Civil Code Volume IV Obligations Contracts

CIVIL CODE OF
THE
PHILIPPINES
BOOK IV
OBLIGATIONS AND
CONTRACTS
TITLE I. OBLIGATIONS
Chapter 1
GENERAL PROVISIONS
Art. 1156. An obligation is a jurii!al n"!"ssit# to gi$"%
to o or not to o.
CO&&ENT'
(1) El"*"nts o+ an Obligation ("ri$" +ro* t," Latin
-obli. gar"/ 0 to bin)
(a) an a!ti$" subj"!t (!all" t," oblig"" or !r"itor) 0 t,"
1oss"ssor o+ a rig,t2 ," in 3,os" +a$or t," obligation is
!onstitut".
(b) a 1assi$" subj"!t (!all" t," obligor or "btor) 0 ," 3,o
,as t," ut# o+ gi$ing% oing% or not oing.
1
(!) t," obj"!t or 1r"station (t," subj"!t *att"r o+ t," obliga.
tion).
() t," "++i!i"nt !aus" (t," $in!ulu* or jurii!al ti") 0 t,"
r"ason 3,# t," obligation "4ists.
(NOTE' In a +"3 !as"s% FO5& 0 or t," *ann"r in
3,i!, t," obligation is *ani+"st" 0 is also i*1ortant.)
6
Art. 1156
CIVIL CODE OF THE PHILIPPINES
(6) E4a*1l"
A 1ro*is"s to 1aint 78s 1i!tur" +or 7 as a r"sult o+ an
agr"". *"nt.
(H"r" A is t," obligor2 7 is t," oblig""2 t," 1ainting o+ 78s
1i!tur" is t," obj"!t or 1r"station2 t," agr""*"nt or !ontra!t is
t," "++i!i"nt !aus".)
(9) Con!"1t o+ Pr"station (7A5 :;ESTION)
A 1r"station is an obligation2 *or" s1"!i+i!all#% it is t,"
subj"!t *att"r o+ an obligation 0 an *a# !onsist o+ gi$ing a
t,ing% oing or not oing a !"rtain a!t. T," la3 s1"a<s o+ an
obligation as a jurii!al n"!"ssit# to !o*1l# 3it, a 1r"station.
T,"r" is a -jurii!al n"!"ssit#%/ +or non.!o*1lian!" !an r"sult
in jurii!al or l"gal san!tion.
&ataas na Lu1a T"nants8
Asso!iation $. Carlos Di*a#uga
an =uliana Di"go Va. " >abri"l
L.96?@A% =un. 65% 1AB@
;n"r PD 151C% t"nants.l"ss""s ar" gi$"n 1r"."*1ti$" or
1r"+"r"ntial rig,ts (rig,t o+ +irst r"+usal) i+ t,"# ,a$" o!!u1i"
t," lan or lot +or o$"r t"n (1?) #"ars. T," o3n"r ,as t,is
obligation to grant sai 1r"+"r"n!". T,us% ," !annot s"ll to a
t,ir 1"rson 3it,out +irst o++"ring t," sa*" to t," l"ss"". I+
t," latt"r r". noun!"s sai rig,t% t," 3ai$"r *ust b" in a
1ubli! instru*"nt.
(@) Dins o+ Obligations
T,"r" ar" $arious basis +or t," !lassi+i!ation o+ obligations.
>i$"n ,"r"un"r ar" +"3 o+ t,"*'
(a) Fro* t," $i"31oint o+ -san!tion/ 0
1) !i$il obligation (or 1"r+"!t obligation)
6) natural obligation
9) *oral obligation (or i*1"r+"!t obligation)
D"+initions 0
9
Art. 1156
a) !i$il obligation 0 t,at "+in" in Art. 1156. T,"
san!tion is jui!ial 1ro!"ss. E4a*1l"' A
1ro*is"s to 1a# 7 ,is (A8s) "bt o+ P1 *illion.
@
Art. 1156
b) natural obligation 0 t," ut# not to r"!o$"r
3,at ,as $oluntaril# b""n 1ai alt,oug, 1a#.
*"nt 3as no long"r r"Euir". E4a*1l"' A o3"s
7 P1 *illion. 7ut t," "bt ,as alr"a#
1r"s!rib". I+ A% <no3ing t,at it ,as
1r"s!rib"% n"$"rt,". l"ss still 1a#s 7% ," (A)
!annot lat"r on g"t ba!< 3,at ," $oluntaril#
1ai. T," san!tion is t," la3 o+ !ours"% but
onl# b"!aus" !ons!i"n!" ,a originall#
*oti$at" t," 1a#*"nt.
!) *oral obligation 0 t," ut# o+ a Cat,oli! to
,"ar *ass on Suna#s an ,ol# a#s o+
obligation. T," san!tion ,"r" is !ons!i"n!" or
*oralit#% or t," la3 o+ t," !,ur!,.
FNOTE' I+ a Cat,oli! 1ro*is"s to ,"ar *ass +or
1? !ons"!uti$" Suna#s in or"r to r"!"i$" P1
*illion t,is obligation b"!o*"s a !i$il on".G
(b) Fro* t," $i"31oint o+ subj"!t *att"r 0
1) r"al obligation 0 t," obligation to gi$"
6) 1"rsonal obligation 0 t," obligation to o or not to
o
(E4a*1l"' t," ut# to 1aint a ,ous"% or to r"+rain
+ro* !o**itting a nuisan!")
(!) Fro* t," a++ir*ati$"n"ss an n"gati$"n"ss o+ t," obliga.
tion 0
1) 1ositi$" or a++ir*ati$" obligation 0 t," obligation to
gi$" or to o
6) n"gati$" obligation 0 t," obligation not to o (3,i!,
naturall# in!lu"s -not to gi$"/)
() Fro* t," $i"31oint o+ 1"rsons oblig" 0
1) unilat"ral 0 3,"r" onl# on" o+ t," 1arti"s is boun
(NOTE' E$"r# obligation ,as 6 1arti"s2 I+ onl#
on" o+ t,"* is boun% 3" ,a$" a unilat"ral
obligation. E4a*1l"' A o3"s 7 P1 *illion. A *ust
1a# 7.)
5
Art. 1156
6) bilat"ral 0 3,"r" bot, 1arti"s ar" boun (E4a*1l"'
In a !ontra!t o+ sal"% t," bu#"r is oblig" to 1a#% 3,il"
t," s"ll"r is oblig" to "li$"r.)
6
Art. 1156
FNOTE' 7ilat"ral obligations *a# b"'
a) r"!i1ro!al
b) non.r"!i1ro!al (3,"r" 1"r+or*an!" b# on" is
non. "1"n"nt u1on 1"r+or*an!" b# t,"
ot,"r).G
(5) Criti!is* o+ t," D"+inition b# t," Co"
Art. 1156 "+in"s obligation as -a jurii!al n"!"ssit# to gi$"%
to o% or not to o./ As 3ill b" noti!"% t,is str"ss"s *"r"l# t,"
ut# o+ t," "btor (t," 1assi$" "l"*"nt) 3it,out "*1,asiHing
a !orr"s1oning rig,t on t," 1art o+ t," !r"itor (t," a!ti$" "l".
*"nt). On t,is 1oint% =usti!" =.7.L. 5"#"s o+ t," Su1r"*"
Court ,as r"*ar<"' -T,is "+inition% ta<"n +ro* San!,"H
5o*an is in!o*1l"t"% in t,at% it $i"3s obligations onl# +ro* t,"
"bit si". T,"r" is no "bt 3it,out a !r"it% an t," !r"it is
an ass"t in t," 1atri*on# o+ t," !r"itor just as t," "bt is a
liabilit# o+ t," obligor. Follo3ing t," "+"!ti$" *"t,o o+ t,"
S1anis, Ci$il Co"% t," n"3 Co" s"1arat"s r"s1onsibilit# +ro*
t," ot,"r "l". *"nt o+ obligation./ (La3#"r8s =ournal% =an. 91%
1A51% 1. @C). H" t,"n Euot"s 3it, a11ro$al t," +ollo3ing
"+inition gi$"n b# Arias 5a*os'
-An obligation is a jurii!al r"lation 3,"r"b# a 1"rson
(!all" t," !r"itor) *a# "*an +ro* anot,"r (!all" t," "btor)
t," obs"r$an!" o+ a "t"r*inati$" !onu!t (t," gi$ing% oing% or
not oing)% an in !as" o+ br"a!,% *a# "*an satis+a!tion +ro*
t," ass"ts o+ t," latt"r./
FNOTE' T,is "+inition is a!!urat" b"!aus" it $i"3s -ob.
ligation/ +ro* a -total/ stan1oint (bot, a!ti$" an 1assi$"
$i"31oint).G
(6) So*" Cas"s
P"la#o $. Lauron
16 P,il. @59 (7A5)
FACTS' A 3i+" 3as about to "li$"r a !,il. H"r 1ar"nts.
in.la3 !all" t," o!tor. Issu"' I,o s,oul 1a# t," o!tor' t,"
,usban or t," 1ar"ntsJ
C
Art. 1156
HELD' T," ,usban s,oul 1a#% "$"n i+ ," 3as not t,"
on" 3,o !all" t," o!tor. It is ,is ut# to su11ort t," 3i+"%
B
Art. 1156
an su11ort in!lu"s *"i!al att"nan!". T," ut# to 1a# is an
obligation to gi$"% an is i*1os" b# t," la3.
Poss $. >ottli"b
1A9 N.K.S. @1B
FACTS' T,"r" 3"r" t3o 1artn"rs "ngag" in bu#ing an
r"s"lling lan. A+t"r t,"# ,a boug,t a 1i"!" o+ lan% on" as<"
t," ot,"r to s"ll t," latt"r8s s,ar" to ,i* +or t," 1ri!" in$"st"
b# t," latt"r. T," +irst 1artn"r% 3,o no3 !o*1l"t"l# o3n" t,"
lan% r"sol it at a ,ug" 1ro+it to a t,ir 1"rson. T," s"!on
1artn"r 3oul not ,a$" sol ,is s,ar" ,a ," <no3n t,at a big
o++"r ,a b""n *a" b# su!, t,ir 1"rson. T," +irst 1artn"r al.
l"g" t,at ," s,oul not b" bla*" on t," groun t,at ,"% a+t"r
all i not *a<" an# +als" !on!"al*"nt to ,is 1artn"r% t,at is%
," i not t"ll t," latt"r t,at nobo# 3ant" t," lan. Issu"'
&a# t," s"!on 1artn"r su!!"ss+ull# bring an a!tion +or
a*ag"s against t," +irst 1artn"rJ
HELD' K"s% b"!aus" t," +irst 1artn"r is liabl". H" ,a t,"
ut# not onl# to *a<" an# +als" !on!"al*"nt but also to abstain
+ro* all <ins o+ !on!"al*"nt inso+ar as t," 1artn"rs,i1 3as
!on!"rn". T,is is an obligation to o (to r"la# all 1"rtin"nt
in+or*ation).
=oaEuin P. N"*"nHo $. 7"rnab" Sabillano
L.6?ACC% S"1t. C% 1A6B
FACTS' A *uni!i1al *a#or% u1on assu*1tion o+ o++i!"%
arbitraril# is*iss" a !or1oral (a !i$il s"r$i!" "ligibl") in t,"
1oli!" +or!" o+ t," *uni!i1alit#% 3it,out u" in$"stigation.
Issu"' Is t," *a#or 1"rsonall# liabl"J
HELD' K"s% b"!aus" ,is a!t o+ is*issing t," !or1oral
3it,. out 1r"$ious a*inistrati$" in$"stigation an 3it,out
justi+iabl" !aus" is !l"arl# an injur# to t," !or1oral8s rig,ts.
T," *a#or !annot ,i" un"r t," *antl" o+ ,is o++i!ial
!a1a!it# an 1ass t," liabilit# to t," *uni!i1alit# o+ 3,i!, ,"
3as *a#or. T,"r" ar" altog"t,"r too *an# !as"s o+ t,is natur"%
3,"r"in lo!al "l"!. ti$" o++i!ials% u1on assu*1tion o+ o++i!"%
A
Art. 1156
3i"l t,"ir n"3.+oun 1o3"r inis!ri*inat"l# b# r"1la!ing
"*1lo#""s 3it, t,"ir o3n 1rot"gLs% r"garl"ss o+ t," la3s an
r"gulations go$"rning t,"
1?
Art. 1156
!i$il s"r$i!". Vi!tor# at t," 1olls s,oul not b" ta<"n as aut,or.
it# +or t," !o**ission o+ su!, ill"gal a!ts.
L"oni"s P"ngson $. Court o+ A11"als
>5 L.65666% =un. 6A% 1AB@
I+ t," o3n"r o+ !"rtain s,ar"s s,oul 1l"g" t," sa*" to
,is !r"itor% an lat"r sai o3n"r s"lls ,is s,ar"s to a t,ir
1"rson% t," !r"itor !annot b" !o*1"ll" to surr"n"r t," s,ar"
!"rti+i!at"s to t," bu#"r% an t,is r"+usal 3ill not in$aliat" t,"
sal".
P,il. National 7an< $. Court o+ A11"als
C@ SCAD CB6
(1AA6)
A lo!al ban<% 3,il" a!ting as lo!al !orr"s1on"nt ban<%
o"s not ,a$" t," rig,t to int"r!"1t +uns b"ing !ours" t,ru
it b# its +or"ign !ount"r1art +or trans*ittal an "1osit to t,"
a!!ount o+ an ini$iual 3it, anot,"r lo!al ban<% an
t,"r"a+t"r a11l# t," sai +uns to !"rtain obligations o3" to it
b# t," sai ini$iual.
(C) In an O1tion to 7u#% Pa#*"nt o+ Pur!,as" Pri!" 7#
Cr"i. tor Is Conting"nt ;1on E4"!ution an D"li$"r# o+
a D"" o+ Sal" 7# D"btor
Obligations un"r an o1tion to bu# ar" r"!i1ro!al obliga.
tions. P"r+or*an!" o+ on" obligation is !onition" on t," si.
*ultan"ous +ul+ill*"nt o+ t," ot,"r obligation. In ot,"r 3ors%
in an o1tion to bu#% 1a#*"nt o+ 1ur!,as" 1ri!" b# !r"itor is
!onting"nt u1on t," "4"!ution an "li$"r# o+ a "" o+ sal" b#
t," "btor. (H"irs o+ Luis 7a!us% "t al. $. CA M S1ous"s Faustino
an Vi!toriana Dura#% >5 16C6A5% D"!. 9% 6??1).
(B) Cas"
H"irs o+ Luis 7a!us% "t al. $. CA M S1ous"s Faustino
an Vi!toriana Dura#
>5 16C6A5% D"!. 9% 6??1
FACTS' I,"n 1ri$at" r"s1on"nts o1t" to bu# t," 1ro1.
11
Art. 1156
"rt#% t,"ir obligation 3as to a$is" 1"tition"rs o+ t,"ir "!ision
16
Art. 115C
an t,"ir r"ain"ss to 1a# t," 1ri!". Issu"' At t,is 1oint in ti*"%
3"r" r"s1on"nts alr"a# oblig" to *a<" a!tual 1a#*"ntJ
HELD' No. Onl# u1on 1"tition"rs8 a!tual "4"!ution an
"li$"r# o+ t," "" o+ sal" 3"r" t,"# r"Euir" to 1a#. T," latt"r
3as !onting"nt u1on t," +or*"r.
Art. 115C. Obligations aris" +ro*'
(1) La32
(6) Contra!ts2
(9) :uasi.!ontra!ts2
(@) A!ts or o*issions 1unis," b# la32 an
(5) :uasi."li!ts.
CO&&ENT'
(1) Sour!"s o+ Obligations
(a) La3 (obligations "4 l"g") 0 li<" t," ut# to 1a# ta4"s an
to su11ort on"8s +a*il#.
(b) Contra!ts (obligations "4 !ontra!tu) 0 li<" t," ut# to
r"1a# a loan b# $irtu" o+ an agr""*"nt.
(!) :uasi.!ontra!ts (obligations "4 Euasi.!ontra!tu) 0 li<" t,"
ut# to r"+un an -o$"r !,ang"/ o+ *on"# b"!aus" o+ t,"
Euasi.!ontra!t o+ solutio in"biti or -unu" 1a#*"nt./
() Cri*"s or A!ts or O*issions Punis," b# La3 (obligations
"4 *al"+i!io or "4 "li!to) 0 li<" t," ut# to r"turn a stol"n
!arabao.
(") :uasi."li!ts or Torts 0 (obligation "4 Euasi."li!to or "4
Euasi.*al"+i!io) 0 li<" t," ut# to r"1air a*ag" u" to
n"glig"n!".
(6) Criti!is* o+ t," Enu*"ration List" Do3n b# t," La3
i*1os" b# t," la3. (L"ung 7"n $. O87ri"n% 9B P,il. 1B6).
B9
Art. 115C
T," "nu*"ration is not s!i"nti+i! b"!aus" in r"alit# t,"r"
ar" onl# t3o sour!"s' t," la3 an !ontra!ts% b"!aus" obligations
arising +ro* Euasi.!ontra!ts% !ri*"s% an Euasi."li!ts ar" r"all#
i*1os" b# t," la3. (L"ung 7"n $. O87ri"n% 9B P,il. 1B6).
B9
Art. 115B
(9) O++"rs o+ 5"3ar in N"3s1a1"r or Publi! Cont"st
Alt,oug, no "41r"ss 1ro$ision o+ la3 r"gulat"s sai !on.
t"sts% it is un"rstoo t,at on!" !ont"stants a!!"1t t," o++"r b#
sub*itting "ntri"s% t,"r" is a sort o+ i*1li" !ontra!t t,at
1riH"s 3oul "$"ntuall# b" a3ar". It is un"rstoo t,at t,"
rul"s o+ t," !ont"st +or* 1art o+ t," !ontra!tual sti1ulations.
(@) E4!lusi$"n"ss o+ t," Enu*"ration
T," "nu*"ration b# t," la3 is "4!lusi$"2 ,"n!"% no obliga.
tion "4ists i+ its sour!" is not on" o+ t,os" "nu*"rat" un"r
Art. 115C. (Na$al"s $. 5ias% B P,il. 5?B).
Art. 115B. Obligations "ri$" +ro* la3 ar" not
1r"su*". Onl# t,os" "41r"ssl# "t"r*in" in t,is Co" or
in s1"!ial la3s ar" "*anabl"% an s,all b" r"gulat" b#
t," 1r"!"1ts o+ t," la3 3,i!, "stablis,"s t,"*2 an as to
3,at ,as not b""n +or"s""n% b# t," 1ro$isions o+ t,is 7oo<.
CO&&ENT'
(1) Obligations E4 L"g"
(a) E4a*1l"s'
1) t," ut# to su11ort. (Art. 6A1% Ci$il Co").
6) t," ut# to 1a# ta4"s. (National Int"rnal 5"$"nu"
Co").
CanoniHao $. 7"nit"H
L.@A915% L.6?A66% F"b. 6?% 1AB@
T," obligation o+ a *arri" !ou1l" to su11ort "a!,
ot,"r% un"r t," la3% g"n"rall# subsists all t,roug,out t,"
*arriag". I+ su11ort 3,i!, ,a b""n sus1"n" is again
in$o<"% a si*1l" *otion in t," sa*" 1ro!""ing 3ill su+.
"!r"as"% or *a# "$"n !"as"% at l"ast% t"*1oraril#.)
B@
Art. 115B
+i!". T,"r" is no n"!"ssit# to +il" a s"1arat" a!tion. (Not"
t,at in a $"r# r"al s"ns"% a +inal jug*"nt +or su11ort !an
n"$"r b" r"all# +inal as t," a*ount gi$"n *a# in!r"as"%
"!r"as"% or *a# "$"n !"as"% at l"ast% t"*1oraril#.)
B@
Art. 115B
(b) No agr""*"nt is n"!"ssar# b"+or" obligation "4 l"g" !an
aris"% but o+ !ours" t," la3 st"1s in onl# b"!aus" o+ ,u*an
a!tuations. For "4a*1l"% on" 3,o ga*bl"s an 3ins !an b"
!o*1"ll" b# t," los"r to r"turn t," 3innings. (Art. 6?1@).
T," a!tion b# t," los"r is !all" in"bitatus assu*1sit.
(L"ung 7"n $. O87ri"n% 9B P,il. 1B6).
Va. " 5"!into $. In!iong
CC SC5A 1A6
A 1"rson 3,o bu#s anot,"r8s 1ro1"rt# una3ar" o+ t," rig,t
t,"r"to o+ so*" ot,"r 1art# is to b" !onsi"r" a bu#"r in goo
+ait,. I,il" ," is liabl"% ,is is t," liabilit# o+ a 1"rson in goo
+ait,.
S"rrano $. C"ntral 7an<
L.9?511% F"b. 1@% 1AB?
T," C"ntral 7an< (no3 7ang<o S"ntral) is NOT O7LI>ED
to 1a# t," "1osit o+ a "1ositor *a" in an insol$"nt ban<.
(NOTE' T," P,ili11in" D"1osit Insuran!" Cor1oration
0 PDIC 0 1a#s u1 to P1??%???.?? 1"r "1ositor).
Santos $. Court o+ A11"als
L.6?61?% &ar. 6C% 1AB@
T," rig,t o+ 1r"."*1tion (rig,t o+ +irst r"+usal) or r""*1.
tion un"r PD 151C r"+"rs onl# to urban lan l"as" to a 1"rson
3,o !onstru!ts ,is ,ous" t,"r"on an 3,o ,as l"as" t," lan
+or *or" t,an t"n (1?) #"ars. T," la3 o"s not a11l# i+ bot, t,"
lan an t," ,ous" b"long to t," l"ssor. In t," latt"r !as"% t,"
l"ssor ,as no l"gal obligation to allo3 1r""*1tion or r""*1.
tion.
>onHal"s $. P,ili11in" National 7an<
>5 9996?% &a# 9?% 1AB9
T," PN7 is not an orinar# !or1oration an t,"r"+or"
1C
Art. 115B
not go$"rn" b# t," Cor1oration La3 but b# its o3n !,art"r. A
sto!<,ol"r o+ t," PN7 !annot% t,"r"+or"% insist on t," ins1"!.
1B
Art. 115A
tion o+ its boo<s. T,is !an b" on" onl# b# t," D"1art*"nt o+
Su1"r$ision an E4a*ination o+ t," C"ntral 7an< (no3 7ang<o
S"ntral).
(6) &"aning o+ t," Arti!l" (7A5)
T," la3 sa#s -obligations "ri$" +ro* la3 ar" not 1r".
su*"./ T,is *"r"l# *"ans t,at t," obligation *ust b" !l"arl#
("41r"ssl# or i*1li"l#) s"t +ort, in t," la3 (t," Ci$il Co" or
S1"!ial La3s). T,us% an "*1lo#"r is orinaril# not r"Euir" to
+urnis, ,is "*1lo#""s 3it, l"gal assistan!"% +or no la3 r"Euir"s
t,is. (S"" D" la CruH $. Nort,"rn T,"atri!al Ent"r1ris"s% 5? O.>.
@665% S"1t. 1A5@% 3,"r" a *o$i" ,ous" guar% +or!" to "+"n
,i*s"l+ in !ourt +or <illing a gat" !ras,"r% 3as a!Euitt" but
3as not allo3" to r"!o$"r attorn"#8s +""s +ro* t," t,"at"r
o3n"r.) In !as" o+ o$"r1a#*"nt o+ ta4"s% t," National >o$8t.
!annot b" r"Euir" to 1a# int"r"st on t," a*ount r"+unabl" in
t," abs"n!" o+ a statutor# 1ro$ision "41r"ssl# ir"!ting or
aut,oriHing su!, 1a#*"nt. (Coll"!tor o+ Int. 5"$. $. Fis,"r% "t
al.% L.11666 an L.1166B% =an. 6B% 1A61).
Hilario =ara$ata $. Saniganba#an
L.561C?% =an. 91% 1AB@
A ,ig, s!,ool 1rin!i1al ,as no l"gal obligation to +a!ilitat"
t," r"l"as" o+ t," salar# i++"r"ntials o+ t," t"a!,"rs un"r
,i*. So i+ ," r"!"i$"s r"i*burs"*"nt +or ,is -"41"ns"s/ or as
-gi+ts%/ ," !annot b" ajug" guilt# un"r t," Anti.>ra+t La3%
+or a+t"r all% ," ,a no ut# to o sai +a!ilitation.
(9) Con+li!t 7"t3""n Ci$il Co" an S1"!ial La3s
I+ r"garing an obligation "4 l"g"% t,"r" is a !on+li!t
b"t3""n t," N"3 Ci$il Co" an a s1"!ial la3% t," latt"r
1r"$ails unl"ss t," !ontrar# ,as b""n "41r"ssl# sti1ulat" in t,"
N"3 Ci$il Co". (S"" Art. 1B).
Art. 115A. Obligations arising +ro* !ontra!ts ,a$" t,"
1A
Art. 115A
+or!" o+ la3 b"t3""n t," !ontra!ting 1arti"s an s,oul b"
!o*1li" 3it, in goo +ait,.
6?
Art. 115A
CO&&ENT'
(1) Obligations E4.Contra!tu
I,il" obligations arising +ro* a !ontra!t ,a$" t," +or!"
o+ la3 b"t3""n t," 1arti"s% t,is o"s not *"an t,at t," la3 is
in+"rior to !ontra!ts. T,is is b"!aus" b"+or" a !ontra!t !an b"
"n+or!"% it *ust +irst b" $ali% an it !annot b" $ali i+ it is
against t," la3. &or"o$"r% t," rig,t o+ t," 1arti"s to sti1ulat" is
li*it". H"n!"% Art. 19?6 o+ t," Ci$il Co" sa#s' -T," !ontra!t.
ing 1arti"s *a# "stablis, su!, sti1ulations% !laus"s% t"r*s an
!onitions as t,"# *a# ""* !on$"ni"nt% 1ro$i"% t,"# ar" not
!ontrar# to la3% *orals% goo !usto*s% 1ubli! or"r% or 1ubli!
1oli!#./
As long as Art. 19?6 is !o*1li" 3it,% t," !ontra!t s,oul
b" gi$"n "++"!t% "$"n i+ at t," ti*" it 3as "nt"r" into% no l"gal
1ro$ision "4ist" go$"rning it. (:uiHana $. 5"ug"rio% 5? O.>.
6@@@% =un. 1A5@).
(6) &"aning o+ t," Arti!l"
T," Arti!l" *"ans t,at n"it,"r 1art# *a# unilat"rall# an
u1on ,is o3n "4!lusi$" $olition% "s!a1" ,is obligations un"r t,"
!ontra!t% unl"ss t," ot,"r 1art# ass"nt" t,"r"to% or unl"ss +or
!aus"s su++i!i"nt in la3 an 1ronoun!" a"Euat" b# a !o*1"t"nt
tribunal. (L.1?99C% &a# 6C% 1A5C).
-Co*1lian!" in goo +ait,/ *"ans t,at 3" *ust int"r.
1r"t -not b# t," l"tt"r t,at <ill"t, but b# t," s1irit t,at gi$"t,
li+"./ (S"" Iillia* >olang!o Constru!tion Cor1. $. PCI7% @B5
SC5A 6?9 F6??6G.).
&artin $. &artin% "t al.
L.16@9A% &a# 69% 1A5A
I,"r" t," 1arti"s to a !o*1ro*is" agr""*"nt sign" an
"4"!ut" t," sa*" IILLIN>LK an VOL;NTA5ILK% t,"#
ar" 7O;ND b# its t"r*s% "$"n i+ t," CO;5T b"+or" 3,i!, it
3as *a" ,a NO jurisi!tion o$"r t," !as". In a r"gi*" o+ la3
an or"r% t," r"1uiation o+ an agr""*"nt $alil# "nt"r" into
!annot b" *a" 3it,out an# justi+iabl" r"ason. (NOTE' T," a1.
61
Art. 115A
1ro$al o+ t," !ourt ,"r" is i**at"rial2 3,at is i*1ortant is t,"
*utual !ons"nt to t," !o*1ro*is".)
66
Art. 115A
National &ar<"ting Cor1. (NA&A5CO) $. Tan% "t al.
L.1C?C@% &ar. 91% 1A6@
FACTS' On August B% 1A5A% t," 7oar o+ Dir"!tors o+ t,"
FEDE5ATION o+ NA&A5CO DIST5I7;TO5S r"Eu"st" t,"
Pr"si"nt o+ t," P,ili11in"s to allo3 t," NA&A5CO to 1ur.
!,as" !"rtain !o**oiti"s% +or istribution to t," *"*b"rs o+
t," FEDE5ATION. ;1on "nors"*"nt b# t," Pr"si"nt% t,"
NA&A5CO aut,oriH" t," i*1ortation. I,"n t," F""ration
ga$" NA&A5CO !"rtain !as, a$an!"s +or t," !ost o+ i*1or.
tation% NA&A5CO an t," F""ration "4"!ut" a !ontra!t%
3,"r"b# t," +or*"r sol to t," latt"r t," goos to b" i*1ort".
Part o+ t," goos (3,"n t,"# arri$") 3as "li$"r" to t," F".
"ration% but 3,"n a n"3 7oar too< !,arg" o+ t," NA&A5CO%
t," 7oar r"+us" +urt,"r "li$"r# to outsi"rs. Issu"' Ias
NA&A5CO8s a!tion 1ro1"rJ
HELD' No% b"!aus" it ,a "nt"r" into a $ali !ontra!t
3it, t," F""ration.
(9) T," 5ig,t to Ent"r into Contra!ts
T," rig,t to "nt"r into la3+ul !ontra!ts !onstitut"s on" o+
t," lib"rti"s o+ t," 1"o1l" o+ t," Stat". I+ t,at rig,t b" stru!<
o3n or arbitraril# int"r+"r" 3it,% a substantial i*1air*"nt
o+ !onstitutional rig,ts 3oul r"sult. (P"o1l" $. Po*ar% @6 P,il.
@@?). N"$"rt,"l"ss% in !ontra!ts 3,"r" 1ubli! int"r"st is in$ol$"
(as in t," !as" o+ labor agr""*"nts)% t," go$"rn*"nt ,as a rig,t
to int"r$"n" +or t," 1rot"!tion o+ t," 3,ol". (L"#t" Lan Trans.
$. L"#t" Far*"r8s ;nion% >5 L.1ACC% &a# 16% 1A@B).
(@) Di++"r"n!"s 7"t3""n an Obligation an a Contra!t
An obligation is t," r"sult o+ a !ontra!t (or so*" ot,"r
sour!"). H"n!"% 3,il" a !ontra!t% i+ $ali% al3a#s r"sults in
obliga. tions% not all obligations !o*" +ro* !ontra!ts. A !ontra!t
al3a#s 1r"su11os"s a *""ting o+ t," *ins2 t,is is not
n"!"ssaril# tru" +or all <ins o+ obligations.
7" it not"% ,o3"$"r% +ro* anot,"r $i"31oint t,at a !on.
tra!t *a# its"l+ b" t," r"sult o+ an obligation. T,us% i+ P "ngag"s
69
Art. 115A
A as t," +or*"r8s ag"nt% 3" ,a$" t," !ontra!t o+ ag"n!#. As an
ag"nt% A ,as t," obligation% sa# to loo< aroun +or !li"nts or
6@
Art. 115A
bu#"rs% as in t," r"al "stat" busin"ss. As a r"sult o+ su!, obli.
gation% A *a# "nt"r into a !ontra!t o+ sal" 3it, C% a !usto*"r.
T," !ontra!t o+ sal" its"l+ r"sults in t," obligations to 1a# an
to "li$"r. T," obligation to "li$"r *a# r"sult in a !ontra!t o+
!arriag"% an so on% a in+initu*.
(5) So*" D"!i" Cas"s
D" los 5"#"s $. Al"jao
16 P,il. @AA
FACTS' A borro3"r agr"" to 1a# ,is "bt% an in !as" o+
non.1a#*"nt% to r"n"r +r"" s"r$i!" as a s"r$ant. Issu"' Is t,"
obligation $aliJ
HELD' T," obligation to 1a# is% o+ !ours"% $ali an !annot
b" Eu"stion" but t," un"rta<ing to r"n"r o*"sti! s"r$i!"s
+or +r"" is !ontrar# to la3 an *orals% +or ,"r"% sla$"r# 3oul
r"sult. (NOTE' I+% ,o3"$"r% t," -+r""/ s"r$i!"s 3ill b" r"n"r"
in satis+a!tion o+ t," "bt% t," sti1ulation !an b" gi$"n "++"!t%
+or ,"r" t," s"r$i!"s 3ill not r"all# b" gratuitous. E$"n in t,is
!as"% ,o3"$"r% s1"!i+i! 1"r+or*an!" o+ t," s"r$i!" 3ill not b" a
1ro1"r r"*"# +or non.!o*1lian!". Inst"a% an a!tion +or a*.
ag"s o+ 1a#*"nt o+ t," "bt s,oul b" broug,t.)
&olina $. " la 5i$a
6 P,il. 16
FACTS' T," 1arti"s in a !as" agr"" to go to !ourt in Alba#%
alt,oug, anot,"r Court ,as jurisi!tion.
HELD' T," agr""*"nt is null an $oi% +or jurisi!tion is
!on+"rr" b# la3% an not b# t," 3ill o+ t," 1arti"s.
7a!,ra!, $. >oling!o
9A P,il. 19B
ISS;E' I+ t,"r" is an "41r"ss 3ritt"n !ontra!t +or +""s b".
t3""n an attorn"# an ,is !li"nt% *a# t," !ourt still isr"gar
t," !ontra!tJ
65
Art. 115A
HELD' K"s% b"!aus" a !ontra!t +or attorn"#8s +""s is i++"r.
"nt +ro* ot,"r !ontra!ts. It *a# b" isr"gar" i+ t," a*ount
66
Art. 115A
+i4" is un!ons!ionabl" or unr"asonabl"% !onsi"ring t," $alu"
o+ t," 3or< a!!o*1lis,".
FNOTE' A !lai* +or attorn"#8s +""s *a# b" ass"rt" "it,"r
in t," $"r# a!tion in 3,i!, t," s"r$i!"s in Eu"stion ,a$" b""n
r"n"r"% or in a s"1arat" a!tion. I+ t," +irst alt"rnati$" is !,os"n%
t," !ourt *a# 1ass u1on sai !lai* "$"n i+ its a*ount 3"r" l"ss
t,an t," *ini*u* 1r"s!rib" b# la3 +or t," jurisi!tion o+ t,"
!ourt o$"r t," subj"!t *att"r o+ t," !as" +or so long as t," *ain
a!tion is 3it,in t," jurisi!tion o+ sai !ourt% u1on t," t,"or#
t,at t," rig,t to r"!o$"r attorn"#8s +""s is but an INCIDENT o+
t," !as" in 3,i!, t," s"r$i!"s o+ !ouns"l ,a$" b""n r"n"r".
(&aria 5"#"s " Tol"ntino $. >oo+r"o Es!alono% "t al.% L.66556%
=an. 6@% 1A6?2 s"" Palan!a $. P"!son% A@ P,il. @1A an Da,l<"
$. Vina% 51 P,il. C?C).G
Conrao $. =ug" Tan
51 O.>. 6A69% =un. 1A55
FACTS' In a $alil# *a" !ontra!t% so*" 1ro$isions 3"r"
lat"r on ins"rt" b# a +alsi+i"r. Issu"' Is t," 3,ol" !ontra!t
$oiJ
HELD' Onl# t," aitional 1ro$ision s,oul b" isr"gar"%
an t," original t"r*s s,oul b" !onsi"r" $ali an subsist.
ing.
Al!antara $. Alin"a
B P,il. 111
FACTS' A borro3" +ro* 7 P@B? an agr"" t,at in !as"
o+ non.1a#*"nt on t," at" sti1ulat"% A8s ,ous" an lot 3oul
b" sol to 7 +or t," a*ount o+ P@B?. Issu"' Is t," sti1ulation
$aliJ
HELD' K"s% an i+ A o"s not 1a#% A s,oul s"ll t," ,ous"
an lot +or P@B?. T," agr""*"nt is not !ontrar# to la3. (S"" also
:uiHana $. 5"ug"rio% 5? O.>. 6@@@% =un"% 1A5@).
(NOTE' It s""*s to t," aut,or t,at t," sti1ulation *a#
b" !onsi"r" $oi as b"ing a 1a!tu* !o**issoriu*% unl"ss A
6C
Art. 115A
b" allo3"% inst"a o+ s"lling% to s"l"!t t," o1tion o+ still b"ing
in"bt"% 3it, !ons"Eu"ntial a*ag"s or int"r"st.)
6B
Art. 115A
>anHon $. =ug" San!,o
>5 56@5?% =ul. 69% 1AB9
I+ a *ortgag" is substitut" b# a guarant# or sur"t# bon
3it,out t," !ons"nt o+ all t," r"Euir" 1arti"s% t," !ontra!t
*a# b" sai to b" i*1air".
Oll"nor+ $. Abra,a*son
9B P,il. 5B5
FACTS' Oll"nor+% n""l"3or< *anu+a!tur"r% ,ir" Abra.
,a*son +or t3o #"ars% on t," !onition t,at +or +i$" #"ars% t,"
latt"r s,oul not "ngag" in !o*1"titi$" n""l"3or< *anu+a!tur".
A+t"r on" #"ar% t," latt"r l"+t +or r"asons o+ ,"alt,. S,ortl#
a+t"r. 3ars% a+t"r r"gaining ,is ,"alt,% ," !o*1"t" 3it, ,is
+or*"r "*1lo#"r% 3,o no3 s""<s to r"strain ,i* +ro* su!,
!o*1"tition. T," "+"nant argu"s t,at t," r"stri!tion is $oi%
b"!aus" it is an unr"asonabl" r"straint o+ tra".
HELD' T," agr""*"nt 3as $ali% an is a r"asonabl" r".
straint% !onsi"ring t,at it 3as onl# +or 5 #"ars. Inas*u!, as it
is "n+or!"abl" an ,as t," rul" o+ la3 b"t3""n t," 1arti"s% t,"
"+"nant !an b" 1ro1"rl# r"stri!t".
H"r*inia >ou!o $. Court o+ A11"als% "t al.
L.1C6@C% F"b. 6B% 1A6@
I+ u1on t," 1ro*is" o+ t," son.in.la3 o+ a s"ll"r% an ag"nt
s"lls on !o**ission a 1ar!"l o+ lan to a bu#"r% sai bu#"r% not
,a$ing 1ro*is" to gi$" sai !o**ission% is NOT liabl" t,"r"+or.
Pa#*"nt o+ t," !o**ission *ust b" soug,t +ro* 3,o"$"r *a"
t," 1ro*is" to 1a# su!, a*ount% na*"l#% t," son.in.la3 o+ t,"
s"ll"r.
&ola$" &otor Sal"s% In!.
$. Laron an >"*iniano
L.659CC% &a# 6B% 1AB@
I,"n an "*1lo#"" in a !ar r"1air s,o1 ,as ,is o3n !ar
6A
Art. 115A
r"1air" t,"r"in an 1ur!,as"s !"rtain s1ar" 1arts% ,is liabil.
it# t,"r"+or is go$"rn" b# t," Ci$il Co"% not t," Labor Co".
9?
Art. 115A
T,"r"+or"% it is t," !i$il !ourts% not t," &inistr# (D"1art*"nt)
o+ Labor% t,at ,as jurisi!tion o$"r t," !as".
7or!"na% "t al. $. IAC
>5 C??AA% =an. C% 1ABC
Contra!ts +or attorn"#8s s"r$i!"s stan u1on an "ntir"l#
i++"r"nt +ooting +ro* !ontra!ts +or t," 1a#*"nt o+ !o*1"nsa.
tion +or an# ot,"r s"r$i!"s. An attorn"# is not "ntitl"% in t,"
abs"n!" o+ "41r"ss !ontra!t% to r"!o$"r *or" t,an a r"asonabl"
!o*1"nsation +or ,is s"r$i!"s. An "$"n 3,"n an "41r"ss !on.
tra!t is *a"% t," !ourt !an ignor" it an li*it t," r"!o$"r# o+
r"asonabl" !o*1"nsation i+ t," a*ount o+ t," sti1ulat" +"" is
+oun b# t," !ourt to b" unr"asonabl". T,is is a $"r# i++"r"nt
rul" +ro* t,at announ!" in S"!. 1?A1 o+ t," Ci$il Co" o+ S1ain
(no3 Art. 115A% Ci$il Co") 3it, r"+"r"n!" to t," obligation o+
!ontra!ts in g"n"ral% 3,"r" it is sai t,at su!, obligation ,as
t," +or!" o+ la3 b"t3""n t," !ontra!ting 1arti"s.
PN7 $. S"% =r.
C? SCAD 969
(1AA6)
As !ontra!ts% 3ar",ous" r"!"i1ts *ust b" r"s1"!t" b#
aut,orit# o+ Art. 115A o+ t," Ci$il Co".
A 1rior jug*"nt ,oling t,at a 1art# is a 3ar",ous"*an
obligat" to "li$"r sugar sto!<s !o$"r" b# t," Iar",ous"
5"!"i1ts o"s not n"!"ssaril# !arr# 3it, it a "nial o+ t," 3ar".
,ous"*an8s li"n o$"r t," sa*" sugar sto!<s. E$"n in t," abs"n!"
o+ a 1ro$ision in t," Iar",ous" 5"!"i1ts% la3 an "Euit# i!tat"
t," 1a#*"nt o+ t," 3ar",ous"*an8s li"n 1ursuant to S"!tions
6C an 91 o+ t," Iar",ous" 5"!"i1ts La3.
A 1art# is in "sto11"l in is!lai*ing liabilit# +or t," 1a#.
*"nt o+ storag" +""s u" t," 3ar",ous"*an 3,il" !lai*ing to
b" "ntitl" to t," sugar sto!<s !o$"r" b# t," subj"!t Iar",ous"
5"!"i1ts on t," basis o+ 3,i!, it an!,ors its !lai* +or 1a#*"nt
or "li$"r# o+ t," sugar sto!<s. I*1"rati$" is t," rig,t o+ t,"
91
Art. 115A
3ar",ous"*an to "*an 1a#*"nt o+ ,is li"n b"!aus" ," los"s
,is li"n u1on goos b# surr"n"ring 1oss"ssion t,"r"o+.
96
Art. 116?
(6) T," So.!all" Inno*inat" Contra!ts
For 3ant o+ an "41r"ss na*"% t," +ollo3ing ar" t"r*"
-!ontratos inno*inaos/'
(a) Do ut "s 0 I gi$" t,at #ou *a# gi$".
(b) Do ut +a!ias 0 I gi$" t,at #ou *a# o.
(!) Fa!io ut "s 0 I o t,at #ou *a# gi$".
() Fa!io ut +a!ias 0 I o t,at #ou *a# o.
E4a*1l"' A 3or<" +or 7 as int"r1r"t"r. E$"n 3it,out an
"41r"ss agr""*"nt as to !o*1"nsation% A is "ntitl" to !o*1"n.
sation b"!aus" o+ +a!io ut "s 0 I o t," int"r1r"ting t,at #ou
*a# gi$" t," *on"#. (P"r"H $. Po*ar% 6 P,il. 6B6).
Vi!"nt" Alaba $. Court o+ A11"als% "t al.
L.616C6% F"b. 6B% 1A6A
FACTS' Dr. Vi!"nt" Alaba an ,is aug,t"r% Dr. =an"
Alaba% r"n"r" s"r$i!"s to 7"l"n Alaba% a ri!, 3o*an o+
&alolos% 7ula!an +or 1? #"ars 3it,out r"!"i$ing an# !o*1"nsa.
tion. It 3as a*itt" t,at +or su!, s"r$i!"s% t," t3o o!tors i
NOT "41"!t to b" 1ai. Issu"s' Ias t,"r" a !ontra!t% 3,"t,"r
"41r"ss or i*1li"J Ias 7"l"n oblig" to !o*1"nsat" t," t3o
o!torsJ
HELD' T,"r" 3as no !ontra!t% 3,"t,"r "41r"ss or i*1li"%
an t,"r"+or" 7"l"n 3as not oblig" to !o*1"nsat" t," t3o o!.
tors2 no "41r"ss !ontra!t% +or not,ing on t,is 1oint 3as agr""
u1on2 an no i*1li" !ontra!t% +or t," o!tors i not "41"!t
to b" 1ai +or t,"ir s"r$i!"s. I,"n a 1"rson o"s not "41"!t to
b" 1ai +or ,is s"r$i!"s% t,"r" !annot b" a !ontra!t i*1li" in
+a!t to gi$" !o*1"nsation +or su!, s"r$i!"s. To gi$" ris" to an
i*1li" !ontra!t to 1a# +or s"r$i!"s% sai s"r$i!"s *ust ,a$"
b""n r"n"r" b# on" 1art# in "41"!tation t,at t," ot,"r 1art#
3oul 1a# +or t,"* an *ust ,a$" b""n a!!"1t" b# t," ot,"r
1art# 3it, <no3l"g" o+ t,at "41"!tation. (S"" 5B A*. =ur.% 1.
516% an t," !as"s !it" t,"r"in).
Art. 116?. Obligations "ri$" +ro* Euasi.!ontra!ts
99
Art. 116?
s,all b" subj"!t to t," 1ro$isions o+ C,a1t"r 1% Titl" NVII% o+
t,is 7oo<.
9@
Art. 116?
CO&&ENT'
(1) O:uasi.Contra!t8 D"+in"
A Euasi.!ontra!t is t,at jurii!al r"lation r"sulting +ro*
a la3+ul% $oluntar#% an unilat"ral a!t% an 3,i!, ,as +or its
1ur1os" t," 1a#*"nt o+ in"*nit# to t," "n t,at no on" s,all
b" unjustl# "nri!," or b"n"+it" at t," "41"ns" o+ anot,"r. (S""
Art. 61@6% Ci$il Co").
(6) T," 6 Prin!i1al Dins
(a) n"gotioru* g"stio (unaut,oriH" *anag"*"nt)
(b) solutio in"biti (unu" 1a#*"nt)
(9) N"gotioru* >"stio
T,is ta<"s 1la!" 3,"n a 1"rson $oluntaril# ta<"s !,arg"
o+ anot,"r8s abanon" busin"ss or 1ro1"rt# 3it,out t,"
o3n"r8s aut,orit#. (Art. 61@@% Ci$il Co"). 5"i*burs"*"nt *ust
b" *a" to t," g"stor +or n"!"ssar# an us"+ul "41"ns"s% as a
rul". (S"" Art. 615?% Ci$il Co").
(@) Solutio In"biti
T,is ta<"s 1la!" 3,"n so*"t,ing is r"!"i$" 3,"n t,"r"
is no rig,t to "*an it% an it 3as unul# "li$"r" t,ru *is.
ta<". T," r"!i1i"nt ,as t," ut# to r"turn it. (E4a*1l"' I+ I l"t
a stor"<""1"r !,ang" *# P5?.?? bill an b# "rror ," gi$"s *"
P5?.6?% I ,a$" t," ut# to r"turn t," "4tra P?.6?). (S"" Art.
615@% Ci$il Co").
Cit# o+ C"bu $. Pi!!io an Caball"ro
L.19?16 an 1@BC6% D"!. 91% 1A6?
FACTS' Caball"ro% an "*1lo#"" o+ t," Cit# o+ C"bu 3,o
,as b""n ill"gall# is*iss"% su" +or ba!<3ag"s b# 3a# o+
*ana*us an *a" as "+"nants t,"r"to t," Cit# &a#or% t,"
&uni!i1al 7oar% t," Cit# Tr"asur"r% an t," Cit# Auitor o+
C"bu Cit#% 7;T t," Cit# o+ C"bu its"l+ 3as not *a" a "+"n.
95
Art. 116?
ant. I,"n Caball"ro 3as lat"r 1ai% t," Cit# o+ C"bu broug,t
an a!tion +or t," 5EF;ND o+ t," 1a#*"nt on t," groun t,at
96
Art. 116?
t," 1a#*"nt 3as ill"gal b"!aus" t," Cit# o+ C"bu ,a NOT b""n
*a" a 1art# to Caball"ro8s *ana*us !as".
HELD' T," Cit# o+ C"bu CANNOT r"!o$"r. T," !lai* +or
r"+un is 1r"i!at" on -solutio in"biti./ T," r"Euisit"s +or t,is
ar"' (a) ," 3,o 1ai 3as NOT un"r obligation to o so2 (b) t,"
1a#*"nt 3as *a" b# r"ason o+ an "ss"ntial *ista<" o+ +a!t.
T,"s" r"Euisit"s ar" NOT 1r"s"nt b"!aus" Caball"ro ,as a rig,t
to b" 1ai an no *ista<" 3as *a". T," +a!t t,at t," Cit#
its"l+ 3as NOT a 1art# is i**at"rial +or a jug*"nt against a
*uni!i1al o++i!"r% su" in ,is o++i!ial !a1a!it#% 7INDS t," Cit#.
T," a!ts o+ t," ul# aut,oriH" o++i!ials bin t," 1rin!i1al 0 t,"
!it#.
;ST Coo1"rati$" Stor" $. Cit# o+ &anila% "t al.
L.1C199% D"!. 91% 1A65
FACTS' T," ;ST Coo1"rati$" Stor"% 3,i!, is ta4."4"*1t
un"r 5A 6?69 (T," P,ili11in" Non.Agri!ultural Coo1"rati$"
A!t) b"!aus" its ass"ts ar" not *or" t,an P5??%??? 1ai ta4"s to
t," Cit# o+ &anila% not <no3ing t,at it 3as ta4."4"*1t. Issu"'
&a# it su!!"ss+ull# as< +or a r"+unJ
HELD' K"s% b"!aus" t," 1a#*"nt is not !onsi"r" $ol.
untar# in !,ara!t"r. Cl"arl#% t," 1a#*"nt 3as *a" un"r a
*ista<". (S"" 51 A*. =ur. 1?69).
(5) :u"r#' Is a :uasi.Contra!t an I*1li" Contra!tJ
ANS.' No% b"!aus" in a Euasi.!ontra!t (unli<" in an i*1li"
!ontra!t) t,"r" is NO *""ting o+ t," *ins.
(6) Ot,"r E4a*1l"s o+ :uasi.Contra!ts
(a) I,"n uring a +ir"% +loo% or ot,"r !ala*it#% 1ro1"rt# is
sa$" +ro* "stru!tion b# anot,"r 1"rson 3it,out t,"
<no3l"g" o+ t," o3n"r% t," latt"r is boun to 1a# t,"
+or*"r just !o*1"nsation. (Art. 616B% Ci$il Co").
(b) An# 1"rson 3,o is !onstrain" to 1a# t," ta4"s o+ anot,"r
9C
Art. 116?
s,all b" "ntitl" to r"i*burs"*"nt +ro* t," latt"r. (Art.
61C5% Ci$il Co").
9B
Art. 1161
(C) No ;njust Enri!,*"nt
Lirag T"4til" &ills% In!. $. 5"1arations Co**ission
CA SC5A 6C5
I+ t," 1ri!" o+ !"rtain goos is "t"r*in"% !onsi"ring
t," rat" o+ "4!,ang" at t," ti*" o+ its 1ro!ur"*"nt% t,"r" is no
unjust "nri!,*"nt in$ol$".
Art. 1161. Ci$il obligations arising +ro* !ri*inal o++"ns"s
s,all b" go$"rn" b# t," 1"nal la3s% subj"!t to t,"
1ro$isions o+ Arti!l" 61CC% an o+ t," 1"rtin"nt 1ro$isions o+
C,a1t"r 6% Pr"li*inar# Titl"% on Hu*an 5"lations% an o+
Titl" NVIII o+ t,is 7oo<% r"gulating a*ag"s.
CO&&ENT'
(1) Obligations E4 D"li!to or E4 &al"+i!io
>o$"rning rul"s (7A5 :;ESTION)
(a) P"rtin"nt 1ro$isions o+ t," 5"$is" P"nal Co" an ot,"r
1"nal la3s% subj"!t to t," 1ro$isions o+ Art. 61CC% Ci$il
Co".
(b) C,a1t"r 6% Pr"li*inar# Titl"% on Hu*an 5"lations (o+ t,"
Ci$il Co").
(!) Titl" 1B o+ 7oo< IV o+ t," Ci$il Co" 0 on a*ag"s.
7aiong $. =ug" A1aliso<
>5 6?151% =un. 6@% 1AB9
Alt,oug, t," "+"nant in a !ri*inal !as" ,as alr"a#
1l"a" guilt#% an ,as +il" an a11li!ation +or 1robation% t,"
!ourt s,oul still s"t t," !as" +or ,"aring to r"!"i$" t," o++"n"
1art#8s "$i"n!" on t," !i$il liabilit# o+ t," a!!us". I+ t,is
3oul not b" on"% t," o++"n" 1art# 3ill b" "ni" u"
1ro!"ss.
9A
Art. 1161
(6) P"rtin"nt Pro$ision o+ t," 5"$is" P"nal Co"
Art. 1??% 5.P.C. sa#s' -E$"r# 1"rson !ri*inall# liabl" +or
a +"lon# is also !i$ill# liabl"./ T," r"ason li"s in t," +a!t t,at
@?
Art. 1161
o+t"nti*"s t," !o**ission o+ a !ri*" !aus"s not onl# *oral "$il
but also *at"rial a*ag". I+ no *at"rial a*ag" is on"% !i$il
liabilit# !annot b" "n+or!". (S"" Alb"rt% 5"$. P"nal Co"% Vol.
I% 11. @?C.@?B).
El!ano $. Hill
CC SC5A AB
An a!!us" in a !ri*inal !as" *a# b" su" CIVILLK
3,"t,"r or not ," is +oun guilt# or is a!Euitt". 7ut t," $i!ti*
!annot r"!o$"r a*ag"s in bot, !as"s (onl# in on").
(9) Liabilit# o+ an Insan" Cri*inal
An insan" *an 3,o !o**its a !ri*" is "4"*1t" +ro*
!ri*inal liabilit#% but ,is guarian !an b" ,"l !i$ill# liabl"
unl"ss t," latt"r 3as ilig"nt in ,is tas< o+ ta<ing !ar" o+ t,"
insan". I+ t,"r" is no guarian% or i+ sai guarian (in t," 1ro1"r
!as") is insol$"nt% t," 1ro1"rt# o+ t," insan" *an !an b" *a"
liabl". (S"" Arts. 16 an 1?1% 5.P.C.).
(@) Cas"
Sal"s $. 7al!"
L.1@@1@% A1r. 6C% 1A6?
FACTS' T," son o+ t," 1lainti++ 3as <ill" b# t," *inor
son (b"lo3 15) o+ t," "+"nant. T," son 3,o a!t" 3it, is!"rn.
*"nt 3as !on$i!t"% but ,a no *on"#. Issu"' Ar" ,is 1ar"nts
subsiiaril# liabl"J
HELD' Art. 1?1 o+ t," 5"$is" P"nal Co" 1r"s!rib"s
t," subsiiar# liabilit# o+ t," 1ar"nts in !as" o+ a *inor o$"r A
but un"r 15 3,o DID NOT a!t 3it, is!"rn*"nt. I+ ," a!t"
IITH is!"rn*"nt% t," 5"$is" P"nal Co" is sil"nt b"!aus" ,"
is !ri*inall# liabl". In t,at !as"% r"sort is *a" to t," g"n"ral
la3 3,i!, is t," Ci$il Co"% Art. 6?B? o+ 3,i!, a11li"s. ;n"r
sai Arti!l"% t," 1ar"nts 3oul b" ,"l liabl" unl"ss t,"# !an
1ro$" u" su1"r$ision. To ,ol t,at t," Ci$il Co" o"s not a1.
1l# b"!aus" it !o$"rs onl# obligations arising +ro* n"glig"n!"
@1
Art. 1161
or Euasi."li!ts 3oul r"sult in an A7S;5DITK +or% 3,il" in a
n"glig"nt a!t% t," 1ar"nts ar" subsiiaril# liabl" +or t," a*ag"
@6
Art. 1161
!aus" b# t,"ir son% no liabilit# 3oul atta!, i+ t," a*ag" is
!aus" 3it, !ri*inal int"nt. It is !l"ar% t,"r"+or"% t,at a11l#.
ing Art. 6?B? o+ t," Ci$il Co"% t," 1ar"nts 3oul orinaril# b"
liabl".
(5) I,at Ci$il Liabilit# Arising +ro* a Cri*" In!lu"s
(a) r"stitution2
(b) r"1aration o+ t," a*ag" !aus"2
(!) in"*ni+i!ation +or !ons"Eu"ntial a*ag"s. (Art. 1?@% 5"$.
P"nal Co").
(NOTE' In t," !as" o+ P"o1l" $. 5origu"H% >5 L.65A6%
=ul# 6A% 1A56% it 3as ,"l t,at i+ a !ri*inal is !on$i!t"
3it,out t," !ourt "!laring ,is !i$il liabilit# an ," i*.
*"iat"l# !o**"n!"s s"r$ing s"nt"n!"% t," !ourt *a# still
grant in"*nit#% u1on *otion o+ t," $i!ti*% 9 a#s a+t"r
t," !ri*inal b"gan to s"r$" s"nt"n!"% b"!aus" t,"
jug*"nt ,as not #"t b"!o*" +inal% +or t," 1"rio to
a11"al ,as not #"t 1r"s!rib". In anot,"r !as"% P"o1l" $.
&ostas"sa% >5 L.56B@% =an. 66% 1A5@% it 3as ,"l t,at i+ a
1"rson !o**its a !ri*" b# ta<ing so*"t,ing% ," !annot
is!,arg" ,is !i$il liabilit# b# o++"ring to gi$" a si*ilar
t,ing. H" *ust 1a# t," 1ri!"% +or t," !i$il liabilit# arising
+ro* a !ri*" is not go$"rn" b# t," Ci$il Co" but b# Arts.
1??.111% 5"$. P"nal Co".)
(6) E++"!t o+ Aggra$ating an &itigating Cir!u*stan!"s
In !ri*"s% t," a*ag"s to b" ajui!at" *a# b"% r"s1"!.
ti$"l#% in!r"as" or l"ss"n" a!!oring to t," aggra$ating or
*itigating !ir!u*stan!"s. (Art. 66?@% Ci$il Co").
(C) Da*ag"s in Cas" o+ D"at,
In aition to ot,"r a*ag"s% i+ a !ri*" r"sults in "at,%
Art. 66?6 o+ t," Ci$il Co" stat"s t,at at l"ast t,r"" t,ousan
1"sos *ust b" gi$"n to t," ,"irs o+ t," $i!ti*. Ho3"$"r% sai
*ini*u* a*ount ,as no3 b""n rais" to P5?%??? in $i"3 o+
@9
Art. 1161
t," "!r"asing $alu" o+ t," 1"so. (Loss o+ "arning !a1a!it# an
*oral a*ag"s% a*ong ot,"r t,ings% s,oul b" gi$"n.)
@@
Art. 1161
(B) Ci$il A!tion I*1li!itl# Institut" in Cri*inal Cas"
As a g"n"ral rul"% 3,"n"$"r a !ri*inal a!tion is institut"%
t," !i$il a!tion +or t," !i$il liabilit# is also i*1li"l# institut"
tog"t,"r 3it, t," !ri*inal a!tion. (S"" 5ul" 9% S"!. 1% 5"$is"
5ul"s o+ Court).
(A) E++"!t o+ D"at, o+ t," Cri*inal O++"n"r P"ning Trial
7u"na$"ntura 7"la*ala $. &ar!"lino Polinar
L.6@?AB% No$. 1B% 1A6C
FACTS' T," "+"nant in a !ri*inal !as" +or 1,#si!al
injuri"s i" b"+or" +inal jug*"nt. Issu"' Is ,is !i$il liabilit#
"4tinguis,"J
HELD' No% ,is !i$il liabilit# is not "4tinguis," +or% a+t"r
all% in Art. 99 o+ t," Ci$il Co"% t,"r" !an% in t," !as" o+ 1,#si!al
injuri"s% still b" an in"1"n"nt !i$il a!tion. T," a!tion 3ill b"
ir"!t" against t," a*inistrator o+ t," "stat"% t," obligation
,a$ing b"!o*" t," obligation o+ t," ,"irs2 but o+ !ours" t,"
liabilit# !annot "4!"" t," $alu" o+ t," in,"ritan!". (Art. CC@%
Ci$il Co"). In!i"ntall#% as alr"a# sai% t," r"*"# is an a!tion
against t," a*inistrator% an not *"r"l# a !lai* against t,"
"stat". T," r"ason is b"!aus" t," 1ur1os" is to r"!o$"r a*ag"s
+or an injur# to 1"rson or 1ro1"rt# (,"n!"% "4tra.!ontra!tual as
it aros" +ro* "it,"r a !ri*" or a tort). (S"" Aguas $. Ll"*os%
L.1B1?C% Aug. 9?% 1A66). Ha t," liabilit# b""n !ontra!tual% a
*"r" !lai* against t," "stat" 3oul ,a$" su++i!". (S"" L"ung
7"n $. O87ri"n% 9B P,il. 1B6).
La*b"rto Torrijos $. Court o+ A11"als
L.@?996% O!t. 6@% 1AC5
FACTS' In 1A6@% Torrijos 1ur!,as" a lot +ro* Dia*nuan.
Lat"r% Torrijos l"arn" t,at in 1A6A% Dia*nuan sol t," sa*"
lot to D" >uia. Torrijos initiat" an "sta+a !o*1laint against
t," s"ll"r% 3,o 3as "$"ntuall# !on$i!t" b# t," CFI (no3 5TC).
During t," 1"n"n!# o+ t," !as" in t," Court o+ A11"als% t,"
a!!us" Dia*nuan i". His la3#"r +il" a *otion to i*iss t,"
@5
Art. 1161
!as" all"ging t,at t," "at, o+ ,is !li"nt% 1rior to +inal jug*"nt%
"4tinguis," bot, t," 1"rsonal an t," 1"!uniar# 1"nalti"s.
@6
Art. 1161
Issu"' Is t," !i$il liabilit# also "4tinguis,"J S,oul t," !as"
b" is*iss"J
HELD' T," !i$il liabilit# ,"r" is not "4tinguis,"% b"!aus"
in"1"n"ntl# o+ t," !ri*inal !as"% t," a!!us" 3as !i$ill# liabl"
to Torrijos. I+ a+t"r r"!"i$ing t," 1ur!,as" 1ri!" +ro* Torrijos% ,"
+ail" to "li$"r t," 1ro1"rt# ("$"n b"+or" s"lling it again to D"
>uia)% t,"r" 3oul as #"t b" no "sta+a% but t,"r" is no Eu"stion
o+ ,is !i$il liabilit# t,ru an a!tion b# Torrijos "it,"r +or s1"!i+i!
1"r+or*an!" 1lus a*ag"s% or r"s!ission 1lus a*ag"s. D"at,
is not a $ali !aus" +or t," "4tinguis,*"nt o+ a !i$il obligation.
Ha t," onl# basis b""n t," !o**ission o+ "sta+a% it is !l"ar
t,at t," "4tinguis,*"nt o+ t," !ri*inal r"s1onsibilit# 3oul
also "4tinguis, t," !i$il liabilit#% 1ro$i" t,at "at, !o*"s
b"+or" +inal jug*"nt.
Furt,"r*or"% un"r Arts. 1A% 6?% an 61 o+ t," Ci$il Co"%
t," a!!us" 3oul b" !i$ill# liabl" in"1"n"ntl# o+ t," !ri*inal
liabilit# +or 3,i!, ," !an b" ,"l liabl". An t,is !i$il liabilit#
"4ists "s1it" "at, 1rior to +inal jug*"nt o+ !on$i!tion.
T," !as"% t,"r"+or"% !annot as #"t b" is*iss".
(1?) Din o+ Proo+ N"""
(a) I+ a !i$il a!tion *"r"l# is institut"% *"r" 1r"1on"ran!"
o+ "$i"n!" is su++i!i"nt.
(b) I+ a !ri*inal !as" is broug,t (an 3it, it% t," !i$il !as")%
t," guilt *ust b" "stablis," b# 1roo+ b"#on r"asonabl"
oubt.
(11) E++"!t o+ A!Euittal in Cri*inal Cas"
Su11os" a "+"nant in a !ri*inal !as" is a!Euitt"% !an
," still b" ,"l liabl" !i$ill#J
ANS.' It "1"ns.
(a) I+ t," r"ason 3,# t,"r" 3as an a!Euittal 3as b"!aus" t,"
a!!us" !oul not ,a$" !o**itt" t," a!t (as 3,"n ," 3as
in anot,"r !ountr# at t," ti*" ," 3as su11os" to ,a$"
*ur"r" so*"bo# in t," P,ili11in"s)% no !i$il a!tion
!an lat"r on b" broug,t.
@C
Art. 1161
(b) I+ t," r"ason +or t," a!Euittal 3as b"!aus" o+ an "4"*1ting
!ir!u*stan!" (as in t," !as" o+ an insan" "+"nant)% ,"
@B
Art. 1161
3oul still b" !i$ill# liabl" (i+ ," ,as no guarian% or i+ t,"
guarian 3,o *a# un"r t," !ir!u*stan!" b" orinaril#
liabl"% is insol$"nt).
(!) I+ t,"r" is an in"1"n"nt !i$il a!tion allo3" b# t," la3%
!i$il liabilit# *a# still aris" i+ t,is a!tion is institut" an
t," "+"nant8s liabilit# is 1ro$" b# *"r" 1r"1on"ran!"
o+ "$i"n!" (b"!aus" 3,il" guilt b"#on r"asonabl" oubt
*ig,t not ,a$" b""n 1ro$"% it 3oul b" a si*1l"r *att"r
to 1ro$" guilt b# *"r" 1r"1on"ran!" o+ "$i"n!").
Co San $. Dir"!tor o+ Pat"nts% "t al.
L.1?569% F"b. 69% 1A61
A jug*"nt o+ a!Euittal in a !ri*inal a!tion +or
+rauul"nt r"gistration o+ a tra"*ar< in $iolation o+ S"!.
1B o+ A!t No. 666% !annot b" in$o<" as r"s jui!ata in a
!i$il a!tion bas" on un+air an *ali!ious !o*1"tition on
t," groun t,at t," +a!ts o+ t," latt"r ar" i++"r"nt an
,a$" not b""n 1ass" u1on in t," jug*"nt r"n"r" in
t," +or*"r !as". (S"" Ogura $. C,ua an Con+"sor% 5? P,il.
@C1).
(16) E4a*1l" o+ In"1"n"nt Ci$il A!tions
-In !as"s o+ "+a*ation (lib"l% slan"r)% +rau ("sta+a%
"!"it)% an 1,#si!al injuri"s (in!luing att"*1t"% +rustrat"%
or !onsu**at" ,o*i!i"% *ur"r% 1arri!i"s or in+anti!i")
a !i$il a!tion +or a*ag"s% "ntir"l# s"1arat" an istin!t +ro*
t," !ri*inal a!tion *a# b" broug,t b# t," injur" 1art# (or
,is ,"irs). Su!, !i$il a!tion s,all 1ro!"" in"1"n"ntl# o+ t,"
!ri*inal 1ros"!ution% an s,all r"Euir" onl# a 1r"1on"ran!"
o+ "$i"n!"./ (Art. 99% Ci$il Co").
(19) E++"!t o+ 5"s"r$ation o+ t," Ci$il As1"!t
=o$"n!io Luansing $. P"o1l" o+ t,"
P,ili11in"s M Court o+ A11"als
L.696BA% F"b. 6B% 1A6A
@A
Art. 1161
FACTS' In a !ri*inal a!tion +or s"u!tion% t," o++"n"
1art# "41r"ssl# r"s"r$" t," rig,t to +il" a s"1arat" !i$il a!tion.
5?
Art. 1161
T," CFI (no3 5TC) +oun t," a!!us" guilt#% an i*1os" !i$il
liabiliti"s. No *otion +or r"!onsi"ration 3as +il" b# t," o+.
+"n" 1art#. Issu"' Ias t," i*1osition o+ !i$il liabilit# 1ro1"r%
"s1it" t," r"s"r$ationJ
HELD' No% t," i*1osition o+ t," !i$il liabilit# 3as not
1ro1"r b"!aus"'
(a) t,"r" 3as t," r"s"r$ation as to t," !i$il as1"!t2
(b) t," *"r" +ailur" to +il" a *otion +or r"!onsi"ration o"s
not n"!"ssaril# r"sult in 3ai$"r or abanon*"nt.
Abanon. *"nt r"Euir"s a *or" !on$in!ing Euantu* o+
"$i"n!" t,an *"r" +orb"aran!" to a!tuall# +il" t," !i$il
a!tion% "s1"!iall# 3,"n 3" !onsi"r t," +a!t t,at t," sa*"
!oul b" +il" "$"n a+t"r t," "!ision in t," !ri*inal !as"
,a b""n r"n"r"2
(!) 1roo+ s,oul b" gi$"n 3it, r"s1"!t to t," a*ount.
(1@) Is T,"r" N"" o+ &a<ing a 5"s"r$ation o+ t," Ci$il
Cas" (I,"r" t," La3 >rants an In"1"n"nt Ci$il
A!tion) i+ a Cri*inal Cas" is First 7roug,t to CourtJ
;n"r 5ul" 111% S"!s. 1 an 9 o+ t," N"3 5ul"s on Cri*i.
nal Pro!"ur"% t," ans3"r is KES. In t," !as" o+ >ar!ia% "t al.
$. =ug" Florio% L.95?A5% Aug. 91% 1AC9% t," Court rul" t,at
3,il" a r"s"r$ation is in"" r"Euir"% t," r"s"r$ation n"" not
b" *a" at t," ti*" t," !ri*inal 1ro!""ings ar" +il"% i+ t,"
o++"n" 1arti"s ,a no !,an!" to o so (as 3,"n t,"# 3"r" still
in a ,os1ital% as a r"sult o+ injuri"s su++"r" in a $",i!ular a!!i.
"nt% at t," ti*" t," !ri*inal suit against t," "rring ri$"r
3as +il"). Ho3"$"r% in t," !as" o+ Cris1in Ab"llana% "t al. $.
=ug" &arau"% L.6CC6?% &a# 6A% 1AC@% t," Court sai t,at
5ul" 111 o+ t," N"3 5ul"s on Cri*inal Pro!"ur"% inso+ar as it
r"Euir"s a r"s"r$ation "$"n in t," !as" o+ an in"1"n"nt !i$il
a!tion% is o+ oubt+ul !onstitutionalit# inas*u!, as t," 5ul"s
o+ Court !annot a*"n substantial la3% li<" t," Ci$il Co".
>ar!ia $. Florio
L.95?A5% Aug. 91% 1AC9
51
Art. 1161
FACTS' A+t"r a $",i!ular a!!i"nt% t," $i!ti*s 3"r"
broug,t to t," ,os1ital +or tr"at*"nt. In t," *"anti*"% t,"
56
Art. 1161
1oli!" aut,oriti"s +il" a !ri*inal !as" o+ r"!<l"ss i*1ru"n!"
r"sulting in 1,#si!al injuri"s% IITHO;T *a<ing a r"s"r$ation
as to t," !i$il as1"!t. I,"n t," $i!ti*s b"!a*" 3"ll "noug, to
go to !ourt% t,"# "!i" to +il" a !i$il !as" "s1it" t," 1"n"n!#
o+ t," !ri*inal !as". Issu"' S,oul t," !i$il !as" b" allo3"%
"s1it" t," 1"n"n!# o+ t," !ri*inal 1ro!""ingsJ
HELD' K"s% +or 3,il" it is tru" t,at a r"s"r$ation s,oul
,a$" b""n *a" un"r 5ul" 111 o+ t," N"3 5ul"s on Cri*inal
Pro!"ur" (t,oug, su!, rul" ,as b""n assail" b# SO&E in t,is
r"s1"!t as $irtuall# "li*inating or a*"ning t," -substanti$"/
rig,t o+ allo3ing an -in"1"n"nt !i$il a!tion%/ as orain" b#
t," Ci$il Co") still t," 5ul" o"s not stat" 3,"n t," r"s"r$ation
is su11os" to b" *a". H"r" t," $i!ti*s ,a no !,an!" to *a<"
t," r"s"r$ation (+or t,"# 3"r" still at t," ,os1ital)2 *or"o$"r%
t," trial ,as not "$"n b"gun. It is% t,"r"+or"% not #"t too lat" to
*a<" t," r"s"r$ation2 in +a!t% t," a!tual +iling o+ t," !i$il !as"%
t,oug, at t,is stag"% is "$"n b"tt"r t,an t," *a<ing o+ t," r"s.
"r$ation.
Cris1in Ab"llana an Fran!is!o Ab"llana $.
Hon. >"roni*o 5. &arau" an
>"roni*o Co*1an"r% "t al.
L.6CC6?% &a# 6A% 1AC@
FACTS' Fran!is!o Ab"llana 3as ri$ing a !argo tru!<
3,"n ," ,it a *otoriH" 1"i!ab. Four o+ t," 1ass"ng"rs o+ t,"
1"i!ab 3"r" injur". H" 3as tri" in t," Cit# Court o+ OHa*is
+or r"!<l"ss i*1ru"n!" (no r"s"r$ation 3as *a" as to an#
!i$il a!tion t,at *ig,t b" institut")2 ," 3as !on$i!t". H" t,"n
a11"al" to t," Court o+ First Instan!" (no3 5"gional Trial
Court F5TCG). During t," 1"n"n!# o+ t," a11"al (an in +a!t%
b"+or" trial in t," CFI Fno3 5TCG)% t," $i!ti*s "!i" to *a<"
a IAIVE5 r" !lai* +or a*ag"s in t," !ri*inal !as"% an 5ES.
E5VATION 3it, r"s1"!t to t," !i$il as1"!ts. T," $i!ti*s t,"n
in anot,"r 7ran!, o+ t," CFI Fno3 5TCG allo3" t," FILIN>
o+ t," !i$il !as". T," a!!us" obj"!t" to t," allo3an!" on t,"
t,"or# t,at in t," Cit# Court (original !ourt) no r"s"r$ation ,as
b""n *a"% t,us% t," !i$il as1"!t s,oul b" ""*" in!lu" in
t," !ri*inal suit% !on+or*abl# 3it, 5ul" 111 o+ t," N"3 5ul"s
59
Art. 1161
on Cri*inal Pro!"ur". T," CFI (5TC) *aintain" t,at t," !i$il
!as" s,oul b" allo3" b"!aus"% 3it, t," a11"al% t," jug*"nt
5@
Art. 1161
o+ t," Cit# Court ,a b"!o*" $a!at" (sai !ourt 3as t,"n not
a !ourt o+ r"!or) an in t," CFI (5TC) t," !as" 3as to b" tri"
an"3 (trial " no$o). T,is ruling o+ t," CFI (5TC) 3as "l"$at"
to t," Su1r"*" Court on !"rtiorari. Issu"' &a# a !i$il !as" still
b" broug,t "s1it" t," a11"al in t," !ri*inal !as"J
HELD' K"s% +or t,r"" r"asons'
(a) Firstl#% 3it, t," a11"al% t," original jug*"nt o+ !on$i!.
tion 3as VACATED2 t,"r" 3ill b" a trial " no$o in t,"
CFI (5TC)% a trial t,at ,as not "$"n b"gan2 t,"r"+or"% a
r"s"r$ation !an still b" *a" an a !i$il a!tion !an still b"
allo3".
(b) S"!onl#% to sa# t,at t," !i$il a!tion is barr" b"!aus" no
r"s"r$ation (1ursuant to 5ul" 111) ,a b""n *a" in t,"
Cit# Court 3,"n t," !ri*inal suit 3as +il" is to 1r"s"nt
a gra$" !onstitutional Eu"stion% na*"l#% !an t," Su1r"*"
Court% in 5ul" 111 a*"n or r"stri!t a S;7STANTIVE
rig,t grant" b# t," Ci$il Co"J T,is !annot b" on".
T," a11ar"nt lit"ral i*1ort o+ t," 5ul" !annot 1r"$ail. A
jug" -is not to +all 1r"#%/ as a*onis," b# =usti!" Fran<
Fran<+urt"r% -to t," $i!" o+ lit"raln"ss.88
(!) T,irl#% it 3oul b" ;NFAI5% un"r t," !ir!u*stan!"s%
i+ t," $i!ti*s 3oul not b" allo3" to r"!o$"r an# !i$il li.
abilit#% !onsi"ring t," a*ag" on" to t,"*.
(15) 5"!o$"r# o+ Da*ag"s in SA&E CASE D"s1it" A!Euittal
5o# Pailla $. Court o+ A11"als
L.9AAAA% &a# 91% 1AB@
I+ a 1"rson is a!Euitt" in a !ri*inal !as" on r"asonabl"
oubt% ," *a#% in t," $"r# sa*" !ri*inal !as"% b" ,"l liabl"
+or a*ag"s% i+ t,is is 3arrant" b# t," "$i"n!" t,at ,a b""n
au!". T,"r" is no n"" to institut" a s"1arat" !i$il suit +or
a*ag"s.
P"o1l" $. CastaP"a
>5 @ACB1% =un. 6@% 1AB9
55
Art. 1161
I+ a 1"rson is not !ri*inall# liabl"% it o"s not n"!"ssaril#
+ollo3 t,at ," is also not !i$ill# liabl". H" *a# in"" b" !i$ill#
56
Art. 1161
r"s1onsibl". T,us% ," *a# still b" su" !i$ill# +or t," sa*"
a!t.
P"o1l" $. T"r"sa =alanoni
>5 5C555% Aug. 6B% 1AB@
E$"n i+ an a!!us" in an "sta+a !as" is a!Euitt" on r"a.
sonabl" oubt s," *a# still b" ,"l !i$ill# liabl"% +ollo3ing t,"
ruling in Pailla $. Court o+ A11"als% L.9AAAA% &a# 91% 1AB@.
(16) A++ia$it o+ D"sistan!"
P"o1l" $. Ent"s
L.5?696% F"b. 6@% 1AB1
A++ia$its o+ "sistan!" (su!, as an "41r"ss 1aron in 1ri.
$at" !ri*"s a+t"r t," +iling o+ t," !ri*inal !as") o not justi+#
t," is*issal o+ a !ri*inal !o*1laint.
P"o1l" $. &a#or Carun!,o% =r.
L.5CB?@% =an. 69% 1AB@
(1) A !o*1ro*is" on t," !i$il liabilit# o+ a 1"rson +or ,a$ing
!o**itt" a !ri*" o"s not "4tinguis, ,is !ri*inal or
1"nal liabilit#.
(6) I+ a *uni!i1al jug" is*iss"s a !ri*inal !as" +or -slig,t
1,#si!al injuri"s/ on a!!ount o+ a $oluntar# a++ia$it o+
". sistan!"% 3,il" t,is *a# b" an -abus" o+ is!r"tion%/
t,"r" !annot b" a -gra$" abus" o+ is!r"tion./ T,us% a
1"tition +or !"rtiorari r" t," is*issal o+ t," !as" 3ill
FAIL or 7E DENIED.
(1C) E++"!t o+ Non.All"gation o+ Da*ag"s
7aiong $. =ug" A1aliso<
>5 6?151% =un. 6@% 1AB9
In a !ri*inal !as"% !i$il liabilit# *a# b" !lai*" "$"n i+
t,"r" is no s1"!i+i! all"gation o+ a*ag"s in t," in+or*ation or
5C
Art. 1161
!o*1laint t,at ,as b""n +il".
5B
Art. 1166
Art. 1166. Obligations "ri$" +ro* Euasi."li!ts s,all
b" go$"rn" b# t," 1ro$isions o+ C,a1t"r 6% Titl" NVII o+ t,is
7oo<% an b# s1"!ial la3s.
CO&&ENT'
(1) Obligations E4 :uasi.D"li!ts or E4 :uasi.&al"+i!io
>o$"rning la3s (7ar :u"stion)
(a) C,a1t"r 6% Titl" 1C% 7oo< IV% Ci$il Co"
(b) S1"!ial La3s
(6) Anot,"r Na*" +or :uasi.D"li!t
Anot,"r na*" +or Euasi."li!t is -tort/ or -!ul1a aEuil.
iana./
(9) D"+inition o+ O:uasi.D"li!t8
A Euasi."li!t is a +ault or a!t o+ n"glig"n!" (or o*ission
o+ !ar") 3,i!, !aus"s a*ag"s to anot,"r% t,"r" b"ing no 1r".
"4isting !ontra!tual r"lations b"t3""n t," 1arti"s.
FNOTE' I+ a 1"rson is su" +or !ausing a*ag" t,ru t,"
$iolation o+ tra++i! rul"s% t," a!!usation is on" a!tuall# r"+"rring
to n"glig"n!" or Euasi."li!t or !ul1a aEuiliana. -Violation o+
tra++i! rul"s/ is *"r"l# "s!ri1ti$" o+ t," +ailur" o+ t," ri$"r to
obs"r$"% +or t," 1rot"!tion o+ t," int"r"sts o+ ot,"rs% t,at
"gr"" o+ !ar"% 1r"!aution% an $igilan!" 3,i!,
!ir!u*stan!"s justl# "*an% 3,i!, +ailur" r"sults in injur# on
!lai*ants. E4!"ssi$" s1"" in $iolation o+ tra++i! rul" is a !l"ar
ini!ation o+ n"glig"n!". (>ar!ia% "t al. $. =ug" Florio% CFI%
&isa*is Ori"ntal% "t al.% L.95?A5% Aug. 91% 1AC9).G
El!ano $. Hill
CC SC5A AB
Cul1a aEuiliana (Euasi."li!ts) !an r"+"r to a!ts 3,i!,
5A
Art. 1166
ar" !ri*inal in !,ara!t"r% 3,"t,"r t," sa*" b" $oluntar# or
n"glig"nt.
6?
Art. 1166
(@) E4a*1l"s
(a) I,il" ri$ing a !ar r"!<l"ssl#% I injur" a 1""strian.
(b) I,il" !l"aning *# 3ino3 sill% *# n"glig"n!" !aus" a
+lo3"r 1ot to +all on t," str""t% br"a<ing t," ar*s o+ *#
n"ig,bor.
(NOTE' In t," abo$" "4a*1l"s% I !an also b" !,arg"
3it, t," !ri*" o+ 1,#si!al injuri"s t,ru si*1l" or r"!<l"ss
i*1ru"n!".)
(5) D"+initions o+ N"glig"n!" (Cul1a)
(a) -N"glig"n!" is t," +ailur" to obs"r$"% +or t," 1rot"!tion
o+ t," int"r"sts o+ anot,"r 1"rson% t,at "gr"" o+ !ar"%
1r"!aution% an $igilan!" 3,i!, t," !ir!u*stan!"s justl#
"*an% 3,"r"b# su!, ot,"r 1"rson su++"rs injur#./ (;.S.
$. 7arrias% 69 P,il. @9@).
(b) As "+in" b# t," Ci$il Co"% n"glig"n!" is t," o*ission o+
t,at ilig"n!" 3,i!, is r"Euir" b# t," !ir!u*stan!"s o+
1"rson% 1la!"% an ti*". (S"" Art. 11C9). T,us% n"glig"n!"
is a Eu"stion o+ +a!t. (S"" Tu!<"r $. &ilan% FC.A.G @A O.>.
@9AC% O!t. 1A59).
(6) T"st +or D"t"r*ination o+ N"glig"n!"
-T," t"st in "t"r*ining 3,"t,"r a 1"rson is n"glig"nt
. . . is t,is' Ioul a 1ru"nt *an (in ,is 1osition) +or"s"" ,ar*
to t," 1"rson injur" as a r"asonabl" !ons"Eu"n!" o+ t," !ours"
about to b" 1ursu"J I+ so% t," la3 i*1os"s a ut# on t," a!tor
to r"+rain +ro* t,at !ours"% or to ta<" 1r"!aution against its
*is!,i"$ous r"sults% an t," +ailur" to o so !onstitut"s n"gli.
g"n!". 5"asonabl" +or"sig,t o+ ,ar*% +ollo3" b# t," ignoring
o+ t," a*onition born o+ t,is 1ro$ision% is t," !onstitut" +a!t
o+ n"glig"n!"./ (Pi!art $. S*it,% 9C P,il. B?A).
(C) 5"Euir"*"nts 7"+or" a P"rson Can 7" H"l Liabl" +or a
:uasi.D"li!t
(a) t,"r" *ust b" +ault or n"glig"n!" attributabl" to t,"
61
Art. 1166
1"rson !,arg"2
(b) t,"r" *ust b" a*ag" or injur#2
66
Art. 1166
(!) t,"r" *ust b" a ir"!t r"lation o+ !aus" an "++"!t b"t3""n
t," +ault or n"glig"n!" on t," on" ,an an t," a*ag" or
injur# on t," ot,"r ,an (1ro4i*at" !aus").
FNOTE'
1) Pro4i*at" !aus" is t,at a"Euat" an "++i!i"nt !aus"%
3,i!, in t," natural or"r o+ "$"nts% n"!"ssaril# 1ro.
u!"s t," a*ag"s or injur# !o*1lain" o+.
In t," !as" o+ Tuason $. LuHon St"$"oring Co.%
"t al.% L.195@1% =an. 6B% 1A61% t," Su1r"*" Court ,"l
t,at sin!" t," 1lainti++% Euaro Tuason% 3as tra$"l.
ling at a $"r# ,ig, rat" o+ s1""% an on t," 3rong
si" o+ t," roa% ,is n"glig"n!" 3as t," 1ro4i*at"
!aus" o+ t," a!!i"nt 3,i!, bal# injur" ,i*% an
t,"r"+or" ," !annot r"!o$"r a*ag"s +ro* t," ot,"r
1art# in t," !ollision.
6) T,"r" ar" instan!"s 3,"n -alt,oug, t,"r" is
a*ag"s% t,"r" is no l"gal injur# or 3rong/
(a*nu* absEu" injuria 0 a*ag" 3it,out l"gal
injur#). (E4a*1l"' I+ a !ar"+ull#.ri$"n !ar !aus"s
a*ag" to a 1""strian b"!aus" t," ri$"r 3as
su"nl# stru!< b# lig,tning% t,is is an instan!" o+
a*ag" 3it,out injur#.)G
(B) Cul1a AEuiliana o+ &arri" &inors
El!ano $. Hill
CC SC5A AB
I+ a *arri" *inor !o**its a Euasi."li!t or !ul1a aEui.
liana% ,is 1ar"nts 3oul b" liabl" i+ sai *inor li$"s 3it,% an
is "1"n"nt on% t,"*.
(A) Violation o+ an Obligation
&as!unana $. V"r"+lor
CA SC5A 99A
69
Art. 1166
O3n"rs o+ lan +ronting a 1ubli! str""t ,a$" a !aus" o+
a!tion against a *uni!i1al !oun!il r"solution t,at ,as or"r"
t," !losur" o+ sai str""t to $",i!ular tra++i!.
6@
Chapter 2
NATURE AND EFFECT OF OBLIGATIONS
Art. 1169. E$"r# 1"rson oblig" to gi$" so*"t,ing is
also oblig" to ta<" !ar" o+ it 3it, t," 1ro1"r ilig"n!" o+ a
goo +at,"r o+ a +a*il#% unl"ss t," la3 or t," sti1ulation o+
t," 1ar. ti"s r"Euir"s anot,"r stanar o+ !ar".
CO&&ENT'
(1) Dut# to E4"r!is" Dilig"n!"
T,is Arti!l" "als 3it, t," +irst "++"!t o+ an obligation to
"li$"r a "t"r*inat" t,ing (as istinguis," +ro* a g"n"ri! t,ing
0 or on" o+ a !lass) 0 na*"l# 0 t," ut# to "4"r!is" 1ro1"r
ilig"n!". ;nl"ss ilig"n!" is "4"r!is"% t,"r" is a ang"r t,at
t," 1ro1"rt# 3oul b" lost or "stro#"% t,us r"n"ring illusor#
t," obligation. (S"" B &anr"sa 95.96).
(6) Dilig"n!" N"""
(a) T,at 3,i!, is r"Euir" b# t," natur" o+ t," obligation an
!orr"s1ons 3it, t," !ir!u*stan!"s o+ 1"rson% ti*"% an
1la!". (Art. 11C9% Ci$il Co"). T,is is r"all# ilig"n!" o+ a
goo +at,"r o+ a +a*il#.
(b) Ho3"$"r% i+ t," la3 or !ontra!t 1ro$i"s +or a i++"r"nt
stanar o+ !ar"% sai la3 or sti1ulation *ust 1r"$ail. (Art.
1169% Ci$il Co").
FE4a*1l" o+ a !as" 3,"r" t," la3 r"Euir"s "4traorinar# !ar"
(not *"r"l# t,at o+ a 1ru"nt *an)'
-A !o**on !arri"r is boun to !arr# t," 1ass"ng"rs sa+"l#
65
as +ar as ,u*an !ar" an +or"sig,t !an 1ro$i"% using t," ut*ost
ilig"n!" o+ $"r# !autious 1"rsons% 3it, a u" r"gar +or all t,"
!ir!u*stan!"s./ (Art. 1C55% Ci$il Co").G
66
Art. 1169
(9) So*" Cas"s
Ob"j"ra% "t al. $. Iga S#
C6 P,il. 5B?
FACTS' During t," =a1an"s" o!!u1ation% A an 7 soug,t
r"+ug" in t," ,ous" o+ a !"rtain Vill"na in 7atangas% 7atangas.
I,"n t," =a1an"s" n"ar" t," 1la!"% A an 7 ,i t,"ir
$aluabl"s in Vill"na8s ugout. Lat"r% t," $aluabl"s 3"r" lost.
A !lai*" t,at ," ,a gi$"n ,is t,ings to 7 as a "1osit% an
t,at t,"r"+or" 7 s,oul b" liabl" +or t," loss. 7 "ni" t,"
"4ist"n!" o+ su!, "1osit. D"!i" t," Eu"stion o+ liabilit#.
HELD' In t," +irst 1la!"% it is ,ar to b"li"$" t,at 7 !on.
s"nt" to sa+"guar t," $aluabl"s at a ti*" 3,"n no on" !oul
b" sur" o+ ,is o3n li+". In t," s"!on 1la!"% granting t,at 7 ,a
assu*" t," obligation to ta<" !ar" o+ t," 1ro1"rt#% still !onsi.
"ring t," !ir!u*stan!"s o+ t," ti*" an 1la!"% t," obligation to
r"turn t," $aluabl"s 3as "4tinguis," b# t," loss o+ t," t,ing
t,ru so*"t,ing 3,i!, 3as not t," +ault o+ 7.
7is,o1 o+ =aro $. D" la P"Pa
66 P,il. 1@@
FACTS' A 1ri"st% A. " la P"Pa% 3as t," !ustoian o+ !"r.
tain !,arit# +uns (P6%6@1) 3,i!, ," "1osit" tog"t,"r 3it, ,is
1"rsonal a!!ount o+ (P1A%???) in an Iloilo 7an< s,ortl# b"+or"
t," A*"ri!an in$asion o+ t," P,ili11in"s. During t,"
r"$olution% P"Pa b"!a*" a 1oliti!al 1rison"r an ,is ban<
"1osit 3as !on+is. !at" on t," groun t,at t,"# 3"r" b"ing
us" +or r"$olutionar# 1ur1os"s. Issu"' Is ," liabl" +or t," loss
o+ t," trust +unsJ
HELD' No% b"!aus" n"glig"n!" i not "4ist in ,is "1osit.
ing t," *on"# 3it, t," ban<. It is as i+ t," *on"# 3as ta<"n
+ro* ,i* b# +or!" an !l"arl#% ," s,oul not b" r"s1onsibl".
7"rnab" A+ri!a% "t al. $. Calt"4% "t al.
L.16AB6% &ar. 91% 1A66
6C
Art. 1169
FACTS' A +ir" bro<" out at a Calt"4 s"r$i!" station. It
start" 3,il" gasolin" 3as b"ing ,os" +ro* a tan< tru!< into
t," un"rgroun storag"% rig,t at t," o1"ning o+ t," r"!"i$ing
6B
Art. 116@
tan< 3,"r" t," noHHl" o+ t," ,os" ,a b""n ins"rt". T," +ir"
"stro#" s"$"ral ,ous"s. Calt"4 an t," station *anag"r 3"r"
su". Issu"' Iit,out 1roo+ as to t," !aus" an origin o+ t," +ir"%
3oul t," o!trin" o+ r"s i1sa loEuitur a11l# su!, t,at t," ".
+"nants !an b" 1r"su*" n"glig"ntJ
HELD' K"s% +or t," gasolin" station 3as un"r t," !ar" o+
t," "+"nant% 3,o ga$" no "41lanation at all r"garing t," +ir".
It is +air to r"asonabl# in+"r t,at t," in!i"nt ,a11"n"
b"!aus" o+ t,"ir 3ant o+ !ar".
5onEuillo% "t al. $. Singson
CA% L.66616.5% A1r. 66% 1A5A
FACTS' A *an or"r" a t"n.#"ar.ol bo#% =os" 5onEuillo%
to !li*b a ,ig, an rat,"r sli11"r# santol tr""% 3it, a 1ro*is"
to gi$" ,i* 1art o+ t," +ruits. T," bo# 3as <ill" in t," a!t o+
!li*bing. Issu"' Is t," 1"rson 3,o or"r" ,i* liabl"J
HELD' K"s% in $i"3 o+ ,is n"glig"nt a!t in *a<ing t,"
or"r. H" i not ta<" u" !ar" to a$oi a r"asonabl# +or"s"".
abl" injur# to t," 1?.#"ar.ol bo#. T," tr"" 3as a tr"a!,"rous
on"% a $"ritabl" tra1. His a!t 3as !l"arl# a "1artur" +ro* t,"
stanar o+ !onu!t r"Euir" o+ a 1ru"nt *an. H" s,oul
,a$" "sist" +ro* *a<ing t," or"r. Sin!" ," +ail" to
a11r"!iat" t," 1r"i!tabl" ang"r an aggra$at" su!,
n"glig"n!" b# o++"ring 1art o+ t," +ruits as a r"3ar% it is !l"ar
t,at ," s,oul b" *a" to r"s1on in a*ag"s +or t,"
a!tionabl" 3rong !o**itt" b# ,i*.
Art. 116@. T," !r"itor ,as a rig,t to t," +ruits o+ t,"
t,ing +ro* t," ti*" t," obligation to "li$"r it aris"s.
Ho3"$"r% ," s,all a!Euir" no r"al rig,t o$"r it until t,"
sa*" ,as b""n "li$"r" to ,i*.
CO&&ENT'
(1) I,"n Cr"itor Is Entitl" to t," Fruits
E4a*1l"' A is oblig" to gi$" 7 on D"!. 9% 6??@% a 1arti!ular
6A
Art. 116@
1ar!"l o+ lan. (7"+or" D"!. 9% ," ,as no rig,t 3,atso"$"r o$"r
t," +ruits). A+t"r D"!. 9% 6??@% 7% t," !r"itor is "ntitl" (as o+
C?
Art. 116@
rig,t) to t," +ruits. 7ut i+ t," +ruits an t," lan ar" a!tuall# or
!onstru!ti$"l# "li$"r" onl# on D"!. 15% 6??@% 7 b"!o*"s o3n"r
o+ sai +ruits an lan onl# +ro* sai at". 7"t3""n D"!. 9 an
D"!. 15% 7 ,a onl# a 1"rsonal rig,t ("n+or!"abl" against A)2
a+t"r D"!. 15% ," ,as a r"al rig,t (o$"r t," 1ro1"rti"s)% a rig,t
t,at is "n+or!"abl" against t," 3,ol" 3orl.
FNOTE' A 1"rsonal rig,t is also !all" jus in 1"rsona* or
jus a r"*2 a r"al rig,t is a jus in r". (S"" Fi"lit# an D"1osit
Co. $. Iilson% B P,il. 51). A 1"rsonal rig,t is 1o3"r "*anabl"
b# on" 1"rson o+ anot,"r 0 to gi$"% to o% or not to o (9 San!,"H
5o*an 6% B)2 a r"al rig,t is a 1o3"r o$"r a s1"!i+i! t,ing (li<" t,"
rig,t o+ o3n"rs,i1 or 1oss"ssion) an is bining on t," 3,ol"
3orl. (S"" 9 San!,"H 5o*an 6% B).G
FNOTE' In t," !as" o+ a 1ur!,as" o+ lan% +or "4a*1l"%
b"+or" t," lan is "li$"r"% t," 1ro1"r r"*"# o+ t," bu#"r
(sin!" ," is not #"t t," o3n"r) is to !o*1"l s1"!i+i! 1"r+or*an!"
an "li$"r#% an not an a!!ion r"in$ini!atoria (+or t," latt"r
r"*"# 1r"su11os"s o3n"rs,i1). (S"" >ar!,itor"na $. Al*"a%
FC.A.G @B O.>. 9@962 s"" also CruHao $. 7ustos M Es!al"r% 9@
P,il. 1C).G
(6) Latin &a4i* (5" D"li$"r# an O3n"rs,i1)
-Non nuis 1a!tis% s" traitionis o*inia r"r#* trans+"r.
antur./ (As a !ons"Eu"n!" o+ !"rtain !ontra!ts% it is not
agr""*"nt but traition or "li$"r# t,at trans+"rs o3n"rs,i1).
(1? &anr"sa
99A an Fi"lit# M D"1osit Co. $. Iilson% B P,il. 51).
(9) Dins o+ D"li$"r#
D"li$"r# *a# b" "it,"r a!tual or !onstru!ti$".
(a) A!tual "li$"r# (or traition) 0 3,"r" 1,#si!all#% t,"
1ro1"rt# !,ang"s ,ans. E4a*1l"' I+ A s"lls 7 a +ountain
1"n% t," gi$ing b# A to 7 o+ t," +ountain 1"n is a!tual tra.
ition.
(b) Constru!ti$" "li$"r# 0 t,at 3,"r" t," 1,#si!al trans+"r
is i*1li". T,is *a# b" on" b#'
C1
Art. 116@
1) traitio si*boli!a (s#*boli!al traition) 0 (as 3,"n
t," <"#s o+ a bo"ga ar" gi$"n)
C6
Art. 116@
6) traitio longa *anu ("li$"r# b# *"r" !ons"nt or
t," 1ointing out o+ t," obj"!t) (Et#*ologi!all#% -t,"
"4t"ning o+ t," ,an./) E4a*1l"' 1ointing out t,"
!ar% 3,i!, is t," obj"!t o+ t," sal".
9) traitio br"$i *anu 0 ("li$"r# b# t," s,ort ,an2
t,at <in o+ "li$"r# 3,"r"b# a 1oss"ssor o+ a t,ing
not as an o3n"r% b"!o*"s t," 1oss"ssor as o3n"r)
(E4a*1l"' 3,"n a t"nant alr"a# in 1oss"ssion bu#s
t," ,ous" ," is r"nting).
@) traitio !onstitutu* 1oss"ssoriu* 0 t," o11osit" o+
br"$i *anu2 t,us% t," "li$"r# 3,"r"b# a 1oss"ssor
o+ a t,ing as an o3n"r% r"tains 1oss"ssion no long"r
as an o3n"r% but in so*" ot,"r !a1a!it# (li<" a ,ous"
o3n"r% 3,o s"lls a ,ous"% but r"*ains in 1oss"ssion
as t"nant o+ t," sa*" ,ous").
5) traition b# t," "4"!ution o+ l"gal +or*s an sol"*ni.
ti"s (li<" t," "4"!ution o+ a 1ubli! instru*"nt s"lling
lan).
FNOTE' A sal" 3,i!, is si*ulat"% or "$"n a g"nuin" on"%
3,"r" t,"r" is no "li$"r# o+ t," obj"!t% o"s not trans+"r o3n"r.
s,i1. (S"" CruHao $. 7ustos M Es!al"r% 9@ P,il. 1C).G
(@) D"li$"r# o+ I"al S,ar"
>at!,alian $. Arl"gui
C5 SC5A 69@
I,"n b# $irtu" o+ a !ourt jug*"nt% a 1"rson is or"r"
to "li$"r to anot,"r t," 1oss"ssion o+ a 1ro ini$iso or i"al
s,ar" o+ 1ro1"rt#% o3n" in !o**on% it is un"rstoo t,at 3,at
is !ont"*1lat" is s#*boli!al or !onstru!ti$" "li$"r#% not *at".
rial or a!tual "li$"r#.
(5) I,"n Do"s t," Obligation to D"li$"r Aris"J
ANS.' It "1"ns'
C9
Art. 116@
(a) I+ t,"r" is no t"r* or !onition% t,"n +ro* t," 1"r+"!tion
o+ t," !ontra!t.
C@
Art. 1165
(b) I+ t,"r" is a t"r* or a !onition% t,"n +ro* t," *o*"nt
t," t"r* arri$"s or t," !onition ,a11"ns. (S"" B &anr"sa
@@.@5).
Art. 1165. I,"n 3,at is to b" "li$"r" is a "t"r*inat"
t,ing% t," !r"itor% in aition to t," rig,t grant" ,i* b#
Arti!l" 11C?% *a# !o*1"l t," "btor to *a<" t," "li$"r#.
I+ t," t,ing is in"t"r*inat" or g"n"ri!% ," *a# as<
t,at t," obligation b" !o*1li" 3it, at t," "41"ns" o+ t,"
"btor.
I+ t," obligor "la#s% or ,as 1ro*is" to "li$"r t,"
sa*" t,ing to t3o or *or" 1"rsons 3,o o not ,a$" t,"
sa*" int"r. "st% ," s,all b" r"s1onsibl" +or +ortuitous "$"nt
until ," ,as "++"!t" t," "li$"r#.
CO&&ENT'
(1) Classi+i!ation o+ Obligation +ro* t," Vi"31oint o+ Subj"!t
&att"r
Fro* t," $i"31oint o+ t," subj"!t *att"r (or obj"!t) o+ t,"
obligation% obligations ar" i$i" into'
(a) r"al obligations (to gi$")'
1) to gi$" a s1"!i+i! t,ing (s"t a1art +ro* a !lass)2
6) to gi$" a g"n"ri! or in"t"r*inat" t,ing (on" o+ a
!lass).
(b) 1"rsonal obligations (to o or not to o).
(6) S1"!i+i! or D"t"r*inat" T,ings
A t,ing is sai to b" s1"!i+i! or "t"r*inat" 3,"n it is !a.
1abl" o+ 1arti!ular "signation.
E4a*1l"s'
(a) t,is !ar
C5
Art. 1165
(b) t," !ar o3n" b# A on S"1t. 16% 6??5
(!) t," !ar 3it, 1lat" nu*b"r 1B1@ (6??5)
C6
Art. 1165
() t,is 1arti!ular 1i!tur" o+ &aui in *# not"boo<
(9) >"n"ri! or In"t"r*inat" T,ings
A t,ing is g"n"ri! or in"t"r*inat" 3,"n it r"+"rs onl# to
a !lass% to a g"nus% an !annot b" 1oint" out 3it, 1arti!ular.
it#.
E4a*1l"s'
(a) a !ar
(b) a 6??5 7&I auto*obil"
(!) t," su* o+ P5 *illion
() a <ilo o+ sugar
(@) 5"*"i"s o+ t," Cr"itor I,"n t," D"btor Fails to Co*.
1l# Iit, His Obligation
(a) "*an s1"!i+i! 1"r+or*an!" (or !o*1lian!") o+ t," obli.
gation. (T,is is tru" 3,"t,"r t," obligation b" g"n"ri! or
s1"!i+i!.)
(b) "*an r"s!ission or !an!"llation (in so*" !as"s).
(!) "*an a*ag"s "it,"r 3it, or 3it,out "it,"r o+ t," +irst
t3o% (a) or (b).
(NOTE' I+ I a* "ntitl" to 1? <ilos o+ sugar +ro* A% I
!an "*an t,at A obtain t," sugar an gi$" *" 1? <ilos
t,"r"o+. T,is is tru" "$"n i+ t," obligation ,"r" b" g"n"ri!.
A !annot insist on just 1a#ing *" a*ag"s or t,"
*on"tar# $alu" o+ t," sugar. ;1on t," ot,"r ,an% i+ I
"sir" to% I !an just bu# 1? <ilos o+ sugar an#3,"r" an
!,arg" t," "41"ns" to A.).
;# $. PuHon
CA SC5A 5AB
I+ a 1artn"r in a !onstru!tion "nt"r1ris" +ails to +ul+ill ,is
!o**it*"nts to t," 1artn"rs,i1% ," is r"Euir" to in"*ni+# ,is
CC
Art. 1165
!o.1artn"r +or t," latt"r8s loss"s% su!, as t," *on"# in$"st" or
s1"nt b# t," latt"r.
CB
Art. 1165
(5) Cas" (5" I*1rison*"nt 7"!aus" o+ a D"bt)
5u+o :u"*u"l $. Court o+ A11"als
L.66CA@% =an. 16% 1A6B
FACTS' 5u+o :u"*u"l 3as !on$i!t" b# t," Court o+ First
Instan!" (no3 5"gional Trial Court) o+ 5iHal o+ t," !ri*" o+
lib"l. T," !on$i!tion 3as a++ir*" b# t," Court o+ A11"als. On
a11"al to t," Su1r"*" Court% ," all"g"% a*ong ot,"r t,ings'
(a) T,at t,"r" 3as no 1roo+ t,at a*ag"s ,a b""n sustain"
b# t," o++"n" 1art#2 an
(b) T,at subsiiar# i*1rison*"nt +or non.1a#*"nt o+ t,"
in"*nit# !onstitut"s i*1rison*"nt +or non.1a#*"nt o+
"bt an is t,"r"+or" un!onstitutional.
HELD'
(a) As r"gars t," all"g" abs"n!" o+ 1roo+ t,at t," o++"n"
1art# ,as su++"r" *"ntal anguis,% loss o+ sl""1% or !oul
not loo< at ,is n"ig,bor straig,t in t," "#"% su++i!" it to
str"ss t,at b# its $"r# natur"% lib"l !aus"s is,onor% is.
r"1ut" an is!r"it2 t,at t," injur# to t," r"1utation o+
t," injur" 1art# is a natural an 1robabl" !ons"Eu"n!" o+
t," "+a*ator# 3ors in lib"l !as"s2 t,at 3,"r" t," arti!l"
is lib"lous 1"r s" 0 -t," la3 i*1li"s a*ag"s2/ an t,at
t," !o*1lainant in lib"l !as"s is -not r"Euir" to introu!"
"$i"n!" o+ a!tual a*ag"s%/ at l"ast% 3,"n t," a*ount o+
t," a3ar is *or" or l"ss no*inal.
(b) T," !i$il liabilit# arising +ro* lib"l is not a -"bt%/ 3it,in
t," 1ur$i"3 o+ t," !onstitutional 1ro$ision against i*.
1rison*"nt +or non.1a#*"nt o+ a -"bt./ Inso+ar as sai
injun!tion is !on!"rn"% -"bt/ *"ans an obligation to 1a#
a su* o+ *on"# -arising +ro* !ontra!t/ "41r"ss or i*1li".
In aition to b"ing 1art o+ t," 1"nalt#% t," !i$il liabilit#
in t," 1r"s"nt !as" aris"s +ro* a tort or !ri*"% an ,"n!"%
+ro* la3. As a !ons"Eu"n!"% t," subsiiar# i*1rison*"nt
+or non.1a#*"nt o+ sai liabilit# o"s not $iolat" t," !on.
stitutional injun!tion.
CA
Art. 1165
FNOTE' ;n"r a !o*1arati$"l# n"3 5"1ubli! A!t%
!ourts !an no long"r i*1os" subsiiar# i*1rison*"nt in
B?
Art. 1165
!as" o+ !i$il liabilit# arising +ro* a !ri*" 1r"!is"l# on t,"
t,"or# t,at sai subsiiar# i*1rison*"nt 3oul s""*
to $iolat" t," !onstitutional injun!tion. Ho3"$"r% i+ +in"s
(not !i$il liabiliti"s) ar" un1ai to t," Stat" (not" t,at
!i$il liabiliti"s go to o++"n" 1ri$at" 1arti"s)% subsiiar#
i*1rison*"nt !an b" i*1os" (1ro$i" t," "!ision o+ t,"
!ourt i*1os"s su!, subsiiar# i*1rison*"nt).G
(6) E++"!t o+ Fortuitous E$"nts
Anot,"r i*1ortant i++"r"n!" b"t3""n a g"n"ri! an a
s1"!i+i! obligation is t,at% a s1"!i+i! obligation% t,at is% an obli.
gation to "li$"r a s1"!i+i! t,ing% is% as a rul"% "4tinguis," b#
a +ortuitous "$"nt or a!t o+ >o. ;1on t," ot,"r ,an% g"n"ri!
obligations ar" n"$"r "4tinguis," b# +ortuitous "$"nts.
E4a*1l"s'
(a) A is oblig" to gi$" 7 t,is !ar. 7"+or" "li$"r#% an "art,.
Eua<" "stro#s !o*1l"t"l# t," !ar. T," obligation to "li$"r
is "4tinguis,".
(b) A is oblig" to gi$" 7 a boo<. Sin!" t,is is a g"n"ri! t,ing%
"$"n i+ on" 1arti!ular boo< is lost% ot,"r boo<s *a# ta<"
its 1la!". H"n!"% t," obligation is not "4tinguis," (g"nus
nunEua* 1"rit).
(C) T3o Instan!"s I,"r" a Fortuitous E$"nt Do"s Not E4.
"*1t
T," 9r 1aragra1, o+ Art. 1165 gi$"s t3o instan!"s 3,"n
a +ortuitous "$"nt o"s not "4!us" !o*1lian!"'
(a) i+ t," obligor -"la#s/ (T,is is r"all# "+ault or -*ora./)
(b) i+ t," obligor is guilt# o+ 7AD FAITH (+or ,a$ing 1ro*is"
to "li$"r t," sa*" t,ing to t3o or *or" 1"rsons 3,o o
not ,a$" t," sa*" int"r"st 0 as 3,"n on" is not t," ag"nt
*"r"l# o+ t," ot,"r)
(B) OOrinar# D"la#8 Distinguis," +ro* OD"+ault8
B1
Art. 1165
Orinar# "la# is i++"r"nt +ro* l"gal "la# ("+ault). T,"
+irst is *"r"l# non.1"r+or*an!" at t," sti1ulat" ti*"2 "+ault
B6
Art. 1165
is t,at "la# 3,i!, a*ounts to a $irtual non+ul+ill*"nt o+ t,"
obligation. (As a rul"% to 1ut a "btor in "+ault% t,"r" *ust b"
a "*an +or +ul+ill*"nt% t," "*an b"ing "it,"r jui!ial or
"4trajui!ial.)
(A) E4a*1l"s
(a) A is oblig" to gi$" 7 ,is =aguar !ar on D"!. C% 6??5. I+ on
sai a#% A o"s not "li$"r% ," is in orinar# "la# (not
"+ault). I+ on D"!. B% 6??5% an "art,Eua<" "stro#s t,"
=aguar !ar% A is not liabl" b"!aus" t," obligation is "4tin.
guis,".
(b) I+% ,o3"$"r% on D"!. B% "*an 3as *a" +or "li$"r#% A
3oul b" in l"gal "la# ("+ault) an i+ lat"r% t," !ar is
"stro#" b# a +ortuitous "$"nt% ," 3oul still b" liabl"
(in t,at t," obligation to "li$"r t," lost s1"!i+i! t,ing is
!on$"rt" into a *on"tar# !lai* +or a*ag"s). (S"" Art.
1165% Ci$il Co"). Ho3"$"r% i+ t," !ar 3oul ,a$" b""n
"stro#" at an# rat" "$"n i+ no "*an ,a b""n *a"%
t," a*ount o+ a*ag" 3oul b" r"u!". (Art. 6615% No.
@% Ci$il Co").
(1?) So*" D"!i" Cas"s an Court 5ulings
T," 1,ras" -1?? <ilos o+ 1st !lass sugar rais" in *# 1lan.
tation/ "als 3it, a g"n"ri! t,ing b"!aus" o+ la!< o+ 1,#si!al
s"gr"gation. (Ku T"< $. >onHal"s% 6A P,il. 6B@).
Ku T"< $. >onHal"s
6A P,il. 9B@
FACTS' A obligat" ,i*s"l+ to s"ll +or a "+init" 1ri!" a
!"rtain s1"!i+i" Euantit# o+ sugar o+ a gi$"n Eualit#% 3it,out
"signating a 1arti!ular lot. Issu"' In !as" t," sugar is lost b# a
+ortuitous "$"nt% 3,o b"ars t," loss 1rior to "li$"r#% t," s"ll"r
or t," bu#"rJ
HELD' In t,is !as"% t," s"ll"r b"ars t," loss b"!aus" 3,at
3as to b" "li$"r" 3as not a s1"!i+i! t,ing% but a g"n"ri! t,ing.
An g"nus n"$"r 1"ris,"s. In!i"ntall#% t," sal" ,"r" !annot b"
B9
Art. 1165
sai to ,a$" b""n alr"a# 1"r+"!t" b"!aus" o+ t," la!< o+ 1,#si.
!al s"gr"gation +ro* t," r"st o+ t," sugar.
B@
Art. 1166
5o*an $. >ri*alt
6 P,il. A6
FACTS' A 3ant" to bu# a 1arti!ular s,i1 +ro* 7 on !on.
ition t,at 7 3oul 1ro$" b# 1a1"rs t,at ," (7) 3as t," r"al
o3n"r o+ t," s,i1. Subs"Eu"ntl#% t," s,i1 3as lost b# a
+ortuitous "$"nt alt,oug, t," 1a1"rs ,a not #"t b""n
1rou!". Issu"' Is A r"Euir" to 1a#J
HELD' A is not l"gall# boun to 1a# b"!aus" t,"r" 3as
no 1"r+"!t" sal" #"t% sin!" t," !onition% na*"l#% t," 1roo+ o+
o3n"rs,i1 ,a% at t,at ti*" o+ loss% not #"t b""n +ul+ill". A 3as
not a bu#"r2 ," 3as onl# a 3oul.b" bu#"r.
FNOTE' Ha A alr"a# boug,t t," s,i1 0 (,a t," 1roo+
o+ o3n"rs,i1 b""n 1r"s"nt" "arli"r) 0 ," 3oul ,a$" b""n
!o*1"ll" to 1a# t," 1ur!,as" 1ri!" "$"n i+ at t," ti*" o+ loss%
t," t,ing ,a not #"t b""n "li$"r" to ,i*% sin!" a+t"r all% t,"
sal" 3oul ,a$" b""n alr"a# 1"r+"!t".G
>uti"rr"H 5"1i" $. AlH"lius
9A P,il. 1A?
FACTS' A boug,t 1ro1"rt# +ro* 7 on install*"nt. I,"n
t," +irst install*"nt +"ll u"% A i not 1a#. His "+"ns" 3as t,at
," i not ,a$" *on"#% an ," t,"r"+or" 1l"a" i*1ossibilit#
o+ 1"r+or*an!". Issu"' Is A "4!us" +ro* ,is obligationJ
HELD' No. &"r" 1"!uniar# inabilit# to 1a# o"s not is.
!,arg" an obligation to 1a#% nor o"s it !onstitut" an# "+"ns"
to a "!r"" +or s1"!i+i! 1"r+or*an!". T," stabilit# o+ !o**"r!ial
transa!tions r"Euir"s t,at t," rig,ts o+ t," s"ll"r b" 1rot"!t"
just as "++"!ti$"l# as t," rig,ts o+ t," bu#"r.
Art. 1166. T," obligation to gi$" a "t"r*inat" t,ing
in!lu"s t,at o+ "li$"ring all its a!!"ssions an
a!!"ssori"s% "$"n t,oug, t,"# *a# not ,a$" b""n
*"ntion".
CO&&ENT'
(1) I,at t," Obligation to >i$" a D"t"r*inat" T,ing In!lu"s
B5
Art. 1166
E4a*1l"'
I+ I a* oblig" to "li$"r a 1arti!ular !ar% I *ust also
gi$" t," a!!"ssori"s (li<" t," -ja!</). I+ I a* oblig" to "li$"r
B6
Art. 116C
a 1i"!" o+ lan% I *ust gi$" also t," a!!"ssions (li<" a builing
!onstru!t" t,"r"on). (T,is is tru" "$"n i+ no *"ntion o+ t,"*
3as *a" in t," !ontra!t.)
(6) A!!"ssori"s 0 t,os" join" to or in!lu" 3it, t," 1rin!i1al
+or t," latt"r8s b"tt"r us"% 1"r+"!tion% or "njo#*"nt. (E4a*1l"s'
t," <"#s to a ,ous"% t," is,"s in a r"staurant.)
(9) A!!"ssions 0 aitions to or i*1ro$"*"nts u1on a t,ing.
T,"s" in!lu" allu$iu* (soil grauall# "1osit" b# t,"
!urr"nt o+ a ri$"r on a ri$"r ban<) an 3,at"$"r is built%
1lant"% or so3n on a 1"rson8s 1ar!"l o+ lan.
(NOTE' E$"n i+ t," 3ino3s o+ a builing ,a$" b""n t"*.
1oraril# r"*o$"% t,"# s,oul still b" in!lu".)
(@) E++"!t o+ Sti1ulation
O+ !ours"% i+ t,"r" is a sti1ulation to sai "++"!t% a!!"ssions
an a!!"ssori"s o not ,a$" to b" in!lu".
Art. 116C. I+ a 1"rson oblig" to o so*"t,ing +ails to o
it% t," sa*" s,all b" "4"!ut" at ,is !ost.
T,is sa*" rul" s,all b" obs"r$" i+ ," o"s it in !ontra.
$"ntion o+ t," t"nor o+ t," obligation. Furt,"r*or"% it *a#
b" "!r"" t,at 3,at ,as b""n 1oorl# on" b" unon".
CO&&ENT'
(1) Positi$" P"rsonal Obligations
T," +irst s"nt"n!" o+ t," Arti!l" "als 3it, a 1ositi$" 1"r.
sonal obligation (TO DO).
(6) 5"*"i"s o+ Cr"itor i+ D"btor Fails to Do
(a) To ,a$" t," obligation 1"r+or*" (b# ,i*s"l+ or b# anot,"r)
at "btor8s "41"ns" (onl# i+ anot,"r !an o t," 1"r+or*an!").
(S"" C,a$"H $. >onHal"s% L.6C@5@% A1r. 9?% 1AC?).
BC
Art. 116C
(b) Also 0 to obtain a*ag"s. (Art. 11C?% Ci$il Co"). (Da*.
ag"s alon" !annot substitut" +or 1"r+or*an!" i+ o3n"rs !an
BB
Art. 116C
o it2 i+ 1ur"l# 1"rsonal or s1"!ial 0 as a 1ainting to b"
on" b# a r"1ut" artist 0 onl# a*ag"s *a# b" as<"%
unl"ss substitution is 1"r*itt".)
(NOTE' S1"!i+i! 1"r+or*an!" is not a r"*"# in
1"rsonal obligations2 ot,"r3is"% t,is *a# a*ount to in$ol.
untar# s"r$itu"% 3,i!, as a rul" is 1ro,ibit" un"r our
Constitution.)
FNOTE' A 1art# to an agr""*"nt to *arr# 3,o ba!<s
out !annot b" ,"l liabl" +or t," !ri*" o+ slan"r b# ""
+or t,"n t,at 3oul b" an inir"!t 3a# o+ !o*1"lling sai
1art# to go into a *arriag" 3it,out ,is or ,"r +r"" !ons"nt%
an t,is 3oul !ontra$"n" t," 1rin!i1l" in la3 t,at 3,at
!annot b" on" ir"!tl# s,oul NOT b" on" inir"!tl#2 an
sai 1art# t,"r"+or" ,as t," rig,t to a$oi +or ,i*s"l+ or
,"rs"l+ t," "$il o+ going t,ru a lo$"l"ss *arriag"% 1ursu.
ant to Art. 11% 1ar. @ o+ t," 5"$is" P"nal Co". (P"o1l" $.
H"rnan"H% "t al.% 55 O.>.% 1. B@56% CA).G
C,a$"H $. >onHal"s
L.6C@5@% A1r. 9?% 1AC?
FACTS' A t#1"3rit"r o3n"r "li$"r" t," sa*" to a
r"1air*an +or r"1airs agr"" u1on orall#. D"s1it" r"1"at"
"*ans% no 3or< 3as on" t,"r"on. E$"ntuall# t," r".
1air*an r"turn" t," *a!,in"% unr"1air" an 3ors"%
s"$"ral 1arts 3"r" *issing% t,us t," "s!ri1tion -!annibal.
iH" an unr"1air"./ T," o3n"r 3as t,"n !onstrain" to
,a$" t," t#1"3rit"r r"1air" in anot,"r s,o1. O3n"r no3
!lai*s a*ag"s +ro* t," +irst r"1air*an (+or t," !ost o+
t," r"1airs an t," !ost o+ t," *issing 1arts). D"+"nant
r"1air*an% ,o3"$"r% all"g"s t,at o3n"r s,oul ,a$" +irst
+il" a 1"tition +or t," !ourt to +i4 t," 1"rio 3it,in 3,i!,
t," job o+ r"1airing 3as to b" +inis,".
ISS;ES'
(a) Can t," "+"nant b" ,"l liabl" +or a*ag"sJ
BA
Art. 116C
(b) Ho3 about t," +ailur" o+ t," o3n"r to +irst as<
t," !ourt +or t," +i4ing o+ t," 1"rioJ
A?
Art. 116B
HELD'
(a) K"s% t," "+"nant !an b" ,"l +or a*ag"s an t,is
3oul in!lu" t," !ost o+ labor an n""" *at"rials%
as 3"ll as t," $alu" o+ t," *issing 1arts. A!!oring
to Art. 116C 0 -I+ a 1"rson oblig" to o so*"t,ing
+ails to o it% t," sa*" s,all b" "4"!ut" at ,is !ost.
T," sa*" rul" s,all b" obs"r$" i+ ," o"s it in !on.
tra$"ntion o+ t," t"nor o+ t," obligation./
(b) T," +ailur" o+ t," o3n"r o+ t," !o*1ut"r not"boo<
to +irst as< t," !ourt +or a +i4ing o+ t," 1"rio 3it,in
3,i!, t," r"1airs 3"r" to b" on" is o+ no signi+i!an!".
In $i"3 o+ ,is r"turning o+ t," *a!,in"% t," ti*" +or
!o*1lian!" *a# b" ""*" to ,a$" alr"a# "41ir".
T,"r" is% t,"r"+or"% no *or" 1"rio to b" +i4"% t,"r"
alr"a# b"ing a br"a!, o+ !ontra!t b# non.1"r+or*.
an!". Sai non.1"r+or*an!" *a# b" sai to ,a$" b""n
i*1li"l# a*itt" 3,"n t," not"boo< 3as r"turn"
unr"1air" an 3it, so*" o+ its "ss"ntial 1arts *iss.
ing.
(9) I,"n a T,ing &a# 7" Or"r" ;non"
(a) i+ *a" 1oorl# (Art. 116C) (H"r" 1"r+or*an!" b# anot,"r
an a*ag"s *a# b" "*an").
(b) i+ t," obligation is a n"gati$" on" (1ro$i" t," unoing is
1ossibl").
Art. 116B. I,"n t," obligation !onsists in not oing%
an t," obligor o"s 3,at ,as b""n +orbi"n ,i*% it s,all
also b" unon" at ,is "41"ns".
CO&&ENT'
N"gati$" P"rsonal Obligations
(a) T,is Arti!l" r"+"rs to a n"gati$" 1"rsonal obligation.
(b) As a rul"% t," r"*"# is t," unoing o+ t," 1ro,ibit" t,ing
A1
Art. 116B
1lus a*ag"s. (S"" Art. 11C?% Ci$il Co").
A6
Art. 116A
Art. 116A. T,os" oblig" to "li$"r or to o so*"t,ing
in!ur in "la# +ro* t," ti*" t," oblig"" jui!iall# or "4tra.
jui!iall# "*ans +ro* t,"* t," +ul+ill*"nt o+ t,"ir
obliga. tion.
Ho3"$"r% t," "*an b# t," !r"itor s,all not b"
n"!"s. sar# in or"r t,at "la# *a# "4ist'
(1) I,"n t," obligation or t," la3 "41r"ssl# so "!lar"s2
or
(6) I,"n +ro* t," natur" an t," !ir!u*stan!"s o+ t,"
obligation it a11"ars t,at t," "signation o+ t," ti*" 3,"n
t," t,ing is to b" "li$"r" or t," s"r$i!" is to b" r"n"r"
3as a !ontrolling *oti$" +or t," "stablis,*"nt o+ t,"
!ontra!t2 or
(9) I,"n "*an 3oul b" us"l"ss% as 3,"n t," obligor
,as r"n"r" it b"#on ,is 1o3"r to 1"r+or*.
In r"!i1ro!al obligations% n"it,"r 1art# in!urs in "la#
i+ t," ot,"r o"s not !o*1l# or is not r"a# to !o*1l# in a
1ro1"r *ann"r 3it, 3,at is in!u*b"nt u1on ,i*. Fro* t,"
*o*"nt on" o+ t," 1arti"s +ul+ills ,is obligation% "la# b# t,"
ot,"r b"gins.
CO&&ENT'
(1) D"+ault or &ora
Alt,oug, Art. 116A us"s t," 3ors -in "la#%/ t,"s" s,oul
b" translat" to *"an "+ault (&O5A).
(6) N"!"ssit# in >"n"ral o+ D"*an
To 1ut a "btor in "+ault% as a rul"% DE&AND is n""".
T," "*an *a# b" jui!ial% as 3,"n a !o*1laint +or s1"!i+i!
1"r+or*an!" is +il"2 or "4trajui!ial% 3it,out !ourt 1ro!"".
ings.
(9) I,"n D"*an Is Not N""" to Put D"btor in D"+ault
A9
Art. 116A
(a) I,"n t," la3 so 1ro$i"s. (E4a*1l"' Ta4"s s,oul b" 1ai
3it,in a "+init" 1"rio% ot,"r3is" 1"nalti"s ar" i*1os"
3it,out n"" o+ "*an +or 1a#*"nt.)
A@
Art. 116A
(b) I,"n t," obligation "41r"ssl# so 1ro$i"s.
FNOTE' T," *"r" +i4ing o+ t," 1"rio is not "noug,2
t,"r" *ust b" a 1ro$ision t,at i+ 1a#*"nt is not *a"
3,"n u"% "+ault or liabilit# +or a*ag"s or int"r"sts
auto*ati!all# aris"s. (S"" D" la 5osa $. 7an< o+ P.I.% 51
P,il. A66).G
(NOTE' T," !ontrar# ruling in Siulong an Co. $.
Klagan% @9 P,il. 9A9% is 3rong.)
(!) I,"n ti*" is o+ t," "ss"n!" o+ t," !ontra!t (or 3,"n t,"
+i4ing o+ t," ti*" 3as t," !ontrolling *oti$" +or t," "stab.
lis,*"nt o+ t," !ontra!t).
E4a*1l"s' T," *a<ing o+ a 3"ing r"ss% i+ t," 3".
ing is s!,"ul" at t," ti*" t," r"ss is u"2 agri!ultural
!ontra!ts 3,"r" i*1l"*"nts ar" n""" at a 1arti!ular
ti*"2 t," s"lling o+ lan 3it, 1a#*"nt at s1"!i+i" ti*"% so
t,at t," s"ll"r !oul 1a# o++ !"rtain "bts t,at 3"r" u" on
sai at" (Ab"lla $. Fran!is!o% 55 P,il. @@C)2 *on"# n"""
to +inan!" *ining installations i+ sai installations ,a
to b" *a" on a !"rtain at". (Hanlon $. Hauss"r*an% @?
P,il. CA6).
FNOTE' It is not "ss"ntial +or t," !ontra!t to !at"gori.
!all# stat" t,at ti*" is o+ t," "ss"n!"2 t," int"nt is su++i.
!i"nt as long as t,is is i*1li". (Hanlon $. Hauss"r*an%
Su1ra.)G
() I,"n "*an 3oul b" us"l"ss% as 3,"n t," obligor ,as
r"n"r" it b"#on ,is 1o3"r to 1"r+or*. (E4a*1l"s' I,"n
b"+or" t," *aturit#% t," s"ll"r ,as is1os" o+ it in +a$or
o+ anot,"r% or ,as "stro#" t," subj"!t *att"r% or is ,i.
ing.)
(") I,"n t," obligor ,as "41r"ssl# a!<no3l"g" t,at ," r"all#
is in "+ault (7ut it s,oul b" not" t,at ,is *"r" as<ing
+or "4t"nsion o+ ti*" is not an "41r"ss a!<no3l"g*"nt o+
t," "4ist"n!" o+ "+ault on ,is 1art). (S"" 9 Sal$at 6@).
(@) Di++"r"nt Dins o+ &ora
A5
Art. 116A
(a) *ora sol$"ni ("+ault on t," 1art o+ t," "btor)
A6
Art. 116A
1) *ora sol$"ni "4 r" ("btor8s "+ault in r"al obliga.
tions)
6) *ora sol$"ni "4 1"rsona ("btor8s "+ault in 1"rsonal
obligations)
(b) *ora a!!i1i"ni ("+ault on t," 1art o+ t," !r"itor)
(!) !o*1"nsatio *ora" (3,"n in a r"!i1ro!al obligation bot,
1arti"s ar" in "+ault2 ,"r" it is as i+ n"it,"r is in ".
+ault).
(5) &ora Sol$"ni
(a) T,"r" is no *ora sol$"ni in n"gati$" obligations (on" !an.
not b" lat" in not oing or gi$ing).
(b) T,"r" is no *ora in natural obligations.
(!) 5"Euisit"s +or *ora sol$"ni'
1) T," obligation *ust b" u"% "n+or!"abl"% an alr"a#
liEuiat" or "t"r*inat" in a*ount. (TS% &ar. 15%
1A66).
6) T,"r" *ust b" non.1"r+or*an!".
9) T,"r" *ust b" a "*an% unl"ss t," "*an is not
r"Euir" (as alr"a# is!uss"). (I,"n "*an is
n"""% 1roo+ o+ it *ust b" s,o3n b# t," !r"itor). (B
&anr"sa 61).
FNOTE' A *"r" r"*in"r% li<" -T,is is to r"*in
#ou t,at #our n"4t install*"nt +alls u" on =an. C%
6??5%/ is not a "*an b"!aus" +or all t,at 3" <no3%
lat"n"ss *a# still b" tol"rat" b# t," !r"itor. (6
Castan 56B).G
@) T," "*an *ust b" +or t," obligation t,at is u"
(an not +or anot,"r obligation% nor on" 3it, a bigg"r
a*ount% "4!"1t in !"rtain instan!"s% !onsi"ring all
t," !ir!u*stan!"s). (S"" TS% =an. 1A1?).
() E++"!ts o+ &ora Sol$"ni
AC
Art. 116A
1) I+ t," "btor is in "+ault% ," *a# b" liabl" +or int"r"st
or a*ag"s.
AB
Art. 116A
6) H" *a# also ,a$" to b"ar t," ris< o+ loss.
(In bot, !as"s% it is% ,o3"$"r% "ss"ntial t,at ,is b"ing
in "+ault is attributabl" to ,is o3n +ault.)
9) H" is liabl" "$"n +or a +ortuitous "$"nt (Art. 1165%
Ci$il Co")% alt,oug, a*ag"s ,"r" *a# b"
*itigat" i+ ," !an 1ro$" t,at "$"n i+ ," ,a not b""n
in "+ault% loss 3oul ,a$" o!!urr" just t," sa*".
(Art. 6615% Ci$il Co").
(") In a 1ur!,as" b# install*"nts% t," !ontra!t *a# 1ro$i"
+or an -a!!"l"ration !laus"/ (a !laus" 3,i!, 3oul *a<" all
install*"nts u"% u1on "+ault in on" install*"nt). D"+ault
in t," 1a#*"nt o+ on" install*"nt o"s not *"an "+ault
in t," 3,ol" a*ount. I+ t,"r" is an a!!"l"ration !laus"% all
t,at ,a11"ns 3ill b" t,at t," 3,ol" a*ount b"!o*"s u".
An "*an is still n""" to 1ut t," "btor in "+ault.
(S"" :u"blar $. >aruno M &artin"H% 66 P,il. BAC).
(6) &ora A!!i1i"ni
(a) T," !r"itor is guilt# o+ "+ault 3,"n ," unjusti+iabl#
r"+us"s to a!!"1t 1a#*"nt or 1"r+or*an!" at t," ti*" sai
1a#*"nt or 1"r+or*an!" !an b" on". So*" justi+iabl"
r"asons +or r"+usal to a!!"1t *a# b" t,at t," 1a#or ,as no
l"gal !a1a!it# or t,at t,"r" is an o++"r to 1a# an obligation
ot,"r t,an 3,at ,as b""n agr"" u1on.
(b) I+ an obligation aris"s "4 "li!to (as t," r"sult o+ a !ri*")%
t," "btor.!ri*inal is r"s1onsibl" +or loss% "$"n t,oug,
t,is b" t,roug, a +ortuitous "$"nt% unl"ss t," !r"itor is
in *ora a!!i1i"ni. T," la3 sa#s'
-I,"n t," "bt o+ a t,ing !"rtain an "t"r*inat"
1ro!""s +ro* a !ri*inal o++"ns"% t," "btor s,all not b"
"4"*1t" +ro* t," 1a#*"nt o+ its 1ri!"% 3,at"$"r *a#
b" t," !aus" +or t," loss% unl"ss t," t,ing ,a$ing b""n o+.
+"r" b# ,i* to t," 1"rson 3,o s,oul r"!"i$" it% t," latt"r
r"+us" 3it,out justi+i!ation to a!!"1t it./ (Art. 166B% Ci$il
Co").
AA
Art. 116A
FNOTE' I,at s,oul t," !ri*inal o i+ t," !r"itor
is in *ora a!!i1i"niJ
1??
Art. 116A
ANS.' H" *ust "it,"r'
1) !onsign it in !ourt ("41"ns"s !,arg"abl" to !r"i.
tor)2
6) or <""1 it ,i*s"l+ (,"r" ," s,oul still "4"r!is" ili.
g"n!" an !ar"% but t,is ti*"% ," 3oul not b" liabl"
+or loss u" to a +ortuitous "$"nt). (S"" 6 &anr"sa
961). (Loss t,ru robb"r# 3it, $iol"n!" is a +ortuitous
"$"nt 1ro$i" t,at t," $iol"n!" or inti*iation 3as
irr"sistibl" or gra$".)G
(!) T," i*1ro1"r r"+usal o+ t," l"ssor (!r"itor) to a!!"1t t,"
r"nts t"n"r" b# t," l"ss"" 1la!"s sai l"ssor in "+ault
(*ora) an ," *ust s,oul"r t," subs"Eu"nt a!!i"ntal
loss o+ t," 1r"*is"s l"as". T," *ora a!!i1i"ni o+ sai
l"ssor is not !ur" b# t," l"ss""8s +ailur" to *a<"
!onsignation o+ t," r"j"!t" 1a#*"nts% but t," l"ss""
r"*ains obligat" to 1a# t," a*ounts ," ,a t"n"r"
but i not "1osit in !ourt. (Va. " Villaru"l% "t al. $.
&anila &otor Co. M Caloniar"s% L.1?9A@% D"!. 9% 1A5B).
(C) 5"!i1ro!al Obligations
(a) 5"!i1ro!al obligations "1"n u1on "a!, ot,"r +or 1"r+or*.
an!". (E4a*1l"' In a sal" t," bu#"r *ust PAK% an t,"
s"ll"r *ust DELIVE5.)
(b) H"r" 1"r+or*an!" *a# b" s"t on i++"r"nt at"s.
FE4a*1l" 0 "li$"r# on D"!. A% 6??52 an 1a#*"nt on D"!.
19% 6??5. To 1ut t," s"ll"r in "+ault% "*an as a rul"
*ust b" *a". D"li$"r#% u1on t," ot,"r ,an% o"s not 1ut
t," bu#"r in "+ault% till a+t"r "*an% unl"ss "*an is
not r"Euir". T,is is b"!aus"% in t," "4a*1l" gi$"n%
i++"r"nt 1"rios +or 1"r+or*an!" 3"r" gi$"n. (S"" B
&anr"sa 69.
6@).G
(!) I+ t," 1"r+or*an!" is not s"t on i++"r"nt at"s% "it,"r b#
t," la3% !ontra!t% or !usto*% it is un"rstoo t,at 1"r.
as i+ no on" is in "+ault). I+ on" 1art# 1"r+or*s% an t,"
16C
Art. 116A
+or*an!" *ust b" si*ultan"ous. H"n!"% on" 1art# !annot
"*an 1"r+or*an!" b# t," ot,"r% i+ t," +or*"r ,i*s"l+
!annot 1"r+or*. An 3,"n n"it,"r ,as 1"r+or*"% t,"r"
is !o*1"nsatio *ora" ("+ault on t," 1art o+ bot,2 so it is
as i+ no on" is in "+ault). I+ on" 1art# 1"r+or*s% an t,"
16C
Art. 116A
ot,"r o"s not% t," latt"r 3oul b" in "+ault. (S"" >uti"r.
r"H H"r*anos $. Oria H"r*anos% 9? P,il. @A1).
&ariano 5origu"H% "t al. $.
Por+irio 7"lgi!a% "t al.
L.1?B?1% F"b. 6B% 1A61
FACTS' 5origu"H an 7"lgi!a 3"r" !o.o3n"rs o+ lan
in t," 1ro1ortion o+ B6Q an 1@Q% r"s1"!ti$"l#. 7"lgi!a
o3" 5origu"H P9?%???. To "nabl" 7"lgi!a to 1a# it% it
3as *utuall# agr"" t,at 5origu"H 3oul grant aut,or.
it# to 7"lgi!a to s"ll or *ortgag" 3it,in C? a#s 96Q o+
t," lan% so t,at 7"lgi!a 3oul b" abl" to rais" t," *on"#
+or 1a#*"nt o+ t," loan. Issu"' Fro* 3,at ti*" s,oul t,"
C?.a# 1"rio b"gin to runJ
HELD' T," 1"rio !o**"n!"s +ro* t," ti*" 5o.
rigu"H grants sai aut,orit# to 7"lgi!a. For t,is 1arta<"s
o+ a r"!i1ro!al obligation 0 t," granting o+ t," aut,orit#
an t," 1a#*"nt o+ t," loan. Iit,out su!, aut,orit#% it
3as i++i!ult% i+ not i*1ossibl"% +or 7"lgi!a to obtain t,"
n""" P9?%???. T,is 3as b"!aus" ," o3n" onl# 1@Q o+
t," lan.
(B) I,"n Da*ag"s or Int"r"st &a# 7" Lost
A !r"itor "ntitl" to a*ag"s or int"r"st b"!aus" o+ &O5A
*a# los" t," sa*" 0
(a) I+ t," 1rin!i1al obligation is allo3" to la1s" b# 1r"s!ri1.
tion2
(b) I+ t," a*ag"s or int"r"st ar" allo3" to 1r"s!rib"2
(!) I+ t," a*ag"s or int"r"st ar" !onon" (3ai$" or r"*it.
t").
(A) So*" D"!i" Cas"s
Co*1ania >"n"ral " Taba!os $. AraHa
a*ag"s) s,oul b" !,arg" not +ro* t," at" o+ *aturit#% but
16B
Art. 116A
C P,il. @55
I+ a "bt is not 1ai at t," sti1ulat" 1"rio% int"r"st (as
a*ag"s) s,oul b" !,arg" not +ro* t," at" o+ *aturit#% but
16B
Art. 116A
+ro* t," ti*" t," jui!ial a!tion is +il"% in !as" no "4trajui!ial
"*an 3as *a".
Pri!"% In!. $. 5illoraHa% "t al.
L.B6?59% &a# 65% 1A55
FACTS' A t"nant l"as" a lan on t," lanlor8s 1ro*is"
t,at t," latt"r 3oul *a<" i*1ro$"*"nts on t," 1ro1"rt#
l"as". I,"n t," lanlor i not *a<" t," i*1ro$"*"nts% t,"
t"nant su" +or s1"!i+i! 1"r+or*an!"% t,at is% to *a<" t,"
lanlor o t," i*1ro$"*"nts. T,r"" a#s lat"r% t," lanlor
su" +or unla3+ul "tain"r +or non.1a#*"nt o+ r"nt.
HELD' T,is is r"!i1ro!al obligation% an sin!" no i*1ro$".
*"nts ,a$" #"t b""n *a"% t," lanlor !annot "*an r"nts
an t," t"nant is not #"t in "+ault% an t,"r"+or" unla3+ul
"tain"r !annot 1ros1"r.
:u"blar $. >aruno an &artin"H
66 P,il. BCA
FACTS' A "bt 3as 1a#abl" in install*"nts. It 3as also
agr"" t,at i+ an# install*"nt 3as not 1ai on ti*"% t," 3,ol"
"bt 3oul *atur" (a!!"l"ration !laus"). T," "btor i not 1a#
on" install*"nt on ti*". A+t"r so*" ti*"% b"!aus" t," "btor
i not 1a# t," 3,ol" "bt% t," !r"itor broug,t t,is a!tion. Is.
su"' Fro* 3,at ti*" 3as t," "btor in "+ault% +ro* t," ti*"
t," install*"nt 3as not 1ai at t," sti1ulat" at"% or +ro* t,"
ti*" t," a!tion 3as +il"J (T,is 3as "ss"ntial to "t"r*in" t,"
!o*1utation o+ int"r"st.)
HELD' Fro* t," ti*" "*an 3as *a" b# t," +iling o+
t," a!tion% t,"r" ,a$ing b""n no 1r"$ious "4trajui!ial "*an.
H"n!"% int"r"st as a*ag"s s,oul b"gin onl# +ro* t,at at".
5"ason' It is tru" t,at t,"r" 3as an a!!"l"ration !laus"% an
t,is is 3,# t," !r"itor is no3 "ntitl" to r"!o$"r t," 3,ol" "bt.
7ut t," !ontra!t i not sa# t,at +ailur" to 1a# on" install*"nt
3oul 1ut t," "btor in "+ault. H"n!"% "*an 3as still
"ss"ntial.
Causing $. 7"n!"r
1?5
Art. 116A
9C P,il. @1C
FACTS' Plainti++ A% a!ting as guarian o+ so*" *inors%
agr"" to s"ll to "+"nant 7 a 1ar!"l o+ lan o3n" in !o**on
1?6
Art. 116A
b# ,"r an ,"r 3ars on t," !onition t,at A 3oul +irst obtain
jui!ial a11ro$al 3it, r"gar to t," 3ars8 s,ar". 7
i**"iat"l# 1ai 1art o+ t," 1ur!,as" 1ri!" an 1ro!""" to
o!!u1# t," lan. Alt,oug, jui!ial a11ro$al ,a b""n
obtain"% A i not "4"!ut" a "" su++i!i"nt to !on$"# t,"
3,ol" 1ar!"l. Inst"a% s," as<" +or t," balan!" o+ t,"
1ur!,as" 1ri!". Failing in t,is% s," !,arg" 7 3it, "+ault an
no3 3ants to r"s!in or !an!"l t," !ontra!t on t," groun o+
non.1a#*"nt.
HELD' In r"!i1ro!al obligations li<" t,is% "+ault on t,"
1art o+ on" b"gins onl# +ro* t," *o*"nt t," ot,"r 1art# +ul+ills
3,at is in!u*b"nt u1on ,i* or ,"r. Sin!" t," 1lainti++ 5u+ina
Causing ,as not #"t "4"!ut" a "" su++i!i"nt to 1ass t," 3,ol"
"stat"% s," is not no3 in a 1osition to r"s!in t," !ontra!t.
D" la 5osa $. 7an< o+ P.I.
51 P,il. A66
E$"n i+ 1riH"s ar" not istribut" on t," at" s"t in t,"
rul"s o+ a !ont"st% t," s1onsoring !o*1an# is not in "+ault till
a+t"r a "*an is *a"% +or orinaril# on" o"s not "nt"r a
!ont"st just to g"t t," 1riH" on t," at" s1"!i+i".
&ala#an Insuran!" Co.% In!. $. CA
>5 5AA1A% No$. 65% 1AB6
A "btor 3,o in!urs in "la# or "+ault is liabl" +or
a*ag"s 1lus int"r"st% g"n"rall# +ro* "4trajui!ial or jui!ial
"*an in t," +or* o+ int"r"st.
S1ous"s Pu"rto $. CA
>5 19B61?% =un. 19% 6??6
FACTS' P"tition"rs !o**itt" a br"a!, o+ obligation in
t,"ir r"+usal to 1a# a su* o+ *on"# loan". Issu"' O3ing to sai
br"a!,% *a# !o*1"nsator# a*ag"s b" a3ar"J
HELD' K"s% b# 3a# i+ an int"r"st is t," a*ount o+ 16Q
1"r annu*% to b" !o*1ut" +ro* "+ault% i.".% +ro* jui!ial or
"4trajui!ial "*an in a!!oran!" 3it, Art. 116A.
1?C
Art. 116A
Su!, int"r"st is not u" to sti1ulation 5at,"r it is u" to
t," g"n"ral 1ro$ision o+ la3 t,at in obligation to 1a# *on"#2
1?B
Art. 116A
3,"r" t," "btor in!urs in "la#% ," ,as to 1a# int"r"st b# 3a#
o+ a*ag"s. (S"" East"rn S,i11ing Lin"s% In!. $. CA% 69@ SC5A
CB F1AA@G).
(1?) I*1osition o+ Int"r"st
7ang<o S"ntral ng Pili1inas $. Santa*aria
>5 19ABB5% =an. 19% 6??9
In East"rn S,i11ing Lin"s% In!. $. Court o+ A11"als (69@
SC5A CB F1AA@G)% t," +ollo3ing gui"lin"s ,a$" b""n lai o3n
in t," i*1osition o+ int"r"st'
1. I,"n an obligation% not !onstituting a loan or +or.
b"aran!" o+ *on"#% is br"a!,"% an int"r"st on t," a*ount o+
a*ag"s a3ar" *a# b" i*1os" at t," !ourt8s is!r"tion 3it,
6Q rat" 1"r annu*. No int"r"st% ,o3"$"r% s,all b" ajug" on
unliEuiat" !lai*s or a*ag"s "4!"1t 3,"n or until "*an
!an b" "stablis," 3it, r"asonabl" !"rtaint#. In t," "$"nt t,at
"*an is "stablis," 3it, r"asonabl" !"rtaint#% int"r"st s,all
b"gin to run +ro* t," ti*" !lai* is *a" jui!iall# or "4traju.
i!iall#. (Art. 116A% Ci$il Co"). Ho3"$"r% 3,"n su!, !"rtaint#
!annot b" so r"asonabl# "stablis," at t," ti*" "*an is
*a"% int"r"st s,all b"gin to run onl# +ro* t," at" t," !ourt
jug. *"nt is *a" (at 3,i!, ti*"% Euanti+i!ation o+ a*ag"s
*a# b" ""*" to ,a$" b""n r"asonabl# as!"rtain"). A!tual
bas" +or !o*1utation o+ l"gal int"r"st s,all% is an# !as"% b" on
a*ount +inall# ajug".
6. I,"n !ourt jug*"nt a3aring a su* o+ *on"# b".
!o*"s +inal an "4"!utor#% t," rat" o+ l"gal int"r"st% 3,"t,"r
t," !as" +alls un"r 1ar. 1 or 1ar. 6 abo$"% s,all b" 16Q 1"r
annu* +ro* su!, +inalit# until its satis+a!tion% t,is int"ri*
1"rio b"ing ""*" to b" b# t,"n an "Eui$al"nt to
+orb"aran!" o+ !r"it.
Sin!" t," !as" at bar o"s not in$ol$" an# obligation aris.
ing +ro* loan or +orb"aran!" o+ *on"#% t,"n int"r"st s,oul b"
i*1os" as +ollo3s'
1?A
Art. 116A
a. On t," +irst billing +or P@5?%6?@.A6 R 6Q 1"r
annu* !o*1ut" +ro* t," at" o+ "*an on F"b. 69%
1AA6 3,il" an int"r"st o+ 16Q 1"r annu* s,all b" i*1os"
11?
Art. 11C?
on su!, a*ount +ro* +inalit# o+ "!ision until 1a#*"nt
t,"r"o+.
b. On t," s"!on billing +or P66%@51.?5 R 6Q 1"r
annu* !o*1ut" +ro* at" o+ "*an on S"1t. 1?% 1AA6
3,il" an int"r"st o+ 16Q 1"r annu* s,all b" i*1os"
on su!, a*ount +ro* +inalit# o+ "!ision until 1a#*"nt
t,"r"o+.
!. On t," P1?B%61?.56 +or s"r$i!"s r"n"r" +ro*
A1r. 1?% 1AA6 to =ul. 91% 1AA6 0 6Q 1"r annu* !o*1ut"
+ro* at" o+ "!ision o+ IAC (Int"r*"iat" A11"llat"
Court) on F"b. 6?% 1AAB 3,il" int"r"st o+ 16Q 1"r
annu* s,all b" i*1os" on su!, a*ount +ro* +inalit# o+
"!ision until 1a#*"nt t,"r"o+.
Art. 11C?. T,os" 3,o in t," 1"r+or*an!" o+ t,"ir
obliga. tion ar" guilt# o+ +rau% n"glig"n!"% or "la# an
t,os" 3,o in an# *ann"r !ontra$"n" t," t"nor t,"r"o+% ar"
liabl" +or a*ag"s.
CO&&ENT'
(1) >rouns +or Liabilit# in t," P"r+or*an!" o+ Obliga.
tions
(a) +rau ("!"it or olo) (int"ntional "$asion o+ +ul+ill*"nt).
(b) n"glig"n!" (+ault or !ul1a). (S"" Art. 11C9% Ci$il Co").
(!) "+ault (or *ora) (i+ i*1utabl" to t," "btor).
() $iolation o+ t," t"r*s o+ t," obligation ($iolatio) (unl"ss
"4!us" in 1ro1"r !as"s b# +ortuitous "$"nts).
FNOTE' T," +ollo3ing o not "4!us" +ul+ill*"nt'
1) in!r"as" in !ost o+ 1"r+or*an!". (;.S. $. Vara"ro "
la :uinta% @? P,il. @B).
6) 1o$"rt#. (5"1i" $. AlH"lius% 9A P,il. 1A?).
9) 3ar b"t3""n t," subj"!t o+ a n"utral !ountr# an t,"
subj"!t o+ a !ountr# at 3ar% as long as substantial
111
Art. 11C?
!o*1lian!" !an still b" on". (Int. Har$"st"r Co. $.
Ha*burg.A*"ri!an Lin"% @6 P,il. B5@).
116
Art. 11C?
7;T !,aos in &anila in F"bruar# 1A@5 uring
t," lib"ration 1"rio !an b" !onsi"r" a su++i!i"nt
"4!us" +or not 1a#ing on ti*" t," obligations *atur.
ing t,at *ont,. (&anala! $. >ar!ia% C6 P,il. 616).G
(NOTE' In &!Conn"l% "t al. $. Court o+ A11"als%
L.1?51?% &ar. 1C% 1A61% it 3as ,"l t,at "$"n ini.
$iual sto!<,ol"rs *a# b" ,"l liabl" +or !or1orat"
obligations 3,"r"$"r !ir!u*stan!"s s,o3 t,at t,"
!or1orat" "ntit# is b"ing us" as an alt"r "go or busi.
n"ss !onuit +or t," sol" b"n"+it o+ t," sto!<,ol"rs
or "ls" to "+"at 1ubli! !on$"ni"n!"% justi+# 3rong%
1rot"!t +rau% or "+"n !ri*". T," +i!tion o+ s"1arat"
1"rsonalit# !annot b" us" to s,i"l +rau. In 5i$"ra%
"t al. $. Colago% "t al.% L.16969% F"b. 6@% 1A61% t,"
Court ,"l t,at t," go$"rn*"nt o++i!ials !on!"rn"
ar" ut# boun to i*1l"*"nt t," 1ro$isions o+ t,"
*ini*u* 3ag" la3 b# a11ro1riating t," n"!"ssar#
a*ounts +or t," 1a#*"nt o+ t," in!r"as" salari"s
o+ t," "*1lo#""s. Su!, a11ro1riation !annot b" l"+t
at t,"ir is!r"tion nor !an sai o++i!ial a$oi !o*1li.
an!" 3it, t,"ir ut# b# in$o<ing la!< o+ +uns. I,il"
orinaril# t,"r" s,oul ,a$" b""n a !"rti+i!ation o+
t," a$ailabilit# o+ +uns% t,is is NOT n""" ,"r"%
+or ot,"r "*1lo#""s ,a alr"a# b""n 1ai 1rior to
t," !o**"n!"*"nt o+ t,is !as". Sin!" t," ut# is
*anator#% &ANDA&;S !an 1ro1"rl# issu".)
>at!,alian $. Arl"gui
C5 SC5A 69@
I+ a losing 1art# litigant isob"#s a 3rit o+ 1oss"ssion a.
r"ss" b# t," !ourt not to ,i* but to a s,"ri++% sai isob"i.
"nt litigant is not% b# t,at +a!t o+ isob"i"n!" alon"% guilt# o+
!ont"*1t o+ !ourt.
(6) E4a*1l"s o+ Violation o+ a Contra!t (-In An# &ann"r
Contra$"n" t," T"nor T,"r"o+/)
(a) I,"n a lanlor +ails to *aintain a t"nant in t," l"gal 1os.
119
Art. 11C?
s"ssion o+ t," l"as" lan (b"!aus" t," lanlor 3as not its
o3n"r% an t," o3n"r no3 3ants to o!!u1# t," lan). (D"
11@
Art. 11C?
la CruH $. S"*inar# o+ &anila% 1B P,il. 99?). Si*ilarl#% i+
a l"ss"" or t"nant o"s not 1a# t," sti1ulat" r"nts "s1it"
oral an 3ritt"n "*ans b# t," l"ssor or lanlor% t,"
latt"r is "ntitl" to a jug*"nt +or "j"!t*"nt an r"!o$"r#
o+ a*ag"s su++"r". (D" los Santos $. >oros1"% "t al.% L.
16?69% A1r. 6A% 1A5A).
(b) I,"n a 1"rson 3,o agr"" to su11l# so*"
!in"*atogra1,i! +il*s !annot o so b"!aus" o+ ,is +ault.
(A!*" Fil*s $. T,"at"rs Su11l#% 69 P,il. 65C).
(!) I,"n a !o**on !arri"r +ails to ta<" its 1ass"ng"rs to t,"ir
"stination. (>uti"rr"H $. >uti"rr"H% 56 P,il. 1CC). I,il"
o$"r!ro3ing in a bus is not n"glig"n!" 1"r s"% still t," bus
is un"r a ut# to "4"r!is" a ,ig, "gr"" o+ !ar" to 1rot"!t
its 1ass"ng"rs +ro* ang"rs li<"l# to aris" t,"r"+ro*.
T,us% i+ as a r"sult o+ o$"r!ro3ing a 1ass"ng"r +alls% an
an att"*1t" r"s!u" b# a +"llo3 1ass"ng"r is +rustrat"
b"!aus" t," bus ri$"r i**"iat"l# starts t," $",i!l"% t,"
bus !o*1an# !an b" ,"l liabl".
() I+ a ta4i 1ass"ng"r is int"ntionall# <ill" b# t," ri$"r% an
a!tion +or a*ag"s !an b" broug,t against bot, t," ri$"r
an t," ta4i !o*1an# (or o1"rator) un"r Art. 1C5A o+ t,"
Ci$il Co". T," ri$"r% tru"% i not a!t 3it,in t," s!o1" o+
,is aut,orit#% but t,"n a !arri"r (li<" t," !o*1an#) *ust
a++or +ull 1rot"!tion. T," !arri"r "l"gat"s to t," ri$"r
(its s"r$ant) t," ut# to 1rot"!t t," 1ass"ng"rs 3it,
ut*ost !ar". T," !o*1an# t,us b"ars t," ris< o+ 3rong+ul
or n"g. lig"nt a!ts o+ its "*1lo#""s sin!" it ,as 1o3"r to
s"l"!t an r"*o$". (&aranan $. P"r"H% >5 L.666C6% =un.
66% 1A6C).
(") I+ a 1"rson "nt"rs into a !ontra!t 3,"r" ," ,as to *""t
!"rtain ban< r"Euir"*"nts% but is unabl" to *""t sai r".
Euir"*"nts% ," is liabl" +or br"a!, o+ !ontra!t% i+ ," <n"3
+ro* t," $"r# b"ginning t,at sai r"Euir"*"nts !oul not
b" !o*1li" 3it, b# ,i*. (Arri"ta $. NA5IC% L.156@5% =an.
91% 1A6@).
Santiago $. >onHal"s
CA SC5A @A@
115
Art. 11C?
FACTS' 5"garing a !ontra!t 3it, a !onstru!tion
+ir*% t," o3n"r 3rot" t," +ir* t,at ," int"n" to !an!"l
116
Art. 11C?
t," !ontra!t% 3,"r"u1on t," +ir* sto11" !onstru!tion 3or<
+or all"g" non.1a#*"nt o+ +""s at t," 1ro1"r ti*". Is t,"
+ir* liabl"J
HELD' No% +or a+t"r all% t," a$"rs" 1art# ,a
alr"a# in+or*" t," +ir* o+ t," +or*"r8s int"ntion to
!an!"l or r"s!in t," !ontra!t.
(9) Liabilit# +or Da*ag"s
T,os" liabl" un"r Art. 11C? s,oul 1a# a*ag"s% but
g"n"rall# onl# i+ asi" +ro* t," br"a!, o+ !ontra!t% 1r"jui!" or
a*ag" 3as !aus". (7"rg $. T"us% >5 L.6@59% O!t. 9?% 1A6@).
7ua#an Cattl" Co.% In!. $. :uintillan
L.66AC?% &ar. 1A% 1AB@
E$"n i+ a l"as" agr""*"nt (su!, as t," Pastur" L"as"
Agr""*"nt) "41ir"s% t," !lai*s +or a*ag"s t,at aros" uring
t," "4ist"n!" o+ t," l"as" !ontinu" to subsist. I" !annot r"gar
sai !lai*s as ,a$ing b"!o*" *oot an a!a"*i!.
7obis $. Pro$. S,"ri++ o+ Ca*arin"s Nort"
>5 6AB9B% &ar. 1B% 1AB9
I+ a s,"ri++ +ollo3s t," lit"ral t"r*s o+ a 3rit o+ "4"!ution%
," is not liabl" +or a*ag"s.
P,il. Long Distan!" T"l"1,on" Co. $. National
Labor 5"lations Co**ission
>5 5B??@% &a# 9?% 1AB9
I+ an "*1lo#"" ,as b""n lai o++ +or *or" t,an +our (@)
#"ars but 3as not in t," *"anti*" 1ro,ibit" +ro* loo<ing +or
anot,"r "*1lo#*"nt% ,is ba!<3ag"s *a# b" li*it" or r"u!".
On" *ust *ini*iH" a*ag"s t,at ,a$" b""n in+li!t" u1on ,i*.
H" s,oul ,a$" loo<" +or 3or< in t," *"anti*".
11C
Art. 11C?
(@) Dins o+ Da*ag"s (D"#3or 0 &ENTAL)
(a) &O5AL 0 (+or *"ntal an 1,#si!al anguis,)
11B
Art. 11C?
FNOTE' T," anguis,% 3orr# an an4i"t# o+ a "+"n.
ant in a litigation t,at 3as not *ali!iousl# litigat" !annot
b" !onsi"r" as t," *oral a*ag"s !ont"*1lat" in t,"
la3. (5a*os $. 5a*os% L.1ABC6% D"!. 9% 1AC@).G
Co*1ania &ariti*a $.
Alli" Fr"" Ior<"rs8 ;nion
CC SC5A 6@
&oral a*ag"s !annot b" r"!o$"r" unl"ss 1ro$". A
*"r" 1ra#"r +or t," sa*" is not su++i!i"nt.
(b) ENE&PLA5K 0 (!orr"!ti$" or to s"t an "4a*1l")
(!) NO&INAL 0 (to $ini!at" a rig,t 0 3,"n no ot,"r <in
o+ a*ag"s *a# b" r"!o$"r")
(NOTE' In V"ntanilla $. C"nt"no% L.@999% =an. 6B%
1A61% it 3as ,"l t,at no*inal a*ag"s ar" NOT +or in.
"*ni+i!ation o+ t," loss su++"r"% but +or t," $ini!ation
o+ a rig,t $iolat"% t," ass"ss*"nt o+ 3,i!, is l"+t to t,"
is!r"tion o+ t," !ourt.)
() TE&PE5ATE 0 (3,"n t," "4a!t a*ount o+ a*ag"s !an.
not b" "t"r*in")
(") ACT;AL 0 (a!tual loss"s as 3"ll as unr"aliH" 1ro+it)
(+) LI:;IDATED 0 (1r""t"r*in" b"+or",an 0 b# agr"".
*"nt)
Da*ag"s s,oul b" 1ai b# t,os" r"s1onsibl" +or t,"*.
(En!iso $. Na!o!o% FC.A.G @6 O.>. @961).
Tra$"ll"rs8 In"*nit# Co.
$. 7arb"r St"a*s,i1 Lin"s% In!.
CC SC5A 1?
On" 3,o !lai*s a*ag"s b"!aus" o+ a*ag" to goos
un"r t," 7ur"au o+ Custo*s arrastr" s"r$i!"s s,oul +il"
t," !lai* 3it, t," Co**ission on Auit inst"a o+ +iling
t," !as" 3it, t," r"gular !ourts. T," 7ur"au o+ Custo*s% in
o1"rating t," arrastr" s"r$i!"% o"s so in !onn"!tion 3it, a
1rin!i1al go$"rn*"nt +un!tion. As su!,% n"it,"r t," 7ur"au
11A
Art. 11C?
nor t," 5"1ubli! *a# b" su". T,us% t," r"*"# is 3it, t,"
Co**ission on Auit un"r A!t 9?B9 an CA 96C.
16?
Art. 11C?
7agu*ba#an Cor1oration $. Int"r*"iat"
A11"llat" Court M L"lisa S"Pa >5 666C@%
S"1t. 9?% 1AB@
I+ in a r"staurant% a 3ait"r +alls on a la# !usto*"r% s1ills
rin<s on ,"r% an !aus"s ,"r to go to t," !o*+ort roo* an
ta<" o++ ,"r !lot,"s an r"*ain na<"% 3it,out t," r"staurant
o++"ring ,"r an# a1olog#% s," is "ntitl" to ACT;AL DA&A>ES%
but not to &O5AL DA&A>ES% +or t," *"ntal anguis, an "*.
barrass*"nt in t,is !as" !annot b" !onsi"r" as +alling 3it,in
t," s!o1" o+ Art. 661C o+ t," Ci$il Co".
(5) Da*ag"s in &on"tar# Obligations
In *on"tar# obligations% in"*nit# +or a*ag"s !onsists
o+'
(a) t,at agr"" u1on2
(b) in t," abs"n!" o+ agr""*"nt% t," l"gal rat" o+ int"r"st. (Art.
66?A% Ci$il Co"2 :uiros $. Tan.>uinla#% 5 P,il. 6C5). I+ a
!ontra!t o+ si*1l" loan sti1ulat"s t," ti*" 3,"n int"r"st
3ill b" !ount"% sai sti1ulat" ti*" !ontrols. (Pi!Hon $.
Pi!Hon% L.6A19A% No$. 15% 1AC@).
(6) 5"*"i"s o+ Pro+"ssors an T"a!,"rs
;n"r t," Ci$il Co"% t,"r" is no 1ro$ision go$"rning t,"
r"lati$" rig,ts o+ a t"a!,"r or 1ro+"ssor% an t,os" o+ t," s!,ool
t,at "sir"s to is1"ns" 3it, t," s"r$i!"s o+ t," +or*"r.
Ho3"$"r% t," r"*"# !an b" +oun toa# in 5"1ubli! A!t 1A56
(t," -*". saa/ or -on".*ont, 1a#/ rul") as a*"n" b# 5A
1CBC. (&a1ua Institut" o+ T"!,nolog# $. &analo% L.1@BB5% &a#
91% 1A6?).
(C) Cr"itor o+ a =ug"
Taboaa $. Cabr"ra
CB SC5A 695
161
Art. 11C?
I+ a !r"itor o+ a jug" 3ants to !oll"!t a su* o+ *on"# +ro*
t," latt"r% t," !r"itor s,oul not +il" t," !i$il !o*1laint 3it,
t," Su1r"*" Court.
166
Art. 11C1
Art. 11C1. 5"s1onsibilit# arising +ro* +rau is "*an.
abl" in all obligations. An# 3ai$"r o+ an a!tion +or +utur"
+rau is $oi.
CO&&ENT'
(1) Liabilit# +or Frau or Dolo
(a) A!!oring to ti*" o+ !o**ission% +rau *a# b" 1ast or
+utur" (liabilit# +or 1ast +rau *a# b" 3ai$"2 t,is is not
so +or +utur" +rau).
(b) A!!oring to *"aning% +rau *a# b" !lassi+i" as +ollo3s'
1) +rau in obtaining !ons"nt (*a# b" !ausal or *"r"l#
in!i"ntal)
6) +rau in 1"r+or*ing a !ontra!t (ina!!urat"l# r"+"rr"
to b# so*" as in!i"ntal +rau). Frau ,"r" *a# b"
"it,"r'
a) olo !ausant" (!ausal +rau)
b) olo in!i"nt" (in!i"ntal +rau)
(6) I,il" olo !ausant" is so i*1ortant a +rau t,at
$itiat"s !ons"nt (allo3ing t,"r"+or" annul*"nt)% olo
in!i"nt" is not i*1ortant
7ango# $. P,il..A*"ri!an
Li+" Insuran!" Co*1an#
CA.>5 55656.5
I+ an insur" !o**its a *at"rial *isr"1r"s"ntation% +rau%
or !on!"al*"nt in ,is insuran!" a11li!ation% t," insuran!" !on.
tra!t !annot b" r"gar" as $ali. (Not"' t," annul*"nt !as"
*ust b" 3it,in t3o #"ars +ro* t," 1"r+"!tion o+ t," !ontra!t.)
I+ t," trut, ,a b""n tol% t,"r" 3oul ,a$" b""n no !ontra!t%
or on" 3oul ,a$" b""n *a" 3it, a *u!, ,ig,"r 1r"*iu*
(!onsi"ring t," tru" stat" o+ ,"alt, o+ t," insur").
169
Art. 11C1
(NOTE' T," +rau ,"r" is i*1ortant% an is r"+"rr" to as
DOLO CA;SANTE.)
16@
Art. 11C6
(9) Ta4 E$asion
Ta4 "$asion (as istinguis," +ro* ta4 a$oian!") !on.
not"s +rau t,ru t," us" o+ 1r"t"ns"s an +orbi"n "$i!"s to
l"ss"n or "+"at ta4"s. Ho3"$"r% a ta41a#"r ,as t," l"gal rig,t
to "!r"as" t," a*ount o+ 3,at ot,"r3is" 3oul b" ,is ta4"s
or altog"t,"r a$oi t,"* b# *"ans 3,i!, t," la3 1"r*its. H"
o"s not in!ur +rau t,"r"b# "$"n i+ t," ta4 1ai is t,"r"a+t"r
+oun to b" insu++i!i"nt. (Kuti$o M Sons Har3ar" Co. $. Court
o+ Ta4 A11"als% "t al.% L.196?9% =an. 6B% 1A61).
Art. 11C6. 5"s1onsibilit# arising +ro* n"glig"n!" in t,"
1"r+or*an!" o+ "$"r# <in o+ obligation is also "*anabl"%
but su!, liabilit# *a# b" r"gulat" b# t," !ourts% a!!oring
to t," !ir!u*stan!"s.
CO&&ENT'
(1) Frau Distinguis," +ro* N"glig"n!"
DOL
O
C;LP
A
(a) T,"r" is a
DELI7E5ATE int"ntion
to !aus" a*ag" or
1r"jui!".
(b) Liabilit# arising +ro*
olo !annot b" *itigat"
or r". u!" b# t,"
!ourts.
(!) Iai$"r o+ an a!tion to
"n. +or!" liabilit# u" to
+utur" +rau is $oi.
(a) Alt,oug, $oluntar#
(t,at is% not on" t,ru
+or!") still t,"r" is NO
DELI7E5ATE int"ntion
to !aus" a*. ag".
(b) Liabilit# u" to
n"glig"n!" *a# b"
r"u!" in !"rtain !as"s.
(!) Iai$"r o+ an a!tion to
"n. +or!" liabilit# u" to
+utur" !ul1a *a# in a
!"rtain s"ns" b"
allo3".
Laur"l $. Abroga
@B9 SC5A 6@9 (6??6)
165
Art. 11C6
A*ong t," 1ro,ibit" a!ts "nu*"rat" in S"!. A o+ 5A No.
B@B@ or -A!!"ss D"$i!"s 5"gulation A!t o+ 1AAB%/ ar"'
166
Art. 11C6
1. t," a!ts o+ obtaining *on"# or an#t,ing o+ $alu" t,ru
t," us" o+ an a!!"ss "$i!" 3it, int"nt to "+rau or
int"nt to gain an +l""ing a+t"r2 an
6. o+ "++"!ting transa!tions 3it, on" or *or" a!!"ss ".
$i!"s issu" to anot,"r 1"rson or 1"rsons to r"!"i$"
1a#*"nt or an# ot,"r t,ing o+ $alu".
;n"r S"!. 11 o+ t," la3% !ons1ira!# to !o**it a!!"ss
"$i!"s +rau is a !ri*".
(6) Sti1ulations 5"garing N"glig"n!" (Futur" N"gli.
g"n!")
(a) >ross n"glig"n!" !an n"$"r b" "4!us" in a$an!" +or t,is
3oul b" !ontrar# to 1ubli! 1oli!#.
(b) Si*1l" n"glig"n!" *a# in !"rtain !as"s b" "4!us" or *iti.
gat".
(!) T,r"" (9) usual <ins o+ sti1ulation in a bill o+ laing
(!ontra!t +or t," s,i11ing or trans1orting o+ goos)'
1) T," +irst on" "4"*1ts t," !arri"r +ro* all liabiliti"s
+or loss or a*ag" o!!asion" b# its o3n n"glig"n!".
(T,is is against 1ubli! 1oli!# an is $oi). (S"" Art.
1C@5% Nos. 6 an 9% Ci$il Co").
E4a*1l" o+ t,is in$ali sti1ulation' -No *at.
t"r ,o3 n"glig"nt t," !arri"r 3ill b"% it 3ill not b"
r"s1onsibl" +or t," a*ag" !aus"./
6) T," s"!on on" li*its t," liabilit# to an agr"" $alu.
ation% no *att"r ,o3 *u!, a*ag" is !aus". (In
ot,"r 3ors% no *att"r ,o3 *u!, a*ag" is !aus"%
t," $alu" t,at !an b" r"!o$"r" is t," sa*". T,is is
also VOID sin!" a 3"alt,# !o*1an# 3oul b" abl" to
a++or b"ing n"glig"nt.)
E4a*1l"' -No *att"r ,o3 n"glig"nt t," !arri"r
3ill b"% an r"garl"ss o+ t," $alu" o+ t," goos% it
3ill 1a# a*ag"s onl# u1 to P1??.??./ (Sin!" t,is is
;NLESS t," s,i11"r "!lar"s a ,ig,"r $alu" an 1a#s
1@?
Art. 11C6
$oi% t," a!tual a*ag" *a# still b" r"!o$"r".)
9) T," t,ir on" li*its t," liabilit# to an agr"" $alu"
;NLESS t," s,i11"r "!lar"s a ,ig,"r $alu" an 1a#s
1@?
Art. 11C6
a ,ig,"r rat" o+ +r"ig,t. (T,is is $ali an "n+or!"abl"%
as a rul"). (Fr"i4as Co. $. Pa!i+i! &ail St"a*s,i1 Co.%
@6 P,il. 1AB an H"a!o!< $. &a!onra# an Co.% @6
P,il. 6?5). (S"" A*"ri!an Pr"si"nt Lin"s% Lt. $. 5i.
!,ar A. Dl"11"r% "t al.% L.156C1% No$. 6A% 1A6?% 3,"r"
t," Su1r"*" Court a3ar" onl# t," a*ount stat"
in t," bill o+ laing 0 P5?? inst"a o+ P6%C6A.5? 0
t," a*ount o+ a!tual a*ag"s. Dl"11"r !annot
"lu" its 1ro$isions si*1l# b"!aus" t,"# 1r"jui!"
,i*% an ta<" a$antag" o+ t,os" t,at ar"
b"n"+i!ial.)
E4a*1l"' -No *att"r ,o3 n"glig"nt t," !arri"r
*a# b"% it 3ill 1a# a*ag"s onl# u1 to P1??% 7;T%
i+ t," s,i11"r "!lar"s t,at t," $alu" o+ ,is goos is
*or" t,an P1??% an 1a#s a ,ig,"r rat" o+ +r"ig,t%
t,"n a*ag"s *a# b" r"!o$"r" to t," "4t"nt o+ t,"
$alu" "!lar"./ FT,is is orinaril# $ali sin!" it
r"3ars ,on"st#2 but so*"ti*"s t," a*ount 3ill b"
in!r"as" i+ t," $alu" o+ t," goos b" !onsi"rabl#
,ig,"r t,an t," 1ri!" "!lar" as 3,"n sil< !as"s
3ort, P9%5?? "a!, 3"r" lost but t," !arri"r onl#
3ant" to 1a# P9?? "a!, b"!aus" t," s,i11"r
+ail" to "!lar" a $alu" ,ig,"r t,an P9??. H"r"%
t," !ourt sai t,at to gi$" onl# P9?? +or "a!, 3oul
b" un!ons!ionabl"% !onsi"ring t," !ir!u*stan!"s.
(S"" Ks*a"l an Co. $. 7arr"tto% 51 P,il. A?).G
P,o"ni4 Assuran!" Co. $.
&a!onra# M Co.% In!.
L.65?@B% &a# 19% 1AC5
FACTS' A s,i11"r in Sout, Carolina s"nt to a !arri"r
s,i1 (S.S. F"rnban<) +or "$"ntual "li$"r# to Floro S1in.
ning &ills in &anila a s,i1*"nt o+ on" bo4 an on" !arton
!ontaining t"4til" *a!,in"r# s1ar" 1arts 3ort,
S@%1B9.C@. T," $alu" 3as% ,o3"$"r% NOT DECLA5ED
laing an "4tra +r"ig,tag" 1ai% i+ r"Euir" (t,is ti*" t,"
1@1
Art. 11C6
an so t," usual !,arg" o+ S@6.6? 3as *a" +or t,"
+r"ig,tag". In t," bill o+ laing 3as 1rint" a sti1ulation
to t," "++"!t t,at in !as" o+ loss or a*ag"% t," !arri"r8s
liabilit# 3as +i4" onl# at S5??% unl"ss a ,ig,"r $alu" is
"!lar" in t," bill o+
laing an "4tra +r"ig,tag" 1ai% i+ r"Euir" (t,is ti*" t,"
1@1
Art. 11C6
+r"ig,tag" 3oul b" on a $alu" or a $alor"* basis). T,"
s,i1*"nt 3as insur" +or S5%@5? 3it, P,o"ni4 Assuran!"
Co*1an# o+ N"3 Kor<. On arri$al% it 3as is!o$"r" t,at
a 1ortion o+ t," s,i1*"nt ,a b""n a*ag" (to t," "4t"nt
o+ S1%516.CB). T," Floro S1inning &ills su" bot, !arri"r
an insuran!". T," P,o"ni4 Assuran!" Co*1an# 1ai t,"
"Eui$al"nt o+ S1%516.CB. In turn% t," insuran!" !o*1an#
as<" r"i*burs"*"nt +ro* t," !arri"r. T," !arri"r% ,o3.
"$"r% sai t,at it 3as 3illing to ans3"r +or onl# S5?? as
stat" in t," bill o+ laing. Issu"' Ho3 *u!,
r"i*burs"*"nt *ust b" gi$"n 0 S5?? or S1%516.CBJ
HELD' 5"i*burs"*"nt s,oul b" +or onl# S5?? in
$i"3 o+ t," sti1ulation in t," bill o+ laing% a sti1ulation
san!tion" b# our juris1ru"n!". (H"a!o!< $. &a!onra#
an Co.% @6 P,il. 6?5% "t!. an Arts. 1C@A an 1C5?% Ci$il
Co"). 7" it not" t,at no $alu" ,ig,"r t,an S5?? ,a b""n
"!lar". (Not" t," S5?? s,oul b" gi$"n in t," !on$"rsion
rat" t,at 3ill "4ist at t," ti*" satis+a!tion o+ t,"
jug*"nt is a!tuall# *a".)
(9) 5ul" in Contra!ts o+ A,"sion
T,"r" is gr"at"r +r""o* to sti1ulat" on n"glig"n!" i+ t,"
1arti"s ar" on an "Eual 1lan"2 not 3,"r" t,"# ar" ob$iousl# in
un"Eual 1ositions (CONT5ACTS OF ADHESION) su!, as in
t," !as" o+ "*1lo#*"nt or trans1ortation !ontra!ts. (S"" Art.
1C@5% Ci$il Co"2 6 Castan 596.599). &or"o$"r% sti1ulations on
n"glig"n!" *ust b" stri!tl# !onstru" against t," 1art# situ.
at" in a ,ig,"r or *or" a$antag"ous 1osition. (S"" &55 $.
Co*1ania Transatlanti!a% 9B P,il. BC5).
D"lgao 7rot,"rs% In!. $. Court o+ A11"als% "t al.
L.1565@% D"!. 6A% 1A6?
FACTS' D"lgao 7rot,"rs% In!. 3"r" t," o++i!ial unloa.
"rs o+ t," !argo"s s,i11" on t," A*"ri!an Pr"si"nt Lin"s. In
its !ontra!t 3it, t," latt"r% a !laus" r"as' -I"% t," A*"ri!an
Pr"si"nt Lin"s% ,"r"b# assu*" +ull r"s1onsibilit# an liabilit#
+or a*ag"s to !argo"s% s,i1% or ot,"r3is" arising +ro* t," us"
191
Art. 11C6
o+ t," unloaing !ran" o+ t," D"lgao 7rot,"rs% In!. an 3" 3ill
not ,ol sai Co*1an# liabl" or r"s1onsibl" in an# 3a# t,"r"o+.88
196
Art. 11C6
On" 5i!,ar Dl"11"r s,i11" t,ru t," A*"ri!an Pr"si"nt
Lin"s a li+t $an !ontaining !"rtain 1"rsonal "++"!ts. I,il" t,"
$an 3as b"ing unloa" b# t," gantr# !ran" o1"rat" b# t,"
D"lgao 7rot,"rs% it +"ll on t," 1i"r% br"a<ing t," goos insi".
T," s,i11ing !o*1an# 3as or"r" to 1a# +or t," a*ag"s. Issu"'
Is t," D"lgao 7ros.% In!. r"Euir" to r"i*burs" t," !arri"rJ
HELD' No% b"!aus" o+ t," "4"*1tion in t," !ontra!t +ro*
liabilit# on t," 1art o+ t," D"lgao 7ros.% In!. T," "4"*1tion is
CLEA5.
NOTE' In Iarn"r% 7arn"s M Co.% Lt. $. Kasa# (L.16AB@%
=ul# 66% 1A6?)% t," Su1r"*" Court ,"l t,at 3,il" t," "btor
3as n"glig"nt in 1a#ing +or t," !ost o+ t," +"rtiliH"r 3,i!, ,"
,a 1ur!,as" on !r"it 1rior to t," last 3ar% still ," s,oul not
b" !,arg" int"r"st uring t," 3ar #"ars% sin!" ," 3as in goo
+ait,% an sin!" also t," !r"itor 3as a 7ritis, !o*1an# an
t,"r"+or" an "n"*# o+ t," =a1an"s" o!!u1ation +or!"s.
(@) Dins o+ Cul1a Classi+i" A!!oring to t," Sour!" o+ t,"
Obligation
(a) !ul1a !ontra!tual (!ontra!tual n"glig"n!" 0 or t,at 3,i!,
r"sults in a br"a!, o+ a !ontra!t).
(b) !ul1a aEuiliana (!i$il n"glig"n!" or tort or Euasi."li!t).
(!) !ul1a !ri*inal (!ri*inal n"glig"n!" 0 or t,at 3,i!,
r"sults
in t," !o**ission o+ a !ri*" or a "li!t).
(5) Distin!tions 5" t," T,r"" Dins o+ Cul1a
C;LPA
CONT5ACT;A
L
C;LP
A
A:;ILIAN
C;LP
A
C5I&INA
199
Art. 11C6
(a) N"glig"n!" is
*"r"l#
in!i"ntal%
in!i"nt to t,"
1"r+or*an!" o+ an
obligation alr"a#
"4isting b"!aus"
o+ a !ontra!t.
(a) N"glig"n!" ,"r"
is ir"!t%
substan. ti$"%
an in".
1"n"nt.
(5a<"s
$. Atlanti! >ul+
M Pa!i+i! Co.% C
(a) N"glig"n!" ,"r"
is ir"!t%
substan. ti$"%
an in"1"n.
"nt o+ a
!ontra!t.
19@
Art. 11C6
$. Atlanti! >ul+ M
Pa!. Co.% C P,il.
9A5).
(b) T,"r" is a 1r".
"4isting obliga.
tion (a !ontra!t%
"it,"r "41r"ss
or i*1li").
(5a<"s Cas").
(b) No 1r"."4isting
obligation
("4!"1t o+
!ours" t," ut#
to b" !ar"+ul in
all
,u*an
(b) No 1r"."4ist.
ing obligation
("4!"1t t,"
ut# n"$"r to
,ar* ot,"rs).
(!) Proo+ n""" 0
1r"1on"ran!" o+
"$i"n!".
(7arr"o $.
>ar!ia% I.O.>. No.
