake,
ARTICLE 1364. When through the
fraud, inequitable conduct or accident,
ignorance, lack of skill, negligence or
one of the parties may ask for the
bad faith on the part of the person
reformation of the instrument to the
drafting the instrument or of the clerk
end that such true intention may be
or typist, the instrument does not
expressed.
express the true intention of the
If mistake, fraud, inequitable conduct,
parties, the courts may order that the
or accident has prevented a meeting of
instrument be reformed.
the minds of the parties, the proper
ARTICLE 1365. If two parties agree
remedy is not reformation of the
upon the mortgage or pledge of real or
instrument but annulment of the
personal property, but the instrument
contract.
states that the property is sold
ARTICLE 1360. The principles of the
absolutely or with a right of
general law on the reformation of
repurchase, reformation of the latter shall prevail over the former.
instrument is proper. (1281)
ARTICLE 1366. There shall be no ARTICLE 1371. In order to judge the
reformation in the following cases: intention of the contracting parties,
(1) Simple donations inter vivos their contemporaneous and
wherein no condition is imposed; subsequent acts shall be principally
(2) Wills; considered. (1282)
(3) When the real agreement is void. ARTICLE 1372. However general the
ARTICLE 1367. When one of the terms of a contract may be, they shall
parties has brought an action to not be understood to comprehend
enforce the instrument, he cannot things that are distinct and cases that
subsequently ask for its reformation. are different from those upon which
ARTICLE 1368. Reformation may be the parties intended to agree. (1283)
ordered at the instance of either party ARTICLE 1373. If some stipulation of
or his successors in interest, if the any contract should admit of several
mistake was mutual; otherwise, upon meanings, it shall be understood as
petition of the injured party, or his heirs bearing that import which is most
and assigns. adequate to render it effectual. (1284)
ARTICLE 1369. The procedure for the ARTICLE 1374. The various
reformation of instrument shall be stipulations of a contract shall be
governed by rules of court to be interpreted together, attributing to the
promulgated by the Supreme Court. doubtful ones that sense which may
result from all of them taken jointly.
Chapter 5: Interpretation of (1285)
Contracts ARTICLE 1375. Words which may
have different significations shall be
ARTICLE 1370. If the terms of a
understood in that which is most in
contract are clear and leave no doubt
keeping with the nature and object of
upon the intention of the contracting
the contract. (1286)
parties, the literal meaning of its
ARTICLE 1376. The usage or custom
stipulations shall control.
of the place shall be borne in mind in
If the words appear to be contrary to
the interpretation of the ambiguities of
the evident intention of the parties, the
a contract, and shall fill the omission of
stipulations which are ordinarily ARTICLE 1381. The following
established. (1287) contracts are rescissible:
ARTICLE 1377. The interpretation of (1) Those which are entered into by
obscure words or stipulations in a guardians whenever the wards whom
contract shall not favor the party who they represent suffer lesion by more
caused the obscurity. (1288) than one-fourth of the value of the
ARTICLE 1378. When it is absolutely things which are the object thereof;
impossible to settle doubts by the rules (2) Those agreed upon in
established in the preceding articles, representation of absentees, if the
and the doubts refer to incidental latter suffer the lesion stated in the
circumstances of a gratuitous contract, preceding number;
the least transmission of rights and (3) Those undertaken in fraud of
interests shall prevail. If the contract is creditors when the latter cannot in any
onerous, the doubt shall be settled in other manner collect the claims due
favor of the greatest reciprocity of them;
interests. (4) Those which refer to things under
If the doubts are cast upon the litigation if they have been entered into
principal object of the contract in such by the defendant without the
a way that it cannot be known what knowledge and approval of the litigants
may have been the intention or will of or of competent judicial authority;
the parties, the contract shall be null (5) All other contracts specially
and void. (1289) declared by law to be subject to
ARTICLE 1379. The principles of rescission. (1291a)
interpretation stated in Rule 123 of the ARTICLE 1382. Payments made in a
Rules of Court shall likewise be state of insolvency for obligations to
observed in the construction of whose fulfillment the debtor could not
contracts. (n) be compelled at the time they were
effected, are also rescissible. (1292)
Chapter 6: Rescissible Contracts ARTICLE 1383. The action for
rescission is subsidiary; it cannot be
ARTICLE 1380. Contracts validly
instituted except when the party
agreed upon may be rescinded in the
suffering damage has no other legal
cases established by law. (1290)
means to obtain reparation for the
same. (1294)
ARTICLE 1384. Rescission shall be some writ of attachment has been
only to the extent necessary to cover issued. The decision or attachment
the damages caused. (n) need not refer to the property
ARTICLE 1385. Rescission creates alienated, and need not have been
the obligation to return the things obtained by the party seeking the
which were the object of the contract, rescission.
together with their fruits, and the price In addition to these presumptions, the
with its interest; consequently, it can design to defraud creditors may be
be carried out only when he who proved in any other manner
demands rescission can return recognized by the law of evidence.
