1179. Every obligation whose performance does not depend upon a
future or uncertain event, or upon a past event unknown to the parties,
is demandable at once.
obligation which contains a resolutory condition shall also be demandable,
without prejudice to the effects of the happening of the event.
1180. When the debtor binds himself to pay when his means permit
him to do so, the obligation shall be deemed to be one with a period,
subject to the provisions of article 1197. (n)
1181. In conditional obligations, the acquisition of rights, as
well as the extinguishment or loss of those already acquired, shall
depend upon the happening of the event which constitutes the condition.
ARTICLE 1182. When the fulfillment of the condition depends upon
the sole will of the debtor, the conditional obligation shall be
void. If it depends upon chance or upon the will of a third person,
the obligation shall take effect in conformity with the provisions
of this Code. (1115)
1183. Impossible conditions, those contrary to good customs or public
policy and those prohibited by law shall annul the obligation which
depends upon them. If the obligation is divisible, that part thereof
which is not affected by the impossible or unlawful condition shall
condition not to do an impossible thing shall be considered as not
having been agreed upon. (1116a)
1184. The condition that some event happen at a determinate time
shall extinguish the obligation as soon as the time expires or if
it has become indubitable that the event will not take place. (1117)
1185. The condition that some event will not happen at a determinate
time shall render the obligation effective from the moment the time
indicated has elapsed, or if it has become evident that the event
no time has been fixed, the condition shall be deemed fulfilled
at such time as may have probably been contemplated, bearing in
mind the nature of the obligation. (1118)
ARTICLE 1186. The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment. (1119)
1187. The effects of a conditional obligation to give, once the
condition has been fulfilled, shall retroact to the day of the constitution
of the obligation. Nevertheless, when the obligation imposes reciprocal
prestations upon the parties, the fruits and interests during the
pendency of the condition shall be deemed to have been mutually
compensated. If the obligation is unilateral, the debtor shall appropriate
the fruits and interests received, unless from the nature and circumstances
of the obligation it should be inferred that the intention of the
person constituting the same was different.
obligations to do and not to do, the courts shall determine, in
each case, the retroactive effect of the condition that has been
complied with. (1120)
1188. The creditor may, before the fulfillment of the condition,
bring the appropriate actions for the preservation of his right.
debtor may recover what during the same time he has paid by mistake
in case of a suspensive condition. (1121a)
1189. When the conditions have been imposed with the intention of
suspending the efficacy of an obligation to give, the following
rules shall be observed in case of the improvement, loss or deterioration
of the thing during the pendency of the condition:
If the thing is lost without the fault of the debtor, the obligation
shall be extinguished;
If the thing is lost through the fault of the debtor, he shall be
obliged to pay damages; it is understood that the thing is lost
when it perishes, or goes out of commerce, or disappears in such
a way that its existence is unknown or it cannot be recovered;
When the thing deteriorates without the fault of the debtor, the
impairment is to be borne by the creditor;
If it deteriorates through the fault of the debtor, the creditor
may choose between the rescission of the obligation and its fulfillment,
with indemnity for damages in either case;
If the thing is improved by its nature, or by time, the improvement
shall inure to the benefit of the creditor;
If it is improved at the expense of the debtor, he shall have no
other right than that granted to the usufructuary. (1122)
1190. When the conditions have for their purpose the extinguishment
of an obligation to give, the parties, upon the fulfillment of said
conditions, shall return to each other what they have received.
In case of the loss, deterioration or improvement of the thing,
the provisions which, with respect to the debtor, are laid down
in the preceding article shall be applied to the party who is bound
for the obligations to do and not to do, the provisions of the second
paragraph of article 1187 shall be observed as regards the effect
of the extinguishment of the obligation. (1123)
1191. The power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is
incumbent upon him.
The injured party may choose between the fulfillment and the rescission
of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment,
if the latter should become impossible.
court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with articles
1385 and 1388 and the Mortgage Law. (1124)
1192. In case both parties have committed a breach of the obligation,
the liability of the first infractor shall be equitably tempered
by the courts. If it cannot be determined which of the parties first
violated the contract, the same shall be deemed extinguished, and
each shall bear his own damages. (n)
Obligations with a Period
1193. Obligations for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes.
with a resolutory period take effect at once, but terminate upon
arrival of the day certain.
certain is understood to be that which must necessarily come, although
it may not be known when.
the uncertainty consists in whether the day will come or not, the
obligation is conditional, and it shall be regulated by the rules
of the preceding Section. (1125a)
1194. In case of loss, deterioration or improvement of the thing
before the arrival of the day certain, the rules in article 1189
shall be observed. (n)
1195. Anything paid or delivered before the arrival of the period,
the obligor being unaware of the period or believing that the obligation
has become due and demandable, may be recovered, with the fruits
and interests. (1126a)
1196. Whenever in an obligation a period is designated, it is presumed
to have been established for the benefit of both the creditor and
the debtor, unless from the tenor of the same or other circumstances
it should appear that the period has been established in favor of
one or of the other. (1127)
1197. If the obligation does not fix a period, but from its nature
and the circumstances it can be inferred that a period was intended,
the courts may fix the duration thereof.
courts shall also fix the duration of the period when it depends
upon the will of the debtor.
every case, the courts shall determine such period as may under
the circumstances have been probably contemplated by the parties.
Once fixed by the courts, the period cannot be changed by them.
1198. The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent,
unless he gives a guaranty or security for the debt;
When he does not furnish to the creditor the guaranties or securities
which he has promised;
When by his own acts he has impaired said guaranties or securities
after their establishment, and when through a fortuitous event they
disappear, unless he immediately gives new ones equally satisfactory;
When the debtor violates any undertaking, in consideration of which
the creditor agreed to the period;
When the debtor attempts to abscond. (1129a)
1199. A person alternatively bound by different prestations shall
completely perform one of them.
creditor cannot be compelled to receive part of one and part of
the other undertaking. (1131)
1200. The right of choice belongs to the debtor, unless it has been
expressly granted to the creditor.
debtor shall have no right to choose those prestations which are
impossible, unlawful or which could not have been the object of
the obligation. (1132)
1201. The choice shall produce no effect except from the time it
has been communicated. (1133)
1202. The debtor shall lose the right of choice when among the prestations
whereby he is alternatively bound, only one is practicable. (1134)
1203. If through the creditor's acts the debtor cannot make a choice
according to the terms of the obligation, the latter may rescind
the contract with damages. (n)
1204. The creditor shall have a right to indemnity for damages when,
through the fault of the debtor, all the things which are alternatively
the object of the obligation have been lost, or the compliance of
the obligation has become impossible.