6% 1. 1A1).
(!) Proo+ n"""
0 1r"1on"ran!"
o+ "$i"n!".
(7arr"o $.
>ar!ia% I.O.>.
No. 6% 1. 1A1).
(!) Proo+ n"""
in a !ri*" 0
1roo+ o+ guilt
b"#on
r"asonabl"
oubt.
(7arr"o $.
() D"+"ns" o+ -goo
+at,"r o+ a
+a*il#/ in t,"
s"l"!tion an
su1"r$ision o+
"*1lo#""s is not
a 1ro1"r !o*.
1l"t" "+"ns" in
!ul1a
!ontra!tual
(t,oug, t,is
*a# &ITI>ATE
a*. ag"s).
(Cang!o $.
&anila 5ailroa
Co.% 9B P,il. C6A
an D" >uia $.
&"ral!o% @?
P,il.
C6?). H"r" 3"
+ollo3 t," rul"
o+
5ESPONDEAT
S;PE5IO5 or
CO&&AND
() D"+"ns" o+ -goo
+a. t,"r% "t!%/ is a
1ro1. "r an
!o*1l"t" "+"ns"
(inso+ar as
"*1lo#"rs or
guar. ians ar"
!on!"rn") in
!ul1a a!Euiliana.
(Cang!o an D"
>uia Cas"s).
() T,is is not a
1ro1"r
"+"ns" in
!ul1a !ri*i.
nal. H"r" t,"
"*1lo#""8s
guilt is
auto*ati!all#
t,"
"*1lo#"r8s
!i$il guilt% i+
t," +or*"r is
insol. $"nt.
(S"" &. Luisa
&artin"H $.
7arr"o).
195
Art. 11C6
(") As long as it is
1ro$" t,at
t,"r" 3as a
!ontra!t%
(") Orinaril#% t,"
$i!. ti* ,as to
1ro$" t,"
n"glig"n!" o+ t,"
(") A!!us" is
1r". su*"
inno!"nt until
t," !on.
196
Art. 11C6
an t,at it 3as
not !arri" out% it
is 1r"su*" t,at
t," "btor is at
+ault% an it is ,is
ut# to 1ro$" t,at
t,"r" 3as no n"g.
lig"n!" in !arr#.
ing out t," t"r*s
o+ t," !ontra!t.
(Cang!o Cas"2 B
&anr"sa C1).
"+"nant. T,is is
b"!aus" ,is a!tion
is bas" on all"g"
n"glig"n!" on t,"
1art o+ t," "+"n.
ant. (Cang!o Cas"
an B &anr"sa C1).
trar# is 1ro$"%
so 1ros"!ution
,as t," bur"n
o+ 1ro$ing t,"
n"glig"n!" o+ t,"
a!!us".
(6) So*" Illustrati$" E4a*1l"s
(a) C;LPA CONT5ACT;AL
A 1ass"ng"r in a ta4i 3as ,urt b"!aus" o+ t," ta4i
ri$"r8s n"glig"n!".
1) T,is is !ul1a !ontra!tual (t,"r" 3as a !ontra!t o+
!arriag" b"t3""n t," 1ass"ng"r an t," o3n"r o+ t,"
ta4i!ab !o*1an#). T,is is tru" "$"n i+ t," 1ass"ng"r
,a not #"t 1ai2 tru" also% "$"n i+ ," ,a no *on"#
to 1a#2 tru" also "$"n i+ t," a!!i"nt o!!urr" as t,"
1ass"ng"r 3as boaring t," ta4i. (S"" Lasa* $.
S*it,%
@5 P,il. 65C).
6) T," ,urt 1ass"ng"r *a# bring a !i$il !as" o+ !ul1a
!ontra!tual (+or br"a!, o+ t," !ontra!t o+ !arriag")
against t," o3n"r o+ t," ta4i!ab !o*1an#% an not
against t," ri$"r% b"!aus" t," !ontra!t is b"t3""n
t," 1ass"ng"r an t," o3n"r% an not b"t3""n t,"
1ass"ng"r an t," ri$"r% 3,o *"r"l# r"1r"s"nts
t," o3n"r. H"n!"% 1ro1"rl#% onl# t," o3n"r s,oul
b" t," "+"nant (3it,out 1r"jui!" to ,is rig,t to
r"i*burs"*"nt +ro* ,is ri$"r). (Suo $. Ta*ora%
FC.A.G 9C O.>. A66 an En!iso $. Na!o!o% FC.A.G @6
O.>. A66 gi$" t," !orr"!t rul"% an not >uti"rr"H $.
19C
Art. 11C6
>uti"rr"H% 56 P,il. 1CC).
9) I+ t," o3n"r !an 1ro$" t,at ," "4"r!is" u" ilig"n!"
in t," s"l"!tion an su1"r$ision o+ t," ri$"r% sai
19B
Art. 11C6
o3n"r is still r"s1onsibl" b"!aus" o+ -r"s1on"at su.
1"rior/ or t," *ast"r.s"r$ant rul" (t," n"glig"n!" o+
t," s"r$ant is t," n"glig"n!" o+ t," *ast"r). Ho3"$"r%
t,is -ilig"n!"/ o+ t," o3n"r *a<"s ,i* a "btor in
goo +ait, an t," a*ag"s 3oul b" *itigat". (S""
&anila 5ailroa Co. $. Co*1ania Transatlanti!a% 9B
P,il. BC52 Cang!o $. &anila 5ailroa Co.% 9B P,il.
C6A an D" >uia $. &anila El"!tri! Co.% @? P,il.
C6?).
@) All t,at t," 1ass"ng"r *ust 1ro$" is t," "4ist"n!" o+
t," !ontra!t o+ !arriag"% an t," +a!t t,at t,"r" 3as
a br"a!, b"!aus" ," i not arri$" at ,is "stination
un,urt. I+ t," !o*1an# 3ants to "s!a1" liabilit#% it
is its ut# to 1ro$" t,at t," ri$"r 3as r"all# !ar"+ul2
ot,"r3is"% t," 1r"su*1tion o+ t," ri$"r8s n"glig"n!"
r"*ains. (S"" Cang!o $. &anila 5ailroa Co.% 9B
P,il.
C6A% 3,"r" a train 1ass"ng"r% on alig,ting +ro* a
train% 3as ,urt 3,"n ," +"ll on sa!<s o+ 3at"r*"lons
!ar"l"ssl# str"3n about2 s"" also B &anr"sa C1).
Antonio V. 5oEu" $. 7i"n$"nio P. 7uan
L.66@5A% O!t. 91% 1A6C
FACTS' In a bus boun +or Pa*1anga% a 1as.
s"ng"r (Antonio V. 5oEu") 3as injur" as a r"sult o+
t," ri$"r8s $iol"nt s3"r$ing to t," rig,t to a$oi a
,"a.on !ollision 3it, anot,"r $",i!l". Issu"' Is t,"
bus !o*1an# 1r"su*" n"glig"ntJ
HELD' K"s% t," bus or !o**on !arri"r is 1r".
su*" n"glig"nt in !as" o+ "at, or 1,#si!al injuri"s
to 1ass"ng"rs unl"ss it 1ro$"s t," "4"r!is" o+ "4traor.
inar# ilig"n!". In"" 3,"n t," a!tion is bas" on
a !ontra!t o+ !arriag"% an not o+ tort% t," !ourt n""
not *a<" an "41r"ss +ining o+ +ault or n"glig"n!" on
t," 1art o+ t," !arri"r% +or its obligation is to
trans1ort t," 1ass"ng"r sa+"l#. (S"" D# S# $. &alat"
Ta4i!ab% "t al.% L.BA9C% No$. 6A% 1A5C).
Art. 11C6
5) I+ t," ta4i !ontain" "+"!ti$" 1arts% t,is is also n"g.
lig"n!" on t," 1art o+ t," !o*1an#. T," !o*1an#
!annot !lai* +or!" *aj"ur" as an "4!us" ,"r". (Lasa*
$. S*it,% @5 P,il. 65C).
Art. 11C6
San P"ro 7us Lin" $. Na$arro
L.66A1% A1r. 6A% 1A5@
FACTS' A 1ass"ng"r on a tru!< 3as ,urt% but in a
!ri*inal !as" against t," ri$"r% sai ri$"r 3as a!Euit.
t". T," $i!ti* no3 su"s t," o3n"r o+ t," tru!< +or !ul1a
!ontra!tual. Issu"' &a# t," suit still 1ros1"rJ
HELD' K"s% b"!aus" t," a!tion is bas" on a !ontra!t.
It is su++i!i"nt +or ,i* to 1ro$" t," "4ist"n!" o+ t," !ontra!t
o+ !arriag" an t," injuri"s su++"r". It is not n"!"ssar#
+or ,i* to 1ro$" t," n"glig"n!" o+ t," ri$"r +or t,is is
1r"su*" ,"r". (O+ !ours"% i+ t," ri$"r !an 1ro$" ," 3as
not n"glig"nt% t," !o*1an# 3oul not b" liabl".)
6) Instan!"s o+ r"!<l"ssn"ss on t," 1art o+ t," ri$"r'
a) ri$ing at an unjusti+i" rat" o+ s1""2
b) +lagrant $iolations o+ t," "l"*"ntar# !ourt"si"s
o+ t," roa2
!) +ailur" to signal 1ro1"rl#2
) "lib"rat" "ntr# on on".3a# str""ts2
") ,is into4i!ation at t," ti*" o+ t," *is,a1 Fas
istinguis," +ro* t," *"r" rin<ing o+ ,ar
liEuorG (Irig,t $. &anila El"!tri! Co.% 6B P,il.
166)2
+) in g"n"ral% an att"*1t to 1ass anot,"r $",i!l"
3,i!, +ails to gi$" 3a# (Cla#ton $. &!Illnat,%
6@1 Io3a 1166).
C) Instan!"s o+ r"!<l"ssn"ss on t," 1art o+ t," o3n"r% or
o1"rator ,i*s"l+'
a) +ailur" to r"1air "+"!ti$" 1arts in t," $",i!l"
(Lasa* $. S*it,% @5 P,il. 65C an =os" Son
$. C"bu Autobus Co.% L.6155% A1ril 9?% 1A5@)
or allo3ing a 3orn.out !onition o+ t," $",i!l"
(Da$ao >ul+ Lu*b"r Cor1. $. N. 7a"ns "l 5osa.
rio% L.15ACB% D"!. 6A% 1A6?) or t," +ailur" o+ t,"
Art. 11C6
!arri"r to 1ro$i" an# !o$"r at t," rig,t si" o+
t," bus to sa+"guar 1ass"ng"rs sitting t,"r"at
Art. 11C6
+ro* +alling t,"r"+ro*. Failur" o+ t," 1ass"ng"r
to ,ol on to t," ar* o+ t," s"at inst"a o+ t,"
,an o+ a +ri"n *itigat"s ,o3"$"r t," liabilit#.
(Laguna Ta#abas 7us Co. $. Cornista% L.661A9%
&a# 6A% 1A6@).
b) +ailur" to +urnis, a !o*1"t"nt an t"st" ri$"r%
to 3,o* t," o3n"r or o1"rator *ust issu"% 3,"n
"ss"ntial% 1ro1"r instru!tions +or sa+" *an"u.
$"ring on t," ,ig,3a#. (Car+ $. &""l% 99 P,il.
9C).
(!) +ailur" to "t"!t a "+"!t in an a11lian!" 1ur.
!,as" +ro* a *anu+a!tur"r% a "+"!t t,at !oul
,a$" b""n is!o$"r" b# t," !arri"r. (N"!"ssito
$. Paras% "t al.% >5 L.1?6?5 an L.1?6?6% =un.
9?% 1A5B). (H"r"% t," Court sai t,at a 1ass"ng"r
o"s not ,a$" t," o11ortunit# +or ins1"!tion%
3,i!, orinaril#% is a$ailabl" to t," !arri"r.)
Lour"s &unsa#a! $.
7"n"i!ta " Lara
L.61151% =un. 66% 1A6B
FACTS' A ri$"r o+ a j""1n"# 3as +oun
r"!<l"ssl# n"glig"nt% t,"r"b# !ausing injuri"s
to ,is 1ass"ng"r. Is t," o3n"r.o1"rator o+ t,"
j""1n"# liabl" +or "4"*1lar# a*ag"s (in ai.
tion to ot,"r <ins o+ a*ag"s)J
HELD' Not n"!"ssaril#. A 1rin!i1al or
*ast"r !an b" ,"l liabl" +or "4"*1lar# or 1uni.
ti$" a*ag"s bas" u1on t," 3rong+ul a!t o+ ,is
ag"nt or s"r$ant onl# 3,"n ," 1arti!i1at" in
t," oing o+ su!, 3rong+ul a!t or ,as 1r"$iousl#
aut,oriH" or subs"Eu"ntl# rati+i" it% 3it, +ull
<no3l"g" o+ t," +a!ts. E4"*1lar# a*ag"s
1un. is, t," int"nt 0 an t,is !annot b"
1r"su*" on t," 1art o+ t," "*1lo#"r *"r"l#
b"!aus" o+ t," 3anton% o11r"ssi$"% or
Art. 11C6
*ali!ious int"nt on t," 1art o+ t," ag"nt.
Art. 11C6
A*baan% "t al. $. 7"llosillo% "t al.
CA.>5 56BC@.5% =ul. B% 1AB1
T," injur" 1ass"ng"rs o+ a 1ubli! utilit#
j""1 ri$"n b# a r"!<l"ss ri$"r !an su" t,"
o3n"r.o1"rators o+ t," j""1 3it,out t," n"!"s.
sit# o+ +irst bringing a !ri*inal !as" against sai
ri$"r. T," go$"rning la3 in su!, a !as" is t,"
Ci$il Co" 3,i!, r"Euir"s !o**on !arri"rs to
!arr# t,"ir 1ass"ng"rs sa+"l# to t,"ir "stina.
tions% 3it, t," "4"r!is" o+ "4traorinar# ili.
g"n!". Consi"ring t," n"glig"n!" o+ t," ri$"r%
it is !l"ar t,at un"r t," *ast"r an s"r$ant
rul"% t," liabilit# o+ t," o3n"rs.o1"rators is not
subsiiar#% but ir"!t an i**"iat". In""%
t," n"glig"n!" o+ t," s"r$ant in !ontra!tual
obligations is t," n"glig"n!" o+ t," *ast"r. T,"
*ast"r an s"r$ant rul" is also <no3n as t,"
o!trin" o+ -r"s1on"at su1"rior./ ;n"r t,is
rul"% t," *ast"r% to "s!a1" liabilit#% !annot 1ut
u1 t," "+"ns" o+ a goo +at,"r in t," s"l"!tion
an su1"r$ision o+ "*1lo#""s ("4!"1t to *itigat"
sai liabilit#% i+ t,is "+"ns" is ul# 1ro$").
(b) C;LPA A:;ILIANA
A 1""strian 3as ,it b# a ta4i an su++"r" 1,#si!al
injuri"s. T," ta4i ri$"r 3as n"glig"nt an 3as r"s1onsibl"
+or t," injur#.
1) T,is is !ul1a aEuiliana% t,"r" b"ing no 1r"$ious "4ist.
ing !ontra!tual r"lations b"t3""n t," 1""strian on
t," on" ,an% an t," ta4i ri$"r an t," o3n"r o+
t," ta4i!ab !o*1an#% u1on t," ot,"r ,an. (S"" H"r.
nan"H $. &"ral!o% @? O.>. 1? S. No. 11% 1. 952 Lilius
$. &anila 5ailroa Co.% 5A P,il. C5B an >uti"rr"H
$. >uti"rr"H% 56 P,il. 1CC).
6) T," injur" 1""strian !an bring an a!tion bas" on
!ul1a aEuiliana (tort or Euasi."li!t) against 7OTH
t," ta4i ri$"r an t," o3n"r or o1"rator o+ t,"
Art. 11C6
ta4i!ab !o*1an#. 5"ason' T," ri$"r is r"s1onsibl"
+or ,is n"glig"n!" in *a<ing 1ossibl" t," injur#.
Art. 11C6
9) THE5EFO5E% in t,is !as" o+ !ul1a aEuiliana% i+ t,"
o3n"r !an 1ro$" u" ilig"n!" in t," s"l"!tion an
su1"r$ision o+ ,is ri$"r% ," !oul not ,a$" b""n r".
s1onsibl" in an# 3a# +or t," injur#. T,us% t,is "+"ns"
is 1ro1"r +or t," "*1lo#"r% an i+ 1ro$"% 3ill "4"*1t
,i* +ro* liabilit#. (H"r"% t," *ast"r.s"r$ant rul"
o"s not a11l#). (7a,ia $. Litonjua M L"#n"s% 9? P,il.
@6@ an H"rnan"H $. &"ral!o% @? O.>. F1? SG No. 1@%
1. 95).
@) Sin!" it is t," 1""strian 3,o all"g"s n"glig"n!" on
t," 1art o+ t," "+"nant% it is ,is (t," 1""strian8s)
ut# to 1r"s"nt an 1ro$" sai n"glig"n!". In ot,"r
3ors% ," 3ill ,a$" t," bur"n o+ 1roo+. As stat" b#
t," Su1r"*" Court' -As a g"n"ral rul"% it is logi!al
t,at in !as" o+ !ul1a aEuiliana% a suing !r"itor
s,oul assu*" t," bur"n o+ 1ro$ing t," "4ist"n!"
o+ t," n"glig"n!"% as t," onl# +a!t u1on 3,i!, ,is
a!tion is bas"./ (Cang!o $. &anila 5ailroa Co.% 9B
P,il. C6A% !iting &anr"sa).
IbaP"H% "t al. $. Nort, N"gros
Sugar Co.% In!.% "t al.
L.6CA?% &ar. 6B% 1A55
Pass"ng"rs o+ a 1ri$at" auto*obil" 3,o broug,t
a !ri*inal a!tion against t," ri$"r o+ a train% an
3,o r"s"r$" a !i$il a!tion against t," train o3n"r%
!an still bring on t," basis o+ !ul1a aEuiliana t,"
!i$il !as" against t," train o3n"r% "$"n i+ t," ri$"r
b" a!Euitt" in t," !ri*inal !as".
(NOTE' E$"n 3it,out r"s"r$ation% t," !i$il !as"
!an also 1ros1"r. T,is is b"!aus" t," train o3n"r is
not r"all# a "+"nant in t," !ri*inal !as". &or"o$"r%
s"" Art. 61CC% Ci$il Co".)
5a*os $. P"1si.Cola
L.66599% F"b. A% 1A6C
Art. 11C6
FACTS' A ri$"r o+ P"1si.Cola is a*itt"l#
n"glig"nt in a $",i!ular !ollision. Suit 3as broug,t
Art. 11C6
b# t," ot,"r !ar o3n"r against bot, t," ri$"r an
P"1si.Cola. 7ut P"1si.Cola 3as abl" to 1ro$" ilig"n!"
in s"l"!tion (no !ul1a in "ligi"no) an su1"r$ision
(no !ul1a in $igilano) o+ t," ri$"r. Issu"' Is P"1si.
Cola still liabl"J
HELD' No% ot,"r3is" it 3oul ,a$" b""n liabl"
soliaril# 3it, t," ri$"r. In P,ili11in" torts% 3" o
not +ollo3 t," o!trin" o+ r"s1on"at su1"rior (3,"r"
t," n"glig"n!" o+ t," s"r$ant is t," n"glig"n!" o+ t,"
*ast"r). Inst"a% 3" +ollo3 t," rul" o+ bonus +a*ilias
(goo +at,"r o+ a +a*il#). T," n"glig"n!" o+ t," "*.
1lo#"r ,"r" is onl# 1r"su*1ti$"2 it !an t,"r"+or" b"
r"butt"% as in t,is !as".
Vinluan $. Court o+ A11"als
L.61@CC.B1% A1r. 6A% 1A66
FACTS' A 1ass"ng"r o+ a bus 3as ,urt b"!aus"
o+ t," n"glig"n!" o+ t," ri$"r o+ t," bus as 3"ll as
t," n"glig"n!" o+ t," ri$"r o+ anot,"r $",i!l". Issu"'
I,o s,oul b" liabl"J
HELD' A!!oring to t," !ourt% +our 1"rsons ar"
liabl"' t," o3n"r o+ t," bus% t," ri$"r o+ t," bus%
t," o3n"r o+ t," ot,"r $",i!l"% an t," ri$"r o+ sai
ot,"r $",i!l" 0 an t,"ir liabilit# is SOLIDA5K
0 not3it,staning t," +a!t t,at t," liabilit# o+ t,"
bus !o*1an# is 1r"i!at" on a CONT5ACT% 3,il"
t," liabilit# o+ t," o3n"r an ri$"r o+ t," ot,"r $".
,i!l" is bas" on a :;ASI.DELICT. (Obs"r$ation'
T," bus ri$"r !an b" "4!us" on t," basis o+ !ul1a
!ontra!tual +or t," !ontra!t o+ !o**on !arriag" 3as
not 3it, ,i*% but 3it, t," bus !o*1an#2 non"t,"l"ss%
," !an b" ,"l liabl" on t," basis o+ !ul1a aEuiliana%
t,"r" b"ing no 1r"."4isting !ontra!t b"t3""n ,i* an
t," 1ass"ng"r. Not" also t,at t," o3n"r o+ t," ot,"r
$",i!l" !an b" "4!us" i+ ," !an 1ro$" u" ilig"n!"
in t," s"l"!tion an su1"r$ision o+ ,is ri$"r% un"r
Art. 61B?% last 1aragra1,% unl"ss at t," ti*" o+ t,"
Art. 11C6
!ollision% sai o3n"r 3as also in ,is $",i!l"% in 3,i!,
!as"% not3it,staning u" !ar" in s"l"!tion an su.
Art. 11C6
1"r$ision% ," 3oul still b" liabl"% i+ ," !oul ,a$"% b#
us" o+ ilig"n!" 1r"$"nt" t," *is+ortun". (S"" Art.
61B@% Ci$il Co").
P"o1l" $. Al"janro O. Tan% =r.
CA.>5 61A@C.C5% =ul. 61% 1AB1
I+ a ri$"r on on" si" o+ t," str""t "sir"s to
!ross t," sa*" to b" on t," ot,"r si"% it is not su+.
+i!i"nt +or ,i* to 1ut on t," l"+t signal lig,t o+ t,"
$",i!l". It is o+ jui!ial noti!" t,at *an# ri$"rs in
our !ountr# toa# 1a# littl" ,"" to su!, a signal%
1ar. ti!ularl# i+ t," $",i!l" b"ing ri$"n b# an
a11roa!,ing ri$"r is s1""ing. I,at t," ri$"r
int"nt on !rossing s,oul o is to si*1l# IAIT +or
t," ot,"r $",i!l" to 1ass% +or a+t"r all% t," ot,"r
ri$"r ,as t," rig,t o+ 3a#. Failur" to so 3ait is
s,""r n"glig"n!".
(!) C;LPA C5I&INAL
A 1""strian 3as injur" b"!aus" o+ t," r"!<l"ssn"ss
o+ a ta4i.ri$"r. As 3" ,a$" alr"a# s""n% t," 1""strian
!an bring an a!tion o+ !ul1a aEuiliana against t," ri$"r
an t," o3n"r o+ t," ta4i !o*1an#. 7ut i+ t," 1""strian
3ants% ," *a# bring an a!tion +or !ul1a !ri*inal (1,#si.
!al injuri"s t,ru r"!<l"ss i*1ru"n!"). In t," sa*" 3a#%
1ass"ng"r *a# bring not onl# a suit +or !ul1a !ontra!tual
but also a suit +or !ul1a !ri*inal (1,#si!al injuri"s t,ru
r"!<l"ss i*1ru"n!").
Pro!"ur" to b" +ollo3"'
T," injur" 1""strian 3ill +il" a !ri*inal !as"
against t," ri$"r (not against t," o3n"r). I+ t,"
ri$"r is +oun guilt#% t," o3n"r 3ill b" subsiiaril#
liabl" i+ t," ri$"r is insol$"nt. T," o3n"r 3ill not
b" allo3" to 1r"s"nt t," "+"ns" o+ u" ilig"n!"
in t," s"l"!tion an su1"r$ision o+ ,is "*1lo#""% +or
t," !on$i!t" ri$"r s,oul 1a#. I+ t," ri$"r b" insol.
156
Art. 11C6
,is liabilit# is auto*ati! an subsiiar#. T,"r" is no
n"!"ssit# o+ 1r"$iousl# r"s"r$ing t," !as" against t,"
o3n"r (b"!aus" t," o3n"r is not a "+"nant in t,"
!ri*inal !as"). A+t"r t," !ri*inal !as" is t"r*inat"%
t," !on$i!t" ri$"r s,oul 1a#. I+ t," ri$"r b" insol.
156
Art. 11C6
$"nt% t," $i!ti* !an no3 +il" a !i$il a!tion against t,"
o3n"r to r"!o$"r on t," latt"r8s subsiiar# liabilit#.
All t," $i!ti* ,as to o is'
a) To 1r"s"nt t," jug*"nt in t," !ri*inal !as"%
"!laring t," ri$"r guilt#.
b) To 1r"s"nt 1roo+ o+ ri$"r8s insol$"n!# b# s,o3.
ing t,at t," "4"!ution att"*1t" b# t," s,"ri++
!oul not b" satis+i". In t," abs"n!" o+ !ollusion
b"t3""n t," ri$"r an 1ros"!uting attorn"#%
on!" t," 6 "4,ibits ar" 1r"s"nt" or 1ro$"% t,"
jug" s,oul or"r t," o3n"r to 1a#. T," o3n"r
3ill not b" allo3" to 1r"s"nt an# "+"ns" an#.
*or". H" !annot% ,o3"$"r% b" sai to ,a$" b""n
"1ri$" o+ ,is a# in !ourt b"!aus" ," also ,a
,is !,an!"% na*"l#% in t," !ri*inal !as" against
t," ri$"r. In sai !as"% ," s,oul ,a$" gi$"n
,is ri$"r a goo "+"ns" !ouns"l% b"!aus" in
"+"ning t," int"r"st o+ t," ri$"r% t," o3n"r
3oul also b" "+"ning ,is o3n int"r"st% +or
,is liabilit# is auto*ati! an "1"n"nt on t,"
ri$"r8s guilt an insol$"n!#. T,is is t," rul"
in !ul1a !ri*inal. (S"" &aria Luisa &artin"H
$. &anu"l H. 7arr"o% "t al.% >5 @A9?B an
7arr"o $. >ar!ia% C9 P,il. 6?C).
(NOTE' I+ a 1ass"ng"r su"s +or !ul1a
!ri*i. nal% substantiall# t," sa*" 1ro!"ur"
as t," abo$" 3oul b" +ollo3".)
(C) So*" Cas"s
7arr"o $. >ar!ia an Al*ario
C9 P,il. 6?C
FACTS' A ta4i.ri$"r o+ 7arr"o <ill" >ar!ia t,ru r"!<.
l"ss ri$ing 3,"n t," ri$"r ,it t," !arr"t"la 3,"r" >ar!ia 3as
ir"!tl# against 7arr"o% t," o3n"r o+ t," ta4i!ab !o*1an#
159
Art. 11C6
a 1ass"ng"r. T," ri$"r 3as +oun guilt# in t," !ri*inal !as"
(!ul1a !ri*inal). 7ut t," !i$il a!tion ,a b""n r"s"r$". Lat"r%
t," ,"irs o+ >ar!ia broug,t a !i$il a!tion (!ul1a aEuiliana)
ir"!tl# against 7arr"o% t," o3n"r o+ t," ta4i!ab !o*1an#
159
Art. 11C6
(&alat" Ta4i!ab Co*1an#). It 3as 1ro$" t,at 7arr"o 3as
n"glig"nt +or ,is ri$"r ,a b""n "*1lo#" b# ,i* "$"n i+ ,"
,a 1r"$iousl# b""n !on$i!t" +or $iolation o+ t," Auto*obil"
La3. 7arr"o !ont"n"% ,o3"$"r% t,at t," a!tion s,oul not
,a$" b""n broug,t against ,i* at on!"% b"!aus" a!!oring to
t," 5"$is" P"nal Co"% ," s,oul b" liabl" onl# i+ t," ri$"r
!annot 1a#% an t,at t,"r"+or"% t," !i$il a!tion s,oul ,a$" b""n
broug,t +irst against t," ri$"r% an t,"n% i+ t," ri$"r is +oun
guilt# an insol$"nt% t,is 3oul not b" t," 1ro1"r ti*" to ta<"
t," a!tion against ,i* (7arr"o). D"!i".
HELD' 7arr"o is !on+us". It is tru" t,at in a !i$il
obligation arising +ro* a !ri*"% t," "*1lo#"r 3oul b" onl#
subsiiaril# liabl" in !as" t," "*1lo#"" !o**itt" t," !ri*" in
t," is!,arg" o+ ,is uti"s. 7;T t,is !as" is not on" o+ t," !i$il
liabilit# arising +ro* a !ri*"% but on" arising +ro* a Euasi."li!t
or !ul1a aEuiliana. An un"r t," Ci$il Co" 1ro$isions on torts%
an "*1lo#"r in a !as" li<" t,is is not *"r"l# subsiiaril#% but
1ri*aril# liabl"% an t,"r"+or" a !as" !an b" broug,t ir"!tl#
against ,i*. His "+"ns" !an b" u" ilig"n!" in t," s"l"!tion
an su1"r$ision o+ ,is "*1lo#""s% but ,"r"% ," 3as 1ro$" to b"
n"glig"nt. H"n!"% ," !an b" *a" to 1a# i**"iat"l#.
Nagrania $. &uluan"#% In!.
L.B966% O!t. 6@% 1A55
FACTS' T," ri$"r o+ an "*1lo#"r 3as !ri*inall# +oun
guilt# o+ a*ag" to 1ro1"rt#% an b"!aus" ," 3as insol$"nt% t,"
"*1lo#"r 3as su" +or ,is subsiiar# !i$il liabilit#. T," $i!ti*
as<" +or P1%9??% but t," "*1lo#"r% in ,is ans3"r% a*itt" li.
abilit# +or onl# P9?? (or P1%??? l"ss). Issu"' I+ bot, 1arti"s as<"
+or jug*"nt on t," 1l"aings% !an t," "*1lo#"r b" ,"l liabl"
+or t," 3,ol" P1%9?? 3,i!, ,a b""n ajug" as t," ri$"r8s
liabilit#J
HELD' K"s% b"!aus" o+ ,is auto*ati! subsiiar# liabilit#
on!" t," ri$"r is +oun !ri*inall# guilt# an insol$"nt. T," o++"r
o+ P9?? 3as an i*1li" a*ission o+ bot, t," ri$"r8s !on$i!tion
an insol$"n!#. T,at ," a*itt" a l"ss a*ount is i**at"rial
155
Art. 11C6
+or% un"r t," la3% ,is is a !o*1l"t" subsiiar# liabilit#.
156
Art. 11C6
&aria Luisa &artin"H $. &anu"l 7. 7arr"o%
"t al.% >5 @A9?B
FACTS' On A1r. 11% 1A@? a ta4i!ab o3n" b# Fausto
7arr"o an ri$"n b# 5os"no Dig*an !olli" 3it, a C,"$.
rol"t !ar ri$"n b# &aria Luisa &artin"H. A !ri*inal !as" 3as
institut" against t," ta4i ri$"r% 3,o 1l"a" guilt#% an 3as
*a" to 1a# a +in" an to in"*ni+# &artin"H. Du" to Dig*an8s
insol$"n!#% &artin"H +il" an a!tion against 7arr"o to ,ol ,i*
subsiiaril# liabl". At t," trial% &artin"H r"li" sol"l# on'
a) t," jug*"nt o+ !on$i!tion against Dig*an2
b) t," 3rit o+ "4"!ution issu" against Dig*an an 1roo+ o+
,is insol$"n!#.
ISS;E' Ioul t," "$i"n!" o+ &artin"H b" su++i!i"nt to
,ol 7arr"o !i$ill# liabl"J
HELD' K"s% t," jug*"nt o+ !on$i!tion 1lus 1roo+ o+ in.
sol$"n!# is su++i!i"nt to ,ol t," "*1lo#"r subsiiaril# liabl"2
in t," abs"n!" o+ !ollusion b"t3""n t," ri$"r an t," $i!ti*%
t," stig*a o+ a !ri*inal !on$i!tion sur1ass"s in "++"!t *"r" !i$il
liabilit#. Co**on s"ns" i!tat"s t,at a +ining o+ guilt in a
!ri*i. nal !as" in 3,i!, 1roo+ b"#on r"asonabl" oubt is
n"!"ssar#% s,oul not b" nulli+i" in a subs"Eu"nt !i$il a!tion
r"Euiring onl# 1r"1on"ran!" o+ "$i"n!". 7arr"o !annot b"
sai to ,a$" b""n "1ri$" o+ ,is a# in !ourt b"!aus" t,"
liabilit# r"all# "1"n" u1on t," ri$"r8s guilt an
insol$"n!#% t," liabilit# b"ing auto*ati! an subsiiar#. It is
,ig, ti*" t,at "*1lo#. "rs s,oul ,a$" t,"ir "*1lo#""s
"+"n" $"r# 3"ll% su11l#ing t,"* 3it, !ouns"l% +or in
"+"ning ,is "*1lo#""s8 int"r"st (in a !ri*inal !as")% ,"% t,"
"*1lo#"r% is auto*ati!all# "+"ning ,i*s"l+. It 3oul ,a$"
b""n i++"r"nt ,a t," !as" b""n on" o+ !ul1a aEuiliana.
FNOTE' T,is ruling 3as r"it"rat" in t," !as" o+ &analo%
"t al. $. 5obl"s Trans. Co.% In!.% L.B1C1% Aug. 16% 1A56. In sai
!as" t," Court also ,"l t,at t," s,"ri++8s r"turn o+ t," 3rit o+
"4"!ution s,o3ing non.satis+a!tion o+ t," jug*"nt b"!aus" o+
a!!us"8s insol$"n!# 3as a*issibl" in "$i"n!" an t," s,"ri++
15C
Art. 11C6
o"s not n"" to t"sti+# in !ourt as to t," +a!t stat" in t," "ntr#
b"!aus" it is an o++i!ial jug*"nt. &or"o$"r% t," !i$il !as" !an
15B
Art. 11C6
b" broug,t not 3it,in onl# +our #"ars but 3it,in t"n (1?) #"ars
b"!aus" it aris"s out o+ a +inal jug*"nt.G
P"o1l" o+ t," P,ili11in"s $. ="sus V"rano
L.15B?5% F"b. 6B% 1A61
FACTS' Do*inaor Paras% a 1ass"ng"r in a tru!< o+ t,"
&inanao 7us Co.% 3as <ill" 3,"n t," tru!< ri$"n b# ="sus
V"rano +igur" in a $",i!ular a!!i"nt. T," 7us Co. 1ai t,"
,"irs o+ t," "!"as" P9%???. &rs. Paras% in ,"r o3n b",al+% an
on b",al+ o+ ,"r *inor !,ilr"n 3it, t," "!"as"% 3ai$"
+urt,"r rig,ts to r"!o$"r a*ag"s. V"rano 3as subs"Eu"ntl#
!,arg" 3it, ,o*i!i" t,ru r"!<l"ss i*1ru"n!". A+t"r trial%
t," lo3"r !ourt +oun ,i* guilt#. In aition to t," s"nt"n!"
o+ i*1ris. on*"nt% V"rano 3as or"r" to 1a# t," ,"irs o+ t,"
"!"as"% Paras% t," su* o+ P5%??? 3it, subsiiar#
i*1rison*"nt in !as" o+ insol$"n!#. T," issu"s ar" 3,"t,"r t,"
3ai$"r in +a$or o+ t," !o*1an# "*bra!"s t," !i$il liabilit# o+
t," ri$"r2 3,"t,"r t," rig,t to r"!o$"r u1on t," !i$il liabilit#
arising +ro* t," !ri*" *a# b" 3ai$" an 3,"t,"r su!,
3ai$"r *a# b" *a" in b",al+ o+ t," *inor ,"irs b# t,"ir
*ot,"r.
HELD'
a) T," 3ai$"r in +a$or o+ t," !o*1an# in!lu"s t," !i$il li.
abilit# o+ t," ri$"r% +or in !as" o+ insol$"n!# on t," 1art o+
t," ri$"r% t," !o*1an# is liabl" un"r t," 5"$is" P"nal
Co". For t," ,"irs to also r"!o$"r +ro* t," ri$"r 3oul
b" to grant t,"* oubl" in"*nit#.
b) ;n"r t," 5ul"s o+ Court% !i$il liabilit#% 3,"t,"r arising
+ro* a !ri*" or not% !an b" 3ai$".
!) T," 3ai$"r b# &rs. Paras in ,"r o3n b",al+ is $ali% but
not t,at in b",al+ o+ ,"r *inor !,ilr"n% sin!" alt,oug,
s," is t," a*inistrator o+ t,"ir 1ro1"rt#% t," 3ai$"r or
!o*1ro*is" s,oul ,a$" ,a !ourt a11ro$al% b"ing an a!t
o+ o3n"rs,i1 an not *"r" a*inistration. (Arts. 96?%
6?96% Ci$il Co" an Visa#an $. Suguitan% L.B9??% No$.
1B% 1A55). T,"r"+or"% sin!" P9%??? ,a alr"a# b""n 1ai%
15A
Art. 11C6
t," ,"irs *a# still r"!o$"r P6%???% t," 1art t,at ,a NOT
b""n $alil# 3ai$". In ot,"r 3ors% t," in"*nit# in t,"
!ri*inal !as" 3as r"u!" to P6%???.
16?
Art. 11C6
) Art. 61CC sa#s' -5"s1onsibilit# +or +ault or n"glig"n!" un"r
Art. 61C6 0 !ul1a aEuiliana 0 is "ntir"l# s"1arat" an
is. tin!t +ro* t," !i$il liabilit# arising +ro* n"glig"n!"
un"r t," P"nal Co" ("4 "li!to). 7ut t," 1lainti++ !annot
r"!o$"r t3i!" +or t," sa*" a!t or o*ission o+ t,"
"+"nant./
Virata $. O!,oa
L.@61CA% =an. 91% 1ACB
A ri$"r8s a!Euittal in a !ri*inal !as" is not a bar to
a !i$il !as" +or a*ag"s. I,at is 1ro,ibit" is a oubl"
r"!o$"r# +or t," sa*" n"glig"nt a!t.
(B) E++"!ts o+ Vi!ti*8s O3n N"glig"n!" an o+ His Contribu.
tor# N"glig"n!"
(a) I,"n a 1lainti++8s o3n n"glig"n!" 3as t," i**"iat" an
1ro4i*at" !aus" o+ ,is injur#% ," !annot r"!o$"r a*ag"s
(b"!aus" t,"r" is no !ul1a aEuiliana on t," 1art o+ t," ".
+"nant). (Art. 61CA% Ci$il Co"). E4a*1l"' A 1""strian%
not loo<ing 3,"r" ," 3as going% bu*1" into a !ar"+ull#
ri$"n !ar. H" !annot r"!o$"r a*ag"s in !ul1a aEuiliana.
As a *att"r o+ +a!t% i+ an# a*ag" 3as !aus" t," !ar% t,"
o3n"r !an r"!o$"r +ro* t," 1""strian.
Ong $. &"tro1olitan Iat"r Distri!t
L.C66@% Aug. 6A% 1A6B
FACTS' A $isitor 3as ro3n" in a s3i**ing r"sort
u" to ,is o3n n"glig"n!"% an "s1it" *"asur"s on t," 1art
o+ t," r"sort aut,oriti"s to sa$" ,i*. Issu"' Is t," r"sort
liabl"J
HELD' No% t," r"sort is NOT liabl". I,il" it is ut#.
boun to 1ro$i" +or sa+"t# *"asur"s% still it is not an
absolut" insur"r o+ t," sa+"t# o+ its !usto*"rs or $isitors.
T," o!trin" o+ -last !l"ar !,an!"/ !annot a11l# i+ t,"'
1) n"glig"n!" o+ t," 1lainti++ is !on!urr"nt 3it, t,"
161
Art. 11C6
n"glig"n!" o+ t," "+"nant2
6) 1art# !,arg" is r"Euir" to a!t instantan"ousl#2
166
Art. 11C6
9) injur# !annot b" a$oi" "s1it" t," a11li!ation at
all ti*"s o+ all t," *"ans to a$oi t," injur# (a+t"r
t," 1"ril is% or s,oul ,a$" b""n% is!o$"r")% at l"ast
in all instan!"s 3,"r" t," 1r"$ious n"glig"n!" o+ t,"
1art# !,arg" !annot b" sai to ,a$" !ontribut" to
t," injur# at all.
(b) I+ t," 1lainti++8s n"glig"n!" 3as onl# CONT5I7;TO5K%
t," i**"iat" an 1ro4i*at" !aus" o+ t," injur# b"ing
t," "+"nant8s la!< o+ u" !ar"% t," 1lainti++ *a# r"!o$"r
a*ag"s% 7;T t," !ourts s,all *itigat" t," a*ag"s to
b" a3ar". (Art. 61CA% Ci$il Co").
5a<"s $. Atlanti! >ul+ an Pa!i+i! Co.
C P,il. 95A
FACTS' 5a<"s% a N"gro% 3as at 3or< trans1orting
iron rails +ro* a barg" in t," ,arbor to t," #ar o+ t,"
Atlanti! >ul+ an Pa!i+i! Co*1an#. At a !"rtain s1ot% t,"
railroa tra!< bro<"% u1s"t t," !art% an ,it 5a<"s. His
l"g 3as a+t"r3ars a*1utat". It 3as 1ro$" t,at t,"
!aus" o+ t," a!!i"nt 3as a "+"!t in t," tra!<% a "1r"s.
sion t,"r"in. Pr"$iousl# t," "1r"ssion ,a b""n noti!"%
but t," r"1air u1on it 3as on" n"glig"ntl#. T,"r" is no
Eu"stion t,"r"+or" o+ t," Co*1an#8s n"glig"n!". 7ut t,"
Co*1an# !ount"r" b# sa#ing t,at 5a<"s ,i*s"l+ 3as
n"glig"nt in t3o r"s1"!ts'
1) Alt,oug, ," noti!" t," "1r"ssion% ," still !ontinu"
3it, ,is 3or<2
6) Inst"a o+ 3al<ing in +ront or b",in t," !ar% 5a<"s
3al<" at t," si".
T," Court is*iss" t," +irst groun b# sa#ing t,at
5a<"s i not <no3 t,at t," tra!< ,as b""n r"1air" n"gli.
g"ntl#. T," s"!on groun% ,o3"$"r% 3as a*itt" to s,o3
5a<"s8 n"glig"n!".
Issu"' Is t,is n"glig"n!" o+ 5a<"s su++i!i"nt to bar ,i*
+ro* a r"!o$"r# o+ a*ag"sJ
169
Art. 11C6
HELD' No% t,is n"glig"n!" o+ 5a<"s i not bar ,i*
+ro* r"!o$"ring a*ag"s. 5a<"s i not !ontribut" to t,"
16@
Art. 11C6
a!!i"nt2 ," onl# !ontribut" to t," injur# or a*ag" u1on
,i*s"l+. T,"r"+or"% ," !an still r"!o$"r% but t," a*ag"s
s,oul b" r"u!" or *itigat" b"!aus" o+ ,is o3n
!ontribu. tor# n"glig"n!".
(A) So*" Do!trin"s
(a) I+ an "*1lo#"r !o*1an# +ails to 3arn an ignorant "*1lo#""
to b" !ar"+ul about an un+a*iliar *a!,in"% it s,oul r".
s1on +or a*ag"s in !as" o+ injur#. (Ta*a#o $. >s"ll% 95
P,il. A59).
(b) T," *"r" +a!t t,at a *an 3as run< at t," ti*" o+ an
a!!i. "nt o"s not *"an ," 3as n"glig"nt% 1ro$i" ,"
"4"r!is" u" !ar". (Irig,t $. &anila El"!tri! Co.% 6B
P,il. 166).
(!) Storing 1otato"s in a $"r# tig,t an un$"ntilat" lor!,"r
un"r a burning sun !ausing t,"* to rot is gross n"gli.
g"n!". (Has,i* an Co. $. 5o!,a an Co.% 1B P,il. 915).
() Abanoning a to3" $"ss"l in a !al* s"a just b"!aus" t,"
to3 lin" bro<"% an 3it, +ull <no3l"g" t,at it *ig,t g"t
lost% is n"glig"n!". (>uH*an $. N M 7",n an &"#"r% M Co.
$. P,il. &otors Cor1.% 55 P,il. 16A).
(") I+ a str""t!ar 1ass"ng"r is ,urt b"!aus" o+ an a!!i"nt
3,"r" t,"r" 3as no n"glig"n!" at all% t," str""t!ar !o*1an#
!annot b" liabl" +or !ul1a !ontra!tual +or t,"r" 3as no
n"glig"n!". (Carlos >o!o $. &"ral!o% 9C O.>. 1. 66C5). A
tir" blo3.out o"s not !onstitut" n"glig"n!" unl"ss t,"
tir" 3as alr"a# ol an s,oul not ,a$" b""n us" at all.
In""% t,is 3oul b" a !l"ar !as" o+ a +ortuitous "$"nt.
(5origu"H $. 5" Lin" Trans1ortation Co.% FC.A.G 51 O.>.
9??6% =un". 1A55).
(+) N"glig"n!" is a Eu"stion "1"ning u1on t," +a!ts o+ "a!,
1arti!ular !as"2 in"" it is a Eu"stion o+ +a!t. (Tu!<"r $.
&ilan% FC.A.G @A O.>. @9CA).
(1?) Liabilit# +or t," Cul1a AEuiliana o+ Ot,"rs
165
Art. 11C6
(a) T," +at,"r an% in !as" o+ ,is "at, or in!a1a!it#% t,"
*ot,"r% ar" r"s1onsibl" +or t," a*ag"s !aus" b# t,"
*inor !,ilr"n 3,o li$" in t,"ir !o*1an#% unl"ss t," 1ar.
"nt !an 1ro$" t,at ," or s," obs"r$" all t," ilig"n!" o+
166
Art. 11C9
a goo +at,"r o+ a +a*il# to 1r"$"nt a*ag". (Art. 61B?%
Ci$il Co").
(b) >uarians ar" liabl" +or a*ag"s !aus" b# t," *inors or
in!a1a!itat" 1"rsons 3,o ar" un"r t,"ir aut,orit# an
li$" in t,"ir !o*1an#% unl"ss sai guarians obs"r$" all
t," ilig"n!" o+ a goo +at,"r o+ a +a*il# to 1r"$"nt a*.
ag". (Art. 61B?% Ci$il Co").
(!) E*1lo#"rs s,all b" liabl" +or t," a*ag"s !aus" b# t,"ir
"*1lo#""s an ,ous",ol ,"l1"rs a!ting 3it,in t," s!o1" o+
t,"ir assign" tas<% "$"n t,oug, t," +or*"r ar" not "ngag"
in an# busin"ss or inustr#% unl"ss sai "*1lo#"rs !an
1ro$" t,at t,"# obs"r$" all t," ilig"n!" o+ a goo +at,"r
o+ a +a*il# to 1r"$"nt a*ag". (Art. 61B?% Ci$il Co").
() I,o"$"r 1a#s +or t," a*ag" !aus" b# ,is "1"n"nts or
"*1lo#""s *a# r"!o$"r +ro* t," latt"r 3,at ," ,a 1ai
or "li$"r" in satis+a!tion o+ t," !lai*. (Art. 61B1% Ci$il
Co").
(") Pro$in!"s% !iti"s% an *uni!i1aliti"s s,all b" liabl" +or
a*ag"s +or t," "at, o+ or injuri"s su++"r" b# an# 1"r.
son b# r"ason o+ t," "+"!ti$" builings% an ot,"r 1ubli!
3or<s un"r t,"ir !ontrol or su1"r$ision. (Art. 61BA% Ci$il
Co").
>olin $. Li1<in
(Fla) @A So. 6n% 59A
6C AL5 6 B16 (1A59)
An inn<""1"r is un"r a ut# to "4"r!is" orinar# !ar" to
<""1 ,all3a#s r"asonabl# 3"ll.lig,t" an +r"" +ro* obstru!tions
an 3ill% t,"r"+or"% b" liabl" in !as" a gu"st is injur" 3,"n t,"
,all3a# to ,is roo* is not lig,t"% an ," tri1s o$"r a *attr"ss
!ar"l"ssl# 1la!" in t," ar< ,all.
Art. 11C9. T," +ault or n"glig"n!" o+ t," obligor
!onsists in t," o*ission o+ t,at ilig"n!" 3,i!, is r"Euir"
b# t," na. tur" o+ t," obligation an !orr"s1ons 3it, t,"
!ir!u*stan!"s o+ t," 1"rson% o+ t," ti*" an o+ t," 1la!".
16C
Art. 11C9
I,"n n"glig"n!" s,o3s ba +ait,% t," 1ro$isions o+
Arti!l"s 11C1 an 66?1% 1aragra1, 6% s,all a11l#.
16B
Art. 11C9
I+ t," la3 or !ontra!t o"s not stat" t," ilig"n!"
3,i!, is to b" obs"r$" in t," 1"r+or*an!"% t,at 3,i!, is
"41"!t" o+ a goo +at,"r o+ a +a*il# s,all b" r"Euir".
CO&&ENT'
(1) D"gr""s o+ Cul1a ;n"r 5o*an La3
Art. 11C9 !,ang"s t," "gr""s o+ !ul1a <no3n un"r 5o*an
La3% 3,i!, 3"r" as +ollo3s'
(a) !ul1a lata 0 gra$" n"glig"n!"
(b) !ul1a l"$is 0 orinar# n"glig"n!"
(!) !ul1a l"$issi*a 0 slig,t n"glig"n!"
FNOTE' ;n"r 5o*an La3 0
1) I+ slig,t ilig"n!" is r"Euir"% it is onl# gra$" n"gli.
g"n!" t,at 3ill *a<" t," "btor liabl".
6) I+ orinar# ilig"n!" is r"Euir"% it is orinar# n"gli.
g"n!" t,at 3ill *a<" t," "btor liabl".
9) I+ gr"at ilig"n!" is r"Euir"% "$"n slig,t n"glig"n!"
3ill *a<" t," "btor liabl".G
(NOTE' T," !lassi+i!ation abo$" ,as not b""n +ollo3"
in t," Ci$il Co" b"!aus" toa# t,"r" ar" $"r# *an# <ins
or "gr""s o+ ilig"n!" r"Euir".)
(6) Dins o+ Dilig"n!" ;n"r t," Ci$il Co"
;n"r t," Co"% t," +ollo3ing <ins o+ ilig"n!" ar" r".
Euir"'
(a) t,at agr"" u1on b# t," 1arti"s
(b) in t," abs"n!" o+ (a)% t,at r"Euir" b# t," la3 (1arti!ular
1ro$ision)
FNOTE' T," r"s1onsibilit# o+ a !o**on !arri"r is
,as a rig,t to r"!"i$" t,"*. (Art. 1C96% Ci$il Co"). It !an
161
Art. 11C9
ENT5AO5DINA5K an lasts +ro* t," ti*" t," goos ar"
1la!" in its 1oss"ssion until t,"# ar" "li$"r" a!tuall#
or !onstru!ti$"l#% to t," !onsign"" or to t," 1"rson 3,o
,as a rig,t to r"!"i$" t,"*. (Art. 1C96% Ci$il Co"). It !an
161
Art. 11C9
onl# b" "4"*1t t,"r"+ro* +or !aus"s "nu*"rat" in Art.
1C9@. (A*"ri!an Pr"s. Lin"s $. 5i!,ar A. Dl"11"r% "t al.%
L.156C1% No$. 6A% 1A6?).G
(!) in t," abs"n!" o+ (b)% t,at "41"!t" o+ a goo +at,"r o+ a
+a*il# (bonu* 1at"r +a*ilia)
FNOTE' In a !ontra!t 3it, a !o**on !arri"r +or 1as.
s"ng"rs (li<" a ta4i or a jitn"#) t," la3 1ro$i"s t,at t,"
!arri"r is boun to !arr# t," 1ass"ng"rs sa+"l# as +ar as
,u*an !ar" an +or"sig,t !an 1ro$i"% using t," ut*ost
ilig"n!" o+ $"r# !autious 1"rsons% 3it, a u" r"gar +or
all t," !ir!u*stan!"s. (Art. 1C55% Ci$il Co"). T,is is so
"$"n i+ t," 1ass"ng"r is !arri" +r"" or at a r"u!" rat".
(Art. 1C5B% i.). ;1on t," ot,"r ,an% t," 1ass"ng"r s,oul
obs"r$" t," ilig"n!" o+ a goo +at,"r o+ a +a*il# to a$oi
injur# to ,i*s"l+. (Art. 1C61% i.). 7ut t," !ontributor# n"g.
lig"n!" o+ t," 1ass"ng"r o"s not bar r"!o$"r# o+ a*ag"s
+or ,is "at, or injuri"s% i+ t," 1ro4i*at" !aus" t,"r"o+ is
t," n"glig"n!" o+ t," !o**on !arri"r% but t," a*ount o+
a*ag"s s,all b" "Euitabl# r"u!". (Art. 1C66% i.).G
FNOTE' T," Publi! S"r$i!" Co**ission *a#% on its
o3n *otion or on 1"tition o+ an# int"r"st" 1art#% a+t"r
u" ,"aring% !an!"l t," !"rti+i!at" o+ 1ubli! !on$"ni"n!"
grant" to an# !o**on !arri"r t,at r"1"at"l# +ails to
!o*1l# 3it, ,is or its ut# to obs"r$" "4traorinar#
ilig"n!". (Art.
1C65% i.).G
>l"nn $. Ha#n"s
1A6 Va. 5C@ (1A59)
I+ an attorn"# los"s t,ru t,"+t b# a !ri*inal t," 1ro1"rt#
o+ ,is !li"nt 3,i!, ,a b""n "li$"r" to ,i*% t," attorn"# is
1r"su*" to ,a$" b""n n"glig"nt in ta<ing !ar" o+ sai 1ro1"rt#
an 3oul orinaril# b" liabl".
Dr#broug, $. V""!,
is not !all" to t," 1r"s"n!" o+ t," +ur !oat% s,oul t," o3n"r
166
Art. 11C9
69B SI 6% AA6 (1A59)
ISS;E' I+ an auto*obil" 3it, a +ur !oat insi" is l"+t
insi" a 1ar<ing lot% but t," att"ntion o+ t," 1ar<ing lot
att"nant
is not !all" to t," 1r"s"n!" o+ t," +ur !oat% s,oul t," o3n"r
166
Art. 11C9
o+ t," 1ar<ing lot b" liabl" in !as" t," +ur !oat is stol"n b# an
outsi"rJ
HELD' No% +or 3,il" t,"r" 3as a "1osit (bail*"nt) o+ t,"
!ar% t,"r" 3as no "1osit o+ t," +ur !oat.
Da$ao >ul+ Lu*b"r Cor1. $.
N. 7a"ns "l 5osario% "t al.
L.15ACB% D"!. 6A% 1A6?
I+ a tru!< ri$"r% in $iolation o+ !o*1an# r"gulations% al.
lo3s ,is 3i+" an !,ilr"n to ri" 3it, ,i* on t," tru!<% t,is is
NOT b# its"l+ n"glig"n!". On t," !ontrar#% t,"ir 1r"s"n!" 3oul
*a<" t," ri$"r "4tr"*"l# !ar"+ul.
Far East 7an< an Trust Co. $. Estr"lla O. :u"ri*it
>5 1@B5B6% =an. 16% 6??6
FACTS' 5"s1on"nts +il" a !o*1laint against 1"tition"r.
ban< an !"rtain o++i!ials o+ t," latt"r% all"ging t,at t,at t,"#
r"+us" to allo3 ,"r to 3it,ra3 ,"r ti*" "1osit "$i"n!" b#
+our !"rti+i!at"s o+ "1osit in t," total a*ount o+ S6?%???. T,"
trial !ourt or"r" 1"tition"r.ban< an its o++i!ials to allo3 r".
s1on"nt to 3it,ra3 ,"r ti*" "1osit 1lus a!!ru" int"r"sts.
T," Court o+ A11"als (CA) a++ir*" t," "!ision o+ t," trial
!ourt 3it, t," *oi+i!ation t,at 1"tition"r.ban< 3as sol"l#
liabl" b"!aus" t," latt"r ,a a 1"rsonalit# s"1arat" +ro* its
o++i!"rs an sto!<,ol"rs. On a11"al% t," Su1r"*" Court
a++ir*" t," CA.
HELD' P"tition"r.ban< +ail" to 1ro$" t,at it ,a alr"a#
*a" 1a#*"nt !onsi"ring t,at t," subj"!t !"rti+i!at"s o+ ".
1osit 3"r" still in t," 1oss"ssion o+ t," "1ositors. T," 1rin!i1l"
t,at 1a#*"nt% in or"r to is!,arg" a "bt% *ust b" *a" to
so*"on" aut,oriH" to r"!"i$" it is a11li!abl" to t," 1a#*"nt
o+ !"rti+i!at"s o+ "1osit. P"tition"r s,oul% t,us% not ,a$" 1ai
r"s1on"nt8s ,usban or an# t,ir 1art# t," a*ount o+ t," ti*"
"1osit 3it,out r"Euiring t," surr"n"r o+ t," !"rti+i!at"s o+
"1osit. La!,"s 3oul also not "+"at r"s1on"nt8s !lai* as s,"
1C9
Art. 11C9
i not 3it,ra3 ,"r "1osit b"!aus" s," r"li" on 1"tition"r
ban<8s assuran!" t,at int"r"st 3oul a!!u*ulat" annuall# "$"n.
1C@
Art. 11C@
a+t"r *aturit# o+ t," ti*" "1osit an s," s"t asi" t," *on"#
t,"r"in +or ,"r r"tir"*"nt.
Art. 11C@. E4!"1t in !as"s "41r"ssl# s1"!i+i" b# t,"
la3% or 3,"n it is ot,"r3is" "!lar" b# sti1ulation or
3,"n t," natur" o+ t," obligation r"Euir"s t," assu*1tion
o+ ris<% no 1"rson s,all b" r"s1onsibl" +or t,os" "$"nts
3,i!, !oul not b" +or"s""n% or 3,i!, t,oug, +or"s""n%
3"r" in"$itabl".
CO&&ENT'
(1) >"n"ral 5ul" +or Fortuitous E$"nts
No liabilit# +or a +ortuitous "$"nt (!aso +ortuito) (t,at 3,i!,
!oul not b" +or"s""n% or 3,i!, "$"n i+ +or"s""n% 3as in"$ita.
bl").
(6) E4!"1tions 0 T," "btor is r"s1onsibl" +or a +ortuitous "$"nt
in t," +ollo3ing !as"s'
(a) I,"n "41r"ssl# "!lar" b# t," la3 Fsu!, as 3,"n t," 1os.
s"ssor is in 7AD +ait, (Art. 556% Ci$il Co") or is in "+ault.
(Art. 1165% Ci$il Co").G
(b) I,"n "41r"ssl# "!lar" b# sti1ulation or !ontra!t Fsu!,
as 3,"n t," !ontra!t sa#s'
-I+ t,"r" b" a +ortuitous "$"nt t,at 3oul !aus" "la# in
t," "li$"r# o+ 1alo!<s% an "4t"nsion *ust b" soug,t%
ot,"r3is"% a*ag"s !an b" as<"./ (S"" 5"1ubli! o+ t,"
P,ili11in"s $. Litton M Co.% >5 L.5?1B% No$. 6B% 1A59).G
(!) I,"n t," natur" o+ t," obligation r"Euir"s t," assu*1tion
o+ ris< (t," o!trin" o+ C5EATED 5ISD) FE4a*1l"' I,"n
a !arri"r trans1orts #na*it"% an b"!aus" o+ an
a!!i"ntal tir" blo3.out it injur"s n"arb# 1ro1"rt#% t,"
!arri"r 3oul b" r"s1onsibl". T,is is b"!aus" o+ t,"
natur" o+ !arr#ing #na*it". ;1on t," ot,"r ,an%
injuri"s !aus" b# a tir" blo3.out o+ a 1"r+"!tl# n"3 tir"%
or at l"ast a still goo on"% 3,"n no "41losi$"s or
1C5
Art. 11C@
ang"rous t,ings 3"r" b"ing !ar. ri"% ar" u" to an
una$oiabl" a!!i"nt% an t," o3n"r o+ t," !ar 3oul not
b" liabl". (S"" 5origu"H $. 5" Lin" Trans1ortation Co.%
FC.A.G 51 O.>. 9??6% =un. 1A55).G
1C6
Art. 11C@
(9) EEui$al"nt T"r*s +or Fortuitous E$"nt
(a) !aso +ortuito (lit"ral translation)
(b) a!t o+ >o (li<" lig,tning)
=uan F. Na<1il an Sons% "t al. $. CA% "t al.
>5 @CB51% O!t. 9% 1AB6
To "4"*1t t," obligor +ro* liabilit# +or a br"a!, o+
an obligation u" to an -a!t o+ >o%/ t," +ollo3ing *ust
!on!ur' (a) t," !aus" o+ t," br"a!, o+ t," obligation *ust
b" in"1"n"nt o+ t," 3ill o+ t," "btor2 (b) t," "$"nt *ust
b" "it,"r un+or"s""abl" or una$oiabl"2 (!) t," "$"nt *ust
b" su!, as to r"n"r it i*1ossibl" +or t," "btor to +ul+ill ,is
obligation in a nor*al *ann"r2 an () t," "btor *ust b"
+r"" +ro* an# 1arti!i1ation in% or aggra$ation o+% t," injur#
to t," !r"itor.
An a!t o+ >o is an a!!i"nt% u" ir"!tl# an "4.
!lusi$"l# to natural !aus"s 3it,out ,u*an int"r$"ntion%
3,i!, b# no a*ount o+ +or"sig,t% 1ains or !ar"% r"asonabl#
to ,a$" b""n "41"!t"% !oul ,a$" b""n 1r"$"nt".
(!) +or!" *aj"ur" (li<" 3ar or ar*" robb"r#) but i+ t," 3ar
,a alr"a# bro<"n out b"+or" t," !ontra!t 3as "nt"r"
into% t," 3ar !annot b" !onsi"r" un+or"s""n. (S"r$"r $.
Eis"*b"rg an Co.% L.1?C@1% &ar. 6A% 1A51).
() una$oiabl" a!!i"nt (li<" a tir" blo3.out 1ro$i" t,"r"
3as no n"glig"n!")
(@) Ess"ntial C,ara!t"risti!s o+ a Fortuitous E$"nt
(a) t," !aus" *ust b" in"1"n"nt o+ t," 3ill o+ t," "btor
(+r""o* +ro* PA5TICIPATION or A>>5AVATION)2
E4a*1l"' Loss o+ a +ir"ar* 3,i!, +"ll to t," botto* o+ t,"
s"a 3,"n t," s,i1 san< uring a stor*. (Insular >o$8t. $.
7ing,a*% 19 P,il. 55B).
(b) i*1ossibilit# o+ +or"s""ing or i*1ossibilit# o+ a$oiing it%
"$"n i+ +or"s""n2
1CC
Art. 11C@
E4a*1l"' Da*ag" to train 1ass"ng"rs 3,"n t," train is
,it b# lig,tning.
1CB
Art. 11C@
(!) t," o!!urr"n!" *ust b" su!, as to r"n"r it i*1ossibl" +or
t," "btor to +ul+ill ,is obligation in a nor*al *ann"r.
E4a*1l"s' Ar*" robb"r# !ausing t," loss o+ a s1"!i+i! ra.
io% but not i+ *on"# is ta<"n +or *on"# is a g"n"ri! t,ing2
s"iHur" b# t," =a1an"s" *ilitar# +or!"s% uring t," 3ar% o+
!o1ra "1osit" in a 3ar",ous". (Nort, N"gros Sugar Co.
$. Co. >"n. " Taba!os% L.A6CC% &ar. 6A% 1A5C).
(5) So*" Cas"s
Lasa* $. S*it,
@5 P,il. 65C
FACTS' A 1ass"ng"r 3as ,urt 3,"n t," !ar ," 3as riing
on +igur" in an -a!!i"nt/ !aus" "it,"r b# t," ri$"r8s r"!<l"ss.
n"ss or !ar "+"!ts.
HELD' T," o1"rator is liabl" sin!" t,is is not a !as" o+
+ortuitous "$"nt. (T,is ruling 3as r"it"rat" in t," !as" o+ =os"
Son $. C"bu Autobus Co.% L.6155% A1r. 9?% 1A5@% 3,"r" t," "+"!t
3as in t," rag.lin< s1ring.)
5"1ubli! o+ t," P,ili11in"s $. Litton an Co.
A@ P,il. 56
FACTS' T," "+"nant 1ro*is" to "li$"r to t," 1lainti++
(go$"rn*"nt) on or b"+or" &ar. 1% 1A@6% A6%??? 1alo!<s +or "l"!.
tion 1ur1os"s but 3as not abl" to "li$"r t3o.t,irs b"!aus" o+
!"rtain un+or"s""n "$"nts (su!, as t," $"ss"l b"ing stran" at
a !"rtain islan or trans1ortation "tour). In t," !ontra!t% t,"
+ollo3ing 1ro$ision 3as *a"' -S,oul t,"r" b" "la# in "li$"r#%
u" to a !onition !l"arl# b"#on t," !ontra!tor8s !ontrol% t,"
Pur!,asing Ag"nt *a# grant a r"asonabl" ti*" +or "4t"nsion i+
a11li" +or b"+or" "+ault is in!urr". D"li$"ri"s *a" 3it,in
t," "4t"n" 1"rio s,all not b" subj"!t to 1"nalti"s./ Alt,oug,
t,"r" a11ar"ntl# 3"r" una$oiabl" !aus"s 1r"$"nting "li$"r#
on ti*"% !ontra!tor +ail" to 1ro1"rl# as< +or t," n""" "4t"n.
sion. Issu"' Is ," liabl"J
1CA
Art. 11C@
HELD' K"s% t," !ontra!tor is liabl"% b"!aus" 1ro1"rl# in.
t"r1r"t"% t," 1ro$ision Euot" abo$" is on" t,at !l"arl# i*1os"s
1B?
Art. 11C@
liabilit# "$"n +or +ortuitous "$"nts. Su!, a sti1ulation is !l"arl#
allo3" b# t," la3.
Vi!torias Plant"rs Assn.% "t al. $.
Vi!torias &illing Co.% In!.
AC P,il. 91B
FACTS' In a !ontra!t% it 3as agr"" t,at +or 9? #"ars% t,"
1lant"rs 3oul "li$"r t,"ir sugar to a *illing !o*1an#. Ho3.
"$"r% uring t," 3ar (@ #"ars) an uring t," 1"rio o+ r"!onsti.
tution (6 #"ars)% t," *illing !o*1an# !oul not o1"rat" its *ill.
Issu"' S,oul t," 1"rio o+ 6 #"ars b" *a" u1J In ot,"r 3ors%
s,oul t," 1lant"rs b" r"Euir" to "li$"r +or 6 *or" #"ars t,"ir
sugar to t," sa*" *ill to *a<" u1 +or 3,at ,a b""n lostJ
HELD' No *or"% b"!aus" 3ar is a +ortuitous "$"nt t,at
3oul r"li"$" t," 1lant"rs +ro* t,is obligation sin!" +ul+ill*"nt
t,"n ,a b""n r"n"r" i*1ossibl".
Cran" S# Pau!o $. >onHaga
1? P,il. 6@6
FACTS' P"ning t," "!ision o+ a !as" against ,i*% t,"
!arabaos o+ L 3"r" atta!," b# a s,"ri++. L ga$" a bon +or t,"ir
r"l"as"% t," !onition b"ing t,at i+ L los"s t," !as"% L 3oul ".
li$"r t," ani*als. L lost% but 3as not abl" to "li$"r t," !arabaos%
b"!aus" t,"# ,a i" u" to !aus" not i*1utabl" to L. Issu"'
Ar" t," bons*"n liabl"J
HELD' No% t," bons*"n ar" not liabl" b"!aus" t," "at,
o+ t," !arabaos 3as +ortuitous. T,us% t," obligation to "li$"r
t," !arabaos 3as "4tinguis,".
:u"stion' 7ut is it not tru" t,at t," bons*"n (3,o ,a
"4"!ut" t," bon) 3"r" 1r"!is"l# su11os" to ans3"r in !as"
o+ non."li$"r#J
ANS.' K"s% t,"# 3"r" 1r"!is"l# su11os" to ans3"r but
onl# i+ L 3"r" to "lib"rat"l# 3it,,ol "li$"r#. H"r"% L% 3as
"4!us" +ro* r"turning (t," 1rin!i1al obligation)2 ,"n!"% t,"
guarant# (t," s"!on obligation) is auto*ati!all# "4tinguis,"%
1B1
Art. 11C@
sin!" t," !ontra!t i not 1ro$i" +or liabilit# "$"n in !as" o+
+or!" *aj"ur".
1B6
Art. 11C@
7ail"# $. L" Cr"s1ign#
La3 5"1orts% @? 7 1B?
FACTS' A "nt"rs into a !ontra!t 3it, 7 obligating ,i*s"l+
un"r a bon to !onstru!t a 3"lling ,ous" u1on a 1arti!ular
tra!t o+ lan. 7ut b"+or" !o*1l"tion o+ t," !onstru!tion% t,"
go$"rn*"nt "41ro1riat" t," lan2 ,"n!"% +ul+ill*"nt 3as not
*a". Issu"' Is A liabl"J
HELD' No% +or t,is 3as un+or"s""n. To "!i" !ontra!t3is"
3oul b" naus"ating to t," $"r# i"a o+ justi!".
Sian% "t al. $. Lo1"H% "t al.
L.59AB% O!t. 6?% 1A5@
I+ a +ir" +ortuitousl# br"a<s out an surrouning ,ous"s
ar" "stro#" b"!aus" o+ t,"ir n"arn"ss% la!< o+ 3at"r% an an
un+ortunat" ,ig, br""H"% no on" !an b" ,"l r"s1onsibl".
Pa!i+i! V"g"tabl" Oil Cor1oration $. Singson
L.CA1C% A1r. 6A% 1A55
FACTS' A 3as oblig" to 1"r+or* a !"rtain obligation
in 78s +a$or. 7ut a +ortuitous "$"nt ,a11"n". Lat"r% A an 7
agr"" t,at b"!aus" o+ 3,at ,a ,a11"n"% A 3oul b" gi$"n a
n"3 1"rio. 7ut 3,"n t," 1"rio arri$"% A 3as still not abl" to
1"r+or*. Issu"' Can A 1l"a +ortuitous "$"nt as a "+"ns"J
HELD' No *or"% b"!aus" t," s"ttl"*"nt 3as *a"
AFTE5% an not b"+or"% t," +ortuitous "$"nt% i*1l#ing a
3ai$"r o+ an# "+"ns" on t,is groun 3,i!, ," !oul ,a$"
rais" b"+or".
Tan C,iong Sian $. In!,austi M Co.
66 P,il. 156
I+ a s,i1 o3n"r% <no3ing t," ang"rous an 3"a< !oni.
tion o+ ,is $"ss"l% n"$"rt,"l"ss or"rs ,is !a1tain to "*bar< on a
$o#ag"% an uring sai $o#ag" a t#1,oon !aus"s t," "stru!tion
1B9
Art. 11C@
o+ bot, t," s,i1 an its !argo% t," o3n"r 3ill still b" ,"l liabl".
H" !annot absol$" ,i*s"l+ b# !r#ing -an a!t o+ >o./
1B@
Art. 11C@
Soriano $. D" L"on% "t al.
(C.A.) @B O.>. 66@5% =un. 1A56
I+ a "btor +ails to 1"r+or* b"!aus" o+ +loos an ina"Euat"
trans1ortation% ," is not r"s1onsibl".
;.S. $. &a*bag
96 P,il. 9B@
I+ a stol"n !arabao i"s b"!aus" o+ a +ortuitous "$"nt% t,"
t,i"+ is still liabl" unl"ss t," !r"itor.o3n"r is in *ora a!!i1i.
"ni.
Na<1il an Sons $. CA
>5 @CB51% O!t. 9% 1AB6
FACTS' T," builing !ontra!tor an t," ar!,it"!t *a"
substantial "$iations +ro* t," 1lans an s1"!i+i!ations an
+ail" to obs"r$" t," r"Euisit" 3or<*ans,i1 in t," !onstru!tion
as 3"ll as to "4"r!is" t," r"Euisit" "gr"" o+ su1"r$ision2 3,il"
t," 1lans an s1"!i+i!ations 1r"1ar" b# t," ar!,it"!ts !ontain"
ina"Eua!i"s an "+"!ts. T," "+"!ts in t," !onstru!tion an
in t," 1lans an s1"!i+i!ations 3"r" t," 1ro4i*at" !aus"s t,at
r"n"r" t," builing unabl" to 3it,stan t," "art,Eua<".
HELD' T," !ontra!tor an t," ar!,it"!t !annot !lai* "4.
"*1tion +ro* liabilit#. T," 3anton n"glig"n!" o+ bot, t," buil.
ing !ontra!tor an t," ar!,it"!t in "++"!ting t," 1lans% "signs%
s1"!i+i!ations% an !onstru!tion o+ t," builing is su!,
n"glig"n!" as to a*ount to ba +ait, in t," 1"r+or*an!" o+ t,"ir
r"s1"!ti$" tas<s. On" 3,o n"glig"ntl# !r"at"s a ang"rous
!onition !an. not "s!a1" liabilit# +or t," natural an 1robabl"
!ons"Eu"n!"s t,"r"o+% alt,oug, t," a!t o+ a t,ir 1"rson% or an
a!t o+ >o +or 3,i!, ," is not r"s1onsibl"% int"r$"n"s to
1r"!i1itat" t," loss.
>at!,alian $. D"li*
>5 56@BC% O!t. 61% 1AA1
To "4"*1t a !o**on !arri"r +ro* liabilit# +or "at, or
1B5
Art. 11C@
1,#si!al injuri"s to 1ass"ng"rs u1on t," groun o+ +or!" *aj"ur"%
t," !arri"r *ust !l"arl# s,o3 not onl# t,at t," "++i!i"nt !aus"
o+ t," !asualt# 3as "ntir"l# in"1"n"nt o+ t," ,u*an 3ill% but
1B6
Art. 11C@
also t,at it 3as i*1ossibl" to a$oi. An# 1arti!i1ation b# t,"
!o**on !arri"r in t," o!!urr"n!" o+ t," injur# 3ill "+"at t,"
"+"ns" o+ +or!" *aj"ur". I,"r" +ortuitous "$"nt or +or!" *aj"ur"
is t," i**"iat" an 1ro4i*at" !aus" o+ t," loss% t," obligor
is "4"*1t +ro* liabilit# +or non.1"r+or*an!". T," 1artias%
t," ant"!""nt o+ Arti!l" 11C@ o+ t," Ci$il Co"% "+in"s -!aso
+ortuito/ as an "$"nt t,at ta<"s 1la!" b# a!!i"nt an !oul not
,a$" b""n +or"s""n. E4a*1l"s o+ t,is ar" "stru!tion o+ ,ous"s%
un"41"!t" +ir"% s,i13r"!<% $iol"n!" o+ robb"rs.
In a l"gal s"ns" an !ons"Eu"ntl#% also in r"lation to !on.
tra!ts% a !aso +ortuito 1r"s"nts t," +ollo3ing "ss"ntial !,ara!t"r.
isti!s' (1) t," !aus" o+ t," un+or"s""n an un"41"!t"
o!!urr"n!" or t," +ailur" o+ t," "btor to !o*1l# 3it, ,is
obligation% *ust b" in"1"n"nt o+ t," ,u*an 3ill2 (6) it *ust
b" i*1ossibl" to +or"s"" t," "$"nt 3,i!, !onstitut"s t," !aso
+ortuito% or i+ it !an b" +or"s""n% it *ust b" i*1ossibl" to a$oi2
(9) t," o!!urr"n!" *ust b" su!, as to r"n"r it i*1ossibl" +or
t," "btor to +ul+ill ,is obligation in a nor*al *ann"r2 an
(@) t," obligor *ust b" +r"" +ro* an# 1arti!i1ation in t,"
aggra$ation o+ t," injur# r"sulting to t," !r"itor.
5ob"rto C. Si!a*% "t al. $. Lulu V. =org"% "t al.
>5 15A61C% Aug. B% 6??C
FACTS' ;n"r S"!. 1C o+ C"ntral 7an< Cir!ular 9C@%
5ul"s an 5"gulations +or Pa3ns,o1s% 3,i!, too< "++"!t on
=ul. 19%
1AC9% an 3,i!, 3as issu" 1ursuant to PD No. 11@% t," Pa3n.
*a<"rs 5"gulation A!t% it is 1ro$i" t,at 1a3ns 1l"g" *ust
b" insur". Ho3"$"r% t,is S"!tion 3as subs"Eu"ntl# a*"n" b#
C7 Cir!ular C6@% 3,i!, too< "++"!t on O!t. 1% 1AB?. A!!oring to
S"!. 19 t,"r"o+% o++i!" builingU1r"*is"s an 1a3ns o+ a 1a3n.
s,o1 *ust b" insur" against ,i* RR an 3,"r" t," r"Euir"*"nt
t,at insuran!" against burglar# 3as "l"t". Ob$iousl#% t,"
C"ntral 7an< (no3 7ang<o S"ntral) !onsi"r" it not +"asibl"
to r"Euir" issuan!" o+ 1a3n" arti!l"s against burglar#. In t,"
!as" at bar% a robb"r# in a 1a3ns,o1 ,a11"n" in 1ABC. Issu"'
Consi"ring t," abo$"!it" a*"n*"nt% is t,"r" a statut"
1BC
Art. 11C@
ul#. i*1os" on 1"tition"r to insur" t," 1a3n" j"3"lr# in
3,i!, !as" it 3as "rror +or t," Court o+ A11"als (CA) to
!onsi"r it as a +a!tor in !on!luing t,at 1"tition"rs 3"r"
n"glig"nt.
1BB
Art. 11C@
HELD' T,"r" is non". N"$"rt,"l"ss% t," 1r"1on"ran!" o+
"$i"n!" s,o3s t,at 1"tition"rs +ail" to "4"r!is" t," ilig"n!"
r"Euir" o+ t,"* un"r t," N"3 Ci$il Co". T," ilig"n!" 3it,
3,i!, t," la3 r"Euir"s t," ini$iual at all ti*"s to go$"rn ,is
!onu!t $ari"s 3it, t," natur" o+ t," situation in 3,i!, ," is
1la!" an 5"!"i1ts La3. (Pili1inas 7an< $. Ong% @95 P,il.
C96 F6??6G). Furt,"r% t," 1art# in$o<ing no$ation *ust 1ro$"
t,at t," n"3 !ontra!t i in"" ta<" "++"!t. (DiongHon $. CA%
9CB P,il. 1?A? F1AAAG).
(6) Loss in a S,i13r"!<
As a g"n"ral rul"% t," loss o+ t," s,i1 u" to a +ortuitous
"$"nt s,oul b" born" b# its o3n"r2 t," loss o+ t," !argo% b# t,"ir
o3n"rs% unl"ss t," !a1tain la!<" s<ill% or t,"r" 3as *ali!" or
n"glig"n!". (Tan C,iong Sian $. In!,austi M Co.% su1ra).
(C) Loss 7"!aus" o+ an A!t o+ >o$"rn*"nt
In Sab"lino $. 5FC (L.11CA?% S"1t. 9?% 1A5B)% it 3as ,"l
t,at t," 5FC an t," PN7 !oul b" +or!" to a!!"1t 9?.#"ar
t"r* ba!<1a# !"rti+i!at"s in 1a#*"nt o+ *ortgag" obligations
"s1it" t," +a!t t,at a!!"1tan!" t,"r"o+ 3oul +r""H" a larg"
1art o+ t,"ir ass"ts an !o*1"l t,"* to sustain loss"s an r".
u!tion in #i"l. T," a!!"1tan!" *ust b" allo3" b"!aus" it is
so 1ro$i" un"r 5"1. A!t BAC. T,is la3 is an a!t o+ so$"r"ign
1o3"r an% t,"r"+or"% 3,at"$"r loss in!urr" !an b" attribut"
to a +or!" *aj"ur"% an !"rtainl# t," Stat" !annot !o*1lain o+ a
loss !aus" b# its"l+.
(B) Co*bination o+ Fortuitous E$"nt an N"glig"n!"
Su11os" t,"r" is a !o*bination o+ a +ortuitous "$"nt an
n"glig"n!" on t," 1art o+ t," "btor% is t," obligation to "li$"r
a s1"!i+i! t,ing "4tinguis,"J
ANS.' It "1"ns'
(a) I+ t," +ortuitous "$"nt 3as t," 1ro4i*at" !aus"% t," obliga.
tion is "4tinguis,".
(b) I+ t," n"glig"n!" 3as t," 1ro4i*at" !aus"% t," obligation is
1BA
Art. 11C@
not "4tinguis,". (It is !on$"rt" into a *on"tar# obligation
+or a*ag"s.)
1A?
Art. 11C5
Art. 11C5. ;surious transa!tions s,all b" go$"rn" b#
s1"!ial la3s.
CO&&ENT'
(1) O;sur#8 D"+in"
It is !ontra!ting +or or r"!"i$ing so*"t,ing in "4!"ss o+
t," a*ount allo3" b# la3 +or t," loan or us" o+ *on"#% goos%
!,att"ls% or !r"its. (Tol"ntino M &anio $. >onHal"s S# C,ia*%
5? P,il. 55B). In ot,"r 3ors% usur# is t," "4a!tion o+ "4!"ssi$"
int"r"st.
(6) Dins o+ Int"r"st
T,"r" ar" t3o <ins o+ int"r"st'
(a) Int"r"st gi$"n +or !o*1"nsation or us" o+ t," *on"# (also
!all" b# so*" aut,ors as &O5ATO5K INTE5EST).
E4a*1l"' I borro3" P1 *illion at BQ int"r"st 1"r
annu* +or 9 #"ars. (T,is is t," <in o+ int"r"st r"gulat"
b# t," ;sur# La3.)
(b) Int"r"st gi$"n b# 3a# o+ a*ag"s (also r"+"rr" to b# so*"
aut,ors as CO&PENSATO5K INTE5EST% i.".% it !o*1"n.
sat"s t," a*ag" !aus").
E4a*1l"' I borro3" P1 *illion 3it, no int"r"st +or 9
#"ars. I+ I 1a# at t," "n o+ t,r"" #"ars% I 1a# no int"r"st.
I+ I in!ur "+ault (o not 1a# "$"n a+t"r "*an)% I 3ill
no3 b" r"s1onsibl" +or int"r"st (b# 3a# o+ a*ag"s) at t,"
rat" o+ 6Q 1"r annu*% to b" !ount" +ro* "+ault.
(9) 5"gar o+ P"o1l" +or ;sur#
;sur# ,as b""n r"gar" 3it, ab,orr"n!" +ro* t," "arli"st
ti*"s. (Tol"ntino M &anio $. >onHal"s S# C,ia*% su1ra). It 3as
1ro,ibit" b# t," an!i"nt la3s o+ t," C,in"s" an Hinus% t,"
Dor"ans% t," At,"nians% an t," 5o*ans. (;.S. $. Constantino%
9A P,il. 55@). HOIEVE5% toa# t," ;sur# La3 ,as b""n 5E.
PEALED b# C"ntral 7an< (no3 7ang<o S"ntral) Cir!ular A?5%
1A1
Art. 11C5
"++"!ti$" =an. 1% 1AB9.
1A6
Art. 11C5
(@) D"+inition o+ Si*1l" Loan (&utuu*)
7# t," !ontra!t o+ si*1l" loan% on" o+ t," 1arti"s "li$"rs
to anot,"r *on"# or ot,"r !onsu*abl" t,ings u1on t," !oni.
tion t,at t," sa*" a*ount o+ t," sa*" <in an Eualit# s,all
b" 1ai. (Art. 1A99% Ci$il Co").
(5) La3+ul an L"gal 5at"s
;n"r t," +or*"r ;sur# La3'
(a) La3+ul rat"s (aut,oriH" rat"s) 0 t,os" allo3" as *a4i.
*u* un"r t," +or*"r ;sur# La3.
1) 16Q 1"r annu* 0 i+ s"!ur" in 3,ol" or in 1art b#
a *ortgag" u1on r"al "stat"% i+ t," titl" to t," r"al
"stat" is ul# r"!or"2 or b# an# o!u*"nt !on$"#ing
su!, r"al "stat" (also r"gist"r" "stat") or an int"r"st
t,"r"in. (S"!. 6% ;sur# La3% as a*"n" b# Co*. A!t
9AA).
6) 1@Q 1"r annu* 0 i+ not s"!ur" as 1ro$i" abo$"
(S"!. 9% ;sur# La3% as a*"n" b# Co*. A!t 9AA).
9) For 1a3ns,o1s'
a) 6 1U6Q a *ont, 0 i+ su* l"nt is l"ss t,an
P1??.
b) 6Q a *ont, 0 P1?? to P5??
!) 1@Q 1"r annu* 0 i+ *or" t,an P5??
FNOTE' It s,all b" unla3+ul +or a 1a3nbro.
<"r or ,is ag"nt to i$i" t," 1a3n o++"r" b#
a 1"rson into t3o or *or" +ra!tions% in or"r to
!oll"!t gr"at"r int"r"st t,an t,at 1"r*itt". Fur.
t,"r*or"% it s,all also b" unla3+ul to r"Euir"
t," 1a3n"r to 1a# an aitional !,arg" as
insuran!" 1r"*iu* +or t," sa+"<""1ing an
!ons"r$ation o+ t," arti!l" 1a3n". (S"!. @%
;sur# La3% A!t
6655 as a*"n" b# Co*. A!t 9AA).G
1A9
Art. 11C5
FNOTE' T," rat"s gi$"n abo$" ,a$" alr"a#
b""n !,ang" (+ro* ti*" to ti*") b# t," &on.
"tar# 7oar an b# t," 7ang<o S"ntral).G
1A@
Art. 11C5
(b) L"gal 5at" (t,at 1r"su*" b# t," la3 to ,a$" b""n agr""
u1on i+ t," loan *"ntions int"r"st but no rat" 3as sti1u.
lat")
T,is us" to b" 6Q 1"r annu* (Art. 66?A% Ci$il Co"2
s"" S"!. 1% A!t 6655). It is no3 16Q 1"r annu* as ir"!t"
b# a C"ntral 7an< (7ang<o S"ntral) Cir!ular.
FNOTE' No int"r"st (b# 3a# o+ !o*1"nsation +or its
us") 3ill b" gi$"n in !as" it is not "41r"ssl# sti1ulat" in
3riting. (Art. 1A5@% Ci$il Co").G
(6) I*1ortant Distin!tion 7"t3""n S"!ur" (S"!. 6) an ;n.
s"!ur" (S"!. 9) Loans 0 ;n"r t," Ol ;sur# La3
(a) S"!. 6 1"naliH"s t," ta<ing or r"!"i$ing o+ "4!"ssi$" int"r"st
(not t," *"r" agr""ing)
(b) S"!. 9 1"naliH"s not onl# t," ta<ing or r"!"i$ing% but also
t," "*aning or t," agr""ing to !,arg" an "4!"ssi$" rat".
(O+ !ours"% in bot, !as"s% it is onl# t," C5EDITO5 3,o is
guilt#). (S"" P"o1l" $. 7"rnat"% 96 O.>. 1. 6C6?).
(C) In!onsist"n!# in t," Co"
In !as" o+ !on+li!t% 3,i!, s,oul 1r"$ail% t," Ci$il Co" or
t," ;sur# La3J
ANS.' T," Ci$il Co" ans3"r" t,is in!onsist"ntl#.
(a) In Art. 11C5% it is "$i"nt t,at t," ;sur# La3 1r"$ails
0 -;surious transa!tions s,all b" go$"rn" b# s1"!ial
la3s./
(b) K"t% in Art. 1A61% t," la3 sa#s t," Ci$il Co" 1r"$ails
0 -;surious !ontra!ts s,all b" go$"rn" b# t," ;sur# La3
an ot,"r s1"!ial la3s so +ar as t,"# ar" not in!onsist"nt
3it, t,is Co"./
(NOTE' Eit,"r o+ t," t3o !on+li!ting arti!l"s *ust b" r".
1"al".)
(NOTE' In t," !as" o+ C,"ri" Palil"o $. 7"atriH Cosio% L.
C66C% No$. 6B% 1A55% t," Su1r"*" Court a11li" t," Ci$il
1A5
Art. 11C5
Co" inst"a o+ t," ;sur# La3. Ho3"$"r% t," "!ision i
not is!uss t," !on+li!t.)
1A6
Art. 11C5
(NOTE' In t," !as"% ,o3"$"r% o+ Ang"l =os" Iar",ousing
Co.% In!. $. C,"la Ent"r1ris"s an Da$i S#jui!o% L.65C?@% A1r.
6@% 1A6B% t," Court ,"l t,at 3it, r"s1"!t to t," Eu"stion 0
-,o3 *u!, int"r"st !an b" r"!o$"r" b# a "btor 3,o ,as 1ai
usuri. ous int"r"stJ88 0 t," int"r"st r"!o$"rabl" is t," "ntir"
int"r"st agr"" u1on +or su!, "ntir" int"r"st is VOID. T," Court
+urt,"r ,"l t,at 3it, r"s1"!t to sai Eu"stion% t,"r" is NO
CONFLICT b"t3""n t," Ci$il Co" an t," ;sur# La3.)
Ang"l =os" Iar",ousing Co.% In!. $.
C,"la Ent"r1ris"s an Da$i S#jui!o
L.65C?@% A1r. 6@% 1A6B
FACTS' A 1artn"rs,i1 (C,"la Ent"r1ris"s an Da$i
S#jui!o) borro3" P6?%??? +ro* Ang"l =os" Iar",ousing Co.
at !l"arl# usurious rat"s (+ro* 6Q to 6 1U6Q PE5 &ONTH).
ISS;ES'
(a) Can !r"itor r"!o$"r t," P5INCIPAL "btJ
(b) I+ t," "ntir" usurious rat" ,as b""n 1ai b# t," "btor%
,o3 *u!, o+ it !an b" r"!o$"r" b# sai "btor +ro* t,"
!r"itorJ
HELD'
(a) K"s% t," !r"itor !an r"!o$"r t," P5INCIPAL "bt. T,"
!ontra!t o+ loan 3it, usurious int"r"st is $ali as to t,"
loan% an $oi onl# 3it, r"s1"!t to t," int"r"st 0 +or t,"
loan is t," 1rin!i1al !ontra!t 3,il" t," int"r"st is *"r"l#
an a!!"ssor# "l"*"nt. T," t3o ar" s"1arabl" +ro* "a!,
ot,"r. (S"" Lo1"H $. El Hogar Fili1ino% @C P,il. 6@A). T,"
ruling on t,is 1oint b# t," Court o+ A11"als in t," !as" o+
S"bastian $. 7autista% 5B O.>. No. 15% 1. 91@6% ,oling t,at
"$"n t," loan its"l+ is $oi is I5ON>.
(b) Iit, r"s1"!t to t," usurious int"r"st% t," "ntir" int"r"st
agr"" u1on is $oi% an i+ alr"a# 1ai% *a# b" r"!o$"r"
b# t," "btor. It is 3rong to sa# t,at t," "btor !an r"!o$"r
onl# t," "4!"ss o+ 16Q or 1@Q% as t," !as" *a# b" 0 +or t,"
si*1l" r"ason t,at t," "ntir" int"r"st sti1ulation is ini$is.
1AC
Art. 11C5
ibl"% an b"ing ill"gal% s,oul b" !onsi"r" "ntir"l# $oi. It
is tru" t,at Art. 1@19 o+ t," Ci$il Co" stat"s t,at -int"r"st
1AB
Art. 11C5
1ai in "4!"ss o+ t," int"r"st allo3" b# t," ;sur# La3
*a# b" r"!o$"r" b# t," "btor 3it, int"r"st t,"r"on +ro*
t," at" o+ 1a#*"nt.88 7ut% as 3" !onstru" it% Art. 1@19% in
s1"a<ing o+ -int"r"st 1ai in "4!"ss o+ t," int"r"st allo3"
b# t," usur# la3s/ *"ans t," 3,ol" usurious int"r"st' t,at
is% in a loan o+ P1%???% 3it, int"r"st o+ 6?Q 1"r annu* or
P6?? +or on" #"ar% i+ t," borro3"r 1a#s sai P6??% t," 3,ol"
P6?? is t," usurious int"r"st not just t,at 1art t,"r"o+ in
"4!"ss o+ t," int"r"st allo3" b# la3. It is in t,is !as" t,at
t," la3 o"s not allo3 i$ision. T," 3,ol" sti1ulation as to
int"r"st is $oi sin!" 1a#*"nt o+ sai int"r"st is t," !aus"
or obj"!t% an sai int"r"st is ill"gal. Not" t,at t,"r" is no
!on+li!t on t,is 1oint b"t3""n t," N"3 Ci$il Co" an t,"
;sur# La3 3,i!, stat"s in S"!. 6% t,at an# 1"rson 3,o
+or a loan s,all ,a$" 1ai a ,ig,"r rat" or gr"at"r su* or
$alu" t,at is allo3" in sai la3% *a# r"!o$"r t," 3,ol"
int"r"st 1ai. T," onl# !,ang" "++"!t"% t,"r"+or"% b# Art.
1@19 o+ t," N"3 Ci$il Co" is not to 1ro$i" +or t," r"!o$"r#
o+ int"r"st 1ai in "4!"ss o+ t,at allo3" b# la3% 3,i!, t,"
;sur# La3 alr"a# 1ro$i" +or% but to a t,at t," sa*"
!an b" r"!o$"r" -3it, int"r"st t,"r"on +ro* t," at" o+
1a#*"nt./ T," +or"going int"r1r"tation is r"a!," 3it,
t," 1,iloso1,# o+ usur# l"gislation in *in' to is!our.
ag" sti1ulations on usurious int"r"st% sai sti1ulations
ar" tr"at" as 3,oll# $oi% so t,at t," loan b"!o*"s on"
3it,out sti1ulations as to 1a#*"nt o+ int"r"st. It s,oul
not% ,o3"$"r% b" int"r1r"t" to *"an +or+"itur" "$"n o+ t,"
1rin!i1al% +or t,is 3oul unjustl# "nri!, t," borro3"r at
t," "41"ns" o+ t," l"n"r. Furt,"r*or"% 1"nal san!tions
ar" a$ailabl" against a usurious l"n"r% as a +urt,"r
"t"rr"nt to usur#.
T," 1rin!i1al "bt r"*aining 3it,out sti1ulation +or
1a#*"nt o+ int"r"st !an t,us b" r"!o$"r" b# jui!ial a!.
tion. An in !as" o+ su!, "*an an t," "btor in!urs in
"la#% t," "bt "arns int"r"st +ro* t," at" o+ t," "*an%
3,"t,"r jui!ial or "4trajui!ial (in t," instant !as"% +ro*
t," +iling o+ t," !o*1laint). Su!, int"r"st is not u" to sti1u.
lation% +or t,"r" 3as non"% t," sa*" b"ing $oi. 5at,"r%
it is u" to t," g"n"ral 1ro$ision o+ la3 t,at in obligation
1AA
Art. 11C5
to 1a# *on"#% 3,"r" t," "btor in!urs in "la#% ," ,as to
1a# int"r"st b# 3a# o+ a*ag"s. (Art. 66?A% Ci$il Co").
6??
Art. 11C6
Lia* La3 $. Ol#*1i! Sa3*ill
L.9?CC1% &a# 6B% 1AB@
1. T," r"Euir"*"nt in t," ;sur# La3 an t," 5ul"s o+
Court t,at an all"gation o+ usur#% i+ it is "ni"%
*ust b" "ni" un"r oat,% a11li"s onl# i+ it is t,"
1lainti++ *a<ing t," all"gation% not t," "+"nant.
6. ;n"r C"ntral 7an< (no3 7ang<o S"ntral) Cir!ular
A?5% usur# ,a b""n abolis," in our !ountr# sin!"
=an. 1% 1AB9. Int"r"st 3ill no3 "1"n on t," *utual
agr""*"nt o+ borro3"r an l"n"r.
9. T," 1ro$isions on usur# all"gations in t," 5ul"s o+
Court% b"ing *"r"l# 1ro!"ural% ,a$" b""n r"1"al"%
an t,is r"1"al ,as r"troa!ti$" "++"!t.
Art. 11C6. T," r"!"i1t o+ t," 1rin!i1al b# t," !r"itor%
3it,out r"s"r$ation 3it, r"s1"!t to t," int"r"st% s,all gi$"
ris" to t," 1r"su*1tion t,at sai int"r"st ,as b""n 1ai.
T," r"!"i1t o+ a lat"r install*"nt o+ a "bt 3it,out
r"s"r$ation as to 1rior install*"nt% s,all li<"3is" rais" t,"
1r"su*1tion t,at su!, install*"nts ,a$" b""n 1ai.
CO&&ENT'
(1) E4a*1l" o+ Par. 1 (5"!"i1t o+ Prin!i1al Iit,out
5"s"r$a. tion as to Int"r"st)
A !r"itor o+ P1%???%???% 3it, BQ int"r"st% r"!"i$"
P1%???%??? in 1a#*"nt o+ t," 1rin!i1al. Int"r"st 3as not r".
+"rr" to in t," 1a#*"nt. It is 1r"su*" t,at t," BQ int"r"st
,a alr"a# b""n 1r"$iousl# 1ai. T,is is b"!aus" un"r Art.
1659% Ci$il Co"% 1a#*"nt o+ t," int"r"st as a rul" 1r"!""s
1a#. *"nt o+ t," 1rin!i1al. (O+ !ours"% Art. 11C6 "stablis,"s
*"r"l# a r"buttabl"% not a !on!lusi$" 1r"su*1tion). (S"" Hill $.
V"loso% 91
P,il. 16? an Va. " Ongsia!o $. Cabatuano% L.1?C9B% &ar!,
1A% 1A5A). T,us% "$"n i+ t,"r" is a r"!"i1t "$i"n!ing 1a#*"nt
6?1
Art. 11C6
o+ t," 1rin!i1al% t," a!!u*ulat" int"r"st *a# in !"rtain !as"s
still b" r"!o$"r". (S"" &agal"na Estat"s% In!. $. 5origu"H%
L.1B@11% D"!. 1C% 1A66).
6?6
Art. 11CC
(6) E4a*1l" o+ Par. 6 (5"!"i1t o+ a Lat"r Install*"nt)
I+ a !r"itor r"!"i$"s t," +ourt, install*"nt o+ a "bt% it is
un"rstoo t,at t," +irst t,r"" install*"nts ,a$" b""n 1ai.
(NOTE' I+ I 1a# *# in!o*" ta4 t,is #"ar% no 1r"su*1tion
aris"s about *# 1a#*"nt o+ t," ta4 last #"ar. Ta4"s 1a#abl" b#
t," #"ar !annot b" !onsi"r" install*"nts.)
FNOTE' T," 1r"su*1tion in 1ar. 6 is also r"buttabl".
(&anila Traing M Su11l# Co. $. &"ina% L.16@CC% &a# 91%
1A61).G
(NOTE' In &anila Traing an Su11l# Co. $. &"ina% L.
16@CC% &a# 91% 1A61% it 3as rul" t,at +or t," 1r"su*1tion in
1ar. 6% Art. 11C6 to a11l#% it is not "noug, t,at t," r"!"i1t +or
t," install*"nt 1ai b" at"2 it *ust also s1"!i+# t,at t,"
r"!"i1t is +or t," 1a#*"nt o+ a 1arti!ular install*"nt u"% +or
"4a*1l"% on a !"rtain *ont,. T,us% i+ t," at" o+ t," r"!"i1t is
=anuar#%
1AAA% t,is +a!t alon" b# its"l+ !annot justi+# t," in+"r"n!" t,at
t," =anuar# install*"nt ,a b""n 1ai. T," r"!"i1t *a# ,a$"
b""n +or a 1rior install*"nt.)
Art. 11CC. T," !r"itors% a+t"r ,a$ing 1ursu" t," 1ro1.
"rt# in 1oss"ssion o+ t," "btor to satis+# t,"ir !lai*s% *a#
"4"r!is" all t," rig,ts an bring all t," a!tions o+ t," latt"r
+or t," sa*" 1ur1os"% sa$" t,os" 3,i!, ar" in,"r"nt in ,is
1"rson2 t,"# *a# also i*1ugn t," a!ts 3,i!, t," "btor
*a# ,a$" on" to "+rau t,"*.
CO&&ENT'
(1) 5ig,ts o+ Cr"itors
(a) "4a!t 1a#*"nt.
(b) "4,aust "btor8s 1ro1"rti"s% g"n"rall# b# atta!,*"nt ("4.
!"1t 1ro1"rti"s "4"*1t" b# t," la3). (S"" Art. 6696% Ci$il
Co").
(!) a!!ion subrogatoria (subrogator# a!tion) 0 i.".% "4"r!is"
6?9
Art. 11CC
all rig,ts an a!tions "4!"1t t,os" in,"r"nt in t," 1"rson
(li<" 1ar"ntal aut,orit#% rig,t to r"$o<" onations on
groun o+ ingratitu"% ,ol o++i!"% !arr# out an ag"n!#).
T,is is
6?@
Art. 11CC
not r"*"# o+ subrogation r"+"rr" to in t," C,a1t"r on
No$ation. (S"" B &anr"sa% 1. 6C6).
() a!!ion 1auliana (i*1ugn or r"s!in a!ts or !ontra!ts on"
b# t," "btor to "+rau t," !r"itors). (S"" Arts. 19B? to
19BA o+ t," Ci$il Co" 3,i!, "als 3it, r"s!issibl" !on.
tra!ts.)
E4a*1l"'
5"galao $. Lu!,asing!o an Co.
5 P,il. 665
FACTS' A 3as a "+"nant in a !i$il !as". H" lost% an at.
ta!,*"nt 3as issu" against ,is 1ro1"rt#. 7% t," 3inn"r% !oul
not !oll"!t ,is !lai* b"!aus" it 3as is!o$"r" t,at A ,a sol
,is 3ar",ous" to ,is son% C% a+t"r atta!,*"nt ,a b""n issu"
on su!, 1ro1"rt#. 7% 3,o !oul not !oll"!t in an# ot,"r 3a# b".
!aus" A ,a no *on"#% broug,t an a!tion to r"s!in t," !ontra!t
all"g"l# *a" to "+rau ,i*. It 3as 1ro$" t,at'
1) Alt,oug, t," 3ar",ous" 3as 3ort, P65%???% t," son al.
l"g"l# 1ai onl# P15%??? +or it2
6) T," son 1robabl# i not ,a$" t," P15%??? or an# ot,"r
su* o+ i*1ortan!" 3it, 3,i!, to bu# t," sai 3ar",ous".
HELD' T," transa!tion is +rauul"nt an sin!" 7% t,"
!r"itor% !annot r"!o$"r in an# ot,"r 3a#% t," !ontra!t oug,t to
b" r"s!in".
S"rrano $. C"ntral 7an<% "t al.
L.9?511% F"b. 1@% 1AB?
To r"!o$"r ti*" "1osits 1lus int"r"st +ro* a istr"ss"
ban<% t," !lai* *ust b" $"ntilat" in t," Court o+ First
Instan!" (no3 5"gional Trial Court) in t," 1ro1"r a!tion% but
t,is a!tion s,oul not b" on" +or *ana*us or 1ro,ibition.
In t," !on!urring o1inion% ,o3"$"r% o+ =usti!"s 5a*on
AEuino an Antonio 7arr"o% t," !lai* *ust b" +il" in t,"
6?5
Art. 11CC
1ro1"r liEuiation 1ro!""ings.
6?6
Art. 11CC
(6) E4a*1l"s o+ 5ig,ts In,"r"nt in t," P"rson o+ t,"
D"btor an I,i!, T,"r"+or" Cannot 7" E4"r!is" b#
t," Cr"i. tors
(a) T," rig,t to "4ist"n!"% t,"r"b# "4"*1ting +ro* t," r"a!,
o+ !r"itors% 3,at"$"r ," *a# b" r"!"i$ing as su11ort.
(b) 5ig,ts or r"lations o+ a 1ubli! !,ara!t"r (li<" 1ositions in
t," go$"rn*"nt).
(!) 5ig,ts o+ an ,onorar# !,ara!t"r (li<" a o!tor8s "gr""%
,onoris !ausa).
() 5ig,ts 1"rtaining to t," a++airs o+ t," ,o*" an t," +a*il#
(su!, as t," 1"rsonal rig,ts o+ ,usban an 3i+").
(") 5ig,ts grant" b# la3 onl# to t," "btor su!, as t," a!tion
to r"$o<" a onation on t," groun o+ ingratitu". (S"" B
&anr"sa 116).
(+) T," rig,t to a11"ar in !ourt 1ro!""ings% li<" t,"
s"ttl"*"nt o+ an "stat". (In 5" Estat" o+ C"ballos% 16 P,il.
6C1).
(9) Pro1"rti"s E4"*1t +ro* E4"!ution
E4!"1t as ot,"r3is" "41r"ssl# 1ro$i" b# la3% t," +ollo3.
ing 1ro1"rt#% an no ot,"r% s,all b" "4"*1t +ro* "4"!ution'
(a) T," jug*"nt obligor8s +a*il# ,o*" as 1ro$i" b# la3% or
t," ,o*"st"a in 3,i!, ," r"si"s% an lan n"!"ssaril#
us" in !onn"!tion t,"r"3it,2
(b) Orinar# tools an i*1l"*"nts 1"rsonall# us" b# ,i* in
,is tra"% "*1lo#*"nt% or li$"li,oo2
(!) T,r"" ,ors"s% or t,r"" !o3s% or t,r"" !arabaos% or ot,"r
b"asts o+ bur"n% su!, as t," jug*"nt obligor *a# s"l"!t
n"!"ssaril# us" b# ,i* in ,is orinar# o!!u1ation2
() His n"!"ssar# !lot,ing an arti!l"s +or orinar# 1"rsonal
us"% "4!luing j"3"lr#2
(") Hous",ol +urnitur" an ut"nsils n"!"ssar# +or ,ous"<""1.
ing% an us" +or t,at 1ur1os" b# t," jug*"nt obligor an
,is +a*il#% su!, as t," jug*"nt obligor *a# s"l"!t% o+ a
6?C
Art. 11CC
$alu" not "4!""ing on" ,unr" t,ousan 1"sos2
(+) Pro$isions +or ini$iual or +a*il# us" su++i!i"nt +or +our
*ont,s2
6?B
Art. 11CC
(g) T," 1ro+"ssional librari"s an "Eui1*"nt o+ jug"s% la3.
#"rs% 1,#si!ians% 1,ar*a!ists% "ntists% "ngin""rs% sur.
$"#ors% !l"rg#*"n% t"a!,"rs% an ot,"r 1ro+"ssionals% not
"4!""ing t,r"" ,unr" t,ousan 1"sos in $alu"2
(,) On" +is,ing boat an a!!"ssori"s not "4!""ing t," total
$alu" o+ on" ,unr" t,ousan 1"sos o3n" b# a +is,"r*an
an b# t," la3+ul us" o+ 3,i!, ," "arns ,is li$"li,oo2
(i) So *u!, o+ t," salari"s% 3ag"s% or "arnings o+ t,"
jug*"nt obligor +or ,is 1"rsonal s"r$i!"s 3it,in t,"
+our *ont,s 1r"!"ing t," l"$# as ar" n"!"ssar# +or t,"
su11ort o+ ,is +a*il#2
(j) L"tt"r" gra$"ston"s2
(<) &oni"s% b"n"+its% 1ri$il"g"s% or annuiti"s a!!ruing or in an#
*ann"r gro3ing out o+ an# li+" insuran!"2
(l) T," rig,t to r"!"i$" l"gal su11ort% or *on"# or 1ro1"rt#
obtain" as su!, su11ort% or an# 1"nsion or gratuit# +ro*
t," >o$"rn*"nt2
(*) Pro1"rti"s s1"!iall# "4"*1t" b# la3.
7ut no arti!l" or s1"!i"s o+ 1ro1"rt# *"ntion" in t,is s"!.
tion s,all b" "4"*1t +ro* "4"!ution issu" u1on a jug*"nt
r"!o$"r" +or its 1ri!" or u1on a jug*"nt o+ +or"!losur"
o+ a *ortgag" t,"r"on. (S"!. 19% 5ul" 9A o+ 1AAC 5ul"s o+
Ci$il Pro!"ur").
&uni!i1alit# o+ San &igu"l $.
Hon. Os!ar F"rnan"H
L.61C@@% =un. 66% 1AB@
T," +uns o+ a *uni!i1alit# s,oul b" r"gar" as 1ubli!
+uns% an as su!,% ar" "4"*1t" +ro* "4"!ution to satis+# a
*on"tar# jug*"nt in a !i$il litigation.
(@) I,"n Fa*il# Ho*" Is Not E4"*1t" +ro* Atta!,*"nt
or E4"!ution
(a) =ui!ial +a*il# ,o*"
T," +a*il# ,o*"% a+t"r its !r"ation b# $irtu" o+
6?A
Art. 11CC
jui!ial a11ro$al% s,all b" "4"*1t +ro* "4"!ution% +or!"
sal"% or atta!,*"nt% "4!"1t'
61?
Art. 11CC
1) +or non.1a#*"nt o+ ta4"s (all <ins)2
6) in satis+a!tion o+ a jug*"nt on a "bt s"!ur" b# a
*ortgag" !onstitut" on t," i**o$abl" b"+or" or a+t"r
t," "stablis,*"nt o+ t," +a*il# ,o*". (Art. 696% Ci$il
Co").
(b) E4trajui!ial +a*il# ,o*"
T," +a*il# ,o*" "4trajui!iall# +or*" s,all b" "4"*1t
+ro* "4"!ution% +or!" sal"% or atta!,*"nt% "4!"1t'
1) +or non.1a#*"nt o+ ta4"s (all <ins)2
6) +or "bts in!urr" b"+or" t," "!laration 3as r"!or"
in t," 5"gistr# o+ Pro1"rt#2
9) +or "bts s"!ur" b# *ortgag"s on t," 1r"*is"s b"+or"
or a+t"r su!, r"!or o+ t," "!laration2
@) +or "bts u" to labor"rs% *"!,ani!s% ar!,it"!ts%
buil"rs% *at"rial*"n an ot,"rs 3,o ,a$" r"n"r"
s"r$i!" or +urnis," *at"rial +or t," !onstru!tion o+
t," builing. (Art. 6@9% Ci$il Co").
(5) E4t"nt o+ D"btor8s Liabilit#
-T," "btor is liabl" 3it, all ,is 1ro1"rt#% 1r"s"nt an
+utur"% +or t," +ul+ill*"nt o+ ,is obligations subj"!t to t,"
"4"*1. tions 1ro$i" b# la3./ (Art. 6696% Ci$il Co").
S1"!ial S"r$i!"s Cor1oration $.
C"ntro La PaH
L.@@1??% A1r. 6B% 1AB9
T," !ourt8s 1o3"r to "n+or!" its jug*"nt a11li"s onl# to
t," 1ro1"rti"s 3,i!, ar" unis1utabl# o3n" b# t," jug*"nt
"btor.
(6) 5ig,t o+ t," Cr"itor o+ an Insol$"nt Cor1oration
East"rn S,i11ing Lin"s% In!.
$. Sout, S"a E41orts% In!.% "t al.% 5i!aro V.
Alina#u an Ariano D. Isasos CA.>5
5BBB9.5% =ul. 61% 1AB1
611
Art. 11CC
A !r"itor o+ an insol$"nt !or1oration !an su" a subs!rib"r
t,"r"to 3,o ,as not !o*1l"t"l# 1ai +or ,is subs!ri1tion% 1ro.
616
Art. 11CB
$i" su!, !r"itor su"s not in ,is o3n 1ri$at" !a1a!it#% but in
a r"1r"s"ntati$" !a1a!it#% t,at is% in b",al+ o+ t," !or1oration.
T,is is un"r t," rational" t,at sai un1ai subs!ri1tion is an
ass"t o+ t," !or1oration an t,"r"+or" 3it,in t," r"a!,% not o+
t," suing !r"itor alon"% but o+ all t," $arious !or1orat" !r"i.
tors. A !ontrar# rul" 3oul b" un+air to all t," ot,"r !or1orat"
!r"itors.
Art. 11CB. Subj"!t to t," la3s% all rig,ts a!Euir" in $ir.
tu" o+ an obligation ar" trans*issibl"% i+ t,"r" ,as b""n no
sti1ulation to t," !ontrar#.
CO&&ENT'
(1) Trans*issibilit# o+ 5ig,ts
(a) >"n"ral rul" 0 5ig,ts ar" trans*issibl".
(b) E4!"1tions
1) i+ t," la3 1ro$i"s ot,"r3is"2
6) i+ t," !ontra!t 1ro$i"s ot,"r3is"2
9) i+ t," obligation is 1ur"l# 1"rsonal.
FNOTE' Intrans*issibilit# b# !ontra!tual sti1ulation%
b"ing t," "4!"1tion to t," rul"% *ust b" !l"arl# 1ro$". (S""
Estat" o+ H"rnan"H $. LuHon Sur"t# Co.% L.B@9C% No$. 6B%
1A56).G
(6) Non.N"gotiabl" Pro*issor# Not"
E$"n i+ a 1ro*issor# not" is not n"gotiabl"% it *a# still
b" gi$"n% onat"% or assign" to anot,"r. T," "++"!ts 3ill b"
go$"rn" not b# t," la3 on n"gotiation but b# t," la3 on as.
sign*"nt or onations. (>onHal"s $. 7las% 9 P,il. 9CA). Pa#*"nt
!an b" *a" to trans+"r""% 1ro$i" ," is in la3+ul 1oss"ssion
o+ t," !r"it. (AHarraga $. 5origu"H% A P,il. 69C).
(9) Trans+"r o+ 5ig,ts +ro* t," =a1an"s" to t," A*"ri!ans
to t," Fili1inos
5"1ubli! $. E*ilio >uanHon
619
Art. 11CB
L.669C@% D"!. 1B% 1AC@
FACTS' E*ilio >uanHon borro3" *on"# +ro* t," 7an<
o+ Tai3an uring t," =a1an"s" o!!u1ation. S"!urit# 3as gi$"n
61@
Art. 11CB
in t," +or* o+ a r"al *ortgag" on t3o 1ar!"ls% an a !,att"l
*ortgag" on t," !ro1s gro3ing on sai 1ar!"ls. I,"n t," P,ili1.
1in"s 3as lib"rat" in 1A@6% t," *ortgag" !r"it 3as a!Euir"
b# t," ;nit" Stat"s% an lat"r trans+"rr" to t," P,ili11in"s
t,ru t," P,ili11in" Pro1"rt# A!t o+ 1A@6 (o+ t," ;.S. Congr"ss%
an t,"r"+or"% a +or"ign la3). T," P,ili11in"s t,"n +il"s an a!tion
+or +or"!losur". T," lo3"r !ourt is*iss" t," a!tion% +irstl#% on
t," groun t,at t," P,ili11in"s is not a 1art#.in.int"r"st (,as
no r"al l"gal int"r"st in t," *ortgag" loans)% an s"!onl#% on
t," groun t,at t," +or"ign la3 !it" !annot b" ta<"n jui!ial
noti!" o+% an r"sultantl#% !annot b" "++"!ti$" in our !ountr#.
HELD'
(a) T," P,ili11in"s ,as l"gal int"r"st in t," *ortgag" loans%
b"!aus" t," *ortgag" !r"it 3as trans+"rr" to our
go$"rn. *"nt b# t," ;.S. t,ru t," P,ili11in" Pro1"rt# A!t
o+ 1A@6 (a +or"ign la3 ul# a!Eui"s!" in b# bot, t,"
"4"!uti$" an l"gislati$" bran!,"s o+ our go$"rn*"nt).
(7ro3n"ll% =r. $. Sun Li+" Assuran!" Co.% A5 P,il. 66B
F1A5@G.)
(b) 7"!aus" o+ su!, !ons"nt% sai +or"ign la3 !an b" ta<"n
jui!ial noti!" o+% an t,"r"+or" !an b" gi$"n "++"!t in our
!ountr#.
(@) Assign*"nt b# a >uarantor
Co 7un C,un $. O$"rs"as 7an< o+ &anila
L.6C9@6% &a# 6@% 1AB@
I,"n a 1"rson 3it, a ti*" "1osit assigns t," sa*" to
t," ban< to guarant"" t," "bts or o$"rra+ts o+ ot,"rs% t,"
assignor is NOT a *"r" guarantor. H" is boun b# all t," t"r*s
in!lu" in t," assign*"nt.
615
Chapter 3
DIFFERENT KINDS OF OBLIGATIONS
Classi+i!ation o+ Obligations
(a) A!!oring to t," P5I&A5K !lassi+i!ation o+ t," Ci$il
Co"'
1) 1ur" as istinguis," +ro* !onitional
6) 1ur" as istinguis," +ro* t,at 3it, a 1"rio or
t"r*
9) alt"rnati$" or +a!ultati$" obligations (as istinguis,"
+ro* !onjun!ti$")
@) joint as istinguis," +ro* soliar#
5) i$isibl" as istinguis," +ro* ini$isibl"
6) 3it, a 1"nal !laus" (as istinguis," +ro* t,os"
3it,out)
(b) SECONDA5K !lassi+i!ation b# t," Ci$il Co"'
1) unilat"ral as istinguis," +ro* bilat"ral (Arts. 116B%
11A1).
6) r"al an 1"rsonal (Arts. 116@.1165).
9) "t"r*inat" an g"n"ri! (Arts. 116C% 116B).
@) 1ositi$" an n"gati$" (S"" Arts. 116C% 116B).
5) l"gal% !on$"ntional% 1"nal (Arts. 1156% 115B% 115A%
1161).
6) !i$il an natural.
(!) A!!oring to San!,"H 5o*an% IV% 6?.6@'
1) a!!oring to jurii!al Eualit# an "++i!a!iousn"ss
616
a) natural 0 a!!oring to natural la3
b) !i$il 0 a!!oring to !i$il la3
61C
!) *i4" 0 a!!oring to bot, natural an !i$il
la3s
6) b# t," 1arti"s or subj"!ts
a) unilat"ral% bilat"ral
b) ini$iual% !oll"!ti$"
!) joint% soliar#
9) b# t," obj"!t o+ t," obligation
a) s1"!i+i!% g"n"ri!
b) 1ositi$"% n"gati$"
!) r"al% 1"rsonal
) 1ossibl"% i*1ossibl"
") i$isibl"% ini$isibl"
+) 1rin!i1al% a!!"ssor#
g) si*1l"% !o*1oun
FI+ !o*1oun 0 *a# b"
(1) !onjun!ti$" 0 "*anabl" at t," sa*"
ti*"
(6) istributi$" 0 "it,"r alt"rnati$" or +a!ulta.
ti$"G
() Classi+i!ation b# t," Co" a!!oring to D"+"!ts'
1) No "+"!t 0 $ali
6) D"+"!ti$"
a) r"s!issibl"
b) $oiabl"
!) un"n+or!"abl"
) $oi
5ogal"s $. Int"r*"iat" A11"llat" Court
L.65?66% =an. 91% 1AB@
Co*1ulsor# r"+"r"n!" to t," baranga#
61B
!ourts on t," 1ro1"r !as"s IS NOT jurisi!tional%
alt,oug, it g"n"rall# is a !onition to litigation.
61A
Art. 11CA
La!< o+ r"+"r"n!" a++"!ts onl# a 1art#8s !aus" o+
a!tion. T,us% obj"!tion to t," la!< o+ a stat"
!aus" o+ a!tion is ""*" 3ai$" i+ not rais".
S"!tion 1
P;5E AND CONDITIONAL O7LI>ATIONS
Art. 11CA. E$"r# obligation 3,os" 1"r+or*an!" o"s not
"1"n u1on a +utur" or un!"rtain "$"nt% or u1on a 1ast
"$"nt un<no3n to t," 1arti"s% is "*anabl" at on!".
E$"r# obligation 3,i!, !ontains a r"solutor# !onition
s,all also b" "*anabl"% 3it,out 1r"jui!" to t," "++"!ts o+
t," ,a11"ning o+ t," "$"nt.
CO&&ENT'
(1) Pur" Obligation 0 on" 3it,out a !onition or a t"r* (,"n!"%
"*anabl" at on!"% 1ro$i" t,"r" 3ill b" no absurit#).
E4a*1l"s'
(a) I 1ro*is" to 1a# #ou P1 *illion. FT,is is "*anabl" at
on!"% unl"ss a 1"rio 3as r"all# int"n"% as 3,"n a loan
,as just b""n !ontra!t" (S"" Floriano $. D"lgao% 11 P,il.
15@)% or 3,"n so*" ti*" is r"asonabl# n"!"ssar# +or t,"
a!tual +ul+ill*"nt o+ t," obligation% as 3,"n a 1"rson
bins ,i*s"l+ to 1a# i**"iat"l# +or t," subs!ri1tion o+
!or1orat" s,ar"s o+ sto!<. (Paul S!,"n<"r $. Iillia* F.
>"*1"rl"% L.16@@A% Aug. 91% 1A66).G
(b) -I8ll 1a# #ou P1 *illion on "*an./ (S"" Abarri% In!. $.
>alan% @C O.>. 66@1). 7ut instant 1"r+or*an!" is not a
n"!"ssit#% ot,"r3is" absur !ons"Eu"n!"s 3ill aris". (B
&anr"sa 1C6).
(!) I,"n t," original 1"rio or !onition ,as b""n !an!"ll"
b# t," *utual sti1ulation o+ bot, 1arti"s. (S"" Estat" o+
&ota $. S"rra*% @C P,il. @6@).
(6) Conitional Obligation 0 3,"n t,"r" is a !onition.
66?
Art. 11CA
E4a*1l"'
(a) I8ll bu# #our lan +or P1? *illion i+ #ou 1ass t," last bar
661
Art. 11CA
"4a*inations. (T,is is sus1"nsi$" +or t," r"sults 3ill b"
a3ait").
(b) I8ll gi$" #ou *# lan no3% but s,oul #ou +ail in t," last bar
"4a*inations% #our o3n"rs,i1 3ill !"as" an it 3ill b" *in"
again. (T,is is r"solutor# b"!aus" it "ns u1on +ailur".).
(9) D"+inition o+ Conition
-It is an un!"rtain "$"nt 3,i!, 3i"ls an in+lu"n!" on a
l"gal r"lations,i1./ 0 &anr"sa.
(@) D"+inition o+ a T"r* or P"rio
T,at 3,i!, n"!"ssaril# *ust !o*" (li<" 6??5) 3,"t,"r t,"
1arti"s <no3 3,"n it 3ill ,a11"n or not (li<" "at,% sin!" t,is
is sur").
(NOTE' D"at, b"!aus" o+ S.A.5.S. is a !onition% sin!"
"at, *a# b" u" to ot,"r !aus"s.)
E4a*1l"' -I8ll 1a# #ou P1 &illion on =un. 1% 6??5./
(5) I,"n an Obligation Is D"*anabl" at On!"
(a) I,"n it is 1ur"2
(b) Or 3,"n it ,as a r"solutor# !onition.
(E4a*1l"' I8ll gi$" #ou *# !ar% but #ou s,oul not
*arr# &aria t,is #"ar.) (T,is is "*anabl" NOI.)
(NOTE' I+ t," obligation is 3or" t,is 3a#
0 -I8ll gi$" #ou *# !ar% but onl# a+t"r #ou !an 1ro$"
t,at b# t," "n o+ t,is #"ar% #ou ,a$" not *arri"
&aria/ 0 t,is is sus1"nsi$"% b"!aus" t," "n o+ t,"
t"sting 1"rio *ust b" a3ait".)
(6) Past E$"nt ;n<no3n to t," Parti"s
T,is is not "4a!tl# a !onition sin!"% as a *att"r o+ r"alit#%
t," t,ing ,as alr"a# ,a11"n" or not. I,at is r"all# *"ant
666
Art. 11CA
,"r" is% +utur" <no3l"g" o+ a 1ast "$"nt 3ill "t"r*in"
3,"t,"r or not an obligation 3ill aris". (S"" B &anr"sa 16?.
161). H"n!"%
669
Art. 11CA
a !onition is r"all# -a +utur" AND !"rtain "$"nt%/ not -a +utur"
O5 un!"rtain "$"nt./ (=.7.L. 5"#"s% Obs"r$ation on t," N"3 Ci$il
Co"% La3#"r8s =ournal% =an. 91% 1A51% 1. @C).
(C) Classi+i!ation o+ Conitions
(a) 0 1
)
sus1"nsi$" 0 t," ,a11"ning o+ t," !onition
gi$"s ris" to t," obligation.
6
)
r"solutor# 0 t," ,a11"ning o+ t," !onition
"4tin. guis,"s t," obligation.
(b) 0 1
)
1ot"stati$" 0 "1"ns u1on t," 3ill o+ t,"
"btor
(E4a*1l"' I8ll s"ll #ou *# !ar i+ I li<".)
6
)
!asual 0 "1"ns on !,an!" or ,aHar or t,"
3ill o+ a t,ir 1"rson (i+ I 3in in t," lotto).
9
)
*i4" 0 "1"ns 1artl# on t," 3ill o+ on" o+
t," 1arti"s an 1artl# on !,an!" or t," 3ill o+ a
t,ir 1"rson (i+ I 1ass t," bar).
(!) 0 1
)
i$isibl" (!a1abl" o+ 1artial 1"r+or*an!").
6
)
ini$isibl" (not !a1abl" o+ 1artial
1"r+or*an!" b"!aus" o+ t," natur" o+ t,"
t,ing% or b"!aus" o+ t," int"ntion o+ t,"
1arti"s).
() 0 1
)
1ositi$" 0 an a!t is to b" 1"r+or*".
6
)
n"gati$" 0 so*"t,ing 3ill b" o*itt".
(") 0 1
)
"41r"ss 0 t," !onition is stat".
6
)
i*1li" 0 t," !onition *"r"l# in+"rr".
(+) 0 1
)
1ossibl" 0 !a1abl" o+ +ul+ill*"nt in natur" an
in la3.
6
)
i*1ossibl" 0 not !a1abl" o+ +ul+ill*"nt u" to
natur" or u" to t," o1"ration o+ t," la3 or
*or. als or 1ubli! 1oli!#2 or u" to a
!ontrai!tion in its t"r*s.
(g) 0 1
)
!onjun!ti$" 0 i+ all t," !onitions *ust b"
1"r. +or*".
66@
Art. 11CA
6
)
alt"rnati$" 0 i+ onl# a +"3 o+ t," !onitions
,a$" to b" 1"r+or*". (S"" B &anr"sa 19?).
665
Art. 11B?
Art. 11B?. I,"n t," "btor bins ,i*s"l+ to 1a# 3,"n
,is *"ans 1"r*it ,i* to o so% t," obligation s,all b"
""*" to b" on" 3it, a 1"rio% subj"!t to t," 1ro$isions o+
Arti!l"
11AC.
CO&&ENT'
(1) D"btor to Pa# -I,"n His &"ans P"r*it/
Alt,oug, it *a# s""* t,at Art. 11B? s1"a<s o+ a !onition
"1"n"nt "4!lusi$"l# on t," 3ill o+ t," "btor (an t,"r"+or"
a11ar"ntl# VOID un"r Art. 11B6)% t," +a!t r"*ains t,at 1a#.
*"nt o"s not "1"n on "btor8s 3ill% +or in"" ," ,a 1ro*.
is" 1a#*"nt. I,at "1"ns r"all# on ,i* is not 1a#*"nt% but
t," TI&E 3,"n 1a#*"nt is to b" *a". H"n!"% t," la3 un"r
Art. 11B? !onsi"rs t,is obligation as on" 3it, a TE5& or PE.
5IOD.
(6) Si*ilar P,ras"s
(a) -3,"n *# *"ans 1"r*it to o so/2
(b) -3,"n I !an a++or it/2
(!) -3,"n I a* abl" to/2
() -3,"n I ,a$" *on"#%/ "t!.
(9) Ho3 Long Is t," T"r*J
It is ob$ious t,at to l"a$" t," sa*" to t," is!r"tion o+
"it,"r !r"itor or "btor 3oul b" unjust% t,"r"+or"% Art. 11AC
s,oul b" a11li"% 3,"r" t," Court is oblig" to +i4 t," uration
o+ t," 1"rio. T," g"n"ral rul" is% t,"r"+or"% +or t," !r"itor to
as< t," !ourt +irst +or t," +i4ing o+ t," t"r*% an it is onl# 3,"n
t,at t"r* s"t arri$"s t,at ," !an "*an +ul+ill*"nt. An# a!tion
to r"!o$"r b"+or" t,is is on" is !onsi"r" 1r"*atur". (Pat"nt"
$. O*"ga% A9 P,il. 61B). In sai Pat"nt" !as"% t," 1,ras" 3as
-as soon as 1ossibl" or as soon as I ,a$" *on"#./ T," onl# !as"
3,"n t," bringing o+ t," a!tion to "n+or!"% b"+or" t," !ourt +i4"s
666
Art. 11B?
t," t"r*% 3oul b" allo3" is 3,"n t," 1rior a!tion o+ +i4ing t,"
t"r* 3oul s"r$" no 1ur1os" but "la#. (Tiglao% "t al. $. &anila
5ailroa Co.% AB P,il. 1B1).
66C
Art. 11B1
Art. 11B1. In !onitional obligations% t," a!Euisition o+
rig,ts% as 3"ll as t," "4tinguis,*"nt or loss o+ t,os" alr"a#
a!Euir"% s,all "1"n u1on t," ,a11"ning o+ t," "$"nt
3,i!, !onstitut"s t," !onition.
CO&&ENT'
(1) Sus1"nsi$" an 5"solutor# Conitions
T,is Arti!l" tr"ats o+'
(a) sus1"nsi$" !onitions 0 t," ,a11"ning o+ 3,i!, 3ill gi$"
ris" to t," a!Euisition o+ a rig,t (also !all" !onitions
1r"!""nt or !onitions ant"!""nt). 7" it not" t,at 3,at
!,ara!t"riH"s an obligation 3it, a sus1"nsi$" !onition is
t," +a!t t,at its "++i!a!# or obligator# +or!" is suborinat"
to t," ,a11"ning o+ a +utur" an un!"rtain "$"nt2 i+ t,"
sus1"nsi$" !onition o"s not ta<" 1la!"% t," 1arti"s 3oul
stan as i+ t," !onitional obligation ,a n"$"r "4ist".
(>ait" $. Fona!i"r% L.11B6C% =ul. 91% 1A61% 6 SC5A B91).
E4a*1l"s'
1) -I 1ro*is" to o 3,at #ou as< 1ro$i" t,at N !oni.
tion is +irst !o*1li" 3it,./ (S"" P,il. Nat. 7an< $.
P,il. Trust Co.% 6B P,il. @B).
6) A% in ,is 3ill% ga$" so*" 1ro1"rt# to 7% 1ro$i" t,at
A 3oul i" 3it,in a !"rtain 1"rio. A i not i"
uring sai 1"rio. Sin!" t," sus1"nsi$" !onition
3as not !o*1li" 3it,% 7 is not "ntitl" to in,"rit.
(Nati$ia $. >abino% 96 P,il. 669).
9) I+ in a jug*"nt b# a !ourt it is stat" t,at unl"ss
a bon is gi$"n% t," jug*"nt !an b" "n+or!" "$"n
3,il" it is still on a11"al% t," gi$ing o+ t," bon s,oul
b" !onsi"r" as 1arta<ing o+ t," natur" o+ a sus1"n.
si$" !onition. I+ t," bon b" not gi$"n% "n+or!"*"nt
or "4"!ution !an issu". (S"" Santos $. &oji!a% L.6@666%
=an. 6@% 1A6@).
7"ngson $. C,an
CB SC5A 119
ISS;E' I+ a !ontra!t 1ro$i"s +or arbitration 1rior
66B
Art. 11B1
to r"!ours" to !ourts but t," !as" 3as +il" 3it,out su!,
n""" arbitration% s,oul t," !as" b" is*iss"J
66A
Art. 11B1
HELD' No% +or t," r"*"# s,oul b" to sus1"n t,"
!as" until a+t"r arbitration is r"sort" to. (S"" also 5.A.
No. BC6% ot,"r3is" <no3n as t," Arbitration La3).
San &igu"l $. Elbinias
L.@B61?% =an. 91% 1AB@
7"+or" t," 3rit o+ 1r"li*inar# injun!tion !an b"
grant"% t," 1osting o+ a bon (to ans3"r +or !ons"Eu"nt
a*ag"s) is a !onition sin" Eua non (inis1"nsabl" sus.
1"nsi$" !onition or !onition 1r"!""nt).
Aga1ito >uti"rr"H $. Ca1ital Insuran!"
an Sur"t# Co.
L.66B6C% =un. 6A% 1AB@
I+ t," insuran!" !ontra!t sti1ulat"s t,at t," ri$"r o+
an insur" !ar *ust b" t," o3n"r o+ a $ali an subsist.
ing li!"ns"% an at t," ti*" o+ t," a!!i"nt t," ri$"r ,a
an "41ir" li!"ns"% t," insuran!" !o*1an# 3oul not b"
liabl".
Int"grat" Constru!tion $. 5"lo$a
>5 @111C% D"!. 6A% 1AB6
FACTS' A "!ision.a3ar b# an arbitration boar
or"r" t," &"tro1olitan Iat"r3or<s an S"3"rag" S#s.
t"* (&ISS) to 1a# Int"grat" Constru!tion P19%1BB.5?.
Lat"r% Int"grat" agr"" to gi$" &ISS so*" is!ounts
1ro$i" &ISS 3oul 1a# t," a*ount on O!t. 1C% 1AC6.
&ISS% ,o3"$"r% 1ai onl# on D"!. 66% 1AC6% t," a*ount
stat" in t," "!ision l"ss t," r"u!tions. T,r"" #"ars
lat"r% Int"grat" *o$" +or "4"!ution against &ISS +or
t," balan!" u" un"r t," "!ision.a3ar. &ISS o11os"
t," "4"!ution s"tting +ort, t," "+"ns" o+ 1a#*"nt. T,"
jug" "ni" t," "4"!ution on t," groun t,at t," 1arti"s
,a no$at" t," a3ar b# t,"ir subs"Eu"nt agr""*"nt.
HELD' I,il" t," t"nor o+ t," subs"Eu"nt agr""*"nt
69?
Art. 11B1
in a s"ns" no$at"s t," jug*"nt a3ar t,"r" b"ing a s,ort.
"ning o+ t," 1"rio 3it,in 3,i!, to 1a#% t," sus1"nsi$"
691
Art. 11B1
an !onitional natur" o+ t," sai agr""*"nt (*a<ing t,"
no$ation !onitional) is a!<no3l"g" b# &ISS. Its +ail.
ur" to 1a# 3it,in t," sti1ulat" 1"rio r"*o$" t," $"r#
!aus" +or t," agr""*"nt% r"n"ring t," sa*" in"++"!ti$"
an% t,"r"+or"% t," 1arti"s 3"r" r"*itt" to t,"ir original
rig,ts un"r t," jug*"nt a3ar.
(b) r"solutor# !onitions 0 (also !all" !onitions subs"Eu"nt)
0 ,"r"% rig,ts alr"a# a!Euir" ar" lost on!" t," !onition
is +ul+ill".
E4a*1l"'
1) I8ll gi$" #ou *# !ar no3 but s,oul #ou 1ass t," bar%
t," onation 3ill not b" "++"!ti$". I+ #ou 1ass t," bar%
#ou *ust r"turn t," !ar to *".
Par<s $. Pro$. o+ Tarla!
@A P,il. 1@6
FACTS' Con!"1!ion Cirir an =a*"s Hill o.
nat" lan to t," 1ro$in!" o+ Tarla! on !onition t,at
t," latt"r 3oul buil u1on t," lan a s!,ool,ous"
an a 1ar<% t," 3or< to b"gin 3it,in 6 *ont,s +ro*
t," at" t," 1arti"s rati+# t," onation. T," 1ro$in!"
a!!"1t" t," onation% an t," lan 3as r"gist"r" in
t," na*" o+ t," on"". S"$"ral #"ars lat"r% noti!ing
t,at t," 1ro$in!" ,a not 1"r+or*" t," !onitions%
t," onors sol t," lan to &r. Par<s. No3 Par<s
su" to r"!o$"r t," lan +ro* t," 1ro$in!".
HELD' Par<s ,as no rig,t to g"t t," lan. It is
tru" t,at t," onation 3as r"$o!abl" b"!aus" o+ br"a!,
o+ t," !onitions. 7ut until t," onation 3as r"$o<"%
it r"*ain" $ali% an ,"n!"% Cirir an Hill ,a no
rig,t to s"ll t," lan to Par<s. On" !annot gi$" 3,at
," o"s not ,a$" (n"*o at Euo non ,ab"t). I,at
t," onors s,oul ,a$" on" +irst 3as to ,a$" t," o.
nation annull". An a+t"r t,at 3as on"% t,"# !oul
$alil# ,a$" is1os" o+ t," lan in +a$or o+ Par<s.
696
Art. 11B1
7ut t,"r" is on" *or" 1oint to b" ans3"r". T,"
onors !ont"n t,at t," !onition s"t +ort, 0 t,"
699
Art. 11B1
!onstru!tion 0 3as in t," natur" o+ a sus1"nsi$"
!onition (!onition 1r"!""nt)% t,at is% sin!" t," !on.
ition n"$"r ,a11"n"% t,"r" r"all# 3as no onation%
an i+ t,"r" 3as no onation% t,"r" is no onation to
b" annull". H"n!"% t," onors insist on t,"ir rig,t
to s"ll t," 1ro1"rt# to Par<s. Ar" t," onors !orr"!t
,"r"J
HELD' No. T," !onition i*1os" 3as not a
!onition 1r"!""nt. It is not tru" t,at t," s!,ool,ous"
an t," 1ar< ,a to b" !onstru!t" b"+or" t," onation
b"!a*" "++"!ti$"% t,at is% b"+or" t," 1ro$in!" !oul
b"!o*" t," o3n"r o+ t," lan2 ot,"r3is"% it 3oul b"
in$aing t," 1ro1"rt# rig,ts o+ t," onors. H"n!"%
t," onation ,a to b"!o*" $ali "$"n b"+or" t,"
+ul+ill*"nt o+ t," !onition. H"n!"% t," !onition is a
r"solutor# on". Inas*u!, as alt,oug, r"$o!abl"% t,"
onation ,a not #"t b""n r"$o<"% it +ollo3s t,at in
t," *"anti*"% it is $ali an% t,"r"+or"% t," sal" b#
t," onors to Par<s is not $ali. H"n!"% Par<s ,as no
rig,t to r"!o$"r t," 1ro1"rt#.
FAut,or8s Not"' It is sub*itt" t,at it is not !or.
r"!t to sa# t,at on" ,as to b" +irst t," o3n"r o+ t,"
lan b"+or" ," !an b" allo3" to buil on it. On" !an
$"r# 3"ll o so u1on t," o3n"r8s 1"r*ission% an it
is "$i"nt t,at in t,is !as"% t," o3n"rs (t," onors)
3"r" alr"a# granting 1"r*ission.G
(6) Conitional P"r+"!tion o+ a Contra!t
I+ t," 1"r+"!tion o+ a !ontra!t "1"ns u1on t," +ul+ill*"nt
o+ a !onition% non.+ul+ill*"nt t,"r"o+ *"ans t," non.1"r+"!tion
o+ t," !ontra!t sin!" t," sus1"nsi$" !onition s,oul ,a$" b""n
+irst +ul+ill". (5u1"rto $. Dos!a% 66 P,il. 66C).
(9) So*" Cas"s an Do!trin"s
Panganiban $. 7atangas Trans. Co.
its"l+ to +urnis, a !"rtain nu*b"r o+ tru!<s 1ro$i" t,"# 3"r"
69@
Art. 11B1
(C.A.) @6 O.>. 916C
FACTS' T," 7atangas Trans1ortation Co*1an# boun
its"l+ to +urnis, a !"rtain nu*b"r o+ tru!<s 1ro$i" t,"# 3"r"
695
Art. 11B1
a$ailabl" on t," a# n""". On sai a# no tru!< 3as a$ailabl".
Issu"' Ias t," Co*1an# boun still to su11l# t," tru!<sJ
HELD' T," Co*1an# n"$"r in!urr" t," obligation sin!"
t," !onition i not *at"rialiH".
Paulo Ang% "t al. $. Furton Fir" Insuran!" Co.
L.15B66% =ul. 91% 1A61
A !onition !ontain" in an insuran!" 1oli!# t,at !lai*s
*ust b" 1r"s"nt" 3it,in on" #"ar a+t"r r"j"!tion is not *"r"l#
a 1ro!"ural r"Euir"*"nt% but in t," natur" o+ a !onition
1r"!""nt to t," liabilit# o+ t," insur"r% or in ot,"r 3ors% a
r"solutor# !laus"% t," 1ur1os" o+ 3,i!, is to t"r*inat" all li.
abiliti"s in !as" t," a!tion is not +il" b# t," insur" 3it,in t,"
1"rio sti1ulat".
LuHon St"$"oring Cor1oration $. CI5
L.1C@11% 1B6B1 an 1B6B9% D"!. 91% 1A65
A C,rist*as bonus is NOT a "*anabl" an "n+or!"abl"
obligation unl"ss it is *a" a 1art o+ t," 3ag" or salar# or !o*.
1"nsation an "$"n t,"n t," bonus 3oul b" CONTIN>ENT%
"1"n"nt on t," r"aliHation o+ 1ro+its. I+ t,"r" b" no 1ro+its%
t,"r" 3ill b" no bonus.
7"ngson $. C,an
L.6C6B9% =ul. 6A% 1ACC
FACTS' In a !ontra!t +or t," !onstru!tion o+ a !ono*iniu*
builing% it 3as "41r"ssl# agr"" t,at s,oul t,"r" b" an#
is1ut"% a boar o+ arbitrators *ust +irst b" r"sort" to b"+or"
ta<ing an# jui!ial a!tion. T," o3n"r 3"nt to !ourt b"!aus" t,"
builing 3as not +inis," on ti*"% but t,"r" 3as no 1rior r"sort
to arbitration. Issu"' Iill t," !as" no3 b" is*iss"J
HELD' No% t," !as" 3ill not b" is*iss"% alt,oug, t,"r"
3as no 1rior r"sort to arbitration. T,is is so b"!aus" un"r t,"
Arbitration La3 (5A BC6)% in a !as" li<" t,is% 3,at t," Court
696
Art. 11B1
s,oul o is to r"+"r t," *att"r to t," arbitrators 3,o ar" su1.
1os" to b" s"l"!t" b# t," 1arti"s.
69C
Art. 11B6
LuHon Sur"t# Co.% In!. $. :u"brar
L.@?61C% =an. 91% 1AB@
I+ a statut" r"Euir"s t," 1utting u1 o+ a bon% it is un"r.
stoo t,at t," !onitions 1r"s!rib" b# t," statut" s,all +or*
1art o+ t," bon agr""*"nt.
San &igu"l $. Elbinias
L.@B61?% =an. 91% 1AB@
In +i4ing t," a*ount o+ a bon +or t," grant o+ a 1r"li*inar#
injun!tion% t3o +a!tors t,at *a# b" !onsi"r" ar" t," *ar<"t
$alu" o+ t," 1ro1"rt#% an t," 1ossibl" r"sultant a*ag" i+
it s,oul turn out t,at t," injun!tion s,oul not ,a$" b""n
grant".
Art. 11B6. I,"n t," +ul+ill*"nt o+ t," !onition "1"ns
u1on t," sol" 3ill o+ t," "btor% t," !onitional obligation
s,all b" $oi. I+ it "1"ns u1on !,an!" or u1on t," 3ill o+
a t,ir 1"rson% t," obligation s,all ta<" "++"!t in
!on+or*it# 3it, t," 1ro$isions o+ t,is Co".
CO&&ENT'
(1) Pot"stati$"% Casual% &i4" Conitions
T,is Arti!l" "als 3it, t,r"" <ins o+ !onitions'
(a) 1ot"stati$" 0 "1"ns on t," "4!lusi$" 3ill o+ on" o+ t,"
1arti"s. (T,is is also !all" +a!ultati$" !onition.)
(b) !asual 0 "1"ns on !,an!" O5 u1on t," 3ill o+ a t,ir
1"rson. FE4a*1l"' I+ I 3in in t," lotto. (Vali)G
(6) Pot"stati$" (Fa!ultati$") Conition
(a) Pot"stati$" on t," 1art o+ t," DE7TO5'
1) i+ also sus1"nsi$" 0 bot, t," !onition an t," obliga.
tion ar" VOID% +or t," obligation is r"all# illusor#.
69B
Art. 11B6
FE4a*1l"' I8ll gi$" #ou P1%???%??? n"4t *ont,
i+ I li$". (B &anr"sa 191).G
69A
Art. 11B6
6) i+ also r"solutor# 0 $ali
FE4a*1l"' I8ll "*1lo# #ou no3 as *# su1"rin.
t"n"nt in t," +a!tor#% but it is un"rstoo t,at i+
+or an# r"ason (in!luing *# o3n !an!"llation o+ t,"
or"r) t," *a!,in"r# 3,i!, I or"r" +ro* t," ;nit"
Stat"s 3ill not arri$"% t," "*1lo#*"nt 3ill "n. (Ta#.
lor $. Ku Ti"ng% @9 P,il. BC9% ,"l t,at -a !onition
bot, 1ot"stati$" an r"solutor# *a# b" $ali "$"n i+
t," !onition is *a" to "1"n u1on t," 3ill o+ t,"
obligor./)G
FNOTE' It is sub*itt" t,at alt,oug, t,is is
in"" a r"solutor# !onition (b"!aus" t," or"r 3oul
b" "it,"r !an!"ll" or not)% still it ,as t," "++"!t o+ a
r"solutor# t"r* (b"!aus" t," "*1lo#"" ,"r" 3oul not
b" oblig" to r"turn 3ag"s +or 3or< alr"a# on").G
(b) Pot"stati$" on t," 1art o+ t," C5EDITO5 0 VALID
E4a*1l"' -I8ll gi$" #ou *# +ountain 1"n i+ #ou "sir"
to ,a$" it./ (S"" B &anr"sa 19@.195).
(9) :u"r#
-I8ll gi$" #ou P1%???%??? i+ I !an s"ll *# lan./ Su11os" I
a* abl" to s"ll *# lan% a* I boun to gi$" #ou P1%???%???J
ANS.' It is sub*itt" t,at t," ans3"r is KES. I,il" a1.
1ar"ntl#% t,is is a 1ot"stati$" !onition (b"!aus" I *a# or I *a#
not s"ll) (S"" Os*"na $. 5a*a% 1@ P,il. AA 0 3,i!,% in a si*ilar
!as"% ,"l t,at su!, a sti1ulation is VOID)% still it is not 1ur"l#
1ot"stati$" (as istinguis," +ro* t," si*1l# 1ot"stati$") but
r"all# a *i4" on"% b"!aus" t," s"lling 3oul "1"n not onl#
on *# "sir" to s"ll but also on t," a$ailabilit# an 3illingn"ss
o+ t," bu#"r an ot,"r !ir!u*stan!"s su!, as 1ri!"% +ri"ns,i1%
or t," n"!"ssit# o+ trans+"rring to a i++"r"nt "n$iron*"nt. (S""
H"r*oso $. Longara% @A O.>. @6BC% O!t. 1A59).
(@) Cas"s
S*it,% 7"ll an Co. $. Sot"lo &atti
@@ P,il. BC@
6@?
Art. 11B6
FACTS' A sol *"r!,anis" to 7% sai *"r!,anis" to b"
"li$"r" in 9 *ont,s% but t," 1"rio o+ "li$"r# 3as not guar.
6@1
Art. 11B6
ant"". Alt,oug, A tri" ,is b"st to +ul+ill ,is !o**it*"nts on
ti*"% still trans1ortation an go$"rn*"nt r" ta1" *a" "li$"r#
1ossibl" onl# a+t"r t,r"" *ont,s. I,"r"u1on 7 r"+us" to a!!"1t
t," goos an to 1a# +or t,"* on t," groun t,at t," t"r* ,a
not b""n !o*1li" 3it,.
HELD' 7 s,oul a!!"1t an 1a#% +or t,"r" 3as r"all# no
t"r* but a *i4" !onition. Consi"ring t,at A ,a alr"a# tri"
,is b"st% it is as i+ all t," t"r*s o+ t," !ontra!t ,a b""n +ait,.
+ull# !o*1li" 3it,% +or ,"r" t," +ul+ill*"nt o+ t," !onition i
not "1"n 1ur"l# on ,is 3ill but on ot,"rs% li<" t," s,i11ing
!o*1an# an t," go$"rn*"nt. 7 s,oul no3 !o*1l#.
=a!into $. C,ua L"ng
(C.A.) @5 O.>. 6A1A
FACTS' A o3n" a ,ous" r"nt" b# 7. A sol t," ,ous"
to C% an C agr"" to 1a# t," balan!" o+ t," 1ri!" as soon as
7 l"a$"s t," 1r"*is"s. C 3as to ta<" !ar" o+ s""ing to it t,at 7
$a!at" t," ,ous". A no3 sa#s t," !ontra!t is $oi b"!aus" it is
1ot"stati$" on C8s 1art.
HELD' T," !ontra!t is $ali. It 3as not 1ur"l# 1ot"stati$"
on C8s 1art.
(a) Firstl# 0 7 *ig,t $a!at" o+ ,is o3n a!!or% an C 3oul
no3 ,a$" to 1a# (so t," +ul+ill*"nt r"all# in 1art "1"n"
on t," 3ill o+ a t,ir 1art#).
(b) S"!onl# 0 I+ C i not as< 7 to l"a$"% A !oul $"r# 3"ll o
so b# an a!tion o+ unla3+ul "tain"r against 7. An 3,"n
7 is oust"% C 3oul ,a$" to 1a#.
T," !onition b"ing *i4"% t," !ontra!t is $ali.
Trillana $. :u"Hon Coll"g"s% In!.
A9 P,il. 9B9
FACTS' D 1ur!,as" 6?? s,ar"s o+ sto!< o+ t," :u"Hon Col.
l"g"s% subj"!t to t," !onition t,at s," 3oul 1a# +or t," sa*"
6@6
Art. 11B6
as soon as s," 3oul b" abl" to ,ar$"st +is, +ro* ,"r +is,1on.
Issu"' Is t,is !onition $aliJ
6@9
Art. 11B9
HELD' No% b"!aus" t,is sus1"nsi$" !onition is 1ur"l#
1ot"stati$" on ,"r 1art.
Art. 11B9. I*1ossibl" !onitions% t,os" !ontrar# to goo
!usto*s or 1ubli! 1oli!# an t,os" 1ro,ibit" b# la3 s,all
annul t," obligation 3,i!, "1"ns u1on t,"*. I+ t,"
obliga. tion is i$isibl"% t,at 1art t,"r"o+ 3,i!, is not
a++"!t" b# t," i*1ossibl" or unla3+ul !onition s,all b"
$ali.
T," !onition not to o an i*1ossibl" t,ing s,all b"
!on. si"r" as not ,a$ing b""n agr"" u1on.
CO&&ENT'
(1) I*1ossibl" an Ill"gal Conitions
T,is Arti!l" "als 3it, t," "++"!t o+ i*1ossibl" an ill"gal
!onitions.
(6) Classi+i!ation
(a) I*1ossibl" F1,#si!all# 0 to *a<" a "a *an li$"2 0 logi.
!all# 0 to *a<" a !ir!l" t,at is at t," sa*" ti*" a sEuar"
(illogi!al !onition)G.
(b) Ill"gal F1ro,ibit" b# goo !usto*s% 1ubli! 1oli!#2 1ro,ibit.
"% ir"!tl# or inir"!tl#% b# la3% li<" <illing N% a +ri"nG.
(9) E++"!ts
(a) I+ t," !onition is to o an i*1ossibl" or ill"gal t,ing% 7OTH
t," !onition an t," obligation ar" VOID (b"!aus" t,"
"btor <no3s t,at no +ul+ill*"nt !an b" on" an t,"r"+or"
is not s"rious about b"ing liabl").
E4a*1l"' I8ll s"ll #ou *# lan i+ #ou !an *a<" a "a
*an li$" again.
(b) I+ t," !onition is NE>ATIVE% t,at is% not to o t," i*.
1ossibl"% just isr"gar t," !onition 7;T t," obligation
r"*ains.
6@@
Art. 11B9
E4a*1l"' I8ll s"ll #ou *# lan i+ #ou !annot *a<" a
!ir!l" t,at is at t," sa*" ti*" a sEuar". (T,is b"!o*"s a
6@5
Art. 11B9
1ur" an $ali obligation. As a *att"r o+ +a!t% t," !onition
,"r" !an al3a#s b" +ul+ill".)
(!) I+ t," !onition is NE>ATIVE% i.".% not to o an ill"gal
t,ing% bot, t," !onition an t," obligation ar" VALID.
E4a*1l"' I8ll s"ll #ou *# lan i+ #ou o not <ill N. (T,is
is $ali. I+ N is <ill" b# #ou% #ou ,a$" no rig,t to bu# *#
lan.)
FNOTE' T," "4a*1l" gi$"n abo$" a11li"s onl# to
obligations an !ontra!ts% not to t"sta*"ntar# is1osition
or to onations. In sai !as"% t," i*1ossibl" or ill"gal !on.
ition is just isr"gar"% an t," is1osition or onation
r"*ains $ali. (S"" Arts. BC9 an C6C% Ci$il Co").G
(NOTE' T,is is b"!aus" in sai !as"s% it is r"all#
t," lib"ralit# o+ t," gi$"r t,at is t," !onsi"ration o+ t,"
gi+t.)
(@) So*" Cas"s
Santos $. S"!. o+ Agri!ultur" an Natural
5"sour!"s an Dir"!tor o+ Lans
A1 P,il. B96
T," ut# o+ a su!!"ss+ul bi"r to *a<" a !onstru!tion
3it,in on" an on".,al+ #"ars +ro* t," a3ar is "4tinguis,"%
i+ b"!aus" o+ t," !on+is!ation o+ ,is *at"rials b# t," =a1an"s"
ar*#% t," 3or< ,as b"!o*" 1,#si!all# i*1ossibl".
Lun"ta &otor Co. $. F""ri!o Aba
6C P,il. 69
FACTS' A +il" a suit against 7% an as<" +or a 3rit to
atta!, 78s 1ro1"rti"s. T," 3rit 3as grant"% but 7 as<" +or its
!an!"llation% an +or t,is 1ur1os" o++"r" a bon% s"!ur" b# t3o
sur"ti"s. T," bon !ontain" a stat"*"nt t,at in !as" A s,oul
IIN% t," sur"ti"s 3oul ans3"r +or 78s liabilit#. 7"!aus" o+ t,is
bon% t," 3rit 3as issol$". Lat"r% A lost t," !as"% it ,a$ing
b""n is*iss". Issu"' Ar" 78s sur"ti"s still bounJ
6@6
Art. 11B9
HELD' No *or"% b"!aus" A !an n"$"r 3in% t," !as" ,a$ing
b""n is*iss". T," !onition ,as b"!o*" a l"gal i*1ossibilit#.
6@C
Art. 11B@
Litton% "t al. $. LuHon Sur"t#% In!.
A? P,il. CB9
FACTS' S"ll"r o3n" a 1i"!" o+ lan *ortgag" to N. Lan
3as sol to bu#"r on t," !onition t,at t," *ortgag" 3oul +irst
b" !an!"ll". S"ll"r% ,o3"$"r% !oul not ,a$" !onta!t 3it, N.
Issu"' Is ," still boun to s"llJ
HELD' No% sin!" t," !onition ,as b"!o*" i*1ossibl".
Fi"l*an8s Insuran!" Co.% In!. $. &"r!""s
Vargas Va. " Song!o an t," Court o+ A11"als
L.6@B99% S"1t. 69% 1A6B
I+ so*" !onitions in a !ontra!t ar" i*1ossibl" to !o*1l#
3it,% t," insur"r !annot $alil# ass"rt a br"a!, o+ sai !oni.
tions.
Art. 11B@. T," !onition t,at so*" "$"nt ,a11"n at a
"t"r*inat" ti*" s,all "4tinguis, t," obligation as soon as
t," ti*" "41ir"s or i+ it ,as b"!o*" inubitabl" t,at t,"
"$"nt 3ill not ta<" 1la!".
CO&&ENT'
(1) Positi$" Conitions
T,is Arti!l" "als 3it, 1ositi$" !onitions.
E4a*1l"' I8ll gi$" #ou *# lan i+ #ou *arr# &aria N t,is
#"ar. I+ b# t," "n o+ t," #"ar% &aria N is alr"a# "a% or #ou
,a$" not #"t *arri" ,"r% t," obligation is "4tinguis,".
Aison $. F"li4
9B P,il. @?@
FACTS' A boug,t 78s lan on !onition t,at 3it,in a
!"rtain 1"rio% 7 3oul obtain a Torr"ns Titl". 7 i not o so
3it,in t," sti1ulat" t"r*.
6@B
Art. 11B@
HELD' A is r"l"as" +ro* ,is obligation to 1ur!,as".
6@A
Art. 11B5
(6) E++"!t i+ P"rio o+ Ful+ill*"nt Is Not Fi4"
I+ t," 1"rio is not +i4" in t," !ontra!t% t," !ourt% !onsi"r.
ing t," 1arti"s8 int"ntions% s,oul "t"r*in" 3,at 1"rio 3as
r"all# int"n". (S"" Art. 11B5% 1ar. 6% Ci$il Co").
&artin $. 7o#"ro
55 P,il. C6?
FACTS' A sol 7 a 1ar!"l o+ lan on !onition t,at t," 1ri!"
3oul b" 1ai as soon as 7 ,a 1ai o++ t," *ortgag" an ot,"r
"bts o+ t," "stat". A 3ait" +or so*" ti*"% but sin!" 7 ,a not
#"t su!!""" in 1a#ing o++ t," "bts% A broug,t an a!tion to
!an!"l t," sal".
HELD' T," sal" 3ill not b" !an!"ll". T,"r" 3as no ti*"
sti1ulat" ,"r"% an b"si"s% 7 3as tr#ing ,is b"st to !o*1l#
3it, ,is agr""*"nt. So 7 *ust b" gi$"n *or" ti*".
Art. 11B5. T," !onition t,at so*" "$"nt 3ill not ,a11"n
at a "t"r*inat" ti*" s,all r"n"r t," obligation "++"!ti$"
+ro* t," *o*"nt t," ti*" ini!at" ,as "la1s"% or i+ it ,as
b"!o*" "$i"nt t,at t," "$"nt !annot o!!ur.
I+ no ti*" ,as b""n +i4"% t," !onition s,all b" ""*"
+ul+ill" at su!, ti*" as *a# ,a$" 1robabl# b""n
!ont"*1lat"% b"aring in *in t," natur" o+ t," obligation.
CO&&ENT'
(1) N"gati$" Conitions
T,is Arti!l" r"+"rs to n"gati$" !onitions.
(6) E4a*1l"
-I8ll gi$" #ou P1%???%??? i+ b# O!t. 1% 6??5 #ou ,a$" not #"t
*arri" &aria N./ I+ b# sai at"% #ou ar" not #"t *arri"% or i+
1rior t,"r"to% &aria N ,a i"% t," obligation is "++"!ti$" 0 in
t," +irst !as"% +ro* O!t. 1% 6??52 an in t," s"!on !as"% +ro*
&aria8s "at,.
65?
Art. 11B5
:u"r#' Su11os" b"+or" t,at at"% #ou b"!o*" a 5o*an
Cat,oli! 1ri"st% is t," obligation "++"!ti$" on t," at" #ou "nt"r"
651
Art. 11B6
t," 1ri"st,ooJ No% b"!aus" so*" 1ri"sts% "s1it" r"ligious $o3s%
still !ontra!t l"gall# $ali *arriag"s.
Art. 11B6. T," !onition s,all b" ""*" +ul+ill" 3,"n
t," obligor $oluntaril# 1r"$"nts its +ul+ill*"nt.
CO&&ENT'
(1) 5ul" I,"n D"btor Voluntaril# Pr"$"nts Ful+ill*"nt o+
t," Conition
T,is Arti!l" "als 3it, CONST5;CTIVE O5 P5ES;&ED
F;LFILL&ENT. 5"ason +or t," Arti!l"' On" *ust not 1ro+it b#
,is o3n +ault.
(6) 5"Euisit"s
(a) VOL;NTA5ILK *a" 0 (Eit,"r *ali!iousl# or not% t,"
int"nt to 1r"$"nt *ust b" 1r"s"nt.) (B &anr"sa 19C). (I+
on" $oluntaril# +or anot,"r 1ur1os"% t,is r"Euisit" is not
1r"s"nt).
(b) a!tuall# P5EVENTS 0 (Int"ntion 3it,out 1r"$"ntion% or
1r"$"ntion 3it,out int"ntion is not su++i!i"nt.) (B &anr"sa
19B). F7ut int"ntion an 1r"$"ntion in t," "4"r!is" o+ a la3.
+ul rig,t 3ill not r"n"r t," Arti!l" a11li!abl". (9 Sal$at
916).G
(9) E4a*1l"
A 1ro*is" to s"ll to 7 a !ar i+ C !oul 1ass t," bar. On
t," a# o+ t," "4a*ination% A !aus" C to b" 1oison" an b"
,os1italiH". A is still boun to s"ll t," !ar. (I+% ,o3"$"r% it turns
out t,at C 3as r"all# isEuali+i" to ta<" t," bar% as 3,"n ,"
,a not +inis," ,ig, s!,ool% or ,a ta<"n ,is +irst #"ar la3 in
t," 1ro,ibit" s1"!ial !lass% A is not boun.)
(@) Cas"s
Laba#"n $. Talisa#
56 P,il. @@?
656
Art. 11B6
FACTS' A 3as a ,a!i"na o3n"r 3,o !ontra!t" t,"
s"r$i!"s o+ 7% a sugar !"ntral% to grin ,is (A8s) sugar !an". For
659
Art. 11B6
t,is 1ur1os"% A 3as su11os" to allo3 7 to !onstru!t a railroa
t,roug, A8s ,a!i"na. 7ut A i not gi$" 1"r*ission +or t,"
!onstru!tion. K"t ," su" 7 +or +ailur" to grin t," sugar !an".
Issu"' S,oul A8s a!tion 1ros1"rJ
HELD' No% +or ," ,a $oluntaril# 1r"$"nt" !o*1lian!"
b# +ailing to allo3 !onstru!tion.
Val"n!ia $. 5FC
L.1?C@A% A1r. 65% 1A5B
FACTS' Val"n!ia bi +or t," installation o+ t," 1lu*bing
in a go$"rn*"nt builing. T," bi 3as a!!"1t"% an Val"n!ia
3as as<" to 1ut u1 t," 1"r+or*an!" bon. Val"n!ia i not 1ut
u1 t," bon an i not b"gin t," 3or<. I,"n su"% ,is "+"ns"
3as t,at sin!" ," i not 1ut u1 t," bon% t,"r" 3as no !ontra!t
sin!" t," !onition 3as not !o*1li" 3it,.
HELD' Val"n!ia is liabl". Firstl#% t," 1utting u1 o+ t," 1"r.
+or*an!" bon 3as not a !onition b"+or" ," !oul b" !o*1"ll"
to *a<" t," installation% alt,oug, o+ !ours" it 3as a !onition
b"+or" ," !oul insist on 3or<ing an on g"tting 1ai. S"!onl#%
assu*ing t,at t," !onition 3as in"" !onitional% it 3as ,"
3,o $oluntaril# 1r"$"nt" its +ul+ill*"nt2 t,"r"+or"% ," !an b"
,"l liabl".
&ana $. LuHon Consoliat" &in"s M Co.
(C.A.) @? O.>. (@t, S"ri"s) 16A
FACTS' A ,ir" 7 to !onstru!t a roa +or ,i* u1 to a "sir"
l"ngt,. 7ut 3it,out justi+i!ation% A or"r" t," !onstru!tion
sto11" 3,"n ,al+.+inis,". 7 as<" +or t," !o*1l"t" 1ri!". A
r"+us" on t," groun t,at t," 1roj"!t 3as onl# ,al+.+inis,".
HELD' A s,oul 1a# in +ull% +or it 3as ," 3,o $oluntaril#
1r"$"nt" +ul+ill*"nt o+ t," !onition 0 t," !onstru!tion o+ t,"
"ntir" roa 0 an so it is as i+ t," 3or< ,a b""n !o*1l"t".
Ta#lor $. Ku Ti"ng Piao
@9 P,il. BC9
65@
Art. 11B6
FACTS' A "*1lo#" 7 +or 6 #"ars unl"ss 3it,in 6 *ont,s%
*a!,in"r# alr"a# or"r" 3oul not% +or an# r"ason% arri$". A
655
Art. 11BC
!an!"ll" t," or"r% so t," *a!,in"s i not arri$". At t," "n o+
si4 *ont,s 7 3as is!,arg". 7 no3 !lai*s salar# +or t," 1"rio
o+ t3o #"ars on t," groun t,at t," "btor (A) ,a $oluntaril#
1r"$"nt" !o*1lian!" 3it, t," !onition.
HELD' 7 ,as no rig,t. First% b"!aus" t," !onition ,"r" is
r"solutor# an not sus1"nsi$"2 s"!on% it 3as "41r"ssl# agr""
t,at t," +ailur" to arri$" !oul b" +or -an# r"ason%/ in!luing
A8s o3n a!ts. Orinar# 3ors s,oul b" gi$"n t,"ir orinar#
signi+i!ations% unl"ss t," 1arti"s int"n" ot,"r3is".
(5) A11li!abilit# o+ t," Arti!l" to 5"solutor# Conitions
Alt,oug, in g"n"ral% Art. 11B6 a11li"s onl# to a sus1"nsi$"
!onition% it *a# so*"ti*"s a11l# to a r"solutor# !onition as
in t,is !as"'
A sol lan no3 to 7 on !onition t,at 7 *arri"s C 3it,in
on" #"ar% ot,"r3is" 7 s,oul r"turn t," lan. I+ A <ills C% 7 o"s
not ,a$" to r"turn t," lan. T,is is b"!aus" A is at +ault. (S""
b# analog# TS% &ar!, 1C% 1A@1).
Art. 11BC. T," "++"!ts o+ a !onitional obligation to gi$"%
on!" t," !onition ,as b""n +ul+ill"% s,all r"troa!t to t,"
a# o+ t," !onstitution o+ t," obligation. N"$"rt,"l"ss%
3,"n t," obligation i*1os"s r"!i1ro!al 1r"stations u1on
t," 1arti"s% t," +ruits an int"r"sts uring t," 1"n"n!# o+
t," !oni. tion s,all b" ""*" to ,a$" b""n *utuall#
!o*1"nsat". I+ t," obligation is unilat"ral% t," "btor
s,all a11ro1riat" t," +ruits an int"r"sts r"!"i$"% unl"ss
+ro* t," natur" an !ir!u*stan!"s o+ t," obligation it
s,oul b" in+"rr" t,at t," int"ntion o+ t," 1"rson
!onstituting t," sa*" 3as i++"r"nt.
In obligations to o an not to o% t," !ourts s,all
"t"r. *in"% in "a!, !as"% t," r"troa!ti$" "++"!t o+ t,"
!onition t,at ,as b""n !o*1li" 3it,.
CO&&ENT'
(1) E++"!ts o+ Ful+ill*"nt o+ Sus1"nsi$" Conitions
656
Art. 11BC
T," obligation b"!o*"s "++"!ti$".
Fro* 3,at a#J
65C
Art. 11BC
(a) 5ET5OACTS 0 (as a g"n"ral rul") to t," a# t," obliga.
tion 3as !onstitut".
(b) No r"troa!ti$it# 3it, r"+"r"n!" onl# to'
1) +ruits or int"r"sts. (Art. 11BC% Ci$il Co").
6) 1"rio o+ 1r"s!ri1tion. (H"r*osa !as"% >5 L.566C%
O!t. 6C% 1A59). H"r" t," 1"rio runs +ro* t," a# t,"
!onition 3as +ul+ill"% b"!aus" it !an b" "n+or!" onl#
+ro* sai at".
(6) E4a*1l"s o+ 5"troa!ti$" E++"!ts
=os" in 6??@ 1ro*is" to s"ll to &aria ,is lan 1ro$i"
&aria 1ass"s t," bar in 6??6. &aria 1ass" t," bar in 6??6.
(a) It is as i+ &aria 3as "ntitl" to t," lan b"ginning 6??@.
(b) T,"r"+or" 0
1) an# onation or *ortgag" *a" b# &aria in 6??@
(b"+or" 1assing) 3ill b" !onsi"r" $ali. (;n"r t,"
la3 o+ onations% +utur" 1ro1"rt# !annot as a rul" b"
onat"% but inas*u!, as &aria is "ntitl" to t,"
lan "++"!ti$" 6??@% it +ollo3s t,at t," 1ro1"rt# !an.
not b" !onsi"r" a +utur" on". T," sa*" is tru" 3it,
r"gar to a *ortgag"% +or un"r t," la3% t," *ort.
gagor *ust b" t," o3n"r). (T,"s" ar" a!ts 1"n"nt"
!onitiona".)
6) an# ali"nation on t," lan *a" b# =os" (1"n"nt"
!onitiona") s,oul as a rul" b" !onsi"r" in$ali.
FNOTE' T,is r"troa!ti$" "++"!t !an a11l# onl# to
CONSENS;AL !ontra!ts (li<" sal")% an not to r"al
!ontra!ts (su!, as "1osit or !o**oatu*)% 3,i!,
ar" 1"r+"!t" onl# u1on "li$"r#.G
(9) No 5"troa!ti$" E++"!ts as to Fruits an Int"r"sts
(a) In unilat"ral obligations% "btor g"ts t," +ruits an int"r.
"sts unl"ss t,"r" is a !ontrar# int"nt.
65B
Art. 11BC
E4a*1l"' In 6??5% A 1ro*is" to gi$" 7 ,is (A8s) lan
i+ 7 1ass"s t," bar in 6??6. I+ t," !onition is +ul+ill"%
65A
Art. 11BB
o"s A also gi$" t," +ruits +or t," 1"rio o+ on" #"arJ NO%
b# "41r"ss 1ro$ision o+ t," la3 unl"ss t,"r" is a !ontrar#
int"nt.
(b) In r"!i1ro!al obligations% t," +ruits an int"r"sts uring t,"
1"n"n!# o+ t," !onition s,all (+or t," 1ur1os" o+ !on$"n.
i"n!" an 1ra!ti!al "++"!ti$"n"ss) b" ""*" to !o*1"nsat"
"a!, ot,"r ("$"n t,oug, t,"# r"all# b" un"Eual).
E4a*1l"' In 1AAA% A agr"" to s"ll 7 ,is lan an 7 agr""
to 1a# i+ C 1ass"s t," bar o+ 6??6. C 1ass". A *ust no3
gi$" t," lan% an 7 *ust 1a#. T," +ruits o+ t," lan +or
t," on".#"ar 1"rio 3ill r"*ain 3it, A% i.".% A o"s not
,a$" to gi$" sai +ruits. ;1on t," ot,"r ,an% 7 3ill <""1
t," 6Q l"gal int"r"st on ,is *on"#. T,is is tru" "$"n i+ t,"
int"r"sts b" gr"at"r or l"ss"r t,an t," +ruits.
(@) S!o1" o+ -Fruits/
-Fruits/ ,"r" r"+"r to natural% inustrial% an !i$il +ruits
(li<" r"nt). (S"" Art. @@6% Ci$il Co").
Art. 11BB. T," !r"itor *a#% b"+or" t," +ul+ill*"nt o+ t,"
!onition% bring t," a11ro1riat" a!tions +or t," 1r"s"r$ation
o+ ,is rig,t.
T," "btor *a# r"!o$"r 3,at uring t," sa*" ti*" ,"
,as 1ai b# *ista<" in !as" o+ a sus1"nsi$" !onition.
CO&&ENT'
(1) First Paragra1, (A!tions to Pr"s"r$" Cr"itor8s 5ig,ts)
(a) 5"ason' I+ not allo3" to ta<" t," a11ro1riat" a!tions% t,"r"
is a ang"r t," !r"itor 3ill r"!"i$" not,ing% as 3,"n t,"
obj"!t is "lib"rat"l# "stro#"% or ,i"n% or ali"nat".
(b) -7ring a11ro1riat" a!tions./ A!!oring to =usti!" =.7.L.
5"#"s% t,is *"ans to su" in !ourt. H" sa#s -ta<" a11ro1riat"
a!tion/ 3oul b" a b"tt"r 1,ras"% sin!" t,is 3oul in!lu"
not onl# suits in !ourt% but also su!, r"*"i"s as r"!or.
66?
Art. 11BB
ing (o+ t," "41"!t" rig,t) 3it, t," 5"gist"r o+ D""s. (S""
La3#"rs8 =ournal% =an. 91% 1A51% 1. @C).
661
Art. 11BB
Ot,"r a11ro1riat" a!tions'
1) as< +or s"!urit# i+ t," "btor is about to b" insol.
$"nt.
6) as< t," !ourt to 1r"$"nt ali"nation or !on!"al*"nt
1"n"nt" !onitiona".
(!) -Pr"s"r$ation'/ Not" t,at t," la3 sa#s -1r"s"r$ation%/ not
-1r"+"r"n!"/ o$"r ot,"r !r"itor. (=a!into $. " L"on% 51
P,il. AA6).
P,il. Long Distan!" T"l"1,on" Co. $. ="turian
L.CC56% =ul. 9?% 1A55
FACTS' T," P,il. Long Distan!" T"l"1,on" Co. o1"rat" a
1"nsion 1lan 1rior to t," last Pa!i+i! Iar% 3,"r"b#% subj"!t to
!"rtain !onitions (su!, as ag" an l"ngt, o+ s"r$i!")% "*1lo#""s
3,o r"tir" 3oul b" gi$"n 1"nsions. A+t"r t," 3ar% t," 1lan 3as
abolis," b"!aus" o+ loss"s sustain" uring t," =a1an"s" o!.
!u1ation.
ISS;ES'
(a) P"ning +ul+ill*"nt o+ t," !onitions (su!, as t," "*1lo#.
""8s s"r$i!")% o t," "*1lo#""s ,a$" an# rig,t 3it, r"s1"!t
to t," 1"nsion 1lanJ
(b) Ioul +inan!ial loss"s uring t," 3ar aut,oriH" abolition
o+ t," 1lanJ
HELD'
(a) P"ning +ul+ill*"nt o+ t," !onitions% t," "*1lo#""s ,a$"
a rig,t in "41"!tan!#% 3,i!, t," la3 1rot"!ts. H"n!"% un"r
Art. 11BB% a11ro1riat" a!tions *a# b" ta<"n b# t,"*.
(b) Finan!ial loss"s 3ill not "4!us" abolition o+ t," 1"nsion
1lan b"!aus" t," obligation to 1a# *on"# is an obligation
to gi$" a >ENE5IC t,ing.
(6) S"!on Paragra1, (5ig,t o+ D"btor to 5"!o$"r I,at Ias
Pai b# &ista<")
(a) 5"ason' I,at 3as 1ai b# *ista<" *a# b" r"!o$"r" b".
666
Art. 11BB
!aus"% a+t"r all% t," !onition *a# not *at"rialiH". In t,"
*"anti*"% t," "btor ,as lost t," us" o+ t," obj"!t. It is
669
Art. 11BA
un+air +or t," !r"itor to unjustl# "nri!, ,i*s"l+. T,is is a
!as" o+ SOL;TIO INDE7ITI (unu" 1a#*"nt). T," "btor
is also "ntitl" to +ruits or l"gal int"r"st i+ t," !r"itor b"
in 7AD FAITH% t,at is% i+ t," !r"itor <n"3 t,at 1a#*"nt
3as b"ing *a" 1rior to t," +ul+ill*"nt o+ t," !onition.
(b) I+ 1a#*"nt 3as not b# -*ista<"/ (t,at is% it 3as on" ".
lib"rat"l#)% !an t,"r" b" r"!o$"r#J
ANS.' It "1"ns'
1) I+ t," !onition is +ul+ill"% no r"!o$"r# b"!aus" o+
r"troa!ti$it# (alr"a# is!uss").
6) I+ t," !onition is not +ul+ill"% t,"r" s,oul b" a r".
!o$"r# (+or t,is 3oul b" unjust "nri!,*"nt) unl"ss
a 1ur" onation 3as int"n".
Art. 11BA. I,"n t," !onitions ,a$" b""n i*1os" 3it,
t," int"ntion o+ sus1"ning t," "++i!a!# o+ an obligation
to gi$"% t," +ollo3ing rul"s s,all b" obs"r$" in !as" o+ t,"
i*1ro$"*"nt% loss or "t"rioration o+ t," t,ing uring t,"
1"n"n!# o+ t," !onition'
(1) I+ t," t,ing is lost 3it,out t," +ault o+ t," "btor%
t," obligation s,all b" "4tinguis,"2
(6) I+ t," t,ing is lost t,roug, t," +ault o+ t," "btor%
," s,all b" oblig" to 1a# a*ag"s2 it is un"rstoo t,at t,"
t,ing is lost 3,"n it 1"ris,"s% or go"s out o+ !o**"r!"% or
isa11"ars in su!, a 3a# t,at its "4ist"n!" is un<no3n or it
!annot b" r"!o$"r"2
(9) I,"n t," t,ing "t"riorat"s 3it,out t," +ault o+
t," "btor% t," i*1air*"nt is to b" born" b# t," !r"itor2
(@) I+ it "t"riorat"s t,roug, t," +ault o+ t," "btor%
t," !r"itor *a# !,oos" b"t3""n t," r"s!ission o+ t," obliga.
tion an its +ul+ill*"nt% 3it, in"*nit# +or a*ag"s in "it,"r
!as"2
(5) I+ t," t,ing is i*1ro$" b# its natur"% or b# ti*"%
t," i*1ro$"*"nt s,all inur" to t," b"n"+it o+ t," !r"itor2
66@
Art. 11BA
(6) I+ it is i*1ro$" at t," "41"ns" o+ t," "btor% ,"
s,all ,a$" no ot,"r rig,t t,an t,at grant" to t,"
usu+ru!tuar#.
665
Art. 11BA
CO&&ENT'
(1) Loss% D"t"rioration% an I*1ro$"*"nt During t," P"n.
"n!# o+ Conition
(a) T," Arti!l" a11li"s onl# i+'
1) t," sus1"nsi$" !onition is +ul+ill"2 an
6) t," obj"!t is s1"!i+i! (not g"n"ri!).
(b) I,at ar" t," t,r"" t,ings t,at *a# ,a11"n to t," obj"!t
o+ an obligation 1"ning t," +ul+ill*"nt o+ a sus1"nsi$"
!onitionJ
ANS.' T," obj"!t'
1) *a# b" lost
6) *a# "t"riorat" ($alu" is r"u!" or i*1air")
9) *a# b" i*1ro$"
T," obj"!t *a# b" lost'
a) 3it,out t," +ault o+ t," "btor
b) 3it, +ault o+ t," "btor
!) 1artl# 3it, an 1artl# 3it,out t," +ault o+ t,"
"btor
T," obj"!t *a# "t"riorat"'
a) 3it,out t," +ault o+ t," "btor
b) 3it, t," +ault o+ t," "btor
!) 1artl# 3it, an 1artl# 3it,out t," +ault o+ t,"
"btor
T," obj"!t *a# i*1ro$"'
a) b# natur" or b# ti*"
b) t,roug, t," "41"ns" o+ t," "btor
!) 1artl# t,roug, natur" or ti*" an 1artl# b# t,"
"btor
(NOTE' 7"!aus" o+ t,"s" $ar#ing !ir!u*.
stan!"s% t," Co" ,as ""*" it 1ro1"r to "nun.
666
Art. 11BA
!iat" s"$"ral rul"s t,"r"on% ,"n!"% t," "4ist"n!"
o+ Art. 11BA.)
66C
Art. 11BA
(6) -Loss/ D"+in"
It is un"rstoo t,at t," t,ing is lost'
(a) 3,"n it 1"ris,"s (as 3,"n a ,ous" is burnt to as,"s)
(b) 3,"n it go"s out o+ !o**"r!" (as 3,"n t," obj"!t ,"r"to+or"
un1ro,ibit" b"!o*"s 1ro,ibit")
(!) 3,"n it isa11"ars in su!, a 3a# t,at its "4ist"n!" is un.
<no3n (as 3,"n a 1arti!ular !ar ,as b""n *issing +or so*"
ti*")
() 3,"n it isa11"ars in su!, a 3a# t,at it !annot b" r"!o$"r"
(as 3,"n a 1arti!ular ia*on ring is ro11" in t," *i.
l" o+ t," Pa!i+i! O!"an). (Art. 11BA% 1ar. 6% Ci$il Co").
(9) E++"!ts o+ Partial Loss
It *a# b" 1artial loss'
(a) t,at 3oul a*ount to a loss i*1ortant "noug, to b" !onsi.
"r" a !o*1l"t" loss (t,is 3ill b" "t"r*in" b# t," !ourts).
(Art. 1669% Ci$il Co").
(b) t,at 3oul *"r"l# b" !onsi"r" a "t"rioration o+ t,"
t,ing% in 3,i!, !as" t," rul"s on "t"rioration s,oul a1.
1l#.
