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OBLIGATIONS AND CONTRACTS 4 TH EXAMDEFECTIVE CONTRACTS REVIEWER

Emille Dane S. Viola 1

DEFECTIVE CONTRACTS

RESCISSIBLE CONTRACTS

- a on!"a! #$i$ $a% a&%e' a (a"!i&la" 'ama)e !o one o* !$e(a"!ie% o" !o a !$i"' (e"%on+ an' #$i$ *o" e,&i!ale "ea%on% mae %e! a%i'e even if its valid.

-

Re%i%%ion i% ("ini(all a%e' on %ome eonomi 'ama)e/le%ion0 a% a "e%&l! o* !$e ine,&i!ale on'&! one (a"!

Art. 1381. Contracts validly agreed upon may be rescinded incases established by law.

Re,&i%i!e% o* "e%i%%ion1. Con!"a! m&%! e "e%i%%ile /1231123505. 6a"! a%7in) *o" "e%i%%ion m&%! $a8e no o!$e" le)al mean%

!o o!ain "e(a"a!ion *o" 'ama)e% a&%e' /123202. 6e"%on 'eman'in) "e%i%%ion m&%! e ale !o "e!&"n

#$a!e8e" $e ma e oli)e' !o "e%!o"e i* "e%i%%ion i%)"an!e' /12390

4. T$e !$in) #$i$ a"e !$e o:e! o* !$e on!"a! m&%! no! $a8e(a%%e' legally !o !$e (o%%e%%ion o* a !$i"' (e"%on acting ingod faith /12390

9. T$e a!ion m&%! e "o&)$! #i!$in 4 ea"% /123;0

Art. 1381. The following contracts are rescissible:

(1 Those which are entered into by guardians whenever thewards whom they represent su!er lesion by more than one"fourth of the value of the things which are the ob#ect thereof$

(% Those agreed upon in representation of absentees& if thelatter su!er the lesion stated in the preceding number$

(3 Those underta'en in fraud of creditors when the lattercannot in any other manner collect the claims due them$

( Those which refer to things under litigation if they havebeen entered into by the defendant without the 'nowledgeand approval of the litigants or of competent #udicial authority$

() All other contracts specially declared by law to be sub#ectto rescission.

No. 1 No. 5 a"e "ea%on o* a!% o* a'mini%!"a!ion /e<. 6&"$a%e o* e,&i(men! *o" !$e &l!i8a!ion o* lan'%+ %ale o* $a"8e%!+ (&"$a%e o* ma!e"ial *o" !$e "e(ai" o* !$e &il'in)0 an' 'o no! inl&'e a!% o*

'ominion=o#ne"%$i( /e<. Con!"a! o* Com("omi%e0 I* i! #e"e a!% o* o#ne"%$i(+ i! #o&l' *all &n'e" >NENFORCEABLE CONTRACTS.

LESSION- !$e in:&" #= one o* !$e (a"!ie% %&?e" 8i"!&e o* a on!"a!#= i% 'i%a'8an!a)eo&% *o" $im.-m&%! e 7no#n o" o&l' $a8e een 7no#n a! !$e !ime o* !$e ma7in) o* !$e on!"a!+ an' no! '&e !o i"&m%!ane% %&%e,&en! !$e"e!o o"&n7no#n !o !$e (a"!ie%

RE@>ISITES FOR ACCION 6A>LIANA1. !$e (lain!i? $a% a "e'i! ("io" !o !$e aliena!ion+ al!$o&)$

'eman'ale la!e"5. T$e 'e!o" ma'e a %&%e,&en! on!"a! on8ein) a

(a!"imonial ene! !o a 2"' (e"%on2. T$e "e'i!o" $a% no le)al mean% !o %a!i%* $i% laim+ &!

#o&l' ene! !$e "e%i%%ion o* !$e on8eane !o !$e 2 "'

(e"%on4. T$e a! im(&)ne' i% *"a&'&len!9. T$e 2"' (e"%on #$o "eei8e' !$e ("o(e"!+ i* one"o&% !i!le

$a% een an aom(lieA! !$e !ime A6 #a% "o&)$!+ !$e "e'i! m&%! al"ea' e '&e-&')men! $a% a "e!"oa!i8e e?e! !o !$e 'a!e #$en !$e "e'i! #a%on%!i!&!e'.

TEST OF FRA>D-!$e *"a&' !$a! :&%!ie% !$e A6 i% no! $a"a!e"ie' !$e in!en!ion !oin:&"e !$e "e'i!o"+ &! !$e 7no#le')e !$a! 'ama)e #o&l' eini!e'. T$i% 7no#le')e e<i%!% #$en !$e 'e!o" 7no#% !$a! $i%("o(e"! anno! e aliena!e' #i!$o&! ("o'&in) e8i'en! in:&" !o $i%"e'i!o"% #i!$ e<i%!in) laim%+ #$e!$e" !$e e '&e o" no!.

SIGNS OF FRA>D1. T$e *a! !$a! on%i'e"a!ion o* on8eane i% ina'e,&a!e5. A !"an%*e" ma'e a 'e!o" a*!e" %&i! $a% e)&n an' #$ile

(en'in) a)ain%! $im2. A %ale &(on a "e'i! an in%ol8en! 'e!o"4. E8i'ene o* la")e in'e!e'ne%%=in%ol8en9. T"an%*e" o* all o" nea"l all !$e 'e!o"% ("o(e"!+ e%( #$en

$e i% in%ol8en! o" )"ea!l ema""a%%e' naniall. T$e *a! !$a! !$e !"an%*e" i% ma'e e!#een *a!$e" an' %on+

when any of the circumstances above are present. Fail&"e o* !$e 8en'ee !o !a7e e<l&%i8e (o%%e%%ion o* !$e

("o(e"!

*ratuitous alienation- %im(le 7no#le')e !$a! "e'i!o" #o&l' %&?e"in:&"

- )oo' *ai!$ o* !$e !"an%*e"ee 'oe% no! ("o!e! $im ea&%e$e )a8e no!$in) an' %o $e i% no! ("e:&'ie' !$e"e%i%%ion.

+nerous alienation- mo!i8a!e' an in!en!ion !o ("e:&'ie- !"an%*e"ee m&%! e a (a"! !o !$e *"a&' i* $e a!% in )oo'*ai!$+ !$e"e an e no "e%i%%ion ea&%e $a8in) )i8en%ome!$in)+ $i% (o%i!ion #o&l' e %imila" !o !$a! o* !$e

"e'i!o" an' ein) al"ea' in (o%%e%%ion $i% a,&i%i!ion #ille "e%(e!e'.

S>BSIDIARJ REMEDJ- i! i% nee%%a" !$a! !$e om(lainin) "e'i!o"%m&%! ("o8e !$a! !$e anno! "eo8e" in an o!$e" manne" #$a! i% '&e!$em.

A% a "&le+ !$e "e%i%%ion %$o&l' ene! onl !$e "e'i!o" #$o o!aine'!$e "e%i%%ion+ ea&%e !$e "e%i%%ion i% !o "e(ai" !$e in:&" a&%e' !o$im !$e *"a&'&len! aliena!ion+ $o#e8e" "e'i!o"% #$o o&l' al%o"in) !$e a!ion ma ene! i* a alane i% le*! a*!e" %a!i%*in) !$elaim o* !$e "e'i!o" #$o "o&)$! !$e a!ion.

C"e'i!o"% #$o anno! "in) !$e a!ion /!$o%e #$o eame "e'i!o"%a*!e" "e%i%%ion0 anno! ene! !$e anno! )e! in'i"e!l #$a! !$eanno! o!ain 'i"e!l.

Art. 138%. ,ayments made in a state of insolvency forobligations to whose ful-llment the debtor could not becompelled at the time they were e!ected& are also rescissible.

e/uisites1. T$e De!o"-(ae" m&%! $a8e een in%ol8en! /no :&'iial

'ela"a!ion nee'e'05. De! #a% no! e! '&e an' 'eman'ale

INSOLVENCJ IN FACT- 'oe% no! "e,&i"e an :&'iial ("oee'in) inin%ol8en.A "e'i!o" nee' no! $a8e a :&')men! o" e<e&!ion in o"'e" !o "e%in'!$e (amen! ma'e '&"in) in%ol8en o* #$a! #a% no! !$en '&e.

Art. 1383. The action for rescission is subsidiary$ it cannot beinstituted e0cept when the party su!ering damage has noother legal means to obtain reparation for the same.