The indemnity shall be fixed taking as a basis the value of the
last thing which disappeared, or that of the service which last
Damages other than the value of the last thing or service may also
be awarded. (1135a)
1205. When the choice has been expressly given to the creditor,
the obligation shall cease to be alternative from the day when the
selection has been communicated to the debtor.
then the responsibility of the debtor shall be governed by the following
If one of the things is lost through a fortuitous event, he shall
perform the obligation by delivering that which the creditor should
choose from among the remainder, or that which remains if only one
If the loss of one of the things occurs through the fault of the
debtor, the creditor may claim any of those subsisting, or the price
of that which, through the fault of the former, has disappeared,
with a right to damages;
If all the things are lost through the fault of the debtor, the
choice by the creditor shall fall upon the price of any one of them,
also with indemnity for damages.
The same rules shall be applied to obligations to do or not to do
in case one, some or all of the prestations should become impossible.
1206. When only one prestation has been agreed upon, but the obligor
may render another in substitution, the obligation is called facultative.
loss or deterioration of the thing intended as a substitute, through
the negligence of the obligor, does not render him liable. But once
the substitution has been made, the obligor is liable for the loss
of the substitute on account of his delay, negligence or fraud.
Joint and Solidary Obligations
1207. The concurrence of two or more creditors or of two or more
debtors in one and the same obligation does not imply that each
one of the former has a right to demand, or that each one of the
latter is bound to render, entire compliance with the prestation.
There is a solidary liability only when the obligation expressly
so states, or when the law or the nature of the obligation requires
1208. If from the law, or the nature or the wording of the obligations
to which the preceding article refers the contrary does not appear,
the credit or debt shall be presumed to be divided into as many
shares as there are creditors or debtors, the credits or debts being
considered distinct from one another, subject to the Rules of Court
governing the multiplicity of suits. (1138a)
1209. If the division is impossible, the right of the creditors
may be prejudiced only by their collective acts, and the debt can
be enforced only by proceeding against all the debtors. If one of
the latter should be insolvent, the others shall not be liable for
his share. (1139)
1210. The indivisibility of an obligation does not necessarily give
rise to solidarity. Nor does solidarity of itself imply indivisibility.
1211. Solidarity may exist although the creditors and the debtors
may not be bound in the same manner and by the same periods and
1212. Each one of the solidary creditors may do whatever may be
useful to the others, but not anything which may be prejudicial
to the latter. (1141a)
ARTICLE 1213. A solidary creditor cannot assign his rights without
the consent of the others. (n)
1214. The debtor may pay any one of the solidary creditors; but
if any demand, judicial or extrajudicial, has been made by one of
them, payment should be made to him. (1142a)
1215. Novation, compensation, confusion or remission of the debt,
made by any of the solidary creditors or with any of the solidary
debtors, shall extinguish the obligation, without prejudice to the
provisions of article 1219.
creditor who may have executed any of these acts, as well as he
who collects the debt, shall be liable to the others for the share
in the obligation corresponding to them. (1143)
1216. The creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The demand made against one
of them shall not be an obstacle to those which may subsequently
be directed against the others, so long as the debt has not been
fully collected. (1144a)
1217. Payment made by one of the solidary debtors extinguishes the
obligation. If two or more solidary debtors offer to pay, the creditor
may choose which offer to accept.
who made the payment may claim from his co-debtors only the share
which corresponds to each, with the interest for the payment already
made. If the payment is made before the debt is due, no interest
for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such share
shall be borne by all his co-debtors, in proportion to the debt
of each. (1145a)
ARTICLE 1218. Payment by a solidary debtor shall not entitle him
to reimbursement from his co-debtors if such payment is made after
the obligation has prescribed or become illegal. (n)
1219. The remission made by the creditor of the share which affects
one of the solidary debtors does not release the latter from his
responsibility towards the co-debtors, in case the debt had been
totally paid by anyone of them before the remission was effected.
1220. The remission of the whole obligation, obtained by one of
the solidary debtors, does not entitle him to reimbursement from
his co-debtors. (n)
1221. If the thing has been lost or if the prestation has become
impossible without the fault of the solidary debtors, the obligation
shall be extinguished.
If there was fault on the part of any one of them, all shall be
responsible to the creditor, for the price and the payment of damages
and interest, without prejudice to their action against the guilty
or negligent debtor.
through a fortuitous event, the thing is lost or the performance
has become impossible after one of the solidary debtors has incurred
in delay through the judicial or extrajudicial demand upon him by
the creditor, the provisions of the preceding paragraph shall apply.
1222. A solidary debtor may, in actions filed by the creditor, avail
himself of all defenses which are derived from the nature of the
obligation and of those which are personal to him, or pertain to
his own share. With respect to those which personally belong to
the others, he may avail himself thereof only as regards that part
of the debt for which the latter are responsible. (1148a)
Divisible and Indivisible Obligations
1223. The divisibility or indivisibility of the things that are
the object of obligations in which there is only one debtor and
only one creditor does not alter or modify the provisions of Chapter
2 of this Title. (1149)
1224. A joint indivisible obligation gives rise to indemnity for
damages from the time anyone of the debtors does not comply with
his undertaking. The debtors who may have been ready to fulfill
their promises shall not contribute to the indemnity beyond the
corresponding portion of the price of the thing or of the value
of the service in which the obligation consists. (1150)
1225. For the purposes of the preceding articles, obligations to
give definite things and those which are not susceptible of partial
performance shall be deemed to be indivisible.
the obligation has for its object the execution of a certain number
of days of work, the accomplishment of work by metrical units, or
analogous things which by their nature are susceptible of partial
performance, it shall be divisible.
even though the object or service may be physically divisible, an
obligation is indivisible if so provided by law or intended by the
In obligations not to do, divisibility or indivisibility shall be
determined by the character of the prestation in each particular
Obligations with a Penal Clause
1226. In obligations with a penal clause, the penalty shall substitute
the indemnity for damages and the payment of interests in case of
noncompliance, if there is no stipulation to the contrary. Nevertheless,
damages shall be paid if the obligor refuses to pay the penalty
or is guilty of fraud in the fulfillment of the obligation.
penalty may be enforced only when it is demandable in accordance
with the provisions of this Code. (1152a)
1227. The debtor cannot exempt himself from the performance of the
obligation by paying the penalty, save in the case where this right
has been expressly reserved for him. Neither can the creditor demand
the fulfillment of the obligation and the satisfaction of the penalty
at the same time, unless this right has been clearly granted him.
However, if after the creditor has decided to require the fulfillment
of the obligation, the performance thereof should become impossible
without his fault, the penalty may be enforced. (1153a)
1228. Proof of actual damages suffered by the creditor is not necessary
in order that the penalty may be demanded. (n)
1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor.