(@) Illustrati$" Probl"*s
(a) A 1ro*is" to gi$" 7 ,is !ar i+ 7 1ass"s t," bar. P"n.
ing t," r"sults o+ t," bar "4a*s% t," !ar is "stro#" b#
a +ortuitous "$"nt% 3it,out an# +ault at all on t," 1art o+
t," "btor. I,"n 7 1ass"s t," bar% o"s A ,a$" to gi$" 7
an#t,ingJ
ANS.' No% A o"s not ,a$" to gi$" 7 an#t,ing. -I+ t,"
t,ing is lost 3it,out t," +ault o+ t," "btor% t," obligation
s,all b" "4tinguis,"./ (1st 1ar.% Art. 11BA% Ci$il Co"). T,"
r"ason is t,at as a g"n"ral rul"% no on" s,oul b" liabl"
+or a +ortuitous "$"nt unl"ss ot,"r3is" 1ro$i" b# la3 or
!ontra!t.
66B
Art. 11BA
(b) A 1ro*is" to gi$" 7 P1%???%??? i+ 7 1ass"s t," bar. P"n.
ing t," r"sults o+ t," bar% A8s *on"# is "stro#" b# +ir"%
66A
Art. 11BA
not i*1utabl" to A. I,"n 7 1ass"s t," bar% o"s A still
,a$" to gi$" ,i* P1%???%???J
ANS.' K"s% b"!aus" t," *on"# ,"r" is g"n"ri!. -In an
obligation to "li$"r a g"n"ri! t,ing t," loss or "stru!.
tion o+ an#t,ing o+ t," sa*" <in o"s not "4tinguis, t,"
obligation./ (Art. 1669% Ci$il Co"). T," r"ason is ->"nus
nunEua* 1"ruit/ 0 -g"nus n"$"r 1"ris,"s./
(!) Su11os" t," loss o!!urr" t,roug, t," +ault o+ t," "btor%
is t," "btor liabl"J
ANS.' K"s. -I+ t," t,ing is lost t,roug, t," +ault o+
t," "btor% ," s,all b" oblig" to 1a# a*ag"s./ (Art. 11BA%
1ar. 6% Ci$il Co").
() Su11os" 1"ning t," +ul+ill*"nt o+ t," sus1"nsi$" !oni.
tion% t," obj"!t% sa# a 1arti!ular !ar% "t"riorat"s 3it,out
t," +ault o+ t," "btor% is t," "btor boun to *a<" u1 +or
t," "1r"!iation% or s,oul t," !r"itor b"ar t," "t"riora.
tion su++"r"J
ANS.' In su!, a !as"% t," !r"itor 3ill ,a$" to su++"r
t," "t"rioration or i*1air*"nt. T," la3 sa#s' -I,"n
t," t,ing "t"riorat"s 3it,out t," +ault o+ t," "btor% t,"
i*1air*"nt is to b" born" b# t," !r"itor./ (Art. 11BA% 1ar.
9% Ci$il Co").
(") Su11os" t," t,ing "t"riorat"s t,roug, t," +ault o+ "bt.
orJ
ANS.' T," !r"itor ,"r" *a# !,oos" b"t3""n'
1) 5"s!ission (or !an!"llation o+ t," agr""*"nt or obliga.
tion)% 1lus a*ag"s2
6) Or +ul+ill*"nt o+ t," obligation ("$"n i+ t,"r" ,as b""n
"t"rioration) 1lus a*ag"s. (Art. 11BA% 1ar. @% Ci$il
Co").
(+) Su11os" t," t,ing is i*1ro$" b# natur" or b# ti*"% 3,o
g"ts t," b"n"+it o+ t," i*1ro$"*"ntJ
ANS.' T," !r"itor g"ts t," b"n"+it. -I+ t," t,ing is
6C?
Art. 11BA
i*1ro$" b# its natur" or b# ti*"% t," i*1ro$"*"nt s,all
inur" (go) to t," b"n"+it o+ t," !r"itor./ (Art. 11BA% 1ar. 5%
6C1
Art. 11A?
Ci$il Co"). T," r"ason +or t,is is to !o*1"nsat" t," !r"i.
tor 3,o 3oul su++"r in !as"% inst"a o+ i*1ro$"*"nt% t,"r"
3oul b" "t"rioration 3it,out t," +ault o+ t," "btor.
(g) Su11os" t," t,ing ,as i*1ro$"% not t,roug, ti*" or b#
its natur" but t,roug, t," "41"ns" o+ t," "btor% 3,at 3ill
b" t," rig,ts o+ sai "btorJ
ANS.' T," "btor 3ill ,a$" t," rig,ts grant" to a
usu+ru!tuar# +or i*1ro$"*"nts on a t,ing ,"l in usu+ru!t.
(;su+ru!t is t," rig,t to t," "njo#*"nt o+ t," us" an t,"
+ruits o+ a t,ing.) T,"s" rig,ts grant" to t," usu+ru!tuar#
3it, r"+"r"n!" to i*1ro$"*"nts *a# b" +oun in Art. 5CA o+
t," Ci$il Co"% 3,i!, r"as as +ollo3s' -T," usu+ru!tuar#
*a# *a<" on t," 1ro1"rt# ,"l in usu+ru!t su!, us"+ul i*.
1ro$"*"nts or "41"ns"s +or *"r" 1l"asur" as ," *a# ""*
1ro1"r% 1ro$i" ," o"s not alt"r its +or* or substan!"2
but ," s,all not ,a$" t," rig,t to b" in"*ni+i" t,"r"+or.
H" *a#% ,o3"$"r% r"*o$" su!, i*1ro$"*"nts% s,oul it
b" 1ossibl" to o so 3it,out a*ag" to t," 1ro1"rt#./ In
ot,"r 3ors% ," is not "ntitl" to r"i*burs"*"nt but ,"
*a# r"*o$" t," i*1ro$"*"nts 1ro$i" ," o"s not% b#
oing so% a*ag" t," 1ro1"rt#. -H" *a# ,o3"$"r s"t o++ t,"
i*1ro$"*"nts ," *a# ,a$" *a" on t," 1ro1"rt# against
an# a*ag" to t," sa*"./ (Art. 5B?% Ci$il Co").
(,) Su11os" t," i*1ro$"*"nt is u" 1artl# to t," "41"ns"s
*a" b# t," "btor an 1artl# u" to its natur" or b# ti*"%
3,o g"ts t," b"n"+itJ
ANS.' T," !r"itor g"ts t," b"n"+it o+ t," i*1ro$".
*"nt o+ t," t,ing b# its natur" or b# ti*"% but t," "btor
is "ntitl" to t," rig,ts o+ a usu+ru!tuar# o$"r us"+ul i*.
1ro$"*"nts t,at *a# ,a$" b""n !aus" at ,is "41"ns".
(NOTE' T," subj"!t o+ usu+ru!t is tr"at" in "tail in
t," subj"!t -Pro1"rt#./)
Art. 11A?. I,"n t," !onitions ,a$" +or t,"ir 1ur1os"
t," "4tinguis,*"nt o+ an obligation to gi$"% t," 1arti"s% u1on
6C6
Art. 11A?
t," +ul+ill*"nt o+ sai !onitions% s,all r"turn to "a!, ot,"r
3,at t,"# ,a$" r"!"i$".
6C9
Art. 11A?
In !as" o+ t," loss% "t"rioration or i*1ro$"*"nt o+ t,"
t,ing% t," 1ro$isions 3,i!,% 3it, r"s1"!t to t," "btor% ar"
lai o3n in t," 1r"!"ing arti!l" s,all b" a11li" to t,"
1art# 3,o is boun to r"turn.
As +or obligations to o an not to o% t," 1ro$isions o+
t," s"!on 1aragra1, o+ Arti!l" 11BC s,all b" obs"r$" as
r"gars t," "++"!t o+ t," "4tinguis,*"nt o+ t," obligation.
CO&&ENT'
(1) E++"!ts I,"n 5"solutor# Conition Is Ful+ill"
(a) T," obligation is "4tinguis,". (Art. 11B1% Ci$il Co").
(b) 7"!aus" t," obligation ,a b""n "4tinguis," an !onsi.
"r" to ,a$" ,a no "++"!t% t," 1arti"s s,oul r"stor" to
"a!, ot,"r 3,at t,"# ,a$" r"!"i$".
(!) Asi" +ro* t," a!tual t,ings r"!"i$"% t," +ruits or t," in.
t"r"sts t,"r"on s,oul also b" r"turn" a+t"r "u!ting o+
!ours" t," "41"ns"s *a" +or t,"ir 1rou!tion% gat,"ring%
an 1r"s"r$ation. (Art. @@9% Ci$il Co").
() T," rul"s gi$"n in Art. 11BA 3ill a11l# to 3,o"$"r ,as t,"
ut# to r"turn in !as" o+ t," loss% "t"rioration% or i*1ro$".
*"nt o+ t," t,ing.
(") T," !ourts ar" gi$"n 1o3"r to "t"r*in" t," r"troa!ti$it#
o+ t," +ul+ill*"nt o+ r"solutor# !onitions.
(6) Probl"*s
(a) A ga$" 7 a 1ar!"l o+ lan on t," !onition t,at 7 3ill n"$"r
go to t," !asino. A *ont, lat"r% 7 3"nt to t," !asino. I,at
,a11"ns to A8s obligationJ
ANS.' A8s obligation is "4tinguis,"% an t,"r"+or" it
is as i+ t,"r" n"$"r 3as an obligation at all. 7 3ill t,"r"+or"
,a$" to r"turn bot, t," lan an t," +ruits ," ,a r"!"i$"
t,"r"+ro* +ro* t," *o*"nt A ,a gi$"n ,i* t," lan.
(b) Su11os" in t," *"anti*"% t," lan ,a b""n i*1ro$"
6C@
Art. 11A?
t,roug, its natur" or b# ti*"% 3,o b"n"+its +ro* su!,
i*1ro$"*"ntsJ
6C5
Art. 11A1
ANS.' A g"ts t," b"n"+it b"!aus" ," is no3 t," !r"itor
3it, r"s1"!t to t," r"!o$"r# o+ t," lan. (Art. 11BA% 1ar. 5%
Ci$il Co").
Art. 11A1. T," 1o3"r to r"s!in obligations is i*1li" in
r"!i1ro!al on"s% in !as" on" o+ t," obligors s,oul not
!o*1l# 3it, 3,at is in!u*b"nt u1on ,i*.
T," injur" 1art# *a# !,oos" b"t3""n t," +ul+ill*"nt
an t," r"s!ission o+ t," obligation% 3it, t," 1a#*"nt o+
a*ag"s in "it,"r !as". H" *a# also s""< r"s!ission% "$"n
a+t"r ," ,as !,os"n +ul+ill*"nt% i+ t," latt"r s,oul b"!o*"
i*1ossibl".
T," !ourt s,all "!r"" t," r"s!ission !lai*"% unl"ss
t,"r" b" just !aus" aut,oriHing t," +i4ing o+ a 1"rio.
T,is is un"rstoo to b" 3it,out 1r"jui!" to t," rig,ts
o+ t,ir 1"rsons 3,o ,a$" a!Euir" t," t,ing% in a!!oran!"
3it, Arti!l"s 19B5 an 19BB an t," &ortgag" La3.
CO&&ENT'
(1) 5ig,t to 5"s!in
-T," 1o3"r to r"s!in%/ as us" in t,is Arti!l"% *"ans t,"
rig,t to !an!"l (or r"sol$") t," !ontra!t or r"!i1ro!al obligations
in !as" o+ non.+ul+ill*"nt on t," 1art o+ on". T,us% t," -r"s!is.
sion/ r"+"rr" to ,"r" is not 1r"i!at" on injur# to "!ono*i!
int"r"sts on t," 1art o+ t," 1art# 1lainti++ (3,i!, is t," basis +or
t," r"s!ission *"ntion" in Arts. 19B? an 19B1% Ci$il Co")%
but on t," br"a!, o+ +ait, b# t," "+"nant% 3,i!, br"a!, is
$iolati$" o+ t," r"!i1ro!it# b"t3""n t," 1arti"s. (;ni$"rsal Foo
Cor1oration $. Court o+ A11"als% L.6A155% &a# 19% 1AC?).
S1ous"s &ariano T. V"lar" M A$"lina D.
V"lar" $. CA% Da$i A. 5a#*uno% M
>"org" 5a#*uno
>5 1?B9@6% =ul. 11% 6??1
6C6
Art. 11A1
FACTS' P"tition"rs +ail" to !o*1l# 3it, t,"ir obligation
to 1a# t," balan!" o+ t," 1ur!,as" 1ri!" to 1ri$at" r"s1on"nts.
6CC
Art. 11A1
Issu"' 7"!aus" o+ t," +ailur"% 3"r" 1ri$at" r"s1on"nts !orr"!t
in $alil# "4"r!ising t,"ir rig,t to r"s!in t," !ontra!tJ
HELD' K"s. Inubitabl#% 1"tition"rs $iolat" t," $"r#
"ss"n!" o+ r"!i1ro!it# in t," !ontra!t o+ sal"% a $iolation t,at
!ons"Eu"ntl# ga$" ris" to 1ri$at" r"s1on"nts8 rig,t to r"s!in
t," sa*" in a!!oran!" 3it, la3. Stat" in anot,"r *oalit#% a
substantial br"a!, o+ a r"!i1ro!al obligation% li<" +ailur" to 1a#
t," 1ri!" in t," *ann"r 1r"s!rib" b# t," !ontra!t% "ntitl"s t,"
injur" 1art# to r"s!in t," obligation. 5"s!ission abrogat"s t,"
!ontrast +ro* its in!"1tion an r"Euir"s a *utual r"stitution o+
b"n"+its r"!"i$".
5"s!ission !r"at"s t," obligation to r"turn t," obj"!t o+ t,"
!ontra!t. It !an b" !arri" out onl# 3,"n t," on" 3,o "*ans
r"s!ission !an r"turn 3,at"$"r ," *a# b" oblig" to r"stor". (Co.
$. CA% 916 SC5A 56B F1AAAG). To r"s!in is to "!lar" a !ontra!t
$oi at its in!"1tion an to 1ut an "n to it as t,oug, it n"$"r
3as. It is not *"r"l# to t"r*inat" it an r"l"as" t," 1arti"s
+ro* +urt,"r obligations to "a!, ot,"r% but to abrogat" it +ro*
t," b"ginning an r"stor" t," 1arti"s to t,"ir r"lati$" 1ositions
as i+ no !ontra!t ,as b""n *a". (O!a*1o $. CA% 699 SC5A 551
F1AA@G).
(6) 5"!i1ro!al Obligations
T,is Arti!l" in s1"a<ing o+ -r"!i1ro!al on"s/ r"+"rs onl# to r".
!i1ro!al obligations% t,at is% to obligations 3,"r" t3o 1arti"s ar"
r"!i1ro!all# oblig" to o or gi$" so*"t,ing. (E4a*1l"' !ontra!t
o+ sal"). It is not "noug, t,at bot, 1arti"s ar" in"bt" to "a!,
ot,"r. T," !aus" *ust b" IDENTICAL an t," obligations s,oul
aris" si*ultan"ousl#. (S"" B &anr"sa 655). Par"nt,"ti!all#% in
r"!i1ro!al !ontra!ts or transa!tions% t," obligation or 1ro*is"
o+ "a!, 1art# is t," !aus" or !onsi"ration +or t," obligation or
1ro*is" o+ t," ot,"r. (Va. " :uirino $. Palar!a% L.6B66A% Aug.
15% 1A6A).
As1on Si*on $. Aa*os
L.9A9CB% Aug. 6B% 1AB@
6CB
Art. 11A1
In an a!tion to r"s!in or +or s1"!i+i! 1"r+or*an!"% t," latt"r
3as grant"% but t," sa*" lat"r b"!a*" i*1ossibl" (in $i"3 o+
6CA
Art. 11A1
t," !an!"llation o+ !"rtain titl"s). &a# t," r"*"# o+ r"s!ission
still b" grant"J K"s% un"r Art. 11A1 o+ t," Ci$il Co"% sin!"
s1"!i+i! 1"r+or*an!" ,as no3 b"!o*" i*1ossibl" 0 b"!aus" t,"
titl"s o+ t," lots (+or*"rl# in t," na*" o+ t," "+"nants) ,a$"
alr"a# b""n nulli+i" or !an!"ll"% so t,at "+"nants !an no
long"r "li$"r t,"ir o3n"rs,i1 to 1lainti++s.
D&5C Ent"r1ris" $. Est" "l Sol
&ountain 5"s"r$"
>5 5CA96% S"1t. 66% 1AB@
I+ a l"ss"" agr""s 3it, ,is l"ssor to 1a# r"nt 1artl# in !or.
1orat" s,ar"s% it is t," r"gular !ourts (not t," S"!uriti"s an
E4!,ang" Co**ission) t,at ,as jurisi!tion o$"r a !o*1laint
+or s1"!i+i! 1"r+or*an!" an "li$"r# o+ 1"rsonal 1ro1"rt#.
T,"r" is no intra.!or1orat" !ontro$"rs#. T," *"r" +a!t t,at t,"
l"ssor also 3ants to b" r"gar" as a sto!<,ol"r is i**at"rial.
In +a!t% t,is "sir" *"r"l# ini!at"s t,at t," l"ssor is not #"t a
sto!<,ol"r.
(9) E4a*1l"s
(a) In a !ontra!t o+ sal"% t," bu#"r !an r"s!in i+ t," s"ll"r o"s
not "li$"r% or t," s"ll"r !an r"s!in i+ t," bu#"r o"s not
1a#. (T,is is all rig,t +or t,is is a r"!i1ro!al obligation.)
(b) A borro3" P1%???%??? +ro* 7 as a loan. A% on t," ot,"r
,an% is t," o3n"r o+ a garag" 3,"r" 7 "1osits (+or sa+".
<""1ing) ,is !ar. 7 o3"s A P1%???%??? +or "1osit +""s. Is
t,is a r"!i1ro!al obligationJ No. Alt,oug, t,"# ar" *utuall#
boun% t," !aus" o"s not aris" +ro* t," sa*" !ontra!t.
On" is t," !ontra!t o+ loan2 t," ot,"r is t," !ontra!t o+
"1osit. T," 1a#*"nt o+ P1%???%??? as a loan o"s not
"1"n on t," 1a#*"nt o+ P1%???%??? as "1osit +""s.
(NOTE' In t," abo$" !as" o+ "1osit% 3,i!, in!i"n.
tall# is% b# its"l+% a r"!i1ro!al obligation% t," ut# to 1a#
"1osit +""s ,as its r"!i1ro!al !ount"r1art in t," ut# to
sa+"l# <""1 t," !ar.)
6B?
Art. 11A1
Asturias Sugar C"ntral $.
Pur" Can" &olass"s Co.
6? P,il. 655
FACTS' A sol to 7 so*" 1ro1"rti"s. It 3as agr"" t,at
7% t," bu#"r% s,oul ta<" !ar" o+ 1"r+"!ting 3it,in 6 *ont,s
t," titl" 1a1"rs to t," 1ro1"rt#. T,is ut# 7 3as not abl" to o.
Issu"' D"s1it" t," +a!t t,at 7 ,as alr"a# 1ai t," 1ri!"% *a#
A% t," s"ll"r% r"sol$" t," !ontra!t on t," groun t,at 7 ,a not
!o*1li" 3it, t," obligation r"+"rr" to abo$"J
HELD' No. In a !as" o+ sal"% t," !orr"s1oning uti"s ar"'
+or t," s"ll"r to "li$"r% an +or t," bu#"r to 1a#. H"r" t," bu#"r
,as 1ai. T,"r"+or"% t," s"ll"r !annot r"sol$" just b"!aus" t,"
titl" 1a1"rs ,a not #"t b""n 1"r+"!t". Ha t," bu#"r not #"t
1ai% it 3oul ,a$" b""n a i++"r"nt stor#. (S"" also 7orro*"o
$. Fran!o% 5 P,il. @A).
Aba#a $. Stanar Va!uu* Oil Co.
L.A511% Aug. 9?% 1A5C
I+ t," 1arti"s "nt"r into an agr""*"nt t,at t," 1lainti++ 3ill
b" a11oint" as o1"rator o+ a gasolin" station% 1ro$i" t,at ,"
signs an o1"rator8s agr""*"nt r"Euiring ,i* to 1ur!,as" 15?%???
lit"rs o+ gasolin" *ont,l# +ro* t," "+"nant% but t," 1lainti++
r"+us"s to sign sai agr""*"nt% t," "+"nant is absol$" +ro*
its obligation. T," r"ason is si*1l". In r"!i1ro!al obligations%
t," 1"r+or*an!" o+ on" is !onition" on t," si*ultan"ous +ul.
+ill*"nt o+ t," ot,"r.
Pio 7arr"to Sons% In!. $. Co*1ania &ariti*a
L.6695B% =an. 6A% 1AC5
FACTS' A lu*b"r !o*1an# su" to !oll"!t a !"rtain a*ount
+ro* a !usto*"r as 1a#*"nt +or lu*b"r 1ur!,as" on !r"it.
T," CFI (no3 5TC) "!i" in +a$or o+ t," lu*b"r !o*1an#% but
t," CA r"$"rs" t," CFI (5TC) on t," groun t,at t," "li$"r#
o+ t," lu*b"r ,a not b""n 1ro$". It is no3 !ont"n" b# t,"
lu*b"r !o*1an# t,at t," CA s,oul not ,a$" tou!," on t,"
issu" o+ "li$"r#% b"!aus" t," issu" tou!," u1on b# t," CFI
6B1
Art. 11A1
(5TC) 3as t," issu" o+ 3,"t,"r or not 1a#*"nt ,a b""n *a".
Issu"' S,oul t," issu" o+ "li$"r# b" tou!," u1onJ
6B6
Art. 11A1
HELD' K"s% t," issu" o+ "li$"r# s,oul b" tou!," u1on
b"!aus" "li$"r# an 1a#*"nt in a !ontra!t o+ sal" ar" so int"r.
r"lat" t,at in t," abs"n!" o+ "li$"r# o+ t," goos% t,"r" is
g"n"rall# no !orr"s1oning obligation #"t +or t," bu#"r to 1a#.
(S"" Art. 1@5B% 1ar. 1% Ci$il Co").
Santiago $. >onHal"s
L.9666C% O!t. 6?% 1ACC
FACTS' T," builing !ontra!tor in a !onstru!tion !ontra!t%
not ,a$ing b""n 1ai 1ro1"rl# +or t," 3or<% "!i" to sto1 t,"
!onstru!tion an to !an!"l or r"s!in t," !ontra!t. As a r"sult o+
t," r"s!ission% bot, 1arti"s agr"" to sub*it t," is1ut" to an
Arbitration 7oar. A+t"r t," n"!"ssar# ,"aring an r"!"1tion o+
"$i"n!"% t," 7oar a3ar" n"arl# P5?%??? to t," !ontra!tor
as t," 1ri!" still o3ing ,i*. Not satis+i" 3it, t," arbitral $"r.
i!t% t," o3n"r 3"nt to t," CFI (5TC)% 3,i!,% 3it,out r"!"i$ing
an# aitional "$i"n!"% r"n"r" a "!ision stating t,at t,"
arbitral a3ar 3as 1ro1"r. T," o3n"r t,"n +il" a *otion +or
r"!onsi"ration but +ail" to ini!at" in 3,at 3a# t," jug*"nt
!ontra$"n" "it,"r t," la3 or t," "$i"n!". Issu"' S,oul t,"
$"ri!t o+ t," trial !ourt b" sustain"J
HELD' K"s% b"!aus" t," o3n"r ,a su++i!i"nt o11ortunit#
to 1r"s"nt ,is si" b"+or" t," ul# !onstitut" Arbitration 7oar.
Ot,"r3is" stat"% t,"r" 3as no "nial o+ u" 1ro!"ss.
C"ntral 7an< $. CA
>5 @5C1?% O!t. 9% 1AB5
T," borro3"r8s 1ro*is" to 1a# is t," !onsi"ration +or t,"
obligation o+ a l"n"r.ban< to +urnis, t," a*ount b"ing bor.
ro3". I,"n t," borro3"r "4"!ut"s a r"al "stat" *ortgag"% ,"
signi+i"s ,is 3illingn"ss to 1a# t," loan. Fro* su!, at"% t,"
obligation o+ t," l"n"r.ban< to gi$" t," a*ount o+ loan% a!!ru"s%
an +ro* t,at at"% t," l"n"r.ban<8s "la# in +urnis,ing t,"
"ntir" loan starts.
(@) C,ara!t"risti!s o+ t," 5ig,t to 5"s!in or 5"sol$" ;n"r
T,is Arti!l"
6B9
Art. 11A1
(a) It "4ists onl# in r"!i1ro!al obligations. (Art. 11A1% Ci$il
Co"). F7" it not"% ,o3"$"r% t,at i+ t," obligation is
6B@
Art. 11A1
r"!i1ro!al 7;T 3it, a 1"rio% n"it,"r 1art# !an "*an
1"r+or*an!" or b" !onsi"r" in "+ault b"+or" t," "41i.
ration o+ t," 1"rio. (Ab"sa*is $. Ioo!ra+t Ior<s% Lt.%
L.1BA16% No$. 1B% 1A6A).G
(b) It !an b" "*an" onl# i+ t," 1lainti++ is r"a#% 3illing%
an abl" to !o*1l# 3it, ,is o3n obligation% an t," ot,"r
is not. FOt,"r3is"% i+ n"it,"r is r"a#% n"it,"r !an r"sol$".
&or"o$"r% t," guilt# 1art# !annot r"s!in. H" 3,o !o*"s
to "Euit# *ust !o*" 3it, !l"an ,ans. (S"" S"$a $. 7"r3ia%
@B P,il. 5B1).G
(!) T," rig,t to r"s!in is NOT absolut". T,us'
1) Tri$ial !aus"s or slig,t br"a!,"s 3ill not !aus" r"s!is.
sion. (Song Fo $. Ha3aiian.P,il. Co.% @C P,il. B61
0 3,"r" t," !ourt r"+us" r"s!ission 3,"n t,"r" 3as
a s,ort "la# in t," 1a#*"nt o+ *olass"s.) FHo3"$"r% a
substantial br"a!, o+ an "*1lo#""8s obligations is su+.
+i!i"nt !aus" to 1ut an "n to a !ontra!t o+ "*1lo#*"nt
b"+or" t," 1"rio +or t," t"r*ination o+ su!, "*1lo#.
*"nt. (&ar!aia $. P,il. Eu!. Co.% L.AA6?% &a# 6A%
1A5C an D" la CruH $. L"gas1i% 51 O.>. 6616).G
Ang% "t al. $. CA an L"" C,u# 5"alt# Cor1.
>5 B??5B% F"b. 19% 1ABA
I,il" it is tru" t,at in r"!i1ro!al obligations%
su!, as t," !ontra!t o+ 1ur!,as" an sal" in t,is
!as"% t," 1o3"r to r"s!in is i*1li" an an# o+ t,"
!ontra!ting 1arti"s *a#% u1on non.+ul+ill*"nt b# t,"
ot,"r 1art# o+ ,is 1art o+ t," obligation% r"sol$" t,"
!ontra!t% r"s!ission 3ill not b" 1"r*itt" +or a slig,t
or !asual br"a!, o+ t," !ontra!t.
5"s!ission *a# b" ,a onl# +or su!, br"a!,"s
t,at ar" so substantial an +una*"ntal as to "+"at
t," obj"!t o+ t," 1arti"s in *a<ing t," agr""*"nt.
Filoil &ar<"ting Cor1. $. IAC% "t al.
to r"s!ission on t," groun o+ non.!o*1lian!" 3it,
6B5
Art. 11A1
>5 6C115% =an. 6?% 1ABA
It is "rror to ,ol t,at a !ontra!t o+ sal" is subj"!t
to r"s!ission on t," groun o+ non.!o*1lian!" 3it,
6B6
Art. 11A1
on" o+ its !onitions% 1r"su*abl# t," 1a#*"nt o+
t," 1ur!,as" 1ri!"% i+ t," groun r"li" u1on is
*"r"l# assu*" an not "stablis,". In +a!t% as
r"$"al" in t," !as" at bar% it i not "4ist at t,"
ti*" o+ t," +iling o+ t," !o*1laint.
6
)
I+ t,"r" b" a just !aus" +or +i4ing t," 1"rio
3it,in 3,i!, t," "btor !an !o*1l#% t," !ourt 3ill
not "!r"" r"s!ission. (Art. 11A1% 1ar. 9% Ci$il
Co"). F7ut t," !ourt !annot +i4 t," t"r* in
unla3+ul "tain"r !as"s 3,"r" t," l"ss"" ,as not
#"t 1ai t," r"nts +or in t," la3 o+ l"as"% t," !ourt
,as no su!, is!r"tion un"r Art. 165A o+ t,"
Ci$il Co". (S"" &ina $. 5origu"H% FC.A.G O.>.
Su11.% Aug. 9?% 1A@1% 1. 65).G
9
)
I+ t," 1ro1"rt# is no3 in t," ,ans o+ an
inno!"nt t,ir 1art# 3,o ,as la3+ul 1oss"ssion
o+ t," sa*". (Asiati! Co**"r!ial Cor1. $. Ang%
FC.A.G @? O.>. F11t, Su11.G% 1. 1?6).
() T
,

" rig,t to r"s!in n""s jui!ial a11ro$al in !"rtain
!as"s% in ot,"rs% o"s not n"" su!, a11ro$al.
1
)
=ui!ial a11ro$al is n""" 3,"n t,"r" ,as
alr"a# b""n "li$"r# o+ t," obj"!t (unl"ss o+
!ours" t,"r" is a $oluntar# r"turning). (>u"$ara $.
Pas!ual% 16 P,il.
911 an Es!u"ta $. Pano% C6 P,il.
6
)
=ui!ial a11ro$al is NOT n""" 3,"n t,"r" ,as
b""n no "li$"r# #"t (S"" &agal"na Estat" $.
&#ri!<% C
P,il. 9@@) O5% in !as" t,"r" ,as b""n "li$"r#%
t," !ontra!t sti1ulat"s t,at "it,"r 1art# !an
r"s!in t," sa*" or ta<" 1oss"ssion o+ t,"
1ro1"rt# u1on non. +ul+ill*"nt b# t," ot,"r 1art#.
(Consing $. =a*anr"% L.6C6C@% &a# 16% 1AC5).
E4a*1l"'
I sol *# !ar toa# to N +or PB??%??? 3it, t,"
sti1ulation t,at ," gi$"s *" t," 1a#*"nt at t," At.
"n"o " &anila ;ni$"rsit# to*orro3. I+ I ,a$" not #"t
"li$"r" t," !ar to ,i*% an ," o"s not !o*" an 1a#
6BC
Art. 11A1
to*orro3% I !an !onsi"r t," !ontra!t as auto*ati!all#
r"s!in". (Art. 15A9 o+ t," Ci$il Co" r"as' -Iit,
6BB
Art. 11A1
r"s1"!t to *o$abl" 1ro1"rt#% t," r"s!ission o+ t," sal"
s,all o+ rig,t ta<" 1la!" in t," int"r"st o+ t," $"nor%
i+ t," $"n"" u1on t," "41iration o+ t," 1"rio +i4"
+or t," "li$"r# o+ t," t,ing s,oul not ,a$" a11"ar"
to r"!"i$" it% or ,a$ing a11"ar"% ," s,oul not ,a$"
t"n"r" t," 1ri!" at t," sa*" ti*"% unl"ss a long"r
1"rio ,as b""n sti1ulat" +or 1a#*"nt./) I+ u1on
t," ot,"r ,an% t," !ar ,as alr"a# b""n "li$"r"% I
!annot ta<" t," la3 into *# o3n ,ans an just g"t
ba!< t," !ar 3it,out a jug*"nt in *# +a$or. (S""
O!"jo P"r"H an Co. $. Int"rnational 7an<% 9C P,il.
691). Nor a* I% in t," *"anti*"% "*1o3"r" to s"ll
to anot,"r 1"rson t," sa*" !ar% 3it,out 1r"jui!" o+
!ours" to t," "++"!ts o+ Art. 15@@ o+ t," Ci$il Co".
(S"" Es!u"ta $. Pano% C6 P,il. 656).
(") T," rig,t to r"s!in is i*1li" (1r"su*") to "4ist an%
t,"r"+or"% n"" not b" "41r"ssl# sti1ulat" u1on. (Art. 11A1%
1ar. 1% Ci$il Co" an Hog"s $. >ranaa% 5A P,il. @6A).
(+) T," rig,t to r"s!in *a# b" 3ai$"% "41r"ssl# or i*1li"l#.
(5a*os $. 7las% FC.A.G 51 O.>. 1A6?% A1r. 1A55).
Ang"l"s $. CalasanH% "t al.
>5 @66B9% &ar. 1B% 1AB5
A!!"1ting "la#" install*"nt 1a#*"nts b"#on t,"
gra!" 1"rio a*ounts to a 3ai$"r o+ t," rig,t to r"s!in.
:uano $. Court o+ A11"als
>5 A5A??% =ul. 69% 1AA6
T," a!t o+ t," !,art"r"r in sub.!,art"ring t," $"ss"l%
ins1it" o+ a !at"gori!al 1ro,ibition *a# b" a $iolation o+
t," !ontra!t% but t," o3n"r8s rig,t o+ r"!ours" is against
t," original !,art"r"r% "it,"r +or r"s!ission or +ul+ill*"nt%
3it, t," 1a#*"nt o+ a*ag"s in "it,"r !as".
(5) C,oi!" b# t," Injur" Part#
6BA
Art. 11A1
(a) T," injur" 1art# *a# !,oos" b"t3""n'
1) +ul+ill*"nt (s1"!i+i! 1"r+or*an!") (1lus a*ag"s)2
6A?
Art. 11A1
6) or r"s!ission (1lus a*ag"s). (Art. 11A1% Ci$il Co").
(b) T," rig,t is alt"rnati$" (Art. 11A1% Ci$il Co") an an
alt"rnati$" 1ra#"r *a# b" *a" in a !ourt !o*1laint un.
l"ss "it,"r ,a b""n 3ai$" 1r"$iousl#. (TS% F"bruar# 6%
1A16).
(!) T," rig,t is not !onjun!ti$"% t,at is% t," 1lainti++ !annot
as< +or 7OTH r"*"i"s. (V"r!"luH $. Eano% @@ P,il. B?1
an &agal"na Estat" $. &#ri!<% C1 P,il. 9@@). T,us% i+
t," 1lainti++ "l"!ts +ul+ill*"nt o+ a r"!i1ro!al obligation%
r"s!ission t,"r"o+ *a# not b" "!lar" at t," sa*" ti*".
(7a!oro $. Al!antara% L.6??B?% =ul# 9?% 1A65). Ho3"$"r%
in so*" !as"s% in t," int"r"st o+ justi!" 1artial r"s!ission
an 1artial +ul+ill*"nt *a# b" allo3". (S"" Tan >uat $.
Pa*intuan% FC.A.G O.>. 6@A@).
Ho3"$"r% t," rul" is still t,at t," r"s!ission or r"solution o+
a !ontra!t ,as t," "++"!t o+ abrogating it in all its 1arts% t,"
!r"itor !annot "*an r"s!ission% an still insist on t,"
1"r+or*an!" o+ suborinat" sti1ulations. H"n!"% a !laus"
allo3ing +or attorn"#8s +""s +or t," +or"!losur" o+ a *ortgag"
!annot b" a$ail" o+ i+ t," *ortgag" is its"l+ r"s!in". (Po
Pau"s $. S"Eu"nHa% @C P,il. @?@).
() T," injur" 1art# 3,o ,as "l"!t" +ul+ill*"nt *a#% i+ +ul+ill.
*"nt b" i*1ossibl"% still as< +or r"s!ission (1ro$i" t,at
r"s!ission is ot,"r3is" 1ro1"r). (Art. 11A1% Ci$il Co"). T,"
rul" is $i!".$"rsa% 1ro$i" t," !ourt ,as not #"t gi$"n a
+inal jug*"nt.
(") I+ an a!tion is broug,t +or s1"!i+i! 1"r+or*an!"% t," a*.
ag"s soug,t *ust b" as<" in t," sa*" a!tion2 ot,"r3is"%
t," a*ag"s ar" ""*" 3ai$". (Da#3alt $. Agustinian
Cor1.% 9A P,il. 56C).
(6) Illustrati$" Cas"s
5a*ir"H $. Court o+ A11"als% "t al.
AB P,il. 665
(Illustrating E++"!t o+ Loss in Conn"!tion 3it,
Art. 11A1)
6A1
Art. 11A1
FACTS' A an 7 3"r" !o.o3n"rs o+ a *otor boat. In a
3ritt"n instru*"nt% 7 sol ,"r ,al+.s,ar" in t," boat to A +or
6A6
Art. 11A1
P@%5?? 3,i!, 3as to b" 1ai in t,r"" "Eual install*"nts. It 3as
agr"" t,at in !as" o+ +irst "+ault% A *ust 1a# int"r"sts2 an
t,at in !as" o+ s"!on "+ault% 7 g"ts ba!< ,"r ,al+.s,ar" in t,"
boat 3it,out t," n"!"ssit# o+ r"i*bursing A +or 3,at"$"r A ,as
alr"a# 1ai. A+t"r 1a#ing t3o install*"nts% A "+ault" in t,"
1a#*"nt o+ t," t,ir install*"nt. Subs"Eu"ntl#% a +ortuitous
"$"nt "stro#" t," boat. 7 no3 institut" an a!tion to r"!o$"r
3,at ,as not #"t b""n 1ai (t," t,ir install*"nt) 1lus 6Q int"r.
"st +ro* "+ault. A !lai*s% ,o3"$"r% t,at t," loss o+ t," boat b#
a +ortuitous "$"nt ,as "4!us" ,i* +ro* t," obligation to 1a#
t," balan!". Issu"' Is ," !orr"!tJ
HELD' A *ust still 1a#. ;n"r t," !ontra!t an un"r
t," la3% 7% t," s"ll"r.!r"itor% ,a t," rig,t to "*an s1"!i+i!
1"r+or*an!" (1a#*"nt) or r"s!ission (g"tting ba!< ,"r s,ar").
S," s"l"!t" s1"!i+i! 1"r+or*an!" (+or un"r t," !ontra!t t,"
+irst "+ault "ntitl" ,"r to !oll"!t 1lus int"r"st). T," loss o+ t,"
boat is i**at"rial% +or t," g"n"ri! obligation to 1a# *on"# is
not "4tinguis," or "4!us" b# t," +ortuitous loss o+ t," boat.
Song Fo M Co. $. Ha3aiian.P,il. Co.
@C P,il. B61
(Illustrating E++"!t o+ a Slig,t 7r"a!,)
FACTS' Song Fo an Co. or"r" *olass"s +ro* t," Ha.
3aiian.P,il. Co. I,"n t," ti*" +or 1a#*"nt !a*"% Song Fo
an Co*1an# 3as not #"t r"a# to 1a#. It 3as onl# 6? a#s
a+t"r3ars t,at t," bu#"r o++"r" to 1a#. T," s"ll"r a!!"1t" t,"
o$"ru" a!!ount% an start" "li$"ring t," *olass"s% but it lat"r
!,ang" its *in an 3rot" a l"tt"r to t," bu#"r% !an!"lling t,"
!ontra!t. T," bu#"r broug,t t,is a!tion to "n+or!" +ul+ill*"nt.
D"!i".
HELD' T," bu#"r 3ins t," !as" +or t3o r"asons'
1) T," br"a!, o+ t," !ontra!t 0 t," "la# o+ t," 1a#*"nt
0 is onl# a slig,t br"a!,% an is not substantial "noug,
to 3arrant r"s!ission2
6) >ranting t,at t,"r" 3as a br"a!,% still t," s"ll"r 3ai$"
6A9
Art. 11A1
t,is b# a!!"1ting t," 1a#*"nt o+ t," o$"ru" a!!ount. (S""
Iarn"r% 7arn"s an Co. $. InHa% @ P,il. 5?5).
6A@
Art. 11A1
(NOTE' In Villanu"$a $. Kulo% "t al.% L.16AB5% D"!.
6A% 1A5A% t," Court ,"l t,at a non.substantial br"a!,
o+ a !ontra!t !annot gi$" ris" to a r"s!ission. H"r"% t,"
br"a!, 3as t," +ailur" to a PB%??? to t," bu#ing 1ri!"%
3,i!, a*ount 3as to b" gi$"n as a brib" to t," =a1an"s"
ar*# o++i!"rs 0 to 1r"$"nt t,"* +ro* using t," 1r"*is"s
in Eu"stion as t,"ir ,"aEuart"rs uring t," =a1an"s"
o!!u1ation. It turn" out% ,o3"$"r% t,at t," =a1an"s" i
not r"all# int"n to us" sai 1r"*is"s 0 ,"n!"% t," obj"!t
o+ t," !ontra!t 3as n"$"r "+"at".)
P,ili11in" A*us"*"nt Ent"r1ris"s% In!. $. Nati$ia
L.61BC6% S"1t. 6A% 1A6C
FACTS' Nati$ia l"as" a ju<"bo4 +ro* t," P,ili11in"
A*us"*"nt Ent"r1ris"s In!or1orat" +or a t"r* o+ t,r"" #"ars
at an a*ount "Eual to C5Q o+ t," 3""<l# gross r"!"i1ts% but in
no !as" to b" l"ss t,an P5? a 3""<. Si4 *ont,s lat"r% Nati$ia
as<" t," l"ssor to ta<" ba!< t," ju<"bo4% b"!aus" it !oul not
o1"rat" 1ro1"rl# (on!" in a 3,il"% t," *a!,in" !oul not o1"r.
at" b"!aus" t," !oins ins"rt" t,"r"in 3oul b" stu!< u1). T,"
l"ssor% ,o3"$"r% r"+us" to ta<" ba!< t," *a!,in". E$"ntuall#%
t," l"ssor su" Nati$ia +or s1"!i+i! 1"r+or*an!" an a*ag"s
on t," t,"or# t,at in t," !as" o+ an# !oin.o1"rat" 1,onogra1,%
t," stu!<ing.u1 o+ t," !oins 3as a nor*al o!!urr"n!". Issu"' Iill
t," l"ssor b" allo3" to r"!o$"rJ
HELD' K"s. T," 1o3"r to r"s!in *ust b" "4"r!is" t,roug,
t," !ourts. T,is% Nati$ia i not o. &or"o$"r% t," br"a!, o+
!ontra!t ,"r" is not substantial +or t," "+"!t !o*1lain" o+ i
not r"n"r t," ju<"bo4 unsuitabl" or uns"r$i!"abl".
Asiati! Co*. Cor1. $. Ang
(C.A.) @? O.>. (11t, Su11l.% 1. 1?6) (Illustrating
5ig,ts o+ Inno!"nt T,ir P"rsons)
FACTS' Fran!is!o Ang boug,t an r"!"i$" +ro* t," 1lain.
ti++ 96 !artons o+ >lo!o Toni! u1on ,is 1ro*is" to 1a# t,at $"r#
a+t"rnoon. Alt,oug, ," ,a not #"t 1ai% ," sol sa*" to &r.
6A5
Art. 11A1
Tan% an inno!"nt 1ur!,as"r +or $alu". T," 1lainti++ no3 su"s +or
t," r"!o$"r# o+ t," !artons o+ >lo!o Toni! +ro* &r. Tan.
6A6
Art. 11A1
HELD' Plainti++ !annot r"!o$"r +ro* &r. Tan. His onl# rig,t
3oul b" to 1ro!"" against &r. Ang% +or t," la3 suborinat"s
t," rig,t o+ r"s!ission to t," rig,t o+ inno!"nt t,ir 1"rsons.
>u"$ara $. Pas!ual
16 P,il. B11
(Illustrating N"!"ssit# o+ =ui!ial A!tion I,"n
T,"r" Has 7""n D"li$"r#)
FACTS' A sol 7 a 1arti!ular bar 0 t," -N"3 Coin Ca+"./
7 agr"" to 1a# t," 1ri!" in install*"nts in aition to 1a#ing a
"bt 3,i!, A o3" C. In ot,"r 3ors% 7 3as su11os" to 1a# C
A8s "bt 0 as 1art o+ t," 1ur!,as" 1ri!". T," !ontra!t !ontain"
t3o sti1ulations 3,i!, 1ro$i"'
1) T,at in !as" o+ non.+ul+ill*"nt b# "it,"r 1art#% t," !ontra!t
3oul b" r"s!in"2
6) An t,at in !as" t," 1ur!,as"r +ail" to !o*1l# 3it, an# o+
t," sti1ulations o+ t," !ontra!t% t," bar 3as to b" r"turn"
to t," $"nor 3it,out r"*un"rating t," bu#"r +or an#
i*1ro$"*"nts s," *a# ,a$" *a".
7 i not !o*1l# 3it, t," sti1ulations o+ t," !ontra!t. As
a *att"r o+ +a!t% s," borro3" *on"# +ro* C. As a r"sult% C
broug,t an a!tion against 7. =ug*"nt 3as r"n"r" against
7% an t," s,"ri++ atta!," t," 1ro1"rt# (t," bar) "s1it" A8s
1rot"st. T," 1ro1"rt# 3as t,"n sol at 1ubli! au!tion an t,"
s"lling 1ri!" 3as gi$"n to C. A t,"n broug,t t,is a!tion against
C. It 3as 1ro$" t,at'
1) T," s,"ri++ <n"3 o+ t," !ontra!t b"t3""n A an 7% an
3as t,"r"+or" in ba +ait, (+or ," s,oul ,a$" noti+i" t,"
!ourt).
6) C i not <no3 o+ sai !ontra!t b"t3""n A an 7% an 3as
t,"r"+or" in goo +ait,.
Issu"' &a# A r"!o$"r +ro* CJ I,#J I+ not% 3,at is A8s
r"*"#J
HELD' A !annot r"!o$"r t," bar +ro* C b"!aus" alt,oug,
it is tru" t,at t," s"ll"r ,as t," rig,t to r"s!in in !as" t,"
6AC
Art. 11A1
bu#"r s,oul not +ul+ill ,is or ,"r obligations% still r"s!ission
!annot b" a$ail" o+ b"!aus" t," 1ro1"rt# is no3 in t," ,ans
6AB
Art. 11A1
o+ an inno!"nt t,ir 1"rson. A8s r"*"# 3ill b" to g"t a*ag"s
+ro* 7% an also +ro* t," s,"ri++% sin!" bot, ar" in ba +ait,.
It !annot b" sai t,at t,"r" 3as auto*ati! r"s!ission ,"r" (+or
t," 1ro1"rt# ,a alr"a# b""n "li$"r"). An a++ir*ati$" jui!ial
a!tion to r"s!in or r"sol$" s,oul ,a$" b""n broug,t. (S"" TS%
=an. 1A% 1A?@ an Es!u"ta $. Pano% @6 O.>. No. 11% 1. 6C5?%
3,i!, ,"l t,at sin!" t," la3 sa#s -T," !ourt s,all "!r"" t,"
r"s!ission !lai*" . . ./ it +ollo3s t,at jui!ial int"r$"ntion is
"ss"ntial.)
(NOTE' Obs"r$" t,at i+ t," 1ro1"rt# ,a not #"t b""n
"li$"r" b# A to 7% t,"r" 3oul ,a$" b""n no n"!"ssit# o+ a
jui!ial a!tion o+ r"s!ission.)
&agal"na Estat" $. &#ri!<
C1 P,il. 9@@
(Illustrating E++"!t o+ &a<ing t," C,oi!"% E++"!t o+
5"s!ission an I,"n 5"s!ission &a# 7" Allo3"
E$"n Iit,out =ui!ial A11ro$al)
FACTS' &r. &#ri!< 1ur!,as" on install*"nt t3o lots
+ro* t," &agal"na Estat" +or PB%???. A+t"r 1a#ing P6%5?? ,"
"+ault" in t," 1a#*"nt. Alt,oug, t,"r" 3as no sti1ulation t,at
in !as" o+ +ailur" to !ontinu" 1a#ing t," *ont,l# install*"nts%
t," *on"# 1ai in 1r"$ious install*"nts 3oul b" +or+"it" in
+a$or o+ t," s"ll"r% an no sti1ulation about r"s!ission% still t,"
Estat" in+or*" &#ri!< t,at'
1) t," !ontra!t 3oul b" !onsi"r" alr"a# !an!"ll" or r".
s!in"2
6) t," a*ount alr"a# 1ai 3oul b" +or+"it".
A+t"r so*" ti*"% &#ri!< institut" t,is suit to r"!o$"r
*on"# ," ,a 1r"$iousl# 1ai% tog"t,"r 3it, l"gal int"r"st
t,"r"on.
T," Estat" !ont"n" t,at'
1) t," !ontra!t i not 1ro$i" +or r"s!ission2 an
6) t," r"s!ission it ,a *a" 3as i*1ro1"r sin!" t," !ourt
,a not a11ro$" t," sa*"2 an
6AA
Art. 11A1
9) t,at t,"r"+or"% sin!" it !,os" s1"!i+i! 1"r+or*an!"% t,"
*on"# 1ai s,oul not b" r"turn".
9??
Art. 11A1
HELD' T," &agal"na Estat" is !o*1l"t"l# 3rong.
1) Firstl#% alt,oug, t," !ontra!t i not 1ro$i" +or r"s!ission%
t,is rig,t is "41r"ssl# grant" b# t," la3 +or all r"!i1ro!al
obligations.
6) S"!onl#% t," r"*"i"s o+ t," "stat" 3"r" t,"r"+or" to
r"s!in or to as< +or s1"!i+i! 1"r+or*an!". T,is rig,t ,as
b""n alr"a# "4"r!is" b# it 3,"n it noti+i" t," bu#"r o+
its !an!"llation o+ t," !ontra!t.
9) T,irl#% it !annot !lai* t,at t," r"s!ission 3as i*1ro1"r
sin!" it 3as t," Estat" its"l+ t,at *a" t," r"s!ission an
t,"r"+or" it is no3 in "sto11"l an !annot r"1uiat" its o3n
a!tuations.
@) Fourt,l#% t," !ontra!t ,a$ing b""n r"s!in"% t," 1arti"s
*ust b" r"stor" to t,"ir original situation% inso+ar as
1ra!ti!abl"% an t,is !an b" on" b# r"turning t," 1ri!"
1ai alr"a# 3it, int"r"st +ro* t," at" o+ t," institution
o+ t," a!tion% t,"r" b"ing no sti1ulation about +or+"itur".
T," r"*"i"s b"ing alt"rnati$" an not !u*ulati$" an
t," Estat"% ,a$ing "l"!t" to !an!"l t," !ontra!t% it !annot
no3 a$ail o+ s1"!i+i! 1"r+or*an!".
(NOTE' T," 1ri!" 3oul ,a$" b""n "*anabl" ,a
s1"!i+i! 1"r+or*an!" b""n as<". On" !annot !an!"l t,"
sal"% an at t," sa*" ti*" also g"t t," 1ri!".)
(NOTE F;5THE5% t,at in t,is !as" t," Su1r"*"
Court allo3" r"s!ission 3it,out jui!ial aut,oriHation.)
Sol"a T. Consing $. =os" T. =a*anr"
L.6C6C@% &a# 16% 1AC5 (Illustrating
I,"n =ui!ial 5"s!ission Is
;nn"!"ssar#)
FACTS' In a !ontra!t b"t3""n a sub.l"ssor (=a*anr") an
a sub.l"ss"" (Consing) it 3as agr"" t,at i+ Consing 3oul $iolat"
t," !ontra!t% =a*anr" 3oul b" aut,oriH" to ta<" 1oss"ssion o+
t," l"as" 1r"*is"s "$"n 3it,out r"sorting to !ourt a!tion. Cons.
ing !ont"ns% ,o3"$"r% t,at su!, sti1ulation is VOID b"!aus" it
9?1
Art. 11A1
a*ounts to a r"nun!iation o+ on"8s a# in !ourt% an t,"r"+or"
null. 7"si"s% -t,is *ig,t o1"n t," +loogat"s to $iol"n!" 3,i!,
9?6
Art. 11A1
our la3s s""< to su11r"ss./ =a*anr" all"g"s% ,o3"$"r% t,at t,"
sti1ulation o"s not 1ro$i" +or t," us" o+ +or!" in ta<ing 1os.
s"ssion o+ t," 1ro1"rt#% an s,oul t,"r"+or" not b" r"gar" as
!ontrar# to 1ubli! 1oli!#. T," sti1ulation r"as' -t,at in !as" o+
t," +ailur" on t," 1art o+ t," sub.l"ss"" to !o*1l# 3it, an# o+
t," t"r*s an !onitions t,"r"o+% t," sub.l"ss"" ,"r"b# gi$"s an
aut,orit# to t," sub.l"ssor or to an# o+ ,is aut,oriH" r"1r"s"nta.
ti$"s to ta<" 1oss"ssion o+ t," l"as" 1r"*is"s in!luing all its
i*1ro$"*"nts t,"r"on 3it,out !o*1"nsation to t," sub.l"ss""
an 3it,out n"!"ssit# o+ r"sorting to an# !ourt a!tion% in 3,i!,
!as"% t," sub.l"ss"" s,all b" ul# a$is" in 3riting o+ ,"r +ailur"
to !o*1l# 3it, t," t"r*s an !onitions o+ t," !ontra!t b# 3a#
o+ r"*in"r b"+or" t," ta<"o$"r./
ISS;E' Is t,is sti1ulation $aliJ
HELD' K"s% t," sti1ulation is $ali. It is in t," natur" o+ a
r"solutor# !onition% +or u1on t," "4"r!is" b# t," sub.l"ssor o+
,is rig,t to ta<" 1oss"ssion o+ t," l"as" 1ro1"rt#% t," !ontra!t
is ""*" t"r*inat". T,is <in o+ !ontra!tual sti1ulation is
l"gal% t,"r" b"ing not,ing in t," la3 1ro,ibiting su!, <in o+
agr"". *"nt. As ,"l in Froilan $. Pan Ori"ntal S,i11ing Co.% L.
11BAC% O!t. 91% 1A6@ 0 T,"r" is not,ing in Art. 11A1 o+ t," Ci$il
Co" or in an# ot,"r l"gal 1ro$ision t,at 1ro,ibits t," 1arti"s
+ro* "nt"ring into an agr""*"nt t,at $iolation o+ t," t"r*s
3oul !aus" !an!"llation t,"r"o+% "$"n 3it,out !ourt
int"r$"ntion. In ot,"r 3ors% it is not al3a#s n"!"ssar# +or t,"
injur" 1art# to r"sort to t," !ourts +or r"s!ission o+ t,"
!ontra!t. As alr"a# ,"l% jui!ial a!tion is n""" 3,"r"
(a*ong ot,"r instan!"s) t,"r" is abs"n!" o+ a s1"!ial 1ro$ision
in t," !ontra!t granting to a 1art# t," rig,t o+ r"s!ission
("s1it" "li$"r# o+ t," subj"!t *att"r).
5a*os $. 7las
(C.A.) 51 O.>. 1A6?% A1r. 1A55
(Illustrating I*1li" Iai$"r o+ t,"
5ig,t to 5"s!in)
FACTS' A sol ,is 1ar!"l o+ lan to 7. Lat"r% 7 a+t"r 1a#.
ing t," o3n 1a#*"nt% agr"" to ,a$" t," lan b" t," s"!urit#
9?9
Art. 11A1
+or t," balan!" o+ t," 1ri!". Issu"' I+ 7 lat"r !annot or o"s not
1a#% *a# A r"s!in t," !ontra!tJ
9?@
Art. 11A1
HELD' No *or". I,at ," !an o is to !oll"!t t," balan!"
or +or"!los" t," s"!urit#% sin!" ,is a!!"1tan!" o+ t," s"!urit#
!an b" !onsi"r" "Eui$al"nt to an i*1li" 3ai$"r o+ t," rig,t
to r"s!in.
Tan >uat $. Pa*intuan
(C.A.) 9C O.>. 6@A@
(Illustrating Partial 5"s!ission an Partial
P"r+or*an!")
FACTS' A boug,t lu*b"r +ro* 7 +or t," !onstru!tion o+ ,is
,ous". 7 "li$"r" 1art o+ t," lu*b"r% 3,i!, A i**"iat"l# us".
I,"n 7 i not "li$"r t," r"st% A 3as +or!" to g"t lu*b"r +ro*
ot,"r "al"rs. I,"n 7 3as r"a# to !o*1l# 3it, t," obligation
o+ "li$"ring t," r"st% A i not 1a# +or su!, balan!" b"!aus" ,"
no long"r n""" t,"*. 7 t,"n su" A. A 1l"a" in "+"ns"
t,at it 3as 7 3,o s,oul b" liabl" to ,i* +or t," in!o*1l"t"
"li$"r#. In ,is 1l"aings% A i not sa#% ,o3"$"r% 3,"t,"r ,"
3ant" r"s!ission or +ul+ill*"nt. A "$i"ntl# i not 3ant
r"s!ission +or t,"n ," 3oul b" oblig" to r"turn t," lu*b"r
alr"a# us". A also "$i"ntl# i not 3ant +ul+ill*"nt sin!" ,"
r"all# i not n"" t," r"st o+ t," lu*b"r an#*or".
HELD' T,"r" !an b" r"s!ission r"garing t," un"li$"r"
lu*b"r2 an r"garing t," "li$"r" lu*b"r% t,"r" 3as alr"a#
s1"!i+i! 1"r+or*an!". H"n!"% A s,oul 1a# 3,at ," still o3"s 7
+or t," "li$"r" lu*b"r% an in turn g"t a*ag"s +ro* 7 +or
78s +ailur" to !o*1l"t" t," "li$"r# o+ t," lu*b"r.
Ab"lla $. Fran!is!o
55 P,il. @@C
(5"s!ission I,"n Ti*" Is o+ t," Ess"n!")
FACTS' Fran!is!o sol ,is lan to Ab"lla to 1a# o++ !"rtain
obligations 3,i!, +"ll u" in t," *ont, o+ D"!"*b"r% 1A6B. I,"n
t," ti*" +or 1a#*"nt !a*"% t," bu#"r 3as not r"a# to 1a#% so
t," s"ll"r notariall# r"s!in" t," sal". Lat"r 3,"n t," bu#"r
!oul 1a#% Fran!is!o no long"r 3ant" to s"ll. In ot,"r 3ors%
9?5
Art. 11A1
t," s"ll"r "sir" r"s!ission% t," bu#"r "sir" s1"!i+i! 1"r+or*.
an!".
9?6
Art. 11A1
HELD' Sin!" ti*" 3as o+ t," "ss"n!" ,"r"% t," s"ll"r ,a
t," rig,t to r"s!in u1on t," bu#"r8s "+ault. So% t," s"ll"r s,oul
3in.
(C) Da*ag"s +or 7r"a!, o+ L"as" Contra!t
Ho3 *u!, a*ag"s *a# b" r"!o$"r" in !as" a l"as" !on.
tra!t is bro<"n b#% sa#% non.1a#*"nt o+ r"nt 3,"n t," 1"rio
,as not #"t "41ir"J
ANS.' It "1"ns u1on 3,at r"*"# ,as b""n r"sort" to
b# t," l"ssor (lanlor).
a) I+ ," s"l"!ts s1"!i+i! 1"r+or*an!"% ," !an "*an t," a!.
!ru" r"nt 1lus t," +utur" r"nt +or t," un"41ir" t"r*.
E4a*1l"' 1? #"ars !ontra!t. T," +irst 6 #"ars r"nt ,a$" not
#"t b""n 1ai. L"ssor at t," "n o+ t," 6 #"ars "*ans
s1"!i+i! 1"r+or*an!". H" g"ts t," ba!< r"nts +or 6 #"ars
an t," r"nts +or t," r"*aining B #"ars% 1a#abl" as t,"#
a!!ru"% 1lus a*ag"s.
b) I+ t," l"ssor "*ans r"s!ission% ," g"ts onl# t," ba!< r"nts
an oust"r o+ t," l"ss""% 1lus a*ag"s% but not (n"!"ssaril#)
t," +utur" r"nts or r"ntals +or t," un"41ir" t"r*.
5ios $. =a!into Pal*a% "t al.
@A P,il. C
FACTS' A l"as" !ontra!t +or 15 #"ars at P@?? a *ont, 3as
!o*1li" 3it, +or onl# 9 #"ars% a+t"r 3,i!, t," l"ss"" i not 1a#
r"nt. T," l"ssor as<" t," l"ss"" to $a!at" t," 1r"*is"s% i+ ,"
!oul not a++or to 1a#. T," l"ss"" t,"n turn" o$"r t," 1r"*is"s
to t," l"ssor. No3 t," l"ssor "*ans r"nt +or t," r"*aining 16
#"ars.
HELD' Sin!" t," l"ssor "!i" to s"l"!t r"s!ission% ," is
no3 "ntitl" to 1oss"ssion% but not to t," +utur" r"nts +or t,"
un"41ir" t"r*. H" !annot ,a$" bot, r"*"i"s o+ r"s!ission
an s1"!i+i! 1"r+or*an!". Ha t," ba!< r"ntals not b""n 1ai
#"t% ," 3oul ,a$" b""n "ntitl" to t,"*. In t," instant !as"%
," !an !oll"!t onl# s1"!ial a*ag"s t,os" t,at r"sult" +ro*
9?C
Art. 11A1
t," br"a!,% not n"!"ssaril# t," un"41ir" r"nts. (S"" 5ubio "
Lar"na $. Villanu"$a% 59 P,il. A96).
9?B
Art. 11A1
S1ous"s &ariano T. V"lar" M A$"lina D. V"lar"
$. CA% Da$i A. 5a#*uno M >"org" 5a#*uno
>5 1?B9@6% =ul. 11% 6??1
A substantial br"a!, o+ a r"!i1ro!al obligation% li<" +ailur"
to 1a# t," 1ri!" in t," *ann"r 1r"s!rib" b# t," !ontra!t% "ntitl"s
t," injur" 1art# to r"s!in t," obligation.
5"s!ission abrogat"s t," !ontra!t +ro* its in!"1tion an
r"Euir"s a *utual r"stitution o+ b"n"+its r"!"i$".
(B) Da*ag"s in Cas" o+ 7r"a!, o+ E*1lo#*"nt
Sta. C"!ilia Sa3*ills% In!. $. CI5
L.1A6C9 an L.1A6C@% F"b. 6A% 1A6@
A ruling t,at 3oul 1"r*it a is*iss" labor"r to "arn
ba!<3ag"s +or all ti*" or +or a $"r# long 1"rio o+ ti*" is not onl#
unjust to t," "*1lo#"r but t," sa*" 3oul +ost"r inol"n!" on
t," 1art o+ t," labor"rs. T," labor"r is not su11os" to b" r"l#ing
on a !ourt jug*"nt +or ,is su11ort% but s,oul o "$"r#t,ing a
r"asonabl" *an 3oul o2 ," s,oul +in "*1lo#*"nt as soon
as "*1lo#*"nt ,as b""n lost% "s1"!iall# 3,"n t," "*1lo#*"nt
,as to "1"n on a litigation. In""% ," ,as to *ini*iH" ,is
loss.
(A) Instan!" I,"r" Arti!l" Is Ina11li!abl"
Suria $. IAC
>5 C9BA9% =an. 9?% 1ABC
FACTS' HAC% o3n"r o+ t," lot in is1ut"% "nt"r" into a
"" o+ sal" 3it, *ortgag" 3it, >5=. >5= 1ai onl# on" in.
stall*"nt% i.".% t," on" u" in =ul. 1AC5. All t," ot,"rs r"*ain"
uns"ttl". D"s1it" r"1"at" "*ans% >5= +ail" to !o*1l#.
T,"r"a+t"r% HAC su" >5= +or r"s!ission. &"an3,il"% >5=
o++"r" to 1a# all outstaning balan!" un"r t," D"" o+ Sal"
3it, *ortgag". 7ut HAC r"j"!t" t," o++"r. T,"n% >5= *o$"
to is*iss on t," groun t,at HAC is not "ntitl" to subsiiar#
9?A
Art. 11A1
r"*"# o+ r"s!ission b"!aus" o+ t," 1r"s"n!" o+ t," r"*"# o+
+or"!losur". T," trial !ourt "ni" t," *otion.
91?
Art. 11A1
T," Court o+ A11"als sustain" t," trial !ourt% sa#ing t,"
grant to t," $"nor.*ortgag"" (HAC) o+ t," rig,t to +or"!los"
i+ t," $"n"".*ortgagor (>5=) +ails to !o*1l# 3it, t," 1ro$i.
sions o+ t," *ortgag" *"r"l# r"!ogniH"s t," rig,t o+ t," $"nors
to +or"!los" an r"aliH" on t," *ortgag" but o"s not 1r"!lu"
t,"* +ro* a$ailing o+ t,"ir ot,"r r"*"i"s un"r t," la3 su!,
as r"s!ission o+ !ontra!t an a*ag"s un"r Arts. 11A1 an 11C?
o+ t," Ci$il Co" in r"lation to 5"1ubli! A!t 6556.
T," Su1r"*" Court r"$"rs" t," Court o+ A11"als an
or"r" t," $"n"".*ortgagor (>5=) to 1a# t," balan!" o+ ,is
in"bt"n"ss un"r t," D"" o+ Sal" 3it, &ortgag" 3it, l"gal
int"r"sts +ro* t," s"!on install*"nt u" in 1AC5 until +ull#
1ai% +ailing 3,i!, t," $"nor.*ortgag"" (HAC) *a# r"sort to
+or"!losur".
HELD' Art. 11A1 on r"!i1ro!al obligations is not a11li!abl"
un"r t," +a!ts o+ t,is !as". &or"o$"r% Art. 19B9 o+ t," Ci$il Co"
1ro$i"s t,at t," a!tion +or r"s!ission is subsiiar#. It !annot
b" institut" "4!"1t 3,"n t," 1art# su++"ring a*ag" ,as no
ot,"r l"gal *"ans to obtain r"1aration +or t," sa*".
T," $"n"".*ortgagor8s (>5=8s) br"a!, o+ obligation is
not 3it, r"s1"!t to t," 1"r+"!t" !ontra!t o+ sal" but in t,"
obligations !r"at" b# t," *ortgag" !ontra!t. T," r"*"# is
not a 1rin!i1al a!tion r"taliator# in !,ara!t"r% but b"!o*"s a
subsiiar# on" 3,i!, b# la3 is a$ailabl" onl# in t," abs"n!" o+
an# ot,"r l"gal r"*"#. (Art. 19B@% Ci$il Co"). For"!losur" ,"r"
is not onl# a r"*"# a!!or" b# la3 but is a s1"!i+i! 1ro$ision
+oun in t," !ontra!t b"t3""n t," 1arti"s. In t," !ontra!t o+
1ur!,as" an sal"% t," 1arti"s sti1ulat" t,at t," 1a#*"nt o+
t," 1ri!" 3as guarant"" b# t," *ortgag" o+ t," 1ro1"rt# sol.
T,is agr""*"nt ,as t," t3o.+ol "++"!t o+' (1) a!<no3l"ging
inis1utabl# t,at t," sal" ,a b""n !onsu**at"% so *u!, so
t,at t," $"n"".*ortgagor 3as is1osing o+ it b# *ortgaging
it to t," $"nor2 an (6) o+ 3ai$ing t," 1a!to !o*isorio% i.".% t,"
r"solution o+ t," sal" in t," "$"nt o+ +ailur" to 1a# t," 1ur!,as"
1ri!"% su!, 3ai$"r b"ing 1ro$" b# t," "4"!ution o+ t," *ortgag"
to guarant"" t," 1a#*"nt% an in a!!or t,"r"3it, t," $"nor8s
a"Euat" r"*"#% in !as" o+ non.1a#*"nt% is t," +or"!losur" o+
*ortgag".
911
Art. 11A1
T,"r" is no !aus" +or t," r"solution o+ t," sal" as 1ra#"
+or b# t," $"nor.*ortgag"". His a!tion s,oul ,a$" b""n on"
916
Art. 11A1
+or t," +or"!losur" o+ t," *ortgag"% 3,i!, is not t," a!tion in
t,is !as". Arti!l" 11A1 is not a11li!abl" in t,is !as"% sin!" t,"
subj"!t *att"r o+ t," sal" is r"al 1ro1"rt#. It o"s not !o*"
stri!tl# 3it,in t," 1ro$isions o+ Art. 11A1 (Art. 116@% S1anis,
Ci$il Co")% but is rat,"r subj"!t" to t," sti1ulations agr""
u1on b# t," !ontra!ting 1arti"s an to t," 1ro$isions o+ Art.
15A6 (Art. 15?@% S1anis, Ci$il Co") o+ t," Ci$il Co".
>5=% t," $"n"".*ortgagor% ,as o++"r" to 1a# all 1ast u"
a!!ounts. Consi"ring t," lo3"r 1ur!,asing $alu" o+ t," 1"so in
t"r*s o+ 1ri!"s o+ r"al "stat" toa#% HAC% t," $"nor.*ortgag""%
is !orr"!t in stating t,at ," ,as su++"r" loss"s. Ho3"$"r% ," is
also to bla*" +or trusting 1"rsons 3,o !oul not or 3oul not
!o*1l# 3it, t,"ir obligations on ti*". HAC !oul ,a$" +or"!los"
on t," *ortgag" i**"iat"l# 3,"n it +"ll u" inst"a o+ 3ait.
ing all t,"s" #"ars 3,il" tr#ing to "n+or!" t," 3rong r"*"#.
T," O1a!to !o*isorio8 or Ol"# !o*isoria8 is not,ing *or" t,an a
!onition subs"Eu"nt to t," !ontra!t o+ 1ur!,as" an sal".
Consi"r" !ar"+ull#% it is t," $"r# !onition subs"Eu"nt t,at
is al3a#s atta!," to all bilat"ral obligations a!!oring to Art.
11A1 (Art. 116@% S1anis, Ci$il Co")2 "4!"1t t,at 3,"n a11li" to
r"al 1ro1"rt# it is not 3it,in s!o1" o+ sai Art. 11A1 (Art. 116@)%
an it is suborinat" to t," sti1ulations *a" b# t," !ontra!ting
1arti"s an to t," 1ro$isions o+ Art. 15A6. (Art. 15?@% S1anis,
Ci$il Co").
(1?) E4trajui!ial 5"s!ission
S1ous"s 5"#nalo Al!araH M Es*"rala Al!araH $.
P"ro &. Tangga.an% "t al.% >5 16B56B% A1r. A% 6??9
FACTS' P"tition"r.s1ous"s r"s!in" t," !ontra!t o+ l"as"
3it,out jui!ial a11ro$al. Du" to t," !,ang" in o3n"rs,i1 o+
t," lan% 1"tition"r.s1ous"s "!i" to unilat"rall# !an!"l t,"
!ontra!t b"!aus" Virgilio su11os"l# b"!a*" t," n"3 o3n"r o+
t," ,ous" a+t"r a!Euiring titl" to t," lot. T,"# all"g" t,at t,"r"
3as no r"ason an#*or" to 1"r+or* t,"ir obligations as l"ss""s
b"!aus" t," l"ss"r ,a !"as" to b" t," o3n"r o+ t," ,ous".
HELD' T,"r" is not,ing in t," l"as" !ontra!t t,at allo3s
t," 1arti"s to "4trajui!iall# r"s!in t," sa*" in !as" o+ $iola.
tion o+ t," t"r*s t,"r"o+. E4trajui!ial r"s!ission o+ a !ontra!t
919
Art. 11A1
is not 1ossibl" 3it,out an "41r"ss sti1ulation to t,at "++"!t. (Art.
11A1). I,at 1"tition"r.s1ous"s s,oul ,a$" on" 3as to +il" a
91@
Arts. 11A6.11A9
s1"!ial !i$il a!tion +or int"r1l"a"r +or !lai*ants to litigat" t,"ir
!lai*s an to "1osit r"ntals in !ourt.
Art. 11A6. In !as" bot, 1arti"s ,a$" !o**itt" a br"a!,
o+ t," obligation% t," liabilit# o+ t," +irst in+ra!tor s,all b"
"Euitabl# t"*1"r" b# t," !ourts. I+ it !annot b" "t"r*in"
3,i!, o+ t," 1arti"s +irst $iolat" t," !ontra!t% t," sa*"
s,all b" ""*" "4tinguis,"% an "a!, s,all b"ar ,is o3n
a*. ag"s.
CO&&ENT'
5ul" i+ 7ot, Parti"s Ha$" Co**itt" a 7r"a!,
-T," abo$" rul"s ar" ""*" just. T," +irst on" is +air to
bot, 1arti"s b"!aus" t," s"!on in+ra!tor also "ri$" or t,oug,t
," 3oul "ri$" so*" a$antag" b# ,is o3n a!t or n"gl"!t. T,"
s"!on rul" is li<"3is" just% b"!aus" it is 1r"su*" t,at bot, at
about t," sa*" ti*" tri" to r"a1 so*" b"n"+it./ (5"1ort o+ t,"
Co" Co**ission% 1. 19?).
S"!tion 6
O7LI>ATIONS IITH A PE5IOD
Art. 11A9. Obligations +or 3,os" +ul+ill*"nt a a# !"r.
tain ,as b""n +i4"% s,all b" "*anabl" onl# 3,"n t,at a#
!o*"s.
Obligations 3it, a r"solutor# 1"rio ta<" "++"!t at on!"%
but t"r*inat" u1on arri$al o+ t," a# !"rtain.
A a# !"rtain is un"rstoo to b" t,at 3,i!, *ust
n"!"s. saril# !o*"% alt,oug, it *a# not b" <no3n 3,"n.
I+ t," un!"rtaint# !onsists in 3,"t,"r t," a# 3ill
!o*" or not% t," obligation is !onitional an it s,all b"
r"gulat" b# t," rul"s o+ t," 1r"!"ing S"!tion.
CO&&ENT'
(1) OP"rio8 D"+in"
915
Arts. 11A6.11A9
A 1"rio is a !"rtain l"ngt, o+ ti*" 3,i!, "t"r*in"s t,"
"++"!ti$it# or t," "4tinguis,*"nt o+ obligations.
916
Art. 11A9
(6) &anr"sa8s D"+inition o+ a OP"rio8
-A t"r* or a 1"rio !onsists in a s1a!" o+ ti*" 3,i!, ,as an
in+lu"n!" on obligations as a r"sult o+ a jui!ial a!t% an "it,"r
sus1"ns t,"ir "*anabl"n"ss% or 1rou!"s t,"ir "4tinguis,.
*"nt. . . Obligations 3it, a 1"rio ar"% t,"r"+or"% t,os" 3,os"
!ons"Eu"n!"s ar" subj"!t" in on" 3a# or anot,"r to t," "41ira.
tion o+ sai t"r*./ (&anr"sa% Co**"ntari"s on t," Ci$il Co"%
Vol. B% 1. 159).
A1arri $. Court o+ A11"als
L.9??5C% =an. 91% 1AB@
T," t"r* o+ o++i!" o+ t," g"n"ral *anag"r o+ a !or1oration
is not +i4" b# la3 but b# t," 7oar o+ Dir"!tors o+ t," !or1ora.
tion.
(9) P"rio Distinguis," +ro* a Conition
(a) In t,"ir +ul+ill*"nt 0
A !onition is an un!"rtain "$"nt2 but a 1"rio is an
"$"nt 3,i!, *ust ,a11"n soon"r or lat"r% at a at" <no3n
b"+or",an% or a ti*" 3,i!, !annot b" "t"r*in".
(b) Iit, r"+"r"n!" to ti*" 0
A 1"rio al3a#s r"+"rs to t," +utur"% a !onition *a#
un"r t," la3 r"+"r "$"n to t," 1ast.
(!) As to in+lu"n!" on t," obligation 0
A !onition !aus"s an obligation to aris" or to !"as"%
but a 1"rio *"r"l# +i4"s t," ti*" or t," "++i!a!iousn"ss o+
an obligation. It is tru" t,at a 1"rio *a# ,a$" a
sus1"nsi$" or r"solutor# "++"!t% but in t," +or*"r% it
!annot 1r"$"nt t," birt, o+ t," obligation in u" ti*"%
an in t," latt"r% it o"s not *ilitat" against its "4ist"n!".
(B &anr"sa 159%
15@).
(@) T," Di++"r"nt Dins o+ T"r*s or P"rios
91C
Art. 11A9
(a) 0 1) D"+init" 0 t," "4a!t at" or ti*" is <no3n an
gi$"n.
91B
Art. 11A9
(b)
6
)
In"+init" 0 so*"t,ing t,at 3ill sur"l#
,a11"n% but t," at" o+ ,a11"ning is un<no3n
(as in t," !as" o+ "at,).
0 1
)
L"gal 0 a 1"rio grant" un"r t," 1ro$isions
o+ t," la3.
6
)
Con$"ntional or Voluntar# 0 1"rio agr""
u1on or sti1ulat" b# t," 1arti"s.
9
)
=ui!ial 0 t," 1"rio or t"r* +i4" b# t,"
!ourts +or t," 1"r+or*an!" o+ an obligation or
+or its t"r. *ination.
(!) 0 1
)
E4 i" 0 a 1"rio 3it, a sus1"nsi$" "++"!t.
H"r"% t," obligation b"gins onl# +ro* a a#
!"rtain% in ot,"r 3ors% u1on t," arri$al o+ t,"
1"rio.
6
)
In i"* 0 a 1"rio or t"r* 3it, a r"solutor#
"++"!t. ;1 to a ti*" !"rtain% t," obligation
r"*ains $ali% but u1on t," arri$al o+ sai
1"rio% t," obligation t"r*inat"s. (S"" B
&anr"sa% 11. 16?% 16A).
(5) E4a*1l" o+ an Obligation 3it, a P"rio OE4 Di"8
-I 3ill su11ort #ou% b"ginning t," +irst a# o+ n"4t #"ar./
H"r"% t," obligation onl# b"!o*"s "++"!ti$" on t," a# sti1u.
lat".
(6) E4a*1l" o+ an Obligation 3it, a P"rio OIn Di"*8
-I 3ill su11ort #ou until =an. 1 o+ n"4t #"ar./ H"r"% t,"
obligation is i**"iat"l# "*anabl" an 3ill "n onl# on =an.
1 o+ t," n"4t #"ar.
N"3 Fronti"r &in"s% In!. $. National Labor
5"lations Co**ission an Crisanto 7rion"s
>5 515CB% &a# 6A% 1AB@
A *anag"rial "*1lo#"" 3,o go"s on l"a$" 3it,out 1"r*is.
sion an 3,il" b"ing auit" (!as, s,ortag" ,a$ing b""n is!o$.
91A
Art. 11A9
"r") *a# b" is*iss" or t"r*inat" +or la!< o+ !on+i"n!".
96?
Art. 11A9
(C) :u"ri"s
(a) -I 3ill su11ort #ou +ro* t," ti*" N *arri"s./ Is t,is an
obligation 3it, a t"r* or a !onitional obligationJ
ANS.' T,is is a !onitional obligation b"!aus" 3" !an.
not b" sur" 3,"t,"r or not N 3ill *arr#. In ot,"r 3ors%
t,is is an obligation 3it, a sus1"nsi$" !onition% not an
obligation 3it, a sus1"nsi$" t"r*.
(b) -I 3ill b"gin su11orting #ou i+ #our +at,"r i"s./ Is t,is a
!onitional obligation or an obligation 3it, a t"r*J
ANS.' T,is is an obligation 3it, a t"r* "4 i" 0 a t"r*
3it, a sus1"nsi$" "++"!t. E$"n i+ t," 3or -i+/ 3as us"%
still t,"r" is no oubt t,at -#our +at,"r/ 3ill i"% soon"r or
lat"r.
(!) -I 3ill b"gin su11orting #ou +ro* t," ti*" #our +at,"r i"s
o+ *alaria./ Is t,is an obligation 3it, a t"r*J
ANS.' T,is is an obligation 3it, a sus1"nsi$" !oni.
tion. It is tru" t,at -#our +at,"r/ 3ill i" soon"r or lat"r%
7;T 3" ar" not sur" 3,"t,"r or not ," 3ill i" o+ *alaria.
H"n!"% 3" ,a$" ,"r" a !onition inst"a o+ a t"r*.
() -I 3ill 1a# #ou *# "bt 3,"n *# *"ans 1"r*it *" to o
so./ Is t,is an obligation 3it, a !onition or an obligation
3it, a t"r*J
ANS.' T,is is !onsi"r" b# t," la3 as an obligation
3it, a t"r*. -I,"n t," "btor bins ,i*s"l+ to 1a# 3,"n
,is *"ans 1"r*it ,i* to o so% t," obligation s,all b"
""*" to b" on" 3it, a 1"rio% subj"!t to t," 1ro$isions
o+ Art. 11AC./ (Art. 11B?% Ci$il Co").
NOTE' In >ait" $. Fona!i"r% "t al.% L.11B6C% =ul. 91%
1A61% t," balan!" o+ 1ri!" in a sal" o+ iron or" 3as sti1ulat"
to b" 1ai out o+ t," +irst 1ro!""s +ro* a trans,i1*"nt
o+ t," or". T," !ourt ,"l t,at sai trans,i1*"nt is a sus.
1"nsi$" t"r* (not a sus1"nsi$" !onition) b"!aus" 3,"t,"r
or not t,"r" !oul b" a trans,i1*"nt% t," balan!" still o3.
ing ,a to b" 1ai. T," sti1ulation on trans,i1*"nt 3as
961
Art. 11A9
int"n" *"r"l# to +i4 t," +utur" at" o+ t," 1a#*"nt.
966
Art. 11A9
(B) OA Da# C"rtain8 D"+in"
-A a# !"rtain is un"rstoo to b" t,at 3,i!, *ust n"!"s.
saril# !o*"% alt,oug, it *a# not b" <no3n 3,"n./ (Par. 9% Art.
11A9% Ci$il Co").
FNOTE'
(a) I,"n 3" <no3 t,at so*"t,ing 3ill ,a11"n but 3" ar"
un!"rtain as to t," ti*" it 3ill ,a11"n% t,is is a t"r*.
(b) I,"n 3" ar" not "$"n sur" i+ so*"t,ing 3ill ,a11"n as a
+a!t or not% t,is is a !onition.G
(A) So*" Cas"s
D" Cort"s $. V"nturanHa
CA SC5A C?A
I+ it is all"g" t,at a !"rtain 3ritt"n !ontra!t 3it, a "+init"
1"rio is r"all# !onitional% but t," !onition is not ini!at"
t,"r"on (su!, as t," !onition t,at a bu#"r 3ill 1a# onl# i+ ,"
is abl" to !oll"!t in turn t," 1ur!,as" 1ri!" o+ ,is o3n t3o ,a!i.
"nas% sol to anot,"r "ntit#)% t," !ontra!t 3ill not b" r"gar"
as !onitional but on" t,at is 3it, a "+init" t"r*.
Lirag T"4til" &ills% In!. an F"li4 D. Lirag
$. Court o+ A11"als an Cristan Al!antara
L.9?C96% =ul. 11% 1AC5
FACTS' Al!antara 3as 1"rsua" b# F"li4 Lirag o+ t,"
Lirag T"4til" &ills to gi$" u1 a 1"r*an"nt job an to join Lirag
in t," latt"r8s busin"ss until su!, 1"rio as 3,"n Al!antara
3oul $oluntaril# r"sign or until Al!antara is r"*o$" +or a
$ali !aus". So*"ti*" lat"r% Al!antara 3as r"*o$" on a!!ount
o+ +inan!ial r"$"rs"s on t," 1art o+ t," Co*1an# (a groun 3,i!,
1ro$"% ,o3"$"r% to b" +als"). Issu"' In an a!tion b# Al!antara
+or a*ag"s% 3oul t," 1ro$isions o+ 5A 1?56 as a*"n" (t,"
T"r*ination Pa# La3 3,"n t,"r" is no ti*" +i4" +or "*1lo#.
*"nt) a11l# su!, t,at all t,at Al!antara 3ill r"!"i$" is a s*all
969
Art. 11A9
su* bas" on t," nu*b"r o+ #"ars ," ,as b""n "*1lo#" b# t,"
Co*1an#J
96@
Art. 11A9
HELD' 5A 1?56 as a*"n"% 3ill not a11l#% b"!aus" in t,"
1r"s"nt !as" t,"r" is an "41r"ss agr""*"nt as to t," 1"rio o+
Al!antara8s "*1lo#*"nt% t,at 1"rio to start +ro* Al!antara8s
"*1lo#*"nt u1 to t," ti*" Al!antara *a# $oluntaril# r"sign% or
3,"n t," "*1lo#"r r"*o$"s Al!antara +or a $ali !aus". T,us%
t," "*1lo#*"nt ,as a 1"rio subj"!t onl# to t," r"solutor# !on.
ition o+ r"signation or r"*o$al +or !aus". 5A 1?56 as a*"n"
b# 5A 1CBC% o"s not a11l#. T," "*1lo#"r% ,a$ing t"r*inat"
Al!antara8s "*1lo#*"nt 3it,out a $ali !aus"% !o**itt" a
br"a!, o+ !ontra!t *a<ing it liabl" +or a*ag"s. (Art. 11C?% Ci$il
Co").
S*it,% 7"ll M Co. $. Sot"lo &atti
@@ P,il. BC@
FACTS' A or"r" goos +ro* 7. T," goos 3"r" su11os"
to b" 1ai +or 3,"n t,"# arri$" +ro* t," ;.S. It 3as 1ro$" t,at
+or t," goos to b" abl" to l"a$" t," ;.S.% t," ;.S. >o$"rn*"nt
,a to gi$" a !"rti+i!at" o+ 1riorit# an 1"r*ission2 ot,"r3is"%
t," goos 3oul ,a$" to r"*ain in t," ;.S. Issu"' Is t," arri$al
o+ t," goos in &anila +ro* t," ;.S. a t"r* or a !onitionJ
HELD' T," arri$al o+ t," goos is un!"rtain% o3ing to t,"
i++"r"nt r"Euir"*"nts t,at ,a to b" !o*1li" 3it, +irst. H"n!"%
t," arri$al o+ sai goos is a !onition% not a t"r*.
Co*1ania >"n"ral " Taba!os $. AnoHa
C P,il. @55
FACTS' A 3as in"bt" to 7. T," "bt 3as su11os" to
b" 1ai in install*"nts. T,"r" 3as no 1ro$ision in t," !ontra!t
b# 3,i!, u1on +ailur" o+ on" install*"nt o+ t," "bt% t," 3,ol"
"bt s,oul t,"r"u1on b"!o*" at on!" 1a#abl". A 3as unabl"
to 1a# on" install*"nt on ti*". 7 broug,t an a!tion not onl# to
r"!o$"r sai install*"nt but t," "ntir" "bt. Issu"' Ho3 *u!,
!an 7 r"!o$"rJ
HELD' 7 !an r"!o$"r onl# t," install*"nt u". T," bal.
an!" is not #"t "*anabl"% an 3ill b"!o*" so onl# at t," ti*"
965
Art. 11A9
sti1ulat" b# t," 1arti"s. T,is is b"!aus" t,"r" 3as no ACCEL.
E5ATION CLA;SE.
966
Art. 11A9
7"rg $. &agal"na Estat"% In!.
A6 P,il. 11?
T," !laus" -until t," "+"nant s,all ,a$" obtain" a loan
+ro* t," National Cit# 7an< o+ N"3 Kor<% or a+t"r it ,as obtain"
+uns +ro* ot,"r sour!"s/ s,oul b" !onsi"r" a !onition (an
not a t"r*)% +or t," obtaining o+ +uns *a# or *a# not ,a11"n.
(As a *att"r o+ +a!t% ,"r" t," loan n"$"r *at"rialiH".)
Santos $. Court o+ A11"als
L.6?61?% &ar. 6C% 1AB@
A l"as" on a -*ont, to *ont, basis/ is on" 3it, a "+init"
t"r*% an is% t,"r"+or"% not go$"rn" b# PD 6? or 7atas Pa*.
bansa 7ilang 65 (+ollo3ing t," 5ANTAEL !as"). (S"" 5anta"l
$. Lla$"% AC SC5A @59).
=. A*"ur+ina &"l"n!io.H"rr"ra'
(!on!urring an iss"nting)
T," *"r" +a!t t,at 1a#*"nt o+ r"nt is *a" "$"r# *ont,
o"s not +ollo3 t,at t," l"as" is r"all# on a -*ont, to *ont,
basis/ (ot,"r3is"% t,"r" 3ill ,arl# b" an# o!!asion 3,"r" PD 6A
or 7P 65 !an b" a11li"). For t," t3o la3s to a11l#% t,"r" *ust
r"all# b" an agr""*"nt t,at t," l"as" is +ro* *ont, to *ont,.
I,"r" t,"r" is no -*ont,l# basis%/ PD 6? an 7P 65 !an a11l#%
"$"n i+ t," r"nt is 1ai *ont,l#.
7alu!anag $. =ug" Fran!is!o
>5 99@66% &a# 9?% 1AB9
I+ t," r"nt agr"" u1on is 1a#abl" on a *ont,l# basis% t,"
uration o+ t," l"as" is ""*" +ro* *ont, to *ont,% an t,"
l"ssor is allo3" to t"r*inat" t," l"as" a+t"r "a!, *ont,% 1ro.
$i" t,"r" is u" noti!". A+t"r su!, noti!"% t," l"ss""8s rig,t to
!ontinu" in 1oss"ssion !"as"s% an an a!tion o+ unla3+ul "tain"r
*a# b" broug,t against ,i*.
A!".Agro D"$"lo1*"nt Cor1. $. CA
>5 11AC6A% =an. 61% 1AAC
CB SCAD 1@6
96C
Art. 11A9
ISS;E' 7"!aus" t," sus1"nsion o+ 3or< un"r a !ontra!t
,as b""n broug,t about b# +or!" *aj"ur"% is t," 1"rio uring
96B
Art. 11A9
3,i!, 3or< ,as b""n sus1"n" justi+# an "4t"nsion o+ t," t"r*
o+ t," !ontra!tJ
HELD' No. T," +a!t t,at t," !ontra!t is subj"!t to a
r"solutor# 1"rio% 3,i!, r"li"$"s t," 1arti"s o+ t,"ir r"s1"!ti$"
obligations% o"s not sto1 t," running o+ t," 1"rio o+ t,"ir
!ontra!t.
(1?) 5"Euisit"s +or a Vali P"rio or T"r*
(a) It *ust r"+"r to t," +utur".
(b) It *ust b" !"rtain (sur" to !o*") but !an b" "4t"n". (I+
"li*inat" subs"Eu"ntl# b# *utual agr""*"nt% t," obliga.
tion b"!o*"s 1ur" an i**"iat"l# "*anabl"). (Estat"
o+ &ota $. S"rra% @C P,il. @6@).
(!) It *ust b" 1,#si!al an l"gall# 1ossibl"% ot,"r3is" t,"
obligation is $oi. (E4a*1l"' -I8ll gi$" #ou *# ,ous" on"
#"ar a+t"r #our "at,./ T," obligation ,"r" is $oi.)
(11) :u"r#
(a) I+ an obligation is "*anabl" -on or about D"!. 5% 6??5%/
3,"n is it r"all# "*anabl"J
ANS' A +"3 a#s b"+or" or a+t"r D"!. 5% 6??5% an not
a at" +ar a3a# nor on" +i4" b# t," "btor. (S"" S# $. D"
L"on% FC.A.G >5 6BB.5% S"1t. 65% 1AC@).
(b) An obligation stat" -A 3ill gi$" 7 a !ar t," *o*"nt N
b"!o*"s 9? #"ars ol./ No3% N is onl# 6B. Su11os" N i"s
at t," ag" o+ 6A% s,oul A still gi$" t," onationJ
ANS.' K"s% it 3oul s""* t,at t," 1arti"s r"all#
int"n" a t"r*% an not a !onition% unl"ss +a!ts s,oul
"4ist 3,i!, s,o3 t,at t," 1arti"s int"n" a !onition.
(S"" Art. 6?6 o+ t," Ci$il Co" b# analog#).
(16) I,"n P"rio o+ Pr"s!ri1tion 7"gins
T," 1"rio o+ 1r"s!ri1tion !o**"n!"s +ro* t," ti*" t,"
96A
Art. 11A9
t"r* in t," obligation arri$"s% +or it is onl# +ro* t,at at" t,at
it is u" an "*anabl". (S"" ;ll*ann $. H"rna"H% 9? P,il.
6A).
99?
Art. 11A@
(19) E4t"nsion o+ P"rio
E$i"n!" o+ "4t"nsion o+ 1"rio% i+ an# b" gi$"n% *ust b"
s,o3n b# "btor. (S"" P,il. Engin""ring Co. $. >r""n% @B P,il.
@66).
(1@) T," &oratoriu* La3s o+ t," P,ili11in"s
S,ortl# a+t"r lib"ration% 3" ,a our so.!all" &oratoriu*
La3s. (E4. Or"rs Nos. 65% 96 F1A@5G an 5A 9@6 F1A@BG.) T,"
1ur1os" o+ a *oratoriu* is to obtain a 1ost1on"*"nt o+ t,"
1"rio 3it,in 3,i!, to 1a# o++ obligations. It is a sus1"nsion o+
1a#*"nt% an a!t o+ gra!". In t," !as" o+ 5utt"r $. Est"ban% A9
P,il. 6B% t," &oratoriu* La3s 3"r" "!lar" (in 1A59) as
un!onstitutional b"!aus"'
(a) t," 1"rio stat" in t," la3 is in"+init"2
(b) an t," !ontinuation o+ t," *oratoriu* 3ill b" unr"ason.
abl" an o11r"ssi$" to !r"itors% inas*u!, as% !onsi"ring
t," 1"rio t,at ,as "la1s" sin!" lib"ration% t," "btors
*a# b" sai to ,a$" alr"a# r",abilitat" t,"*s"l$"s. (S""
also Llan"s $. Insular Li+" Assuran!" Co.% >5 L.6@656% A1r.
1@% 1A5@).
FNOTE' In g"n"ral% t," &oratoriu* La3s *a# b" a1.
1li!abl" also to obligations !ontra!t" b"+or" t," 3ar. (5io
# Co*1ania $. Datu =ol<i1li% L.169?1% A1r. 19% 1A5A).G
Art. 11A@. In !as" o+ loss% "t"rioration or i*1ro$"*"nt
o+ t," t,ing b"+or" t," arri$al o+ t," a# !"rtain% t," rul"s
in Arti!l" 11BA s,all b" obs"r$".
CO&&ENT'
5ul"s in Cas" o+ LOSS% D"t"rioration% or I*1ro$"*"nt
(a) Not" t," !ross.r"+"r"n!" to Art. 11BA o+ t," Ci$il Co".
(b) E4a*1l"' I+ A is su11os" to "li$"r to 7 a 1arti!ular !ar
991
Art. 11A@
on &ar. 1% 6??5 but t," !ar is "stro#" b# a +ortuitous
"$"nt on D"!. 15% 6??@% t," obligation is "4tinguis,".
996
Art. 11A5
Art. 11A5. An#t,ing 1ai or "li$"r" b"+or" t," arri$al
o+ t," 1"rio% t," obligor b"ing una3ar" o+ t," 1"rio or b".
li"$ing t,at t," obligation ,as b"!o*" u" an "*anabl"%
*a# b" r"!o$"r"% 3it, t," +ruits an int"r"sts.
CO&&ENT'
(1) Pa#*"nt or D"li$"r# &a" 7"+or" t," Arri$al o+ t," P".
rio
(a) A 3as su11os" to 1a# 7 P1%???%??? on D"!. 91% 6??5. 7ut
b"li"$ing t,at t," obligation 3as u" an "*anabl"
alr"a# on D"!. 91% 6??@% A 1ai 7 t," P1%???%??? on sai
at". Ho3 *u!, *a# A r"!o$"r +ro* 7% sa# on =un. 9?%
6??5J
ANS.' A *a# r"!o$"r +ro* 7 on =un. 9?% 6??5% t,"
a*ount o+ P1%???%??? 3,i!, ,a b""n 1r"*atur"l# 1ai
1lus o+ !ours" int"r"st at t," l"gal rat" +ro* =an. 1% 6??5%
to =un. 9?% 6??5% 6Q o+ P1%???%??? V P6?%??? (int"r"st +or
on" #"ar). P6?%??? W 6 V P9?%??? (int"r"st +or t," ,al+.#"ar
1"rio +ro* =an. 1% 6??5% to =un" 9?% 6??5). So A *a# r".
!o$"r a total o+ P1%???%??? +ro* 7. O+ !ours"% 3,"n D"!. 91%
6??5 +inall# arri$"s% A is su11os" to gi$" 7 t," P1%???%???.
H"r" A is allo3" to r"!o$"r 3,at ,a b""n in goo +ait,
1r"*atur"l# 1ai% 1lus int"r"st o+ !ours".
(b) Su11os" in t," 1r"!"ing 1robl"*% A ,a 1ai 1r"*atur"l#
<no3ing +ull# 3"ll o+ t," "4ist"n!" o+ t," t"r*% ,o3 *u!,
!an A r"!o$"rJ
ANS.' A !an r"!o$"r not,ing. T," r"ason is t," la3 o"s
not gi$" ,i* su!, a rig,t. To b" abl" to r"!o$"r% A'
1) *ust ,a$" b""n una3ar" o+ t," 1"rio2 or
6) *ust ,a$" b"li"$" t,at t," obligation ,as b"!o*"
u" an "*anabl".
Sin!" A i not ,a$" "it,"r o+ t,"s" t3o !onitions% ,"
!annot r"!o$"r. T," r"ason +or t,"s" i*1li" 1ro$isions o+
t," la3 is% a+t"r all% A is su11os" to 1a# 7% soon"r or lat"r
so 3,# l"t ,i* r"!o$"r sin!"% an#3a#% it 3as A8s +ault t,at
999
Art. 11A5
1r"*atur" 1a#*"nt ,a b""n *a". O+ !ours"% un"r "it,"r
o+ t," !onitions list" ,"r"inabo$"% "$"n i+ A is boun to
99@
Art. 11A5
1a# 7 soon"r or lat"r% still it is unjust to "1ri$" A in t,"
*"anti*" o+ t," *on"# as 3"ll as its us" (int"r"st).
(!) On &ar. 1% A sol 7 a 1arti!ular auto*obil". It 3as agr""
t,at 1a#*"nt an "li$"r# 3"r" to b" *a" on &ar. 91.
7ut on &ar. 15% A "li$"r" t," !ar an 7 1ai +or sai !ar.
P"ning t," arri$al o+ &ar. 91% s,oul 7 r"turn t," !ar 1lus
a*ag"s an s,oul A r"turn t," 1ri!" 1lus int"r"stJ
ANS.' T,"r" s,oul b" no r"turning +or t3o r"a.
sons'
1) It is tru" t,at &ar. 91 3as t," at" s"t +or 1a#*"nt o+
t," 1ri!" an "li$"r# o+ t," !ar% but t," subs"Eu"nt
a!tions o+ t," 1arti"s !on!"rn" s,o3 t,at bot, i*.
1li!itl# agr"" to t," !,anging o+ t," at" s1"!i+i"
0 +ro* &ar. 91 to &ar. 15.
6) E$"n i+ t,"r" ,a b""n no !,ang" in t," at" agr""
u1on% still it *ust b" r"*"*b"r" t,at t," 1robl"*
,"r" is on" 3,"r" 3" ar" "aling not 3it, t3o uni.
lat"ral obligations. An 3" alr"a# <no3 t,at in
r"!i1ro!al obligations% 1"ning t," +ul+ill*"nt o+ t,"
!onition (an% t,"r"+or"% also 1"ning t," t"r*ina.
tion o+ t," 1"rio) t," int"r"sts an +ruits ar" ""*"
to !o*1"nsat" "a!, ot,"r% 3,"n t,"r" ,as b""n 1r".
*atur" 1"r+or*an!" on bot, si"s. (Art. 11BC o+ t,"
Ci$il Co"). (S"" B &anr"sa 166).
(6) P"rio Iit,in I,i!, 5"!o$"r# &a# 7" &a"
(a) Iit,in 3,at 1"rio *ust r"!o$"r# b" *a" i+ t," "btor
i not <no3 t,at 1a#*"nt 3as not #"t u"J
ANS.' 7"+or" t," "bt *atur"s (r"garing 3,at 3as
1ai). E$"n a+t"r *aturit# (r"garing int"r"st) +or a+t"r all
t," !r"itor 3as in 7AD FAITH. (7ut t," rig,t 1r"s!rib"s
5 #"ars a+t"r 1r"*atur" 1a#*"nt.) (S"" Art. 11@A% Ci$il
Co").
(b) Iit,in 3,at 1"rio% i+ an#% *ust r"!o$"r# b" *a" i+ t,"
"btor <n"3 t,at 1a#*"nt 3as not #"t u"J
ANS.' No r"!o$"r# !an b" ,a o+ 3,at ,as b""n
995
Art. 11A5
1ai% *u!, l"ss !an t,"r" b" r"!o$"r# o+ int"r"st. T,is
is tru" 3,"t,"r t," !r"itor is in goo or ba +ait,% sin!"
996
Art. 11A6
t," i*1ortant t,ing is t," <no3l"g" b# t," "btor o+ t,"
P5E&AT;5ENESS (I*1li" Iai$"r).
(9) Pr"su*1tion t,at D"btor Dn"3 o+ Pr"*atur"n"ss
T," la3 1r"su*"s t,at t," "btor <n"3 o+ t," 1r"*a.
tur"n"ss. T,is *a#% ,o3"$"r% b" r"butt" b# ,i*. (B &anr"sa
16@).
(@) Di++"r"nt &"anings o+ P,ras"s
Not" t,at t," 1,ras"s -3it,in B #"ars/ an -3it,in t," Bt,
#"ar/ ,a$" i++"r"nt *"anings.
Art. 11A6. I,"n"$"r in an obligation a 1"rio is "sig.
nat"% it is 1r"su*" to ,a$" b""n "stablis," +or t,"
b"n"+it o+ bot, t," !r"itor an t," "btor% unl"ss +ro* t,"
t"nor o+ t," sa*" or ot,"r !ir!u*stan!"s it s,oul a11"ar
t,at t," 1"rio ,as b""n "stablis," in +a$or o+ on" or o+
t," ot,"r.
CO&&ENT'
(1) For I,os" 7"n"+it t," T"r* Has 7""n Establis,"
>"n"ral 5ul"
T"r* is +or t," b"n"+it o+ "btor or !r"itor. (&"aning' T,"
"btor !annot 1a# 1r"*atur"l# an t," !r"itor !annot "*an
1r"*atur"l#).
FNOTE' T,is Arti!l" a11li"s onl# 3,"r" t," 1arti"s to a
!ontra!t t,"*s"l$"s ,a$" +i4" a 1"rio% an not to a !as" 3,"r"
t," 1arti"s ,a$" aut,oriH" t," Court to +i4 a r"asonabl" t"r*.
(Orit $. 7alrogan Co.% Lt.% L.166CC% D"!. 6A% 1A5A).G
(6) E4!"1tions (i+ t,"r" b" su!, int"nt)
(a) T"r* is +or t," b"n"+it o+ "btor alon". F&"aning' H" is
r"Euir" to 1a# onl# at t," "n% but ," *a# 1a# "$"n b".
+or". E4a*1l"' D 3ill 1a# C -3it,in 6 #"ars./ H"r" D !an
1a# "$"n a+t"r on" 3""< +ro* t," ti*" t," obligation 3as
99C
Art. 11A6
!ontra!t". (S"" Sia $. Court o+ A11"als% @B O.>. 565A). D
*a# also r"sist 1r"*atur" "*an +or !o*1lian!". (S""
Sa*son $. Anal " Aguila% L.5A96% F"b. 65% 1A5@).G
99B
Art. 11A6
(b) T"r* is +or t," b"n"+it o+ t," !r"itor alon". (&"aning'
Cr"itor !an "*an at an# ti*" "$"n b"+or" t," t"r* "4.
1ir"s% an ," !annot b" !o*1"ll" to a!!"1t 1a#*"nt +ro*
t," "btor 1rior to t," sti1ulat" 1"rio.
E4a*1l"' D 1ro*is" to 1a# on D"!. 1% 6??5% 3it,
t," !r"itor gi$"n t," rig,t to "*an 1"r+or*an!" "$"n
b"+or" sai at".)
(9) Cir!u*stan!"s I,i!, Ini!at" For I,o* t," 7"n"+it o+
t," T"r* Is
(a) For t," b"n"+it o+ bot,
1) I,"n t,"r" is int"r"st sti1ulat" (H"r" t," !r"itor
is int"r"st" in t," t"r* b"!aus" o+ t," int"r"sts t,at
3oul b" "arn"2 t," "btor is int"r"st" b"!aus" ,"
is gi$"n "noug, ti*" to 1a#). (S"" Sar*i"nto $. Vil.
las"Por% @9 P,il. BB?).
6) I,"n t," !r"itor is int"r"st" in <""1ing ,is *on"#
sa+"l# in$"st" (t,us *a<ing t," "btor a sort o+
"1ositor#)% or 3,"n t," !r"itor 3ants to 1rot"!t
,i*s"l+ +ro* t," ang"rs o+ !urr"n!# "1r"!iation.
Ni!olas% "t al. $. &atias% "t al.
BA P,il. 166
FACTS' During t," =a1an"s" o!!u1ation (=un. 6A% 1A@@)% D
borro3" P9?%??? +ro* C in =a1an"s" !urr"n!# at 6Q int"r"st 1"r
annu*. &aturit# 0 on an# a# -3it,in t," 6t, #"ar/ (not 3it,in
6 #"ars% but uring t," 6t, #"ar)2 in ot,"r 3ors% b"t3""n =un.
9?% 1A@A an =un. 6A% 1A5?. On =ul. 15% 1A@@% D 3ant" to 1a#
t," 3,ol" a*ount% an "$"n o++"r" to 1a# int"r"st +or 5 #"ars.
(E$i"ntl#% D 3as a3ar" o+ t," "!r"asing 1ur!,asing $alu" o+
t," 1"so at t,at ti*"). Issu"' Can C b" !o*1"ll" to a!!"1tJ
HELD' No% C !annot b" !o*1"ll" to a!!"1t. H"r"% t,"
b"n"+it o+ t," t"r* is +or bot, D an C 0 +or D% b"!aus" ,"
!oul us" t," *on"# +or at l"ast 5 #"ars2 an C% b"!aus" C ,a
99A
Art. 11A6
3is"l# !al!ulat" t,at a+t"r 5 #"ars% t," !,an!"s 3"r" t,at t,"
=a1an"s" as 3"ll as t," =a1an"s" !urr"n!# 3oul no long"r b" in
9@?
Art. 11A6
t," P,ili11in"s. &or"o$"r% +or C to a!!"1t 5 #"ars8 int"r"st 3oul
b" +or ,i* to $iolat" t," ;sur# La3% 3,i!, allo3s 1a#*"nt o+
a$an!" int"r"st +or onl# on" #"ar.
(b) For t," b"n"+it o+ t," "btor
1) I,"n t," loan is 3it,out int"r"st% t,is is g"n"rall#
onl# +or t," b"n"+it o+ t," "btor.
FNOTE' T,is rul"% ,o3"$"r% is NOT absolut"%
+or "$"n i+ t," !r"itor r"!"i$"s no int"r"st% still ,"
*a# ,a$" "nt"r" into t," !ontra!t to 1rot"!t ,i*s"l+
against t," su"n "!lin" in t," 1ur!,asing 1o3"r
o+ t," !urr"n!#. (Aguilar $. &irana% L.1651?% No$.
6A% 1A61).G
6) I,"n 1a#*"nt is to b" *a" -3it,in/ a !"rtain 1".
rio +ro* at" o+ !ontra!t. (S"" Sa*son $. Aguila%
su1ra).
(!) For t," b"n"+it o+ t," !r"itor
F;suall#% t,is onl# "4ists i+ t,"r" is a sti1ulation to
t,is "++"!t% as 3,"n t," !ontra!t 1ro$i"s t,at no 1a#*"nt
s,oul b" *a" till a+t"r a !"rtain gi$"n 1"rio. (S"" O!,oa
$. Lo1"H% FC.A.G 5? O.>. 5BC1% D"!. 1A5@). A!!"1tan!" o+
1artial 1a#*"nt "$"n b"+or" t," "41iration o+ t," 1"rio
*"ans a 3ai$"r on t," 1art o+ t," !r"itor o+ ,is rig,t to
r"+us" 1a#*"nt b"+or" t," "n o+ sai 1"rio. (Lo1"H $.
O!,oa% L.CA55% &a# 9?% 1A5B).G
(@) So*" D"!i" Cas"s
Sar*i"nto $. Villas"Por
@9 P,il. BB?
FACTS' A borro3" *on"# +ro* 7% an 1l"g" a *"al
3it, ia*ons as s"!urit#. It 3as agr"" t,at A 3as to 1a# t,"
*on"# loan" 3it, int"r"st at t," "n o+ on" #"ar. Issu"' 7"+or"
t," "41iration o+ t," on".#"ar 1"rio% is A allo3" to 1a# ,is "bt
an r"!o$"r t," *"al 1l"g"J
9@1
Art. 11A6
HELD' No% unl"ss 7 !ons"nts% +or t," on".#"ar 1"rio 3as
"stablis," +or t," b"n"+it o+ bot,.
9@6
Art. 11A6
Pastor $. >as1ar
6 P,il. 5A6
I,"n a !ontra!t 1ro$i"s +or sti1ulations in +a$or o+ t,"
"btor 0 3,i!, t," "btor ,as an#3a# "$"n i+ t," !ontra!t o"s
not *"ntion t,"* 0 t," t"r* is +or t," "btor8s b"n"+it.
Illusorio an Via $. 7usu"go
L.B66% 1A@A
FACTS' A borro3" P95%??? +ro* 7 3it, int"r"st o+ BQ
1"r annu*. As s"!urit#% A *ortgag" s"$"ral 1ar!"ls o+ lan in
+a$or o+ 7. T," !ontra!t 1ro$i" t,at t," "bt 3oul b" 1a#abl"
3it,in a 1"rio o+ 9 #"ars% 7;T t," *ortgagor 3oul not b" al.
lo3" to 1a# t," "bt b"+or" sai ti*" ;NLESS t," *ortgag""
7 s,oul !ons"nt. T," !ontra!t 3as "nt"r" into in 1A@9. Lat"r%
A sol t," lans to C. C assu*" A8s obligation to3ar 7. In
1A@@% C 3as 1a#ing 7 t," 3,ol" "bt% 3it, 9 #"ars int"r"st% but
7 r"+us". T,"r"u1on% C "1osit" t," *on"# in !ourt an bot,
A an C +il" an a!tion to !o*1"l 7 to a!!"1t t," 1a#*"nt. Issu"'
&a# C 1a# 7 t," 3,ol" "bt "$"n b"+or" t," "41iration o+ t,r""
#"ars an 3it,out t," !ons"nt o+ 7% 1ro$i" t,at C 3oul 1a#
t," int"r"st +or t," 3,ol" t,r"" #"arsJ
HELD' No. O+ !ours"% t," obligation !oul b" 1ai 3it,in
t,r"" #"ars% but t," !ontra!t r"Euir" 78s !ons"nt i+ t," 1a#*"nt
3as to b" *a" b"+or" t," "n o+ t,r"" #"ars. Sin!" 7 i not
!ons"nt% it is !l"ar t,at C !annot #"t 1a#. 7ot, !onitions *ust
b" gi$"n "++"!t. (Diss"nting' K"s. It is tru" t,at 78s !ons"nt is
r"Euir" i+ 1r"*atur" 1a#*"nt is to b" *a" but "$i"ntl#% t,"
onl# 1ur1os" o+ t,is 3as to *a<" sur" t,at t," int"r"st +or 9
#"ars 3oul b" 1ai2 ot,"r3is"% t,"r" 3oul b" t," ang"r t,at
t," "btor 3oul 1a# 1r"*atur"l# an gi$" a l"ss"r a*ount
o+ int"r"st. Sin!" t,is +"ar ,as b""n "li*inat" b# t," o++"r to
1a# int"r"st +or t," 3,ol" t,r"" #"ars% t,"r" is no r"ason 3,#
7 s,oul not no3 a!!"1t. In t,is 3a#% bot, !onitions o+ t,"
!ontra!t ar" b"ing gi$"n "++"!t. T," *ajorit# isr"gars t," +irst
!onition% an gi$"s "++"!t onl# to t," s"!on.)
O!,oa $. Lo1"H
(C.A.) 5? O.>. 5BC1% D"!. 1A5@
9@9
Art. 11A6
FACTS' D borro3" +ro* C a su* o+ *on"# s"!ur" b# a
*ortgag". T," !ontra!t sti1ulat" t,at t," "btor D 3oul not
9@@
Art. 11AC
b" allo3" to 1a# till a+t"r t," "n o+ t3o #"ars +ro* t," at"
t," !ontra!t 3as 1"r+"!t". 7"+or" t," "n o+ t," t3o #"ars%
,o3"$"r% D o++"r" to 1a# 1artiall#% an C a!!"1t" t," 1artial
1a#*"nt. Issu"' I,at is t," "++"!t o+ C8s a!!"1tan!" o+ t," 1r".
*atur" 1artial 1a#*"ntJ
HELD' I,il" at t," b"ginning it 3as !l"ar t,at t," !r"i.
tor ,a t," b"n"+it o+ t," t"r*% ,is a!!"1tan!" o+ t," 1r"*atur"
1artial 1a#*"nt i*1li"s ,is r"nun!iation o+ t," b"n"+it o+ t,"
t"r*. H" ,a t," rig,t to r"+us"% but ," i not.
N"1o*u!"no $. Nar!iso% "t al.
B@ P,il. 5@6
FACTS' A sti1ulation in a !ontra!t o+ *ortgag" 1ro$i"
t,at t," *ortgagor s,oul not 1a# o++ t," *ortgag" 3,il" t,"
3ar (Iorl Iar II) 3as going on. Issu"' Is t," sti1ulation
$aliJ
HELD' K"s% b"!aus" it is n"it,"r !ontrar# to la3 nor to
*orals% 1ubli! or"r% an 1ubli! 1oli!#.
(5) I,"n Pr"s!ri1ti$" P"rio 7"gins
;n"r t," N"3 Ci$il Co"% an a!tion u1on a 3ritt"n !on.
tra!t (o+ loan% +or "4a*1l") *ust b" broug,t 3it,in 1? #"ars
+ro* t," ti*" t," rig,t o+ a!tion a!!ru"s. (Art. 11@@). In
obligations 3it, t," b"n"+it o+ t," t"r* gi$"n to bot, "btor
an !r"itor% t," rig,t o+ a!tion a!!ru"s +ro* t," "n o+ t,"
sti1ulat" 1"rio% b"!aus" it is onl# +ro* t,at ti*" t,at t,"
obligation r"all# b". !o*"s "n+or!"abl". (S"" Sar*i"nto $.
Villas"Por% @9 P,il. BB?).
Art. 11AC. I+ t," obligation o"s not +i4 a 1"rio% but
+ro* its natur" an t," !ir!u*stan!"s it !an b" in+"rr"
t,at a 1". rio 3as int"n"% t," !ourts *a# +i4 t," uration
t,"r"o+.
T," !ourts s,all also +i4 t," uration o+ t," 1"rio
3,"n it "1"ns u1on t," 3ill o+ t," "btor.
9@5
Art. 11AC
In "$"r# !as" t," !ourts s,all "t"r*in" su!, 1"rio as
*a# un"r t," !ir!u*stan!"s ,a$" b""n 1robabl# !ont"*.
1lat" b# t," 1arti"s. On!" +i4" b# t," !ourts% t," 1"rio
!annot b" !,ang" b# t,"*.
9@6
Art. 11AC
CO&&ENT'
(1) I,"n t," Court &a# Fi4 a P"rio
(a) I,"n t," uration "1"ns u1on t," 3ill o+ t," "btor.
E4a*1l"s'
1) -3,"n *# *"ans 1"r*it *" to o so/ (Art. 11B?% Ci$il
Co")
6) -I8ll 1a# #ou littl" b# littl"/ (S"on" $. Fran!o% 6@ P,il.
9?A)
9) -as soon as 1ossibl"/ (>onHal"s $. =os"% 9B O.>. 1C512
66 P,il. 96A)
@) -as soon as I ,a$" *on"#/ (Pat"nt" $. O*"ga% >5 L.
@@99% &a# 6A% 1A59)
5) -in 1artial 1a#*"nts/ (L"$# H"r*anos $. Pat"rno% 1B
P,il. 959)
6) I,"n t," "btor is -in a 1osition to is!,arg" ,is
obligation./ (S"" Luing Ha,n $. LaHatin% "t al.% L.
119@6% 115@A% =un. 9?% 1A5A).
(b) I,"n alt,oug, t," obligation o"s not +i4 a 1"rio% it !an
b" in+"rr" t,at a 1"rio 3as int"n".
E4a*1l"s'
1) A !ontra!t to !onstru!t a ,ous" 3,"r" t," 1"rio 3as
not stat". (S"" Con!"1!ion $. P"o1l"% C@ P,il. 169).
6) A onation 3,"r" lan 3as gi$"n 1ro$i" !"rtain
!on. stru!tion 3as to b" *a" on it. H"r" t," ti*"
3it,in 3,i!, !onstru!tion is to b" *a" s,oul b"
+i4" b# t," !ourts. (7arr"tto $. Cit# o+ &anila% C
P,il. @16).
9) An obligation 3it, an in"+init" 1"rio% su!, as
3,"n t," ti*" +or t," 1a#*"nt o+ a subs!ri1tion o+
s,ar"s o+ sto!<s ,as not b""n +i4". As a *att"r o+
+a!t in a !as" li<" t,is% t," obligation *ust g"n"rall#
b" i**"iat"l# +ul+ill"% gi$ing t," "btor onl# su!,
9@C
Art. 11AC
ti*" as *ig,t r"asonabl# b" n"!"ssar# +or its a!tual
+ul+ill*"nt. (S!,"n<"r $. >"*1"rl"% L.16@AA% Aug. 91%
1A66).
9@B
Art. 11AC
@) In a l"as" !ontra!t% t," !ourt *ust +i4 t," uration
o+ t," l"as" 3,"n a sti1ulation t,"r"o+ r"as 0 -T,"
o3n"rs o+ t," lan un"rta<" to *aintain t," La3n
T"nnis Club as t"nant as long as t," latt"r s,all s""
+it./ (H"r" t," !ourt sai t,at Art. 11AC a11li"s b".
!aus" t,"r" 3as a !on$"ntional 1"rio t,oug, it 3as
in"+init"% an not Art. 16BC 3,i!, a11li"s onl# 3,"n
no 1"rio 3as agr"" u1on% in 3,i!, !as" t," la3 +i4"s
t," l"gal 1"rio stat" in Art. 16BC) (El"iH"gui $. La3n
T"nnis Club% 6 P,il. 9?A)2 or 3,"n t," !ontra!t stat"s
-as long as t," t"nant 1a#s t," sti1ulat" r"nt./ (Ku
C,in Piao $. Li* Tua!o% 99 P,il. A6).
5) In a sal" on !r"it% 3,"n t," 1arti"s +orgot to stat" in
t," in$oi!" t," 1"rio +or 1a#*"nt. (Cos*i! Lu*b"r
Co.% In!. $. &anois% L.166A6% =an. 9?% 1A6?).
(NOTE' In D"uor% "t al. $. =.&. Tuason an Co.% "t
al.% L.19C6B% &a# 9?% 1A61% t," Su1r"*" Court rul" t,at
3,"n b# $irtu" o+ Art. 11AC% t," !ourt +i4"s t," t"r*% it
o"s not t,"r"b# a*"n or *oi+# t," obligation !on!"rn"
b"!aus" sai Arti!l" is 1art an 1ar!"l o+ all obligations
!ont"*1lat" t,"r"in. H"n!"% 3,"n"$"r t," 1"rio is +i4"%
t," !ourt *"r"l# "n+or!"s or !arri"s out an i*1li" sti1ula.
tion in t," !ontra!t.)
>r"gorio Aran"ta% In!. $. P,il. Sugar Estat"s
D"$"lo1*"nt Co.
L.6655B% &a# 91% 1A6C
FACTS' In a !ontra!t o+ sal"% it 3as agr"" t,at t,"
bu#"r 3oul buil on a 1ar!"l o+ lan t," Santo Do*ingo
C,ur!, an !on$"nt% 3,il" t," s"ll"r 3oul !onstru!t str""t
bor"ring t," lot. T," s"ll"r +ail" to +inis, t," !onstru!tion
o+ t," str""t on on" si" b"!aus" so*" sEuatt"rs t,"r"on
r"+us" to $a!at". T," !,ur!, 3as "$"ntuall# +inis,".
In 1A5B% t," bu#"r broug,t t," instant !as" against t,"
s"ll"r to !o*1"l ,i* to !o*1l# 3it, ,is obligation% an to
1a# a*ag"s. T," "+"ns" 3as t,at t," obligation% to !on.
stru!t t," str""t% 3as 3it, a 1"rio% ,"n!"% t," !o*1laint
3as 1r"*atur"% as t," bu#"r *ust +irst as< t," !ourt to
9@A
Art. 11AC
+i4 t," 1"rio. In!i"ntall#% t," 1r"s"n!" o+ t," sEuatt"rs
3as <no3n to t," 1arti"s at t," ti*" t," !ontra!t 3as
95?
Art. 11AC
"nt"r" into. &or"o$"r% t,"r" 3as a 1"ning !as" against
sai sEuatt"rs. Issu"' Do"s t," Court still ,a$" to +i4 t,"
1"rioJ
HELD' K"s% in $i"3 o+ t," <no3l"g" o+ bot, 1arti"s
o+ t," 1r"s"n!" o+ t," sEuatt"rs. 7"!aus" o+ t,is
<no3l"g"% t," 1arti"s *ust ,a$" int"n" to "+"r
1"r+or*an!" until t," sEuatt"rs s,all ,a$" b""n ul#
"$i!t". T," t"r* +i4" b# t," !ourt 3as !l"arl# just
-until all t," sEuatt"rs ar" +inall# "$i!t"./
(6) I,"n t," Court &a# Not Fi4 t," T"r*
(a) I,"n no t"r* 3as s1"!i+i" b# t," 1arti"s b"!aus" no t"r*
3as "$"n int"n"% in 3,i!, !as" t," obligation is r"all# a
1ur" on"% an "*anabl" at on!"% unl"ss o+ !ours" absur
!ons"Eu"n!"s 3oul aris". (Art. 11CA% 1ar. 1 o+ t," Ci$il
Co" b# i*1li!ations2 TS% O!t. 6?% 1BA6).
(b) I,"n t," obligation or not" is -1a#abl" on "*an./ (P"o.
1l"8s 7an< $. Oo*% 6@ P,il. 166).
(!) I,"n a r"1air"r o+ t#1"3rit"rs 3,o ,as b""n gi$"n a t#1".
3rit"r to r"1air but 3it,out a 1"rio 3it,in 3,i!, to o t,"
3or<% r"turns t," t#1"3rit"r 3it,out 1"r+or*ing an# 3or<
t,"r"on% ," ,as lost 3,at"$"r rig,t ," originall# ,a to
,a$" t," 1"rio +i4" un"r Art. 11AC. (C,a$"s $. >onHal"s%
L.6C@5@% A1r. 9?% 1AC?). H"r"% t," o3n"r o+ t," *a!,in"
,a it r"1air" b# so*"on" "ls". T," Court rul" t,at t,"
original r"1air*an !an b" r"Euir" to 1a# t," 1"rson 3,o
a!tuall# *a" t," n""" r"1airs. T," Court a11li" Art.
116C. (Ibi.)
() I,"n s1"!i+i! 1"rios ar" 1ro$i" +or in t," la3% as in an
"*1lo#*"nt !ontra!t 3,"r" i+ no 1"rio 3as agr"" u1on%
t," ti*" o+ "*1lo#*"nt "1"ns u1on t," ti*" +or 1a#*"nt
o+ salar#.
E4a*1l"'
7arr"tto $. Santa &arina
66 P,il. @@?
951
Art. 11AC
FACTS' A 3as "*1lo#" b# 7 as *anag"r o+ a !igar
an !igar"tt" +a!tor#% t," -La Insular./ 7 obligat" ,i*s"l+
956
Art. 11AC
to us" A8s s"r$i!"s so long as A i not s,o3 is!ourag"*"nt
in ,is 3or<. Lat"r A 3as is!,arg". A !o*1lain" t,at
7 s,oul ,a$" +irst broug,t an a!tion to +i4 t," uration
o+ t," 1"rio ,"r"% an sin!" 7 i not% A no3 "sir"s to
obtain a*ag"s.
HELD' T,is is not an obligation 3it, an int"ntion to
grant t," "btor a t"r*% b"!aus" t,is !as" is go$"rn" b#
t," s1"!i+i! 1ro$isions r"garing ag"n!#.
FNOTE' T," "*1lo#*"nt o+ a 1"rson 3,o ,as 3or<"
+or a $"r# long ti*"% sa# +ro* 1A91 to t," ti*" o+ ,is
s"1aration in 1A66% !annot b" ""*" to b" on" 3it,out a
"+init" 1"rio2 in ot,"r 3ors% ,is "*1lo#*"nt s,oul b"
!onsi"r" as on" 3it, a 1"rio% an t,"r"+or" ," !annot
b" is*iss" 3it,out just !aus" 0 un"r t," T"r*ination
Pa# La3. (S"" LuHon St"$"oring Cor1oration $. Court o+
Inustrial 5"lations% L.9@9??% No$. 66% 1AC@).G
FNOTE' E*1lo#""s% "$"n 3it, +i4" t"r*s% !an or.
inaril# b" is*iss" +or a!ts ini*i!al to t," int"r"sts o+
t," "*1lo#"r. For instan!"% t," +ollo3ing a!ts o+ s"!urit#
guars ar"% a*ong ot,"rs% just !aus"s +or is*issal' !,al.
l"nging su1"rior o++i!"rs% insuborination% sl""1ing on t,"
1osts% "r"li!tion o+ ut#. (LuHon St"$"oring Cor1. $. CI5%
L.1C@11% 1B6B1% 1B6B9% D"!. 91% 1A65)G.
Ni!anor &. 7altaHar $. San &igu"l 7r"3"r#
L.69?C6% F"b. 6C% 1A6A
FACTS' 7altaHar 3as a sal"s*an in !,arg" o+ t,"
Dagu1an 3ar",ous" o+ t," San &igu"l 7r"3"r#. His "*.
1lo#*"nt 3as 3it,out a "+init" 1"rio. 7"!aus" o+ @B a#s
o+ abs"n!" 3it,out 1"r*ission or 1ro1"r r"ason% 7altaHar
3as is*iss" b# t," Co*1an# +or 3,at 3as a*itt"l#
a just !aus". Issu"' No3 t,"n% is ," "ntitl" to t," on".
*ont, (*"saa) s"1aration 1a# 1ro$i" +or in 5A 1?56
as a*"n"J
HELD' No% b"!aus" ,is is*issal 3as +or a just !aus".
It is 3"ll.s"ttl" in t,is jurisi!tion t,at i+ t," is*issal is
959
Art. 11AC
+or a just !aus"% a 1"rson 3it,out a "+init" t"r* o+ "*1lo#.
*"nt is not "ntitl" to on" *ont, noti!" or in li"u t,"r"o+
95@
Art. 11AC
to on" *ont, salar#. I+ an "*1lo#"" ,ir" +or a "+init"
1"rio !an b" is*iss" +or a just !aus" 3it,out t," n""
o+ 1a#ing ,i* a *ont,8s salar#% an "*1lo#"" ,ir" 3it,.
out a "+init" t"nur" s,oul not b" allo3" to "njo# b"tt"r
rig,ts.
(") I,"n 3,at a11"ars to b" a t"r* is r"all# a !onition (su!,
as 3,"n a "bt is 1a#abl" onl# a+t"r t," "btor8s "stat"8s
ot,"r "bts ,a$" b""n 1ai% +or t,is o"s not "1"n u1on
t," "4!lusi$" 3ill o+ t," "btor). (S"" &artin $. 7o#"ro% 55
P,il. C6?).
(+) I,"n t," 1"rio 3it,in 3,i!, to as< t," Court to ,a$"
t," 1"rio +i4" ,as its"l+ alr"a# 1r"s!rib". (Cal"ro $.
Carrion% "t al.% L.196@6% &ar. 9?% 1A6?).
(9) A11li!abilit# o+ t," Arti!l" to t," Obligations Cont"*.
1lat" T,"r"in
Art. 11AC s,oul b" !onsi"r" as 1art an 1ar!"l (or au.
to*ati!all# in!or1orat") in all obligations 3,i!, ar" !ont"*.
1lat" t,"r"in. T,us% +or "4a*1l"% i+ t," obligation int"ns to
grant a t"r* but t," t"r* ,as not b""n +i4"% t," Court 3ill b"
aut,oriH" to o so. Pl"as" not" t,at i+ t," Court% 1ursuant to
t," Arti!l"% a!tuall# +i4"s t," t"r*% t," Court o"s not a*"n or
*oi+# t," obligation. T," Court *"r"l# "n+or!"s or !arri"s out
an i*1li" sti1ulation in t," !ontra!t. (D"uor $. =.&. Tuason
an Co.% In!.% L.19C6B% &a# 9?% 1A61).
(@) T," A!tion to 7ring ;n"r T,is Arti!l"
T," onl# a!tion 3,i!, t," !r"itor !an bring u1on an ob.
ligation t,at o"s not +i4 a t"r*% but 3,"r" a t"r* 3as in""
int"n"% is to as< t," !ourt to +i4 t," 1"rio 3it,in 3,i!, t,"
"btor *ust 1a# +or t," si*1l" r"ason t,at t," +ul+ill*"nt o+ t,"
obligation its"l+ !annot b" "*an" until a+t"r t," !ourt ,as
+i4" t," 1"rio +or its !o*1lian!". (Va. " ;ngson $. Lo1"H%
FC.A.G >5 L.1?1B?.5% &ar. 1?% 1A5@% 5? O.>. @6AB). T," Court
*a# +i4 t," 1"rio% "$"n i+ t,is ,as not b""n s1"!i+i!all# as<"%
so long as t," 1ra#"r% +or "4a*1l"% as<s +or -su!, ot,"r an
955
Art. 11AC
+urt,"r r"li"+ as to t," !ourt *a# a11"ar just an "Euitabl"./
(Paul S!,"n<"r $. Iillia* F. >"*1"rl"% L.16@AA% Aug. 91% 1A66).
956
Art. 11AC
An orinaril# s1"!i+i! 1"r+or*an!" !annot b" "*an" at t,"
sa*" ti*" t,at t," !ourt is as<" to +i4 t," 1"rio (Con!"1!ion $.
P"o1l"% C@ P,il. 66% "!i"% Aug. 1A@9)% su!, a!tion +or s1"!i+i!
1"r+or*an!" b"ing 1r"*atur". (El"iH"gui $. La3n T"nnis Club%
6 P,il. 9?A). In a !as"% ,o3"$"r% t," Su1r"*" Court ,as rul"
t,at in "4!"1tional instan!"s% as 3,"n a 1rior an s"1arat" a!.
tion 3oul b" a *"r" +or*alit# an s"r$" no ot,"r 1ur1os" but
"la#% t,"r" is no n"!"ssit# o+ su!, 1rior a!tion. (Tiglao% "t al. $.
&55 Co.% in+ra.)
Illustrations'
Tiglao% "t al. $. &anila 5ailroa Co.
AB P,il. 1B1
FACTS' T," &anila 5ailroa Co. 1ai its "*1lo#""s a
1art o+ t," latt"r8s salar# i++"r"ntials an 1ro*is" to 1a# t,"
balan!" a+t"r -+uns +or t," 1ur1os" 3oul b" a$ailabl"./ T,is
3as an a!tion b# t," "*1lo#""s to r"!o$"r sai balan!". On"
1oint rais" b# t," !o*1an# 3as t,at a s"1arat" a!tion 3as +irst
n"!"ssar# to +i4 t," uration o+ t," t"r* 3it,in 3,i!, it 3oul
b" r"Euir" to 1a#.
HELD' Sin!" t," ti*" +or 1a#*"nt ,"r" r"all# "1"n" on
t," jug*"nt o+ t," 7oar o+ Dir"!tors o+ t," Co*1an#% t,is
*a# b" !onsi"r" as an obligation 3it, a t"r* 3,os" uration
,as b""n l"+t to t," 3ill o+ t," "btor% so t,at 1ursuant to t,"
la3% t," uration o+ t," t"r* s,oul b" +i4" b# t," !ourt.
Alt,oug, t," g"n"ral rul" is to +irst bring a s"1arat" a!tion +or
t," "41r"ss 1ur1os"% still as in t,is !as"% i+ t,is 1oint ,as b""n
rais" an is!uss" in t," 1l"aings t," !ourt ,as 1o3"r
alr"a# to +i4 t," t"r*% 3it,out t," n"!"ssit# o+ instituting a
s"1arat" a!tion 1r"!is"l# +or t,at 1ur1os"% su!, 1rior an
s"1arat" a!tion b". ing a *"r" +or*alit# in t,is !as"% an
s"r$ing no ot,"r 1ur1os" but "la#. T," t"r* o+ on" #"ar s"t b#
t," lo3"r !ourt 3as t,us a++ir*" b# t," Su1r"*" Court.
(NOTE' It 3oul s""* ,"r" t,at t," bringing o+ t," !as" to
!o*1"l 1a#*"nt is 1r"*atur"% sin!" t," rig,t to "*an !o*1li.
an!" a!!ru"s onl# at t," t"r*ination o+ t," on".#"ar 1"rio
+i4". It is as i+ I a* boun to 1a# N P1%??? at t," "n o+ t,r""
95C
Art. 11AC
#"ars. Ob$iousl#% t," !as" !an b" is*iss" +or t," !aus" ,as
not #"t a!!ru".)
95B
Art. 11AC
FNOTE' In t," !as" o+ Pag"s $. 7asilan Lu*b"r Co.
(L.1?6CA% No$. 6A% 1A5B)% t," Su1r"*" Court ,"l t,at 3,"n a
3oul.b" 1ur!,as"r ,as not b""n gi$"n a "+init" ti*" li*it as
to 3,"n ," s,oul *a<" t," 1ur!,as"% ," is not in "+ault "$"n
i+ t," 3oul.b" s"ll"r *a<"s a "*an. I,at t," latt"r *ust
o +irst s,oul b" to as< t,at t," !ourt +i4 t," t"r*. (S"" S"r$"r
$. Eis"nb"rg M Co.% L.1?C@1% &ar. 6A% 1A5B).G
E1i+anio Alano% "t al. $. Claro Cort"s% "t al.
L.156C6% No$. 6B% 1A6?
FACTS' T," litigants in a !"rtain !i$il !as" "nt"r" into a
jui!ial !o*1ro*is" 3,"r"b# Alano% 3,o o3" Cort"s a su* o+
*on"#% 3oul 1a# Cort"s P191%???% an Cort"s 3oul in turn
!on$"# to ,i* a !"rtain 1ar!"l o+ lan. T," Court or"r" t,"
1arti"s to !o*1l# 3it, t,"ir r"s1"!ti$" obligations. 7"!aus"
Alano +ail" to 1a#% Cort"s +il" a *otion in t," sa*" !as" as<ing
t," !ourt to +i4 a at" on 3,i!, t," obligation o+ Alano s,oul
b" 1ai. T," Court t,"n +i4" a 1"rio o+ 9? a#s 3it,in 3,i!,
t," 1lainti++ s,oul 1a#. T," Court also 3rot" in its or"r a
+or+"itur" !laus"% b# $irtu" o+ 3,i!, t," rig,t o+ Alano o$"r t,"
1ro1"rt# 3oul b" +or+"it" in !as" o+ +ailur" to 1a# 3it,in sai
9? a#s. Issu"' Is t," jui!ial or"r $aliJ
HELD' K"s% b"!aus" it 3as a st"1 n"!"ssar# to gi$" +or!"
an "++"!t to its "!ision. T," jug*"nt b"ing bas" on a !o*.
1ro*is"% it 3as i**"iat"l# "4"!utor#% an t," !ourt% in +i4ing
t," 1"rio% *"r"l# i*1l"*"nt" its "!ision. It is 1r"1ost"rous
to 1r"su*" t,at no 1"rio 3as int"n" b# t," 1arti"s% an t,at
t,"# int"n" to l"a$" t," 1"r+or*an!" o+ t,"ir un"rta<ing to
t," 3,i* o+ "it,"r 1art#% t,"r"b# +rustrating t," $"r# 1ur1os"
o+ t," agr""*"nt. T," +or+"itur" !laus" is also justi+i" un"r
t," 5ul"s o+ Court 3,i!, sa#s t,at 3,"n a+t"r jug*"nt ,as
b"!o*" +inal% +a!ts an !ir!u*stan!"s trans1ir" 3,i!, r"n"r
t," "4"!ution o+ a jug*"nt i*1ossibl" or unjust% t," int"r"st"
1art# *a# as< t," Court to *oi+# or alt"r t," jug*"nt to ,ar.
*oniH" t," sa*" 3it, justi!" an 3it, t," +a!ts.
(5) :u"r#' Iit,in I,at P"rio &ust t," A!tion to Fi4 t,"
P"rio 7" 7roug,tJ
95A
Art. 11AC
ANS.' Iit,in t," 1ro1"r 1r"s!ri1ti$" 1"rio +or s1"!i+i! 1"r.
+or*an!" i+ a 1"rio ,a b""n originall# +i4"% but to b" !ount"
96?
Art. 11AC
+ro* t," 1"r+"!tion o+ t," !ontra!t. T,is is b"!aus" t," rig,t
"4ists b# o1"ration o+ la3 +ro* t," *o*"nt o+ su!, agr""*"nt.
E4trajui!ial "*an is not t,"r"+or" "ss"ntial +or t," !r"ation
o+ t," !aus" o+ a!tion to ,a$" t," 1"rio +i4". (Cal"ro $. Carrion%
"t al.% L.196@6% &ar. 9?% 1A6?).
(NOTE' In t,is !as"% t," !ourt sai t,at t," 1r"s!ri1ti$"
1"rio is 1? #"ars.)
E4a*1l"' D 3rot" a 1ro*issor# not" in C8s +a$or 1ro*is.
ing 1a#*"nt -littl" b# littl"./ Iit,in 1? #"ars +ro* t," at" t,"
3ritt"n !ontra!t 3as 1"r+"!t"% C *ust bring t," a!tion to +i4
t," t"r*. I+ t," 1"rio la1s"s% t," rig,t to ,a$" t," !ourt +i4 t,"
t"r* is !onsi"r" to ,a$" 1r"s!rib". (S"" >onHal"s $. =os"% 66
P,il. 96A).
(6) Ho3 t," Court Fi4"s t," P"rio
T," Court "t"r*in"s t," 1"rio b# !onsi"ring t," ti*"
1robabl# !ont"*1lat" b# t," 1arti"s. (Art. 11AC). On!" t," 1"rio
is +i4" b# t," !ourts% t," 1"rio b"!o*"s 1art o+ t," !ontra!t%
t,us t," !ourts !annot !,ang" it. (Ibi.). T," sa*" is tru" i+
t," 1"rio is +i4" in a !o*1ro*is" agr""*"nt a11ro$" b# t,"
Court. T,is is b"!aus" t," !o*1ro*is" agr""*"nt a!Euir"s t,"
sa*" +or!" an "++"!t as t," "!ision. (D"uor $. =.&. Tuason
M Co.% In!.% L.19C6B% &a# 9?% 1A61). T," 1arti"s *a# o+ !ours"
!,ang" t," 1"rio b# *utual agr""*"nt% or *a# "$"n isr"gar
t," sa*" (S"" 7arr"tto $. Cit# o+ &anila% 11 P,il. 66@) in 3,i!,
!as"% t," obligation b"!o*"s a 1ur" on"% an "*anabl" at
on!". (S"" Art. 11AC).
(C) An E4a*1l" I,"r" t," Arti!l" Is Not A11li!abl"
&illar" $. H"rnano
>5 55@B?% =un. 9?% 1ABC
T,is Arti!l" o"s not a11l# to a !ontra!t o+ l"as" 3,i!,
+i4"s a 1"rio% ".g.% an original 1"rio o+ +i$" #"ars% 3,i!, ,as
"41ir"% an 3,"r" t," 1arti"s r"s"r$" to t,"*s"l$"s t," +a!.
ult# o+ agr""ing u1on t," 1"rio o+ t," r"n"3al !ontra!t. It o"s
961
Art. 11AC
not also a11l# i+ t," uration o+ t," r"n"3al 1"rio is not l"+t to
t," 3ill o+ t," l"ss"" alon"% but rat,"r to t," 3ill o+ t," l"ssor
966
Art. 11AB
an t," l"ss"". Art. 11AC a11li"s onl# 3,"r" a !ontra!t o+ l"as"
!l"arl# "4ists. I+ t," !ontra!t is not r"n"3" at all% t,"r" !oul
b" no !ontra!t t," 1"rio o+ 3,i!, !oul b" +i4".
Art. 11AB. T," "btor s,all los" "$"r# rig,t to *a<" us"
o+ t," 1"rio'
(1) I,"n a+t"r t," obligation ,as b""n !ontra!t"% ,"
b"!o*"s insol$"nt% unl"ss ," gi$"s a guarant# or s"!urit# +or
t," "bt2
(6) I,"n ," o"s not +urnis, to t," !r"itor t,"
guaran. ti"s or s"!uriti"s 3,i!, ," ,as 1ro*is"2
(9) I,"n b# ,is o3n a!ts ," ,as i*1air" sai guaran.
ti"s or s"!uriti"s a+t"r t,"ir "stablis,*"nt% an 3,"n
t,roug, a +ortuitous "$"nt t,"# isa11"ar% unl"ss ,"
i**"iat"l# gi$"s n"3 on"s "Euall# satis+a!tor#2
(@) I,"n t," "btor $iolat"s an# un"rta<ing% in !on.
si"ration o+ 3,i!, t," !r"itor agr"" to t," 1"rio2
(5) I,"n t," "btor att"*1ts to abs!on.
CO&&ENT'
(1) I,"n t," D"btor Los"s t," 7"n"+it o+ t," P"rio
&"aning o+ -t," "btor s,all los" "$"r# rig,t to *a<" us"
o+ t," 1"rio/ 0 t," t"r* is "4tinguis,"% an t," obligation is
"*anabl" at on!".
(6) E4a*1l"s
(a) O+ Par. 1' D o3"s C P1%???%??? "*anabl" on =ul. 9%
6??B. In D"!"*b"r% 6??@% D b"!a*" insol$"nt. T," "bt is
i**"iat"l# "*anabl" in D"!"*b"r% 6??@ unl"ss D !an
o++"r su++i!i"nt s"!urit#.
(NOTE' T," insol$"n!# r"+"rr" to o"s not ,a$" to
b" jui!iall# "!lar"2 it is su++i!i"nt +or ,i* to +in a ,ar
969
Art. 11AB
ti*" 1a#ing o++ ,is obligations b"!aus" o+ +inan!ial
r"$"rs"s t,at ,a$" *a" ,is ass"ts l"ss t,an ,is
liabiliti"s.)
96@
Art. 11AB
FNOTE' I+ t,"r" ,a11"ns to b" a *oratoriu* la3% t,"
"btor 3,o ,a11"ns to b" insol$"nt !an still ta<" a$antag"
o+ sai *oratoriu*% 3,i!, is r"all# a t"r* or an "4t"nsion
o+ a 1"rio% b"!aus" a *oratoriu* is 1r"!is"l# *a" to ai
t,os" 3,o ar" insol$"nt. (S"" Ti*bol $. &artin% >5 L.9@6A%
A1ril 6?% 1A51).G
(b) O+ Par. 6' I+ a "btor inst"a o+ *a<ing a *ortgag" in
+a$or o+ t," !r"itor% *a<"s it in +a$or o+ anot,"r 1"rson%
," +ails to +urnis, t," 1ro*is" guaranti"s% an ," t,"r".
+or" los"s t," b"n"+it o+ t," t"r*. (Dagu,o# Ent"r1ris"s%
In!. $. Pon!"% "t al.% A6 P,il. 15). T," sa*" t,ing is tru" i+
inst"a o+ *ortgaging to t," !r"itor 9 1ar!"ls o+ lan% ,"
*ortgag"s onl# t3o o+ t,"*. (La1lana $. >ar!,itor"na% @B
P,il. 169).
(!) O+ Par. 9' I+ a *ortgag" ,ous" is allo3" to "!a# b#
t," *ortgagor% ," i*1airs t," $alu" o+ t," guarant#% an
t,"r"+or" t," "bt b"!o*"s "*anabl" i**"iat"l#. In
t," sa*" 3a#% i+ a *ortgag" ,ous" is !o*1l"t"l# lost
(isa11"ars) in a t#1,oon% t," "bt is u" at on!" unl"ss
anot,"r *ortgag" "Euall# goo is !onstitut". T,is is tru"
"$"n i+ t," loss b" t,ru a +ortuitous "$"nt.
Song Fo an Co. $. Oria
99 P,il. 9
FACTS' Song Fo an Co. sol a laun!, to t," "+"n.
ant &anu"l Oria +or P16%??? 1a#abl" in Euart"rl# install.
*"nts o+ P1%??? "a!,. T," laun!, 3as *a" s"!urit# +or
t," "bt. S,ortl# a+t"r "li$"r# to Oria% it 3as s,i13r"!<"
in a stor*. Issu"' S,oul t," bu#"r still 1a#J I+ so% 3,"nJ
HELD' K"s% ," *ust still 1a#% sin!" t," loss o+ t,"
*on"# (a g"n"ri! t,ing) ,as not b""n "4tinguis,". &or"o.
$"r% t," 3,ol" balan!" b"!o*"s u" i**"iat"l# b"!aus"
t," s"!urit# ,as isa11"ar" "$"n t,oug, t,ru a +or!"
*aj"ur"% unl"ss ," !an substitut" "Euall# goo s"!uriti"s.
H"n!"% t," s"ll"r !an no3 !oll"!t t," "ntir" balan!".
() O+ Par. @' I+ a !onition% su!, as not to ga*bl" an#*or"%
965
Art. 11AB
is $iolat"% an# t"r* gi$"n b"!aus" o+ t," !onition is
lost. I+ an "*1lo#"" !o**its a substantial br"a!, o+ ,is
966
Art. 11AB
"*1lo#*"nt !ontra!t% t," "*1lo#"r *a# t"r*inat" t,"
"*1lo#*"nt% "$"n i+ t,"r" 3as a +i4" uration +or t," job.
(&ar!aia $. P,il. Eu!. Co.% L.AA6?% &a# 6A% 1A5C an
>onHal"s $. Hal""r"r% @C P,il. 9B?). T,is 1aragra1, 3as
a11li" b# t," !ourt in Cor1us $. Ali<1ala (L.69C?C% =an.
1C% 1A6B).
(") O+ Par. 5' An att"*1t b# t," "btor to "s!a1" is a sign o+
ba +ait,% ,"n!"% t," loss o+ t," t"r*. Not" t,at it is not
"ss"ntial t,at t,"r" b" an a!tual abs!oning% t," int"nt to
o so b"ing su++i!i"nt. ;1on t," ot,"r ,an% a *"r" 1,#si!al
l"a$ing% 3it, no int"nt to "+rau% is not su++i!i"nt.
(9) Ho3 T"r*s or P"rios Ar" Co*1ut"
-I,"n t," la3s s1"a< o+ #"ars% *ont,s% a#s or nig,ts% it
s,all b" un"rstoo t,at 0
(a) #"ars 0 ar" o+ t,r"" ,unr" si4t#.+i$" a#s "a!,2
(b) *ont,s 0 o+ t,irt# a#s2
(!) a#s 0 o+ t3"nt#.+our ,ours2
() an nig,ts 0 +ro* suns"t to sunris".
-I+ *ont,s ar" "signat" b# t,"ir na*"% t,"# s,all b" !o*.
1ut" b# t," nu*b"r o+ a#s 3,i!, t,"# r"s1"!ti$"l# ,a$".88
-In !o*1uting a 1"rio% t," +irst a# s,all b" "4!lu" an
t," last a# in!lu"./ (Art. 19% Ci$il Co").
-In !o*1uting an# 1"rio o+ ti*" 1r"s!rib" or allo3" b#
t,"s" 5ul"s% or b# or"r o+ t," !ourt% or b# an# a11li!abl" statut"%
t," a# o+ t," a!t or "$"nt +ro* 3,i!, t," "signat" 1"rio o+
ti*" b"gins to run is to b" "4!lu" an t," at" o+ 1"r+or*an!"
in!lu". I+ t," last a# o+ t," 1"rio% as t,us !o*1ut"% +alls on
a Satura#% a Suna#% or a l"gal ,olia# in t," 1la!" 3,"r" t,"
!ourt sits% t," ti*" s,all not run until t," n"4t 3or<ing a#.88
(S"!. 1% 5ul" 66% 1AAC 5ul"s o+ Ci$il Pro!"ur").
-I,"r" t," instru*"nt is 1a#abl" at a +i4" 1"rio a+t"r
at"% a+t"r sig,t% or a+t"r t," ,a11"ning o+ a s1"!i+i" "$"nt% t,"
ti*" o+ 1a#*"nt is "t"r*in" b# "4!luing t," a# +ro* 3,i!,
96C
Art. 11AB
ti*" is to b"gin to run% an b# in!luing t," a# o+ 1a#*"nt./
(S"!. B5% N"gotiabl" Instru*"nts La3).
96B
Art. 11AB
FNOTE' I+ a !ontra!t sti1ulat" t,at no 1a#*"nt s,all b"
*a" until a+t"r on" #"ar +ro* t," at" o+ rati+i!ation o+ t,"
Tr"at# o+ P"a!" !on!luing t," >r"at"r East Asia Iar% but t,"
"bt s,all b" +ull# 1ai 3it,in a 1"rio o+ t,r"" #"ars !ount"
+ro* t," "41iration o+ t," a+or"*"ntion" on" #"ar a+t"r t,"
rati+i!ation o+ t," tr"at#% t," obligation b"!o*"s u" +our #"ars
+ro* A1r. 6B% 1A56% 3,"n a *ajorit# o+ t," stat"s signator#
to t," Tr"at# o+ P"a!" rati+i" t," sa*"% or on A1ril 6A% 1A56.
T," 1"rios +i4" in t," !ontra!t !annot b" !ount" +ro* t,"
rati+i!ation b# t," P,ili11in"s o+ t," tr"at#% b"!aus" t," t"r*
-rati+i!ation/ is us" in a g"n"ral s"ns" 3it,out an# r"+"r"n!"
to an# s1"!i+i! !ountr#2 n"it,"r s,oul it b" !ount" +ro* t,"
+a!tual t"r*ination o+ t," 3ar on S"1t. 6% 1A@5 b# t," signing
o+ t," tr"at# o+ surr"n"r o+ =a1an in To<#o 7a#% b"!aus" t,"
!ontra!t "41r"ssl# *"ntions -rati+i!ation/ o+ t," Tr"at# o+ P"a!"
!on!luing t," 3ar. (Ar"llano $. Tinio " Do*ingo% L.B6CA% =ul.
66% 1A5C).G
(@) So*" Cas"s
&o"sto Soriano $. Carolina Abalos% "t al.
B@ P,il. 6?6
FACTS' On &ar. 1C% 1A9B% =uliana Abalos an Carolina
Abalos sol a 1ar!"l o+ lan to F"li1" &an"!lang an &o"sto
Soriano at t," 1ri!" o+ PC5?% 3it, o1tion to r"1ur!,as" t,"
sa*"% -at an#ti*" t,"# ,a$" t," *on"#./ O++"r to r"1ur!,as"
3as *a" in D"!. 1A@1% but t,is !oul not b" !arri" out b"!aus"
o+ t," 3ar. &an"!lang% in t," *"anti*"% !"" all ,is rig,ts to
Soriano. In &a#% 1A@@% o++"r to r"1ur!,as" 3as again *a"% but
Soriano r"j"!t" t," o++"r. 7"!aus" o+ t,is% t," $"nors (Abalos)
!onsign" ("1osit") t," 1ri!" o+ PC5? 3it, t," !ourt an +il"
a !o*1laint +or r"1ur!,as". Soriano r"+us" to a!!"1t b"!aus"
a!!oring to ,i* t,"r" 3as no "41r"ss agr""*"nt as to t," ti*"
3it,in 3,i!, t," r"1ur!,as" !oul b" *a" an a!!oring to
t," Ci$il Co"% i+ no ti*" +or r"1ur!,as" is sti1ulat"% onl# a
1"rio o+ +our #"ars is allo3". Issu"' Do"s t," 1,ras" -at an#
ti*" t,"# ,a$" t," *on"#/ "41r"ssl# sti1ulat" a ti*" or notJ
HELD' T," sti1ulation in t," !ontra!t 1ro$i"s t,at t,"
96A
Art. 11AB
$"nors *a# r"1ur!,as" t," 1ro1"rt# -at an#ti*" t,"# ,a$" t,"
*on"#./ T,"r" is% t,"r"+or"% a ti*" 3,i!, is "41r"ssl# sti1ulat".
9C?
Art. 11AA
An t,is is -an#ti*"./ H"n!"% t," 1"rio o+ +our #"ars *"ntion"
in t," Ci$il Co" +or r""*1tion is not a11li!abl". Inst"a% 3"
a11l# anot,"r 1ro$ision o+ t," Co" 3,i!, sa#s t,at i+ t," ti*"
gi$"n is unli*it" or in"+init"% t," ti*" +or r""*1tion !annot
"4!"" t"n #"ars. T," !ourt !it" t," +ollo3ing !as"s to su11ort
t,is !ont"ntion' H"irs o+ =u*"ro $. LiHar"s (91 P,il. 116)2 7an.
ong% "t al. $. Austria% >5 91@CA% an Lino >onHaga $. =uan
Co% >5 @C?61. Sin!"% t,"r"+or"% o++"r to r"1ur!,as" 3as *a"
$alil# in &a#% 1A@@% t,"r" is no Eu"stion t,at r""*1tion !an
b" allo3".
=os" L. >o*"H% "t al. $. &igu"l Tabia
B@ P,il. 66A
FACTS' A sol 7 a 1ar!"l o+ lan +or P5%??? in =a1an"s"
*on"#% on =un. 6@% 1A@@. In t," !ontra!t it 3as agr"" t,at
3it,in 9? a#s a+t"r t," "41iration o+ on" #"ar +ro* =un. 6@%
1A@@% t," a+or"*"ntion" lan *a# b" r"""*" or r"1ur!,as"
-sa ganito ing ,alaga/ (at t," sa*" 1ri!")% an t,at i+ t,is 3as
not on"% 7 3oul b" t," absolut" o3n"r o+ sai lan. 7"+or"
t," "41iration o+ t," 1"rio but a+t"r lib"ration% A ,as gi$"n 7
P5??% P,ili11in" !urr"n!#% but 7 r"+us"% sa#ing t,at ," 3oul
a!!"1t P5%???% P,ili11in" !urr"n!#. 7ot, t," trial !ourt an
t," Court o+ A11"als ga$" an "Eui$al"nt $alu" to t," P5%???
=a1an"s" *on"# in P,ili11in" !urr"n!#. 7 a11"al" t," !as" to
t," Su1r"*" Court as<ing in P,ili11in" !urr"n!# t," 1ri!" +or
t," r""*1tion. Issu"' I,at o"s t," 1,ras" -sa ganito ing
,alaga/ *"ansJ S,oul it b" P5%???% =a1an"s" *on"# (aroun
PCB?.66 a!!oring to t," 7allant#n" s!al" 0 3,i!, ,as b""n
ao1t" +or "Eui$al"nts)J
HELD' T," *"aning o+ t," 1,ras" is P5%???% P,ili11in"
!urr"n!# (an not *"r"l# its "Eui$al"nt)% b"!aus" bot, 1arti"s
,"r" s1"!ulat" on t," at" o+ t," t"r*ination o+ t," 3ar an t,"
lib"ration o+ t," P,ili11in"s% an t,is <in o+ !ontra!t 0 al"a.
tor# 0 is allo3".
S"!tion 9
ALTE5NATIVE O7LI>ATIONS
9C1
Art. 11AA
Art. 11AA. A 1"rson alt"rnati$"l# boun b# i++"r"nt
1r"stations s,all !o*1l"t"l# 1"r+or* on" o+ t,"*.
9C6
Art. 16??
T," !r"itor !annot b" !o*1"ll" to r"!"i$" 1art o+ on"
an 1art o+ t," ot,"r un"rta<ing.
CO&&ENT'
(1) OAlt"rnati$" Obligation8 D"+in"
An alt"rnati$" (or +a!ultati$") obligation is on" 3,"r" out
o+ t," t3o or *or" 1r"stations 3,i!, *a# b" gi$"n% onl# on" is
u".
(6) E4a*1l"
-A 3ill gi$" 7 t,is !ar or t,is ring or t,is +ountain 1"n./
A o"s not ,a$" to gi$" 7 all t," t,r"" t,ings "nu*"rat". T,"
gi$ing o+ on" is su++i!i"nt to satis+# t," obligation.
(9) :u"r#
In t," "4a*1l" gi$"n abo$"% *a# A !o*1"l 7 to a!!"1t
,al+ t," !ar an ,al+ t," ring (,"n!"% "stablis,ing !o.o3n"rs,i1
b"t3""n A an 7)J
ANS.' No% 7 !annot b" +or!" to a!!"1t. T," !r"itor !an.
not b" !o*1"ll" to r"!"i$" 1art o+ on" an 1art o+ t," ot,"r
un"rta<ing.
Art. 16??. T," rig,t o+ !,oi!" b"longs to t," "btor%
unl"ss it ,as b""n "41r"ssl# grant" to t," !r"itor.
T," "btor s,all ,a$" no rig,t to !,oos" t,os"
1r"stations 3,i!, ar" i*1ossibl"% unla3+ul or 3,i!, !oul
not ,a$" b""n t," obj"!t o+ t," obligation.
CO&&ENT'
(1) I,o Has t," 5ig,t o+ C,oi!"
As a g"n"ral rul"% t," rig,t b"longs to t," "btor. 7# 3a#
o+ "4!"1tion it *a# b"long to t," !r"itor 3,"n su!, rig,t ,as
9C9
Art. 16??
"41r"ssl# b""n grant" to ,i*.
9C@
Art. 16??
(6) E4a*1l"
A is oblig" to gi$" 7 t,is !ar or t,is ring or t,is !igar"tt"
!as". Not,ing is sai in t," !ontra!t as to 3,o 3as gi$"n t,"
rig,t o+ !,oi!". Su11os" 7 s"l"!ts t," !ar% is A boun b# t,"
!,oi!" *a"J
ANS.' No% A is not boun b# t," !,oi!" *a" b"!aus" it is
not 7 but A 3,o% in t," abs"n!" o+ an# sti1ulation% is gi$"n t,"
rig,t to !,oos" t," obj"!t ," "sir"s to gi$".
(9) :u"r#
In 3,at 3a# o"s an obligation 3it, a t"r* i++"r +ro* an
alt"rnati$" obligation 3it, r"+"r"n!" to b"n"+itJ
ANS.' In an obligation 3it, a t"r*% t," g"n"ral rul" is t,at
t," t"r* is +or t," b"n"+it o+ bot, t," "btor an t," !r"itor.
In an alt"rnati$" obligation% ,o3"$"r% t," g"n"ral rul" is t,at
t," "btor ,as t," rig,t o+ !,oi!".
(@) So*" Cas"s
Agon!illo $. =a$i"r
9? P,il. 16@
FACTS' A borro3" *on"# +ro* 7. It 3as agr"" t,at at
t," *aturit# o+ t," "bt% A 3ill gi$" 7 "it,"r t," su* l"nt or a
1arti!ular ,ous" an lot. Issu"' Is t,is sti1ulation $aliJ
HELD' K"s% t,is sti1ulation is $ali b"!aus" it is si*1l#
an alt"rnati$" obligation% 3,i!, is "41r"ssl# allo3" b# t,"
la3. T," agr""*"nt to !on$"# t," ,ous" an lot at an a11rais"
$aluation in t," "$"nt o+ +ailur" to 1a# t," "bt in *on"# at its
*aturit# is% ,o3"$"r% in our o1inion 1"r+"!tl# $ali. It is si*1l#
an un"rta<ing t,at i+ t," "bt is not 1ai in *on"#% it 3ill b"
1ai in anot,"r 3a#. As t," !ontra!t r"as% t," agr""*"nt is not
o1"n to t," obj"!tion t,at t," sti1ulation is a 1a!to !o**isorio.
It is not an att"*1t to 1"r*it t," !r"itor to "!lar" a +or+"itur"
o+ t," s"!urit# u1on t," +ailur" o+ t," "btor to 1a# t," "bt at
*aturit#. It is si*1l# 1ro$i" t,at i+ t," "bt is not 1ai in
*on"# it s,all b" 1ai in anot,"r s1"!i+i! 3a# b# t," trans+"r
9C5
Art. 16??
o+ t," 1ro1"rt# at a $aluation. O+ !ours"% su!, an agr""*"nt
unr"!or"% !r"at"s no rig,t in r"*% but as b"t3""n t," 1arti"s%
9C6
Art. 16??
it is 1"r+"!tl# $ali% an s1"!i+i! 1"r+or*an!" b# its t"r*s *a#
b" "n+or!" unl"ss 1r"$"nt" b# t," !r"ation o+ su1"rior rig,ts
in +a$or o+ t,ir 1"rsons.
T," !ontra!t no3 un"r !onsi"ration is not sus!"1tibl" o+
t," int"r1r"tation t,at t," titl" to t," ,ous" an lot in Eu"stion
3as to b" trans+"rr" to t," !r"itor i1so +a!to u1on t," *"r" +ail.
ur" o+ t," "btors to 1a# t," "bt at its *aturit#. T," obligations
assu*" b# t," "btors 3"r" in t," alt"rnati$"% an t,"# ,a
t," rig,t to "l"!t 3,i!, t,"# 3oul 1"r+or*. T," !onu!t o+ t,"
1arti"s s,o3 t,at it 3as not t,"ir un"rstaning t,at t," rig,t
to is!,arg" t," obligation b# t," 1a#*"nt o+ *on"# 3as lost to
t," "btors b# t,"ir +ailur" to 1a# t," "bt at its *aturit#. T,"
1lainti++ (7) a!!"1t" a 1artial 1a#*"nt +ro* Anasta!io Alano
(A) in 1A?B% s"$"ral #"ars a+t"r t," "bt *atur". T," 1ra#"r
o+ t," !o*1laint is to "4"!ut" a !on$"#an!" o+ t," ,ous" an lot
a+t"r its a11raisal% unl"ss t," "+"nants 1a# t," 1lainti++ t,"
"bt 3,i!, is t," subj"!t o+ t,is a!tion.
It is Euit" !l"ar% t,"r"+or"% t,at un"r t," t"r*s o+ t," !on.
tra!t% as 3" r"a it% an t," 1arti"s t,"*s"l$"s ,a$" int"r1r"t"
it% t," liabilit# o+ t," "+"nant as to t," !on$"#an!" o+ t," ,ous"
an lot is subsiiar# an !onitional% b"ing "1"n"nt u1on t,"ir
+ailur" to 1a# t," "bt in *on"#. It *ust +ollo3% t,"r"+or"% t,at
i+ t," a!tion to r"!o$"r t," "bt 3as 1r"s!rib"% t," a!tion to
!o*1"l a !on$"#an!" o+ t," ,ous" an lot is li<"3is" barr"% as
t," agr""*"nt to *a<" su!, !on$"#an!" 3as not an in"1"n"nt
1rin!i1al un"rta<ing% but *"r"l# a subsiiar# alt"rnati$" 1a!t
r"lating to t," *"t,os b# 3,i!, t," "bt *ig,t b" 1ai.
Ong >uan Can an 7an< o+ t," P,il. Islans
$. C"ntur# Insuran!" Co*1an#
@6 P,il. 5A6
FACTS' A insur" ,is ,ous" 3it, 7% an insuran!" !o*1an#.
T," !ontra!t stat" t,at i+ t," ,ous" is a*ag" or "stro#"%
7 *a# "it,"r 1a# +or t," a*ag" or ,a$" t," ,ous" r"built in a
su++i!i"nt *ann"r. Issu"' Is t,is an alt"rnati$" obligationJ
HELD' K"s. -It o1"rat"s to *a<" t," obligation o+ t,"
9CC
Art. 16??
insuran!" !o*1an# an alt"rnati$" on"% t,at is to sa#% t,at it
9CB
Art. 16?1
*a# "it,"r 1a# t," a*ount in 3,i!, t," ,ous" 3as insur" or
r"buil it.88
EEuitabl" Insuran!" Casualt# Co.% In!.
$. 5ural Insuran!" an Sur"t# Co.% In!.
L.1C@96% =an. 91% 1A66
T," t"r* -+a!ultati$"/ (or -alt"rnati$"/) us" in r"insur.
an!" !ontra!ts% *"r"l# "+in"s t," rig,t o+ t," r"insur"r (on"
3,o insur"s an insur"r against loss) to a!!"1t or not to a!!"1t
1arti!i1ation o+ ot,"rs in t," ris< insur". Su!, a +a!ultati$"
r"insuran!" !ontra!t is not t," +a!ultati$" or alt"rnati$" obliga.
tion r"+"rr" to in t," Ci$il Co".
(NOTE' T,us% in a +a!ultati$" r"insuran!"% t," !,oi!" is to
a!!"1t or r"+us"2 in a +a!ultati$" or alt"rnati$" obligation% t,"r"
is an obligation an t," !,oi!" is li*it" to ,o3 t,at obligation
*a# b" !o*1li" 3it,.)
(5) Li*itation on t," D"btor8s C,oi!"
T," "btor s,all ,a$" no rig,t to !,oos" t,os" 1r"stations
3,i!, ar"'
(a) i*1ossibl"
(b) unla3+ul
(!) or 3,i!, !oul not ,a$" b""n t," obj"!t o+ t," obligation.
(Art. 16??% 1ar. 6% Ci$il Co").
(6) E4a*1l"
A is boun to gi$" 7 a 1a!< o+ s,abu% or a bottl" o+ *il<
ta<"n +ro* a goat% or a 1arti!ular !igar"tt" !as"% or a 1arti!u.
lar +ountain 1"n. A !annot !,oos" t," +irst% b"!aus" t,is 3oul
b" unla3+ul2 nor t," s"!on% b"!aus" t,is is i*1ossibl". A !an%
t,"r"+or"% !,oos" onl# b"t3""n t," t,ir an t," +ourt,.
Art. 16?1. T," !,oi!" s,all 1rou!" no "++"!t "4!"1t
9CA
Art. 16?1
+ro* t," ti*" it ,as b""n !o**uni!at".
9B?
Art. 16?1
CO&&ENT'
(1) &"ans o+ Noti+i!ation or Co**uni!ation to Ot,"r Part#
o+ C,oi!"
Sin!" t," la3 r"Euir"s no s1"!i+i! +or*% it is b"li"$" t,"
!,oi!" !an b" !o**uni!at" orall# or in 3riting% "41r"ssl#% or
i*1li"l#% su!, as b# 1"r+or*an!" o+ on" o+ t," obligations. (S""
B &anr"sa 1B1).
(6) E++"!t o+ Noti!" t,at C,oi!" Has 7""n &a"
On!" noti!" ,as b""n *a" t,at a !,oi!" ,as b""n on"%
t," obligation b"!o*"s a si*1l" obligation to o or "li$"r t,"
obj"!t s"l"!t". (B &anr"sa 1B1). An "l"!tion on!" *a" is bin.
ing on t," 1"rson 3,o *a<"s it% an ," 3ill not% t,"r"+or"% b"
1"r*itt" to r"noun!" ,is !,oi!" an ta<" an alt"rnati$" 3,i!,
3as +irst o1"n to ,i*. (5"#"s $. &artin"H% 55 P,il. @A6).
(9) 5"ason +or Co**uni!ating t," C,oi!" to Cr"itor
In t," !as" o+ Ong >uan Can an 7an< o+ t," P,il. Islans
$. C"ntur# Insuran!" Co.% @6 P,il. 5A6% t," Su1r"*" Court stat"
t,at t," "btor *ust noti+# t," !r"itor -in or"r to gi$" t,"
!r"itor o11ortunit# to "41r"ss ,is !ons"nt or to i*1ugn t," "l"!.
tion *a" t," "btor./ T,is is an "rror b"!aus" i+ t,is 3"r" so%
t," "btor is r"all# b"ing "1ri$" o+ ,is rig,t% un"r t," la3% to
*a<" ,is o3n !,oi!". T," r"al 1ur1os" o+ t," noti!" is to in+or*
t," !r"itor t,at t," obligation is no3 a si*1l" on"% no long"r
alt"rnati$"% an i+ alr"a# u"% +or t," !r"itor to r"!"i$" t,"
obj"!t b"ing "li$"r"% i+ t"n"r o+ t," sa*" ,as b""n *a".
(@) 5"Euisit"s +or t," &a<ing o+ t," C,oi!"
(a) *a" 1ro1"rl# so t,at t," !r"itor or ,is ag"nt 3ill a!tuall#
<no32
(b) *a" 3it, +ull <no3l"g" t,at a s"l"!tion is in"" b"ing
*a". (T,us% E55O5 in a11r"!iating t," *"aning o+ al.
t"rnati$" obligations 3ill gi$" ris" to $itiat" !ons"nt% an
t," !,oi!" !an lat"r on b" annull".)2
9B1
Art. 16?1
(!) *a" $oluntaril# an +r""l# (3it,out FO5CE% INTI&IDA.
TION% COE5CION% or ;ND;E INFL;ENCE)2
9B6
Arts. 16?6.16?9
() *a" in u" ti*"% t,at is% b"+or" or u1on *aturit# (ot,"r.
3is"% t," !r"itor !an su" ,i* in !ourt 3it, an alt"rnati$"
r"li"+ as -gi$" t,is or t,at% "1"ning u1on #our !,oi!"/)2
(") *a" to all t," 1ro1"r 1"rsons (H"n!"% i+ t,"r" b" joint
!r"itors% all o+ t,"* *ust b" noti+i".)2
(+) *a" 3it,out !onitions unl"ss agr"" to b# t," !r"i.
tor (ot,"r3is"% it !an b" sai t,at no r"al !,oi!" is b"ing
*a")2
(g) *a# b" 3ai$"% "41r"ssl# or i*1li"l# (sin!" all rig,ts in
g"n"ral *a# b" 3ai$").
Art. 16?6. T," "btor s,all los" t," rig,t o+ !,oi!" 3,"n
a*ong t," 1r"stations 3,"r"b# ," is alt"rnati$"l# boun%
onl# on" is 1ra!ti!abl".
CO&&ENT'
I,"n D"btor Los"s t," 5ig,t o+ C,oi!"
E4a*1l"'
N is oblig" to gi$" K "it,"r obj"!t A or obj"!t 7 or obj"!t
C. I+ obj"!ts A an 7 ar" lost b# a +ortuitous "$"nt b"+or" !,oi!"
!an b" *a"% N !an "li$"r onl# obj"!t C% b"!aus" t," obligation
,as b"!o*" a si*1l" on". I+ lat"r% obj"!t C is also "stro#" b#
a +ortuitous "$"nt% t," obligation is "4tinguis,"% an N 3oul
not b" liabl" in an# 3a#.
San =os" $. =a$i"r
L.6B?6% 1A5@
A s"ll"r ,a an alt"rnati$"' "it,"r to s"ll ,is ,ous" tog"t,"r
3it, ,is rig,t o+ o1tion% to bu# t," lan on 3,i!, it ,a b""n
!onstru!t"% or to r"turn t," a$an!" 1a#*"nt gi$"n b# t,"
bu#"r. I+ ," los"s t," rig,t to t," o1tion% ," los"s ,is rig,t to
!,oos" t," sal" o+ t," ,ous".
Art. 16?9. I+ t,roug, t," !r"itor8s a!ts t," "btor !annot
9B9
Arts. 16?6.16?9
*a<" a !,oi!" a!!oring to t," t"r*s o+ t," obligation% t,"
latt"r *a# r"s!in t," !ontra!t 3it, a*ag"s.
9B@
Art. 16?@
CO&&ENT'
5ul" I,"n D"btor Cannot C,oos" 7"!aus" o+ Cr"itor8s
A!ts
E4a*1l"'
For P6??%??? D 1ro*is" to t"a!, C *at,"*ati!s +or t,"
#"ar 6??5 or to bu# +or ,i* a stat".o+.t,".art !o*1ut"r not"boo<.
I+ in 6??5% C go"s to >"r*an#% D ob$iousl# !annot t"a!, ,i*%
an sin!" D is "1ri$" o+ t," rig,t to !,oos" b"!aus" o+ C8s o3n
a!t (o+ l"a$ing)% D *a# "it,"r'
(a) bu# t," stat".o+.t,".art !o*1ut"r not"boo<.
(b) or r"s!in t," !ontra!t 3it, t," rig,t to r"!o$"r 3,at"$"r
a*ag"s ," ,as su++"r".
(NOTE' Pl"as" obs"r$" t,at t," !ontra!t is not au.
to*ati!all# r"s!in"2 t," la3 sa#s t,at t," "btor -*a#
r"s!in%/ i*1l#ing t,at ," *a# allo3 it to r"*ain in +or!"
inso+ar as t," 1ossibl" !,oi!" or !,oi!"s ar" in$ol$".)
Art. 16?@. T," !r"itor s,all ,a$" a rig,t to in"*nit#
+or a*ag"s 3,"n% t,roug, t," +ault o+ t," "btor% all t,"
t,ings 3,i!, ar" alt"rnati$"l# t," obj"!t o+ t," obligation
,a$" b""n lost% or t," !o*1lian!" o+ t," obligation ,as
b"!o*" i*1os. sibl".
T," in"*nit# s,all b" +i4" ta<ing as a basis t," $alu" o+
t," last t,ing 3,i!, isa11"ar"% or t,at o+ t," s"r$i!"
3,i!, last b"!o*" i*1ossibl".
Da*ag"s ot,"r t,an t," $alu" o+ t," last t,ing or s"r$i!"
*a# also b" a3ar".
CO&&ENT'
(1) Alt"rnati$" 5ig,ts o+ Cr"itor I,"n Loss or I*1ossibilit#
O!!urs 7"+or" D"btor8s C,oi!"
T,is Arti!l" a11li"s 3,"n'
(a) t," rig,t to !,oos" b"long" to t," "btor2
9B5
Art. 16?@
(b) an t," loss or i*1ossibilit# ,a11"n" b"+or" s"l"!tion 3as
*a".
9B6
Art. 16?5
(6) E4a*1l"
(a) D is oblig" to gi$" C% at D8s o1tion% "it,"r obj"!t No. 1%
obj"!t No. 6 or obj"!t No. 9. I+ all obj"!ts 3"r" lost t,ru D8s
+ault% t," $alu" o+ t," last t,ing lost 3it, a*ag"s *ust
b" gi$"n to C. T,is is b"!aus" i+ obj"!ts Nos. 1% 6% an 9
isa11"ar" in t,at or"r% u1on t," loss o+ obj"!ts 1 an 6%
t," obligations 3"r" !on$"rt" into a si*1l" on"% na*"l#
to gi$" obj"!t No. 9. T,us% it is obj"!t No. 98s $alu" 3,i!,
s,oul b" ta<"n as a basis.
(b) In t," abo$" "4a*1l"% i+ obj"!ts Nos. 1 an 6 3"r" "stro#"
b# a +ortuitous "$"nt% an lat"r obj"!t No. 9 is "stro#"
b# D8s +ault% 3oul D b" liabl"J
ANS.' K"s% b"!aus" loss o+ obj"!ts Nos. 1 an 6 !on.
$"rt" t," obligation into a si*1l" on"% an D is liabl" +or
obj"!t No. 9.
(!) I+ inst"a% obj"!ts Nos. 1 an 6 3"r" "stro#" b# D8s o3n
+ault% an lat"r obj"!t No. 9 is lost b# a +ortuitous "$"nt%
s,oul D b" ,"l liabl"J
ANS.' It is b"li"$" t,at D s,oul not b" ,"l liabl".
D ,a all t," rig,t in t," 3orl to "stro# obj"!ts Nos. 1
an 6% sin!" ," 3as +r"" not to s"l"!t t,"*. In "stro#ing
Nos. 1 an 6 ," r"all# *a" ,is !,oi!" an t," obligation
to gi$" ,as b"!o*" a si*1l" on" 0 to gi$" No. 9. Loss o+
t," obj"!t o+ a si*1l" obligation b# +ortuitous "$"nt s,oul
as a rul" "4tinguis, an# liabilit#. (To a$oi un+airn"ss%
,o3"$"r% it 3oul s""* t,at i**"iat"l# a+t"r t," loss o+
obj"!t No. 1 an obj"!t No. 6% t," "btor *ust in+or* t,"
!r"itor o+ t,is +a!t.)
Art. 16?5. I,"n t," !,oi!" ,as b""n "41r"ssl# gi$"n to
t," !r"itor% t," obligation s,all !"as" to b" alt"rnati$"
+ro* t," a# 3,"n t," s"l"!tion ,as b""n !o**uni!at"
to t," "btor.
;ntil t,"n t," r"s1onsibilit# o+ t," "btor s,all b" go$.
"rn" b# t," +ollo3ing rul"s'
9BC
Art. 16?5
(1) I+ on" o+ t," t,ings is lost t,roug, a +ortuitous
"$"nt% ," s,all 1"r+or* t," obligation b# "li$"ring t,at
3,i!, t,"
9BB
Art. 16?5
!r"itor s,oul !,oos" +ro* a*ong t," r"*ain"r% or t,at
3,i!, r"*ains i+ onl# on" subsists2
(6) I+ t," loss o+ on" o+ t," t,ings o!!urs t,roug, t,"
+ault o+ t," "btor% t," !r"itor *a# !lai* an# o+ t,os" sub.
sisting% or t," 1ri!" o+ t,at 3,i!,% t,roug, t," +ault o+ t,"
+or*"r ,as isa11"ar"% 3it, a rig,t to a*ag"s2
(9) I+ all t," t,ings ar" lost t,roug, t," +ault o+ t,"
"btor% t," !,oi!" b# t," !r"itor s,all +all u1on t," 1ri!" o+
an# on" o+ t,"*% also 3it, in"*nit# +or a*ag"s.
T," sa*" rul"s s,all b" a11li" to obligations to o or
not to o in !as" on"% so*" or all o+ t," 1r"stations s,oul
b"!o*" i*1ossibl".
CO&&ENT'
(1) 5ul"s I,"n C,oi!" Has 7""n >i$"n to Cr"itor
(a) T," Arti!l" gi$"s t," rul"s. For t," !,oi!" to b" gi$"n t,"
!r"itor% t," rig,t *ust "41r"ssl# b" gi$"n to ,i*. It !annot
just b" i*1li". O+ !ours"% t," !o**uni!ation o+ !,oi!" b#
,i* *a# b" "41r"ss or i*1li"% su!, as 3,"n suit is *a"
+or on" o+ t," obj"!ts.
(b) As in t," !as" o+ t," "btor% it s,oul b" un"rstoo t,at
t," !r"itor los"s t," rig,t to !,oos" i+ onl# on" o+ t,"
1r"stations is 1ra!ti!abl". T,us% in a 1A51 !as"% 3,"r"
t," !r"itor 3as "ntitl" to "*an% at *aturit#% "it,"r
Englis, !urr"n!# or t," P,ili11in" 1"so% ," !oul onl# g"t
t," P,ili11in" 1"so (=a1an"s" not"s) b"!aus" at ti*" o+
*aturit# (F"b. 1C% 1A@9) onl# sai !urr"n!# 3as a$ailabl"%
all ot,"rs ,a$ing b""n outla3". T," "btor8s obligation
,a !"as" to b" alt"rnati$" an ,a b"!o*" a si*1l" on".
(L"gara% "t al. $. &ial,"% >5 9@95% A1r. 6B% 1A51).
(!) Art. 16?5 o"s not a11l# 3,"n t," !ontra!t o"s not stat"
to 3,o* t," rig,t to !,oos" is gi$"n% +or in su!, !as" it is
t," "btor 3,o !an !,oos".
(6) E4a*1l"
9BA
Art. 16?5
D is oblig" to gi$" C "it,"r obj"!t No. 1 or obj"!t No. 6 or
obj"!t No. 9 at C8s o1tion. 7"+or" C !o**uni!at" ,is !,oi!" to
9A?
Art. 16?6
D% obj"!t No. 1 ,a b""n "stro#" t,ru D8s +ault an obj"!t No.
6 ,a b""n "stro#" b# a +ortuitous "$"nt. I,at ar" C8s rig,ts%
i+ an#J
ANS.' C !an "*an'
(a) "it,"r obj"!t No. 9 (3,i!, is still t,"r")2
(b) or t," 1ri!" o+ obj"!t No. 1 (3it, a*ag"s% in "it,"r !as"%
b"!aus" C ,as b""n "1ri$" o+ t," rig,t to s"l"!t).
7ut C !annot as< +or t," $alu" o+ obj"!t No. 6 sin!"
t,is 3as lost +ortuitousl#.
(9) E++"!t i+ Cr"itor D"la#s in &a<ing t," C,oi!"
I+ t," !r"itor "la#s in !,oosing% ," !annot #"t ,ol t,"
"btor in "+ault% not3it,staning t," la1s" o+ *aturit#% +or t,"
"btor o"s not <no3 3,at to "li$"r. ;1on t," ot,"r ,an% i+
t," "btor 3ants to r"li"$" ,i*s"l+% ," *a# 1"tition t," !ourt
to !o*1"l !r"itor to a!!"1t% in t," alt"rnati$"% at t," !r"itor8s
o1tion% 3it, r"sultant a*ag"s i+ an#.
Art. 16?6. I,"n onl# on" 1r"station ,as b""n agr""
u1on% but t," obligor *a# r"n"r anot,"r in substitution% t,"
obligation is !all" +a!ultati$".