W$e"e i% i% %$o#n !$a! !$e ("o(e"! !"an%*e""e' !$e 'e!o" !oano!$e" #a% $i% onl ("o(e"!+ i! i% o8io&% !$a! !$e "e'i!o" an $a8eno "eo&"%e !o %a!i%* $i% laim e<e(! "e%i%%ion.

Art. 138. escission shall be only to the e0tent necessary tocover the damages caused.

6a"!ial "e%i%%ion i% (o%%ile ene!% onl !$e "e'i!o" #$o $a% a%7e'*o" "e%i%%ion

WHO MAJ BRING ACTION1. 6e"%on in:&"e' /#a"'+ a%en!ee+ "e'i!o"% a *"a&'&len!

aliena!ion+ (lain!i?05. T$e Hei"%2. T$ei" "e'i!o"% 8i"!&e o* !$e "i)$! )"an!e' A"! 11

/aion %&"o)a!o"ia0

Art. 11. The creditors& after havingpursued the property in possession of thedebtor to satisfy their claims& may e0erciseall the rights and bring all the actions of thelatter for the same purpose& save thosewhich are inherent in his person$ they mayalso impugn the acts which the debtor mayhave done to defraud them

Art. 138). escission creates the obligation to return the

things which were the ob#ect of the contract& together withtheir fruits& and the price with its interest$ conse/uently& it canbe carried out only when he who demands rescission canreturn whatever he may be obliged to restore.

2either shall rescission ta'e place when the things which arethe ob#ect of the contract are legally in the possession of thirdpersons who did not act in bad faith.

n this case& indemnity for damages may be demanded fromthe person causing the loss.

M>T>AL RESTIT>TION

A66LICABLE ONLJ TO No. 1 an' No. 5 o* 1231

e/uisites before escission can be 4rought

a0 Gene"all+ (lain!i? m&%! e ale !o "e!&"n #$a! $a% een"eei8e' 8i"!&e o* "e%i%%ile on!"a!. E<e(! #$en i! i%

("e:&'iial !o "e'i!o"%.0 T$e !$in)-o:e! o* !$e on!"a! i% no! in !$e le)al (o%%e%%iono* 2"' (e"%on% in )oo' *ai!$.

0 T$e"e m&%! e no o!$e" le)al "eme'.'0 T$e a!ion m&%! e "o&)$! #=in ("o(e" ("e%"i(!i8e (e"io'

A 8ali' !"an%*e" !o a !$i"' (e"%on #$o a,&i"e% !$e ("o(e"! in )oo'*ai!$ i% %&Kien! !o 'e*ea! !$e a!ion *o" "e%i%%ion.

Ri)$! o* !$e T"an%*e"eeG"a!&i!o&% T"an%*e"- "e'i!o" $a% a e!!e" "i)$! !$an !$e

!"an%*e"ee #$o $a% )i8en no!$in) an' #o&l' e &n:&%!l en"i$e' a!!$e e<(en%e o* !$e "e'i!o" i* !$e !"an%*e" #a% &($el'. Re%i%%ion #ille allo#e' i""e%(e!i8e o* !$e )oo' *ai!$ o" a' *ai!$ o* !$e !"na*e"ee.





One"o&% T"an%*e"- !$e !"an%*e"ee in )oo' *ai!$ i% ("o!e!e' !o(e"mi! "e%i%%ion+ !$e !"an%*e"ee m&%! e a (a"! !o !$e *"a&'+ $e m&%!$a8e a 7no#le')e !$a! !$e !"an%*e" !o $im #o&l' ("e:&'ie e<i%!in)"e'i!o"% o* !$e !"an%*e"o".

TRANSFEREE IN GOOD FAITHG"a!&i!o&%- oli)e' !o "e!&"n !$e #$ole !$in)+ &! ein) a

(o%%e%%o" in )oo' *ai!$+ $e i% no! oli)e' !o (a !$e *"&i!% "eei8e' $im. He i% en!i!le' !o "eim&"%emen! *o" !$e nee%%a" an' &%e*&le<(en%e% in&""e' on !$e !$in).

Re!&"n% !$e !$in) in !$e on'i!ion i! mae *o&n'+ $e i% no!liale *o" !$e lo%%e% o" 'e!e"io"a!ion e<e(! in a%e% in #$i$ i! i%("o8e' !$a! $e a!e' #i!$ *"a&'&len! in!en! o" ne)li)ene a*!e" :&'iial%&mmon%

TRANSFEREE IN BAD FAITHNo! en!i!le' *o" in'emni! *o" 'ama)e% *"om !$e 'e!o".

RIGHT TO DAMAGESW$en !$e on!"a! anno! e "e%in'e' %ine !$e ("o(e"! i%

a,&i"e' a !$i"' (e"%on in )oo' *ai!$+ !$e (e"%on "e%(on%ile *o" !$elo%% i% liale *o" 'ama)e% /)&a"'ian+ "e("e%en!a!i8e0

Art. 1385. escission referred to in 2os. 1 (entered by the

guardian and % (entered by representatives of absentee of Article 1381 shall not ta'e place with respect to contractsapproved by the courts.

Art. 138. All contracts by virtue of which the debtor alienatesproperty by gratuitous title are presumed to have beenentered into in fraud of creditors& when the donor did notreserve su6cient property to pay all debts contracted beforethe donation.

Alienations by onerous title are also presumed fraudulentwhen made by persons against whom some #udgment has beenissued. The decision or attachment7 need not refer to theproperty alienated& and need not have been obtained by theparty see'ing the rescission.

n addition to these presumptions& the design to defraudcreditors may be proved in any other manner recognied bythe law of evidence.

6RES>M6TIONS In!en!ion !o 'e*"a&'

Doe% no! a((l #$en aliena!ion #a% ma'e e*o"e :&')men!.

In a%e o* a!!a$men!+ i! i% eno&)$ !$a! i! #a% i%%&e'+ an aliena!iona*!e" %&$ i%%&ane+ e8en i* ma'e e*o"e %e"8ie o" e<e&!ion o* %&$a!!a$men!+ #ill e ("e%&me' *"a&'&len!.

REB>TTAL OF 6RES>M6TION-%a!i%*a!o" an' on8inin) e8i'ene i! i% nee%%a" !o e%!ali%$aK"ma!i8el !$a! !$e on8eane #a% ma'e in good faith an' *o" asu6cient and valuable consideration.-#$en !$e ("e%&m(!ion $a% een o8e"!$"o#n+ i! i% in&men! &(on !$e(a"! a%7in) *o" "e%i%%ion !o ("o8e %&Kien! e8i'ene !$a! !$e"e#a% a!&al mala 'e% in !$e aliena!ion+ o!$e" #i%e !$e on!"a! #ill no!e "e%in'e'.

BADGES OF FRA>D

1. T$e *a! !$a! !$e on%i'e"a!ion o* !$e on8eane% i% !i!io&% o" i%ina'e,&a!e.5. A !"an%*e" ma'e a 'e!o" a*!e" %&i! $a% een e)&n an' #$ile i! i%(en'in) a)ain%! $im.2. A %ale &(on "e'i! an in%ol8en! 'e!o".4. E8i'ene o* la")e in'e!e'ne%% o" om(le!e in%ol8en.9. T$e !"an%*e" o* all o" nea"l all o* $i% ("o(e"! a 'e!o"+ e%(eiall#$en $e i% in%ol8en! o" )"ea!l ema""a%%e' naniall.. T$e *a! !$a! !$e !"an%*e" i% ma'e e!#een *a!$e" an' %on+ #$e"e!$e"e a"e ("e%en! o!$e" o* !$e ao8e i"&m%!ane%.. T$e *ail&"e o* !$e 8en'ee !o !a7e e<l&%i8e (o%%e%%ion o* all !$e("o(e"!.

EFFECT OF FRA>D-e<i%!ene o* *"a&' 'oe% no! nee%%a"il ma7e !$e aliena!ion"e%i%%ile+ *"a&' i% onl a "e,&i%i!e o* aion (a&liana. E8en i* !$e

'e!o" a!e' *"a&'&len!l+ i* !$e !"an%*e"ee a,&i"e' !$e !$in) in )oo'*ai!$ an' *o" 8al&ale on%i'e"a!ion+ !$e "e%i%%ion #ill no! e allo#e'.

Art. 1388. 9hoever ac/uires in bad faith the things alienatedin fraud of creditors& shall indemnify the latter for damagessu!ered by them on account of the alienation& whenever& dueto any cause7& it should be impossible for him to return them.

f there are two or more alienations& the -rst ac/uirer shall beliable -rst& and so on successively.