Even if there has been no performance, the penalty may also be reduced
by the courts if it is iniquitous or unconscionable. (1154a)
1230. The nullity of the penal clause does not carry with it that
of the principal obligation.
nullity of the principal obligation carries with it that of the
penal clause. (1155)
Extinguishment of Obligations
1231. Obligations are extinguished:
By payment or performance;
By the loss of the thing due;
By the condonation or remission of the debt;
By the confusion or merger of the rights of creditor and debtor;
causes of extinguishment of obligations, such as annulment, rescission,
fulfillment of a resolutory condition, and prescription, are governed
elsewhere in this Code. (1156a)
Payment or Performance
1232. Payment means not only the delivery of money but also the
performance, in any other manner, of an obligation. (n)
1233. A debt shall not be understood to have been paid unless the
thing or service in which the obligation consists has been completely
delivered or rendered, as the case may be. (1157)
1234. If the obligation has been substantially performed in good
faith, the obligor may recover as though there had been a strict
and complete fulfillment, less damages suffered by the obligee.
1235. When the obligee accepts the performance, knowing its incompleteness
or irregularity, and without expressing any protest or objection,
the obligation is deemed fully complied with. (n)
1236. The creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the
obligation, unless there is a stipulation to the contrary.
pays for another may demand from the debtor what he has paid, except
that if he paid without the knowledge or against the will of the
debtor, he can recover only insofar as the payment has been beneficial
to the debtor. (1158a)
1237. Whoever pays on behalf of the debtor without the knowledge
or against the will of the latter, cannot compel the creditor to
subrogate him in his rights, such as those arising from a mortgage,
guaranty, or penalty. (1159a)
1238. Payment made by a third person who does not intend to be reimbursed
by the debtor is deemed to be a donation, which requires the debtor's
consent. But the payment is in any case valid as to the creditor
who has accepted it. (n)
1239. In obligations to give, payment made by one who does not have
the free disposal of the thing due and capacity to alienate it shall
not be valid, without prejudice to the provisions of article 1427
under the Title on "Natural Obligations." (1160a)
1240. Payment shall be made to the person in whose favor the obligation
has been constituted, or his successor in interest, or any person
authorized to receive it. (1162a)
1241. Payment to a person who is incapacitated to administer his
property shall be valid if he has kept the thing delivered, or insofar
as the payment has been beneficial to him.
made to a third person shall also be valid insofar as it has redounded
to the benefit of the creditor. Such benefit to the creditor need
not be proved in the following cases:
If after the payment, the third person acquires the creditor's rights;
If the creditor ratifies the payment to the third person;
If by the creditor's conduct, the debtor has been led to believe
that the third person had authority to receive the payment. (1163a)
1242. Payment made in good faith to any person in possession of
the credit shall release the debtor. (1164)
1243. Payment made to the creditor by the debtor after the latter
has been judicially ordered to retain the debt shall not be valid.
1244. The debtor of a thing cannot compel the creditor to receive
a different one, although the latter may be of the same value as,
or more valuable than that which is due.
obligations to do or not to do, an act or forbearance cannot be
substituted by another act or forbearance against the obligee's
1245. Dation in payment, whereby property is alienated to the creditor
in satisfaction of a debt in money, shall be governed by the law
of sales. (n)
1246. When the obligation consists in the delivery of an indeterminate
or generic thing, whose quality and circumstances have not been
stated, the creditor cannot demand a thing of superior quality.
Neither can the debtor deliver a thing of inferior quality. The
purpose of the obligation and other circumstances shall be taken
into consideration. (1167a)
1247. Unless it is otherwise stipulated, the extrajudicial expenses
required by the payment shall be for the account of the debtor.
With regard to judicial costs, the Rules of Court shall govern.
1248. Unless there is an express stipulation to that effect, the
creditor cannot be compelled partially to receive the prestations
in which the obligation consists. Neither may the debtor be required
to make partial payments.
when the debt is in part liquidated and in part unliquidated, the
creditor may demand and the debtor may effect the payment of the
former without waiting for the liquidation of the latter. (1169a)
1249. The payment of debts in money shall be made in the currency
stipulated, and if it is not possible to deliver such currency,
then in the currency which is legal tender in the Philippines.
delivery of promissory notes payable to order, or bills of exchange
or other mercantile documents shall produce the effect of payment
only when they have been cashed, or when through the fault of the
creditor they have been impaired.
the meantime, the action derived from the original obligation shall
be held in the abeyance. (1170)
1250. In case an extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the currency at the time
of the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary. (n)
1251. Payment shall be made in the place designated in the obligation.
There being no express stipulation and if the undertaking is to
deliver a determinate thing, the payment shall be made wherever
the thing might be at the moment the obligation was constituted.
any other case the place of payment shall be the domicile of the
If the debtor changes his domicile in bad faith or after he has
incurred in delay, the additional expenses shall be borne by him.
These provisions are without prejudice to venue under the Rules
of Court. (1171a)
Application of Payments
1252. He who has various debts of the same kind in favor of one
and the same creditor, may declare at the time of making the payment,
to which of them the same must be applied. Unless the parties so
stipulate, or when the application of payment is made by the party
for whose benefit the term has been constituted, application shall
not be made as to debts which are not yet due.
the debtor accepts from the creditor a receipt in which an application
of the payment is made, the former cannot complain of the same,
unless there is a cause for invalidating the contract. (1172a)
1253. If the debt produces interest, payment of the principal shall
not be deemed to have been made until the interests have been covered.
1254. When the payment cannot be applied in accordance with the
preceding rules, or if application can not be inferred from other
circumstances, the debt which is most onerous to the debtor, among
those due, shall be deemed to have been satisfied.
the debts due are of the same nature and burden, the payment shall
be applied to all of them proportionately. (1174a)
Payment by Cession
1255. The debtor may cede or assign his property to his creditors
in payment of his debts. This cession, unless there is stipulation
to the contrary, shall only release the debtor from responsibility
for the net proceeds of the thing assigned. The agreements which,
on the effect of the cession, are made between the debtor and his
creditors shall be governed by special laws. (1175a)
Tender of Payment and Consignation
1256. If the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from
responsibility by the consignation of the thing or sum due.
alone shall produce the same effect in the following cases:
When the creditor is absent or unknown, or does not appear at the
place of payment;
When he is incapacitated to receive the payment at the time it is
When, without just cause, he refuses to give a receipt;
When two or more persons claim the same right to collect;
When the title of the obligation has been lost. (1176a)
1257. In order that the consignation of the thing due may release
the obligor, it must first be announced to the persons interested
in the fulfillment of the obligation.
consignation shall be ineffectual if it is not made strictly in
consonance with the provisions which regulate payment. (1177)
1258. Consignation shall be made by depositing the things due at
the disposal of judicial authority, before whom the tender of payment
shall be proved, in a proper case, and the announcement of the consignation
in other cases.