T," loss or "t"rioration o+ t," t,ing int"n" as a
substitut"% t,roug, t," n"glig"n!" o+ t," obligor% o"s not
r"n"r ,i* liabl". 7ut on!" t," substitution ,as b""n *a"%
t," obligor is liabl" +or t," loss o+ t," substitut" on a!!ount
o+ ,is "la#% n"glig"n!" or +rau.
CO&&ENT'
(1) OFa!ultati$" Obligation8 D"+in"
It is on" 3,"r" onl# on" 1r"station ,as b""n agr"" u1on
but t," obligor *a# r"n"r anot,"r in substitution.
E4a*1l"' D 1ro*is" to gi$" C ,is ia*on.stu" ring
9A1
Art. 16?6
but it 3as sti1ulat" t,at D !oul gi$" ,is 7&I !ar as a sub.
stitut".
9A6
Art. 16?6
(6) Distin!tions 7"t3""n t," Alt"rnati$" an t," Fa!ultati$"
Obligations
(a) First% b# "4a*1l"'
1) ALTE5NATIVE 0 D 3ill gi$" obj"!t No. 1 or obj"!t
No. 6. I+ obj"!t No. 1 is lost b# a +ortuitous "$"nt% D
3ill still ,a$" to gi$" obj"!t No. 6.
6) FAC;LTATIVE 0 D 3ill gi$" obj"!t No. 1 but i+ D
3ants% ," *a# gi$" obj"!t No. 6. I+ obj"!t No. 1 is lost
b# a +ortuitous "$"nt% t," obligation is "4tinguis,"
(b"!aus" t," 1rin!i1al obj"!t ,as b""n lost)% an D
o"s not ,a$" to gi$" obj"!t No. 6.
(b) S"!on% in t,"or#.
ALTE5NATIVE FAC;LTATIVE
9A9
Art. 16?6
(1) Various t,ings ar"
u"% but t," gi$ing o+ on"
is su+. +i!i"nt.
(6) I+ on" o+ t," 1r"stations
is ill"gal% t," ot,"rs *a#
b" $ali an t," obligation
r"*ains.
(9) I+ it is i*1ossibl" to
gi$" all "4!"1t on"% t,at
last on" *ust still b"
gi$"n.
(@) T," rig,t to !,oos" *a#
b" gi$"n "it,"r to "btor
or !r"itor.
(1) Onl# on" t,ing is
1rin!i. 1all# u"% an
it is t,at on" 3,i!,
g"n"ral l # is gi$"n% but
t," ot,"r (t,"
substitut") *a# b" gi$"n
to r"n"r 1a#*"nt or
+ul+ill. *"nt "as#.
(6) I + t," 1rin!i1al
obliga. tion is $oi% an
t,"r" is no n"!"ssit# o+
gi$ing t," substitut".
(-T," nullit# o+ t,"
1rin!i1al !arri"s 3it, it
t," nullit# o+ t," a!!"s.
sor# or substitut".88 0
t,is 1rin!i1l" *a# b#
analog# b" a11li".)
(9) I+ it is i*1ossibl" to gi$"
t," 1rin!i1al% t,"
substitut" o"s not ,a$"
to b" gi$"n2 i+ it is
i*1ossibl" to gi$" t,"
substitut"% t,"
1rin!i1al *ust still b"
gi$"n.
9A@
Art. 16?C
:uiHana $. 5"ug"rio an Postrao
A@ P,il. 61B
FACTS' T," 1arti"s agr"" t,at in !as" t," borro3"r% in a
!ontra!t o+ loan% !annot 1a# t," in"bt"n"ss on t," at" s1"!i.
+i"% t," borro3"r s,oul *ortgag" a 1ar!"l o+ lan to s"!ur"
sai obligation.
HELD' T," sti1ulation is $ali an "++"!ti$" an is <no3n
as a +a!ultati$" obligation. T,is is a n"3 1ro$ision an is not
+oun in t," ol Ci$il Co" in +or!" in 1A@B% 3,"n t," agr"".
*"nt 3as "nt"r" into. N"$"rt,"l"ss% sin!" t," agr""*"nt is
not !ontrar# to 1ubli! *orals or 1ubli! 1oli!#% t," *"r" abs"n!"
o+ an# l"gal 1ro$isions go$"rning it at t," ti*" it 3as "nt"r"
into is o+ no *o*"nt% an t,"r" is no r"ason 3,# it s,oul not
b" gi$"n "++"!t.
(9) :u"r#
T," la3 sa#s t,at -t," loss or "t"rioration o+ t," t,ing
int"n" as a substitut"% t,ru t," n"glig"n!" o+ t," obligor% o"s
not r"n"r ,i* liabl"./ (T,is is b"!aus" t," "btor !an al3a#s
s"l"!t t," 1rin!i1al% an not n"!"ssaril# t," substitut". An it
is un"rstoo t,at t," s"nt"n!" abo$" a11li"s b"+or" !,oi!" ,as
b""n *a".) Su11os" inst"a o+ loss t,ru -n"glig"n!"%/ loss o+
t," substitut" 3as on" "lib"rat"l# s,oul t," "btor b" no3
,"l liabl"J
ANS.' Still no% sin!" ," !an al3a#s !o*1l# 3it, t," 1rin.
!i1al obligation.
S"!tion @
=OINT AND SOLIDA5K O7LI>ATION
Art. 16?C. T," !on!urr"n!" o+ t3o or *or" !r"itors or
o+ t3o or *or" "btors in on" an t," sa*" obligation o"s
not i*1l# t,at "a!, on" o+ t," +or*"r ,as a rig,t to
"*an% or t,at "a!, on" o+ t," latt"r is boun to r"n"r%
"ntir" !o*. 1lian!" 3it, t," 1r"station. T,"r" is a soliar#
9A5
Art. 16?C
liabilit# onl# 3,"n t," obligation "41r"ssl# so stat"s% or
3,"n t," la3 or t," natur" o+ t," obligation r"Euir"s
soliarit#.
9A6
Art. 16?C
CO&&ENT'
(1) =oint Distinguis," +ro* Soliar# Obligations
In a joint obligation -"a!, obligor ans3"rs onl# +or a 1art o+
t," 3,ol" liabilit# an to "a!, oblig"" b"longs onl# a 1art o+ t,"
!orr"lati$" rig,ts./ I,"r"as% in -a soliar# or joint an s"$"ral
obligation% t," r"lations,i1 b"t3""n t," a!ti$" an t," 1assi$"
subj"!ts is so !los" t,at "a!, o+ t," +or*"r or o+ t," latt"r *a#
"*an t," +ul+ill*"nt o+ or *ust !o*1l# 3it, t," 3,ol" obliga.
tion./ (B &anr"sa 1A@). Stat" ot,"r3is"% t," +ollo3ing ar" t,"
*a4i*s to r"*"*b"r'
(a) =oint Obligations 0 -To "a!, ,is o3n.88
(b) Soliar# Obligations 0 -On" +or all% all +or on"./
(6) E4a*1l"s
For =oint Obligations'
(a) A an 7 ar" joint "btors o+ C to t," a*ount o+ P1%???%???.
C !an "*an onl# P5??%??? +ro* A% an onl# P5??%???
+ro* 7.
(b) A an 7 ar" joint "btors o+ C% D% E% an F% 3,o ar" joint
!r"itors to t," a*ount o+ P1%???%???. C *a# "*an onl#
P165%??? +ro* A% an P165%??? +ro* 7. D% E% an F% ,a$"
t," sa*" rig,ts as C.
For Soliar# Obligations'
(a) A an 7 ar" soliar# "btors o+ C to t," a*ount o+
P1%???%???. C !an "*an t," 3,ol" P1%???%??? +ro* A.
A in turn% a+t"r 1a#ing C% !an as< r"i*burs"*"nt +ro* 7
to t," a*ount o+ P5??%???.
(b) A an 7 ar" soliar# "btors o+ C% D% E% F% soliar# !r"i.
tors% to t," a*ount o+ P1%???%???. An# !r"itor% li<" C% !an
"*an +ro* an# "btor% li<" A% t," 3,ol" P1%???%???. In
turn% C ,as to gi$" P65?%??? "a!, to D% E% an F. 7 ,as to
r"i*burs" A +or P5??%??? 3,i!, is r"all# 78s s,ar" o+ t,"
obligation.
(9) >"n"ral 5ul" an E4!"1tions
9AC
Art. 16?C
I,"r" t,"r" ar" t3o or *or" "btors or t3o or *or" !r"i.
tors% t," obligation is'
9AB
Art. 16?C
>"n"ral 5ul" 0 =oint
E4!"1tions 0
(a) 3,"n t,"r" is a sti1ulation in t," !ontra!t t,at t," obliga.
tion is soliar#
(b) 3,"n t," natur" o+ t," obligation r"Euir"s liabilit# to b"
soliar#
(!) 3,"n t," la3 "!lar"s t," obligation to b" soliar#
(@) So*" Instan!"s I,"r" t," La3 I*1os"s Soliar# Liabil.
it#
(a) obligations arising +ro* tort
(b) obligations arising +ro* Euasi.!ontra!ts
(!) l"gal 1ro$isions r"garing t," obligations o+ "$is""s an
l"gat""s
() liabilit# o+ 1rin!i1als% a!!o*1li!"s% an a!!"ssori"s o+ a
+"lon#
(") bail""s in !o**oatu*
(5) :u"r#
&a# t," obligation b" joint on t," si" o+ t," !r"itors an
soliar# on t," si" o+ t," "btors or $i!".$"rsaJ
ANS.' K"s. -In su!, !as"s% t," rul"s a11li!abl" to "a!,
subj"!t o+ t," obligation s,oul b" a11li"% t," !,ara!t"r o+ t,"
!r"itors or t," "btors "t"r*ining t,"ir r"s1"!ti$" rig,ts an
liabiliti"s./ (B &anr"sa% 11. 6?1.6?6).
E4a*1l"s'
(a) A an 7 ar" joint "btors o+ C% D% E% an F% soliar# !r"i.
tors to t," a*ount o+ P1%???%???. Ho3 *u!, !an C !oll"!t
+ro* AJ
ANS.' C is a soliar# !r"itor% so 1r"su*abl# ," !an
9AA
Art. 16?C
!oll"!t t," 3,ol" "bt. 7ut sin!" A is onl# a joint "btor% C
is "ntitl" to !oll"!t onl# P5??%??? +ro* A.
@??
Art. 16?C
(b) A an 7 ar" soliar# "btors o+ C% D% E% an F% joint !r"i.
tors to t," a*ount o+ P1%???%???. Ho3 *u!, !an C r"!o$"r
+ro* AJ
ANS.' Sin!" C is onl# a joint !r"itor% ," !an onl#
r"!o$"r ,is s,ar" 3,i!, is P65?%??? +ro* A% a soliar#
"btor.
(NOTE' Ha C b""n soliar# !r"itor% ," !oul ,a$"
r"!o$"r" P1%???%??? +ro* A2 ,a A b""n a joint "btor%
an C% also a joint !r"itor% C !oul ,a$" r"!o$"r" onl#
P165%??? +ro* A.)
;< Pa L"ung $. Nigorra
A P,il. 9B1
FACTS' T," "+"nants% as 1artn"rs in t," *anag"*"nt
o+ a ba<"r#% o3" t," 1lainti++ t," a*ount o+ P@9.95. T," trial
!ourt or"r" "a!, o+ t," "+"nants liabl" +or t," 3,ol" a*ount
(in soliu*). Nigorra a11"al" t,is 1oint. Issu"' In t," abs"n!"
o+ an# +a!t or la3 3,i!, 3oul *a<" t," "+"nants soliaril#
liabl"% ar" t,"# jointl# or soliaril# r"s1onsibl"J
HELD' T," 1r"su*1tion is t,at t,"# ar" onl# jointl# liabl".
H"n!"% Nigorra s,oul 1a# onl# ,al+ o+ t," "bt.
Pi*"nt"l $. >uti"rr"H
1@ P,il. @A
FACTS' T,r"" 1"rsons sign" a !ontra!t. No 3ors 3"r"
us" to *a<" "a!, liabl" +or t," 3,ol" a*ount.
HELD' Ea!, on" is liabl" onl# +or ,is 1ro1ortion or aliEuot
s,ar" o+ t," obligation. -I+ t,r"" 1"rsons sign a !ontra!t un"r
t," 1ro$isions o+ t," Ci$il Co"% an no 3ors ar" us" to *a<"
"a!, liabl" +or t," +ull a*ount% "a!, is onl# liabl" +or t," 1ro1or.
tionat" a*ount o+ t," !ontra!t. Fro* a r"aing o+ t," !ontra!t in
Eu"stion% it 3ill b" s""n t,at it is una obliga!ion *an!o*unaa
# no soliaria an t,at t," t,r"" "btors ar" not liabl"
@?1
Art. 16?C
s"1arat"l# +or t," 1a#*"nt o+ t," 3,ol" a*ount. T,"# ar" "a!,
liabl" +or an aliEuot 1art o+ t," original obligation./
@?6
Art. 16?C
D" L"on $. N"1o*u!"no an D" ="sus
9C P,il. 1B?
FACTS' In an "l"!tion !ont"st% t," 1rot"st"" an t," in.
t"r$"nor 3"r" s"nt"n!" to 1a# t," !osts an "41"ns"s o+ t,"
!ont"st. Issu"' Is t," obligation joint or soliar#J
HELD' T," obligation is joint. -A +inal jug*"nt +or !osts
an "41"ns"s in an "l"!tion !ont"st 1ro$iing t,at t," !osts
an "41"ns"s o+ t," int"r$"nor is a joint an NOT a joint an
s"$"ral jug*"nt +or !osts an "41"ns"s./ -I+ a jug*"nt o"s
not s1"!i+# ,o3 !"rtain "btors ar" boun it is 1r"su*" t,at
t,"# ar" boun Ojointl#8 an not Osoliaril#8.88 (;< Pa L"ung $.
Nigorra% A P,il. 9B12 Floriano $. D"lgao% 11 P,il. 15@2 I,it" $.
EnriEu"H% 15 P,il. 1192 D" L"on $. N"1o*u!"no an D" ="sus%
su1ra).
Parot $. >"*ora
C P,il. A@
FACTS' T3o 1"o1l" borro3" *on"# an sign" a 1ro*is.
sor# not" 1ro*ising to 1a# -juntos o s"1araa*"nt"./ Ar" t,"#
jointl# or soliaril# liabl"J
HELD' T,"# ar" soliaril# liabl". -I" ar" o+ t," o1inion%
an so ,ol t,at t," 1,ras" Ojuntos o s"1araa*"nt"8 us" in
t,is 1ro*issor# not"% is an "41r"ss stat"*"nt% *a<ing "a!, o+
t," 1"rsons 3,o sign" it ini$iuall# liabl" +or t," 1a#*"nt o+
t," +ull a*ount o+ t," obligation !ontain" t,"r"in. T," 1,ras"
juntos o s"1araa*"nt" us" in a !ontra!t !r"at"s t," sa*"
obligation as t," 1,ras" *an!o*un o insoliu*. T," 3ors
Os"1araa*"nt"8 an Oinsoliu*8 us" in a !ontra!t in !onn"!tion
3it, t," natur" o+ t," liabiliti"s o+ t," 1arti"s ar" su++i!i"nt to
!r"at" an ini$iual liabilit#./
Calo% =r. $. Cabanos
L.1AC?@% O!t. 1A% 1A66
I+ a +at,"r is a "btor an ," i"s% ,is ,"irs% u1 to t," $alu"
o+ t," in,"ritan!"% ar" liabl". T,us% b"+or" t," ,"irs s,ar" in
t," in,"ritan!"% t," "bt *ust +irst b" 1ai. T,us also% it is not
@?9
Art. 16?C
a!!urat" to sa# t,at t," ,"irs ar" soliaril# liabl" +or t," "bt
o+ t,"ir +at,"r.
@?@
Art. 16?C
Ori"ntal Co**"r!ial Co.% In!. $. F"li4 La+u"nt"
(C.A.) 9B O.>. A@C
FACTS' To guarant# t," obligation in!urr" b# F"li4 La+u.
"nt"% a grou1 o+ *"n "4"!ut" a bon in +a$or o+ t," Ori"ntal
Co**"r!ial Co.% 3,"r" t,"# 1ro*is" to ans3"r -ini$iuall#
an !oll"!ti$"l# +or t," total a*ount./ Issu"' Ar" t," sur"ti"s
,"r" jointl# or soliaril# liabl"J
HELD' T,"# ar" soliaril# liabl"% an "$"r#on" is ini$iu.
all# r"s1onsibl" +or t," +ull 1a#*"nt o+ t," obligation.
Ior!"st"r $. O!a*1o% "t al.
66 P,il. @6
FACTS' A an 7 3"r" bot, r"s1onsibl" in !ausing an in.
jur# to C t,roug, t,"ir (A8s an 78s) n"glig"n!". C broug,t an
a!tion against bot,. A *aintains t,at ,is liabilit# is onl# joint%
not soliar#. Issu"' Ar" joint tort+"asors (t,os" liabl" +or a tort)
jointl# or soliaril# liabl"J
HELD' T,"# ar" soliaril# liabl". -I+ s"$"ral 1"rsons
jointl# !o**it a tort% t," 1lainti++ or t," 1"rson injur" ,as ,is
"l"!tion to su" all or so*" o+ t," 1arti"s jointl#% or on" o+ t,"*
s"1arat"l# b"!aus" t," tort is in its natur" a s"1arat" a!t o+
"a!, ini$iual. (1 C,i"#% Co**on La3 Pl"aings B6). It is
not n"!"ssar# t,at t," !oo1"ration s,oul b" a ir"!t% !or1or"al
a!t. It *a# b" stat" as a g"n"ral rul" t,at joint tort+"asors ar"
all t," 1"rsons 3,o !o**an% instigat"% 1ro*ot"% "n!ourag"%
a$is"% !ount"nan!"% !oo1"rat"% ai or ab"t t," !o**ission o+ a
tort or 3,o a11ro$" o+ it a+t"r it is on". T,"# ar" "a!, liabl" as
1rin!i1als% to t," sa*" "4t"nt% an in t," sa*" *ann"r as i+
t,"# ,a 1"r+or*" t," 3rong+ul a!t t,"*s"l$"s./ (Cool"# on
Torts% 1992 &oir $. Ho1<ins% 16 Ill. 919).
Ab"lla $. Co 7un Di*% "t al.
1?? P,il. 1?1A
ISS;E' I,at is t," liabilit# o+ a "btor an t," r"!"i$"r
o+ ,is 1ro1"rt# (as assign"" in insol$"n!#) 0 joint or soliar#J
@?5
Art. 16?C
HELD' T," rul"s !on!"rning joint an soliar# obligations
(obliga!ion"s *an!o*unaas # obliga!ion"s soliarias) r"Euir"
@?6
Art. 16?C
a 1luralit# o+ subj"!ts (!r"itors% "btors% or bot,)% an ,a$" no
a11li!ation 3,"n t,"r" is onl# on" !r"itor an on" "btor% "$"n
i+ 1a#*"nt is to b" *a" b# s"$"ral ini$iuals% r"1r"s"nting on"
an t," sa*" int"r"st or "btor. T,us% t," liabilit# o+ a "btor
an t," r"!"i$"r o+ ,is 1ro1"rt# in a litigation !annot b" sai to
b" joint or soliar# b"!aus" t," r"!"i$"r o"s not r"1r"s"nt an
int"r"st !o*1l"t"l# istin!t an s"1arat" +ro* t," o3n"r o+ t,"
1ro1"rt#% but is *"r"l# t," !ustoian o+ t," 1ro1"rt#% an an
"4t"nsion o+ t," 1"rsonalit# o+ t," latt"r.
Ta*a#o $. AEuino
L.1669@.16C6?% &a# 6A% 1A5A
FACTS' A% r"gist"r" o1"rator (in t," Publi! S"r$i!" Co*.)
o+ a !o**on !arri"r% sol t," $",i!l" to 7 3it,out 1rior a11ro$al
o+ t," Co**ission. 7 t,"n o1"rat" t," $",i!l". An a!!i"nt
too< 1la!" on" a#% injuring a 1ass"ng"r o+ 7. Issu"' Ar" A an
7 jointl# or soliaril# liabl"J
HELD' Onl# A% t," r"gist"r" o3n"r is liabl"% but ," !an
r"!o$"r in"*nit# +ro* 7. Sin!" onl# on" is liabl"% t," istin!tion
b"t3""n joint an soliar# liabilit# o"s not "4ist. A is liabl" as
a r"sult o+ t," !ul1a !ontra!tual (not !ul1a aEuiliana) b"!aus"
t," $",i!l" 3as still r"gist"r" un"r ,is na*". T,is is tru"
"$"n i+ t," 1ro1"rt# ,a alr"a# b""n sol to anot,"r at t," ti*"
t," a!!i"nt too< 1la!". I+ t," rul" 3"r" ot,"r3is"% a r"gist"r"
o3n"r !an "asil# "$a" r"s1onsibilit# b# !ollusion 3it, ot,"rs
3,o *a# 1oss"ss no 1ro1"rt# to ans3"r +or t," a*ag"s. (S""
Er"Ho $. ="1t"% >5 L.A6?5% S"1t. 9?% 1A5C).
NOTE' In Can"rs% "t al. $. Arias% "t al.% (Court o+ A11"als)
>5 L.6@BB1.5% &ar!, @% 1A61% it 3as ,"l t,at i+ t," $",i!l"
3,i!, +igur" in an a!!i"nt 3as o1"rat" un"r t," so.!all"
-<abit s#st"*%/ t," a3ar o+ "4"*1lar# a*ag"s% a*ong ot,"rs%
1a#abl" jointl# an s"$"rall# b# t," o1"rator an t," grant"" o+
t," !"rti+i!at" o+ 1ubli! !on$"ni"n!" is justi+i". T,is 1"rni!ious
s#st"* is not onl# a $iolation o+ la3 but a +rau u1on t," tra$.
"lling 1ubli!% 3,i!, ,as a rig,t to "41"!t t,at t," ,ol"r o+ t,"
!"rti+i!at" b" t," on" to a!tuall# o1"rat" ,is trans1ortation lin"%
@?C
Art. 16?C
,ir" t," ri$"rs% an ot,"r "*1lo#""s an "4"r!is" t," n"!"ssar#
su1"r$ision o$"r t,"*.
@?B
Art. 16?C
="r"os $. Court o+ A11"als
L.@BC@C% S"1t. 9?% 1AB6
In a !i$il a!tion u" to a Euasi."li!t (!ul1a aEuiliana)% t,"
r"gist"r" o3n"r% t," a!tual o3n"r% an t," ri$"r o+ t," j""1
in$ol$" ar" soliaril# liabl". (S"" Er"Ho $. ="1t"% 1?6 P,il. 1?92
Ta*a#o $. AEuino% 1?5 P,il. A@A2 an D" P"ralta $. &angusang%
16? P,il. 5B6).
F" P"r"H $. =os"+ina >uti"rr"H% "t al.
L.9?115% S"1t. 6B% 1AC9
FACTS' >uti"rr"H% ,ol"r o+ a !"rti+i!at" o+ 1ubli! !on$"n.
i"n!" an aut,oriH" to o1"rat" an auto.!al"sa in t," 1ro$in!"
o+ Da$ao% sol t," $",i!l" to Alajar. T," sal"% at t," ti*" o+ t,"
a!!i"nt% ,a not b""n a11ro$" b# t," Publi! S"r$i!" Co**is.
sion% an 3as t,"r"+or" not r"gist"r" 3it, su!, Co**ission.
Lat"r% t,ru t," r"!<l"ss i*1ru"n!" o+ its ri$"r% Cor"ro% t,"
$",i!l" *"t an a!!i"nt r"sulting in injuri"s to P"r"H% on" o+ its
1ass"ng"rs. Issu"' I,o s,oul b" ,"l liabl" to P"r"HJ
HELD' T," r"gist"r" o3n"r% >uti"rr"H% s,oul b" t," on"
ir"!tl# liabl" to P"r"H (S"" Er"Ho $. ="1t") "s1it" t," trans+"r
o+ t," $",i!l" to anot,"r. In "aling 3it, $",i!l"s r"gist"r"
un"r t," Publi! S"r$i!" La3% t," 1ubli! ,as rig,t to 1r"su*"
t,at t," r"gist"r" o3n"r is t," a!tual o3n"r t,"r"o+% +or it
3oul b" i++i!ult +or t," 1ubli! to "n+or!" t," a!tion +or
a*ag"s +or injuri"s !aus" to t,"* b# $",i!l"s b"ing
n"glig"ntl# o1"rat"% i+ t," 1ubli! s,oul b" r"Euir" to 1ro$"
3,o t," a!tual o3n"r is. T," trans+"r""% ,o3"$"r% s,oul in
turn b" r"s1onsibl" to t," r"gist"r" o3n"r +or in o1"rating t,"
$",i!l" 3it,out its trans+"r ,a$ing b""n a11ro$" b# t,"
Publi! S"r$i!" Co**ission% t," trans+"r"" a!t" *"r"l# as an
ag"nt o+ t," r"gist"r" o3n"r an s,oul b" r"s1onsibl" to ,i*.
T," ri$"r s,oul also b" ,"l liabl" soliaril# 3it, >uti"rr"H
to F" P"r"H in a!!oran!" 3it, t," 1ro$isions o+ Art. 61B@ in
r"lation to Art. 61B? o+ t," Ci$il Co". (NOTE' T," ri$"r 3as
also ,"l liabl" on t," basis o+ a Euasi."li!t% t,"r" b"ing no
@?A
Art. 16?C
!ontra!tual r"lation b"t3""n ,i* an t," 1ass"ng"r.)
@1?
Art. 16?C
>onHal"s $. Halili% "t al.
L.11561% O!t. 91% 1A5B
T," liabilit# o+ t3o *otor $",i!l" ri$"rs !on$i!t" +or in.
juri"s t,ru r"!<l"ss i*1ru"n!" is soliar#. Cons"Eu"ntl#% t,"
"*1lo#"r o+ "a!, o+ t,"* is also soliaril# liabl" 3it, r"s1"!t
to ,is subsiiar# liabilit#% as sai liabilit# *ust n"!"ssaril# b"
!o."4t"nsi$" 3it, t," jug*"nt against ,is "*1lo#"".
5"1ubli! Plant"rs 7an< $. CA
>5 L.A9?C9% D"!. 61% 1AA6
In t," !as" at bar% t," soliar# liabilit# o+ 1ri$at" r"s1on.
"nt F"r*in Canlas is *a" !l"ar"r an !"rtain% 3it,out r"ason
+or a*biguit#% b# t," 1r"s"n!" o+ t," 1,ras" -joint an s"$"ral/
as "s!ribing t," un!onitional 1ro*is" to 1a# to t," or"r o+
5"1ubli! Plant"rs 7an<.
A joint an s"$"ral not" is on" in 3,i!, t," *a<"rs bin
t,"*s"l$"s bot, jointl# an ini$iuall# to t," 1a#"" so t,at all
*a# b" su" tog"t,"r +or its "n+or!"*"nt% or t," !r"itor *a#
s"l"!t on" or *or" as t," obj"!t o+ t," suit. A joint an s"$"ral
obligation in !o**on la3 !orr"s1ons to a !i$il la3 soliar#
obligation% i.".% on" o+ s"$"ral "btors boun in su!, 3is" t,at
"a!, is liabl" +or t," "ntir" a*ount% an not *"r"l# +or ,is
1ro1ortionat" s,ar". 7# *a<ing a joint an s"$"ral 1ro*is" to
1a# to t," or"r o+ 5"1ubli! Plant"rs 7an<% 1ri$at" r"s1on"nt
Canlas assu*" t," soliar# liabilit# o+ a "btor an t," 1a#""
*a# !,oos" to "n+or!" t," not"s against ,i* alon" or jointl# 3it,
"+"nant S,oHo Ka*agu!,i an Pin!, &anu+a!turing Cor1. as
soliar# "btors.
As to 3,"t,"r t," int"r1olation o+ t," 1,ras" -an (in) ,is
1"rsonal !a1a!it#/ b"lo3 t," signatur"s o+ t," *a<"rs in t,"
not"s 3ill a++"!t t," liabilit# o+ t," *a<"rs% t," Court o"s not
+in it n"!"ssar# to r"sol$" an "!i"% b"!aus" it is i**at"rial
an 3ill not a++"!t t," liabilit# o+ 1ri$at" r"s1on"nt Canlas
as a joint an s"$"ral "btor o+ t," not"s. Iit, or 3it,out t,"
1r"s"n!" o+ sai 1,ras"% 1ri$at" r"s1on"nt Canlas is 1ri*aril#
@11
Art. 16?C
liabl" as a !o.*a<"r o+ "a!, o+ t," not"s an ,is liabilit# is t,at
o+ a soliar# "btor.
@16
Art. 16?B
Art. 16?B. I+ +ro* t," la3% or t," natur" or t," 3oring
o+ t," obligations to 3,i!, t," 1r"!"ing arti!l" r"+"rs t,"
!ontrar# o"s not a11"ar% t," !r"it or "bt s,all b"
1r"su*" to b" i$i" into as *an# "Eual s,ar"s as t,"r"
ar" !r"i. tors or "btors% t," !r"its or "bts b"ing
!onsi"r" istin!t +ro* on" anot,"r% subj"!t to t," 5ul"s o+
Court go$"rning t," *ulti1li!it# o+ suits.
CO&&ENT'
(1) Pr"su*1tion T,at Obligation Is =oint
T,is Arti!l" gi$"s us t," 1r"su*1tion t,at 3,"n t,"r" ar"
t3o or *or" "btors% or t3o or *or" !r"itors% t," obligation is
joint an as a !ons"Eu"n!"'
(a) T," "bt s,all b" i$i" into as *an# s,ar"s as t,"r" ar"
!r"itors or "btors.
(b) T," !r"its or t," "bts 3ill b" istin!t +ro* on" anot,"r%
7;T r"garing t," bringing o+ t," a!tion in !ourt% t,"
5ul"s o+ Court go$"rning t," *ulti1li!it# o+ suits 3ill b"
+ollo3".
(6) Distin!t S,ar"s
In joint obligations% t," i++"r"nt s,ar"s o+ t," "bt or
t," !r"it ar" !onsi"r" istin!t +ro* on" anot,"r. 7ut t,"#
ar" subj"!t to t," 5ul"s o+ Court go$"rning t," *ulti1li!it# o+
suits. T,is *"ans t,at orinaril# on" !r"itor *a# su" on" o+
t," "btors +or t," latt"r8s s,ar" o+ t," obligation. 7ut% in $i"3
o+ t," +a!t t,at t," ai* o+ t," 5ul"s o+ Court is to obtain a just%
s1""#% an in"41"nsi$" "t"r*ination o+ "$"r# a!tion or 1ro.
!""ing% it 3oul b" *u!, b"tt"r to su" all t," n"!"ssar# 1arti"s
at t," sa*" ti*".
Co*1ania >"n"ral " Taba!os $. Ob"
19 P,il. 9A1
FACTS' A *ot,"r an ,"r son borro3" *on"#. Not,ing
3as sai in t," !ontra!t r"garing soliar# liabilit#. 7ut in t,"
@19
Art. 16?B
bri"+ 1r"s"nt" b# t," la3#"r +or *ot,"r an son% t," t3o "bt.
ors un3ittingl# sai t,"# 3"r" soliaril# liabl". Issu"' Do"s t,"
@1@
Art. 16?B
stat"*"nt in t," bri"+ o+ t," la3#"r !on$"rt t," joint obligation
into a soliar# on"J
HELD' No. T," stat"*"nt in t," bri"+ is i**at"rial. I,at
*ust 1r"$ail is t," !ontra!t in Eu"stion% an sin!" not,ing is
*"ntion" t,"r"in r"lating to soliarit#% t," obligation is onl#
joint.
Ori"ntal Co**"r!ial Co. $. Ab"to
6? P,il. C69
FACTS' A borro3" *on"# +ro* 7 on t," str"ngt, o+ t3o
sur"ti"s% C an D% 3,o assu*" joint an s"$"ral liabilit# 3it,
A. T," trial jug"% u1on non.1a#*"nt o+ t," "bt% r"n"r"
a jug*"nt against all t," "+"nants (A% C% D) +or t," total
a*ount soug,t b# 7. 7ut t," jug*"nt i not stat" 3,"t,"r
t," liabilit# o+ t," "+"nants 3as joint or soliar#. 7 t,"n as<"
+or "4"!ution on t," 1ro1"rti"s o+ C% on" o+ t," sur"ti"s +or t,"
3,ol" obligation. Issu"' In t," !ontra!t% liabilit# 3as soliar#
but in t," jug*"nt% not,ing 3as sai about t," natur" o+ t,"
obligation% ,"n!" it is no3 *"r"l# joint an not soliar#. Ho3
3ill t," obligation no3 b" !onsi"r"' joint as in t," jug*"nt%
or soliar# as in t," !ontra!tJ
HELD' T," obligation s,oul no3 b" !onsi"r" as *"r"l#
a joint on"2 ,"n!"% 7 !an g"t +ro* t," 1ro1"rti"s o+ C onl# t,"
1ro1ortional s,ar" o+ C. T," jug*"nt i not stat" t,at t,"
obligation 3as joint an s"$"ral% so non" o+ t," "+"nants *a#
b" r"Euir" to 1a# +or t," 3,ol" obligation. It o"s not *att"r
t,at un"r t," 1ro$isions o+ t," 3ritt"n !ontra!t "nt"r" into
b# t," 1arti"s t," obligation !ontra!t" b# t," sur"ti"s 3as
soliar#. It *ust b" r"*"*b"r" t,at t,"r" 3as no a11"al +ro*
sai jug*"nt% an ,"n!" t," jug*"nt 3as +inal. Sin!" t," +inal
jug*"nt su1"rs"" t," a!tion broug,t +or t," "n+or!"*"nt
o+ sai !ontra!t an sin!" it i*1li!itl# "!lar" t," obligation
to b" joint an not soliar#% it +ollo3s t,at sai +inal jug*"nt
!annot b" "4"!ut" ot,"r3is". H"n!"% it s,oul b" "4"!ut" as
i*1osing *"r"l# joint liabiliti"s.
Purita Ali1io $. CA
>5 19@1??% S"1t. 6A% 6???
@15
Art. 16?B
FACTS' T," trial !ourt or"r" 1"tition"r an t," &anu"l
s1ous"s to 1a# 1ri$at" r"s1on"nt t," un1ai balan!" o+ t,"
@16
Art. 16?B
agr"" r"nt in t," a*ount o+ P5?%??? 3it,out s1"!i+#ing
3,"t,"r t," a*ount is to b" 1ai b# t,"* jointl# or soliaril#.
HELD' I+ +ro* t," la3 or t," natur" or t," 3oring o+
t," obligation t," !ontrar# o"s not a11"ar% an obligation is
1r"su*" to b" onl# joint% i.".% t," "bt is i$i" into as *an#
"Eual s,ar"s as t,"r" ar" "btors% "a!, "bt b"ing !onsi"r"
istin!t +ro* on" anot,"r. (S"" Art. 16B).
(@) S#non#*s
(a) For joint obligation
1) *an!o*unaa
6) *an!o*unaa si*1l"
9) 1ro1ortionat"
@) 1ro rata
(b) For soliar# obligation
1) joint an s"$"ral
6) in soliu*
9) *an!o*unaa soliaria
@) juntos o s"1araa*"nt"
5) ini$iuall# an !oll"!ti$"l#
6) "a!, 3ill 1a# t," 3,ol" $alu"
FNOTE'
(a) -I" 1ro*is" to 1a#%/ 3,"n t,"r" ar" t3o or *or" signatur"s
V joint liabilit#.
(b) -I 1ro*is" to 1a#%/ 3,"n t,"r" ar" t3o or *or" signatur"s
V soliar# liabilit#.
(S"" Parot $. >"*ora% C P,il. A@% su1ra).G
(5) So*" Cons"Eu"n!"s o+ =oint Liabilit#
(a) Vitiat" !ons"nt on t," 1art o+ on" "btor o"s not a++"!t
t," ot,"rs.
@1C
Art. 16?B
E4a*1l"' A an 7 ar" joint "btors o+ C +or P1%???%???.
A8s !ons"nt 3as obtain" b# C t,ru +rau. 7 3oul still b"
@1B
Art. 16?B
liabl" +or P5??%???% 3,il" A 3ill not b" liabl"% sin!" t," 6
"bts ar" !onsi"r" istin!t +ro* "a!, ot,"r.
(b) Insol$"n!# o+ on" "btor o"s not *a<" ot,"rs r"s1onsibl"
+or ,is s,ar".
E4a*1l"' A% 7% an C ar" joint "btors o+ D +or
P9%???%???. I+ A is insol$"nt% ,o3 *u!, s,oul 7 1a# DJ
ANS.' Onl# P1%???%???% ,is o3n 1ro1ortionat"
s,ar".
(!) D"*an b# t," !r"itor on on" joint "btor 1uts ,i* in
"+ault% but not t," ot,"rs sin!" t," "bts ar" istin!t.
() I,"n t," !r"itor int"rru1ts t," running o+ t," 1r"s!ri1.
ti$" 1"rio b# "*aning jui!iall# +ro* on"% t," ot,"rs
ar" not a++"!t". (T,"r"+or"% it is 1ossibl" t,at t," s,ar"
o+ on" joint "btor ,as not 1r"s!rib"% 3,il" t,os" o+ t,"
ot,"rs ,a$" alr"a# 1r"s!rib".) (Agon!illo M &arino $.
=a$i"r% 9B P,il. @6@ an 1 >"ogi B92 99 Dallos 6AC).
(") D"+"ns"s o+ on" "btor ar" not n"!"ssaril# a$ailabl" to t,"
ot,"rs. (S"" B &anr"sa 6??.6?1).
(6) Liabiliti"s o+ Partn"rs
(a) I+ it aris"s out o+ a !ontra!t% t," liabilit# is joint or 1ro rata.
(Art. 1B16% Ci$il Co"). E4!"1tion 0 i+ t," "1"n"nts o+ an
"*1lo#"" !lai* !o*1"nsation +or t," "*1lo#""8s "at, in
lin" o+ ut#. (Li3anag% "t al. $. Ior<*"n8s Co*1"nsation
Co**ission% >5 L.1616@% &a# 66% 1A5A).
(b) I+ it aris"s out o+ a !ri*" or a Euasi."li!t% t," liabilit# is
soliar# (tog"t,"r 3it, t," 1artn"rs,i1). (Arts. 1B66% 1B69
an 1B6@% Ci$il Co").
Li3anag% "t al. $. Ior<*"n8s Co*1"nsation
Co**ission
L.1616@% &a# 66% 1A5A
FACTS' 5oEu" 7al"ra*a% a s"!urit# guar o+ a 1artn"r.
@1A
Art. 16?B
s,i1% t," Li3anag Auto Su11l#% 3as <ill" in lin" o+ ut#. His
,"irs !lai* !o*1"nsation un"r t," Ior<*"n8s Co*1"nsation
@6?
Art. 16?B
A!t. Issu"' T," A!t b"ing sil"nt on t," 1oint% 3,at is t," liabilit#
o+ t," 1artn"rs 0 joint or soliar#J
HELD' Soliar#. It is tru" t,at orinaril#% t," liabilit#
o+ 1artn"rs is onl# joint% but t,is s,oul not a11l# to a !as" o+
!o*1"nsation +or "at, in lin" o+ ut#. Arts. 1C11 an 1C16 o+
t," Ci$il Co"% ta<"n tog"t,"r 3it, S"!. 6 o+ t," Ior<*"n8s
Co*1"nsation La3% r"asonabl# ini!at" t,at in !o*1"nsation
!as"s% t," liabilit# o+ busin"ss 1artn"rs s,oul b" soliar#% ot,.
"r3is" t," rig,t o+ t," "*1lo#"" *a# b" "+"at"% or at l"ast
!ri11l". I+ t," r"s1onsibilit# o+ t," 1artn"rs 3"r" to b" *"r"l#
joint an not soliar#% an on" o+ t,"* ,a11"ns to b" insol$"nt%
t," a*ount a3ar" 3oul onl# b" 1artiall# satis+i". T,is is
"$i"ntl# !ontrar# to t," int"nt an 1ur1os"s o+ t," A!t% 3,i!,
is to gi$" +ull 1rot"!tion to t," "*1lo#""s.
(C) Liabiliti"s o+ Ag"nts
In g"n"ral 0 joint% "$"n i+ a11oint" at t," sa*" ti*"% un.
l"ss soliarit# ,as b""n agr"" u1on. (Art. 1BA@% Ci$il Co").
(B) Liabiliti"s o+ Co.Prin!i1als (In Ag"n!#)
Soliar#.
(A) Liabiliti"s o+ Husban an Ii+"
A+t"r !onjugal +uns ,a$" b""n "4,aust"% t," ,usban an
t," 3i+" ar" liabl" jointl# to !r"itors o+ t," !onjugal 1artn"rs,i1.
(H"r" t," rul"s o+ 1artn"rs,i1 ar" su11l"toril# a11li!abl".) (S""
Art. 1@C% Ci$il Co").
(1?) Liabiliti"s o+ Violators o+ Arts. 1A% 6?% 61% 66 (on Hu*an
5"lations) o+ t," Ci$il Co"
Alt,oug, t," la3 o"s not "41r"ssl# sa# so% it is b"li"$"
t,at in+ra!tors t,"r"o+ s,oul b" ,"l liabl" in soliu*% !on.
si"ring t," +a!t t,at sai $iolations ar" "it,"r 1"nal in natur"
or !ontrar# to *orals. T,"s" ar" 1"r,a1s !as"s 3,"r" t,"r" is
@61
Art. 16?B
soliarit# b"!aus" o+ t," natur" o+ t," obligation. (S"" Art. 16?C%
Ci$il Co").
@66
Art. 16?A
(11) Liabiliti"s o+ E*1lo#"r an E*1lo#"" +or t," Latt"r8s
Tortious A!t
H"r"% t," liabilit# o+ an "*1lo#"r is 1ri*ar# (not subsii.
ar#)% an soliar# 3it, t,at o+ t," "*1lo#""s. (Arts. 61B? an
61A@% Ci$il Co"). Ho3"$"r% i+ t," injur" 1art# o"s not a11"al
+ro* an "rron"ous jug*"nt ,oling t," liabilit# to b" *"r"l#
subsiiar#% inst"a o+ soliar#% t," sa*" b"!o*"s r"s jui!ata%
an t," obligation !"as"s to b" soliar#. (7a!,ra!, &otor Co.
$. >a*boa% L.1?6A6% &a# 61% 1A5C).
(16) :u"r#
I+ a !ontra!t stat"s -=os" or &aria 3ill 1a# #ou P1%???%???/
(isjun!ti$" obligations)% s,oul t,is b" !onsi"r" alt"rnati$"%
joint% or soliar#J
ANS.' It r"all# "1"ns u1on t," int"ntion o+ t," 1arti"s.
H"n!"% i+ 3,at is int"n" is to ,a$" t," obligation satis+i" in
+ull% t," 1a#"r b"ing i**at"rial% t," !ourts *a# b" in!lin" to
!onsi"r t," sa*" as soliar#% 3it, t," !r"itor b"ing gi$"n t,"
rig,t to s"l"!t 3,o 3oul 1a#% an in !as" o+ 1artial 1"r+or*an!"
*"r"l#% ," !an still as< t," ot,"r +or t," balan!".
Art. 16?A. I+ t," i$ision is i*1ossibl"% t," rig,t o+ t,"
!r"itors *a# b" 1r"jui!" onl# b# t,"ir !oll"!ti$" a!ts%
an t," "bt !an b" "n+or!" onl# b# 1ro!""ing against all
t," "btors. I+ on" o+ t," latt"r s,oul b" insol$"nt% t,"
ot,"rs s,all not b" liabl" +or ,is s,ar".
CO&&ENT'
(1) Ini$isibl" =oint Obligation
T,is Arti!l" s1"a<s o+ an ini$isibl" joint obligation (in.
i$isibl" 0 r"+"rring to t," O7=ECT2 joint 0 r"+"rring to t,"
TIE b"t3""n t," 1arti"s% 3,o ar" *"r"l# 1ro1ortionat"l# liabl"%
unl"ss soliarit# ,as b""n sti1ulat" b# t," 1arti"s or t," la3%
in 3,i!, !as"% it is !all" a soliar# ini$isibl" obligation).
@69
Art. 16?A
(6) E4a*1l" o+ a =oint Ini$isibl" Obligation
A an 7 ar" jointl# liabl" to gi$" C t,is 1arti!ular !ar.
@6@
Art. 16?A
(9) &anr"sa8s Co**"nt
-T," obligation is in a s"ns" *i3a# b"t3""n t," joint an
t," soliar#% alt,oug, it 1r"s"r$"s t," t3o !,ara!t"risti!s o+ t,"
joint obligation in t,at' (a) no !r"itor !an o an a!t 1r"jui!ial
to t," ot,"rs% an (b) no "btor !an b" *a" to ans3"r +or t,"
ot,"rs. T," 1"!uliarit# o+ t,is obligation% ,o3"$"r% is t,at its
+ul+ill*"nt r"Euir"s t," !ons"nt o+ all t," "btors% alt,oug, "a!,
+or ,is 1art. On t," si" o+ t," !r"itors% !oll"!ti$" a!tion is also
r"Euir" +or a!ts 3,i!, *a# b" 1r"jui!ial./ (B &anr"sa 1AC).
(@) C,ara!t"risti!s
(a) T," obligation is joint but sin!" t," obj"!t is ini$isibl"%
t," !r"itor *ust 1ro!"" against ALL t," joint "btors
(Art. 16?A)% +or !o*1lian!" is 1ossibl" onl# i+ all t," joint
"btors 3oul a!t TO>ETHE5.
(b) D"*an *ust% t,"r"+or"% b" *a" on ALL t," joint "bt.
ors.
(!) I+ an# on" o+ t," "btors o"s not !o*1l# 3it, ,is *on"tar#
obligation +or a*ag"s. (Art. 166@% Ci$il Co"2 B &anr"sa
69C.69B).
() I+ an# o+ t," joint "btors b" insol$"nt% t," ot,"rs s,all not
b" liabl" +or ,is s,ar". (Art. 16?A% Ci$il Co").
(NOTE' T," obligation to 1a# *on"tar# a*ag"s is o+
!ours" no long"r ini$isibl"% an t,"r"+or"% t," !r"itor
*a# go against "a!, "btor ini$iuall#% subj"!t to t,"
1ro$isions o+ t," 5ul"s o+ Court.)
(") I+ t,"r" b" joint !r"itors% "li$"r# *ust b" *a" to all% an
not *"r"l# to on"% unl"ss t,at on" b" s1"!i+i!all# aut,oriH"
b# t," ot,"rs.
(+) Ea!, joint !r"itor is allo3" to r"noun!" ,is 1ro1ortionat"
!r"it.
(5) E4a*1l"
@65
Art. 16?A
A% 7% an C ar" jointl# liabl" to gi$" a 1arti!ular !ar 3ort,
P1.6 *illion in +a$or o+ D% E% F% an >. A is insol$"nt an t,"
@66
Art. 16?A
"btors% t,"r"+or"% !annot 1ur!,as" t," !ar to gi$" to t," !r"i.
tors. D an E ,a$" r"noun!" t,"ir rig,ts. T," "btors ar" not
in "+ault. Ho3 *u!, !an "a!, o+ t," !r"itors g"t +ro* "a!, o+
t," "btorsJ
ANS.' Sin!" t,is is a joint an ini$isibl" obligation an
sin!" t," !ar !annot b" gi$"n% it is !on$"rt" into an obligation
to gi$" in"*nit# +or a*ag"s. Sin!" t,is is a joint obligation%
"a!, "btor is 1ro1ortionat"l# liabl" an "a!, !r"itor is onl#
"ntitl" to ,is 1ro1ortional !r"it.
P1.6& i$i" b# 9 V P@??%??? (t," total "bt o+ "a!,
"btor)
P @??%??? i$i" b# @ V P1??%??? (t," !r"it b"longing to
"a!, joint !r"itor% not +ro* "a!,
joint "btor).
A is insol$"nt% an ,is s,ar" 3ill not b" in!lu" in t,"
liabilit# o+ 7 an C.
T,"r"+or"'
(a) D an E ,a$ing r"noun!" t,"ir rig,ts% t,"# g"t not,ing.
(b) F ,as not r"noun!" ,is rig,t% so ," !an g"t P1??%??? +ro*
7 an P1??%??? +ro* C. O$"r A% F ,as t," rig,ts o+ !r"itor
o$"r an insol$"nt "btor.
(!) > ,as "4a!tl# t," sa*" rig,ts as F.
(6) A D"*an b# On" =oint Cr"itor Is Not a D"*an b# t,"
Ot,"rs
In a joint ini$isibl" obligation% i+ on" o+ t," joint !r"itors
*a<"s a "*an u1on on" o+ t," "btors% t,"r" is no oubt t,at
t," "btor is in "+ault 3it, r"+"r"n!" to t," "*aning !r"i.
tor8s s,ar". Is s," also in "+ault 3it, r"+"r"n!" to t," ot,"rsJ
ANS.' Alt,oug, it 3oul s""* t,at t," ans3"r is KES%
b"!aus" t,is a!t b"n"+its% an o"s not 1r"jui!" t," ot,"rs% an
is t,"r"+or" i*1li!itl# 3,at t," la3 1ro$i"s (S"" B &anr"sa
1AC)% still it s,oul b" born" in *in t,at t," !r"its ar" still
@6C
Art. 16?A
in"1"n"nt o+ on" anot,"r (S"" b# analog# +ro* t," "!ision
o+ t," Su1r"*" Court o+ Lousiana% 7uar $. L"*"s S#ni!.% 16
@6B
Art. 161?
5obinson8s 5"1orts% 1. 6@9)% an% t,"r"+or"% t," ans3"r s,oul
b" NO.
Art. 161?. T," ini$isibilit# o+ an obligation o"s not
n"!"ssaril# gi$" ris" to soliarit#. Nor o"s soliarit# o+ its"l+
i*1l# ini$isibilit#.
CO&&ENT'
(1) Ini$isibilit# as Distinguis," +ro* Soliarit#
Ini$isibilit# 0 r"+"rs to t," Subj"!t &att"r
Soliarit# 0 r"+"rs to t," Ti" b"t3""n t," Parti"s.
(H"n!"% t," t3o ar" not t," sa*".)
(6) E4a*1l"s
(a) =oint i$isibl" obligation 0 A an 7 ar" jointl# liabl" to N
+or P1 *illion.
(b) =oint ini$isibl" obligation 0 A an 7 ar" jointl# liabl" to
gi$" N t,is !ar.
(!) Soliar# i$isibl" obligation 0 A an 7 ar" soliaril#
boun to gi$" N P1 *illion.
() Soliar# ini$isibl" obligation 0 A an 7 ar" soliaril#
boun to gi$" N t,is !ar.
(9) T," Di++"r"nt Dins o+ Soliarit#
First !lassi+i!ation'
(a) A!ti$" soliarit# 0 on t," 1art o+ t," !r"itors or obli.
g""s
(b) Passi$" soliarit# 0 on t," 1art o+ t," "btors or obli.
gors
(!) &i4" soliarit# 0 on t," 1art o+ t," obligors an oblig""s%
or on t," 1art o+ t," "btors an t," !r"itors
S"!on !lassi+i!ation'
@6A
Art. 161?
(a) Con$"ntional soliarit# 0 agr"" u1on b# t," 1arti"s
(b) L"gal soliarit# 0 t,at i*1os" b# t," la3
@9?
Art. 1611
Art. 1611. Soliarit# *a# "4ist alt,oug, t," !r"itors an
t," "btors *a# not b" boun in t," sa*" *ann"r an b# t,"
sa*" 1"rios an !onitions.
CO&&ENT'
(1) Soliarit# D"s1it" Di++"r"nt T"r*s or Conitions
(a) A!!oring to San!,"H 5o*an% 3,at ar" t," i++"r"nt 3a#s
b# 3,i!, t3o "btors *a# b" bounJ
ANS.'
1) ;ni+or* 0 3,"n t," "btors ar" boun b# t," sa*"
sti1ulations an !laus"s2
6) Ot,"r3is" 0 3,"r" t," obligors t,oug, liabl" +or t,"
sa*" 1r"station% ar" n"$"rt,"l"ss not subj"!t to t,"
sa*" s"!onar# sti1ulations an !laus"s. (@ San!,"H
5o*an 5?).
(b) E4a*1l" o+ a !as" 3,"n soliarit# *a# "4ist "$"n 3,"n t,"
!r"itors an t," "btors ar" not boun in t," sa*" *an.
n"r'
A an 7 soliaril# boun t,"*s"l$"s to 1a# a total
o+ P1%???%??? to C% D% an E subj"!t to t," +ollo3ing !on.
itions an t"r*s' C8s s,ar" 3ill b" u" at t," "n o+ t,"
#"ar2 D 3ill g"t ,is s,ar" onl# i+ ," 1ass"s t," bar2 an E
3ill g"t ,is s,ar" onl# a+t"r ," (E) ,as 1aint" t," ,ous"
o+ N. H"r"% t," obligation is still soliar#.
(!) In t," "4a*1l" gi$"n in (b)% 3,"n 3ill t,is soliar# obliga.
tion b" u" an "*anabl"J
ANS.' T," obligation is still soliar# but C8s s,ar" 3ill
onl# b" u" an "*anabl" at t," "n o+ t," #"ar% an E
an D8s s,ar"s 3ill b" u" an "*anabl" onl# u1on t,"
+ul+ill*"nt o+ t," !onition.
Su11osing t," obligation is to b" subj"!t to i++"r"nt
t"r*s an !onitions% t," +ollo3ing is t," solution' t,"
!r"itor *a# r"!o$"r t,at 1art 3,i!, is 1ur" an un!oni.
tional% an s,oul l"a$" in sus1"ns" or 1"ning% t," rig,t
@91
Art. 1611
to "*an t," 1a#*"nt o+ t," r"*ain"r until t,"
"41iration o+ t," t"r* or t," +ul+ill*"nt o+ t," !onition.
Soliarit#
@96
Art. 1611
is still 1r"s"r$" b# r"!ogniHing in t," !r"itor t," 1o3"r%
u1on t," +ul+ill*"nt o+ t," !onition or t," "41iration o+ t,"
t"r*% o+ !lai*ing +ro* an# or all o+ t," "btors% t,at 1art
o+ t," obligation "++"!t" b# t,"s" !onitions.88 (S!a"$ola%
Coigo Ci$il Co*"ntao # Con!orao% Vol. 1A% 11. B??.
B?1).
(6) Cas"
In!,austi M Co. $. Kulo
9@ P,il. ACB
FACTS' A% 7% C% D% an E borro3" *on"# +ro* F. T,"
!ontra!t sti1ulat" soliar# on"% an t," "btors 3"r" boun
un"r i++"r"nt t"r*s an !onitions. F broug,t an a!tion to
r"!o$"r +ro* A% 3,os" obligation 3as alr"a# u". A !lai*s t,at
," !annot b" *a" to 1a# b"!aus" t," obligations in!urr" b#
,is soliar# !o."btors 3"r" not #"t u". Issu"' I,"n t," "btors
o+ a soliar# obligation ar" boun b# i++"r"nt t"r*s an !oni.
tions% *a# t," !r"itor su" on" o+ t,"*J
HELD' K"s% t," !r"itor *a# su" t," on" 3,os" s,ar" ,as
alr"a# b"!o*" u" an "*anabl" but t," !r"itor !annot
r"!o$"r #"t +ro* t," "btor su"% t," s,ar"s o+ t," ot,"r "btors%
until t," !onitions or t"r*s o+ t," ot,"rs ,a$" alr"a# b""n
+ul+ill". In ot,"r 3ors% F *a# r"!o$"r no3 +ro* A onl# A8s
s,ar"2 an 3,"n t," !onitions an t"r*s ,a$" b""n +ul+ill"
+or t," s,ar"s o+ 7% C% D% an E% t," !r"itor F !an r"!o$"r t,"ir
s,ar"s +ro* A. T,is% a+t"r all% is still a soliar# obligation.
(9) Probl"*
In 6??@% A% 7% an C boun t,"*s"l$"s in soliu* to gi$" N
P9??%??? subj"!t to t," +ollo3ing sti1ulations' A to 1a# in 6??52
7% i+ ," 1ass"s t," bar2 C% in 6??C.
(a) In 6??5% ,o3 *u!, !an N "*an +ro* AJ
ANS.' Onl# P1??%???. Sin!" t,is is soliar#% N ,as a
rig,t to P9??%??? (t," 3,ol") &IN;S 78s s,ar" o+ P1??%???
an C8s s,ar" o+ P1??%???% or a total o+ onl# P1??%???. In
6??C% N !an !oll"!t +ro* A t," P1??%??? !orr"s1oning to
@99
Art. 1611
C. T," *o*"nt 7 1ass"s t," bar% N !an also !oll"!t +ro*
A% 78s s,ar" o+ P1??%???.
@9@
Arts. 1616.1619
(b) Su11os" N inst"a *a" a "*an on C in 6??5% ,o3 *u!,
!an ," !oll"!t +ro* CJ
ANS.' Onl# P1??%???% t," s,ar" !orr"s1oning to A%
b"!aus" C8s o3n s,ar" ,as not #"t *atur" an 7 ,as not
#"t 1ass" t," bar.
FNOTE' In bot, 1robl"*s% t," rul" is t,at t," 3,ol"
soliar# obligation !an b" r"!o$"r" +ro* ANK o+ t," soli.
ar# "btors &IN;S t," s,ar" o+ t,os" 3it, un*atur"
!onitions or t"r*s. (S"" B &anr"sa 6?9).G
Art. 1616. Ea!, on" o+ t," soliar# !r"itors *a# o 3,at.
"$"r *a# b" us"+ul to t," ot,"rs% but not an#t,ing 3,i!,
*a# b" 1r"jui!ial to t," latt"r.
CO&&ENT'
Soliar# Cr"itors &a# Do ;s"+ul% Not Pr"jui!ial A!ts
(a) E4a*1l" o+ 7"n"+i!ial A!t 0 To int"rru1t t," running o+
1r"s!ri1tion% t," a!t o+ on" soliar# !r"itor in *a<ing a
jui!ial "*an u1on an# o+ t," soliar# "btors is su+.
+i!i"nt. T," la3 1ro$i"s t,at' -T," 1r"s!ri1tion o+ a!tions
is int"rru1t" 3,"n t,"# ar" +il" b"+or" t," Courts./ (Art.
1155% 1st !laus"% Ci$il Co").
(b) Pr"jui!ial A!ts 0 s,oul not b" 1"r+or*"% ot,"r3is"%
t,"r" 3ill b" liabilit# +or a*ag"s. Ho3"$"r% in t," !as" o+
r"*ission or !ononation (3,i!, is r"all# 1r"jui!ial)% t,"
soliar# !r"itor is allo3" to so r"*it% an t," obligation
is "4tinguis,"% 3it,out 1r"jui!" to ,is liabilit# to t,"
ot,"r !r"itors. (S"" Art. 1615% Ci$il Co").
Art. 1619. A soliar# !r"itor !annot assign ,is rig,ts
3it,out t," !ons"nt o+ t," ot,"rs.
CO&&ENT'
(1) >"n"ral 5ul" About Non.Assign*"nt o+ 5ig,ts b# Soli.
ar# Cr"itor
@95
Arts. 1616.1619
T," soliar# !r"itor !annot assign ,is rig,ts.
@96
Art. 161@
E4!"1tion'
H" is allo3" i+ all t," ot,"rs !ons"nt.
5"ason +or t," La3'
Ess"ntiall#% a soliar# obligation i*1li"s *utual ag"n!#
an *utual !on+i"n!". S,oul t," assign"" or substitut" o a!ts
3,i!, 3oul 1r"jui!" t," ot,"rs (as 3,"n ," abs!ons a+t"r
r"!"i$ing 1a#*"nt)% t,"r" is no oubt t,at t," ot,"r !r"itor8s
rig,t ar" "nang"r"% ,"n!"% t," n"!"ssit# o+ t,"ir !ons"nt.
(6) Criti!is* b# =usti!" =.7.L. 5"#"s
-T," rul" (o+ non.assign*"nt 3it,out t," ot,"r8s !ons"nt)
is =;STIFIA7LE an 1la!"s an unn"!"ssar# r"stri!tion on t,"
rig,ts o+ t," soliar# !o.!r"itors u1on ,is s,ar". T," r"ason
b",in it s""*s to b" t,at "a!, !r"itor r"1r"s"nts t," ot,"rs
an% t,"r"+or"% *ust ,a$" t," !on+i"n!" o+ t," latt"r. 7ut in
t," +irst 1la!"% !on+i"n!" b"t3""n !o.!r"itors !annot 1ro1"rl#
b" sai to "4ist "4!"1t in t," !as" o+ a soliar# !r"it b# !ontra!t
(not" t,at t," la3 is t," on" t,at i*1os"s soliarit# in so*" obli.
gations% not t," *utual agr""*"nt o+ t," 1arti"s). In t," s"!on
1la!"% r"1r"s"ntation (b# "a!, !r"itor) o+ t," soliar# !r"itors
is !r"at" b# la3 an not b# !ons"nt or agr""*"nt o+ t," 1arti"s.
I+ ang"r is s""n in t," 1ossibl" *is+"asan!" o+ t," assign""% t,"
r"*"# is not t," 1aral#Hation o+ t," 1ro1ri"tar# rig,ts to t,"
soliar# !r"itor% but to i*1os" u1on ,i* a subsiiar# r"s1onsi.
bilit# +or t," a!ts o+ t," assign""% si*ilar to t,at o+ t," ag"nt +or
t," a!ts o+ sub.ag"nt un"r Art. 1BA6./ T,is is &anr"sa8s $i"3
in ,is !o**"nt to Art. 11@1 o+ t," Co" o+ 1BBA. So t,at Art.
1619 s,oul ,a$" b""n *a" to r"a' -A soliar# !r"itor 3,o
assigns ,is rig,ts 3it,out t," !ons"nt o+ ,is !o.!r"itors s,all
ans3"r subsiiaril# +or an# 1r"jui!" !aus" to t," latt"r b#
t," assign"" in !onn"!tion 3it, t," !r"it./ (La3#"r8s =ournal%
Obs"r$ations on t," n"3 Ci$il Co"% =an. 91% 1A51% 1. @B).
Art. 161@. T," "btor *a# 1a# an# on" o+ t," soliar#
!r"itors2 but i+ an# "*an% jui!ial or "4trajui!ial% ,as
@9C
Art. 161@
b""n *a" b# on" o+ t,"*% 1a#*"nt s,oul b" *a" to ,i*.
@9B
Art. 161@
CO&&ENT'
(1) To I,o* D"btor &ust Pa#
(a) to an# o+ t," soliar# !r"itors
(b) "4!"1tion 0 1a#*"nt *ust b" *a" to soliar# !r"itor
3,o *a" a "*an (jui!ial or "4trajui!ial)
(6) Probl"*s
(a) A an 7 ar" soliar# "btors o+ C% D% an E% soliar# !r"i.
tors. &a# A 1a# C t," 3,ol" obligationJ
ANS.' K"s% 1ro$i"% no jui!ial or "4trajui!ial "*an
,a b""n *a" b# "it,"r D or E.
(b) A an 7 ar" soliar# "btors o+ C% D% an E% soliar# !r"i.
tors. E *a<"s jui!ial "*an. T,"r" is no "4trajui!ial
"*an u1on A. To 3,o* s,oul A 1a#J
ANS.' Onl# E% 3,o ,a *a" t," jui!ial "*an.
Pa#*"nt to an# ot,"r !r"itor 3ill not "4tinguis, t," ob.
ligation "4!"1t inso+ar as t," 1a#""8s s,ar" is !on!"rn".
(!) A an 7 ar" soliar# "btors o+ C% D% an E% soliar# !r"i.
tors. C *a<"s a jui!ial "*an on A. Can D an E su"
AJ
ANS.' In t," *"anti*"% no% b"!aus" C is su11os" to
b" r"1r"s"nting alr"a# D an E. I+ jug*"nt is r"n"r"
against A% an A o"s not ,a$" "noug, *on"#% t,"n D% E%
or C (ini$iuall# or !oll"!ti$"l#) *a# still su" 7 +or t,"
r"*ain"r. 7ut it is "ss"ntial t,at t," +irst a!tion b" +irst
t"r*inat".
() A an 7 ar" soliar# "btors o+ C% D% an E. C *a<"s an
"4trajui!ial "*an u1on A% 3,o o"s not 1a#. Can D an
E su" (jui!ial "*an) AJ
ANS.' Alt,oug, stri!tl# s1"a<ing% t," ans3"r *a#
b" in t," NE>ATIVE sin!" un"r t," la3 1a#*"nt *ust
b" *a" to C% 3,o ,a *a" t," "4trajui!ial "*an%
still t," la3 s,oul not b" !onstru" to "++"!t an absurit#
@9A
Art. 161@
in t,at D an E 3oul b" !o*1"ll" to just stan b# il#%
sin!" C o"s not institut" an# jui!ial a!tion. Sin!" C8s a!t
@@?
Art. 1615
(or ina!tion) is 1r"jui!ial to D an E% t," t3o (D an E)
s,oul b" allo3" to *a<" t," jui!ial "*an. (S"" Art.
1616% Ci$il Co").
(") A an 7% soliaril# "btors% ar" in"bt" to C% D% an E%
soliar# !r"itors. C "4trajui!iall# "*ans +ro* A% but
7 (u1on 3,o* no "*an ,as b""n *a")% 1a#s t," 3,ol"
"bt to E. Is 7 allo3" to o t,at% an is t," soliar# obli.
gation "4tinguis,"J
ANS.' K"s% +or a+t"r all no "*an ,a b""n *a" b#
C u1on 7. It is onl# A t,at is boun% not 7. (S"" B &anr"sa
61?).
Art. 1615. No$ation% !o*1"nsation% !on+usion or r"*is.
sion o+ t," "bt% *a" b# an# o+ t," soliar# !r"itors or
3it, an# o+ t," soliar# "btors% s,all "4tinguis, t,"
obligation% 3it,out 1r"jui!" to t," 1ro$ision o+ Arti!l"
161A.
T," !r"itor 3,o *a# ,a$" "4"!ut" an# o+ t,"s" a!ts%
as 3"ll as ," 3,o !oll"!ts t," "bt% s,all b" liabl" to t,"
ot,"rs +or t," s,ar" in t," obligation !orr"s1oning to
t,"*.
CO&&ENT'
(1) E++"!t o+ No$ation
No$ation is t," *oi+i!ation o+ an obligation b# !,anging
its obj"!t or 1rin!i1al !onitions% or b# substituting t," 1"rson
o+ t," "btor% or b# subrogating t," 1"rson o+ t," "btor% or b#
subrogating a t,ir 1"rson in t," rig,ts o+ !r"itor. (Art. 16A1%
Ci$il Co").
(a) E4a*1l"'
A an 7 ar" soliaril# liabl" to N an K% soliar# !r"itors%
+or t," 1a#*"nt o+ PB??%???. A an N agr"" t,at inst"a
o+ 1a#ing PB??%???% A 3ill just 1aint N8s ,ous" (in!luing
!osts o+ t," 1oints to b" us"). H"r" t," soliar# obligation
o+ 1a#ing PB??%??? is "4tinguis," but a n"3 on"% t,at o+
@@1
Art. 1615
1ainting N8s ,ous"% ,as aris"n. I+ 7 i not !ons"nt to t,"
no$ation% 7 3ill not b" boun to N an K in an# 3a#% an
*or"o$"r% 3ill not b" oblig" to gi$" A an#t,ing "4!"1t
inso+ar as ," (7) ,as b""n b"n"+it". ;1on t," ot,"r ,an%
@@6
Art. 1615
onl# N 3ill b" allo3" to 1r"jui!" ,is !o.!r"itor K% so N
*ust r"i*burs" K +or P@??%??? (3,i!, is r"all# K8s s,ar"
o+ t," !r"it). (Art. 1615% 6n 1ar.).
(b) A an 7 ar" soliar# "btors o+ N. I+ A is grant" an "4t"n.
sion o+ ti*" 3it,in 3,i!, to 1a#% is 7 r"l"as" +ro* t,"
obligationJ
ANS.' No. (S"" P,il. >uarant# $. =os"% O.>. Aug. 16%
1A@1% 1. 1@C5). T," onl# "++"!t is t,is' i+ N su"s 7% 7 3ill 1a#
t," 3,ol" "bt *inus t," s,ar" o+ A. I,"n t," "4t"n"
1"rio t"r*inat"s% N !an "*an t," r"*aining balan!"
(A8s s,ar") +ro* "it,"r A or 7. An i+ 7 1a#s again% 7 3ill
no3 ,a$" t," rig,t to !oll"!t r"i*burs"*"nt +ro* A% +or
A8s s,ar". (S"" In!,austi an Co. $. Kulo% 9@ P,il. ACB).
FNOTE' T," rul" is i++"r"nt in sur"t#s,i1% 3,"r"
alt,oug, t," sur"t# is also% in a 3a#% a soliar# "btor%
an "4t"nsion o+ ti*" to t," 1rin!i1al "btor 3it,out t,"
sur"t#8s !ons"nt 3ill r"l"as" t," sur"t# +ro* t," !ontra!t.
(S"" P,il. Nat. 7an< $. V"ragut,% 5? P,il. 659).G
(6) E++"!t o+ Co*1"nsation
Co*1"nsation is t,at 3,i!, ta<"s 1la!" 3,"n t3o 1"rsons%
in t,"ir o3n rig,t% ar" !r"itors an "btors o+ "a!, ot,"r. (Art.
16CB% Ci$il Co") 0 (as 3,"n A o3"s 7 P1%???%??? an 7 o3"s
A P1%???%???). Co*1"nsation *a# b" total or 1artial% "1"n.
ing u1on t," a*ount in$ol$". Total !o*1"nsation o+ !ours"
auto*ati!all# "4tinguis,"s t," obligation% 3,"t,"r <no3n or
un<no3n to t," 1arti"s. (S"" Art. 16A?% Ci$il Co").
(a) E4a*1l" o+ Total Co*1"nsation in Conn"!tion 3it, Soli.
ar# Obligation'
A an 7 ar" soliar# "btors o+ N an K% soliar#
!r"i. tors to t," a*ount o+ P@??%???. 7ut N o3"s A
P@??%??? on a!!ount o+ a i++"r"nt obligation. H"r" 3"
,a$" a !as" o+ auto*ati! "4tinguis,*"nt o+ t," obligation
b# $irtu" o+ total !o*1"nsation. 7ut 7 s,oul not b"n"+it
!o*1l"t"l# sin!" it 3as A8s !r"it t,at 3as us" to
!o*1"nsat". So 7 o3"s A P6??%??? (,is s,ar" o+ t," "bt).
@@9
Art. 1615
;1on t," ot,"r ,an% K s,oul not b" 1r"jui!"% so K !an
r"!o$"r P6??%??? (,is !r"it) +ro* N. (Art. 1615% 1ar. 6).
@@@
Art. 1615
(b) E4a*1l" o+ Partial Co*1"nsation in Conn"!tion 3it, Soli.
ar# Obligations'
A an 7 ar" soliar# "btors o+ C to t," a*ount o+
P6%???%???% but C is in"bt" to A +or P5??%???. T,is is a
!as" o+ 1artial !o*1"nsation% an t,"r"+or" t," soliar#
obligation a*ounting to P1%5??%??? still subsists.
(9) E++"!t o+ Con+usion (or &"rg"r)
Con+usion or *"rg"r is t,at 3,i!, ta<"s 1la!" 3,"n t,"
!,ara!t"rs o+ !r"itor an "btor ar" *"rg" in t," sa*" 1"r.
son (Art. 16C5% Ci$il Co")% as 3,"n *# !,"!< in t," !ours" o+
n"gotiation% is "$"ntuall# "nors" to *".
E4a*1l"'
A an 7 *a" a n"gotiabl" 1ro*issor# not" in +a$or o+ C
an D% 3,"r"b# A an 7 boun t,"*s"l$"s soliaril# to C an
D% soliar# !r"itors. C an D "nors" t," not" in +a$or o+ E2
E in +a$or o+ F2 F in +a$or o+ A. Noti!" t,at A% 3,o is a "btor%
no3 b"!o*"s a !r"itor. T,"r" is *"rg"r or !on+usion o+ rig,ts
,"r"2 t," soliar# obligation is "4tinguis,"2 but 7 is in"bt"
to A +or ,is (78s) s,ar" o+ t," "bt.
(@) E++"!t o+ 5"*ission (or Iai$"r)
5"*ission or 3ai$"r is t,at a!t o+ lib"ralit# 3,"r"b# a
!r"itor !onon"s t," obligation o+ t," "btor2 t,at 3,"r" t,"
!r"itor t"lls t," "btor to -+org"t about t," 3,ol" t,ing./ (S""
Art. 16C?% Ci$il Co"). (5"*ission *a# b" total or 1artial).
(a) E4a*1l" o+ Total 5"*ission'
A an 7 ar" soliar# "btors o+ N an K% soliar#
!r"itors to t," a*ount o+ P@ *illion. N t"lls A t,at ,"
3as 3ai$ing t," 3,ol" obligation. H"r"% t," total r"*is.
sion !o*1l"t"l# "4tinguis,"s t," 3,ol" obligation% 3it,out
1r"jui!" to K !oll"!ting +ro* N ,is (K8s) s,ar" o+ t," !r"it
o+ P6 *illion% ot,"r3is" N8s r"*ission 3oul 1r"jui!" K.
;1on t," ot,"r ,an% 7 o"s not ,a$" to r"i*burs" A +or
an#t,ing% +or a+t"r all t," r"*ission 3as a gratuitous a!t%
@@5
Art. 1615
an A i not ,a$" to gi$" an#t,ing to t," !r"itors. (S""
B &anr"sa% 11. 665.666).
@@6
Art. 1616
(b) E4a*1l" o+ Partial 5"*ission'
A% 7% an C ar" soliar# "btors o+ N in t," a*ount
o+ P9 *illion. N t,"n *a" a "*an +ro* A but !oll"!t"
onl# P6 *illion b"!aus" ," (N) 3as r"*itting A8s s,ar" (o+
P1 *illion). Ho3 *u!, !an A r"!o$"r +ro* 7 an CJ
ANS.' Onl# P1 *illion +ro* "a!, b"!aus" t," soliar#
"bt o+ P9 *illion ,a b""n r"u!" b# 1artial r"*ission
to onl# P6 *illion.
FNOTE' It +ollo3s% in t," "4a*1l" gi$"n% t,at A !an
b" r"i*burs" t," 3,ol" P6 *illion (1lus int"r"st in t,"
1ro1"r !as")% an t,"r"+or" it is as i+ A i not ,a$" to 1a#
+ro* ,is o3n 1o!<"t. T,is is but just b"!aus" a+t"r all% A8s
s,ar" ,a b""n r"*itt". T,is "4a*1l" is also a !orr"!t il.
lustration o+ t," rul" t,at a 1artial r"*ission b"n"+its ALL
in t,at t," soliar# "bt is i*inis,"% so t,at i+ A ,a not
b""n abl" to 1a#% or ,a t," !r"itor !,os"n to !oll"!t +ro*
"it,"r 7 or C% ," !an "*an not P9 *illion but onl# P6
*illion. (S"" In!,austi M Co. $. Kulo% 9@ P,il. ACB).G
(NOTE' Alt,oug, +ro* sai $i"31oint all ,a b""n
b"n"+it"% it s,oul b" not" t,at t," ini$iual s,ar"s o+
7 an C ,a$" NOT r"all# b""n i*inis,".)
(NOTE' ;n"r Art. 161A% i+ t," s,ar" o+ a soliar#
"btor is r"*itt" b# t," !r"itor a+t"r anot,"r soliar#
"btor ,a 1ai t," 3,ol" obligation% t," r"*ission is
us"l"ss b"!aus" t,"r" 3as r"all# not,ing *or" t," !r"itor
!oul r"*it in $i"3 o+ t," !o*1l"t" 1a#*"nt. In su!, a !as"%
t," "btor 3,os" s,ar" 3as r"*itt" !an still b" *a" to
r"i*burs" ,is s,ar" to t," 1a#or."btor. In+"r"ntiall#% ,a
r"*ission 1r"!"" 1a#*"nt% t," "btor 3,os" s,ar" ,as
b""n r"*itt" !annot b" *a" to r"i*burs" an#t,ing% +or
a+t"r all% t," 1a#or."btor 3ill ,a$" 1ai onl# t," balan!"
o+ t," "bt (a+t"r "u!ting t," s,ar" o+ t," "btors 3,o
,as r"!"i$" t," b"n"+it o+ t," r"*ission).
Art. 1616. T," !r"itor *a# 1ro!"" against an# on" o+
t," soliar# "btors or so*" or all o+ t,"* si*ultan"ousl#.
T," "*an *a" against on" o+ t,"* s,all not b" an
@@C
Art. 1616
obsta!l" to t,os" 3,i!, *a# subs"Eu"ntl# b" ir"!t"
against t," ot,"rs% so long as t," "bt ,as not b""n +ull#
!oll"!t".
@@B
Art. 1616
CO&&ENT'
(1) Against I,o* Cr"itor &a# Pro!""
Against an#% so*"% or all o+ t," soliar# "btors 0 si*ul.
tan"ousl#.
Constant" A*or " Castro $. CA
>5 11B9B% =ul. 1B% 6??6
I,"n t," la3 "41r"ssl# 1ro$i"s +or soliarit# o+ t," obli.
gation% as in t," liabilit# o+ !o.1rin!i1als in a !ontra!t o+ ag"n!#%
"a!, obligor *a# b" !o*1"ll" to 1a# t," "ntir" obligation. T,"
ag"nt *a# r"!o$"r t," 3,ol" !o*1"nsation +ro* an# on" o+ t,"
!o.1rin!i1als in a !ontra!t o+ ag"n!#% "a!, obligor *a# b" !o*.
1"ll" to 1a# t," "ntir" obligation. T," ag"nt *a# r"!o$"r t,"
3,ol" !o*1"nsation +ro* an# on" o+ t," !o.1rin!i1als% as in t,is
!as".
In"" Art. 1616 o+ t," Ci$il Co" 1ro$i"s t,at a !r"itor
*a# su" an# o+ t," soliar# "btors. Soliarit# o"s not *a<"
a soliar# obligor an inis1"nsabl" 1art# in a suit +il" b# t,"
!r"itor. Art. 1616 sa#s t,at t," !r"itor *a# 1ro!"" against
an#on" o+ t," soliar# "btors or so*" or all o+ t,"* si*ultan".
ousl#.
(6) E++"!t o+ Not Pro!""ing Against All
I+ t," !r"itor su"s onl# on"% or t3o% or s"$"ral o+ t,"
"btors (but not all) t,"r" is no 3ai$"r against t,os" not #"t
su". T,"# *a# b" 1ro!""" against lat"r. (S"" Art. 16162 s""
also >u"rr"ro $. Court o+ A11"als% L.66966% O!t. 9?% 1A6A).
(9) A11li!abilit# o+ Art. 1616
Not" t,at Art. 1616 a11li"s onl# to soliar# obligations%
not to joint on"s% +or in t," latt"r% +ailur" to !oll"!t +ro* on"
joint "btor ,is s,ar" o"s not aut,oriH" t," !r"itor to 1ro!""
against t," ot,"rs% r"garing t," insol$"nt "btor8s s,ar". (S""
Luna $. Ar!"nas% 9@ P,il. B?).
P,il. National 7an< $. Con!"1!ion &ining Co.% "t al.
L.16A6B% =ul. 91% 1A66
@@A
Art. 1616
FACTS' In a soliar# obligation "$i"n!" b# a 1ro*is.
sor# not"% t," soliar# "btors 3"r" t," Con!"1!ion &ining Co.%
@5?
Art. 1616
Vi!"nt" L. L"gara% an =os" S. Sart". L"gara 3as not su"%
,o3"$"r% b"!aus" ," ,a i" b"+or" t," suit b"gan. T," ot,"r
"btors t,"n as<" t,at t," "stat" o+ L"gara b" in!lu" as a
1art#."+"nant.
HELD' T," "stat" o+ L"gara o"s not ,a$" to b" su"
sin!" un"r Art. 1616% t," !r"itor or 1a#"" o+ t," 1ro*issor#
not" *a# su" ANK o+ t," soliar# "btors.
P,il. National 7an< $. Nu"$as
L.61655% No$. 6A% 1A65
Art. 1616 a11li"s "$"n i+ t," suit is +or t," r"$i$al o+ a
jug*"nt. H"n!"% i+ in t," jug*"nt% all t," "btors 3"r" ".
!lar" -jointl# an s"$"rall# liabl"%/ t," "ntir" jug*"nt *a# b"
"n+or!" against ANK o+ t,"*.
O1"rators In!or1orat" $. A*"ri!an 7is!uit Co.% In!.
>5 9@C6C% O!t. 69% 1ABC
E$"n i+ t," soliar# natur" o+ t," "btor8s liabilit# is s"l+.
"$i"nt% t," !r"itor !annot isr"gar an arbitration !laus"
sti1ulat" in t," !ontra!ts. Soliarit# o"s not *a<" a soliar#
obligor an inis1"nsabl" 1art# in a suit +il" b# t," !r"itor.
(@) Passi$" Soliarit#
Art. 1616 a11li"s to 3,at is !all" 1assi$" soliarit# (soli.
arit# a*ong t," "btors). It !an also a11l# to *i4" soliar.
it#.
(5) Passi$" Soliarit# an Sur"t#s,i1
(a) Si*ilariti"s
1) 7ot, t," soliar# "btor an t," sur"t# guarant""
+or anot,"r 1"rson.
6) 7ot, !an "*an r"i*burs"*"nt.
(b) Di++"r"n!"s
1) T," soliar# "btor is in"bt" +or ,is o3n s,ar"
@51
Art. 1616
onl#2 t," sur"t# is in"bt" onl# +or t," s,ar" o+ t,"
1rin!i1al "btor.
@56
Art. 1616
6) H"n!"% t," soliar# "btor !an b" r"i*burs" 3,at
," ,as 1ai &IN;S ,is o3n s,ar"2 t," sur"t# !an b"
r"i*burs" +or "$"r#t,ing ," 1ai.
9) I+ a soliar# "btor r"!"i$"s an "4t"nsion o+ t," 1"rio
+or 1a#*"nt% t," ot,"rs ar" still liabl" +or t," 3,ol"
obligation no3% *inus t," s,ar" o+ t," "btor 3,o ,as
r"!"i$" t," "4t"nsion (but sa*" s,ar" !an b" "*an.
abl" also +ro* t,"* u1on t," arri$al o+ t," "4t"n"
t"r*). I+ a 1rin!i1al "btor r"!"i$"s an "4t"nsion%
3it,out t," sur"t#8s !ons"nt% t," sur"t# is r"l"as".
(S"" P,il. >uarant# $. =os"% O.>.% Aug. 16% 1A@1% 1.
1@C5 an St"$"nson $. Cli*a!o% 96 O.>. 15C1).
(6) E4a*1l"s
(a) A an 7 ar" soliar# "btors o+ C to t," a*ount o+
P1%???%???. Eit,"r A or 7 *a# b" *a" to 1a# t," 3,ol"
P1%???%??? but t," 1a#"r !an !oll"!t ,al+ (P5??%???) +ro*
t," ot,"r (sin!" "a!, is a 1rin!i1al "btor).
(b) A borro3" +ro* C P1%???%???. 7 a!t" as sur"t# (soli.
ar# guarantor) +or A. C !an "*an P1%???%??? +ro*
"it,"r A or 7. 7ut i+ 7 is *a" to 1a#% 7 !an "*an t,"
3,ol" P1%???%??? +ro* A sin!" 7 is not r"all# a 1rin!i1al
"btor.
FNOTE' A guarantor bins ,i*s"l+ subsiiaril# to
ans3"r +or t," 1rin!i1al "btor% in !as" o+ insol$"n!#2
,"n!"% t," !r"itor !annot i**"iat"l# 1ro!"" against
t," guarantor2 a sur"t# is a guarantor 3,o bins ,i*s"l+
soliaril# 3it, t," 1rin!i1al "btor% ,"n!"% !r"itor !an
1ro!"" against t," sur"t# i**"iat"l# (t,at is% 3it,out
+irst "4,austing t," 1ro1"rti"s o+ t," 1rin!i1al "btor). (S""
Art. 6?@C% Ci$il Co").G
(C) Probl"*s
(a) A an 7 ar" soliar# "btors o+ N an K to t," a*ount o+
P@ *illion. N su" A but r"!o$"r" onl# P9.5 *illion. &a#
K still su" 7 +or P5??%???J
@59
Art. 1616
ANS.' K"s% b"!aus" t," "bt ,as not #"t b""n "ntir"l#
satis+i".
@5@
Art. 161C
(b) A an 7 ar" soliar# "btors o+ N an K. N su"s A but A
3ins t," !as" (+or "4a*1l"% on t," groun t,at t," subj"!t
*att"r is ill"gal). Can K still su" 7J
ANS.' No *or" b"!aus" ,"r" t," 1rin!i1l" o+ r"s ju.
i!ata !l"arl# a11li"s. Sin!" N 3as r"1r"s"nting K% t,"r"
3oul b" i"ntit# o+ 1arti"s.
Art. 161C. Pa#*"nt *a" b# on" o+ t," soliar# "btors
"4tinguis,"s t," obligation. I+ t3o or *or" soliar# "btors
o++"r to 1a#% t," !r"itor *a# !,oos" 3,i!, o++"r to a!!"1t.
H" 3,o *a" t," 1a#*"nt *a# !lai* +ro* ,is !o.
"btors onl# t," s,ar" 3,i!, !orr"s1ons to "a!,% 3it, t,"
int"r"sts +or t," 1a#*"nt alr"a# *a". I+ t," 1a#*"nt is
*a" b"+or" t," "bt is u"% no int"r"st +or t," int"r$"ning
1"rio *a# b" "*an".
I,"n on" o+ t," soliar# "btors !annot% b"!aus" o+
,is insol$"n!#% r"i*burs" ,is s,ar" to t," "btor 1a#ing t,"
obligation% su!, s,ar" s,all b" born" b# all ,is !o."btors% in
1ro1ortion to t," "bt o+ "a!,.
CO&&ENT'
(1) E++"!ts o+ Pa#*"nt
T," Arti!l" gi$"s t," "++"!ts o+ 1a#*"nt.
(6) OPa#*"nt8 D"+in"
Pa#*"nt is on" o+ t," 3a#s b# 3,i!, an obligation is "4tin.
guis," an !onsists in t," "li$"r# o+ t," t,ing or t," r"nition
o+ t," s"r$i!" 3,i!, is t," obj"!t o+ t," obligation.
(9) Probl"*s
(a) I+ a soliar# "btor 1a#s t," !r"itor% 3,at ,a11"ns to t,"
obligationJ
ANS.' T," obligation is "4tinguis,". -Pa#*"nt *a"
@55
Art. 161C
b# on" o+ t," soliar# "btors "4tinguis,"s t," obligation./
(1st s"nt"n!"% Art. 161C% Ci$il Co").
@56
Art. 161C
(b) A% 7% an C ar" t," soliar# "btors o+ D. A an 7 o++"r
to 1a#. Is t," !r"itor allo3" to !,oos" 3,i!, o++"r to a!.
!"1tJ
ANS.' K"s. -I+ t3o or *or" soliar# "btors o++"r to
1a#% t," !r"itor *a# !,oos" 3,i!, to a!!"1t./ (Art. 161C%
6n s"nt"n!"% Ci$il Co").
(!) Su11os" in 1robl"* (b)% alt,oug, A an 7 ,a$" o++"r" to
1a#% D n"$"rt,"l"ss *a<"s a "*an u1on C% is D allo3"
to o soJ
ANS.' E$"n i+ C ,as not o++"r" to 1a#% it is b"li"$"
t,at D 3oul b" allo3" to *a<" a "*an u1on C. -T,"
!r"itor *a# 1ro!"" against an# on" o+ t," soliar# "bt.
ors./ (1st s"nt"n!"% Art. 1616% Ci$il Co"). 7ut% o+ !ours"%
it 3oul b" a +oolis, !r"itor 3,o 3oul r"+us" to a!!"1t
1a#*"nt +ro* on" 3,o o++"rs it.
() A% 7% C% an D ar" soliar# "btors o+ E to t," a*ount o+
P1.6 *illion. A 1a#s E t," 3,ol" P1.6 *illion. Is A "ntitl"
to r"i*burs"*"nt +ro* 7% C% an DJ
ANS.' K"s% r"i*burs"*"nt 1lus int"r"st +ro* t," at"
o+ 1a#*"nt.
(@) Natur" o+ Liabilit# +or 5"i*burs"*"nt
A% 7% C% an D ar" soliar# "btors o+ E to t," a*ount o+
P1.6 *illion. A 1ai E t," 3,ol" a*ount o+ P1.6 *illion. It is
!l"ar t,at A is "ntitl" to r"i*burs"*"nt +or no3 A ,as b"!o*"
t," !r"itor +or r"i*burs"*"nt. Ar" 7% C% an D !onsi"r" t,"
soliar# "btors o+ AJ
ANS.' No. Iit, r"+"r"n!" to t," r"i*burs"*"nt 7% C% an
D ar" not soliar# "btors o+ A but *"r"l# joint "btors o+ A. It
is tru" t,at 7% C% an D% tog"t,"r 3it, A% us" to b" soliar#
"btors o+ E% but A8s 1a#*"nt to E o+ t," 3,ol" a*ount ,as
"4tinguis," t,at soliar# obligation% an 3,at r"*ains no3
is *"r"l# t," joint obligation o+ r"i*burs"*"nt. As a *att"r o+
+a!t% t," la3 1ro$i"s t,at' -H" 3,o *a" t," 1a#*"nt *a#
!lai* +ro* ,is !o."btors onl# t," s,ar" 3,i!, !orr"s1ons to
@5C
Art. 161C
"a!,% 3it, t," int"r"st +or 1a#*"nt alr"a# *a"./ (1st
s"nt"n!"% s"!on 1aragra1,% Art. 161C% Ci$il Co"). T,is !l"arl#
s,o3s t,at t,"
@5B
Art. 161C
soliar# obligation 3,i!, ,as b""n "4tinguis," ,as no3 b""n
!on$"rt" into a joint obligation +or r"i*burs"*"nt2 ot,"r3is"%
t," la3 3oul not ,a$" 1ro$i" t,at 3,at t," 1a#ing "btors
!an r"!o$"r is onl# t," 1ro1ortionat" s,ar"% 3it, int"r"st.
Sin!" originall# t,"r" 3"r" +our "btors% "a!, ,as a 1ro1or.
tional s,ar" o+ P9??%??? in t," obligation. H"n!"% A !an r"!o$"r
P9??%??? 3it, int"r"st +ro* "a!, o+ t," ot,"r t,r"".
It s,oul b" not"% ,o3"$"r% t,at t," liabilit# is not t,"
orinar# joint on"% +or in t," instant !as"% t," insol$"n!# o+ on"
*ust in t," *"anti*" b" s,oul"r" b# t," r"st. (Last 1ara.
gra1,% Art. 161C% Ci$il Co").
In!,austi M Co. $. Kulo
9@ P,il. ACB
FACTS' A% 7% C% D% E% an F 3"r" soliar# "btors o+ >
to t," a*ount o+ P659%@@5.@6. Lat"r in an agr""*"nt 3it, 7%
C% D% E% an F% t," "bt 3as r"u!" b# > to P665%???. > su"
A. 7"!aus" o+ t," 1artial r"*ission% A 3as *a" to 1a# onl#
P665%???. Issu"' Ho3 *u!, !an A r"!o$"r +ro* t," ot,"r soliar#
"btorsJ
HELD' A !an r"!o$"r t," 1ro1ortional s,ar"s o+ t," ot,"r%
not 3it, r"s1"!t to P659%@@5.@6 but 3it, r"s1"!t to P665%???%
t," a*ount as r"u!". Sin!" t,"r" ar" 6 soliar# "btors% ,"
!an r"!o$"r 1U6 o+ P665%??? +ro* "a!, 1lus int"r"st +ro* t,"
ti*" o+ 1a#*"nt.
(5) 7asis o+ t," 5ig,t to b" 5"i*burs"
T," +a!t o+ 1a#*"nt (an not t," original !ontra!t) is t,"
basis o+ t," rig,t to b" r"i*burs"% +or not until t,"n ,a ,"
t," rig,t to b" r"i*burs". H"n!"% t," obligation o+ t," ot,"rs
to r"i*burs" ,i* aris"s onl# +ro* t," ti*" 1a#*"nt is *a".
(Iilson $. 7"r<"n<ott"r% >5 L.@@C6% A1r. 6?% 1A59).
Iilson $. 7"r<"n<ott"r
A6 P,il. A1B
@5A
Art. 161C
FACTS' In 1A9B% t,r"" 1"rsons A% 7% an C sign" as soli.
ar# "btors a 1ro*issor# not" in +a$or o+ t," C,art"r" 7an<
@6?
Art. 161C
o+ Inia in t," a*ount o+ PA?%???. In 1A@@% uring t," =a1an"s"
o!!u1ation% 7 1ai t," 3,ol" a*ount in =a1an"s" not"s. In 1A5?
(a+t"r lib"ration)% A o++"r" to 1a# 7 ,is (A8s) s,ar" in t," obliga.
tion. T," issu" is 3,"t,"r P9?%??? or onl# P6?? (t," "Eui$al"nt
o+ P9?%??? un"r t," 7allant#n" s!al") *ust b" r"i*burs"%
!onsi"ring t,at 1a#*"nt b# 7 to t," ban< 3as in =a1an"s"
*on"#.
HELD' It ,as b""n ,"l in s"$"ral !as"s t,at a "bt !on.
tra!t" uring t," =a1an"s" o!!u1ation% an 1a#abl" on "*an
or uring t," o!!u1ation (but not a+t"r t," 3ar or at a s1"!i+i"
at" t,"r"a+t"r as to ini!at" t,at t," 1arti"s 3"r" s1"!ulating
on t," "ning or !ontinuation o+ t," 3ar) 3oul b" 1ai un"r
t," 7allant#n" s!al". In t,is !as"% t,"r"+or"% 3" ,a$" to +in
out 3,"n t," obligation o+ A to 7 3as !r"at"% 3,"t,"r it 3as
b"+or" t," 3ar or uring t," 3ar. I+ uring t," 3ar% t,"n t,"
7allant#n" s!al" s,oul b" su++i!i"nt. An our "!ision is t,at
in t,is !as"% t," obligation to r"i*burs" 3as *a" onl# uring
t," 3ar sin!" b"+or" 1a#*"nt b# 7% A 3as not #"t 78s "btor.
H"n!"% t," !orr"!t su* is P6??.
(6) Substitution o+ Parti"s
A% 7% an C ar" soliar# "btors o+ N 3,o su" all o+ t,"*.
I+ uring t," 1"n"n!# o+ t," !as"% A 1a#s N% in t," sa*" a!tion
A !an b" !,ang" +ro* "+"nant to 1lainti++ in substitution o+
N. T,is is to "nabl" A to !oll"!t r"i*burs"*"nt o+ !ontribution
+ro* 7 an C. (S"" 7an< o+ t," P,il. Islans $. &!Co#% 56 P,il.
B91).
(C) 7A5
A% 7% an C "4"!ut" jointl# an s"$"rall# a 1ro*issor#
not" +or P9??%??? in +a$or o+ D 1a#abl" a+t"r 6 *ont,s. ;1on
*aturit#% A an 7 r"+us" to 1a#. Is D "ntitl" to r"!o$"r +ro*
C t," P9??%???J In !as" o+ 1a#*"nt b# C% 3,at rig,t% i+ an#% ,as
," against A an 7J
ANS.' K"s% D !an g"t t," 3,ol" P9??%??? +ro* C% b"!aus"
C boun ,i*s"l+ in soliu*. I+ C 1a#s t," 3,ol" a*ount% 7 an
A 3ill "a!, b" liabl" to ,i* +or P1??%???. (S"" Arts. 1616 an
@61
Art. 161C
161C% Ci$il Co").
@66
Art. 161B
(B) P5O7LE&
A an 7 3"r" su" on a 1ro*issor# not" 3,i!, r"a as
+ollo3s' -&anila% &a# 1% 6??@. For $alu" r"!"i$"% 3"% t," un.
"rsign"% 1ro*is" soliaril# to 1a# C or ,is or"r% on or b"+or"
&a# 1% 6??5% t," su* o+ P1%???%???% 1lus an int"r"st o+ 6Q (Sg.)
A an 7./ S,oul 7 turn out to b" insol$"nt% *a# C r"!o$"r all
,is !lai* +ro* A 3,o is sol$"ntJ I,#J
ANS.' K"s% b"!aus" A ,a boun ,i*s"l+ soliaril#% 3it,out
1r"jui!"% o+ !ours"% to ,is r"!o$"ring lat"r on +ro* 7% t," s,ar"
o+ 7 in t," "bt% 1lus int"r"st +ro* t," at" o+ 1a#*"nt. (Art.
161C% Ci$il Co").
(A) ANOTHE5 P5O7LE&
A% 7% an C ar" joint an s"$"ral "btors o+ D. D allo3s C
an "4t"nsion o+ t3o #"ars 3it,in 3,i!, to 1a# ,is 1ortion o+ t,"
in"bt"n"ss. ;1on b"ing su" b# D% *a# A an 7 int"r1os" t,"
"+"ns" o+ t," "4t"nsion o+ t," ti*" grant" to CJ S,oul A an
7 "$"ntuall# 1a# t," "ntir" obligation% *a# t,"# !o*1"l C to
r"i*burs" t,"* 3it, ,is s,ar" 3it,out 3aiting +or t," t3o.#"ar
"4t"nsion grant" to DJ 5"asons.
ANS.' K"s% A an 7 !an s"t u1 t," "4t"nsion but onl# as
1artial "+"ns"% li*it" to C8s s,ar". H"n!"% t,"# s,oul no3
1a# ALL *inus C8s s,ar". (S"" In!,austi $. Kulo% 9@ P,il. ACB).
I+ t,"# 1ai ALL (3it,out "u!tions) t,"# *ust 3ait +or t,"
6.#"ar 1"rio b"+or" t,"# !an !o*1"l r"i*burs"*"nt +ro* C.
T,is is b"!aus" A an 7 *"r"l# st"11" into t," s,o"s o+ t,"
!r"itor D% an t,"r"+or" C !an 1l"a against t,"* t," "+"ns"
o+ "4t"nsion o+ 1a#*"nt.
Art. 161B. Pa#*"nt b# a soliar# "btor s,all not
"ntitl" ,i* to r"i*burs"*"nt +ro* ,is !o."btors i+ su!,
1a#*"nt is *a" a+t"r t," obligation ,as 1r"s!rib" or
b"!o*" ill"gal.
CO&&ENT'
(1) E++"!t o+ Pa#*"nt o+ Pr"s!rib" D"bt
Art. 161B
P1%???%???.
Art. 161A
T," "bt 1r"s!rib". 7ut A $oluntaril# 1ai C% n"$"rt,".
l"ss% b"!aus" A +"lt *orall# oblig" to so 1a#.
(a) &a# A r"!o$"r +ro* C 3,at ," ,as 1aiJ
(b) &a# A g"t an# r"i*burs"*"nt +ro* 7J
ANS.'
(a) A !annot r"!o$"r +ro* C 3,at ," ,as 1ai b"!aus" it 3as
$oluntaril# gi$"n a+t"r A <n"3 o+ t," 1r"s!ri1tion o+ t,"
"bt. T," la3 sa#s% -3,"n a rig,t to su" u1on a !i$il ob.
ligation ,as la1s" b# "4tin!ti$" 1r"s!ri1tion% t," obligor
!annot r"!o$"r 3,at ," ,as "li$"r" or t," $alu" o+ t,"
s"r$i!" ," ,as r"n"r".88 (Art. 1@6@% Ci$il Co"). (NOTE'
I+ 1a#*"nt ,a b""n *a" b# A to C% 3it,out A <no3ing
t,at t," "bt ,a 1r"s!rib"% A !an r"!o$"r +ro* C on t,"
basis o+ solutio in"biti.)
(b) A !annot g"t an# r"i*burs"*"nt +ro* 7 b"!aus" A 1ai t,"
"bt a+t"r it ,a 1r"s!rib". T," la3 sa#s% -Pa#*"nt b# a
soliar# "btor s,all not "ntitl" ,i* to r"i*burs"*"nt +ro*
,is !o."btors i+ su!, 1a#*"nt is *a" a+t"r t," obligation
,as 1r"s!rib" or b"!o*" ill"gal./ (Art. 161B% Ci$il Co").
(6) E++"!t o+ Pa#*"nt o+ an Ill"gal Obligation
A an 7 ar" soliaril# boun to gi$" C so*" rugs 3ort,
P1%???%???. Lat"r% t," la3 1ro,ibits t," transa!tion o+ sai
rugs% an "!lar"s t," rugs to b" outsi" t," !o**"r!" o+
*an. Dno3ing t,is% A n"$"rt,"l"ss "li$"rs t," rugs to C. &a#
A no3 g"t r"i*burs"*"nt +ro* 7J
ANS.' No% A !annot g"t an# r"i*burs"*"nt +ro* 7 b"!aus"
A *a" t," 1a#*"nt a+t"r t," obligation ,a b"!o*" ill"gal.
Art. 161A. T," r"*ission *a" b# t," !r"itor o+ t,"
s,ar" 3,i!, a++"!ts on" o+ t," soliar# "btors o"s not
r"l"as" t," latt"r +ro* ,is r"s1onsibilit# to3ars t," !o.
"btors% in !as" t," "bt ,a b""n totall# 1ai b# an#on" o+
Art. 161A
t,"* b"+or" t," r"*ission 3as "++"!t".
Art. 161A
CO&&ENT'
(1) E++"!t o+ 5"*ission &a" A+t"r Total Pa#*"nt Ha Al.
r"a# E4tinguis," t," Obligation
T,is Arti!l" is "sign" to 1r"$"nt +rau an to gi$" justi!"
to t," 1a#ing "btor. (S"" B &anr"sa 666). E4a*1l"' A an 7
soliaril# o3" N P1%???%???. A 1ai N t," 3,ol" a*ount. Lat"r%
N r"*itt" 78s s,ar". Can A still r"!o$"r r"i*burs"*"nt o+
P5??%??? +ro* 7J
ANS.' K"s.
(6) 5"ason +or t," Pro$ision
Sin!" 1a#*"nt "4tinguis,"s t," obligation% t,"r" is not,ing
*or" to r"*it. (S"" Co**"nts un"r Art. 1615% Ci$il Co").
(9) Probl"*s
(a) A% 7% an C soliaril# o3" N P9 *illion. N r"*itt" C8s
s,ar". A% t,"r"+or"% 1ai lat"r onl# P6 *illion. Can A r".
!o$"r r"i*burs"*"ntJ
ANS.' K"s% but onl# +ro* 7 an not +ro* C% 3,os"
s,ar" ,a 1r"$iousl# b""n r"*itt". H"r"% r"*ission 3as
1r"$ious to t," 1a#*"nt.
(b) In 1robl"* (a)% ,o3 *u!, !an A r"!o$"r +ro* 7 an CJ
ANS.' Fro* 7% P1 *illion 3it, int"r"st. Fro* C% not,ing%
b"!aus" C8s s,ar" ,a b""n r"*itt".
(!) In 1robl"* (b)% su11os" 7 is insol$"nt% !an C b" *a" liabl"
in t," *"anti*" +or 1art o+ t," insol$"n!#J In ot,"r 3ors%
!an A g"t an#t,ing +ro* C% 3,os" s,ar" t," !r"itor ,a
r"*itt"J
ANS.' K"s% b"!aus" un"r Art. 161C% -3,"n on" o+ t,"
soliar# "btors !annot% b"!aus" o+ ,is insol$"n!#% r"i*.
burs" ,is s,ar" to t," "btor 1a#ing t," obligation% su!,
s,ar" *ust b" born" b# all ,is !o."btors in 1ro1ortion
to t," "bt o+ "a!,./ In ot,"r 3ors% "$"n i+ C8s s,ar" ,as
Art. 161A
b""n r"*itt" (an "$"n i+ ," t,"r"+or" o"s not ,a$" to
r"i*burs" +or ,is o3n s,ar") ," 3ill still ,a$" to b"ar 1art
Arts. 166?.1661
o+ t," bur"n o+ 78s insol$"n!#% b"!aus" t," !r"itor8s a!t
o+ lib"ralit# to3ars ,i* !annot "4!us" ,i* +ro* +ul+illing
,is l"gal ut# un"r t," 1ro$ision ,"r"inabo$" *"ntion".
T,us% 78s s,ar" o+ P1 *illion 3ill b" born" in t," *"anti*"
b# A an C% an C 3ill ,a$" to gi$" P5??%??? to A. Lat"r% C
!an r"!o$"r +ro* 7% s,oul t," latt"r8s +inan!"s i*1ro$".
Art. 166?. T," r"*ission o+ t," 3,ol" obligation% obtain"
b# on" o+ t," soliar# "btors% o"s not "ntitl" ,i* to r"i*.
burs"*"nt +ro* ,is !o."btors.
CO&&ENT'
(1) 5"*ission o+ t," I,ol" Obligation
T,is Arti!l" is a n"3 1ro$ision o+ t," Ci$il Co". 5"*ission%
it *ust b" born" in *in% is "ss"ntiall# gratuitous. Not" t,at
t,is Arti!l" a11li"s onl# 3,"n t," 3,ol" obligation is r"*itt".
(6) E4a*1l"
P1%???%???. C r"*itt" t," 3,ol" obligation 3,"n A o++"r" to
1a#. A ,"r" !annot g"t an# r"i*burs"*"nt +ro* 7 sin!" a+t"r
all% A i not 1a# an#t,ing to C. To allo3 t," !ontrar# 3oul b"
to inu!" +rau an to !ount"nan!" 1artialit#.
Art. 1661. I+ t," t,ing ,as b""n lost or i+ t," 1r"station
,as b"!o*" i*1ossibl" 3it,out t," +ault o+ t," soliar#
"btors% t," obligation s,all b" "4tinguis,".
I+ t,"r" 3as +ault on t," 1art o+ an# on" o+ t,"*% all
s,all b" r"s1onsibl" to t," !r"itor +or t," 1ri!" an t,"
1a#*"nt o+ a*ag"s an int"r"st% 3it,out 1r"jui!" to
t,"ir a!tion against t," guilt# or n"glig"nt "btor.
I+ t,roug, a +ortuitous "$"nt% t," t,ing is lost or t,"
1"r+or*an!" ,as b"!o*" i*1ossibl" a+t"r on" o+ t," soliar#
"btors ,as in!urr" in "la# t,roug, t," jui!ial or "4tra.
Arts. 166?.1661
jui!ial "*an u1on ,i* b# t," !r"itor% t," 1ro$isions o+
t," 1r"!"ing 1aragra1, s,all a11l#.
Art. 1661
CO&&ENT'
(1) E++"!t o+ Loss or I*1ossibilit#
(a) I+ 3it,out +ault 0 no liabilit#.
(b) I+ 3it, +ault 0 t,"r" is liabilit# (also +or a*ag"s an
int"r"st).
(!) Loss b"!aus" o+ a +ortuitous "$"nt AFTE5 "+ault 0 ,"r"%
t,"r" 3ill b" liabilit# b"!aus" o+ t," DEFA;LT.
(6) Probl"*s
(a) A an 7 ar" soliaril# oblig" to gi$" C t,is 1arti!ular
!ar. T," !ar 3as lost b# a +ortuitous "$"nt% an 3it,out
an# +ault on t," 1art o+ t," "btors. I,at ,a11"ns to t,"
obligationJ
ANS.' T," obligation is "4tinguis,". It is "ss"ntial
,"r"% ,o3"$"r% t,at t," "btors b" not guilt# o+ "+ault.
(b) I+ in 1robl"* (a)% t," !ar 3as lost t,roug, t," +ault o+ A%
an C *a<"s a "*an lat"r u1on 7% s,oul 7 b" liabl"
+or t," 1ri!" o+ t," !ar as 3"ll as a*ag"s or int"r"stJ
ANS.' K"s% 7 3ill still b" liabl" "$"n i+ ," 3as not at
+ault at all. 5"*"*b"r t,at a soliar# obligation i*1li"s
*utual ag"n!# an *utual !on+i"n!". T," la3 "41r"ssl#
*a<"s 7 liabl" in su!, a !as" bot, +or t," 1ri!" o+ t,"
!ar as 3"ll as a*ag"s or int"r"sts% but 7 !an lat"r on
r"!o$"r +ro* A t," 3,ol" o+ 3,at ," 1ai% +or ,a A not
b""n at +ault% t," obligation 3oul ,a$" b""n alr"a# "4.
tinguis,".
(!) A% 7% an C ar" soliar# "btors o+ D in an obligation to
gi$" a 1arti!ular !ar. D *a<"s an "4trajui!ial "*an
u1on A. A+t"r t," "*an% t," !ar 3as lost b# a +ortuitous
"$"nt. Is t," obligation "4tinguis,"J I+ not% 3,at is D8s
rig,tJ
ANS.' T," obligation is not "4tinguis," b"!aus" t,"
loss t,roug, a +ortuitous "$"nt o!!urr" a+t"r "+ault on
t," 1art o+ t," "btors ,a aris"n. D8s rig,t is to "4a!t t,"
Art. 1661
1ri!" o+ t," !ar +ro* an# o+ t,"*. T," "btors% ,o3"$"r%
3,o i not ,a$" a ,an in t," "+ault (7 an C) ,a$" t,"
Art. 1666
rig,t to r"!o$"r +ro* t,"ir !o."btor% A% 3,o a+t"r all% 3as
r"s1onsibl" u" to ,is "+ault.
Art. 1666. A soliar# "btor *a#% in a!tions +il" b# t,"
!r"itor% a$ail ,i*s"l+ o+ all "+"ns"s 3,i!, ar" "ri$"
+ro* t," natur" o+ t," obligation an o+ t,os" 3,i!, ar"
1"rsonal to ,i*% or 1"rtain to ,is o3n s,ar". Iit, r"s1"!t to
t,os" 3,i!, 1"rsonall# b"long to t," ot,"rs% ," *a# a$ail
,i*s"l+ t,"r"o+ onl# as r"gars t,at 1art o+ t," "bt +or
3,i!, t," latt"r ar" r"s1onsibl".
CO&&ENT'
(1) D"+"ns"s in A!tions Fil"
T,is Arti!l" a11li"s in ACTIONS +il" b# t," !r"itor.
(6) Dins o+ D"+"ns"s
(a) T,os" "ri$" +ro* t," natur" o+ t," obligation (t,is is a
!o*1l"t" "+"ns").
E4a*1l"s'
1) la!< o+ !onsi"ration or !aus"
6) absolut" si*ulation (as 3,"n t," !ontra!t is totall#
+i!titious)
9) ill"gal !onsi"ration
@) "4tinguis,*"nt o+ t," obligation (as 3,"n t," 3,ol"
"bt ,as b""n 1ai% r"*itt"% or ,as 1r"s!rib")
5) non.+ul+ill*"nt o+ t," sus1"nsi$" !onition (i+ *a"
u1on t," 3,ol" obj"!t or u1on all t," "btors)
6) Statut" o+ Fraus
C) 3,"n ALL t," "btors 3"r" in!a1a!itat" to gi$" !on.
s"nt (su!, as un"*an!i1at" *inors% insan"% iiots%
1"rsons un"r a ,#1noti! s1"ll)
B) 3,"n t,"r" ar" VICES OF CONSENT ($itiat" !on.
s"nt) on t," 1art o+ ALL t," "btors (su!, as 3,"n
Art. 1666
all 3"r" +or!" or inti*iat" or unul# in+lu"n!"
or 3"r" l" into "rror)
Art. 1666
(b) T,os" 1"rsonal to t," "btor su". (T,is is a !o*1l"t" ".
+"ns" g"n"rall#% but i+ t," "+"ns" is non.+ul+ill*"nt #"t o+ a
!onition or t," non.arri$al #"t o+ t," t"r*% t,is is onl# a
PA5TIAL "+"ns"% t,at is% ," 3ill still b" liabl" "4!"1t +or
,is o3n s,ar" in t," *"anti*"). (S"" In!,austi $. Kulo%
9@ P,il. ABC).
E4a*1l"s'
1) Vitiat" !ons"nt (as 3,"n ," 3as +or!"% "t!.) 0 CO&.
PLETE "+"ns".
6) In!a1a!it# to gi$" !ons"nt (as 3,"n ," is a *inor)
0 CO&PLETE "+"ns".
9) Non.+ul+ill*"nt o+ !onition i*1os" r"garing ,is
s,ar" (PA5TIAL "+"ns"% unl"ss 1ro$i" ot,"r.
3is").
@) Non.arri$al o+ t"r* (r"garing ,is s,ar" 0 PA5TIAL
"+"ns" 0 unl"ss 1ro$i" ot,"r3is").
(!) T,os" 1"rsonal to t," ot,"rs 0 sa*" as (b) 0 (Partial
"+"ns" r"garing s,ar" o+ ot,"rs in$ol$").
(9) E4a*1l"s
(a) A% 7% an C ar" soliaril# in"bt" to N +or t," s"lling o+
s,abu or t," sal" o+ 1ro1"rt# o+ 1ubli! o*inion. I+ A% 7%
or C is su"% non" !an b" ,"l liabl". T,is is a !o*1l"t"
"+"ns".
(b) A% 7% an C ar" soliaril# in"bt" to N +or P9 *illion but
A8s !ons"nt ,a b""n obtain" b# inti*iation.
1) I+ N su"s A% ,o3 *u!, 3ill A b" liabl" +orJ
ANS.' Not,ing% +or as to ,i*% t,is is a !o*1l"t"
"+"ns". A+t"r all% ," 3oul not ,a$" b""n in$ol$"
at all% ,a t,"r" b""n no inti*iation.
6) I+ N su"s 7% ,o3 *u!, 3ill 7 b" liabl" +orJ
ANS.' For t," 3,ol" P9 *illion &IN;S A8s
s,ar" (P1 *illion) i+ 7 1uts u1 A8s $itiat" !ons"nt
Art. 1666
as a "+"ns". Ha$ing onl# a PA5TIAL "+"ns"% 7 !an
still b" ,"l liabl" +or P6 *illion.
Art. 1666
P5O7LE&
On =un. 15% 6??5% N% K% an T "4"!ut" a 1ro*issor# not"
1ro*ising to 1a# 7 t," su* o+ P9%???%??? jointl# an s"$"rall#
3it, int"r"st o+ 1?Q 1"r annu* 3it,in 6 *ont,s. In an a!tion
b# 7 against N +or non1a#*"nt o+ t," not"% N int"r1os" t,"
"+"ns"s (1) t,at K 3as a *inor 3,"n t," not" 3as "4"!ut"%
an (6) t,at 7 ,a gi$"n an "4t"nsion o+ on" #"ar to T. I,at
ar" t," "++"!ts o+ t,"s" "+"ns"sJ
ANS.' 7 !an r"!o$"r P1%???%??? b"!aus" K8s *inorit# is a
1artial "+"ns" +or N (+or K8s s,ar" o+ P1%???%???). T," "4t"nsion
to T is also a 1artial "+"ns" +or N (+or T8s s,ar" o+ P1%???%???).
(Art. 16662 s"" In!,austi $. Kulo% 9@ P,il. ACB).
7raganHa $. Villa Abrill"
L.16@C1% A1r. 19% 1A5C
FACTS' On O!t. 6?% 1A@@% 5osario " 7raganHa an ,"r t3o
*inor sons (1B an 16 #"ars o+ ag") borro3" +ro* Villa Abrill"
PC?%??? in =a1an"s" *on"#% 1ro*ising to 1a# soliaril# P1?%???
in l"gal !urr"n!# o+ t," P,ili11in"s 6 #"ars a+t"r t," 3ar. T,"
*on"# 3as us" +or t," su11ort o+ t," !,ilr"n. For +ailur" to
1a#% Villa Abrill" su" in &ar!, 1A@A. T," *ot,"r an t," t3o
sons 1l"a" in "+"ns" t," *inorit# o+ t," t3o !,ilr"n at t,"
ti*" t," !ontra!t 3as "nt"r" into.
HELD'
1) T," *ot,"r is liabl" +or 1U9 o+ t," P1?%???. 5"ason' T,"
*inorit# o+ ,"r !,ilr"n i not !o*1l"t"l# r"l"as" ,"r +ro*
liabilit#% sin!" *inorit# is a 1"rsonal "+"ns" o+ t," *inors.
S," !an a$ail ,"rs"l+ o+ sai "+"ns" onl# as r"gars t,at
1art o+ t," "bt +or 3,i!, t," *inors ar" liabl".
6) T," !ontra!t "nt"r" into b# t," *inors is $oiabl"% but
sin!" it !annot b" "ni" t,at t,"# ,a 1ro+it" b# t,"
*on"# t,"# r"!"i$" (+or t,"ir su11ort)% it is +air to ,ol
t,"* liabl" to t," "4t"nt o+ sai b"n"+it (!o*1ut" in a!.
Art. 1666
!oran!" 3it, t," 7allant#n" s!al").
Art. 1666
Ouano Arrastr" S"r$i!"% In!. $.
Al"onor% "t al.
>5 AC66@% O!t. 1?% 1AA1
FACTS' Int"rnational P,ar*a!"uti!als% In!. (IPI) su"
t," &"r!antil" Insuran!" Co*1an# an Ouano Arrastr" S"r$.
i!"% In!.% +or r"1la!"*"nt o+ !"rtain "Eui1*"nt i*1ort" b# IPI
3,i!, 3"r" insur" b# &"r!antil" but 3"r" lost on arri$al%
all"g"l# b"!aus" o+ *is,anling b# Ouano. Ouano8s ans3"r
3as +il" b# t," la3 +ir* o+ L""s*a% "t al. an sign" b# Att#.
&anu"l Trinia o+ t," C"bu bran!, o+ t," la3 o++i!". Ho3"$"r%
Att#. Trinia lat"r r"sign" +ro* t," la3 +ir* an Att#. Fi"l
&analo% a 1artn"r +ro* t," &a<ati O++i!" +il" a *otion to 1ost.
1on" t," ,"aring% stating t,at t," !as" ,a just b""n "nors"
to ,i* b# Ouano.
On =an. 16% 1AA?% a+t"r t," trial 3,i!, Att#. &analo ,an.
l" +or Ouano% t," trial !ourt ,"l &"r!antil" an Ouano jointl#
an s"$"rall# liabl" +or t," !ost o+ r"1la!"*"nt o+ t," a*ag"
"Eui1*"nt 1lus a*ag"s. Onl# &"r!antil" a11"al". On =un.
1A% 1AA?% IPI *o$" +or "4"!ution o+ t," "!ision against Ouano
3,i!, t," jug" grant" on =un. 65% 1AA?. On =un. 66% 1AA?%
Ouano8s !ouns"l Att#. Cati1a# +il" a noti!" o+ a11"al !lai*ing
t,at t," "!ision 3as -*ista<"nl# s"nt/ b# t," trial !ourt to t,"
la3 +ir*8s ,"a o++i!" in &a<ati. T," trial jug" "ni" Ouano8s
*otion% "!laring t,at t," a11"al !annot b" gi$"n u" !ours" +or
la!< o+ *"rit. T," Court o+ A11"als (CA) is*iss" Ouano8s a1.
1"al. P"tition"r !o*1lains t,at an i**"iat" "4"!ution% 1"ning
&"r!antil"8s a11"al% 3oul r"sult in -!o*1l"4iti"s/ i+ t," (CA)
3"r" to absol$" &"r!antil" o+ its liabiliti"s% t,at Ouano 3oul ,a$"
no r"!ours" against its soliar# !o."btor an 3oul in "++"!t b"
,"l t," onl# on" liabl" un"r t," trial !ourt8s jug*"nt.
HELD' I+ t,at 3"r" to ,a11"n% Ouano ,as onl# its"l+ to
bla*". It allo3" t," 1"rio +or a11"al to la1s" 3it,out a11"al.
ing. P"tition"r also argu"s t,at un"r t," Ci$il Co"% a soliar#
!o."btor !an rais" t," "+"ns"s 1"rsonal to ,is !o."btor an
t,at% t,"r"+or"% Ouano s,oul b" "4"*1t +ro* 1a#ing t," 1or.
tion o+ t," jug*"nt !orr"s1oning to &"r!antil". T," Su1r"*"
Court ,a r"j"!t" a si*ilar !lai* *a" to "la# "4"!ution o+
a trial !ourt8s "!ision. &or"o$"r% Ouano argu"s t,at "+"ns"s
Art. 1666
1"rsonal to !o."btors ar" a$ailabl" to t," ot,"r !o."btor b".
!aus" -t," rig,ts an liabiliti"s o+ t," 1arti"s ar" so int"r3o$"n
Art. 1669
an "1"n"nt on "a!, ot,"r% as to b" ins"1arabl"%88 i.".% t,"
rig,ts an liabiliti"s to b" -int"r3o$"n/ in t,"ir "+"ns"s *ust
b" -si*ilar./ Ouano8s an &"r!antil"8s "+"ns"s a!tuall# !on+li!t
3it, "a!, ot,"r. Ouano !lai*s t,at t," goos 3"r" r"!"i$" b#
it +ro* t," !arri"r $"ss"l in ba !onition. &"r!antil"% u1on t,"
ot,"r ,an% *aintains t,at t," goos i not sustain an#
a*ag" or loss uring t," $o#ag". Furt,"r*or"% &"r!antil"
!lai*s t,at% in an# !as"% t," insuran!" !ontra!t 3it, IPI ,as
alr"a# la1s"% a "+"ns" 3,i!, Ouano% as t," arrastr"
!o*1an# r"s1onsibl" +or t," a*ag"% !annot in$o<" to a$oi
liabilit#. Finall#% +ailing to a11"al% Ouano "++"!ti$"l# 3ai$" an#
rig,t it *ig,t ,a$" ,a to ass"rt% as against t," jug*"nt
!r"itor% an# "+"ns" 1"rtaining to &"r!antil". In ot,"r 3ors%
Ouano b# its o3n a!t or ina!tion% is no long"r in a 1osition to
b"n"+it +ro* t," 1ro$isions o+ Art.
1666.
(@) E++"!t o+ D"btor8s D"at,
N is K8s sur"t#. Cr"itor su" K% 3,o i" 1"ning t,"
1ro!""ings. Alt,oug, t," !r"it *ust no3 b" broug,t in t,"
s1"!ial s"ttl"*"nt 1ro!""ings o+ K8s "stat"% an orinar# a!tion
+il" against N as sur"t# 3oul 1ros1"r% t," trans+"r not b"ing
a "+"ns" o+ N. (S"" C,in"s" C,a*b"r o+ Co**"r!" $. Pua T"
C,ing% 16 P,il. @?6).
S"!tion 5
DIVISI7LE AND INDIVISI7LE O7LI>ATIONS
Art. 1669. T," i$isibilit# or ini$isibilit# o+ t," t,ings
t,at ar" t," obj"!t o+ obligations in 3,i!, t,"r" is onl# on"
"btor an onl# on" !r"itor o"s not alt"r or *oi+# t,"
1ro$isions o+ C,a1t"r 6 o+ t,is Titl".
CO&&ENT'
(1) Di$isibl" an Ini$isibl" Obligations D"+in"
Art. 1669
(a) Di$isibl" obligation 0 on" !a1abl" o+ 1artial 1"r+or*.
an!".
(E4a*1l"' to "li$"r 6?? <ilos o+ sugar)
Art. 1669
(b) Ini$isibl" obligation 0 on" not !a1abl" o+ 1artial 1"r+or*.
an!".
(E4a*1l"' to "li$"r a s1"!i+i! !ar)
(6) OIni$isibilit#8 Distinguis," +ro* OSoliarit#8
SOLIDA5ITK INDIVISI7ILITK
(1) r"+"rs to ti" b"t3""n
t," 1arti"s
(6) n""s at l"ast t3o
"btors or !r"itors
(9) t," +ault o+ on" is t,"
+ault o+ t," ot,"rs.
(1) r"+"rs to natur" o+
obliga. tion
(6) *a# "4ist "$"n i+ t,"r"
is onl# on" "btor an onl#
on" !r"itor
(9) t," +ault o+ on" is not
t," +ault o+ t," ot,"rs.
(9) Class"s or Dins o+ Ini$isibilit#
(a) !on$"ntional ini$isibilit# (b# !o**on agr""*"nt)
(b) natural or absolut" ini$isibilit# (b"!aus" o+ t," natur"
o+ t," obj"!t o+ un"rta<ing 0 E4a*1l"' to ta<" a tri1 to
&anila2 or to gi$" a 1arti!ular ring)
(!) l"gal ini$isibilit# (i+ so 1ro$i" +or b# la3)
(@) Dins o+ Di$ision
(a) Euantitati$" i$ision ("1"ns on Euantit#' E4a*1l" 0 i+
1? !,airs ar" "Euall# i$i" b"t3""n t3o brot,"rs.)
(b) Eualitati$" i$ision ("1"ns on Eualit#% irr"s1"!ti$" o+
Euantit#. E4a*1l"' I+ on" !,il in,"rits lan% an anot,"r
in,"rits !as,.)
(!) int"ll"!tual or *oral i$ision (on" t,at "4ists *"r"l# in t,"
*in% an not in 1,#si!al r"alit#. E4a*1l"' &# brot,"r an
Art. 1669
I o3n in !o**on a !ar. &# on".,al+ s,ar" is onl# in t,"
*in.)
Art. 166@
Art. 166@. A joint ini$isibl" obligation gi$"s ris" to in.
"*nit# +or a*ag"s +ro* t," ti*" an#on" o+ t," "btors
o"s not !o*1l# 3it, ,is un"rta<ing. T," "btors 3,o *a#
,a$" b""n r"a# to +ul+ill t,"ir 1ro*is"s s,all not !ontribut"
to t," in"*nit# b"#on t," !orr"s1oning 1ortion o+ t,"
1ri!" o+ t," t,ing or o+ t," $alu" o+ t," s"r$i!" in 3,i!, t,"
obligation !onsists.
CO&&ENT'
(1) =oint Ini$isibl" Obligation
(a) H"r" t," obj"!t is ini$isibl" an #"t t," 1arti"s ar" *"r"l#
boun jointl#.
(b) E4a*1l"' &ila an Liga#a ar" jointl# boun to gi$" a s1".
!i+i! !ar to =os".
(6) E++"!t o+ Non.Co*1lian!"
(a) T," obligation is !on$"rt" into a *on"tar# on" +or in"*.
nit#.
(b) E4a*1l"' &ila an Liga#a 1ro*is" jointl# to gi$" a s1".
!i+i! !ar 3ort, P6%@??%??? to =os". In t," *"anti*"% t,"
!ar is 3it, Hona &otors Co. &ila8s s,ar" is% t,"r"+or"%
P1%6??%???. I+ &ila% b"!aus" o+ ga*bling% o"s not ,a$"
t," *on"#% but Liga#a ,as P1%6??%??? it is !l"ar t,at t,"#
!annot g"t t," !ar +ro* Hona &otors Co. So t,"# also
!annot !o*1l# 3it, t,"ir obligation o+ "li$"ring t," !ar
to =os". H"r"% t," obligation to gi$" t," !ar is !on$"rt" to
a *on"tar# obligation to gi$" P6%@??%??? to =os". Liga#a is
not r"s1onsibl" +or &ila8s insol$"n!#% so s," is ut# boun
to gi$" onl# P1%6??%???. &ila 3ill b" in"bt" to =os" +or
,"r s,ar" o+ P1%6??%???.
(!) Su11os" in t," 1r"!"ing 1robl"*% t," obligation 3as SOLI.
DA5K an INDIVISI7LE% 3,at 3oul b" t," "++"!tJ
ANS.' =os" !an "*an t," 3,ol" !ar or its 1ri!" o+
Art. 166@
P6%@??%??? +ro* Liga#a alon"% but Liga#a !an lat"r
r"!o$"r r"i*burs"*"nt +ro* &ila.
Art. 1665
Art. 1665. For t," 1ur1os"s o+ t," 1r"!"ing arti!l"s%
obligations to gi$" "+init" t,ings an t,os" 3,i!, ar" not
sus!"1tibl" o+ 1artial 1"r+or*an!" s,all b" ""*" to b" in.
i$isibl".
I,"n t," obligation ,as +or its obj"!t t," "4"!ution o+ a
!"rtain nu*b"r o+ a#s o+ 3or<% t," a!!o*1lis,*"nt o+ 3or<
b# *"tri!al units% or analogous t,ings 3,i!, b# t,"ir natur"
ar" sus!"1tibl" o+ 1artial 1"r+or*an!"% it s,all b" i$isibl".
Ho3"$"r% "$"n t,oug, t," obj"!t or s"r$i!" *a# b" 1,#si.
!all# i$isibl"% an obligation is ini$isibl" i+ so 1ro$i" b#
la3 or int"n" b# t," 1arti"s.
In obligations not to o% i$isibilit# or ini$isibilit#
s,all b" "t"r*in" b# t," !,ara!t"r o+ t," 1r"station in
"a!, 1ar. ti!ular !as".
CO&&ENT'
(1) Obligations T,at Ar" D""*" Ini$isibl"
(a) Obligations to gi$" "+init" t,ings.
(E4a*1l"' to gi$" t,is !ar)
(b) T,os" 3,i!, ar" not sus!"1tibl" o+ 1artial 1"r+or*an!".
(E4a*1l"' to !onu!t t," or!,"stra in a singl" r"ni.
tion o+ 7u"n!a*ino8s -&a#on Con!"rto/)
(!) E$"n i+ t," t,ing is 1,#si!all# i$isibl"% it *a# b" ini$is.
ibl" i+ so 1ro$i" b# la3.
() E$"n i+ t," t,ing is 1,#si!all# i$isibl"% it *a# b" ini$is.
ibl" i+ su!, 3as t," int"ntion o+ t," 1arti"s !on!"rn".
(6) Obligations T,at Ar" D""*" Di$isibl"
(a) I,"n t," obj"!t o+ t," obligation is t," "4"!ution o+ a !"r.
tain nu*b"r o+ a#s o+ 3or<.
E4a*1l"' I,"n a labor"r is ,ir" to 3or< +or 1?
a#s.
Art. 1665
(b) I,"n t," obj"!t o+ t," obligation is t," a!!o*1lis,*"nt o+
3or< b# *"tri!al units.
Art. 1665
E4a*1l"' I,"n a labor"r is ,ir" to !onstru!t a str""t
9 *"t"rs 3i" an 5? *"t"rs long.
(!) I,"n t," 1ur1os" o+ t," obligation is to 1a# a !"rtain
a*ount in install*"nts.
E4a*1l"' I,"n a "btor is r"Euir" to 1a# in t"n
annual install*"nts. (Soriano $. ;bat% L.11699% =an. 91%
1A61).
() I,"n t," obj"!t o+ t," obligation is t," a!!o*1lis,*"nt o+
3or< sus!"1tibl" o+ 1artial 1"r+or*an!".
FNOTE' T," !,ara!t"r o+ t," 1r"station or obligation
3ill "t"r*in" t," i$isibilit# or ini$isibilit# o+ obligations
not to o (n"gati$" obligations).G
(9) E++"!t o+ Ill"galit# on a Di$isibl" Contra!t
In !as" o+ a i$isibl" !ontra!t% i+ t," ill"gal t"r*s !an b"
s"1arat" +ro* t," l"gal on"s% t," latt"r *a# b" "n+or!". (Art.
1@6?% Ci$il Co"2 s"" Ang"l =os" Iar",ousing Co.% In!. $. C,"la
Ent"r1ris"s% L.65C?@% A1r. 6@% 1A6B).
(@) Cas"s
7losso* M Co. $. &anila >as Cor1.
55 P,il. 666
FACTS' P an D "nt"r" into a !ontra!t 3,"r"b# D 3ill
su11l# P 3it, gas tar at t," 1ri!" o+ P65 1"r ton. T," !ontra!t
3as to run +or 1? #"ars% to start +ro* t," #"ar 1A1A. D b"gan
"li$"ring but lat"r on ," r"+us" to !ontinu". In 1A69% P broug,t
an a!tion +or a*ag"s against D an as<" +or a*ag"s. P 3as
a3ar" a*ag"s u1 to 1A69. T," jug*"nt b"!a*" +inal% an P
i not t,"n as< +or *or". Lat"r% P broug,t an a!tion to r"!o$"r
a*ag"s +ro* 1A69 to 1A6A. Issu"' Is ," allo3" to o soJ
HELD' No% P is not allo3" to r"!o$"r an# *or" a*ag"s.
H" s,oul ,a$" Eu"stion" t," jug*"nt b"+or" it b"!a*" +inal%
but ," i not. H" ,a broug,t t," +irst a!tion to r"!o$"r a*ag"s
Art. 1665
+or t," !ontra!t% t," 3,ol" !ontra!t% an b"!aus" t," jug*"nt
in t,at !as" ,a alr"a# b"!o*" +inal% it !annot b" !,ang"
Art. 1665
alt,oug, 3,at ," ,a obtain" 3as onl# 1artial r"!o$"r#. As a
g"n"ral rul"% a !ontra!t to o s"$"ral t,ings at s"$"ral ti*"s is
i$isibl"% an a jug*"nt +or a singl" br"a!, o+ a !ontinuing
!ontra!t is not a bar to a suit +or t," subs"Eu"nt br"a!,.
-I,"n t," "+"nant (D) t"r*inat" a !ontinuing !ontra!t
b# absolut" r"+usal in ba +ait, to 1"r+or* (absolut"% b"!aus" ,"
r"+us" not onl# a singl" "li$"r# but all subs"Eu"nt "li$"ri"s
0 Aut,or8s !o**"nts)% a !lai* +or a*ag"s +or a br"a!, is an
ini$isibl" "*an% an 3,"r" as in t,is !as"% a +or*"r +inal
jug*"nt 3as r"n"r"% it is a bar to an# a*ag"s 3,i!, t,"
1lainti++ *a# t,"r"a+t"r sustain./
L. 7u!< M Son Lu*b"r Co. $. Atlanti! Lu*b"r Co.
1?A F""ral @11
FACTS' A !ontra!t 3as *a" +or t," sal" o+ a larg" Euantit#
o+ logs to b" "li$"r" in *ont,l# install*"nts uring a 1"rio
o+ B #"ars% 1a#*"nts to b" *a" also in install*"nt% at ti*"s
,a$ing r"lations to t," "li$"ri"s. It !ontain" sti1ulations as
to su!, 1a#*"nts% an guaranti"s as to t," a$"rag" siH" o+ t,"
logs to b" "li$"r" in "a!, install*"nt. T," s"ll"r t"r*inat"
t," !ontra!t +or all"g" br"a!,"s b# t," bu#"r an broug,t suit
+or a*ag"s% a*ong t,"* 1a#*"nts u" +or install*"nts o+ t,"
logs alr"a# "li$"r". T," s"ll"r got so*" a*ag"s. Lat"r% ,"
3ant" to r"!o$"r +or t," ot,"r install*"nts.
ISS;ES'
(a) Is t,is a i$isibl" or ini$isibl" obligationJ
(b) A+t"r r"!o$"r# ,as b""n ,a o+ 1rior install*"nts in a !ourt
a!tion% *a# anot,"r !ourt a!tion 1ros1"r +or t," r"!o$"r#
o+ t," r"*aining install*"ntsJ
HELD'
(a) -T,is is an ini$isibl" !ontra!t% an not a nu*b"r o+
s"1arat" an in"1"n"nt agr""*"nts +or t," sal" o+ t,"
Euantit# to b" "li$"r" an 1ai +or "a!, *ont,% alt,oug,
t,"r" *ig,t b" br"a!,"s o+ t," *inor sti1ulations an 3ar.
Art. 1665
ranti"s 3it, r"+"r"n!" t,"r"to 3,i!, 3oul 3arrant suits
3it, a t"r*ination o+ t," !ontra!t./
Art. 1666
(b) T," lat"r !ourt a!tion +or t," r"!o$"r# o+ t," r"*aining
install*"nts !annot 1ros1"r. -T," jug*"nt in su!, a!.
tion 3as !on!lusi$" as to all !lai*s or "*ans o+ "it,"r
1art# against t," ot,"r% gro3ing out o+ t," ini$isibl"
!ontra!t.88
S"!tion 6
O7LI>ATIONS IITH A PENAL CLA;SE
Art. 1666. In obligations 3it, a 1"nal !laus"% t,"
1"nalt# s,all substitut" t," in"*nit# +or a*ag"s an t,"
1a#*"nt o+ int"r"sts in !as" o+ non.!o*1lian!"% i+ t,"r" is
no sti1ula. tion to t," !ontrar#. N"$"rt,"l"ss% a*ag"s
s,all b" 1ai i+ t," obligor r"+us"s to 1a# t," 1"nalt# or is
guilt# o+ +rau in t," +ul+ill*"nt o+ t," obligation.
T," 1"nalt# *a# b" "n+or!" onl# 3,"n it is
"*anabl" in a!!oran!" 3it, t," 1ro$isions o+ t,is Co".
CO&&ENT'
(1) OP"nal Claus"8 D"+in"
(a) It is a !o"r!i$" *"ans to obtain +ro* t," "btor !o*1lian!"
+ro* t," "btor. (>"org).
(b) A 1"nal !laus" is an a!!"ssor# un"rta<ing to assu*"
gr"at"r liabilit# in !as" o+ br"a!,. It is atta!," to obliga.
tions in or"r to insur" t,"ir 1"r+or*an!". (B &anr"sa
6@5).
(6) Dins o+ P"nal Claus"s
First !lassi+i!ation'
(a) l"gal 1"nal !laus" 0 on" t,at is i*1os" b# t," la3
(b) !on$"ntional 1"nal !laus" 0 t,at 3,i!, ,as b""n agr""
u1on b# t," 1arti"s
S"!on !lassi+i!ation'
(a) subsiiar# 0 3,"n onl# t," 1"nalt# *a# b" as<"
Art. 1666
(b) joint 0 3,"n bot, t," 1rin!i1al !ontra!t an t," 1"nal
!laus" !an b" "n+or!". (B &anr"sa 615).
Art. 1666
(9) P"nal Claus" Distinguis," +ro* a Conition
-7"t3""n a !onition an a 1"nalt#% t,"r" ar" notabl"
i++"r"n!"s' t," latt"r !onstitut"s an obligation alt,oug, a!.
!"ssor#2 t," +or*"r o"s not. T,"r"+or"% t," latt"r *a# b"!o*"
"*anabl" in "+ault o+ t," un1"r+or*" 1rin!i1al obligation%
an so*"ti*"s jointl# 3it, it% 3,il" t," +or*"r or t," !onition
is n"$"r "*anabl"./ (&anr"sa8s Co**"ntari"s on t," Ci$il
Co"% Vol. B% 1. 6@@).
(@) Prin!i1al Pur1os" o+ t," P"nal Claus"
Its 1rin!i1al 1ur1os" is to insur" t," 1"r+or*an!" o+ an
obligation an also to substitut" +or a*ag"s an t," 1a#*"nt
o+ int"r"st in !as" o+ non.!o*1lian!". (Art. 166@% 1st 1ar.% Ci$il
Co").
(5) E4a*1l"s
(a) A 1ro*is" to !onstru!t t," ,ous" o+ 7 3it,in B? a#s.
In t," !ontra!t% t,"r" is a 1ro$ision to t," "++"!t t,at +or
"$"r# a#8s "la# a+t"r t," sti1ulat" B? a#s% A 3oul 1a#
a +in" or in"*nit# or 1"nalt# o+ P1?%???. I+ t," ,ous" is%
t,"r"+or"% !onstru!t" +inall# at t," "n o+ B5 a#s 0 5
a#s *or" t,an t," ti*" sti1ulat" 0 A 3oul ,a$" to
1a# a 1"nalt# o+ P5?%???% i.".% 3,at"$"r su* 7 agr"" to
gi$" A +or t," !onstru!tion o+ t," ,ous" 3ill b" gi$"n to A
*inus% o+ !ours"% t," P5?%??? i*1os" as 1"nalt#. T," +irst
1ur1os" o+ t," 1"nal !laus" is% t,"r"+or"% !l"ar. Its ins"rtion
3as to gi$" A a *oti$" to +inis, t," !onstru!tion on ti*"2
ot,"r3is"% ," 3oul ,a$" to su++"r t," 1"nalt#. T," s"!on
1ur1os" is also !l"ar% na*"l#% t,at inst"a o+ !o*1uting
t," a!tual a*ag"s t,at *a# ,a$" b""n !aus" b# t,"
+i$" a#s8 "la#% an inst"a o+ !o*1uting t," l"gal rat" o+
int"r"st as a*ag"s% t," *att"r ,as b"!o*" si*1li+i" b#
t," ins"rtion o+ sai 1"nal !laus"% 3,i!, in t,is !as" no3
assu*"s t," 1art o+ liEuiat" a*ag"s. T," g"n"ral rul"
is% t,"r"+or"% t,is' T," 1"nalt# ta<"s t," 1la!" o+ in"*nit#
+or a*ag"s an t," 1a#*"nt o+ int"r"st.
Art. 1666
(b) A sti1ulation in t," !ontra!t 1ro$iing +or t," !o*1oun.
ing o+ int"r"st in !as" o+ non.1"r+or*an!" 1arta<"s o+ t,"
Art. 1666
natur" o+ a 1"nalt# !laus". I+ in"Euitous or un!ons!ion.
abl"% t," int"r"st *a# b" r"u!". (Hog"s $s. =a$"llana%
L.1C6@C% A1r. 6B% 1A66).
(!) A sti1ulation in a !ontra!t +or t," sal" o+ a r"si"ntial lot
t,at i+ 3it,in 6 #"ars +ro* t," sal" t," bu#"r ,as not #"t
built 5?Q o+ ,is 1ro1os" r"si"n!"% ," 3oul 1a# P11%169
to t," s"ll"r 0 is an "4a*1l" o+ a 1"nalt# !laus". (&a<ati
D"$"lo1*"nt Cor1oration $. E*1ir" Insuran!" Co.% L.
61CB?% =un. 9?% 1A6C).
(6) E4!"1tions to t," >"n"ral 5ul" t,at t," P"nalt# Ta<"s
t," Pla!" o+ In"*nit# +or Da*ag"s an +or t,"
Pa#*"nt o+ Int"r"st (stat" ot,"r3is"% Instan!"s 3,"n
ADDITIONAL a*ag"s *a# b" r"!o$"r")'
T," "4!"1tions ar" t," +ollo3ing'
(a) I,"n t,"r" is "41r"ss sti1ulation to t," "++"!t t,at a*ag"s
or int"r"st *a# still b" r"!o$"r"% "s1it" t," 1r"s"n!" o+
t," 1"nalt# !laus"2
(b) I,"n t," "btor r"+us"s to 1a# t," 1"nalt# i*1os" in t,"
obligation2
(!) I,"n t," "btor is guilt# o+ +rau or olo in t," +ul+ill*"nt
o+ t," obligation. T," r"ason +or t," t,ir "4!"1tion is
!l"ar' t,"r" !an b" no r"nun!iation o+ an a!tion to "n+or!"
liabilit# +or +utur" +rau b"!aus"% as 3" ,a$" s""n% t,is is
against 1ubli! 1oli!# an against t," "41r"ss 1ro$isions o+
t," la3.
NOTE' 7r"a!, o+ t," obligation IITHO;T +rau
!annot !onstitut" on" o+ t," "4!"1tions. (Cabarroguis% "t
al. $. Vi!"nt"% L.1@9?@% &ar. 69% 1A6?).
(C) &a# An# P"nalt# 7" D"*anabl"J
ANS.' No. T," 1"nalt# *a# b" "n+or!" onl# 3,"n it is
"*anabl" in a!!oran!" 3it, t," 1ro$isions o+ t," Ci$il Co"%
Art. 1666
on" o+ 3,i!, stat"s t,at t," 1"nalt# *a# b" r"u!" i+ it is in.
"Euitous or un!ons!ionabl". (Art. 166A% Ci$il Co").
Art. 1666
(B) Cas"s
Na$arro $. &allari
@5 P,il. 6@6
FACTS' In a builing !ontra!t% t,"r" 3as sti1ulation +or
a 1"nalt# !laus". T," buil"r% ,o3"$"r% 3as su" +or aitional
a*ag"s on a!!ount o+ br"a!, o+ t," !ontra!t. 7ut t," br"a!,
3as not o!!asion" b# +rau. Issu"' Is t," o3n"r "ntitl" to g"t
*or" a*ag"s +ro* t," buil"rJ
HELD' No% ," !annot g"t a*ag"s ot,"r t,an 3,at ,as
b""n sti1ulat" u1on as t," 1"nalt# or 3ai$"r o+ ot,"r a*.
ag"s% "4!"1t i+ ot,"r3is" 1ro$i" b# la3. A 1art# to a builing
!ontra!t 3,o is gi$"n t," b"n"+it o+ a sti1ulation +i4ing a roun
su* as liEuiat" a*ag"s +or br"a!, o+ !ontra!t on t," 1art
o+ t," buil"r !annot b" a3ar" aitional a*ag"s at larg"
+or t," sa*" br"a!,. Insist"n!" u1on r"!"i$ing satis+a!tion o+
t," 1"nal !laus" o1"rat"s as a r"nun!iation o+ t," rig,t to ot,"r
a*ag"s.
La*b"rt $. Fo4
66 P,il. 5BB
FACTS' In t," 1ro*issor# not"s "4"!ut" b# t," "+"n.
ants% an in!or1orat" in t," *ortgag" ""s% t,"# $oluntaril#
un"rtoo< to 1a# t," su* o+ P1%9?? as !ourt !osts% "41"ns"s o+
!oll"!tion% an attorn"#8s +""s% 3,"t,"r in!urr" or not. Issu"'
Is t,is 1"nal !laus" $aliJ
HELD' K"s% t,is sti1ulation is $ali an 1"r*issibl" 1"nal
!laus"% not !ontrar# to an# la3% *orals% or 1ubli! or"r% an is
t,"r"+or"% stri!tl# bining u1on t," "+"nants. (S"" >o$"rn*"nt
o+ t," P,ili11in" Islans $. Li*% 61 P,il. C9C2 7a!,ra!, $. >ol.
ing!o% 9A P,il. 19B2 Co*1ania >"n"ral " Taba!os $. =alanoni%
5? P,il. 5?12 7a!,ra!, &otor Co. $. Es1iritu% 56 P,il. 9@62 an
&anila 7uiling M Loan Asso!iation $. >r""n% 5@ P,il. 5?C).
&anila 5a!ing Club% In!. $. &anila =o!<"# Club
6A P,il. 55
Art. 1666
FACTS' A 1ur!,as"r boug,t so*" 1ro1"rt# in install*"nts.
It 3as sti1ulat" in t," !ontra!t t,at +ailur" to 1a# an# subs".
Art. 1666
Eu"nt install*"nt 3oul +or+"it install*"nts alr"a# *a". In
t,is !as"% t," 1ur!,as"r ,a alr"a# 1ai P1??%??? but "+ault"
in t," 1a#*"nt o+ t," ot,"r install*"nts. Is t," !laus" in t,"
!ontra!t r"garing +or+"itur" $aliJ
HELD' K"s% su!, a !laus" is $ali. It is in t," natur" o+ a
1"nalt# !laus" an is not iniEuitous or un!ons!ionabl"% !onsi.
"ring t,at 3,at ,as b""n +or+"it" a*ounts onl# to BQ o+ t,"
sti1ulat" 1ri!".
-T," !laus" o+ t," !ontra!t r"+"rring to t," +or+"itur" o+
t," P1??%??? alr"a# 1ai% s,oul t," 1ur!,as"r +ail to 1a# t,"
subs"Eu"nt install*"nts% is $ali. It is in t," natur" o+ a 1"nal
!laus" 3,i!, *a# b" l"gall# "stablis," b# t," 1arti"s. -In its
oubl" 1ur1os" o+ insuring !o*1lian!" 3it, t," !ontra!t an o+
ot,"r3is" *"asuring b"+or" an t," a*ag"s 3,i!, *a# r"sult
+ro* non.!o*1lian!"% it is not !ontrar# to la3% *orals% or 1ubli!
or"r b"!aus" it 3as $oluntaril# an <no3ingl# agr"" u1on b#
t," 1arti"s. Vi"3ing !on!r"t"l# t," tru" "++"!ts t,"r"o+ in t,"
1r"s"nt !as"% t," a*ount +or+"it" !onstitut"s onl# BQ o+ t,"
sti1ulat" 1ri!"% 3,i!, is not "4!"ssi$" i+ !onsi"r" as t," 1ro+it
3oul ,a$" b""n obtain" ,a t," !ontra!t b""n !o*1li" 3it,.
T,"r" is% *or"o$"r% "$i"n!" t,at t," "+"nants ,a to r"j"!t
anot,"r 1ro1osition to bu# t," sa*" 1ro1"rt#. At an# rat"% t,"
1"nal !laus" o"s a3a# 3it, t," ut# to 1ro$" t," "4ist"n!" an
*"asur" o+ t," a*ag"s !aus" b# t," br"a!,.88
Na<1il an Sons% "t al. $. CA
>5 @CB51% 5"solution on
&otion +or 5"!onsi"ration
FACTS' T," 1ro*issor# not" sign" b# t," borro3"r stat"s
t,at t," loan o+ P@6%?5? s,all b"ar int"r"st at t," rat" o+ 1AQ
1"r annu*% an subj"!t to 1"nalt# !,arg"s "Eui$al"nt to 6Q
1"r *ont, o+ an# a*ount u" an un1ai. T,is 3oul #i"l an
int"r"st o+ PC%ABA.5? 1"r annu* or a total o+ P@6%99A.1? +ro*
No$"*b"r 66% 1ACB to S"1t"*b"r 16% 1AB@% t," at" o+ +iling t,"
!o*1laint.
HELD' P"nalt# int"r"st o+ 1Q a *ont, or 16Q 1"r annu*
Art. 1666
is r"asonabl" so t,at +ro* D"!"*b"r 16% 1AB? to S"1t"*b"r
16% 1AB@% 1"nalt# !,arg"s s,oul b" P1A%6?6.B9. Consi"ring
Art. 1666
t,at t," borro3"rs ,a$" 1ai t," a*ount o+ P6B%6C6.C5% t,"#
t,"r"+or" o3" t," ban< t," a*ount o+ P9B%A15.1B 3,"n t,"
!o*1laint 3as +il". T,"r" is no ini!ation in t," r"!ors as to
t," +lu!tuation o+ a!tual int"r"st rat"s +ro* 1AB@ an% t,"r"+or"%
t," Court or"rs int"r"st at t," l"gal rat" o+ 16Q 1"r annu* on
t," un1ai a*ount.
T," i*1osition o+ 16Q 1ursuant to C"ntral 7an< F7ang<o
S"ntralG Cir!ular @16 (1ass" 1ursuant to t," aut,orit# grant"
to t," C"ntral 7an< (7ang<o S"ntral) b# Pr"si"ntial D"!r"" 116
3,i!, a*"n" A!t 6655% ot,"r3is" <no3n as t," ;sur# La3%
is a11li!abl" onl# in t," +ollo3ing' (1) loans2 (6) +orb"aran!" o+
an# *on"#% goos or !r"it2 an (9) rat" allo3" in jug*"nts
(jug*"nts s1o<"n o+ r"+"r to jug*"nts in$ol$ing loans or
+orb"aran!" o+ an# *on"#% goos or !r"its).
Countr# 7an<"rs Insuran!" Cor1. $. CA
>5 B5161% S"1. 11% 1AA1
FACTS' L"ssor V"ntanilla an L"ss"" S#% "nt"r" into a
l"as" agr""*"nt o$"r a t,"at"r. T," l"as" 3as +or si4 #"ars. A+t"r
*or" t,an t3o #"ars o+ t," o1"ration o+ t," t,"at"rs% V"ntanilla
*a" "*ans +or t," r"1oss"ssion o+ t," l"as" 1ro1"rti"s
in $i"3 o+ S#8s arr"ars in *ont,l# r"ntals an non.1a#*"nt
o+ a*us"*"nt ta4"s. In 1ursuan!" o+ t,"ir latt"r agr""*"nt%
S#8s arr"ars in r"ntal in t," a*ount o+ P165%@@5 3as r"u!"
to PC1%?6B. Ho3"$"r% t," a!!ru" a*us"*"nt ta4 liabilit# o+
t," t,r"" t,"at"rs to t," Cit# >o$"rn*"nt ,a a!!u*ulat" to
PB@%??? "s1it" t," +a!t t,at S# ,a b""n "u!ting t," a*ount
o+ P@%??? +ro* ,is *ont,l# r"ntal 3it, t," obligation to r"*it
t," sai "u!tions to t," !it# go$"rn*"nt. H"n!"% l"tt"rs o+
"*an 3"r" s"nt to S# "*aning 1a#*"nt o+ t," arr"ars
in r"ntals an a*us"*"nt ta4 "linEu"n!#. I,"n S# +ail" to
1a# t," a*ounts in +ull% "s1it" "*ans% V"ntanilla 1alo!<"
t," gat"s o+ t," t,r"" t,"at"rs un"r l"as" an too< 1oss"ssion
t,"r"o+. S# +il" an a!tion +or r"+or*ation an injun!tion. 7#
$irtu" o+ t," injun!tion% S# r"gain" 1oss"ssion o+ t," t,"at"r.
T," trial !ourt ,"l t,at S# is not "ntitl" to r"+or*ation. On
t," !ount"r!lai*% t," !ourt +oun t,at V"ntanilla 3as "1ri$"
Art. 1666
o+ t," "njo#*"nt o+ t," l"as" 1r"*is"s an su++"r" a*ag"s
as a r"sult o+ t," +iling o+ t," !as" b# S# an ,is $iolation o+ t,"
Art. 1666
t"r*s an !onitions o+ t," agr""*"nt. It ,"l t,at V"ntanilla
is "ntitl" to r"!o$"r t," a*ag"s in aition to t," arr"ars in
r"ntals an a*us"*"nt ta4 "linEu"n!# o+ S# an t," a!!ru"
int"r"st t,"r"on. It +oun t,at as o+ t," "n o+ No$. 1AB?% 3,"n
V"ntanilla r"gain" 1oss"ssion o+ t," t,r"" t,"at"rs% S#8s un1ai
r"ntals an a*us"*"nt ta4 liabilit# a*ount" to P6BA%59@.
In aition% it ,"l S# un"r obligation to 1a# P1?%??? "$"r#
*ont, +ro* F"b. to No$. 1AB? or t," total a*ount o+ P1??%???
3it, int"r"st on "a!, a*ount o+ P1?%??? +ro* t," ti*" t," sa*"
b"!a*" u". T,us% P1?%??? 1ortion o+ t," *ont,l# l"as" r"ntal
3as su11os" to !o*" +ro* t," r"*aining !as, "1osit o+ S#
but 3it, t," !ons"Eu"nt +or+"itur" o+ t," r"*aining !as, "1osit
o+ P6A?%???% t,"r" 3as no *or" !as, "1osit +ro* 3,i!, sai
a*ount !oul b" "u!t" +urt,"r. It ajug" S# to 1a# attor.
n"#8s +""s "Eui$al"nt to 1?Q o+ t," a*ounts abo$".*"ntion".
Finall#% t," !ourt ,"l S# t,ru t," injun!tion bon liabl" to
1a# P1?%??? "$"r# *ont, +ro* F"b. to No$. 1AB?. T," a*ount
r"1r"s"nts t," su11os" in!r"as" in r"ntal +ro* P5?%??? to
P6?%??? in $i"3 o+ t," o++"r o+ so*"on" to l"as" t," t,r"" t,"at.
"rs in$ol$" +or P6?%??? a *ont,. T," Court o+ A11"als (CA)
sustain" t," trial !ourt.
HELD' T," Su1r"*" Court a++ir*" t," CA8s "!ision an
,"l t,at inas*u!, as t," +or+"itur" !laus" 1ro$i"s t,at t,"
"1osit s,all b" ""*" +or+"it"% 3it,out 1r"jui!" to an# ot,"r
obligation still o3ing b# t," l"ss"" to t," l"ssor% t," 1"nalt#
!annot substitut" +or t," P1??%??? su11os" a*ag" r"sulting
+ro* t," issuan!" o+ t," injun!tion against t," P6A%??? r"*ain.
ing !as, "1osit. T,is su11os" a*ag" su++"r" b# OVEC 3as
t," all"g" P1?%??? a *ont, in!r"as" in r"ntal (+ro* P5?%???
to P6?%???)% 3,i!, OVEC +ail" to r"aliH" +or t"n *ont,s +ro*
F"b. to No$. 1AB? in t," total su* o+ P1??%???. T,is o11ortunit#
!ost 3,i!, 3as ul# 1ro$"n b"+or" t," trial !ourt% 3as !orr"!tl#
*a" !,arg"abl" b# t," sai !ourt against t," injun!tion bon
1ost" b# CISCO. T," un"rta<ing assu*" b# CISCO un"r
subj"!t injun!tion r"+"rs to -all su!, a*ag"s as su!, 1art# *a#
sustain b# r"ason o+ t," injun!tion i+ t," Court s,oul +inall#
Art. 1666
"!i" t,at t," Plainti++ 3as not "ntitl" t,"r"to./ T," CA !or.
r"!tl# sustain" t," trial !ourt in ,oling t,at t," bon s,all
Art. 1666
an *a# ans3"r onl# +or a*ag"s 3,i!, OVEC *a# su++"r as
a r"sult o+ t," injun!tion. T," arr"ars in r"ntal% t," unr"*it.
t" a*ounts o+ t," a*us"*"nt ta4 "linEu"n!#% t," a*ount o+
P1??%??? (P1?%??? 1ortions o+ "a!, *ont,l# r"ntal 3,i!, 3"r"
not "u!t" +ro* 1lainti++8s !as, "1osit +ro* F"b. to No$. 1AB?
a+t"r t," +or+"itur" o+ sai !as, "1osit on F"b. 11% 1AB?) an
attorn"#8s +""s 3,i!, 3"r" all !,arg" against S# 3"r" !orr"!t
an !onsi"r" b# t," CA as a*ag"s 3,i!, OVEC sustain"
not as a r"sult o+ t," injun!tion.
(A) Obligations 3it, a P"nal Claus" Distinguis," +ro* E4.
a*1l"s +ro* t," Fa!ultati$" an t," Alt"rnati$"
Obliga. tions
(a) Obligations 3it, a 1"nal !laus"
E4a*1l"' >loria is oblig" to gi$" *" a ia*on ring.
I+ s," +ails to o so% s," *ust gi$" PC??%???.
(NOTE' Orinaril#% >loria !annot "4!us" ,"rs"l+ +ro* t,"
ut# o+ gi$ing *" t," ring b# si*1l# 1a#ing PC??%???. For
,"r to substitut" t," 1"nalt#% s," *ust b" "41r"ssl# gi$"n
t," rig,t to o so.)
(b) Fa!ultati$" obligation
E4a*1l"' >loria is oblig" to gi$" *" a 1arti!ular
ia*on ring. Ho3"$"r% i+ s," so "sir"s% s," *a# inst"a
gi$" *" PC??%???.
(NOTE' H"r"% >loria is !l"arl# an "41r"ssl# allo3"
to *a<" t," substitution. I+ t," ring is lost b# a +ortuitous
"$"nt% s," is "4!us" +ro* gi$ing *" t," substitut" o+
PC??%???% +or in"" t," 1rin!i1al obligation ,as b""n
"4tinguis,".)
(!) Alt"rnati$" obligation
E4a*1l"' >loria is oblig" to gi$" *" "it,"r a 1arti!u.
lar ia*on ring or PC??%???.
(NOTE' H"r"% t," !,oi!" gi$"n to >loria is absolut".
Art. 1666
I+% ,o3"$"r% t," ring is lost b# a +ortuitous "$"nt% s," is
still oblig" to gi$" *" t," PC??%???.)
Art. 166C
Art. 166C. T," "btor !annot "4"*1t ,i*s"l+ +ro* t,"
1"r+or*an!" o+ t," obligation b# 1a#ing t," 1"nalt#% sa$"
in t," !as" 3,"r" t,is rig,t ,as b""n "41r"ssl# r"s"r$" +or
,i*. N"it,"r !an t," !r"itor "*an t," +ul+ill*"nt o+ t,"
obligation an t," satis+a!tion o+ t," 1"nalt# at t," sa*" ti*"%
unl"ss t,is rig,t ,as b""n !l"arl# grant" ,i*. Ho3"$"r% i+
a+t"r t," !r"itor ,as "!i" to r"Euir" t," +ul+ill*"nt o+ t,"
obligation% t," 1"r+or*an!" t,"r"o+ s,oul b"!o*" i*1ossibl"
3it,out ,is +ault% t," 1"nalt# *a# b" "n+or!".
CO&&ENT'
(1) >"n"rall#% D"btor Cannot Substitut" P"nalt# +or t,"
Prin!i1al Obligation
T," g"n"ral rul" is t,at t," "btor is not allo3" to just
1a# t," 1"nalt# inst"a o+ +ul+illing t," obligation. H" !an onl#
o so i+ t," rig,t ,as b""n ENP5ESSLK r"s"r$". T," r"ason
is t,at i+ ," !an just 1a#% +ul+ill*"nt o+ t," obligation 3ill b"
!onsi"r" an alt"rnati$" on". T," 3or ENP5ESSLK *"ans
t,at an# i*1li" r"s"r$ation is not allo3".
(6) E4a*1l"
A 1ro*is"s to +inis, a !"rtain 1i"!" o+ 3or< 3it,in si4
*ont,s. T," !ontra!t sti1ulat"s t,at in !as" ," o"s not buil
t," ,ous" at all% ," is su11os" to +or+"it t," su* o+ P1%???%???.
In t,is !as"% as a g"n"ral rul" t," !ontra!tor !annot just gi$"
t," su* o+ P1%???%??? as a substitut" +or ,is non.1"r+or*an!"
o+ t," obligation. It *ust b" r"*"*b"r" t,at as a g"n"ral rul"%
t,"r"+or"% t," 1"nal !laus" is not su11os" to substitut" t,"
1"r+or*an!" o+ t," 1rin!i1al obligation. H" *a#% ,o3"$"r% b"
"41r"ssl# grant" b# t," !r"itor t," rig,t to r"+rain +ro* t,"
"4"!ution o+ t," !ontra!t b# a +or+"itur" o+ t," 1"nalt#.
Cui $. Sun C,an
@1 P,il. 569
FACTS' A l"ss"" r"nt" 1ro1"rt# +ro* a l"ssor. T," !on.
Art. 166C
tra!t o+ l"as" !ontain" a sti1ulation to t," "++"!t t,at t," l"s.
s"" s,oul not *a<" an# !onstru!tion on t," 1ro1"rt# 3it,out
Art. 166C
t," 1"r*ission o+ t," l"ssor% an t,at s,oul t," l"ss"" o so
3it,out t," 1"r*ission o+ t," l"ssor sai i*1ro$"*"nts 3oul
inur" to t," b"n"+it o+ t," "stat" (l"ssor) an t," l"ss""% in su!,
a !as"% 3oul not ,a$" an# rig,t to as< +or an# r"i*burs"*"nt
+or t," !ost o+ t," !onstru!tion. T," l"ss"" *a" so*" i*1ro$".
*"nts 3it,out t," !ons"nt o+ t," l"ssor. No3% t," l"ssor 3ants
to "$i!t t," l"ss"" +or t," $iolation o+ t," !onitions o+ t," l"as".
T," l"ss""% on t," ot,"r ,an% sai t,at ," s,oul not b" oust"
b"!aus" ," 3as r"a# to +or+"it t," i*1ro$"*"nts in +a$or o+
t," l"ssor8s "stat". Issu"' Is t," +a!t t,at t," l"ss"" is r"a# to
+or+"it t," i*1ro$"*"nt on t," "stat" su++i!i"nt to 1r"$"nt ,is
b"ing oust" +ro* t," 1r"*is"sJ
HELD' E$"n i+ t," l"ss"" is r"a# to +or+"it t," i*1ro$".
*"nts on t," "stat"% ," *a# still b" oust" +ro* t," 1r"*is"s
+or ,is ,a$ing $iolat" t," !onition i*1os" u1on ,i*% na*"l#%
not to *a<" an# su!, i*1ro$"*"nts 3it,out t," 1"r*ission o+
t," l"ssor. It is tru" t,at t," l"ss"" 3as r"a# to +ul+ill 3,at
*a# 1"r,a1s b" t"r*" a 1"nalt#% but t,is o"s not "4!us" ,i*
+ro* !o*1l#ing 3it, t," 1rin!i1al obligation o+ not *a<ing an#
i*1ro$"*"nts 3it,out t," !ons"nt o+ t," l"ssor. It *ust b" born"
in *in t,at a "btor (t," l"ss"") !annot "s!a1" t," +ul+ill*"nt
o+ t," obligation b# just 1a#ing t," 1"nalt#% unl"ss su!, rig,t
,as "41r"ssl# b""n grant" ,i*. H"n!"% "$"r#t,ing !onsi"r"%
t," l"ss"" *a# la3+ull# b" oust" +ro* t," 1r"*is"s.
(9) >"n"rall#% Cr"itor Cannot D"*an 7ot, Ful+ill*"nt
an t," P"nalt# at t," Sa*" Ti*"
As a g"n"ral rul"% t," !r"itor o"s not ,a$" t,is rig,t to
"*an +ul+ill*"nt o+ t," obligation an t," 1"nalt# at t," sa*"
ti*". T," "4!"1tion aris"s 3,"n su!, a rig,t ,as b""n CLEA5LK
grant" to ,i*.
FNOTE' In Cabarroguis% "t al. $. Vi!"nt"% L.1@9?@% &ar.
69% 1A6?% t," Su1r"*" Court ,"l t,at in obligations +or t,"
1a#*"nt o+ a su* o+ *on"#% 3,"n a 1"nalt# is sti1ulat" +or
"+ault% 7OTH t," 1rin!i1al obligation an t," 1"nalt# !an b"
"*an" b# t," !r"itor (>o$"rn*"nt $. Li*% "t al.% 61 P,il.
C9C an Lun"ta &otor Co. $. &ora% C9 P,il. B?)% 3it, int"r"st
Art. 166C
on t," a*ount o+ t," 1"nalt# +ro* t," at" o+ "*an% "it,"r
jui!ial or "4trajui!ial.G
Art. 166C
Vitug Di*atula! $. Coron"l
@? P,il. 6B6
FACTS' A sol r"al 1ro1"rt# to 7 3it, t," rig,t o+ r"1ur.
!,as". It 3as agr"" in t," !ontra!t t,at s,oul A 3,o 3as o!.
!u1#ing t," 1ro1"rt# in t," *"anti*" as l"ss"" "+ault in t,"
1a#*"nt o+ r"ntals on t," 1ro1"rt#% t," rig,t to r"""* 3oul
b" "4tinguis,". T," a# !a*" 3,"r" t,"r" 3as su!, a "+ault.
7 too< 1oss"ssion o+ t," 1ro1"rt#% !lai*ing t,at ,"r rig,t as
t," n"3 o3n"r o+ t," 1ro1"rt# ,a alr"a# b""n !onsoliat"
in ,"rs"l+ b"!aus" t," s"ll"r i not ,a$" an#*or" t," rig,t to
r"1ur!,as" t," 1ro1"rt#. S," "nt"r" into a !o*1ro*is" 3it, A
r"garing t," 1ast r"ntals. 7 no3 brings t,is a!tion to r"!o$"r
t," +utur" r"ntals% *"aning t," r"ntals t,at s,oul ,a$" a!.
!ru" +ro* t," *o*"nt 7 too< 1oss"ssion o+ t," 1ro1"rt# until
t," ti*" originall# sti1ulat" u1on +or t," r""*1tion o+ t,"
1ro1"rt#. Issu"' Is 7 allo3" to ta<" o$"r t," 1ro1"rt#% t,us
!onsoliating t," o3n"rs,i1 in ,"r% an at t," sa*" ti*" as<
+or +utur" r"ntalsJ
HELD' No. 7 is not allo3" to ,a$" bot, r"*"i"s. T,"
1ro$ision in t," !ontra!t "4tinguis,ing t," rig,t o+ r""*1tion
u1on t," "+ault o+ t," 1a#*"nt o+ t," r"ntals is in t," natur"
o+ a 1"nalt# !laus". A!!oring to t," la3% t," g"n"ral rul" is t,at
t," !r"itor !annot "*an bot, t," 1"r+or*an!" o+ t," 1rin!i1al
obligation an t," +or+"itur" o+ t," 1"nalt# unl"ss su!, rig,t
,as b""n !l"arl# grant" to sai !r"itor. In t,is !as" no su!,
rig,t 3as grant". It +ollo3s% t,"r"+or"% t,at t," !r"itor !oul
not "*an bot, s1"!i+i! 1"r+or*an!" an t," +or+"itur" o+ t,"
1"nalt#. T," a!tion o+ t," !r"itor 7 in ta<ing 1oss"ssion o+ t,"
1ro1"rt# +ull# s,o3s t,at s," 3as "ag"r to i*1os" t," 1"nalt#
sti1ulat" u1on t," !ontra!t. S,"% t,"r"+or"% ,as no *or" rig,t
to insist on t," 1a#*"nt o+ t," +utur" r"ntals. As a *att"r o+
+a!t% s," ,a no rig,t "$"n to t," 1ast r"ntals% but "$i"ntl#
t," "btor ,a alr"a# 3ai$" t,is b# $irtu" o+ t," !o*1ro*is"
agr"" u1on b"t3""n A an 7 as r"gar t," 1ast r"ntals.
Na$arro $. &allari
@5 P,il. 6@6
Art. 166C
FACTS' T," "+"nant 3as oblig" to !onstru!t a !,a1"l
+or t," 1lainti++ +or P16%???. O+ t,is a*ount% P16%??? ,as alr"a#
Art. 166B
b""n 1ai an onl# P@%??? r"*ains to b" 1ai. T," !ontra!t !ar.
ri" a 1"nal !laus" to t," "++"!t t,at in !as" o+ non.!o*1lian!"
3it, t," obligation% t," "+"nant 3oul ,a$" to 1a# a 1"nalt#
o+ P@%???. It 3as 1ro$" at t," trial t,at t," "+"nant i not
!onstru!t t," !,a1"l $"r# 3"ll 0 i not !onstru!t it a!!oring
to t," s1"!i+i!ations o+ t," !ontra!t. H"n!"% Na$arro broug,t
t,is a!tion to r"!o$"r P@%??? +ro* &allari% t," "+"nant% as
1"nalt#. On ,is 1art% Na$arro r"+us" to 1a# t," balan!" o+
P@%??? 3,i!, ," still o3" t," "+"nant. In ot,"r 3ors% t,"
1lainti++ Na$arro 3ant"'
(a) to g"t P@%??? +ro* &allari as 1"nalt#2 an
(b) not to 1a# an#*or" ,is (Na$arro8s) un1ai balan!" o+
P@%???.
ISS;E' Is Na$arro la3+ull# "ntitl" not to 1a# ,is r"*ain.
ing "bt an at t," sa*" ti*" as< +or t," 1"nalt#J
HELD' Na$arro is r"all# "ntitl" to t," 1"nalt# b"!aus" o+
t," 1oor !onstru!tion o+ t," !,a1"l but sin!" ," still o3"s P@%???%
3,at ," !an g"t !o*1"nsat"s +or 3,at ," still ,as to gi$". H"n!"%
Na$arro !annot r"all# g"t an#t,ing. His "bt !o*1"nsat"s +or
,is !r"it.
Art. 166B. Proo+ o+ a!tual a*ag"s su++"r" b# t,"
!r"itor is not n"!"ssar# in or"r t,at t," 1"nalt# *a# b"
"*an. ".
CO&&ENT'
(1) No N"!"ssit# o+ Pro$ing A!tual Da*ag"s
T,is Arti!l" is a n"3 1ro$ision o+ t," N"3 Ci$il Co". T,"
1"nalt# *a#% in t," 1ro1"r !as"% b" "*an" 3it,out t," n".
!"ssit# o+ 1ro$ing a!tual a*ag"s.
(6) 5"ason
I,"n a 1"nal !laus" ,as b""n agr"" u1on in a !ontra!t%
*or" as a 1unis,*"nt +or t," in+ra!tion t,"r"o+ t,an a *"r"
s"!urit#% it is a la3+ul *"ans +or r"1airing loss"s an a*ag"s%
Art. 166B
an u1on "$i"n!" o+ t," $iolation o+ t," !onitions sti1ulat"%
t," injur" 1art# is not oblig" to 1ro$" loss"s an a*ag"s su+.
Art. 166A
+"r"% nor t," "4t"nt o+ t," sa*" in or"r to "*an t," "n+or!".
*"nt o+ t," 1"nal !laus" agr"" u1on. (Pala!ios $. &uni!i1alit#
o+ Ca$it"% 16 P,il. 1@?).
La*b"rt $. Fo4
66 P,il. 5BB
FACTS' A 3as oblig" un"r a !ontra!t 3it, 7% not to s"ll
s,ar"s o+ sto!< +or on" #"ar. A 1"nal !laus" 3as 1ro$i". 7ut
A sol s,ar"s o+ sto!< 3it,in t," 1"rio s1"!i+i" but a*ag"s
3"r" not 1ro$" b# 7 to ,a$" b""n su++"r" b# ,i* (7). Issu"'
&a# 7 r"!o$"r t," 1"nalt#J
HELD' K"s% 7 *a# la3+ull# r"!o$"r t," 1"nalt#. -In t,is
jurisi!tion !ontra!ts ar" "n+or!" as t,"# ar" r"a% an 1ar.
ti"s 3,o ar" !o*1"t"nt to !ontra!t *a# *a<" su!, agr""*"nts
3it,in t," li*itations o+ t," la3 an 1ubli! 1oli!# as t,"# "sir"%
an t," !ourts 3ill "n+or!" t,"* a!!oring to t,"ir t"r*s. A
1"nalt# i*1os" +or t," br"a!, o+ a !ontra!t not to s"ll s,ar"s
o+ sto!< +or on" #"ar 3ill b" "n+or!" i+ t," agr""*"nt is bro<"n%
no *att"r 3,"t,"r t," 1"rson s""<ing to "n+or!" t," 1"nalt# ,as
su++"r" a*ag"s or not./
Art. 166A. T," jug" s,all "Euitabl# r"u!" t," 1"nalt#
3,"n t," 1rin!i1al obligation ,as b""n 1artl# or irr"gularl#
!o*1li" 3it, b# t," "btor. E$"n i+ t,"r" ,as b""n no 1"r.
+or*an!"% t," 1"nalt# *a# also b" r"u!" b# t," !ourts i+ it
is iniEuitous or un!ons!ionabl".
CO&&ENT'
(1) I,"n P"nalt# &a# 7" 5"u!" b# t," Court
(a) I,"n t," obligation ,as b""n 1artl# !o*1li" 3it, b# t,"
"btor. (Partial P"r+or*an!") (S"" &a<ati D"$"lo1*"nt
Cor1. $. E*1ir" Insuran!" Co.% L.61CB?% =un. 9?% 1A6C).
(b) I,"n t," obligation ,as b""n irr"gularl# !o*1li" 3it,
b# t," "btor. (Irr"gular P"r+or*an!").
(!) I,"n t," 1"nalt# is iniEuitous or un!ons!ionabl"% "$"n i+
Art. 166A
t,"r" ,as b""n no 1"r+or*an!" at all. (;n!ons!ionabl" or
IniEuitous).
Art. 166A
(6) E4a*1l"s
(a) A 1ro*is"s to "li$"r to 7 1?? bottl"s o+ 3in" on a !"rtain
a# 3,"n a banEu"t 3ill b" ,"l. T," !ontra!t stat"s t,at
+ailur" o+ A to o so on t,at a# 3ill r"sult in a +or+"itur"
o+ P1??%???. On t,at a#% A 3as abl" to "li$"r onl# A? o+
t," 1?? bottl"s 1ro*is". It is un+air no3 +or 7 to "4a!t t,"
1a#*"nt o+ t," +ull a*ount o+ 1?? b"!aus" ,"r"% t,"r" ,as
b""n 1artial or irr"gular 1"r+or*an!"% an 7 ,as in so*"
3a# b""n alr"a# b"n"+it" b# t," gi$ing o+ t," A? bottl"s
o+ 3in".
(b) T," "+"nants 3"r" abl" to r"turn onl# 5 o+ t," 6? ri+l"s
ta<"n b# t,"* b# $irtu" o+ t,"ir li!"ns"s. T," !ontra!t
!ontain" a 1"nalt# !laus" or a 1"nal bon 3,i!, 3as su1.
1os" to ans3"r +or non."li$"r#. S,oul t," 1"nal !laus"
b" r"u!"J
ANS.' K"s% t," 1"nal bon s,oul b" r"u!" or *itigat"
in $i"3 o+ t," 1artial 1"r+or*an!". (Insular >o$8t. $. Pun.
Halan% C P,il. 5@6).
(!) Su11osing in t," abo$".*"ntion" 1robl"*% t," "+"nants
i not ,"l1 at all in t," r"!o$"r# o+ t," ri+l"s% ar" t,"# still
"ntitl" to a *itigation o+ t," 1"nal bonJ
ANS.' K"s. I,"n so*" o+ t," lost ar*s ar" a+t"r3ars
r"!o$"r"% alt,oug, t," 1"rsons r"s1onsibl" +or t,"ir
sa+"<""1ing i not assist in t,"ir r"!o$"r#% t," liabilit#
un"r t," bon s,all b" 1ro1ortionat"l# r"u!". (Insular
>o$"rn*"nt $. A*"!,aHurra% "t al.% 1? P,il. 69C).
(9) Cas"s
C,ua >ui S"ng $. >"n"ral Sal"s Su11l# Co.% In!.
A1 P,il. 159
FACTS' Plainti++ l"as" to "+"nant ,is 1r"*is"s +or a
1"rio o+ t,r"" #"ars. It 3as also agr"" t,at in aition% in
or"r to guarant"" 1"r+or*an!"% a "1osit o+ P1%??? 3oul b"
*a"% sai P9%??? to b" a11li" to t," *ont,l# r"nts o+ P5?? +or
Art. 166A
t," last si4 *ont,s (t,at is% +or t," 1st 6 #"ars an 6 *ont,s%
P5?? 3oul b" !oll"!t" *ont,l#2 but +or t," r"*aining si4
Art. 166A
*ont,s% no *or" r"nt 3oul b" !oll"!t" in $i"3 o+ t," P9%???
alr"a# "1osit"). T,"r" 3as also a sti1ulation t,at in !as" o+
non.!o*1l"tion o+ t," t"r* o+ t,r"" #"ars% t," P9%??? 3oul b"
+or+"it". T," t"nant t,"n +ait,+ull# 1ai +or t," +irst on" an
on".,al+ #"ars% but 3as not abl" to 1a# +or 6 *ont,s. Plainti++
no3 3rot" a l"tt"r to t," "+"nant% as<ing'
(a) t,at t," t"r*s o+ t," !ontra!t b" "n+or!"% 3it, t," P9%???
b"ing +or+"it"2
(b) but stating t,at i+ t," ba!< r"ntals (+or 6 *ont,s) 3oul
b" 1ai 3it,in 15 a#s% t," "1osit o+ P9%??? 3oul not b"
+or+"it".
;1on r"!"i$ing t," l"tt"r o+ "*an% t," "+"nant l"+t
t," 1r"*is"s 3it,out 1a#ing t," 6 *ont,s r"ntal% on t," b"li"+
t,at t,is !oul b" !,arg" to t," P9%??? "1osit. Issu"' S,oul
t," "ntir" P9%??? b" +or+"it"J
HELD' No% it is not 1ro1"r t,at t," "ntir" P9%??? b" +or.
+"it" +or% a+t"r all% t," l"as" ,a alr"a# "4ist" +or *or" t,an
,al+ o+ t," 1"rio sti1ulat". Hal+ o+ P9%??? *a#% ,o3"$"r%
b" +or+"it". It is unjust +or t," 3,ol" a*ount to b" +or+"it"
!onsi"ring% asi" +ro* t," 1artial 1"r+or*an!"% t," +ollo3ing
+a!tors'
(a) T," lanlor !oul loo< +or anot,"r t"nant a+t"r t," 15.a#
1"rio o+ gra!".
(b) T," t"nant i not l"a$" in ba +ait,% +or it ,on"stl#
t,oug,t% +ro* t," l"tt"r o+ "*an% t,at it 3as all rig,t to
l"a$"% 3it, t," 6 *ont,s r"nt b"ing *"r"l# "u!t" +ro*
t," P9%???.
Kulo $. P"
L.1??61% A1r. 66% 1A5C
FACTS' A builing 3as l"as"% 3it, an a$an!" 1a#*"nt
o+ P6%???. It 3as 1ro$i" in t," !ontra!t t,at i+ t," t"nant
"+aults in t," 1a#*"nt o+ t," *ont,l# r"nt% t," !ontra!t 3ill
b" auto*ati!all# !an!"ll"% an -at t," sa*" ti*"% a rig,t o+
Art. 166A
!on+is!ation is grant" t," l"ssor o+ t," l"ss""8s a$an!" 1a#*"nt
as a*ag"s./ Issu"' Is t," sti1ulation $aliJ
Art. 166A
HELD' T," sti1ulation is a 1"nalt# !laus"% an "$"n i+ in.
iEuitous or un!ons!ionabl"% in a s"ns"% it is not $oi% but subj"!t
*"r"l# to "Euitabl" r"u!tion. &or"o$"r% t," a*ount t,at !an
b" r"!o$"r" is not li*it" *"r"l# to a!tual or !o*1"nsator#
a*ag"s.