Doe% no! a((l !o No. 1 5 o* A"! 1231mae *o"!&i!o&%+ *a&l!+ o" ne)li)ene

S>BSE@>ENT TRANSFER- I* !"an%*e"ee i% in )oo' *ai!$ )oo'= a' *ai!$ o* ne<! !"an%*e"ee i%

imma!e"ial- I* !"an%*e"ee i% in a' *ai!$ !$e ne<! !"an%*e"ee i% onl liale i* $e

i% in a' *ai!$.- So in !$i% a%e+ !$e "%! a,&i"e" %$all e liale+ !$en a% #e %ai'+

$e !"an%*e"% i! !o T5 an' !$en !o T2+ !$e liaili! #ill e onl &(!o

T2. He #ill no! e liale !o "e!&"n+ ("ei%el ea&%e $e $a%!"an%*e""e' i!+ &! $e #ill e liale *o" 'ama)e%. Bea&%e o* !$eim(o%%iili! !o "e!&"n #$a! $e i% %&((o%e' !o "e!&"n !o !$e 'e!o"*o" (&"(o%e% o* an%#e"in) !$e liaili!ie% o* !$e 'e!o".

Art. 138. The action to claim rescission must be commencedwithin four years. ;or persons under guardianship and forabsentees& the period of four years shall not begin until thetermination of the former<s incapacity& or until the domicile of the latter is 'nown.

WHO CAN BRING ACTION1. T$e in:&"e' (a"! /o" 'e*"a&'e' "e'i!o"05. Hi% $ei" o" %&e%%o"-in-in!e"e%!2. C"e'i!o"% o* /a0 an' /0 8i"!&e o* A"!. 11 o* C.C

W$en 'o o& in%!i!&!e !$e a!ion *o" "e%i%%ion M&%! e ommene'#i!$in *o&" ea"%. Fo" (e"%on% &n'e" )&a"'ian%$i( an' *o" a%en!ee%+!$e *o&" ea"% %$all no! e)in &n!il !$e !e"mina!ion o* !$e *o"me"%ina(ai!+ o" &n!il !$e 'omiile o* !$e la!!e" i% 7no#n.

No# %&((o%e i! 'oe% no! *all &n'e" n&me"% 1 an' 5. W$en %$all o&%!a"! o&n!in) !$e *o&" ea" (e"io' T$a! #a% an%#e"e' in !$e a%e o* C$en) 8%. CA.

T$e (e"io' e)in% !o "&n a*!e" !$e a))"ie8e' (a"! $a% &n%&e%%*&lle<$a&%!e' all (o%%ile le)al "eme'ie% !o en*o"e !$e oli)a!ion o""eo8e" lo%%e%+ and from the time—1.T$e ina(ai! o* (e"%on% &n'e" )&a"'ian%$i( !e"mina!e%+ in a%e% o* (e"%on% &n'e" )&a"'ian%$i(5.T$e a%en!ee lea"n% o* !$e on!"a!+ in a%e% o* a%en!ee%2.T$e *"a&' i% 'i%o8e"e'+ *o" on!"a!% en!e"e' in *"a&' o* "e'i!o"%4.O* !$e 7no#le')e o* !$e !"an%a!ion+ *o" on!"a!% en!e"e' #i!$"e%(e! !o !$in)% &n'e" li!i)a!ion #i!$o&! a(("o8al

VOIDABLE CONTRACTS

-a on!"a! in #$i$ on%en! o* one o* !$e (a"! i% 'e*e!i8e+ ei!$e"ea&%e o* #an! o* a(ai!+ o" ea&%e i! i% 8i!ia!e'+ &! on!"a! i%%!ill 8ali' &n!il %e! a%i'e a om(e!en! o&"!.

Art. 13=. The following contracts are voidable or annullable&even though there may have been no damage to thecontracting parties:

(1 Those where one of the parties is incapable of givingconsent to a contract$

(% Those where the consent is vitiated by mista'e& violence&intimidation& undue in>uence or fraud. These contracts arebinding& unless they are annulled by a proper action in court.They are susceptible of rati-cation.

T$e a(ai! o* a (a"! i% no! a "e,&i%i!e sine qua non o* a on!"a! i!%#an! i% onl a )"o&n' *o" ann&lmen!.

Re(en!ane i% no! a )"o&n' *o" n&llia!ion o* on!"a!.

CHENG v CAA"!ile 123; o* !$e Ci8il Co'e %im(l ("o8i'e% !$a!+ T$e

a!ion !o laim "e%i%%ion m&%! e ommene' #i!$in *o&" ea"%.Sine !$i% ("o8i%ion o* la# i% %ilen! a% !o #$en !$e ("e%"i(!i8e(e"io' #o&l' ommene+ !$e )ene"al "&le+ i.e+ *"om !$e momen!!$e a&%e o* a!ion a"&e%+ !$e"e*o"e+ a((lie%. A"!ile 119 o* !$eCi8il Co'e i% (a"!i&la"l in%!"&!i8e

A"!. 119. T$e !ime *o" ("e%"i(!ion *o" all 7in'% o* a!ion%+ #$en !$e"e i% no %(eial ("o8i%ion #$i$ o"'ain%o!$e"#i%e+ %$all e o&n!e' *"om !$e 'a !$e ma e

"o&)$!.In'ee'+ !$i% Co&"! en&nia!e' !$e ("ini(le !$a! i! i% !$e le)al(o%%iili! o* "in)in) !$e a!ion #$i$ 'e!e"mine% !$e %!a"!in)(oin! *o" !$e om(&!a!ion o* !$e ("e%"i(!i8e (e"io' *o" !$e a!ion.A"!ile 1232 o* !$e Ci8il Co'e ("o8i'e% a% *ollo#%

A"!. 1232. An a!ion *o" "e%i%%ion i% %&%i'ia" i! anno!e in%!i!&!e' e<e(! #$en !$e (a"! %&?e"in) 'ama)e$a% no o!$e" le)al mean% !o o!ain "e(a"a!ion *o" !$e%ame.

I! i% !$&% a((a"en! !$a! an a!ion !o "e%in' o" an accion paulianam&%! e o* la%! "e%o"!+ a8aile' o* onl a*!e" all o!$e" le)al "eme'ie%$a8e een e<$a&%!e' an' $a8e een ("o8en *&!ile.

An accion pauliana a"&e% onl #$en !$e "e'i!o" 'i%o8e"% !$a!$e $a% no o!$e" le)al "eme' *o" !$e %a!i%*a!ion o* $i% laima)ain%! !$e 'e!o" o!$e" !$an an accion pauliana. T$e accion pauliana i% an a!ion o* a la%! "e%o"!.





T$e%e on!"a!% a"e in'in)+ &nle%% !$e"e a"e ann&lle' a ("o(e"a!ion in o&"!. T$e a"e %&%e(!ile o* "a!ia!ion. An' 8oi'ale o"ann&llale on!"a!% anno! e a!!a7e' olla!e"all. Jo& m&%! in%!i!&!ea 'i"e! ("oee'in) a%7in) !$a! !$e on!"a! e ann&lle'.

In%!i!&!e an a!ion a%7in) !$e o&"! a%7in) !$e o&"! !o ann&l !$eon!"a! on !$e )"o&n' o* 1 o" 5. O" o& an %!a!e i! in !$e

o&n!e"laim i* o& a"e a 'e*en'an!.Co&"!% m&%! no! onl 'ela"e !$e on!"a! 8oi'ale i! m&%! ann&l o" %e!a%i'e !$e on!"a! an' o"'e" mutual restitution (138

Art. 131. The action for annulment shall be brought withinfour years. This period shall begin:

n cases of intimidation& violence or undue in>uence& from thetime the defect of the consent ceases.

n case of mista'e or fraud& from the time of the discovery of the same.

And when the action refers to contracts entered into by minorsor other incapacitated persons& from the time the guardianshipceases.

T$e )&a"'ian an al%o "in) an a!ion *o" ann&lmen!+ &! i* i! #e"e !$emino"+ !$en &(on "ea$in) !$e a)e o* ma:o"i!+ i* !$e ina(ai!a!e'+!$en *"om !$e !ime o* !$e e%%a!ion o* )&a"'ian%$i(.

Ra!ia!ion /12;5-12;90

Art. 13%. ati-cation e0tinguishes the action to annul avoidable contract.