consignation having been made, the interested parties shall also
be notified thereof. (1178)
1259. The expenses of consignation, when properly made, shall be
charged against the creditor. (1179)
1260. Once the consignation has been duly made, the debtor may ask
the judge to order the cancellation of the obligation.
the creditor has accepted the consignation, or before a judicial
declaration that the consignation has been properly made, the debtor
may withdraw the thing or the sum deposited, allowing the obligation
to remain in force. (1180)
1261. If, the consignation having been made, the creditor should
authorize the debtor to withdraw the same, he shall lose every preference
which he may have over the thing. The co-debtors, guarantors and
sureties shall be released. (1181a)
Loss of the Thing Due
1262. An obligation which consists in the delivery of a determinate
thing shall be extinguished if it should be lost or destroyed without
the fault of the debtor, and before he has incurred in delay.
by law or stipulation, the obligor is liable even for fortuitous
events, the loss of the thing does not extinguish the obligation,
and he shall be responsible for damages. The same rule applies when
the nature of the obligation requires the assumption of risk. (1182a)
1263. In an obligation to deliver a generic thing, the loss or destruction
of anything of the same kind does not extinguish the obligation.
1264. The courts shall determine whether, under the circumstances,
the partial loss of the object of the obligation is so important
as to extinguish the obligation. (n)
1265. Whenever the thing is lost in the possession of the debtor,
it shall be presumed that the loss was due to his fault, unless
there is proof to the contrary, and without prejudice to the provisions
of article 1165. This presumption does not apply in case of earthquake,
flood, storm, or other natural calamity. (1183a)
ARTICLE 1266. The debtor in obligations to do shall also be released
when the prestation becomes legally or physically impossible without
the fault of the obligor. (1184a)
1267. When the service has become so difficult as to be manifestly
beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part. (n)
1268. When the debt of a thing certain and determinate proceeds
from a criminal offense, the debtor shall not be exempted from the
payment of its price, whatever may be the cause for the loss, unless
the thing having been offered by him to the person who should receive
it, the latter refused without justification to accept it. (1185)
1269. The obligation having been extinguished by the loss of the
thing, the creditor shall have all the rights of action which the
debtor may have against third persons by reason of the loss. (1186)
Condonation or Remission of the Debt
1270. Condonation or remission is essentially gratuitous, and requires
the acceptance by the obligor. It may be made expressly or impliedly.
and the other kind shall be subject to the rules which govern inofficious
donations. Express condonation shall, furthermore, comply with the
forms of donation. (1187)
1271. The delivery of a private document evidencing a credit, made
voluntarily by the creditor to the debtor, implies the renunciation
of the action which the former had against the latter.
in order to nullify this waiver it should be claimed to be inofficious,
the debtor and his heirs may uphold it by proving that the delivery
of the document was made in virtue of payment of the debt. (1188)
1272. Whenever the private document in which the debt appears is
found in the possession of the debtor, it shall be presumed that
the creditor delivered it voluntarily, unless the contrary is proved.
1273. The renunciation of the principal debt shall extinguish the
accessory obligations; but the waiver of the latter shall leave
the former in force. (1190)
ARTICLE 1274. It is presumed that the accessory obligation of pledge
has been remitted when the thing pledged, after its delivery to
the creditor, is found in the possession of the debtor, or of a
third person who owns the thing. (1191a)
Confusion or Merger of Rights
1275. The obligation is extinguished from the time the characters
of creditor and debtor are merged in the same person. (1192a)
1276. Merger which takes place in the person of the principal debtor
or creditor benefits the guarantors. Confusion which takes place
in the person of any of the latter does not extinguish the obligation.
1277. Confusion does not extinguish a joint obligation except as
regards the share corresponding to the creditor or debtor in whom
the two characters concur. (1194)
1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other. (1195)
1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that
he be at the same time a principal creditor of the other;
That both debts consist in a sum of money, or if the things due
are consumable, they be of the same kind, and also of the same quality
if the latter has been stated;
(3) That the two debts be due;
That they be liquidated and demandable;
That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
ARTICLE 1280. Notwithstanding the provisions of the preceding article,
the guarantor may set up compensation as regards what the creditor
may owe the principal debtor. (1197)
1281. Compensation may be total or partial. When the two debts are
of the same amount, there is a total compensation. (n)
1282. The parties may agree upon the compensation of debts which
are not yet due. (n)
1283. If one of the parties to a suit over an obligation has a claim
for damages against the other, the former may set it off by proving
his right to said damages and the amount thereof. (n)
1284. When one or both debts are rescissible or voidable, they may
be compensated against each other before they are judicially rescinded
or avoided. (n)
1285. The debtor who has consented to the assignment of rights made
by a creditor in favor of a third person, cannot set up against
the assignee the compensation which would pertain to him against
the assignor, unless the assignor was notified by the debtor at
the time he gave his consent, that he reserved his right to the
the creditor communicated the cession to him but the debtor did
not consent thereto, the latter may set up the compensation of debts
previous to the cession, but not of subsequent ones.
the assignment is made without the knowledge of the debtor, he may
set up the compensation of all credits prior to the same and also
later ones until he had knowledge of the assignment. (1198a)
1286. Compensation takes place by operation of law, even though
the debts may be payable at different places, but there shall be
an indemnity for expenses of exchange or transportation to the place
of payment. (1199a)
1287. Compensation shall not be proper when one of the debts arises
from a depositum or from the obligations of a depositary or of a
bailee in commodatum.