;*ali $. &i!lat
L.A666% =ul. 1?% 1A5A
(a) I+ t," 1"nalt# !laus" is unr"asonabl"% as 3,"n it 1ro$i"
+or a sur!,arg" o+ 1?Q "$"r# 9? a#s in !as" o+ +ailur" to
+ul+ill t," obligation% "Euit# "*ans t,at t," sa*" b"
5ED;CED in +airn"ss to t," obligor. A sur!,arg" o+ 6?Q
1"r annu* 3oul% ,o3"$"r% b" r"asonabl".
(b) I+ in aition to t," sur!,arg" as 1"nalt#% t," !ontra!t also
1ro$i"s t,at a*ag"s *a# b" r"!o$"r"% sai sti1ulation
as to a*ag"s 3oul b" all rig,t% an s,oul b" !o*1ut"
on t," basis o+ 6Q 1"r annu*% t," obligation b"ing *on.
"tar# in !,ara!t"r. Art. 1666 "41r"ssl# allo3s a sti1ulation
as to a*ag"s% in aition to t," 1"nalt#.
5"#"s $. Viua # Hijos " For*oso
(C.A.) @6 O.>. No. 5661
A +ortuitous "$"nt *ilitat"s against t," "n+or!"*"nt o+ a
1"nalt# !laus" against t," l"ssor an against t," l"ss"". For
"4a*1l"% t," i!tatorial a!ts o+ t," =a1an"s" ar*# in ta<ing
o$"r a l"as" builing uring t," =a1an"s" o!!u1ation. Fro*
anot,"r $i"31oint% i+ bot, 1arti"s !o**itt" a br"a!, o+ a r".
!i1ro!al obligation% it is !l"ar t,at t," 1"nalt# !laus" !annot b"
"n+or!".
FNOTE' It is t,us !l"ar t,at a 1"nal !laus" !annot b" "n.
+or!" i+'
(a) t," br"a!, is t," +ault o+ t," !r"itor (TS% D"!. 1A% 1BA1)2
(b) or a +ortuitous "$"nt int"r$"n"% unl"ss t," "btor "41r"ssl#
agr"" on ,is liabilit# in !as" o+ +ortuitous "$"nts (3,"r"
," a!ts as -insur"r/) (S"" TS% D"!. 15% 1A66)2
Art. 166A
(!) t," "btor is not #"t in "+ault. (TS% &a# 61% 1A?@).G
Art. 169?
Co**"r!ial Cr"it Cor1. o+ Caga#an
" Oro $. CA an t," Caga#an
" Oro Colis"u*% In!.
>5 CB915% =an. 6% 1ABA
Art. 166A o+ t," Ci$il Co" a11li"s onl# to an obliga.
tion or !ontra!t% subj"!t o+ a litigation% t," !onition b"ing
t,at t," sa*" ,as b""n 1artl# or irr"gularl# !o*1li" 3it,
b# t," "btor. Sai 1ro$iso also a11li"s "$"n i+ t,"r" ,as
b""n no 1"r+or*an!"% as long as t," 1"nalt# is iniEuitous
or un!ons!ionabl". It !annot a11l# to a +inal an "4"!utor#
jug*"nt.
I,"n t," 1arti"s "nt"r" into t," !o*1ro*is" agr"".
*"nt an sub*itt" t," sa*" +or t," a11ro$al o+ t," trial
!ourt% its t"r*s an !onitions *ust b" t," 1ri*orial
!onsi"ration 3,# t," 1arti"s $oluntaril# "nt"r" into t,"
sa*". T," trial !ourt a11ro$" it b"!aus" it is la3+ul% an
is not against 1ubli! 1oli!# or *orals. E$"n t," r"s1on"nt
Court o+ A11"als u1,"l t," $aliit# o+ t," sai !o*1ro*is"
agr""*"nt. H"n!"% t," r"s1on"nt !ourt ,as no aut,orit#
to r"u!" t," 1"nalt# an attorn"#8s +""s t,"r"in sti1ulat"
3,i!, is t," la3 b"t3""n t," 1arti"s an is r"s jui!ata.
Insular 7an< o+ Asia an A*"ri!a $. SalaHar
>5 B6?B6% &ar. 65% 1ABB
T," Ci$il Co" 1"r*its t," agr""*"nt u1on a 1"nalt#
a1art +ro* t," int"r"st. S,oul t,"r" b" su!, an agr"".
*"nt% t," 1"nalt# o"s not in!lu" t," int"r"st% an as
su!, t," t3o ar" i++"r"nt an istin!t t,ings 3,i!, *a#
b" "*an" s"1arat"l#. T," sti1ulation about 1a#*"nt
o+ su!, aitional rat" 1arta<"s o+ t," natur" o+ a 1"nalt#
!laus"% 3,i!, is san!tion" b# la3.
Art. 169?. T," nullit# o+ t," 1"nal !laus" o"s not !arr#
3it, it t,at o+ t," 1rin!i1al obligation.
T," nullit# o+ t," 1rin!i1al obligation !arri"s 3it, it
Art. 169?
t,at o+ t," 1"nal !laus".
Art. 169?
CO&&ENT'
(1) E++"!t o+ Nullit# o+ t," P"nalt# Claus"
I+ t," 1rin!i1al obligation is null an $oi% t," 1"nal !laus"
3ill ,a$" no *or" us" +or "4ist"n!" an is t,"r"+or" also !on.
si"r" null an $oi. ;1on t," ot,"r ,an% just b"!aus" t,"
1"nal !laus" is not $ali% it o"s not *"an t,at its nullit# 3ill
also *a<" t," 1rin!i1al obligation null an $oi. 5"ason' T,"
1rin!i1al obligation !an stan alon"% an t," $oi 1"nal !laus"
3ill just b" isr"gar".
(6) E4a*1l"s
(a) A is oblig" to gi$" 7 a 1a!< o+ s,abu. T,"r" is a 1"nal !laus"
r"garing t," +or+"itur" o+ P5??%??? in !as" o+ non.!o*1lian!"
o+ t," obligation. H"r"% t," subj"!t *att"r is outsi" t," !o*.
*"r!" o+ *an. T," 1"nalt# !laus" ,"r"% alt,oug, in its"l+ $ali%
3ill also b" !onsi"r" null an $oi b"!aus" -t," nullit# o+ t,"
1rin!i1al obligation !arri"s 3it, it t,at o+ t," 1"nal !laus"./ (Art.
169?% 6n 1aragra1,% Ci$il Co").
(b) A is oblig" to !onstru!t a ,ous" +or 7 3it,in 6 *ont,s. T,"
!ontra!t 1ro$i"s +or a 1"nalt# !laus" in !as" A is not abl" to
1"r+or* ,is obligation 3it,in t," sti1ulat" 1"rio. T," 1"nal
!laus" !onsists o+ t," gi$ing b# A to 7 o+ s"$"ral tins o+ o1iu*.
H"r" t," 1"nalt# !laus" is null an $oi b"!aus" o1iu* is out.
si" t," !o**"r!" o+ *an. 7ut t," 1rin!i1al obligation% t,at o+
!onstru!ting t," ,ous"% r"*ains $ali. T," 1"nal !laus" 3ill
b" isr"gar". T," la3 1ro$i"s t,at -t," nullit# o+ t," 1"nal
!laus" o"s not !arr# 3it, it t,at o+ t," 1rin!i1al obligation./
(Art. 169?% 1ar. 1% Ci$il Co").
Chapter 4
ETINGUIS!"ENT OF OBLIGATION
GENERAL PROVISIONS
Art. 1691. Obligations ar" "4tinguis,"'
(1) 7# 1a#*"nt or 1"r+or*an!"2
(6) 7# t," loss o+ t," t,ing u"2
(9) 7# t," !ononation or r"*ission o+ t," "bt2
(@) 7# t," !on+usion or *"rg"r o+ t," rig,ts o+ !r"itor
an "btor2
(5) 7# !o*1"nsation2
(6) 7# no$ation.
Ot,"r !aus"s o+ "4tinguis,*"nt o+ obligations% su!, as
annul*"nt% r"s!ission% +ul+ill*"nt o+ a r"solutor# !onition%
an 1r"s!ri1tion% ar" go$"rn" "ls"3,"r" in t,is Co".
CO&&ENT'
(1) Classi+i!ation b# CASTAN o+ Caus"s o+ E4tinguis,*"nt
o+ Obligations
(a) Voluntar#2 an
(b) In$oluntar#
Voluntar# Caus"s' (a)
P"r+or*an!"
1) 1a#*"nt or 1"r+or*an!"
6) !onsignation
Art. 1691
(b) Substitution o+ 1"r+or*an!"
1) !o*1"nsation
6) no$ation
9) a!ion "n 1ago (atio in solutu*)
(!) Agr""*"nt to r"l"as"
1) subs"Eu"nt to obligation'
a) unilat"ral 3ai$"r
b) natural 3ai$"r
!) r"*ission
) *utual iss"nt (is"nso)
") !o*1ro*is"
6) si*ultan"ous 3it, !r"ation o+ obligation'
a) r"solutor# t"r* or "4tin!ti$" 1"rio
b) r"solutor# !onition or !onition subs"Eu"nt
In$oluntar# Caus"s'
(a) 7# +ailur" to bring an a!tion
E4a*1l"' 1r"s!ri1tion o+ t," rig,t o+ a!tion (Statut" o+
li*itations)
(b) 5"solutor# !onition or !onition subs"Eu"nt
E4a*1l"s'
1)
6)
*"rg"r or !on+usion
in 1"rsonal obligations 0 b# t," "at,
o+ a 1art#
9) !,ang" o+ !i$il status (in obligations
b". !aus" o+ +a*il# r"lations)
(!) 7# r"ason o+
t,
" obj"!t
E4a*1l"s'
1)
I*1ossibilit# o+ 1"r+or*an!"
6) Loss o+ t," t,ing u"
(6) Classi+i!ation A!!oring to t," Ci$il Co"
Art. 1691
(a) Orinaril# b#
Art. 1691
1) 1a#*"nt or 1"r+or*an!"
6) loss o+ t," t,ing u"
9) !ononation or r"*ission o+ t," "bt or 3ai$"r
@) !on+usion or *"rg"r o+ t," rig,ts o+ !r"itor an
"btor
5) !o*1"nsation
6) no$ation (Art. 1691% Ci$il Co")
(b) Ot,"r !aus"s *"ntion" in Art. 1691 o+ t," Ci$il Co" but
go$"rn" un"r ot,"r C,a1t"rs o+ t," Co"
1
)
annul*"nt
6
)
r"s!ission
9
)
+ul+ill*"nt o+ a r"solutor# !onition
@
)
1r"s!ri1tion
(!) S
ti
l ot,"r !aus"s
1
)
"at, o+ a 1art# in !as" t," obligation is a
1"rsonal on" (as 3,"n a sing"r% ,ir" to 1"r+or*
at a !on!"rt% i"s b"+or" t," !on!"rt b"gins)
6
)
r"solutor# t"r* 0 (,"r" t," obligation !"as"s
u1on t," arri$al o+ t," t"r*)
9
)
!,ang" o+ !i$il status 0 (as 3,"n a *arri"
3o*an b"!o*"s a 3io3% or 3,"n an un*arri"
3o*an g"ts *arri")
@
)
!o*1ro*is"s
5
)
*utual iss"nt (as 3,"n bot, 1arti"s to a
!ontra!t r"+us" to go a,"a 3it, t," !ontra!t)
6
)
i*1ossibilit# o+ +ul+ill*"nt
C
)
+ortuitous "$"nt
Co**ission"r o+ Int"rnal 5"$"nu"
$. Iillia* =. Sut"r M
t," Court o+ Ta4 A11"als
L.65596% F"b. 6B% 1A6A
Art. 1691
FACTS' A li*it" 1artn"rs,i1 na*" -Iillia* =. Sut"r
O&or!oin8 Co.% Lt./ 3as +or*" on S"1t. 9?% 1A@C b# Iillia* =.
Art. 1691
Sut"r as g"n"ral 1artn"r (on" liabl" "$"n b"#on ,is !ontribu.
tion)% an =ulia S1irig an >usta$ Carlson% as li*it" 1artn"rs
(t,os" liabl" onl# to t," "4t"nt o+ t,"ir !ontributions). In 1A@B%
Sut"r an S1irig got *arri"% an so*"ti*" lat"r% Carlson sol
,is s,ar" in t," 1artn"rs,i1 to Sut"r an ,is 3i+". Issu"' Di
t," *arriag" issol$" or 1ut an "n to t," 1artn"rs,i1J
HELD' No% t," *arriag" i not issol$" t," 1artn"rs,i1.
I,il" s1ous"s !annot "nt"r into a uni$"rsal 1artn"rs,i1% t,"#
!an "nt"r into a 1arti!ular 1artn"rs,i1 or b" *"*b"rs t,"r"o+.
T," !ontra!t 3as not% t,"r"+or"% "n".
La*b"rto Torrijos $. Court o+ A11"als
L.@?996% O!t. 6@% 1AC5
FACTS' In 1A6@ Torrijos 1ur!,as" a lot +ro* Dia*nuan.
Lat"r Torrijos l"arn" t,at in 1A6A Dia*nuan sol t," sa*"
lot to D" >uia. Torrijos initiat" an "sta+a !o*1laint against
t," s"ll"r% 3,o 3as !on$i!t". During t," a11"al in t," Court
o+ A11"als% t," a!!us" Dia*nuan i". His la3#"r +il" a *o.
tion to is*iss all"ging t,at t," "at, o+ ,is !li"nt% 1rior to +inal
jug*"nt% "4tinguis," bot, t," 1"rsonal an t," 1"!uniar#
1"nalti"s. Issu"' Is t," !i$il liabilit# also "4tinguis,"J
HELD' T," !i$il liabilit# ,"r" is not "4tinguis,"% b"!aus"
in"1"n"ntl# o+ t," !ri*inal !as"% t," a!!us" 3as !i$ill# liabl"
to Torrijos. I+ a+t"r r"!"i$ing t," 1ur!,as" 1ri!" +ro* Torrijos% ,"
+ail" to "li$"r t," 1ro1"rt# ("$"n b"+or" s"lling it again to D"
>uia)% t,"r" 3oul as #"t b" no "sta+a% but t,"r" is no Eu"stion
o+ ,is !i$il liabilit# t,ru an a!tion b# Torrijos "it,"r +or s1"!i+i!
1"r+or*an!" 1lus a*ag"s or r"s!ission 1lus a*ag"s. D"at,
is not a $ali !aus" +or t," "4tinguis,*"nt o+ a !i$il obligation.
Ha t," onl# basis b""n t," !o**ission o+ "sta+a% it is !l"ar t,at
t," "4tinguis,*"nt o+ t," !ri*inal r"s1onsibilit# 3oul also
"4tinguis, t," !i$il liabilit#% 1ro$i" t,at "at, !o*"s b"+or"
+inal jug*"nt. Furt,"r*or"% un"r Arts. 1A% 6?% an 61 o+ t,"
Ci$il Co"% t," a!!us" 3oul b" !i$ill# liabl" in"1"n"ntl# o+
t," !ri*inal liabilit# +or 3,i!, ," !an b" ,"l liabl". An t,is
!i$il liabilit# "4ists "s1it" "at, 1rior to +inal jug*"nt o+
Art. 1691
!on$i!tion.
Art. 1696
LaHaro $. Sagun
CB SC5A 1??
T," "at, o+ a la3#"r r"n"rs *oot an a!a"*i! !,arg"s
against ,i* +or un"t,i!al a!ts.
S"!tion 1
PAK&ENT O5 PE5FO5&ANCE
Art. 1696. Pa#*"nt *"ans not onl# t," "li$"r# o+
*on"# but also t," 1"r+or*an!"% in an# ot,"r *ann"r% o+ an
obliga. tion.
CO&&ENT'
(1) OPa#*"nt8 D"+in"
Pa#*"nt is t,at *o" o+ "4tinguis,ing obligations 3,i!,
!onsists o+'
(a) t," "li$"r# o+ *on"#% or
(b) t," 1"r+or*an!" in an# ot,"r *ann"r o+ an obligation.
(E4a*1l"' r"nition o+ t," r"Euir" s"r$i!").
(6) Pr".E4isting Obligation
A 1"rson 1a#s a 1r"."4isting obligation. I+ no su!, obliga.
tion "4ists% stri!tl# s1"a<ing t,"r" is no 1a#*"nt.
E4a*1l"'
A 3as gi$"n t," o1tion to bu# a !ar or not% 3it,in t," 1".
rio o+ on" 3""<. H"r"% A ,as no ut# to bu#. 7ut i+ ," "!i"s
to bu#% an obligation is !r"at" an ," *ust 1a#. (S"" Asturias
C"ntral $. Pur" Can" &olass"s Co.% 6? P,il. 65A% 3,"r" it 3as
,"l t,at a -1a#*"nt/ *a" b"!aus" o+ a r"s"r$" rig,t or o1.
tion or 1ri$il"g" is not go$"rn" b# Arts. 1696 to 1666% b"!aus"
su!, -1a#*"nt/ !annot b" "*an" b# t," !r"itor.)
(9) A!!"1tan!" b# Cr"itor
For 1a#*"nt to 1ro1"rl# "4ist% t," !r"itor ,as to a!!"1t
Art. 1696
t," sa*"% "41r"ssl# or i*1li!itl#. Pa#*"nt% +or $ali r"asons%
*a# 1ro1"rl# b" r"j"!t". (TS% &a# 1B% 1A@9).
Art. 1699
(@) E++"!t o+ Pa#*"nt &a" ;n"r a Voi =ug*"nt
I+ t," jug*"nt u1on 3,i!, t," aggri"$" 1art# *a"
1a#*"nt is null an $oi% t," 1a#*"nt *a" t,"r"un"r is also
null an $oi. (&anila Sur"t# an Fi"lit# Co. $. Li*% L.A9@9%
D"!. 6A% 1A5A).
Art. 1699. A "bt s,all not b" un"rstoo to ,a$" b""n
1ai unl"ss t," t,ing or s"r$i!" in 3,i!, t," obligation
!onsists ,as b""n !o*1l"t"l# "li$"r" or r"n"r"% as t,"
!as" *a# b".
CO&&ENT'
(1) Co*1l"t"n"ss o+ Pa#*"nt
5"Euisit"s +or a $ali 1a#*"nt un"r t,is Arti!l"'
(a) T," $"r# t,ing or s"r$i!" !ont"*1lat" *ust b" 1ai.
(b) Ful+ill*"nt *ust b" !o*1l"t". (5a*os $. L""s*a% 16 P,il.
656).
(6) Ho3 Pa#*"nt or P"r+or*an!" Is &a"
(a) I+ t," "bt is a *on"tar# obligation% b# "li$"r# o+ t,"
*on"#. T," a*ount 1ai *ust b" +ull% unl"ss o+ !ours"
ot,"r3is" sti1ulat" in t," !ontra!t.
FNOTE' T," t"r* -in"bt"n"ss/ ,as b""n "+in"
as an un!onitional an l"gall# "n+or!"abl" obligation +or
t," 1a#*"nt o+ *on"#. (Co**ission"r o+ Int. 5"$. $. Pri"to%
L.19A16% S"1t. 9?% 1A6?). Iit,in t,at "+inition% it is a11ar.
"nt t,at a ta4 *a# b" !onsi"r" as an in"bt"n"ss. (S""
Sa*brano $. Court o+ Ta4 A11"als% "t al.% 59 O.>. @B9A).G
(b) I+ t," "bt is t," "li$"r# o+ a t,ing or t,ings% b# "li$"r#
o+ t," t,ing or t,ings.
(!) I+ t," "bt is t," oing o+ a 1"rsonal un"rta<ing% b# t,"
1"r+or*an!" o+ sai 1"rsonal un"rta<ing.
Art. 1699
() I+ t," "bt is not oing o+ so*"t,ing% b# r"+raining +ro*
oing t," a!tion.
Art. 1699
(9) 7ur"n o+ Proo+
(a) An all"g" !r"itor ,as t," bur"n o+ s,o3ing t,at a $ali
"bt "4ists.
(b) On!" ," o"s t,is% t," "btor ,as t," bur"n o+ 1ro$ing
t,at ," ,as 1ai t," sa*". (Lo1"H $. Tan Tio!o% B P,il.
6A9). T,us% i+ a 1ro*issor# not" is still in t," !r"itor8s
1oss"ssion% t," 1r"su*1tion is t,at it ,as not #"t b""n
1ai. (7antug $. "l 5osario% 11 P,il. 511).
(@) &"ans o+ Pro$ing Pa#*"nt
On" goo 1roo+ is t," 1r"s"ntation o+ t," r"!"i1t. (Toribio
$. Fo4% 9@ P,il. A19). A "btor is justi+i" in "*aning t,at a
!r"itor issu" a r"!"i1t 3,"n t," "bt is 1ai. (TS% =an. 5% 1A112
s"" Art. 1656% Ci$il Co").
=a$i"r $. 7rinas
(C.A.) @? O.>. @t, Su11. No. B% 1. 6CA
FACTS' A borro3" *on"# +ro* 7% t," "bt to b" 1ai
in install*"nts. T,"r" 3"r" s"$"ral r"!"i1ts% "a!, o+ 3,i!,
a!<no3l"g" t," 1a#*"nt o+ a !"rtain install*"nt. 7 broug,t
an a!tion against A +or install*"nts not !o$"r" b# r"!"i1ts. A8s
"+"ns" 3as t,at ," ,a 1ai t," 3,ol" "bt but t,at ," !oul not
s,o3 all t," r"!"i1ts +or all t," install*"nts b"!aus" t,"r" 3"r"
instan!"s 3,"n in ,is "alings 3it, t," !r"itor% no r"!"i1t 3as
issu" in ,is +a$or. Issu"' Is A8s t"sti*on# su++i!i"nt to "stablis,
or 1ro$" t," +a!t t,at t," 3,ol" "bt ,a b""n 1aiJ
HELD' No% ,is t"sti*on# o"s not !onstitut" su++i!i"nt
1roo+ t,at t," "ntir" "bt ,as b""n 1ai. His t"sti*on# is in
+a!t in!o*1atibl" 3it, t," usual 1ro!"ur" b"t3""n ,i* an 7%
t," !r"itor% as "$i"n!" b# t," +a!t t,at in t,"ir transa!tions%
r"!"i1ts 3"r" issu".
(NOTE' It *ust b" r"!all" at t,is stag"% ,o3"$"r% t,at
a r"!"i1t +or a lat"r install*"nt "stablis,"s t," 1r"su*1tion t,at
1rior or 1r"$ious install*"nts ,a$" b""n 1ai or is!,arg".)
Art. 169@
(5) In a usur# !as"% it ,as b""n ,"l t,at t," *"r" +a!t t,at t,"
int"r"st is usurious o"s not n"!"ssaril# *"an t,at t," loan
is $oi. A+t"r all% t," loan its"l+ is t," 1rin!i1al !ontra!t. T,"
sti1ulation r"garing int"r"st *a# b" r"gar" as *"r"l# a!!"s.
sor#. T," 1rin!i1al o+ t," loan *ust still b" 1ai% ot,"r3is" it
r"*ains un1ai.
>ui =ong M Co. $. 5i$"ra an A$"llar
@5 P,il. CCB
FACTS' 5i$"ra borro3" *on"# +ro* >ui =ong an Co.
at a usurious rat"% s"!ur" b# a *ortgag". I,"n as<" +or 1a#.
*"nt% ," sai t,at ,is obligation ,as b""n "4tinguis," b"!aus"
t," !ontra!t is usurious. Issu"' Is ," !orr"!tJ I+ t," l"n"r no3
"sir"s to +or"!los"% *a# ," o soJ
HELD' T," obligation to 1a# t," 1rin!i1al (an t," la3+ul
int"r"st) ,as not b""n "4tinguis," an in !as" o+ non.1a#*"nt
t,"r"o+% +or"!losur" is 1ro1"r.
Art. 169@. I+ t," obligation ,as b""n substantiall# 1"r.
+or*" in goo +ait,% t," obligor *a# r"!o$"r as t,oug, t,"r"
,as b""n stri!t an !o*1l"t" +ul+ill*"nt% l"ss a*ag"s su++"r"
b# t," oblig"".
CO&&ENT'
Substantial P"r+or*an!" in >oo Fait,
(a) T," abo$" rul" (Art. 169@) is ao1t" +ro* A*"ri!an La3.
Its +airn"ss is "$i"nt. In !as" o+ substantial 1"r+or*an!"%
t," oblig"" is b"n"+it". So t," obligor s,oul b" allo3"
to r"!o$"r as i+ t,"r" ,a b""n a stri!t an !o*1l"t" +ul+ill.
*"nt% l"ss a*ag"s su++"r" b# t," oblig"". T,is last !on.
ition a++ors a just !o*1"nsation +or t," r"lati$" br"a!,
!o**itt" b# t," obligor. (5"1ort o+ t," Co" Co**ission%
1. 191).
(b) It *ust b" not" t,at t," liabilit# o+ t," "btor +or a*ag"s
su++"r" b# t," !r"itor in !as" o+ substantial 1"r+or*an!"
Art. 169@
o"s not aris" un"r t," !onitions s"t +ort, in Art. 1695
o+ t," Ci$il Co".
Art. 1695
(!) Inas*u!, as substantial 1"r+or*an!" in goo +ait, *a#
alr"a# b" "Eui$al"nt to -+ul+ill*"nt/ or -1a#*"nt%/ it
+ollo3s t,at t," rig,t to r"s!in (*"ntion" in Art. 11A1)
!annot b" us" si*1l# b"!aus" t,"r" ,a$" b""n slig,t
br"a!,"s o+ t," obligation. In +a!t% su!, rig,t to r"s!in is
not absolut"% an t,"r"+or" t," Court *a# "$"n grant% at
its is!r"tion% a 1"rio to a 1"rson in "+ault% 3it,in 3,i!,
t," obligation !an b" +ul+ill". (S"" >abo#a $. Cui% L.1A61@%
&ar. 6C% 1AC1).
5os"t"% "t al. $. P"rob"r D"$. Cor1.
CA.>5 61?96.5
=ul. 91% 1AB1
Substantial 1"r+or*an!" or !o*1lian!" is% in a s"ns"% a
1"r+or*an!" a!!oring to t," +air int"nt o+ t," !ontra!t% 3it,
an att"*1t in goo +ait, to 1"r+or*.
Fair "aling an "Euit# "*an a +ait,+ul !o*1lian!" o+
on"8s !ontra!tual obligations.
Art. 1695. I,"n t," oblig"" a!!"1ts t," 1"r+or*an!"%
<no3ing its in!o*1l"t"n"ss or irr"gularit#% an 3it,out "4.
1r"ssing an# 1rot"st or obj"!tion% t," obligation is ""*"
+ull# !o*1li" 3it,.
CO&&ENT'
(1) Esto11"l on t," Cr"itor8s Part in Vi"3 o+ His A!!"1t.
an!"
5"ason +or t," Arti!l"' T," 1r"s"n!" o+ IAIVE5 an ES.
TOPPEL.
(6) :uali+i" A!!"1tan!"
Not" t,at un"r t,is Arti!l"% t,"r" is a 1ossibilit# t,at a
1rot"st or obj"!tion !an b" *a". H"n!"% t,"r" is 3,at is !all"
-Euali+i" a!!"1tan!" o+ in!o*1l"t" or irr"gular 1a#*"nt./ 7"
it r"*"*b"r" t,at a !r"itor 3,o gi$"s a r"!"i1t +or a 1artial
Art. 1695
1a#*"nt o"s not n"!"ssaril# a!Eui"s!" to su!, in!o*1l"t" 1a#.
*"nt. His a!tuations *a# s,o3 ,is issatis+a!tion. (Esgu"rra
Art. 1696
$. Villanu"$a% L.691A1% D"!. 1A% 1A6C). T,us% a !r"itor *a#
!onitionall# a!!"1t 1"r+or*an!" b# t," "btor a+t"r t," ti*" o+
*aturit#% but 3it, t," sti1ulation t,at t," sur"t# or t," guar.
antor o+ t," "btor s,oul gi$" CONSENT. T,is is to 1r"$"nt
t," sur"t# or guarantor +ro* lat"r on all"ging t,at t," !r"itor
,a gi$"n an "4t"nsion o+ ti*" to t," "btor. In t,is 3a#% t,"
sur"t# or guarantor !annot !lai* t,at ," ,as b""n r"l"as" +ro*
t," obligation. (=o"8s El"!tri!al Su11l# $. Alto El"!troni! Cor1.%
L.169C6% Aug. 66% 1A5B).
(9) Cas"
Constant" A*or " Castro $. CA
>5 115B9B% =ul. 1B% 6??6
T," 3or -a!!"1t%/ as us" in Art. 1695 o+ t," Ci$il Co"%
*"ans to ta<" a satis+a!tor# or su++i!i"nt% or agr"" to an in!o*.
1l"t" or irr"gular 1"r+or*an!".
In t," !as" at bar% t," *"r" r"!"i1t o+ a 1artial 1a#*"nt
is not "Eui$al"nt to t," r"Euir" a!!"1tan!" o+ 1"r+or*an!" as
3oul "4tinguis, t," 3,ol" obligation.
Art. 1696. T," !r"itor is not boun to a!!"1t 1a#*"nt
or 1"r+or*an!" b# a t,ir 1"rson 3,o ,as no int"r"st in t,"
+ul+ill*"nt o+ t," obligation% unl"ss t,"r" is a sti1ulation to
t," !ontrar#.
I,o"$"r 1a#s +or anot,"r *a# "*an +ro* t," "btor
3,at ," ,as 1ai% "4!"1t t,at i+ ," 1ai 3it,out t,"
<no3l"g" or against t," 3ill o+ t," "btor% ," !an r"!o$"r
onl# inso+ar as t," 1a#*"nt ,as b""n b"n"+i!ial to t,"
"btor.
CO&&ENT'
(1) 5ig,t o+ Cr"itor to 5"+us" Pa#*"nt b# T,ir P"rson
T," !r"itor !an r"+us" 1a#*"nt b# a strang"r (9r 1"rson)
Art. 1696
"4!"1t'
(a) i+ t,"r" is a sti1ulation allo3ing t,is2
Art. 1696
(b) or i+ sai t,ir 1"rson ,as an int"r"st in t," +ul+ill*"nt o+
t," obligation (!o."btor% guarantor% "$"n a joint "btor).
(&ont" " Pi"a $. 5origo% 69 P,il. 916).
(6) Co**"nt o+ t," Co" Co**ission
I,at is t," r"ason o+ t," Co" Co**ission in r"!o*.
*"ning t,at t," !r"itor s,oul not b" !o*1"ll" -to a!!"1t
1a#*"nt or 1"r+or*an!" b# a t,ir 1"rson 3,o ,as no int"r"st
in t," +ul+ill*"nt o+ t," obligation% unl"ss t,"r" is sti1ulation
to t," !ontrar#J
ANS.' -;n"r t," ol Ci$il Co"% t," !r"itor !annot r"+us"
1a#*"nt b# a t,ir 1"rson but t," Co**ission b"li"$"s t,at
t," !r"itor s,oul ,a$" a rig,t to insist on t," liabilit# o+ t,"
"btor. &or"o$"r% t," !r"itor s,oul not b" !o*1"ll" to a!!"1t
1a#*"nt +ro* a t,ir 1"rson 3,o* ," *a# isli<" or istrust.
T," !r"itor *a# not% +or 1"rsonal r"asons% "sir" to ,a$" an#
busin"ss "alings 3it, a t,ir 1"rson2 or t," !r"itor *a# not
,a$" !on+i"n!" in t," ,on"st# o+ t," t,ir 1"rson 3,o *ig,t
"li$"r a "+"!ti$" t,ing or 1a# 3it, a !,"!< 3,i!, *a# b" ,on.
or"./ (5"1ort o+ t," Co" Co**ission% 1. 196).
(9) Obs"r$ation o+ =usti!" =.7.L. 5"#"s
No goo r"ason "4ists +or "1arting +ro* t," rul" o+ t,"
S1anis, Co" (Art. 115B) t,at 1a#*"nt *a# b" *a" b# a
strang"r 3,"r" t," obligation is not intuitu 1"rsona". Su!, rul"
(Art. 115B% ol Co") is justi+i" b#'
(a) t," "4ist"n!" o+ t," Euasi.!ontra!t o+ n"gotioru* g"stio o+
3,i!, 1a#*"nt +or anot,"r is but a $ariant2 an
(b) t," "$olution o+ t," !on!"1t o+ orinar# obligation +ro* a
r"lation o+ 1"rson to 1"rson (as it 3as in 5o*an La3)% to
a r"lation o+ 1atri*on# to 1atri*on# in t," *o"rn la3.
I,"r" no 1"rsonal Eualiti"s ar" in$ol$"% 3,at int"r"st
o"s t," !r"itor ,a$" in s""ing t,at t," 1"r+or*an!"
s,oul b" b# A or 7J As +or t," "btor% ," is 1rot"!t" b#
t," s"!on 1aragra1, o+ Art. 1696% an b# Art. 169C. T,"
Art. 1696
+irst 1aragra1, o+ Art. 1696 s,oul b" "li*inat".88 (:uot"
in Tol"ntino% Ci$il Co"% Vol. @% 1. 6@6).
Art. 1696
(@) Pa#*"nt b# a T,ir P"rson (7A5)
T," t,ir 1"rson *a# 1a#'
(a) 3it, t," <no3l"g" an !ons"nt o+ t," "btor. (H"r"% t,"
1a#or is "ntitl" to 5EI&7;5SE&ENT an S;75O>A.
TION to su!, rig,ts as guarant#% 1"nalt# !laus"% or *ort.
gag".) (S"" Art. 169C2 s"" also D" >uH*an $. Santos% 6B
P,il. 9C1).
(b) 3it,out t," "btor8s <no3l"g" or against ,is 3ill. (H"r"%
t," 1a#or is not "ntitl" to subrogation2 *or"o$"r% ," is
allo3" onl# 7ENEFICIAL 5EI&7;5SE&ENT.)
(E4a*1l"' I+ N 1a#s +or K8s trans1ortation +ar"% 3it,.
out K8s <no3l"g"% or against K8s 3ill% an lat"r is!o$"rs
t,at K 3as "ntitl" to HALF.FA5E% N !an r"!o$"r onl#
sai ,al+.+ar"% "$"n i+ ," ,a 1ai t," F;LL FA5E. T,is
is !l"arl# t," +ault o+ N.)
FNOTE' In t," "4a*1l" gi$"n% !an N r"!o$"r K8s ,al+.
+ar" +ro* t," !r"itorJ
HELD' No% +or t,is is not solutio in"biti (+or sai ,al+.
+ar" 3as r"all# u"). N8s rig,t is against K% t," "btor% +or
sai ,al+.+ar". (S"" 7an< o+ P.I. $. Trinia% @6 P,il. 669
an &ont" " Pi"a $. F"rnano 5origo% 69 P,il. 916).
T," r"*aining ,al+.+ar"% 3,i!, 3as NOT "$"n u" t,"
!r"itor% is o+ !ours" unu" 1a#*"nt or solutio in"biti an
*a# 1ro1"rl# b" r"!o$"r" +ro* t," !r"itor. (B &anr"sa
6C?).G
FNOTE' Ot,"r instan!"s 3,"n r"!o$"r# !an b" ,a
+ro* t," !r"itor an not +ro* t," inno!"nt "btor'
a) 3,"n t," "bt ,a 1r"s!rib"
b) 3,"n t," "bt ,a b""n !o*1l"t"l# r"*itt"
!) 3,"n t," "bt ,as alr"a# b""n 1ai
) 3,"n l"gal !o*1"nsation ,a alr"a# ta<"n 1la!". (B
&anr"sa 6C?).G
E4a*1l"'
Art. 1696
A o3"s 7 P1%???%???. Lat"r% A 1ai 7 PC??%???% l"a$.
ing a balan!" o+ P9??%???. C% a !lass*at" o+ A% an int"n.
Art. 1696
ing to sur1ris" A% 1ai 7 t," su* o+ P1%???%??? t,in<ing
t,at A still o3" 7 t,at a*ount. H" i t,is 3it,out
<no3l"g" o+ A. Ho3 *u!, !an C r"!o$"r +ro* AJ
ANS.' C !an r"!o$"r onl# P9??%??? +ro* A% b"!aus"
it is onl# u1 to t,is a*ount t,at A ,as b""n b"n"+it". C
!an r"!o$"r t," r"*aining PC??%??? +ro* 7 3,o s,oul
not ,a$" a!!"1t" !o*1l"t" 1a#*"nt +or a "bt alr"a#
1artiall# 1ai. I+ 7 in!i"ntall# is in ba +ait,% 7 is r"s1on.
sibl" not onl# +or t," r"turn o+ t," PC??%??? but also +or
t," int"r"st in li"u o+ a*ag"s.
In t," 1r"!"ing 1robl"*% su11os" t," 1a#*"nt b# C
,a b""n *a" against t," 3ill o+ A% 3oul #our ans3"r
b" t," sa*"J
ANS.' K"s% t," ans3"r 3oul b" t," sa*". T," la3
*a<"s no istin!tion as to t," rig,t o+ r"!o$"r# in !as" 1a#.
*"nt b# a strang"r 3as *a" "it,"r 3it,out t," <no3l"g"
or against t," !ons"nt o+ t," "btor. In bot, !as"s% t," 1a#.
ing strang"r -!an r"!o$"r onl# inso+ar as t," 1a#*"nt ,as
b""n b"n"+i!ial to t," "btor./ (Art. 1696% 6n 1aragra1,%
Ci$il Co").
(5) Cas"s
Agon!illo $. =a$i"r
9B P,il. @6@
FACTS' D o3"s C. Iit,out D8s <no3l"g"% N% a +ri"n% 1ai
C 1art o+ D8s "bt. So% D still o3"s t," r"*ain"r. Do"s N8s 1a#.
*"nt o+ 1art o+ t," "bt 1r"$"nt t," running o+ t," 1r"s!ri1ti$"
1"rio r"garing t," r"*aining 1artJ
HELD' No% b"!aus" in no 3a# *a# D b" sai to ,a$" a!.
<no3l"g" t," "4ist"n!" o+ t," "bt.
>onHaga $. >ar!ia
6C P,il. C
FACTS' Fran!is!o sol a 1ar!"l o+ lan a r"tro to so*"bo#.
Art. 1696
In t," r"gistr# r"!ors% t," rig,t to r"1ur!,as" 3as t,"r"+or
annotat". Fran!is!o sol lat"r t,is rig,t o+ r"1ur!,as" to D"l
Art. 1696
5osario 3,o in turn sol t," sa*" to >onHaga. Fran!is!o lat"r
1ai on ,is o3n b",al+ t," r"1ur!,as" *on"# to t," bu#"r a
r"tro% an t," annotation o+ t," rig,t to r"""* in t," 5"gistr#
o+ Pro1"rt# 3as !an!"ll". >onHaga no3 s""<s to ,a$" t," lan
r"gist"r" un"r ,is na*" on t," t,"or# t,at Fran!is!o ,a
1ai +or ,is (>onHaga8s) -"bt%/ an t,"r"+or" t," lan no3
1ro1"rl# b"longs to ,i* (>onHaga).
HELD' P"tition o+ >onHaga 3ill not 1ros1"r% b"!aus" Art.
1696% b"ing a11li!abl" onl# to -"bts%/ !annot b" us" in t,is
!as". >onHaga 3as not a tru" "btor. I,il" >onHaga ,a t,"
rig,t to r"1ur!,as"% su!, rig,t 3as onl# a rig,t% not a ut#. In
a tru" "bt% t,"r" is a ut#. In a !as" o+ t," rig,t to r"1ur!,as"%
3,"t,"r or not t," 1ro1"rt# 3oul b" r"1ur!,as" "1"ns "n.
tir"l# on >onHaga. T,"r"+or"% Fran!is!o8s a!t o+ r"1ur!,asing
i not *a<" D"l 5osario or ,is trans+"rr""% >onHaga% t,"
o3n"r% !annot ,a$" t," lan r"gist"r" un"r ,is na*".
FNOTE' Ha Fran!is!o a!t" as ag"nt +or >onHaga% or ,a
Fran!is!o8s a!t b""n a !as" o+ n"gotioru* g"stio% t," ans3"r
3oul ,a$" b""n i++"r"nt. (S"" Sison $. 7algos% 9@ P,il. BB5%
3,"r" t," Court ,"l t,at an un!l" o+ !"rtain 3ars% 3,"t,"r
a11oint" l"gal guarian +or t,"* or not% is allo3" un"r t,"
la3 to r"1ur!,as" or r"""* 1ro1"rt# in b",al+ o+ t," *inors%
inas*u!, as "$"n a t,ir 1"rson% 3,o is a !o*1l"t" strang"r%
*a# 1a# +or so*"on" un"r Art. 1696).G
&itsui 7ussan Dais,a $. &"ral!o
9A P,il. 66@
FACTS' Plainti++% a s"ll"r in =a1an% sol to "+"nant%
a bu#"r% so*" !oal. I,il" "li$"r# 3as b"ing *a"% t," P,il.
L"gislatur" i*1os" a s1"!i+i! ta4 o+ P1 1"r *"tri! ton o+ !oal.
So t,at t," !oal !oul "nt"r &anila% t," 1lainti++ 1ai t,is ta4.
I,"n "+"nant 3as as<" +or r"i*burs"*"nt% "+"nant r".
+us" to 1a#. H"n!"% 1lainti++ broug,t t,is a!tion.
Issu"s' 1
)
I,o s,oul r"all# 1a# t," ta4J
Art. 1696
6
)
I+ bu#"r s,oul r"all# 1a# t," ta4% *a#
s"ll"r r"!o$"r +ro* t," bu#"r 3,at ,as b""n
1ai +or t," ta4"s% "$"n t,oug, sai
1a#*"nt 3as "+. +"!t" 3it,out t," !ons"nt
o+ t," bu#"rJ
Art. 1696
HELD' (1) T," bu#"r s,oul r"all# 1a# t," ta4. Alt,oug,
t," A!t 1ro$i"s t,at t," s"ll"r *a# 1a# t," ta4% as is 1ra!tis"
un"r our r"$"nu" s#st"*% still t," ulti*at" liabilit# s,oul +all
u1on t," bu#"r.
(6) Sin!" t," s"ll"r% t,"r"+or"% *"r"l# 1ai in b",al+ o+ t,"
bu#"r% t," s"ll"r !an no3 r"!o$"r t," ta4 1ai +ro* t," bu#"r%
not3it,staning t," +a!t t,at t," bu#"r8s !ons"nt ,a not b""n
1r"$iousl# obtain". I,at !an b" r"!o$"r" is t,at a*ount 3,i!,
,as b"n"+it" t," bu#"r ("btor o+ t," ta4)% an in t,is !as"% t,"
a*ount o+ b"n"+it 3as !l"arl# t," 3,ol" ta4.
(NOTE' ;n"r Art. 61C5 o+ t," Ci$il Co"% t," +ollo3ing is
"41r"ssl# 1ro$i"' -An# 1"rson 3,o is !onstrain" to 1a# t,"
ta4"s o+ anot,"r s,all b" "ntitl" to r"i*burs"*"nt +ro* t,"
latt"r./)
5",abilitation Finan!" Cor1. $.
Court o+ A11"als% "t al.
A@ P,il. AB5
In t,is !as"% t," Court *a" t," +ollo3ing rulings'
1) As to 3,"t,"r or not 1a#*"nt b# a t,ir 1"rson r"all# b"n"+it"
t," "btor is a *att"r to b" broug,t u1 b# t," "btor% an not
t," !r"itor% +or ,a$ing gi$"n !ons"nt to t," strang"r8s 1a#*"nt%
t," "bt is alr"a# 1ai% an as !r"itor% ," no3 st"1s out o+ t,"
1i!tur". &or"o$"r% onl# t," "btor8s rig,ts ar" a++"!t".
6) On!" t," !r"itor ,as a!!"1t" 1a#*"nt +ro* a strang"r% it
!annot lat"r on r"Euir" t," 1"r*ission o+ t," "btor to t," 1a#.
*"nt.
9) H"r" also% t," Su1r"*" Court sai t,at i+ t," strang"r 1a#s
3it, t," <no3l"g" o+ t," "btor 3,o <""1s Eui"t an o"s not
obj"!t% it is as i+ t," "btor ,a r"all# !ons"nt". T," "btor is
not allo3" to 1rot"st long a+t"r t," 1a#*"nt. His !onu!t at
t," ti*" o+ 1a#*"nt is 3,at !ounts.
FNOTE' T," <no3l"g" o+ t," "btor t,at so*"on" is 1a#.
ing +or ,i* !an b" 1ro$" in+"r"ntiall# an b# ,is !onu!t. (S""
Art. 1696
D" >uH*an $. Santos% 6B P,il. 9C1).G
Art. 169C
C,onn"# Li* $. CA% L"a
Castro I,"lan M D"it, La3r"n!" I,"lan
>5 1?@B1A.6?% =ul. 6?% 1AAB
T," 1a#*"nt o+ t," loan an !a1ital gains ta4 unoubt"l#
r"li"$" t," a11"llant +ro* su!, obligations. T," b"n"+it ,a
"$"n b""n *utual% bot, a11"llant an a11"ll"" ,a obtain"
a$antag"s on t,"ir si"s 0 t," a11"llant +ro* ,is loan% an
a11"ll"" +ro* b"ing s"!ur" o+ t," 1oss"ssion.
T,is Court +ins no "rror in ruling t,at 1"tition"r Li* is
not "ntitl" to r"s!ission o+ t," !ontra!t. It !annot b" "ni"
t,at C,onn"# Li* is also not 3it,out +ault in t,is !as". It 3as
Li*8s obligation to s"" to it t,at t," 1ro1"rt# 3as +r"" +ro*
all "n!u*bran!"s an ta4 liabiliti"s% int"r alia% 3,i!, ," ob$i.
ousl# +ail" to o. T," r"s1on"nt !ourt8s ruling in !onsi"ring
t," 1a#*"nt o+ t," *ortgag" loan an t," !a1ital gains ta4 b#
L"a I,"lan as ,"r +ull 1a#*"nt +or t," 1ro1"rt# is but a +air
is1osition 3,i!, t,is Court o"s not s"" an# !og"nt r"ason to
r"$"rs".
Art. 169C. I,o"$"r 1a#s on b",al+ o+ t," "btor 3it,out
t," <no3l"g" or against t," 3ill o+ t," latt"r% !annot
!o*1"l t," !r"itor to subrogat" ,i* in ,is rig,ts% su!, as
t,os" aris. ing +ro* a *ortgag"% guarant#% or 1"nalt#.
CO&&ENT'
(1) I,"n No Subrogation E4ists
T,is Arti!l" is an a*"n*"nt o+ Art. 115A o+ t," ol Ci$il
Co". ;n"r t," arti!l" o+ t," ol Ci$il Co"% no *"ntion 3as
*a" in !as" t," 1a#or 1ai against t," 3ill o+ t," "btor. Fur.
t,"r*or"% no "4a*1l"s o+ subrogation 3"r" *a". T," a*"n.
*"nt% ,o3"$"r% o"s not "++"!t an# rai!al !,ang" in t," la3
inas*u!, as "$"n un"r t," ol Ci$il Co"% our juris1ru"n!"
,as rul" t,at on" 3,o 1a#s 3it,out t," <no3l"g" o+ t," "btor
,as no rig,t to subrogation. H"n!"% 3it, l"ss r"ason s,oul a
1a#or against t," 3ill o+ t," "btor b" "ntitl" to subrogation.
;n"r t," ol Ci$il Co" too% t," !on!"1t o+ subrogation an t,"
Art. 169C
rig,ts it !arri" 3"r" 3"ll <no3n2 ,"n!"% t," N"3 Ci$il Co"
arti!l" in t,is r"s1"!t ,as not *a" an# substantial !,ang".
Art. 169C
(6) OSubrogation8 D"+in"
Subrogation *"ans t," a!t o+ 1utting so*"bo# into t,"
s,o"s o+ t," !r"itor% ,"n!"% "nabling t," +or*"r to "4"r!is" all
t," rig,ts an a!tions t,at !oul ,a$" b""n "4"r!is" b# t,"
latt"r. T," la3 sa#s' -Subrogation trans+"rs to t," 1"rson subro.
gat" t," !r"it 3it, all t," rig,ts t,"r"to a11"rtaining% "it,"r
against t," "btor or against t,ir 1"rsons% b" t,"# guarantors or
1oss"ssors o+ *ortgag"s% subj"!t to sti1ulation in a !on$"ntional
subrogation./ (Art. 19?9% Ci$il Co").
(9) So*" 5ig,ts I,i!, &a# 7" E4"r!is" b# t," P"rson
Subrogat" in t," Pla!" o+ t," Cr"itor
T," rig,ts arising +ro*'
(a) a *ortgag"2
(b) a guarant#2
(!) a 1"nalt# or 1"nal !laus".
(@) Probl"*s
(a) A borro3" P1 *illion +ro* 7. T," loan 3as s"!ur" b# a
*ortgag" o+ A8s lan in +a$or o+ 7. Iit,out t," <no3l"g" o+
A% C 1ai 7 t," su* o+ P1 *illion +or A8s "bt. A b"n"+it"
to t," a*ount o+ P1 *illion.
1) &a# C !lai* r"i*burs"*"nt +ro* AJ
6) I+ so% ,o3 *u!,J
9) I+ A !annot 1a#% *a# C +or"!los" t," *ortgag" on A8s
lanJ
ANS.'
1) K"s% C !an !lai* r"i*burs"*"nt +ro* A inas*u!, as
C 1ai A8s "bt.
6) C !an r"!o$"r t," 3,ol" a*ount o+ P1 *illion inas.
*u!, as t," 1robl"* stat"s t,at A b"n"+it" u1 to t,"
a*ount o+ P1 *illion.
9) I+ A !annot 1a#% C !annot +or"!los" t," *ortgag" on
A8s lan. It is tru" t,at t," original !r"itor 7 ,a
Art. 169C
t," rig,t to +or"!los" in !as" o+ non.1a#*"nt% 7;T
in t,is !as"% t," n"3 !r"itor C ,a not b""n subro.
Art. 169C
gat" in t," rig,ts o+ 7% inas*u!, as C 1ai 3it,out
t," <no3l"g" o+ A. T," onl# rig,t o+ C t,"r"+or" is
r"i*burs"*"nt u1 to t," a*ount A ,a b"n"+it"%
but NOT t," rig,t o+ subrogation. -I,o"$"r 1a#s on
b",al+ o+ t," "btor 3it,out t," <no3l"g" or against
t," 3ill o+ t," latt"r% !annot !o*1"l t," !r"itor to
subrogat" ,i* in ,is rig,ts% su!, as t,os" arising
+ro* a *ortgag"% "t!./ (Art. 169C% Ci$il Co").
FNOTE' I+ in 1robl"* (a)% C ,a 1ai A8s "bt
against t," 3ill o+ A% 3oul #our ans3"r b" t,"
sa*"J
ANS.' K"s% t," ans3"r 3oul b" t," sa*"% inas.
*u!, as t," la3 gi$"s t," sa*" rig,ts to on" 3,o 1a#s
3it,out t," <no3l"g" an to on" 3,o 1a#s against
t," 3ill o+ t," "btor. (Art. 169C% Ci$il Co").G
(b) A o3"s 7 t," su* o+ P1 *illion. C is t," guarantor o+ A. A
3as abl" to 1a# 7 t," su* o+ P@??%???. T,"r"+or"% P6??%???
still r"*ains un1ai. D% t,in<ing t,at A still o3" 7 P1
*illion 1ai P1 *illion to 7% against t," 3ill o+ A.
1) &a# D r"!o$"r +ro* AJ
6) I+ so% ,o3 *u!,J
9) I+ A !annot 1a#% *a# D 1ro!"" against t," guarantor
CJ
ANS.'
1) K"s% D *a# r"!o$"r +ro* A.
6) D !an r"!o$"r onl# P6??%??? b"!aus" t,is is t," onl#
a*ount 3,i!, b"n"+it" A. 5"*"*b"r t,at 1r"$iousl#
P@??%??? ,a b""n 1ai% l"a$ing a balan!" o+ *"r"l#
P6??%???.
9) I+ A !annot 1a#% D !annot orinaril# 1ro!"" against
t," guarantor C b"!aus" D% ,a$ing 1ai against t,"
3ill o+ A% is not "ntitl" to subrogation.
(5) :u"stions
(a) Su11os" a 1a#or 1a#s t," !r"itor 3it, t," "41r"ss or
Art. 169C
i*1li" !ons"nt o+ t," "btor% 3,at ar" t," rig,ts o+ t,"
1a#orJ
Art. 169C
ANS.' A 1a#or in t,is !as" 3oul b" "ntitl" not
*"r"l# to +ull r"i*burs"*"nt but also to subrogation% or
t," rig,t to bring a!tions against t," "btor as *ortgag""
or against t,ir 1"rsons.
(b) Is t,"r" an# s1"!i+i! 1ro$ision o+ t," la3 su11orting t,"
ans3"r in (a)J
ANS.' K"s. Art. 19?6 o+ t," Ci$il Co" stat"s t,at' -It
is 1r"su*" t,at t,"r" is l"gal subrogation 4 4 4 (6) 3,"n
a t,ir 1"rson% not int"r"st" in t," obligation% 1a#s 3it,
t," "41r"ss or ta!it a11ro$al o+ t," "btor./
(!) Art. 169C sa#s t," 1a#or -!annot !o*1"l t," !r"itor% but
t,is is NOT t," *"aning o+ t," la3% +or subrogation !an
ta<" 1la!" onl# i+ t," 1a#*"nt ,a b""n *a" 3it, t,"
<no3l"g" an 3it,out t," obj"!tion o+ t," "btor. I,at
t," la3% t,"r"+or"% *"ans is t,at su!, 1a#or as is r"+"rr"
to in Art. 169C -is not "ntitl" to subrogation./
(6) OSubrogation8 Distinguis," +ro* O5"i*burs"*"nt8
In subrogation% r"!ours" !an b" ,a to t," *ortgag"
or guarant# or 1l"g"2 in r"i*burs"*"nt% t,"r" is no su!, r".
!ours".
In subrogation% t," "bt is "4tinguis," in on" s"ns"% but a
n"3 !r"itor% 3it, "4a!tl# t," sa*" rig,ts as t," ol on"% a11"ars
on t," s!"n". In r"i*burs"*"nt% t," n"3 !r"itor ,as i++"r"nt
rig,ts% so it is as i+ t,"r" ,as in"" b""n an "4tinguis,*"nt o+
t," obligation.
In subrogation% t,"r" is so*"t,ing *or" t,an a 1"rsonal
a!tion o+ r"!o$"r#2 in r"i*burs"*"nt% t,"r" is onl# a 1"rsonal
a!tion to r"!o$"r t," a*ount. (B &anr"sa 66A).
(C) Si*ilarit#
Not"% ,o3"$"r% t,at in bot, r"i*burs"*"nt an subro.
gation% t,"r" !an b" r"!o$"r# o+ 3,at t," strang"r -,as 1ai/
(not n"!"ssaril# t," a*ount o+ t," !r"it). (S"" Art. 1696% 6n
Art. 169C
1aragra1,% Ci$il Co").
Arts. 169B.169A
Art. 169B. Pa#*"nt *a" b# a t,ir 1"rson 3,o o"s not
int"n to b" r"i*burs" b# t," "btor is ""*" to b" a
ona. tion% 3,i!, r"Euir"s t," "btor8s !ons"nt. 7ut t,"
1a#*"nt is in an# !as" $ali as to t," !r"itor 3,o ,as
a!!"1t" it.
CO&&ENT'
(1) I,"n Pa#*"nt b# Strang"r Is D""*" a Donation
5"ason 3,# "btor ,as to !ons"nt 0 No on" s,oul b"
!o*1"ll" to a!!"1t t," g"n"rosit# o+ anot,"r. (5"1ort o+ t,"
Co" Co**ission% 1. 196).
(6) E4a*1l"
A o3"s 7 P1 *illion. C% in b",al+ o+ A% 1a#s 7 P1 *illion
against t," !ons"nt o+ A% alt,oug, C ,a 1r"$iousl# tol A t,at
," (C) i not int"n to b" r"i*burs". N""l"ss to sa#% 7 a!.
!"1t" t," 1a#*"nt b# C in b",al+ o+ A.
(a) Is A8s obligation to3ars 7 "4tinguis,"J
(b) &a# C still r"!o$"r +ro* A% b"!aus" o+ t," +a!t t,at A i
not !ons"nt to 3,at t," la3 ""*s a onation on t," 1art
o+ C in +a$or o+ AJ
ANS.'
(a) K"s% A8s obligation to3ar 7 is "4tinguis," "$"n i+ A i
not !ons"nt to t," onation. T," la3 sa#s' -7ut t," 1a#*"nt
is in an# !as" $ali as to t," !r"itor 3,o ,as a!!"1t" it./
(6n s"nt"n!"% Art. 169B% Ci$il Co").
(b) K"s% C *a# still r"!o$"r +ro* A% alt,oug, originall# C i
not int"n to b" r"i*burs". T,is is so b"!aus" ,"r" t,"r"
,as b""n no r"al onation. Ho3"$"r% inas*u!, as t,"
1a#*"nt b# C ,a b""n "++"!t" against t," 3ill o+ A% all
t,at C !an r"!o$"r +ro* A is to t," "4t"nt t,at A ,as b""n
b"n"+it" b# C8s 1a#*"nt to 7 in A8s b",al+.
Art. 169A. In obligations to gi$"% 1a#*"nt *a" b# on"
3,o o"s not ,a$" t," +r"" is1osal o+ t," t,ing u" an
Arts. 169B.169A
!a1a!it# to ali"nat" it s,all not b" $ali% 3it,out 1r"jui!"
to t," 1ro$isions o+ Arti!l" 1@6C un"r t," Titl" on -Natural
Obligations./
Art. 16@?
CO&&ENT'
(1) Pa#*"nt b# an In!a1a!itat" P"rson
>"n"ral 5ul" 0 I+ 1"rson 1a#ing ,as no !a1a!it# to gi$"'
(a) 1a#*"nt is not $ali 0 i+ a!!"1t"2
(b) !r"itor !annot "$"n b" !o*1"ll" to a!!"1t it2
(!) t," r"*"# o+ !onsignation 3oul not b" 1ro1"r. (B &anr"sa
66C).
E4!"1tion (as 1ro$i" +or in Art. 1@6C% Ci$il Co")'
-I,"n a *inor b"t3""n "ig,t""n an t3"nt#.on" #"ars o+
ag"% 3,o ,as "nt"r" into a !ontra!t 3it,out t," !ons"nt o+ t,"
1ar"nts or guarian $oluntaril# 1a#s a su* o+ *on"# or "li$"rs
a +ungibl" t,ing in +ul+ill*"nt o+ t," obligation% t,"r" s,all b"
no rig,t to r"!o$"r t," sa*" +ro* t," oblig"" 3,o ,as s1"nt or
!onsu*" it in goo +ait,./
(6) E4a*1l" o+ t," E4!"1tion
A% a *inor% "nt"r" into a !ontra!t 3it,out t," !ons"nt o+
,is 1ar"nts. In sai !ontra!t% A 3as su11os" to 1a# to 7 t,"
su* o+ P1 *illion. 7 i not <no3 o+ A8s *inorit#% an 3,"n
A $oluntaril# 1ai ,i* t," *on"#% 7 a!!"1t" t," su*. Out o+
t,is a*ount% 7 s1"nt PB??%???. Lat"r% t," 1ar"nts o+ A l"arn"
o+ t," transa!tion% an broug,t an a!tion in !ourt to r"!o$"r t,"
P1 *illion 1ai to 7. Ho3 *u!, !an t," 1ar"nts r"!o$"r +ro*
7J
ANS.' T," 1ar"nts !an r"!o$"r onl# P6??%??? inas*u!, as
t," PB??%??? ,a alr"a# b""n s1"nt in goo +ait,.
FNOTE' I,il" Art. 169A r"+"rs to 1a#*"nt b# an in!a1a!i.
tat" 1"rson% Art. 16@1 r"+"rs to 1a#*"nt to an in!a1a!itat"
1"rson.G
Art. 16@?. Pa#*"nt s,all b" *a" to t," 1"rson in
3,os" +a$or t," obligation ,as b""n !onstitut"% or ,is
Art. 16@?
su!!"ssor in int"r"st% or an# 1"rson aut,oriH" to r"!"i$" it.
Art. 16@?
CO&&ENT'
(1) To I,o* Pa#*"nt &ust 7" &a"
(a) to t," 1"rson in 3,os" +a$or t," obligation ,as b""n !on.
stitut" (t," !r"itor)2
FNOTE' T,is r"+"rs to t," !r"itors at t," ti*" o+ 1a#.
*"nt% not t," original !r"itor at t," ti*" t," obligation
3as !onstitut". (Tuason an San P"ro $. Ta*ora an
Sons% 6 P,il. 9?5).G
(b) to t," su!!"ssor.in.int"r"st (li<" t," ,"irs)2
(!) to an# 1"rson aut,oriH" to r"!"i$" it.
(NOTE' T," aut,oriHation *a# b" b# agr""*"nt or
b# la3.)
FNOTE' I+ t," r"!i1i"nt 3as not aut,oriH"% t," 1a#.
*"nt g"n"rall# is NOT $ali (3it,out 1r"jui!" to Art.
16@1). (D""l"r El"!. Co. $. 5origu"H% @@ P,il. 1A2 Or*a!,"a
$. Trillana% 19 P,il. 1A@2 an Crisol $. Cla$"ron% 9B O.>.
No. 156% 1. 9C9@).G
(6) Cas"s
Harr# E. D""l"r El"!tri! Co. $. 5origu"H
@@ P,il. 1A
FACTS' 5origu"H o3" t," !o*1an# a !"rtain a*ount
o+ *on"#. On" &ont"libano a11roa!," 5origu"H an !lai*"
t,at ," (&ont"libano) 3as ul# aut,oriH" to r"!"i$" 1a#*"nt
+or t," !o*1an#. Iit,out *a<ing an# $"ri+i!ation% 5origu"H
1ai &ont"libano. Lat"r% t," !o*1an# su" 5origu"H +or 1a#.
*"nt o+ "bt. 5origu"H 1r"s"nt" t," "+"ns" t,at ," ,a
alr"a# 1ai ,is "bt to &ont"libano 3,o 3as not aut,oriH"
to r"!"i$" 1a#*"nt. Issu"' S,oul 5origu"H still 1a# ,is "bt
to t," !o*1an#J
HELD' K"s. 5origu"H8s 1a#*"nt to &ont"libano 3as not
$ali b"!aus" &ont"libano 3as not ul# aut,oriH" to r"!"i$"
Art. 16@?
su!, 1a#*"nt. Pa#*"nt to an unaut,oriH" ag"nt is at t," ris< o+
t," 1a#or. 5origu"H s,oul ,a$" *a" a 1ro1"r $"ri+i!ation.
Art. 16@?
Or*a!,"a $. Trillana
19 P,il. 1A@
FACTS' Plainti++ 3as +or*"rl# a *"*b"r o+ a 1artn"rs,i1%
an u1on issolution o+ sai 1artn"rs,i1% ," 3as gi$"n t," rig,t
to !oll"!t t," "bts u" t," 1artn"rs,i1. Plainti++ su" t," ".
+"nant. D"+"nant 1r"s"nt" a not" sign" b# La3a% t," +or*"r
a*inistrator o+ t," 1artn"rs,i1% to t," "++"!t t,at "+"nant8s
"bt ,a alr"a# b""n "4tinguis,". Ho3"$"r% t," $al"s still
r"*ain" in t," 1oss"ssion o+ t," 1lainti++.
ISS;ES'
1) I,at is t," $alu" o+ t," $al"s b"ing still in t," ,ans o+
t," 1lainti++J
6) Ias La3a aut,oriH" to sa# t,at t," obligation o+ t,"
"+"nant 3as "4tinguis,"% "$"n i+ at t,at ti*" La3a
3as no long"r t," a*inistrator o+ t," 1artn"rs,i1 (3,i!,
in!i"ntall# ,as alr"a# b""n issol$")J
9) S,oul t," "+"nant 1a# t," 1lainti++J
HELD'
1) T," $al"s still in t," ,ans o+ t," 1lainti++ !onstitut" a
1r"su*1tion t,at t," "bt o+ t," "+"nant ,as not #"t
b""n 1ai.
6) La3a 3as not aut,oriH" to sa# t,at t," obligation o+ t,"
"+"nant 3as "4tinguis," b"!aus" La3a 3as at t,at
ti*" no long"r aut,oriH" to r"!"i$" 1a#*"nts in b",al+
o+ t," 1artn"rs,i1. Ha ," b""n ul# aut,oriH" to o so%
t,is +a!t 3oul ,a$" r"butt" t," 1r"su*1tion r"garing
t," non.1a#*"nt o+ t," "bt% an 3oul ,a$" "4tinguis,"
t," "bt inas*u!, as 1r"su*abl# it ,a b""n 1ai to on"
aut,oriH" to r"!"i$" t," 1a#*"nt.
9) K"s% t," "+"nant s,oul 1a# t," 1lainti++ b"!aus" t,"
"+"nant ,as not su!!""" in 1ro$ing t,at ,is "bt ,as
b""n 1ai.
Crisol $. Cla$"ron
9B O.>. No. 156% 1. 9C9@
Art. 16@?
FACTS' Crisol 3as t," !r"itor o+ Cla$"ron. I,"n Crisol8s
+irst 3i+" i"% ," istribut" t," 1ro1"rt# a*ong ,is !,ilr"n.
Art. 16@?
Lat"r Crisol *arri" again. A+t"r Crisol8s "at, t," !,ilr"n
as<" Cla$"ron to 1a# t,"* ,is "bt. Cla$"ron inst"a 1ai t,"
s"!on 3i+"% 3,o 3as "!lar" unaut,oriH" b# t," !ourt. Issu"'
Is Cla$"ron8s "bt "4tinguis,"J
HELD' No% Cla$"ron8s "bt is not "4tinguis," b"!aus"
t," 1"rson to 3,o* ," ,a *a" t," 1a#*"nt 3as not aut,or.
iH" to r"!"i$" it. 7"si"s% t," ,"irs o+ Crisol ,a alr"a# *a"
a "*an u1on Cla$"ron% #"t Cla$"ron r"+us" to ,"" sai
"*an. H" *ust no3 1a# +or ,is stubbornn"ss.
(9) Pa#*"nt &a" to Aut,oriH" Entiti"s
Pa#*"nt *a" to "ntiti"s aut,oriH" b# an o!!u1ation
go$"rn*"nt (li<" t," =a1an"s" o!!u1ation go$"rn*"nt in t,"
P,ili11in"s) o+ "bts in +a$or o+ "n"*# 1"rsons an !or1orations%
s,oul b" !onsi"r" as $ali% b"!aus" a b"llig"r"nt *ilitar#
o!!u1ant ,as t," rig,t un"r Int"rnational La3 to s"Eu"st"r
or +r""H" t," ass"ts o+ t," "n"*#. (Ha3 Pia $. C,ina 7an<ing
Cor1.% B? P,il. 6?@).
Ha3 Pia $. C,ina 7an<ing Cor1oration
B? P,il. 6?@
FACTS' Ha3 Pia o3" "+"nant a su* o+ *on"# (P,ili1.
1in" 1"sos) s"!ur" b# a *ortgag". During t," =a1an"s" o!!u.
1ation% t," 7an< o+ Tai3an 3as gi$"n t," rig,t b# t," &ilitar#
A*inistration to liEuiat" t," ass"ts o+ "n"*# ban<s. Ha3
Pia t,"n 1ai o++ t," *ortgag"% not to t," "+"nant% but to t,"
7an< o+ Tai3an. Lib"ration !a*". Ha3 Pia is no3 as<ing +or
t," !an!"llation o+ t," *ortgag" on t," groun t,at it ,a b""n
1ai. T," "+"nant r"+us"% an on t," !ontrar# as<" +or 1a#.
*"nt o+ t," "bt.
ISS;ES'
(a) Ha t," =a1an"s" &ilitar# A*inistration t," rig,t to
liEuiat" an +r""H" t," ass"ts o+ "n"*# ban<sJ
(b) Di 1a#*"nt b# Ha3 Pia to t," 7an< o+ Tai3an "4tin.
guis," t," "btJ
Art. 16@?
(!) Ias =a1an"s" *on"# t,"n l"gal t"n"rJ
Art. 16@?
HELD'
(a) K"s% t," =a1an"s" &ilitar# A*inistration% un"r t,"
1rin!i1l"s o+ int"rnational la3% ,a t," rig,t to liEuiat"
an +r""H" t," ass"ts o+ "n"*# ban<s. I,at it i 3as
not !on+is!ation% but *"r"l# liEuiation so as to +r""H" as.
s"ts.
(b) K"s% 1a#*"nts b# Ha3 Pia to t," 7an< o+ Tai3an "4tin.
guis," t," *ortgag" "bt% inas*u!, as un"r t," la3 t,"n
1r"$ailing% t," 7an< o+ Tai3an 3as aut,oriH" to r"!"i$"
1a#*"nt. H"n!"% t," *ortgag" s,oul b" !an!"ll".
(!) K"s% t," =a1an"s" &ilitar# not"s 3as l"gal t"n"r b"!aus"
un"r Int"rnational La3% t," in$aing 1o3"r ,as t," rig,t
to issu" !urr"n!# +or !ir!ulation ,"r".
Subsiiar# Issu"' Do"s not t," +a!t t,at t," obligation
,"r" to 1a# in P,ili11in" 1"so *a<" it an obligation to 1a# in a
s1"!i+i" s1"!i"J
HELD' Tru"% t," obligation 3as to 1a# in P,ili11in" 1"sos%
but t,is 3as not a sti1ulat" s1"!i"% but ob$iousl# r"+"rr" onl#
to t," l"gal t"n"r sin!" a+t"r all% t," *ost !o**on o!!urr"n!"s
ar" transa!tions in P,ili11in" 1"sos. It 3as n"$"r t," int"ntion
o+ t," 1arti"s to s1"!i+# t,at onl# P,ili11in" 1"sos% o+ 1r".3ar
$aluation% *a# b" 1ai. T," us" o+ t," t"r* -P,ili11in" 1"so/
,"r" is *"r"l# in!i"ntal.
E$"r"tt St"a*s,i1 Cor1oration $.
7an< o+ t," P,ili11in" Islans
B@ P,il. 6?6
FACTS' Plainti++ is a !or1oration in &anila% t," *ajor.
it# sto!<,ol"rs o+ 3,i!, ar" A*"ri!an an 7ritis, !itiH"ns.
D"+"nant is a ban<ing !or1oration. 7"+or" D"!"*b"r 1A@1%
1lainti++ ,a a !urr"nt a!!ount 3it, t," "+"nant% an on D".
!"*b"r 6A% 1A@1% t," 1lainti++ ,a a $ali balan!" in its +a$or o+
P59%1C5.51% P,ili11in" !urr"n!#. During t," =a1an"s" o!!u1a.
tion% t," o++i!"rs o+ t," 1lainti++ !or1oration 3"r" int"rn" b# t,"
=a1an"s" Ar*" For!"s insi" t," ;ST !o*1oun. 7# or"r o+
Art. 16@?
t," =a1an"s" &ilitar# A*inistration% t," "+"nant 3as *a"
to turn o$"r t," a!!ount o+ t," 1lainti++ to t," 7an< o+ Tai3an%
Art. 16@?
t," "1ositor# o+ En"*# Pro1"rti"s. T," "+"nant t,us ga$"
to t," 7an< o+ Tai3an a !,"!< in t," su* o+ P59%1C5.51. A+t"r
lib"ration% 1lainti++ 3ant" to ra3 t," P59%1C5.51 it t,oug,t it
still ,a% +ro* t," "+"nant ban<. T," latt"r 1l"a" 1a#*"nt
to t," 7an< o+ Tai3an. Issu"' &a# t," 1lainti++ still r"!o$"r +ro*
t," "+"nantJ
HELD' -In t," instant !as"% t," issu" in$ol$" is 3,"t,"r
t," =a1an"s" &ilitar# A*inistration !oul $alil# r"Euir" t,"
"+"nant.a11"llant to trans+"r to t," 7an< o+ Tai3an t," bal.
an!" o+ 1lainti++8s !urr"nt a!!ount 3it, t," "+"nant.88
-In t," Ha3 Pia !as" t," sa*" issu" 3as in$ol$". T,"
Court rul" in t," Ha3 Pia !as" t,at t," !oll"!tion b# t," 7an<
o+ Tai3an o+ t," C,ina 7an<ing Cor1oration8s !r"it +ro* t,"
latt"r8s "btor% b# or"r o+ t," =a1an"s" *ilitar# a*inistra.
tion% 3as $ali an r"l"as" t," "+"nant8s obligation to t,"
1lainti++./
5"1ubli! $. >rijalo
L.6?6@?% D"!. 91% 1A65
FACTS' In 1A@9% a borro3"r obtain" loans +ro* t,"
7an< o+ Tai3an. A+t"r t," 3ar% t," 5"1ubli! o+ t," P,ili11in"s
soug,t to r"!o$"r t," loans. It 3as all"g" b# t," "btor t,at
t," 5"1ubli! ,a no rig,t to !oll"!t sin!" t," r"al !r"itor 3as
t," 7an< o+ Tai3an. It 3as +urt,"r all"g" t,at t," loan 3as a
1ri$at" !ontra!t b"t3""n t," borro3"r an t," 7an<% an t,at
t,"r"+or" t," 5"1ubli! !oul not l"gall# !oll"!t.
HELD' It is tru" t,at t," 7an< o+ Tai3an 3as t," original
!r"itor% an t,at t," transa!tion 3as a 1ri$at" !ontra!t. Ho3.
"$"r% 1ursuant to t," Traing 3it, t," En"*# A!t as a*"n"%
an E4. Or"r A?A5 o+ t," ;.S.% an un"r V"sting Or"r P.@%
at" =an. 61% 1A@6% t," 1ro1"rti"s o+ t," 7an< o+ Tai3an 3"r"
$"st" in t," ;.S. >o$"rn*"nt. Pursuant +urt,"r to t," P,ili1.
1in" Pro1"rt# A!t o+ 1A@6% an t," Trans+"r Agr""*"nts at"
=ul. 6?% 1A5@ an =un. 15% 1A5C% t," ass"ts o+ t," 7an< 3"r"
trans+"rr" to an $"st" in t," 5"1ubli! o+ t," P,ili11in"s.
Sin!" t," 5"1ubli! is t," su!!"ssor to t," rig,ts in t," loans%
it is "$i"nt t,at t,"r" ,as b""n !r"at" a 1ri$it# o+ !ontra!t
Art. 16@?
b"t3""n t," 5"1ubli! an t," borro3"r% "nabling t," 5"1ubli!
to su" +or !oll"!tion.
Art. 16@?
FNOTE' I+ t," *on"# is 1ai to t," 3rong 1art# in goo
+ait,% t," "bt is not "4tinguis,". &or"o$"r% t," obligation !ar.
ri"s 3it, it t," 1a#*"nt o+ int"r"st an t," int"r"st !ontinu"s
to run. (S"" D""l"r El"!tri! Co. $. 5origu"H% @@ P,il. 1A).G
Ar!a!," $. LiHar"s M Co.
A1 P,il. 9@B
FACTS' D o3" C. Inst"a o+ 1a#ing C% D "1osit" t,"
*on"# in a ban< in t," na*" an +or t," !r"it o+ C. All t,"s"
3"r" on" 3it,out C8s 1"r*ission. Issu"' Has t," "bt b""n
"4tinguis,"J
HELD' No. 7ut i+ a+t"r "++orts ,a b""n *a"% t," !r"itor
!oul not b" +oun% 1arti!ularl# at t," 1la!" 3,"r" 1a#*"nt is
su11os" to b" *a"% t," "btor !annot b" ,"l guilt# o+ ".
+ault.
P,il. Nat. 7an< $. Er"n"ta% "t al.
L.19?5B% Aug. 6B% 1A5A
;n"r t," ol la3% 5"1. A!t BAC% t," a!!"1tan!" o+ ba!<1a#
!"rti+i!at"s in 1a#*"nt o+ loans to go$"rn*"nt !or1orations 3as
in"" an obligation u1on t," P,il. Nat. 7an<. Ho3"$"r% t,"
"na!t*"nt o+ 5"1. A!t 15C6% at" =un. 16% 1A65% 3,i!, a"
a n"3 1ro$ision% S"!tion A.a% to t," 5"$is" C,art"r o+ t," PN7%
r"*o$"s t,is obligation i*1os" u1on sai 7an<.
=os"+ina 5uiH " LuHuriaga 7lan!o $. Co*1ania
>"n"ral " Taba!os " Fili1inas% "t al. L.1?B1?%
No$. 6A% 1A6?
FACTS' Plainti++s "ntrust" !"rtain bons to t," Taba.
!al"ra 3,i!, t,"# also *a" t,"ir "1ositor#% trust""% an at.
torn"#.in.+a!t. T," bons% issu" b# a Tarla! Sugar C"ntral% +"ll
u" on or b"+or" No$. 15% 1A@9. 7"+or" sai at"% t," C"ntral
noti+i" t," Taba!al"ra o+ its int"ntion to r"""* sai bons.
Taba!al"ra t,"n allo3" t," r""*1tion. T," *on"# obtain"
3as t,"n "1osit" in t," 7an< o+ Tai3an in t," na*" o+ Taba.
Art. 16@?
!al"ra% as "1ositar#% trust""% an attorn"#.in.+a!t +or 1lainti++s.
T,is 3as on"% ,o3"$"r% b# Taba!al"ra 3it,out noti+#ing t,"
Art. 16@1
1lainti++s +irst. Iit, t," a$"nt o+ lib"ration% "1osits 3it, t,"
7an< o+ Tai3an 3"r" r"n"r" 3ort,l"ss. Issu"' Ias Taba.
!al"ra8s a!t o+ !ons"nting to t," r""*1tion $ali an bining
on t," 1lainti++sJ
HELD' K"s% b"!aus" un"r t," t"r*s o+ t," bons% t,"
Sugar C"ntral ,a t," rig,t to r"""* t," bons on or b"+or" t,"
at" s1"!i+i"% an Taba!al"ra ,a b""n 1ro1"rl# *a" t," at.
torn"#.in.+a!t o+ t," 1lainti++s. No noti!" 3as n""" 0 un"r
t," agr""*"nt b"t3""n Taba!al"ra an t," 1lainti++s. 7"si"s%
t," r""*1tion 3as 1ro1"rl# *a" in =a1an"s" !urr"n!# 0
3,i!, 3as t,"n $ali l"gal t"n"r. Taba!al"ra 3as% t,"r"+or"%
rig,t in surr"ning t," bons t,at 3"r" b"ing r"""*".
Plainti++s *ust% t,"r"+or"% b"ar t," loss.
5io &ont"!illo $. Igna!ia 5"#n"s M S1s. 5""*1tor
M Elisa Abu!a#
>5 19B?1B% =ul. 66% 6??6
FACTS' P"tition"r &ont"!illo8s D"" o+ Sal" o"s not stat"
t,at t," P@C%??? 1ur!,as" 1ri!" s,oul b" 1ai b# t," +or*"r to
C"bu I!" Storag" (CIS). &ont"!illo +ail" to au!" an# "$i"n!"
b"+or" t," trial !ourt s,o3ing t,at 5"#n"s ,a agr""% $"rball#
or in 3riting t,at t," P@C%??? 1ur!,as" 1ri!" s,oul b" 1ai to
CIS.
HELD' Abs"nt an# "$i"n!" s,o3ing t,at r"s1on"nt
,a agr"" to t," 1a#*"nt o+ t," 1ur!,as" 1ri!" to an# ot,"r
1art#% t," 1a#*"nt to b" "++"!ti$" *ust b" *a" to r"s1on"nt%
t," $"nor in t," sal". T,us% 1"tition"r8s 1a#*"nt to CIS is not
t," 1a#*"nt t,at 3oul "4tinguis, t," +or*"r8s obligation to
r"s1on"nt un"r t," D"" o+ Sal".
Art. 16@1. Pa#*"nt to a 1"rson 3,o is in!a1a!itat" to
a*inist"r ,is 1ro1"rt# s,all b" $ali i+ ," ,as <"1t t,"
t,ing "li$"r"% or inso+ar as t," 1a#*"nt ,as b""n
b"n"+i!ial to ,i*.
Pa#*"nt *a" to a t,ir 1"rson s,all also b" $ali
inso+ar as it ,as r"oun" to t," b"n"+it o+ t," !r"itor.
Art. 16@1
Su!, b"n"+it to t," !r"itor n"" not b" 1ro$" in t,"
+ollo3ing !as"s'
Art. 16@1
(1) I+ a+t"r t," 1a#*"nt% t," t,ir 1"rson a!Euir"s t,"
!r"itor8s rig,ts2
(6) I+ t," !r"itor rati+i"s t," 1a#*"nt to t," t,ir 1"r.
son2
(9) I+ b# t," !r"itor8s !onu!t% t," "btor ,as b""n l"
to b"li"$" t,at t," t,ir 1"rson ,a aut,orit# to r"!"i$" t,"
1a#*"nt.
CO&&ENT'
(1) Pa#*"nt to In!a1a!itat" or ;naut,oriH" P"rsons
T," +irst 1aragra1, "als 3it, 1a#*"nt to an INCAPACI.
TATED 1"rson2 t," s"!on "als 3it, 1a#*"nt to an ;NA;.
THO5ITED t,ir 1"rson.
(6) First Paragra1, 0 Pa#*"nt to an In!a1a!itat" P"r.
son
(a) Is 1a#*"nt to a 1"rson in!a1a!itat" to *anag" or a*in.
ist"r ,is 1ro1"rt# $aliJ
ANS.' Su!, 1a#*"nt is $ali onl#'
1) i+ t," in!a1a!itat" 1"rson ,as <"1t t," t,ing "li$.
"r"2 or
6) inso+ar as t," 1a#*"nt ,as b""n b"n"+i!ial to ,i*.
(1st s"nt"n!"% Art. 16@1% Ci$il Co").
(b) A o3"s 7 P1%???%???. I,"n A 1ai 7% t," latt"r 3as alr"a#
insan". Ho3"$"r% t," *on"# 3as n"$"r s1"nt% an is still
in t," 1oss"ssion o+ 7. Is A8s obligation "4tinguis,"J
ANS.' K"s% A8s obligation is alr"a# "4tinguis,"
b# $irtu" o+ A8s 1a#*"nt to 7. Tru"% 7 3as in!a1a!itat"
to a*inist"r ,is o3n 1ro1"rt#% #"t 7 ,as <"1t t," t,ing
"li$"r". H"n!"% A8s 1a#*"nt is $ali.
(!) In Eu"stion (b)% su11os" t,at a s3inl"r ,a as<" 7 +or
P1%???%??? in "4!,ang" +or a ring 3ort, P5??%???% o"s
A8s 1a#*"nt to 7 r"*ain $aliJ
ANS.' A8s 1a#*"nt to 7 r"*ains $ali onl# u1 to t,"
Art. 16@1
"4t"nt o+ P5??%???% b"!aus" t,is is onl# t," a*ount 3,i!,
Art. 16@1
7 r"all# b"n"+it" +ro* A8s 1a#*"nt to ,i*. A8s 1a#*"nt
is t,us $ali onl# inso+ar as t," 1a#*"nt ,as b"n"+it" t,"
in!a1a!itat" 1a#"".
() I,o ,as t," bur"n o+ 1ro$ing t,at t," 1a#*"nt ,as b"n.
"+it" t," in!a1a!itat" 1a#""J
ANS.' T," on" 3,o *a" t," 1a#*"nt ,as t," bur"n o+
1ro$ing t,at it b"n"+it" t," in!a1a!itat" 1a#"". (Pangani.
ban $. Cu"$as% C P,il. @CC). T," b"n"+it *a# b" +inan!ial%
*oral or int"ll"!tual but it *ust b" 1ro$". (Ibi.).
(") In 1ro$ing t,at t," in!a1a!itat" 1a#"" r"all# b"n"+it"
+ro* t," 1a#*"nt% is it n"!"ssar# +or t," 1a#or to 1ro$"
t,at t," 1a#"" in$"st" t," t,ing or *on"# "li$"r" in
so*" 1ro+itabl" "nt"r1ris"J
ANS.' No% 1roo+ o+ in$"st*"nt is not n"!"ssar#. All t,at is
n""" is 1roo+ t,at 1a#*"nt to t," in!a1a!itat" 1a#""
,as in so*" 3a# or anot,"r r"oun" to t," b"n"+it o+ t,"
1a#"". A+t"r all% t,is is all t,at t," la3 r"Euir"s. (B &anr"sa
6B6).
(+) A goo "4a*1l" o+ b"n"+i!ial 1a#*"nt to t," in!a1a!itat"
1"rson is 3,"n t," *on"# ,as b""n us" +or 1ro1"r ,os1ital
or 1s#!,iatri! "41"ns"s.
(g) I+ in"" t,"r" ,as b""n no b"n"+it% 3,at r"*"# is gi$.
"nJ
ANS.' T," 1a#*"nt is not $ali2 t,"r"+or"% t," l"gal r"1.
r"s"ntati$" o+ t," in!a1a!itat" 1"rson !an "*an a n"3
1a#*"nt on b",al+ o+ ,is 3ar. T," 3ar ,i*s"l+% s,oul
," r"gain !a1a!it#% is allo3" to !lai* a n"3 1a#*"nt. (B
&anr"sa 6CA).
(9) S"!on Paragra1, 0 Pa#*"nt to a T,ir Part# Not Dul#
Aut,oriH"
(a) E++"!t in g"n"ral o+ 1a#*"nt to t,ir 1art#' T," 1a#*"nt is
$ali 7;T onl# to t," "4t"nt o+ b"n"+it (+inan!ial% *oral% or
int"ll"!tual) to t," !r"itor. T," 1a#*"nt *ust b" 1ro$"
(Panganiban $. Cu"$as% C P,il. @CC)% an is% t,"r"+or"% not
Art. 16@1
1r"su*" "4!"1t in t," t,r"" instan!"s 1ro$i" +or in t,"
s"!on 1aragra1, o+ Art. 16@1.
Art. 16@6
(b) E4a*1l"s o+ 3,"n b"n"+it to t," !r"itor is 1r"su*"'
1) I+ a+t"r 1a#*"nt t," t,ir 1"rson a!Euir"s t," !r"i.
tor8s rig,ts2
(E4a*1l"' An i*1ostor.ag"nt% a+t"r 1a#*"nt to
,i*% b"!o*"s t," o3n"r o+ t," !o*1an#.!r"itor.)
6) I+ t," !r"itor rati+i"s t," 1a#*"nt to t," t,ir 1"r.
son2
(E4a*1l"' I+ t," &"ral!o% a +"3 a#s a+t"r its
unaut,oriH" !oll"!tor ,a !oll"!t" +ro* #ou%
t"lls #ou t,at t," 1a#*"nt to ,i* is all rig,t.
H"r" t," "+"!t is !ur".)
9
)
I+ b# t," !r"itor8s !onu!t% t," "btor ,as b""n l"
to *a<" t," 1a#*"nt. (T,is is a !as" o+ "sto11"l% as
3,"n t," i*1ostor.ag"nt ,a b""n gi$"n b# t,"
&"ral!o t," usual uni+or* +or !oll"!tors.)
(!) 5
ul
" 3it, r"+"r"n!" to !,"!<s.
P"o1l" $. Kabut
L.@6B@C% L.@6A?6% A1r. 6A% 1ACC
D"li$"r# to t," *"ss"ng"r o+ t," 1a#"" o+ a !,"!< is not
#"t "li$"r# to t," 1a#"" 3it,in t," !ont"4t o+ t," N"gotiabl"
Instru*"nts La3.
(NOTE' T,is ruling is o+ oubt+ul $aliit# b"!aus" as long
as t," *"ss"ng"r 3as ul# aut,oriH" b# t," 1a#""% "li$"r# to
t," *"ss"ng"r Fan ag"ntG s,oul b" !onsi"r" as "li$"r# to
t," 1a#"".)
Art. 16@6. Pa#*"nt *a" in goo +ait, to an# 1"rson
in 1oss"ssion o+ t," !r"it s,all r"l"as" t," "btor.
CO&&ENT'
(1) Pa#*"nt &a" in >oo Fait, to a P"rson in Poss"ssion
o+ t," Cr"it
Art. 16@6
T," Arti!l" is anot,"r instan!" o+ a $ali 1a#*"nt.
Art. 16@6
(6) 5"Euisit"s
(a) Pa#*"nt b# 1a#or *ust b" *a" in goo +ait, (t,is is
1r"su*") (but 1a#"" *a# b" in goo or ba +ait,).
(b) T," 1a#"" *ust b" in 1oss"ssion o+ t," !r"it its"l+ (not
*"r"l# t," o!u*"nt "$i"n!ing t," !r"it).
(NOTE' I,"n on" 1oss"ss"s t," !r"it% t,"r" is !olor
o+ titl" to it.)
(9) E4a*1l"s o+ a P"rson in Poss"ssion o+ t," Cr"it
(a) N +oun a n"gotiabl" 1ro*issor# not" 1a#abl" to b"ar"r.
(I+ t," *a<"r t,"r"o+ 1a#s in goo +ait, to N% t," "bt is
"4tinguis,"% "$"n i+ N 3as not "ntitl" to it.)
HELD' I+ t," 1ro*issor# not" 3as 1a#abl" to a s1"!i+i! 1"r.
son K% t,"n 1a#*"nt to N is not $ali% b"!aus" N 3oul b"
t," 1oss"ssor onl# o+ t," o!u*"nt% not t," !r"it its"l+.
(b) N% a 1r"su*" ,"ir% "nt"r" u1on an in,"ritan!"% !oll"!t"
t," !r"its o+ t," "stat"% but 3as lat"r "!lar" b# t," !ourt
to b" in!a1a!itat" to in,"rit. (Pa#*"nt o+ t," !r"it to N
"4tinguis," t," obligation.)
(@) Cas"
S1s. Al!araH $. Tangga.an
>5 16B56B% A1r. A% 6??9
FACTS' P"tition"r.s1ous"s a$"r t,at t,"ir 1a#*"nts to
Virgilio (3,o su11os"l# b"!a*" t," n"3 o3n"r o+ t," ,ous"
a+t"r a!Euiring titl" to t," lot) b"ginning No$. 1AA9 3"r" 1a#.
*"nts *a" in goo +ait, to a 1"rson in 1oss"ssion o+ t," !r"it%
in !onsonan!" 3it, Art. 16@6. Pa#*"nt *a" in goo +ait, to
an# 1"rson in 1oss"ssion o+ t," !r"it s,all r"l"as" t," "btor.
T,is% 1"tition"r.s1ous"s 1oint out% r"l"as" t,"* +ro* t,"ir
obligation. T,"# !lai* t,at Virgilio !oll"!t" t," r"ntals in ,is
!a1a!it# as a !o.o3n"r% an b"ing a son o+ Virginia (,usban o+
r"s1on"nt P"ro Tangga.an)% ," (Virgilio) 3as also "ntitl" to
t," r"nt o+ t," subj"!t ,ous".
Art. 16@6
HELD' T,is !ont"ntion is in!orr"!t. Virgilio !oll"!t" t,"
r"ntals not as a !o.o3n"r but as t," all"g" sol" o3n"r o+ t,"
Art. 16@6
subj"!t ,ous". P"tition"r.s1ous"s t,"*s"l$"s a*itt" t,at
Virgilio !lai*" sol" o3n"rs,i1 o+ t," ,ous" an lot. It 3oul
b" in!ongruous +or t,"* to no3 ass"rt 1a#*"nt in goo +ait, to
a 1"rson t,"# b"li"$" 3as !oll"!ting in b",al+ o+ ,is !o.,"irs
a+t"r a*itting t,at t,"# 1ai r"nt to Virgilio as t," sol" o3n"r
t,"r"o+. H"n!"% +or $iolating t," t"r*s o+ t," l"as" !ontra!t% i.".%
1a#*"nt o+ r"nt% r"s1on"nts !an l"gall# "*an t," "j"!t*"nt
o+ 1"tition"r.s1ous"s.
(5) 7"llig"r"nt O!!u1ant
I,il" a b"llig"r"nt o!!u1ant su!, as t," =a1an"s" Ar*"
For!"s uring t," Iorl Iar II *a# s"Eu"st"r an "n"*#8s
1ri$at" !r"it (Ha3 Pia $. C,ina 7an<ing Cor1.% B? P,il. 6?@
an >ibbs $. 5origu"H% @C O.>. 1B6)% *"r" atta!,*"nt o+ t,"
1ro1"rt#% 3it,out a!tual !on+is!ation% o"s not !on+"r 1oss"ssion
u1on sai b"llig"r"nt. Su!, atta!,*"nt or "*bargo *"r"l# 1ro.
,ibits t," o3n"r +ro* is1osing t,"r"o+. T,is is no s"gr"gation or
s"Eu"stration o+ t," 1ro1"rti"s2 ,"n!"% 1a#*"nt to su!, b"llig"r.
"nt% 3,o is not in 1oss"ssion o+ t," !r"it% o"s not "4tinguis,
t," obligation% 3,"t,"r 1a#*"nt is *a" in goo +ait, or not.
(Panganiban $. Cu"$as% C P,il. @CC).
Panganiban $. Cu"$as
C P,il. @CC
FACTS' Panganiban sol a r"tro in 1BAC ,is 1ar!"l o+
lan to >onHal"s% but subs"Eu"ntl# sai lan 3as atta!," b#
t," r"$olutionar# go$"rn*"nt. 7"!aus" ," 3as not abl" to +in
>onHal"s on a!!ount o+ t," 3ar% Panganiban in goo +ait, 1ai
t," r"1ur!,as" *on"# to sai r"$olutionar# go$"rn*"nt. Lat"r%
>onHal"s sol t," lan to Cu"$as. Panganiban t,"n broug,t t,is
a!tion to g"t t," lan +ro* Cu"$as.
HELD' T," a!tion 3ill not 1ros1"r% b"!aus" 1a#*"nt o+
t," r"1ur!,as" *on"# to t," r"$olutionar# go$"rn*"nt 3as not
$ali. Sai go$"rn*"nt *"r"l# atta!," t," 1ro1"rti"s% *"r"l#
1ro,ibit" its ali"nation. T,"r"+or"% it 3as not in 1oss"ssion o+
Art. 16@6
t," !r"it. Ho3"$"r% Panganiban !an r"""* t," 1ro1"rt# +ro*
Cu"$as b# gi$ing ,i* t," r"1ur!,as" *on"#.
Art. 16@9
Art. 16@9. Pa#*"nt *a" to t," !r"itor b# t," "btor
a+t"r t," latt"r ,as b""n jui!iall# or"r" to r"tain t," "bt
s,all not b" $ali.
CO&&ENT'
(1) Pa#*"nt &a" A+t"r =ui!ial Or"r to 5"tain
T," jui!ial or"r *a# ,a$" b""n 1ro*1t" b# an or"r
o+ atta!,*"nt% injun!tion or garnis,*"nt (garnis,*"nt ta<"s
1la!" 3,"n t," "btor o+ a "btor is or"r" not to 1a# t," latt"r
so t,at 1r"+"r"n!" 3oul b" gi$"n to t," latt"r8s !r"itor). Not"
t,at t," 1a#*"nt in t,is Arti!l" is $oi.
(6) O>arnis,*"nt8 D"+in"
-T," 1ro!""ing b# 3,i!, a "btor8s !r"itor is subj"!t"
to t," 1a#*"nt o+ ,is o3n "bt to anot,"r is <no3n as garnis,.
*"nt. It !onsists in t," !itation o+ so*" strang"r to t," litiga.
tion% 3,o is t," "btor o+ on" o+ t," 1arti"s to t," a!tion. 7# t,is
*"ans su!, "btor.strang"r b"!o*"s a +or!" int"r$"nor% an
t," !ourt% ,a$ing a!Euir" jurisi!tion o$"r ,is 1"rson b# *"ans
o+ t," !itation r"Euir" o+ ,i* to 1a# ,is "bt% not to ,is +or*"r
!r"itor% but to t," n"3 !r"itor% 3,o is t," !r"itor in t," *ain
litigation./ (Ta#abas Lan Co. $. C,arru+% @1 P,il. 9B6).
(9) E4a*1l" o+ >arnis,*"nt
(a) A o3"s 7 P1%???%???. 7% in turn% o3"s C P1??%???. C brings
an a!tion against 7% 3,o% ,o3"$"r% !lai*s insol$"n!# but
a*its t," !r"it 3,i!, ," ,as o$"r A. 7"+or" A 1a#s 7%
A is su**on" into t," 1ro!""ings% an as<" to r"tain
t," "bt in t," *"anti*". T,us% t," "bt is -garnis,"./
T," r"ason is A s,oul not 1a# 7% an inst"a ," s,oul
1a# C% s,oul C r"all# b" ajug" t," !r"itor o+ 7. An#
1a#*"nt *a" b# A to 7 in t," *"anti*" is !onsi"r"
in$ali un"r t," la3.
7 as a !ons"Eu"n!" o+ 3,i!, t," garnis,*"nt 1ro!""ings
9C5
Art. 16@9
(b) Su11os" in t," 1r"!"ing "4a*1l"% A an 7% in t," *"an.
ti*"% "1osit" t," jui!ial or"r to t," !ontrar# an su1.
1osing it s,oul turn out t,at C is not r"all# t," !r"itor o+
7 as a !ons"Eu"n!" o+ 3,i!, t," garnis,*"nt 1ro!""ings
9C5
Art. 16@9
ar" ro11"% s,oul A again 1a# 7% in $i"3 o+ t," +a!t t,at
t," +irst 1a#*"nt% stri!tl# s1"a<ing% is not $ali un"r t,"
la3J
ANS.' It is sub*itt" t,at A n"" not 1a# 7 a s"!on
ti*". Tru"% at t," b"ginning t," 1a#*"nt 3as not $ali%
but t," "+"!t ,"r" ,as b""n !ur" b# t," is*issal o+ t,"
garnis,*"nt 1ro!""ings. It is as i+ t,"r" n"$"r ,a b""n
an# jui!ial or"r as<ing t," "btor A to r"tain t," "bt.
Furt,"r*or"% 3,# s,oul 7% t," !r"itor% b" 1ai t3i!"
+or t," sa*" "btJ To ,ol t,at ," s,oul b" is to allo3 a
tra$"st# o+ justi!"% an unu" "nri!,*"nt o+ 7.
(!) P"ning garnis,*"nt% *a# t," "btor b" jui!iall# or"r"
to 1a# t," !r"itor o+ ,is "btor (su!, !r"itor is t," gar.
nis,ing or atta!,ing !r"itor)J
ANS.' No% b"!aus" un"r t," 5ul"s o+ Court t," !r"it
*ust b" gi$"n to t," !l"r<% s,"ri++% or ot,"r 1ro1"r o++i!"r
o+ t," !ourt. (S"!. B% 5ul" 5C% 5"$is" 5ul"s o+ Court).
(@) OInt"r1l"a"r8 D"+in"
It is t"!,ni!al na*" o+ t," a!tion in 3,i!, a !"rtain 1"rson
in 1oss"ssion o+ !"rtain 1ro1"rt# 3ants !lai*ants to litigat"
a*ong t,"*s"l$"s +or t," sa*". T," 5"$is" 5ul"s o+ Court
1ro$i"s' -I,"n"$"r !on+li!ting !lai*s u1on t," sa*" subj"!t
*att"r ar" or *a# b" *a" against a 1"rson 3,o !lai*s no in.
t"r"st 3,at"$"r in t," subj"!t *att"r% or an int"r"st 3,i!, in
3,ol" or in 1art is not is1ut" b# t," !lai*ants% ," *a# bring
an a!tion against t," !on+li!ting !lai*ants to !o*1"l t,"* to
int"r1l"a an litigat" t,"ir s"$"ral !lai*s a*ong t,"*s"l$"s./
(S"!. 1% 5ul" 69).
(5) E4a*1l" o+ Int"r1l"a"r
A ,as in ,is 1oss"ssion so*" *"r!,anis"% to b" "li$"r"
to t," 1"rson 3,o 1r"s"nts t," 1ro1"r r"!"i1t. 7 an C% "a!,
"li$"r t," 1ro1"rt#. So ," +il"s an a!tion in !ourt b# *"ans o+
9C6
Art. 16@9
ar*" 3it, a r"!"i1t% as< A to turn o$"r t," 1ro1"rt# to on"
o+ t,"*. An "4a*ination o+ t," r"!"i1ts r"$"als t,at t,"# ar"
o+ "4a!tl# t," sa*" <in. A o"s not <no3 to 3,o* ," s,oul
"li$"r t," 1ro1"rt#. So ," +il"s an a!tion in !ourt b# *"ans o+
9C6
Art. 16@@
3,i!, 7 an C 3ill b" abl" to s"ttl" t,"ir !on+li!ting rig,ts. T,"
!ourt *ust no3 issu" an or"r 1ro,ibiting 1a#*"nt to "it,"r 7
an C in t," *"anti*". D"s1it" t," r"!"i1t o+ t," or"r% A 1a#s
7% 3,o is t," brot,"r o+ ,is (A8s) s3""t,"art. Is sai 1a#*"nt
$aliJ Ob$iousl# not. 5"ason' T," 1a#*"nt ,"r" 3as *a" a+t"r
t," "btor ,a b""n jui!iall# or"r" to r"tain t," "bt. 5"ason
+or t," la3' E$i"ntl#% t," "btor ,"r" (A) !annot sa# ," 1ai 7
in goo +ait,. H" ,a ult"rior *oti$"s +or ,is a!t% ot,"r3is" ,"
3oul not ,a$" isob"#" t," la3+ul or"r o+ t," !ourt. ;n"r
t," la3% t,"r"+or"% A is ""*" to b" a 1a#or in ba +ait,.
(6) OInjun!tion8 D"+in"
It is a jui!ial 1ro!"ss b# $irtu" o+ 3,i!, a 1"rson is
g"n"rall# or"r" to r"+rain +ro* oing so*"t,ing. It is !all"
1r"li*inar# injun!tion i+ t," 1ro,ibition is uring t," 1"n"n!#
o+ !"rtain 1ro!""ings.
(C) E4a*1l" o+ Injun!tion
A o3"s 7 a su* o+ *on"#. I,"n A is about to 1a# 7% t,"
r"lati$"s o+ t," latt"r *o$" to sto1 t," 1a#*"nt on t," groun
t,at 7 a11"ars to b" insan". Ho3"$"r% 1ro!""ings in !ourt to
"t"r*in" 78s sanit# ar" still in 1rogr"ss. S""ing A8s "t"r*ina.
tion to 1a#% t," r"lati$"s o+ 7 as< t," !ourt +or a 3rit o+ 1r"li*i.
nar# injun!tion r"straining A +ro* 1a#ing 7 in t," *"anti*".
T," injun!tion is grant". Ioul it b" a$isabl" +or A to 1a# 7
"s1it" sai injun!tionJ
ANS.' No% it 3oul not b" a$isabl" +or A to 1a# 3,il" ," is
un"r injun!tion2 ot,"r3is"% ,is 1a#*"nt 3ill not b" $ali sin!"
t,is 3oul t,"n b" 1a#*"nt *a" to t," !r"itor b# t," "btor
a+t"r t," latt"r ,as b""n jui!iall# or"r" to r"tain t," "bt.
Art. 16@@. T," "btor o+ a t,ing !annot !o*1"l t," !r"i.
tor to r"!"i$" a i++"r"nt on"% alt,oug, t," latt"r *a# b" o+
t," sa*" $alu" as% or *or" $aluabl" t,an t,at 3,i!, is u".
In obligations to o or not to o% an a!t or +orb"aran!"
5AC
Art. 16@@
!annot b" substitut" b# anot,"r a!t or +orb"aran!" against
t," oblig""8s 3ill.
5AB
Art. 16@5
CO&&ENT'
(1) D"btor Cannot Co*1"l Cr"itor to A!!"1t a Di++"r"nt
Obj"!t
E4a*1l"'
A is oblig" to gi$" 7 a =aguar !ar. Not ,a$ing an# =aguar
!ar% A 3ants 7 to a!!"1t a 5olls 5o#!"% a *or" "41"nsi$" !ar% but
7 r"+us"s to a!!"1t. Is 7 justi+i" l"gall# in r"+using to a!!"1tJ
ANS.' K"s. E$"n i+ t," 5olls 5o#!" b" *or" $aluabl" t,an
t," =aguar% i+ 7 o"s not 3ant t," 5olls 5o#!"% ," !annot b"
!o*1"ll" b# A to a!!"1t it. T," t"r*s o+ t," !ontra!t +or*
t," la3 b"t3""n t," 1arti"s% an t," subj"!t *att"r !annot b"
!,ang" 3it,out t," !ons"nt o+ t," 1arti"s.
:u"stion' Is Art. 16@@ o+ t," Ci$il Co" a11li!abl" to 1"r.
sonal 1ositi$" an n"gati$" obligationsJ
ANS.' K"s. In obligations to o or not to o% an a!t or +or.
b"aran!" !annot b" substitut" b# anot,"r a!t or +orb"aran!"
against t," oblig""8s 3ill. O+ !ours"% i+ t," oblig"" !ons"nts% t,is
is all rig,t.
(6) Instan!"s I,"n Art. 16@@ Do"s Not A11l#
(a) in !as" o+ +a!ultati$" obligations2
(b) in !as" t,"r" is anot,"r agr""*"nt r"sulting in "it,"r'
1) ation in 1a#*"nt (Art. 16@5% Ci$il Co")2
6) or no$ation (Art. 16A1% Ci$il Co")2
(!) in !as" o+ 3ai$"r b# t," !r"itor ("41r"ssl# or i*1li"l#).
Art. 16@5. Dation in 1a#*"nt% 3,"r"b# 1ro1"rt# is
ali"n. at" to t," !r"itor in satis+a!tion o+ a "bt in
*on"#% s,all b" go$"rn" b# t," la3 o+ sal"s.
CO&&ENT'
(1) ODation in Pa#*"nt8 D"+in"
It is t,at *o" o+ "4tinguis,ing an obligation 3,"r"b#
5AA
Art. 16@5
t," "btor ali"nat"s in +a$or o+ t," !r"itor% 1ro1"rt# +or t,"
satis+a!tion o+ *on"tar# "bt.
6??
Art. 16@5
(6) S#non#*s +or Dation in Pa#*"nt
(a) atio in solutu*
(b) ajui!a!ion "n 1ago (B &anr"sa 969)
(9) E4a*1l"s
(a) To 1a# *# "bt o+ P1%???%??? in +a$or o+ 7"lla% I ga$"
,"r 3it, ,"r !ons"nt a ia*on ring inst"a 3ort,
P1%???%???.
(b) To 1a# o++ ,is "bt% an ,"ir assign" ,is in,"ritan!" in an
"stat" to ,is !r"itor. (Igna!io $. &artin"H% 99 P,il. 5C6).
(@) 5"asons I,# Dation in Pa#*"nt Is >o$"rn" b# t,"
La3 o+ Sal"s
T,is is so b"!aus" ation in 1a#*"nt 0 t," trans+"r or
!on$"#an!" o+ o3n"rs,i1 o+ a t,ing as an a!!"1t" "Eui$al"nt
o+ 1"r+or*an!" 0 r"all# 1arta<"s in on" s"ns" o+ t," natur"
o+ sal"% i.".% t," !r"itor is r"all# bu#ing so*" 1ro1"rt# o+ t,"
"btor% 1a#*"nt +or 3,i!, is to b" !,arg" against t," "btor8s
"bt. Ho3"$"r% it *a# also b" !all" a -no$ation./ 7ut sal"s an
no$ation r"Euir" !o**on !ons"nt.
(5) Sal" Distinguis," +ro* Dation in Pa#*"nt
SAL
E
DATION
IN
PAK&EN
6?1
Art. 16@5
(a) t,"r" is no 1r".
"4isting !r"it
(b) t,is gi$"s ris" to
obliga. tions
(!) t," !aus" or
!onsi"ra. tion ,"r" is
t," P5ICE (+ro* t,"
$i"31oint o+ t," s"ll"r)2
or t," obtaining o+ t,"
O7=ECT (+ro* t,"
$i"31oint o+ t," bu#"r)
(a) t,"r" is a 1r"."4isting
!r"it
(b) t,is "4tinguis,"s
obliga. tions
(!) t," !aus" or
!onsi"ration ,"r"% +ro*
t," $i"31oint o+ t,"
"btor in ation in
1a#*"nt is t,"
"4tinguis,. *"nt o+ ,is
6?6
Art. 16@6
() t,"r" is gr"at"r +r""o* in
t," "t"r*ination o+ t,"
1ri!"
(") t," gi$ing o+ t," 1ri!" *a#
g"n"rall# "n t," obliga.
tion o+ t," bu#"r
t," a!Euisition o+ t," obj"!t
o++"r" in !r"it
() t,"r" is l"ss +r""o* in
"t"r*ining t," 1ri!"
(") t," gi$ing o+ t," obj"!t
in li"u o+ t," !r"it *a#
"4tinguis, !o*1l"t"l# or
onl# 1artiall# t," !r"it
("1"ning on t," agr"".
*"nt). (B &anr"sa 969).
(6) Conitions ;n"r I,i!, a Dation in Pa#*"nt Ioul 7"
Vali
(a) I+ t," !r"itor !ons"nts% +or a sal" 1r"su11os"s t," !ons"nt
o+ bot, 1arti"s.
(b) I+ t," ation in 1a#*"nt 3ill not 1r"jui!" t," ot,"r !r"i.
tors% +or t,is *ig,t l"a t," "btor to !onni$" 3it, on"
!r"itor in "+rauing t," ot,"r !r"itors.
(!) I+ t," "btor is not jui!iall# "!lar" insol$"nt% +or ,"r" ,is
1ro1"rt# is su11os" to b" a*inist"r" b# t," assign"".
FNOTE' In ation% it is not al3a#s n"!"ssar# t,at all
t," 1ro1"rt# o+ t," "btor 3ill b" gi$"n to satis+# t," !r"it.
(B &anr"sa 696).G
FNOTE' For t," istin!tion b"t3""n !"ssion (assign.
*"nt) an ation% r"+"r to !o**"nts un"r Art. 1655.G
Art. 16@6. I,"n t," obligation !onsists in t," "li$"r#
o+ an in"t"r*inat" or g"n"ri! t,ing% 3,os" Eualit# an !ir.
!u*stan!"s ,a$" not b""n stat"% t," !r"itor !annot
"*an a t,ing o+ su1"rior Eualit#. N"it,"r !an t," "btor
"li$"r a t,ing o+ in+"rior Eualit#. T," 1ur1os" o+ t,"
6?9
Art. 16@6
obligation an ot,"r !ir!u*stan!"s s,all b" ta<"n into
!onsi"ration.
6?@
Art. 16@6
CO&&ENT'
(1) Obligation to >i$" >"n"ri! T,ings
5"asons +or t," Arti!l"'
-T,is Arti!l" gi$"s a 1rin!i1l" o+ "Euit# in t,at it a11li"s
justi!" in a !as" 3,"r" t,"r" is la!< o+ 1r"!is" "!laration in
t," obligation. It is al3a#s ,ar to +in on" t,ing t,at is "4a!tl#
si*ilar to anot,"r. 7ut in t,is <in o+ obligation% t,"r" is t,"
Eu"stion o+ r"lati$" a11r"!iation in t,at on" 1art# a11r"!iat"s
t," sa*" t,ing as t," ot,"r 1art# o"s. I+ t,"r" is isagr""*"nt
b"t3""n t,"*% t,"n t," !ourt st"1s in an "!lar"s 3,"t,"r
t," !ontra!t ,as b""n !o*1li" 3it, or not% a!!oring to t,"
!ir!u*stan!"s./ (B &anr"sa 6B?.6B1).
(6) Iai$"r
I+ t," !ontra!t o"s not s1"!i+# t," Eualit# 0
(a) t," !r"itor !annot "*an a t,ing o+ su1"rior Eualit# (but
i+ ," "sir"s% ," *a# "*an an a!!"1t on" o+ in+"rior
Eualit#).
(b) t," "btor !annot "li$"r a t,ing o+ in+"rior Eualit#% but i+
," so "sir"s% ," *a# "li$"r on" o+ su1"rior Eualit#
(1ro$i" it is not o+ a i++"r"nt <in). (S"" Art. 16@@% Ci$il
Co").
(9) I,"n Contra!t Is VOID
Not" t,at t," Arti!l" s1"a<s o+ :;ALITK an ot,"r
!ir!u*. stan!"s. I,"n t," DIND an :;ANTITK (as
istinguis," +ro* Eualit#) !annot b" "t"r*in" 3it,out n""
o+ a n"3 agr""*"nt o+ t," 1arti"s% t," !ontra!t is $oi. (Art. 19@A
an Art. 1@?A% No.
6% Ci$il Co").
-T," obj"!t o+ "$"r# !ontra!t *ust b" "t"r*inat" as to its
<in. T," +a!t t,at t," Euantit# is not "t"r*in" s,all not b"
an obsta!l" to t," "4ist"n!" o+ t," !ontra!t 1ro$i" it is 1os.
Art. 16@6
sibl" to "t"r*in" t," sa*" 3it,out t," n"" o+ a n"3 !ontra!t
b"t3""n t," 1arti"s./
Arts. 16@C.16@B
Art. 16@C. ;nl"ss it is ot,"r3is" sti1ulat"% t,"
"4trajui. !ial "41"ns"s r"Euir" b# t," 1a#*"nt s,all b" +or
t," a!!ount o+ t," "btor. Iit, r"gar to jui!ial !osts% t,"
5ul"s o+ Court s,all go$"rn.
CO&&ENT'
(1) D"btor Pa#s >"n"rall# +or E4trajui!ial E41"ns"s
>"n"ral 5ul"'
T," "btor ,as to 1a# +or t," "4trajui!ial "41"ns"s in.
!urr" uring t," 1a#*"nt. 5"ason' 7# "41r"ss 1ro$ision o+
la3. 5"ason +or t," la3' It is t," "btor 3,o b"n"+its 1ri*aril#%
sin!" ,is obligation is t,us "4tinguis,".
E4!"1tion' I,"n t,"r" is a sti1ulation to t," !ontrar#.
(6) I,at >o$"rns =ui!ial CostsJ
T," 5ul"s o+ Court% 1rin!i1all# 5ul" 1@6.
(9) Ho3 =ui!ial Costs Ar" D"t"r*in"
>"n"rall#% !osts s,all b" a3ar" to t," 3inning 1art#. 7ut
t,is is subj"!t to t," is!r"tion o+ t," !ourt. -;nl"ss ot,"r3is"
1ro$i" in t,"s" rul"s% !osts s,all b" allo3" to t," 1r"$ailing
1art# as a *att"r o+ !ours"% but t," !ourt s,all ,a$" 1o3"r% +or
s1"!ial r"asons% to ajug" t,at "it,"r 1art# s,all 1a# t," !osts
o+ an a!tion% or t,at t," sa*" b" i$i"% as *a# b" "Euitabl"./
(S"!. 1% 5ul" 1@6% 5"$is" 5ul"s o+ Court).
(@) >"n"rall# No Costs Against t," >o$"rn*"nt
-No !osts s,all b" allo3" against t," 5"1ubli! o+ t," P,ili1.
1in"s% unl"ss ot,"r3is" 1ro$i" b# la3./ (S"!. 1% last s"nt"n!"%
5ul" 1@6% 5"$is" 5ul"s o+ Court).
Art. 16@B. ;nl"ss t,"r" is an "41r"ss sti1ulation to t,at
"++"!t% t," !r"itor !annot b" !o*1"ll" 1artiall# to r"!"i$"
Arts. 16@C.16@B
t," 1r"stations in 3,i!, t," obligation !onsists. N"it,"r
*a# t," "btor b" r"Euir" to *a<" 1artial 1a#*"nts.
Art. 16@B
Ho3"$"r% 3,"n t," "bt is in 1art liEuiat" an in 1art
unliEuiat"% t," !r"itor *a# "*an an t," "btor *a#
"++"!t t," 1a#*"nt o+ t," +or*"r 3it,out 3aiting +or t," liE.
uiation o+ t," latt"r.
CO&&ENT'
(1) P"r+or*an!" S,oul >"n"rall# 7" Co*1l"t"
;n"r Art. 1699 o+ t," Ci$il Co"% a "bt s,all not b" un.
"rstoo to ,a$" b""n 1ai unl"ss t," t,ing or s"r$i!" in 3,i!,
t," obligation !onsists ,as b""n !o*1l"t"l# "li$"r" or r"n"r"%
as t," !as" *a# b". H"n!"% 1artial 1"r+or*an!" is not allo3"
g"n"rall# un"r Art. 16@B.
(6) E4!"1tions
Partial 1"r+or*an!" is allo3"'
(a) I,"n t,"r" is sti1ulation to t,is "++"!t2
(b) I,"n t," i++"r"nt 1r"stations ar" subj"!t to i++"r"nt
!onitions or i++"r"nt t"r*s2
(E4a*1l"' a "bt 1a#abl" in install*"nts)
(!) I,"n a "bt is in 1art liEuiat" an in 1art unliEuiat"%
in 3,i!, !as" 1"r+or*an!" o+ t," liEuiat" 1art *a# b"
insist" u1on "it,"r b# t," "btor or t," !r"itor2
(E4a*1l"' D o3"s C P9 *illion 1lus a*ag"s. E$"n i+
t," a*ount o+ a*ag"s ,as not #"t b""n as!"rtain"% t,"
P9 *illion is alr"a# <no3n or liEuiat". T,is is alr"a#
"*anabl" an 1a#abl".)
() I,"n a joint "btor 1a#s ,is s,ar" or t," !r"itor "*ans
t," sa*"2
(NOTE' T,is is a !o*1l"t" 1a#*"nt o+ ,is s,ar"% but
it is still a 1artial +ul+ill*"nt o+ t," 3,ol" obligation.)
(") I,"n a soliar# "btor 1a#s onl# t," 1art "*anabl"
b"!aus" t," r"st ar" not #"t "*anabl" on a!!ount o+ t,"ir
b"ing subj"!t to i++"r"nt t"r*s an !onitions2
(+) In !as" o+ !o*1"nsation% 3,"n on" "bt is larg"r t,an t,"
Art. 16@B
ot,"r% it +ollo3s t,at a balan!" is l"+t (S"" Art. 16A?% Ci$il
Co")2
Art. 16@A
(g) I,"n 3or< is to b" on" b# 1arts. (S"" Art. 1C6?% Ci$il
Co").
FNOTE' In !ri*inal la3% t," Su1r"*" Court ,as ,"l
t,at t," a!!"1tan!" o+ 1artial 1a#*"nt b# an o++"n"
1art# is not on" o+ t," *"ans o+ "4tinguis,ing !ri*inal
liabilit#. T," r"ason is' A !ri*inal o++"ns" is !o**itt"
against t," 1"o1l"% an t," o++"n" 1art# *a# not 3ai$"
or "4tinguis, t," !ri*inal liabilit# t,at t," la3 i*1os"s
+or t," !o**is. sion o+ t," o++"ns". (Ca*us $. Court o+
A11"als% "t al.% @B
O.>. 9BAB X1A56Y.)
Art. 16@A. T," 1a#*"nt o+ "bts in *on"# s,all b" *a"
in t," !urr"n!# sti1ulat"% an i+ it is not 1ossibl" to
"li$"r su!, !urr"n!#% t,"n in t," !urr"n!# 3,i!, is l"gal
t"n"r in t," P,ili11in"s.
T," "li$"r# o+ 1ro*issor# not"s 1a#abl" to or"r% or
bills o+ "4!,ang" or ot,"r *"r!antil" o!u*"nts s,all
1rou!" t," "++"!t o+ 1a#*"nt onl# 3,"n t,"# ,a$" b""n
!as,"% or 3,"n t,roug, t," +ault o+ t," !r"itor t,"# ,a$"
b""n i*1air".
In t," *"anti*"% t," a!tion "ri$" +ro* t," original
obligation s,all b" ,"l in ab"#an!".
CO&&ENT'
(1) OL"gal T"n"r8 D"+in"
It is t,at 3,i!, a "btor *a# !o*1"l a !r"itor to a!!"1t
in 1a#*"nt o+ t," "bt (3,"t,"r 1ubli! or 1ri$at").
(6) L"gal T"n"r in t," P,ili11in"s
(a) 7"+or" t," a$"nt o+ &artial La3% all not"s an !oins 3"r"
issu" b# t," C"ntral 7an< (no3 7ang<o S"ntral) (3it,out
a *a4i*u* li*it). (S"!. 5@% 5A 665).
(b) ;n"r S"!. 691 o+ Pr"si"ntial D"!r"" C6 (A*"ning 5A
665% t," -C"ntral 7an< A!t/)% o+ &artial La3% an "++"!ti$"
Art. 16@A
No$. 6A% 1AC6% t," 1 !"nta$o !oin an t," 5. !"nta$o !oin
ar" $ali l"gal t"n"r u1 to P6?.??2 t," ot,"r !oins (1?% 65%
5?% an P1) ar" $ali l"gal t"n"r u1 to P5?2 an all bills
ar" $ali l"gal t"n"r +or an# a*ount.
Art. 16@A
FNOTE' During t," =a1an"s" o!!u1ation% t," +ollo3ing
3"r" ,"l to b" l"gal t"n"r'
(a) =a1an"s" *ilitar# not"s. (Ha3 Pia $. C,ina 7an<ing Cor1.%
B? P,il. 6?@).
(b) -E*"rg"n!# not"s/ aut,oriH" an issu" b# t," Co**on.
3"alt, >o$"rn*"nt% but t,"s" !"as" to b" l"gal t"n"r
a+t"r E4"!. Or"r 65 at" an "++"!ti$" No$. 1B% 1A@@.
(&on"jar $. Ni!olo% XC.A.Y @9 O.>. 5?AA).G
FNOTE' 5"gistration an r""*1tion o+ -gu"rilla
not"s/ ar" go$"rn" b# 5A8s 66 an 96A% r"s1"!ti$"l#.G
FNOTE' ;n"r t," ol la3% 5"1. A!t BAC% t," a!.
!"1tan!" o+ ba!<1a# !"rti+i!at"s in 1a#*"nt o+ loans to
go$"rn*"nt !or1orations 3as in"" obligator# u1on t,"
P,ili11in" National 7an< (PN7). Ho3"$"r% t," "na!t*"nt
o+ 5"1. A!t 15C6% at" =un. 16% 1A56% 3,i!, as a n"3
1ro$ision% S"!tion A.a% to t," 5"$is" C,art"r o+ t," PN7%
r"*o$"s t,is obligation i*1os" u1on t," sai ban<. (P,il.
Nat. 7an< $. Er"n"ta% L.19?5B% Aug. 6B% 1A5A).G
(9) Do!trin"s +or Transa!tions During t," =a1an"s" O!!u1a.
tion
(a) Pa#*"nt o+ "bts (1r".3ar an =a1an"s" o!!u1ation "bts)
*a" an u" uring t," =a1an"s" o!!u1ation 3as $ali
b"!aus" t," =a1an"s" not"s 3"r" l"gal t"n"r% so 3it, all
transa!tions t,at i not 1arta<" o+ a 1oliti!al !o*1l"4ion%
unl"ss t,"r" 3as so*" ot,"r "+"!t. (Ha3 Pia $. C,ina
7an<ing Cor1oration% B? P,il. 6?@2 Co Di* C,a* $. Tan
D",% >5 L.5% S.C.% S"1t. 1C% 1A@52 Or"n " P.P. 7"n"i!tos
$. P,il. Trust Co.% @C O.>. No. 6BA@2 an Fili1inas Li+" As.
suran!" Co. $. Na$a% L.6?556% &a# 6?% 1A66).
(b) 7ut i+ t," "bt 3as not u" an 1a#abl" uring t," =a1a.
n"s" o!!u1ation% 1a#*"nt t,"r"o+ 3as VOID. (>ar!ia $. D"
los Santos% @A O.>. @B an Ni!olas $. &atias% L.1C@9).
(!) 7an< "1osits uring t," o!!u1ation 3"r" not $ali% but
3it,ra3als 3"r" $ali an "u!tibl"% "4!"1t inso+ar as
sai 3it,ra3al !oul b" "u!t" +ro* 1rior "1osits o+
Art. 16@A
=a1an"s" *on"#. (E4. Or"r @A% t," Lo3"st &ini*un 7al.
an!" or Cr"it La3). T," rul" a11li"s% 3,"t,"r t," "1osit
Art. 16@A
3as in t," +or* o+ !as, or !,"!<. (K"< Tang Lin Fir" an
&arin" Insuran!" Co. $. PN7% L.1@6C1% A1r. 6A% 1A6?).
(Hilao $. D" la Costa% B9 P,il. @C1% sa#s t," t"!,ni!al
r"ason b"ing t,at a ban< "1osit is not a 1a#*"nt o+ an#
obligation% 3,"r"as a ban< 3it,ra3al is a 1a#*"nt o+
t," loan !ontra!t" b# t," ban<.) &or"o$"r% on" i*1ortant
r"ason 3,# in g"n"ral t," ban< "1osits 3"r" ,"l $oi
3as t,at ban<s ar"% orinaril#% oblig" to r"!"i$" "1osits.
T,"r" is a sort o+ !o*1ulsion. H"n!"% E4. Or"r @A ,a to
b" issu" in t," "4"r!is" o+ t," 1oli!" 1o3"r o+ t," stat".
(F"li!iano CruH $. Au. >"n.% L.16699% &a# 9?% 1A5A).
E4a*1l" o+ >"n"ral 5ul"'
P1%??? 0 (1r".3ar
"1osit)
9?? 0 (1A@6
3it,ra3al)
1?? 0 (1A@9
3it,ra3al)
95? 0 (1A@@ "1osit)
P6?? (balan!" 0 b"!aus" t," 3it,ra3als *ust
b" subtra!t" 3,il" t," "1osit 3ill not b"
a")
E4a*1l" o+ t," E4!"1tion'
P1%??? 0 (1r".3ar
"1osit)
95? 0 (1A@6
3it,ra3al)
9?? 0 (1A@9
3it,ra3al)
1?? 0 (1A@@
3it,ra3al)
PA5? (5"ason' T," P9?? 3it,ra3al !an b" sub.
tra!t" +ro* t," "1osit o+ P95? b"!aus" sai
"1osit 3as *a" us" o+% l"a$ing P5? "4tra
"1osit. T," s"!on 3it,ra3al o+ P1?? !an
b" !,arg" to t," r"*aining P5? an to t,"
original a!!ount o+ P1%??? 0 l"a$ing PA5?).
F"li!iano A. CruH $. Auitor >"n"ral
L.16699% &a# 9?% 1A5A
Art. 16@A
FACTS' During t," =a1an"s" o!!u1ation% CruH 3ant" to
1ur!,as" a lot *a" a$ailabl" to t," 1ubli! b# t," go$"rn*"nt
Art. 16@A
(5ural Prog. A*.). T," lot 3as t," Sta. Clara Estat" in Sa*.
1alo!% &anila. Pursuant to go$"rn*"nt r"Euisit"s% CruH ,as to
1a# P1%16? in =a1an"s" *on"# as -"1osit./ A+t"r lib"ration% ,"
soug,t t," "li$"r# to ,i* o+ t," lot. In t," *"anti*"% ," 3as
r"Euir" to 1a# t," IHOLE 1ur!,as" 1ri!". H" no3 su"s +or
t," $alu" 1ai uring t," =a1an"s" o!!u1ation. T," Au. >"n.
r"+us" on t3o grouns' Firstl#% un"r E4. Or"r No. @A% -".
1osits/ 3"r" !onsi"r" $oi. S"!onl#% t," loss o+ t," -"1osits/
b# a +ortuitous "$"nt *ust b" born" b# t," "1ositor.
HELD' CruH !an r"!o$"r +or 3,at ," ga$" 3as not r"all#
a "1osit (a r"al !ontra!t)% but an a$an!" 1a#*"nt. &or"o$"r%
E4. Or"r @A% 3,i!, s1"a<s o+ -ban< "1osits/ a11li"s *"r"l#
to ban<s% 3,o 3"r" t,"n un"r a sort o+ !o*1ulsion to a!!"1t
-"1osits./ H"r"% t," 5ural Progr"ss A*. 3as un"r no !o*1ul.
sion. I+ at all% it 3as CruH 3,o 3as !o*1"ll" to 1a# t," "1osit
r"Euir". CruH% ,o3"$"r% s,oul b" !r"it" onl# 3it, t," $alu"
in t," 7allant#n" S!al"% as t," "1osit !oul ,a$" b""n r"turn"
uring t," 3ar.
() I,"n t," 7allant#n" S!al" s,oul b" or s,oul not b"
us"'
1) I+ t," "bt 3as !ontra!t" uring t," o!!u1ation an
3as 1a#abl" ON DE&AND% but not #"t 1ai 3,"n
lib"ration !a*"% g"t t," VAL;E o+ t," "bt 0
a) a!!oring to a!tual "4!,ang" rat" at t," ti*"
it 3as u"% b"t3""n g"nuin" !urr"n!# an t,"
=a1an"s" not"s (Ab"nano $. Hao Su Ton% FCAG
@C O.>. 695A an 7ar!"lon $. Ara*bulo% FCAG
@B O.>. 9AC6)2
b) or i+ su!, a!tual "4!,ang" rat" !oul not b"
1ro$"% a!!oring to t," 7allant#n" S!al".
(Iilson $. 7"r<"n<ott"r% A6 P,il. A1B2 Soriano
$. Abalos% B@ P,il. 6?6 an >o*"H $. Tabia% B@
P,il. 66A).
6) I+ t," "bt 3as !ontra!t" uring t," =a1an"s" o!.
!u1ation an 3as 1a#abl" D;5IN> t," o!!u1ation
(sa*" as No. 1). (F"rnan"H% "t al. $. Nat. Ins. Co.% >5
L.A@16% =an. 6C% 1A5A).
Art. 16@A
FNOTE' I+ a !,"!< r"!"i$" as 1a#*"nt 3as
at" =an. 5% 1A@5 (=a1an"s" o!!u1ation 1"rio) but
Art. 16@A
3as 1r"s"nt" +or 1a#*"nt onl# on No$. 15% 1A5@
(1ost.lib"ration 1"rio)% t," !,"!< *ust b" 1ai in
a!!oran!" 3it, t," 7allant#n" s!,"ul" o+ $alu"s%
+or a+t"r all% it 3as 1a#abl" uring t," =a1an"s" o!.
!u1ation. (>ar!ia $. PN7% L.1@AA6% &a# 91% 1A61).G
9) I+ t," "bt 3as !ontra!t" uring t," =a1an"s" o!.
!u1ation an 3as 1a#abl" EITHE5 D;5IN> t,"
o!!u1ation or AFTE5 lib"ration (sa*" as No. 1).
FE4a*1l"'
D borro3" +ro* C P1%??? in 1A@6% an ," 1ro*.
is" to 1a# it on or b"+or" =an. B% 1A56. H"r" it is !l"ar
t,at t," b"n"+it o+ t," t"r* is gi$"n to D% t,"r"+or" ,"
!oul ,a$" 1ai it uring t," o!!u1ation or a+t"r lib"ra.
tion (1A@5). T,"r"+or"% t," rul"s gi$"n abo$" !an a11l#.
(S"" &"r!ao $. &"r!ao% L.1@@61% Aug. 6A% 1A6?2 s""
also Aguilar $. &irana% L.1651?% No$. 6A% 1A61 an
S"r$"r $. Car% L.666C6% No$. 69% 1A66).G
@) I+ t," "bt 3as !ontra!t" uring t," o!!u1ation but
3as 1a#abl" onl# AFTE5 lib"ration (E4a*1l"' -1a#
in 1AC@/)% g"nuin" P,ili11in" !urr"n!# &;ST 7E
PAID (not t," "Eui$al"nt a!tual "4!,ang" rat" NO5
in a!!oran!" 3it, t," 7allant#n" S!al"). (Iilson $.
7"r<"n<ott"r% A6 P,il. A1B2 Pon!" " L"on $. S#ju!o%
In!.% A? P,il. 9112 5ono $. >o*"H% B9 P,il. BA?2 >ar.
!ia $. D" los Santos% A9 P,il. 6B92 Dar" an 7ausa $.
I*1"rial% "t al.% L.CA?6 an L.1?1C6% O!t. 66% 1A5C2
Fong $. =a$i"r% L.11?5A% &ar. 65% 1A6?2 DiHon $. Ar.
rastria% L.159B9% No$. 6A% 1A612 Aguilar $. &irana%
L.1651?% No$. 6A% 1A61 an S"r$"r $. Car% L.666C6%
No$. 69% 1A66).
(NOTE' In t," !as" o+ St"rnb"rg an St"rnb"rg
$. Solo*an% L.1?6A1% =an. 91% 1A5B% it 3as ,"l t,at
3,"r" t," "" o+ *ortgag" at" Aug. C% 1A@@ 1ro.
$i" t,at t," obligation s"!ur" t,"r"b# s,all b" 1ai
on" #"ar +ro* t," at" t,"r"o+% or on Aug. C% 1A@5%
-an "41r"ssl# agr"" not soon"r%/ it is un"rstoo
t,at t," sa*" 3as 1a#abl" onl# a+t"r lib"ration an%
Art. 16@A
t,"r"+or"% *ust b" 1ai in P,ili11in" !urr"n!# on t,"
1"so.to.1"so basis.)
Art. 16@A
(NOTE' In t," !as" o+ Dar" M 7ausa $. I*1"rial%
"t al.% L.CA?6 an L.1?1C6% O!t. 66% 1A5C% t," Court
sai t,at on" o+ t," r"asons +or t,at ruling is t,at t,"
1arti"s in sti1ulating to ,a$" t," *on"tar# obligation
is!,arg" not b"+or" but a+t"r t," t"r*ination o+ t,"
3ar% int"n" to ,a$" t," sai obligation 1ai% not in
=a1an"s" 3ar not"s nor t,"ir $alu"% but in P,ili11in"
!urr"n!#.
In!i"ntall# too% in sai !as"% 3,"r" t," 1arti"s
agr"" t,at 1a#*"nt 3oul b" *a" not soon"r t,an
si4 *ont,s nor lat"r t,an "ig,t""n *ont,s a+t"r t,"
-t"r*ination o+ t," >r"at"r East Asia 3ar%/ t," !ourt
,"l t,at t," t"r*ination o+ su!, 3ar is to b" bas"
on its l"gal *"aning or l"gal s"ns"% na*"l#% t," o++i!ial
1ro!la*ation 3,i!, 3as *a" on D"!. 91% 1A@6.)
FNOTE' I,"r" un"r t," !ontra!t% t," $"nors 3"r"
allo3" to "4"r!is" t,"ir rig,t to r"1ur!,as" 3it,in t," 1".
rio o+ 1? #"ars +ro* t," a# o+ "4"!ution (F"b. 66% 1A@@) on
!onition t,at t,"# *a# "4"r!is" t,"ir rig,t onl# a+t"r t,"
"41iration o+ t," +irst +i$" #"ars% t,is rig,t b"!a*" $"st"
onl# a+t"r t," lib"ration o+ t," P,ili11in"s. H"n!"% 1a#*"nt
!an onl# b" "++"!t" in a!!oran!" 3it, t," 1r"s"nt !ur.
r"n!#. (C"#ras% "t al. $. ;lana#% L.16C??% =un. 6A% 1A5A).G
Valu" o+ On" P"so (P1.??) o+ P,ili11in" Curr"n!# in T"r*s
o+ =a1an"s" &ilitar# Not"s Issu" in t," P,ili11in"s
&ONTHS 1A@6 1A@9 1A@@ 1A@5
Art. 16@A
=anuar#
F"bruar#
&ar!,
A1ril1.??
&a#1.??
=un"1.??
=ul#1.??
August
S"1t"*b"r
O!tob"r
No$"*b"r
D"!"*b"r
1.??
1.??
1.??
1.6?
1.65
1.9?
1.@?
1.??
1.??
1.??
1.??
1.??
1.?5
1.1?
1.15
A.??
16.??
15.??
6?.??
1.5?
1.6?
1.C?
1.B?
6.5?
@.??
5.??
6.??
65.??
9?.??
@?.??
6?.??
A?.??
16.??
NONE
Art. 16@A
FT,is s!al" 3as ta<"n +ro* t," 7ill s"nt b# Pr"si"nt Os*"Pa to
Congr"ss on D"!"*b"r 19% 1A@5. &r. 7allant#n" 3as a S1"!ial
7an< A$is"r to t," Pr"si"nt. ;n+ortunat"l#% t," 7ill% alt,oug,
a11ro$" b# Congr"ss o+ t," P,ili11in"s% 3as not a11ro$" b#
t," Pr"si"nt o+ t," ;nit" Stat"s to 3,i!, it ,a b""n s"nt +or
a11ro$al. N"$"rt,"l"ss% t," 7allant#n" S!al" ,as b""n a11li"
in s"$"ral instan!"s bot, b# t," P,ili11in" Su1r"*" Court% an
b# t," P,ili11in" Court o+ A11"als. T," S!al" is no3 a *att"r
t,at !o*"s 3it,in jui!ial noti!"% inas*u!, as it ,as no3 b"!o*"
1art o+ our juris1ru"n!". So% "$"n i+ not s"t u1 as a "+"ns" or
1ro$"% it *a# b" !onsi"r". (Lo1"H $. O!,oa% L.CA55% &a# 9?%
1A5B).G
(@) Illustrati$" Cas"s
Allison =. >ibbs% "t!. $. Eulogio 5origu"H% Sr.% "t!.
L.1@A@% Aug. 9% 1A@A (Valiit# o+
=a1an"s" Transa!tions)
FACTS' A *ortgag" t3o 1ar!"ls o+ lan to 7% an A*"ri!an
!o*1an# in t," P,ili11in"s. A assign"% 3it, t," !ons"nt o+ 7%
,is (A8s) rig,ts to C. During t," =a1an"s" o!!u1ation% C 1ai o++
t," *ortgag" to t," D"1art*"nt o+ En"*# Pro1"rt# "stablis,"
b# t," =a1an"s" &ilitar# A*inistration. T," 5"gist"r o+ D""s
t,"n !an!"ll" t," *ortgag". No3 7 brings t,is a!tion against
C +or t," a*ount o+ t," *ortgag"% an against t," 5"gist"r o+
D""s +or t," r"storation o+ t," *ortgag". Issu"' Ias t," 1a#.
*"nt b# C to t," 7ur"au o+ En"*# Pro1"rt# $aliJ
HELD' T," Eu"stion in$ol$" in t," instant !as" is 3,"t,"r
or not t," 1a#*"nt o+ t," *ortgag" "" to t," 7ur"au o+ En"*#
Pro1"rt# is $ali. In t," Ha3 Pia Cas"% t," !ourt ,"l t,at su!,
!oll"!tion o+ !r"it 3as not a !on+is!ation but a s"Eu"stration
o+ t," "n"*# 1ri$at" 1ro1"rti"s an% t,"r"+or"% t," 1a#*"nt b#
Ha3 Pia to t," 7an< o+ Tai3an 3as $ali an r"l"as" 1lainti++8s
obligation to t," "+"nant 7an<. In t," 1r"s"nt !as"% t," issu"
is si*ilar. T,"r"+or"% t," "!ision s,oul b" t," sa*"% t,at is%
C ,as alr"a# 1ai o++ t," *ortgag"% an t," 5"gist"r o+ D""s
Art. 16@A
a!t" l"gall# 3,"n ," !an!"ll" t," *ortgag". H"n!"% 7 !annot
r"!o$"r an#t,ing +ro* C.
Art. 16@A
Do*ingo Aurr"o!o"!,a $.
Daban<alan Sugar Co.% In!.
B1 P,il. @C6 (D"+"ns" o+
All"g" Dur"ss)
FACTS' Plainti++ ,a a "1osit a!!ount 3it, t," "+"nant
!or1oration. On O!tob"r 16% 1A@1% 1lainti++ noti+i" t," "+"n.
ant o+ ,is (t," 1lainti++8s) int"ntion to 3it,ra3 all ,is "1osits.
7"!aus" o+ t," outbr"a< o+ t," 3ar% it 3as onl# on A1ril 1B%
1A@9 t,at t," "+"nant a!t" on t," 1lainti++8s a11li!ation +or
3it,ra3al. On sai at"% t," 1lainti++ r"!"i$" ,is balan!"%
a*ounting to P55%A5C.C5. T," +ollo3ing a#% t," 1lainti++ ".
1osit" sai a*ount 3it, t," P,ili11in" National 7an<. 7#
lib"ration ti*"% 1lainti++ i not ,a$" an#*or" *on"#. Plainti++
broug,t t,is a!tion to r"!o$"r +ro* t," "+"nant !or1oration
t," a*ount o+ P55%A5C.C5 on t," groun t,at ," a!!"1t" t,"
*on"# un"r ur"ss b"!aus" ," 3as a+rai t,at i+ ," r"+us"%
," 3oul b" ta<"n to Fort Santiago. Issu"' Ias t," 1a#*"nt to
1lainti++ in =a1an"s" 3ar not"s $ali su!, t,at t," "+"nant
!or1oration ,as "4tinguis," its obligationJ
HELD' K"s. Pa#*"nt o+ 1r".3ar "bts in =a1an"s" *on"#
uring t," o!!u1ation is% as a g"n"ral rul"% $ali. T," su11os"
t,r"at or ur"ss ,"r" 3as !"rtainl# not on" to ins1ir" g"nuin"
+"ar in a *an o+ t," 1lainti++8s 1osition. An "$"n i+ t," 1a#*"nt
in =a1an"s" *on"# i not "4tinguis, t," obligation still ,is
subs"Eu"nt a!t o+ *a<ing us" o+ t," *on"# rati+i" t," 1a#*"nt.
>ranting t,at ," 3as t,r"at"n" into a!!"1ting t," *on"#% ,"
3as not in an# 3a# !o*1"ll" to s1"n sai *on"#.
P,ili11in" Trust Co. $. Luis &a. Aran"ta% "t al.
B9 P,il. 196
(No Coll"!ti$" or >"n"ral Dur"ss)
FACTS' 7"+or" t," 3ar% Aran"ta o3" t," P,ili11in" Trust
Co. t," su* o+ P9%6B9.6?% s"!ur" b# so*" !"rti+i!at" o+ sto!<.
On &a# 6% 1A@@ t," Co*1an# *a" a "*an on Aran"ta.
Aran"ta 1ai% but t," !"rti+i!at"s o+ sto!<s 1l"g" !oul not b"
gi$"n b"!aus" a!!oring to t," Co*1an#% t,"# ,a b""n turn"
o$"r to t," ;.S. +or sa+"<""1ing uring t," 3ar. A+t"r lib"ration%
Aran"ta as<" t," !o*1an# +or t," r"turn o+ t," !"rti+i!at"s o+
sto!<s% but t," !o*1an# r"+us" to o so on t," groun t,at 1a#.
Art. 16@A
*"nt in =a1an"s" 3ar not"s 3as not $ali b"!aus" o+ !oll"!ti$"
or g"n"ral ur"ss.
Art. 16@A
HELD' In t," Ha3 Pia !as"% not" t,at un"r t," rul"s o+
Publi! Int"rnational La3% t," rig,t o+ t," *ilitar# o!!u1ant in
t," "4"r!is" o+ ,is go$"rn*"ntal 1o3"r to or"r t," liEuiation
o+ "n"*# ban<s an t," r"o1"ning o+ ot,"rs in t," o!!u1i" t"r.
ritor#% as 3"ll as to issu" *ilitar# !urr"n!# as l"gal t"n"r% ,as
b""n !on!"".
It is "$i"nt t,at t," 1a#*"nt *a" b# t," r"s1on"nt
(Aran"ta) an a!!"1t" b# t," 1"tition"r (P,ili11in" Trust Co.)
uring t," =a1an"s" o!!u1ation in !o*1lian!" 3it, t," sai
or"rs o+ t," =a1an"s" *ilitar# o!!u1ant% !annot b" !onsi"r"
as *a" un"r a !oll"!ti$" an g"n"ral ur"ss% b"!aus" an a!t
on" 1ursuant to t," la3s or or"rs o+ !o*1"t"nt aut,oriti"s !an
n"$"r b" r"gar" as "4"!ut" in$oluntaril# or un"r ur"ss o+
ill"giti*at" !onstraint o+ !o*1ulsion t,at in$aliat"s t," a!t./
D" Asis $. 7u"n$iaj"% "t al.
@5 O.>. No. 1% 1. 91C
(S"ll"r 7"n"+it" 3it, ;s" o+ =a1an"s" &on"#)
FACTS' A sol 7 so*" 1ro1"rti"s uring t," =a1an"s" o!.
!u1ation. A r"!"i$" 3ar not"s as 1a#*"nt. A+t"r lib"ration% A
soug,t to r"!o$"r t," 1ro1"rti"s on groun t,at t," *on"# 1ai
to ,i* 3as 3ort,l"ss. Issu"' Is A !orr"!tJ
HELD' A is not !orr"!t. 7"!aus" A 3illingl# sol sai
1ro1"rti"s an b"n"+it" 3it, t," us" o+ t," 1ur!,as" *on"#% ,"
!annot no3% on t," groun% atta!< t," $aliit# o+ t," sal". -T,"
=a1an"s" 3ar not"s 3"r" l"gal t"n"r uring t," o!!u1ation an
in &ar. 1A@9% 3,"n t," sal" in Eu"stion 3as *a"% t,"# 3"r" at
1ar 3it, P,ili11in" !urr"n!#. T,os" 3,o sol t,"ir 1ro1"rti"s
t,"n an $oluntaril# a!!"1t" sai not"s in 1a#*"nt t,"r"+or
,a$" to su++"r t," !ons"Eu"n!"s 3,"n t," not"s "1r"!iat" in
$alu" or b"!a*" 3ort,l"ss./
&on"jar $. Ni!olo
@9 O.>. No. 16% 1. 5?AA
(I,"n -E*"rg"n!# Not"s/ C"as"
to 7" L"gal T"n"r)
FACTS' A 3as a sub.l"ssor% an 7% a sub.l"ss"". In 1a#.
Art. 16@A
*"nt o+ r"ntals% 7 3as 1a#ing A -"*"rg"n!# not"s/ but sin!" A
i not 3ant to a!!"1t% 7 "1osit" t," *on"# 3it, t," &uni!i1al
Art. 16@A
Tr"asur"r8s O++i!" on A1r. C% 1A@5. It 3as 1ro$"% ,o3"$"r% t,at
on sai at"% t," -"*"rg"n!# not"s/ 3"r" no long"r l"gal t"n"r.
Issu"' Ias t," "1osit in t," o++i!" "Eui$al"nt to 1a#*"ntJ
HELD' No% sai "1osit 3as not "Eui$al"nt to 1a#*"nt
b"!aus" at t,at ti*"% t," -"*"rg"n!# not"s/ 3"r" no long"r l"gal
t"n"r. T,"# 3"r" goo onl# u1 to No$. 1B% 1A@@ b# $irtu" o+ E4.
Or"r 65.
F"rnan"H% "t al. $.
Nat. Insuran!" Co. o+ t," P,ili11in"s
L.A1@6% =an. 6C% 1A5C
FACTS' =uan F"rnan"H8 li+" 3as insur" on =ul# 15%
1A@@. H" i" on No$. 6% 1A@@. In 1A56% t," b"n"+i!iari"s !lai*
t," in"*nit#. On =ul. A% 1A5@% 1roo+ o+ "at, 3as a11ro$" b#
t," !o*1an#. ;n"r t," Insuran!" La3% a li+" insuran!" 1oli!#%
in t," abs"n!" o+ a "+init" 1"rio% *atur"s u1on DEATH% an
1a#*"nt o+ in"*nit# *ust b" *a" 3it,in 6? a#s +ro* 1roo+
o+ "at,. Issu"' I,"n i t," obligation o+ t," insuran!"
!o*1an# to 1a# t," in"*nit# a!!ru"' in 1A@@ ("at,) or in 1A5@
(a11ro$al o+ 1roo+ o+ "at,)J I+ in 1A@@% t," 7allant#n" s!al" !an
b" us"% +or it !an b" sai t,at t," obligation aros" uring t,"
=a1an"s" o!!u1ation2 i+ in 1A5@% t," 7allant#n" s!al" !annot
ob$iousl# b" us".
HELD' T," obligation a!!ru" in 1A@@ 3,"n t," insur"
i"% ,"n!" t," 7allant#n" s!al" !an b" us". T," si4t#.a# 1".
rio +i4" in t," Insuran!" La3 is *"r"l# 1ro!"ural in natur"2
it is t," "at, t,at *atur"s t," 1oli!#.
(5) Sti1ulation o+ Anot,"r Curr"n!#
(a) ;n"r t," +irst 1aragra1, o+ Art. 16@A% 1a#*"nt *a# b"
"it,"r'
1) in t," !urr"n!# sti1ulat"2
6) or i+ it is not 1ossibl" to "li$"r su!, !urr"n!#% t,"n
in P,ili11in" l"gal t"n"r.
Art. 16@A
(b) Sai +irst 1aragra1, o+ Art. 16@A ,as alr"a# b""n *oi+i"
b# 5A 56A.
Art. 16@A
;n"r t," sai A!t% obligations in!urr" AFTE5 5"1.
A!t 56A (=un. 16% 1A5?)% 3,i!, ar" +or t," 1ur1os" o+ 1a#.
*"nt in'
1) a +or"ign !urr"n!#
6) an a*ount o+ P,ili11in" *on"# to b" *"asur" b#
gol or +or"ign !urr"n!#% s,oul b" null% $oi an o+
no "++"!t.
(!) 5"1. A!t 56A% in !onn"!tion 3it, Art. 16@A o+ t," Ci$il Co"%
,as b""n is!uss" b# t," Su1r"*" Court in t," +ollo3ing
!as"s% a*ong ot,"rs'
1) Eastboar Na$igation Co. $. Ks*a"l an Co.% L.A?A?%
S"1t. 1?% 1A5C.
6) Arri"ta $. National 5i!" an Corn Cor1.% L.156@5%
=an. 91% 1A6@.
T,us% t," Court ,as rul" t,at i+ t," "btor 1ro*is"s
to 1a# in a !urr"n!# ot,"r t,an P,ili11in" l"gal t"n.
"r% t," sti1ulation 3it, r"s1"!t to t," !urr"n!# is
VOID. All t,at t," !r"itor !an "*an is 1a#*"nt
in P,ili11in" l"gal t"n"r *"asur" at t," "4!,ang"
rat" 1r"$ailing not at t," ti*" o+ 1a#*"nt% but at t,"
ti*" o+ !ontra!ting or in!urring t," "bt. (S"" Arri"ta
$. National 5i!" an Corn Cor1.% L.156@5% =an. 91%
1A6@).
() Ho3"$"r% 5A 56A ,as in turn b""n a*"n" b# 5A @1??%
3,i!, too< "++"!t on =un. 1A% 1A6@.
P,o"ni4 Assuran!" Co*1an# $.
&a!onra# an Co.% In!.
L.65?@B% &a# 19% 1AC5
ISS;E' I+ a !ourt jug*"nt stat"s t,at an a*ount
in ollars is su11os" to b" 1ai t," 3inning 1art#% 3,at
tabl" o+ !on$"rsion (o+ "4!,ang" rat"s) *ust b" us" 0
t,at at t," ti*" t," !ontra!t 3as "nt"r" into% t,at at t,"
ti*" o+ jug*"nt% or t,at at t," ti*" 1a#*"nt or
satis+a!tion o+ t," jug*"nt is *a"J
Art. 16@A
HELD' T," !on$"rsion rat" at t," ti*" o+ 1a#*"nt
or satis+a!tion o+ t," jug*"nt. I+ sai ti*" o+ 1a#*"nt or
Art. 16@A
satis+a!tion is is1ut"% t," trial !ourt 3ill "t"r*in" 3,"n
sai 1a#*"nt or satis+a!tion 3as *a".
FNOTE' ;n"r 5A @1?? 3,i!, too< "++"!t on =un. 1A%
1A6@ an 3,i!, a*"n" 5"1ubli! A!t 56A 0 3,i!, in turn
,a *oi+i" Art. 16@A o+ t," Ci$il Co" 0 in -i*1ort."4.
1ort an ot,"r int"rnational ban<ing% +inan!ial in$"st*"nt
an inustrial transa!tions88 t," 1arti"s8 agr""*"nt as to
!urr"n!# in 3,i!, an obligation 3ill b" 1ai is 7INDIN>.G
(T,is 3as a NOTE in t," P,o"ni4 !as".)
FNOTE' 7"+or" t," "++"!ti$it# o+ 5A @1??% t," a11li.
!abl" rul" 3as 5A 56A 3,i!, g"n"rall# 1ro,ibit" trans.
a!tions in +or"ign !urr"n!#% in!luing ollars. T,is is 3,#
in Arri"ta $. National 5i!" M Corn Cor1oration% L.156@5%
=an. 91% 1A6@% 66 O.>. AB1?% 1? SC5A CA% BB% an a3ar o+
a*ag"s a*ounting to S6B6%??? 3as *a" 1a#abl" in P,il.
i11in" 1"sos% a!!oring to t," 1r"$ailing rat" o+ "4!,ang"
on =ul. 1% 1A56% 3,"n t," !ontra!t 3as "4"!ut" (not 3,"n
t," !ontra!t 3as satis+i"). T," 1a#*"nt in ollars b"ing
$oi% 1a#*"nt *ust b" *a" in 1"sos% un"rstoo to b" at
t," !on$"rsion rat" 3,"n t," !ontra!t 3as "nt"r" into%
not 3,"n t," a*ount is 1ai or satis+i".G
Tagala $. =i*"n"H
>5 99?5?% =ul. 69% 1ABC
A jug*"nt a3aring an a*ount in ;.S. ollars *a#
b" 1ai 3it, its "Eui$al"nt a*ount in lo!al !urr"n!# in t,"
!on$"rsion rat" 1r"$ailing at t," ti*" o+ 1a#*"nt. I+ t,"
1arti"s !annot agr"" on t," sa*"% t," trial !ourt s,oul
"t"r*in" su!, !on$"rsion rat". N""l"ss to sa#% t," jug.
*"nt "btor *a# si*1l# satis+# sai a3ar b# 1a#ing in
+ull t," a*ount in ;.S. ollars.
I+ t," 1lainti++ +il"s a *otion to +i4 t," 1"so $alu" o+
t," jug*"nt in ollars% t,"# onl# int"n to "4"r!is" t,"
rig,t grant" to t,"* b# t," 1r"s"nt juris1ru"n!" 0 t,at
t," trial !ourt s,all "t"r*in" or +i4 t," !on$"rsion rat"
Art. 16@A
1r"$ailing at t," ti*" o+ 1a#*"nt% an it is "rror +or t,"
trial !ourt to "n# sai *otion.
Art. 16@A
(6) ;ni+or* Curr"n!# La3
C.F. S,ar1 M Co. $. Nort,3"st Airlin"s
>5 199@AB% A1r. 1B% 6??6
T," r"1"al o+ 5A 56A b# 5A B1B9 ,as t," "++"!t o+ r"*o$.
ing t," 1ro,ibition on t," sti1ulation o+ !urr"n!# ot,"r t,an
P,ili11in" !urr"n!#% su!, t,at obligations or transa!tions *a#
no3 b" 1ai in t," !urr"n!# agr"" u1on b# t," 1arti"s.
=ust li<" 5A 56A% ,o3"$"r% t," n"3 la3 o"s not 1ro$i"
+or t," a11li!abl" rat" o+ "4!,ang" +or t," !on$"rsion o+ +or"ign
!urr"n!#.in!urr" "Eui$al"nt. It +ollo3s% t,"r"+or"% t,at t,"
juris1ru"n!" "stablis," in 5A 56A r"garing t," rat" o+ !on.
$"rsion r"*ains a11li!abl".
Obligations in +or"ign !urr"n!# *a# b" is!,arg" in
P,ili11in" !urr"n!# bas" on t," 1r"$ailing rat" at t," ti*" o+
1a#*"nt. T," 3iso* on 3,i!, t," juris1ru"n!" int"r1r"ting
5A 56A is bas" "Euall# ,ols tru" 3it, 5A B1B9. V"ril#% it is
just an +air to 1r"s"r$" t," r"al $alu" o+ t," +or"ign "4!,ang".
in!urr" obligation to t," at" o+ its 1a#*"nt.
(C) 7ar
In a 1?.#"ar l"as" o+ a stor" s1a!" on t," Es!olta to b" at"
toa#% *a# t," 1arti"s sti1ulat" t,at t," r"ntal s,all b" +or "$"r#
*ont,% t," "Eui$al"nt r"nt in 1"sos% uring t," 1r"!"ing *ont,%
o+ S5??J 7ri"+l# "41lain #our ans3"r.
ANS.' T," 1arti"s to t," l"as" ar" not allo3" to sti1u.
lat" t,at t," r"ntal% alt,oug, 1a#abl" in 1"sos% s,all b" t,"
"Eui$al"nt o+ S5?? b"!aus" un"r 5A 56A% su!, a 1ro$ision is
!onsi"r" null an $oi% i+ t," sa*" 3as agr"" u1on a+t"r sai
A!t% 3,i!, a*"n" Art. 16@A o+ t," n"3 Ci$il Co"% b"!a*"
"++"!ti$". S"!. 1 o+ sai A!t stat"s' -E$"r# 1ro$ision !ontain" in
. . . an# obligation 3,i!, 1ro$ision 1ur1orts to gi$" t," oblig""
t," rig,t to r"Euir" 1a#*"nt in gol or in a 1arti!ular <in o+
!oin or !urr"n!# ot,"r t,an t," P,ili11in" !urr"n!#% or in an
a*ount o+ *on"# o+ t," P,ili11in"s *"asur" t,"r"b#% s,all b"
as it is ,"r"b# "!lar" against 1ubli! 1oli!#% null an $oi an
o+ no "++"!t% an no su!, 1ro$ision s,all b" !ontain" in% or *a"
Art. 16@A
3it, r"s1"!t to% an# obligation ,"r"ina+t"r in!urr"./
Art. 16@A
FNOTE' 5ul"s +or obligations in!urr" P5IO5 to 5"1. A!t
56A an 1a#abl" in a FO5EI>N C;55ENCK'
(a) I+ it 3as an obligation (3,i!, 3as NOT a loan)% 1a#*"nt
s,oul b" *a" in P,ili11in" !urr"n!# at t," rat" o+
"4!,ang" 1r"$ailing at t," ti*" t," obligation 3as IN.
C;55ED.
b) I+ it 3as a LOAN% 1a#*"nt s,oul also b" in P,ili11in"
!urr"n!# at t," rat" o+ "4!,ang" 1r"$ailing at t," ti*" o+
t," sti1ulat" at" o+ 1a#*"nt. (5A 56A). H"n!"% a l"tt"r
o+ !r"it +or S1@%??? obtain" on or b"+or" 1A@A *ust b"
1ai in P,ili11in" !urr"n!# at t," rat" o+ P6 +or S1 inst"a
o+ P6.@1 +or "$"r# ollar% sin!" 5A 56A !annot i*1air ob.
ligations in!urr" 1rior to its "++"!ti$it# in 1A51. (PN7 $.
Tulu"ta% L.C6C1% Aug. 9?% 1A5C r"it"rat" in PN7 $. ;nion
7oo<s% L.B@A?% Aug. 9?% 1A5C). (In sai !as"s% t," !ourt
,"l t,at 3,"t,"r 1a#abl" in ollars or in t," "Eui$al"nt
o+ ollars in P,ili11in" !urr"n!#% t," sa*" 1rin!i1l" 3oul
a11l#.)G
FNOTE' It ,as also b""n ,"l t,at a "btor !annot
b" r"Euir" to 1a# t," +or"ign "4!,ang" ta4% i*1os" b#
la3 a+t"r t," obligation 3as !onstitut"% +or r"*itting
t," 1a#*"nt to t," !r"itor abroa in ollars. (Eastboar
Na$igation $. Ks*a"l% L.A?A?% S"1t. 1?% 1A5C).G
(B) D"li$"r# o+ Co**"r!ial Instru*"nts
(a) A !,"!< is not l"gal t"n"r an% t,"r"+or"% t," !r"itor
!annot b" !o*1"ll" to a!!"1t 1a#*"nt t,ru t,is *"ans.
(7"lisario $. Nati$ia% 6? P,il. 156 an Villanu"$a $.
Santos% 6C P,il. 6@B). T," rul" a11li"s "$"n 3,"n 1a#*"nt
is *a" t,ru !onsignation in !ourt. (Villanu"$a $. Santos%
6C P,il. 6@B).
(b) E$"n a ban< *anag"r8s !,"!< is not l"gal t"n"r. (Cua#!ong
$. 5ius% @C O.>. No. 6165).
(!) Instan!"s 3,"n a !,"!< or a !o**"r!ial o!u*"nt s,oul
b" a!!"1t" as 1a#*"nt'
Art. 16@A
1) 3,"n t," !r"itor is in "sto11"l or ," ,a 1r"$iousl#
1ro*is" ," 3oul a!!"1t a !,"!<2
Art. 16@A
6) 3,"n t," !,"!< ,as lost its $alu" b"!aus" o+ t," +ault
o+ t," !r"itor (Art. 16@A% 6n 1ar.)% as 3,"n ," ,as
unr"asonabl# "la#" in 1r"s"nting t," !,"!< +or 1a#.
*"nt (P,il. Nat. 7an< $. S""to% L.@9BB% Aug. 19% 1A56)%
or 3,"n% in t," !as" o+ a +or"ign bill o+ "4!,ang"% t,"
!r"itor n"gl"!ts to *a<" a 1rot"st (:uiros $. Tan
>uinla#% 5 P,il. 6C5)2
9) 3,"n 1a#*"nt o!!urs not b"!aus" o+ a "bt but
b"!aus" o+ t," "4"r!is" o+ t," rig,t o+ !on$"ntional
r""*1tion% sin!" t,is rig,t is a rig,t% an not a ut#%
1arti!ularl# 3,"n t," !,"!< is in +a!t "1osit" b# t,"
!l"r< o+ !ourt 3it, t," ban<% an t," $"n"" a r"tro
,as 1"tition" t," !ourt t,at ," b" allo3" to 3it,.
ra3 t," a*ount o+ t," "1osit. (Cor"ro $. Sioso!o%
@1 O.>. No. @6@@).
() Probl"*
In 1a#*"nt o+ ,is "bt% D 1ai C a 1ro*issor# not"
1a#abl" to C8s or"r. C a!!"1t" t," 1ro*issor# not". Do"s
t,is *"an t,at t," 1a#*"nt ,as b""n "++"!t"J
ANS.' Not #"t. T," "++"!t o+ 1a#*"nt in t,is !as" 3ill
b" 1rou!" onl# 3,"n t," not" ,as b""n !as,"2 an also%
"$"n i+ it !annot b" !as," b"!aus" o+ t," !r"itor8s +ault.
(Art. 16@A% 1ar. 6% Ci$il Co").
(") Probl"*
D in 1a#*"nt o+ a "bt% 1ai C% 3it, C8s !ons"nt% a
1ro*issor# not" 1a#abl" t3o *ont,s lat"r. During t,"
int"r$"ning 1"rio% *a# C bring an a!tion to r"!o$"r +ro*
DJ
ANS.' No% +or un"r t," la3% 1"ning t," !as,ing
o+ t," *"r!antil" o!u*"nt% -t," a!tion "ri$" +ro* t,"
original obligation s,all b" ,"l in ab"#an!"./ (Art. 16@A%
last s"nt"n!"% Ci$il Co").
:uiros $. Tan >uinla#
5 P,il. 6C5
Art. 16@A
FACTS' A 3as in 1oss"ssion o+ a bill o+ "4!,ang" "nors"
to ,i* or ,is or"r. In 1a#*"nt o+ *"r!,anis"% A inors" t,"
Art. 165?
bill o+ "4!,ang" to 7 3,o 3illingl# a!!"1t" it. I,"n 7 1r"s"nt"
t," bill o+ "4!,ang" to t," ban<% t," ban< r"+us" to 1a#% on t,"
groun t,at t," su11os" a!!"1tan!" (3ritt"n on t," bill) b# t,"
ban< 3as a +org"r#. 7 i not *a<" a 1rot"st an in t," !ours"
o+ ti*"% t," bill lost !o*1l"t"l# its $alu". Lat"r 7 su" A +or t,"
1ri!" o+ t," *"r!,anis". Issu"' Can 7 r"!o$"rJ
HELD' No% 7 !annot r"!o$"r +ro* A. 7# r"ason o+ t," n".
gl"!t o+ 7% t," !r"itor% t," $alu" o+ t," bill ,as b""n i*1air".
7 !annot bla*" A% an% t,"r"+or"% t," "li$"r# o+ t," bill b# A
to 7 o1"rat" as !o*1l"t" 1a#*"nt +or t," *"r!,anis".
(A) Postat" C,"!<s
Ongsi1 $. Pru"ntial 7an<
>5 6C96B% &a# 9?% 1AB9
A 1ostat" !,"!< is not a !,"!< at all% an a ban< is not
allo3" to "u!t +ro* a "1ositor8s !urr"nt a!!ount t," 1ost.
at" !,"!< issu" b# t," "1ositor.
Art. 165?. In !as" an "4traorinar# in+lation or
"+lation o+ t," !urr"n!# sti1ulat" s,oul su1"r$"n"% t,"
$alu" o+ t," !urr"n!# at t," ti*" o+ t," "stablis,*"nt o+
t," obligation s,all b" t," basis o+ 1a#*"nt% unl"ss t,"r" is
an agr""*"nt to t," !ontrar#.
CO&&ENT'
(1) OIn+lation8 D"+in"
It is a s,ar1 su"n in!r"as" o+ *on"# or !r"it or bot,
3it,out a !orr"s1oning in!r"as" in busin"ss transa!tion.
(I"bst"r8s Di!tionar#). Sin!" t," $alu" o+ *on"# ,"r" t"ns to
"!r"as"% t," natural r"sult is an in!r"as" in t," 1ri!" o+ goos
an s"r$i!"s.
(6) OD"+lation8 D"+in"
Art. 165?
It is t," o11osit" o+ in+lation.
Art. 165?
(9) Non.a11li!abilit# o+ t," Arti!l" Toa#
T," Arti!l" s1"a<s o+ t," in+lation or "+lation o+ -t,"
!urr"n!# sti1ulat"%/ *"aning% t," !urr"n!# OTHE5 THAN
P,ili11in" l"gal t"n"r as allo3" un"r Art. 16@A. 7ut sin!"
toa#% no +or"ign !urr"n!# !an b" sti1ulat" un"r 5A 56A% it
+ollo3s t,at lit"rall# !onstru"% Art. 165? !annot b" *a" us"
o+ +or t," 1r"s"nt. 7# analog# or "4t"nsion% ,o3"$"r% it *a# b"
1ossibl" to in!lu" t," "4traorinar# in+lation or "+lation o+
t," P,ili11in" !urr"n!#. Toa#% ,o3"$"r% it is oubt+ul 3,"t,"r
3,at 3" ar" "41"ri"n!ing toa# *a# alr"a# b" !lass" in t,"
!at"gor# o+ -"4traorinar#./
E$"l#n =. Sangraor% =oin" b# ,"r ,usban
5origo Sangraor% =r.
$. S1ous"s Fran!is!o Val"rra*a
an T"r"sita &. Val"rra*a >5
CA556% No$. 6A% 1ABB
Sin!" 1"tition"rs +ail" to 1ro$" t," su1"r$"ning o+ "4traor.
inar# in+lation b"t3""n A1r. 6% 1AB@ an D"!. C% 1AB@ 0 no
1roo+s 3"r" 1r"s"nt" on ,o3 *u!,% +or instan!"% t," 1ri!" in"4
o+ goos an s"r$i!"s ,a ris"n% uring t," int"r$"ning 1"rio
0 an "4traorinar# in+lation !annot b" assu*"2 !ons"Eu"ntl#%
t,"r" is no r"ason or basis% l"gal or +a!tual% +or ajusting t,"
$alu" o+ t," P,ili11in" 1"so in t," s"ttl"*"nt o+ r"s1on"nts8
obligation.
Fili1ino Pi1" an Founr# Cor1. $.
National Iat"r3or<s an
S"3"rag" Aut,orit#
>5 @9@@6% &a# 9% 1ABB
E4traorinar# in+lation "4ists 3,"n -t,"r" is a "!r"as"
or in!r"as" in t," 1ur!,asing 1o3"r o+ t," P,ili11in" !urr"n!#
3,i!, is unusual or b"#on t," !o**on +lu!tuation in t,"
$alu" o+ sai !urr"n!#% an su!, "!r"as" or in!r"as" !oul not
,a$" b""n r"asonabl# +or"s""n or 3as *ani+"stl# b"#on t,"
!ont"*1lation o+ t," 1arti"s at t," ti*" o+ t," "stablis,*"nt o+
Art. 165?
t," obligation.88
Art. 165?
An "4a*1l" o+ "4traorinar# in+lation is t," +ollo3ing
"s!ri1tion o+ 3,at ,a11"n" to t," "uts!,"*ar< in 1A6?'
-&or" r"!"ntl#% in t," 1A6?8s >"r*an# "41"ri"n!" a !as" o+
,#1"rin+lation. In "arl# 1A61% t," $alu" o+ t," >"r*an *ar< 3as
@.6 to t," ;.S. ollar. 7# &a# o+ t," sa*" #"ar it ,a stu*bl"
to 66 to t," ;.S. ollar. An as t," 1ri!"s 3"nt u1 ra1il#% so
t,at b# O!t. 1A69% it ,a r"a!," @.6 trillion to t," ;.S. ollarZ/
As r"1ort"% -1ri!"s 3"r" going u1 "$"r# 3""<% t,"n "$"r# a#%
t,"n "$"r# ,our. Io*"n 3"r" 1ai s"$"ral ti*"s a a# so t,at
t,"# !oul rus, out an "4!,ang" t,"ir *on"# +or so*"t,ing
o+ $alu" b"+or" 3,at littl" 1ur!,asing 1o3"r 3as l"t issol$"
in t,"ir ,ans. So*" 3or<"rs tri" to b"at t," !onstantl# ris.
ing 1ri!"s b# t,ro3ing t,"ir *on"# out o+ t," 3ino3s to t,"ir
3aiting 3i$"s% 3,o 3oul rus, to unloa t," n"arl# 3ort,l"ss
1a1"r. A 1ostag" sta*1 !ost *illions o+ *ar<s an a loa+ o+ br"a
billions./
I,il" t,"r" ,as b""n a "!lin" in t," 1ur!,asing 1o3"r o+
t," P,ili11in" 1"so% t,is o3n3ar +all o+ t," !urr"n!# !annot
b" !onsi"r" -"4traorinar#.88 It is si*1l# a uni$"rsal tr"n
t,at ,as not s1ar" our !ountr#.
(@) 7asis +or Pa#*"nt
;n"r t,is Arti!l"% t," basis +or 1a#*"nt is t," $alu" (t,"
r"al $alu" or 3ort,) at t," ti*" t," obligation 3as !onstitut"
or in!urr"% unl"ss t,"r" is an agr""*"nt to t," !ontrar#.
Pan A*"ri!an $. PAA E*1lo#""s
L.1B9@5% =an. 9?% 1A6@
T," 1ur!,asing 1o3"r or $alu" o+ *on"# or !urr"n!# o"s
not la3+ull# "1"n u1on% !annot la3+ull# !o*" into b"ing% b"
!r"at"% or broug,t about b#% a la3 "na!t" b# Congr"ss. I+
b# la3 or tr"at# t," rat" o+ "4!,ang" b"t3""n t3o !urr"n!i"s
s,oul b" +i4" or sti1ulat"% su!, la3 or tr"at# !oul not gi$"
t," *on"# or !urr"n!# t," 1ur!,asing 1o3"r or $alu" +i4" or
sti1ulat"% but 3oul bin t," >o$"rn*"nt "na!ting t," la3 or
t," !ontra!ting 1arti"s to a tr"at# to 1a# or su11l# t," i++"r"n!"
b"t3""n t," $alu" +i4" or sti1ulat" an t," r"al $alu" o+ t,"
Art. 165?
!urr"n!# s,oul t," latt"r b" lo3"r t,an t," +i4" or sti1ulat"
rat" o+ "4!,ang" b"t3""n t," t3o !urr"n!i"s.
Art. 165?
Co**ission"r o+ Publi! Hig,3a#s $.
Hon. 7urgos% "t al.
L.96C?6% &ar. 91% 1AB?
Art. 165? a11li"s onl# to !as"s 3,"r" a !ontra!t or agr"".
*"nt is in$ol$". It o"s not a11l# 3,"r" t," obligation to 1a#
aris"s +ro* la3% in"1"n"nt o+ !ontra!ts. T," ta<ing o+ 1ri$at"
1ro1"rt# b# t," >o$"rn*"nt in t," "4"r!is" o+ its 1o3"r o+ "*i.
n"nt o*ain o"s not gi$" ris" to a !ontra!tual obligation. ;n"r
t," la3% in t," abs"n!" o+ an# agr""*"nt to t," !ontrar#% "$"n
assu*ing t,at t,"r" ,as b""n an "4traorinar# in+lation 3it,in
t," *"aning o+ Art. 165?% t," $alu" o+ t," 1"so at t," ti*" o+
t," "stablis,*"nt o+ t," obligation% 3,i!, in t," instant !as"
is 3,"n t," 1ro1"rt# 3as ta<"n 1oss"ssion o+ b# t," >o$"rn.
*"nt% *ust b" !onsi"r" +or t," 1ur1os" o+ "t"r*ining just
!o*1"nsation.
Ob$iousl#% t,"r" !an b" no agr""*"nt to t," !ontrar# to
s1"a< o+ b"!aus" t," obligation o+ t," >o$"rn*"nt soug,t to b"
"n+or!" in t," 1r"s"nt a!tion o"s not originat" +ro* a !ontra!t%
but +ro* la3 3,i!,% g"n"rall#% is not subj"!t to t," 3ill o+ t,"
1arti"s. An t,"r" b"ing no ot,"r l"gal 1ro$ision !it" 3,i!,
3oul justi+# a "1artur" +ro* t," rul" t,at just !o*1"nsation
is "t"r*in" on t," basis o+ t," $alu" o+ t," 1ro1"rt# at t,"
ti*" o+ t," ta<ing t,"r"o+ in "41ro1riation b# t," >o$"rn*"nt%
t," $alu" o+ t," 1ro1"rt# as it is 3,"n t," >o$"rn*"nt too<
1oss"ssion o+ t," lan in Eu"stion% not t," in!r"as" $alu"
r"sult. ing +ro* t," 1assag" o+ ti*" 3,i!, in$ariabl# brings
un"arn" in!r"*"nt to lan" 1ro1"rti"s% r"1r"s"nts t," tru"
$alu" to b" 1ai as just !o*1"nsation +or t," 1ro1"rt# ta<"n.
&or"o$"r% t," la3 !l"arl# 1ro$i"s t,at t," $alu" o+ t,"
!urr"n!# at t," ti*" o+ t," "stablis,*"nt o+ t," obligation
s,all b" t," basis o+ 1a#*"nt 3,i!,% in !as"s o+ "41ro1riation%
3oul b" t," $alu" o+ t," 1"so at t," ti*" o+ t," ta<ing o+ t,"
1ro1"rt# 3,"n t," obligation o+ t," >o$"rn*"nt to 1a# aris"s.
It is onl# 3,"n t,"r" is an agr""*"nt to t," !ontrar# t,at t,"
"4traorinar# in+lation 3ill *a<" t," $alu" o+ t," !urr"n!# at
t," ti*" o+ 1a#*"nt% not at t," ti*" o+ t," "stablis,*"nt o+ t,"
obligation% t," basis +or 1a#*"nt.
Art. 165?
In ot,"r 3ors% an agr""*"nt is n""" +or t," "++"!ts o+
an "4traorinar# in+lation to b" ta<"n into a!!ount to alt"r t,"
Art. 1651
$alu" o+ t," !urr"n!# at t," ti*" o+ t," "stablis,*"nt o+ t,"
obligation 3,i!,% as a rul"% is al3a#s t," "t"r*inati$" "l"*"nt%
to b" $ari" b# agr""*"nt t,at 3oul +in r"ason onl# in t,"
su1"r$ision o+ "4traorinar# in+lation or "+lation.
A!ting C,i"+ =usti!" Clauio T"",an<"" (!on!urring)' T,"
a11li!abilit# or non.a11li!abilit# o+ Art. 165? s,oul b" ta<"n
as obit"r i!ta% sin!" sai arti!l" *a# not b" in$o<" nor a1.
1li"% 3it,out a 1ro1"r "!laration o+ "4traorinar# in+lation or
"+lation o+ !urr"n!# b# t," !o*1"t"nt aut,oriti"s. T," Court
,as% t,us% s"t asi" r"s1on"nt jug"8s raising o+ t," a*ount o+
!o*1"nsation +or t," lan +ro* P1@%615.CA (at P6.9C 1"r sEuar"
*"t"r) as 1ro1"rl# "t"r*in" to b" its $alu" at t," ti*" o+ its
ta<ing in 1A6@ to P@A%@5A.9@ 1ur1ort"l# b"!aus" o+ t," "+lat"
$alu" o+ t," 1"so in r"lation to t," ollar.
Art. 1651. Pa#*"nt s,all b" *a" in t," 1la!"
"signat" in t," obligation.
T,"r" b"ing no "41r"ss sti1ulation an i+ t,"
un"rta<ing is to "li$"r a "t"r*inat" t,ing% t," 1a#*"nt
s,all b" *a" 3,"r"$"r t," t,ing *ig,t b" at t," *o*"nt
t," obligation 3as !onstitut".
In an# ot,"r !as" t," 1la!" o+ 1a#*"nt s,all b" t,"
o*i. !il" o+ t," "btor.
I+ t," "btor !,ang"s ,is o*i!il" in ba +ait, or a+t"r ,"
,as in!urr" in "la#% t," aitional "41"ns"s s,all b" born"
b# ,i*.
T,"s" 1ro$isions ar" 3it,out 1r"jui!" to $"nu" un"r
t," 5ul"s o+ Court.
CO&&ENT'
(1) I,"r" Pa#*"nt &ust 7" &a"
t,ing% t,"n in t," 1la!" 3,"r" t," t,ing *ig,t b"
(usuall# or ,abituall#) at t," ti*" t," obligation
@?9
Art. 1651
(a) I+ t,"r" is a sti1ulation 0 in t," 1la!" DESI>NATED
(b) I+ t,"r" is no sti1ulation
1) I+ it is an obligation to "li$"r a "t"r*inat" s1"!i+i!
t,ing% t,"n in t," 1la!" 3,"r" t," t,ing *ig,t b"
(usuall# or ,abituall#) at t," ti*" t," obligation
@?9
Art. 1651
3as CONSTIT;TED. (I+ *"r"l# t"*1oraril# t,"r"%
as 3,"n t," obj"!t is b"ing s,i11" or is alr"a# in
t," o!"an% 1a#*"nt s,oul b" at t," o*i!il" o+ t,"
"btor.)
6) I+ t," obligation is an# ot,"r t,ing (as 3,"n it is to
"li$"r a g"n"ri! t,ing% or to gi$" *on"#% or a 1"rsonal
obligation)% "li$"r# *ust b" *a" at t," o*i!il" o+
t," "btor.
(6) E4a*1l"s
Orinaril#% a t"nant o+ a ,ous" ,as t," rig,t to 3ait +or t,"
lanlor in t," ,ous" sin!" t,is is an obligation to 1a# *on"# (a
g"n"ri! t,ing). (&anala! $. >ar!ia% C6 P,il. 6162 >o*"H $. Ng
Fat% C6 P,il. 555). Si*ilarl#% a jug*"nt "btor ,as to 1a# onl#
at ,is o*i!il"% in t," abs"n!" o+ a s1"!i+i!ation in t," !ourt
"!r"". (Eastboar Na$igation $. Ks*a"l% L.A?A?% S"1t. 1?%
1A5C). Pa#. *"nt not at t," "signat" 1la!" but onl# to t,"
*"r" "1ositor# o+ t," !r"itor8s +uns is not !onsi"r" as
$ali. So i+ Iloilo 3as "signat"% but t"n"r is *a" in &anila%
t," 1a#*"nt is not g"n"rall# to b" *a" at t," latt"r 1la!".
(>onHaga M H"rnan"H $. 5",abilitation Finan!" Cor1.% L.BA@C%
F"b. 1?% 1A5C).
(9) Illustrati$" Cas"s
&anala! $. >ar!ia
C6 P,il. 616
FACTS' A r"nt" a ,ous" +ro* 7. Alt,oug, t,"r" 3as
no n"" to o so% it 3as "41r"ssl# agr"" t,at 1a#*"nt o+ t,"
r"ntal s,oul b" *a" at t," o*i!il" o+ t," l"ss"" A. I,"n t,"
ti*" +or 1a#*"nt !a*"% A 3ait" at t," ,ous" +or a r"!"i1t to b"
1r"s"nt" to ,i*. 7ut 7 "la#" s"$"ral *ont,s% on t," groun
Court' -T," 1a#*"nt o+ t," r"ntal ,a$ing b""n agr"" to b"
*a" at t," o*i!il" o+ t," "btor% ," ,a a rig,t to 3ait t,at
@?@
Art. 1651
t,at A s,oul ,a$" gon" to 7 (an not 7 to a A). Issu"' Is A in
"+aultJ
HELD' No% A is not in "+ault. H" 3as justi+i" in 3aiting
+or t," r"!"i1t at t," ,ous" ," 3as r"nting. Sai t," Su1r"*"
Court' -T," 1a#*"nt o+ t," r"ntal ,a$ing b""n agr"" to b"
*a" at t," o*i!il" o+ t," "btor% ," ,a a rig,t to 3ait t,at
@?@
Art. 1651
t," r"!"i1t b" 1r"s"nt" to ,i* an ," o"s not in!ur "+ault
+or t," ti*" t," !r"itor allo3s to 1ass 3it,out r"aliHing t,"
!oll"!tion./ (Translation)
>o*"H $. Ng Fat
C5 P,il. 555
FACTS' A t"nant 3as b"ing oust" b# ,is lanlor on t,"
groun o+ non.1a#*"nt o+ r"ntals. T," t"nant8s "+"ns" 3as t,at
t," !oll"!tor% 3,o usuall# !oll"!t" t," r"ntals% i not a11"ar
an alt,oug, ," 3as 3illing to 1a#% still ," 3as 3aiting +or sai
!oll"!tor. Issu"' Ias t," t"nant justi+i"J
HELD' K"s% t," t"nant 3as justi+i". -It *a# also b" r".