Ra!ia!ion lean%e% !$e on!"a! o* i!% 'e*e!%+ an' i! %$all "e!"oa! !o!$e 'a o* !$e ine(!ion o* !$e on!"a!. I! $a% "e!"oa!i8e e?e!+ an' i!lean%e% !$e on!"a! o* #$a!e8e" 'e*e!% i! "ea!e%. So i! eome% a8ali' on!"a!.

Ratication and annulment are to inconsistent remedies

C R ma e &%e' in!e"$an)eal.

Conformation i% !$e a! #= a (e"%on en!i!le' !o "in) an a!ion *o"ann&lmen!+ #i!$ 7no#le')e o* !$e a&%e o* ann&lmen! an' a*!e" i! $a%

ea%e' !o e<i%!+ 8ali'a!e% !$e on!"a! ei!$e" e0pressly or impliedly.

ati-cation- a! o* a(("o8in) a on!"a! en!e"e' in!o ano!$e"#i!$o&! !$e a&!$o"ia!ion o* !$e (e"%on in #$o%e name i! #a% en!e"e'in!o o" eon' !$e %o(e o* !$e a&!$o"i! o* !$e *o"me"." a! o" mean% #$i$ eKa i% )i8en !o a on!"a! o" an

oli)a!ion #= %&?e"% *"om a 8ie o* curable nullity.

Ac'nowledgement" "eme'ie% !$e 'eien o* ("oo* #$en #$a! $a%een a)"ee' &(on o"all i% (&! in #"i!in) o" #$en a ("i8a!e 'o&men! i%on8e"!e' in!o a (&li in%!"&men!+ !$e"e i% a7no#le')emen!.

RE@>ISITES FOR RATIFICATION

1. Con!"a! i% 8oi'ale5. 6e"%on "a!i*in) m&%! 7no# !$e "ea%on *o" !$e on!"a! ein)

8oi'ale /a&%e i% 7no#n02. Ca&%e m&%! no! e<i%!=on!in&e !o e<i%! anmo"e a! !ime o*

"a!ia!ion4. Ra!ia!ion i% ma'e e<("e%%l o" an a! im(lin) a #ai8e"

o* a!ion !o ann&l9. 6e"%on "a!i*in) m&%! e !$e in:&"e' (a"!

T$e "i)$! !o "a!i* i% !"an%mi!!e' !o !$e $ei"% o* !$e (a"! en!i!le' !o%&$ "i)$!.

Art. 133. ati-cation may be e!ected e0pressly or tacitly. t isunderstood that there is a tacit rati-cation if& with 'nowledgeof the reason which renders the contract voidable and suchreason having ceased& the person who has a right to invo'e itshould e0ecute an act which necessarily implies an intention towaive his right.

Tai! a!% "e%ellin) o* o:e!+ olle!in) &n(ai' alane+ &%e o* ("oee'%

IM6LIED RATIFICATION

-a! e8inin) an in!en! !o ai'e !$e on!"a! i% e8i'ene o* !$eaK"mane o* !$e on!"a! an' a #ai8e" o* !$e "i)$! !o a%7 *o"ann&lmen!. I! ma e %ilene o" a,&ie%ene+ ae(!ane an'"e!en!ion o* ene!%.

Art. 13. ati-cation may be e!ected by the guardian of theincapacitated person.

T$e "i)$! !o "a!i* (e"!ain% !o !$e ina(ai!a!e' (e"%on $ene. D&"in)!$e e<i%!ene o* ina(ai!+ i! ma e e<e"i%e' !$e )&a"'ian *o"$im

Art. 13). ati-cation does not re/uire the conformity of thecontracting party who has no right to bring the action forannulment.

Art. 135. ati-cation cleanses the contract from all its defectsfrom the moment it was constituted.

Ra!ia!ion i% me"el a 'ela"a!ion o* !$e #ai8e" o* !$e "i)$! !o a%7 *o"ann&lmen!+ $ene i! "e!"oa!% !o !$e momen! #$en !$e on!"a! i%en!e"e' in!o

I* "a!ia!ion $a% een ma'e+ no a!ion !o ann&l !$e %ame an emain!aine' a%e' on !$e %ame 'e*e!% "ela!in) !o i!% o"i)inal 8ali'i!.

Ri)$!% o* innoen! 2"' (e"%on% m&%! no! e ("e:&'ie'.

Ann&lmen!

Art. 13. The action for the annulment of contracts may beinstituted by all who are thereby obliged principally orsubsidiarily. ?owever& persons who are capable cannot allegethe incapacity of those with whom they contracted$ nor canthose who e0erted intimidation& violence& or undue in>uence&or employed fraud& or caused mista'e base their action uponthese >aws of the contract.

6ERSONAL RE@>ISITES1. T$e (lain!i? m&%! $a8e an in!e"e%!5. T$e 8i!im+ no! !$e (a"! "e%(on%ile *o" !$e 'e*e! m&%!

a%%e"!

Art. 138. An obligation having been annulled& the contractingparties shall restore to each other the things which have beenthe sub#ect matter of the contract& with their fruits& and theprice with its interest& e0cept in cases provided by law.

n obligations to render service& the value thereof shall be thebasis for damages.

EFFECT OF ANN>LMENT M>T>AL RESTIT>TION

Re!&"n (a"!ie% !o !$ei" o"i)inal %i!&a!ion i* !$e"e $a% een no(e"*o"mane ei!$e" (a"! !$e on!"a! %im(l ea%e% !o $a8e an*o"e an' e?e!.

6ARTIAL 6ERFORMANCE "e!&"n #$a!e8e" $e ma $a8e "eei8e' "ea%on o* !$e on!"a! &nle%% !$e"e a"e "ea%on% ("o8i'e' la# #$i$#ill ("e8en! %&$ "e%!i!&!ion.

>nle%% e%!o((el %$o&l' e e%!ali%$e'+ !$e "e)i%!"a!ion o* !$e lan''oe% no! e<!in)&i%$ !$e oli)a!ion o* m&!&al "e%!i!&!ion &n'e" !$i%a"!ile.

Canno! e a((lie' !o all on!"a!% /e< on!"a! o* lea%e0+ anno!("o%(e" i* i! #o&l' 8iola!e !$e ("ini( le o* &n:&%! en"i$men!.

Con!"a!% o* %e"8ie- !$e (a"! ene!e' !$e %e"8ie m&%! (a *o" i!%8al&e in %(i!e o* !$e ann&lmen! o* on!"a!.

FR>ITS INTERESTS

Ta7e in!o ao&n! !$e )oo' *ai!$ a' *ai!$6o%%e%%o" in )oo' *ai!$- no! "e,&i"e' !o "e!&"n !$e*"&i!% o" (a !$e in!e"e%!6o%%e%%o" in a' *ai!$ /one #$o em(loe' *"a&'+8iolene+ e!0- oli)e' !o "e%!o"e no! inl !$e *"&i!%"eei8e' &! al%o !$o%e #$i$ mi)$! $a8e een"eei8e'.

LIABILITJ FOR DAMAGESA% a "&le+ ann&lmen! an' m&!&al "e%!i!&!ion elimina!e' !$e (o%%iili!o* 'ama)e% e<e(!ion i% #$en !$e ("o(e"! !"an%*e""e' $a% al"ea'%&?e"e' 'ama)e% in !$e $an'% o* !$e 'e*en'an! e*o"e !$e ann&lmen!o* !$e on!"a!+ in %&$ a%e% !$e in:&"e' (a"! %$o&l' e en!i!le' !o"eo8e".

Art. 13. 9hen the defect of the contract consists in theincapacity of one of the parties& the incapacitated person isnot obliged to ma'e any restitution e0cept insofar as he hasbeen bene-ted by the thing or price received by him.

EXCL>SIVE !o n&lli! a"i%in) *"om ina(ai! o* one o* !$e (a"!ie%+ i* %ome o!$e" a&%e+ a((l 12;3

T$e (a"! %&?e"in) *"om !$e ina(ai! i% onl o&n' !o "e!&"n #$a! $e$a% ("o!e' !$e !$in) %ol' o" !$e ("ie "eei8e'.

No! nee%%a"il a ma!e"ial an' (e"manen! in"ea%e in *o"!&ne aneneial &%e o* !$e !$in) "eei8e' e< *o" lo!$e%+ *oo'+ '#ellin)+$eal!$ "e,&i"emen!%. I* !$e !$in) "eei8e' i% %!ill in $i% (a!"imon a*!e"!$e ina(ai! ea%e%+ $e i% 'eeme' ene!e' !$e"e. I* $e aliena!e%o" %,&an'e"% i!+ i! i% 'eeme' a "a!ia!ion.

6"oo* o* %&$ ene! "e%!% &(on !$e (a"! #$o $a% capacity.