Neither can compensation be set up against a creditor who has a
claim for support due by gratuitous title, without prejudice to
the provisions of paragraph 2 of article 301. (1200a)
1288. Neither shall there be compensation if one of the debts consists
in civil liability arising from a penal offense. (n)
1289. If a person should have against him several debts which are
susceptible of compensation, the rules on the application of payments
shall apply to the order of the compensation. (1201)
1290. When all the requisites mentioned in article 1279 are present,
compensation takes effect by operation of law, and extinguishes
both debts to the concurrent amount, even though the creditors and
debtors are not aware of the compensation. (1202a)
1291. Obligations may be modified by:
Changing their object or principal conditions;
Substituting the person of the debtor;
Subrogating a third person in the rights of the creditor. (1203)
1292. In order that an obligation may be extinguished by another
which substitute the same, it is imperative that it be so declared
in unequivocal terms, or that the old and the new obligations be
on every point incompatible with each other. (1204)
1293. Novation which consists in substituting a new debtor in the
place of the original one, may be made even without the knowledge
or against the will of the latter, but not without the consent of
the creditor. Payment by the new debtor gives him the rights mentioned
in articles 1236 and 1237. (1205a)
1294. If the substitution is without the knowledge or against the
will of the debtor, the new debtor's insolvency or non-fulfillment
of the obligations shall not give rise to any liability on the part
of the original debtor. (n)
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 of the latter against the original obligor, except when
said insolvency was already existing and of public knowledge, or
known to the debtor, when the delegated his debt. (1206a)
1296. When the principal obligation is extinguished in consequence
of a novation, accessory obligations may subsist only insofar as
they may benefit third persons who did not give their consent. (1207)
1297. If the new obligation is void, the original one shall subsist,
unless the parties intended that the former relation should be extinguished
in any event. (n)
1298. The novation is void if the original obligation was void,
except when annulment may be claimed only by the debtor or when
ratification validates acts which are voidable. (1208a)
1299. If the original obligation was subject to a suspensive or
resolutory condition, the new obligation shall be under the same
condition, unless it is otherwise stipulated. (n)
1300. Subrogation of a third person in the rights of the creditor
is either legal or conventional. The former is not presumed, except
in cases expressly mentioned in this Code; the latter must be clearly
established in order that it may take effect. (1209a)
1301. Conventional subrogation of a third person requires the consent
of the original parties and of the third person. (n)
1302. It is presumed that there is legal subrogation:
When a creditor pays another creditor who is preferred, even without
the debtor's knowledge;
When a third person, not interested in the obligation, pays with
the express or tacit approval of the debtor;
When, even without the knowledge of the debtor, a person interested
in the fulfillment of the obligation pays, without prejudice to
the effects of confusion as to the latter's share. (1210a)
1303. Subrogation transfers to the persons subrogated the credit
with all the rights thereto appertaining, either against the debtor
or against third person, be they guarantors or possessors of mortgages,
subject to stipulation in a conventional subrogation. (1212a)
1304. A creditor, to whom partial payment has been made, may exercise
his right for the remainder, and he shall be preferred to the person
who has been subrogated in his place in virtue of the partial payment
of the same credit. (1213)
1305. A contract is a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something
or to render some service. (1254a)
1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or
public policy. (1255a)
1307. Innominate contracts shall be regulated by the stipulations
of the parties, by the provisions of Titles I and II of this Book,
by the rules governing the most analogous nominate contracts, and
by the customs of the place. (n)
1308. The contract must bind both contracting parties; its validity
or compliance cannot be left to the will of one of them. (1256a)
1309. The determination of 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)
1310. The determination shall not be obligatory if it is evidently
inequitable. In such case, the courts shall decide what is equitable
under the circumstances. (n)
1311. Contracts take effect only between the parties, their assigns
and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation
or by provision of law. The heir is not liable beyond the value
of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third
person, he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a favor upon
a third person. (1257a)
1312. In contracts creating real rights, third persons who come
into possession of the object of the contract are bound thereby,
subject to the provisions of the Mortgage Law and the Land Registration
1313. Creditors are protected in cases of contracts intended to
defraud them. (n)
1314. Any third person who induces another to violate his contract
shall be liable for damages to the other contracting party. (n)
1315. Contracts are perfected by mere consent, and from that moment
the parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which, according
to their nature, may be in keeping with good faith, usage and law.
1316. Real contracts, such as deposit, pledge and commodatum, are
not perfected until the delivery of the object of the obligation.
ARTICLE 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law a right
to represent him.
entered into in the name of another by one who has no authority
or legal representation, or who has acted beyond his powers, shall
be unenforceable, unless it is ratified, expressly or impliedly,
by the person on whose behalf it has been executed, before it is
revoked by the other contracting party. (1259a)
Essential Requisites of Contracts
1318. There is no contract unless the following requisites concur:
Consent of the contracting parties;
Object certain which is the subject matter of the contract;
Cause of the obligation which is established. (1261)
1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute
the contract. The offer must be certain and the acceptance absolute.
A qualified acceptance constitutes a counter-offer.
made by letter or telegram does not bind the offerer except from
the time it came to his knowledge. The contract, in such a case,
is presumed to have been entered into in the place where the offer
was made. (1262a)
1320. An acceptance may be express or implied. (n)
1321. The person making the offer may fix the time, place, and manner
of acceptance, all of which must be complied with. (n)
1322. An offer made through an agent is accepted from the time acceptance
is communicated to him. (n)
1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed.
1324. When the offerer has allowed the offeree a certain period
to accept, the offer may be withdrawn at any time before acceptance
by communicating such withdrawal, except when the option is founded
upon a consideration, as something paid or promised. (n)
1325. Unless it appears otherwise, business advertisements of things
for sale are not definite offers, but mere invitations to make an
1326. Advertisements for bidders are simply invitations to make
proposals, and the advertiser is not bound to accept the highest
or lowest bidder, unless the contrary appears. (n)
1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
Insane or demented persons, and deaf-mutes who do not know how to
1328. Contracts entered into during a lucid interval are valid.
Contracts agreed to in a state of drunkenness or during a hypnotic
spell are voidable. (n)
1329. The incapacity declared in article 1327 is subject to the
modifications determined by law, and is understood to be without
prejudice to special disqualifications established in the laws.
1330. A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable. (1265a)
1331. In order that mistake may invalidate consent, it should refer
to the substance of the thing which is the object of the contract,
or to those conditions which have principally moved one or both
parties to enter into the contract.
as to the identity or qualifications of one of the parties will
vitiate consent only when such identity or qualifications have been
the principal cause of the contract.
A simple mistake of account shall give rise to its correction. (1266a)
1332. When one of the parties is unable to read, or if the contract
is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former. (n)
1333. There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract. (n)
1334. Mutual error as to the legal effect of an agreement when the
real purpose of the parties is frustrated, may vitiate consent.
1335. There is violence when in order to wrest consent, serious
or irresistible force is employed.
is intimidation when one of the contracting parties is compelled
by a reasonable and well-grounded fear of an imminent and grave
evil upon his person or property, or upon the person or property
of his spouse, descendants or ascendants, to give his consent.
determine the degree of intimidation, the age, sex and condition
of the person shall be borne in mind.
to enforce one's claim through competent authority, if the claim
is just or legal, does not vitiate consent. (1267a)
1336. Violence or intimidation shall annul the obligation, although
it may have been employed by a third person who did not take part
in the contract. (1268)
1337. There is undue influence when a person takes improper advantage
of his power over the will of another, depriving the latter of a
reasonable freedom of choice. The following circumstances shall
be considered: the confidential, family, spiritual and other relations
between the parties, or the fact that the person alleged to have
been unduly influenced was suffering from mental weakness, or was
ignorant or in financial distress. (n)
1338. There is fraud when, through insidious words or machinations
of one of the contracting parties, the other is induced to enter
into a contract which, without them, he would not have agreed to.