*ar<" t,at t," a11"llant8s (t"nant8s) all"g" "+ault !annot
gi$" 3a# to t,"ir "j"!t*"nt% sin!" it is attributabl" in 1art to
1lainti++8s (o3n"r8s) o*ission or n"gl"!t to !oll"!t./
Eastboar Na$igation% Lt. $. Ks*a"l an Co.
L.A?A?% S"1t. 1?% 1A5C
I+ t," !ourt8s jug*"nt !on+ir*ing t," a3ar o+ a boar
o+ arbitrators o"s not s1"!i+# t," 1la!" 3,"r" t," obligation
s,oul b" 1ai% t," jug*"nt "btor *a# 1a# it in ,is o*i!il"
(&anila). H" !annot b" r"Euir" to 1a# ,is !r"itor in N"3 Kor<
just b"!aus" t," latt"r ,a11"ns to b" t,"r".
>onHaga an H"rnan"H $.
5",abilitation Finan!" Cor1.
L.BA@C% F"b. 6?% 1A5C
FACTS' A *arri" !ou1l" obtain" a loan +ro* t," Agri!ul.
tural an Cr"it 7an< o+ P9C%??? 3it, t,"ir lan gi$"n b# 3a#
o+ *ortgag". T," loan 3as !ontra!t" 1rior to t," 3ar. It 3as
agr"" t,at 1a#*"nt 3as to b" *a" in &anila. During t," 3ar%
t," "btors 1ai not in &anila but in Iloilo% an t," r"!i1i"nt
o+ t," *on"# 3as not t," Iloilo bran!, o+ t," Agri!ultural an
Cr"it 7an< (+or it 3as t,"n !los") but t," Iloilo bran!, o+ t,"
P,ili11in" National 7an<% 3,i!, 3as t," "1ositor# in Iloilo o+
659
Art. 1651
t," +uns b"longing to t," Agri!ultural an Cr"it 7an<. A+t"r
lib"ration% t," *arri" !ou1l" 3"nt to &anila% an as<" +or t,"
!an!"llation o+ t," *ortgag" on t," groun t,at t," in"bt"n"ss
65@
Art. 1656
o+ P9C%??? ,a alr"a# b""n 1ai. T," !r"itor r"+us". Inst"a
o+ going to !ourt% t," *arri" !ou1l" again borro3" +ro* t,"
!r"itor t," -aitional a*ount o+ P1?%???/ an as s"!urit#%
t,"# o++"r" a -s"!on *ortgag"/ on t," sa*" lan t,at ,a b""n
gi$"n as s"!urit# b"+or". T,r"" #"ars lat"r% t," *arri" !ou1l"
+il" in !ourt an a!tion to !an!"l t," *ortgag" on t," P9C%???
1r"3ar loan on t," groun o+ 1a#*"nt. Issu"' Ias t," 1a#*"nt
$aliJ
HELD' T," 1a#*"nt 3as VOID b"!aus"'
1) Pa#*"nt 3as not *a" to t," !r"itor or to ,is ul# aut,or.
iH" ag"nt. (I+ t," Iloilo PN7 bran!, a!t" as ag"nt% it 3as
an ag"nt +or t," "btors% not +or t," !r"itor% +or 3,o* it
3as *"r"l# a "1ositor# o+ +uns.)
6) Pa#*"nt 3as *a" in Iloilo% not in &anila% 3,i!, 3as t,"
"signat" 1la!".
9) T," "btors ar" in "sto11"l (+or inst"a o+ bringing a !ourt
a!tion rig,t a3a#% a+t"r t," !r"itor8s +irst r"+usal% t,"# in.
st"a borro3" again -an aitional su* o+ P1?%???%/ an
"4"!ut" a -s"!on *ortgag" on t," sa*" lan%/ i*1l#ing
t,at t,"# 3"r" 3illing to a*it t," !ontinu" "4ist"n!" o+
t," +irst in"bt"n"ss o+ P9C%???.
T," 1a#*"nt b"ing $oi% it +ollo3s t,at t," *ortgag" r".
*ains $ali an s,oul not b" !an!"ll".
Subs"!tion 1
APPLICATION OF PAK&ENTS
Art. 1656. H" 3,o ,as $arious "bts o+ t," sa*" <in in
+a$or o+ on" an t," sa*" !r"itor% *a# "!lar" at t," ti*"
o+ *a<ing t," 1a#*"nt% to 3,i!, o+ t,"* t," sa*" *ust b"
a11li". ;nl"ss t," 1arti"s so sti1ulat"% or 3,"n t," a11li!a.
tion o+ 1a#*"nt is *a" b# t," 1art# +or 3,os" b"n"+it t,"
t"r* ,as b""n !onstitut"% a11li!ation s,all not b" *a" as
to "bts 3,i!, ar" not #"t u".
I+ t," "btor a!!"1ts +ro* t," !r"itor a r"!"i1t in 3,i!,
655
Art. 1656
an a11li!ation o+ t," 1a#*"nt is *a"% t," +or*"r !annot
!o*1lain o+ t," sa*"% unl"ss t,"r" is a !aus" +or
in$aliating t," !ontra!t.
656
Art. 1656
CO&&ENT'
(1) S1"!ial For*s o+ Pa#*"nt
T,"r" ar" +our s1"!ial +or*s o+ 1a#*"nt'
(a) a11li!ation (or -i*1utation/) o+ 1a#*"nts (Art. 1656% Ci$il
Co")2
(b) ation in 1a#*"nt (-ajui!a!ion "n 1ago/ or -atio in
solutu*/) (Art. 16@5% Ci$il Co")2
(!) assign*"nt in +a$or o+ !r"itors (-!"ssion/) (Art. 1655% Ci$il
Co")2
() t"n"r o+ 1a#*"nt an !onsignation (Arts. 1656.1661% Ci$il
Co").
(6) OA11li!ation o+ Pa#*"nts8 D"+in"
-It is t," "signation o+ t," "bt to 3,i!, s,oul b" a11li"
a 1a#*"nt *a" b# a "btor 3,o o3"s s"$"ral "bts in +a$or o+
t," sa*" !r"itor./ (Castan). Stat" i++"r"ntl#% it is t," 1,ras"
a11li" to s,o3 3,i!, "bt% out o+ t3o or *or" "bts o3ing t,"
sa*" !r"itor% is b"ing 1ai.
(9) I*1ortan!"
It is i*1ortant to <no3 rul"s on a11li!ation o+ 1a#*"nts
b"!aus" ot,"r3is"% 3" *a# not <no3 3,i!, on"% o+ t3o or *or"
"bts% ,as b""n "4tinguis,".
A o3"s 7 P1 *illion 1a#abl" A1r. 1. A also o3"s 7 P1 *il.
lion 1a#abl" A1r. 5. On A1r. 1?% A 1a#s 7 P1 *illion. H"r"% 3"
3ill not <no3 3,i!, "bt ,as b""n "4tinguis," unl"ss 3" <no3
t," rul"s on t," a11li!ation o+ 1a#*"nts.
(@) 5"Euisit"s +or A11li!ation o+ Pa#*"nt to 7" &a" ;s"
o+
(a) t,"r" *ust b" t3o or *or" "bts (s"$"ralt# o+ "bt)2
(b) t," "bts *ust b" o+ t," sa*" <in2
65C
Art. 1656
(!) t," "bts ar" o3" b# t," sa*" "btor in +a$or o+ t," sa*"
!r"itor (t,us% t,"r" *ust b" onl# on" "btor an onl# on"
!r"itor)2
65B
Art. 1656
() all t," "bts *ust b" u" (t,is in!lu"s a !as" 3,"n t,"
b"n"+it o+ t," t"r*s is gi$"n to t," 1"rson *a<ing t,"
a11li!ation)% unl"ss o+ !ours" t," !ontrar# ,as b""n sti1u.
lat")2
(") t," 1a#*"nt is not "noug, to "4tinguis, all t," "bts.
(5) 5ul" I,"n D"bts Ar" Not K"t Du"
D"s1it" t," +a!t t,at not all t," "bts ar" #"t u"% *a#
t,"r" b" a11li!ation o+ 1a#*"nts un"r t,is Arti!l"J
ANS.' K"s% but onl#'
(a) i+ t," 1arti"s so sti1ulat"% or
(b) 3,"n t," a11li!ation o+ 1a#*"nt is *a" b# t," 1art# +or
3,os" b"n"+it t," t"r* ,as b""n !onstitut".
(6) Pr"+"r"ntial 5ig,t o+ D"btor
It is t," "btor 3,o is gi$"n b# t," la3 t," rig,t to s"l"!t
3,i!, o+ ,is "bts ," is 1a#ing. T,is rig,t is not absolut"% ,o3.
"$"r. For "4a*1l"'
(a) I+ t,"r" 3as a $ali 1rior but !ontrar# agr""*"nt% t,"
"btor !annot !,oos"2
(b) T," "btor !annot !,oos" to 1a# 1art o+ t," 1rin!i1al a,"a
o+ t," int"r"st (Art. 1659% Ci$il Co" an Suni!o $. 5a*ir"H%
1@ P,il. 5??)% unl"ss t," !r"itor !ons"nts.
I+ t," "btor *a<"s a 1ro1"r a11li!ation an t,"
!r"itor r"+us"s% t," !r"itor 3ill b" in *ora a!!i1i"ni.
(C) Ho3 A11li!ation o+ Pa#*"nt Is &a"
(a) T," "btor *a<"s t," "signation. (Art. 1656% 1ar. 1% Ci$il
Co")2
(b) I+ not% t," !r"itor *a<"s it% b# so stating in t," r"!"i1t
t,at ," issu"s% -unl"ss t,"r" is !aus" +or in$aliating t,"
65A
Art. 1656
!ontra!t./ (Art. 1651% 1ar. 6% Ci$il Co")2
FNOTE' T,us% i+ t," obligation its"l+ is $oi% t," a1.
1li!ation an t," 1a#*"nt ar" also $oi. (San!,"H 5o*an).
66?
Art. 1656
I+ t," "btor8s !ons"nt in a!!"1ting t," r"!"i1t 3as $itiat"
0 as b# +rau% "rror% or $iol"n!" 0 t," a11li!ation is not
$ali% i.".% it is $oiabl".G
(!) I+ n"it,"r t," "btor nor t," !r"itor ,as *a" t," a11li.
!ation% or i+ t," a11li!ation is not $ali% t,"n a11li!ation
is *a" b# o1"ration o+ la3. (Arts. 1659 an 165@% Ci$il
Co").
(B) A11li!ation &a" b# Cr"itor
I+ t," !r"itor *a<"s t," a11li!ation 3it,out t," <no3l"g"
an !ons"nt o+ t," "btor% t," a11li!ation is not $ali. (7an< o+
t," P,il. Islans $. Es1inosa% FCAG @? O.>. Su1. @% 1. 6B% Aug.
69% 1A@1).
7an< o+ t," P,il. Islans $. Es1inosa
(C.A.) @? O.>. Su1. @% 1. 6B% Aug. 69% 1A@1
FACTS' A an 7 borro3" P5%??? +ro* a ban<. T," liabil.
it# o+ A an 7 in t,is !ontra!t 3as soliar#. A ga$" 7 a !,"!<
3ort, P6%???2 7 1r"s"nt" t," !,"!< to t," ban< an 7 got t,"
*on"#. Lat"r C% a "btor o+ A% 1ai t," a!!ount o+ P5%??? to t,"
ban<. T," ban< sai t,at its total !r"it 3as PC%??? (P5%???
+ro* A an 7% P6%??? +ro* A)% an t,at sin!" onl# P5%??? ,as
b""n 1ai% A an 7 still o3" P6%??? soliaril#. 7 1l"a" as ,is
"+"ns"% 1a#*"nt o+ t," original P5%??? an t,at t,"r"+or" ,"
s,oul b" r"l"as" +ro* all liabilit#. D"!i" t," !as".
HELD' 78s obligation ,as alr"a# b""n "4tinguis,". T,"
ban< ,a no rig,t to in!lu" t," P6%??? to t," soliar# "bt o+
P5%???. Su!, a11li!ation 3as not *a" 3it, t," <no3l"g" an
!ons"nt o+ t," "btor 7. Onl# A is liabl" t,"r"+or.
(A) 5"$o!ation o+ t," A11li!ation
On!" an a11li!ation o+ 1a#*"nts is *a"% *a# it b" r".
$o<"J
ANS.' No (7a!,ra!, >arag" M Ta4i!ab Co. $. >oling!o%
9A P,il. A16)% unl"ss bot, 1arti"s agr"". E$"n i+ bot, 1arti"s
661
Art. 1656
agr""% ,o3"$"r% still t," r"$o!ation or !,ang" in t," a11li!ation
(b# !r"iting t," 1a#*"nt to anot,"r "bt) 3ill not b" allo3"
i+ t,ir 1"rsons 3oul b" 1r"jui!".
666
Art. 1656
(1?) I,"n A11li!ation &ust 7" &a"
A11li!ation *ust b" *a" at t," ti*" 3,"n 1a#*"nt b#
t," "btor is *a"% not a+t"r3ars. (Po3"ll $. Nat. 7an<% 5@
P,il. 5@).
(11) E4a*1l"s o+ Ho3 a Cr"itor &a<"s t," A11li!ation
(a) I,"n t," "btor 3it,out 1rot"st a!!"1ts t," r"!"i1t in
3,i!, t," !r"itor s1"!i+i" "41r"ssl# an un*ista<abl#
t," obligation to 3,i!, su!, 1a#*"nt 3as to b" a11li"%
sai "btor r"noun!" t," rig,t o+ !,oi!". (Danar $. Dan.
nug% FCAG @9 O.>. 91C62 s"" Ligg"tt M &#"rs Toba!!o Cor1.
$. Assn. Insuran!"% "t al.% L.156@9% O!t. 91% 1A6?).
(b) I,"n *ont,l# stat"*"nts 3"r" *a" b# t," ban< s1"!i+#.
ing t," a11li!ation an t," "btor sign" sai stat"*"nts
a11ro$ing t," status o+ ,"r a!!ount as t,us s"nt to ,"r
*ont,l# b# t," ban<. (>ar!ia $. EnriEu"H% 5@ P,il. @69).
Po3"ll $. Nat. 7an<
5@ P,il. 5@
FACTS' A o3" 7 "bts alr"a# u". A 1ai +or on"
"bt% 3it,out s1"!i+#ing 3,i!,. A+t"r sai 1a#*"nt ,a
b""n !r"it"% A !o*1lain"% stating t,at ," ,a t," rig,t
to !,oos" 3,i!, "bt to 1a# un"r t," a11li!ation o+ 1a#.
*"nts. Issu"' Is A justi+i" in ,is !o*1laintJ
HELD' No% A is not justi+i" in ,is !o*1laint. It is
tru" t,at originall#% ," ,a t," rig,t to s1"!i+# t," "bt to
3,i!, ," 3ant" t," 1a#*"nt a11li"% but sin!" ," i not
o so at t," ti*" o+ 1a#*"nt% it is as i+ ," ,as gi$"n u1 ,is
rig,t. H"n!"% t," l"gal rul"s stat" in t," Ci$il Co" *ust
b" t," on"s a11li"% not ,is a11li!ation. -Su++i!" it to sa#
t,at su!, a11li!ation s,oul ,a$" b""n *a" at t," ti*"
o+ 1a#*"nt% an not a+t"r3ars% 3,"n ,is a!!ount 3it, t,"
ban< ,a alr"a# b""n !r"it"./
(16) I,"n A11li!ation o+ Pa#*"nts Cannot 7" A$ail" o+
669
Art. 1656
(a) In t," !as" o+ a 1artn"r.!r"itor un"r Art. 1CA6 o+ t,"
Ci$il Co" 3,i!, r"as'
66@
Art. 1659
-I+ a 1artn"r aut,oriH" to *anag" !oll"!ts a ".
*anabl" su* 3,i!, 3as o3" to ,i* in ,is o3n na*"%
+ro* a 1"rson 3,o o3" t," 1artn"rs,i1 anot,"r su* also
"*anabl"% t," su* t,us !oll"!t" s,all b" a11li" to t,"
t3o !r"its in 1ro1ortion to t,"ir a*ounts% "$"n t,oug, ,"
*a# ,a$" gi$"n a r"!"i1t +or ,is o3n !r"it onl#2 but s,oul
," ,a$" gi$"n it +or t," a!!ount o+ t," 1artn"rs,i1 !r"it%
t," a*ount s,all b" +ull# a11li" to t," latt"r. T," 1ro$i.
sions o+ t,is Arti!l" ar" un"rstoo to b" 3it,out 1r"jui!"
to t," rig,t grant" to t," "btor b# Art. 1656% but onl# i+
t," 1"rsonal !r"it o+ t," 1artn"r s,oul b" *or" on"rous
to ,i*./
(b) T," rig,t !annot b" in$o<" b# a sur"t# or a soliar#
guarantor. (So!on#.Va!uu* Cor1. $. &ira+lor"s% 6C P,il.
9?@). (T," 1"tition +or !"rtiorari ,"r" 3as is*iss" b# t,"
Su1r"*" Court in So!on#.Va!uu* Cor1. $. &ira+lor"s% 6C
P,il. 9?@). T," r"ason is t,at ," ,as onl# on" "bt% an
"$"n t,at is !onting"nt ("1"n"nt) on t," 1rin!i1al "bt.
or8s +ailur" to 1a#.
5"1arations Co**ission $.
;ni$"rsal D""1.S"a Fis,ing Cor1.
L.61A?1% L.61AA6% =un. 6C% 1ACB
A sur"t# 3,o guarant""s a "btor8s "bt o+ P596%@6B.@@ +or
t," a*ount o+ P59%6@9.?? is still liabl" +or P1?%???. It is 3rong
to a11l# t," P1?%??? to t," s"!ur" 1ortion o+ t," "bt 0 as in
t," !as" o+ a11li!ation o+ 1a#*"nts. Sai rul" on a11li!ation o+
1a#*"nts is to b" us" onl# in !as" a "btor o3"s "bts in +a$or
o+ s"$"ral !r"itors.
Art. 1659. I+ t," "bt 1rou!"s int"r"st% 1a#*"nt o+ t,"
1rin!i1al s,all not b" ""*" to ,a$" b""n *a" until t,"
int"r"sts ,a$" b""n !o$"r".
CO&&ENT'
665
Art. 1659
(1) Int"r"st &ust 7" Pai First
T," Arti!l" is obligator#% t,at is% t," "btor !annot insist
t,at ,is 1a#*"nt b" !r"it" to t," 1rin!i1al inst"a o+ t," int"r.
666
Art. 165@
"st. Ho3"$"r% i+ t," !r"itor agr""s% t,is is all rig,t. (B &anr"sa
91C).
5os"t"% "t al. $. P"rob"r D"$. Cor1.
CA.>5 61?96.5% =ul. 91% 1AB1
;n"r t," la3% 1a#*"nt t,at is *a" to a !r"itor *ust b"
!r"it" to int"r"st (t,at is alr"a# u") a,"a o+ t," 1rin!i1al.
T," int"r"st !an r"+"r not onl# to int"r"st on a*ounts alr"a#
u" but also to int"r"st on +utur" install*"nts% i+ sai install.
*"nts ar" "$"ntuall# not 1ai on ti*".
(6) E++"!t i+ Pa#*"nt Is Cr"it" to t," Prin!i1al
5"u!tion o+ t," 1rin!i1al 3oul% o+ !ours"% r"sult in t,"
"!r"as" o+ t," total int"r"st !oll"!tibl".
(9) I,at Int"r"st Is Su11os" to 7" Pai
(a) int"r"st b# 3a# o+ !o*1"nsation2 an
(b) int"r"st b# 3a# o+ a*ag"s u" to "+ault.
5"ason' T," la3 *a<"s no istin!tion.
Art. 165@. I,"n 1a#*"nt !annot b" a11li" in
a!!oran!" 3it, t," 1r"!"ing rul"s% or i+ a11li!ation
!annot b" in+"rr" +ro* ot,"r !ir!u*stan!"s% t," "bt
3,i!, is *ost on"rous to t," "btor% a*ong t,os" u"%
s,all b" ""*" to ,a$" b""n satis+i".
I+ t," "bts u" ar" o+ t," sa*" natur" an bur"n% t,"
1a#*"nt s,all b" a11li" to all o+ t,"* 1ro1ortionat"l#.
CO&&ENT'
(1) 5ul"s in Cas" No A11li!ation o+ Pa#*"nt Has 7""n Vol.
untaril# &a"
(a) A11l# it to t," *ost on"rous (in !as" t," u" an "*an.
66C
Art. 165@
abl" "bts ar" o+ i++"r"nt natur"s).
(b) I+ t," "bts ar" o+ t," sa*" natur" an bur"n% a11li!ation
s,all b" *a" to all 1ro1ortionat"l#.
66B
Art. 165@
FNOTE' I+ on" "bt is +or P1 *illion% an anot,"r is
+or P6 *illion an onl# P1 *illion is 1ai% ,o3 3ill t,"
1a#*"nt b" a11li"JG
ANS.'
1) I+ t," "btor *a<"s t," a11li!ation% t," 1a#*"nt
s,oul b" !r"it" to t," +irst "bt. T," "btor !annot
insist t,at t," !r"itor a!!"1t it +or t," s"!on "bt
+or inso+ar as t," s"!on "bt is !on!"rn"% it is onl# a
1artial 1a#*"nt. An un"r t," la3% a !r"itor !annot
g"n"rall# b" !o*1"ll" to r"!"i$" 1artial 1a#*"nt.
(Art. 16@B% Ci$il Co").
6) I+ no a11li!ation ,as b""n *a"% t," la3 st"1s in% an
a11li!ation 3ill b" *a"% not "Euall# but 1ro1ortion.
at"l#. (Art. 16@B% Ci$il Co").
(6) Sa*1l"s o+ &or" 7ur"nso*" (&or" On"rous) D"bts
(a) Ol"r on"s in !as" o+ running a!!ounts. (Nat. 7an< $. V".
ragut,% 5? P,il. 659).
(b) Int"r"st.b"aring "bts "$"n i+ t," non.int"r"st b"aring "bt
is ol"r. (&"nHi M Co. $. :uing C,uan% 6A P,il. @6).
(!) O+ t3o int"r"st.b"aring "bts% t,at 3,i!, !,arg"s t,"
,ig,"r int"r"st is *or" bur"nso*". (T,is +ollo3s +ro*
t," $"r# natur" o+ t,ings.)
() D"bts s"!ur" b# *ortgag" or b# 1l"g". (&ission " San
Vi!"nt" $. 5"#"s% 1A P,il. 565 an SanH $. La$in 7ros.% 6
P,il. 6AA).
(") D"bts 3it, a 1"nalt# !laus".
(+) A$an!"s +or subsist"n!" ar" *or" on"rous t,an !as, a.
$an!"s. (&ontinola $. >atila% AC P,il. AAA).
(g) A "bt 3,"r" t," "btor is in *ora is *or" on"rous t,an
on" 3,"r" ," is not.
66A
Art. 165@
(,) An "4!lusi$" "bt (not soliar#) is *or" on"rous t,an a
soliar# "bt. (Co**on3"alt, $. Far East"rn Sur"t#% B9
P,il. 9?5).
6C?
Art. 165@
FNOTE' I+ a 1rin!i1al "btor is guarant"" b# a sur"t#
but t," guarant# is +or a s*all"r a*ount% an# 1artial 1a#.
*"nt *a" b# t," "btor s,all b" a11li" to t," 1ortion
3,i!, is NOT s"!ur"% sin!" t,is "4!lusi$" "bt is !onsi.
"r" *or" on"rous to ,i*. (Hong<ong M S,ang,ai 7an<
$. Alan"s"% @B P,il. AA?).G
Hong<ong M S,ang,ai 7an< $. Alan"s"
@B P,il. AA?
FACTS' A s"t u1 a bon in t," su* o+ P1?%???% s"!ur"
b# a sur"t# 3,o agr"" to b" r"s1onsibl" soliaril# 3it, A
but onl# u1 to PB%???. A 1a#s P1%5?? to t," !r"itor% 3it,out
s1"!i+#ing t," a11li!ation o+ t," 1a#*"nt. Issu"' S,oul
t,is b" a11li" to t," PB%??? +or 3,i!, t," sur"t# is also
r"s1onsibl" or +or t," P6%??? 3,i!, 3as not guarant""J
HELD' T," P1%5?? s,oul b" a11li" to t," P6%???
3,i!, 3as not guarant"". T,is is so b"!aus" as r"gars
t," 1rin!i1al "btor A% sai P6%??? is *or" on"rous t,an
t," PB%??? ," soliaril# o3" tog"t,"r 3it, t," sur"t#. T,is
is so b"!aus" t," sur"t# +i4" ,is liabilit# at an a*ount
lo3"r t,an t,at u" +ro* t," 1rin!i1al "btor.
FNOTE' T," -*or" bur"nso*"/ rul" o"s not a11l#
3,"n t," "btor ,as *a" a11li!ation o+ 1a#*"nt.
E4a*1l"'
A o3"s 7 t3o "bts% bot, o+ 3,i!, ar" alr"a# u".
T," +irst "bt is s"!ur" b# a *ortgag"% t," s"!on is not.
A t"lls 7 t,at t," 1a#*"nt ," is no3 *a<ing s,oul b"
a11li" to t," s"!on "bt% inst"a o+ t," +irst. 7 r"+us"s to
a!!"1t su!, a11li!ation on t," groun t,at t," +irst "bt is
*or" bur"nso*" to t," "btor% an t,at% t,"r"+or"% 1a#.
*"nt *ust b" a11li" to it +irst. Is 7 !orr"!tJ
ANS.' No% 7 is not !orr"!t b"!aus" alt,oug, it is tru"
t,at t," *ortgag" "bt is *or" on"rous% still t," 1r"+"r"n!"
o+ t," "btor ,i*s"l+ *ust b" +ollo3". T,is is so b"!aus"
6C1
Art. 165@
Art. 165@ !annot b" a11li" in !as" a11li!ation o+ 1a#*"nts
,as b""n *a" b# t," "btor in a!!oran!" 3it, Art. 1656.
7"si"s% it is not t," !r"itor8s busin"ss to go against t,"
6C6
Art. 165@
3is,"s o+ t," "btor 3,o 1r"+"rs to l"a$" un1ai t," *or"
bur"nso*" obligation ,"r"% +or t," 1"rson 3,o *ig,t b"
1r"jui!" an#3a#% i+ at all% 3ill b" t," "btor% not t,"
!r"itor. (As i*1li" +ro* t," !as" o+ >ar!ia $. EnriEu"H%
@? O.>. X19 SY No. 61% 1. 61A% C1 P,il. @69% 3,i!, ,"l t,at
t," *or" bur"nso*" rul" is not a11li!abl" 3,"n t,"r" ,as
b""n a11li!ation o+ 1a#*"nt).G
(9) D"t"r*ination o+ I,i!, Obligation Is &ost On"rous
So*"ti*"s it is "as#% an so*"ti*"s it is ,ar to "t"r*in"
3,i!, obligation is t," *ost on"rous. T," r"ason is t,at t,"
bur"n *a# b" r"lati$". It +ollo3s% t,"r"+or"% t,at no ,ar an
+ast rul"s !an b" 1ut u1% b"!aus" 3,at *a# b" tru" in on" !as"
*a# not b" tru" in anot,"r !as". (B &anr"sa 91A). T,is b"!o*"s
*or" "$i"nt 3,"n not on" !ir!u*stan!" alon" is !onsi"r" but
a !o*bination o+ i++"r"nt !ir!u*stan!"s as 3,"n'
Obligation A 0 is s"!ur" b# a *ortgag"% non.int"r"st
b"aring% an r"!"nt.
Obligation 7 0 is uns"!ur"% but *a4i*u* int"r"st b"ar.
ing% an ol.
In su!, !as"s% t," 1arti!ular !ir!u*stan!"s 3,i!, ,a$"
signi+i!ant b"aring on t," !as" at ,an s,oul b" obs"r$" an
t," balan!ing *ust b" on". Ho3"$"r% as a last r"sort% 3,"n
it !annot "+init"l# b" "t"r*in" 3,"t,"r on" "bt is *or"
bur"nso*" t,an t," ot,"r% t," aut,or b"li"$"s t,at bot, 3ill
b" !onsi"r" "Euall# bur"nso*"% an ,"n!" 1a#*"nt *ust b"
a11li" to bot, 1ro rata.
(@) Probl"*
I+ on" "bt is P1.6 *illion an t," ot,"r is P6??%???% an
t," "btor 3it,out *a<ing an# a11li!ation o+ 1a#*"nt gi$"s
P9??%???% ,o3 s,oul sai 1a#*"nt b" a11li"% 1r"su*ing t,at
bot, ar" o+ t," sa*" natur" an bur"nJ
ANS.' T," 1a#*"nt 3ill b" a11li" 1ro1ortionat"l#. H"n!"%
P6??%??? 3ill b" "u!t" +ro* t," +irst% an P1??%??? 3ill b"
6C9
Art. 165@
"u!t" +ro* t," s"!on. T," +irst "bt 3ill no3 b" P1 *illion
an t," s"!on 3ill b" P5??%???. T," ratio ,"r" o+ t," +irst "bt
to t," s"!on "bt is t,us 1r"s"r$"% na*"l#% 6 is to 1.
6C@
Art. 1655
Subs"!tion 6
PAK&ENT 7K CESSION
Art. 1655. T," "btor *a# !"" or assign ,is 1ro1"rt# to
,is !r"itors in 1a#*"nt o+ ,is "bts. T,is !"ssion% unl"ss
t,"r" is sti1ulation to t," !ontrar#% s,all onl# r"l"as" t,"
"btor +ro* r"s1onsibilit# +or t," n"t 1ro!""s o+ t," t,ing
assign". T," agr""*"nts 3,i!,% on t," "++"!t o+ t," !"ssion%
ar" *a" b"t3""n t," "btor an ,is !r"itors s,all b"
go$"rn" b# s1"!ial la3s.
CO&&ENT'
(1) C"ssion or Assign*"nt in Fa$or o+ Cr"itors D"+in"
It is t," 1ro!"ss b# 3,i!, a "btor trans+"rs all t," 1ro1.
"rti"s not subj"!t to "4"!ution in +a$or o+ ,is !r"itors so t,at
t," latt"r *a# s"ll t,"*% an t,us a11l# t," 1ro!""s to t,"ir
!r"its. (S"" B &anr"sa 9692 Castan2 an Art. 1655).
(6) Dins or Class"s o+ Assign*"nt
(a) L"gal (T,is is go$"rn" b# t," Insol$"n!# La32 FS"!. B% A!t
1A56G). (T," *ajorit# o+ !r"itors *ust agr"".)
(b) Voluntar# (T,is is 3,at is r"+"rr" to in Art. 1655.) (All
t," !r"itors *ust agr"".)
(9) 5"Euisit"s +or Voluntar# Assign*"nt
(a) *or" t,an on" "bt2
(b) *or" t,an on" !r"itor2
(!) !o*1l"t" or 1artial insol$"n!# o+ "btor2
() abanon*"nt o+ all "btor8s 1ro1"rt# not "4"*1t +ro*
"4"!ution (unl"ss "4"*1tion is $alil# 3ai$" b# "btor)
in +a$or o+ !r"itors2
6C5
Art. 1655
(") a!!"1tan!" or !ons"nt on t," 1art o+ t," !r"itors (+or it
!annot b" i*1os" on an un3illing !r"itor). (>o$8t. $.
Lu<ban% FCAG 9C O.>. 1@@@).
6C6
Art. 1655
(@) E++"!t o+ Voluntar# Assign*"nt
(a) T," !r"itors o not b"!o*" t," o3n"rs2 t,"# ar" *"r"l# as.
sign""s 3it, aut,orit# to s"ll. (I+ o3n"rs,i1 is trans+"rr"%
t,is b"!o*"s a ation in solutu*.)
(b) T," "btor is r"l"as" u1 to t," a*ount o+ t," n"t 1ro!""s
o+ t," sal"% unl"ss t,"r" is a sti1ulation to t," !ontrar#. (Art.
1655% 6n s"nt"n!"). T," balan!" r"*ains !oll"!tibl".
(!) Cr"itors 3ill !oll"!t !r"its in t," or"r o+ 1r"+"r"n!"
agr"" u1on% or in "+ault o+ agr""*"nt% in t," or"r ori.
naril# "stablis," b# la3.
FNOTE' So*" 1ro1"rti"s s,oul not b" assign"% su!, as'
1) t," +a*il# ,o*"% 3,"t,"r jui!iall# or "4trajui!iall#
!r"at"% sa$" in !"rtain "4!"1tions (S"" Arts. 669% 666%
Ci$il Co")2
6) t," a*ount n""" b# t," "btor to su11ort ,i*s"l+
an t,os" ," is r"Euir" b# la3 to su11ort. (S"" Art.
C5?% Ci$il Co"). (I+ su!, a*ount is not r"s"r$"% t,"
!"ssion is not $oi but *"r"l# r"u!ibl" to t," "4t"nt
t,at t," su11ort is i*1air". T," 1art# 1r"jui!" !an
as< t," !ourt +or t," r"u!tion.) (S"" b# i*1li!ation
Aga1ito $. D" =o#a% XC.A.Y @? O.>. No. 9566).G
(5) CESSION Distinguis," +ro* DACION EN PA>O
DACION EN PA>O CESSIO
N
6CC
Art. 1655
a) o"s not a++"!t ALL t,"
1ro1"rti"s
b) o"s not r"Euir"
1luralit# o+ !r"itors
!) onl# t," s1"!i+i! or
!on. !"rn" !r"itor8s
!ons"nt is r"Euir"
a) in g"n"ral% a++"!ts ALL
t," 1ro1"rti"s o+ t,"
"btor
b) r"Eui r"s *or" t,an
on" !r"itor (S"" Art.
1655 an
B &anr"sa 96@)
!) r"Euir"s t," !ons"nt o+
all
6CB
Art. 1655
) *a# ta<" 1la!" uring t,"
sol$"n!# o+ t," "btor
") trans+"rs o3n"rs,i1 u1on
"li$"r#
+) t,is is r"all# an a!t o+ no$a.
tion
) r"Euir"s +ull or 1artial in.
sol$"n!#
") o"s not trans+"r o3n"r.
s,i1
+) not an a!t o+ no$ation
(S"" B &anr"sa 969).
FNOTE' In on" !as"% t," Su1r"*" Court *ista<"nl# r".
+"rr" to a -r"noun!ing/ o+ on"8s a!Euir" in,"ritan!" in +a$or o+
a !r"itor o+ a singl" "bt% as a !"ssion inst"a o+ a ation. (S""
Igna!io $. &artin"H% 99 P,il. 5C6).G
Subs"!tion 9
TENDE5 OF PAK&ENT AND CONSI>NATION
INT5OD;CTO5K CO&&ENT'
(1) OT"n"r o+ Pa#*"nt8 D"+in"
T," a!t o+ o++"ring t," !r"itor 3,at is u" ,i* tog"t,"r
3it, a "*an t,at t," !r"itor a!!"1t t," sa*".
So!o $. =ug" &ilitant"
>5 5BA61% =un. 6B% 1AB9
T," obj"!ti$" o+ noti!" 1rior to !onsignation is to gi$" t,"
!r"itor a !,an!" to r"!onsi"r ,is r"+usal to a!!"1t 1a#*"nt.
In t,is 3a#% !onsignation an litigation *a# b" a$oi". On t,"
ot,"r ,an% t," 1ur1os" o+ noti!" a+t"r !onsignation is to "nabl"
t," !r"itor to 3it,ra3 t," *on"# or goos "1osit" 3it, t,"
jui!ial aut,oriti"s.
(6) OConsignation8 D"+in"
T," a!t o+ "1ositing t," t,ing u" 3it, t," !ourt or
6CA
Art. 1655
jui!ial aut,oriti"s 3,"n"$"r t," !r"itor !annot a!!"1t or
r"+us"s to a!!"1t 1a#*"nt. It g"n"rall# r"Euir"s a 1rior t"n"r
o+ 1a#*"nt. (Li*<a<o $. T"ooro% C@ P,il. 91).
6B?
Art. 1656
D" V"ra% "t al. $. 5"1ubli!% "t al.
L.96AAB% =ul. 16% 1AC9
I+ t," l"ssor r"+us"s to a!!"1t t," 1a#*"nt o+ r"ntals% 3,at
t," l"ss"" s,oul o is to r"sort to jui!ial "1osits o+ t," !or.
r"s1oning a*ounts.
(9) OT"n"r o+ Pa#*"nt8 Distinguis," +ro* OConsignation8
-T," !l"ar *"aning o+ t,"s" 3ors s,o3 t,"ir i++"r"n!".
TENDE5 is t," ant"!""nt o+ CONSI>NATION% i.".% an a!t
1r"1arator# to t," !onsignation% 3,i!, is t," 1rin!i1al% an
+ro* 3,i!, ar" "ri$" t," i**"iat" !ons"Eu"n!"s 3,i!, t,"
"btor "sir"s or s""<s to obtain. TENDE5 o+ 1a#*"nt *a# b"
"4trajui!ial% 3,il" CONSI>NATION is n"!"ssaril# jui!ial% an
t," 1riorit# o+ t," +irst is t," att"*1t to *a<" a 1ri$at" s"ttl".
*"nt b"+or" 1ro!""ing to t," sol"*niti"s o+ !onsignation./ (B
&anr"sa 965).
(@) 5ul"s on Pa#*"nt &ust 7" Co*1li" Iit,
T"n"r o+ 1a#*"nt an !onsignation% to "4tinguis, t,"
"btor8s obligation *ust !o*1l# 3it, t," r"Euisit"s 1ro$i"
in Arts. 1656.165B o+ t," Ci$il Co". T,us% i+ t," "btor *a"
a t"n"r o+ 1a#*"nt b# t"l"gra1,i! trans+"r s"nt to t," !l"r< o+
!ourt% an t," sa*" 3as not r"!"i$" b# t," !r"itor% but inst"a
r"turn" to t," "btor% it !annot b" gi$"n "++"!t. (Al"*ars $.
Caga#an Vall"# Coll"g"% In!.% L.116C?% A1r. B% 1A5B).
Art. 1656. I+ t," !r"itor to 3,o* t"n"r o+ 1a#*"nt ,as
b""n *a" r"+us"s 3it,out just !aus" to a!!"1t it% t,"
"btor s,all b" r"l"as" +ro* r"s1onsibilit# b# t,"
!onsignation o+ t," t,ing or su* u".
Consignation alon" s,all 1rou!" t," sa*" "++"!t in t,"
+ollo3ing !as"s'
(1) I,"n t," !r"itor is abs"nt or un<no3n% or o"s
Art. 1656
not a11"ar at t," 1la!" o+ 1a#*"nt2
(6) I,"n ," is in!a1a!itat" to r"!"i$" t," 1a#*"nt at
t," ti*" it is u"2
Art. 1656
(9) I,"n% 3it,out just !aus"% ," r"+us"s to gi$" a r".
!"i1t2
(@) I,"n t3o or *or" 1"rsons !lai* t," sa*" rig,t to
!oll"!t2
(5) I,"n t," titl" o+ t," obligation ,as b""n lost.
CO&&ENT'
(1) E++"!t o+ T"n"r Iit,out Consignation
T"n"r o+ 1a#*"nt 3it,out !onsignation o"s not "4tin.
guis, t," "bt2 !onsignation *ust +ollo3. (Ca1alungan $. &".
rano% L.19CB9% &a# 1B% 1A6?).
E4a*1l"s'
(a) A o3"s 7 a su* o+ *on"#. A gi$"s 7 t," *on"# but 7 r"+us"s
3it,out just r"ason to a!!"1t it. I,at s,oul A no3 oJ
ANS.' A *ust "1osit t," *on"# in !ourt% sin!" ,is
t"n"r o+ 1a#*"nt 3as r"+us" 3it,out just r"ason. His
"1osit in !ourt is !all" !onsignation.
(b) I,"n a "btor o3"s *on"# l"nt ,i* 3it, int"r"st% is it su+.
+i!i"nt to just t"n"r t," 1rin!i1al 3it,out t," int"r"stJ
ANS.' No. T," t"n"r o+ t," 1rin!i1al *ust b" a!!o*.
1ani" 3it, t," t"n"r o+ t," int"r"st 3,i!, ,as a!!ru".
(Fi"g" M 7ro3n $. S*it,% 7"ll M Co.% an Co31"r% @9 P,il.
119). Ot,"r3is"% sai t"n"r 3ill not b" $ali.
V"l"H $. A$"lino
L.@B@@B% =an. 6?% 1AB@
I+ a l"ss"" t"n"rs ,is r"nt but t," l"ssor r"+us"s to
a!!"1t t," sa*"% t," +or*"r *ust !onsign t," r"nt in !ourt
(b# +irst +iling an a!tion +or !onsignation) or "ls" "1osit t,"
r"nt in a ban<% un"r t," l"ss""8s na*" (3it, t," l"ss""
Art. 1656
b"ing noti+i" o+ t," "1osit). I+ t,is is not on"% "j"!t*"nt
*a# 1ros1"r un"r 7atas Pa*bansa 7ilang 65.
Art. 1656
(6) I,"n Consignation Is Not 5"Euir"
In so*" !as"s% ,o3"$"r% !onsignation is not r"Euir"%
*"r" t"n"r b"ing n""". T,is is so 3,"r" t,"r" r"all# "4ists
no "bt% no obligation% an 3,"r" t,"r"+or" 1a#*"nt is 1ur"l#
$oluntar#% t,at is% t," 1"rson o++"ring% at ,is o1tion% !oul ,a$"
r"+us" to o++"r. T,is *a# ,a11"n in t," !as" o+ OPTIONS (As.
turias Sugar C"ntral $. Pur" Can" &olass"s Co.% 6? P,il. 655)%
or in t," !as" o+ a PACTO DE 5ET5O (Vill"gas $. Ca1istrano%
A P,il. @16 an 5osal"s $. 5"#"s% 65 P,il. @A5)% or in t," !as" o+
LE>AL 5EDE&PTION (D" ="sus M Tablan $. >ar!ia% FC.A.G
@C O.>. 6@?6)% 3,"r" onl# a rig,t% not a ut#% "4ists. T,us% i+
on" is grant" an o1tion to bu# ," *a# or ," *a# not bu#% at
,is !,oi!"2 i+ on" is grant" t," rig,t to r"""*% ," *a# or ,"
*a# not r"""* also at ,is o3n !,oi!".
Vill"gas $. Ca1istrano
A P,il. @16
FACTS' A sol 7 a 1i"!" o+ lan 3it, t," rig,t o+ r"1ur.
!,as". Iit,in t," ti*" gi$"n +or r""*1tion% A t"n"r" t,"
a*ount to 7 to "++"!t t," r"sal". 7ut 7 r"+us". A% ,o3"$"r% i
not !onsign t," *on"# in !ourt. A broug,t an a!tion in !ourt to
!o*1"l 7 to a!!"1t t," r"1ur!,as" 1ri!". 7 !lai*s t,at A s,oul
,a$" "1osit" t," *on"# in !ourt% but sin!" A i not o so% an
sin!" t," 1"rio o+ r""*1tion ,as alr"a# la1s"% A !annot no3
r"""* t," 1ro1"rt#. Issu"' Ias !onsignation n""" ,"r"J
HELD' No. Consignation is not n""". T," "1osit o+ t,"
1ur!,as" 1ri!" is in"" not n"!"ssar# to !o*1"l t," 1ur!,as"r
to *a<" t," r"sal"% i+ ," (7% t," original 1ur!,as"r) r"+us"s to
a!!"1t t," *on"#.
5"ason' T," a!ti!l"s on !onsignation r"+"r onl# to "bts.
A ,"r" 3as not a "btor o+ 7% inas*u!, as A 3as +r"" "it,"r to
r"1ur!,as" t," 1ro1"rt# or not.
FNOTE' In t," abo$".*"ntion" !as" it s,oul b" not" t,at
!onsignation is not r"Euir" to 1r"s"r$" t," rig,t o+ r""*1tion.
Art. 1656
Ho3"$"r% t,"r" is r"all# no r""*1tion #"t unl"ss 1a#*"nt 3as
a!tuall# *a" or t," 1ri!" !onsign". Stat" i++"r"ntl#% it is
tru" t,at !onsignation o+ t," r""*1tion 1ri!" is not n"!"ssar#
Art. 1656
in or"r t,at t," $"nor *a# !o*1"l t," $"n"" to allo3 t,"
r"1ur!,as" (5osal"s $. 5"#"s M Oran"Ha% 65 P,il. @A5)% *"r"
t"n"r o+ 1a#*"nt b"ing "noug,% i+ *a" on ti*" as a basis
+or a!tion against t," $"n"" to !o*1"l ,i* to r"s"ll. 7ut t,at
t"n"r o"s not in its"l+ r"li"$" t," $"nor +ro* ,is obligation to
1a# t," 1ri!" 3,"n r""*1tion is allo3" b# t," !ourt. H"n!"%
*"r" t"n"r is su++i!i"nt to !o*1"l r""*1tion but is not in its"l+
1a#*"nt. (Pa"H $. &agno% B9 P,il. @?5).G
Co $. PN7
L.61CBC% =un. 6A% 1AB6
I+ t," t"n"r o+ r""*1tion *on"# is r"+us"% t,"r" is no
n"" to !onsign it in !ourt.
(9) I,"n Cr"itor Is =usti+i" in 5"+using T"n"r o+ Pa#.
*"nt
T," !r"itor is justi+i" in r"+using to a!!"1t t," t"n"r o+
1a#*"nt i+ t," t"n"r o+ 1a#*"nt is not $ali. To b" $ali% t,"
t"n"r o+ 1a#*"nt *ust ,a$" t," +ollo3ing r"Euisit"s'
(a) It *ust b" *a" in l"gal t"n"r (la3+ul !urr"n!#). T,us%
t"n"ring b# 3a# o+ a !,"!<% "$"n a *anag"r8s !,"!<
is *a"% t," "+"!t in t"n"r *a# b" !onsi"r" !ur".
(&iail," D"sbarats $. Var"la% L.@A15% &a# 65% 1A56).
Far East 7an< an Trust Co. $. DiaH 5"alt#
>5 19B5BB% Aug. 69% 6??1
For a $ali t"n"r o+ 1a#*"nt% it is n"!"ssar# t,at
t,"r" b" a +usion o+ int"nt% abilit#% an !a1abilit# to *a<"
goo "a!, o++"r% 3,i!, *ust b" absolut" an !o$"r t,"
a*ount u".
T,oug, a !,"!< is not l"gal t"n"r% an a !r"itor *a#
$alil# r"+us" to a!!"1t it i+ t"n"r" as 1a#*"nt% on" 3,o%
in +a!t% a!!"1t" a +ull#.+un" !,"!< a+t"r t," "btor8s
Art. 1656
*ani+"station t,at it ,a b""n gi$"n to s"ttl" an obligation
is "sto11" +ro* lat"r on "noun!ing t," "++i!i"n!# o+ su!,
t"n"r o+ 1a#*"nt.
Art. 1656
(NOTE' In La1uH S# $. Eu+"*io% L.1?5C6% S"1t. 9?%
1A5B% t," Su1r"*" Court ,"l t,at a !,"!< int"n" to 1a#
a "bt% i+ r"+us" b# t," oblig"" or !r"itor is not a $ali
t"n"r o+ 1a#*"nt. T," +a!t t,at in 1r"$ious #"ars% 1a#.
*"nt in !,"!< b# t," "btor 3as a!!"1t" b# t," !r"itor
o"s not 1la!" t," latt"r in "sto11"l to 1r"$"nt ,i* +ro*
r"Euiring t," +or*"r to 1a# ,is obligation in !as,.)
(b) It *ust in!lu" 3,at"$"r int"r"st is u". (Fi"g" M 7ro3n
$. S*it,% 7"ll M Co.% @9 P,il. 119).
(!) >"n"rall#% it *ust b" un!onitional. (P,il. Nat. 7an< $.
5"lati$o% "t al.% A6 P,il. 6?9). 7ut i+ *a" 3it, !onitions%
an a!!"1t" b# t," !r"itor 3it,out 1rot"st% t," !r"itor
!annot lat"r on 1r"s!rib" t," t"r*s +or t," $aliit# o+ t,"
a!!"1tan!" 3,i!, ," ,a alr"a# *a". (Vial% Aran"ta M
Co. $. ;# T"!<% FCAG @? O.>. FSu11. 16G% 1. 6B).
() T," obligation *ust alr"a# b" u". (Sal$ant" $. ;bi CruH%
BB P,il. 696).
(@) 5unning o+ Int"r"st
(a) I+ a+t"r t"n"r% !onsignation is *a" $"r# *u!, lat"r (on"
#"ar% +or "4a*1l")% int"r"st s,oul run until t," 1rin!i1al
is 1ai. (Lla*as $. Aba#a% 6? P,il. 5?6).
(b) Alt,oug, a !"rti+i" !,"!< is not l"gal t"n"r% still i+ it is
t"n"r"% but r"+us" on groun ot,"r t,an t," +a!t t,at it
is not l"gal t"n"r% an t," r"+usal is i**"iat"l# +ollo3"
b# !onsignation 0
1) Is t," "bt "4tinguis,"J
ANS.' No% b"!aus" a*ong ot,"r t,ings% t," !,"!<
is not l"gal t"n"r% an t,"r"+or" t," !onsignation 3as
not $ali.
6) Di int"r"st run +ro* t," at" o+ t"n"rJ
ANS.' No% b"!aus" t," t"n"r 3as *a" in goo
+ait,2 t," !,"!< !oul r"ail# b" !on$"rt" to !as, in
Art. 1656
$i"3 o+ t," !"rti+i!ation t,at t," "btor r"all# ,a
su++i!i"nt +uns in t," ban<s2 an +inall# b"!aus" a+t"r
all% t," !aus" +or r"+usal to a!!"1t 3as a groun ot,"r
Art. 1656
t,an t,at it 3as not l"gal t"n"r. (>r"gorio Aran"ta%
In!. $. Tuason " Pat"rno M Vial% A1 P,il. 6B6).
(NOTE' In t,is !as"% t," !r"itor ,a r"+us"
t," t"n"r b"!aus" a!!oring to ,i* t," "bt 3as
not #"t u"% an ," i not 3ant to a!!"1t t," !,"!<
b"!aus" t," t"n"r too< 1la!" uring t," =a1an"s"
o!!u1ation% an ," i not 3ant =a1an"s" *on"#. T,"
Court ,"l ,o3"$"r t,at t," "bt 3as alr"a# u"%
an% t,"r"+or"% 1a#abl".)
(5) I,"n Consignation Is Su++i!i"nt E$"n Iit,out a Prior
T"n"r
Consignation alon" (3it,out t"n"r) is allo3" in t," +ol.
lo3ing !as"s'
(a) I,"n t," !r"itor is A7SENT or ;NDNOIN or DOES
NOT APPEA5 at t," 1la!" o+ 1a#*"nt. (T," !r"itor n""
not b" jui!iall# "!lar" abs"nt.)
(b) I,"n t," !r"itor is INCAPACITATED to r"!"i$" 1a#.
*"nt at t," ti*" it is u". (T," rul" o"s not a11l# i+ t,"
!r"itor ,as a l"gal r"1r"s"ntati$" an t,is +a!t is <no3n
to t," "btor.)
(!) I,"n% 3it,out just !aus"% t," !r"itor 5EF;SES to gi$"
a r"!"i1t. (:u"r#' Do"s t,is not 1r"su11os" a 1rior t"n"r%
+or ot,"r3is"% ,o3 !an t,"r" b" a r"+usalJ)
() I,"n t3o or *or" 1"rsons !lai* t," sa*" rig,t to !oll"!t.
(An a!tion in INTE5PLEADE5 3oul b" 1ro1"r ,"r".)
(") I,"n t," titl" (3ritt"n o!u*"nt) o+ t," obligation ,as
b""n LOST.
(+) I,"n t," "btor ,a 1r"$iousl# b""n noti+i" b# t," !r"i.
tor t,at t," latt"r 3oul not a!!"1t an# 1a#*"nt. (7ana.
,a3% In!. $. D"jar*"% 55 P,il. 99B).
5ural 7an< $. Court o+ A11"als
Art. 1656
L.96116% A1r. 61% 1AB1
I,il" t"n"r g"n"rall# 1r"!""s !onsignation%
!onsignation *a# b" allo3" 3it,out 1rior t"n"r
Art. 165C
in !"rtain !as"s (".g.% i+ t,"r" ar" !onsi"rations o+
"Euit# as 3,"n a 1rior t"n"r or o++"r a11"ars to b"
us"l"ss).
Art. 165C. In or"r t,at t," !onsignation o+ t," t,ing u"
*a# r"l"as" t," obligor% it *ust +irst b" announ!" to t,"
1"rsons int"r"st" in t," +ul+ill*"nt o+ t," obligation.
T," !onsignation s,all b" in"++"!tual i+ it is not *a"
stri!tl# in !onsonan!" 3it, t," 1ro$isions 3,i!, r"gulat"
1a#*"nt.
CO&&ENT'
(1) Ess"ntial 5"Euisit"s +or Consignation
(a) "4ist"n!" o+ a $ali "bt
(b) $ali 1rior t"n"r% unl"ss t"n"r is "4!us"
(!) 1rior noti!" o+ !onsignation (b"+or" "1osit)
() a!tual !onsignation ("1osit)
(") subs"Eu"nt noti!" o+ !onsignation
(6) First 5"Euisit" 0 E4ist"n!" o+ a Vali D"bt
(a) In t," !as" o+ an o1tion% t,"r" is a 1ri$il"g"% not an obliga.
tion or a "bt.
E4a*1l"' A 3as gi$"n an o1tion to !an!"l a !ontra!t
1ro$i" ," 1ai P6??%???. &"r" t"n"r is su++i!i"nt to
1r"s"r$" t," rig,t to !an!"l. (S"" Asturias Sugar C"ntral
$. Pur" Can" &olass"s% 6? P,il. 655). T," sa*" is tru" in
t," !as" o+ an o1tion to bu# gi$"n to a l"ss"". (S"" Va. "
:uirino $. Palar!a% L.6B66A% Aug. 15% 1A6A).
(b) In t," !as" o+ l"gal r""*1tion% t,"r" is as #"t no "bt
(+or t,is again is a rig,t% not a "bt or ut#). (D" ="sus $.
>ar!ia% FC.A.G @C O.>. 6@?6).
Art. 165C
(!) So also% in t," !as" o+ !on$"ntional r""*1tion (t,is again
is a rig,t% not an obligation). (5osal"s $. 5"#"s% 65 P,il.
@A5).
Art. 165C
() So also% i+ t," all"g" "bt ,as 1r"s!rib" (+or ,"r"% t,"r"
is no *or" "bt).
(") So also% i+ t," "bt is +oun" on an ill"gal !aus" or !on.
si"ration% or i+ +or an# ot,"r r"ason% null an $oi.
(+) So also% i+ t," obligation o+ t," "btor is !onitional% an
t," !onition ,as not b""n +ul+ill". (S"" Sotto $. &ijar"s%
L.69569).
(g) 7ut a *ortgag" "bt is a tru" an $ali "bt% an 1a#*"nt
,"r" is a D;TK. (Ca1alungan $. &"rano% L.19CB9% &a#
1B% 1A6?).
(9) S"!on 5"Euisit" 0 Vali Prior T"n"r ;nl"ss T"n"r
Is E4!us"
(a) I+ t"n"r is r"Euir"% it *ust b" a $ali on". (T,"r"+or"% it
*ust b" t," $"r# obj"!t agr"" u1on or i+ a *on"tar# "bt%
*ust b" l"gal t"n"r2 unl"ss t," !aus" +or r"+usal is so*"
ot,"r groun% it *ust b" un!onitional2 also it *ust in!lu"
3,at"$"r int"r"st is u" (P,il. Nat. 7an< $. 5"lati$o% A6
P,il. 6?B2 Aran"ta% In!. $. Tuason " Pat"rno Vial% A1
P,il. 6B6 an Fi"g" an 7ro3n $. S*it,% 7"ll M Co.% @9
P,il. 119)% or an# ta4 an ass"ss*"nts t,at *a# ,a$" b""n
1ai 1ro1"rl# b# t," !r"itor. (&irana $. 5"#"s% L.6@CA1%
Aug. 6A% 1A6A). T," t"n"r *ust also b" in +ull satis+a!tion
o+ t," !lai*% not *"r"l# a 1artial 1a#*"nt t,"r"o+. (=o"8s
5aio an El"!tri!al Su11l# $. Alto El"!troni!s an Alto
Sur"t#% L.169C6% Aug. 66% 1A5B).
(b) For t," instan!"s 3,"n t"n"r is "4!us". (S"" 1ar. 6% Art.
1656% Ci$il Co" an !o**"nt No. 5 un"r sai Arti!l").
Lu3ig Ha,n $. LaHatin% "t al.
L.119@6 an L.115@A% =un. 9?% 1A5A
A !onsignation to b" $ali *ust b" 1r"!"" b# a
r"+usal 3it,out r"ason to a!!"1t t," "btor8s t"n"r o+ 1a#.
*"nt. In t," !as" at bar% 1lainti++8s r"+usal to a!!"1t t,"
t"n"r o+ 1a#*"nt on Aug. @% 1A@@ 3as justi+i" b"!aus"
Art. 165C
un"r t," 1ro$isions o+ t," !ontra!t% t," at" o+ *aturit#
3as =an. 1A@5. T,us% t," !onsignation *a" 3as N;LL
an VOID.
Art. 165C
(@) T,ir 5"Euisit" 0 Prior Noti!" to P"rsons Int"r"st"
(a) T," la3 sa#s t," !onsignation -*ust +irst b" announ!" to
t," 1"rsons int"r"st" in t," +ul+ill*"nt o+ t," obligation./
(Art. 165C% 1ar. 1% Ci$il Co").
(b) Iit,out su!, noti!"% t," !onsignation as a 1a#*"nt is
VOID. (Li*<a<o $. T"ooro% C@ P,il. 919 an Lagon"ra $.
&a!abalag% FCAG @A O.>. 1. 56A). T," r"ason is b"!aus"% ,a
noti!" b""n *a"% t," !r"itor 3oul ,a$" ,a o11ortunit#
to 3it,ra3 t," *on"# !onsign" an t,us *a<" us" o+ it.
(Lagon"ra $. &a!abalag% FCAG @A O.>. 1. 56A) ONE ENCEP.
TION to t," rul" is 3,"n an# att"*1t to gi$" su!, noti!"
3oul b" us"l"ss% as 3,"n t," !r"itor 3as tra$"ling +ro*
1la!" to 1la!" an !oul not b" lo!at". (Pa!is $. Castro%
FCAG @9 O.>. 511A).
(!) Pur1os" o+ t," noti!"' To "nabl" t," !r"itor an ot,"r
1arti"s int"r"st" (su!, as t," *ortgag""s% 1l"g""s% guar.
antors% soliar# !o.!r"itors% an soliar# !o."btors) to
r"!onsi"r t," 1r"$ious r"+usal% an t,us% a$oi litigation
b# t," si*1l" "41"i"nt o+ a!!"1ting 1a#*"nt. (Cabanos%
"t al. $. Calo% "t al.% L.1?A6C% O!t. 9% 1A5B).
So!o $. =ug" &ilitant"
>5 5BA61% =un. 6B% 1AB9
T"n"r o+ 1a#*"nt oug,t to b" *a" in la3+ul !ur.
r"n!# or l"gal t"n"r. T," t"n"r o+ a !,"!< to 1a# a *on.
"tar# obligation is not a $ali t"n"r o+ 1a#*"nt. E$"n i+ in
1r"$ious #"ars% t," !r"itor ,a a!!"1t" !,"!< 1a#*"nts%
t,is 3ill not 1ut ,i* in "sto11"l. T,us% ," !an still r"Euir"
t," "btor to 1a# in !as,.
() N""l"ss to sa#% t," noti!" o+ !onsignation *a# b" *a" b#
*"r"l# gi$ing noti!" o+ t," "btor8s int"ntion to ta<" t," !as"
to !ourt% in t," "$"nt t,at t"n"r is r"j"!t". (Val"nHu"la $.
7a<ani% L.@6BA% Aug. 91% 1A59). T,is is to sa# t,at t," +irst
noti!" o+ !onsignation *a# b" a!!o*1lis," si*ultan"ousl#
3it, t," t"n"r o+ 1a#*"nt. In t," Val"nHu"la !as"% t3o
Art. 165C
l"tt"rs 3"r" s"nt to t," !r"itor% 3,i!, asi" +ro* o++"ring
t," 1ri!"% "41r"ssl# a$is" t,at% i+ no ans3"r t,"r"to 3as
r"!"i$"% t," 1ro1"r jui!ial a!tion 3oul b" institut".
Art. 165C
Ho3"$"r% it 3oul b" b"tt"r to stat" in su!, +irst noti!"
t," +ollo3ing'
1) t,at t"n"r ,a b""n *a" (unl"ss "4!us") on a
s1"!i+i" at"2
6) t,at t"n"r ,as b""n unjusti+iabl# r"j"!t"2
9) t,at "1osit in !ourt is b"ing !ont"*1lat" at a !"rtain
s1"!i+i" at" an at a !"rtain s1"!i+i" !ourt. (O!,oa
$. Lo1"H% FCAG >5 C?5?.5% =un. 1B% 1A5@).
(") T," noti!"% ,o3"$"r% is NOT "ss"ntial i+ t," su* to b"
"1osit" is t," su* u" un"r a +inal jug*"nt. (ArHaga
$. 5u*baoa% A1 P,il. @AA).
(+) Consignation 1r"su11os"s t," "4ist"n!" o+ a suit to !o*1"l
t," !r"itor to a!!"1t. Iit,out a suit% t,"r" !an b" no !on.
signation% an t,"r"+or" no is!,arg". (El Hogar Fili1ino
$. Ang"l"s% L.11619% S"1t. 9?% 1A5B).
HulganHa% "t al. $. C.A.
>5 56156% =an. C% 1ABC
FACTS' A is t," r"gist"r" o3n"r o+ a 1ar!"l o+ lan
!o$"r" b# an original !"rti+i!at" o+ titl" issu" 1ursuant
to a +r"" 1at"nt. H" sol sai 1ar!"l to 7 an b# $irtu" o+
t," sal"% t," original titl" 3as !an!"ll" an a n"3 on"
issu" in +a$or o+ 7. A #"ar lat"r% A su" 7 in t," Court o+
First Instan!" (no3 5"gional Trial Court) to !o*1"l 7 to
allo3 A to r"""* sai lot un"r S"!. 11A o+ Co*. A!t 1@1
(Publi! Lan A!t). T," trial !ourt "!lar" t,at A ,as t,"
l"gal rig,t to "4"r!is" sai rig,t at t," original 1ur!,as"
1ri!" 3it, int"r"sts. T," Court o+ A11"als r"$"rs" t,"
trial !ourt8s "!ision on t," groun t,at A +ail" to !onsign
t," a*ount u" at t," ti*" t,"# +il" t," !o*1laint% sa#.
ing t,at t," a!t o+ *"r"l# +iling t," !o*1laint on t," 1art
o+ A 3it,out !onsignation o+ t," 1ro1"r a*ount 3it,in
t," 1"rio 1r"s!rib" 3as an in"++"!ti$" an in!o*1l"t"
r""*1tion.
HELD' T," bona +i" t"n"r o+ t," r""*1tion 1ri!"
Art. 165C
or its "Eui$al"nt 0 !onsignation o+ sai 1ri!" in !ourt 0 is
not "ss"ntial or n"!"ssar# sin!" t," +iling o+ t," a!tion its"l+
is "Eui$al"nt to a +or*al o++"r to r"""*.
Art. 165C
(5) Fourt, 5"Euisit" 0 A!tual D"1osit 3it, t," Pro1"r =u.
i!ial Aut,oriti"s
(a) It is un"rstoo t,at b"+or" a "1osit is *a"% a !o*1laint
against t," !r"itor to !o*1"l ,i* to a!!"1t ,as to b" +irst
+il" in !ourt.
(b) T," !onsignation *ust b" *a" 0
1) b# "1ositing t," $"r# obj"!t t,at is u" (an not
anot,"r) (Cabr"ra $. Lo1"H% B@ P,il. B9@)2
6) 3it, t," 1ro1"r jui!ial aut,orit# 3,i!,% in !"rtain
!as"% *a# in!lu" t," s,"ri++ (Fabros $. Villa Agustin%
1B P,il. 996)2
9) a!!o*1ani" b# 1roo+ t,at t"n"r ,a b""n ul# *a"%
unl"ss t"n"r is "4!us" (Art. 165B% 1ar. 1)2 an t,at
+irst noti!" o+ t," !onsignation ,a alr"a# b""n s"nt
(Art. 165B% 1ar. 1% Ci$il Co").
FNOTE' T," jui!ial "1osit o+ t," *on"# u" un"r a
+inal jug*"nt o"s not r"Euir" noti!"s to t," 1ro1"r
int"r"st" 1arti"s. (ArHaga $. 5u*baoa% A1 P,il. @AA
an Sal$ant" $. ;bi CruH% BB P,il. 696).G
(!) E++"!ts o+ t," "1osit
1) T," 1ro1"rt# is -in !ustoia l"gis./ (&an"j"ro $. 7u#.
son La*1a% 61 P,il. 66)2
6) An 3ill% t,"r"+or"% b" "4"*1t" +ro* atta!,*"nt an
"4"!ution (S1ring"r $. Olin% 9 P,il. 9@@ an 69 C.=.%
1. 95C% S"!. 1?C)2
9) 7ut i+ t," 1ro1"rt# is 1"ris,abl" b# natur"% t," !ourt
*a# or"r t," sal" o+ t," 1ro1"rt# (&atut" $. C,"ong
7oo% 9C P,il. 9C6)2
@) In t," *"anti*"% t," "btor% b# !onsigning t," t,ing%
1ra!ti!all# *a<"s ,i*s"l+ t," ag"nt or r"!"i$"r o+
t," !ourt% 1arti!ularl# i+ +or so*" r"ason% t," 1ro1.
"rt# !annot a!tuall# b" 1la!" in t," ,ans o+ t,"
!ourt. (&atut" $. C,"ong 7oo% 9C P,il. 9C6). T,is is
Art. 165C
1arti!ularl# tru" 3,"n t," obj"!t in$ol$" is 5EAL
P5OPE5TK. T," 1ro1"r t,ing to o% ,o3"$"r% in su!,
a !as" is to as< t," !ourt +or a 5ECEIVE5SHIP (5"#"s
Art. 165C
an Puno% Outlin" o+ P,ili11in" Ci$il La3% Vol. @% 11.
19?.191)% b"!aus" orinaril#% unl"ss su!, "1osit is
*a"% 1a#*"nt !annot b" *a" an !ons"Eu"ntl#%
t," obligation 3oul r"*ain in +or!". (&agsa#sa# $.
7lan!o% 5? O.>. 1156). In""% t," 1a#*"nt 3oul b"
$oi. (Halili $. Llor"t% A5 P,il. CB).
St. Do*ini! Cor1. $. IAC
>5 6C6?C% Aug. 66% 1AB5
I,"r" t," !ourt8s "!ision stat"s t,at t," bal.
an!" o+ t," 1ur!,as" 1ri!" *ust b" *a" 3it,in 6?
a#s +ro* r"!"i1t ,"r"o+% t," jug*"nt "btor *ust
1a# t," a*ount 3it,in a r"asonabl" ti*" t,"r"a+t"r
an not +ro* t," ti*" t," jug*"nt b"!o*"s +inal.
I+ t," jug*"nt !r"itor r"+us"s to r"!"i$" t,"
1a#*"nt% t," 1ro1"r 1ro!"ur" is +or t," jug*"nt
"btor to !onsign t," sa*" 3it, t," !ourt also 3it,in
t," 6?.a# 1"rio or 3it,in a r"asonabl" ti*" t,"r"a+.
t"r. T," +a!t t,at t," jug*"nt "btor tri" to r"a!,
an agr""*"nt 3it, t," jug*"nt !r"itor a+t"r t,"
1ro*ulgation o+ t," "!ision o"s not a++"!t t," +inal.
it# o+ t," jug*"nt.
(6) Fi+t, 5"Euisit" 0 Subs"Eu"nt or S"!on Noti!" (&a"
A+t"r t," D"1osit)
(a) T,is is r"Euir" b# t," la3 3,i!, sa#s' -T," !onsignation
,a$ing b""n *a"% t," int"r"st" 1arti"s s,all b" noti+i"
t,"r"o+./ (Art. 165B% 1ar. 6% Ci$il Co").
(b) T,is is *anator# an% t,"r"+or"% 3it,out su!, subs"Eu"nt
noti!"% t," !onsignation is VOID (TiaoEui $. C,ina Insur.
an!" M Sur"t# Co.% In!.% FCAG @5 O.>. 655B) unl"ss t,"
a*ount u" is as a !ons"Eu"n!" o+ a FINAL =;D>&ENT%
inas*u!, as t," la3 r"+"rs onl# to a !ontra!tual "bt% not
to on" "!r"" b# t," !ourt. (Sal$ant" $. ;bi CruH% BB P,il.
696 an ArHaga $. 5u*baoa% A1 P,il. @AA).
an t," s"r$i!" o+ su**ons on t," "+"nant.!r"itor% a!.
@9?
Art. 165C
(!) FO5&' It 3oul b" a$isabl" to issu" a +or*al noti!"2 ,o3.
"$"r% it ,as b""n ,"l t,at t," *"r" +iling o+ t," !o*1laint
an t," s"r$i!" o+ su**ons on t," "+"nant.!r"itor% a!.
@9?
Arts. 165B.165A
!o*1ani" b# a !o1# o+ t," !o*1laint% !an ta<" t," 1la!"
o+ sai s"!on noti!". (Anr"s $. Court o+ A11"als% @C O.>.
6BC62 Li*<a<o $. T"ooro% C@ P,il. 919 an Dungao $.
5oEu"% L.@1@?.@1@1% D"!. 6A% 1A51).
Art. 165B. Consignation s,all b" *a" b# "1ositing t,"
t,ings u" at t," is1osal o+ jui!ial aut,orit#% b"+or" 3,o*
t," t"n"r o+ 1a#*"nt s,all b" 1ro$"% in a 1ro1"r !as"% an
t," announ!"*"nt o+ t," !onsignation in ot,"r !as"s.
T," !onsignation ,a$ing b""n *a"% t," int"r"st"
1ar. ti"s s,all also b" noti+i" t,"r"o+.
CO&&ENT'
Ho3 Consignation Is A!tuall# &a"
(a) T," t,ings u" *ust b" "1osit" 3it, t," 1ro1"r jui!ial
aut,oriti"s (3,il" orinaril# t," !as,i"r or t," !as, o++i!"r
s,oul b" t," 1"rson to issu" t," r"!"i1t +or t," *on"#
!onsign"% a t"*1orar# r"!"i1t issu" b# t," !l"r< o+ !ourt
+or sai "1osit 3oul su++i!"). (S"" Ka1 $. Tingin% L.1BA@9%
&a# 91% 1A69).
(b) T,"r" *ust b" P5OOF t,at'
1) t"n"r ,a 1r"$iousl# b""n *a" (g"n"ral rul")2
6) or t,at t," !r"itor ,a 1r"$iousl# noti+i" t," "btor
t,at !onsignation 3ill b" *a" (in !as" t"n"r is not
r"Euir").
Art. 165A. T," "41"ns"s o+ !onsignation% 3,"n 1ro1"rl#
*a"% s,all b" !,arg" against t," !r"itor.
CO&&ENT'
(1) Cr"itor >"n"rall# to 7"ar E41"ns"s o+ Consignation
5"ason 3,# t," !r"itor 1a#s t," "41"ns"s o+ t," !onsig.
!onsignation "41"ns"s ar"% o+ !ours"% !,arg"abl" to t," "btor.
@91
Arts. 165B.165A
nation i+ 1ro1"rl# *a"' Cl"arl#% t,is !onsignation is u" to
t," !r"itor8s +ault% +or ,a ," a!!"1t"% t,"r" 3oul not ,a$"
b""n an# n"" +or t," !onsignation. I+ not 1ro1"rl# *a"% t,"
!onsignation "41"ns"s ar"% o+ !ours"% !,arg"abl" to t," "btor.
@91
Art. 166?
(6) T," E41"ns"s
T," "41"ns"s in!lu" t,os" +or t," 1r"s"r$ation or 3ar".
,ousing o+ t," goos 1"ning litigation. (&atut" $. C,"ong 7oo%
9C P,il. 9C6).
Art. 166?. On!" t," !onsignation ,as b""n ul# *a"%
t," "btor *a# as< t," jug" to or"r t," !an!"llation o+ t,"
obligation.
7"+or" t," !r"itor ,as a!!"1t" t," !onsignation% or
b"+or" a jui!ial "!laration t,at t," !onsignation ,as b""n
1ro1"rl# *a"% t," "btor *a# 3it,ra3 t," t,ing or t," su*
"1osit"% allo3ing t," obligation to r"*ain in +or!".
CO&&ENT'
(1) E++"!ts i+ Consignation Has 7""n Dul# &a"
I+ t," !onsignation is D;LK (1ro1"rl#) *a"'
(a) T," "btor *a# as< t," jug" to or"r t," !an!"llation o+
t," obligation.
(b) T," running o+ int"r"st is sus1"n".
(!) Ho3"$"r% it s,oul b" obs"r$" t,at b"+or" t," !r"itor
ACCEPTS% or b"+or" t," jug" "!lar"s t,at !onsignation
,as b""n P5OPE5LK &ADE% t," obligation 5E&AINS.
(Paua $. 5iHal Sur"t#% @C O.>. Su11. No 16% 1. 9?B).
FNOTE' No jui!ial a11ro$al is n""" i+ ALL t,"
"ss"ntial r"Euisit"s +or a $ali !onsignation ar" 1r"s"nt.
T,is is 1arti!ularl# tru" 3,"n t," "1osit an t," r"!ors
o+ t," !as" ar" a!!i"ntall# "stro#"% but t,"r" is NO
r"ason s,o3n 3,# t," !onsignation s,oul b" !onsi"r"
i*1ro1"r. (Sia $. Court o+ A11"als% A6 P,il. 995).G
(6) 5is< o+ Loss
I+ t," !onsignation is jui!iall# a11ro$" O5 i+ all t," "s.
s"ntial r"Euisit"s ar" 1r"s"nt O5 i+ t," !r"itor ,as signi+i"
C?C
Art. 166?
,is a!!"1tan!"% t," !r"itor b"ars t," loss2 ot,"r3is"% it is t,"
"btor 3,o b"ars t," bur"n. (S"" Sia $. Court o+ A11"als% A6
C?B
Art. 166?
P,il. 9952 s"" also C,ua Da# $. Li* C,ang% L.5AA5% &a# 1B%
1A56).
(9) E++"!ts o+ I*1ro1"r Consignation
(a) I+ t," !onsignation 3as i*1ro1"rl# *a"% t," obligation
r"*ains% b"!aus" t," !onsignation is NOT EFFECTIVE
as a 1a#*"nt. (7ra$o $. 7arr"ras% A6 P,il. 6CA).
(b) I+ at t," ti*" o+ !onsignation t," "bt 3as alr"a# u"%
an t," r"Euisit"s +or !onsignation ar" abs"nt% t," "btor
is in DEFA;LT.
(@) E++"!t o+ Dis*issal o+ t," Cas"
I+ t," !as" in 3,i!, !onsignation 3as *a" is is*iss" b#
t," !ourt% t," !onsignation naturall# 3oul 1rou!" NO "++"!t.
(7ra$o $. 7arr"ras% A6 P,il. 6CA).
FNOTE' T," sa*" t,ing r"sults i+ t,"r" is +ailur" to r"!on.
stitut" t," !as"% +or ,"r" t,"r" 3oul b" IAIVE5. (Val"nHu"la $.
D" AEuino% L.6666% Aug. 91% 1A@A an C,ua Da# $. Li* C,ang%
L.5AA5% &a# 1B% 1A56).G
(5) :u"r#
Su11os" on" o+ t," "ss"ntial r"Euisit"s +or !onsignation
is not 1r"s"nt% *a# t," "btor as< +or t," !an!"llation o+ t,"
obligationJ
ANS.' K"s% 1ro$i" t," !r"itor o"s not obj"!t. T,is 3oul
,a$" t," "++"!t o+ a 3ai$"r. (S"" Li*<a<o $. T"ooro% C@ P,il.
919).
(6) I,"n D"btor &a# Iit,ra3 t," T,ing or Su* Con.
sign"
(a) As a *att"r o+ rig,t'
1) b"+or" t," !r"itor ,as a!!"1t" t," !onsignation (S""
>a*boa $. Tan% L.1C?C6% =an. 6A% 1A66)2
6) or b"+or" t,"r" is a jui!ial "!laration t,at t," !onsig.
C?A
Art. 166?
nation ,as b""n 1ro1"rl# *a". (H"r"% t," obligation
an t," a!!"ssor# sti1ulations r"*ain.)
C1?
Art. 1661
(NOTE' T," rig,t is gi$"n t," "btor b"!aus" ," still
o3ns t," t,ing2 ,o3"$"r% ," b"ars t," "41"ns"s. T," !o.
"btors% guarantors% an sur"ti"s !annot obj"!t.)
(b) As a *att"r o+ 1ri$il"g"'
I,"n a+t"r !onsignation ,a b""n 1ro1"rl# *a"
(t," !r"itor ,a$ing a!!"1t" or t," !ourt ,a$ing "!lar"
it 1ro1"r)% t," !r"itor aut,oriH"s t," "btor to 3it,ra3
t," t,ing. (Art. 1661% Ci$il Co").
(C) :u"r#
Ho3 !an t," !r"itor 1r"$"nt t," "btor +ro* "4"r!ising
t," 5I>HT to 3it,ra3 t," t,ing !onsign"J
ANS.' 7# i**"iat"l# a!!"1ting t," !onsignation 3it, or
3it,out r"s"r$ations. I+ ," a!!"1ts 3it,out r"s"r$ing ,is rig,t to
+urt,"r !lai*s su!, as a*ag"s% t,is 3oul b" a !as" o+ IAIVE5.
(Sing =u!o $. Cua#!ong% @6 P,il. B1).
Art. 1661. I+% t," !onsignation ,a$ing b""n *a"% t,"
!r"itor s,oul aut,oriH" t," "btor to 3it,ra3 t," sa*"% ,"
s,all los" "$"r# 1r"+"r"n!" 3,i!, ," *a# ,a$" o$"r t,"
t,ing. T," !o."btors% guarantors an sur"ti"s s,all b"
r"l"as".
CO&&ENT'
(1) Iit,ra3al b# D"btor A+t"r Consignation Has 7""n
&a"
;n"r t,is Arti!l"% t," !onsignation ,as alr"a# b""n *a"
(t,at is% t," !r"itor ,as a!!"1t"2 or t," !ourt ,as a11ro$"
t," !onsignation). T," 3it,ra3al b# t," "btor is a *att"r o+
P5IVILE>E.
(6) E++"!ts
(a) T," obligation r"*ains.
(b) T," !r"itor los"s an# 1r"+"r"n!" (1riorit#) o$"r t,"
t,ing.
C11
Art. 1661
(!) T," !o."btors% guarantors% an sur"ti"s ar" 5ELEASED
(unl"ss t,"# !ons"nt").
C16
Art. 1661
FNOTE' T," !o."btors r"+"rr" to ar" t," soliar# !o.
"btors% not t," joint on"s% +or t,"ir liabiliti"s ar" istin!t.
(B &anr"sa 9@@).G
(NOTE' 5"garing t," soliar# !o."btors% t,"# ar"
r"l"as" onl# +ro* t," soliarit#% not +ro* t,"ir o3n ini.
$iual s,ar"s% sin!" unli<" guarantors or sur"ti"s% t," soli.
ar# !o."btors ar" in t,"*s"l$"s P5INCIPAL "btors.)
S"!tion 6
LOSS OF THE THIN> D;E
(1) I,at -Loss/ In!lu"s
-Loss/ un"r t,is S"!tion in!lu"s -i*1ossibilit# o+ 1"r+or*.
an!"./
(6) I,"n Is T,"r" a Loss
(a) 3,"n t," obj"!t 1"ris,"s (1,#si!all#% it is "stro#")
(b) 3,"n it go"s out o+ !o**"r!"
(!) 3,"n it isa11"ars in su!, a 3a# t,at
1) its "4ist"n!" is un<no3n
6) or it !annot b" r"!o$"r". (Art. 11BA% No. 6% Ci$il
Co").
(9) I,at I*1ossibilit# o+ P"r+or*an!" In!lu"s
(a) 1,#si!al i*1ossibilit#
(b) l"gal i*1ossibilit#% 3,i!, is "it,"r'
1) ir"!tl# !aus" as 3,"n 1ro,ibit" b# la3
6) or inir"!tl# !aus" as 3,"n t," "btor is r"Euir"
to "nt"r a *ilitar# ra+t
C19
Art. 1661
(!) *oral i*1ossibilit# (i*1ra!ti!abilit#). (S"" Art. 166C% Ci$il
Co").
C1@
Art. 1661
Asia 7" Fa!tor# $. National 7"
Ior<"r8s ;nion% "t al.
L.A166% =an. 91% 1A5C
FACTS' T," !o*1an# an its "*1lo#""s% in a !oll"!ti$"
agr""*"nt% agr"" t,at -"*1lo#""s s,all b" 1ro$i" 3it,
3or< on Suna#s at ti*" an a ,al+ (15?Q 3ag"s)2 an t,at in
t," "$"nt no 3or< on Suna#s is a$ailabl" t,ru no +ault o+ t,"
"*1lo#""s% t,"# s,all b" 1ai t," "Eui$al"nt o+ t,"ir 3ag"s as i+
t,"# ,a 1"r+or*" 3or< +or t,at a#./ T,r"" *ont,s lat"r t,"
7lu" Suna# La3 3as 1ass"% 1ro,ibiting 3or< on Suna#s. T,"
"*1lo#""s !ont"n" t,"# s,oul n"$"rt,"l"ss b" 1ai on Sun.
a#s 0 sin!" t,is 1ro,ibition b# t," la3 3as not t,"ir +ault.
HELD' T," "*1lo#""s s,oul not b" 1ai b"!aus" t,"
!o*1an# 3as 1ro,ibit" b# la3 to 1ro$i" t,"* 3or< on Sun.
a#s. T," !o*1an#8s ut# to 1ro$i" 3or< on Suna#s 3as
"4tinguis," b# t," la3% so it is un+air to r"Euir" it to 1a# t,"
"*1lo#""s 3,o a+t"r all 3oul not b" 3or<ing on sai a#s.
In""% t," obligation o+ t," "*1lo#"r to +urnis, 3or< b"!a*"
a l"gal i*1ossibilit#.
Hous" $. Si4to " la Costa
6B P,il. C@6
FACTS' Hous" su" 7us,% an 1"ning "!ision Hous"
obtain" an atta!,*"nt o+ 7us,8s 1ro1"rt#. 7us, !an!"ll" t,"
atta!,*"nt b# 1osting a P6%??? bon% s"!ur" b# a Sur"t# Co*.
1an#. T," bon sti1ulat" t,at s,oul 7us, los"% 7us, 3oul
r"turn t," 1ro1"rt# to t," s,"ri++% an i+ 7us, 3oul not o so%
t," Sur"t# Co*1an# 3oul b" liabl".
Subs"Eu"ntl#% b# $irtu" o+ an agr""*"nt% 7us, turn"
o$"r to Hous" t," 1ro1"rt# 1r"$iousl# atta!,"% sai 1ro1"rt#
to b" sol at a 1ubli! au!tion. In sai au!tion% Hous" 1ur!,as"
t," 1ro1"rt#. Lat"r t," 1"ning !as" 3as t"r*inat"% an t,"
trial !ourt a3ar" Hous" t," su* o+ P6%???. Hous" 3ant" t,"
*on"# +ro* 7us,% but sin!" 7us, !oul not 1a#% Hous" su"
t," Sur"t# Co*1an# +or sai a*ount. T," trial !ourt% 1r"si"
o$"r b# =ug" Si4to " la Costa% sai t,at t," Sur"t# Co*1an#
C15
Art. 1661
3as not liabl" an#*or" b"!aus" t," bon !oul not b" !o*1li"
3it, (t," gi$ing o+ t," 1ro1"rt# to t," s,"ri++) sin!" Hous" 3as
C16
Art. 1666
alr"a# t," o3n"r o+ t," 1ro1"rt#2 an t,at it 3as Hous"8s a!t
o+ 1ur!,asing t," 1ro1"rt# t,at 1r"$"nt" !o*1lian!" 3it, t,"
t"r*s o+ t," bon. Hous" t,"n broug,t t,is a!tion. D"!i".
HELD' T," trial jug" 3as !orr"!t. T," Sur"t# Co*1an#
!oul ,a$" b""n ,"l liabl" ,a not t," 1"tition"r Hous" 1r".
$"nt" !o*1lian!" 3it, t," t"r*s o+ t," bon b# ,is o3n a!t o+
1ur!,asing t," 1ro1"rt#. 7ut sin!" Hous" i t,is% ," !annot
r"!o$"r +ro* sai Sur"t# Co*1an#.
Art. 1666. An obligation 3,i!, !onsists in t," "li$"r#
o+ a "t"r*inat" t,ing s,all b" "4tinguis," i+ it s,oul b"
lost or "stro#" 3it,out t," +ault o+ t," "btor% an
b"+or" ," ,as in!urr" in "la#.
I,"n b# la3 or sti1ulation% t," obligor is liabl" "$"n
+or +ortuitous "$"nts% t," loss o+ t," t,ing o"s not
"4tinguis, t," obligation% an ," s,all b" r"s1onsibl" +or
a*ag"s. T," sa*" rul" a11li"s 3,"n t," natur" o+ t,"
obligation r"Euir"s t," assu*1tion o+ ris<.
CO&&ENT'
(1) T3o Dins o+ Obligations -To >i$"/
An obligation to gi$" *a# !onsist o+ an obligation'
(a) to gi$" a g"n"ri! t,ing2
(b) or to gi$" a s1"!i+i! t,ing.
FNOTE' T," +irst is NOT "4tinguis," b# loss or b#
a +ortuitous "$"nt b"!aus" -g"nus n"$"r 1"ris,"s./ (Art.
1669% Ci$il Co").G
(6) E++"!t o+ Loss on an Obligation to D"li$"r a S1"!i+i!
T,ing
(a) >"n"ral rul" 0 t," obligation is "4tinguis,".
FNOTE' T," loss *ust b" a+t"r t," obligation ,as b""n
in!urr"% b"!aus" i+ t," loss ,a b""n P5IO5% t,"r" 3oul
C1C
Art. 1666
not b" an# subj"!t *att"r an t,"r"+or" t,"r" 3oul not
,a$" b""n an# obligation at all.G
C1B
Art. 1666
FNOTE' I+ t," *ortgag" 1ro1"rt# is lost% t," *ortga.
gor b"ing t," o3n"r o+ it b"ars t," loss (r"s 1"rit o*ino).
H" is% o+ !ours"% still liabl" +or t," "bt% sin!" t,is obliga.
tion is *on"tar#% an t,"r"+or" *a# b" sai to b" g"n"ri!
in !,ara!t"r. (Iarn"r% 7arn"s M Co. $. Flor"s% L.169CC%
&ar. 6A% 1A61 an La3#"rs Coo1"rati$" Publis,ing Co. $.
Tabora% L.61669% A1r. 9?% 1A65).G
(b) E4!"1tions'
T," obligation is not "4tinguis," in t," +ollo3ing
!as"s'
1) i+ t," "btor is at +ault (Art. 1666% 1ar. 1% Ci$il
Co")2
6) 3,"n t," "btor is *a" liabl" +or a +ortuitous "$"nt
b"!aus"'
a) o+ a 1ro$ision o+ la32
b) o+ a !ontra!tual sti1ulation2
!) t," natur" o+ t," obligation r"Euir"s t," assu*1.
tion o+ ris< on t," 1art o+ t," "btor.
(NOTE' O+ !ours" in t," abo$".*"ntion" !as"s% t,"
obligation to "li$"r t," s1"!i+i! t,ing its"l+ is "4tinguis,"
+or t,"r" is no *or" t,ing to b" gi$"n. 7;T sai obligation
is !on$"rt" into a &ONETA5K O7LI>ATION FO5 DA&.
A>ES. It is in t,is s"ns" t,at 3" sa# t,at t," -obligation/
r"*ains.)
(9) I,"n Clai* o+ Loss &ust 7" &a"
I+ un"r t," t"r*s o+ a !ontra!t a !lai* +or loss or a*ag"
(o+ goos !arri" on a $"ss"l) *ust b" *a" onl# a+t"r t," at"
o+ is!,arg" o+ t," last 1a!<ag" +ro* t," !arr#ing $"ss"l 0 3ill
a !lai* b"+or" su!, at" o+ is!,arg" b" r"gar" as 1r"*atur"
an s1"!ulati$"J
It "1"ns'
(a) T," !lai* is 1r"*atur" an s1"!ulati$" i+ *a" 3it,out
basis.
C1A
Art. 1666
(b) T," !lai* 3oul% ,o3"$"r% b" 1ro1"r i+ t," !lai* 3as *a"
b"!aus" o+ 1rior in+or*ation or is!o$"r# o+ s,ortag" o+ or
C6?
Art. 1669
a*ag" to t," goos. (N"3 Ha*1s,ir" Fir" Insuran!" Co.
$. &anila Port S"r$i!"% "t al.% L.6?A9B% Aug. A% 1A662 S3it.
H"rlan >"n"ral Insuran!" Co. $. &anila 5ailroa Co. M
&anila Port S"r$i!"% L.6615?% A1r. 66% 1A6B an Insuran!"
Co. o+ Nort, A*"ri!a $. &anila Port S"r$i!"% L.6@BBC% A1r.
66% 1A6B).
(@) E4a*1l"s o+ Instan!"s I,"n t," La3 5"Euir"s Liabilit#
E$"n in t," Cas" o+ a Fortuitous E$"nt
(a) 3,"n t," "btor is in "+ault (*ora) (Art. 1165% Ci$il
Co")2
(b) 3,"n t," "btor ,as 1ro*is" to "li$"r t," sa*" t,ing
to t3o or *or" 1"rsons (1arti"s) 3,o o not ,a$" t," sa*"
int"r"st (Art. 1165% Ci$il Co")2
(!) 3,"n t," obligation aris"s +ro* a !ri*". (Art. 166B% Ci$il
Co")2
() 3,"n a borro3"r (o+ an obj"!t) ,as l"nt t," t,ing to anot,"r
3,o is not a *"*b"r o+ ,is o3n ,ous",ol (Art. 1A@6F@G%
Ci$il Co")2
(") 3,"n t," t,ing loan" ,as b""n "li$"r" 3it, a11raisal
o+ t," $alu"% unl"ss t,"r" is a sti1ulation "4"*1ting t,"
borro3"r +ro* r"s1onsibilit# in !as" o+ a +ortuitous "$"nt
(Art. 1A@6F9G% Ci$il Co")2
(+) 3,"n t," 1a#"" in solutio in"biti is in ba +ait,. (Art. 615A%
Ci$il Co").
Art. 1669. In an obligation to "li$"r a g"n"ri! t,ing%
t," loss or "stru!tion o+ an#t,ing o+ t," sa*" <in o"s not
"4. tinguis, t," obligation.
CO&&ENT'
(1) E++"!t o+ Loss on Obligation to D"li$"r a >"n"ri! T,ing
T," obligation !ontinu"s to "4ist b"!aus" a g"n"ri! t,ing
C61
Art. 1669
o"s not r"all# 1"ris, (g"nus nunEua* 1"rit 0 -g"nus n"$"r
1"ris,"s/).
C66
Art. 166@
(6) E4!"1tions
(a) I+ t," g"n"ri! t,ing is "li*it" (li<" -5? <ilos o+ sugar
+ro* *# 1AAA ,ar$"st/ 3,"n su!, ,ar$"st is !o*1l"t"l#
"stro#") (-"li*it" g"n"ri! t,ing/).
(b) I+ t," g"n"ri! t,ing ,as alr"a# b""n s"gr"gat" or s"t
asi"% in 3,i!, !as"% it ,as b"!o*" s1"!i+i!.
(9) &on"tar# Obligations
An obligation to 1a# *on"#% su!, as on" un"r a 1"nsion
1lan% is g"n"ri!. H"r" +ailur" to rais" +uns is not a "+"ns"
(P,il. Long Distan!" T"l. Co. $. ="turian% L.CC56% =ul. 9?% 1A55
an 5"#"s $. Calt"4% @C O.>. 11A9)% nor is it "4!us" just
b"!aus" t," "btor ,as lost !"rtain s1"!i+i! 1ro1"rt# u" to a
+ortuitous "$"nt. (5a*ir"H $. Court o+ A11"als% 56 O.>. CC?).
5"1ubli! o+ t," P,ili11in"s $. =os" >rijalo
L.6?6@?% D"!. 91% 1A65
FACTS' A borro3"r obtain" a loan +ro* a ban<. T," loan
3as "*boi" in s"$"ral 1ro*issor# not"s. As s"!urit#% t," bor.
ro3"r "4"!ut" a !,att"l *ortgag" on ,is staning !ro1s. Sai
!ro1s 3"r"% ,o3"$"r% subs"Eu"ntl# "stro#" b# t," =a1an"s"
+or!"s uring t," last 3ar. Issu"' Is t," borro3"r still liabl" +or
t," loan "s1it" t," "stru!tion o+ t," !ro1s b# so*"on" "ls"J
HELD' K"s% t," borro3"r is still liabl"% +or ,is obligation
3as not to "li$"r "t"r*inat" t,ings (t," !ro1s) but to "li$"r
a g"n"ri! t,ing (*on"#). T," a*ount o+ *on"# r"1r"s"nting t,"
$alu" o+ t," !ro1s% 3it, int"r"st% !annot b" sai to ,a$" b""n
lost% +or t," a!!ount !an still b" 1ai +ro* sour!"s ot,"r t,an
t," *ortgag" !ro1s.
Art. 166@. T," !ourts s,all "t"r*in" 3,"t,"r% un"r
t," !ir!u*stan!"s% t," 1artial loss o+ t," obj"!t o+ t,"
obligation is so i*1ortant as to "4tinguis, t," obligation.
CO&&ENT'
E++"!t o+ Partial Loss
C69
Art. 166@
In !"rtain !as"s% 1artial loss *a# in"" b" "Eui$al"nt to a
!o*1l"t" loss% su!, as t," loss o+ a s1"!i+i! +ountain 1"n *inus
C6@
Arts. 1665.1666
t," !o$"r. In ot,"r !as"s% t," loss *a# b" insigni+i!ant. H"n!"%
jui!ial "t"r*ination o+ t," "++"!t is n""".
Art. 1665. I,"n"$"r t," t,ing is lost in t," 1oss"ssion
o+ t," "btor% it s,all b" 1r"su*" t,at t," loss 3as u" to
,is +ault% unl"ss t,"r" is 1roo+ to t," !ontrar#% an 3it,out
1r"jui!" to t," 1ro$isions o+ Arti!l" 1165. T,is
1r"su*1tion o"s not a11l# in !as" o+ "art,Eua<"% +loo%
stor*% or ot,"r natural !ala*it#.
CO&&ENT'
(1) Pr"su*1tion T,at Loss Ias Du" to D"btor8s Fault
Not" t,at t," "btor is 1r"su*" to b" at +ault. I+ a 1"rson
+or "4a*1l" is "ntrust" 3it, s"$"ral ,"as o+ !attl" an ,"
!annot a!!ount +or so*" *issing on"s% ," is 1r"su*" to b" at
+ault. (Pala!io $. Suario% C P,il. 6C52 s"" &ala#an Insuran!"
Co.% In!. $. &anila Port S"r$i!"% L.66C??% &a# 15% 1A6A).
(6) I,"n Pr"su*1tion Do"s Not A11l#
T," 1r"su*1tion o+ +ault o"s not a11l# in t," !as" o+ a
natural !ala*it#. Alt,oug, +ir" is not a natural !ala*it#% i+ a
t"nant is abl" to 1ro$" t,at t," +ir" !aus" in ,is a1art*"nt 3as
1ur"l# ACCIDENTAL% ," is NOT liabl". (LiHar"s $. H"rna"H M
Alunan% @? P,il. AB1).
Art. 1666. T," "btor in obligations to o s,all also b"
r"l"as" 3,"n t," 1r"station b"!o*"s l"gall# or 1,#si!all#
i*1ossibl" 3it,out t," +ault o+ t," obligor.
CO&&ENT'
(1) Loss in P"rsonal Obligations
T,is Arti!l" r"+"rs to a !as" 3,"n !o*1lian!" o+ a 1"rsonal
obligation b"!o*"s% 3it,out t," "btor8s +ault 0
(a) a l"gal i*1ossibilit#2
C65
Arts. 1665.1666
(b) or a 1,#si!al i*1ossibilit#.
C66
Art. 1666
(6) I,"n t," I*1ossibilit# &ust E4ist
T," i*1ossibilit# *ust b" AFTE5 t," !onstitution o+ t,"
obligation. I+ it 3as b"+or"% t,"r" is not,ing to "4tinguis,. (B
&anr"sa 95@). (Not" t," 3or -b"!o*"s/). H"n!"% i+ t," 1"r+or*.
an!" 3as i*1ossibl" rig,t at t," start% t," obligation *ust b"
r"gar" as VOID.
(9) E4a*1l"s o+ I*1ossibilit#
(a) L"gal i*1ossibilit#
T," +urnis,ing o+ 3or< on Suna#s 3,"n t," sa*"
is 1ro,ibit" b# la3 (Asia 7" Fa!tor# $. National 7"
Ior<"r8s ;nion% "t al.% L.A166% =an. 91% 1A5C)2 r"+usal o+ t,"
go$"rn*"nt to issu" a builing 1"r*it. (Tabora $. LaHatin%
L.56@5% &a# 6A% 1A59).
(b) P,#si!al i*1ossibilit#
To install a *otor in a s,i1 t,at 3as lost a+t"r t,"
1"r+"!tion o+ t," !ontra!t but 1rior to su!, installation.
(S"" &ilan $. 5io # Olabarri"ta% @5 P,il. C1B).
&ilan $. 5io # Olabarri"ta
@5 P,il. C1B
FACTS' A sol a ,al+.int"r"st in ,is *otorboat to 7. It 3as
agr"" t,at t," 1ri!" to b" 1ai b# 7 3oul b" us" in install.
ing a *otor on t," $"ss"l. Lat"r% t," $"ss"l 3as "stro#" b# a
+ortuitous "$"nt. Issu"' Is 78s obligation to 1a# t," 1ri!" "4tin.
guis,"J
HELD' 7 *ust still 1a# b"!aus" ,is obligation to 1a# is
g"n"ri!. T,is is so "$"n i+ t,"r" is no *or" us" o+ installing t,"
*otor sin!" t," boat ,as alr"a# b""n "stro#" b# t," +ortuitous
"$"nt. It s,oul b" not" ,"r" t,at it is not t," 1a#ing t,at ,as
b"!o*" i*1ossibl" (+or in""% it still is)2 it is *"r"l# t," a!t to
b" 1"r+or*" a+t"r t," 1a#ing t,at ,as b"!o*" i*1ossibl". T,us%
t," obligation or 1r"station (to 1a#) r"*ains.
(@) E++"!t o+ Subj"!ti$" I*1ossibilit#
I+ t," a!t is subj"!ti$"l# i*1ossibl" (+or t," "btor ,i*s"l+)
C6C
Art. 1666
but ot,"r3is" obj"!ti$"l# 1ossibl" (+or all ot,"rs)% is t," obliga.
tion "4tinguis,"J
C6B
Art. 166C
ANS.' It "1"ns. ;suall# t," obligation subsists (5"#"s
$. Calt"4% @C O.>. 11A9)% unl"ss 1"rsonal !onsi"rations ar"
in$ol$" su!, as 3,"n onl# a 1arti!ular !o*1an# is 1ro,ibit"
b# la3 to +urnis, 3or< on a !"rtain a#.
(5) E++"!t o+ Loss T,ru a Fortuitous E$"nt in 5"!i1ro!al
Obligations
(a) >"n"ral rul"' T," obligation t,at 3as not "4tinguis," b#
t," +ortuitous "$"nt r"*ains. (E4a*1l"' I+ a+t"r 1"r+"!tion a
builing t,at 3as sol is "stro#" b# lig,tning% t," bu#"r
*ust still 1a#% +or ," b"ars t," loss "$"n i+ t," builing
,a not #"t b""n "li$"r" to ,i*.) (S"" Art. 11A1% Ci$il
Co").
(b) E4!"1tions'
So*" "4!"1tions ar" 1ro$i" +or b# t," la3% su!,
as'
1) In t," !as" o+ l"as" 0 I+ t," obj"!t is "stro#"% bot,
t," l"as" an t," obligation to 1a# r"nt ar" "4tin.
guis,". (S"" Art. 1655% Ci$il Co").
6) In !ontra!ts +or a 1i"!" o+ 3or< 0 H"r"% t," 3or<"r
or !ontra!tor !annot su!!"ss+ull# as< +or t," 1ri!" i+
t," t,ing b" lost b# a +ortuitous "$"n 1rior to "li$"r#.
Not" ,"r" t,at t," ris< is on t," 3or<"r. (S"" Art.
1C1C% Ci$il Co").
(6) Partial I*1ossibilit#
Art. 166@ a11li"s to 1artial i*1ossibilit#.
Art. 166C. I,"n t," s"r$i!" ,as b"!o*" so i++i!ult as to
b" *ani+"stl# b"#on t," !ont"*1lation o+ t," 1arti"s% t,"
obligor *a# also b" r"l"as" t,"r"+ro*% in 3,ol" or in 1art.
CO&&ENT'
(1) E++"!t o+ Di++i!ult# 7"#on t," Parti"s8 Cont"*1lation
T,is Arti!l" r"+"rs to *oral i*1ossibilit# or i*1ra!ti!abil.
C6A
Art. 166C
it# u" to !,ang" o+ !"rtain !onitions (r"bus si! stantibus 0 a
tr"at# or agr""*"nt r"*ains $ali onl# i+ t," sa*" !onitions
C9?
Art. 166C
1r"$ailing at t," ti*" o+ !ontra!ting !ontinu" to "4ist at t," ti*"
o+ 1"r+or*an!").
FNOTE' T,is is also r"+"rr" to as t," o!trin" o+ -t," +rus.
tration o+ t," !o**"r!ial obj"!t/ (5" 7ais!," Co. F1A61G 6 C,.
Eng 991)% -+rustration o+ "nt"r1ris"./ (5"#"s an Puno% Outlin"
o+ Ci$il La3% Vol. IV% 1. 69A% !iting Corbin on Contra!ts% Vol. 6%
11. 1959.1961).G
(6) Non.A11li!abilit# to 5"al Obligations
It 3ill b" not" t,at Art. 166C s1"a<s o+ a -s"r$i!"/ 0 a
1"rsonal obligation. T,us% r"al obligations (-to gi$"/) ar" not in.
!lu" 3it,in its s!o1". I+ +or "4a*1l" a l"as" !ontra!t is "nt"r"
into +or sa# 6? #"ars at a +i4" r"ntal 1"r *ont,% 3oul t," l"ssor
b" justi+i" in in!r"asing sai r"nt to B??Q i+ t," ta4"s or ass"ss.
*"nts ar" also in!r"as" b# B??QJ It is sub*itt" t,at in $i"3
o+ t," "4ist"n!" o+ t," !ontra!t% no su!, in!r"as" !an b" "++"!t"
3it,out t," l"ss""8s !ons"nt. A+t"r all% t," in!r"as" in ta4"s or
in ass"ss*"nts !annot b" sai to b" -b"#on t," !ont"*1lation
o+ t," 1arti"s./ I+ u1on t," ot,"r ,an t," l"ss"" 3ill ,a$" ,is
o3n ,ous" !onstru!t" in sa# 5 #"ars% an 3ill% t,us% not n""
t," 1r"*is"s an#*or"% ," 3ill n"!"ssaril# still b" boun b# t,"
!ontra!tual agr""*"nt.
-T," g"n"ral rul" is t,at i*1ossibilit# o+ 1"r+or*an!"
r"l"as"s t," obligor. Ho3"$"r% it is sub*itt" t,at 3,"n t,"
s"r$i!" ,as b"!o*" so i++i!ult as to b" *ani+"stl# b"#on t,"
!ont"*1lation o+ t," 1arti"s% t," !ourt s,oul b" aut,oriH" to
r"l"as" t," obligor in 3,ol" or in 1art. T," int"ntion o+ t," 1ar.
ti"s s,oul go$"rn an i+ it a11"ars t,at t," s"r$i!" turns out
to b" so i++i!ult as to ,a$" b""n b"#on t,"ir !ont"*1lation%
it 3oul b" oing $iol"n!" to t,at int"ntion to ,ol t," obligor
still r"s1onsibl"./ (5"1ort o+ t," Co" Co**ission% 1. 199).
(@) E4a*1l"s o+ &oral I*1ossibilit#
T," ut# to !onstru!t a railroa 3,"n su!, !onstru!tion
3as 1ossibl" but $"r# ang"rous to li+" an 1ro1"rt#% is "4!us"
C91
Art. 166C
b# t," la32 t,"r"+or"% +ailur" to grin sugar !an" in $i"3 o+ t,"
non.!onstru!tion o+ t," railroa o"s NOT gi$" ris" to a*ag"s.
C96
Art. 166B
(B &anr"sa 955 an Laba#"n $. Talisa#.Sila# &illing Co.% 56
P,il. @@?). Ho3"$"r% i+ inst"a o+ "4tr"*" ang"r t,"r" is onl#
1ro$" t," "4ist"n!" o+ *"r" in!on$"ni"n!"% un"41"!t" i*1"i.
*"nts% or in!r"as" "41"ns"s% t," sa*" 3oul not b" "noug, to
r"li"$" a "btor +ro* ,is -ba bargain./ (Castro% "t al. $. Longa%
BA P,il. 5B1).
FNOTE' For Art. 166C to a11l#% t," +ollo3ing r"Euisit"s
*ust !on!ur'
(a) T," s"r$i!" *ust b"!o*" so i++i!ult t,at it 3as *ani.
+"stl# b"#on t," !ont"*1lation o+ 7OTH 1arti"s. (Art.
166C). T,us% it is not "noug, t,at n"it,"r 1art# a!tuall#
anti!i1at" or +or"sa3 t," i++i!ult#2 t," i++i!ult# !oul
not POSSI7LK ,a$" b""n anti!i1at" or +or"s""n.
(b) On" o+ t," 1arti"s *ust as< +or r"li"+. (TS% &a# 1C%
1A@1).
(!) T," obj"!t *ust b" a +utur" s"r$i!" 3it, +utur" unusual
!,ang" in !onitions. (Naturall#% an al"ator# !ontra!t or
on" "1"n"nt on !,an!"% in $i"3 o+ t," ris<s b"ing +or".
s""n% o"s not !o*" un"r t," s!o1" o+ Art. 166C).G
Art. 166B. I,"n t," "bt o+ a t,ing !"rtain an "t"r*i.
nat" 1ro!""s +ro* a !ri*inal o++"ns"% t," "btor s,all not
b" "4"*1t" +ro* t," 1a#*"nt o+ its 1ri!"% 3,at"$"r *a# b"
t," !aus" +or t," loss% unl"ss t," t,ing ,a$ing b""n o++"r"
b# ,i* to t," 1"rson 3,o s,oul r"!"i$" it% t," latt"r r"+us"
3it,out justi+i!ation to a!!"1t it.
CO&&ENT'
(1) E++"!t o+ Loss in Cri*inal O++"ns"s
(a) T,is Arti!l" gi$"s on" instan!" 3,"r" a +ortuitous "$"nt
o"s not "4tinguis, t," obligation.
(b) E4!"1tion' I,"n t," !r"itor (t," o++"n" 1art# in t,"
!ri*") is in &O5A ACCIPIENDI.
!ar stol"n to its o3n"r 7. I+% b"+or" t," !ar is "li$"r" to
@@5
Art. 166B
(6) Illustrati$" :u"stions
(a) A !o**its t," !ri*" o+ t,"+t% an is as<" to r"turn t,"
!ar stol"n to its o3n"r 7. I+% b"+or" t," !ar is "li$"r" to
@@5
Art. 166A
7% it is "stro#" b# +ortuitous "$"nt% is A8s liabilit# "4tin.
guis,"J
ANS.' No% A8s liabilit# is not "4tinguis,".
5"ason' A8s obligation to "li$"r t," !ar aros" +ro* a
!ri*inal o++"ns"% an in su!, a !as"% t," rul" is% ," is liabl"
"$"n i+ t," loss o!!urs b"!aus" o+ a +ortuitous "$"nt.
(b) Su11os" in Probl"* (a)% A ,a 1r"$iousl# as<" t," o3n"r
to a!!"1t t," !ar% but t," o3n"r 3it,out an# justi+iabl"
r"ason r"+us"s to a!!"1t t," !ar% o #ou b"li"$" A to still b"
r"s1onsibl" i+% l"t us sa#% t," !ar is lost lat"r b# a +ortuitous
"$"ntJ
ANS.' In t,is !as"% t," !ri*inal !oul no long"r b"
liabl" b"!aus" ,"r" t," !r"itor is in *ora a!!i1i"ni. T,is
is t," "4!"1tion to t," rul".
(!) I+ t," !r"itor r"+us"s to a!!"1t t," t,ing u" +ro* t,"
!ri*inal% 3,at s,oul t," latt"r oJ
ANS.' T," !ri*inal *a# "it,"r !onsign t," t,ing or
"ls" <""1 t," t,ing in ,is 1oss"ssion. I+ ," o"s t," latt"r
t,ing% ," is still oblig" to !ar" +or it 3it, u" ilig"n!"% but
t,is ti*" ," 3ill not b" liabl" i+ t," t,ing is lost t,roug, a
+ortuitous "$"nt. (6 &anr"sa 961).
Art. 166A. T," obligation ,a$ing b""n "4tinguis," b#
t," loss o+ t," t,ing% t," !r"itor s,all ,a$" all t," rig,ts o+
a!tion 3,i!, t," "btor *a# ,a$" against t,ir 1"rsons b#
r"ason o+ t," loss.
CO&&ENT'
(1) Trans+"r o+ 5ig,ts +ro* t," D"btor to t," Cr"itor in
Cas" o+ Loss
E4a*1l"'
!aus" ot,"r3is" S 3oul unul# 1ro+it in t,at ," 3ill gain t3o
@@6
Art. 166A
S is oblig" to "li$"r ,is !ar to 7. 7ut N "stro#s t," !ar.
7 ,as a rig,t to su" N. T," rig,t is gi$"n to 7 inst"a o+ S b".
!aus" ot,"r3is" S 3oul unul# 1ro+it in t,at ," 3ill gain t3o
@@6
Art. 16C?
t,ings' +irst% ,is obligation to gi$" t," !ar or its $alu" is alr"a#
"4tinguis,"2 s"!on% ," 3oul b" allo3" to r"!o$"r +ro* N. It
is ob$ious t,at S *ust not unul# 1ro+it at t," "41"ns" o+ 7.
(6) -5ig,ts o+ A!tion88
-5ig,ts o+ a!tion/ in!lu" t," insuran!" in"*nit# t,at
*a# ,a$" b""n r"!"i$". (S"" ;rrutia M Co. $. 7a!o 5i$"r
Plantation Co.% 66 P,il. 696).
;rrutia M Co. $. 7a!o 5i$"r Plantation Co.
66 P,il. 696
FACTS' A $"ss"l !olli" 3it, anot,"r $"ss"l. T," +irst
$"ss"l 3as at +ault% but it san<. Ho3"$"r% t," o3n"r o+ t," $"s.
s"l !oll"!t" insuran!". Issu"' Is t," insuran!" *on"# liabl" +or
t," a*ag"s sustain" b# t," s"!on $"ss"lJ
HELD' K"s. -T," $"ss"l lost 3as insur"% an t," "+"n.
ant !oll"!t" t," insuran!". T,at b"ing t," !as"% t," insuran!"
*on"# substitut"s t," $"ss"l% an *ust b" us"% so +ar as n"!"s.
sar#% to 1a# t," jug*"nt r"n"r" in t,is !as"./
S"!tion 9
CONDONATION O5 5E&ISSION OF THE DE7T
Art. 16C?. Cononation or r"*ission is "ss"ntiall#
gratui. tous% an r"Euir"s t," a!!"1tan!" b# t," obligor. It
*a# b" *a" "41r"ssl# or i*1li"l#.
On" an t," ot,"r <ins s,all b" subj"!t to t," rul"s
3,i!, go$"rn ino++i!ious onations. E41r"ss !ononation
s,all% +urt,"r*or"% !o*1l# 3it, t," +or*s o+ onation.
CO&&ENT'
(1) O5"*ission or Cononation8 D"+in"
C9C
Art. 16C?
It is -t," gratuitous abanon*"nt b# t," !r"itor o+ ,is
rig,t./ (@ San!,"H 5o*an @66).
C9B
Art. 16C?
(6) E4a*1l"
>loria o3"s Egaro P5.??. I,"n t," "bt *atur"
Egaro tol >loria t,at s," n"" not 1a# t," "bt sin!" ," 3as
!ononing it. >loria% in turn% "41r"ss" ,"r gratitu". H"r"% t,"
"bt ,as b""n "4tinguis," b# r"*ission.
(9) Ess"ntial 5"Euisit"s +or 5"*ission
(a) T,"r" *ust b" an agr""*"nt (sin!" a!!"1tan!" o+ t," o++"r
is r"Euir"). (Art. 16C?).
(b) T," 1arti"s *ust b" !a1a!itat" an *ust !ons"nt (t,"r".
+or"% it is b"#on t," 1o3"r o+ t," !ourts or o+ Congr"ss to
!onon" int"r"st unl"ss t," !r"itor !ons"nts). (7an"H $.
Koung% L.@695% O!t. 6C% 1A56).
(!) T,"r" *ust b" subj"!t *att"r (obj"!t o+ t," r"*ission
0 ot,"r3is"% t,"r" 3oul b" not,ing to !onon").
() T," !aus" or !onsi"ration *ust b" lib"ralit# (+or r"*ission
is ESSENTIALLK >5AT;ITO;S). (Ot,"r3is"% t," a!t
*a# b" a ation in 1a#*"nt% or a no$ation% or a !o*1ro.
*is".) (B &anr"sa 96A.99?).
(") T," obligation r"*itt" *ust ,a$" b""n "*anabl" at t,"
ti*" o+ r"*ission (ot,"r3is"% t," r"*ission is us"l"ss). (B
&anr"sa 99?).
(+) T," r"*ission *ust not b" ino++i!ious (ot,"r3is"% it 3oul
b" r"u!ibl"% so t,at t," l"giti*"s o+ t," !o*1ulsor# ,"irs
3oul not b" i*1air").
:;E5K' T," la3 *"ntions -ino++i!ious onations%/
but o"s not r"+"r to t," ot,"r grouns +or r"$o!ation o+
onations su!, as ingratitu". No3 t,"n% *a# t," r"*is.
sion b" r"$o<" on sai ot,"r grounsJ
ANS.' K"s% b"!aus" r"*ission is "ss"ntiall# a onation
(Castan)% "s1it" t," "4!lusi$" *"ntion o+ -ino++i!ious./
(g) For*aliti"s o+ a onation ar" r"Euir" in t," !as" o+ an
"41r"ss (not i*1li") r"*ission. (Art. 16C?).
E4a*1l"' A r"*ission o+ an obligation to gi$" lan
C9A
Art. 16C?
*ust b" in a 1ubli! instru*"nt in or"r to b" $ali. (Art.
C@A% Ci$il Co").
C@?
Art. 16C?
:;E5K' &a# an "41r"ss r"*ission "+"!ti$" in +or*
b" !onsi"r" an i*1li" r"*issionJ
ANS.' No% ot,"r3is"% t," r"Euir"*"nt o+ t," la3 on
"41r"ss r"*ission 3oul b" r"n"r" us"l"ss. T,us% an
"41r"ss r"*ission% not *a" in u" +or*% !annot a++"!t t,"
!r"itor i+ it is 3it,ra3n in u" ti*". It 3oul a++"!t ,i*
onl# 3,"n n"3 a!ts o+ 3ai$"r !on+ir* t," "41r"ss 1ur1os"
o+ t," +or*"r% as on" o+ t," bas"s on 3,i!, ta!it or i*1li"
r"*ission *a# r"st. (B &anr"sa 9@@).
(NOTE' I+ r"*ission is *a" in a 3ill% it is "ss"ntial
t,at t," 3ill b" VALID "4trinsi!all#% an P5O7ATED.
A+t"r all% su!, a r"*ission is *a" ENP5ESSLK. T," 3ill%
b" it r"*"*b"r"% a!tuall# 1arta<"s o+ a onation *ortis
!ausa.)
(,) Iai$"rs or r"*issions ar" not to b" 1r"su*" g"n"rall#.
T,"# *ust b" !l"arl# an !on$in!ingl# s,o3n% "it,"r b#
"41r"ss sti1ulation% or b# a!ts a*itting o+ no ot,"r r"a.
sonabl" "41lanation. (Arri"ta $. NA5IC% L.156@5% =an. 91%
1A6@).
(@) Class"s o+ 5"*ission
(a) As r"gars its "++"!t or "4t"nt'
1) total
6) 1artial (onl# a 1ortion is r"*itt" or t," r"*ission
*a# r"+"r onl# to t," a!!"ssor# obligations)
(b) As r"gars its at" o+ "++"!ti$it#'
1) int"r $i$os (uring li+")
6) *ortis !ausa (a+t"r "at,)
(T,is *ust ,a$" t," +or*aliti"s o+ a 3ill an t," 3ill
*ust b" 1robat".)
(!) As r"gars its +or*'
1) i*1li" or ta!it (t,is r"Euir"s no +or*alit#) (!onu!t
is su++i!i"nt)
6) "41r"ss or +or*al (t,is r"Euir"s t," +or*aliti"s o+ a
C@1
Art. 16C?
onation i+ int"r $i$os2 o+ a 3ill or !oi!il i+ *ortis
!ausa)
C@6
Art. 16C?
(5) 5"*ission &ust 7" >ratuitous
L#ri! Fil* E4!,ang" $. Co31"r
(C.A.) 96 O.>. 16@6
FACTS' A boug,t +urnitur" +ro* 7 on !r"it. On t," at"
o+ 1a#*"nt 7 tol A ," 3oul !onon" t," "bt 1ro$i" t,at
A 3oul r"turn t," +urnitur" 3,i!, ,as b""n +urnis," ,i*. A
agr"". Is t,"r" r"*ission ,"r"J
HELD' T," Court o+ A11"als sai t,at t,is is% stri!tl#
s1"a<. ing% not t," satis+a!tion o+ an obligation but t,"
!ononation or r"*ission o+ a "bt.
(NOTE' T,is s,oul b" r"all# !onsi"r" a !o*1ro*is"%
not a r"*ission +or it is not gratuitous.)
(6) E++"!t i+ 5"*ission Is Not A!!"1t" b# t," D"btor
T,is 3oul not b" r"*ission2 ,o3"$"r% i+ t," !r"itor o"s
not r"all# !oll"!t 3it,in t," Statut" o+ li*itations (1"rio o+
1r"s!ri1tion)% t," "bt *a# b" sai to ,a$" b""n "4tinguis,"
b# P5ESC5IPTION.
(C) I,at 5"*ission In!lu"s
Fran!is!o PuHon $. &ar!"lino >a"rlan% "t al.
L.1A5C1% D"!. 91% 1A65
FACTS' A !onjugal t3o.stor"# builing% o3n" b# a ,us.
ban an 3i+" li$ing s"1arat"l# +ro* "a!, ot,"r% 3as l"as" in
+a$or o+ !"rtain t"nants% but t," !ontra!t o+ l"as" sti1ulat" t,at
t," r"nts 3oul b" 1ai to t," ,usban alon". T," 3i+" su" +or
1art o+ sai r"ntals. In t," !ours" o+ t," trial% a !o*1ro*is" 3as
agr"" u1on b"t3""n t," s1ous"s to t," "++"!t t,at t," 3i+" 3oul
1a# t," ,usban P95%??? in !onsi"ration o+ a 3ai$"r *a" b#
t," ,usban to an# rig,t in sai 1ro1"rt# an to an# a!!ounting
o+ t," r"ntals t," 1ro1"rt# 3oul "arn. T," !o*1ro*is" 3as t,"n
a11ro$" b# t," !ourt. Issu"' Do"s t," 3ai$"r to t,is 1ro1"rt#
issol$" t," !onjugal 1artn"rs,i1 b"t3""n t," s1ous"sJ
C@9
Art. 16C?
HELD' No% +or t," 3ai$"r a11li"s onl# to t," 1ro1"rt#
*"ntion" in t," agr""*"nt. Iit, r"+"r"n!" to all ot,"r !onjugal
C@@
Art. 16C1
1ro1"rti"s% as 3"ll as +utur" 1ro1"rti"s% t," !onjugal 1artn"rs,i1
still r"*ains.
(B) I,"n Iai$"r or Abanon*"nt Is D"+"!ti$"
=o$"n!io Luansing $. P"o1l" o+ t,"
P,ili11in"s M Court o+ A11"als
L.696BA% F"b. 6B% 1A6A
FACTS' In a !ri*inal a!tion +or s"u!tion% t," o++"n"
1art# "41r"ssl# r"s"r$" t," rig,t to +il" a s"1arat" !i$il a!tion.
T," CFI (no3 5TC) +oun t," a!!us" guilt#% an i*1os" !i$il
liabiliti"s. No *otion +or r"!onsi"ration 3as +il" b# t," o+.
+"n" 1art#. Issu"' Ias t," i*1osition o+ !i$il liabilit# 1ro1"r%
"s1it" t," r"s"r$ationJ
HELD' No% t," i*1osition o+ t," !i$il liabilit# 3as not
1ro1"r b"!aus"'
(a) t,"r" 3as t," r"s"r$ation as to t," !i$il as1"!t2
(b) t," *"r" +ailur" to +il" a *otion +or r"!onsi"ration o"s
not n"!"ssaril# r"sult in 3ai$"r or abanon*"nt. Aban.
on*"nt r"Euir"s a *or" !on$in!ing Euantu* o+ "$i"n!"
t,an *"r" +orb"aran!" to a!tuall# +il" t," !i$il a!tion% "s.
1"!iall# 3,"n 3" !onsi"r t," +a!t t,at t," sa*" !oul b"
+il" "$"n a+t"r t," "!ision in t," !ri*inal !as" ,a b""n
r"n"r"2
(!) 1roo+ s,oul b" gi$"n 3it, r"s1"!t to t," a*ount.
Art. 16C1. T," "li$"r# o+ a 1ri$at" o!u*"nt "$i"n!.
ing a !r"it% *a" $oluntaril# b# t," !r"itor to t," "btor%
i*1li"s t," r"nun!iation o+ t," a!tion 3,i!, t," +or*"r
,a against t," latt"r.
I+ in or"r to nulli+# t,is 3ai$"r it s,oul b" !lai*"
to b" ino++i!ious% t," "btor an ,is ,"irs *a# u1,ol it b#
1ro$. ing t,at t," "li$"r# o+ t," o!u*"nt 3as *a" in
C@5
Art. 16C1
$irtu" o+ 1a#*"nt o+ t," "bt.
C@6
Art. 16C1
CO&&ENT'
(1) E++"!t o+ D"li$"r# o+ Pri$at" Do!u*"nt E$i"n!ing t,"
Cr"it
T," Arti!l" s1"a<s o+ a -1ri$at" o!u*"nt%/ not a 1ubli!
on" b"!aus" in t," !as" o+ t," latt"r% a !o1# is "asil# obtainabl"%
b"ing a 1ubli! r"!or. Not" t,at 3it, t," "li$"r# o+ t," 1ri$at"
instru*"nt% a r"*ission or r"nun!iation is 1r"su*".
(6) E4a*1l"
St"++i *a" a 1ro*issor# not" in +a$or o+ Agassi in t,"
a*ount o+ P1?? *illion. A+t"r so*" ti*"% Agassi $oluntaril#
"li$"r" t," 1ro*issor# not" to St"++i 3it,out !oll"!ting t,"
P1?? *illion. St"++i is no3 in 1oss"ssion o+ sai not". T,"r" is
a is1utabl" 1r"su*1tion t,at t,"r" ,as b""n a r"*ission. T,"
1r"su*1tion is *"r"l# is1utabl" an not !on!lusi$" b"!aus" it
*a# b" t,at t," instru*"nt 3as "li$"r" onl# +or "4a*ination
b# St"++i or +or !oll"!tion. (S"" Lo1"H Vito $. Ta*bunting% 99 P,il.
666).
(9) I*1li" 5"*ission
It s,oul b" not" t,at Art. 16C1 gi$"s us an "4a*1l" o+
an i*1li" r"*ission.
(NOTE' T," $oluntar# "stru!tion b# t," !r"itor o+ t,"
instru*"nt is li<"3is" anot,"r +or* o+ i*1li" r"*ission.)
FNOTE' 7ut t," *"r" +a!t t,at t," !r"itor ,as o*itt" a
!"rtain "bt or t," na*" o+ t," "btor +ro* an in$"ntor# *a"
b# ,i* o"s not i*1l# a ta!it r"*ission. (TS% No$. 1A% 1A15).G
(@) Fals",oo Not Allo3"
It *ust not b" t,oug,t t,at t," s"!on 1aragra1, allo3s a
+als",oo. T," "btor an ,is ,"irs no3 !lai* t,at t," instru.
*"nt 3as "li$"r" not b"!aus" o+ 1a#*"nt 7;T onl# 3,"n
in"" t,"r" 3as a 1a#*"nt. T," la3 *ust not b" !onstru" to
C@C
Art. 16C1
allo3 an i**oral a!tuation.
C@B
Art. 16C6
(5) Con+li!t o+ Pr"su*1tion
It s,oul b" not" li<"3is" t,at as b"t3""n t," 1r"su*1.
tion o+ r"*ission an t," 1r"su*1tion o+ 1a#*"nt% t," +irst
(r"*ission) orinaril# 1r"$ails.
Art. 16C6. I,"n"$"r t," 1ri$at" o!u*"nt in 3,i!, t,"
"bt a11"ars is +oun in t," 1oss"ssion o+ t," "btor% it s,all
b" 1r"su*" t,at t," !r"itor "li$"r" it $oluntaril#%
unl"ss t," !ontrar# is 1ro$".
CO&&ENT'
(1) Pr"su*1tion o+ Voluntar# D"li$"r#
(a) I,il" Art. 16C1 gi$"s a 1r"su*1tion o+ r"*ission% Art. 16C6
gi$"s a 1r"su*1tion o+ $oluntar# "li$"r#.
(b) Not" again ,"r" t,at t," la3 s1"a<s o+ a 1ri$at" o!u.
*"nt.
(!) T," 1r"su*1tion is is1utabl" or 1ri*a +a!i"% +or t," la3
its"l+ sa#s -until t," !ontrar# is 1ro$"./ (Art. 16C62 s""
Lo1"H Vito $. Ta*bunting% 99 P,il. 666).
Lo1"H Vito $. Ta*bunting
99 P,il. 666
FACTS' A o3" 7 a su* o+ *on"#. 7 s"nt a r"!"i1t sign"
b# ,i* to A t,roug, a !oll"!tor% 3,o 3as su11os" to !oll"!t a
"bt. A i not 1a#% ,o3"$"r% alt,oug, ," <"1t t," r"!"i1t. T,"
!r"itor (7) 3as abl" to 1ro$" t,at t," onl# r"ason ," ,a s"nt
t," r"!"i1t 3as to !oll"!t t," *on"#. Issu"' Is t,"r" r"*ission
,"r"J
HELD' No% t,"r" is no r"*ission ,"r"2 t," !r"itor ,as
b""n abl" to 1ro$" t," r"al r"ason 3,# t," "btor ,a in ,is
1oss"ssion t," r"!"i1t. H"n!"% t," 1r"su*1tion o+ r"*ission ,as
b""n o$"r!o*".
(6) 5ul" i+ t," Instru*"nt o+ Cr"it Is Still in Cr"itor8s
Hans
C@A
Art. 16C6
I+ t," instru*"nt o+ !r"it is still in t," ,ans o+ t," !r"i.
tor% t,is is "$i"n!" t,at t," "bt ,as not #"t b""n 1ai% unl"ss
C5?
Art. 16C9
t," !ontrar# b" +ull# 1ro$". (Toribio $. Fo4% 9@ P,il. A19). To
r"but t," 1r"su*1tion% orinaril#% a r"!"i1t o+ 1a#*"nt *ust
b" 1r"s"nt". (Pinon M &anala! $. Osorio% 9? P,il. 965).
(9) Pr"su*1tion in =oint or Soliar# Obligations E++"!t i+ t,"
obligation is joint% or i+ it is soliar#. E4a*1l"' A an 7
o3" C P1??%???% "$i"n!" b# a 1ri$at"
o!u*"nt.
(a) I+ t," 1ri$at" o!u*"nt is +oun in t," 1oss"ssion o+ A%
3,o is a joint "btor% 3,at is t," 1r"su*1tionJ
ANS.' T," 1r"su*1tion is t,at onl# A8s "bt ,as b""n
r"*itt".
5"ason' A8s "bt is not P1??%??? but onl# P5?%???2 in
ot,"r 3ors% ,is "bt is r"all# istin!t +ro* 78s "bt.
(b) I+ t," 1ri$at" o!u*"nt is +oun in t," 1oss"ssion o+ A 3,o
is a soliar# "btor% 3,at is t," 1r"su*1tionJ
ANS.' Sin!" t,is is a soliar# obligation% t," 1r"su*1.
tion is t,at t," 3,ol" obligation (not *"r"l# A8s s,ar") ,as
b""n r"*itt".
(!) In bot, !as"s% *a# t," 1r"su*1tion b" r"butt"J
ANS.' K"s% t," 1r"su*1tion in bot, !as"s !an b" o$"r.
!o*" b# su1"rior !ontrar# "$i"n!". (B &anr"sa 9CA).
Art. 16C9. T," r"nun!iation o+ t," 1rin!i1al "bt s,all
"4tinguis, t," a!!"ssor# obligation2 but t," 3ai$"r o+ t,"
latt"r s,all l"a$" t," +or*"r in +or!".
CO&&ENT'
(1) 5"nun!iation o+ Prin!i1al E4tinguis,"s A!!"ssor#% 7ut
Not Vi!".V"rsa
T,is +ollo3s t," rul" o+ -a!!"ssor# +ollo3s t," 1rin!i1al./
C51
Art. 16C9
(6) E4a*1l"
A r"*ission o+ t," 1"nalt# o"s not r"*it t," 1rin!i1al
C56
Arts. 16C@.16C5
obligation% but i+ t," 1rin!i1al "bt is !onon"% t," 1"nalt# is
also !onon".
Art. 16C@. It is 1r"su*" t,at t," a!!"ssor# obligation
o+ 1l"g" ,as b""n r"*itt" 3,"n t," t,ing 1l"g"% a+t"r
its "li$"r# to t," !r"itor% is +oun in t," 1oss"ssion o+ t,"
"btor% or o+ a t,ir 1"rson 3,o o3ns t," t,ing.
CO&&ENT'
(1) 5"*ission o+ Pl"g"
(a) Not" ,"r" t,at onl# t," a!!"ssor# obligation o+ 1l"g" is
1r"su*" r"*itt". T," 1rin!i1al obligation (t," loan)
r"*ains in +or!".
(b) T," 1r"su*1tion is onl# is1utabl"% +or t," "btor or
t," t,ir 1"rson *a# b" in 1oss"ssion o+ t," 1ro1"rt# b#
t,"+t or b"!aus" it ,a b""n s"nt +or r"1airs% or +or si*ilar
!aus"s.
(6) 5"ason +or t," Pr"su*1tion
It is "ss"ntial in 1l"g" t,at t," t,ing b" "li$"r" to t,"
!r"itor% or to a t,ir 1"rson b# !o**on agr""*"nt.
(9) Poss"ssion b# a T,ir P"rson
T," la3 sa#s -or o+ a t,ir 1"rson 3,o o3ns t," t,ing./
T,"r"+or"% i+ t," t,ir 1"rson o"s not o3n t," t,ing% t," 1r".
su*1tion o"s not aris". As a *att"r o+ +a!t% t," strang"r *a#
just ,a$" +oun it or it *a# ,a$" b""n "li$"r" to ,i* onl# +or
sa+"<""1ing.
S"!tion @
CONF;SION O5 &E5>E5 OF 5I>HTS
Art. 16C5. T," obligation is "4tinguis," +ro* t," ti*"
C59
Arts. 16C@.16C5
t," !,ara!t"rs o+ !r"itor an "btor ar" *"rg" in t," sa*"
1"rson.
C5@
Art. 16C5
CO&&ENT'
(1) O&"rg"r or Con+usion8 D"+in"
It is t," *""ting in on" 1"rson o+ t," Eualiti"s o+ !r"itor
an "btor 3it, r"s1"!t to t," sa*" obligation. (A@ San!,"H
5o*an @61).
(6) 5"ason or 7asis +or &"rg"r
I+ a "btor is ,is o3n !r"itor% "n+or!"*"nt o+ t," obliga.
tion b"!o*"s absur% sin!" on" !annot !lai* against ,i*s"l+. (B
&anr"sa 9@A).
(9) 5"Euisit"s o+ a Vali &"rg"r
(a) It s,oul ta<" 1la!" b"t3""n t," 1rin!i1al "btor an !r"i.
tor. T,"r"+or"% !on+usion o+ t," !r"itor 3it, t," 1"rson o+
t," guarantor o"s not "4tinguis, t," 1rin!i1al obligation.
(Art. 16C6). O+ !ours"% in a !as" li<" t,is% t," a!!"ssor#
obligation o+ guarant# is "4tinguis,".
T,"r"+or" also% t,"r" !an b" no !on+usion or *"rg"r i+
t," "btor an !r"itor r"1r"s"nt (i++"r"nt) jurii!al "nti.
ti"s "$"n i+ t," o++i!"rs o+ bot, ar" t," SA&E. (Da1isanan
ng *ga &anggaga3a sa &55 $. Cr"it ;nion% "t!.% L.
1@996% &a# 6?% 1A6?).
(b) T," *"rg"r *ust b" !l"ar an "+init". (T"stat" Estat" o+
&ota $. S"rra% @C P,il. @6@).
(!) T," $"r# obligation in$ol$" *ust b" t," sa*" or i"nti.
!al (b"!aus" i+ t," "btor a!Euir"s !"rtain rig,ts +ro* t,"
!r"itor 3it, r"s1"!t to ot,"r t,ings% t,"r" is no *"rg"r).
(T"stat" Estat" o+ &ota $. S"rra% @C P,il. @6@).
(NOTE' I+ an ,"ir is a "btor o+ t," "!"as"% *"rg"r
o"s not n"!"ssaril# +ollo3% +or ot,"r !r"itors *a# b"
1r"jui!".)
(@) E4a*1l" o+ &"rg"r
A *a<"s a !,"!< 1a#abl" to b"ar"r% an ,ans t," !,"!<
to C% 3,o ,ans it to D 3,o +inall# ,ans it to A. H"r" A o3"s
C55
Art. 16C5
,i*s"l+. T,is is a !l"ar !as" o+ *"rg"r% an ,"n!" t," obligation
o+ A is "4tinguis,".
C56
Art. 16C5
(5) E++"!t o+ Trans+"r o+ 5ig,ts
&"r" trans+"r to a t,ir 1"rson o+ rig,ts b"longing to bot,
t," "btor an t," !r"itor 7;T not t," !r"it as against t,"
"bt o"s not r"sult in *"rg"r. (T"stat" Estat" o+ &ota $. S"rra%
@C P,il. @6@).
E4a*1l"'
A an 7 3"r" !o.o3n"rs o+ a 1i"!" o+ 1ro1"rt# 3ort,
P1%???%???. For so*" r"1airs t,"r"on% 7 1ai P6??%???. 7"!aus"
t,"# 3"r" !o.o3n"rs% A ,a to s,ar" in sai "41"ns"s% an so
A o3" 7 P1??%???. A sol ,is s,ar" in t," 1ro1"rt# to C an
7 also sol ,is s,ar" in t," 1ro1"rt# to C. Lat"r 7 broug,t t,is
a!tion to r"!o$"r P1??%??? +ro* A. A !lai*" t,at sin!" C is no3
t," o3n"r o+ t," 1ro1"rt#% C o3"s ,i*s"l+% an t,"r"+or" sai
*"rg"r ,a "4tinguis," ,is "bt to 7. S,oul A 1a# 7J
ANS.' K"s% A s,oul 1a# 7% sin!" t,"r" 3as r"all# no *"rg"r
,"r". I,at ,a b""n sol to C 3"r" t," ,al+ s,ar"s o+ "a!, o+
t," !o.o3n"rs% or P5??%??? 3ort, o+ 1ro1"rt# +ro* "a!,. C i
not a!Euir" t," in"bt"n"ss o+ P1??%??? +or t," r"1airs% ,"n!"
t,"r" !an b" no *"rg"r 3it, r"+"r"n!" to t,at "bt. (As i*1li"
+ro* t," !as" o+ T"stat" Estat" o+ &ota $. S"rra% @C P,il. @6@).
(6) E4tin!tion o+ 5"al 5ig,ts
5"al rig,ts% su!, as usu+ru!t o$"r 1ro1"rt#% *a# b" "4tin.
guis," b# *"rg"r 3,"n t," na<" o3n"r ,i*s"l+ b"!o*" t,"
usu+ru!tuar#.
(NOTE' T,is is also "no*inat" -!onsoliation o+ o3n"r.
s,i1./)
E4a*1l"'
A ,a t3o brot,"rs 7 an C. A ga$" a 1ar!"l o+ lan to 7 in
usu+ru!t (rig,t to t," us" an rig,t to t," +ruits)% an t," sa*"
1ar!"l to C in na<" o3n"rs,i1. I+ lat"r C onat"s t," na<"
o3n"rs,i1 o+ t," lan to 7% 7 3ill no3 ,a$" t," +ull o3n"rs,i1
(,is o3n"rs,i1 is !onsoliat")% an it is as i+ *"rg"r ,a r".
sult".
(C) 5"$o!abilit# o+ Con+usion or &"rg"r
C5C
Art. 16C5
I+ t," r"ason +or t," !on+usion !"as"s% t," obligation is
5EVIVED.
C5B
Art. 16C6
(B) E++"!t i+ &ortgag"" 7"!o*"s t," O3n"r o+ t," &ortgag"
Pro1"rt#
I+ t," *ortgag"" b"!o*"s t," o3n"r o+ t," 1ro1"rt# t,at
,a b""n *ortgag" to ,i*% t," *ortgag" is naturall#
"4tinguis,"% but t," 1rin!i1al obligation *a# r"*ain. (S"" K"<
Ton Lin Fir" $. Kusing!o% 6@ P,il. 1?66).
E4a*1l"'
I borro3" P1%???%??? +ro* *# brot,"r% an as s"!urit#% I
*ortgag" *# lan in ,is +a$or. Lat"r I sol t," lan to ,i*.
T," *ortgag" is "4tinguis," but I still o3" ,i* P1%???%???.
(NOTE' Ha ," assign" ,is !r"it o+ P1%???%??? to a
+ri"n an t," +ri"n assign" t," !r"it to *"% bot, t,"
1rin!i1al obligation an t," *ortgag" ar" "4tinguis,".)
Art. 16C6. &"rg"r 3,i!, ta<"s 1la!" in t," 1"rson o+ t,"
1rin!i1al "btor or !r"itor b"n"+its t," guarantors. Con+u.
sion 3,i!, ta<"s 1la!" in t," 1"rson o+ an# o+ t," latt"r
o"s not "4tinguis, t," obligation.
CO&&ENT'
(1) E++"!t o+ &"rg"r on >uarantors
-A!!"ssor# +ollo3s t," 1rin!i1al/ (t," guarant# b"ing !on.
si"r" t," a!!"ssor# obligation)2 ,"n!"% i+ t,"r" is *"rg"r 3it,
r"s1"!t to t," 1rin!i1al "bt% t," guarant# is "4tinguis,"2 not"%
,o3"$"r% t," s"!on s"nt"n!" o+ t," Arti!l".
(6) E4a*1l"s
(a) A o3"s 7 PC??%???% guarant"" b# C. 7 assigns ,is !r"it
to N. N assigns t," !r"it to K. K assigns t," !r"it to A.
A8s obligation is "4tinguis," an C is r"l"as" +ro* ,is
obligation as guarantor.
(b) A o3"s 7 PC??%???% guarant"" b# C. 7 assigns ,is !r"it
to N. N assigns ,is !r"it to K. K assigns ,is !r"it to C%
t," guarantor. Do"s A still ,a$" to 1a# CJ
C5A
Art. 16C6
ANS.' K"s. Ho3"$"r% t," !ontra!t o+ guarant# is "4.
tinguis,"% but not A8s obligation to 1a# t," PC??%???.
C6?
Arts. 16CC.16CB
(9) Probl"*s
(a) A o3"s 7 3it, C8s lan gi$"n as s"!urit# b# 3a# o+ *ort.
gag". Lat"r 7 b"!o*"s t," o3n"r o+ on".t,ir o+ C8s lan
(sai on".t,ir s,ar" ,a$ing b""n sol or onat" to ,i*
b# C). Is t," *ortgag" "4tinguis,"J
ANS.' T," *ortgag" is "4tinguis," r"garing 78s
on".t,ir s,ar" o+ t," lan b"!aus" o+ *"rg"r. T,is is "$i.
"nt b"!aus" ot,"r3is"% i+ t," "bt is not 1ai% 7 3oul
,ol ,is o3n 1ro1"rt# as s"!urit# an t,is 3oul b" absur.
Ho3"$"r% t," *ortgag" !ontinu"s to subsist on t," t3o.
t,irs o+ t," lan still b"longing to C.
(b) Su11os" in t," 1r"!"ing 1robl"*% 7 b"!a*" t," o3n"r o+
t," 3,ol" o+ C8s lan% 3,at ,a11"ns to t," *ortgag"J
ANS.' For t," sa*" r"ason ,"r"inabo$" gi$"n% t,"
*ortgag" is !o*1l"t"l# "4tinguis,". Ho3"$"r% o"s A8s
"bt in +a$or o+ 7 still "4istJ T," ans3"r is "$i"ntl# KES%
+or "4tinguis,*"nt o+ t," a!!"ssor# obligation o"s not b#
its"l+ "4tinguis, t," 1rin!i1al obligation 3,i!, is t," loan.
T,is ti*"% ,o3"$"r% it 3oul b" a !as" o+ a loan 3it,out
s"!urit#.
Art. 16CC. Con+usion o"s not "4tinguis, a joint
obligation "4!"1t as r"gars t," s,ar" !orr"s1oning to t,"
!r"itor or "btor in 3,o* t," t3o !,ara!t"rs !on!ur.
CO&&ENT'
&"rg"r in =oint Obligations
A an 7 jointl# o3" C P1%???%???. I+ C assigns t," "ntir"
!r"it to A% A8s s,ar" is "4tinguis,"% but 78s s,ar" r"*ains. In
ot,"r 3ors% 7 3oul still o3" A t," su* o+ P5??%???. In a joint
obligation% t," "bts ar" istin!t an s"1arat" +ro* "a!, ot,"r.
S"!tion 5
CO&PENSATION
Art. 16CB. Co*1"nsation s,all ta<" 1la!" 3,"n t3o 1"r.
C61
Arts. 16CC.16CB
sons% in t,"ir o3n rig,t% ar" !r"itors an "btors o+ "a!,
ot,"r.
C66
Art. 16CB
CO&&ENT'
(1) OCo*1"nsation8 D"+in"
(a) -It is a sort o+ balan!ing (!u* 1on"r 0 Oto 3"ig, tog"t,"r8)
b"t3""n t3o obligations2 it in$ol$"s a +igurati$" o1"ration
o+ 3"ig,ing t3o obligations si*ultan"ousl# in or"r to
"4tinguis, t,"* to t," "4t"nt in 3,i!, t," a*ount o+ on"
is !o$"r" b# t," ot,"r./ (B &anr"sa 966).
(b) It is t," "4tinguis,*"nt in t," !on!urr"nt a*ount o+ t,"
obligations o+ t,os" 1"rsons 3,o ar" r"!i1ro!all# "btors
an !r"itors o+ "a!, ot,"r. (Castan% D"r"!,o% Ci$il Es.
1aPol% 1. 61).
(6) ;s"+uln"ss o+ Co*1"nsation
In "++"!t% it is a s1"!i" o+ abbr"$iat" 1a#*"nt 3,i!, gi$"s
to "a!, o+ t," 1arti"s a oubl" a$antag"'
(a) -+a!ilit# o+ 1a#*"nt2
(b) guarant# +or t," "++"!ti$"n"ss o+ t," !r"it b"!aus" i+ on"
o+ t," 1arti"s 1a#s "$"n 3it,out 3aiting to b" 1ai b# t,"
ot,"r% ," !oul "asil# b" *a" a $i!ti* o+ +rau or insol.
$"n!#.88 (Castan% D"r"!,o% Ci$il Es1aPol% 11. 61.66).
In""% it is si*1li+i" or abbr"$iat" 1a#*"nt% b".
!aus" t," t3o "bts ar" "4tinguis," 3it,out r"Euiring t,"
trans+"r o+ *on"# or 1ro1"rt# +ro* on" 1art# to t," ot,"r.
(TS% &a# 11% 1A66).
(NOTE' In ban<ing o1"rations% a -!l"aring ,ous"/
ta<"s !ar" o+ !o*1"nsation in ban<ing a!!ounts.)
(9) OCo*1"nsation8 Distinguis," +ro* OPa#*"nt8
(a) I,il" 1a#*"nt *ust b" !o*1l"t" an ini$isibl" as a rul"%
in !o*1"nsation% 1artial "4tinguis,*"nt is al3a#s 1"r*it.
t". (S"" B >"orgi% T"oria " las Obliga!ion"s% 11. 6@.65).
(b) I,il" 1a#*"nt in$ol$"s a!tion or "li$"r#% tru" !o*1"nsa.
tion (l"gal !o*1"nsation) ta<"s 1la!" b# o1"ration o+ la3.
C69
Art. 16CB
(@) OCo*1"nsation8 Distinguis," +ro* O&"rg"r8
(a) As to t," nu*b"r o+ 1"rsons'
C6@
Art. 16CB
In !on+usion% t,"r" is onl# on" 1"rson in 3,o* is
*"rg" t," Eualiti"s o+ !r"itor an "btor.
In !o*1"nsation% t,"r" *ust b" t3o 1"rsons 3,o ar"
*utuall# !r"itor an "btor to "a!, ot,"r.
(b) As to t," nu*b"r o+ obligations'
In !on+usion% t,"r" !an b" onl# on".
In !o*1"nsation% t,"r" *ust b" t3o.
(5) OCo*1"nsation8 Distinguis," +ro* OCount"r!lai*8 or
OS"t.o++8
(a) -A s"t.o++ or a !ount"r!lai* *ust b" 1l"a" to b" "++"!tual%
3,"r"as !o*1"nsation ta<"s 1la!" b# *"r" o1"ration o+
la3% an "4tinguis,"s r"!i1ro!all# t," t3o "bts as soon as
t,"# "4ist si*ultan"ousl#% to t," a*ount o+ t,"ir r"s1"!ti$"
su*s./ (11 La Ann% 56?2 16 La Ann% 1B12 !it" in t," !as"
o+ Ka1 ;n<i $. C,ua =a*!o% 1@ P,il. 6?6).
(b) A s"t.o++ or !ount"r!lai* 3or<s as a sort o+ jui!ial !o*.
1"nsation% 1ro$i" t,at t," r"Euir"*"nts o+ t," 5ul"s o+
Court% 1arti!ularl# on Count"r!lai*s anUor Cross.!lai*s
ar" obs"r$". (S"" S"!. 6% 5ul" A% 5"$is" 5ul"s o+ Court).
(6) Dins or Class"s o+ Co*1"nsation
(a) A!!oring to its "++"!t or "4t"nt'
(1) Total 0 i+ bot, obligations ar" !o*1l"t"l# "4tin.
guis," b"!aus" t,"# ar" o+ t," sa*" or "Eual
a*ounts.
(6) Partial 0 3,"n a balan!" r"*ains (,"n!"% t,"r" is a
1artial !o*1"nsation in t," larg"r o+ t," t3o "bts).
(b) A!!oring to its origin or !aus"'
1) L"gal 0 t,is ta<"s 1la!" b# o1"ration o+ la3% an n""
not b" 1l"a".
6) Voluntar# or !on$"ntional 0 t,is is u" to t," agr"".
C65
Art. 16CB
*"nt o+ t," 1arti"s.
C66
Art. 16CB
9) =ui!ial (also t"r*" -s"t.o++/) 0 t,is *ust b" 1l"a.
"2 it !an b" *a" "++"!ti$" onl# b# an or"r +ro* t,"
!ourt. (S"" Ka1 $. C,ua =a*!o% 1@ P,il. 6?62 S"" also
Art. 16B9% Ci$il Co").
@) Fa!ultati$" 0 ,"r"% on" o+ t," 1arti"s ,as t," !,oi!" o+
!lai*ing t," !o*1"nsation or o+ o11osing it (1"r,a1s
b"!aus" not all t," r"Euisit"s o+ l"gal !o*1"nsation
ar" 1r"s"nt).
E4a*1l" o+ Fa!ultati$" Co*1"nsation'
A o3"s 7 P1 *illion "*anabl" an u" on
=an. 16% 6??@. 7 o3"s A P1 *illion "*anabl" an
u" on or b"+or" =an. 91% 6??@. On =an. 16% 6??@ 7%
3,o 3as gi$"n t," b"n"+it o+ t," t"r*% *a# !lai*
!o*1"nsation b"!aus" ," !oul t,"n !,oos" to 1a#
,is "bt on sai at"% 3,i!, is -on or b"+or" =an. 91%
6??@./ I+% u1on t," ot,"r ,an A !lai*s !o*1"nsation%
7 !an 1ro1"rl# o11os" it b"!aus" 7 !oul not b" *a"
to 1a# until =an. 91% 6??@.
(NOTE' It s,oul b" obs"r$" t,at 3,il" +a!ulta.
ti$" !o*1"nsation is unilat"ral an o"s not r"Euir"
*utual agr""*"nt% $oluntar# or !on$"ntional !o*.
1"nsation r"Euir"s *utual !ons"nt.)
(C) I,"n Co*1"nsation Cannot E4ist
;n"r t," la3% t," t3o 1"rsons !on!"rn" ar" !r"itors an
"btors o+ "a!, ot,"r2 t,"r"+or"% a "btor o+ a !or1oration !annot
!o*1"nsat" ,is "bt 3it, ,is s,ar" o+ sto!< in t," !or1oration%
sin!" t," !or1oration is not !onsi"r" ,is "btor. (>ar!ia $.
Li* C,u Sing% 5A P,il. 566). It 3oul ,a$" b""n i++"r"nt ,a
t," !or1oration r"all# b""n ,is "btor as 3,"n ," ,a 1ai it a
su* gr"at"r t,an t," $alu" o+ ,is s,ar"s. (7ri*o $. >ol"nb"rg
an Co.% In!.% @? O.>. F6t, SG No. 1?% 1. 1AA).
>ar!ia $. Li* C,u Sing
5A P,il. 566
FACTS' D"+"nant is t," o3n"r o+ s,ar"s o+ sto!< o+ t,"
C6C
Art. 16CB
&"r!antil" 7an< o+ C,ina a*ounting to P1?%???. Lat"r% t," ".
+"nant borro3" *on"# +ro* t," 7an< a*ounting to PA%6?5.1C
C6B
Art. 16CB
3it, int"r"st t,"r"on at 6Q 1"r annu*. T," "bt 3as to b"
1ai in install*"nts. On" o+ t," !onitions o+ t," "bt !ontra!t
is t,at in !as" o+ t," "btor8s "+ault in t," 1a#*"nt o+ an# o+
t," install*"nts as t,"# b"!o*" u"% t," "ntir" a*ount or t,"
un1ai balan!" t,"r"o+ 3ill b"!o*" u" an 1a#abl" on "*an.
T," "+"nant "+ault" in t," 1a#*"nt o+ s"$"ral install*"nts
an 1lainti++ broug,t t,is a!tion to r"!o$"r t," un1ai balan!".
T," "+"nant 1l"a" !o*1"nsation. Issu"' Can "+"nant8s
"bt b" !o*1"nsat" 3it, t," s,ar"s o+ sto!< ," o3nsJ
HELD' T,"r" !an b" no !o*1"nsation b"!aus" r"garing
t," s,ar"s o+ sto!<% t,"r" is no r"lations,i1 o+ "btor an !r"i.
tor. Sai t," Su1r"*" Court'
-A sto!<,ol"r8s in"bt"n"ss to a ban<ing !or1oration
!annot b" !o*1"nsat" 3it, t," a*ount o+ ,is s,ar"s in t,"
sa*" institution% t,"r" b"ing no r"lation o+ !r"itor an "btor
3it, r"gars to su!, s,ar"s.88
-A!!oring to t," 3"ig,t o+ aut,orit#% a s,ar" o+ sto!< or
t," !"rti+i!at" t,"r"o+ is not an in"bt"n"ss to t," o3n"r nor
"$i"n!" o+ in"bt"n"ss% an% t,"r"+or"% it is not a !r"it. (1@
Cor1us =uris% 1. 9BB% S"!. 511). Sto!<,ol"rs% as su!,% ar" not
!r"itors o+ t," !or1oration. (1@ Cor1us =uris% 1. B@B% S"!. 16BA).
It is t," 1r"$ailing o!trin" o+ t," A*"ri!an !ourts% r"1"at.
"l# ass"rt" in t," broa"st t"r*s% t,at t," !a1ital sto!< o+ a
!or1oration is a trust +un to b" us" *or" 1arti!ularl# +or t,"
s"!urit# o+ t," !r"itors o+ t," !or1oration% 3,o 1r"su*abl# "al
3it, it on t," !r"it o+ its !a1ital sto!<. (1@ Cor1us =uris% 1. 9B9%
S"!. 5?5). T,"r"+or"% t," "+"nant.a11"llant Li* C,u Sing% not
b"ing a !r"itor o+ t," &"r!antil" 7an< o+ C,ina% alt,oug, t,"
latt"r is a !r"itor o+ t," +or*"r% t,"r" is no su++i!i"nt groun to
justi+# a !o*1"nsation./ (A!uPa Co C,ong!o $. Di"$as% 16 P,il.
65?).88
7ri*o $. >ol"nb"rg an Co.% In!.
6A P,il. 5?6
FACTS' 7ri*o 3as a sto!<,ol"r an a tr"asur"r o+ a !or.
1oration. 7ri*o 1ai a su* gr"at"r t,an t," $alu" o+ ,is s,ar"s%
C6A
Art. 16CB
an 3as t,"r"+or" a !r"itor to t,at "4t"nt (t," "4!"ss% but not
as to t," $alu" o+ t," s,ar"s% +or ,"r"% ," is not a !r"itor). As
CC?
Art. 16CB
tr"asur"r% 7ri*o o3" t," !or1oration a !"rtain su*. Issu"'
&a# 7ri*o8s !r"it b" !o*1"nsat" 3it, ,is in"bt"n"ss as
tr"asur"rJ
HELD' K"s% b"!aus" bot, ar" "bts an !r"its.
Fran!ia $. IAC
>5 6C6@A% =un. 6B% 1ABB
Int"rnal r"$"nu" ta4"s !annot b" t," subj"!t o+ !o*1"n.
sation. 5"ason' go$"rn*"nt an ta41a#"r -ar" not *utuall#
!r"itors o+ "a!, ot,"r/ un"r Art. 16CB o+ t," Ci$il Co" an a
-!lai* +or ta4"s is not su!, a "bt% "*an% !ontra!t or jug*"nt
as is allo3" to b" s"t.o++.88
T,"r" !an b" no o++s"tting o+ ta4"s against t," !lai*s t,at
t," ta41a#"r *a# ,a$" against t," go$"rn*"nt. A 1"rson !annot
r"+us" to 1a# a ta4 on t," groun t,at t," go$"rn*"nt o3"s ,i*
an a*ount "Eual to or gr"at"r t,an t," ta4 b"ing !oll"!t". T,"
!oll"!tion o+ a ta4 !annot a3ait t," r"sult o+ a la3suit against
t," go$"rn*"nt.
Tan $. &"n"H
>5 19B66A% =un. 6% 6??6
FACTS' T," *"*oranu* s,o3s t,at so*" un"n!as,"
!,"!<s r"turn" to r"s1on"nt to all"g"l# o++s"t t," is,onor"
!,"!< 3"r" +ro* t," 7aao ti!<"t sal"s 3,i!, ar" s"1arat" +ro*
t," ti!<"t sal"s o+ r"s1on"nt. H"r"% r"s1on"nt onl# a!t" as
an int"r*"iar# in r"*itting t," 7aao ti!<"t sal"s.
HELD' 7"!aus" o+ r"s1on"nt8s rol" as *"r" int"r*"iar#%
," is not a "btor o+ 1"tition"rs. No !o*1"nsation !an ta<" 1la!"
b"t3""n 1"tition"rs an r"s1on"nt as t," latt"r is not a "btor
o+ t," +or*"r inso+ar as t," t3o !,"!<s r"1r"s"nting !oll"!tions
+ro* t," 7aao ti!<"t sal"s ar" !on!"rn".
Carlos $. Ab"laro
>5 1@65?@% A1r. A% 6??6
FACTS' D"+"nant.,usban in in$o<ing t," "+"ns"
CC1
Art. 16CB
o+ !o*1"nsation argu"s t,at i+ in"" ," an ,is s1ous" ar"
in"bt" to 1lainti++% t," latt"r !oul ,a$" a11li" t,"ir s,ar"
CC6
Art. 16CA
in t," 1ro!""s or in!o*" o+ t," !or1oration to t," !on!urr"nt
a*ount o+ t," all"g" loan% inst"a o+ gi$ing t," a*ount o+ P9
*illion to t,"*. Issu"' Is t,is argu*"nt t"nabl"J
HELD' T,is argu*"nt is unt"nabl". As Art. 16CB ini!at"s%
!o*1"nsation is a sort o+ balan!ing b"t3""n t3o obligations. In
t," instant !as"% !o*1"nsation is a sort o+ balan!ing b"t3""n
t3o obligations. In t," instant !as"% 1lainti++ an "+"nant.
,usban ar" not "btors an !r"itors o+ "a!, ot,"r. E$"n
granting t,at t," "+"nant.,usban8s !lai* to t," 1ro+its o+
t," !or1oration is justi+i"% still !o*1"nsation !annot "4tinguis,
,is loan obliga. tion to 1lainti++ b"!aus" un"r su!, assu*1tion%
t," "+"nant is "aling 3it, t," !or1oration an not 3it, t,"
1lainti++ in ,is 1"rsonal !a1a!it#. H"n!"% !o*1"nsation !annot
ta<" 1la!".
Art. 16CA. In or"r t,at !o*1"nsation *a# b" 1ro1"r% it
is n"!"ssar#'
(1) T,at "a!, on" o+ t," obligors b" boun 1rin!i1all#%
an t,at ," b" at t," sa*" ti*" a 1rin!i1al !r"itor o+ t,"
ot,"r2
(6) T,at bot, "bts !onsist in a su* o+ *on"#% or i+ t,"
t,ings u" ar" !onsu*abl"% t,"# b" o+ t," sa*" <in% an
also o+ t," sa*" Eualit# i+ t," latt"r ,as b""n stat"2
(9) T,at t," t3o "bts b" u"2
(@) T,at t,"# b" liEuiat" an "*anabl"2
(5) T,at o$"r n"it,"r o+ t,"* t,"r" b" an# r"t"ntion
or !ontro$"rs#% !o**"n!" b# t,ir 1"rsons an
!o**uni!at" in u" ti*" to t," "btor.
CO&&ENT'
(1) L"gal Co*1"nsation or Co*1"nsation b# O1"ration o+
La3
T," r"Euisit"s "nu*"rat" un"r Art. 16CA ar" t,os"
CC9
Art. 16CA
+or LE>AL !o*1"nsation2 $oluntar# !o*1"nsation in g"n"ral
r"Euir"s no r"Euisit" "4!"1t t,at t," agr""*"nt b" $oluntaril#
an $alil# "nt"r" into.
CC@
Art. 16CA
(6) A++ir*ati$" 5"Euisit"s +or L"gal Co*1"nsation
It"*s (1)% (6)% (9) an (@) o+ Art. 16CA ar" t," a++ir*ati$"
r"Euisit"s.
(9) N"gati$" 5"Euisit"s +or L"gal Co*1"nsation
(a) O$"r n"it,"r o+ t," "bts *ust t,"r" b" an# r"t"ntion or
!on. tro$"rs# !o**"n!" b# t,ir 1"rsons an
!o**uni!at" in u" ti*" to t," "btor. (Par. 5% Art.
16CA). T,us% t,"r" !an b" no l"gal !o*1"nsation 3,"n
on"8s !lai* against anot,"r is still t," subj"!t o+ !ourt
litigation. (&iail," $. Halili% L.165BC% O!t. 91% 1A66).
(b) T,"r" *ust ,a$" b""n no 3ai$"r o+ t," !o*1"nsation (su!,
3ai$"r !oul ,a$" b""n $alil# agr"" on% sin!" t,is 3oul
not b" !ontrar# to 1ubli! 1oli!#). (&anr"sa).
(!) T," !o*1"nsation o+ t," "bts *ust not ,a$" b""n 1ro.
,ibit" b# la3. T," !o*1"nsation o+ t," +ollo3ing ar"
1ro,ibit"'
1) "bts arising +ro* a "1ositu* ("4!"1t ban< "1osits%
3,i!, ar" b# la3 !onsi"r" as loans to t," ban<) (Art.
16BC2 Art. 1AB?% Ci$il Co")2
6) "bts arising +ro* t," obligations o+ a "1ositor# (Art.
16BC% Ci$il Co")2
9) "bts arising +ro* t," obligations o+ a bail"" in !o*.
*oatu* (li<" t," borro3"r o+ a bi!#!l") (Art. 16BC%
Ci$il Co")2
@) "bts arising +ro* a !lai* +or +utur" su11ort u" b#
gratuitous titl" (Art. 16BC% Ci$il Co")2
5) "bts !onsisting in !i$il liabilit# arising +ro* a 1"nal
o++"ns" (Art. 16BB% Ci$il Co")2
6) a*ag"s su++"r" b# a 1artn"rs,i1 t,ru t," +ault o+
a 1artn"r !annot b" !o*1"nsat" 3it, 1ro+its an
b"n"+its 3,i!, ," *a# ,a$" "arn" +or t," 1artn"r.
s,i1 b# ,is inustr#. (Art. 1CA@% Ci$il Co"). 5"asons'
Sin!" t," 1artn"r ,as t," ut# to obtain b"n"+its +or
CC5
Art. 16CA
t," +ir*% an a ut# not to b" at +ault% t,"r" !an b" no
!o*1"nsation b"!aus" bot, ar" uti"s% an t," 1art.
CC6
Art. 16CA
n"r is t," "btor in bot, instan!"s. (S"" 11 &anr"sa
9CC).
FNOTE' T," !ourts *a#% ,o3"$"r% "Euitabl#
l"ss"n t,is r"s1onsibilit# o+ t," 1artn"r% i+% t,ru t,"
1artn"r8s "4traorinar# "++orts in ot,"r a!ti$iti"s o+
t," 1artn"rs,i1% unusual 1ro+its ,a$" b""n r"aliH".
(Art. 1CA@% Ci$il Co").G
(@) T," First A++ir*ati$" 5"Euisit"
-T,at "a!, o+ t," obligors b" boun 1rin!i1all#% an t,at
," b" at t," sa*" ti*" a 1rin!i1al !r"itor o+ t," ot,"r./
(a) Firstl#% t,"r" *ust b" a r"lations,i1 o+ "btor an !r"i.
tor.
(b) S"!onl#% t,"r" *ust b" t3o "bts an t3o !r"its.
(!) T,irl#% t,"# *ust g"n"rall# b" boun as 1rin!i1als (an
not in t,"ir r"1r"s"ntati$" !a1a!it#).
E4a*1l"'
>% as guarian +or I% is a !r"itor o+ D. D in turn is a
!r"itor o+ > 3,o o3"s ,i* a 1"rsonal "bt. T,"r" !an b"
NO !o*1"nsation b"!aus" it is I 3,o is t," r"al !r"itor%
not >.
Anot,"r "4a*1l"'
A% "btor o+ t3o 1artn"rs% !annot !o*1"nsat" t," "bt
3it, 3,at t," 1artn"rs,i1 its"l+ o3"s ,"r. (Es!ano $. H"irs
o+ Es!ano% 6B P,il. C9).
Anot,"r "4a*1l"'
A "btor o3"s a !r"itor P1 *illion but t," !r"itor
o3"s t," "btor8s guarantor P1 *illion. T," "btor !annot
!lai* !o*1"nsation. (HOIEVE5% a guarantor *a# s"t
u1 !o*1"nsation as r"gars 3,at t," !r"itor *a# o3"
t," 1rin!i1al "btor. T," r"ason is si*1l"' I+ t," 1rin!i1al
obligation is "4tinguis,"% t," a!!"ssor# obligation o+ guar.
CCC
Art. 16CA
ant# is also "4tinguis,".) (S"" Art. 16B?% Ci$il Co").
CCB
Art. 16CA
(5) T," S"!on A++ir*ati$" 5"Euisit"
-T,at bot, "bts !onsist in a su* o+ *on"#% or i+ t," t,ings
u" ar" !onsu*abl" (+ungibl")% t,"# b" o+ t," sa*" <in% an
also o+ t," sa*" Eualit# i+ t," latt"r ,as b""n stat"./
(a) T," 3or -!onsu*abl"/ *ust b" ta<"n to *"an -+ungibl"/
(sus!"1tibl" o+ substitution% i+ su!, b" t," int"ntion).
(b) E4a*1l"'
A o3"s 7 a +ountain 1"n (g"n"ri!). 7 o3"s A also a
+ountain 1"n (g"n"ri!). T,"r" !an b" !o*1"nsation ,"r"
b"!aus" t," obj"!ts ar" +ungibl" (alt,oug, not !onsu*.
abl").
FNOTE' Ha s1"!i+i! +ountain 1"ns b""n agr"" u1on%
t,"r" !an b" no !o*1"nsation (l"gal !o*1"nsation).G
FNOTE' T"n sa!<s o+ !orn !annot b" !o*1"nsation
(l"gal !o*1"nsation) +or t"n sa!<s o+ ri!".G
(6) T," T,ir A++ir*ati$" 5"Euisit"
-T,at t," t3o "bts b" u"./
(a) -Du"/ *"ans t,at t," 1"rio ,as arri$"% or t," !onition
,as b""n +ul+ill". On t," ot,"r ,an% -"*anabl"/ *a#
r"+"r to t," +a!t t,at n"it,"r o+ t," "bts ,as 1r"s!rib"%
or t,at t," obligation is not in$ali or ill"gal.
(b) Solita o3"s E*uno P1 *illion 1a#abl" A1r. 1% 6??5.
E*uno o3"s Solita P1 *illion 1a#abl" =un. B% 6??5. Can
t,"r" b" l"gal !o*1"nsation on A1r. 1% 6??5J
ANS.' No% +or on" o+ t," "bts is not #"t u". Ho3"$"r%
t,"r" !an b" $oluntar# !o*1"nsation u1on agr""*"nt. (S""
Art. 16B6% Ci$il Co").
(C) T," Fourt, A++ir*ati$" 5"Euisit"
-T,at t,"# b" liEuiat" an "*anabl"./
(a) For t," *"aning o+ -"*anabl"%/ s"" !o**"nt No. 6(a).
(b) I+ on" o+ t," "bts ,as alr"a# 1r"s!rib"% t,"r" !an b" no
CCA
Art. 16CA
!o*1"nsation (B &anr"sa @11) +or t," si*1l" r"ason t,at
sai "bt is no long"r "*anabl".
CB?
Art. 16CA
(!) -LiEuiat"/ "bts ar" t,os" 3,"r" t," "4a!t a*ount ,as
alr"a# b""n "t"r*in"% t,oug, not n"!"ssaril# in +igur"s
sin!" !a1a!it# o+ b"ing arri$" at b# si*1l" arit,*"ti!al
1ro!"ss"s 3oul b" "noug,. I+ a*ag"s ar" as<" +or% an
t," a*ount is is1ut"% t," "bt !annot b" sai to b" al.
r"a# a -liEuiat"/ on". (Co*1ania >"n"ral " Taba!os
$. Fr"n!, an ;nson% 9A P,il. 9@). On!" liEuiat" b# a
jug*"nt% ,o3"$"r% a s"t.o++ as<" +or in a !ount"r!lai*
3oul b" 1ro1"r. (B &anr"sa @?A.@1?).
Co*1ania >"n"ral " Taba!os $.
Fr"n!, an ;nson
9A P,il. 9@
FACTS' A 1ri$at" !o**on !arri"r trans1ort" gasolin"
+or t," go$"rn*"nt (7ur"au o+ Su11l#) +or P966.A9. T," Aui.
tor >"n"ral% ,o3"$"r% 3ant" to "u!t +ro* sai a*ount t,"
a*ag"s t," !arri"r ,a !aus" to t," !argo o+ gasolin"% but
sai a*ag"s 3"r" still un"t"r*in" an unliEuiat". Issu"'
Is a s"t.o++ 1ro1"rJ
HELD' T,"r" !an b" NO s"t.o++ or !o*1"nsation +or t,"
all"g" a*ag" !aus" 3as still unliEuiat"% an !oul not #"t
t,"r"+or" b" s"t.o++ against t," go$"rn*"nt liabilit#. -;nliEui.
at" a*ag"s/ !annot b" sai to b" -"bts/ o3ing t," go$"rn.
*"nt.
Salina1 $. =ug" "l 5osario
>5 5?69B% =ul. 65% 1AB9
Co*1"nsation ta<"s 1la!" onl# i+ bot, obligations ar" liE.
uiat". T,"r"+or"% it !annot ta<" 1la!" i+ on"8s !lai* against
t," ot,"r is still t," subj"!t o+ !ourt litigation.
P"r"H $. Court o+ A11"als
L.561?1% F"b. 6?% 1AB@
I+ t," loan instru*"nts int"n" to b" s"t o++ against "a!,
CB1
Art. 16CA
ot,"r ar" not #"t u" an "*anabl"% t,"r" !annot b" !o*1"n.
sation.
CB6
Art. 16B?
(B) T," First N"gati$" 5"Euisit"
-T,at o$"r n"it,"r o+ t," "bts *ust t,"r" b" an# r"t"ntion
or !ontro$"rs# !o**"n!" b# t,ir 1"rsons an !o**uni!at"
in u" ti*" to t," "btor./
E4a*1l"'
A o3"s 7 P1??%???% an 7 o3"s A P1??%???% but A8s !r"it
o+ P1??%??? ,as b""n garnis," b# C 3,o !lai*s to b" an un1ai
!r"itor o+ A. 7 ,as b""n ul# noti+i" o+ t," !ontro$"rs#. T,"r"
!an b" NO !o*1"nsation ,"r". (S"" 5ul" 5C% S"!. B% 5"$is"
5ul"s o+ Court on >arnis,*"nt). An# 1ossibl" !o*1"nsation is
in t," *"anti*" sus1"n". I+ C 3ins ,is !lai*% t,"r" !an b"
no !o*1"nsation2 i+ ," los"s% t," !ontro$"rs# is r"sol$"% an
!o*1"nsation !an ta<" 1la!". (B &anr"sa @?C).
Art. 16B?. Not3it,staning t," 1ro$isions o+ t," 1r"!".
ing arti!l"% t," guarantor *a# s"t u1 !o*1"nsation as
r"gars 3,at t," !r"itor *a# o3" t," 1rin!i1al "btor.
CO&&ENT'
(1) >uarantor &a# S"t ;1 Co*1"nsation Iit, 5"s1"!t to
Prin!i1al D"bt
(a) T,is is an "4!"1tion to Art. 16CA% 1ar. 1% b"!aus" a guaran.
tor is S;7SIDIA5ILK% not 1rin!i1all#% boun.
(b) 5"ason +or t," la3' E4tinguis,*"nt (1artial or total) o+
1rin!i1al obligation "4tinguis,"s (1artiall# or totall#) t,"
guarant# (3,i!, is *"r"l# an a!!"ssor# obligation).
(6) E4a*1l"s
(a) A o3"s 7 P5??%???. C is t," guarantor o+ A. 7 o3"s A
P1??%???. I,"n 7 su"s A an A !annot 1a#% +or ,o3 *u!,
3ill C b" liabl"J
ANS.' C 3ill b" liabl" +or onl# P@??%???% b"!aus" ," !an
s"t u1 t," P1??%??? !r"it o+ A as t," basis +or 1artial
!o*1"nsation.
CB9
Art. 16B?
(b) A o3"s 7 P5??%???. C is t," guarantor o+ A. 7 o3"s C
P5??%???. I,"n 7 su"s A +or t," P5??%???% *a# A su!!"ss.
CB@
Arts. 16B1.16B9
+ull# 1ut u1 t," "+"ns" o+ !o*1"nsation in t,at% a+t"r all%
,is !r"itor (7) o3"s C t," sa*" a*ountJ
ANS.' T,"r" !an b" no !o*1"nsation ,"r" b"!aus"
in t," obligation 3,i!, C guarant"" +or A% ," (C) is not
boun in ,is o3n rig,t. N"it,"r is A t," !r"itor o+ 7.
(NOTE' I+ A !annot 1a# an 7 su"s t," guarant#% C
3ill not b" liabl" an#*or" b"!aus" t," obligation o+ guar.
ant# ,as b""n "4tinguis," b# !o*1"nsation.)
Art. 16B1. Co*1"nsation *a# b" total or 1artial. I,"n
t," t3o "bts ar" o+ t," sa*" a*ount% t,"r" is a total
!o*1"nsa. tion.
CO&&ENT'
Total or Partial Co*1"nsation
T," Arti!l" is tru" +or all t," i++"r"nt <ins o+ !o*1"nsa.
tion% 3,"t,"r $oluntar#% l"gal% "t!.
Art. 16B6. T," 1arti"s *a# agr"" u1on t," !o*1"nsation
o+ "bts 3,i!, ar" not #"t u".
CO&&ENT'
Con$"ntional or Voluntar# Co*1"nsation
(a) T,is a11li"s to !on$"ntional or $oluntar# !o*1"nsation.
(b) As a *att"r o+ +a!t% t," r"Euisit"s *"ntion" in Art. 16CA
o not a11l#.
(!) It is su++i!i"nt in !on$"ntional !o*1"nsation t,at t," agr"".
*"nt or !ontra!t 3,i!, "!lar"s t," !o*1"nsation s,oul
its"l+ b" $ali2 t,us a*ong ot,"r t,ings% t," 1arti"s *ust
,a$" l"gal !a1a!it# an *ust +r""l# gi$" t,"ir !ons"nt.
Art. 16B9. I+ on" o+ t," 1arti"s to a suit o$"r an
obligation ,as a !lai* +or a*ag"s against t," ot,"r% t,"
CB5
Arts. 16B1.16B9
+or*"r *a# s"t it o++ b# 1ro$ing ,is rig,t to sai a*ag"s
an t," a*ount t,"r"o+.
CB6
Art. 16B9
CO&&ENT'
(1) =ui!ial Co*1"nsation or S"t.o++
(a) T,is r"+"rs to jui!ial !o*1"nsation or s"t.o++. Pl"aing
an 1roo+ o+ t," !ount"r!lai* *ust b" *a".
(b) All t," r"Euisit"s *"ntion" in Art. 16CA *ust b" 1r"s"nt%
"4!"1t t,at at t," ti*" o+ 1l"aing% t," !lai* n"" not #"t
b" liEuiat". T," liEuiation (or +i4ing o+ t," 1ro1"r su*)
*ust b" *a" in t," 1ro!""ings.
(!) ;nl"ss 1l"aing an 1roo+ ar" *a"% t," !ourt !annot o+
its o3n a!!or "!lar" t," !o*1"nsation. T,is is b"!aus" o+
-t," su11li!ator# !,ara!t"r o+ our !i$il 1ro!"ur"./ (5"#"s M
Puno% Outlin" o+ Ci$il La3% Vol. IV% 1. 156% !iting Castan%
D" 7u"n). T," !o*1"nsation ta<"s 1la!" b# t," jug*"nt%
as to t," at" t," !o*1"nsation 3as 1l"a". (5"#"s M
Puno% i.).
(6) =urisi!tion o+ t," Court 5"garing t," Valu" o+ t,"
D"*an
>"n"ral 5ul"' T," jurisi!tion o+ t," !ourt "1"ns u1on
t," totalit# o+ t," "*an in all t," !aus"s o+ a!tion% irr"s1"!ti$"
o+ 3,"t,"r t," 1lural !as"s aros" out o+ t," sa*" or i++"r"nt
transa!tions. (Soriano $. O*ilia% 51 O.>. No. C% 1. 9@65 an
Ca*1os 5u"a Cor1oration $. Sta. CruH Ti*b"r Co.% 56 O.>.
No. 9% 1. 19BC).
E4!"1tions'
(a) I,"r" t," !lai* join" un"r t," sa*" !o*1laint ar"
s"1arat"l# o3" b#% or u" to% i++"r"nt 1arti"s% in 3,i!,
!as" "a!, s"1arat" !lai* +urnis,"s t," jurisi!tional t"st.
(ArgonHa% "t al. $. Int"rnational Coll"g"s% L.9BB@% No$. 6A%
1A51 an Soriano # Cia $. San =os"% @C O.>. 16t, Su11.%
1. 156).
(b) I,"r" not all t," !aus"s o+ a!tion join" ar" "*ans or
!lai*s +or *on"#. (F"li4 Va. " 5osario $. =usti!" o+ t,"
P"a!" o+ Ca*iling% "t al.% L.A6B@% =ul. 91% 1A56% 56 O.>.
No. 5156).
CBC
Art. 16B9
FNOTE' Cons"Eu"ntial a*ag"s an attorn"#8s +""s%
3,"n 1ro1"rl# !lai*" an r"!o$"rabl" as an it"* o+
CBB
Arts. 16B@.16B5
a*ag"% ar" not "4!lu" +ro* t," jurisi!tional a*ount.
(Suan"s $. Al*"a.Lo1"H% C9 P,il. 5C9).G
Art. 16B@. I,"n on" or bot, "bts ar" r"s!issibl" or $oi.
abl"% t,"# *a# b" !o*1"nsat" against "a!, ot,"r b"+or"
t,"# ar" jui!iall# r"s!in" or a$oi".
CO&&ENT'
(1) Co*1"nsation in t," Cas" o+ 5"s!issibl" or Voiabl"
D"bts
5"s!issibl" or $oiabl" "bts ar" $ali until r"s!in" or
$oi"2 ,"n!"% !o*1"nsation is allo3".
(6) Pr"$"ntion o+ ;n+airn"ss
To a$oi un+airn"ss i+ r"s!ission or annul*"nt is lat"r on
"!r"" b# t," !ourt% it is as i+ NO !o*1"nsation "$"r too< 1la!".
T," "!r"" t,us a!ts r"troa!ti$"l#.
E4a*1l"'
A o3"s 7 P1 *illion. Lat"r% A +or!" 7 to sign a 1ro*is.
sor# not" +or P1 *illion in A8s +a$or. T," +irst "bt is $ali2 t,"
s"!on is $oiabl". 7ut i+ all t," r"Euisit"s +or l"gal !o*1"nsa.
tion ar" 1r"s"nt% bot, "bts ar" "4tinguis," sin!" 78s "bt is
not #"t annull". T,is is ob$iousl# un+air i+% lat"r on% 78s "bt
is annull" b# t," !ourt. T,us ,"r"% t," !o*1"nsation t,at ,as
ta<"n 1la!" 3ill b" !an!"ll".
Art. 16B5. T," "btor 3,o ,as !ons"nt" to t," assign.
*"nt o+ rig,ts *a" b# a !r"itor in +a$or o+ a t,ir 1"rson%
!annot s"t u1 against t," assign"" t," !o*1"nsation 3,i!,
3oul 1"rtain to ,i* against t," assignor% unl"ss t,"
assignor 3as noti+i" b# t," "btor at t," ti*" ," ga$" ,is
!ons"nt% t,at ," r"s"r$" ,is rig,t to t," !o*1"nsation.
I+ t," !r"itor !o**uni!at" t," !"ssion to ,i* but
t," "btor i not !ons"nt t,"r"to% t," latt"r *a# s"t u1
CBA
Arts. 16B@.16B5
t," !o*1"nsation o+ "bts 1r"$ious to t," !"ssion% but
not o+ subs"Eu"nt on"s.