Art. 1==. 9henever the person obliged by the decree of annulment to return the thing can not do so because it hasbeen lost through his fault& he shall return the fruits receivedand the value of the thing at the time of the loss& with interestfrom the same date.

Lo%% !$"o&)$ !$e *a&l! o* !$e (e"%on oli)e' !o "e!&"n.

Lo%% !$"o&)$ oli)ee% *a&l! F"&i!% Val&e a! !$e !ime o* lo%% In!e"e%! *"om !$e !ime o* lo%%. /FVI0

Art. 1=1. The action for annulment of contracts shall bee0tinguished when the thing which is the ob#ect thereof is lostthrough the fraud or fault of the person who has a right toinstitute the proceedings.

f the right of action is based upon the incapacity of any one of the contracting parties& the loss of the thing shall not be anobstacle to the success of the action& unless said loss too' place through the fraud or fault of the plainti!.

I* !$e !$in) i% lo%! !$"o&)$ !$e *a&l! o* !$e (e"%on #$o $a% !$e "i)$! !o

in%!i!&!e !$e a!ion+ !$en !$e (e!i!ion *o" ann&lmen! i% e<!in)&i%$e'.

Art. 1=%. As long as one of the contracting parties does notrestore what in virtue of the decree of annulment he is boundto return& the other cannot be compelled to comply with whatis incumbent upon him.

FORT>ITO>S EVENT T$e a!ion *o" ann&lmen! i% no! e<!in)&i%$e' !$e 'e*en'an! anno!e oli)e' !o ma7e "e%!i!&!ion !o !$e (lain!i?. T$e (lain!i? #$o #a% in(o%%e%%ion o* !$e o:e! a! !$e !ime o* !$e lo%% m&%! %!ill e on%i'e"e'!$e o#ne" !$e"eo* %n' $e m&%! ea" !$e lo%% o* !$e *o"!&i!o&% e8en!.

B>T i* !$e (lain!i? in %&$ a%e o?e"% !o (a *o" !$e 8al&e o* !$e !$in)lo%!+ a% a %&%!i!&!e+ !$e 'e*en'an! %$o&l' e oli)e' !o ma7e"e%!i!&!ion /140 e<e(!+ !$e (lain!i? nee' no! (a !$e in!e"e%! o* !$e!$in) lo%! ea&%e !$e lo%% #a% no! $i% *a&l!. /Onl Val&e o* !$in) lo%!+NO INTEREST0

@22;+CA4B C+2TACT-'oe% no! ("o'&e an e?e! &nle%% "a!ie' 8ali' &! no o&"! a!ionma a"i%e !$e"e*"om.

Art. 1=3. The following contracts are unenforceable& unlessthey are rati-ed:

(1 Those entered into in the name of another person by onewho has been given no authority or legal representation& orwho has acted beyond his powers$

(% Those that do not comply with the tatute of ;rauds as setforth in this number. n the following cases an agreementhereafter made shall be unenforceable by action& unless thesame& 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 receivedwithout the writing& or a secondary evidence of its contents:

(a An agreement that by its terms is not to be performedwithin a year from the ma'ing thereof$

(b A special promise to answer for the debt& default& ormiscarriage of another$

(c An agreement made in consideration of marriage& otherthan a mutual promise to marry$

(d An agreement for the sale of goods& chattels or things inaction& at a price not less than -ve hundred pesos& unless thebuyer accept and receive part of such goods and chattels& orthe evidences& or some of them& of such things in action or payat the time some part of the purchase money$

but when a sale is made by auction and entry is made by theauctioneer in his sales boo'& at the time of the sale& of theamount and 'ind of property sold& terms of sale& price& namesof the purchasers and person on whose account the sale ismade& it is a su6cient memorandum$

(e An agreement of the leasing for a longer period than oneyear& or for the sale of real property or of an interest therein$

(f A representation as to the credit of a third person.

(3 Those where both parties are incapable of giving consentto a contract.

1. Con!"a! o* a)en= a&!$o"i! m&%! e in #"i!in)5. STATT>E OF FRA>DS 6&"el e<e&!o" on!"a!% #$i$

"e,&i"e% a e"!ain la%% o* on!"a!% !o e in writing. Doe%no! 'e("i8e (a"!ie% !$e "i)$! !o on!"a!+ me"el "e)&la!e%!$e *o"mali!ie% nee%%a" !o "en'e" i! en*o"eale. Doe% no!a((l !o a!ion% #$i$ a"e nei!$e" *o" %(ei (e"*o"maneno" *o" !$e 8iola!ion !$e"eo*

T$e a)"eemen!+ no!e+ o" memo"an'&m m&%! e in#"i!in) %&%"ie' !$e (a"!ie% $a")e'= $i%a)en!.

,urpose: !o ("e8en! *"a&' an' (e":&" in !$e en*o"emen! o* oli)a!ion% 'e(en'in) *o" !$ei" e8i'ene &(on !$e &na%%i%!e'memo" o* !$e #i!ne%%e% "e,&i"in) e"!ain on!"a!% an'

!"an%a!ion% !o e in #"i!in) an' %i)ne' !$e (a"!ie%$a")e'.

No a!ion *o" 'ama)e% '&e !o non-(e"*o"mane.D&"in) !"ial+ (a"!ie% !o !$e on!"a! ma7e% no o:e!ion !o !$ea'mi%%iili! o* o"al e8i'ene -P in'in) a% i* "e'&e' in!o#"i!in).

5/0. a7no#le')emen! o* a $il'5/'0. &nle%% !$e &e" "eei8e% (a"! o* !$e )oo'% o* !$ee8i'ene% o" (a a! !$e !ime %ome (a"! o* !$e (&"$a%e("ie. THINGS IN ACTION- Mo8ale% no! %&%e(!ile o* (o%%e%%ionne)o!iale in%!"&men!%+ a%%i)nmen! o* "e'i!SALE BJ A>CTION- en!" in !$e %ale% oo7 m&%! e ma'e a!!$e !ime o* !$e %ale en!" i% a %&Kien! memo"an'&m

1. amo&n! an' 7in' o* ("o(e"! %ol'5. !e"m% o* %ale2. ("ie

4. name% o* (&"$a%e" an' (e"%on in #$o%eao&n! !$e (&"$a%e #a% ma'e

SoF anno! e in8o7e' #$en !$e"e i% al"ea' a !o!al o"(a"!ial (e"*o"mane an' ae(!ane one o" o!$ (a"!ie%.I! i% no! eno&)$ *o" a (a"! !o alle)e (a"!ial (e"*o"mane ino"'e" *o" SoF !o e ina((liale i! m&%! e '&l ("o8e'ei!$e" 'o&men!a" o" o"al e8i'ene.

No (a"!i&la" *o"m o* lan)&a)e o" in%!"&men! i% nee%%a" !o on%!i!&!ea memo"an'&m o" no!e a% a #"i!in) &n'e" SoF. I! mee!% !$e"e,&i"emen! i* i! on!ain%

1. !$e name% o* !$e (a"!ie%+5. !$e !e"m% an' on'i!ion%+2. 'e%"i(!ion o* !$e %&:e! ma!!e" %&Kien! !o "en'e" i!

a(ale o* i'en!ia!ion+4. !$e 'a!e an' (lae o* !$e ma7in) o* a)"eemen!+9. %i)na!&"e o* !$e (a"! a%%&min) !$e oli)a!ion.

5/a0. !ime e)in% !o "&n *"om !$e 'a !$e on!"a! i% en!e"e' in!o+ no!

*"om !$e !ime !$a! (e"*o"mane i% ma'e. A)"eemen!% !o e *&ll(e"*o"me' on one %i'e #=n a " i% !a7en o&! o* !$e o(e"a!ion o* SoF. I* !$e"e i% no !ime <e'+ an' !$e"e i% no!$in) !o %$o# !$a! !$e a)"eemen!anno! e (e"*o"me' #=n a ea"+ ao"'in) !o i!% !e"m% an'&n'e"%!an'in)+ i! i% no! #=n SoF.

5/0. o"i)inal 'e!o" on!in&e% !o e liale+ ("omi%o" "eei8in) noene!% %$o&l' e o&n' onl !$e e<a! !e"m% o* $i% ("omi%e !$e"em&%! e a 'e! o* oli)a!ion o* one o!$e" !$en !$e ("omi%o" *o" #$o%e'e*a&l! !$e la!!e" &n'e"!a7e% !o e "e%(on%ile.Q'e*a&l! o" mi%a""ia)e inl&'e% liaili! *o" !o"! an' a"e no! "e%!"i!e'!o 'e*a&l!% o" mi%a""ia)e% a"i%in) o&! o* on!"a!%.