1339. Failure to disclose facts, when there is a duty to reveal
them, as when the parties are bound by confidential relations, constitutes
ARTICLE 1340. The usual exaggerations in trade, when the other party
had an opportunity to know the facts, are not in themselves fraudulent.
1341. A mere expression of an opinion does not signify fraud, unless
made by an expert and the other party has relied on the former's
special knowledge. (n)
1342. Misrepresentation by a third person does not vitiate consent,
unless such misrepresentation has created substantial mistake and
the same is mutual. (n)
1343. Misrepresentation made in good faith is not fraudulent but
may constitute error. (n)
1344. In order that fraud may make a contract voidable, it should
be serious and should not have been employed by both contracting
fraud only obliges the person employing it to pay damages. (1270)
1345. Simulation of a contract may be absolute or relative. The
former takes place when the parties do not intend to be bound at
all; the latter, when the parties conceal their true agreement.
1346. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and
is not intended for any purpose contrary to law, morals, good customs,
public order or public policy binds the parties to their real agreement.
Object of Contracts
1347. All things which are not outside the commerce of men, including
future things, may be the object of a contract. All rights which
are not intransmissible may also be the object of contracts.
contract may be entered into upon future inheritance except in cases
expressly authorized by law.
services which are not contrary to law, morals, good customs, public
order or public policy may likewise be the object of a contract.
1348. Impossible things or services cannot be the object of contracts.
1349. The object of every contract must be determinate as to its
kind. The fact that the quantity is not determinate shall not be
an obstacle to the existence of the contract, provided it is possible
to determine the same, without the need of a new contract between
the parties. (1273)
Cause of Contracts
1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or promise of a thing or service
by the other; in remuneratory ones, the service or benefit which
is remunerated; and in contracts of pure beneficence, the mere liberality
of the benefactor. (1274)
ARTICLE 1351. The particular motives of the parties in entering
into a contract are different from the cause thereof. (n)
1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law,
morals, good customs, public order or public policy. (1275a)
1353. The statement of a false cause in contracts shall render them
void, if it should not be proved that they were founded upon another
cause which is true and lawful. (1276)
1354. Although the cause is not stated in the contract, it is presumed
that it exists and is lawful, unless the debtor proves the contrary.
1355. Except in cases specified by law, lesion or inadequacy of
cause shall not invalidate a contract, unless there has been fraud,
mistake or undue influence. (n)
Form of Contracts
1356. Contracts shall be obligatory, in whatever form they may have
been entered into, provided all the essential requisites for their
validity are present. However, when the law requires that a contract
be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is
absolute and indispensable. In such cases, the right of the parties
stated in the following article cannot be exercised. (1278a)
1357. If the law requires a document or other special form, as in
the acts and contracts enumerated in the following article, the
contracting parties may compel each other to observe that form,
once the contract has been perfected. This right may be exercised
simultaneously with the action upon the contract. (1279a)
1358. The following must appear in a public document:
Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property;
sales of real property or of an interest therein are governed by
articles 1403, No. 2, and 1405;
The cession, repudiation or renunciation of hereditary rights or
of those of the conjugal partnership of gains;
The power to administer property, or any other power which has for
its object an act appearing or which should appear in a public document,
or should prejudice a third person;
The cession of actions or rights proceeding from an act appearing
in a public document.
other contracts where the amount involved exceeds five hundred pesos
must appear in writing, even a private one. But sales of goods,
chattels or things in action are governed by articles, 1403, No.
2 and 1405. (1280a)
Reformation of Instruments (n)
1359. When, there having been a meeting of the minds of the parties
to a contract, their true intention is not expressed in the instrument
purporting to embody the agreement, by reason of mistake, fraud,
inequitable conduct or accident, one of the parties may ask for
the reformation of the instrument to the end that such true intention
may be expressed.
mistake, fraud, inequitable conduct, or accident has prevented a
meeting of the minds of the parties, the proper remedy is not reformation
of the instrument but annulment of the contract.
1360. The principles of the general law on the reformation of instruments
are hereby adopted insofar as they are not in conflict with the
provisions of this Code.
1361. When a mutual mistake of the parties causes the failure of
the instrument to disclose their real agreement, said instrument
may be reformed.
1362. If one party was mistaken and the other acted fraudulently
or inequitably in such a way that the instrument does not show their
true intention, the former may ask for the reformation of the instrument.
1363. When one party was mistaken and the other knew or believed
that the instrument did not state their real agreement, but concealed
that fact from the former, the instrument may be reformed.
1364. When through the ignorance, lack of skill, negligence or bad
faith on the part of the person drafting the instrument or of the
clerk or typist, the instrument does not express the true intention
of the parties, the courts may order that the instrument be reformed.
1365. If two parties agree upon the mortgage or pledge of real or
personal property, but the instrument states that the property is
sold absolutely or with a right of repurchase, reformation of the
instrument is proper.
1366. There shall be no reformation in the following cases:
Simple donations inter vivos wherein no condition is imposed;
When the real agreement is void.
1367. When one of the parties has brought an action to enforce the
instrument, he cannot subsequently ask for its reformation.
1368. Reformation may be ordered at the instance of either party
or his successors in interest, if the mistake was mutual; otherwise,
upon petition of the injured party, or his heirs and assigns.
1369. The procedure for the reformation of instrument shall be governed
by rules of court to be promulgated by the Supreme Court.
Interpretation of Contracts
1370. If the terms of a contract are clear and leave no doubt upon
the intention of the contracting parties, the literal meaning of
its stipulations shall control.
If the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former. (1281)
1371. In order to judge the intention of the contracting parties,
their contemporaneous and subsequent acts shall be principally considered.
ARTICLE 1372. However general the terms of a contract may be, they
shall not be understood to comprehend things that are distinct and
cases that are different from those upon which the parties intended
to agree. (1283)
1373. If some stipulation of any contract should admit of several
meanings, it shall be understood as bearing that import which is
most adequate to render it effectual. (1284)
1374. The various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may
result from all of them taken jointly. (1285)
1375. Words which may have different significations shall be understood
in that which is most in keeping with the nature and object of the
1376. The usage or custom of the place shall be borne in mind in
the interpretation of the ambiguities of a contract, and shall fill
the omission of stipulations which are ordinarily established. (1287)
1377. The interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity. (1288)
ARTICLE 1378. When it is absolutely impossible to settle doubts
by the rules established in the preceding articles, and the doubts
refer to incidental circumstances of a gratuitous contract, the
least transmission of rights and interests shall prevail. If the
contract is onerous, the doubt shall be settled in favor of the
greatest reciprocity of interests.
the doubts are cast upon the principal object of the contract in
such a way that it cannot be known what may have been the intention
or will of the parties, the contract shall be null and void. (1289)
1379. The principles of interpretation stated in Rule 123 of the
Rules of Court shall likewise be observed in the construction of
1380. Contracts validly agreed upon may be rescinded in the cases
established by law. (1290)
1381. The following contracts are rescissible:
Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than one-fourth of the value
of the things which are the object thereof;
Those agreed upon in representation of absentees, if the latter
suffer the lesion stated in the preceding number;
Those undertaken in fraud of creditors when the latter cannot in
any other manner collect the claims due them;
Those which refer to things under litigation if they have been entered
into by the defendant without the knowledge and approval of the
litigants or of competent judicial authority;
All other contracts specially declared by law to be subject to rescission.