CA?
Art. 16B5
I+ t," assign*"nt is *a" 3it,out t," <no3l"g" o+ t,"
"btor% ," *a# s"t u1 t," !o*1"nsation o+ all !r"its 1rior
to t," sa*" an also lat"r on"s until ," ,a <no3l"g" o+ t,"
assign*"nt.
CO&&ENT'
(1) E++"!t o+ Assign*"nt on Co*1"nsation o+ D"bts
;n"r Art. 16A?% -3,"n all t," r"Euisit"s *"ntion" in
Art. 16CA ar" 1r"s"nt% !o*1"nsation ta<"s "++"!t b# o1"ration o+
la3% an "4tinguis,"s bot, "bts to t," !on!urr"nt a*ount% "$"n
t,oug, t," !r"itors an "btors ar" not a3ar" o+ t," !o*1"n.
sation./ T,us% !o*1"nsation ta<"s 1la!" auto*ati!all# or i1so
jur". No3 t,"n% i+ AFTE5 !o*1"nsation ,as ta<"n 1la!" on" o+
t," "4tinguis," "bts is ASSI>NED to a strang"r% orinaril#
t,is 3oul b" a us"l"ss a!t sin!" t,"r" is not,ing *or" to assign.
T," "+"ns" o+ !o*1"nsation !oul t,"n b" s"t u1.
T,"r" is ONE "4!"1tion to sai rul"% an t,is ta<"s 1la!"
3,"n t," assign*"nt (a+t"r !o*1"nsation ,as alr"a# ta<"n
1la!") 3as *a" IITH THE CONSENT o+ t," "btor. Su!,
!ons"nt o1"rat"s as a IAIVE5 o+ t," rig,ts to !o*1"nsation.
T," "4!"1tion to t," "4!"1tion o!!urs 3,"n -at t," ti*" ,"
ga$" ,is !ons"nt% ," 5ESE5VED ,is rig,t to t," !o*1"nsation./
(S"" B &anr"sa% 11. @19.@1@).
(6) T," T,r"" Cas"s Co$"r" b# t," Arti!l"
(a) T," assign*"nt *a# b" *a" 3it, t," !ons"nt o+ t,"
"btor. (Par. 1% Art. 16B5).
(b) T," assign*"nt *a# b" *a" 3it, t," <no3l"g" but
3it,out t," !ons"nt (or against t," 3ill) o+ t," "btor. (Par.
6% Art. 16B5).
(!) T," assign*"nt *a# b" *a" 3it,out t," <no3l"g" o+
t," "btor. (Par. 9% Art. 16B5).
(9) T," First Cas" 0 T," Assign*"nt *a# b" &a" Iit,
t," Cons"nt o+ t," D"btor FS"" also Co**"nt No. (1)
un"r t,is Arti!l"G
CA1
Art. 16B5
E++"!t' Co*1"nsation !annot b" s"t u1 (b"!aus" t,"r" ,as
b""n !ons"nt an% t,"r"+or"% a 3ai$"r).
CA6
Art. 16B5
E4!"1tion' I+ t," rig,t to t," !o*1"nsation (t,at ,as alr"a#
ta<"n 1la!") is r"s"r$".
E4a*1l"'
A o3"s 7 P1%???%???. 7 in turn o3"s A P6??%???. 7"!aus"
bot, "bts ar" alr"a# u"% an b"!aus" all ot,"r r"Euisit"s +or
l"gal !o*1"nsation ar" 1r"s"nt% bot, "bts ar" "4tinguis,"
auto*ati!all# u1 to t," a*ount o+ P6??%???. Lat"r ,o3"$"r% 7%
3it, t," !ons"nt o+ A% assign" ,is (78s) P1%???%??? !r"it to C.
Ho3 *u!, !an C !oll"!t su!!"ss+ull# +ro* AJ
ANS.' C !an !oll"!t +ro* A t," 3,ol" P1%???%???. A !annot
s"t u1 t," "+"ns" o+ !o*1"nsation as o+ t," P6??%??? in $i"3
o+ ,is !ons"nt to t," assign*"nt.
(NOTE' Ha A r"s"r$" ,is rig,t to t," !o*1"nsation% A
3oul b" +or!" to gi$" onl# PB??%???.)
FNOTE' Par. 1 o+ Art. 16B5 a11li"s 3,"t,"r t," !ons"nt to
t," !"ssion 3as 7EFO5E or AFTE5 t," "bts b"!a*" !o*1"n.
sabl". (B &anr"sa @19.@1@).G
(@) T," S"!on Cas" 0 Assign*"nt &a" Iit, t," Dno3l.
"g" but Iit,out t," Cons"nt or Against t," Iill o+ t,"
D"btor.
E++"!t' Co*1"nsation !an b" s"t u1 r"garing "bts 1r"$i.
ous to t," !"ssion or assign*"nt. T,is r"+"rs to "bts *aturing
b"+or" t," assign*"nt (t,at is% b"+or" t," NOTICE)2 ,"n!" ,"r"%
l"gal !o*1"nsation ,as alr"a# ta<"n 1la!".
E4a*1l"s'
(a) A o3"s 7 P1%???%???. 7 o3"s A P6??%???. 7ot, "bts ar"
alr"a# u". Lat"r 7% 3it, t," <no3l"g" but 3it,out t,"
!ons"nt (or against t," 3ill) o+ A% assign" t," P1%???%???
!r"it to C. Ho3 *u!, !an C su!!"ss+ull# !oll"!t +ro* AJ
ANS.' I+ A s"ts u1 t," "+"ns" o+ 1artial !o*1"nsation as
to 1r"$iousl# *aturing "bts% C !an !oll"!t onl# PB??%???.
CA9
Art. 16B5
T,"r" ,a alr"a# b""n !o*1"nsation 3it, r"s1"!t to t,"
P6??%???.
CA@
Art. 16B5
(b) A o3"s 7 P1%???%??? u" on A1r. 62 7 o3"s A P6??%???
u" also on A1r. 6. On F"b. @ (3,"n t,"r" 3as no l"gal
!o*1"nsation #"t)% 7 assign" ,is P1%???%??? !r"it to C%
3it, t," <no3l"g" but 3it,out t," !ons"nt o+ A. On A1r.
6% ,o3 *u!, !an C su!!"ss+ull# !oll"!t +ro* AJ
ANS.' P1%???%???% b"!aus" i+ at all t,"r" 3oul b"
!o*1"nsation ,"r"% it too< 1la!" a+t"r t," assign*"nt%
not b"+or". It o"s not *att"r t,at t," P6??%??? ,a b""n
in!urr" 1rior to t," !"ssion% +or 3,"n t," la3 s1"a<s o+
-"bts 1r"$ious to t," !"ssion%/ it r"+"rs to "bts *aturing
b"+or" t," !"ssion (not to "bts in!urr" 1rior to su!, !"s.
sion 3,i!, ,a$" not #"t *atur" b"+or" sai !"ssion).
(5) T," T,ir Cas" 0 Assign*"nt &a" Iit,out t,"
Dno3l. "g" o+ t," D"btor
E++"!t' D"btor !an s"t u1 !o*1"nsation as a "+"ns" +or
all "bts *aturing P5IO5 to ,is <no3l"g" o+ t," assign*"nt
(3,"t,"r t," "bts *atur" b"+or" or a+t"r t," assign*"nt).
(NOTE' T," !ru!ial ti*" ,"r" is t," ti*" o+ <no3l"g" o+
t," assign*"nt% not t," ti*" o+ assign*"nt its"l+.)
E4a*1l"'
A o3"s 7 P1%???%???. 7 o3"s A in turn P6??%???. 7ot,
"bts ar" alr"a# u". Lat"r% 7 assigns t," P1%???%??? !r"it to
C% 3it,out t," <no3l"g" o+ A. T,is assign*"nt 3as *a" on
=ul# 1. On =ul. 15% a P65?%??? "bt o+ 7 in +a$or o+ A *atur".
A l"arn" o+ t," assign*"nt on Aug. 1. On Aug. 69% a P15?%???
"bt o+ 7 in +a$or o+ A *atur". Lat"r C as<s A to 1a# ,is "bt.
Ho3 *u!, !an C su!!"ss+ull# !oll"!t +ro* AJ
ANS.' C !an !oll"!t P55?%??? b"!aus" A !an s"t u1 t," ".
+"ns" o+ 1artial !o*1"nsation r"garing t," P6??%??? an t,"
P65?%??? "bts% "bts 3,i!, ,a *atur" an 3"r" t,"r"+or"
alr"a# !o*1"nsabl" P5IO5 to ,is <no3l"g" o+ t," assign.
*"nt. 7ut A !annot s"t u1 t," last "bt o+ P15?%??? +or 1artial
!o*1"nsation b"!aus" t,is *atur" onl# a+t"r ," <n"3 o+ t,"
CA5
Art. 16B5
assign*"nt.
CA6
Arts. 16B6.16BC
(6) 5"ason +or t," Arti!l"
Art. 16B5 ,as +or its 1ur1os" t," 1r"$"ntion o+ +rauul"nt
"1ri$ation o+ t," b"n"+its o+ total an 1artial !o*1"nsation. (B
&anr"sa @19.@1@).
Art. 16B6. Co*1"nsation ta<"s 1la!" b# o1"ration o+ la3%
"$"n t,oug, t," "bts *a# b" 1a#abl" at i++"r"nt 1la!"s%
but t,"r" s,all b" an in"*nit# +or "41"ns"s o+ "4!,ang" or
trans1ortation to t," 1la!" o+ 1a#*"nt.
CO&&ENT'
(1) Co*1"nsation b# O1"ration o+ La3
(a) T,is a11li"s to !o*1"nsation b# o1"ration o+ la3.
(b) -In"*nit# +or "41"ns"s o+ trans1ortation/ (t,is a11li"s to
trans1ortation o+ t," goos or o+ t," obj"!t).
(!) -In"*nit# +or "41"ns"s o+ "4!,ang"/ (t,is r"+"rs to *on.
"tar# "4!,ang"% in !as" t," "bts ar" *on"# "bts).
(6) E4a*1l"
A o3"s 7 P1& 1a#abl" in &anila an 7 o3"s A P1& 1a#.
abl" in Englan. I,o"$"r !lai*s !o*1"nsation *ust 1a# +or
t," "4!,ang" rat" o+ !urr"n!#.
(9) OFor"ign E4!,ang"8 D"+in"
For"ign "4!,ang" ,as b""n "+in" as t," !on$"rsion o+ an
a*ount o+ *on"# or !urr"n!# o+ on" !ountr# into an "Eui$al"nt
a*ount o+ *on"# or !urr"n!# o+ anot,"r. (S"" Dr. Egaro C.
Paras% E!ono*i!s +or La3#"rs% 1AA9% 11. 5A@.6?9).
Art. 16BC. Co*1"nsation s,all not b" 1ro1"r 3,"n on"
o+ t," "bts aris"s +ro* a "1ositu* or +ro* t," obligations
o+ a "1ositor# or o+ a bail"" in !o**oatu*.
N"it,"r !an !o*1"nsation b" s"t u1 against a !r"itor
CAC
Arts. 16B6.16BC
3,o ,as !lai* +or su11ort u" b# gratuitous titl"% 3it,out
1r"jui!" to t," 1ro$isions o+ 1aragra1, 6 o+ Arti!l" 9?1.
CAB
Art. 16BC
CO&&ENT'
(1) I,"n L"gal Co*1"nsation Cannot Ta<" Pla!"
T,is Arti!l" s1"a<s o+ t," instan!"s 3,"n l"gal !o*1"nsa.
tion !annot ta<" 1la!"% su!, as'
(a) I,"n on" "bt aris"s +ro* a "1ositu* (not ban< "1osit%
+or t,is is r"all# a loan). (>ullas $. P,il. Nat. 7an<% 66 P,il.
51A an Art. 1AB?% Ci$il Co").
(NOTE' T," 1ur1os" is to 1r"$"nt br"a!, o+ trust an
!on+i"n!".)
(NOTE' It is t," "1ositar# 3,o !annot !lai* !o*.
1"nsation. T," "1ositor is allo3" to so !lai*.)
(b) I,"n on" "bt aris"s +ro* t," obligations o+ a "1ositar#.
(NOTE' T,is ,as t," sa*" r"ason as t," 1r"!"ing
on". Again% t," "1ositor is gi$"n t," rig,t to !lai* !o*.
1"nsation.)
(!) I,"n on" "bt aris"s +ro* t," obligations o+ a bail"" in
!o**oatu* (t," borro3"r o+ 1ro1"rt# 3,o 1a#s not,ing
+or t," loan).
(NOTE' Again% t," r"ason ,"r" is to 1r"$"nt a br"a!,
o+ trust.)
(NOTE' T," l"n"r *a# !lai* !o*1"nsation2 t,"
borro3"r is NOT allo3" to o so.)
FNOTE' In t," t,r"" instan!"s gi$"n abo$"% sin!" t,"
"1ositor an t," l"n"r ,a$" an o1tion to !lai* or not to
!lai* !o*1"nsation% 3" ,a$" !l"ar instan!"s o+ +a!ulta.
ti$" !o*1"nsation. (S"" Co**"nt No. 6 Xb.@Y un"r Art.
16CB).G
() I,"n on" "bt aris"s b"!aus" o+ a !lai* +or su11ort u"
to gratuitous titl".
FNOTE' Su11ort in arr"ars *a# b" !o*1"nsat" (Art.
9?1% 1ar. 6% Ci$il Co") but not +utur" su11ort% +or t,is is
-$ital to t," li+" o+ t," r"!i1i"nt./ (5"1ort o+ t," Co" Co*.
*ission).G
CAA
Art. 16BC
FNOTE' In t," +or"going is!ussion% 1l"as" obs"r$"
t,at 3,il" !o*1"nsation !annot b" *a" us" o+ b# on" 1art#
B??
Art. 16BC
(".g.% t," "1ositar#)% !o*1"nsation *a# b" !lai*" b# t,"
ot,"r 1art# (".g.% t," "1ositor#). T,is <in o+ !o*1"nsa.
tion% 3,"r"b# onl# on" si" !an !lai* it but not t," ot,"r%
is r"+"rr" to as FAC;LTATIVE CO&PENSATION.G
(6) So*" Probl"*s
(a) A ,as a P1%???%??? sa$ings "1osit 3it, t," P,il. National
7an<. On" a# A borro3" P6??%??? +ro* t," 7an<. Iit,.
out as<ing 1"r*ission +ro* A% t," 7an< subtra!t" t,"
P6??%??? +ro* A8s a!!ount% l"a$ing a balan!" o+ PB??%???
in A8s +a$or. Is t," ban<8s a!tion 1ro1"rJ
ANS.' K"s. Co*1"nsation is allo3" ,"r" b"!aus" in
t,is !as"% t," r"lations,i1 b"t3""n t," ban< an t," ".
1ositor is t,at o+ "btor an !r"itor. (S"" Art. 1AB?% Ci$il
Co" an >ullas $. P,il. Nat. 7an<% 66 P,il. 51A).
(b) A as<" 7 to <""1 P1%???%??? +or ,i*. No3% A is in"bt" to
7 +or t," a*ount o+ P@??%???. I,"n A as<s +or t," r"turn
o+ ,is *on"#% 7 gi$"s ,i* onl# P6??%???% all"ging 1artial
!o*1"nsation. Is 7 !orr"!tJ
ANS.' No% 7 is not !orr"!t b"!aus" t," P1%???%???
"1osit 3it, ,i* is not subj"!t to !o*1"nsation. (Art. 16BC%
1st 1ar.% Ci$il Co").
(9) Obligations o+ a D"1ositar#
T," la3 sa#s t,at !o*1"nsation is not 1ro1"r 3,"n on" o+
t," "bts aris"s +ro* t," obligations o+ a "1ositar#. No3% 3,at
ar" so*" o+ t,"s" obligations o+ a "1ositar#J
ANS.'
(a) T," "1ositar# is oblig" to <""1 t," t,ing sa+"l# an to
r"turn it% 3,"n r"Euir"% to t," "1ositor% or to ,is ,"irs
an su!!"ssors% or to t," 1"rson 3,o *a# ,a$" b""n "s.
ignat" in t," !ontra!t. (Art. 1AC6% Ci$il Co").
(b) ;nl"ss t,"r" is a sti1ulation to t," !ontrar#% t," "1ositar#
B?1
Art. 16BC
!annot "1osit t," t,ing 3it, a t,ir 1"rson. (Art. 1AC9%
i.).
B?6
Art. 16BB
(!) I+ "1osit 3it, a t,ir 1"rson is allo3"% t," "1ositar# is
liabl" +or t," loss i+ ," "1osit" t," t,ing 3it, a 1"rson
3,o is *ani+"stl# !ar"l"ss or un+it. (Ibi.).
() T," "1ositar# is r"s1onsibl" +or t," n"glig"n!" o+ ,is
"*1lo#""s. (Ibi.).
(") T," "1ositar# !annot *a<" us" o+ t," t,ing "1osit"
3it,out t," "41r"ss 1"r*ission o+ t," "1ositor. Ot,"r.
3is"% ," s,all b" liabl" +or a*ag"s. Ho3"$"r% 3,"n t,"
1r"s"r$ation o+ t," t,ing r"Euir"s its us"% it *ust b" us"
but onl# +or t,at 1ur1os". (Art. 1ACC% i.).
Art. 16BB. N"it,"r s,all t,"r" b" !o*1"nsation i+ on" o+
t," "bts !onsists in !i$il liabilit# arising +ro* a 1"nal
o++"ns".
CO&&ENT'
(1) Non.Co*1"nsation i+ On" D"bt Aris"s +ro* a Cri*"
5"ason +or t," 1ro$ision'
-I+ on" o+ t," "bts !onsist in !i$il liabilit# arising +ro* a
1"nal o++"ns"% !o*1"nsation 3oul b" i*1ro1"r an ina$isabl"
b"!aus" t," satis+a!tion o+ su!, obligation is i*1"rati$"./
(5"1ort o+ t," Co" Co**ission% 1. 19@).
(6) 7ut Vi!ti* Can Clai* Co*1"nsation
It is !l"ar t,at t," !ri*inal !annot !lai* !o*1"nsation.
Ho3 about t," $i!ti*J
ANS.' H" s,oul b" allo3". =usti!" =.7.L. 5"#"s sa#s'
-T,is s,oul b" s1"!i+i!all# li*it" to t," a!!us" to 1r"$"nt
,is "s!a1ing liabilit# b# 1l"aing 1rior !r"its against t," o+.
+"n" 1art#. 7ut not to t," $i!ti* o+ a !ri*" 3,o ,a11"ns to
b" in"bt" to t," a!!us"./ (Obs"r$ation on t," n"3 Ci$il Co"%
=usti!" =.7.L. 5"#"s% La3#"r8s =ournal% =an. 91% 1A51).
B?9
Art. 16BB
(T,is is again anot,"r instan!" o+ FAC;LTATIVE CO&.
PENSATION.)
B?@
Art. 16BA
Art. 16BA. I+ a 1"rson s,oul ,a$" against ,i* s"$"ral
"bts 3,i!, ar" sus!"1tibl" o+ !o*1"nsation% t," rul"s on
t," a11li!ation o+ 1a#*"nts s,all a11l# to t," or"r o+ t,"
!o*1"nsation.
CO&&ENT'
Not" t," !ross.r"+"r"n!" to a11li!ation o+ 1a#*"nts.
St"$" Tan M &ar!iano Tan $.
Fabian &"n"H% =r. >5
19B66A% =un. 6% 6??6
FACTS' P"tition"r St"$" Tan an &ar!iano Tan ar" t,"
o3n"rs o+ &ast"r Tours an Tra$"l Cor1. an o1"rators o+ P,il.
i11in" La3in 7us Co.% In!. (PL7CI)% 3,il" r"s1on"nt Fabian
&"n"H% =r. is t," o3n"r o+ t,r"" gasolin" stations in Iriga Cit#%
Ligao in Alba# an Si1o!ot% Ca*arin"s Sur. P"tition"rs o1"n" a
!r"it lin" +or t,"ir bus"s8 lubri!ants an +u"l !onsu*1tion 3it,
r"s1on"nt. At t," sa*" ti*"% t," latt"r 3as also "signat"
b# 1"tition"rs as t," boo<ing an ti!<"ting ag"nt o+ PL7CI in
Iriga Cit#.
;n"r su!, an arrang"*"nt% 1"tition"rs8 ri$"rs 1ur!,as"
on !r"it +u"l an $arious oil 1rou!ts +or its bus"s t,ru 3it,.
ra3al sli1s issu" b# 1"tition"rs% 3it, 1"rioi! 1a#*"nts to
r"s1on"nt t,ru t," issuan!" o+ !,"!<s. ;1on t," ot,"r ,an%
r"s1on"nt r"*itt" t," 1ro!""s o+ ti!<"t sal"s to 1"tition"rs
also t,ru t," issuan!" o+ !,"!<s. S"nt tog"t,"r 3it, r"s1on"nt8s
r"*ittan!" ar" t," r"*ittan!"s o+ t," ti!<"t sal"s in t," 7aao
7oo<ing O++i!"% 3,i!, is *anag" s"1arat"l# an in"1"n"ntl#
b# anot,"r ag"nt% Elias 7o!sain.
A!!oringl#% 1"tition"rs issu" s"$"ral !,"!<s to r"s1on.
"nt as 1a#*"nt +or oil an +u"l 1rou!ts. On" o+ t,"s" is FE7TC
!,"!< C?@66C at" =un. @% 1AA1 in t," a*ount o+ P5B%69C.C5
as 1a#*"nt +or gasolin" an oil 1rou!ts 1ro!"ss" uring t,"
1"rio &a# 6.15% 1AA1. Sai !,"!< 3as is,onor" b# t," ban<
u1on 1r"s"nt*"nt +or 1a#*"nt +or b"ing ra3n against insu+.
+i!i"nt +uns. 5"s1on"nt s"nt a "*an l"tt"r at" =un. 61%
B?5
Art. 16BA
1AA1 to 1"tition"rs "*aning t,at t,"# *a<" goo t," !,"!<
or 1a# t," a*ount t,"r"o+% to no a$ail. H"n!"% an in+or*ation
B?6
Art. 16BA
+or $iolation o+ 7P 66 3as +il" against 1"tition"rs% u1on t,"
!o*1laint o+ r"s1on"nt b"+or" t," 5TC o+ Iriga Cit#% 7r. 9C.
P"tition"rs 1l"a" not guilt# uring arraign*"nt an trial
"nsu". ;1on t," ot,"r ,an% t," "+"ns" 1r"s"nt" 1"tition"r
&ar!iano Tan an Isiro Tan as 3itn"ss"s. In ,is t"sti*on#%
&ar!iano a$"rr" t,at ," !annot b" ,"l liabl" +or $iolation o+
7P 66 b"!aus" t," a*ount subj"!t o+ t," !,"!< ,a alr"a# b""n
"4tinguis," b# o++s"t or !o*1"nsation against t," !oll"!tion
+ro* ti!<"t sal"s +ro* t," boo<ing o++i!"s. H" 1r"s"nt" a *"*o.
ranu* at" =un. 1?% 1AA1 s,o3ing t," r"turn to r"s1on"nt
o+ $arious un!as," !,"!<s in t," total a*ount o+ P66%B9A.65
r"1r"s"nting r"*ittan!" o+ ti!<"t sal"s in t," Iriga an 7aao
o++i!"s t,at 3"r" "arli"r s"nt b# r"s1on"nt. A+t"r t," all"g"
o++s"t% t,"r" r"*ains a balan!" o+ P666%CB5.B9.
;1on !ross."4a*ination% &ar!iano a*itt" to ,a$" ra3n
t," subj"!t !,"!< to 1a# 1ri$at" r"s1on"nt8s gasolin" station
an t,at it 3as not !o$"r" b# su++i!i"nt +uns at t," ti*" o+
its issuan!" u" to un!oll"!t" r"!"i$abl"s. ;1on Eu"r# b# t,"
!ourt% ," !lai*" t,at ," i not tal< to 1ri$at" !o*1lainant
an !oul not t"ll i+ t," latt"r agr"" to o++s"t t," !,"!<s 3it,
t," r"*ittan!"s. Isiro Tan% 1"tition"r8s brot,"r% !orroborat"
&ar!iano8s !lai* o+ o++s"t. H" also a*itt" s1"a<ing 3it, &ulr#
&"n"H r"garing t," 1ro1os" s"ttl"*"nt o+ t," !as" 3,i!,%
,o3"$"r% 3as not a!!"1t" b# r"s1on"nt.
On r"buttal% r"s1on"nt is1ut" 1"tition"rs8 !lai* o+ 1a#.
*"nt t,ru o++s"t or !o*1"nsation. H" !lai*" t,at t," a*ount
o+ t," +our un"n!as," !,"!<s totalling P66%B9A.65 !oul not
,a$" o++s"t t," a*ount o+ t," is,onor" !,"!<s sin!" 1"tition.
"rs8 total obligations at t,at ti*" ,a alr"a# r"a!," PA?6%???.
&or"o$"r% "$"n i+ !o*1"nsation too< 1la!"% it s,oul ,a$" b""n
a11li" on an all"g" "arli"r obligation o+ P695%9BC.99. 5"s1on.
"nt also !lai*" t,at !o*1"nsation i not ta<" 1la!" as t,"r"
3as no a11li!ation o+ 1a#*"nt *a" b# t," 1"tition"rs in t,"ir
*"*oranu* at" =un. 1?% 1AA1.
A+t"r trial% t," trial !ourt !on$i!t" 1"tition"rs +or $iola.
tion o+ 7P 66. On a11"al% t," Court o+ A11"als (CA) a++ir*"
t," !on$i!tion o+ 1"tition"rs% ,"n!"% t,is 1"tition.
B?C
Art. 16BA
ISS;E' I,"t,"r t," CA "rr" 3,"n it +ail" to !onsi"r
t," +a!t o+ 1a#*"nt b# o++s"tting 1rior to t," "*an l"tt"r s"nt
B?B
Art. 16BA
b# r"s1on"nt "s1it" t," abunan!" o+ "$i"n!" 1ro$ing t,"
sa*".
HELD' It b"ars str"ssing t,at t," issu" o+ 3,"t,"r or not
t," obligation !o$"r" b# t," subj"!t !,"!< ,a b""n 1ai b#
!o*1"nsation or o++s"t is a +a!tual issu" t,at r"Euir"s "$aluation
an ass"ss*"nt o+ !"rtain +a!ts. T,is is not 1ro1"r in a 1"tition
+or r"$i"3 on !"rtiorari to t," Su1r"*" Court. T,is Court is not a
tri"r o+ +a!ts (Luis Iong $. CA M P"o1l" o+ t," P,ils.% >5 11CB5C%
F"b. 6% 6??1 an Al"ria% =r. $. V"l"H% 6AB SC5A 611 F1AABG)% its
jurisi!tion o$"r !as"s "l"$at" +ro* t," CA b"ing !on+in" to
t," r"$i"3 o+ "rrors o+ la3 as!rib" to t," latt"r% 3,os" +inings
o+ +a!t ar" !on!lusi$" abs"nt an# s,o3ing t,at su!, +inings ar"
"ntir"l# "$oi o+ an# substantiation on r"!or. On t,is as1"!t%
t," CA a++ir*" t," +inings o+ t," trial !ourt t,at t," all"g"
!o*1"nsation is not su11ort" b# !l"ar an 1ositi$" "$i"n!".
For as +oun b# t," trial !ourt% 1"tition"rs8 "+"ns" o+ !o*1"n.
sation is una$ailing b"!aus" 1"tition"rs i not !l"arl# s1"!i+#
in t," *"*oranu* at" =un. 1?% 1AA1 3,i!, is,onor"
!,"!< is b"ing o++s"t. A11l#ing Art. 16BA r"a tog"t,"r 3it, Art.
165@ o+ t," Ci$il Co"% t," un"n!as," !,"!<s a*ounting to
P66%B9A.65 s,oul ,a$" b""n a11li" to t," "arli"r is,onor"
!,"!< a*ounting to P695%9BC.99 3,i!, is *or" on"rous t,an
t," subj"!t !,"!< a*ounting to onl# P5B%69C.C5.
&or"o$"r% no !o*1"nsation !an ta<" 1la!" b"t3""n 1".
tition"rs an r"s1on"nt as t," latt"r is not a "btor o+ t,"
+or*"r inso+ar as t," t3o !,"!<s r"1r"s"nting !oll"!tions +ro*
t," 7aao ti!<"t sal"s ar" !on!"rn". T," Ci$il Co" r"Euir"s% as
a 1r"r"Euisit" +or !o*1"nsation% t,at t," 1arti"s b" *utuall#
an 1rin!i1all# boun as !r"itors an "btors. (Art. 16CB). I+
t,"# 3"r" not *utuall# !r"itors an "btors o+ "a!, ot,"r% t,"
la3 on !o*1"nsation 3oul not a11l#. (Ibi.). In t," !as" at bar%
t," *"*oranu* s,o3s t,at so*" un"n!as," !,"!<s r"turn"
to r"s1on"nt to all"g"l# o++s"t t," is,onor" !,"!< 3"r"
+ro* t," 7aao ti!<"t sal"s 3,i!, ar" s"1arat" +ro* t," ti!<"t
sal"s o+ r"s1on"nt. T," latt"r onl# a!t" as an int"r*"iar#
in r"*itting t," 7aao ti!<"t sal"s an% t,us% is not a "btor o+
1"tition"rs.
B?A
Art. 16BA
Int"r"stingl#% 1"tition"rs n"$"r all"g" !o*1"nsation 3,"n
t,"# r"!"i$" t," "*an l"tt"r% uring t," 1r"li*inar# in$"s.
B1?
Art. 16BA
tigation% or b"+or" trial b# +iling a *otion to is*iss. I+ in""
t,"r" 3as 1a#*"nt b# !o*1"nsation% 1"tition"rs s,oul ,a$"
r"""*" or ta<"n t," !,"!<s ba!< in t," orinar# !ours" o+
busin"ss. (Alb"rto Li* $. P"o1l" o+ t," P,ils.% >5 1@9691% O!t.
66% 6??1% !iting Di!o $. CA% 9?5 SC5A 69C F1AAAG% an S"!. 9FEG%
5ul" 191% 5"$is" 5ul"s o+ Court). T,"r" is no "$i"n!" on r"!or
t,at t,"# i so.
I,il" t," Su1r"*" Court sustain" t," !on$i!tion o+
1"tition"rs% it ""*" it a11ro1riat" to *oi+# t," 1"nalti"s
i*1os". It "l"t" t," 1"nalt# o+ i*1rison*"nt an in li"u
t,"r"o+% i*1os" u1on 1"tition"rs a +in" a*ounting to oubl"
t," $alu" o+ t," subj"!t !,"!<% 3it, subsiiar# i*1rison*"nt
in !as" o+ insol$"n!# or non.1a#*"nt.
In t,is instant !as"% t," Court not"s t,at 1"tition"rs ,a
"4"rt" "++orts to s"ttl" t,"ir obligations. T," +a!t o+ r"turning
t," un"n!as," !,"!<s to r"s1on"nt ini!at"s goo +ait, on t,"
1art o+ 1"tition"rs. Abs"nt an# s,o3ing t,at 1"tition"rs a!t"
is ba +ait,% t," "l"tion o+ t," 1"nalt# o+ i*1rison*"nt in t,is
!as" is 1ro1"r.
T," 1"tition is "ni" an t," CA "!ision is a++ir*" 3it,
*oi+i!ation. P"tition"rs ar" or"r" to in"*ni+# r"s1on"nt
in t," a*ount o+ P5B%69C.C5 3it, l"gal int"r"st +ro* t," at" o+
jui!ial "*an. T," s"nt"n!" o+ i*1rison*"nt o+ 6 *ont,s is
s"t asi" an in li"u t,"r"o+% a +in" in t," a*ount o+ P116%@C5.5?
(P5B%69C.C5 4 6) is i*1os" u1on 1"tition"rs% 3it, subsiiar#
i*1rison*"nt not to "4!"" 6 *ont,s in !as" o+ insol$"n!# or
non.1a#*"nt. (5osa Li* $. P"o1l" o+ t," P,ils.% 9@? SC5A @AC
F6???G% !iting Art. 9A% 1ar. 6.% 5"$. P"nal Co"2 DiongHon $.
CA% 961 SC5A @CC F1AAAG2 an Lla*ao $. CA% 6C? SC5A @69
F1AACG).
FNOTE' Su1r"*" Court A*inistrati$" Cir!ular 16.6???%
as !lari+i" b# A*inistrati$" Cir!ular 19.6??6% "stablis," a
rul" o+ 1r"+"r"n!" in i*1osing 1"nalti"s in 7P 66 !as"s. S"!.
1 o+ 7P 66 i*1os"s t," +ollo3ing alt"rnati$" 1"nalti"s +or its
$iolation% to 3it' (a) i*1rison*"nt o+ not l"ss t,an 9? a#s but
not *or" t,an 1 #"ar2 or (b) a +in" o+ not l"ss t,an but not *or"
t,an oubl" t," a*ount o+ t," !,"!< 3,i!, +in" s,all in no !as"
B11
Art. 16BA
"4!"" P6??%???2 or (!) bot, su!, +in" an i*1rison*"nt at t,"
is!r"tion o+ t," !ourt. T," rational" o+ A*. Cir!ular 16.6???
B16
Art. 16BA
is +oun in t," Su1r"*" Court rulings in Euaro Va!a $. CA
(6AB SC5A 656 F1AABG) an 5osa Li* $. P"o1l" o+ t," P,ils. (9@?
SC5A @AC F6???G). T," Court ,"l in t,os" !as"s t,at it 3oul
b"st s"r$" t," "ns o+ !ri*inal justi!" i+% in +i4ing t," 1"nalt# to
b" i*1os" +or $iolation o+ 7P 66% t," sa*" 1,iloso1,# un"r.
l#ing t," In"t"r*inat" S"nt"n!" La3 is obs"r$"% i.".% t,at o+
r"""*ing $aluabl" ,u*an *at"rial an 1r"$"nting unn"!"s.
sar# "1ri$ation o+ 1"rsonal lib"rt# an "!ono*i! us"+uln"ss
3it, u" r"gar to t," 1rot"!tion o+ t," so!ial or"rG.
FNOTE' To b" sur"% it is not its int"ntion% o1in" t," Su.
1r"*" Court% to "!ri*inaliH" $iolation o+ 7P 66. N"it,"r is it
t," int"ntion to "l"t" t," alt"rnati$" 1"nalt# o+ i*1rison*"nt.
T," 1ro1ri"t# an 3iso* o+ "!ri*inaliHing $iolation o+ 7P 66
is b"st l"+t to t," l"gislatur" an not t,is Court. As !lari+i" b#
SC A*. Cir. 19.6??1% t," !l"ar t"nor o+ A*. Cir. 16.6??? is
not to r"*o$" i*1rison*"nt as an alt"rnati$" 1"nalt#% but to
la# o3n a rul" o+ 1r"+"r"n!" in t," a11li!ation o+ t," 1"nalti"s
1ro$i" +or in 7P 66. I,"r" t," !ir!u*stan!"s o+ t," !as"% +or
instan!"% !l"arl# ini!at" goo +ait, or a !l"ar *ista<" o+ +a!t
3it,out taint o+ n"glig"n!"% t," i*1osition o+ a +in" alon" *a#
b" !onsi"r" as t," *or" a11ro1riat" 1"nalt#. T,is rul" o+
1r"+"r"n!" o"s not +or"!los" t," 1ossibilit# o+ i*1rison*"nt +or
$iolators o+ 7P 66. N"it,"r o"s it "+"at t," l"gislati$" int"nt
b",in t," la3. N""l"ss to sa# t," "t"r*ination o+ 3,"t,"r
t," !ir!u*stan!"s 3arrant t," i*1osition o+ a +in" alon" r"sts
sol"l# u1on t," jug". S,oul t," jug" "!i" t,at i*1rison.
*"nt is t," *or" a11ro1riat" 1"nalt#% A*. Cir!ular 16.6???
oug,t not to b" ""*" a ,inran!". (A*. Cir. 19.6??1% !it"
in Alb"rto Li* $. P"o1l" o+ t," P,ils.% su1ra).G
FNOTE +urt,"r' T," Su1r"*" Court in not una3ar" o+
t," i*1ortan!" o+ !,"!<s in !o**"r!ial transa!tions. In !o*.
*"r!ial 1arlan!"% t,"# ,a$" b""n 3i"l# an +ittingl# <no3n
as t," substitut" o+ *on"# an ,a$" "++"!ti$"l# +a!ilitat" t,"
s*oot, +lo3 o+ !o**"r!ial transa!tions. T," 1"rni!ious "++"!ts
an r"1"r!ussions o+ !ir!ulating 3ort,l"ss !,"!<s ar" si*1l#
uni*aginabl". It is +or t,is r"ason t,at 7P 66 3as "na!t" b#
t," l"gislatur"% to 1"naliH" ini$iuals 3,o 3oul 1la!" 3ort,.
l"ss !,"!<s in !ir!ulation an "gra" t," $alu" an i*1ortan!"
B19
Art. 16BA
o+ !,"!<s in !o**"r!ial transa!tions. N"$"rt,"l"ss% 3,il" t,is
Court r"!ogniH"s t," nobl" obj"!ti$" o+ 7P 66 it ""*s it 1ro1"r
B1@
Art. 16A?
to a11l# t," 1,iloso1,# un"rl#ing t," In"t"r*inat" S"nt"n!"
La3 in i*1osing 1"nalti"s +or its $iolation. T," gist o+ A*. Cir.
19.6??? is to !onsi"r t," un"rl#ing !ir!u*stan!"s o+ t," !as"
su!, t,at i+ t," situation !alls +or t," i*1osition o+ t," alt"rna.
ti$" 1"nalt# o+ +in" rat,"r t,an i*1rison*"nt% t," !ourts s,oul
not ,"sitat" to o so. (St"$" Tan M &ar!iano Tan $. Fabian
&"n"H% =r.% su1ra).G
Art. 16A?. I,"n all t," r"Euisit"s *"ntion" in Arti!l"
16CA ar" 1r"s"nt% !o*1"nsation ta<"s "++"!t b# o1"ration o+
la3% an "4tinguis,"s bot, "bts to t," !on!urr"nt a*ount%
"$"n t,oug, t," !r"itors an "btors ar" not a3ar" o+ t,"
!o*1"nsation.
CO&&ENT'
Auto*ati! Co*1"nsation i+ All 5"Euisit"s Ar" Pr"s"nt
(a) Not" t,at l"gal !o*1"nsation ta<"s 1la!" auto*ati!all#
unl"ss t,"r" ,as b""n $ali 3ai$"r t,"r"o+.
(b) Co*1"nsation 3,i!, "4tinguis,"s 1rin!i1al obligations
also "4tinguis,"s a!!"ssor# obligations. (&anr"sa).
(!) -To t," !on!urr"nt a*ount/ *"ans t,at i+ on" "bt is larg"r
t,an t," ot,"r% t," balan!" subsists as "bt.
Int"rnational Cor1orat" 7an<% In!. $. IAC% "t al.
>5 6A56?% =un. 9?% 1ABB
FACTS' In 1AB?% Nati$ia s"!ur" +ro* Int"rnational
Cor1orat" 7an<8s (IC78s) 1r""!"ssor.in.int"r"st a loan o+ P5?
*illion. To s"!ur" t,is loan% Nati$ia *ortgag" ,"r r"al
1ro1"rti"s in &anila an 7ula!an. O+ t,is loan% onl# P6? *illion
3as a11ro$" +or r"l"as". T," sa*" a*ount 3as a11li" to 1a#
ot,"r obligations to IC7. T,us% Nati$ia !lai*s t,at s," i
not r"!"i$" an#t,ing +ro* t," a11ro$" loan. Lat"r% Nati$ia
*a" a *on"# *ar<"t 1la!"*"nt 3it, IC78s 1r""!"ssor in t,"
a*ount o+ P1 *illion at 1CQ int"r"st 1"r annu* +or a 1"rio
o+ 96 a#s. &"an3,il"% Nati$ia all"g"l# +ail" to 1a# ,"r
B15
Art. 16A?
*ortgag" in"bt"n"ss to IC7 so t,at t," latt"r r"+us" to 1a#
t," 1ro!""s o+ t," *on"# *ar<"t 1la!"*"nt on *aturit# but a1.
B16
Art. 16A?
1li" t," a*ount inst"a to t," "+i!i"n!# in t," 1ro!""s o+ t,"
au!tion sal" o+ t," *ortgag" 1ro1"rti"s. Iit, IC78s 1r""!"ssor
b"ing t," onl# bi"r% sai 1ro1"rti"s 3"r" sol in its +a$or +or
onl# P6? *illion. IC7 !lai*s t,at a+t"r "u!ting t,is a*ount
Nati$ia is still in"bt" in t," a*ount o+ P6 *illion.
In 1AB6% Nati$ia su" IC7 +or annul*"nt o+ t," s,"r.
i++8s sal" o+ t," *ortgag" 1ro1"rti"s% +or t," r"l"as" to ,"r o+
t," balan!" o+ ,"r loan +ro* IC7 in t," a*ount o+ P9? *illion
an +or r"!o$"r# o+ P1 *illion r"1r"s"nting t," 1ro!""s o+ ,"r
*on"# *ar<"t in$"st*"nt. S," all"g"s t,at t," *ortgag" is
not #"t u" an "*anabl" an% ,"n!"% t," +or"!losur" 3as
ill"gal. IC7 ans3"r"% sa#ing t,at it ,as t," rig,t to a11l# or
s"t o++ Nati$ia8s *on"# *ar<"t !lai* o+ P1 *illion. IC7 t,us
int"r1os"s !ount"r!lai*s to r"!o$"r P5.C *illion r"1r"s"nting
t," balan!" o+ its "+i!i"n!# !lai* a+t"r "u!ting t," 1ro!""s
o+ t," *on"# *ar<"t 1la!"*"nt.
T," trial jug" or"r" IC7 to "li$"r to Nati$ia t,"
a*ount o+ P1.?6 *illion !onition" u1on Nati$ia8s +iling a
bon. IC7 +il" a s1"!ial !i$il a!tion +or !"rtiorari 3it, t," Court
o+ A11"als. Sai !ourt is*iss" t," 1"tition% sa#ing t,at t," !ir.
!u*stan!"s o+ t,is !as" 1r"$"nt l"gal !o*1"nsation +ro* ta<ing
1la!" b"!aus" t," Eu"stion o+ 3,"t,"r Nati$ia is in"bt" to
IC7 in t," a*ount o+ P6.B1 *illion r"1r"s"nting t," "+i!i"n!#
balan!" a+t"r t," +or"!losur" o+ *ortgag" is is1ut".
ISS;E' Can t,"r" b" l"gal !o*1"nsation in t," !as" at
barJ
HELD' No. ;noubt"l#% IC7 is in"bt" to Nati$ia in
t," a*ount o+ P1.?6 *illion% r"1r"s"nting t," 1ro!""s o+ ,"r
*on"# *ar<"t in$"st*"nt. 7ut 3,"t,"r Nati$ia is in"bt"
to IC7 in t," a*ount o+ P6.B *illion r"1r"s"nting t," "+i!i"n!#
balan!" a+t"r t," +or"!losur" o+ t," *ortgag" "4"!ut" to s"!ur"
t," loan is is1ut". T,is !ir!u*stan!" 1r"$"nts l"gal !o*1"nsa.
tion +ro* ta<ing 1la!". T," $aliit# o+ t," "4trajui!ial +or"!los.
ur" sal" an IC78s !lai* +or "+i!i"n!# ar" still in Eu"stion% so
*u!, so t,at t," r"Euir"*"nt o+ Art. 16CA t,at t," "bts *ust
b" liEuiat" an "*anabl" ,as not #"t b""n *"t. H"n!"%
l"gal !o*1"nsation !annot ta<" 1la!" un"r Art. 16A? o+ t,"
B1C
Art. 16A?
Ci$il Co".
B1B
Art. 16A1
tor.
S"!tion 6
NOVATION
Art. 16A1. Obligations *a# b" *oi+i" b#'
(1) C,anging t,"ir obj"!t or 1rin!i1al !onitions2
(6) Substituting t," 1"rson o+ t," "btor2
(9) Subrogating a t,ir 1"rson in t," rig,t o+ t," !r"i.
CO&&ENT'
(1) ONo$ation8 D"+in"
-7# no$ation is un"rstoo t," substitution or !,ang" o+
an obligation b# anot,"r% 3,i!, "4tinguis,"s or *oi+i"s t,"
+irst% "it,"r !,anging its obj"!t or 1rin!i1al !onition% or
substituting anot,"r in 1la!" o+ t," "btor% or subrogating a
t,ir 1"rson in t," rig,t o+ t," !r"itor./ (B &anr"sa @6B).
T," t"r* -1rin!i1al !onitions/ in Art. 16A1 o+ t," N"3
Ci$il Co" s,oul b" !onstru" to in!lu" a !,ang" in t," 1"rio
to !o*1l# 3it, t," obligation% 3,i!, !,ang" in t," 1"rio 3oul
onl# b" 1artial no$ation% sin!" t," 1"rio *"r"l# a++"!ts t," 1"r.
+or*an!"% not t," !r"ation o+ t," obligation. (Ong $. 7ogPalbal%
5?1 SC5A @A? F6??6G).
(6) No Di++"r"n!" in Ci$il an Co**on La3 Con!"1ts o+
No$ation
-7"t3""n t," !i$il an !o**on la3% 3it, r"+"r"n!" to t,"
"4tinguis,*"nt o+ on" obligation b# t," !r"ation o+ anot,"r%
t,"r" s""*s to b" no i++"r"n!". ;n"r bot, s#st"*s o+ juris1ru.
"n!"% in or"r to "4tinguis, on" obligation b# t," !r"ation o+
anot,"r% t," "4tinguis,*"nt *ust b" *a" to !l"arl# a11"ar./
(Tiu Sui!o $. Ha$ana% @5 P,il. C?C).
-A no$ation% un"r t," rul"s o+ t," Ci$il La3% 3,"n!" t,"
t"r* ,as b""n introu!" into t," *o"rn no*"n!latur" o+ our
!o**on la3 juris1ru"n!"% 3as a *o" o+ "4tinguis,ing on"
obligation b# anot,"r2 t," substitution% not o+ a n"3 1a1"r or
not"% but o+ a n"3 obligation% in li"u o+ an ol on"% t," "++"!t o+
Art. 16A1
3,i!, 3as to 1a#% issol$"% or ot,"r3is" is!,arg" it./ (Iors
an P,ras"s% Vol. 5% 1. @B@B).
Art. 16A1
(9) Dual Pur1os" or Fun!tion o+ No$ation
-As !oul b" s""n% unli<" ot,"r *o"s o+ "4tin!tion o+ ob.
ligations% no$ation is a jurii!al a!t o+ ual +un!tion in t,at at
t," ti*" it "4tinguis,"s an obligation% it !r"at"s a n"3 on" in
li"u o+ t," ol./ (>o$8t. o+ t," P.I. $. 7autista% FCAG 9C O.>. No.
AC% 1. 1BB?).
FNOTE' I,il" a tru" or 1ro1"r no$ation "4tinguis,"s an
obligation% a 1artial% *oi+i!ator# or i*1"r+"!t no$ation *"r"l#
*oi+i"s t," ol obligation. T,us% Art. 16A1 sa#s -Obligations
*a# b" &ODIFIED b# . . ./ (S"" TS% F"b. 1?% 1A5?). &or"o$"r%
sin!" a n"3 or *oi+i" obligation aris"s% no$ation -o"s not
o1"rat" as an absolut" but onl# as a r"lati$" "4tin!tion./ (B
&anr"sa @6B).G
(@) Dins o+ No$ation
(a) A!!oring to Its Obj"!t or Pur1os"
1) 5"al or Obj"!ti$" 0 (!,anging t," obj"!t or t," 1rin!i.
1al !onitions o+ t," obligation). (Art. 16A1% 1ar. 1).
6) P"rsonal or Subj"!ti$" 0 (C,ang" o+ P"rsons)
A) Substituting t," 1"rson o+ t," "btor (E41ro*i.
sion or D"l"ga!ion)
7) Subrogating a t,ir 1"rson in t," rig,ts o+ t,"
!r"itor (!,ang" o+ !r"itor *a# b" b# agr""*"nt
0 -!on$"ntional subrogation%/ or b# o1"ration
o+ la3 0 -l"gal subrogation/)
9) &i4" (C,ang" o+ Obj"!t an Parti"s)
(b) A!!oring to t," For* o+ Its Constitution
1) "41r"ss
6) i*1li" (3,"n t," t3o obligations ar" "ss"ntiall#
in!o*1atibl" 3it, "a!, ot,"r)
(!) A!!oring to Its E4t"nt or E++"!t
1) total or "4tin!ti$" no$ation (3,"n t," ol obligation
Art. 16A1
is !o*1l"t"l# "4tinguis,")
Art. 16A1
Iloilo Tra"rs Finan!"% In!. $. H"irs
o+ Os!ar Soriano% =r.% "t al.
>5 1@A6B9% =un. 16% 6??9
FACTS' T," 1arti"s to a !as" +or t," !oll"!tion
o+ a loan in!r"as" t," in"bt"n"ss u" to a!!ruing
int"r"st% +ro* P6A?%6A1 to P@91%6??. T," !o*1ro.
*is" agr""*"nt "4t"n" t," 1"rio o+ 1a#*"nt an
1ro$i" +or n"3 t"r*s o+ 1a#*"nt% an 1ro$i" +or
a 3ai$"r o+ !lai*s% !ount"r!lai*s% attorn"#8s +""s% or
a*ag"s t,at t," "btors *ig,t ,a$" against t,"ir
!r"itors. Ho3"$"r% t," s"ttl"*"nt n"it,"r !an!"ll"%
nor *at"riall# alt"r" t," usual !laus"s in t," r"al
"stat" *ortgag"s% ".g.% t," +or"!losur" o+ t," *ort.
gag" 1ro1"rt# in !as" o+ "+ault. Issu"' Coul it b"
sai t,at t," original obligation o+ t," "btors ,a
b""n i*1li"l# *oi+i"J
HELD' K"s. No$ation is *"r"l# *oi+i!ator#
3,"r" t," !,ang" broug,t about b# an# subs"Eu"nt
agr""*"nt is *"r"l# in!i"ntal to t," *ain obligation
(".g.% a !,ang" o+ int"r"st rat"s). (7an< o+ P,ili11in"s
Islans $. Abala"jo% 59 P,il. 1@) or an "4t"nsion o+
ti*" to 1a#. (Daban<alan Sugar Co. $. Pa!,"!o% 55
P,il. 555).
No$ation o+ a !ontra!t *a# "it,"r b" "4tin!ti$"
or *oi+i!ator#% *u!, b"ing "1"n"nt on t," natur"
o+ t," !,ang" an t," int"ntion o+ t," 1arti"s.
E4tin!ti$" no$ation is n"$"r 1r"su*"2 t,"r"
*ust b" an "41r"ss int"ntion to no$at". In !as"s
3,"r" it is i*1li"% t," a!ts o+ t," 1arti"s *ust !l"arl#
"*onstrat" t,"ir int"nt to issol$" t," ol obligation
as t," *o$ing !onsi"ration +or t," "*"rg"n!" o+ t,"
n"3 on". I*1li" no$ation n"!"ssitat"s t,at t," ol
obligation is !o*1l"t"l# su1"rs"" b# t," n"3 on".
T," t"st o+ in!o*1atibilit# is 3,"t,"r t,"# !an
stan tog"t,"r% "a!, on" ,a$ing an in"1"n"nt
+"!ts o+% +irst% "4tinguis,ing an "4isting obligation an%
@A?
Art. 16A1
"4ist"n!"% i+ t,"# !annot an ar" irr"!on!ilabl"% t,"
subs"Eu"nt obligation 3oul also "4tinguis, t," +irst.
An "4tin!ti$" no$ation 3oul% t,us% ,a$" t," t3in "+.
+"!ts o+% +irst% "4tinguis,ing an "4isting obligation an%
@A?
Art. 16A1
s"!on% !r"ating a n"3 on" in its st"a. T,is <in o+
no$ation 1r"su11os"s a !on+lu"n!" o+ +our (@) "ss"n.
tial r"Euisit"s' (1) a 1r"$ious $ali obligation% (6) an
agr""*"nt o+ all 1arti"s !on!"rn" to a n"3 !ontra!t%
(9) t," "4tinguis,*"nts o+ t," ol obligation% an (@)
t," birt, o+ a $ali n"3 obligation.
6) 1artial or *oi+i!ator# 0 (t,is is also t"r*" i*1"r.
+"!t or i*1ro1"r no$ation)
FH"r" t," ol obligation is *"r"l# *oi+i"2 t,us%
it still r"*ains in +or!" "4!"1t inso+ar as it ,as b""n
*oi+i". S,oul t,"r" b" an# oubt as to 3,"t,"r
t," no$ation is total or 1artial% it s,all b" 1r"su*"
to b" *"r"l# *oi+i!ator#. (TS% D"!. 9?% 1A95).G
(5) 5"Euisit"s +or No$ation (in >"n"ral)
(a) T,"
"4ist"n!
FNOTE'
" o+ a VALID ol obligation.
I+ t," ol obligation is VOID or NON.
ENIST. ENT% t,"r" is not,ing to no$at".
(&aa*ba
Va. " Aiart" $. Tu*an"ng% BB
P,il.
6) I+ t," ol obligation is VOIDA7LE%
no$a. tion is still 1ossibl" 1ro$i" t,"
obligation ,as not #"t b""n annull".
(Art. 16AB% Ci$il Co").G
(b) T," int"nt to "4tinguis, or to *oi+# t," ol obligation b# a
substantial i++"r"n!" (t," "4tinguis,*"nt or *oi+i!ation
its"l+ is a 5ES;LT o+ no$ation).
(!) T," !a1a!it# an !ons"nt o+ all t," 1arti"s ("4!"1t in t,"
!as" o+ "41ro*ision% 3,"r" t," ol "btor o"s not 1arti!i.
1at").
7o#sa3% "t al. $. Int"r1,il Pro*otions% "t al.
>5 665A?% &ar. 6?% 1ABC
"la# or 1r"$"nt t," +ul+ill*"nt o+ t," obligation b# r"ason
@A1
Art. 16A1
T," !ons"nt o+ t," !r"itor to t," !,ang" o+ "btors%
3,"t,"r in "41ro*ision or "l"ga!ion% is an inis1"nsabl"
r"Euir"*"nt. Substitution o+ on" "btor +or anot,"r *a#
"la# or 1r"$"nt t," +ul+ill*"nt o+ t," obligation b# r"ason
@A1
Art. 16A1
o+ t," inabilit# or insol$"n!# o+ t," n"3 "btor. H"n!"% t,"
!r"itor s,oul agr"" to a!!"1t t," substitution in or"r
t,at it *a# b" bining on ,i*.
E4a*1l"' In a !ontra!t 3,"r" N is t," !r"itor an K
is t," "btor% i+ K "nt"rs into a !ontra!t 3it, T un"r 3,i!,
," trans+"rs to T all ,is rig,ts un"r t," +irst !ontra!t% to.
g"t,"r 3it, t," obligations t,"r"un"r% but su!, trans+"r
is not !ons"nt" to or a11ro$" b# N% t,"r" is no no$ation.
N !an still bring ,is a!tion against K +or t," 1"r+or*an!"
o+ t,"ir !ontra!t or a*ag"s in !as" o+ br"a!,.
() T," $aliit# o+ t," n"3 obligation. (Tiu Sui!o $. Habana%
@5 P,il. C?C).
FNOTE' I+ t," n"3 obligation is subj"!t to a sus1"nsi$"
!onition% su!, as t," obtaining o+ so*" signatur"s% an
t," !onition o"s not *at"rialiH"% su!, n"3 obligation
n"$"r b"!a*" $ali or "++"!ti$"% so no no$ation ,as r"sult".
(&artin"H $. Ca$i$"s% 65 P,il. 5B1). I+ t," !ont"*1lat" n"3
obligation is "*boi" in a *"r" ra+t% 3,i!, is unsign"
an t,"r"+or" not !ons"nt" to% no n"3 obligation is !r"at"
b"!aus" o+ t," abs"n!" o+ no$ation. (Va!a $. Dos!a% 66 P,il.
9BB).G
Torr"s% "t al. $. CA
>5 A65@?% D"!. 11% 1AA6
5aising +or t," +irst ti*" t," issu" o+ no$ation onl#
3,"n t," !as" 3as alr"a# in t," Court o+ A11"als o"s
not "s"r$" !onsi"ration in t,is 1"tition.
(6) No$ation Is Not On" o+ t," &"ans 5"!ogniH" b# t,"
5"$is" P"nal Co" I,"r"b# Cri*inal Liabilit# !an b"
E4tinguis,"
SSS $. D"1t. o+ =usti!"% "t al.
IV o+ t," n"3 Ci$il Co")% is not on" o+ t," *"ans r"!ogniH"
b# t," 5"$is" P"nal Co" 3,"r"b# !ri*inal liabilit# !an b"
@A6
Art. 16A1
>5 15B191% Aug. B% 6??C
No$ation% a !i$il la3 !on!"1t r"lating to t," *oi+i!ation
o+ obligations (S"" Arts. 16A1.19?@% S"!. 6% C,a1. @% Titl" I% 7oo<
IV o+ t," n"3 Ci$il Co")% is not on" o+ t," *"ans r"!ogniH"
b# t," 5"$is" P"nal Co" 3,"r"b# !ri*inal liabilit# !an b"
@A6
Art. 16A1
"4tinguis,"2 ,"n!"% t," rol" o+ no$ation *a# onl# b" to "it,"r
1r"$"nt t," ris" o+ !ri*inal liabilit# or to !ast oubt on t," tru"
natur" o+ t," original basi! trans1ortation% 3,"t,"r or not it 3as
su!, t,at its br"a!, 3oul not gi$" ris" to 1"nal r"s1onsibilit#%
as 3,"n *on"# loan" is *a" to a11"ar as a "1osit% or ot,"r
si*ilar isguis" is r"sort" to. (P"o1l" $. N"r#% L.1A56C% F"b. 5%
1A6@). For t,at *att"r% no$ation ,as b""n in$o<" to r"$"rs"
!on$i!tions in !as"s 3,"r" an un"rl#ing !ontra!t initiall# ".
+in" t," r"lation o+ t," 1arti"s.
Not" t,at t," !as" o+ CruH $. >angan (@@9 P,il. B56)% !it"
b# 1"tition"rs in t,"ir 1l"aings% 3,"r" t," $i!ti*s o+ robb"r#
3"r" "4on"rat" +ro* liabilit#% +in no a11li!ation to t," instant
!as".
CruH $. >angan
@@9 P,il. B56 (6??9)
FACTS' Dr. Filonila O. CruH Ca*ana#a Distri!t Dir"!tor o+
TESDA% boar" t," L5T +ro* S"n. Pu#at A$". to &onu*"nto
3,"n ,"r ,anbag 3as slas," an t," !ont"nts 3"r" stol"n
b# an uni"nti+i" 1"rson. A*ong t,os" stol"n 3"r" ,"r 3all"t
an t," go$"rn*"nt.issu" !"llular 1,on". S," t,us r"1ort"
t," in!i"nt to t," 1oli!" aut,oriti"s. Ho3"$"r% t," t,i"+ 3as not
lo!at"% an t," !"ll1,on" 3as not r"!o$"r". S," also r"1ort"
t," loss to t," 5"gional Dir"!tor o+ TESDA% an s," r"Eu"st"
t,at s," b" +r"" +ro* a!!ountabilit# +or t," !"ll1,on". T," 5"si.
"nt Auitor o+ t," COA "ni" ,"r r"Eu"st on t," groun t,at
s," la!<" t," ilig"n!" r"Euir" in t," !usto# o+ go$"rn*"nt
1ro1"rt# an 3as or"r" to 1a# t," 1ur!,as" $alu" in t," total
a*ount o+ P@%69B. T," COA +oun no su++i!i"nt justi+i!ation to
grant t," r"Eu"st +or r"li"+ +ro* a!!ountabilit#. Issu"' Is t,"
COAOs +inings !orr"!tJ
HELD' T," Su1r"*" Court r"$"rs" t," ruling an +oun
t,at riing t," L5T !annot 1"r s" b" "noun!" as a n"glig"nt
a!t *or" so b"!aus" CruHOs *o" o+ transit 3as in+lu"n!" b#
ti*" an *on"# !onsi"ration2 t,at s," boar" t," L5T to
!"ll1,on" s,oul not ,in"r on" +ro* boaring t," L5T !oa!,
B6A
Art. 16A1
b" abl" to arri$" in Caloo!an in ti*" +or 9 1.*. *""ting2 t,at
an# 1ru"nt an rational 1"rson un"r si*ilar !ir!u*stan!"s
!an r"asonabl# b" "41"!t" to o t," sa*"2 t,at 1oss"ssion o+ a
!"ll1,on" s,oul not ,in"r on" +ro* boaring t," L5T !oa!,
B9?
Art. 16A6
as CruH i !onsi"ring t,at 3,"t,"r s," ro" a j""1 or bus%
t," ris< o+ t,"+t 3oul ,a$" also b""n 1r"s"nt2 t,at b"!aus"
o+ ,"r r"lati$"l# lo3 1osition an 1a#% s," 3as not "41"!t" to
,a$" ,"r o3n $",i!l" or to ri" a ta4i!ab2 s," i not ,a$" a
go$"rn*"nt.assign" $",i!l"2 t,at 1la!ing t," !"ll1,on" in bag
a3a# as s," i is orinaril# su++i!i"nt !ar" o+ a !"ll1,on" 3,il"
tra$"lling on boar t," L5T2 an t,at t," r"!ors i not s,o3
an# s1"!i+i! a!t o+ n"glig"n!" on ,"r 1art an n"glig"n!" !an
n"$"r b" 1r"su*".
Art. 16A6. In or"r t,at an obligation *a# b" "4tinguis,"
b# anot,"r 3,i!, substitut"s t," sa*"% it is i*1"rati$" t,at
it b" so "!lar" in un"Eui$o!al t"r*s% or t,at t," ol an
t," n"3 obligation b" on "$"r# 1oint in!o*1atibl" 3it,
"a!, ot,"r.
CO&&ENT'
(1) E41r"ss an I*1li" No$ation
A!!oring to t," *ann"r or +or* in 3,i!, t," no$ation ,as
b""n !onstitut" or *a"% no$ation is !lassi+i" into'
(a) "41r"ss no$ation% it is "!lar" in un"Eui$o!al t"r*s. (Art.
16A6).
(b) i*1li" no$ation (!o*1l"t" or substantial in!o*1atibilit#).
(7orja $. &ariano% 9B O.>. 65C62 s"" >u"rr"ro $. Court o+
A11"als% L.616C6% F"b. 6B% 1A6A).
(6) Ho3 I*1li" No$ation &a# 7" &a"
I*1li" no$ation is on" b# *a<ing S;7STANTIAL
CHAN>ES 0
(a) in t," obj"!t or subj"!t *att"r o+ t," !ontra!t (E4a*1l"'
"li$"r# o+ a !ar inst"a o+ a ia*on ring)
(b) in t," !aus" or !onsi"ration o+ t," !ontra!t FE4a*1l"' an
u13ar !,ang" in t," 1ri!". (&atut" $. H"rnan"H% 6 P,il.
6B).G
B91
Art. 16A6
(NOTE' 5"u!tion in 1ri!" i*1li"s a r"*ission.)
(!) in t," 1rin!i1al t"r*s or !onitions o+ t," !ontra!t
B96
Art. 16A6
FE4a*1l"s'
1) i+ a "bt subj"!t to a !onition is *a" an absolut"
on" 3it,out a !onition. (&a!onra# $. 5uiH% 66 P,il.
566).
6) r"u!tion o+ t," t"r* or 1"rio originall# sti1ulat".
(Daban<alan Sugar Co. $. Pa!,"!o% 55 P,il. 555).
9) 3,"n% 3it,out t," !ons"nt o+ so*" subs!rib"rs% t,"
!a1ital sto!< o+ a !or1oration is in!r"as". H"r" t,"
subs!rib"rs 3,o i not !ons"nt to t," in!r"as" ar"
r"l"as" or +r"" +ro* t,"ir subs!ri1tion. (National
E4!,ang" Co. $. 5a*os% 51 P,il. 91?).G
FNOTE' No$ation t,ru !,ang" o+ t," obj"!t%
!aus"% or 1rin!i1al t"r*s an !onitions is not 1r".
su*"2 !l"ar 1roo+ o+ no$ation *ust b" gi$"n. (&ar.
tin"H $. Ca$i$"s% 65 P,il. 5A1).G
(9) Cas"s
National E4!,ang" Co.% Lt. $. 5a*os
51 P,il. 91?
FACTS' A !or1oration 3as b"ing "stablis,". A subs!rib"
to so*" s,ar"s o+ sto!< in t," 1ro1os" !or1oration. Iit,out A8s
!ons"nt% t," aut,oriH" !a1ital o+ t," !or1oration 3as in!r"as".
Issu"' Is A r"li"$" o+ ,is obligation to 1a# +or sai s,ar"sJ
HELD' K"s. -On" 3,o subs!rib"s +or sto!< o+ a 1ro1os"
!or1oration is r"li"$" o+ ,is obligation% i+% 3it,out ,is !ons"nt%
t," aut,oriH" !a1ital sto!< o+ t," !or1oration is in!r"as"./
5ios% "t al. $. =a!into% Pal*a # Honos
@A P,il. C
FACTS' A r"nt" a ,ous" +ro* 7. In t," !ontra!t o+ l"as"%
t," l"ss"" A 3as gi$"n aut,orit# to assign t," l"as" to strang"rs.
7"!aus" o+ t,is A l"as" it to C. Issu"' Is A r"l"as" +ro* ,is
obligation to3ars t," l"ssor 7J
HELD' -A 1ro$ision in a l"as" un"r 3,i!, t," l"ss"" is
B99
Art. 16A6
aut,oriH" to assign it to strang"rs to t," !ontra!t o"s not% in
t," "$"nt o+ su!, assign*"nt% r"l"as" t," original l"ss"" +ro*
B9@
Art. 16A6
,is obligations to t," l"ssor% unl"ss it b" s1"!i+i!all# agr"" t,at
t," assign*"nt s,all ,a$" t,at "++"!t./
P"tt"rson $. AHaa
B P,il. @96
FACTS' A o3" C P5?? an P9%??? "$i"n!" b# t3o
1ro*issor# not"s. Lat"r% a n"3 loan o+ P9?? 3as obtain". 7#
"41r"ss agr""*"nt% t," t,r"" "bts 3"r" !onsoliat" into on"
1ro*issor# not" +or P9%B?? (P5?? 1lus P9%??? 1lus P9??). T,at
t," last 1ro*issor# not" 3as to ta<" t," 1la!" o+ t," ot,"rs 3as
agr"" u1on. Issu"' Is t,"r" no$ation ,"r"J
HELD' K"s% in $i"3 o+ t," !,ang"s *a".
(NOTE' Ha t,"r" b""n no 1roo+ t,at t," t,ir not" in.
t"n" to r"1la!" t," ot,"rs% t,"r" r"all# 3oul b" not,ing
in!onsist"nt 3it, ,a$ing i++"r"nt not"s +or i++"r"nt a*ount. I+
t,"r" is no no$ation% all t," obligations 3oul r"*ain subsisting
an t," "btor 3oul b" liabl" +or all.)
>anHon $. =ug" San!,o
>5 56@5?% =ul. 65% 1AB9
I+ a *ortgag" agr""*"nt is r"1la!" b# a sur"t# bon% t,"
*ortgag""8s rig,t 3oul b" abrig". A *ortgag" li"n is a rig,t
in r"* an is ins"1arabl" +ro* t," 1ro1"rt#% 3,il" t," li"n o+ a
sur"t# is onl# a rig,t in 1"rsona*.
T"o+isto >uingona% =r. $. Cit# Fis!al o+ &anila
L.6??99% A1r. @% 1AB@
I+ a trust r"lations,i1 is no$at" to a "btor.!r"itor or
loan r"lations,i1 1rior to t," +iling o+ a !ri*inal in+or*ation b#
t," +is!al% t,"r" 3oul b" no !ri*inal liabilit# +or "sta+a.
(@) Instan!"s I,"n t," Court H"l T,at T,"r" Ias NO E4.
tin!ti$" No$ation
(H"r" t," original !ontra!t or obligation r"*ains% subj"!t
B95
Art. 16A6
onl# to t," slig,t *oi+i!ations introu!". In ot,"r 3ors% onl#
a *oi+i!ator# no$ation ,as b""n "++"!t".)
B96
Art. 16A6
(a) I,"n t,"r" ar" onl# slig,t alt"rations or *oi+i!ations in
t," !onstru!tion 1lans o+ a builing. (Tiu Sui!o $. Habana%
@5 P,il. C?C).
(b) I,"n t," n"3 !ontra!t *"r"l# !ontains su11l"*"ntar#
agr""*"nt. (Asiati! P"trol"u* Co. $. :uar# Si* Pao% FCAG
@? O.>. Su11. No$. 1% 1A@1% 1. @@).
(!) I,"n aitional int"r"st is agr"" u1on. (7an< o+ t," P.I.
$. >oo!,% @5 P,il. 51@).
() I,"n aitional s"!urit# is gi$"n. (7an< o+ t," P.I. $. H"r.
rig"% @C P,il. 5C).
(") I,"n% a+t"r a +inal jug*"nt% a !ontra!t 3as "nt"r" into
1r"!is"l# to 1ro$i" a *"t,o o+ 1a#*"nt ot,"r t,an t,at
stat" in t," jug*"nt. (Ta1anta $. 5ota"!,"% 61 P,il.
15@).
FNOTE' 7ut t," Su1r"*" Court ,as ,"l t,at i+ t,"
obj"!t o+ t," n"3 !ontra!t is to s"ttl" t," jug*"nt% b#
r"u!ing t," a*ount stat" in t," jug*"nt% an b# sti1u.
lating an attorn"#8s +""s in !as" o+ non.1a#*"nt% an b#
ins"rting a 1"nalt# !laus"% t," jug*"nt *a# b" !onsi"r"
to ,a$" b""n no$at". (Fua Ca* Lu $. Ka1 Fau!o% C@ P,il.
6BC).G
(+) I,"n a guarantor "nt"rs into an agr""*"nt 3it, t," !r"i.
tor t,at ," (t," guarantor) 3ill also b" a 1rin!i1al "btor.
(H"r" t," original 1rin!i1al "btor is not r"l"as" +ro* ,is
obligation). (Santos $. 5"#"s% 1? P,il. 169).
(g) I,"n t," !r"itor in t," *"anti*" r"+rains +ro* (or +or.
b"ars +ro*) suing t," "btor (T"al &otors $. Contin"ntal
Ins. Co.% 5A P,il. B1@)% or "$"n 3,"n t," !r"itor *"r"l#
"4t"ns t," t"r* o+ 1a#*"nt% +or ,"r" t," 1"rio *"r"l#
a++"!ts t," 1"r+or*an!"% not t," !r"ation o+ t," obligation.
(In!,austi $. Kulo% 96 P,il. ACB an Ta1anta $. D" 5ota"!,"%
61 P,il. 15@).
FNOTE' Ho3"$"r% guarantors 3,o o not !ons"nt to
t," "4t"nsion o+ t"r* ar" r"l"as" +ro* t,"ir obligation o+
B9C
Art. 16A6
guarant# b# "41r"ss 1ro$ision o+ t," la3% an not b"!aus" o+
an# "4tin!ti$" *oi+i!ation. (S"" Art. 6?CA% Ci$il Co").G
B9B
Art. 16A6
(,) I,"n t," 1la!" o+ 1a#*"nt is !,ang" or 3,"n t,"r" is a
$ariation in t," a*ount o+ 1artial 1a#*"nts. (B &anr"sa
@6A).
(i) I,"n a 1ubli! instru*"nt is "4"!ut" to !on+ir* a $ali
!ontra!t% 3,"t,"r oral or in a 1ri$at" instru*"nt. (Ibi.)
(j) I,"n 1a#*"nt o+ t," 1ur!,as" 1ri!" +or !"rtain tru!<s is
*a" b# t," "4"!ution o+ a 1ro*issor# not" +or sai 1ri!".
H"r"% t,"r" is no no$ation o+ t," !ontra!t o+ sal". (Lun"ta
&otor Co. $. 7aguio 7us Co.% L.1515C% =un. 9?% 1A6?).
(5) Cas"s
Tiu Sui!o $. Habana
@5 P,il. C?C
FACTS' A "ngag" 7 to !onstru!t a builing +or ,i* (A). In
t," 1ro!"ss o+ t," !onstru!tion% *an# 3ritt"n alt"rations 3"r"
agr"" u1on an r"all# *a"% but it 3as 1ro$" t,at "ss"ntiall#%
t," 1lans +ollo3" 3"r" t," original 1lans. It *ust b" stat"
t,at in t," !ontra!t% a s1"!i+i! a*ount +or t," !onstru!tion 3as
agr"" u1on. Lat"r% 3,"n t," builing 3as +inis,"% t," !on.
tra!tor 3ant" to abanon t," original 1ri!" on t," groun t,at
t," alt"rations in t," builing ,a !aus" an abanon*"nt or
a no$ation o+ t," ol !ontra!t. T," !ontra!tor t,"r"+or 3ant"
to b" 1ai% not on t," basis o+ t," !ontra!t% but on t," basis o+
Euantu* *"ruit. T," o3n"r i not !ons"nt to t,is. Issu"' Ias
t,"r" no$ation ,"r"J
HELD' T,"r" 3as no no$ation ,"r". T," ol !ontra!t 3as
not abanon" sin!"% a+t"r all% t," original 1lans 3"r" +ollo3".
T,"r"+or"% 3it,out t," !ons"nt o+ t," o3n"r% t," !ontra!tor !an.
not tr"at t," ol !ontra!t as abanon". T," !ontra!tor% 3it,out
t," !ons"nt o+ t," o3n"r% !annot r"!o$"r on t," basis o+
Euantu* *"ruit (on t," 3or< on"). 5at,"r% t," !ontra!t 1ri!"
3ill +or* t," basis +or 1a#*"nt% 1lus t," !ost o+ t," alt"rations.
(NOTE' ;n"r Art. 1C6@ o+ t," N"3 Ci$il Co"% t," !ontra!.
tor !annot "*an an in!r"as" in t," 1ri!" unl"ss t," !,ang"
in t," 1lans an s1"!i+i!ations 3as aut,oriH" in 3riting an
t," aitional 1ri!" to b" 1ai 3as also "t"r*in" in 3riting
B9A
Art. 16A6
b# bot, 1arti"s. ;n"r t," ol Ci$il Co"% no su!, r"Euisit" in
3riting 3as "ss"ntial.)
B@?
Art. 16A6
Asiati! P"trol"u* Co. $. :ua# Si* Pao
(C.A.) @? O.>. Su11. No$. 1% 1A@1% 1. @@
FACTS' A% in a !ontra!t o+ ag"n!# 3it, 7% agr"" to b" t,"
ag"nt o+ t," latt"r. In t," !ours" o+ t," ag"n!#% t," ag"nt 3as
gi$"n !"rtain 1ri$il"g"s an +a!iliti"s% 3,i!,% ,o3"$"r% 3"r" not
in!o*1atibl" 3it, t," ol agr""*"nt. Issu"' Ias t,"r" no$ation
,"r"J
HELD' T,"r" 3as no no$ation ,"r" b"!aus" t,"r" is r"al
in. !o*1atibilit# b"t3""n t," ol an t," n"3 agr""*"nts.
7"si"s% t," n"3 agr""*"nt 3as *"r"l# o+ a su11l"*"ntal
natur".
Ta1anta $. 5ota"!,"
61 P,il. 15@
FACTS' In a +inal jug*"nt% Ta1anta 3as "!lar" t,"
"btor o+ OrtiH. Lat"r% Ta1anta an OrtiH agr"" t,at t," jug.
*"nt 3as to b" "4tinguis," b# 1a#*"nt in *ont,l# install.
*"nts% 3it, t," sti1ulation t,at in !as" o+ "+ault% OrtiH !oul
su" Ta1anta. Ta1anta lat"r "+ault". OrtiH% to 1rot"!t ,is
rig,ts% obtain" an "4"!ution o+ t," +inal jug*"nt r"+"rr" to%
an so t," 1ro1"rt# o+ Ta1anta 3as l"$i" u1on. Ta1anta no3
institut" t,is a!tion +or a*ag"s on t," groun t,at t," "4"!u.
tion 3as i*1ro1"r% t," jug*"nt ,a$ing b""n "4tinguis," b#
no$ation.
HELD' T," !ontra!t i not "41r"ssl# "4tinguis, t," obli.
gations "4isting in sai jug*"nt. On t," !ontrar#% it "41r"ssl#
r"!ogniH"s t," obligations "4isting b"t3""n t," 1arti"s in sai
jug*"nt% an "41r"ssl# 1ro$i"s a *"t,o b# 3,i!, t," sa*"
s,all b" "4tinguis,". T," !ontra!t% inst"a o+ !ontaining 1ro$i.
sions absolut"l# in!o*1atibl" 3it, t," obligations o+ t," jug.
*"nt% "41r"ssl# rati+i"s su!, obligations an !ontains 1ro$isions
+or satis+#ing t,"*. T," sai agr""*"nt si*1l# ga$" Ta1anta a
*"t,o an *or" ti*" +or t," satis+a!tion o+ t," jug*"nt. It i
not "4tinguis, t," obligations !ontain" in t," jug*"nt until
t," t"r*s o+ sai !ontra!t ,a b""n +ull# !o*1li" 3it,. Ha
Ta1anta !ontinu" to !o*1l# 3it, t," !onitions o+ t," !ontra!t%
B@1
Art. 16A6
," *ig,t ,a$" su!!"ss+ull# in$o<" its 1ro$isions against t," is.
suan!" o+ an "4"!ution u1on t," sai jug*"nt. T," !ontra!t an
t," 1un!tual !o*1lian!" 3it, its t"r*s onl# "la#" t," rig,t
B@6
Art. 16A6
o+ t," "+"nant to an "4"!ution u1on t," jug*"nt. T,"r" 3as
t,"r"+or" no no$ation% an "4"!ution 3as 1ro1"r.
Fua Ca* Lu $. Ka1 Fau!o
C@ P,il. 6BC
FACTS' A "btor 3as% b# +inal jug*"nt% or"r" to 1a#
P1%5??% 3it, l"gal int"r"st an !osts. Lat"r% t," "btor "4"!ut"
a *ortgag" in +a$or o+ t," jug*"nt !r"itor !ontaining t," +ol.
lo3ing t"r*s'
1) T," "bt 3as r"u!" to P1%6??% 1a#abl" in +our *ont,l#
install*"nts o+ P9?? "a!,.
6) T," "btor8s !a*arin 3as *ortgag" to t," !r"itor.
9) In !as" o+ +ailur" to 1a# an# o+ t," install*"nts% t," "btor
3oul 1a# +or attorn"#8s +""s an jui!ial !osts 0 in t,"
a!tion to b" broug,t b# t," !r"itor.
@) T," i++"r"n!" o+ P9?? 3oul ,a$" to b" gi$"n to t," !r"i.
tor.
5) T," agr""*"nt 3as "nt"r" into as a s"ttl"*"nt o+ t,"
jug*"nt.
ISS;E' Ias t,"r" "4tin!ti$" no$ationJ
HELD' T,"r" 3as "4tin!ti$" no$ation% in $i"3 o+ t,"
in!o*1atibilit# b"t3""n t," jug*"nt an t," !ontra!t% !on.
si"ring t," +a!t t,at t," jug*"nt 3as 1a#abl" at on!"% 3as
uns"!ur"% an !ontain" a sti1ulation +or attorn"#8s +""s. T,"
!ontra!t 3as NOT a *"r" "4t"nsion o+ t," 1"rio 3it,in 3,i!,
to 1a# t," jug*"nt b"!aus" t," !ontra!t its"l+ stat" t,at t,"
1ro*is" to 1a# t," P1%6?? 3as 1r"!is"l# *a" as a s"ttl"*"nt
o+ sai jug*"nt. T,"r" 3oul ,a$" b""n no s"ttl"*"nt ,a it
not b""n i*1li!itl# agr"" t,at t," obligation in t," jug*"nt
3as !onsi"r" b# bot, 1arti"s as alr"a# "4tinguis,".
In!,austi an Co. $. Kulo
9@ P,il. ACB
FACTS' Four 1"o1l" 3"r" soliaril# boun in a !ontra!t
B@9
Art. 16A6
*a" on Aug. 16% 1A?A. On &a# 16% 1A11% t,r"" o+ t,"* *a"
a !ontra!t 3it, t," !r"itor gi$ing t," t,r"" "btors i++"r"nt
B@@
Art. 16A6
t"r*s an !onitions +or t," 1a#*"nt o+ t," obligation. Sai
n"3 !ontra!t r"a++ir*" t," liabilit# o+ t," "btor not 1r"s"nt.
I,"n t," abs"nt "btor% >r"gorio Kulo% 3as as<" to 1a#% ,"
1r"s"nt" t," "+"ns" o+ no$ation to t," "++"!t t,at t," s"!on
!ontra!t is in!o*1atibl" 3it, t," +irst% an t,at% t,"r"+or"% ,"
s,oul not b" *a" to 1a#. Issu"' Is >r"gorio Kulo !orr"!tJ
HELD' No% >r"gorio Kulo is 3rong. Far +ro* 1ro$iing t,at
t," obligation o+ +our 3as b"ing substitut" b# t," obligation
o+ t,r""% t," n"3 !ontra!t rati+i" or r"a++ir*" t," obligation
o+ t," abs"nt "btor% an t,"r"+or" t," abs"nt "btor% >r"gorio
Kulo% *ust 1a#. Sai t," Su1r"*" Court'
-Iit, r"s1"!t to t," t,ir% t,"r" !an also b" no oubt t,at
t," !ontra!t o+ &a# 16% 1A11% o"s not !onstitut" a no$ation o+
t," +or*"r on" o+ Aug. 16% 1A?A% 3it, r"s1"!t to t," ot,"r "btors
3,o "4"!ut" t,is !ontra!t% or *or" !on!r"t"l#% 3it, r"s1"!t to t,"
"+"nant >r"gorio Kulo' First% b"!aus" in or"r t,at an obliga.
tion *a# b" "4tinguis," b# anot,"r 3,i!, substitut"s it% it is
n"!"ssar# t,at it s,oul b" so "41r"ssl# "!lar" or t,at t," ol
an t," n"3 b" in!o*1atibl" in all 1oints%88 an t," instru*"nt o+
&a# 16% 1A11% +ar +ro* "41r"ssl# "!laring t,at t," obligation o+
t," t,r"" 3,o "4"!ut" it substitut"s t," +or*"r sign" b# >r"gorio
Kulo an t," ot,"r "btors% "41r"ssl# an !l"arl# stat" t,at t,"
obligation o+ >r"gorio Kulo to 1a# t," t3o ,unr" an +i+t#.t,r""
t,ousan an o 1"sos su" +or "4ists% sti1ulating t,at t," suit
*ust !ontinu" its !ours"% an i+ n"!"ssar#% t,"s" t,r"" 1arti"s 3,o
"4"!ut" t," !ontra!t on &a# 16% 1A11% 3oul !oo1"rat" in or"r
t,at t," a!tion against >r"gorio Kulo *ig,t 1ros1"r (Ct, 1oint
in t," stat"*"nt o+ +a!ts)% 3it, ot,"r un"rta<ings !on!"rning
t," "4"!ution o+ t," jug*"nt 3,i!, *ig,t b" r"n"r" against
>r"gorio Kulo in t,is sa*" suit. -It is al3a#s n"!"ssar# to stat"
t,at it is t," int"ntion o+ t," !ontra!ting 1arti"s to "4tinguis, t,"
+or*"r obligation b# t," n"3 on". (=ug*"nt in !assation% =ul. B%
1A?A). T,"r" "4ists no in!o*1atibilit# b"t3""n t," ol an t,"
n"3 obligation as 3ill b" "*onstrat" in t," r"solution o+ t,"
last 1oint% an +or t," 1r"s"nt 3" 3ill *"r"l# r"it"rat" t," l"gal
o!trin" t,at an obligation to 1a# a su* o+ *on"# is not no$at"
in a n"3 instru*"nt 3,"r"in t," ol is rati+i"% b# !,anging onl#
t," t"r* o+ 1a#*"nt an aing ot,"r obligations not in!o*1at.
B@5
Art. 16A6
ibl" 3it, t," ol on".88 (=ug*"nts in !assation o+ =un. 6B% 1A?@
an o+ =ul. B% 1A?A).
B@6
Art. 16A6
P"o1l" $. N"r#
L.1A56C% F"b. 5% 1A6@
FACTS' Sol"a N"r# 3as gi$"n b# F""ria &antillaro t3o
ia*on rings to b" sol b# ,"r. I+ su!!"ss+ul% N"r# 3as su11os"
to r"!"i$" a !o**ission. S," +ail" to r"turn t," rings or t,"ir
!as, $alu"% so t," o3n"r su" ,"r +or "sta+a. I,il" t," !as" 3as
1"ning% s," "4"!ut" a "" o+ !o*1ro*is"% 1ro*ising to 1a#
+or t," *on"# in install*"nts. A+t"r *a<ing on" 1a#*"nt% s,"
i not !ontinu" 1a#ing +or t," balan!". S," no3 !ont"ns t,at
s," oug,t to b" a!Euitt" b"!aus" t," a!!"1tan!" b# t," o3n"r
o+ t," 1artial 1a#*"nt NOVATED t," original r"lation b"t3""n
t," 1arti"s.
HELD' S," is still guilt# o+ "sta+a% +irstl#% b"!aus" t,"
"4a!tion o+ !ri*inal r"s1onsibilit# is so*"t,ing t,at !an b"
r"noun!" onl# b# t," Stat"% not b# t," o++"n" 1art#2 an
s"!onl#% b"!aus" t,"r" 3as no int"nt to "4tinguis, t," original
r"lations,i1. T," no$ation t,"or# *a# 1"r,a1s a11l# P5IO5
to t," +iling o+ t," !ri*inal in+or*ation in !ourt b"!aus" u1 to
t,at ti*"% t," original trust r"lation *a# b" !on$"rt" b# t,"
1arti"s into an orinar# !r"itor."btor situation% t,"r"b# 1la!.
ing t," $i!ti* in "sto11"l s,oul ," insist on t," original trust.
7ut AFTE5 t," +iling o+ t," !as" in !ourt% t," o++"n" 1art#
*a# no long"r i$"st t," 1ros"!ution o+ its 1o3"r to "4a!t t,"
!ri*inal liabilit# as istinguis," +ro* t," !i$il. T," !ri*" b"ing
an o++"ns" against t," Stat"% onl# t," latt"r *a# r"noun!" t,"
!ri*inal !ons"Eu"n!"s. T," a!!"1tan!" o+ 1artial satis+a!tion
!annot in"" "++"!t t," nulli+i!ation o+ a !ri*inal liabilit# t,at
is alr"a# +ull# *atur" an in t," 1ro!"ss o+ jug*"nt. (;.S. $.
&ontan"s% B P,il. 66?2 Ab"to $. P"o1l"% A? P,il. 5B1 an Ca*us
$. Court o+ A11"als% @B O.>. No. 9BAB).
Carlos 7. >onHal"s $. Eulogio S"rrano
L.65CA1% S"1t. 69% 1A6B
FACTS' 7# $irtu" o+ an agr""*"nt 3,i!, 3as on t," sur.
+a!" on" o+ C.O.D. (Cas, on D"li$"r#)% but 3,i!, 3as r"all# an
issu" a !,"!< +or PB%???. T," n"4t a#% s," r"Eu"st" >onHal"s
5?6
Art. 16A6
ag"n!# to s"ll% Carlos 7. >onHal"s "li$"r" to on" Libraa S.
Asis !"rtain +lo3"rs 3ort, a11ro4i*at"l# P1?%???. I,"n t,"
3o*an too< "li$"r# o+ t," +lo3"rs% s," 1ai P6%??? !as, an
issu" a !,"!< +or PB%???. T," n"4t a#% s," r"Eu"st" >onHal"s
5?6
Art. 16A6
not to "1osit t," !,"!< +or s," i not ,a$" su++i!i"nt +uns in
t," ban< as s," ,a not #"t b""n abl" to is1os" o+ t," +lo3"rs.
>onHal"s agr"" b# not "1ositing t," !,"!<. N"arl# a *ont,
lat"r s," *a" a 1artial 1a#*"nt o+ P5%5?? on t," balan!".
5"garing t," r"*aining "bt% s," o++"r" to r"turn t," unsol
+lo3"rs !orr"s1oning to t," a*ount o+ t," "+i!i"n!#. >onHal"s
t,"n su" ,"r +or "sta+a. Issu"' Is s," guilt# o+ "sta+aJ
HELD' S," is not guilt# o+ "sta+a% in $i"3 o+ t," +ollo3ing
r"asons'
(a) T," agr""*"nt% alt,oug, a11ar"ntl# on" o+ C.O.D.% 3as
a!tuall# an ag"n!# to s"ll2 s," !oul r"turn t," unsol
goos inst"a o+ t," 1ri!" t,"r"+or. H"r"% s," is 3illing to
r"turn2 an "$"n i+ s," o"s not% t,"r" 3oul onl# b" a !i$il
obligation% not a !ri*inal o++"ns".
(b) E$"n granting t,at a trust r"lation ,a b""n !r"at" b".
!aus" o+ t," C.O.D. an t," issuan!" o+ t," !,"!<% still t,"r"
3oul b" no liabilit# +or a !ri*" b"!aus" t," 1arti"s% a s,ort
ti*" a+t"r t," "li$"r# o+ t," !,"!<% !,ang" t," original
trust r"lation into an orinar# !r"itor."btor situation.
H"n!"% t," no$ation o+ t," !ontra!t too< 1la!" long b"+or"
t," +iling o+ t," !ri*inal !o*1laint.
La Ca*1ana Foo Prou!ts% In!. $. PCI7% "t al.
>5 @6@?5% =un. 9?% 1AB6
I,"r" t," *ortgag"".ban< agr"" to guarant"" t,"
*ortgagor8s +or"ign loan subj"!t to t," !onition t,at t,"
latt"r s,oul "1osit 3it, t," +or*"r t," 1ro!""s o+ t,"
loan 3,i!, s,oul b" *a" a$ailabl" +or 1a#*"nt to t,"
*ortgagor8s obligation to a lo!al +inan!ial institution an
to s"r$" as 3or<ing !a1ital% t," *ortgag"".ban< i not
substitut" t," *ortgagor as "btor to t," +inan!ial institu.
tion.
3,i!, in!lu" t," 1ar!"ls o+ lan *ortgag" to t," +inan.
5?9
Art. 16A6
T," *ortgag"".ban<8s guarant"" ,as to b" s"!ur"
b# t," +irst *ortgag" on t," ass"ts t,"n *ortgag" to t,"
sai ban< an t," ass"ts o++"r" as aitional s"!uriti"s%
3,i!, in!lu" t," 1ar!"ls o+ lan *ortgag" to t," +inan.
5?9
Art. 16A6
!ial institution. H"n!"% t," *ortgag"".ban< r"Euir"s t,"
+inan!ial institution to l"n t," trans+"r !"rti+i!at"s o+ titl"
!o$"ring t," 1ar!"ls o+ lan *ortgag" b# t," *ortgagor
to t," +inan!ial institution +or t," *ortgag"".ban< to b"
abl" to r"gist"r its *ortgag" t,"r"in.
7isa#a Lan Trans1ortation Co.% In!. $. San!,"H
>5 C@669% Aug. 91% 1ABC
FACTS' A% t," r"!"i$"r o+ 7IST5ANCO% an S "nt"r"
into a s,i11ing ag"n!# !ontra!t 3,"r"b# S 3as !onstitut"
as s,i11ing ag"nt an 3as to r"!"i$" 1?Q !o**ission on
all +r"ig,t an 1ass"ng"r r"$"nu"s !o*ing +ro* 7utuan
Cit# an 5Q +or all +r"ig,t going to 7utuan. T,"r"a+t"r% a
*"*oranu* o+ agr""*"nt 3as "nt"r" into 3,"r"b# t,"
rat" o+ !o**ission +or +r"ig,t an 1assag" 3as r"u!"
+ro* 1?Q to C.1U6Q an t," t"r* o+ t," !ontra!t r"u!"
+ro* 5 #"ars to a t"r* o+ on" #"ar r"n"3abl" #"arl# u1on
*utual !ons"nt.
Lat"r% 7IST5ANCO !onta!t" t," s,i11"rs a$ising
t,"* to transa!t t,"ir busin"ss ir"!tl# 3it, its n"3 bran!,
o++i!". S su" 7IST5ANCO +or s1"!i+i! 1"r+or*an!". 7IS.
T5ANCO ans3"r" t,at t," 3or<ing agr""*"nts "4"!ut"
b# S an 7IST5ANCO no$at" t," ag"n!# !ontra!t.
HELD' T," *"*oranu* o+ agr""*"nt 3as not
*"ant to no$at" t," !ontra!t. T," int"nt o+ t," 1arti"s
3as to sus1"n so*" o+ t," 1ro$isions o+ t," !ontra!ts +or
a 1"rio o+ on" (1) #"ar% uring 3,i!, t," 1ro$isions o+ t,"
Agr""*"nt 3ill 1r"$ail. T,us% t," agr""*"nt t,at' -It is
in t,is s1irit o+ !oo1"ration 3it, A to "nabl" ,i* to 1a#
,ug" obligations o+ t," !o*1an# t,at ag"nt S ,as a!!""
to t," r"Eu"st o+ 7IST5ANCO to a!!"1t t," r"u!tion o+
,is !o**issions./
It 3oul not b" "Euitabl" +or S to sa# t,at t," !on.
tra!ts 3"r" "4tinguis," an substitut" b# t," Agr"".
*"nt. It 3oul 1unis, S +or !on!"ssions ," "4t"n" to
7IST5ANCO.
T," !,ang"s 3"r" not r"all# substantial to bring
about no$ation. T," !,ang"s b"t3""n t," !ontra!t an t,"
B51
Art. 16A6
agr""*"nt i not go into t," "ss"n!" o+ t," !aus" or obj"!t
o+ t," agr""*"nt. ;n"r t," agr""*"nt% S r"*ains t,"
B56
Art. 16A9
ag"nt o+ 7IST5ANCO. T,"r" is no !l"ar in!o*1atibilit#.
T," !ontra!t an t," agr""*"nt !an b" r"!on!il". T,"
1ro$isions o+ t," agr""*"nt 3,i!, 3"r" *or" o+ !,ang"s
on ,o3 to "n+or!" t," ag"n!# 1r"$ail" uring t," 1"rio
1ro$i" in t,"*% but a+t"r t,"ir "41iration% t," !onitions
un"r t," !ontra!ts 3"r" i*1l"*"nt" again.
5"#"s $. CA
C6 SCAD 6A
(1AA6)
T," *"r" !ir!u*stan!" o+ t," !r"itor r"!"i$ing 1a#.
*"nts +ro* a t,ir 1art# 3,o a!Eui"s!" to assu*" t,"
obligation o+ t," "btor 3,"n t,"r" is !l"arl# no agr""*"nt
to r"l"as" t," "btor +ro* t," r"s1onsibilit# o"s not !on.
stitut" no$ation.
At *ost% it onl# !r"at"s a jurii!al r"lation o+ !o."bt.
ors,i1 or sur"t#s,i1 on t," 1art o+ t," t,ir 1art# to t,"
!ontra!tual obligation o+ t," "btor% an t," !r"itor !an
still "n+or!" t," obligation against t," "btor.
Art. 16A9. No$ation 3,i!, !onsists in substituting a n"3
"btor in t," 1la!" o+ t," original on"% *a# b" *a" "$"n
3it,out t," <no3l"g" or against t," 3ill o+ t," latt"r% but
not 3it,out t," !ons"nt o+ t," !r"itor. Pa#*"nt b# t," n"3
"btor gi$"s ,i* t," rig,ts *"ntion" in Arti!l"s 1696 an
169C.
CO&&ENT'
(1) P"rsonal or Subj"!ti$" No$ation
T,"r" ar" t3o <ins o+ 1"rsonal or subj"!ti$" no$ation'
(a) !,ang" o+ t," "btor (1assi$")
(b) !,ang" o+ t," !r"itor (a!ti$")
D" Cort"s $. V"nturanHa
CA SC5A C?A
B59
Art. 16A9
A substitution o+ "btor 3it,out t," !ons"nt o+ t,"
!r"itor is bining u1on t," 1arti"s to t," substitution but
not on t," !r"itor.
B5@
Art. 16A9
(6) Substitution o+ D"btor
Art. 16A9 s1"a<s o+ 1assi$" subj"!ti$" no$ation (substitu.
tion o+ t," "btor)% 3,i!, *a# b" in t," +or* o+'
(a) "41ro*ision (3,"r" t," initiati$" !o*"s +ro* a t,ir 1"r.
son). (Art. 16A@% Ci$il Co").
(b) "l"ga!ion (3,"r" t," initiati$" !o*"s +ro* t," "btor% +or
it is ," 3,o "l"gat"s anot,"r to 1a# t," "bt% an t,us% ,"
"4!us"s ,i*s"l+. H"r" t," t,r"" 1arti"s !on!"rn" 0 t,"
ol "btor% t," n"3 "btor% an t," !r"itor 0 *ust agr"").
(Art. 16A5% i.).
(9) E41ro*ision
(a) H"r" t," initiati$" !o*"s +ro* a t,ir 1"rson.
(b) It is "ss"ntial t,at t," ol "btor b" 5ELEASED +ro*
,is obligation% ot,"r3is" t,"r" 3ill b" no "41ro*ision% no
no$ation.
E4a*1l"'
D o3"s C P1%???%???. F% a +ri"n o+ D% a11roa!,"s C
an t"lls ,i*' -I 3ill 1a# #ou 3,at D o3"s #ou./ C agr""s.
Is t,"r" "41ro*ision ,"r"J
ANS.' ;n"r t," +a!ts gi$"n% t,"r" is no "41ro*ision
b"!aus" t,"# i not agr"" t,at D 3oul b" r"l"as" +ro*
,is obligation. I+ F t,"r"+or" o"s not 1a# C% C 3ill still b"
allo3" to !oll"!t +ro* D. It is "$i"nt ,"r" t,at no no$a.
tion "4ists b"!aus" it *a# b" t,at C un"rstoo F to b"
a!ting *"r"l# as t," ag"nt o+ D% alt,oug, F *a# not ,a$"
on" so as su!, ag"nt. (S"" B &anr"sa @95). T,us% it ,as
b""n rul" t,at i+ a !r"itor a!!"1ts 1artial 1a#*"nts +ro*
a t,ir 1"rson 3,o ,as "!i" to assu*" t," obligation%
7;T t,"r" is no agr""*"nt t,at t," +irst "btor s,all b"
r"l"as" +ro* r"s1onsibilit#% no no$ation ,as #"t ta<"n
1la!"% an t," !r"itor !an still "n+or!" t," obligation
against t," original "btor. (S"" &agal"na Estat"s% In!.
$. 5origu"H% L.1B@11% D"!. 1C% 1A66).
B55
Art. 16A9
E4a*1l" o+ Tru" E41ro*ision'
D o3"s C P1%???%???. F% +ri"n o+ D% a11roa!,"s C
an t"lls ,i*' -I 3ill 1a# #ou 3,at D o3"s #ou. Fro* no3
on% !onsi"r *" #our "btor% not D. D is to b" "4!us". Do
#ou agr""J/ C agr""s. Is t,"r" "41ro*ision ,"r"J
ANS.' K"s% an "$"n i+ F o"s not 1a# C% D !annot
b" ,"l liabl" an#*or" b"!aus" ,is obligation ,as alr"a#
b""n "4tinguis,". (Art. 16A@ 1ro$i"s t,at' -I+ t," sub.
stitution is 3it,out t," <no3l"g" or against t," 3ill o+
t," "btor% t," n"3 "btor8s insol$"n!# or non.+ul+ill*"nt
o+ t," obligation s,all not gi$" ris" to an# liabilit# on t,"
1art o+ t," original "btor./)
(@) 5"Euisit"s +or E41ro*ision
(a) T," initiati$" *ust !o*" +ro* a t,ir 1"rson (3,o 3ill b"
t," n"3 "btor).
(b) T," n"3 "btor an t," !r"itor *ust CONSENT. (>ar!ia
$. D,u K"< C,iong% 9B O.>. No. A66).
(!) T," ol "btor *ust b" "4!us" or r"l"as" +ro* ,is obliga.
tion.
FNOTE' T," ol "btor8s !ons"nt or <no3l"g" is not
r"Euir". (Art. 16A9% Ci$il Co").G
FNOTE' T," *"r" 3ritt"n stat"*"nt o+ a 3io3 t,at
s," ,o1" to 1a# 1art o+ ,"r ,usban8s ban< "bt o"s not
r"sult in "41ro*ision. (>ar!ia $. D" &anHano% 9A P,il.
5CC).G
>il Villanu"$a $. Filo*"no >irg"
L.1515@% D"!. 6A% 1A6?
FACTS' >irg" o3" Villanu"$a a !"rtain su* o+ *on"#.
L"gas1i 3rot" Villanu"$a a l"tt"r stating t,at ," (L"gas1i) 3oul
b" -t," on" to ta<" !ar"/ o+ >irg"8s "bt -as soon as/ >irg"
,as *a" a s,i1*"nt o+ logs to =a1an. >irg" n"$"r *a" su!,
s,i1*"nt. L"gas1i i NOT 1a# Villanu"$a. Issu"' Is L"gas1i
liabl" to Villanu"$aJ
B56
Art. 16A9
HELD' No. First% b"!aus" L"gas1i i NOT assu*"
>irg"8s "bt. H" *"r"l# assur" t,at t," "bt 3oul b" ta<"n
B5C
Art. 16A9
!ar" o+. S"!onl#% "$"n granting t,at t,"r" 3as an assu*1tion
o+ in"bt"n"ss% still t," !onition 0 t," s,i1*"nt 0 ,as NOT
#"t b""n +ul+ill". T,us% L"gas1i !annot b" ,"l liabl".
(5) D"l"ga!ion
(a) T,is is "+in" as a *"t,o o+ no$ation !aus" b# t,"
r"1la!"*"nt o+ t," ol "btor b# a n"3 "btor% 3,o (t,"
ol "btor) ,as 1ro1os" ,i* to t," !r"itor% an 3,i!,
r"1la!"*"nt ,as b""n agr"" to b# sai !r"itor an b#
sai n"3 "btor.
(b) Not" t,at ,"r" t," "l"ga!ion or initiati$" !o*"s +ro* t,"
ol "btor ,i*s"l+.
(!) As in t," !as" o+ "41ro*ision% t," ol "btor *ust b"
r"l"as" +ro* t," obligation2 ot,"r3is"% t,"r" is no $ali
"l"ga!ion.
E4a*1l"'
I+ a "btor 1,on"s ,is !r"itor an t"lls ,i* t,at F% a
+ri"n% 3ill 1a# t," "bt% an t," !r"itor agr""s% t,is o"s
not n"!"ssaril# *"an t,at a "l"ga!ion ,as b""n "++"!t"%
+or a+t"r all% t," +ri"n *a# b" a!ting onl# as an ag"nt%
*"ss"ng"r% or "*1lo#"" o+ t," "btor. ;1on t," ot,"r ,an%
i+ t," "btor t"lls t," !r"itor% -&# +ri"n F 3ill 1a# *#
"bt. I% t,"r"+or"% 3is, to b" r"l"as" +ro* *# obligation%/
an bot, t," +ri"n an t," !r"itor agr""% t,is 3oul b"
a !orr"!t "4a*1l" o+ "l"ga!ion. In su!, a !as"% i+ F +ails to
1a#% 3ill t," ol "btor b" "4!us"J
ANS.' >"n"rall# #"s% in $i"3 o+ t," no$ation% "4!"1t i+
F8s +ailur" to 1a# 3as u" to insol$"n!#% an su!, insol$"n!#
3as alr"a# "4isting an o+ 1ubli! <no3l"g" O5 alr"a#
"4isting an <no3n to t," "btor 3,"n ," "l"gat" ,is
"bt. (Art. 16A5). T," r"ason +or t," "4!"1tion is "$i"nt'
,is ob$ious ba +ait,. (S"" B &anr"sa @9C).
C.N. Hog"s $. &atias C. 5"#
L.1655@% F"b. 6B% 1A61
FACTS' 5"# borro3" +ro* Hog"s t," su* o+ P9%???.
B5B
Art. 16A9
T,r"" a#s a+t"r t," loan 3as !ontra!t"% 5"# b# *"ans
o+ a l"tt"r% aut,oriH" t," P,il. Nat. 7an< to 1a# ,is in.
B5A
Art. 16A9
"bt"n"ss to Hog"s out o+ 3,at"$"r !ro1 loan *ig,t b"
grant" to ,i* b# sai ban<. On t," sa*" at"% t," 7an<
agr"". 7ut t," 7an< 1ai Hog"s onl# P6%???. On t,"
at" o+ *aturit#% Hog"s su" t," 7an< an 5"# +or t,"
r"*aining P1%???. Issu"' Is t," 7an< liabl" to 5"#J
HELD' No% +or t," 7an< i NOT assu*" 5"#8s in.
"bt"n"ss. T," +a!t t,at it 1ai P6%??? o"s not bin t,"
7an< +or t," r"*ain"r o+ P1%???% +or 3,at it i 3as to
*"r"l# *a<" a$ailabl" to t," !r"itor 3,at it !oul l"n
to 5"#.
(6) T," Parti"s in D"l"ga!ion
(a) T," "l"gant" 0 t," original "btor
(b) T," "l"gatario 0 t," !r"itor
(!) T," "l"gao 0 t," n"3 "btor
(C) 5"Euisit"s +or D"l"ga!ion
(a) T," initiati$" !o*"s +ro* t," ol "btor.
(b) All t," 1arti"s !on!"rn" *ust !ons"nt or agr"". (>ar!ia
$. D,u K"< C,iong% 65 P,il. @66 an Aiart" $. Court o+
A11"als% "t al.% A6 P,il. C5B.)
FNOTE' T," !ons"nt o+ t," !r"itor'
1) *a# b" gi$"n in an# +or* (5io >ran" Oil Co. $. Col".
*an% FCAG 9A O.>.% 1. AB6% &ar. 6A% 1A@1)2
6) *a# b" "41r"ss% or *a# b" i*1li" +ro* ,is a!ts (Asia
7an<ing Cor1oration $. Els"r% 5@ P,il. AA@ an 7ar.
r"tto # Cia $. Alba M S"$illa% 66 P,il. 5A9) but not +ro*
,is *"r" a!!"1tan!" o+ 1a#*"nt b# a t,ir 1art#% +or
t,"r" is no tru" trans+"r o+ t," "bt ,"r" (Pa!. Co*.
Co. $. Sotto% 9@ P,il. 69C)2
9) *a# b" b"+or" or a+t"r t," n"3 "btor ,as gi$"n ,is
!ons"nt (TS% =un. 16% 1A?B an Estat" o+ &ota $.
S"rra% @C P,il. @6@)2
@) *a# b" !onitional% but t," !onition ,as to b" +ul.
B6?
Art. 16A9
+ill"2 ot,"r3is"% t,"r" is no $ali "l"ga!ion. (>o$8t.
$. 7autista% FCAG C O.>. F@CG 1BB?).G
B61
Art. 16A@
(B) 5ig,ts o+ t," N"3 D"btor
T," la3 sa#s t,at -1a#*"nt b# t," n"3 "btor gi$"s ,i*
t," rig,ts *"ntion" in Arts. 1696 an 169C/ (na*"l#% -b"n"+i!ial
r"i*burs"*"nt%/ i+ 1a#*"nt 3as *a" 3it,out t," <no3l"g" or
against t," 3ill o+ t," ol "btor2 -r"i*burs"*"nt an subroga.
tion%/ i+ it 3as *a" 3it, t," ol "btor8s !ons"nt).
(A) No$ation Cannot 7in 5"s1on"nt
Not a Part# to t," Assign*"nt.
Publi! Estat"s Aut,orit# $. El1iio S. ;#
>5 1@CA99.9@% D"!. 16% 6??1
FACTS' P"tition"r argu"s t,at its liabilit# to r"s1on"nt
,as b""n "4tinguis," b# no$ation 3,"n it assign" an turn"
o$"r all its !ontra!t" 3or<s at t," H"ritag" Par< to t," H"rit.
ag" Par< &anag"*"nt Cor1.
HELD' T,is !annot bin r"s1on"nt% 3,o 3as not a 1art#
to t," assign*"nt. &or"o$"r% it ,as not b""n s,o3n t,at r".
s1on"nt ga$" ,is !ons"nt to t," turno$"r. (S"" Art. 16A9% Ci$il
Co").
Art. 16A@. I+ t," substitution is 3it,out t," <no3l"g"
or against t," 3ill o+ t," "btor% t," n"3 "btor8s insol$"n!#
or non.+ul+ill*"nt o+ t," obligation s,all not gi$" ris" to an#
liabilit# on t," 1art o+ t," original "btor.
CO&&ENT'
(1) E++"!t o+ Insol$"n!# or Non.Ful+ill*"nt b# N"3 D"btor
in E41ro*ision
(a) T,is r"+"rs to "*1ro*ision.
(b) 5"ason 3,# t," ol "btor 3ill not b" r"s1onsibl" +or t,"
n"3 "btor8s INSOLVENCK or NON.F;LFILL&ENT' T,"
"41ro*ision 3as broug,t about 3it,out ,is initiati$". (B
B66
Art. 16A@
&anr"sa @9A).
B69
Art. 16A5
(6) :u"r#
T," Arti!l" sa#s -i+ t," substitution is 3it,out t," <no3l.
"g" or against t," 3ill o+ t," "btor./ No3% t,"n% su11os" it 3as
3it, t," <no3l"g" or !ons"nt o+ t," ol "btor% 3ill Art. 16A@
still a11l#J
ANS.'
(a) Lit"rall# !onstru"% it 3oul s""* t,at t," Arti!l" 3ill NOT
a11l#2 in ot,"r 3ors% t," ol "btor 3oul b" liabl".
(b) 7ut !onsi"ring t," int"nt o+ t," la3 (an to istinguis,
"*1ro*ision +ro* "l"ga!ion)% it is b"li"$" t,at t," Arti!l"
3oul still a11l#% t,at is% t," ol "btor 3oul still not b"
liabl" +or t," n"3 "btor8s insol$"n!# or non.+ul+ill*"nt.
5"ason'
1) A+t"r all% t," initiati$" i not !o*" +ro* ,i*.
6) A !ontrar# !on!lusion 3oul 1ut ,i* in a 3ors" 1osi.
tion t,an in "l"ga!ion% 3,"r" liabilit# is onl# +or in.
sol$"n!# an not +or ot,"r <ins o+ non.+ul+ill*"nt.
Art. 16A5. T," insol$"n!# o+ t," n"3 "btor% 3,o ,as
b""n 1ro1os" b# t," original "btor an a!!"1t" b# t,"
!r"itor% s,all not r"$i$" t," a!tion o+ t," latt"r against t,"
original obligor% "4!"1t 3,"n sai insol$"n!# 3as alr"a#
"4isting an o+ 1ubli! <no3l"g"% or <no3n to t," "btor%
3,"n ," "l"gat" ,is "bt.
CO&&ENT'
(1) E++"!t o+ Insol$"n!# b# N"3 D"btor in D"l"ga!ion
(a) T,is r"+"rs to "l"ga!ion.
(b) Not" t,at t," Arti!l" "als onl# 3it, insol$"n!#% an not
3it, ot,"r !aus"s o+ non.+ul+ill*"nt. (In sai ot,"r !aus"s%
t," ol "btor is not liabl".)
(6) 5"Euisit"s to Hol Ol D"btor Liabl"
B6@
Art. 16A5
For t," ol "btor to b" liabl" i+ t," n"3 "btor is insol$"nt%
it is r"Euir" t,at "it,"r o+ t," +ollo3ing *ust b" 1r"s"nt'
B65
Art. 16A5
(a) T," insol$"n!# 3as alr"a# "4isting an o+ P;7LIC
DNOILED>E at t," ti*" o+ "l"gation2
(b) O5 t," insol$"n!# 3as alr"a# "4isting an DNOIN TO
THE DE7TO5 at t," ti*" o+ "l"gation.
(Not" t,at i+ t," insol$"n!# o!!urr" onl# AFTE5 t,"
"l"gation% t," ol "btor is not liabl".)
(9) Probl"*
A o3"s 7 P1%???%???. A 1ro1os" to 7 t,at C 3ill 1a# A8s
"bt% an t,at A 3ill b" r"l"as" +ro* all liabiliti"s. 7 an C
agr"" to t," 1ro1osal. Lat"r% 3,"n 7 tri"s to !oll"!t +ro* A% ,"
+ins out t,at C is insol$"nt. It 3as 1ro$" t,at at t," ti*" o+
"l"gation% C 3as alr"a# insol$"nt but t,is 3as not <no3n to A.
N"it,"r 3as t," insol$"n!# o+ 1ubli! <no3l"g". N"$"rt,"l"ss% 7
still su"s A on t," groun t,at it 3as A 3,o *a" t," 1ro1osal%
an t,at t,"r"+or" A r"all# guarant"" C8s insol$"n!#. D"!i".
ANS.' A is NOT liabl"% +or t," insol$"n!# 3as n"it,"r o+
1ubli! <no3l"g" nor <no3n to A at t," ti*" ," "l"gat" ,is
"bt. T," la3 o"s not r"Euir" A to gi$" a blan<"t guarant#.
(Art. 16A5).
(@) I,"n Arti!l" Do"s Not A11l#
It is un"rstoo t,at Art. 16A5 o"s NOT a11l# i+ t,"r"
r"all# 3as NO ENTINCTIVE NOVATION% su!, as'
(a) I,"n t," t,ir 1"rson 3as onl# an ag"nt% *"ss"ng"r% or
"*1lo#"" o+ t," "btor.
(b) I,"n t," t,ir 1"rson a!t" onl# as guarantor or sur"t#.
(!) I,"n t," n"3 "btor *"r"l# agr"" to *a<" ,i*s"l+ soli.
aril# liabl" +or t," obligation.
() I,"n t," n"3 "btor *"r"l# agr"" to *a<" ,i*s"l+
jointl# or 1artl# r"s1onsibl" +or t," obligation. (H"r" t,"
"l"ga. !ion is *"r"l# 3it, r"+"r"n!" to t," joint or
1ro1ortionat" s,ar".) (S"" B &anr"sa @952 Asiati!
P"trol"u* Co. $. Ku O3a% FC.A.G @? O.>. Su11. O!t. 11%
1A@1% 1. 6AA2 5ios $. =a!into% @A P,il. C an >ar!ia $. D,u
B66
Art. 16A5
K"< C,iong% 65 P,il.
@66).
B6C
Art. 16A6
Art. 16A6. I,"n t," 1rin!i1al obligation is "4tinguis," in
!ons"Eu"n!" o+ a no$ation% a!!"ssor# obligations *a#
subsist onl# inso+ar as t,"# *a# b"n"+it t,ir 1"rsons 3,o
i not gi$" t,"ir !ons"nt.
CO&&ENT'
(1) E++"!t on A!!"ssor# Obligation
5"ason +or t," Arti!l"'
E4tinguis,*"nt o+ t," 1rin!i1al obligation !arri"s 3it, it
t," "4tinguis,*"nt o+ t," a!!"ssor# obligations (su!, as 1l"g"s%
*ortgag"s% guaranti"s). (B &anr"sa @@1).
FNOTE' Art. 16A6 o"s not a11l# in !as"s o+ no$ation b#
subrogation o+ t," !r"itor. (S"" Art. 19?9% Ci$il Co").G
(6) &oi+i!ator# No$ation
Art. 16A6 a11li"s in 1arti!ular to "4tin!ti$" no$ation. I+ t,"
no$ation is *"r"l# *oi+i!ator#% ar" guarantors an sur"ti"s
r"l"as"% i+ t," no$ation is *a" IITHO;T t,"ir !ons"ntJ
ANS.'
(a) I+ t," *oi+i" obligation is no3 &O5E ONE5O;S% t,"#
ar" liabl" onl# +or t," original obligation. (S"" Art. 6?5@%
Ci$il Co").
(b) I+ t," *oi+i" obligation is no3 LESS ONE5O;S% t,"
guarantors an sur"ti"s ar" still r"s1onsibl".
(9) Sti1ulation Contrar# to Arti!l" 16A6
&a# it b" agr"" t,at "s1it" t," "4tinguis,*"nt o+ t,"
ol obligation% t," a!!"ssor# obligations 3oul still r"*ain as
a!!"ssor# to t," n"3 obligationJ
ANS.' K"s% 1ro$i" t,at t," "btors o+ sai a!!"ssor#
obligations gi$" t,"ir !ons"nt.
(@) E++"!t on Sti1ulation Pour Autrui
T," rul" gi$"n in Art. 16A6 r"+"rring to t," auto*ati! "4.
B6B
Art. 16A6
tin!tion o+ all t," a!!"ssor# obligations s1"a<s o+ on" "4!"1tion.
I,at is t,isJ
B6A
Art. 16AC
ANS.' A!!"ssor# obligations or sti1ulations *a" in +a$or
o+ t,ir 1"rsons (sti1ulations 1our autrui) r"*ain unl"ss sai
t,ir 1"rsons ,a$" t,"ir !ons"nt to t," no$ation.
5"ason' T,"ir rig,ts to t," a!!"ssor# obligations (3,i!, +or
t,"* is r"all# a istin!t on") s,oul not b" 1r"jui!" 3it,out
t,"ir !ons"nt. (S"" Art. 1911 o+ t," Ci$il Co" +or "4a*1l"s o+
sti1ulations 1our autrui.)
Art. 16AC. I+ t," n"3 obligation is $oi% t," original on"
s,all subsist% unl"ss t," 1arti"s int"n" t,at t," +or*"r
r"la. tion s,oul b" "4tinguis," in an# "$"nt.
CO&&ENT'
(1) E++"!t i+ t," N"3 Obligation Is Voi
T,is Arti!l" ,ig,lig,ts on" o+ t," "ss"ntial r"Euisit"s o+
a $ali no$ation% na*"l#% t," n"3 obligation *ust b" VALID
an EFFECTIVE. T,us% i+ t," n"3 obligation is $oi% t,"r" is
no no$ation% an t," ol obligation g"n"rall# 3ill subsist.
(6) Ot,"r Fa!tors
(a) I+ t," n"3 obligation is subj"!t to a !onition an sai !on.
ition o"s not *at"rialiH"% t," ol obligation subsists.
Illustrati$" Cas"'
&artin"H $. Ca$i$"s
65 P,il. 5B1
FACTS' A an 7 ,a a !ontra!t 3,i!, t,"# agr""
to no$at"% 1ro$i" t," signatur"s o+ C an D !oul b"
obtain". 7ut sai signatur"s 3"r" n"$"r 1ro!ur".
HELD' T," ol obligation subsists +or +ailur" o+ t,"
no$ation.
(b) I+ a n"3 obligation 3as int"n"% but t," n"3 !ontra!t 3as
n"$"r 1"r+"!t" +or la!< o+ t," n"!"ssar# !ons"nt% t," ol
BC?
Art. 16AC
obligation !ontinu"s. (Va!a $. Dos!a% 66 P,il. 9BB).
BC1
Art. 16AC
(9) 5ul" i+ N"3 Obligation Is &"r"l# Voiabl"
Su11os" t," n"3 obligation is $oiabl"% 3,at ,a11"ns to
t," ol obligationJ
ANS.'
(a) T," ol obligation is no$at" b"!aus" a $oiabl" obligation
is $ali until it is annull".
(b) I+ t," n"3 obligation is annull"% t," ol obligation subsists%
an 3,at"$"r no$ation ,as ta<"n 1la!" 3ill naturall# ,a$"
to b" s"t asi". (En!o*i"na $. &"ni"ta% FCAG B A.C.5.
@9B).
En!o*i"na $. &"ni"ta
(C.A.) B A.C.5. @9B
FACTS' A "" o+ sal" 3as *a" $alil#. T,"r" 3as an
att"*1t to no$at" t," sa*" b# t3o n"3 ""s !ontaining%
a*ong ot,"r t,ings% a 1ro$ision +or !on$"ntion r""*1tion.
7ut on" o+ t," 1arti"s to t," n"3 ""s 3as a *inor.
HELD' As to sai *inor% sai n"3 ""s ar" not
$ali an "n+or!"abl". T,"r"+or"% t," original !ontra!t
subsists.
(@) E4!"1tion to t," 5ul" t,at T,"r" Is No No$ation i+ t,"
N"3 Obligation Is VOID
On" "4!"1tion is 3,"n -t," 1arti"s int"n" t,at t," +or*"r
r"lation s,oul b" "4tinguis," in an# "$"nt./ (Art. 16AC% Ci$il
Co").
(5) Probl"*
D an C "nt"r" into a !ontra!t 3,"r"b# D 3as to gi$" C
PB??%??? in !as,. Lat"r% t,"# no$at" t," !ontra!t b# sti1ulating
t,at inst"a o+ !as,% D 3oul gi$" a 1arti!ular !ar. Subs"Eu"ntl#%
t," !ar 3as "stro#" b# a +ortuitous "$"nt. Is D oblig" to gi$"
PB??%???J
ANS.' No% b"!aus" t," original obligation ,a alr"a# b""n
"4tinguis," b# t," $ali no$ation. &or"o$"r% t," obligation to
BC6
Art. 16AC
"li$"r t," 1arti!ular !ar is also "4tinguis," b"!aus" o+ t,"
+ortuitous "$"nt.
BC9
Art. 16AB
Art. 16AB. T," no$ation is $oi i+ t," original obligation
3as $oi% "4!"1t 3,"n annul*"nt *a# b" !lai*" onl# b#
t," "btor% or 3,"n rati+i!ation $aliat"s a!ts 3,i!, ar"
$oi. abl".
CO&&ENT'
(1) E++"!t i+ t," Ol Obligation Ias Voi
On" o+ t," r"Euisit"s o+ a $ali no$ation is t,at t," obliga.
tion b" $ali. THE5EFO5E 0
(a) I+ t," ol obligation is VOID% t,"r" is no $ali no$ation.
(b) I+ t," ol obligation 3as VOIDA7LE an ,as alr"a# b""n
annull"% t,"r" is no *or" obligation. T,"r"+or"% t," no$a.
tion is also $oi.
(6) 5ul" i+ t," Ol Obligation Ias Voiabl"
Su11os" t," ol obligation 3as VOIDA7LE an ,as not
#"t b""n annull"% *a# t,"r" b" a $ali no$ationJ
ANS.' KES% 1ro$i" t,at'
(a) Annul*"nt *a# b" !lai*" onl# b# t," "btor2
E4a*1l"' A 3as +or!" to sign a 1ro*issor# not" to
gi$" 7 P5??%???. Lat"r t," 1arti"s agr"" $oluntaril# to l"t
t," subj"!t *att"r b" a 1r"!ious ston". Alt,oug, t," +irst
!ontra!t 3as $oiabl"% t," s"!on on" is all rig,t b"!aus"
in t," +irst !ontra!t% annul*"nt !oul b" !lai*" onl# b#
t," "btor.
(b) Or 3,"n rati+i!ation $aliat"s a!ts 3,i!, ar" $oiabl".
E4a*1l"' An ag"nt% a!ting 3it,out aut,orit# +ro* ,is
1rin!i1al% boug,t *"r!,anis" +ro* a !o*1an#. S,ortl#
a+t"r ," ,a l"arn" o+ ,is ag"nt8s a!t% t," 1rin!i1al tol t,"
s"ll"r to "li$"r anot,"r <in o+ *"r!,anis"% !o*1l"t"l#
i++"r"nt +ro* t," +irst. T," s"ll"r agr"". Alt,oug, t,"
+irst !ontra!t ,"r" 3as unaut,oriH"% rati+i!ation b# t,"
1rin!i1al ,as !ur" its "+"!ts% an t,"r"+or" t," s"!on
!ontra!t is $ali.
BC@
Art. 16AB
FNOTE' Alt,oug, Art. 16AB s1"a<s o+ a -$oi/ original
obligation% it "$i"ntl# r"+"rs to a -VOIDA7LE/ on"% 3,"r"
BC5
Art. 16AB
annul*"nt or rati+i!ation *a# "4ist. A $oi !ontra!t o"s
not ,a$" to b" annull" nor !an it b" rati+i". (Art. 1@?A%
Ci$il Co").G
(9) 5ul" i+ t," Ol Obligation Ias E4tinguis," b# Loss
&a# an ol obligation t,at ,as b""n "4tinguis," b# LOSS
o+ t," subj"!t *att"r b" no$at"J
ANS.' It "1"ns'
(a) I+ t," loss 3as 1ur"l# b"!aus" o+ a +ortuitous "$"nt 3it,out
liabilit# on t," 1art o+ t," "btor% t," no$ation is VOID +or
t,"r" 3oul b" NO obligation to no$at".
(b) I+ t," loss *a" t," "btor liabl"% t,"r" is still an "4isting
*on"tar# obligation t,at *a# b" t," subj"!t o+ no$ation.
(S"" B &anr"sa 9AC.9AB).
(@) &a# a Pr"s!rib" Obligation 7" t," Subj"!t o+ No$a.
tionJ
K"s% b"!aus" unl"ss t," "+"ns" o+ 1r"s!ri1tion is s"t u1 b#
t," "btor% t," obligation !ontinu"s% sin!" t,is +ailur" a*ounts
to a IAIVE5. (Estraa $. Villar"al% FC.A.G @? O.>. F5t, Su11.G
1. 6?1).
FNOTE' A 1r"s!rib" "bt% !onstituting as it o"s a *oral
or natural obligation% *a# b" t," !aus" or !onsi"ration o+ a n"3
obligation to 1a# t,"r"+or. (Villar"al $. Estraa% C1 P,il. 1@?).G
(5) E++"!t on a VOIDA7LE Obligation o+ No$ation b# EN.
P5O&ISION
(a) H"r" t," "btor is no oubt r"l"as" +ro* ,is obligation
to t," !r"itor% +or t," substitution 3as not on" t,ru ,is
initiati$".
(b) 7;T 3,"n t," n"3 "btor% a+t"r 1a#*"nt% su"s t," ol
"btor +or 7ENEFICIAL 5EI&7;5SE&ENT% t," ol
"btor !an s"t u1 3,at"$"r "+"ns"s ," !oul ,a$" s"t
against t," !r"itor.
BC6
Art. 16AB
(E4a*1l"' t," "+"ns" o+ *inorit# or +rau)
BCC
Art. 16AA
Art. 16AA. I+ t," original obligation 3as subj"!t to a sus.
1"nsi$" or r"solutor# !onition% t," n"3 obligation s,all b"
un"r t," sa*" !onition% unl"ss it is ot,"r3is" sti1ulat".
CO&&ENT'
(1) E++"!t i+ t," Original Obligation Ias Conitional
(a) >"n"ral rul"
T," !onitions atta!," to t," ol obligation ar" also
atta!," to t," n"3 obligation.
(b) E4!"1tion
I+ t,"r" is a CONT5A5K STIP;LATION.
(6) 5"ason +or t," >"n"ral 5ul"
I+% +or "4a*1l"% t," sus1"nsi$" !onition atta!," to t,"
obligation is NOT +ul+ill"% t," ol obligation n"$"r aros".
T,"r"+or"% t,"r" 3oul b" not,ing to no$at"% sin!" no$ation
r"Euir"s t," "4ist"n!" o+ a 1r"$ious VALID an EFFECTIVE
obligation.
(9) Illustrati$" Probl"*s
(a) A 1ro*is" to gi$" 7 a !ar i+ 7 s,oul 1ass t," bar "4a*s.
Lat"r% bot, agr"" t,at 3,at s,oul b" gi$"n 3oul b" a
ia*on ring. Not,ing 3as *"ntion" in t," s"!on !on.
tra!t r"garing t," !onition. Is t," n"3 obligation also
subj"!t to a sus1"nsi$" !onitionJ
ANS.' K"s% unl"ss it 3as ot,"r3is" sti1ulat" in t,"
n"3 !ontra!t. T," "li$"r# o+ t," ia*on ring 3oul%
t,"r"+or"% b" u" onl# a+t"r 7 ,as 1ass" t," bar "4a*s.
(b) A 1ro*is" to gi$" 7 a !ar unl"ss N *arri" K. Lat"r A
an 7 agr"" to !,ang" t," obj"!t to a 1r"!ious ston". No
*"ntion 3as *a" r"garing an# !onition. Is t," s"!on
obligation subj"!t to a r"solutor# !onitionJ
ANS.' K"s% unl"ss t," !ontrar# ,as b""n 1ro$i" +or
BCB
Art. 16AA
in t," !ontra!t.
BCA
Art. 19??
(!) In Eu"stion (b)% su11osing un"r t," sa*" +a!ts% N ,a
alr"a# *arri" K b"+or" A an 7 no$at" t,"ir !ontra!t%
3,at ,a11"ns to t," n"3 obligationJ
ANS.' It is as i+ t," n"3 obligation n"$"r aros"% +or
a !ontra!t t,at ,as alr"a# b""n "4tinguis," !annot b"
no$at".
>o$"rn*"nt $. 7autista
(CA) 9C O.>. No. AC% 1. 1BB?
FACTS' Pilar T. 7autista *ortgag" !"rtain 1ro1"r.
ti"s to t," Postal Sa$ings 7an<. It 3as sti1ulat" in t,"
!ontra!t t,at 7autista !oul trans+"r t," *ortgag" to
an#bo# 1ro$i" s," !o*1li" 3it, !"rtain !onitions
an r"Euir"*"nts (+or "4a*1l"% t," 1a#*"nt o+ t," int"r"st
u"% t," trans+"r o+ titl" to t," 1ro1"rt# to t," assign""%
a "1osit o+ a !"rtain a*ount% "t!.). T,"r"u1on% 7autista
trans+"rr" t," *ortgag" to O!a*1o% 3it,out ,o3"$"r
+ul+illing t," r"Euir"*"nts alt,oug, r"1"at" "*ans
+or t,"ir !o*1lian!" ,a b""n *a". T," 7an< *a" t,"
sa*" "*ans on O!a*1o but still t," r"Euir"*"nts 3"r"
not +ul+ill". Issu"' Has t,"r" r"all# b""n a substitution o+
"btor ,"r"J Can t," 7an< still 1ro!"" to +or"!los" t,"
*ortgag" as against 7autistaJ
HELD' T,"r" ,as b""n no $ali substitution o+ "btor
,"r" an% t,"r"+or"% no no$ation b"!aus" t," !onitions
3"r" not +ul+ill". T,"r"+or" also% 7autista r"*ains t,"
"btor% an t," 7an< !an still 1ro!"" to +or"!los" t,"
*ortgag" against ,"r. T,is is tru" "s1it" t," unEu"stion"
trans+"r o+ t," *ortgag" 1ro1"rti"s to O!a*1o% b"!aus"
t," l"tt"rs o+ "*an i not b# t,"*s"l$"s !onstitut"
su++i!i"nt r"asons to r"l"as" Pilar 7autista +ro* ,"r obliga.
tion.
Art. 19??. Subrogation o+ a t,ir 1"rson in t," rig,ts o+
t," !r"itor is "it,"r l"gal or !on$"ntional. T," +or*"r is
not 1r"su*"% "4!"1t in !as"s "41r"ssl# *"ntion" in t,is
BB?
Art. 19??
Co"2 t," latt"r *ust b" !l"arl# "stablis," in or"r t,at it
*a# ta<" "++"!t.
BB1
Art. 19?1
CO&&ENT'
(1) OSubrogation8 D"+in"
Subrogation ("4tin!ti$" subj"!ti$" no$ation b# !,ang" o+
t," !r"itor) is t," trans+"r to a t,ir 1"rson o+ all t," rig,ts
a11"rtaining to t," !r"itor% in!luing t," rig,t to 1ro!""
against guarantors% or 1oss"ssors o+ *ortgag"s% subj"!t to an#
l"gal 1ro$ision or an# *oi+i!ation t,at *a# b" agr"" u1on.
(S"" B &anr"sa @@).
(6) Dins o+ Subrogation
(a) Fro* t," $i"31oint o+ !aus" or origin'
1) !on$"ntional or $oluntar# subrogation (t,is r"Euir"s
an agr""*"nt an t," !ons"nt o+ t," original 1arti"s
an o+ t," !r"itor) (Art. 19?1)
6) l"gal subrogation (t,is ta<"s 1la!" b# o1"ration o+
la3)
(b) Fro* t," $i"31oint o+ "4t"nt'
1) total subrogation
6) 1artial subrogation (,"r"% t,"r" 3oul no3 b" t3o or
*or" !r"itors)
(9) L"gal Subrogation Not Pr"su*"
L"gal subrogation is not 1r"su*"% "4!"1t in t," !as" "4.
1r"ssl# *"ntion" in t," la3. (S"" Art. 19?62 s"" also Panganiban
$. Cu"$as% C P,il. @CC).
(@) Con$"ntional Subrogation &ust 7" Establis,"
Con$"ntional subrogation *ust b" !l"arl# "stablis,"%
ot,"r3is"% it is as i+ no subrogation ,as ta<"n 1la!".
Art. 19?1. Con$"ntional subrogation o+ a t,ir 1"rson
r"Euir"s t," !ons"nt o+ t," original 1arti"s an o+ t," t,ir
1"rson.
BB6
Art. 19?1
CO&&ENT'
(1) Con$"ntional or Voluntar# Subrogation
For !on$"ntional or l"gal subrogation% t," !ons"nt o+ ALL
t," 1arti"s is r"Euir"'
(a) t," "btor 0 b"!aus" ," b"!o*"s liabl" un"r t," n"3
obligation2 an b"!aus" ,is ol obligation "ns
(b) t," ol !r"itor 0 b"!aus" ,is !r"it is a++"!t"
(!) t," n"3 !r"itor 0 b"!aus" ," b"!o*"s a 1art# to t," ob.
ligation
(NOTE' >"n"rall#% t," "btor los"s t," rig,t to
1r"s"nt against t," n"3 !r"itor an# "+"ns" 3,i!, ,"%
t," "btor% !oul ,a$" s"t u1 against t," ol !r"itor.)
(NOTE' As b"t3""n !on$"ntional subrogation an
assign*"nt o+ t," !r"it% t," latt"r% inso+ar as t," !r"itor
is !on!"rn"% s,oul b" 1r"+"rr"% +or it ,as a$antag"s%
3it,out t," !orr"s1oning isa$antag"s o+ !on$"ntional
subrogation. ;1on t," ot,"r ,an% !on$"ntional subroga.
tion !annot 1r"s"nt an# a$antag" o$"r assign*"nt o+
!r"it.)
(6) Distin!tions 7"t3""n Con$"ntional Subrogation an As.
sign*"nt o+ Cr"it (S"" B &anr"sa% 1. @@B)
ASSI>N&ENT
OF C5EDIT
CONVENTION
AL
S;75O>ATIO
BB9
Art. 19?1
(a) ,"r"% t,"r" is *"r"
trans+"r o+ t," SA&E
rig,t or !r"it (t,"
trans+"r i not "4tin.
guis, t," !r"it)
(b) t,is o"s not r"Euir"
t," "btor8s !ons"nt
(*"r" no. ti+i!ation to
,i* is su++i. !i"nt)
(a) "4tinguis,"s t,"
obligation% an !r"at"s a
n"3 on"
(b) t,is r"Euir"s t,"
"btor8s !ons"nt
BB@
Art. 19?6
(!) t," "+"!t in t," !r"it or
rig,t is not !ur" si*1l# b#
assigning t," sa*" (H"r"%
t," "btor g"n"rall# still
,as t," rig,t to 1r"s"nt
against t," n"3 !r"itor
an# "+"ns" a$ailabl" as
against ol !r"itor.)
(!) t," "+"!t o+ t," ol obliga.
tion *a# b" !ur" in su!,
a 3a# t,at t," n"3 obliga.
tion b"!o*"s "ntir"l# $ali
(T,us ,"r"% t,"r" is no
rig,t to 1r"s"nt against t,"
n"3 !r"itor an# "+"ns"
3,i!, ,"% t," "btor% !oul
,a$" s"t u1 against t," ol
!r"itor.)
(NOTE' T," Court o+ A11"als in t," !as" o+ Cort"s $. P,il.
Trust Co.% (C.A.) @5 O.>. No. 6A6% ,"l% ,o3"$"r% t,at an as.
sign*"nt o+ a sa$ings "1osit in a ban< is not a 3it,ra3al but
a sort o+ subrogation% 3it, t," a!!ount b"ing !ontinu" in t,"
na*" o+ t," assign"".)
tion'
Art. 19?6. It is 1r"su*" t,at t,"r" is l"gal subroga.
(1) I,"n a !r"itor 1a#s anot,"r !r"itor 3,o is 1r".
+"rr"% "$"n 3it,out t," "btor8s <no3l"g"2
(6) I,"n a t,ir 1"rson% not int"r"st" in t,"
obligation% 1a#s 3it, t," "41r"ss or ta!it a11ro$al o+ t,"
"btor2
(9) I,"n% "$"n 3it,out t," <no3l"g" o+ t," "btor% a
1"r. son int"r"st" in t," +ul+ill*"nt o+ t," obligation 1a#s%
3it,out 1r"jui!" to t," "++"!ts o+ !on+usion as to t," latt"r8s
s,ar".
CO&&ENT'
(1) L"gal Subrogation
T,is Arti!l" s1"a<s o+ LE>AL subrogation. ;n"r t," ol
Co"% t," 3or -l"gal/ 3as not 1r"s"nt. It 3as ins"rt" ,"r" +or
t," sa<" o+ !larit#.
BB5
Art. 19?6
(6) First Instan!"
-I,"n a !r"itor 1a#s anot,"r !r"itor 3,o is 1r"+"rr"%
"$"n 3it,out t," "btor8s <no3l"g"./
BB6
Art. 19?6
(a) E4a*1l"'
Liga#a ,as t3o !r"itors' >loria% 3,o is a *ortgag"
!r"itor +or P1%5??%???% an Solita% 3,o is an orinar#
!r"itor +or P6??%???. Solita% 3it,out Liga#a8s <no3l"g"%
1ai Liga#a8s "bt o+ P15?%??? to >loria. H"r" Solita 3ill b"
subrogat" in t," rig,ts o+ >loria. T,is *"ans t,at Solita
3ill ,"rs"l+ no3 b" a *ortgag" !r"itor +or P1%5??%???% an
an orinar# !r"itor +or P6??%???. I+ Liga#a +ails to 1a# t,"
P1%5??%??? "bt% Solita !an ,a$" t," *ortgag" +or"!los"
(t,at is% t," 1ro1"rt# !an b" sol at 1ubli! au!tion% 3it,
Solita b"ing 1ai +ro* t," 1ro!""s t,"r"o+).
(NOTE' T," ans3"r 3ill b" t," SA&E i+ Solita 1ai
3it, Liga#a8s <no3l"g".)
(b) Su11os" in t," abo$"!it" "4a*1l"% Solita 1ai >loria onl#
P1%9??%??? +or Liga#a8s total in"bt"n"ss (>loria agr""
b"!aus" o+ +ri"ns,i1)% ,o3 *u!,% !on!"rning t,is "bt%
*a# Solita su!!"ss+ull# r"!o$"r +ro* Liga#aJ
ANS.' T," 3,ol" P1%5??%??? b"!aus" !on!"rning t,is
"bt% Solita st"1s !o*1l"t"l# into t," s,o"s o+ >loria.
(!) Su11os" in 1robl"* (b)% Solita 1ai t," P1%9??%??? to >loria
3it,out Liga#a8s <no3l"g"% but it turns out t,at at sai
ti*" o+ 1a#*"nt% Liga#a8s "bt ,a alr"a# b""n r"u!"
to P9??%??? (b"!aus" o+ a 1rior 1artial 1a#*"nt)% ,o3 *u!,
!an Solita su!!"ss+ull# r"!o$"r +ro* Liga#a !on!"rning t,is
"btJ
ANS.' Onl# sai P9??%??? b"!aus" t,is is onl# t,"
"4t"nt to 3,i!, Liga#a ,a b""n b"n"+it". It is Solita8s
+ault t,at s," i not +irst in+or* Liga#a o+ ,"r int"ntion
to 1a#. Solita8s r"*"# no3 3oul b" to r"!o$"r t," "4!"ss
a*ount +ro* >loria.
(NOTE' In l"gal subrogation !aus" b# 1a#*"nt to a
1r"+"rr" !r"itor% *a# t," "btor s"t u1 against t," n"3
!r"itor "+"ns"s 3,i!, ,"% t," "btor% !oul ,a$" s"t u1
against t," ol !r"itorJ
ANS.' K"s% +or a+t"r all% t," subrogation too< 1la!"
b# o1"ration o+ la3. T,is "++"!t i++"rs +ro* t," "++"!t o+
Art. 19?6
CONVENTIONAL subrogation 3,"r" t," "btor ga$" ,is
!ons"nt.)
Art. 19?6
(NOTE' E4a*1l"s o+ su!, "+"ns"s ar" t," +ollo3ing'
!aus"s o+ $itiat" !ons"nt li<" +or!"% inti*iation% *inorit#%
unu" in+lu"n!"% "rror2 ot,"r !aus"s li<" 1rior 1a#*"nt
3,"t,"r total or 1artial2 r"*ission2 !o*1"nsation% "t!.)
FNOTE' For "4a*1l" o+ -1r"+"rr" !r"itor/ s"" 7oo<
IV% Titl" NIN o+ t," Ci$il Co" on Pr"+"r"n!" o+ Cr"its.
(Art. 66@1 an t," +ollo3ing arti!l"s).G
(9) S"!on Instan!"
-I,"n a t,ir 1"rson% not int"r"st" in t," obligation% 1a#s
3it, t," "41r"ss or ta!it a11ro$al o+ t," "btor./
(a) E4a*1l"'
Eubolo o3"s Luna P1%???%??? s"!ur" b# a *ortgag".
7l"sila% a !lass*at" o+ Eubolo% an ,a$ing no !onn"!.
tion 3it, t," !ontra!t at all% 1ai Luna t," P1%???%???
3it, Eubolo8s a11ro$al. Is 7l"sila subrogat" in Luna8s
1la!"J
ANS.' K"s% b"!aus" alt,oug, not int"r"st" in t," ob.
ligation% s," n"$"rt,"l"ss 1ai o++ Luna 3it, t," a11ro$al
o+ t," "btor. (Art. 19?6% No. 6).
(b) I+ in t," abo$" "4a*1l"% 7l"sila% 3,o is Luna8s +ri"n%
1ai ,"r onl# PC??%??? +or t," "4tinguis,*"nt o+ Eubolo8s
"bt% but t," 1a#*"nt 3as *a" 3it,out t," "41r"ss or
ta!it a11ro$al o+ Eubolo% 3,at 3oul b" 7l"sila8s rig,ts%
i+ an#J
ANS.' T,"r" is no l"gal subrogation ,"r" b"!aus" t,"r"
3as no "41r"ss or i*1li" a11ro$al o+ Eubolo. T,"r"+or"%
all t,at 7l"sila !an r"!o$"r is PC??%??? +or t,is is t,"
a*ount 3it, 3,i!, s," is su11os" to b" 5EI&7;5SED
(a gi$ing ba!< to ,"r o+ 3,at s," ,a DIS7;5SED). I+
Eubolo o"s NOT 1a#% 7l"sila !annot ,a$" t," *ortgag"
+or"!los". For% as ,as b""n sai% t,"r" ,as b""n no subro.
gation ,"r".
(@) T,ir Instan!"
-I,"n% "$"n 3it,out t," <no3l"g" o+ a "btor% a 1"rson
Art. 19?6
int"r"st" in t," +ul+ill*"nt o+ t," obligation 1a#s% 3it,out
1r"jui!" to t," "++"!ts o+ !on+usion as to t," latt"r8s s,ar"./
Art. 19?9
(a) E4a*1l"s o+ 1"rsons -int"r"st"'/
1) a guarantor
6) t," o3n"r o+ t," 1ro1"rt# *ortgag" as s"!urit# +or
t," "btor8s "bt
(b) E4a*1l" o+ t," T,ir Instan!"'
D o3"s C P1%???%??? s"!ur" b# a *ortgag" an b#
a guarant# o+ >. I+ >% "$"n 3it,out D8s <no3l"g"% 1a#s C
t," P1%???%???% > 3ill b" subrogat" in C8s 1la!". 7ut o+
!ours" t," guarant# is "4tinguis,". T,is is 3,at t," la3
*"ans 3,"n it sa#s t,at t,"r" is l"gal subrogation -3it,.
out 1r"jui!" to t," "++"!ts o+ !on+usion as to t," latt"r8s
(1a#or8s) s,ar" in t," obligation./ (Art. 19?6% 1ar. 9).
(!) Is a soliar# "btor in!lu" in t," s!o1" o+ -a 1"rson in.
t"r"st"J/
1) Stri!tl# s1"a<ing% NO% b"!aus" 3,"n t," soliar#
"btor 1a#s t," 3,ol" obligation to t," !r"itor%
soliar# obligation its"l+ is "4tinguis,". T,"r"+or"%
it !annot b" trul# sai t,at sai soliar# "btor st"1s
!o*1l"t"l# into t," s,o"s o+ t," !r"itor. &or"o$"r%
alt,oug, t," ot,"r soliar# "btors *ust r"i*burs"
,i*% t,is obligation to r"i*burs" is not soliar#% but
*"r"l# joint% "4!"1t o+ !ours" t,at t,"# ar" all 1ro.
1ortionat"l# liabl" in t," *"anti*" +or t," insol$"n!#
o+ on" o+ t,"*. (S"" Iilson $. 7"r<"n<ott"r% @A O.>.
1@?1).
6) In anot,"r (-loos"/) s"ns"% t," soliar# "btor *a#
b" sai to +all un"r t," !at"gor# o+ an -int"r"st"
1"rson/ in t,at ," st"1s in a 3a# into t," s,o"s o+
t," ol !r"itor% sin!" ," 3oul b" "ntitl" to COL.
LECT r"i*burs"*"nt% but o+ !ours" ," !annot !oll"!t
t," 3,ol" a*ount an#*or" in $i"3 o+ t," -"++"!t o+
!on+usion (or *"rg"r) as to ,is s,ar"./ (S"" Art. 161C%
Ci$il Co").
Art. 19?9. Subrogation trans+"rs to t," 1"rson
subrogat" t," !r"it 3it, all t," rig,ts t,"r"to
a11"rtaining% "it,"r against t," "btor or against t,ir
Art. 19?9
1"rsons% b" t,"# guaran. tors or 1oss"ssors o+ *ortgag"s%
subj"!t to sti1ulation in a !on$"ntional subrogation.
Art. 19?@
CO&&ENT'
(1) E++"!ts o+ Subrogation
Not" t,at t," !r"it an all t," a11urt"nant rig,ts% "it,"r
against t," "btor% or against t,ir 1"rsons% ar" trans+"rr"
(t,us% in a s"ns" t," obligation subsists% t,at is% it ,as not #"t
b""n "4tinguis," or 1ai).
(6) E4a*1l" o+ t," E++"!ts o+ Subrogation
D o3"s C P1%???%???. > is t," guarantor. A strang"r S
1ai C t," P1%???%??? 3it, t," !ons"nt o+ D an C. S is no3
subrogat" in t," 1la!" o+ C. I+ D !annot 1a# t," P1%???%???% S
!an 1ro!"" against t," guarantor% >.
(9) E++"!t o+ Pr"s"n!" o+ a Sus1"nsi$" Conition
It is un"rstoo t,at i+ t," trans+"rr" !r"it is subj"!t
to a sus1"nsi$" !onition% t," n"3 !r"itor !annot !oll"!t until
a+t"r sai !onition is +ul+ill". (S"" >onHal"s Di"H $. D"lgao%
9C P,il. 9BA).
Art. 19?@. A !r"itor% to 3,o* 1artial 1a#*"nt ,as b""n
*a"% *a# "4"r!is" ,is rig,t +or t," r"*ain"r% an ," s,all
b" 1r"+"rr" to t," 1"rson 3,o ,as b""n subrogat" in ,is
1la!" in $irtu" o+ t," 1artial 1a#*"nt o+ t," sa*" !r"it.
CO&&ENT'
(1) Partial Subrogation
H"r"% t,"r" ar" t3o !r"itors'
(a) t," ol !r"itor% 3,o still r"*ains a !r"itor as to balan!"
(b"!aus" onl# a 1artial 1a#*"nt ,as b""n *a" to ,i*)2
(b) t," n"3 !r"itor 3,o is a !r"itor to t," "4t"nt o+ 3,at ,"
,a 1ai t," !r"itor.
(6) E4a*1l"
A o3"s 7 P5??%???. Iit, t," !ons"nt o+ bot,% C 1a#s 7
P65?%???. No3 7 an C ar" t," !r"itors o+ A to t," a*ount
o+ P65?%???. Su11os" A ,as onl# P65?%??? 3,o s,oul b" 1r".
Art. 19?@
+"rr"J
Art. 19?@
ANS.' 7% t," original !r"itor% s,oul b" 1r"+"rr" inas*u!,
as ," is grant" b# t," la3 (Art. 19?@% Ci$il Co") 1r"+"r"ntial
rig,t to r"!o$"r t," r"*ain"r% o$"r t," 1"rson subrogat" in
,is 1la!" b# $irtu" o+ t," 1artial 1a#*"nt o+ t," sa*" !r"it.
(9) Pr"+"r"n!" in t," Ass"ts
T," 1r"+"r"n!" is onl# in t," ass"ts r"*aining 3it, t,"
"btor (not t,os" alr"a# trans+"rr" to ot,"rs). (&olina $.
So*"s% 91 P,il. C6). T,"r"+or"% t," ol !r"itor *ust ass"rt ,is
!lai* or 1r"+"r"n!" o$"r t," ass"ts onl# 3,il" t,"# ar" still in
t," ,ans o+ t," s,"ri++ 3,o ,as l"$i" on t," 1ro1"rti"s. I+ on"
lat"r% t," 1r"+"r"n!" gi$"n b# t,is arti!l" CEASES. (&olina $.
So*"s% 91 P,il. C6% r"+"rring to a 1rior !as" 0 So*"s $. &olina%
15 P,il. 199).
So*"s $. &olina
15 P,il. 199
FACTS' 7 boug,t 1ro1"rt# +ro* N on t," install*"nt 1lan
(@ install*"nts). S a!t" as sur"t# (a guarantor 3,o boun
,i*s"l+ soliaril# 3it, 7). I,"n 7 +ail" to 1a# t," +irst install.
*"nt% N su" 7 an S% an t," jug*"nt 3as satis+i" +ro* S8s
1ro1"rti"s. Lat"r% 7 again "+ault" in t," 1a#*"nt o+ t," ot,"r
install*"nts% an jug*"nt 3as "nt"r" against ,i*. S% +"ar+ul
+or ,is rig,ts% t,"n broug,t an a!tion to ,a$" ,i*s"l+ "!lar"
subrogat" in t," rig,ts o+ N. H" i t,is b"!aus" ," 3ant" to
b" 1ai +irst% +ro* t," ass"ts o+ 7. In ot,"r 3ors% ," 3ant" to
b" 1r"+"rr" o$"r N% t," s"ll"r2 ," i not 3ant N to b" 1ai +irst
+or t," jug*"nt.
HELD' S !annot b" 1r"+"rr". As a *att"r o+ +a!t% it is N
to 3,o* t," la3 grants 1r"+"r"n!" b"!aus" N is a !r"itor to
3,o* onl# a 1artial 1a#*"nt ,as b""n *a".
FNOTE' In""% t,"r" 3as onl# a 1artial 1a#*"nt b"!aus"
onl# on" install*"nt 0 o+ t," sa*" "bt 0 ,a b""n 1ai. (S""
Art. 19?@).G
CIVIL CODE OF THE
PHILIPPINES
TITLE II. CONTRACTS
Chapter 1
GENERAL PROVISIONS
Art. 19?5. A !ontra!t is a *""ting o+ *ins b"t3""n t3o
1"rsons 3,"r"b# on" bins ,i*s"l+% 3it, r"s1"!t to t,"
ot,"r% to gi$" so*"t,ing or to r"n"r so*" s"r$i!".
CO&&ENT'
(1) OContra!t8 D"+in"
(a) A !ontra!t% +ro* t," Latin -!ontra!tus/ an +ro* t,"
Fr"n!, -!ontra!t%/ is -a jurii!al !on$"ntion *ani+"st"
in l"gal +or*% b# $irtu" o+ 3,i!,% on" or *or" 1"rsons (or
1arti"s) bin t,"*s"l$"s in +a$or o+ anot,"r or ot,"rs% or
r"!i1ro!all#% to t," +ul+ill*"nt o+ a 1r"station to gi$"% to o
or not to o./ (@ San!,"H 5o*an 1@B.1@A). -A !ontra!t is a
*""ting o+ *ins b"t3""n t3o 1"rsons 3,"r"b# on" bins
,i*s"l+ 3it, r"s1"!t to t," ot,"r% to gi$" so*"t,ing or to
r"n"r so*" s"r$i!".88 (Eilb"rto Al!antara $. Corn"lio 7.
5ita% =r.% >5 196AA6% D"!. 1@% 6??1).
(b) It is t," agr""*"nt o+ t3o or *or" 1"rsons (or 1arti"s)
+or t," 1ur1os" o+ !r"ating% *oi+#ing% or "4tinguis,ing a
jurii!al r"lation b"t3""n t,"*. (Art. 1961% Italian Ci$il
Co" an 6 Castan 1B@).
Croni!o $. =.&. Tuason M Co.% In!.
L.956C6% Aug. 66% 1ACC
S,oul a s"ll"r o+ lots on install*"nt ,a$" t3o or *or"
1ros1"!ti$" bu#"rs% it ,as a rig,t to s"l"!t t," 1"rson to
3,o* t," 1ro1"rt# s,oul b" sol. T,is is 1arti!ularl# so%
Art. 19?5
b"!aus" bu#"rs 3,o *a# b" "linEu"nt in t," 1a#*"nt o+
*ont,l# install*"nts s,oul b" a$oi"% to 1r"$"nt "4.
1"nsi$" suits in !ourt. H"r" it a11"ar" t,at t," r"j"!t"
bu#"r 3as on" 3,o b# ,"rs"l+ !oul not a++or to 1a#% an
3,o a11ar"ntl# 3as a -+ront/ +or so*"on" "ls".
5aio Co**uni!ations o+ t," P,ils.% In!. $. CA
>5 @@C@B% Aug. 6A% 1AB6
E$"r#ti*" a 1"rson trans*its a *"ssag" t,roug, t," +a!ili.
ti"s o+ a !or1oration "ngag" in t," busin"ss o+ r"!"i$ing an
trans*itting *"ssag"s% a !ontra!t is "nt"r" into. ;1on r"!"i1t
o+ t," rat" or +"" +i4"% t," !or1oration un"rta<"s to trans*it
t," *"ssag" a!!urat"l#.
(6) El"*"nts o+ a Contra!t
(a) "ss"ntial "l"*"nts 0 (3it,out t,"* a !ontra!t !annot "4.
ist)
(E4a*1l"s' !ons"nt% subj"!t *att"r% !aus" or !onsi.
"ration)
(NOTE' In so*" !ontra!ts% +or* is also "ss"ntial2 still in
ot,"rs% "li$"r# is li<"3is" "ss"ntial.)
(b) natural "l"*"nts 0 (t,os" +oun in !"rtain !ontra!ts% an
1r"su*" to "4ist% unl"ss t," !ontrar# ,as b""n sti1u.
lat")
(E4a*1l"' 3arrant# against "$i!tion an against ,i.
"n "+"!ts in t," !ontra!t o+ sal")
(!) a!!i"ntal "l"*"nts 0 (T,"s" ar" t," $arious 1arti!ular
sti1ulations t,at *a# b" agr"" u1on b# t," !ontra!ting
1arti"s in a !ontra!t. T,"# ar" !all" a!!i"ntal% b"!aus"
t,"# *a# b" 1r"s"nt or abs"nt% "1"ning u1on 3,"t,"r
or not t," 1arti"s ,a$" agr"" u1on t,"*.)
(E4a*1l"s' t," sti1ulation to 1a# !r"it2 t," sti1ula.
tion to 1a# int"r"st2 t," "signation o+ t," 1arti!ular 1la!"
+or "li$"r# or 1a#*"nt.)
Art. 19?5
(9) Classi+i!ation o+ Contra!ts
(a) A!!oring to 1"r+"!tion or +or*ation'
Art. 19?5
1) !ons"nsual (1"r+"!t" b# *"r" !ons"nt2 "4a*1l"
0 sal")
6) r"al (1"r+"!t" b# "li$"r#2 "4a*1l"s 0 "1ositu*%
1l"g"% !o**oatu*). (Art. 1916% Ci$il Co").
9) +or*al or sol"*n (t,os" 3,"r" s1"!ial +or*aliti"s
ar" "ss"ntial b"+or" t," !ontra!t *a# b" 1"r+"!t")
(E4a*1l"' A onation int"r $i$os o+ r"al 1ro1"rt#
r"Euir"s +or its $aliit# a 1ubli! instru*"nt.)
S"rrano $. C"ntral 7an<% "t al.
L.9?511% F"b. 1@% 1AB?
7an< "1osits ar" in t," natur" o+ irr"gular
"1osits. T,"# ar" r"all# loans b"!aus" t,"# "arn
int"r"st. All <ins o+ ban< "1osits% 3,"t,"r +i4"%
sa$ings% or !urr"nt% ar" to b" tr"at" as loans an
ar" to b" !o$"r" b# t," la3 on loans. Failur" o+ t,"
ban< to ,onor t," ti*" "1osit is +ailur" to 1a# its
obligation as a "btor% an not a br"a!, o+ trust aris.
ing +ro* a "1ositar#8s +ailur" to r"turn t," subj"!t
*att"r o+ t," "1osit.
(b) A!!oring to !aus" or "Eui$al"n!" o+ t," $alu" o+ 1r"sta.
tions'
1) on"rous 0 3,"r" t,"r" is an int"r!,ang" o+ "Eui$al"nt
$aluabl" !onsi"ration
6) gratuitous or lu!rati$" 0 t,is is F5EE% t,us on" 1art#
r"!"i$"s no "Eui$al"nt 1r"station "4!"1t a +""ling t,at
on" ,as b""n g"n"rous or lib"ral
9) r"*un"rati$" 0 (on" 3,"r" on" 1r"station is gi$"n +or
a b"n"+it or s"r$i!" t,at ,a b""n r"n"r" P5EVI.
O;SLK)
(!) A!!oring to i*1ortan!" or "1"n"n!" o+ on" u1on an.
ot,"r'
1) 1rin!i1al (,"r"% t," !ontra!t *a# stan alon" b# its"l+2
"4a*1l"s' sal"s% l"as")
6) a!!"ssor# (t,is "1"ns +or its "4ist"n!" u1on anot,"r
Art. 19?5
!ontra!t2 "4a*1l"' *ortgag") (H"r" t," 1rin!i1al
!ontra!t is on" o+ LOAN.)
Art. 19?5
9) 1r"1arator# (,"r"% t," 1arti"s o not !onsi"r t,"
!ontra!t as an "n b# its"l+% but as a *"ans t,ru
3,i!, +utur" transa!tion or !ontra!ts *a# b" *a"2
"4a*1l"s' ag"n!#% 1artn"rs,i1)
() A!!oring to t," 1arti"s obligat"'
1) unilat"ral F3,"r" onl# on" o+ t," 1arti"s ,as an obli.
gation2 "4a*1l"' !o**oatu* (li<" t," borro3ing o+
a bi!#!l")G
(NOTE' E$"n ,"r"% t," gi$ing o+ !ons"nt *ust b"
*utual or bilat"ral.)
6) bilat"ral (or s#nalag*ati!) (,"r"% bot, 1arti"s ar"
r"Euir" to r"n"r r"!i1ro!al 1r"stations2 "4a*1l"'
sal")
(") A!!oring to t,"ir na*" or "signation'
1) no*inat" 0 (,"r" t," !ontra!t is gi$"n a 1arti!ular or
s1"!ial na*"2 "4a*1l"s' !o**oatu*% 1artn"rs,i1%
sal"% ag"n!#% "1osit)
>uingona% =r. $. Cit# Fis!al o+ &anila
L.6??99% A1r. @% 1AB@
I+ on" o1"ns a ti*" or sa$ings "1osit 3it, a ban<% t,"
!ontra!t is on" o+ si*1l" loan or *utuu*% not a !ontra!t o+
"1osit. O3n"rs,i1 o+ t," "1osit" +uns is trans+"rr"
to t," ban< +ro* t," *o*"nt t," !ontra!t is 1"r+"!t".
6) inno*inat" 0 (also !all" !ontratos inno*inaos)
t,os" not gi$"n an# s1"!ial na*"2 "4a*1l"' -o ut
"s%/ *"aning -I gi$" t,at #ou *a# gi$"/)
(+) A!!oring to t," ris< o+ +ul+ill*"nt'
1) !o**utati$" 0 (,"r" t," 1arti"s !ont"*1lat" a r"al
+ul+ill*"nt2 t,"r"+or"% "Eui$al"nt $alu"s ar" gi$"n2
"4a*1l"s' sal"% l"as")
6) al"ator# 0 (,"r" t," +ul+ill*"nt is "1"n"nt u1on
!,an!"2 t,us t," $alu"s $ar# b"!aus" o+ t," ris< or
Art. 19?5
!,an!"2 "4a*1l"' an insuran!" !ontra!t)
(g) A!!oring to t," ti*" o+ 1"r+or*an!" or +ul+ill*"nt'
Art. 19?5
1) "4"!ut" 0 (on" !o*1l"t" at t," ti*" t," !ontra!t
is "nt"r" into% t,at is% t," obligations ar" !o*1li"
3it, at t,is ti*"2 "4a*1l"' a sal" o+ 1ro1"rt# 3,i!,
,as alr"a# b""n "li$"r"% an 3,i!, ,as alr"a#
b""n 1ai +or)
(NOTE' In t," !as" o+ 1"rsonal 1ro1"rt#% t,is
r"sults in tangibl" 1ro1"rt# its"l+% a -!,os" in 1oss"s.
sion./)
6) "4"!utor# 0 (on" 3,"r" t," 1r"stations ar" to b" !o*.
1li" 3it, at so*" +utur" ti*"2 "4a*1l"' a 1"r+"!t"
sal"% 3,"r" t," 1ro1"rt# ,as not #"t b""n "li$"r"%
an 3,"r" t," 1ri!" ,as not #"t b""n gi$"n) (In t,"
*"anti*"% t,"r" is onl# a -!,os" in a!tion./)
(NOTE' I+ t," 3,ol" or a 1art o+ t," 1ro1"rt#
or t," 1ri!" ,as b""n "li$"r"% t," !ontra!t *a# b"
sai to b" -1artiall# "4"!ut"./)
(,) A!!oring to subj"!t *att"r'
1) !ontra!ts in$ol$ing t,ings (li<" SALE)
6) !ontra!ts in$ol$ing rig,ts or !r"its (1ro$i" t,"s"
ar" trans*issibl"% li<" a !ontra!t o+ usu+ru!t% or as.
sign*"nt o+ !r"its)
9) !ontra!ts in$ol$ing s"r$i!"s Fli<" ag"n!#% l"as" o+
s"r$i!"s% a !ontra!t o+ !o**on !arriag"% a !ontra!t o+
!arriag" (si*1l" !arriag")G
National Po3"r Cor1. $. EIN
>5 6@B56% No$. 1@% 1AB6
FACTS' NPC a3ar" EIN t," !ontra!t to ".
li$"r !ru" sul+ur in on" s,i1*"nt on or b"+or" &a#
1?% 1A56. A bon 1ost" b# t," PIS guarant"" t,"
obligation. EIN obtain" +ro* NPC a l"tt"r o+ !r"it
on &a# B% 1A56. ;1on r"Eu"st o+ EIN% t," NPC r".
s"t t," l"tt"r o+ !r"it to =un. 9?% 1A56. ;1on EIN8s
+urt,"r r"Eu"st% t," NPC "4t"n" t," "41ir# at" o+
t," l"tt"r o+ !r"it to D"!. 9?% 1A56. On Aug. 1A% 1A56%
Art. 19?5
EIN "li$"r" 1%??? o+ t," agr"" 9%6A1 long tons o+
sul+ur ost"nsibl# u" to la!< o+ botto*s. NPC su"
Art. 19?5
EIN +or a*ag"s. T," lo3"r !ourt is*iss" t," !as"
"!laring t,at EIN i not a!t in ba +ait,.
HELD' T," "4t"nsions o+ t," "41ir# at" o+ t,"
l"tt"r o+ !r"it !annot b" int"r1r"t" as "4t"nsions
o+ "li$"r# at". T,"r" is no r"lations,i1 b"t3""n
"li$"r# at" an o1"ning o+ l"tt"r o+ !r"it 3,i!,
3as o1"n" 3it,in a r"asonabl" ti*" a+t"r t," signing
o+ t," !ontra!t. NPC ,as b""n l"ni"nt b# "4t"ning
t," "41ir# at" o+ t," l"tt"r o+ !r"it. T," 1robl"* o+
botto*s is 3"ll.<no3n an t," NPC !annot b" +ault"
+or su!, 1robl"*. EIN !o**itt" a br"a!, o+ !ontra!t
b# +ailing to !o*1l"t"l# "li$"r on its !ontra!t.
(i) A!!oring to obligations i*1os" an r"gar" b# t,"
la3'
1) orinar# 0 (li<" sal"2 t," la3 !onsi"rs t,is as an
orinar# !ontra!t)
6) institutional 0 Fli<" t," !ontra!t o+ *arriag"2 t,"
la3 !onsi"rs *arriag" also as an -in$iolabl" so!ial
institution./ (Art. 56% Ci$il Co").G
(NOTE' ;n"r Art. 1C?? o+ t," Ci$il Co"% t,"
la3 sa#s t,at -t," r"lations b"t3""n CAPITAL an
LA7O5 ar" not *"r"l# !ontra!tual. T,"# ar" so i*.
1r"ss" 3it, 1ubli! int"r"st t,at labor !ontra!ts *ust
#i"l to t," !o**on goo./)
(j) A!!oring to t," "$i"n!" r"Euir" +or its 1roo+'
1) t,os" r"Euiring *"r"l# oral or 1arol "$i"n!"
Lao So< $. Saba#saba#
>5 61BAB% Aug. A% 1AB5
E$"n an oral !ontra!t is bining on t," 1arti"s%
unl"ss +or* is "ss"ntial +or its $aliit# an "n+or!".
abilit#. T,us% t," "*1lo#"r8s o++"r to 1a# t," "*1lo#.
""8s s"1aration 1a# is a 1"r+"!t" !ontra!t.
6) t,os" r"Euiring 3ritt"n 1roo+ ("4a*1l"' !ontra!ts
"nu*"rat" un"r t," Statut" o+ Fraus)
Art. 19?5
(<) A!!oring to t," nu*b"r o+ 1"rsons a!tuall# an 1,#si!all#
"nt"ring into t," !ontra!ts'
Art. 19?5
1) orinar# 0 (3,"r" t3o 1arti"s ar" r"1r"s"nt" b#
i++"r"nt 1"rsons2 "4a*1l"' sal")
6) auto.!ontra!ts 0 (3,"r" onl# on" 1"rson r"1r"s"nts
t3o o11osit" 1arti"s% but in i++"r"nt !a1a!iti"s2 "4.
a*1l"' an ag"nt r"1r"s"nting ,is 1rin!i1al s"lls a
s1"!i+i! !ar to ,i*s"l+% as a bu#"r)
FNOTE' Su!, a !ontra!t is $ali% +or t," la3 o"s
not "41r"ssl# 1ro,ibit sa*" "4!"1t in !"rtain s1"!i+i"
!as"s. T,us% an ag"nt 3,o ,as b""n aut,oriH" to l"n
*on"# +ro* ,is 1rin!i1al !annot borro3 it 3it,out t,"
!ons"nt o+ t," 1rin!i1al2 but i+ ," ,as b""n "*1o3"r"
to borro3 *on"#% ," *a# ,i*s"l+ b" t," l"n"r at t,"
!urr"nt rat" o+ int"r"st. (Art. 1BA?% Ci$il Co").G
(l) A!!oring to t," nu*b"r o+ 1"rsons 3,o 1arti!i1at" in t,"
ra+ting o+ t," !ontra!t'
1) orinar# 0 (li<" an orinar# sal")
6) a !ontra!t o+ a,"sion (li<" on" 1r"1ar" b# a r"al
"stat" !o*1an# +or t," sal" o+ r"al "stat"2 or on" 1r".
1ar" b# an insuran!" !o*1an#) (H"r"% t," bu#"r% or
t," 1"rson int"r"st" in b"ing insur"% signi+i"s ,is
!ons"nt b# signing t," !ontra!t. I+ ," o"s not "sir" to
"nt"r into t," !ontra!t% it is ,is 1ri$il"g" to r"+us".)
S3""t Lin"s% In!. $. 7"rnaro T"$"s% "t al.
L.9CC5?% &a# 1A% 1ACB
7# t," 1"!uliar !ir!u*stan!"s un"r 3,i!, !on.
tra!ts o+ a,"sion ar" "nt"r" into 0 na*"l#% t,at it
is ra+t" onl# b# on" 1art#% usuall# t," !or1oration%
an is soug,t to b" a!!"1t" or a,"r" to b# t,"
ot,"r 1art#% in t,is instan!" t," 1ass"ng"rs% 1ri$at"
r"s1on"nts% 3,o !annot !,ang" t," sa*" an 3,o
ar" t,us *a" to a,"r" ,"r"to on t," -ta<" it or
l"a$" it/ basis 0 !"rtain gui"lin"s in t," "t"r*ina.
tion o+ t,"ir $aliit# anUor "n+or!"abilit# ,a$" b""n
+or*ulat" in or"r to "nsur" t,at justi!" an +air
Art. 19?5
1la# !,ara!t"riH" t," r"lations,i1 o+ t," !ontra!ting
1arti"s. It is a *att"r o+ 1ubli! <no3l"g"% o+ 3,i!,
Art. 19?5
3" !an ta<" jui!ial noti!" Fo+G% t,at t,"r" is a "art,
an a!ut" s,ortag" o+ int"r.islan $"ss"ls 1l#ing b".
t3""n t," !outr#8s s"$"ral islans% an t," +a!iliti"s
t,"# o++"r l"a$" *u!, to b" "sir". T,us% "$"n un"r
orinar# !ir!u*stan!"s% t," 1i"rs ar" !ong"st" 3it,
1ass"ng"rs an t,"ir !argo 3aiting to b" trans1ort".
T," !onitions ar" "$"n 3ors" at 1"a< anUor rain#
s"asons% 3,"n 1ass"ng"rs lit"rall# s!ra*bl" to s"!ur"
3,at"$"r a!!o**oations t,"# *a# a$ail o+% "$"n
t,roug, !ir!uitous rout"s% anUor at t," ris< o+ t,"ir
sa+"t#. ;n"r t,"s" !ir!u*stan!"s% it is ,arl# just
an 1ro1"r to "41"!t t," 1ass"ng"rs to "4a*in" t,"ir
ti!<"ts r"!"i$" +ro* !ro3"U!ong"st" !ount"rs%
*or" o+t"n t,an not% uring rus, ,ours% +or !onitions
t,at *a# b" 1rint" t,"r"on% *u!, l"ss !,arg" t,"*
3it, ,a$ing !ons"nt" to t," !onitions so 1rint"%
"s1"!iall# i+ t,"r" ar" a nu*b"r o+ su!, !onitions in
+in" 1rint% as in t,is !as".
It s,oul also b" str"ss" t,at s,i11ing !o*1a.
ni"s ar" +ran!,is".,ol"rs o+ !"rti+i!at"s o+ 1ubli! !on.
$"ni"n!" an% t,"r"+or"% 1oss"ss a $irtual *ono1ol#
o$"r t," busin"ss o+ trans1orting 1ass"ng"rs b"t3""n
t," 1orts !o$"r" b# t,"ir +ran!,is". T,is b"ing so%
s,i11ing !o*1ani"s ,a$" a $irtual *ono1ol# o+ t,"
busin"ss o+ trans1orting 1ass"ng"rs an *a# t,us
i!tat" t,"ir t"r*s o+ 1assag"% l"a$ing 1ass"ng"rs
3it, no !,oi!" but to bu# t,"ir ti!<"ts an a$ail o+
t,"ir $"ss"ls an +a!iliti"s. Finall#% jui!ial noti!" *a#
b" ta<"n o+ t," +a!t t,at t," bul< o+ t,os" 3,o boar
t,"s" int"r.islan $"ss"ls !o*" +ro* t," lo3.in!o*"
grou1s an ar" l"ss lit"rat"% an 3,o ,a$" littl" or
no !,oi!" but to a$ail o+ 1"tition"r8s $"ss"ls.
Ang"l"s $. CalasanH
>5 @66B9% &ar. 1B% 1AB5
A !ontra!t o+ a,"sion is so !all" b"!aus" its
1ro$isions ar" ra+t" b# onl# on" 1art#% usuall# a
Art. 19?5
!or1oration% an t," onl# 1arti!i1ation o+ t," ot,"r
1art# is to sign ,is na*"% ,is signatur" or ,is -a,".
Art. 19?5
sion/ to t," !ontra!t. Insuran!" !ontra!ts% bills o+
laing% !ontra!ts o+ sal" o+ lots on install*"nt 1lan
+all into t,is !at"gor#. A !ontra!t to s"ll% ra+t" an
1r"1ar" b# t," s"ll"r an o++"r" on a -ta<".it.or.
l"a$".it/ basis to t," bu#"rs% 3,o% b"ing too "ag"r to
a!Euir" a lot u1on 3,i!, t,"# !oul buil t,"ir ,o*"
an 3it,out ,a$ing ,a t," !,an!" to Eu"stion or
!,ang" an# o+ t," t"r*s o+ t," agr""*"nt% ass"nt" to
its t"r*s an !onitions an a++i4" t,"ir signatur"s%
,as so*" !,ara!t"risti!s o+ a !ontra!t o+ a,"sion.
T," t"r*s o+ a !ontra!t o+ sal" 3,i!, ,as t,"
!,ara!t"risti!s o+ a !ontra!t o+ a,"sion *ust b"
!onstru" an int"r1r"t" against t," 1art# 3,o
ra+t" it% "s1"!iall# i+ t," int"r1r"tation 3ill ,"l1
"++"!t justi!" to bu#"rs 3,o% a+t"r ,a$ing in$"st" a
big a*ount o+ *on"#% ar" soug,t to b" "1ri$" o+
t," sa*" t,roug, t," a11li!ation o+ a !ontra!t% !l"$"r
in its 1,ras"olog#% !on"*nabl" in its lo1si"n"ss
an injurious in its "++"!t 3,i!,% in "ss"n!"% an in
its "ntir"t#% is *ost un+air to t," bu#"rs.
ArEu"ro $. Hon. Flojo an 5CPI
>5 6B111% D"!. 6?% 1ABB
FACTS' On No$. 6C% 1AB9% t," 1"tition"r an 1ri.
$at" r"s1on"nt 5aio Co**uni!ations o+ t," P,ils.%
In!. (5CPI)% "nt"r" into a !ontra!t +or s"r$i!"s +or t,"
trans*ission o+ a t"l"gra1,i! *"ssag" t,ru 5CPI8s
bran!, o++i!" in A1arri% Caga#an to Att#. El"aHar S.
Calasan at ,is o++i!" ar"ss in :uia1o% &anila. T,"
t"4t o+ t," t"l"gra* !ontra!t +or* +or trans*ission
(as 3"ll as t," t"l"gra* its"l+) r"as'
-S"n t," +ollo3ing *"ssag" subj"!t to t,"
!onition t,at t," 5CPI s,all not b" liabl" +or
an# a*ag"% ,o3so"$"r% sa*" *a# aris" "4!"1t
+or t," r"+un o+ t"l"gra1, tolls. T," s"n"r
agr""s t,at a !onition 1r"!""nt +or a !aus"
Art. 19?5
o+ a!tion against t," 5CPI an# !o*1laint r"la.
ti$" to t," trans*ittal o+ t,is t"l"gra* *ust b"
Art. 19?5
broug,t to t," att"ntion o+ t," !o*1an# 3it,in
t,r"" *ont,s +ro* at"% an t," $"nu" t,"r"o+
s,all b" in t," !ourts o+ :u"Hon Cit# alon" an
in no ot,"r !ourts.
ATTK. CALASAN
5OO& @?1 PAKAIAL 7LD>.
C?A PATE5NO% :;IAPO% &ANILA
CON>5AT;LATIONS P5EPA5E ONE
NE5ON COPK DECISION SEE KO; 7ONI8S
7I5THDAK
7E5NOLI88
Att#. El"aHar S. Calasan r"!"i$" a !o1# o+ t,"
t"l"gra* t," n"4t a# but ," 3as *a" to 1a# t," su*
o+ PC.9? +or "li$"r# !,arg"s. T,"r"a+t"r% on No$. 9?%
1AB9% at t," birt,a# 1art# o+ Asst. Fis!al 7oni+a!io
Sison in :u"Hon Cit#% Att#. Calasan !on+ront" an
!"nsur" t," 1"tition"r an"nt t," sai t"l"gra*. D".
s1it" t," 1"tition"r8s "41lanation t,at t," t"l"gra*
,a b""n ul# 1ai +or% ," 3as bran" as a -sting#
&a#or 3,o !annot "$"n a++or to 1a# t," *"asl# su*
o+ PC.9? +or t," t"l"gra*%/ in t," 1r"s"n!" o+ *an#
1"rsons. T,us% t," 1"tition"r +il" an a!tion +or a*.
ag"s against 5CPI b"+or" t," 5"gional Trial Court o+
A1arri% Caga#an. 5CPI +il" a *otion to is*iss on
t," groun o+ i*1ro1"r $"nu"% !ont"ning t,at 1ur.
suant to t," s"r$i!" !ontra!t% t," 1arti"s ,a agr""
t,at t," $"nu" o+ an# a!tion 3,i!, *a# aris" out o+
t," trans*ittal o+ t," t"l"gra* s,all b" in t," !ourts
o+ :u"Hon Cit# alon".
On F"b. 19% 1AB@% t," trial !ourt is*iss" t,"
!as" an "ni" t," *otion +or r"!onsi"ration r"
sai is*issal. H"n!"% t," instant 1"tition. Citing t,"
!as" o+ S3""t Lin"s% In!. $. 7"rnaro T"$"s% "t al.% B9
SC5A 961% t," 1"tition"r !lai*s t,at t," !onition
3it, r"s1"!t to $"nu" a11"aring on t," r"a# 1rint"
Art. 19?5
+or* o+ 5CPI8s t"l"gra* +or trans*ission is $oi an
un"n+or!"abl" b"!aus" t," 1"tition"r ,a no ,an in
Art. 19?5
its 1r"1aration. T," Court t,"r" ,"l t,at !ontra!ts
o+ a,"sion 3,"r" t," 1ro$isions ,a$" b""n ra+t"
onl# b# on" 1art# an t," onl# 1arti!i1ation o+ t,"
ot,"r 1art# is t," signing o+ ,is signatur" or ,is a.
,"sion t,"r"to% ar" !ontrar# to 1ubli! 1oli!#% as t,"#
ar" injurious to t," 1ubli! or 1ubli! goo.
HELD' T," agr""*"nt o+ t," 1arti"s in t," !as"
at bar as to $"nu" is not !ontrar# to la3% 1ubli! or"r%
1ubli! 1oli!#% *orals or goo !usto*s. T," 1arti"s o
no is1ut" t,at in t," 3ritt"n !ontra!t su" u1on%
it 3as "41r"ssl# sti1ulat" t,at an# a!tion r"lati$"
to t," trans*ittal o+ t," t"l"gra* against t," 5CPI
*ust b" broug,t in t," Courts o+ :u"Hon Cit# alon".
I" not" t,at n"it,"r 1art# to t," !ontra!t r"s"r$"
t," rig,t to !,oos" t," $"nu" o+ a!tion as +i4" b# la3%
i.".% 3,"r" t," 1lainti++ or "+"nant r"si"s% at t,"
"l"!tion o+ t," 1lainti++ (S"!. 6% 5ul" @% 5ul"s o+ Ci$il
Pro!"ur")% as is usuall# on" i+ t," 1arti"s 1ur1ort"
to r"tain t,at rig,t o+ "l"!tion grant" b# t," 5ul"s.
Su!, b"ing t," !as"% it !an r"asonabl# b" in+"rr"
t,at t," 1arti"s int"n" to "+init"l# +i4 t," $"nu" o+
a!tion% in !onn"!tion 3it, t," 3ritt"n !ontra!t su"
u1on in t," !ourts o+ :u"Hon Cit# onl#. S"!tion 9% 5ul"
@% 5"$is" 5ul"s o+ Court san!tions su!, sti1ulation
b# 1ro$iing t,at -b# 3ritt"n agr""*"nt o+ t," 1arti"s
t," $"nu" o+ a!tion *a# b" !,ang" or trans+"rr"
+ro* on" 1ro$in!" to anot,"r./ (7autista $. " 7orja%
1B SC5A @C@).
In t," instant !as"% t," !onition 3it, r"s1"!t
to $"nu" in t," t"l"gra* +or* +or trans*ission 3as
1rint" !l"arl# in t," u11"r +ront 1ortion o+ t," +or*.