5/0 !$e ma""ia)e m&%! no! e a me"e ini'en! &! !$e en' !o ea!!aine'+ o!$e"#i%e i! i% no! in on%i'e"a!ion o* !$e ma""ia)e an' mae ("o8en o"al e8i'ene.A ("omi%e ma'e !$e *a!$e" o* a ("o%(e!i8e "i'e !o )i8e a )i*! !o!$e ("o%(e!i8e $&%an' i* o8e"e' !$e %!a!&!e.

A)"eemen! *o" a lea%e- !$e memo m&%! 'e%i)na!e !$e len)!$ o"'&"a!ion o* !$e !e"m an' !$e !ime #$en i! i% !o e)in.

5/*0 "e("e%en!a!ion m&%! e in o"'e" !o o!ain "e'i!

2. Bo!$+ nei!$e" (a"! no" $i% "e("e%en!a!i8e an en*o"e !$e on!"a!&nle%% ("e8io&%l "a!ie'. T$e "a!ia!ion one (a"! converts !$eon!"a! in!o a 8oi'ale on!"a! a! !$e o(!ion o* !$e (a"! #$o $a% no!"a!ie' !o a%7 *o" ann&lmen! on !$e )"o&n' o* $i% ina(ai!.

Art. 1=. @nauthoried contracts are governed by Article131 and the principles of agency in Title D of this 4oo'.

Ra!ia!ion 8ali'a!e% on!"a!%

CONTRACTS OF AGENCJA"!. 121. No one ma on!"a! in !$e name o* ano!$e"#i!$o&! ein) a&!$o"ie' !$e la!!e"+ o" &nle%% $e $a%

la# a "i)$! !o "e("e%en! $im.A on!"a! en!e"e' in!o in !$e name o* ano!$e" one #$o$a% no a&!$o"i! o" le)al "e("e%en!a!ion+ o" #$o $a% a!e'eon' $i% (o#e"%+ %$all e &nen*o"eale+ &nle%% i! i%"a!ie'+ e<("e%%l o" im(lie'l+ !$e (e"%on on #$o%ee$al* i! $a% een e<e&!e'+ e*o"e i! i% "e8o7e' !$e o!$e"on!"a!in) (a"!.

Art. 1=). Contracts infringing the tatute of ;rauds& referredto in 2o. % of Article 1=3& are rati-ed by the failure to ob#ectto the presentation of oral evidence to prove the same& or bythe acceptance of bene-t under them.





D&"in) !"ial+ (a"!ie% !o !$e on!"a! ma7e% no o:e!ion !o !$ea'mi%%iili! o* o"al e8i'ene -P in'in) a% i* "e'&e' in!o #"i!in).

SoF anno! e in8o7e' #$en !$e on!"a! $a% een (a"!l e<e&!e' i!a((lie% onl !o e<e&!o" on!"a!%.

Art. 1=5. 9hen a contract is enforceable under the tatute of

;rauds& and a public document is necessary for its registrationin the egistry of Eeeds& the parties may avail themselves of the right under Article 13).

SALE OF REAL 6RO6ERTJA"!. 129. I* !$e la# "e,&i"e% a 'o&men! o" o!$e" %(eial*o"m+ a% in !$e a!% an' on!"a!% en&me"a!e' in !$e*ollo#in) a"!ile+ !$e on!"a!in) (a"!ie% ma om(el ea$o!$e" !o o%e"8e !$a! *o"m+ one !$e on!"a! $a% een(e"*e!e'. T$i% "i)$! ma e e<e"i%e' %im&l!aneo&%l #i!$!$e a!ion &(on !$e on!"a!.

6o#e" !o om(el !$e o!$e" (a"! !o o%e"8e !$e "e,&i"emen!.

Art. 1=. n a contract where both parties are incapable of giving consent& e0press or implied rati-cation by the parent& orguardian& as the case may be& of one of the contracting partiesshall give the contract the same e!ect as if only one of themwere incapacitated. (F+EA4B

f rati-cation is made by the parents or guardians& as the casemay be& of both contracting parties& the contract shall be

validated from the inception. (FABE

Art. 1=8. @nenforceable contracts cannot be assailed by thirdpersons.

DEFENSE IS 6ERSONALMa e #ai8e' !$e (a"! a?e!e'

F+E A2E 2DT2T C+2TACT

• anno! e on"me' o" "a!ie'

• No a!ion *o" ann&lmen! nee%%a" !$e n&lli! i% i(%o :&"e an' a

:&')men! o* n&lli! #o&l' e me"el 'ela"a!o"

• 'e*en%e o* ille)ali! CANNOT e #ai8e'

• No *o"e an' e?e! *"om !$e 8e" e)innin)

• A% i* i! #a% no! en!e"e' in!o

• I* !$e"e $a% een (e"*o"mane+ "e%o"a!ion i% in o"'e"E<. Dona!ion% o* "eal ("o(e"! !$a! i% no! in a 6D an' ae(!ane no!in a 6D

An (a"! ma in8o7e an' n&lli! ma e %e! &( a)ain%! an (e"%on#$o a%%e"!% a "i)$! a"i%in) *"om !$e 8oi' on!"a!.

An a!ion on !$e Con!"a! !o 'ela"e i!% ine<i%!ene i% necessary #$eni! $a% al"ea' een *&llle'. T$e in!e"8en!ion o* a om(e!en! o&"! i%nee%%a" !o 'e"ee !$e "e%!i!&!ion o* #$a! $a% een )i8en. T$e :&')men! #ill retroact !o !$e 'a #$en !$e on!"a! #a% en!e"e' in!o.

Art. 1=. The following contracts are ine0istent and void fromthe beginning:

(1 Those whose cause& ob#ect or purpose is contrary to law&morals& good customs& public order or public policy$

(% Those which are absolutely simulated or -ctitious$

(3 Those whose cause or ob#ect did not e0ist at the time of thetransaction$

( Those whose ob#ect is outside the commerce of men$

() Those which contemplate an impossible service$

(5 Those where the intention of the parties relative to theprincipal ob#ect of the contract cannot be ascertained$

( Those e0pressly prohibited or declared void by law.

These contracts cannot be rati-ed. 2either can the right to setup the defense of illegality be waived.

N&lli! i% (e"manen!+ $o#e8e" "a!ia!ion ma !a7e !$e *o"m o* a newcontract+ in #$i$ a%e !$e 8ali'i! %$all e 'e!e"mine' onl !$ei"&m%!ane% a! !$e !ime o* !$e e<e&!ion o* %&$ ne# on!"a!.

T$e o:e! #$i$ #a% ille)al a! !$e !ime o* !$e "%! on!"a!+ ma $a8eal"ea' eome la#*&l a! !$e !ime o* !$e "a!ia!ion o" %eon'on!"a!. T$e "a!ia!ion would not retroact to the date of the 1 st

contract.

Art. 11=. The action or defense for the declaration of theine0istence of a contract does not prescribe.

De*e! anno! e &"e' ("e%("i!ion6o#e" !o a%7 *o" !$e 'ela"a!ion o* a non-e<i%!ene o* a on!"a! anno!e a%%i)ne'

Art. 111. 9hen the nullity proceeds from the illegality of thecause or ob#ect of the contract& and the act constitutes acriminal o!ense& both parties being in pari delicto& they shallhave no action against each other& and both shall beprosecuted. Goreover& the provisions of the ,enal Code

relative to the disposal of e!ects or instruments of a crimeshall be applicable to the things or the price of the contract.

This rule shall be applicable when only one of the parties isguilty$ but the innocent one may claim what he has given& andshall not be bound to comply with his promise.

Art. 11%. f the act in which the unlawful or forbidden causeconsists does not constitute a criminal o!ense& the followingrules shall be observed:

(1 9hen the fault is on the part of both contracting parties&neither may recover what he has given by virtue of thecontract& or demand the performance of the other<sunderta'ing$

(% 9hen only one of the contracting parties is at fault& hecannot recover what he has given by reason of the contract& oras' for the ful-llment of what has been promised him. Theother& who is not at fault& may demand the return of what hehas given without any obligation to comply his promise.

1411- Con%!i!&!e% a "ime1415- No! on%!i!&!e a "imeo!$ no! a((liale !o !i!io&% an' %im&la!e' on!"a!% onl "e*e" !oon!"a!% #i!$ an ille)al a&%e o" %&: ma!!e" ("e%&((o%e% !$ee<i%!ene o* a a&%e+ al!$o&)$ %&$ ma e 8i!ia!e' an' ma "en'e"

!$e on!"a! 8oi'.