ARTICLE 1382. Payments made in a state of insolvency for obligations
to whose fulfillment the debtor could not be compelled at the time
they were effected, are also rescissible. (1292)
1383. The action for rescission is subsidiary; it cannot be instituted
except when the party suffering damage has no other legal means
to obtain reparation for the same. (1294)
1384. Rescission shall be only to the extent necessary to cover
the damages caused. (n)
1385. Rescission creates the obligation to return the things which
were the object of the contract, together with their fruits, and
the price with its interest; consequently, it can be carried out
only when he who demands rescission can return whatever he may be
obliged to restore.
shall rescission take place when the things which are the object
of the contract are legally in the possession of third persons who
did not act in bad faith.
this case, indemnity for damages may be demanded from the person
causing the loss. (1295)
1386. Rescission referred to in Nos. 1 and 2 of article 1381 shall
not take place with respect to contracts approved by the courts.
1387. All contracts by virtue of which the debtor alienates property
by gratuitous title are presumed to have been entered into in fraud
of creditors, when the donor did not reserve sufficient property
to pay all debts contracted before the donation.
by onerous title are also presumed fraudulent when made by persons
against whom some judgment has been rendered in any instance or
some writ of attachment has been issued. The decision or attachment
need not refer to the property alienated, and need not have been
obtained by the party seeking the rescission.
addition to these presumptions, the design to defraud creditors
may be proved in any other manner recognized by the law of evidence.
ARTICLE 1388. Whoever acquires in bad faith the things alienated
in fraud of creditors, shall indemnify the latter for damages suffered
by them on account of the alienation, whenever, due to any cause,
it should be impossible for him to return them.
If there are two or more alienations, the first acquirer shall be
liable first, and so on successively. (1298a)
1389. The action to claim rescission must be commenced within four
persons under guardianship and for absentees, the period of four
years shall not begin until the termination of the former's incapacity,
or until the domicile of the latter is known. (1299)
1390. The following contracts are voidable or annullable, even though
there may have been no damage to the contracting parties:
Those where one of the parties is incapable of giving consent to
Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
contracts are binding, unless they are annulled by a proper action
in court. They are susceptible of ratification. (n)
1391. The action for annulment shall be brought within four years.
This period shall begin:
cases of intimidation, violence or undue influence, from the time
the defect of the consent ceases.
case of mistake or fraud, from the time of the discovery of the
when the action refers to contracts entered into by minors or other
incapacitated persons, from the time the guardianship ceases. (1301a)
1392. Ratification extinguishes the action to annul a voidable contract.
1393. Ratification may be effected expressly or tacitly. It is understood
that there is a tacit ratification if, with knowledge of the reason
which renders the contract voidable and such reason having ceased,
the person who has a right to invoke it should execute an act which
necessarily implies an intention to waive his right. (1311a)
1394. Ratification may be effected by the guardian of the incapacitated
1395. Ratification does not require the conformity of the contracting
party who has no right to bring the action for annulment. (1312)
1396. Ratification cleanses the contract from all its defects from
the moment it was constituted. (1313)
1397. The action for the annulment of contracts may be instituted
by all who are thereby obliged principally or subsidiarily. However,
persons who are capable cannot allege the incapacity of those with
whom they contracted; nor can those who exerted intimidation, violence,
or undue influence, or employed fraud, or caused mistake base their
action upon these flaws of the contract. (1302a)
1398. An obligation having been annulled, the contracting parties
shall restore to each other the things which have been the subject
matter of the contract, with their fruits, and the price with its
interest, except in cases provided by law.
obligations to render service, the value thereof shall be the basis
for damages. (1303a)
1399. When the defect of the contract consists in the incapacity
of one of the parties, the incapacitated person is not obliged to
make any restitution except insofar as he has been benefited by
the thing or price received by him. (1304)
1400. Whenever the person obliged by the decree of annulment to
return the thing can not do so because it has been lost through
his fault, he shall return the fruits received and the value of
the thing at the time of the loss, with interest from the same date.
1401. The action for annulment of contracts shall be extinguished
when the thing which is the object thereof is lost through the fraud
or fault of the person who has a right to institute the proceedings.
the right of action is based upon the incapacity of any one of the
contracting parties, the loss of the thing shall not be an obstacle
to the success of the action, unless said loss took place through
the fraud or fault of the plaintiff. (1314a)
1402. As long as one of the contracting parties does not restore
what in virtue of the decree of annulment he is bound to return,
the other cannot be compelled to comply with what is incumbent upon
Unenforceable Contracts (n)
1403. The following contracts are unenforceable, unless they are
Those entered into in the name of another person by one who has
been given no authority or legal representation, or who has acted
beyond his powers;
Those that do not comply with the Statute of Frauds as set forth
in this number. In the following cases an agreement hereafter made
shall be unenforceable by action, unless the same, or some note
or memorandum, thereof, be in writing, and subscribed by the party
charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or a secondary evidence
of its contents:
An agreement that by its terms is not to be performed within a year
from the making thereof;
A special promise to answer for the debt, default, or miscarriage
An agreement made in consideration of marriage, other than a mutual
promise to marry;
An agreement for the sale of goods, chattels or things in action,
at a price not less than five hundred pesos, unless the buyer accept
and receive part of such goods and chattels, or the evidences, or
some of them, of such things in action or pay at the time some part
of the purchase money; but when a sale is made by auction and entry
is made by the auctioneer in his sales book, at the time of the
sale, of the amount and kind of property sold, terms of sale, price,
names of the purchasers and person on whose account the sale is
made, it is a sufficient memorandum;
An agreement for the leasing for a longer period than one year,
or for the sale of real property or of an interest therein;
) A representation as to the credit of a third person.
Those where both parties are incapable of giving consent to a contract.
ARTICLE 1404. Unauthorized contracts are governed by article 1317
and the principles of agency in Title X of this Book.