whatever he may be obliged to restore. (1297a)
Neither shall rescission take place ARTICLE 1388. Whoever acquires in
when the things which are the object of bad faith the things alienated in fraud
the contract are legally in the of creditors, shall indemnify the latter
possession of third persons who did for damages suffered by them on
not act in bad faith. account of the alienation, whenever,
In this case, indemnity for damages due to any cause, it should be
may be demanded from the person impossible for him to return them.
causing the loss. (1295) If there are two or more alienations,
ARTICLE 1386. Rescission referred to the first acquirer shall be liable first,
in Nos. 1 and 2 of article 1381 shall not and so on successively. (1298a)
take place with respect to contracts ARTICLE 1389. The action to claim
approved by the courts. (1296a) rescission must be commenced within
ARTICLE 1387. All contracts by virtue four years.
of which the debtor alienates property For persons under guardianship and
by gratuitous title are presumed to for absentees, the period of four years
have been entered into in fraud of shall not begin until the termination of
creditors, when the donor did not the former’s incapacity, or until the
reserve sufficient property to pay all domicile of the latter is known. (1299)
debts contracted before the donation.
Alienations by onerous title are also Chapter 7: Voidable Contracts
presumed fraudulent when made by
ARTICLE 1390. The following
persons against whom some judgment
contracts are voidable or annullable,
has been rendered in any instance or
even though there may have been no ceased, the person who has a right to
damage to the contracting parties: invoke it should execute an act which
(1) Those where one of the parties is necessarily implies an intention to
incapable of giving consent to a waive his right. (1311a)
contract; ARTICLE 1394. Ratification may be
(2) Those where the consent is vitiated effected by the guardian of the
by mistake, violence, intimidation, incapacitated person. (n)
undue influence or fraud. ARTICLE 1395. Ratification does not
These contracts are binding, unless require the conformity of the
they are annulled by a proper action in contracting party who has no right to
court. They are susceptible of bring the action for annulment. (1312)
ratification. (n) ARTICLE 1396. Ratification cleanses
ARTICLE 1391. The action for the contract from all its defects from
annulment shall be brought within four the moment it was constituted. (1313)
years. ARTICLE 1397. The action for the
This period shall begin: annulment of contracts may be
In cases of intimidation, violence or instituted by all who are thereby
undue influence, from the time the obliged principally or subsidiarily.
defect of the consent ceases. However, persons who are capable
In case of mistake or fraud, from the cannot allege the incapacity of those
time of the discovery of the same. with whom they contracted; nor can
And when the action refers to those who exerted intimidation,
contracts entered into by minors or violence, or undue influence, or
other incapacitated persons, from the employed fraud, or caused mistake
time the guardianship ceases. (1301a) base their action upon these flaws of
ARTICLE 1392. Ratification the contract. (1302a)
extinguishes the action to annul a ARTICLE 1398. An obligation having
voidable contract. (1309a) been annulled, the contracting parties
ARTICLE 1393. Ratification may be shall restore to each other the things
effected expressly or tacitly. It is which have been the subject matter of
understood that there is a tacit the contract, with their fruits, and the
ratification if, with knowledge of the price with its interest, except in cases
reason which renders the contract provided by law.
voidable and such reason having
In obligations to render service, the annulment he is bound to return, the
value thereof shall be the basis for other cannot be compelled to comply
damages. (1303a) with what is incumbent upon him.
ARTICLE 1399. When the defect of (1308)
the contract consists in the incapacity
of one of the parties, the incapacitated Chapter 8: Unenforceable Contracts
person is not obliged to make any (n)
restitution except insofar as he has
ARTICLE 1403. The following
been benefited by the thing or price
contracts are unenforceable, unless
received by him. (1304)
they are ratified:
ARTICLE 1400. Whenever the person
(1) Those entered into in the name of
obliged by the decree of annulment to
another person by one who has been
return the thing can not do so because
given no authority or legal
it has been lost through his fault, he
representation, or who has acted
shall return the fruits received and the
beyond his powers;
value of the thing at the time of the
(2) Those that do not comply with the
loss, with interest from the same date.
Statute of Frauds as set forth in this
(1307a)
number. In the following cases an
ARTICLE 1401. The action for
agreement hereafter made shall be
annulment of contracts shall be
unenforceable by action, unless the
extinguished when the thing which is
same, or some note or memorandum,
the object thereof is lost through the
thereof, be in writing, and subscribed
fraud or fault of the person who has a
by the party charged, or by his agent;
right to institute the proceedings.
evidence, therefore, of the agreement
If the right of action is based upon the
cannot be received without the writing,
incapacity of any one of the
or a secondary evidence of its
contracting parties, the loss of the
contents:
thing shall not be an obstacle to the
(a) An agreement that by its terms is
success of the action, unless said loss
not to be performed within a year from
took place through the fraud or fault of
the making thereof;
the plaintiff. (1314a)
(b) A special promise to answer for the
ARTICLE 1402. As long as one of the
debt, default, or miscarriage of
contracting parties does not restore
another;
what in virtue of the decree of
(c) An agreement made in No. 2 of article 1403, are ratified by the
consideration of marriage, other than a failure to object to the presentation of
mutual promise to marry; oral evidence to prove the same, or by
(d) An agreement for the sale of the acceptance of benefits under them.