T$e !pari delicto" "&le 'oe% not a((l in a%e o* 8oi' on!"a!% #$i$a"e %im&la!e' !o i"&m8en! a la#. Fo" in%!ane+ a 'ona!ion e!#een%(o&%e% i% )ene"all 8oi' &n'e" A"!. 122 o* !$e Ci8il Co'e. An' i! $a%een "&le' !$a! in %&$ a a%e+ !$e ("o(e"! an e "elaime' a!an!ime !$e 'ono" o" $i% $ei"% o" an (e"%on ("e:&'ie' !$e"e. To a((l !$e !pari delicto" "&le in %&$ a a%e #o&l' e !o %an!ion ai"&m8en!ion o* !$e ("o$ii!ion.

Hn pari delictoI ule napplicable to ne0istent ContractsIn pari delicto non oritur actio 'enie% all "eo8e" !o !$e )&il! (a"!ie%inter se. I! a((lie% !o a%e% #$e"e !$e n&lli! a"i%e% *o"m !$e ille)ali! o* !$e on%i'e"a!ion o" !$e (&"(o%e o* !$e on!"a!. W$en !#o (e"%on% a"ee,&all a! *a&l!+ !$e la# 'oe% no! "elie8e !$em. T$e e<e(!ion !o !$i%)ene"al "&le i% #$en !$e ("ini(le i% in8o7e' #i!$ "e%(e! !o ine<i%!en!on!"a!%.

Art. 113. nterest paid in e0cess of the interest allowed by theusury laws may be recovered by the debtor& with interestthereon from the date of the payment.

Art. 11. 9hen money is paid or property delivered for anillegal purpose& the contract may be repudiated by one of theparties before the purpose has been accomplished& or beforeany damage has been caused to a third person.

n such case& the courts may& if the public interest will thus besubserved& allow the party repudiating the contract to recoverthe money or property.

Art. 11). 9here one of the parties to an illegal contract isincapable of giving consent& the courts may& if the interest of

#ustice so demands allow recovery of money or propertydelivered by the incapacitated person.

Art. 115. 9hen the agreement is not illegal per se but ismerely prohibited& and the prohibition by the law is designatedfor the protection of the plainti!& he may& if public policy isthereby enhanced& recover what he has paid or delivered.

llegal ,er e on!"a!% a"e !$o%e for#idden ea&%e o* pu#licin!e"e%!.

Gerely prohibited on!"a!% a"e !$o%e *o"i''en ea&%e o* privatein!e"e%!%. He"e recovery i% permitted$ ("o8i'e' !$a! !$e ("o$ii!ion i%'e%i)ne' *o" !$e ("o!e!ion o* !$e (lain!i?+ an' (&li (oli #o&l' een$ane' allo#in) !$e "eo8e".

E<. A 'ona!e' !o % e8e"!$in) !$a! $e &A' (o%%e%%e' an'

o#ne'+ lea8in) no!$in) *o" $im%el*. T$i% i% ("o$ii!e' &! no!ille)al per se. Sine (&li (oli i% $e"e en$ane'+ A #ille allo#e' !o "eo8e"+ a! lea%! !$a! nee%%a" *o" $i% o#n%&((o"! an' !$e %&((o"! o* $i% "ela!i8e%.

Do!"ine o* in pari delicto i% no! a((liale #$e"e !$e on!"a! i%me"el ("o$ii!e' la#+ no! ille)al per se an' !$e ("o$ii!ion i%'e%i)ne' *o" !$e ("o!e!ion o* !$e "i)$!% o* !$e (a"! %ee7in) !o"eo8e".

Art. 11. 9hen the price of any article or commodity isdetermined by statute& or by authority of law& any personpaying any amount in e0cess of the ma0imum price allowedmay recover such e0cess.




Emille Dane S. Viola

Art. 118. 9hen the law -0es& or authories the -0ing of thema0imum number of hours of labor& and a contract is enteredinto whereby a laborer underta'es to wor' longer than thema0imum thus -0ed& he may demand additional compensationfor service rendered beyond the time limit.

Art. 11. 9hen the law sets& or authories the setting of aminimum wage for laborers& and a contract is agreed upon bywhich a laborer accepts a lower wage& he shall be entitled torecover the de-ciency.

Art. 1%=. n case of a divisible contract& if the illegal termscan be separated from the legal ones& the latter may beenforced.

Gene"al R&le i* %!i(&la!ion% in !$e on!"a! /%ome a"e 8ali' %ome a"e8oi'0 an e %e(a"a!e' *"om ea$ o!$e"+ !$o%e #$i$ a"e 8oi' #ill no!$a8e an e?e! &! !$o%e #$i$ a"e 8ali' #ill e en*o"e'. In a%e o* 'o&!+ !$e on!"a! m&%! e on%i'e"e' a% 'i8i%ile o" %e(a"ale

E<e(!ion% 1. W$en !$e na!&"e o* !$e on!"a! "e,&i"e% in'i8i%iili!5. #$en !$e in!en!ion o* !$e (a"!ie% i% !$a! !$e on!"a! e

en!i"e

Art. 1%1. The defense of illegality of contract is not availableto third persons whose interests are not directly a!ected.

Art. 1%%. A contract which is the direct result of a previousillegal contract& is also void and ine0istent.

2AT@AB +4B*AT+2

Art. 1%3. +bligations are civil or natural. Civil obligations givea right of action to compel their performance. 2aturalobligations& not being based on positive law but on e/uity andnatural law& do not grant a right of action to enforce theirperformance& but after voluntary ful-llment by the obligor&they authorie the retention of what has been delivered orrendered by reason thereof. ome natural obligations are setforth in the following articles.

Art. 1%. 9hen a right to sue upon a civil obligation haslapsed by e0tinctive prescription& the obligor who voluntarilyperforms the contract cannot recover what he has delivered orthe value of the service he has rendered.

Art. 1%). 9hen without the 'nowledge or against the will of the debtor& a third person pays a debt which the obligor is notlegally bound to pay because the action thereon hasprescribed& but the debtor later voluntarily reimburses thethird person& the obligor cannot recover what he has paid.

Art. 1%5. 9hen a minor between eighteen and twenty"oneyears of age who has entered into a contract without theconsent of the parent or guardian& after the annulment of thecontract voluntarily returns the whole thing or price received&notwithstanding the fact the he has not been bene-tedthereby& there is no right to demand the thing or price thusreturned.

Art. 1%. 9hen a minor between eighteen and twenty"oneyears of age& who has entered into a contract without theconsent of the parent or guardian& voluntarily pays a sum of money or delivers a fungible thing in ful-llment of theobligation& there shall be no right to recover the same from theobligee who has spent or consumed it in good faith.

Art. 1%8. 9hen& after an action to enforce a civil obligationhas failed the defendant voluntarily performs the obligation&he cannot demand the return of what he has delivered or thepayment of the value of the service he has rendered.

Art. 1%. 9hen a testate or intestate heir voluntarily pays adebt of

the decedent e0ceeding the value of the property which hereceived by will or by the law of intestacy from the estate ofthe deceased& the payment is valid and cannot be rescinded bythe payer.

Art. 13=. 9hen a will is declared void because it has not beene0ecuted in accordance with the formalities re/uired by law&but one of the intestate heirs& after the settlement of thedebts of the deceased& pays a legacy in compliance with aclause in the defective will& the payment is e!ective andirrevocable.

T+,,B• O"i)in in e,&i!+ a%e' on mo"al an' na!&"al :&%!ie.

• A a" #$i$ ("el&'e% a (e"%on *"om 'enin) o" a%%e"!in)

an !$in) on!"a" !o !$a! #$i$ $a%+ in on!em(la!ion o* la#+ $a% een e%!ali%$e' a% !"&!$+ ei!$e" :&'iial o* le)i%la!i8e oKe"% o" $i% o#n 'ee'+ e<("e%% o" im(lie'.

• T$e ("ini(le o* e%!o((el #o&l' %!e( in !o ("e8en! one (a"!

*"om )oin) a7 &(on $i% o#n a!% an' "e("e%en!a!ion% !o!$e ("e:&'ie o* !$e o!$e" (a"! #$o "elie' &(on !$em.

• No e%!o((el '&e !o i)no"ane *o&n'e' on innoen! mi%!a7e.

• E%!o((el anno! e ("e'ia!e' on an ille)al a!.