1405. Contracts infringing the Statute of Frauds, referred to in
No. 2 of article 1403, are ratified by the failure to object to
the presentation of oral evidence to prove the same, or by the acceptance
of benefit under them.
1406. When a contract is enforceable under the Statute of Frauds,
and a public document is necessary for its registration in the Registry
of Deeds, the parties may avail themselves of the right under Article
1407. In a contract where both parties are incapable of giving consent,
express or implied ratification by the parent, or guardian, as the
case may be, of one of the contracting parties shall give the contract
the same effect as if only one of them were incapacitated.
ratification is made by the parents or guardians, as the case may
be, of both contracting parties, the contract shall be validated
from the inception.
1408. Unenforceable contracts cannot be assailed by third persons.
Void and Inexistent Contracts
1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals,
good customs, public order or public policy;
Those which are absolutely simulated or fictitious;
Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
Those which contemplate an impossible service;
Those where the intention of the parties relative to the principal
object of the contract cannot be ascertained;
Those expressly prohibited or declared void by law.
contracts cannot be ratified. Neither can the right to set up the
defense of illegality be waived.
1410. The action or defense for the declaration of the inexistence
of a contract does not prescribe.
1411. When the nullity proceeds from the illegality of the cause
or object of the contract, and the act constitutes a criminal offense,
both parties being in pari delicto, they shall have no action against
each other, and both shall be prosecuted. Moreover, the provisions
of the Penal Code relative to the disposal of effects or instruments
of a crime shall be applicable to the things or the price of the
rule shall be applicable when only one of the parties is guilty;
but the innocent one may claim what he has given, and shall not
be bound to comply with his promise. (1305)
1412. If the act in which the unlawful or forbidden cause consists
does not constitute a criminal offense, the following rules shall
When the fault is on the part of both contracting parties, neither
may recover what he has given by virtue of the contract, or demand
the performance of the other's undertaking;
When only one of the contracting parties is at fault, he cannot
recover what he has given by reason of the contract, or ask for
the fulfillment of what has been promised him. The other, who is
not at fault, may demand the return of what he has given without
any obligation to comply his promise. (1306)
1413. Interest paid in excess of the interest allowed by the usury
laws may be recovered by the debtor, with interest thereon from
the date of the payment.
ARTICLE 1414. When money is paid or property delivered for an illegal
purpose, the contract may be repudiated by one of the parties before
the purpose has been accomplished, or before any damage has been
caused to a third person. In such case, the courts may, if the public
interest will thus be subserved, allow the party repudiating the
contract to recover the money or property.
1415. Where one of the parties to an illegal contract is incapable
of giving consent, the courts may, if the interest of justice so
demands allow recovery of money or property delivered by the incapacitated
1416. When the agreement is not illegal per se but is merely prohibited,
and the prohibition by the law is designed for the protection of
the plaintiff, he may, if public policy is thereby enhanced, recover
what he has paid or delivered.
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.
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 demand additional compensation for service rendered beyond
the time limit.
1419. When the law sets, or authorizes the setting of a minimum
wage for laborers, and a contract is agreed upon by which a laborer
accepts a lower wage, he shall be entitled to recover the deficiency.
1420. In case of a divisible contract, if the illegal terms can
be separated from the legal ones, the latter may be enforced.
1421. The defense of illegality of contract is not available to
third persons whose interests are not directly affected.
1422. A contract which is the direct result of a previous illegal
contract, is also void and inexistent.
1423. Obligations are civil or natural. Civil obligations give a
right of action to compel their performance. Natural obligations,
not being based on positive law but on equity and natural law, do
not grant a right of action to enforce their performance, but after
voluntary fulfillment by the obligor, they authorize the retention
of what has been delivered or rendered by reason thereof. Some natural
obligations are set forth in the following articles.
1424. When a right to sue upon a civil obligation has lapsed by
extinctive prescription, the obligor who voluntarily performs the
contract cannot recover what he has delivered or the value of the
service he has rendered.
1425. When without the knowledge or against the will of the debtor,
a third person pays a debt which the obligor is not legally bound
to pay because the action thereon has prescribed, but the debtor
later voluntarily reimburses the third person, the obligor cannot
recover what he has paid.
1426. When a minor between eighteen and twenty-one years of age
who has entered into a contract without the consent of the parent
or guardian, after the annulment of the contract voluntarily returns
the whole thing or price received, notwithstanding the fact that
he has not been benefited thereby, there is no right to demand the
thing or price thus returned.
1427. When a minor between eighteen and twenty-one years of age,
who has entered into a contract without the consent of the parent
or guardian, voluntarily pays a sum of money or delivers a fungible
thing in fulfillment of the obligation, there shall be no right
to recover the same from the obligee who has spent or consumed it
in good faith. (1160A)
1428. When, after an action to enforce a civil obligation has failed
the defendant voluntarily performs the obligation, he cannot demand
the return of what he has delivered or the payment of the value
of the service he has rendered.
1429. When a testate or intestate heir voluntarily pays a debt of
the decedent exceeding the value of the property which he received
by will or by the law of intestacy from the estate of the deceased,
the payment is valid and cannot be rescinded by the payer.
1430. When a will is declared void because it has not been executed
in accordance with the formalities required by law, but one of the
intestate heirs, after the settlement of the debts of the deceased,
pays a legacy in compliance with a clause in the defective will,
the payment is effective and irrevocable.
1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved
as against the person relying thereon.
1432. The principles of estoppel are hereby adopted insofar as they
are not in conflict with the provisions of this Code, the Code of
Commerce, the Rules of Court and special laws.
1433. Estoppel may in pais or by deed.
1434. When a person who is not the owner of a thing sells or alienates
and delivers it, and later the seller or grantor acquires title
thereto, such title passes by operation of law to the buyer or grantee.
1435. If a person in representation of another sells or alienates
a thing, the former cannot subsequently set up his own title as
against the buyer or grantee.
ARTICLE 1436. A lessee or a bailee is estopped from asserting title
to the thing leased or received, as against the lessor or bailor.
ARTICLE 1437. When in a contract between third persons concerning
immovable property, one of them is misled by a person with respect
to the ownership or real right over the real estate, the latter
is precluded from asserting his legal title or interest therein,
provided all these requisites are present:
There must be fraudulent representation or wrongful concealment
of facts known to the party estopped;
The party precluded must intend that the other should act upon the
facts as misrepresented;
The party misled must have been unaware of the true facts; and
The party defrauded must have acted in accordance with the misrepresentation.
1438. One who has allowed another to assume apparent ownership of
personal property for the purpose of making any transfer of it,
cannot, if he received the sum for which a pledge has been constituted,
set up his own title to defeat the pledge of the property, made
by the other to a pledgee who received the same in good faith and
1439. Estoppel is effective only as between the parties thereto
or their successors in interest.