goods, chattels or things in action, at a ARTICLE 1406. When a contract is
price not less than five hundred pesos, enforceable under the Statute of
unless the buyer accept and receive Frauds, and a public document is
part of such goods and chattels, or the necessary for its registration in the
evidences, or some of them, of such Registry of Deeds, the parties may
things in action, or pay at the time avail themselves of the right under
some part of the purchase money; but Article 1357.
when a sale is made by auction and ARTICLE 1407. In a contract where
entry is made by the auctioneer in his both parties are incapable of giving
sales book, at the time of the sale, of consent, express or implied ratification
the amount and kind of property sold, by the parent, or guardian, as the case
terms of sale, price, names of the may be, of one of the contracting
purchasers and person on whose parties shall give the contract the
account the sale is made, it is a same effect as if only one of them
sufficient memorandum; were incapacitated.
(e) An agreement for the leasing for a If ratification is made by the parents or
longer period than one year, or for the guardians, as the case may be, of both
sale of real property or of an interest contracting parties, the contract shall
therein; be validated from the inception.
(f) A representation as to the credit of ARTICLE 1408. Unenforceable
a third person. contracts cannot be assailed by third
(3) Those where both parties are persons.
incapable of giving consent to a
contract. Chapter 9: Void or Inexistent
ARTICLE 1404. Unauthorized Contracts
contracts are governed by article 1317
ARTICLE 1409. The following
and the principles of agency in Title X
contracts are inexistent and void from
of this Book.
the beginning:
ARTICLE 1405. Contracts infringing
the Statute of Frauds, referred to in
(1) Those whose cause, object or applicable to the things or the price of
purpose is contrary to law, morals, the contract.
good customs, public order or public This rule shall be applicable when only
policy; one of the parties is guilty; but the
(2) Those which are absolutely innocent one may claim what he has
simulated or fictitious; given, and shall not be bound to
(3) Those whose cause or object did comply with his promise. (1305)
not exist at the time of the transaction; ARTICLE 1412. If the act in which the
(4) Those whose object is outside the unlawful or forbidden cause consists
commerce of men; does not constitute a criminal offense,
(5) Those which contemplate an the following rules shall be observed:
impossible service; (1) When the fault is on the part of
(6) Those where the intention of the both contracting parties, neither may
parties relative to the principal object recover what he has given by virtue of
of the contract cannot be ascertained; the contract, or demand the
(7) Those expressly prohibited or performance of the other’s
declared void by law. undertaking;
These contracts cannot be ratified. (2) When only one of the contracting
Neither can the right to set up the parties is at fault, he cannot recover
defense of illegality be waived. what he has given by reason of the
ARTICLE 1410. The action or defense contract, or ask for the fulfillment of
for the declaration of the inexistence of what has been promised him. The
a contract does not prescribe. other, who is not at fault, may demand
ARTICLE 1411. When the nullity the return of what he has given without
proceeds from the illegality of the any obligation to comply with his
cause or object of the contract, and the promise. (1306)
act constitutes a criminal offense, both ARTICLE 1413. Interest paid in excess
parties being in pari delicto, they shall of the interest allowed by the usury
have no action against each other, and laws may be recovered by the debtor,
both shall be prosecuted. Moreover, with interest thereon from the date of
the provisions of the Penal Code the payment.
relative to the disposal of effects or ARTICLE 1414. When money is paid
instruments of a crime shall be or property delivered for an illegal
purpose, the contract may be
repudiated by one of the parties before demand additional compensation for
the purpose has been accomplished, service rendered beyond the time limit.
or before any damage has been ARTICLE 1419. When the law sets, or
caused to a third person. In such case, authorizes the setting of a minimum
the courts may, if the public interest wage for laborers, and a contract is
will thus be subserved, allow the party agreed upon by which a laborer
repudiating the contract to recover the accepts a lower wage, he shall be
money or property. entitled to recover the deficiency.
ARTICLE 1415. Where one of the ARTICLE 1420. In case of a divisible
parties to an illegal contract is contract, if the illegal terms can be
incapable of giving consent, the courts separated from the legal ones, the
may, if the interest of justice so latter may be enforced.
demands allow recovery of money or ARTICLE 1421. The defense of
property delivered by the incapacitated illegality of contract is not available to
person. third persons whose interests are not
ARTICLE 1416. When the agreement directly affected.
is not illegal per se but is merely ARTICLE 1422. A contract which is the
prohibited, and the prohibition by the direct result of a previous illegal
law is designed for the protection of contract, is also void and inexistent.
the plaintiff, he may, if public policy is
thereby enhanced, recover what he
has paid or delivered.
ARTICLE 1417. When the price of any
article or commodity is determined by
statute, or by authority of law, any
person paying any amount in excess
of the maximum price allowed may
recover such excess.
ARTICLE 1418. When the law fixes, or
authorizes the fixing of the maximum
number of hours of labor, and a
contract is entered into whereby a
laborer undertakes to work longer than
the maximum thus fixed, he may