Art. 131. Through estoppel an admission or representation isrendered conclusive upon the person ma'ing it& and cannot bedenied or disproved as against the person relying thereon.

A (a"! ma e e%!o((e' !o in%i%! &(on a laim+ a%%e"! an o:e!ion+ o"!a7e a (o%i!ion #$i$ i% inon%i%!en! #i!$ an a'mi%%ion #$i$ $e $a%("e8io&%l ma'e AND in "eliane &(on #$i$ !$e o!$e" (a"! $a%$an)e' $i% (o%i!ion.

SILENCE OR INACTION ESTO66EL BJ LACHESQOne #$o i% %ilen! #$en $e o&)$! !o %(ea7 #ill no! e $ea"' !o %(ea7#$en $e o&)$! !o e %ilen!-Fail&"e o" ne)le!+ *o" an &n"ea%onale an' &ne<(laine' len)!$ o* !ime+ !o 'o !$a! #$i$+ e<e"i%in) '&e 'ili)ene %$o&l' $a8e een'one ea"lie".

Me"e innoen! %ilene #ill no! #o"7 an e%!o((el+ !$e"e m&%! e %omeelemen! o" T>R6IT>DE o" NEGLIGENCE onne!e' #i!$ !$e %ilene #$i$ ano!$e" i% mi%le' !o $i% in:&".

ELEMENTS OF LACHES

a. Con'&! on !$e (a"! o* 'e*en'an!+ o" o* one &n'e"#$om $e laim%+ )i8in) "i%e !o !$e %i!&a!ion o* #= !$eom(lain! i% ma'e an' *o" #= !$e om(lain! %ee7% a"eme'.

. Dela in a%%e"!in) !$e om(lainan!% "i)$!%+ !$eom(lainan! $a8in) $a' 7no#le')e o" no!ie o* 'e*en'an!% on'&! an' $a8in) een a?o"'e' ano((o"!&ni! !o in%!i!&!e a %&i!.

. La7 o* 7no#le')e o" no!ie on !$e (a"! o* !$e'e*en'an! !$a! om(lainan! #o&l' a%%e"! !$e "i)$! on#= $e a%e% $i% %&i!.

'. In:&"= ("e:&'ie !o 'e*en'an! in !$e e8en! "elie* i%ao"'e' !o om(lainan!+ o" !$e %&i! i% no! $el' !o ea""e'.

La$e% 8 6"e%"i(!ion

LACHES 6RESCRI6TION

E?e! o* 'ela Fa! o* 'ela

A ,&e%!ion o* ine,&i! Ma!!e" o* !imeNo! %!a!&!o" %!a!&!o"

A((le% !o e,&i! A((lie% a! la#

No! a%e' on <e' !ime Ba%e' on <e' !ime

ESTO66EL BJ AC@>IESCENCE- a (e"%on i% ("e8en!e' *"om main!ainin) a (o%i!ion inon%i%!en! #i!$one in #$i$ $e $a% a% a,&ie%e'.

Art. 13%. The principles of estoppel are hereby adoptedinsofar as they are not in con>ict with the provisions of thisCode& the Code of Commerce& the ules of Court and speciallaws.

Art. 133. stoppel may be in pais or by deed.

1. E%!o((el in 6ai% /E,&i!ale e%!o((el0- ea&%e o* %ome!$in) #$i$ $e $a% 'one o" omi!!e' !o 'o+a (a"! i% 'enie' !$e "i)$! !o (lea' o" ("o8e an o!$e"#i%eim(o"!an! *a!a. B on'&! o" ae(!ane o* ene!%. B "e("e%en!a!ion o" onealmen!. B %ilene'. B omi%%ione. B la$e% /&n"ea%onale 'ela in %&in)0

5. E%!o((el Dee' / Te$nial e%!o((el0- A a" #$i$ ("el&'e% one (a"! !o a 'ee' an' $i% ("i8ie%*"om a%%e"!in) a% a)ain%! ano!$e" (a"! an' $i% ("i8ie% an"i)$! o" !i!le in 'e"o)a!ion o* !$e 'ee'+ o" *"om 'enin) !$e!"&!$ o* an ma!e"ial *a!% a%%e"!e' in i!.




Emille Dane S. Viola

a. 6"o(e" /#"i!!en in%!"&men! ma al%o e in !$e *o"m o* aon'=mo"!)a)e0

. E%!o((el :&')men! a% a Co&"! "eo"' #$en o&"! i%in "e% :&'ia!a. 6"e8en!% !$e (a"!ie% *"om "ai%in) ,&e%!ion% !$a!

o&l' $a8e een (&! in i%%&e an' 'ei'e' in("e8io&% a%e.

Art. 13. 9hen a person who is not the owner of a thing sellsor alienates and delivers it& and later the seller or grantorac/uires title thereto& such title passes by operation of law tothe buyer or grantee.

A (e"%on #$o %ell% ("o(e"! #$en $e 'i' no! $a8e !i!le !o i!+ anno!'en 8ali'i! !o !$e %ale a*!e" $e $a% a,&i"e' !i!le. T$e 8en'ee i% al%o'eeme' a (&"$a%e" in )oo' *ai!$.

Art. 13). f a person in representation of another sells oralienates a thing& the former cannot subse/uently set up hisown title as against the buyer or grantee.

Art. 135. A lessee or a bailee is estopped from asserting titleto the thing leased or received& as against the lessor or bailor.

A !enan! #ill no! e $ea"' !o 'i%(&!e $i% lan'lo"'% !i!le a! !$e !ime o* !$e ommenemen! o* !$e "ela!ion o* lan' lo"' an' !enan! e!#een!$em.

Art. 13. 9hen in a contract between third personsconcerning immovable property& one of them is misled by aperson with respect to the ownership or real right over the realestate& the latter is precluded from asserting his legal title orinterest therein& provided all these re/uisites are present:

(1 There must be fraudulent representation or wrongfulconcealment of facts 'nown to the party estopped$

(% The party precluded must intend that the other should actupon the facts as misrepresented$

(3 The party misled must have been unaware of the true facts$and

( The party defrauded must have acted in accordance withthe misrepresentation.

T$i% a((lie% !o an immo8ale. I* i! #e"e a mo8ale+ o& a((l 1429 an'142.

Art. 138. +ne who has allowed another to assume apparentownership of personal property for the purpose of ma'ing anytransfer of it& cannot& if he received the sum for which a pledgehas been constituted& set up his own title to defeat the pledgeof the property& made by the other to a pledgee who receivedthe same in good faith and for value.

Ba%e' &(on !$e ae(!ane an' "e!en!ion one $a8in) 7no#le')e o* !$e *a!% o* !$e ene!% *"om a !"an%a!ion #$i$ $e mi)$! $a8e"e:e!e'.

No!#i!$%!an'in) !$e *a! !$a! !$e o#ne" ne8e" "eei8e' !$e ("oee'%+$e ma e e%!o((e' *"om ,&e%!ionin) !$e (le')e i* $e lo!$e' !$ea)en! #i!$ a((a"en! a&!$o"i! !o 'i%(o%e o* i! an' #$en !$e (e"%on

%e!!in) &( !$e e%!o((el a!e' an' (a"!e' #i!$ 8al&e o" e<!en'e' "e'i!on !$e *ai!$ o* %&$ a((a"en! o#ne"%$i( o" a&!$o"i!.

A((lie% !o a %i!&a!ion #$e"ein o& allo# o&" *"ien' !o o""o# o&" :e#el" an' (a#n. An' la!e" on al%o ma'e &%e o* !$e (o"!ion o* !$e("oee'% o* !$e loan. An' la!e" on o& $a' a $an)e o* $ea"! an' !ell%!$e o#ne" o* !$e (a#n%$o( !$a! o& a"e !$e o#ne". !$a! i% e%!o((el.

Bea&%e !$e"e i% e%!o((el in !$e ae(!ane o* ene!%.

Art. 13. stoppel is e!ective only as between the partiesthereto or their successors in interest.

A %!"an)e" !o a !"an%a!ion i% nei!$e" o&n' + no" in (o%i!ion !o !a7ea'8an!a)e o*+ an e%!o((el a"i%in) !$e"e*"om.

E%!o((el in'% ("i8ie% in loo'+ li7e $ei"%+ an' in e%!a!e+ li7e )"an!ee%M&!&ali! i% an e%%en!ial elemen! o* e%!o((el.

NO ESTO66EL AGAINST THE GOVERNMENT e<e(! la$e% /S!. &'e 8Re(&li0

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