Consi"ring t," 1"tition"r8s "u!ational attain*"nt
(b"ing a la3#"r b# 1ro+"ssion an t," &uni!i1al
&a#or o+ Sta. T"r"sita% Caga#an)% ," *ust b" !,arg"
3it, noti!" o+ t," !onition li*iting t," $"nu" to
:u"Hon Cit#% an b# a++i4ing ,is signatur" t,"r"on%
," signi+i" ,is ass"nt t,"r"to. T,us% t," ruling in
Art. 19?5
S3""t Lin"s% In!. $. T"$"s% "t al.% is not a11li!abl" in
t,is !as".
Art. 19?5
7PI E41r"ss Car Cor1. $. Ei" C. Olalia
>5 191?B6% D"!. 1@% 6??1
FACTS' P"tition"r 7PI E41r"ss Car Cor1.
(7ECC) o1"rat"s a !r"it !ar s#st"* t,ru 3,i!, it
"4t"ns !r"it a!!o**oations to its !ar,ol"rs +or
t," 1ur!,as" o+ goos an ot,"r s"r$i!"s +ro* *"*.
b"r."stablis,*"nts o+ 1"tition"r to b" r"i*burs"
lat"r b# t," !ar,ol"r u1on 1ro1"r billing.
5"s1on"nt Ei" C. Olalia 3as a !r"it !ar.
,ol"r 3it, a !r"it li*it o+ P5%???. I,"n Olalia8s
!r"it !ar "41ir"% a r"n"3al !ar 3as issu". An "4.
t"nsion !ar 3as also issu" to Olalia8s 3i+"% Cristina.
T," "4t"nsion !ar o+ Cristina 3as us" +or 1ur!,as"s
*a" +ro* &ar. to A1r. 1AA1% 1arti!ularl# in t," 1ro$.
in!" o+ Iloilo an 7a!olo Cit#. Total un1ai !,arg"s
+ro* t," us" o+ t,is !ar a*ount" to P1?1%B@@.5@.
Olalia "ni" ,a$ing a11li" +or% *u!, l"ss r"!"i$.
ing t," "4t"nsion !ar. H" +urt,"r all"g" t,at ,is
3i+"% +ro* 3,o* ," 3as alr"a# i$or!"% l"+t +or t,"
;nit" Stat"s in 1AB6 an ,as sin!" r"si" t,"r".
In aition% n"it,"r ," nor Cristina 3as in 7a!olo
or Iloilo at t," ti*" t," Eu"stion" 1ur!,as"s 3"r"
*a". H" a*itt" r"s1onsibilit# +or t," a*ount o+
P19%BB9.6C% r"1r"s"nting 1ur!,as"s *a" un"r ,is
o3n !r"it !ar.
A !as" +or !oll"!tion 3as +il" against Olalia. T,"
trial !ourt initiall# +oun Olalia liabl" +or t," a*ount
o+ P19%BB9.6C onl#. On *otion +or r"!onsi"ration +il"
b# 1"tition"r% t," trial !ourt or"r" Olalia to 1a# t,"
su* o+ P196%6A?.AC. On a11"al% t," Court o+ A11"als
(CA) sustain" Olalia an *a" ,i* liabl" +or onl#
P19%BB9.6C 3it, int"r"st at 9Q 1"r *ont, in aition
to a 1"nalt# +"" o+ 9Q o+ t," a*ount u" "$"r# *ont,%
until +ull 1a#*"nt. H"n!"% t,is 1"tition.
HELD' P"tition is "ni" an 3it, t," CA8s
sion% so.!all" b"!aus" t,"ir t"r*s ar" 1r"1ar" b#
59A
Art. 19?5
"!ision b"ing a++ir*".
Contra!ts o+ t,is natur" ar" !ontra!ts o+ a,".
sion% so.!all" b"!aus" t,"ir t"r*s ar" 1r"1ar" b#
59A
Art. 19?5
onl# on" 1art# 3,il" t," ot,"r *"r"l# a++i4"s ,is
signatur" signi+#ing ,is a,"sion t,"r"to. As su!,%
t,"ir t"r*s ar" !onstru" stri!tl# against t," 1art#
3,o ra+t" it. In t,is !as"% it 3as 7ECC 3,o *a"
t," +or"going sti1ulation% t,us% t,"# ar" no3 tas<"
to s,o3 $igilan!" +or its !o*1lian!".
(*) A!!oring to t," natur" o+ t," !ontra!t'
1) 1"rsonal
6) i*1"rsonal
Insular Li+" Assuran!"% Lt. $. Ebrao
B? SC5A 1B1
T," !ontra!t o+ li+" insuran!" is an "4a*1l" o+ a
-1"rsonal/ !ontra!t. (T,is is b"!aus" u1on t," "at, o+
t," insur"% t," !ontra!t !"as"s to "4ist. In"*niti"s%
in t," 1ro1"r !as" 3ill% o+ !ours"% b" gi$"n.)
(@) Stag"s o+ a Contra!t
(a) Pr"1aration (or Con!"1tion or ->"n"ra!ion/) 0 H"r" t,"
1arti"s ar" 1rogr"ssing 3it, t,"ir n"gotiations2 t,"# ,a$"
not #"t arri$" at an# "+init" agr""*"nt% alt,oug, t,"r"
*a# ,a$" b""n a 1r"li*inar# o++"r an bargaining.
(b) P"r+"!tion (or birt,) 0 H"r" t," 1arti"s ,a$" at long last
!a*" to a "+init" agr""*"nt% t," "l"*"nts o+ "+init" sub.
j"!t *att"r an $ali !aus" ,a$" b""n a!!"1t" b# *utual
!ons"nt.
(!) Consu**ation (or "at, or t"r*ination) 0 H"r" t," t"r*s
o+ t," !ontra!t ar" 1"r+or*"% an t," !ontra!t *a# b" sai
to ,a$" b""n +ull# "4"!ut".
(5) Parti"s to a Contra!t
(a) T," la3 s1"a<s o+ a *""ting o+ *ins b"t3""n t3o -1"r.
sons./ T," *""ting o+ t," *ins r"all# r"+"rs to t3o -1ar.
*ins2 ,"n!"% no !ontra!t. (Coron"l $. Ona% 99 P,il. @56).
5@?
Art. 19?5
ti"s./ I+ at t," ti*" o+ su11os" 1"r+"!tion% on" o+ t," 1arti"s
,a alr"a# 1r"$iousl# i"% t,"r" !an b" no *""ting o+ t,"
*ins2 ,"n!"% no !ontra!t. (Coron"l $. Ona% 99 P,il. @56).
5@?
Art. 19?5
&ari*1"rio Co*1ania Na$i"ra% S.A. $. CA
>5 @?69@% D"!. 1@% 1ABC
A !ontra!t ta<"s "++"!t b"t3""n t," 1arti"s 3,o *a"
it% an also t,"ir assigns an ,"irs% "4!"1t in !as"s 3,"r"
t," rig,ts an obligations arising +ro* t," !ontra!t ar"
not trans*issibl" b# t,"ir natur"% or b# sti1ulation% or b#
1ro$ision o+ la3. Sin!" a !ontra!t *a# b" $iolat" b# t,"
1arti"s t,"r"to% as against "a!, ot,"r% in an a!tion u1on
t,at !ontra!t% t," r"al 1arti"s in int"r"st% "it,"r as 1lainti++
or as "+"nant% *ust b" 1arti"s to sai !ontra!t. T,"r"+or"%
a 1art# 3,o ,as not ta<"n 1art in it !annot su" or b" su"
+or 1"r+or*an!" or +or !an!"llation t,"r"o+% unl"ss ," s,o3s
t,at ," ,as a r"al int"r"st a++"!t" t,"r"b#.
7ali3ag Transit% In!. $. CA an
S1ous"s Sot"ro Caili1an% =r. an
T"naia Lo1"H an >"org" L. Caili1an
>5 B?@@C% =an. 91% 1ABA
Sin!" a !ontra!t *a# b" $iolat" onl# b# t," 1arti"s
t,"r"to% as against "a!, ot,"r% in an a!tion u1on t,at
!ontra!t% t," r"al 1arti"s.in.int"r"st% "it,"r as 1lainti++
or as "+"nant% *ust b" 1arti"s to sai !ontra!t. A r"al
1art#.in.int"r"st.1lainti++ is on" 3,o ,as a l"gal rig,t%
3,il" a r"al 1art#.in.int"r"st."+"nant is on" 3,o ,as a
!orr"lati$" l"gal obligation 3,os" a!t or o*ission $iolat"
t," l"gal rig,t o+ t," +or*"r. In t," abs"n!" o+ an# !ontra!t
o+ !arriag" b"t3""n t," !o**on !arri"r an t," 1ar"nts o+
t," injur" 1art#% t," latt"r ar" not r"al 1arti"s.in.int"r"st
in an a!tion +or br"a!, o+ t,at !ontra!t.
T," g"n"ral rul" o+ t," !o**on la3 is t,at "$"r#
a!tion *ust b" broug,t in t," na*" o+ t," in+ring". For
t," i**"iat" 3rong an a*ag"% t," 1"rson injur" is
t," onl# on" 3,o !an *aintain t," a!tion. T," 1"rson 3,o
sustains an injur# is t," 1"rson to bring an a!tion +or t,"
injur# against t," 3rongo"r.
in!lu"s t3o 1arti"s (t," "btor an t," !r"itor). T,us%
5@1
Art. 19?5
(b) I,il" a 1ro*issor# not" is unilat"ral (in t,at onl# on" 1art#
,as sign" it an is boun t,"r"b#)% still su!, a !ontra!t
in!lu"s t3o 1arti"s (t," "btor an t," !r"itor). T,us%
5@1
Art. 19?5
t," sign"r is not t," onl# 1art#% nor t," onl# on" 3,o !an
su" on su!, a !ontra!t. T,"r" !an b" no obligor 3it,out an
oblig"". (Dilag $. H"irs o+ Fortunato 5"surr"!!ion% C6 P,il.
65?).
(!) T," *""ting o+ t," *ins *a# aris" b"!aus" o+ an "41r"ss
or i*1li" a!!or (su!, as 3,"n s"r$i!"s as an int"r1r"t"r
an gui"% 3,"t,"r soli!it" or not% 3"r" a!!"1t" an
ul# r"n"r"2 ,"r"% an obligation to 1a# +or su!, s"r$i!"s
"4ists). (S"" P"r"H $. Po*ar% 6 P,il. 6B6).
(6) 7asi! Prin!i1l"s or C,ara!t"risti!s o+ a Contra!t
(a) Fr""o* (or lib"rt#) to Sti1ulat" (1ro$i" not !ontrar# to
la3% *orals% goo !usto*s% 1ubli! or"r% or 1ubli! 1oli!#).
(Art. 19?6% Ci$il Co").
(b) Obligator# For!" an Co*1lian!" In >oo Fait,. (Arts.
115A an 1915% i.).
(!) P"r+"!tion b# &"r" Cons"nt (Cons"nsualit#) as a rul". (Art.
1915% i.).
() 7ot, Parti"s ar" &utuall# 7oun. (Art. 19?B% i.).
(") 5"lati$"l# (>"n"rall#% it is bining onl# b"t3""n t," 1ar.
ti"s% t,"ir assigns% an ,"irs). (Art. 1911% i.).
(C) Co."4ist"n!" o+ a Contra!t 3it, a :uasi.D"li!t (Tort)
T," "4ist"n!" o+ a !ontra!t b"t3""n t," 1arti"s o"s not
!onstitut" a bar to t," !o**ission o+ a tort b# on" against t,"
ot,"r% an t," !ons"Eu"nt r"!o$"r# o+ a*ag"s. (Aran"ta $. "
=o#a% L.651C6% &a# 6@% 1AC@).
(B) L"gal E++"!ts o+ a Contra!t 0 Ho3 D"t"r*in"
Aora!ion E. CruH% "t al. $. CA M
S1ous"s Elis"o M Virginia &alolos
*ust b" r"a tog"t,"r an int"r1r"t" in a *ann"r t,at r"!on.
5@6
Art. 19?5
>5 166C19% =ul. 6C% 1AAB
Contra!ts !onstitut" t," la3 b"t3""n t," 1arti"s. T,"#
*ust b" r"a tog"t,"r an int"r1r"t" in a *ann"r t,at r"!on.
5@6
Art. 19?5
!il"s an gi$"s li+" to all o+ t,"*. T," int"nt o+ t," 1arti"s% as
s,o3n b# t," !l"ar languag" us"% 1r"$ails o$"r 1ost +a!to "4.
1lanations t,at +in no su11ort +ro* t," 3ors "*1lo#" b# t,"
1arti"s or +ro* t,"ir !ont"*1orar# an subs"Eu"nt a!ts s,o3ing
t,"ir un"rstaning o+ su!, !ontra!ts. A subs"Eu"nt agr""*"nt
!annot no$at" or !,ang" b# i*1li!ation a 1r"$ious on"% unl"ss
t," ol an n"3 !ontra!ts ar"% on "$"r# 1oint% in!o*1atibl" 3it,
"a!, ot,"r.
In""% t," l"gal "++"!ts o+ a !ontra!t ar" "t"r*in" b#
"4tra!ting t," int"ntion o+ t," 1arti"s +ro* t," languag" t,"#
us" an +ro* t,"ir !ont"*1oran"ous an subs"Eu"nt a!ts. T,is
1rin!i1l" gains *or" +or!" 3,"n t,ir 1arti"s ar" !on!"rn". To
r"Euir" su!, 1"rsons to go b"#on 3,at is !l"arl# 3ritt"n in t,"
o!u*"nt is un+air an unjust. T,"# !annot 1ossibl# "l$" into
t," !ontra!ting 1arti"s8 *ins an sus1"!t t,at so*"t,ing is
a*iss% 3,"n t," languag" o+ t," instru*"nt a11"ars !l"ar an
un"Eui$o!al.
(A) D"li$"r# o+ t," T,ing
P"o1l" $. La!a1
>5 19A11@% O!t. 69% 6??1
FACTS' A!!us".s,abu su11li"r% a +or*"r *ilitar# o++i!"r
train" in nar!oti!s o1"ration% anti.t"rroris*% an *ilitar#
ta!ti!s "ni" t," "4ist"n!" o+ an# bu#.bust o1"ration% an al.
l"g" t,at t," 3,ol" o1"ration 3as a +ra*".u1. T," lo3"r !ourt
!on$i!t" t," su11li"r. On a11"al% ," !ont"n" t,at t,"r" 3as
no a!tual "li$"r# o+ t," rug to t," 1os"ur.bu#"r% t,us% ,"
s,oul b" a!Euitt" o+ t," !,arg" b"!aus" on" o+ t," "l"*"nts o+
t," !ri*" ,a not b""n "stablis,". T,"r" ar" t3o (6) "l"*"nts
n"!"ssar# +or t," 1ros"!ution o+ t," !ri*" o+ ill"gal sal" o+ s,abu
un"r S"!. 15% Art. III o+ 5A 6@65% as a*"n" b# S"!. 6?% Art.
IV o+ 5A C65A% na*"l#' (1) i"ntit# o+ bu#"r an s"ll"r% obj"!t%
an !onsi"ration2 an (6) "li$"r# o+ t,ing sol an 1a#*"nt
t,"r"+or. Issu"' Ias t," su11li"r !orr"!t in ,is !ont"ntionJ
HELD' No. Alt,oug, t," su11li"r i not a!tuall# ,an t,"
!ontraban to t," bu#"r% ," 1la!" it on to1 o+ t," $ault 3,"r"
A66
Art. 19?5
t," latt"r !oul ,a$" "asil# gott"n it a+t"r 1a#ing ,i*. T,"r"
3as% t,us% a !onstru!ti$" "li$"r# o+ t," rug. T," +a!t t,at t,"
A6C
Art. 19?5
su11li"r tri" to 1ut t," s,abu ba!< insi" t," $ault is o+ no
*o*"nt as t," !ri*" ,a b# t,"n b""n alr"a# !onsu**at".
T,"r" is no rul" 3,i!, r"Euir"s t,at in a bu#.bust o1"ration
t,"r" *ust b" a si*ultan"ous "4!,ang" o+ t," *on"# an t,"
rug t," 1os"ur.bu#"r an t," 1us,"r. Nor 3as it i*1ortant
t,at t," -bool"/ *on"# 3as not 1r"s"nt" in !ourt. I,at is
*at"rial to t," 1ros"!ution o+ t," ill"gal sal" o+ ang"rous
rugs is 1roo+ t,at t," transa!tion a!tuall# too< 1la!" 3it, t,"
1r"s"ntation in !ourt o+ t," !or1us "li!ti or t," substantial +a!t
t,at a !ri*" ,as b""n !o**itt".
(1?) O5"+or"station8 Contra!t
7ataan S""ling Asso!iation% In!. $. 5"1ubli!
o+ t," P,ili11in"s
>5 1@1??A% =ul. 6% 6??6
FACTS' ;n"r t," r"+or"station !ontra!t% 1"tition"rs 3"r"
to turn o$"r at t," "n o+ t," t,ir #"ar t," 1roj"!t ar"a +ull#
1lant" an 1ro1"rl# *aintain". Ho3"$"r% t," Proj"!t D"$"l.
o1*"nt Plan% a11"n" an *a" int"gral 1art o+ t," !ontra!t%
s1"!i+i!all# "+in"s an "tails 1"tition"rs8 un"rta<ing. ;n"r
t," Plan% t," +ollo3ing tas<s 3"r" to b" !o*1l"t" uring t,"
+irst #"ar o+ t," 1roj"!t'
(1) sur$"# an *a11ing o+ t," 3,ol" 5? ,"!tar"s2
(6) nurs"r# o1"rations +or +ast.gro3t,% *"iu*.gro3ing% an
slo3.gro3t, s1"!i"s2
(9) 1lantation "stablis,*"nt% in!luing sit" 1r"1aration% s1ot
,o"ing% sta<ing% ,oling % an 1lanting an s"" trans1ort.
ing o+ B9%999 1i"!"s% *"iu*.siH" s""lings an su!<l"rs
in 1lanting ,ol"s2 an
(@) in+rastru!tur" 3or<% in!luing t," "$"lo1*"nt o+ +oot
1at,% gra" trail% 1lantation roa% bun<,ous"% an loo<.
out to3"r.
S1r"a out uring t," 9.#"ar 1"rio is t," annual *aint".
nan!"% 1rot"!tion% a*inistration an su1"r$ision% an *onitor.
A6B
Art. 19?5
ing an "$aluation o+ t," 1roj"!t ar"a. Issu"' I,"t,"r 1"tition"rs8
argu*"nt t,at t,"# ar" not boun to +ull# 1lantU"stablis, t,"
A6A
Art. 19?6
3,ol" 5? ,"!tar"s uring t," +irst #"ar o+ o1"rations is *"ritori.
ousJ
HELD' T," argu*"nt is 3it,out *"rit. Cl"arl#% bas" on
sai s!,"ul"% 1"tition"rs 3"r" to un"rta<" t," 1rin!i1al tas<
o+ 1lanting t," 5? ,"!tar".1roj"!t ar"a uring t," +irst #"ar o+
t," 1roj"!t. I,at is to b" !arri" out uring t," "ntir" 9.#"ar
1"rio is t," *aint"nan!" an a+t"r!ar" o+ t," 1roj"!t sit"% an
1"tition"rs 3"r" to turn o$"r t," 1roj"!t at t," "n o+ t," t,ir
#"ar +ull# 1lant" an "stablis,".
Art. 19?6. T," !ontra!ting 1arti"s *a# "stablis, su!,
sti1ulations% !laus"s% t"r*s an !onitions as t,"# *a# ""*
!on$"ni"nt% 1ro$i" t,"# ar" not !ontrar# to la3% *orals%
goo !usto*s% 1ubli! or"r% or 1ubli! 1oli!#.
CO&&ENT'
(1) T," Prin!i1l" o+ Fr""o*
T,is Arti!l" str"ss"s t," 1rin!i1l" o+ +r""o*. T," +r""
"ntran!" into !ontra!ts g"n"rall# 3it,out r"straint is on" o+ t,"
lib"rti"s guarant"" to t," 1"o1l". (P"o1l" $. Po*ar% @6 P,il.
@@?). Ho3"$"r% t," !onstitutional 1ro,ibition against t," i*1air.
*"nt o+ !ontra!tual obligations r"+"rs onl# to !ontra!ts 3,i!,
ar" l"gal% not to $oi or in"4ist"nt on"s. (San Di"go $. &un. o+
Naujan% L.AA6?% F"b. 6A% 1A6?).
D"nila% >ubatanga an Ina#an $. 7"llosillo
L.9A56A% &a# 16% 1AC5
(Litigants &a# Ent"r Into a Contra!t o+ Co*1ro*is")
FACTS' To 1ut an "n to a !as" 1"ning b"+or" t," Court
o+ Agrarian 5"lations in Iloilo% t," 1arti"s t,"r"to (t," 7"at"rio
"l Santisi*o 5osario " &olo% o3n"r o+ a 19.,"!tar" ri!"lan
an its t"nants% D"nila% >ubatanga% an Ina#an) "nt"r" into
a jui!ial !o*1ro*is" on A1r. 6@% 1AC6 3,"r"b# t," lano3n"r
agr"" to !"" b# 3a# o+ CIVIL LEASE (not agri!ultural l"as"
or l"as" t"nan!#) to t," latt"r !"rtain 1arts o+ t," lan +or t3o
agri!ultural #"ars% 3it, t," r"ntals t,"r"+or b"ing s1"!i+i". T,"
A9?
Art. 19?6
!ontra!t also stat" t,at s,oul t," r"nt b" un1ai% t," lan.
o3n"r 3ill ,a$" t," rig,t to 1ut an "n to t," l"as" an to as<
A91
Art. 19?6
+or a 3rit o+ "4"!ution 3,"r"b# 1oss"ssion 3oul b" r"turn"
to t," lano3n"r. 7"!aus" t," r"nt 3as not 1ai% lano3n"r
*o$" +or a 3rit o+ "4"!ution. T"nants all"g" t,at in $i"3 o+
t," "4ist"n!" o+ a !i$il l"as"% t," Agrarian Court ,as lost juris.
i!tion o$"r t," !as"% an ,"n!"% !an no long"r issu" a 3rit o+
"4"!ution% an t,at +inall#% t,"# !an b" "j"!t" +ro* t," lan onl#
in an unla3+ul "tain"r suit institut" in t," 1ro1"r *uni!i1al
!ourt. Issu"' Do"s t," CA5 (Court o+ Agrarian 5"lations) still
,a$" jurisi!tion to issu" t," 3rit a11li" +orJ
HELD' K"s% t," CA5 ,as su!, jurisi!tion. Sin!" originall#
it ,a jurisi!tion b"!aus" o+ t," agrarian !on+li!t% sai juris.
i!tion !ontinu"s until t," !as" is +inall# "n". An t," !as"
!an "n 1r"!is"l# b# t," issuan!" an "n+or!"*"nt o+ a 3rit o+
"4"!ution (an "n+or!"*"nt !ont"*1lat" b# t," 1arti"s). T,"
!o*1ro*is" agr""*"nt is a !ontra!t bining on t," 1arti"s an
an a*ission b# t,"* o+ t," just "t"r*ination o+ t,"ir rig,ts.
7"ing "*boi" in a !ourt jug*"nt% it ,as u1on t," 1arti"s t,"
"++"!t an aut,orit# o+ 5ES =;DICATA% "n+or!"abl" b# a 3rit
o+ "4"!ution. In""% t," CA5% b"ing $"st" 3it, jurisi!tion to
r"n"r t," "!ision bas" on t," !o*1ro*is" agr""*"nt% ,as
t," 1o3"r an aut,orit# to "n+or!" it in t," sa*" !as". It is not
rig,t +or a 1art# 3,o ,a in$o<" t," !ourt8s jurisi!tion in or.
"r to 1ro!ur" a 1arti!ular r"li"+ to "n# a+t"r3ars t,at sa*"
jurisi!tion so as to a$oi a 3rit o+ "4"!ution.
Clarita Tan<iang San!,"H $. Court
o+ A11"als M P"ro Cristobal
L.666C5% =un. 66% 1AB@
I+ t," o3n"r o+ agri!ultural lan "nt"rs into a !i$il la3 l"as"
3it, a l"ss""% an t," latt"r ,ir"s labor"rs% t," labor"rs !annot
!lai* s"!urit# o+ t"nur" i+ t,"# ar" is*iss" b# t," l"ss"". T,"
r"lations,i1 is not go$"rn" b# t," Agri!ultural T"nan!# A!t
but b# bot, t," l"as" !ontra!t an t," 1ro$isions o+ t," Ci$il
Co".
(6) Li*itations on t," Natur" o+ t," Sti1ulations
A96
Art. 19?6
(a) t," la3
(b) *orals
A99
Art. 19?6
(!) goo !usto*s
() 1ubli! or"r
(") 1ubli! 1oli!#
In t," !as" o+ Ab"% "t al. $. Fost"r I,""l"r Cor1oration%
"t al.% L.1@CB5% No$. 6A% 1A6? an L.1@A69% No$. 6A% 1A6?% t,"
a11"llant !o*1ani"s !ont"n" t,at as t," !ontra!ts o+ "*.
1lo#*"nt 3"r" "nt"r" into at a ti*" 3,"n t,"r" 3as NO la3
granting t," 3or<"rs on" *ont, 1a#% t," a11li!ation as to t,"*
o+ 5A 1?56 r"storing t," sa*" rig,t !onstitut"s an i*1air*"nt
o+ t,"ir !ontra!tual obligations. T,"r" is no *"rit in t,is !on.
t"ntion. T," +r""o* o+ !ontra!t un"r t," 1r"s"nt s#st"* o+
go$"rn*"nt is NOT *"ant to b" absolut". T," sa*" is un"r.
stoo to b" subj"!t to r"asonabl" l"gislati$" r"gulations ai*"
at t," 1ro*otion o+ 1ubli! ,"alt,% *orals% sa+"t#% an 3"l+ar".
In ot,"r 3ors% t," !onstitutional guarant# o+ non.i*1air*"nt
o+ obligations is li*it" b# t," "4"r!is" o+ t," 1oli!" 1o3"r o+
t," Stat". T," Eu"stion t,"n to b" "t"r*in" is 3,"t,"r 5A
1?56 is a r"gulator# *"asur"% not a substanti$" la3% so t,at its
"na!t*"nt *a# 1ro1"rl# b" !onsi"r" a $ali "4"r!is" o+ 1oli!"
1o3"r. T," ans3"r is in t," a++ir*ati$". T," A!t 1r"s!rib"s t,"
*ann"r o+ t"r*inating "*1lo#*"nt% t,at is% 3it,out a +i4" or
"+init" 1"rio b# r"Euiring t," "*1lo#"r or "*1lo#""% b"+or"
t"r*inating su!, "*1lo#*"nt% to noti+# t," ot,"r 1art# o+ su!,
+a!t. E$i"ntl#% t," 1ur1os" is to gi$" t," ot,"r 1art# o11ortunit#
to +in r"1la!"*"nt% in t," !as" o+ t," "*1lo#"r% an anot,"r
1la!" o+ "*1lo#*"nt% in t," !as" o+ t," "*1lo#"". T," rig,t to
b" t,us noti+i" !an ,arl# b" !onsi"r" substanti$". T," a!t
is *"r"l# 5E>;LATO5K.
O!,"ng!o $. Cit# Court o+ Ta*boanga
L.@@65C% =an. 11% 1AB?
E$"n un"r PD 6? (r"gulating r"ntals o+ P9?? or l"ss a
*ont,)% a l"ssor is allo3" to s"ll ,is lan in !as" o+ "4tr"*"
n"!"ssit#% as 3,"n ," is C5 #"ars ol% si!<% n""s *on"# +or ,is
illn"ss% an is jobl"ss. H" is "4"*1t +ro* t," sus1"nsion "!r""
in PD 6?. In +a!t% t," *ont,l# r"nt ,"r" o+ P5?? is a *"r" 1it.
tan!"% an t," l"as" *a# b" !onsi"r" a gratuitous on". 7"si"s%
t," l"ss"" is *u!, b"tt"r o++ t,an t," latt"r b"!aus" ," (l"ss"")
A9@
Art. 19?6
o3ns a *u!, bigg"r lan in t," !it#. T," "!r"" is 1r"!is"l#
"sign" to all"$iat" t," li$ing !onitions o+ t,os" in n"".
A95
Art. 19?6
(9) Li*itations I*1os" b# La3
(a) T," !ontra!tual sti1ulations *ust not b" !ontrar# to *an.
ator# an 1ro,ibiti$" la3s. (Art. 5% Ci$il Co"). Dir"!tor#
an su11l"tor# la3s n"" not b" !o*1li" 3it,% sin!" t,"s"
ar" "it,"r is!r"tionar#% or *"r"l# su11l# t," o*issions o+
t," 1arti"s. (B &anr"sa 66?).
(b) Contra!ts *ust r"s1"!t t," la3% +or t," la3 +or*s 1art o+ t,"
!ontra!t. In""% t," 1ro$isions o+ all la3s ar" un"rstoo
to b" in!or1orat" in t," !ontra!t. (Co**ission"r o+ Int.
5"$"nu" $. ;nit" Lin"s Co.% L.16B5?% &a# 6?% 1A66). FT,us%
t," rig,t to o$"rti*" !o*1"nsation an to 3ag"s% alt,oug,
grant" b# la3% is n"$"rt,"l"ss i*1li!itl# in!lu" in "$"r#
!ontra!t o+ "*1lo#*"nt2 an t,"r"+or" t," 1r"s!ri1ti$" 1".
rio is t,at 1ro$i" +or !ontra!ts% oral or 3ritt"n% as t,"
!as" *a# b"% an not t," 1r"s!ri1ti$" 1"rio +or "n+or!ing
a rig,t gi$"n b# la3. (Flor"s% "t al. $. San P"ro% "t al.% L.
B5B?% S"1t. 9?% 1A5C).G
(NOTE' T,is is 3it,out 1r"jui!" to 5A 1A9.)
5CPI $. CA
>5 @@C@B% Aug. 6A% 1AB6
I+ lib"lous *att"rs ar" in!lu" in t," *"ssag" trans.
*itt"% 3it,out t," !ons"nt or <no3l"g" o+ t," s"n"r%
t," !o*1an# !o**its a br"a!, o+ !ontra!t.
(!) In a *ortgag" !ontra!t% a 1a!tu* !o**issoriu* (a !laus"
1ro$iing t,at t," *ortgag"" 3ill auto*ati!all# o3n t,"
1ro1"rt# *ortgag" i+ t," "bt is not 1ai at *aturit#)
is null an $oi. (Art. 6?BB% Ci$il Co"2 B &anr"sa 66?.
661).
(NOTE' T," *ortgag" its"l+% ,o3"$"r% r"*ains $ali.)
() Li<"3is"% an -u1s"t 1ri!"/ is not allo3" in a *ortgag"
!ontra!t. An u1s"t 1ri!" is a s1"!i+i" 1ri!" b"lo3 3,i!, t,"
*ortgag" 1ro1"rt# is not su11os" to b" sol at t," "4"!u.
tion sal". (Iarn"r% 7arn"s an Co. $. =au!ian% 19 P,il. @).
(") T," 1arti"s to a !ontra!t !annot "1ri$" a !o*1"t"nt !ourt
o+ its jurisi!tion% b"!aus" jurisi!tion is +i4" b# la3% an
A96
Art. 19?6
not b# t," 3ill o+ t," 1arti"s. (&olina $. D" la 5i$a% 6 P,il.
16). Ho3"$"r% $"nu"% or t," 1la!" 3,"r" t," a!tion *a# b"
A9C
Art. 19?6
broug,t% !an b" t," subj"!t o+ sti1ulation. (5ul" @% S"!. @%
5"$is" 5ul"s o+ Court an C"ntral AHu!ar"ra $. D" L"on%
56 P,il. 16A).
Pal*a $. CaniHar"s
1 P,il. 6?6
FACTS' D lost in ga*bling an as 1a#*"nt% "4"!ut"
a 1ro*issor# not" in +a$or o+ t," 3inn"r C. C t,"n assign"
t," not" to A. Issu"' &a# A su!!"ss+ull# r"!o$"r +ro* DJ
HELD' No% b"!aus" t," 1ro*issor# not" is $oi.
=ust as t," 3inn"r !annot r"!o$"r% so also !annot t," as.
sign"".
(NOTE' I+ t," los"r ,a borro3" *on"# +ro* a +ri"n
t,ru a 1ro*issor# not"% sai *on"# to b" us" to 1a# t,"
3inn"r% t," 1ro*issor# not" is $ali +or it 3as not t," r"sult
o+ ga*bling b"t3""n t," los"r an t," +ri"n. T,us% 3,il"
a 3inn"r in ga*bling !annot r"!o$"r% a +ri"n 3,o l"ns
t," *on"# !an r"!o$"r.)
Cabatan $. Court o+ A11"als
L.@@BC5.C6% L.@516?% L.@6611.16
=an. 66% 1AB?
T," !ontra!t o+ t," 1arti"s *ust !on+or* 3it, t,"
la3 in +or!" at t," ti*" t," !ontra!t 3as "4"!ut". Sin!"
at t," ti*" t," !ontra!ts 3"r" "nt"r" into t,"r" 3as as
#"t no statut" +i4ing a !"iling on r"ntals an 1ro,ibiting
t," l"ssor +ro* "*aning an in!r"as" t,"r"o+% t," l"ssor
,a t," rig,t to o so.
(@) Li*itations I*1os" b# &orals
(a) &orals "al 3it, rig,t an 3rong (S"" D" los 5"#"s $. Alo.
jao% 16 P,il. @AA) an 3it, ,u*an !ons!i"n!". (Ibarra $.
A$"#ro% 99 P,il. 6C9).
D" los 5"#"s $. Alojao
16 P,il. @AA
A9B
Art. 19?6
FACTS' A "btor agr"" to 3or< as a s"r$ant +or ,"r
!r"itor IITHO;T PAK until s," !oul +in *on"# 3it,
A9A
Art. 19?6
3,i!, to 1a# ,"r "bt. A+t"r so*"ti*" s," l"+t 3it,out
1a#ing% so t," !r"itor institut" t,is a!tion to !o*1"l
,"r to 1a#% an 3or< as a s"r$ant 3it,out 1a# Otil t," "bt
!oul +inall# b" 1ai. T," "btor% on t," ot,"r ,an% as<"
1a#*"nt +or s"r$i!"s alr"a# r"n"r".
HELD' T," agr""*"nt to 3or< 3it,out 1a# is i*.
*oral an $oi sin!" t,is 3oul a*ount to in$oluntar#
s"r$itu". T," !r"itor 3as or"r" to 1a# 3ag"s an to
subtra!t t,"r"+ro* t," a*ount o+ t," "bt.
E*"t"rio Cui $. Ar"llano ;ni$"rsit#
6 SC5A 6?5
FACTS' A stu"nt 3,o ,a +inis," 9 1U6 s"*"st"rs
in t," Coll"g" o+ La3 o+ t," Ar"llano ;ni$"rsit# trans+"rr"
to anot,"r la3 s!,ool +or ,is last s"*"st"r. For t," 9 1U6
s"*"st"rs ," sta#" at t," Ar"llano ;ni$"rsit#% ," "njo#"
a s!,olars,i12 ,"n!"% 3as not r"Euir" to 1a# +""s. I,"n ,"
soug,t trans+"r an ,is trans!ri1t o+ gra"s% ," 3as as<"
to r"i*burs" all t," s!,olars,i1 +uns sin!"% t," agr""*"nt
1r"!is"l# 1ro$i" +or a r"+un in !as" o+ trans+"r. Issu"' Is
su!, a 1ro$iso $aliJ
HELD' T," 1ro$iso is $oi% an !ontra$"n"s bot,
*orals an 1ubli! 1oli!#. S!,olars,i1s s,oul not b"
1ro1agana *att"r2 t,"# ar" a3ars +or *"rit. H"n!"% t,"
stu"nt n"" not r"i*burs".
Ibarra $. A$"#ro
9C P,il. 6C9
A 1"nalt# !laus" 1ro$iing +or t," 1a#*"nt o+ P5
+or "a!, a#8s "la# a+t"r t," *aturit# o+ a loan +or P@65
3as ,"l i**oral in"Euitabl"% s,o!<ing to t," ,u*an
!ons!i"n!"% an $oi.
7atarra $. &ar!os
C P,il. 156
A@?
Art. 19?6
A 1ro*is" o+ *arriag" bas" on a !arnal !onsi"ration
is i**oral an% t,"r"+or"% $oi.
A@1
Art. 19?6
>oros1"% "t al. $. >o!,ang!o
L.16C95% O!t. 9?% 1A5A
E4!"ssi$" or unr"asonabl" attorn"#8s +""s "$"n i+
sti1ulat" in a !ontra!t *ust b" r"u!"% +or a la3#"r is
1ri*aril# a !ourt o++i!"r% subj"!t to jui!ial !ontrol.
Saturnino S"lano$a $. Al"janro E.
&"noHa% A*. &att"r.B?@.C=
&a# 1A% 1AC5
FACTS' A jug" (an notar# 1ubli!) 1r"1ar" an
rati+i" a o!u*"nt at" No$. 61% 1AC6% liEuiating "4tra.
jui!iall# a !onjugal 1artn"rs,i1 an allo3ing t," *arri"
!ou1l" !on!"rn" to 3ai$" t,"ir rig,t to 1ros"!ut" "a!, ot,"r
+or +utur" a!ts o+ in+i"lit#. Issu"' Ar" sai sti1ulations in
t," 1ubli! instru*"nt !onsi"r" $aliJ
HELD' 7ot, sti1ulations ar" !ontrar# to la3% goo
!usto*s% *orals% an 1ubli! 1oli!#% an t," notariHing o+.
+i!ial !an t,"r"+or" b" 1unis," a*inistrati$"l#.
I,il" it is tru" t,at in La!son $. San =os".La!son%
L.69@B6% L.69C6C% an L.6@65A% Aug. 9?% 1A6B% 6@ SC5A
B9C% su!, an "4trajui!ial agr""*"nt +or issolution !an b"
*a" uring t," *arriag"% still t," jui!ial san!tion *ust
b" obtain" 7EFO5EHAND% not subs"Eu"ntl#.
T," li!"ns" gi$"n to "it,"r s1ous" to !o**it an# a!t
o+ in+i"lit# 3as% in "++"!t% a rati+i!ation o+ t,"ir 1"rsonal
s"1aration an% t,"r"+or"% a $iolation o+ Art. 661 o+ t,"
Ci$il Co" 1ro,ibiting !ontra!ts +or -1"rsonal s"1aration%
b"t3""n ,usban an 3i+"/ (an +or "$"r# "4trajui!ial
agr""*"nt +or t," issolution o+ t," !onjugal 1artn"rs,i1
or o+ t," absolut" !o**unit# o+ 1ro1"rt# b"t3""n t,"
,usban an t," 3i+").
LL an Co*1an# D"$"lo1*"nt an Agro.Inustrial
Cor1. $. Huang C,ao C,un an Kang Tung Fa
>5 1@69CB% &ar. C% 6??6
A@6
Art. 19?6
FACTS' P"tition"r argu"s t,at r"s1on"nts s,oul
b" "j"!t" +or non.1a#*"nt o+ t," n"3 r"ntal rat"s. T,at
A@9
Art. 19?6
is% t," *ont,l# r"ntal is subj"!t to in!r"as". Sai in!r"as"
s,all b" bas" u1on t," i*1osition o+ 5"al Estat" Ta4 +or
"$"r# t3o #"ars u1on 1r"s"ntation o+ t," in!r"as" r"al
"stat" ta4 to t," l"ss""s% but sai in!r"as" s,all not b" l"ss
t,an 65Q.
5"s1on"nts% u1on t," ot,"r ,an% !ount"r t,at
t,"# i not agr"" to t,"s" n"3 rat"s. T," +or*"r "ni"
1"tition"r8s all"gations% !lai*ing inst"a t,at t,"ir +ailur"
to 1a# t," *ont,l# r"ntals on t," 1ro1"rt# 3as u" to 1".
tition"r8s +ault 3,"n it att"*1t" to in!r"as" t," a*ount
o+ r"nt in $iolation o+ t,"ir !ontra!t.
HELD' A unilat"ral in!r"as" in t," r"ntal rat" !an.
not b" aut,oriH" !onsi"ring t,at' (1) t," o1tion to r"n"3
is r"!i1ro!al an% t,us% t," t"r*s an !onitions t,"r"o+
0 in!luing t," r"ntal rat" RR *ust li<"3is" b" r"!i1ro.
!al2 an (6) t," !ontra!t" !laus" aut,oriHing an in!r"as"
RR -u1on 1r"s"ntation o+ t," in!r"as" r"al "stat" ta4 to
l"ss""s/ RR ,as not b""n !o*1li" 3it,% in t," instant !as"%
b# 1"tition"r.
A sti1ulation in a l"as" !ontra!t stating t,at it is
subj"!t to -an o1tion to r"$i"3/ s,all b" int"r1r"t" to
b" r"!i1ro!al in !,ara!t"r. ;nl"ss t," languag" s,o3s an
int"nt to allo3 t," l"ss"" to "4"r!is" it unilat"rall#% su!,
o1tion s,all b" ""*" to b"n"+it bot, t," l"ssor an t,"
l"ss"" 3,o *ust bot, !ons"nt to t," "4t"nsion or r"n"3al%
as 3"ll as to its s1"!i+i! t"r*s an !onitions.
In t," instant !as"% t,"r" 3as not,ing in t," a+or"sai
sti1ulation or in t," a!tuation o+ 1arti"s t,at s,o3" t,"#
int"n" an auto*ati! r"n"3al or "4t"nsion o+ t," t"r* o+
t," !ontra!t. T,us'
1. D"*onstrating 1"tition"r8s isint"r"st in r"n"3.
ing t," !ontra!t 3as its l"tt"r at" Aug. 69% 1AA6%
"*aning t,at r"s1on"nts $a!at" t," 1r"*is"s
+or +ailur" to 1a# r"ntals sin!" 1AA9. As a rul"% t,"
o3n"r.l"ssor ,as t," 1r"rogati$" to t"r*inat" t,"
l"as" u1on its "41iration. (Va. " 5o4as $. CA% 69
SC5A 9?6 F1AC5G).
A@@
Art. 19?6
6. In t," 1r"s"nt !as"% t," isagr""*"nt o+ t," 1arti"s
o$"r t," in!r"as" r"ntal rat" an 1ri$at" r"s1on"nts
A@5
Art. 19?6
+ailur" to 1a# it% 1r"!lu" t," 1ossibilit# o+ a *utual
r"n"3al.
9. T," +a!t t,at t," l"ssor allo3" t," l"ss"" to intro.
u!" i*1ro$"*"nts on t," 1ro1"rt# 3as ini!ati$"%
not o+ t," +or*"r8s int"ntion to "4t"n t," !ontra!t
auto*ati!all# (7u!" $. CA% 996 SC5A 151 F6???G)% but
*"r"l# o+ its ob"i"n!" to its "41r"ss t"r*s allo3ing
t," i*1ro$"*"nts. A+t"r all% at t," "41iration o+ t,"
l"as"% t,os" i*1ro$"*"nts 3"r" to -b"!o*" its 1ro1.
"rt#./
As to t," !ont"ntion t,at it is not +air to "j"!t r"s1on.
"nts +ro* t," 1r"*is"s a+t"r onl# 5 #"ars% !onsi"ring t,"
$alu" o+ t," i*1ro$"*"nts t,"# introu!" t,"r"in% su++i!"
it to sa# t,at t,"# i so 3it, <no3l"g" o+ t," ris< R t,"
!ontra!t ,a 1lainl# 1ro$i" +or a 5.#"ar l"as" 1"rio.
Parti"s ar" +r"" to "nt"r into an# !ontra!tual sti1ula.
tion% 1ro$i" it is not ill"gal or !ontrar# to 1ubli! *orals.
I,"n su!, agr""*"nt% +r""l# an $oluntaril# "nt"r" into%
turn out to b" isa$antag"ous to a 1art#% !ourts !annot
r"s!u" it 3it,out !rossing t," !onstitutional rig,t to !on.
tra!t. T,"# ar" not aut,oriH" to "4tri!at" 1arti"s +ro*
t," n"!"ssar# !ons"Eu"n!"s o+ t,"ir a!ts% an t," +a!t t,at
t," !ontra!tual sti1ulations *a# turn out to b" +inan!iall#
isa$antag"ous 3ill not r"li"$" t," latt"r o+ t,"ir obliga.
tions. (Torr"s $. CA% 96? SC5A @9? F1AAAG).
(5) Li*itations I*1os" b# >oo Custo*s
>oo !usto*s ar" t,os" t,at ,a$" r"!"i$" +or a 1"rio o+
ti*" 1ra!ti!al an so!ial !on+ir*ation. A!!oring to t," Co"
Co**ission% goo !usto*s an *orals -o$"rla1 "a!, ot,"r2 but
so*"ti*"s t,"# o not./ (Co**ission 5"1ort% 1. 19@).
(6) Li*itations I*1os" b# Publi! Or"r
(a) Publi! or"r "als 3it, t," 1ubli! 3"al (7oug, $. Can.
ti$"ros% @? P,il. 6?A)% an in!lu"s 1ubli! sa+"t#. (5"1ort
A@6
Art. 19?6
o+ t," Co" Co**ission% 1. 19@).
A@C
Art. 19?6
Villanu"$a $. CastaP"a% =r.
>5 61911% S"1t. 61% 1ABC
E$"r# !ontra!t a++"!ting 1ubli! int"r"st su++"rs a !on.
g"nital in+ir*it# in t,at it !ontains an i*1li" r"s"r$ation
o+ t," 1oli!" 1o3"r as a 1ostulat" o+ t," "4isting or"r. T,is
1o3"r !an b" a!ti$at" at an# ti*" to !,ang" t," 1ro$i.
sions o+ t," !ontra!t% or "$"n abrogat" it "ntir"l#% +or t,"
1ro*otion or 1rot"!tion o+ t," g"n"ral 3"l+ar". Su!, a!t
3ill not *ilitat" against t," i*1air*"nt !laus"% 3,i!, is
subj"!t to an li*it" b# t," 1ara*ount 1oli!" 1o3"r.
(b) Publi! or"r as us" in t," ol Ci$il Co" 3as s#non#*ous
3it, 1ubli! 1oli!#. (F"rraHHini $. >s"ll% 9@ P,il. 6AC).
(C) Li*itations I*1os" b# Publi! Poli!#
(a) Publi! 1oli!#% 3,i!, $ari"s a!!oring to t," !ultur" o+ a
1arti!ular !ountr#% is t," -1ubli!% so!ial an l"gal int"r"st
in 1ri$at" la3./ (F"rraHHini $. >s"ll% 9@ P,il. 6AC). It is sai
to b" t," *ani+"st 3ill o+ a Stat".
(b) A !ontra!t is !ontrar# to 1ubli! 1oli!# i+ it -,as a t"n"n!#
to injur" t," 1ubli!% is against t," 1ubli! goo% or !ontra.
$"n"s so*" "stablis," int"r"st o+ so!i"t#% or is in!onsist.
"nt 3it, soun 1oli!# an goo *orals% or t"ns !l"arl# to
un"r*in" t," s"!urit# o+ ini$iual8s rig,ts./ (>abri"l $.
&ont" " Pi"a% C1 P,il. 5??).
(!) E4a*1l"s o+ agr""*"nts 3,i!, ar" !ontrar# to 1ubli!
1oli!#'
1) t,os" "n#ing a!!"ss to t," !ourts. (&anila El"!tri!
Co. $. Pasa# Trans1ortation% 5C P,il. 6?9).
6) t,os" 3,i!, t"n to sti+l" t," 1ros"!ution o+ a 1"rson
!,arg" 3it, a !ri*"% +or a 1"!uniar# or ot,"r $alu.
abl" !onsi"ration. (Arro#o $. 7"r3in% 9B P,il. 9B6
an Hibb"r $. 5,o"% 96 P,il. @C6).
(NOTE' In a +"3 !as"s% a !o*1ro*is" is% ,o3.
"$"r% 1"r*itt".)
9) t,os" "4"*1ting a !arri"r +ro* liabilit# +or gross
n"glig"n!". (H"a!o!< $. &a!onra#% 96 P,il. 6?5).
A@B
Art. 19?6
@) t,os" 3,i!, "n!ourag" +rau. (7oug, $. Canti$"ros%
@? P,il. 6?A).
A@A
Art. 19?6
5) t,os" 3,i!, aut,oriH" an# attorn"# s"l"!t" b# t,"
!r"itor to stat" b"+or" t," !ourt% s,oul suit +or !ol.
l"!tion b" broug,t% t,at t," "btor r"!ogniH"s t,"
"4ist"n!" an $aliit# o+ t," "bt. (T,"s" ar" !all"
-3arrants o+ attorn"# to !on+"ss jug*"nt./ T,"s"
ar" $oi b"!aus" t,"# "1ri$" t," "btor o+ ,is a#
in !ourt.) (National 7an< $. &anila Oil 5"+ining Co.%
@9 P,il. @@@).
6) t,os" 3,i!, !onstitut" an unu" or unr"asonabl"
r"straint o+ tra"% su!, as a 1ro,ibition to "ngag" in
an# "nt"r1ris" (3,"t,"r si*ilar or not 3it, t," "n.
t"r1ris" o+ t," "*1lo#"r) 3it,in a 1"rio o+ +i$" #"ars
a+t"r l"a$ing t," s"r$i!" o+ t," "*1lo#"r. (F"rraHHini
$. >s"ll% 9@ P,il. 6AC). (I+ t," r"straint is r"asonabl"%
it s,oul b" gi$"n "++"!t.) (Oll"nor+ $. Abra,a*son%
9B P,il. 5B5 an 5" Lin" $. 7a!,ra!, &otor Co.% 6C
P,il. 5CC).
C) A sti1ulation allo3ing an ag"nt or *il"*an 1?Q
o+ a Euota allo!ation in +or"ign "4!,ang" +ro* t,"
C"ntral 7an< (no3 7ang<o S"ntral). (T"" $. Ta!loban
El"!tri! an I!" Plant Co.% "t al.% L.11AB?% F"b. @% 1A5A2
5"1. A!t 665 as a*"n"% S"!. 9% Art. IV an a C"ntral
7an< F7ang<o S"ntralG Cir!ular 3,i!, stat"s t,at all
a11li!ations +or +or"ign "4!,ang" s,all b" *a" onl#
t,ru aut,oriH" ag"nt ban<s an stat"s +urt,"r t,at
un"r no !ir!u*stan!"s s,oul an# a11li!ant% ,is
ag"nt an r"1r"s"ntati$" +ollo3 u1 an a11li!ation
3it, t," C"ntral 7an< F7ang<o S"ntralG.)
B) A sti1ulation bargaining a3a# or surr"n"ring +or a
!onsi"ration t," rig,t to $ot" an to run +or 1ubli!
o++i!". T,"s" ar" rig,ts !on+"rr" not +or ini$iual
or 1ri$at" b"n"+it or a$antag"s but +or t," 1ubli!
goo an int"r"st. (Saura $. Sini!o% L.19@?9% &ar.
69% 1A6?).
Flor"ntino 7. "l 5osario $. Eug"nio &illao
A*. Cas" C6@% =an. 91% 1A6A
A5?
Art. 19?6
I+ a la3#"r in a !as" bu#s t," subj"!t *att"r in$ol$"
in t," litigation uring sai litigation% t," 1ur!,as" 3oul
A51
Art. 19?6
not b" $ali. Ho3"$"r% i+ t," 1ur!,as" o!!urr" 1rior to
,is "ntr# into t," !as" as !ouns"l% t," 1ur!,as" *ust b"
r"gar" as a $ali transa!tion.
L"al% "t al. $. IAC >5
65@65% No$. 5% 1ABC
FACTS' A !ontra!t "ntitl" -!o*1ra$"nta%/ 3ritt"n
"ntir"l# in t," S1anis, languag"% 1ro$i" t,at -"n !aso
" $"nta% no 1oran $"n"r a otros is!,os lot"s " t"rr"no
sino al aEui $"n"ro o los ,"r""ros or su!"sor"s " "st"
4 4 4./ T,is is an "41r"ss 1ro,ibition against t," sal" o+
t," lots "s!rib" in t," -!o*1ra$"nta/ to t,ir 1"rsons or
strang"rs.
HELD' T," 1ro$ision is a nullit#. A 1ro,ibition to
ali"nat" s,oul not "4!"" at *ost a 1"rio o+ t3"nt# #"ars2
ot,"r3is"% t,"r" 3oul b" sub$"rsion o+ 1ubli! 1oli!# 3,i!,
naturall# +ro3ns on un3arrant" r"stri!tions on t," rig,t
o+ o3n"rs,i1.
To1.I"l &anu+a!turing% In!. $.
ECED% S.A.% "t al. >5
@@A@@% Aug. A% 1AB5
T," rul" o+ 1ari "li!to is "41r"ss" in t," *a4i* -"4
olo *alo non oritor a!tio/ an -in 1ari "li!to 1otior "st
!onitio "+"n"ntis./ T," la3 3ill not ai "it,"r 1art# to
an ill"gal agr""*"nt. It l"a$"s t," 1arti"s 3,"r" it +ins
t,"*.
T,us% a !ontra!t "nt"r" into b# a o*"sti! !or1ora.
tion 3it, a +or"ign !or1oration to *a<" an s"ll t," latt"r8s
1rou!ts is ill"gal i+ t," latt"r is not li!"ns" to o busin"ss
in t," P,ili11in"s b# t," 7oar o+ In$"st*"nts un"r 5".
1ubli! A!t 5@55. 7ut i+ t," o*"sti! !or1oration is in 1ari
"li!to% it !annot as< our !ourts to sto1 t," +or"ign !or1ora.
tion +ro* t"r*inating t," !ontra!t an +ro* n"gotiating
A56
Art. 19?6
3it, an trans+"rring its li!"ns" to 1rou!" an istribut"
its 1rou!ts to t,ir 1"rsons.
A59
Art. 19?6
(B) E4a*1l"s o+ Sti1ulations I,i!, Ha$" 7""n D"!lar"
Vali
(a) A sti1ulation li*iting t," liabilit# o+ a guarantor or sur"t#
+or onl# on" #"ar (or as long as it is +or a long"r ti*" t,an
t," 1"rio +i4" +or t," 1rin!i1al "btor). (=oll#" $. 7ar!"lon
an LuHon Sur"t# Co.% 5? O.>.% 1. 61C2 6B P,il. 16@).
(b) A sti1ulation in a +ir" insuran!" 1oli!# t,at t," a!tion b#
t," insur" s,oul b" broug,t 3it,in a r"asonabl" ti*".
(&a!ias M Co. $. C,ina Fir" Insuran!" Co.% @6 P,il. 9@5).
(!) A sti1ulation t,at int"r"st on loans b" !o*1oun". (>o$8t.
$. Va!a% 6@ P,il. 6).
() A sti1ulation t,at an "*1lo#"" *a# b" is*iss" at an#.
ti*" 3,"n ,is s"r$i!"s ar" no long"r n"""2 or t,at an
"*1lo#"" *a# l"a$" t," s"r$i!"s o+ t," "*1lo#"r% 3it,out
1r"$ious noti!". (7orro3s<# $. Isa<o% FC.A.G @? O.>. 16t,
Su11.% 1. 66@).
(") A sti1ulation to 1a# a "bt% in!urr" uring t," =a1an"s"
o!!u1ation% in P,ili11in" !urr"n!# a+t"r lib"ration. (D"
L"on $. S#ju!o% In!.% A? P,il. 911).
(+) A sti1ulation in a !ontra!t o+ l"as"% allo3ing t," t"nant to
r"tain t," r"nts o+ t," ,ous" +or t," 1a#*"nt o+ r"1airs
an ta4"s. (D" los 5"#"s $. D" los 5"#"s% B P,il. B?9).
(A) D"signation o+ t," Na*" o+ a Contra!t
(a) T," 1arti"s g"n"rall# *a# agr"" on an# !ontra!t% but t,"
na*" t,at t,"# gi$" to it s,oul not b" !ontrolling% +or a
!ontra!t is 3,at t," 1arti"s int"n" it to b"% not 3,at
t,"# !all it. (:uiroga $. Parsons Har3ar" Co.% 9B P,il.
5?1).
(b) T,is is b"!aus" a !ontra!t *ust b" jug" b# its !,ara!t"r%
its natur"% an its l"gal Euali+i!ations. T," !ourts 3ill%
t,"r"+or"% loo< not so *u!, at t," +or* o+ t," transa!tion
as at its substan!". (>abri"l $. &ont" " Pi"a% C1 P,il.
A5@
Art. 19?6
@AC).
A55
Art. 19?C
(1?) Insuran!" Contra!t
;CP7 >"n"ral Insuran!" Co.% In!. $.
&asagana T"l"*art% In!.
>5 19C1C6% A1r. @% 6??6
FACTS' 5"s1on"nt% 3,i!, ,a 1ro!ur" insuran!" !o$"r.
ag" +ro* 1"tition"r +or a nu*b"r o+ #"ars% ,a b""n grant" a 6?
to A?.a# !r"it t"r* +or t," r"n"3al o+ 1oli!i"s. Su!, a 1ra!ti!"
,a "4ist" u1 to t," ti*" t," !lai*s 3"r" +il". &or"o$"r% t,"r"
3as 1r"1on"rant 1roo+ t,at no ti*"l# noti!" o+ non.r"n"3al
3as *a" b# 1"tition"r.
ISS;E' I,"t,"r or not t," +ir" insuran!" 1oli!i"s issu" b#
1"tition"r to r"s1on"nt !o$"ring t," 1"rio +ro* &a# 66% 1AA1
to &a# 66% 1AA6 ,a b""n "4t"n" or r"n"3" b# an i*1li"
!r"it arrang"*"nt t,oug, a!tual 1a#*"nt or 1r"*iu* 3as
t"n"r" on a lat"r at" an a+t"r t," o!!urr"n!" o+ t," +ir".ris<
insur" against.
HELD' T," insur"r *a# grant !r"it "4t"nsion +or
1a#*"nt o+ 1r"*iu*. T,is si*1l# *"ans t,at i+ insur"r ,as
grant" t," insur" a !r"it t"r* +or 1r"*iu* 1a#*"nt an
loss o!!urs b". +or" "41iration o+ t"r*% r"!o$"r# on t," 1oli!#
s,oul b" allo3" "$"n t,oug, 1r"*iu* is 1ai a+t"r t," loss
but 3it,in t," !r"it t"r*. T,"r" is not,ing in S"!. CC o+ t,"
Insuran!" Co" o+ 1ACB 3,i!, 1ro,ibits 1arti"s in an
insuran!" !ontra!t to 1ro$i" a !r"it t"r* 3it,in 3,i!, to 1a#
t," 1r"*iu*s. T,at agr""*"nt is not against t," la3% *orals%
goo !usto*s% 1ubli! or"r% or 1ubli! 1oli!#. T," agr""*"nt
bins t," 1arti"s. (S"" Art. 19?6% Ci$il Co").
In t," instant !as"% it 3oul b" unjust an in"Euitabl" i+
r"!o$"r# on t," 1oli!# 3oul not b" 1"r*itt" against 1"tition"r%
3,i!, ,a !onsist"ntl# grant" a 6? to A?.a# !r"it t"r* +or
1a#*"nt o+ 1r"*iu* "s1it" its +ull a3ar"n"ss o+ S"!.CC a+or".
*"ntion" abo$". Esto11"l t"ars it +ro* ta<ing r"+ug" un"r
sai s"!tion% sin!" r"s1on"nt r"li" in goo +ait, on su!,
1ra!ti!".
Art. 19?C. Inno*inat" !ontra!ts s,all b" r"gulat" b#
A56
Art. 19?C
t," sti1ulations o+ t," 1arti"s% b# t," 1ro$isions o+ Titl"s I
an II o+ t,is 7oo<% b# t," rul"s go$"rning t," *ost
analogous no*inat" !ontra!ts% an b# t," !usto*s o+ t,"
1la!".
A5C
Art. 19?C
CO&&ENT'
(1) >o$"rning 5ul"s +or Inno*inat" Contra!ts
(a) sti1ulations
(b) Titl"s I an II o+ 7oo< IV 0 Obligations an Contra!ts
(!) rul"s on t," *ost ANALO>O;S no*inat" !ontra!ts
() !usto*s o+ t," 1la!"
(6) T," @ Dins o+ Inno*inat" Contra!ts
(a) o ut "s (I gi$" t,at #ou *a# gi$")
(b) o ut +a!ias (I gi$" t,at #ou *a# o)
(!) +a!io ut "s (I o t,at #ou *a# gi$")
San &igu"l Cor1. $. NL5C
>5 B?CC@% &a# 91% 1ABB
T," inno$ation 1rogra* s1onsor" b# a !or1oration
in$iting its "*1lo#""s to sub*it inno$ation 1ro1osals
an t," !or1oration un"rta<ing to grant !as, a3ars
to "*1lo#""s 3,o a!!"1t su!, in$itation an 3,os" in.
no$ati$" sugg"stions% in t," jug*"nt o+ t," !or1oration8s
o++i!ials% satis+i" t," stanars an r"Euir"*"nts o+ t,"
1rogra* an 3,i!,% t,"r"+or"% !oul b" translat" into
so*" substantial b"n"+it to t," !or1oration% t,oug, a uni.
lat"ral un"rta<ing in origin% !oul non"t,"l"ss ri1"n into
an "n+or!"abl" (+a!io ut "s) obligation on t," 1art o+ t,"
!or1oration un"r !"rtain !ir!u*stan!".
() +a!io ut +a!ias (I o t,at #ou *a# o)
Santos $. A!uPa
59 O.>. No. 9B5
FACTS' In a !ontra!t% t," 1ro$isions o+ 3,i!, 3"r"
$"r# si*ilar to a l"as" !ontra!t% bot, 1arti"s agr"" t,at
t," sa*" SHO;LD NOT b" r"gar" as a l"as". Issu"' Is
A5B
Art. 19?C
t,is sti1ulation $aliJ
HELD' K"s% b"!aus"'
A5A
Art. 19?B
(1) t,"r" is no l"gal 1ro$ision 1ro,ibiting su!, a sti1u.
lation (g"n"rall#% 3,at"$"r is agr"" u1on is bin.
ing% 1arti!ularl# in a !ons"nsual !ontra!t su!, as
LEASE)
(6) t,is agr""*"nt *a# b" !onsi"r" on" o+ t," inno*i.
nat" !ontra!ts "41r"ssl# allo3" un"r Art. 19?C.
(9) L"gal S"r$i!"s +or a Fri"n
Cor1us $. Court o+ A11"als
AB SC5A @6@
I+ an attorn"# r"n"rs l"gal s"r$i!"s +or a !los" +ri"n% t,"
+or*"r !an still !,arg" attorn"#8s +""s "$"n in t," abs"n!" o+ an#
agr""*"nt t,"r"on. T,is is b"!aus" o+ t," inno*inat" !ontra!t
o+ +a!io ut "s (I o t,at #ou *a# gi$") 3,i!,% in turn% is bas"
on t," 1rin!i1l" t,at on" !annot unjustl# "nri!, ,i*s"l+ at an.
ot,"r8s "41"ns".
Art. 19?B. T," !ontra!t *ust bin bot, !ontra!ting 1ar.
ti"s2 its $aliit# or !o*1lian!" !annot b" l"+t to t," 3ill o+
on" o+ t,"*.
CO&&ENT'
(1) &utualit# o+ Contra!ts
T,is Arti!l" str"ss"s t," *utualit# o+ !ontra!ts 0 t,at is%
bot, 1arti"s ar" boun. T," 1rin!i1l" is bas" on t," "ss"ntial
"Eualit# o+ t," 1arti"s. It is r"1ugnant to bin on" 1art#% an
#"t l"a$" t," ot,"r +r"". (>ar!ia $. 5ita L"gara% In!.% L.6?1C5%
O!t. 9?% 1A6C).
Al!uaH $. PS7A% "t al.
>5 C6959% &a# 6% 1ABB
FACTS' For ta<ing 1art in a "*onstration or 1rot"st
3,i!, t," s!,ool aut,oriti"s bran" as -anar!,i!/ ralli"s% !"r.
tain stu"nts 3"r" barr" +ro* r"."nroll*"nt 3,il" so*" t"a!,.
A6?
Art. 19?B
"rs 3"r" is*iss". T," a++"!t" stu"nts an t"a!,"rs all"g"
t,at t,"# ,a$" b""n "1ri$" o+ 1ro!"ural u" 1ro!"ss 3,i!,
A61
Art. 19?B
r"Euir"s t,at t,"r" b" u" noti!" an ,"aring% an o+ substanti$"
u" 1ro!"ss 3,i!, r"Euir"s t,at t," 1"rson or bo# to !onu!t t,"
in$"stigation b" !o*1"t"nt to a!t an "!i"% +r"" +ro* bias an
1r"jui!". It is not is1ut" t,at Print" 5ul"s an 5"gulations
o+ t," s!,ool ar" istribut" at t," b"ginning o+ "a!, s!,ool #"ar
to t," stu"nts. T," 5ul"s% a*ong ot,"rs% 1ro$i"' -Enroll*"nt
in t," PS7A is !ontra!tual in natur" an u1on a*ission to t,"
s!,ool% t," stu"nt is ""*" to ,a$" agr"" to bin ,i*s"l+ to
all rul"s an r"gulations b# t," D"1art*"nt o+ Eu!ation%
Cultur" an S1orts. Furt,"r*or"% ," agr""s t,at ," *a# b"
r"Euir" to 3it,ra3 +ro* t," s!,ool at an# ti*" +or r"asons
""*" su+. +i!i"ntl# s"rious b# t," S!,ool A*inistration.88
HELD' Paragra1, 19C o+ t," &anual o+ 5"gulations +or
Pri$at" S!,ools 1ro$i"s t,at 3,"n a !oll"g" stu"nt r"gist"rs
in a s!,ool% it is un"rstoo t,at ," is "nrolling +or t," "ntir"
s"*"st"r. T," &anual also 1ro$i"s t,at t," -3ritt"n !ontra!t/
r"Euir" +or !oll"g" t"a!,"rs ar" +or -on" s"*"st"r./ It is b"#on
is1ut" t,at a stu"nt on!" a*itt" to s!,ool is !onsi"r" "n.
roll" +or on" s"*"st"r. E$i"ntl#% a+t"r t," !los" o+ t," s"*"st"r
t," s!,ool ,as no long"r an# "4isting !ontra!t "it,"r 3it, t,"
stu"nts or 3it, t," int"r$"ning t"a!,"rs. Su!, b"ing t," !as"%
t," !,arg" o+ "nial o+ u" 1ro!"ss is unt"nabl". For !ontra!ts
ar" r"s1"!t" as t," la3 b"t3""n t," !ontra!ting 1arti"s. An
t," !ourts% b" t,"# t," original trial !ourt or t," a11"llat" !ourt%
,a$" no 1o3"r to *a<" !ontra!ts +or t," 1arti"s.
(6) Cons"Eu"n!"s o+ &;T;ALITK
(a) A 1art# !annot r"$o<" or r"noun!" a !ontra!t 3it,out t,"
!ons"nt o+ t," ot,"r% nor !an it ,a$" it s"t asi" on t,"
groun t,at ," ,a *a" a ba bargain. (F"rnan"H $.
&55% 1@ P,il. 6C@).
(b) I,"n t," +ul+ill*"nt o+ t," !onition "1"ns u1on t,"
sol" 3ill o+ t," "btor% t," !onitional obligation is $oi
(Art. 11B6% Ci$il Co") i+ t," !onition is S;SPENSIVE. I+
5ESOL;TO5K% t," obligation is $ali. H"n!"% it is all rig,t
+or t," !ontra!t to "41r"ssl# gi$" to on" 1art# t," rig,t to
CANCEL t," sa*". T,is is b"!aus"% 3,"n t," !ontra!t is
A66
Art. 19?B
t,us !an!"ll"% t," agr""*"nt is r"all# b"ing F;LFILLED.
(Ta#lor $. ;# Ti"ng Piao an Tan Liuan% @9 P,il. BC9).
A69
Art. 19?B
(NOTE' I,"n a !an!"llation is *a"% 7OTH 1arti"s
*ust o+ !ours" b" r"l"as".)
&"l"n!io $. D# Tiao
5 P,il. AA
FACTS' T3o 1"rsons "nt"r" into a !ontra!t o+ l"as"
o+ lan. It 3as sti1ulat" t,at at an# ti*" b"+or" t," t"n.
ant !onstru!t" an# builing t,"r"on% ," !oul !an!"l t,"
l"as". Issu"' Is t," sti1ulation $aliJ
HELD' K"s% +or ,"r" again% 3,"n !an!"llation is
*a"% t,is b# its"l+ is a +ul+ill*"nt o+ t," 1ro$isions o+ t,"
!ontra!t.
PN7 $. CA
>5 BBBB?% A1r. 9?% 1AA1
FACTS' T," P,ili11in" National 7an< (PN7) o$"r
t," obj"!tion o+ "btor% an 3it,out aut,orit# +ro* t,"
&on"tar# 7oar% 3it,in a 1"rio o+ onl# +our *ont,s%
in!r"as" t," 1BQ int"r"st rat" on t," borro3"r8s loan
obligation t,r"" ti*"s' (a) to 96Q in =ul. 1AB@2 (b) to @1Q
in O!t. 1AB@2 an (!) to @BQ in No$. 1AB@.
HELD' T,os" in!r"as"s 3"r" null an $oi% +or i+ t,"
&on"tar# 7oar its"l+ 3as not aut,oriH" to *a<" su!,
!,ang"s o+t"n"r t,an on!" a #"ar% "$"n l"ss so *a# a ban<%
3,i!, is suborinat" to t," 7oar. I,il" t," "btor i
agr"" in t," D"" o+ 5"al Estat" &ortgag" t,at t," int"r"st
rat" *a# b" in!r"as" uring t," li+" o+ t," !ontra!t -to
su!, in!r"as" 3it,in t," rat" allo3" b# la3% as t," 7oar
o+ Dir"!tors o+ t," &ortgag"" *a# 1r"s!rib"/ or -3it,in
t," li*its allo3" b# la3%/ no la3 3as "$"r 1ass" in =ul.
to No$. 1AB@ in!r"asing t," int"r"st rat"s on loans or r".
n"3als t,"r"o+ to 96Q% @1Q an @BQ (1"r annu*)% an no
o!u*"nts 3"r" "4"!ut" an "li$"r" b# t," "btor to
"++"!tuat" t," in!r"as". C"ntral 7an< Cir!ular A?5% S"ri"s
o+ 1AB6 r"*o$" t," ;sur# La3 !"iling on int"r"st rat"s%
A6@
Art. 19?B
but it i not aut,oriH" t," PN7% or an# ban< +or t,at *at.
t"r% to unilat"rall# an su!!"ssi$"l# in!r"as" t," agr""
A65
Art. 19?B
rat" o+ int"r"st rat"s +ro* 1BQ to @BQ 3it,in a s1an o+
+our (@) *ont,s% in $iolation o+ Pr"si"ntial D"!r"" 116
3,i!, li*its su!, !,ang"s to -on!" "$"r# t3"l$" *ont,s./
7"si"s% $iolating PD 116% t," unilat"ral a!tion o+ t,"
PN7 in in!r"asing t," int"r"st rat" on t," borro3"r8s loan
$iolat" t," *utualit# o+ !ontra!ts orain" in Art. 19?B
o+ t," Ci$il Co". In or"r t,at obligations arising +ro*
!ontra!ts *a# ,a$" t," +or!" o+ la3 b"t3""n t," 1arti"s%
t,"r" *ust b" *utualit# b"t3""n t," 1arti"s bas" on
t,"ir "ss"ntial Eualit#. A !ontra!t !ontaining a !onition
3,i!, *a<"s its +ul+ill*"nt "1"n"nt "4!lusi$"l# u1on
t," un!ontroll" 3ill o+ on" o+ t," !ontra!ting 1arti"s is
$oi. An "$"n assu*ing t,at t," P1.B *illion loan agr"".
*"nt b"t3""n t," PN7 an t," borro3"r ga$" t," PN7 a
li!"ns" (alt,oug, in +a!t t,"r" 3as non") to in!r"as" t,"
int"r"st rat" at 3ill uring t," t"r* o+ t," loan% t,at li.
!"ns" 3oul ,a$" b""n null an $oi +or b"ing $iolati$" o+
t," 1rin!i1l" o+ *utualit# "ss"ntial on !ontra!ts. It 3oul
,a$" in$"st" t," loan agr""*"nt 3it, t," !,ara!t"r o+ a
!ontra!t o+ a,"sion% 3,"r" t," 1arti"s o not bargain on
"Eual +ooting% t," 3"a<"r 1art#8s (t," "btor8s) 1arti!i1a.
tion b"ing r"u!" to t," alt"rnati$" -ta<" it or l"a$" it./
Su!, a !ontra!t is a tra1 +or t," 3"a<"r 1art# 3,o* t,"
!ourts o+ justi!" *ust 1rot"!t against abus" an i*1osi.
tion. PN78s su!!"ssi$" in!r"as" o+ t," int"r"st rat" on t,"
borro3"r8s loan% o$"r t," latt"r8s 1rot"st% 3"r" arbitrar#
as t,"# $iolat" an "41r"ss 1ro$ision o+ t," Cr"it Agr"".
*"nt% S"!. A.?1% t,at its t"r*s -*a# b" a*"n" onl# b#
an instru*"nt in 3riting sign" b# t," 1art# to b" boun
as bur"n" b# su!, a*"n*"nt./ T," in!r"as"s i*1os"
b# t," PN7 also !ontra$"n" Art. 1A56 o+ t," Ci$il Co"
3,i!, 1ro$i"s t,at -no int"r"st s,all b" u" unl"ss it ,as
b""n "41r"ssl# sti1ulat" in 3riting.88 H"r"% t," "btor
n"$"r agr"" in 3riting to 1a# t," int"r"st in!r"as"s +i4"
b# t," PN7 b"#on t," 6@Q 1"r annu*2 ,"n!"% ," is not
boun to 1a# a ,ig,"r rat" t,an t,at. T," in!r"as" in t,"
int"r"st rat" +ro* 1BQ to @BQ 3it,in a 1"rio o+ +our (@)
*ont,s is "4!"ssi$".
A66
Art. 19?B
(NOTE' In 7an!o Fili1ino Sa$ings an &ortgag"
7an< $. Na$arro% 15 SC5A 9@6 F1ABCG% t," Su1r"*" Court
A6C
Art. 19?A
isaut,oriH" t," ban< +ro* raising t," int"r"st rat" on
t," borro3"r8s loan +ro* 16Q to 1CQ "s1it" an "s!alation
!laus" in t," loan agr""*"nt sign" b# t," "btors aut,or.
iHing 7an!o Fili1ino -to !orr"s1oningl# in!r"as" t," int"r.
"st rat" sti1ulat" in t,is !ontra!t 3it,out a$an!" noti!"
to *"Uus in t," "$"nt a la3 s,oul b" "na!t" in!r"asing
t," la3+ul rat"s o+ int"r"st t,at *a# b" !,arg" on t,is
1arti!ular <in o+ loan./ T," ban< r"li" on S"!tion 9 o+
C"ntral 7an< (7ang<o S"ntral) Cir!ular @A@% at" =ul.
1% 1AC6 (C6 O.>. No. 9% 1. 6C6.=) 3,i!, 1ro$i" t,at -t,"
*a4i*u* rat" o+ int"r"st% in!luing !o**issions% 1r"*i.
u*s% +""s an ot,"r !,arg"s on loans 3it, a *aturit# o+
*or" t,an C9? a#s b# ban<ing institutions s,all b" 1AQ./
T," Court isallo3" t," in!r"as" b"!aus" -Cir!ular @A@%
alt,oug, it ,as t," "++"!t o+ la3 is not a la3./ T," Court
,"l' -Fro* &ar. 1C% 1AB?% "s!alation !laus"s% to b" $ali%
s,oul s1"!i+i!all# 1ro$i"' (1) t,at t,"r" !an b" an in.
!r"as" in int"r"st i+ in!r"as" b# la3 or b# t," &on"tar#
7oar2 an (6) in or"r +or su!, sti1ulation to b" $ali% it
*ust in!lu" t," 1ro$ision +or r"u!tion o+ t," sti1ulat"
int"r"st -in t," "$"nt t,at t," a11li!abl" *a4i*u* rat" o+
int"r"st is r"u!" b# la3 or b# t," &on"tar# 7oar.88 In
t," 1r"s"nt !as"% t," PN7 r"li" on its o3n boar r"solu.
tion an !ir!ulars but t,os" r"solution an !ir!ulars ar"
n"it,"r la3s nor r"solutions o+ t," &on"tar# 7oar.)
(9) E4!"1tion to In$iolabilit# o+ Contra!tual Obligations
Anu!"nsion $. National Labor ;nion
B? SC5A 95?
T," rul" t,at t," obligation o+ !ontra!ts s,oul not b" i*.
1air" is not absolut". T,us% t," +r"" "4"r!is" o+ r"ligious b"li"+s
is su1"rior to !ontra!tual rig,ts. An "4a*1l" is t," b"li"+ o+ a
r"ligious s"!t t,at its *"*b"rs s,oul not join a labor organiHa.
tion or 1arti!i1at" in a !oll"!ti$" bargaining agr""*"nt.
Art. 19?A. T," "t"r*ination o+ t," 1"r+or*an!" *a#
A6B
Art. 19?A
b" l"+t to a t,ir 1"rson% 3,os" "!ision s,all not b"
bining until it ,as b""n *a" <no3n to bot, !ontra!ting
1arti"s.
A6A
Arts. 191?.1911
CO&&ENT'
(1) D"t"r*ination b# T,ir P"rson
E4a*1l"' In a !ontra!t o+ sal"% t," +i4ing o+ t," 1ri!" an
t," "li$"r# at" !an b" l"+t to a t,ir 1"rson.
(6) I,"n D"!ision Is 7ining
T," "!ision bins t," 1arti"s onl# a+t"r it is *a" <no3n
to bot,.
(9) E++"!t o+ Sti1ulation 5"garing Arbitration
I+ in a !ontra!t% t,"r" is a sti1ulation +or arbitration (un.
"r 5"1. A!t BC5)% an on" 1art#% in !as" o+ is1ut"% r"+us"s to
sub*it t," *att"r to arbitration% t," aggri"$" 1art# 3,o go"s
to !ourt to r"Eu"st it to or"r t," ot,"r 1art# to sub*it t," *at.
t"r to arbitration% s,oul NOT an#*or" 1r"s"nt to t," !ourt
t," *"rits o+ t," is1ut" *att"rs. T," "!ision on sai *"rits
3ill b" u1 to t," arbitrator. T," onl# +un!tion o+ t," Court in
t,is !as" 3oul b" to "!i" 3,"t,"r or not t," 1arti"s s,oul
1ro!"" to arbitration. (&aguinanao Portlan C"*"nt Cor1.
$. &!Donoug,% >5 699A?% A1r. 6@% 1A6C).
Art. 191?. T," "t"r*ination s,all not b" obligator# i+ it
is "$i"ntl# in"Euitabl". In su!, !as"% t," !ourts s,all "!i"
3,at is "Euitabl" un"r t," !ir!u*stan!"s.
CO&&ENT'
E$i"ntl# In"Euitabl" D"t"r*ination Is Not 7ining
(a) I,at is "Euitabl" is a Eu"stion o+ +a!t% to b" as!"rtain"
+ro* t," att"nant !ir!u*stan!"s.
(b) T," !ourt is !all" u1on to "!i" 3,at is "Euitabl".
Art. 1911. Contra!ts ta<" "++"!t onl# b"t3""n t,"
1arti"s% t,"ir assigns an ,"irs% "4!"1t in !as" 3,"r" t,"
rig,ts an obligations arising +ro* t," !ontra!t ar" not
trans*issibl" b# t,"ir natur"% or b# sti1ulation or b#
AC?
Arts. 191?.1911
1ro$ision o+ la3. T," ,"ir is not liabl" b"#on t," $alu" o+
t," 1ro1"rt# ," r"!"i$" +ro* t," "!""nt.
AC1
Art. 1911
I+ a !ontra!t s,oul !ontain so*" sti1ulation in +a$or
o+ a t,ir 1"rson% ," *a# "*an its +ul+ill*"nt 1ro$i" ,"
!o**uni!at" ,is a!!"1tan!" to t," obligor b"+or" its r"$o.
!ation. A *"r" in!i"ntal b"n"+it or int"r"st o+ a 1"rson is
not su++i!i"nt. T," !ontra!ting 1arti"s *ust ,a$" !l"arl# an
"lib"rat"l# !on+"rr" a +a$or u1on a t,ir 1"rson.
CO&&ENT'
(1) Prin!i1l" o+ 5"lati$it#
T,is Arti!l" str"ss"s t," 1rin!i1l" o+ 5ELATIVITK 0 t,at
is% !ontra!ts ar" g"n"rall# "++"!ti$" onl# b"t3""n t," PA5TIES%
t,"ir ASSI>NS% an t,"ir HEI5S.
:uano $. CA% "t al. >5
A5A??% =ul. 69% 1AA6
It is a basi! 1rin!i1l" in !i$il la3 t,at% 3it, !"rtain "4!"1.
tions not obtaining in t,is !as"% a !ontra!t !an onl# bin t,"
1arti"s 3,o ,a "nt"r" into it or t,"ir su!!"ssors 3,o assu*"
t,"ir 1"rsonaliti"s or t,"ir jurii!al 1ositions% an t,at% as a
!ons"Eu"n!"% su!, !ontra!t !an n"it,"r +a$or nor 1r"jui!" a
t,ir 1"rson.
T," obligation o+ !ontra!ts is li*it" to t," 1arti"s *a<ing
t,"* an% orinaril#% onl# t,os" 3,o ar" 1arti"s to !ontra!ts
ar" liabl" +or t,"ir br"a!,. Parti"s to a !ontra!t !annot t,"r"b#
i*1os" an# liabilit# on on" 3,o% un"r its t"r*s% is a strang"r
to t," !ontra!t% an% in an# "$"nt% in or"r to bin a t,ir 1"rson
!ontra!tuall#% an "41r"ssion o+ ass"nt b# su!, 1"rson is n"!"s.
sar#.
F>; Insuran!" Cor1. $. >.P. Sar*i"nto Tru!<ing
Cor1. M La*b"rt &. Erol"s
>5 1@1A1?% Aug. 6% 6??6
FACTS' A tru!< ri$"r 3as not a 1art# to t," !ontra!t o+
!arriag" b"t3""n 1"tition"r8s 1rin!i1al an "+"nant. Issu"'
&a# ," b" ,"l liabl" un"r t," agr""*"ntJ
AC6
Art. 1911
HELD' No% ," *a# not b" ,"l liabl". 5"s1on"nt ri$"r%
3it,out !on!r"t" 1roo+ o+ ,is n"glig"n!" or +ault% *a# not ,i*s"l+
AC9
Art. 1911
b" or"r" to 1a# 1"tition"r. For a !ontra!t !an onl# bin t,"
1arti"s 3,o ,a$" "nt"r" into it or t,"ir su!!"ssors 3,o ,a$" as.
su*" t,"ir 1"rsonalit# or t,"ir jurii!al 1osition. Consonantl#
3it, t," a!tion r"s int"r alios a!ta aus n"Eu" no!"t 1ro"st% su!,
!ontra!t !an n"it,"r +a$or nor 1r"jui!" a t,ir 1"rson.
P"tition"r8s !i$il a!tion against t," ri$"r !an onl# b" bas"
on !ul1a aEuiliana% 3,i!,% unli<" !ul1a !ontra!tual% 3oul r".
Euir" t," !lai*ant +or a*ag"s to 1ro$" n"glig"n!" or +ault on
t," 1art o+ t," "+"nant. (Calalas $. CA% 996 SC5A 956). (S""
Art. 61C6% Ci$il Co").
Sir"# Ent"r1ris"s% In!. $. CA
Conrao " >uH*an
>5 16A?9A% S"1t. 1C% 6??6
FACTS' Pri$at" r"s1on"nt Conrao " >uH*an is an
ar!,it"!t.!ontra!tor oing busin"ss un"r t," na*" an st#l" o+
=igs!on Constru!tion. H"r"in 1"tition"r Sir"# Ent"r1ris"s% In!.
(SEI) is t," o3n"r an "$"lo1"r o+ Ks*a"l Villag"% a subi$i.
sion in Sta. CruH% &arilao in 7ula!an. T," 1r"si"nt o+ SEI is
Is*a"l E. Kanga. As stat" in its Arti!l"s o+ In!or1oration% t,"
1ri*ar# !or1orat" 1ur1os" o+ SEI is to a!Euir" lans% subi$i"
an "$"lo1 t,"*% "r"!t builings an ,ous"s t,"r"on% an s"ll%
l"as" or ot,"r3is" is1os" o+ sai 1ro1"rti"s to int"r"st" bu#.
"rs.
So*"ti*" b"+or" O!t. 1ACB% Kanga "4"!ut" an unat"
l"tt"r o+ Aut,orit# (LoA) aut,oriHing H"r*og"n"s 7. Santos to
o an "4"!ut" !"rtain a!ts in r"1r"s"ntation o+ SEI. T,us% on
O!t. 15% 1ACB% Santos "nt"r" into a D"" o+ Agr""*"nt 3it,
" >uH*an. T," "" "41r"ssl# stat" t,at Santos 3as -r"1r".
s"nting SEI./ Pri$at" r"s1on"nt 3as r"+"rr" to as -!ontra!tor/
3,il" 1"tition"r SEI 3as !it" as -1rin!i1al./ Fro* O!t. 1ACB
to A1r. 1AA?% " >uH*an !onstru!t" 66 r"si"ntial units at
Ks*a"l Villag". T,irt""n o+ t,"s" 3"r" +ull# 1ai but t," ot,"r
19 r"*ain" un1ai. T," total !ontra!tual 1ri!" o+ t,"s" 19
un1ai ,ous"s is P@16%15@.A9 3,i!, 3as $"ri+i" an !on+ir*"
to b" !orr"!t b# Santos% 1"r an a!!o*1lis,*"nt 7illing t,at t,"
AC@
Art. 1911
latt"r sign". D" >uH*an tri" but +ail" to !oll"!t t," un1ai
a!!ount +ro* 1"tition"r. T,us% ," institut" t," a!tion in t,"
AC5
Art. 1911
5TC o+ &alolos% 7ula!an +or s1"!i+i! 1"r+or*an!" against SEI%
Kanga% an Santos 3,o all "ni" liabilit#. During t," trial%
Santos isa11"ar" an ,is 3,"r"abouts r"*ain un<no3n.
In its "+"ns"% 1"tition"r 1r"s"nt" t"sti*onial "$i"n!"
to t," "++"!t t,at SEI ,a no !ontra!t 3it, D" >uH*an an ,a
not aut,oriH" Santos to "nt"r into a !ontra!t 3it, an#on" +or
t," !onstru!tion o+ ,ousing units at Ks*a"l Villag". T," trial
!ourt agr"" 3it, 1"tition"r bas" on t," o!trin" o+ 1ri$it# o+
!ontra!t. On a11"al% " >uH*an obtain" a +a$orabl" jug*"nt
+ro* t," Court o+ A11"als (CA). T," CA ,"l t,at t," LoA ul#
sign" b# Kanga !l"arl# !onstitut" Santos as SEI8s ag"nt% 3,os"
aut,orit# in!lu" "nt"ring into a !ontra!t +or t," builing o+
,ousing units at Ks*a"l Villag". Cons"Eu"ntl#% SEI !annot "n#
liabilit# +or t," D"" o+ Agr""*"nt 3it, 1ri$at" r"s1on"nt "
>uH*an% sin!" t," sa*" !ontra!t 3as "nt"r" into b# SEI8s
ul# "signat" ag"nt% Santos. T,"r" 3as no n"" +or Kanga
,i*s"l+ to b" a signator# to t," !ontra!t% +or ,i* an SEI to b"
boun b# t," t"r*s t,"r"o+. H"n!"% t," CA in r"$"rsing t," a1.
1"al" "!ision r"n"r" t," +ollo3ing $"ri!t' A11"ll"" SEI is
or"r" to 1a# a11"llant " >uH*an8s !osts an P@16%15@.A9 as
a!tual a*ag"s 1lus l"gal int"r"st t,"r"on +ro* t," +iling o+ t,"
!o*1laint on =ul. 6A% 1AB6 until +ull 1a#*"nt t,"r"o+. All ot,"r
!lai*s an !ount"r!lai*s ar" is*iss". H"n!"% t,is 1"tition +or
r"$i"3 on !"rtiorari un"r 5ul" @5 o+ t," 5ul"s o+ Court.
Issu"s' (1) I,"t,"r or not Santos 3as a ul#.!onstitut"
ag"nt o+ SEI% 3it, aut,orit# to "nt"r into !ontra!ts +or t," !on.
stru!tion o+ r"si"ntial units in Ks*a"l Villag" an% t,us% t,"
!a1a!it# to bin SEI to t," D"" o+ Agr""*"nt2 an (6) Assu*ing
argu"no t,at SEI 3as boun b# t," a!ts o+ Santos% 3,"t,"r or
not un"r t," t"r*s o+ t," D"" o+ Agr""*"nt% SEI !an b" ,"l
liabl" +or t," a*ount soug,t to b" !oll"!t" b# 1ri$at" r"s1on.
"nt " >uH*an.
HELD' (1) A $ali ag"n!# 3as !r"at" b"t3""n SEI an
Santos% an t," aut,orit# !on+"rr" u1on t," latt"r in!lu"s t,"
1o3"r to "nt"r into a !onstru!tion !ontra!t to buil ,ous"s su!,
as t," D"" o+ Agr""*"nt b"t3""n Santos an " >uH*an8s
=igs!on Constru!tion. H"n!"% t," in"s!a1abl" !on!lusion is t,at
AC6
Art. 1911
SEI is boun b# t," !ontra!t t,ru t," r"1r"s"ntation o+ its ag"nt
Santos.
ACC
Art. 1911
(6) T,is *att"r is b"ing rais" +or t," +irst ti*" on a11"al.
Fro* t," trial in t," 5TC to t," a11"al b"+or" t," CA% t," all"g"
$iolation o+ t," D"" o+ Agr""*"nt b# " >uH*an 3as n"$"r 1ut
in issu". H"r"to+or"% t," substan!" o+ 1"tition"r8s "+"ns" b"+or"
t," !ourts a Euo !onsist" o+ its "nial o+ an# liabilit# un"r t,"
D"" o+ Agr""*"nt. T,us% -a Eu"stion t,at 3as n"$"r rais" in
t," !ourts b"lo3 !annot b" allo3" to b" rais" +or t," +irst ti*"
on a11"al 3it,out o++"ning basi! rul"s o+ +air 1la#% justi!"% an
u" 1ro!"ss. Su!, an issu" 3as not broug,t to t," +or" "it,"r in
t," trial !ourt or t," CA% an 3oul ,a$" b""n isr"gar" b#
t," latt"r tribunal +or t," r"asons 1r"$iousl# stat". Iit, *or"
r"ason% t," sa*" o"s not "s"r$" !onsi"ration b# t,is Court.
(Sa+i! Al!an M Ci" $. I*1"rial V"g"tabl" Oil Co.% In!.% 955 SC5A
55A F6??1G).
P"tition"r SEI is or"r" to 1a# " >uH*an a!tual a*.
ag"s in t," a*ount o+ P@16%15@.A9% 3it, l"gal int"r"st t,"r"on
+ro* t," ti*" t," !as" 3as +il" until its +ull 1a#*"nt.
(6) E4!"1tions to t," Prin!i1l" o+ 5"lati$it#
(a) I,"r" t," obligations arising +ro* t," !ontra!t ar" not
trans*issibl" b# t,"ir NAT;5E% b# STIP;LATION% or
b# P5OVISION OF LAI. (Art. 1911% Ci$il Co").
(b) I,"r" t,"r" is a STIP;LATION PO;5 A;T5;I (a sti1u.
lation in +a$or o+ a t,ir 1art#). (Art. 1911% Ci$il Co").
(!) I,"r" a t,ir 1"rson inu!"s anot,"r to $iolat" ,is !on.
tra!t. (Art. 191@% Ci$il Co").
() I,"r"% in so*" !as"s% t,ir 1"rsons *a# b" a$"rs"l# a+.
+"!t" b# a !ontra!t 3,"r" t,"# i not 1arti!i1at". (S""
Arts. 1916% 615?% 6151% Ci$il Co"2 A!t 1A56% t," Insol$"n!#
La32 an 5"1. A!t BC5).
(") I,"r" t," la3 aut,oriH"s t," !r"itor to su" on a !ontra!t
"nt"r" into b# ,is "btor (-A!!ion Dir"!ta/).
(9) Dis!ussion o+ t," >"n"ral 5ul"
(a) -Contra!ts ta<" "++"!t onl# b"t3""n t," 1arti"s% t,"ir as.
ACB
Art. 1911
signs% an ,"irs/ (Art. 1911% Ci$il Co")% an% t,"r"+or"%
g"n"rall#% its t"r*s !annot "t"r*in" t," rig,ts o+ t,ir
ACA
Art. 1911
1"rsons. (7autista% "t al. $. =ug" Piguing% L.1???6% O!t.
91% 1A5C2 P,il. Nat. 7an< $. LuHon Sur"t# Co.% In!.% L.1116%
&a# 6B% 1A5B2 an Nat. Labor ;nion $. Int. Oil Fa!tor#%
L.19B@5% &a# 9?% 1A6?). T," r"$o!ation% +or "4a*1l"% o+ a
"" o+ sal" is not !on!lusi$" on t,os" ini$iuals 3,o ar"
not 1arti"s t,"r"to. (5"al &onast"rio " la Purisi*a Con.
!"1!ion $. Do*ingo Fabian% "t al.% L.6B@C?% S"1t. 1A% 1A6B).
Ho3"$"r% a 1"rson 3,o ta<"s a$antag" o+ a !ontra!t%
alt,oug, ," is NOT a signator# t,"r"to% !an 1ro1"rl# b"
boun b# t," t"r*s t,"r"o+. H" !annot ta<" a$antag" o+ a
!ontra!t 3,"n it suits ,i* to o so% an r"j"!t its 1ro$ision
3,"n ," t,in<s ot,"r3is". (Nort,"rn &otors% In!. $. Prin!"
Lin"% L.19BB@% F"b. 6A% 1A6? an C"non Villanu"$a $. 7ar.
b"r.Iil,"l*s"n Lin"% "t al.% L.1@C6@% No$. 69% 1A6?).
(b) 5"asons +or t," rul"'
-5"s int"r alios a!ta aliis n"Eu" no!"t 1ro"st./ (T,"
a!t% "!laration% or o*ission o+ anot,"r% !annot a++"!t an.
ot,"r% "4!"1t as ot,"r3is" 1ro$i" b# la3 or agr""*"nt.)
(S"" S"!. 65% 5ul" 19?% 5"$is" 5ul"s o+ Court).
E4a*1l"' I+ I 1ro*is" to bu# &r. N8s lan% an &r. N
1ro*is" to s"ll to *" t," sa*"% *# +ri"n K !annot insist
t,at t," !ontra!t b" 1"r+or*".
El Hogar Fili1ino $. Ang"l"s
L.11619% S"1t. 9?% 1A5B
FACTS' A 3as a sto!<,ol"r in a *utual builing an
loan asso!iation. H"r s,ar"s *atur" in 1A@?% an +ro*
t,at ti*"% s," !"as" to b" a sto!<,ol"r% an inst"a b".
!a*" its !r"itor +or t," $alu" o+ ,"r s,ar"s. At t,is 1oint%
t," o++i!"rs an *"*b"rs o+ t," 7oar o+ Dir"!tors "nt"r"
into an agr""*"nt 3it, t," C"ntral 7an< !on!"rning t,"
r"$aluation o+ t," s,ar"s. Issu"' Is A boun b# t," a!t o+
t," Cor1oration (Asso!iation)J
HELD' No% b"!aus" at t," ti*" o+ agr""*"nt% s," 3as
no long"r a sto!<,ol"r an% t,"r"+or"% t," o++i!"rs an t,"
7oar o+ Dir"!tors ,a lost t,"ir 1o3"r to r"1r"s"nt an
bin ,"r in !or1orat" transa!tions. T," agr""*"nt o"s
AB?
Art. 1911
not bin ,"r unl"ss s," rati+i"s t," agr""*"nt "41r"ssl#
or i*1li"l#.
AB1
Art. 1911
(NOTE' In t,is !as"% it is !l"ar t,at b"ing a strang"r
to t," !ontra!t% s," 3as not boun b# it.)
(NOTE' A "" o+ assign*"nt o+ 1ro1"rt# not r"gis.
t"r" o"s not an !annot 1r"jui!" or +a$or strang"rs to
t," agr""*"nt.)
7obis $. Pro$in!ial S,"ri++ o+ Ca*arin"s Nort"
>5 6AB9B% &ar. 1B% 1AB9
A 3rit o+ "4"!ution 3,i!, s""<s to "n+or!" a jug*"nt
bas" on !o*1ro*is" !annot b" "n+or!" against a 1"rson
3,o is not a 1art# to sai !o*1ro*is" (alt,oug,) ," *a#
,a$" b""n a 1art# to t," a!tion.
(!) Strang"rs% t,"r"+or"% !annot g"n"rall# "*an t," "n.
+or!"*"nt o+ a !ontra!t (&anila 5ailroa Co. $. Co*1ania
Transatlanti!a% 9B P,il. BC5)2 nor !an t,"# "*an its an.
nul*"nt (A#son $. Court o+ A11"als% >5 L.65?1 an 65??2
&a# 61% 1A55)2 nor ar" t,"# boun b# t," sa*". (C"lis $.
7"n"i!to% O.>. &ar!, 6% 1A@1% 1. 656 an B &anr"sa 69?.
691).
&anila 5ailroa Co. $. Co*1ania Transatlanti!a
9B P,il. BC5
FACTS' A s,i11" ,is !argo in 78s $"ss"l. 7 an C8s
!o*1an# "nt"r" into a !ontra!t +or C8s !o*1an# to unloa
t," !argo +ro* t," s,i18s ,ol. In t," li+ting o1"rations%
A8s !argo 3as a*ag". Issu"' &a# A su!!"ss+ull# su" C8s
!o*1an# +or a*ag"sJ
HELD' No% +or t,"r" 3as no !ontra!t b"t3""n A an
C8s !o*1an#. A8s r"*"# is to go against 7.
C"lis $. 7"n"i!to
O.>. &ar!, 6% 1A@1% 1. 656
FACTS' A l"as" ,is 1ro1"rt# to 7. 7 subl"as" 1art o+
t," 1r"*is"s to C. 7 $iolat" t," !onitions o+ t," l"as"% so
A 3ant" to r"s!in t," l"as" !ontra!t. C obj"!t" b"!aus"
AB6
Art. 1911
i+ t," l"as" is !an!"ll"% t," subl"as" 3oul naturall# b"
a++"!t". Issu"' Iill C8s obj"!tion 1ros1"rJ
AB9
Art. 1911
HELD' No% b"!aus" A is not boun b# t," subl"as"%
inas*u!, as ," i not 1arti!i1at" t,"r"in.
Hous" Int"rnational 7uiling T"nants
Asso!iation% In!. $. IAC
>5 C56BC% =un. 9?% 1ABC
FACTS' To s"!ur" 1a#*"nt o+ ,is obligation to t,"
>SIS% FA *ortgag" a 1ar!"l o+ lan an a 1@.stor"# buil.
ing on sai lan. A+t"r t," >SIS +or"!los" t," *ortgag"
an a+t"r it ,a !onsoliat" o3n"rs,i1 in its na*" Fi.".%
a+t"r FA +ail" to r"""* t," 1ro1"rt#G% t," >SIS sol t,"
1ro1"rt# to CENTE5TOIN un"r a "" o+ !onitional
sal"% 3it,out noti!" to t," t"nants o+ t," builing an
3it,out s"!uring 1rior !l"aran!" o+ t," &inistr# o+ Hu*an
S"ttl"*"nts. 7"!aus" CENTE5TOIN is not aut,oriH"
to "ngag" in r"al "stat" busin"ss% it organiH" a sist"r
!or1oration% TOIE5S% to "ngag" in r"al "stat" busin"ss.
Lat"r% CENTE5TOIN assign" to TOIE5S all its rig,ts
an obligations un"r t," D"" o+ Conitional Sal"% 3it,
t," !ons"nt an a11ro$al o+ t," >SIS.
T," asso!iation o+ t"nants o+ t," builing su"
CENTE5TOIN% TOIE5S% an >SIS +or annul*"nt o+ t,"
"" o+ !onitional sal" an t," subs"Eu"nt assign*"nt o+
t," sal" b# CENTE5TOIN to TOIE5S% on t," groun
t,at t," sal" is VOID ab initio b"!aus" it is ultra $ir"s% sin!"
CENTE5TOIN is not Euali+i" to a!Euir" r"al "stat" or
"ngag" in r"al "stat" transa!tions% an also b"!aus" -its
!onsi"ration is illi!it/ 1ursuant to Art. 1@?A.
HELD' T," T"nant8s Asso!iation is n"it,"r a 1art# nor
a 1ri$# to t," D"" o+ Conitional Sal" an t," assign*"nt
t,"r"o+. H"n!"% it !annot assail t," $aliit# o+ sai !on.
tra!ts. T," int"r"st on" ,as in a gi$"n !ontra!t "t"r*in"s
t," rig,t o+ a 1art# obligat" 1rin!i1all# or subsiiaril#
to "nabl" ,i* to bring an a!tion to nulli+# t," !ontra!t in
3,i!, ," int"r$"n"s. H" 3,o ,as no rig,t in a !ontra!t is
not "ntitl" to 1ros"!ut" an a!tion +or nullit#. T," 1"rson
3,o is not a 1art# to a !ontra!t or ,as no !aus" o+ a!tion
or r"1r"s"ntation +ro* t,os" 3,o int"r$"n" t,"r"in ,as
AB@
Art. 1911
no rig,t o+ a!tion an 1"rsonalit# so as to "nabl" ,i* to
assail t," $aliit# o+ t," !ontra!t.
AB5
Art. 1911
T," *ain t,rust o+ t," Asso!iation8s !,all"ng" on
t," $aliit# o+ t," !onitional sal" is t,at t," !ontra!t
is ultra $ir"s b"!aus" CENTE5TOIN is not Euali+i" to
a!Euir" 1ro1"rti"s un"r its arti!l"s o+ in!or1oration. T,"
Asso!iation ,as !on+us" a $oi !ontra!t 3it, an ultra $ir"s
!ontra!t 3,i!, is *"r"l# $oiabl".
Cit" to su11ort its ass"rtion t,at t," !onitional
sal" is against 1ubli! 1oli!# ar" t," 1ro$isions o+ t," 1AC9
Constitution on "*in"nt o*ain (Art. IV% S"!. 62 Art.
NIV% S"!. 9)% agrarian r"+or* (Art. NIV% S"!. 16) an t,"
D"!laration o+ Prin!i1l"s an Stat" Poli!i"s% 1arti!ularl#
t,os" "*1,asiHing t," -st"3ars,i1 !on!"1t% un"r 3,i!,
1ro1"rt# is su11os" to b" ,"l b# t," ini$iual onl# as
trust"" +or t," 1"o1l" in g"n"ral% 3,o ar" its r"al o3n"rs./
(Art. II% S"!s. 6 an C). T,"s" !onstitutional 1ro$isions ar"
ina11osit" as bas"s +or a "!laration t,at t," !onitional
sal" is null an $oi. Not on" o+ t,"s" 1ro$isions r"n"r
unla3+ul t," !ontra!t in Eu"stion. E4!"1t +or t," 1ro,ibi.
tion against t," ta<ing o+ a 1ri$at" 1ro1"rt# +or 1ubli! us"
3it,out just !o*1"nsation% t," ot,"r 1ro$isions r"Euir"
i*1l"*"nting l"gislation to !on+"r a l"gal rig,t an i*1os"
a l"gal ut# 3,i!, !an b" jui!iall# in$o<".
() Probl"*
S sol an "li$"r" ,is 1ro1"rt# to 7 on !r"it. It
3as agr"" t,at 7 s,oul not s"ll t," 1ro1"rt# to anot,"r%
Otil a+t"r t," 1ri!" ,a b""n 1ai in +ull to S. Subs"Eu"ntl#%
7 sol t," 1ro1"rt# to N alt,oug, 7 ,as not #"t 1ai +ull#
t," 1ri!". &a# t," sal" o+ N b" !an!"ll" on t,is grounJ
ANS.' No% b"!aus" N 3as not a 1art# to t," agr""*"nt
b"t3""n S an 7. S *a#% ,o3"$"r% su" 7 +or a*ag"s. (S""
TS% O!t. 15% 1BAC an B &anr"sa 69?.691).
N"3 &anila Lu*b"r $. 5"1ubli!
o+ t," P,ili11in"s
L.1@6@B% A1r. 6B% 1A6?
FACTS' A lu*b"r !o*1an# su" t," go$"rn*"nt
AB6
Art. 1911
+or t," 1a#*"nt o+ !"rtain *at"rials obtain" +ro* it b#
a !ontra!tor in !onn"!tion 3it, t," !onstru!tion o+ t3o
ABC
Art. 1911
1ubli! s!,ool builings. In!i"ntall#% t," go$"rn*"nt ,a
alr"a# a 1"ning suit against sai !ontra!tor +or br"a!,
o+ !ontra!t. Issu"' Iill t," suit o+ t," lu*b"r !o*1an#
1ros1"rJ
HELD' No% b"!aus" t," lu*b"r !o*1an# is not a 1art#
to t," !ontra!t b"t3""n t," go$"rn*"nt an t," !ontra!tor.
Its r"*"# is to int"r$"n" in t," !as" b"t3""n t," go$"rn.
*"nt an t," !ontra!tor% or to +il" an a!tion in t," na*" o+
t," 5"1ubli! against t," !ontra!tor on t," latt"r8s bon. I+
at all a !lai* is to b" *a" against t," 5"1ubli!% t," sa*"
s,oul ,a$" b""n log" 3it, t," Auitor >"n"ral. In""%
t," Stat" !annot b" su" 3it,out its !ons"nt.
>SIS $. Susana 5o*ualo% "t al.
L.661C?% =an. 6C% 1A6A
Int"stat" ,"irs 3,o i not sign t," "" o+ "4tra.ju.
i!ial s"ttl"*"nt (gi$ing to on" 1arti!ular ini$iual t,"
"ntir" 1ro1"rt#) !annot b" boun b# sai agr""*"nt 0 in
t," abs"n!" o+ "$i"n!" t,at sai non.signator# ,"irs ,a
gi$"n subs"Eu"ntl# t,"ir !on+or*it# t,"r"to.
(") H"irs ar" boun to r"s1"!t t," !ontra!ts "nt"r" into b#
t,"ir 1r""!"ssors in int"r"st (Art. 1911% Ci$il Co") in $i"3
o+ t,"ir P5IVITK OF INTE5EST 3it, su!, 1r""!"ssor.
(>alsinao $. Austria% >5 L.CA1B% &a# 65% 1A55). T,"r"+or"%
i+ t," 1r""!"ssor 3as ut#.boun to r"!on$"# lan to an.
ot,"r% an at ,is "at, t," r"!on$"#an!" ,a not #"t b""n
*a"% t," ,"irs !an b" !o*1"ll" to "4"!ut" t," 1ro1"r
"" +or r"!on$"#an!". (D" >uH*an $. Sala<% >5 L.@199%
&a# 19% 1A56). T," ,"irs% ,o3"$"r% ar" not liabl" b"#on
t," $alu" o+ t," 1ro1"rt# t,"# r"!"i$" +ro* t," "!""nt.
(Art. 1911% Ci$il Co").
(+) In or"r t,at an ,"ir !an Eu"stion t," $aliit# o+ !ontra!ts
"nt"r" into b# ,is 1r""!"ssor% or bring an a!tion to annul
t," sa*"% ," *ust b" a !o*1ulsor# or +or!" ,"ir% +or t,"
si*1l" r"ason t,at t," "!"as" !oul o 3it, t," 1ro1"rt#
3,at"$"r ," "sir"% as long as ," r"s1"!ts t," rig,ts o+
ABB
Art. 1911
,is !o*1ulsor# or +or!" ,"irs. (V"lar"% "t al. $. Pa"H% "t
al.% L.A6?B.A616% A1r. 9?% 1A5C).
ABA
Art. 1911
V"lar"% "t al. $. Pa"H% "t al.
L.A6?B.A616% A1r. 9?% 1A5C
FACTS' T," "!"as" 3as t," r"gist"r" o3n"r o+
s"$"ral 1ar!"ls o+ lan 3,i!, 3"r" sol to t," "+"nants.
T," "!"as" l"+t no !o*1ulsor# ,"irs. T," onl# int"stat"
,"irs 3"r" t," 1lainti++s% 3,o 3"r" t," n"1,"3 an ni"!" o+
t," "!"as". T," 1lainti++s all"g" t,at t," sal"s 3"r" not
$ali b"!aus" t," "!"as" ,a b""n *a" to sign t," sal"
o!u*"nts t,ru t," +rau% "!"it% an *isr"1r"s"ntation
o+ t," "+"nants. Issu"' Di t," 1lainti++s ,a$" t," l"gal
!a1a!it# to Eu"stion t," $aliit# o+ t," ""s o+ sal"J
HELD' No% b"!aus" t,"# ar" not !o*1ulsor# ,"irs.
&or"o$"r% t,"# 3"r" n"it,"r 1rin!i1all# nor subsiiaril#
boun b# t," !ontra!ts o+ sal". In t," instant !as"% t," ".
!""nt !oul is1os" o+ ,"r "stat" 3it,out an# li*itations
"4!"1t t,os" i*1os" b# la3. It !annot b" sai t,at t,"ir
l"giti*"s 3"r" i*1air"% +or t,"# ar" not !o*1ulsor# ,"irs%
an ar"% t,"r"+or"% not "ntitl" to an# l"giti*".
(g) :u"stion' &a# !o*1ulsor# ,"irs Eu"stion t," "!"as"8s
transa!tionsJ
ANS.'
1) i+ t,"# 3"r" $oiabl" 0 KES. (V"lar" $. Pa"H% su.
1ra).
6) i+ t,"# 3"r" illi!it or ill"gal 0 NO% b"!aus" "$"n
t," "!"as" ,a no rig,t to Eu"stion t,"* ,"rs"l+%
an ,a no rig,t to r"!o$"r t," 1ro1"rti"s illi!itl#
!on$"#". HOIEVE5% an a!tion to 5ESCIND t,"
!ontra!t !an 1ros1"r% inso+ar as t," l"giti*"s o+ t,"
!o*1ulsor# ,"irs ar" 1r"jui!"% un"r Art. 19B1(9) o+
t," Ci$il Co" (3,i!, r"+"rs to t," rig,t o+ !r"itors to
r"s!in !ontra!ts in +rau o+ t,"ir rig,ts)% b"!aus" t,"
rig,t to t," l"giti*" is si*ilar to a !r"it o+ a !r"itor%
inso+ar as t," rig,t to t," l"giti*" *a# b" "+"at"
b# su!, transa!tion. (Con!"1!ion $. Sta. Ana% L.66CC%
D"!. 6A% 1A5?).
AA?
Art. 1911
(NOTE' In t," V"lar" $. Pa"H !as"% n"it,"r t,"
r"*"# o+ annul*"nt nor o+ r"s!ission !oul b" a$ail"
AA1
Art. 1911
o+ +or t," si*1l" r"ason t,at t," ,"irs in sai !as"
3"r" not !o*1ulsor# ,"irs.)
(,) 5ig,ts o+ t," 1r""!"ssor *a# b" trans*itt" to t," ,"irs
1ro$i" t,"# ar" not intrans*issibl".
1) T," ,"irs o+ t," b"n"+i!iar# o+ a trust *a# "n+or!" t,"
trust as against t," trust"". (Cristobal $. >o*"H% 5?
P,il. B1?).
6) T," ,"irs *a# !ontinu" a l"as" !ontra!t "nt"r" into
b# t," "!"as". (El"iH"gui $. &anila La3n T"nnis
Club% 6 P,il. 9?A).
(@) T," First E4!"1tion 0 3,"n t," obligation arising +ro* t,"
!ontra!t ar" not trans*issibl" b# t,"ir natur"% b# sti1ulation%
or b# 1ro$isions o+ la3.
(a) E4a*1l"s' a !ontra!t o+ 1artn"rs,i1% or a !ontra!t o+ ag"n!#
(H"r" "at, o+ a 1artn"r% o+ t," 1rin!i1al% or o+ t," ag"nts
ENDS t," !ontra!t% an t," ,"ir o"s not st"1 into t,"
s,o"s o+ t," "!"as".)
(b) &on"# "bts ar" not ir"!tl# !,arg"abl" against t," ,"irs.
T,"# s,oul b" !lai*" in t," "stat" or int"stat" 1ro!"".
ings +or t," s"ttl"*"nt o+ t," "stat" o+ t," "!"as". (S""
V"la#o $. Patri!io% 5? P,il. 1CB).
(5) T," S"!on E4!"1tion 0 Sti1ulation Pour Autrui
(a) Coal Pro$ision 0 -I+ a !ontra!t s,oul !ontain so*"
sti1ulation in +a$or o+ a t,ir 1art#% ," *a# "*an its
+ul+ill*"nt 1ro$i" ," !o**uni!at" ,is a!!"1tan!" to t,"
obligor b"+or" its r"$o!ation (t," r"$o!ation o+ t," 3,ol"
!ontra!t its"l+ or o+ t," sti1ulation alon"). T," !ontra!ting
1arti"s *ust ,a$" !l"arl# an "lib"rat"l# !on+"rr" a +a$or
u1on a t,ir 1"rson. A *"r" in!i"ntal b"n"+it or int"r"st o+
a 1"rson is not su++i!i"nt./ (Art. 1911% s"!on 1aragra1,).
(b) 5"Euisit"s'
1) T,"r" *ust b" a sti1ulation in +a$or o+ a t,ir 1"r.
son.
AA6
Art. 1911
6) T," !ontra!ting 1arti"s *ust ,a$" !l"arl# an "lib.
"rat"l# !on+"rr" a +a$or u1on a t,ir 1"rson.
AA9
Art. 1911
9) A *"r" in!i"ntal b"n"+it or int"r"st o+ a 1"rson is
NOT su++i!i"nt. (S"" ;# Ta* $. L"onar% 9? P,il.
@C1).
@) T," sti1ulation *ust b" PA5T o+ t," !ontra!t.
5) T," t,ir 1"rson !o**uni!at" ,is a!!"1tan!" to t,"
obligor b"+or" its r"$o!ation (r"$o!ation o+ t," !ontra!t
or t," sti1ulation b# t," original 1arti"s) (S"" Dau++.
*an $. P,il. Nat. 7an<% @6 P,il. 1B6)2 a!!"1tan!"
*a# b" in t," +or* o+ a DE&AND. (Ibi.).
6) T,"r" *ust b" no r"lation o+ ag"n!# b"t3""n "it,"r o+
t," 1arti"s an t," t,ir 1"rson. (B &anr"sa 696).
(!) D"+inition o+ a Sti1ulation Pour Autrui'
It is a sti1ulation in +a$or o+ a t,ir 1"rson !on+"rring
a !l"ar an "lib"rat" +a$or u1on ,i*% an 3,i!, sti1ula.
tion is *"r"l# 1art o+ a !ontra!t "nt"r" into b# t," 1arti"s%
n"it,"r o+ 3,o* a!t" as ag"nt o+ t," t,ir 1"rson.
5"b"!!a C. Koung% "t al. $. CA% "t al.
>5 CA51B% =an. 19% 1ABA
T," r"Euisit"s o+ a sti1ulation 1our autrui or a sti1u.
lation in +a$or o+ a t,ir 1"rson ar" t," +ollo3ing'
(1) T,"r" *ust b" a sti1ulation in +a$or o+ a t,ir
1"rson.
(6) T," sti1ulation *ust b" a 1art% not t," 3,ol"%
o+ t," !ontra!t.
(9) T," !ontra!ting 1arti"s *ust ,a$" !l"arl# an
"lib"rat"l# !on+"rr" a +a$or u1on a t,ir 1"rson% not a
*"r" in!i"ntal b"n"+it or int"r"st.
(@) T," t,ir 1"rson *ust ,a$" !o**uni!at" ,is
a!!"1tan!" to t," obligor b"+or" its r"$o!ation.
(5) N"it,"r o+ t," !ontra!ting 1arti"s b"ars t," l"gal
r"1r"s"ntation or aut,oriHation o+ t," t,ir 1art#.
FNOTE' Su!, a sti1ulation is bining on sai t,ir
1"rson% alt,oug, ," *a# not b" a signator# to t," !ontra!t.
AA@
Art. 1911
(Nort,"rn &otors% In!. $. Prin!" Lin"% "t al.% L.19BB@% F"b.
6A% 1A6?).G
AA5
Art. 1911
Asso!iat" 7an< $. CA M Lor"nHo Sar*i"nto% =r.
>5 169CA9% =un. 6A% 1AAB
T," -+air"st t"st88 in "t"r*ining 3,"t,"r t," t,ir
1"rson8s int"r"st in a !ontra!t is a sti1ulation 1our autrui
or *"r"l# an in!i"ntal int"r"st is to "4a*in" t," int"ntion
o+ t," 1arti"s as is!los" b# t,"ir !ontra!t.
() E4a*1l"' D 1ur!,as" C8s lan +or P1?%???%???. It 3as
also agr"" t,at onl# PB%???%??? 3oul b" gi$"n to C%
b"!aus" t," r"*aining P6%???%??? 3oul b" gi$"n b# D to
N% a !r"itor o+ C. I+ N !o**uni!at"s ,is a!!"1tan!" o+ t,"
sti1ulation to D% N !an "*an its +ul+ill*"nt.
(") Anot,"r "4a*1l" 0 Insuran!" ta<"n b# a ta4i !o*1an# in
+a$or o+ its 1ass"ng"rs.
(+) Cas"s
Flor"ntino $. En!arna!ion% Sr.
CA SC5A 1A5
A sti1ulation in a !ontra!t stating t,at t," +ruits o+ a
!"rtain 1ar!"l o+ lan 3ill b" us" +or "41"ns"s !onn"!t"
3it, s1"!i+i" r"ligious +"sti$iti"s is a !l"ar "4a*1l" o+ a
sti1ulation 1our autri.
&"l"!io CoEuia% "t al. $. Fi"l*"n8s Ins. Co.% In!.
L.696C6% No$. 6A% 1A6B
FACTS' T," &anila K"llo3 Ta4i!ab Co. obtain" a
!o**on !arri"r a!!i"nt insuran!" 1oli!# +ro* t," Fi"l.
*"n8s Insuran!" Co. ;n"r t," t"r*s o+ t," 1oli!#% t,"
Insuran!" agr"" to in"*ni+# an# +ar".1a#ing 1ass"ng"r%
in!luing t," aut,oriH" ri$"r% ri$ing t," ta4i at t,"
ti*" o+ t," a!!i"nt. In t," "$"nt o+ "at,% t," 1"rsonal
r"1r"s"ntati$"s 3oul b" gi$"n t," in"*nit#. T," !ontra!t
li<"3is" 1ro$i"s t,at b"+or" suit !oul b" broug,t% t,"
*att"r 3ill +irst b" "!i" b# arbitrators.
No3 t,"n% 3,il" t," 1oli!# 3as in +or!" (F"b. 1?% 1A66)
a ta4i o+ t," Insur"% ri$"n b# ul#.aut,oriH" ri$"r%
AA6
Art. 1911
Carlito CoEuia% *"t an a!!i"nt 3,"r" Carlito i". Al.
t,oug, n"it,"r 1art# soug,t to ,a$" t," *att"r s"ttl" b#
AAC
Art. 1911
arbitrators% CoEuia8s ,"irs soug,t in"*nit# in a jui!ial
a!tion against t," Insuran!" Co*1an#. T," latt"r all"g"s
t,at'
1) t," ,"irs ,a$" no !ontra!tual r"lations 3it, t," !o*.
1an#2
6) t," Insur" ,as not !o*1li" 3it, t," !ontra!tual
1ro$isions on arbitration.
HELD' T," ,"irs !an r"!o$"r in"*nit# +ro* t,"
Insuran!" Co*1an# b"!aus" o+ t," +ollo3ing r"asons'
1) I,il" in g"n"ral onl# 1arti"s to a !ontra!t !an su"
on an a!tion bas" t,"r"on% on" "4!"1tion is in t,"
!as" o+ a sti1ulation 1our autrui. In t,is insuran!"
!as"% t,"r" !l"arl# is a b"n"+it !on+"rr" ir"!tl# in
+a$or o+ t," 1ass"ng"rs an t," aut,oriH" ri$"r (or
t,"ir ,"irs). H"n!"% t," ,"irs !an su". (S"" ;# Tan
$. L"onar% 9? P,il. @C1 an Dau++*an $. P,ili11in"
National 7an<% @6 P,il. 1B6). T," ,"irs in"" ,a$"
a 1ro1"r !aus" o+ a!tion% "$"n 3it,out joining t,"
insur" Ta4i Co. (S"" >uingon $. Ca1ital Insuran!"
M Sur"t# Co.% L.66?@6% Aug. 1C% 1A6C).
6) Sin!" n"it,"r 1art# uring t," n"gotiations 1r"!"ing
t," institution o+ t," !as" in$o<" t," r"+"r"n!" to
arbitration% t,is o*ission ,as t," "++"!t o+ a IAIVE5
o+ t,"ir r"s1"!ti$" rig,ts to "*an an arbitration.
(S"" In"1"n"nt S!,ool Distri!t% No. 95% St. Louis
Count# $. A. H""nb"rg an Co.% C NI 6n% 511% 51C%
51B).
Dau++*an $. P,il. Nat. 7an<
@6 P,il. 1B6
FACTS' T," P,ili11in" Fib"r an Prou!" Co*1an#%
+or so*" !onsi"ration% !ontra!t" 3it, t," P,ili11in" Nat.
7an<. On" o+ t," sti1ulations 3as +or t," ban< to or"r its
r"1r"s"ntati$" in N"3 Kor< to gi$" a !"rtain su* o+ *on"#
to &r. Dau++*an% 3,o 3as Pr"si"nt o+ t," P,il. Fib"r an
Prou!" Co*1an#. A+t"r t," or"r 3as gi$"n% t," N"3 Kor<
AAB
Art. 1911
r"1r"s"ntati$" sugg"st" t,at t," *on"# b" 3it,,"l +ro*
&r. Dau++*an in $i"3 o+ t," latt"r8s r"lu!tan!" to 1a# +or
AAA
Art. 1911
so*" !o*1an# "bts. T," &anila o++i!" t,"n tol t," N"3
Kor< r"1r"s"ntati$" to IITHHOLD sai *on"#. Lat"r% &r.
Dau++*an "*an" 1a#*"nt% an 3,"n t,is 3as r"+us"%
," institut" t,is a!tion. Issu"' Is Dau++*an "ntitl" to t,"
a*ountJ
HELD' K"s% b"!aus" t,is is a !l"ar !as" o+ a sti1ula.
tion 1our autrui. T," "*an +or 1a#*"nt !onstitut" an
a!!"1tan!" o+ t," sti1ulation. It !annot b" sai t,at t,"r"
,a b""n a P5IO5 r"$o!ation o+ t," sti1ulation% +or 3,il" it
is tru" t,at t," 7an< ,a or"r" its N"3 Kor< r"1r"s"nta.
ti$" to 3it,,ol 1a#*"nt% still t," r"$o!ation r"+"rr" to
in t," la3 is a r"$o!ation b# 7OTH 1arti"s to t," original
!ontra!t.
Vargas Plo3 Fa!tor#% In!.
$. T," C"ntral 7an< o+ t," P,il.
L.65C96% F"b. 6C% 1A6A
A sti1ulation in a !ontra!t 3,"r"b# a l"tt"r o+ !r"it
is o1"n" in +a$or o+ a t,ir 1art# is a sti1ulation 1our
autrui.
Flor"ntino $. En!arna!ion% Sr.
CA SC5A 1A6
A sti1ulation 1our autri n"" not b" in an# 1arti!ular
+or*% an *a# "$"n b" in+"rr" +ro* t," +a!t t,at t," b"n.
"+i!iar# ,as "njo#" t," sa*" +or a !onsi"rabl" 1"rio.
Nort,"rn &otors% In!. $. Prin!" Lin"% "t al.
L.19BB@% F"b. 6A% 1A6?
FACTS' T," D"lgao 7rot,"rs% In!. 3as t," arrastr"
!ontra!tor +or &anila in !,arg" o+ unloaing an "li$"r.
ing !argo. In its !ontra!t 3it, t," 7ur"au o+ Custo*s% it
g"n"rall# li*it" its liabilit# to P5?? +or "a!, 1a!<ag" lost.
Issu"' I+ a !onsign"" (9r 1"rson) ta<"s a$antag" o+ t,is
s"r$i!"% is it boun b# t," li*it" liabilit#J
1???
Art. 1911
HELD' K"s% b"!aus" o+ its -a!!"1tan!"./
1??1
Art. 1911
L.956C6% Aug. 66% 1ACC
A sti1ulation 1our autrui is +or t," b"n"+it o+ so*".
bo# 3,o is not a 1art# to a !ontra!t. I+ t," sti1ulation
stat"s t,at on" o+ t," 1arti"s to a !ontra!t is "4"*1t +ro*
all 1r"$ious !lai*s an a*ag"s sustain" b# t," ot,"r
1art#% t," sti1ulation is not 1our autrui.
(g) I+ t," sti1ulation b" *"r"l# in!i"ntal% it is not t," sti1u.
lation 1our autrui r"+"rr" to in t," la3. An "4a*1l" o+
su!, in!i"ntal sti1ulation o!!urs 3,"n a sur"t# !o*1an#
"4"!ut"s a bon in +a$or o+ t," Cit# o+ &anila to guarant""
a !onstru!tion !o*1an#8s builing transa!tion% an stat"s
in!i"ntall# in t," bon t,at it s,all 1ro*1tl# *a<" all
1a#*"nts to labor an *at"rial*"n. H"r"% t," labor an
*at"rial*"n !annot su" on t," basis o+ t," bon% "$"n i+
t,"# ,a 1r"$iousl# *a" <no3n t,"ir a!!"1tan!" o+ su!,
sti1ulation. (;# Ta* $. L"onar% 9? P,il. @C1). (H"r"% t,"
Court sai t,at +ro* t," languag" o+ t," bon% it 3as !l"ar
t,at t," !r"itor 3as t," Cit# o+ &anila% an t,at it 3as
n"$"r int"n" b# t," sur"t# !o*1an# t,at it 3oul b"
boun to t," labor an *at"rial*"n in !as" o+ non.1a#*"nt
to t,"*.)
(,) T," a!!"1tan!" o+ t," sti1ulation b# t," t,ir 1art# *a#
b" *a" "41r"ssl# or i*1li!itl#% +or*all# or in+or*all#.
(Pobl"t" $. Lo Sing!o% @@ P,il. 96A).
Tabar $. 7"!aa
@@ P,il. 16A
FACTS' A 1ro*is" 7 t,at i+ 78s aug,t"r 3oul s"r$"
,i* (A) in ,is ,ous"% A 3oul gi$" to sai aug,t"r so*"
o+ ,is 1ro1"rti"s i+ an 3,"n s," "!i" to g"t *arri" to
t," *an o+ ,"r !,oi!". Subs"Eu"ntl#% t," aug,t"r r"n"r"
s"r$i!"s to A in ,is ,ous". Issu"' Is t,"r" a!!"1tan!" o+ t,"
sti1ulation b# a t,ir 1art#J
HELD' K"s% +or t," r"nition o+ t," s"r$i!"s !an b"
!onsi"r" an i*1li" a!!"1tan!" o+ t," sti1ulation.
1??6
Art. 1911
(i) I+ t," 1rin!i1al !ontra!t o+ 3,i!, t," sti1ulation +or*s 1art
is $oi% t," sti1ulation is g"n"rall# also $oi. I+ b"!aus" o+
1??9
Art. 1911
$itiat" !ons"nt% t," 1rin!i1al !ontra!t is annull"% t,"
sti1ulation also !"as" to b" "++"!ti$".
(j) An# 1art# as 3"ll as t," b"n"+i!iar# o+ t," sti1ulation.
(Flor"ntino $. En!arna!ion% Sr.% CA SC5A 1A6).
(6) T," T,ir E4!"1tion 0 3,"r" a t,ir 1"rson inu!"s anot,"r
to $iolat" ,is !ontra!t. (Art. 191@% Ci$il Co").
(C) T," Fourt, E4!"1tion 0 3,"r" in so*" !as"s% t,ir 1"rsons
*a# b" ADVE5SELK AFFECTED b# a !ontra!t 3,"r" t,"# i
not 1arti!i1at".
(a) T,is is !l"arl# "$i"nt in t," !as" o+ COLLECTIVE CON.
T5ACTS% 3,"r" t," *ajorit# naturall# rul"s o$"r t,"
*inorit#.
(b) E4a*1l"s'
1) in !oll"!ti$" bargaining !ontra!ts b# labor organiHa.
tions un"r 5"1. A!t BC5.
6) in sus1"nsion o+ 1a#*"nts an !o*1ositions un"r
t," Insol$"n!# La3. (A!t 1A56% S"!s. 11 an 69).
(!) Ot,"r instan!"s 3,"r" strang"rs *a# b" a$"rs"l# a++"!t"
ar" t," +ollo3ing'
1) In t," Euasi.!ontra!t o+ -n"gotioru* g"stio%/ so*"
!ontra!ts "nt"r" into b# t," unaut,oriH" *anag"r
(g"stor) *a# bin t," o3n"r. (S"" Arts. 615?.6151%
Ci$il Co").
6) In a !ontra!t 3,i!, !r"at"s a status% t," 3,ol" 3orl
*ust r"s1"!t su!, status. (T,us% 3,"n N *arri"s K%
t," 3,ol" 3orl *ust r"aliH" t,at t," *arriag" sub.
sists% an t,at to ,a$" !arnal <no3l"g" 3it, t," 3i+"
3oul not r"sult in t," !o**ission o+ ault"r#.) (S""
5"#"s M Puno% Outlin" o+ Ci$il La3% Vol. @% 1. 1B1).
9) 5"al rig,ts o$"r r"al 1ro1"rt# *ust b" r"s1"!t" b#
t,ir 1"rsons i+ sai rig,ts ar" r"gist"r" or i+ t,"
t,ir 1"rson ,as a!tual <no3l"g" o+ t," "4ist"n!"
1??@
Art. 1911
o+ su!, rig,ts% a!tual <no3l"g" b"ing "Eui$al"nt to
r"gistration. (S"" Art. 1916% Ci$il Co").
1??5
Art. 1911
E4a*1l"'
A l"as" ,is lan to 7. T," l"as" rig,t 3as ul#
r"!or" in t," 5"gistr# o+ Pro1"rt#. I+ A subs"Eu"ntl#
s"lls t," lan to C 3,il" t," l"as" still subsists% *ust
C r"s1"!t t," l"as"J
ANS.' K"s% "$"n i+ C i not 1arti!i1at" in t,"
l"as" !ontra!t. T,is is b"!aus" t," lan ,as no3 !o*"
into ,is 1oss"ssion% an t,"r" b"ing a ul# r"gist"r"
r"al rig,t t,"r"on% ," *ust r"s1"!t sai r"al rig,t.
(S"" Art. 1916% i.).
(B) T," Fi+t, E4!"1tion 0 3,"r" t," la3 aut,oriH"s t," !r"i.
tor to su" on a !ontra!t "nt"r" into b# ,is "btor (-a!!ion i.
r"!ta/).
(a) E4a*1l"' E$"n i+ a l"ssor o"s not ,a$" to r"s1"!t a sub.
l"as"% still t," -sub.l"ss"" is subsiiaril# liabl" to t," l"s.
sor +or an# r"nt u" +ro* t," l"ss""./ (H"r" is an instan!"
3,"r" t," l"ssor !an su" t," sub.l"ss"".) (Art. 1656% Ci$il
Co"). &or"o$"r% -3it,out 1r"jui!" to ,is obligation to.
3ar t," sub.l"ssor% t," sub.l"ss"" is boun to t," l"ssor
+or all a!ts 3,i!, r"+"r to t," us" an 1r"s"r$ation o+ t,"
t,ing l"as" in t," *ann"r sti1ulat" b"t3""n t," l"ssor
an t," l"ss""./ (Art. 1651% Ci$il Co").
(b) Anot,"r "4a*1l" is t,at gi$"n un"r Art. 1C6A o+ t,"
Ci$il Co" 3,i!, stat"s' -T,os" 3,o 1ut t,"ir labor u1on
or +urnis, *at"rials +or a 1i"!" o+ 3or< un"rta<ing b#
t," !ontra!tor ,a$" an a!tion against t," o3n"r u1 to t,"
a*ount o3ing +ro* t," latt"r to t," !ontra!tor at t," ti*"
!lai* is *a". Ho3"$"r% t," +ollo3ing s,all not 1r"jui!"
t," labor"rs% "*1lo#""s% an +urnis,"rs o+ *at"rials'
-(1) Pa#*"nt *a" b# t," o3n"r to t," !ontra!tor b"+or"
t,"# ar" u"2
(6) 5"nun!iation b# t," !ontra!tor o+ an# a*ount u" ,i*
+ro* t," o3n"r. T,is arti!l" is subj"!t to t," 1ro$i.
sions o+ s1"!ial la3s./ (S"" 5"#"s M Puno% su1ra.).
V"las!o% "t al. $. Court o+ A11"als
L.@C5@@% =an. 6B% 1AB?
1??6
Art. 1911
A ,ous" o3n"r% "$"n i+ ," i not 1arti!i1at"
t,"r"in% is boun b# t," !ontra!ts "nt"r" into b".
1??C
Arts. 1916.1619
t3""n !ontra!tors on t," on" ,an% an labor"rs or
*at"rial*"n on t," ot,"r ,an% su!, t,at t," o3n"r
*a# b" ,"l liabl" +or 1a#*"nt b# su!, labor"rs or
*at"rial*"n. T,is is an "4!"1tion to t," rul" on 1ri$.
it# o+ !ontra!ts "nun!iat" in Art. 1911 o+ t," Ci$il
Co"% an is justi+i" b# t," 1ro$ision o+ A!t 9A5A an
Art. 66@6(9 an @) o+ t," Ci$il Co".
Art. 1916. In !ontra!ts !r"ating r"al rig,ts% t,ir
1"rsons 3,o !o*" into 1oss"ssion o+ t," obj"!t o+ t,"
!ontra!t ar" boun t,"r"b#% subj"!t to t," 1ro$isions o+ t,"
&ortgag" La3 an t," Lan 5"gistration La3s.
CO&&ENT'
(1) Contra!ts Cr"ating 5"al 5ig,ts
T,is Arti!l" !onstitut"s on" o+ t," "4!"1tions to t," g"n"ral
rul" t,at a !ontra!t bins onl# t," 1arti"s.
A r"al rig,t bins t," 1ro1"rt# o$"r 3,i!, it is "4"r!is".
(9) E4a*1l"
I+ A s,oul 1ur!,as" an a1art*"nt ,ous" +ro* t," o3n"r
but t,"r" is a l"as" t,"r"on% A *ust r"s1"!t t," l"as"% i+ t,"
sa*" is r"gist"r" in t," 5"gistr# o+ Pro1"rt#% or i+ A ,as a!tual
<no3l"g" o+ t," "4ist"n!" an uration o+ t," l"as". Si*ilarl#%
t," 1ur!,as"r o+ lan *ust r"s1"!t a *ortgag" !onstitut"
t,"r"on% un"r t," sa*" !ir!u*stan!"s gi$"n ,"r"inabo$".
Art. 1919. Cr"itors ar" 1rot"!t" in !as"s o+ !ontra!ts
int"n" to "+rau t,"*.
CO&&ENT'
(1) 5ig,t o+ D"+rau" Cr"itors
1??B
Arts. 1916.1619
T,is Arti!l" r"1r"s"nts anot,"r instan!" 3,"n an outsi"r
!an in a s"ns" int"r+"r" 3it, anot,"r8s !ontra!t.
1??A
Art. 191@
(6) E4a*1l"
I+ A gratuitousl# gi$"s 7 a 1ar!"l o+ lan% an A ,as no
ot,"r 1ro1"rt# or !as, l"+t to satis+# ,is !r"itors% sai !r"itors
*a# as< +or t," r"s!ission o+ t," !ontra!t% to t," "4t"nt t,at t,"#
,a$" b""n 1r"jui!". (S"" Arts. 11CC% 19B1% an 19BC% Ci$il
Co").
Art. 191@. An# t,ir 1"rson 3,o inu!"s anot,"r to
$iolat" ,is !ontra!t s,all b" liabl" +or a*ag"s to t," ot,"r
!ontra!t. ing 1art#.
CO&&ENT'
(1) 5ul" i+ Contra!t Is Violat" T,ru Inu!"*"nt o+ T,ir
P"rson
T,is Arti!l" gi$"s an instan!" 3,"n a strang"r to a !ontra!t
!an b" su" in $i"3 o+ ,is un3arrant" int"r+"r"n!". I,o"$"r
is injur" *a# 1ro1"rl# su" +or a*ag"s. (>il!,rist $. Cu#%
6A P,il. 5@6).
(6) E4a*1l"
S% a *o$i" a!tr"ss% ,as a on".#"ar !ontra!t 3it, NKT Stuio.
I+ F% a +ri"n o+ S inu!"s ,"r% 3it,out an# justi+iabl" !aus"% to
br"a< t," !ontra!t% t,"n NKT Stuio !an su" F +or a*ag"s.
FNOTE' In t," "4a*1l" gi$"n% t," liabilit# o+ F o"s not
aris" "4.!ontra!tu +or ," 3as not a 1art# to t," !ontra!t. (S""
Da#3alt $. Cor1ora!ion% 9A P,il. 5BC).G
FNOTE' In t," sa*" "4a*1l"% F !annot b" ,"l liabl" +or
gr"at"r a*ag"s t,an S. A !ontrar# ans3"r 3oul -l"a to r"sult
at on!" grot"sEu" an unjust./ (Da#3alt $. Cor1ora!ion% 9A P,il.
5BC). In t," o1inion o+ t," Co" Co**ission% F8s liabilit# 3oul%
at *ost% b" soliar# 3it, S b"!aus" o+ ,is !o**ission o+ a tort.
(Co" Co*. &"*oranu* to =oint Congr"ssional Co**itt"" on
Coi+i!ation% &ar!, B% 1A51).G
(9) Cas"
Ku $. CA% "t al.
1?1?
Art. 191@
>5 B66B9% =an. 61% 1AA9
FACTS' P"tition"r% t," "4!lusi$" istributor o+ t," Hous"
o+ &a#+air 3all.!o$"ring 1rou!ts in t," P,ili11in"s% !ri" +oul
1?11
Art. 191@
3,"n ,is +or*"r "al"r o+ t," sa*" goos% ,"r"in 1ri$at" r".
s1on"nt% 1ur!,as" t," *"r!,anis" +ro* t," Hous" o+ &a#+air
in Englan t,ru FNP Traing in I"st >"r*an# an sol sai
*"r!,anis" in t," P,ili11in"s. 7ot, t," !ourt o+ origin an t,"
a11"llat" !ourt r"j"!t" 1"tition"r8s t,"sis t,at 1ri$at" r"s1on.
"nt 3as "ngag" in a sinist"r +or* o+ un+air !o*1"tition 3it,in
t," !ont"4t o+ Art. 6B o+ t," Ci$il Co".
In t," suit +or injun!tion 3,i!, 1"tition"r +il" b"+or" t,"
5TC.NC5 station" in &anila% 1"tition"r 1r"ss" t," i"a t,at
," 3as 1ra!ti!all# b#.1ass" an t,at 1ri$at" r"s1on"nt a!t"
in !on!"rt 3it, t," FNP Traing in *isl"aing &a#+air into b".
li"$ing t,at t," goos or"r" b# t," traing +ir* 3"r" int"n"
+or s,i1*"nt to Nig"ria alt,oug, t,"# 3"r" a!tuall# s,i11"
to an sol in t," P,ili11in"s. Pri$at" r"s1on"nt 1ro+"ss"
ignoran!" o+ t," "4!lusi$" !ontra!t in +a$or o+ 1"tition"r. E$"n
t,"n% 1ri$at" r"s1on"nt r"s1on" b# ass"rting t,at 1"tition"r8s
un"rstaning 3it, &a#+air is bining onl# b"t3""n t," 1arti"s
t,"r"to.
N"$"rt,"l"ss% on" !ir!u*stan!" 3,i!, r"s1on"nt !ourt
o$"rloo<" 3as 1"tition"r8s sugg"stion% 3,i!, 3as not is1ut"
b# ,"r"in 1ri$at" r"s1on"nt in its !o**"nt% t,at t," Hous"
o+ &a#+air in Englan 3as u1" into b"li"$ing t,at t," goos
or"r" t,ru t," FNP Traing 3"r" to b" s,i11" to Nig"ria
onl#% but t," goos 3"r" a!tuall# s"nt to an sol in t," P,ili1.
1in"s.
HELD' A 1lo# o+ t,is !,ara!t"r is a<in to t," s!"nario o+
a t,ir 1"rson 3,o inu!"s a 1art# to r"n"g" on or $iolat" ,is
un"rta<ing un"r a !ontra!t% t,"r"b# "ntitling t," ot,"r !on.
tra!ting 1art# to r"li"+ t,"r"+ro*. (Art. 191@% Ci$il Co"). T,"
br"a!, !aus" b# 1ri$at" r"s1on"nt 3as "$"n aggra$at" b#
t," !ons"Eu"nt i$"rsion o+ tra" +ro* t," busin"ss o+ 1"tition"r
to t,at o+ 1ri$at" r"s1on"nt !aus" b# t," latt"r8s s1"!i"s o+
un+air !o*1"tition% as "*onstrat" no l"ss b# t," sal"s "++"!t"
ins1it" o+ t,is Court8s r"straining or"r.
T,is brings us to t," irr"1arabl" *is!,i"+ 3,i!, r"s1on.
"nt !ourt *isa11r"!iat" 3,"n it r"+us" to grant t," r"li"+
si*1l# b"!aus" o+ t," obs"r$ation t,at 1"tition"r !an b" +ull#
1?16
Art. 191@
!o*1"nsat" +or t," a*ag". A !ontrario% t," injur# is irr"1ara.
bl" 3,"r" it is !ontinuous an r"1"at" sin!" +ro* its !onstant
1?19
Art. 1915
an +r"Eu"nt r"!urr"n!"% no +air an r"asonabl" r"r"ss !an b"
,a t,"r"+or b# 1"tition"r inso+ar as ,is goo3ill an busin"ss
r"1utation as sol" istributor ar" !on!"rn". Iit,al% to "41"!t
1"tition"r to +il" a !o*1laint +or "$"r# sal" "++"!t" b# 1ri$at"
r"s1on"nt 3ill !"rtainl# !ourt *ulti1li!it# o+ suits.
Art. 1915. Contra!ts ar" 1"r+"!t" b# *"r" !ons"nt% an
+ro* t,at *o*"nt t," 1arti"s ar" boun not onl# to t," +ul.
+ill*"nt o+ 3,at ,as b""n "41r"ssl# sti1ulat" but also to all
t," !ons"Eu"n!"s 3,i!,% a!!oring to t,"ir natur"% *a# b"
in <""1ing 3it, goo +ait,% usag"% an la3.
CO&&ENT'
(1) Cons"nsualit# o+ Contra!ts
T," Arti!l" str"ss"s t," CONSENS;ALITK OF CON.
T5ACTS (or 1"r+"!tion b# *"r" !ons"nt).
Sal$aor P. &albarosa $. CA an S.E.A.
D"$"lo1*"nt Cor1. >5
165C61% A1r. 9?% 6??9
FACTS' Fro* &ar!, 16% 1AA? to A1ril 9% 1AA?% 1"tition"r
,a *or" t,an t3o 3""<s to a!!"1t t," o++"r o+ r"s1on"nt.
Alt,oug, 1"tition"r a$"rs t,at ," ,a a!!"1t" t," o++"r o+ r".
s1on"nt on &ar!, 6B% 1AA?% ,o3"$"r% ," +ail" to trans*it to
r"s1on"nt t," !o1# o+ t," &ar!, 1@% 1AA? l"tt"r.o++"r b"aring
,is !on+or*it# t,"r"to.
HELD' ;nl"ss an until t," r"s1on"nt r"!"i$" sai !o1#
o+ t," l"tt"r.o++"r% it !annot b" argu" t,at a !ontra!t ,a alr"a#
b""n 1"r+"!t" b"t3""n 1"tition"r an r"s1on"nt.
A !ontra!t is 1"r+"!t" onl# +ro* t," ti*" an a!!"1tan!"
o+ an o++"r is *a" <no3n to t," o++"ror. An o++"r *a" int"r
1ra"s"nt"s *ust b" a!!"1t" i**"iat"l#. I+ t," 1arti"s int"n"
t,at t,"r" s,oul b" an "41r"ss a!!"1tan!"% t," !ontra!t 3ill b"
!onstitut"s a !ount"r.o++"r 3,i!, t," o++"ror *a# a!!"1t or r"j"!t.
5BC
Art. 1915
1"r+"!t" onl# u1on <no3l"g" b# t," o++"ror o+ t," "41r"ss a!.
!"1tan!" b# t," o++"r"" o+ t," o++"r. An a!!"1tan!" 3,i!, is not
*a" in t," *ann"r 1r"s!rib" b# t," o++"ror is not "++"!ti$" but
!onstitut"s a !ount"r.o++"r 3,i!, t," o++"ror *a# a!!"1t or r"j"!t.
5BC
Art. 1915
T," !ontra!t is not 1"r+"!t" i+ t," o++"ror r"$o<"s or 3it,ra3s
its o++"r an t," r"$o!ation or 3it,ra3al o+ t," o++"ror is t,"
+irst to r"a!, t," o++"r"". T," a!!"1tan!" b# t," o++"r"" o+ t,"
o++"r a+t"r <no3l"g" o+ t," r"$o!ation or 3it,ra3al o+ t," o++"r
is in"++i!a!ious.
(6) Ho3 Contra!ts Ar" P"r+"!t"
(a) !ons"nsual !ontra!ts 0 b# *"r" !ons"nt (t,is is t," g"n"ral
rul") (Art. 1915). (E4a*1l"' !ontra!t o+ sal")
(b) r"al !ontra!ts 0 1"r+"!t" b# "li$"r# (E4a*1l"s' "1osit
an 1l"g"). (Art. 1916% Ci$il Co").
(!) +or*al or sol"*n !ontra!ts 0 ,"r" a s1"!ial +or* is r"Euir"
+or 1"r+"!tion (E4a*1l"' A si*1l" onation int"r $i$os o+
r"al 1ro1"rt#% to b" $ali an 1"r+"!t"% *ust b" in a 1ubli!
instru*"nt). (Art. C@A% Ci$il Co"). FNOTE' To b" a 3ritt"n
!ontra!t% all its t"r*s *ust b" in 3riting% so t,at a !ontra!t
1artl# in 3riting an 1artl# oral is% in l"gal "++"!t% an oral
!ontra!t. (&anu"l $. 5origu"H% "t al.% L.19@95% =ul. 66%
1A6?).G
(9) P"r+"!tion o+ Cons"nsual Contra!ts
Cons"nsual !ontra!ts ar" 1"r+"!t" +ro* t," *o*"nt t,"r"
is agr""*"nt (!ons"nt) on t," subj"!t *att"r% an t," !aus" or
!onsi"ration.
Lirag T"4til" &ills% In!. $. 5"1arations Co**ission
L.66C6B% O!t. 6B% 1ACC
I,"n a !ontra!t to 1ur!,as" +ro* t," 5"1arations Co*.
*ission is still subj"!t to a s"ri"s o+ t"ious st"1s su!, as t,"
!on!lusion o+ an annual 1ro!ur"*"nt 1rogra*% t," obtaining o+
aut,orit# +ro* a ,ig,"r o++i!" (li<" t," P,ili11in" 5"1arations
&ission in =a1an)% an t," sti1ulating o+ 3,at t," rat" o+ "4.
!,ang" s,oul b"% t,"r" is as #"t no 1"r+"!t" !ontra!t o+ sal".
ENP5ESSLK STIP;LATED (Art. 1915% Ci$il Co")% an
5BB
Art. 1915
(@) Cons"Eu"n!"s o+ P"r+"!tion
(a) T," 1arti"s ar" boun to t," +ul+ill*"nt o+ 3,at ,as b""n
ENP5ESSLK STIP;LATED (Art. 1915% Ci$il Co")% an
5BB
Art. 1915
!o*1lian!" t,"r"o+ *ust b" in >OOD FAITH. (Art. 115A%
Ci$il Co").
FNOTE' I+ t," tru" int"ntion is not "41r"ss" in a
3ritt"n agr""*"nt% in !as" on" ,as b""n *a"% t," 1ro1"r
r"*"# is 5EFO5&ATION. (Art. 195A% Ci$il Co").G
(b) T," 1arti"s ar" ALSO boun to all t," CONSE:;ENCES
3,i!,% a!!oring to t,"ir natur"% *a# b" in <""1ing 3it,
>OOD FAITH% ;SA>E% an LAI.
Va. " &ur!iano $. Au. >"n.% "t al.
L.11C@@% &a# 6B% 1A5B
FACTS' T," Ar*" For!"s o+ t," P,ili11in"s o!.
!u1i" a 1ar!"l o+ lan b"longing to Va. " &ur!iano. To
in"*ni+# ,"r +or t,is o!!u1an!#% t," O++i!" o+ t," C,i"+
o+ Engin""rs +or3ar" to ,"r +or ,"r signatur" a Euit.
!lai* agr""*"nt 3,"r"b# s," 3as to b" 1ai t," a*ount
o+ P15%?6C.91 as !o*1l"t" 1a#*"nt. Plainti++ sign" sai
agr""*"nt on A1r. @% 1A51% an r"turn" t," sa*" to
t," O++i!" o+ Engin""rs. 7"+or" it !oul b" sign" b# t,"
Co**aning O++i!"rs o+ t," P,ili11in" S"r$i!" Co**an
in r"1r"s"ntation o+ t," 5"1ubli!% t," ar*" +or!"s 3as
r"organiH"% an t," C,i"+ o+ Sta++ r"+us" to sign it on
t," groun t,at t," 3o*an 3as "ntitl" to onl# PC%???.
Issu"' Is t," Ar*" For!"s liabl" +or t," +irst a*ount o+
P15%?6C.91J
HELD' K"s% +or t," !ontra!t 3as 1"r+"!t" +ro* t,"
ti*" t," Ar*" For!"s r"!"i$" t," 3o*an8s a!!"1tan!"
o+ its o++"r. T," r"+usal o+ t," C,i"+ o+ Sta++ o"s not in t,"
l"ast a++"!t ,"r rig,t to as< +or +ul+ill*"nt o+ t," 1"r+"!t"
agr""*"nt. T," abs"n!" o+ a 3riting o"s not 1r"!lu" t,"
bining "++"!t o+ t," !ontra!t ul# 1"r+"!t" b# a *""ting
o+ t," *ins% t," !ontra!t not b"ing o+ t," !lass !all"
-+or*al/ or -sol"*n./
Vi!"nt" M &i!,a"l Li* $. CA M Lib"rt# H. Luna
>5 11B9@C% O!t. 6@% 1AA6
C5 SCAD 5C@
1?1B
Art. 1915
Pri$at" r"s1on"nt +ails to istinguis, b"t3""n !oni.
tion i*1os" on t," 1"r+"!tion o+ t," !ontra!t an a !oni.
1?1A
Art. 1916
tion i*1os" on t," 1"r+or*an!" o+ an obligation. Failur"
to !o*1l# 3it, t," +irst !onition r"sults in t," +ailur" o+
a !ontra!t% 3,il" +ailur" to !o*1l# 3it, t," s"!on !oni.
tion onl# gi$"s t," ot,"r 1art# t," o1tion "it,"r to r"+us"
to 1ro!"" 3it, t," sal" or to 3ai$" t," !onition.
In""% 1ri$at" r"s1on"nt is not t," injur" 1art#.
S," !annot r"s!in t," !ontra!t 3it,out $iolating t," 1rin.
!i1l" o+ *utualit# o+ !ontra!ts% 3,i!, 1ro,ibits allo3ing
t," $aliit# an 1"r+or*an!" o+ !ontra!ts to b" l"+t to t,"
3ill o+ on" o+ t," 1arti"s.
Art. 1916. 5"al !ontra!ts% su!, as "1osit% 1l"g" an
!o*. *oatu*% ar" not 1"r+"!t" until t," "li$"r# o+ t,"
obj"!t o+ t," obligation.
CO&&ENT'
(1) P"r+"!tion o+ 5"al Contra!ts
5"al !ontra!ts r"Euir" !ons"nt% subj"!t *att"r% !aus" or
!onsi"ration% an DELIVE5K.
(6) D"li$"r# as a 5"Euisit"
D"li$"r# is r"Euir" o+ t," $"r# natur" o+ t," !ontra!t. (B
&anr"sa 69C). For "4a*1l"% a "1ositar# !annot b" "41"!t" to
!o*1l# 3it, ,is obligation o+ <""1ing t," obj"!t sa+"l# unl"ss
an until it is "li$"r" to ,i*.
(9) T," 5"al Contra!ts 5"+"rr" to
T," r"al !ontra!ts r"+"rr" to in Art. 1916 ar"'
(a) DEPOSIT
(b) PLED>E
(!) CO&&ODAT;&% a loan 3,"r" t," i"nti!al obj"!t *ust
b" r"turn" (E4a*1l"' Loan o+ a !ar)
(@) Futur" 5"al Contra!ts as Cons"nsual Contra!ts
1?6?
Art. 1916
A !ontra!t -to *a<" a "1osit% to *a<" a 1l"g"% or to *a<"
1?61
Art. 191C
a !o**oatu*/ is a !ons"nsual !ontra!t. A+t"r "li$"r#% t,"
!ontra!t b"!o*"s a r"al !ontra!t.
E4a*1l"' A agr"" to l"n 7 ,is (A8s) !ar on S"1t. B. I+ on
S"1t. B A r"+us"s to "li$"r t," !ar% *a# 7 su" ,i* +or a*.
ag"sJ
ANS.' K"s% b"!aus" o+ t," !ons"nsual !ontra!t o+ -to *a<" a
!o**oatu*./ I+ A ,a "li$"r" t," !ar an 7 t,ru n"glig"n!"
a*ag"s t," !ar% A !an su" ,i* b"!aus" o+ t," r"al !ontra!t o+
-!o**oatu*./
FNOTE' Si*ilarl#% -an agr""*"nt (!ons"nsual) to !onstitut"
a "1osit is bining% but t," "1osit its"l+ (t," r"al !ontra!t o+
"1osit) is not 1"r+"!t" until t," "li$"r# o+ t," t,ing./ (Art.
1A69% Ci$il Co").G
(5) T," Contra!t o+ Carriag"
(a) T," !ontra!t -to !arr#/ (at so*" +utur" ti*") is !ons"nsual
an is 1"r+"!t" b# *"r" !ons"nt.
(b) T," !ontra!t o+ -!arriag"/ is a r"al !ontra!t% +or not until
t," !arri"r is a!tuall# us" !an 3" !onsi"r t," !ontra!t
1"r+"!t"% t,at is% Otil t," *o*"nt o+ a!tual us"% t," !arri"r
!annot b" sai to ,a$" alr"a# assu*" t," obligation o+
a !arri"r.
FNOTE' T," r"al !ontra!t o+ !arriag" is 1"r+"!t"
"$"n i+ t," 1ass"ng"r ,as not #"t 1ai% in +a!t% "$"n i+ ,"
,as no *on"# +or ,is +ar". (S"" 7ar<"r $. O,io 5i$"r 5.
Co.% 51 I. Va. @69). It o"s not "$"n *att"r t,at ," ,as
not boar" t," $",i!l" !o*1l"t"l#. T," all.i*1ortant +a!t
is t,at ," ,as% 3it, t," "41r"ss or i*1li" !ons"nt o+ t,"
!arri"r% 1la!" a 1art o+ ,is bo#% or a 1ortion o+ t," goos
on an# 1art o+ t," j""1n"#% ta4i or bus% su!, as t," st"1.
1ing 1lat+or* or t," running boar. (S"" Illinois C. 5. Co.
$. O8D""+"% 6B Ill. 115).G
Art. 191C. No on" *a# !ontra!t in t," na*" o+ anot,"r
3it,out b"ing aut,oriH" b# t," latt"r% or unl"ss ," ,as b#
la3 a rig,t to r"1r"s"nt ,i*.
1?66
Art. 191C
A !ontra!t "nt"r" into in t," na*" o+ anot,"r b# on"
3,o ,as no aut,orit# or l"gal r"1r"s"ntation% or 3,o ,as
a!t"
1?69
Art. 191C
b"#on ,is 1o3"rs% s,all b" un"n+or!"abl"% unl"ss it is
rati+i"% "41r"ssl# or i*1li"l#% b# t," 1"rson on 3,os"
b",al+ it ,as b""n "4"!ut"% b"+or" it is r"$o<" b# t,"
ot,"r !ontra!ting 1art#.
CO&&ENT'
(1) 5"Euisit" +or a P"rson to Contra!t in t," Na*" o+ An.
ot,"r
I+ a 1"rson 3ants to !ontra!t in t," na*" o+ anot,"r 0
(a) ," *ust b" ul# aut,oriH" ("41r"ssl# or i*1li"l#)
(b) O5 ," *ust ,a$" b# la3 a rig,t to r"1r"s"nt ,i* (li<" t,"
guarian% or t," a*inistrator)
(!) O5 t," !ontra!t *ust b" subs"Eu"ntl# 5ATIFIED ("4.
1r"ssl# or i*1li"l#% b# 3or or b# ""). (S"" >uti"rr"H
H"r*anos $. Or"ns"% 6B P,il. BAB).
&ont"$"r" $. Court o+ Inustrial 5"lations
CA SC5A 66A
;nl"ss ," ,as b""n gi$"n s1"!ial aut,orit# to o so%
a la3#"r !annot !o*1ro*is" ,is !li"nt8s !as" nor !an ,"
is!,arg" ,is !li"nt8s !lai* 3it,out a !as, s"ttl"*"nt +or
t," +ull a*ount o+ t," !lai*.
(6) E4a*1l" o+ an ;NA;THO5ITED (a For* o+ ;NEN.
FO5CEA7LE CONT5ACT) CONT5ACT
In =os"8s na*"% but 3it,out =os"8s aut,oriHation% &aria
sol =os"8s !ar to &aril#n. T," sal" o+ t," !ar is unaut,oriH".
FNOTE' In t," "4a*1l" gi$"n% *"r" la1s" o+ ti*" !annot
!ur" t," "+"!t2 t,is is not t," rati+i!ation r"Euir" b# t," la3.
(Ti1ton $. V"las!o% 6 P,il. 6C).G
FNOTE' T," "at, o+ t," 1rin!i1al o"s NOT r"n"r t," a!t
o+ an ag"nt un"n+or!"abl"% 3,"r" t," ag"nt ,a no <no3l"g" o+
su!, "4tinguis,*"nt o+ t," ag"n!#. (H"rr"ra% "t al. $. Lu# Di*
1?6@
Art. 191C
>uan% "t al.% L.1C?@9% =an. 91% 1A61).G
1?65
Art. 191C
7aillo $. F"rr"r
>5 5196A% =ul. 6A% 1ABC
FACTS' &a!ario i" int"stat" in 1A66% sur$i$" b# ,is
3io3% Clarita% an +i$" *inor !,ilr"n. H" l"+t a 1ar!"l o+ lan.
In 1A6C% Clarita% in ,"r o3n b",al+ an as natural guarian o+
t," *inor 1lainti++s% "4"!ut" a "" o+ "4trajui!ial 1artition
an sal" o+ t," 1ro1"rt# t,roug, 3,i!, s," sol t," 1ro1"rt#
to >r"gorio. In 1A6B% &o"sta% a sist"r o+ &a!ario% 3as abl" to
obtain guarians,i1 o$"r t," 1ro1"rt# an 1"rsons o+ t," *inor
!,ilr"n. In 1AC?% t," guarian !aus" t," *inor !,ilr"n to
+il" a !o*1laint to annul t," sal" o+ t,"ir 1arti!i1ation in t,"
1ro1"rt# an as<" t,at as !o.o3n"rs t,"# b" allo3" to "4"r!is"
t," rig,t o+ l"gal r""*1tion 3it, r"s1"!t to Clarita8s 1arti!i1a.
tion t,"r"in. T," trial !ourt annull" t," sal" to >r"gorio o+ t,"
*inor !,ilr"n8s 1arti!i1ation in t," 1ro1"rt# an allo3" t,"*
to r"""* t," 1arti!i1ation o+ t,"ir *ot,"r t,"r"in.
HELD' T," Su1r"*" Court sustain" t," annul*"nt o+
t," sal" 3it, r"s1"!t to t," !,ilr"n8s 1arti!i1ation. T," ""
o+ "4trajui!ial 1artition is un"n+or!"abl"% or *or" s1"!i+i!all#%
an unaut,oriH" !ontra!t un"r Arts. 1@?9F1G an 191C o+ t,"
N"3 Ci$il Co". Clarita ,as no aut,orit#% i.".% s," a!t" b"#on
,"r 1o3"rs in !on$"#ing to >r"gorio t," uni$i" s,ar" o+ ,"r
*inor !,ilr"n in t," 1ro1"rt#. T," 1o3"rs gi$"n to ,"r b# t,"
la3 as t," natural guarian !o$"r onl# *att"rs o+ a*inistra.
tion an !annot in!lu" t," 1o3"r o+ is1osition. T," !,ilr"n
n"$"r rati+i" t," "" o+ 1artition an sal". H"n!"% t," !ontra!t
r"*ain" un"n+or!"abl" or unaut,oriH". No r"stitution *a# b"
or"r" +ro* t," *inors "it,"r as to t,at 1ortion o+ t," 1ur!,as"
1ri!" 3,i!, 1"rtains to t,"ir s,ar" in t," 1ro1"rt# or at l"ast as
to t,at 1ortion 3,i!, b"n"+it" t,"* b"!aus" t," la3 o"s not
san!tion an#.
(9) I*1li" 5ati+i!ation
5ati+i!ation !an b" i*1li" +ro* a!ts% su!, as 3,"n t,"
o3n"r o+ a ,a!i"na 3,i!, 3as sol to strang"rs 3it,out ,is
aut,orit#% !oll"!t" t," a*ount in a 1ro*issor# not" gi$"n as
1ur!,as" 1ri!" (Ta!alinar $. Corro% 9@ P,il. BAB)% or 3,"n t,"
1?66
Art. 191C
7oar o+ Dir"!tors o+ a 1ri$at" !or1oration s,oul ta<"
a$antag" o+ t," b"n"+its "ri$" +ro* an aut,oriH" !ontra!t
"nt"r" into
1?6C
Art. 191C
b# its Pr"si"nt. T," Cor1oration is t,us boun "$"n 3it,out a
+or*al r"solution on t," *att"r. (7u"nas"a $. 7o3"n an Co.%
In!.% "t al.% L.1@AB5% D"!. 6A% 1A6?).
(@) E++"!t o+ 5ati+i!ation
5ati+i!ation !l"ans"s t," !ontra!t +ro* all its "+"!ts +ro*
t," *o*"nt t," !ontra!t 3as "nt"r" into. (Art. 19A6% Ci$il
Co"). H"n!"% t,"r" is a r"troa!ti$" "++"!t. (Ta!alinar $. Corro%
9@ P,il. BAB).
FNOTE' T,"r" !an b" no *or" rati+i!ation i+ t," !ontra!t
,as 1r"$iousl# b""n 5EVODED b# t," ot,"r !ontra!ting 1art#.
(Art. 191C% 1ar. 6).G
(5) E++"!t I,"n an ;naut,oriH" P"rson Do"s Not 5"all#
N"" t," Aut,orit#
I+ a la3#"r% 3it,out ,is !li"nt8s aut,orit#% signs a -!o*1ro.
*is"/ !ontra!t (3,i!, is not r"all# a !o*1ro*is" +or 3,at 3"r"
sti1ulat" 3"r" onl# rig,ts an obligations 1ro$i" +or b# la3
0 an ,"n!" no r"!i1ro!al !on!"ssion 3as r"all# in$ol$"). T,"
!ontra!t 3oul bin t," !li"nt% not b"!aus" o+ t," -!o*1ro*is"/
but b"!aus" o+ t," l"gal 1ro$isions in$ol$". (&"r!" $. 5o*an
Cat,oli! Ar!,bis,o1 o+ &anila% >5 6@616% Aug. 1C% 1A6C).
(6) Cas"
7"nja*in Coron"l M E*ilia &"<ing Va. "
Coron"l $. Flor"ntino Constantino% Aur"a
7u"nsu!"so% M CA
>5 161?6A% F"b. C% 6??9
FACTS' No "$i"n!" 3as 1r"s"nt" to s,o3 t,at t," t,r""
brot,"rs 3"r" a3ar" o+ t," sal" *a" b# t,"ir *ot,"r. T,"ir
*ot,"r% E*ilia% "4"!ut" t," instru*"nt in ,"r o3n b",al+
an not in r"1r"s"ntation o+ ,"r t,r"" !,ilr"n. It ,as b""n
"stablis," t,at at t," ti*" o+ "4"!ution o+ t," -Dasulatan ng
7ili,ang Patulu#an/ on A1ril 69% 1AB1 t," subj"!t 1ro1"rt# 3as
1?6B
Art. 191C
!o.o3n"% 1ro.ini$iso% b# 1"tition"r E*ilia tog"t,"r 3it, ,"r
1"tition"r.son 7"nja*in% an ,"r t3o ot,"r sons% Catalino an
1?6A
Art. 191C
C"+"rino. No 1roo+ 3as 1r"s"nt" to s,o3 t,at t," !o.o3n"rs,i1
t,at "4ist" a*ong t," ,"irs o+ C"+"rino an Catalino an ,"r"in
1"tition"rs ,as "$"r b""n t"r*inat".
A11l#ing Arts. 191C an 1@?9% r"s1"!ti$"l#% t," Court o+
A11"als rul" t,at t,ru t,"ir ina!tion an sil"n!"% t," t,r""
sons o+ E*ilia ar" !onsi"r" to ,a$" rati+i" t," a+or"sai sal"
o+ t," subj"!t 1ro1"rt# b# t,"ir *ot,"r.
HELD' T," Su1r"*" Court isagr""s 3it, t," a11"llat"
!ourt% ruling t,at t," t,r"" sons o+ E*ilia i not rati+# t," sal".
;na3ar" o+ su!, sal"% Catalino% C"+"rino% an 7"nja*in !oul
not b" !onsi"r" as ,a$ing $oluntaril# r"*ain" sil"nt an
<no3ingl# !,os" not to +il" an a!tion +or t," annul*"nt o+ t,"
sal". T,"ir all"g" sil"n!" an ina!tion *a# not b" int"r1r"t"
as an a!t o+ rati+i!ation on t,"ir 1art.
5ati+i!ation *"ans t,at on" un"r no isabilit# $oluntaril#
ao1ts an gi$"s san!tion to so*" unaut,oriH" a!t or "+"!ti$"
1ro!""ing% 3,i!, 3it,out ,is san!tion 3oul not b" bining
on ,i*. It is t,is $oluntar# !,oi!"% <no3ingl# *a"% 3,i!,
a*ounts to a rati+i!ation o+ 3,at 3as% t,"r"+or"% unaut,oriH"%
an b"!o*"s t," aut,oriH" a!t o+ t," 1art# so *a<ing t,"
rati+i!ation.
1?9?
CIVIL CODE OF THE
PHILIPPINES
Chapter 2
ESSENTIAL RE#UISITES OF CONTRACTS
GENERAL PROVISIONS
Art. 191B. T,"r" is no !ontra!t unl"ss t," +ollo3ing r"E.
uisit"s !on!ur'
(1) Cons"nt o+ t," !ontra!ting 1arti"s2
(6) Obj"!t !"rtain 3,i!, is t," subj"!t *att"r o+ t,"
!ontra!t2
(9) Caus" o+ t," obligation 3,i!, is "stablis,".
CO&&ENT'
(1) Ess"ntial 5"Euisit"s o+ Cons"nsual Contra!ts
T," t,r"" "ss"ntial r"Euisit"s +or !ons"nsual !ontra!ts ar"
"nu*"rat" in t,is Arti!l".
(NOTE' ;n"r t," ol Ci$il Co"% -!onsi"ration/ 3as t,"
3or us" inst"a o+ -!aus" o+ t," obligation./)
(6) 5"al Contra!ts
5"al !ontra!ts r"Euir" a +ourt, r"Euisit" 0 DELIVE5K.
(9) Sol"*n or For*al Contra!ts
Sol"*n or +or*al !ontra!ts r"Euir" a +ourt, r"Euisit"
1?91
0 CO&PLIANCE IITH THE FO5&ALITIES 5E:;I5ED 7K
LAI. (E4a*1l"' A si*1l" onation int"r $i$os o+ lan r"Euir"s a
1ubli! instru*"nt +or its 1"r+"!tion.)
1?96
Art. 191B
(@) I,at Cons"nt Pr"su11os"s
Cons"nt 1r"su11os"s l"gal !a1a!it# (B &anr"sa 6@6) an
t," +ul+ill*"nt o+ !onitions% s,oul an# b" atta!,". (5u1"rto
$. Dos!a% 66 P,il. 66C).
(5) E++"!t o+ Non.Cons"nt
(a) I+ t,"r" is absolut"l# no !ons"nt (as in t," !as" o+ a =ODE)%
t,"r" is no !ontra!t. T," agr""*"nt *a# b" !onsi"r"
in"4ist"nt or non."4ist"nt or VOID. (T," sa*" rul" a11li"s
in t," !as" o+ absolut"l# si*ulat" !ontra!t% on" 3,"r" t,"
1arti"s n"$"r int"n" to b" boun.)
(b) I+ t,"r" is a $i!" o+ !ons"nt ($itiat" !ons"nt) su!, as "rror%
+rau% or unu" in+lu"n!"% "t!.% t," !ontra!t is not $oi2 it
is *"r"l# $oiabl".
(6) Trans1ortation Ti!<"t as a Contra!t
P"ralta " >u"rr"ro% "t al. $. &arigal S,i11ing Co.
L.16A51% No$. 1C% 1A5A
A trans1ortation ti!<"t is a !o*1l"t" 3ritt"n !ontra!t b".
t3""n t," s,i11"r an t," 1ass"ng"r sin!" it ,as all t," "l"*"nts
o+ a !o*1l"t" !ontra!t' (a) t," !ons"nt o+ t," !ontra!ting 1arti"s
*ani+"st" b# t," +a!t t,at t," 1ass"ng"r boars t," s,i1 an
t," s,i11"r !ons"nts or a!!"1ts ,i* in t," s,i1 +or trans1orta.
tion2 (b) !aus" or !onsi"ration% 3,i!, is t," +ar" 1ai b# t,"
1ass"ng"r% as stat" in t," ti!<"t2 an (!) obj"!t% 3,i!, is t,"
trans1ortation o+ t," 1ass"ng"r +ro* t," 1la!" o+ "1artur" to
t," 1la!" o+ "stination as stat" in t," ti!<"t.
(C) La!< o+ Cons"nt Is S"1arat" an Distin!t Fro* La!< o+
Consi"ration
5io &ont"!illo $. Igna!ia 5"#n"s M S1air"s
5""*1tor M Elisa Abu!a#
>5 19B?1B% =ul. 66% 6??6
T," *ann"r o+ 1a#*"nt o+ t," 1ur!,as" 1ri!" is an "s.
1?99
Art. 191B
s"ntial "l"*"nt b"+or" a $ali an bining !ontra!t o+ sal" !an
"4ist. Alt,oug, t," Ci$il Co" o"s not "41r"ssl# stat" t,at t,"
1?9@
Art. 191A
*ins o+ t," 1arti"s *ust also *""t on t," t"r*s or *ann"r o+
1a#*"nt o+ t," 1ri!"% t," sa*" is n"""% ot,"r3is" t,"r" is no
sal". Agr""*"nt on t," *ann"r o+ 1a#*"nt go"s into t," 1ri!"
su!, t,at a isagr""*"nt on t," *ann"r o+ 1a#*"nt is tanta.
*ount to a +ailur" to agr"" on t," 1ri!". (To#ota S,a3% In!. $.
CA% 6@@ SC5A 96? F1AA5G).
On" o+ t," t,r"" "ss"ntial r"Euisit"s o+ a $ali !ontra!t is
!ons"nt o+ t," 1arti"s on t," obj"!t an !aus" o+ t," !ontra!t. In
a !ontra!t o+ sal"% t," 1arti"s *ust agr"" not onl# on t," 1ri!"%
but also on t," *ann"r o+ 1a#*"nt o+ t," 1ri!". An agr""*"nt
on t," 1ri!" but a isagr""*"nt on t," *ann"r o+ its 1a#*"nt
3ill not r"sult in !ons"nt% t,us% 1r"$"nting t," "4ist"n!" o+ a
$ali !ontra!t +or la!< o+ !ons"nt. T,is la!< o+ !ons"nt is
s"1arat" an istin!t +ro* la!< o+ !onsi"ration 3,"r" t,"
!ontra!t stat"s t,at t," 1ri!" ,as b""n 1ai 3,"n in +a!t% it ,as
n"$"r b""n 1ai.
S"!tion 1
CONSENT
Art. 191A. Cons"nt is *ani+"st" b# t," *""ting o+ t,"
o++"r an t," a!!"1tan!" u1on t," t,ing an t," !aus" 3,i!,
ar" to !onstitut" t," !ontra!t. T," o++"r *ust b" !"rtain an
t," a!!"1tan!" absolut". A Euali+i" a!!"1tan!" !onstitut"s
a !ount"r.o++"r.
A!!"1tan!" *a" b# l"tt"r or t"l"gra* o"s not bin
t," o++"r"r "4!"1t +ro* t," ti*" it !a*" to ,is <no3l"g".
T," !ontra!t% in su!, a !as"% is 1r"su*" to ,a$" b""n
"nt"r" into in t," 1la!" 3,"r" t," o++"r 3as *a".
CO&&ENT'
(1) Cons"nt as an Ess"ntial 5"Euisit"
T,is Arti!l" "*1,asiH"s CONSENT% 3,i!, is t," +irst "s.
s"ntial r"Euisit" o+ "$"r# !ontra!t.
(6) OCons"nt8 D"+in"
(a) It is t," *""ting o+ t," *ins b"t3""n t," 1arti"s on t,"
1?95
Art. 191A
subj"!t *att"r an t," !aus" o+ t," !ontra!t% "$"n i+ n"it,"r
on" ,as b""n "li$"r".
1?96
Art. 191A
(b) It is t," *ani+"station o+ t," *""ting o+ t," o++"r an t,"
a!!"1tan!" u1on t," t,ing an t," !aus" 3,i!, ar" to !on.
stitut" t," !ontra!t. (Art. 191A% 1st 1ar.).
E4a*1l"'
A o++"r" to s"ll 7 a 1arti!ular !ar +or P6%???%???.
7"+or" 7 !oul !ons"nt% A 3it,r"3 t," o++"r. Ias A al.
lo3" to o soJ
ANS.' K"s% b"!aus" t,"r" 3as NO *""ting o+ t,"
*ins #"t% ,"n!" no !ontra!t ,a b""n 1"r+"!t".
(9) 5"Euisit"s o+ Cons"nt
(a) T,"r" *ust b" t3o or *or" 1arti"s.
FNOTE' On" 1"rson *a# r"1r"s"nt t3o or *or" 1ar.
ti"s% unl"ss t,"r" ar" !ontrai!tor# or 1r"jui!ial int"r"sts
in$ol$". (S"" Art. 1@A?% Ci$il Co"2 >ar!,itor"na $. Sot"lo%
C@ P,il. 65).G
(b) T," 1arti"s *ust b" !a1abl" or !a1a!itat" (,"n!"% i+ on"
1art# b" insan"% t," !ontra!t is *"r"l# $oiabl").
(!) T,"r" *ust b" no $itiation o+ !ons"nt.
(E4a*1l"' T,"r" *ust b" no +rau or inti*iation%
ot,"r3is" t," !ontra!t is $oiabl".)
() T,"r" *ust b" no !on+li!t b"t3""n 3,at 3as "41r"ssl#
"!lar" an 3,at 3as r"all# int"n". Ot,"r3is"% t,"
r"*"# *a# b" r"+or*ation% as 3,"n t," 1arti"s r"all#
int"n" to b" boun% or "ls" t," !ontra!t is VOID% as 3,"n
t," !ontra!t is +i!titious or absolut"l# si*ulat".)
(") T," int"nt *ust b" "!lar" 1ro1"rl# (t,at is% 3,at"$"r
l"gal +or*aliti"s ar" r"Euir" *ust b" !o*1li" 3it,).
5ob"rto Es!a#% "t al. $. Court o+ A11"als% "t al.
L.9C5?@% D"!. 1B% 1AC@
!is"l# to !ur" a "+"!t in t," original !ontra!t (su!, as t,"
5AA
Art. 191A
Con+or*it# to an original !ontra!t g"n"rall# 1r"su1.
1os"s !on+or*it# to a subs"Eu"nt !ontra!t "4"!ut" 1r".
!is"l# to !ur" a "+"!t in t," original !ontra!t (su!, as t,"
5AA
Art. 191A
+ailur" to stat" t," !aus" or !onsi"ration o+ sai original
!ontra!t).
LCC Cor1oration $. Farral"s
L.9AB?@% A1r. 1C% 1AB@
I+ a 1"rson o"s not "nt"r into a !ontra!t +or "li$"r#
o+ !"rtain arti!l"s% ," !annot b" ,"l r"s1onsibl" +or t,"
non.1a#*"nt o+ t," goos. A+t"r all% t,"r" is no 1ri$it# o+
!ontra!t r"+"rr" to in t," 1robl"*.
(@) 5"Euisit"s +or t," &""ting o+ t," &ins
(a) an o++"r t,at *ust b" CE5TAIN2
(b) an an a!!"1tan!" t,at *ust b" ;N:;ALIFIED an A7.
SOL;TE.
(NOTE' I+ t," a!!"1tan!" is Euali+i"% l"t us sa# b# a
!onition% t,is *"r"l# !onstitut"s a CO;NTE5.OFFE5.)
(5) An O++"r T,at Is CE5TAIN
In or"r t,at an o++"r !an b" !onsi"r" CE5TAIN% it *ust
not b" $agu"% *isl"aing% or *a" as a jo<". T,"r"+or"% a "!lara.
tion o+ a 1"rson o+ -,is int"ntion to "nt"r into a !ontra!t/ is not
an o++"r t,at is CE5TAIN. (5os"nsto!< $. 7ur<"% @6 P,il. 61C). I+
t," o++"r is 3it,ra3n b"+or" it is a!!"1t"% t,"r" is no *""ting
o+ t," *ins. (=os" 7"nar"s% "t al. $. Ca1itol Subi$ision% In!.%
L.C99?% No$. 6A% 1A6?).
5os"nsto!< $. 7ur<"
@6 P,il. 61C
FACTS' A l"tt"r b"gan as +ollo3s' -In !onn"!tion 3it, t,"
#a!,t 7ronH"3ing% I a* in 1osition an a* 3illing to "nt"rtain
t," 1ur!,as" o+ it un"r t," +ollo3ing t"r*s./ Issu"' Ias t,"r"
an o++"r ,"r" t,at 3as !"rtain% an o++"r 3,i!,% i+ a!!"1t"% !oul
!o*1"l t," 3rit"r to r"all# bu# t," #a!,tJ
*on !ultur" 3oul us" t,"s" !l"ar an si*1l" 3ors' OI o++"r to
6??
Art. 191A
HELD' No% b"!aus" ,"r" t," o++"r 3as n"it,"r "+init"
nor !"rtain. Sai t," Su1r"*" Court' -To !on$"# t," i"a o+ a
r"solution to 1ur!,as"% a *an o+ orinar# int"llig"n!" an !o*.
*on !ultur" 3oul us" t,"s" !l"ar an si*1l" 3ors' OI o++"r to
6??
Art. 191A
1ur!,as"%8 OI 3ant to 1ur!,as"%8 OI a* in 1osition to 1ur!,as". .
. .8 It *ust b" 1r"su*" t,at a *an in ,is transa!tions in goo
+ait, us" t," b"st *"ans o+ "41r"ssing ,is *in t,at ,is int"l.
lig"n!" an !ultur" so 1"r*it as to !on$"# an "4t"rioriH" ,is
3ill +ait,+ull# an un"Eui$o!all#. T," 3or O"nt"rtain8 a11li"
to an a!t o"s not *"an t," r"solution to 1"r+or* sai a!t% but
si*1l# a 1osition to "lib"rat" +or "!iing to 1"r+or* sai a!t.
It 3as not a "+init" or !"rtain o++"r% but a *"r" in$itation to a
1ro1osal b"ing *a" to ,i*% 3,i!, *ig,t b" a!!"1t" b# ,i* or
not./
FNOTE' I+ t3o !ontra!ts ar" o++"r"% but t,"# ar" in"1"n.
"nt o+ "a!, ot,"r (su!, as a sal" o+ a 1ar!"l o+ lan% an t," l"as"
o+ an auto*obil")% a!!"1tan!" o+ on" o"s not i*1l# a!!"1tan!"
o+ t," ot,"r. 7;T i+ on" !ontra!t "1"ns u1on anot,"r% li<" a
!ontra!t o+ loan 1ro$i" it is s"!ur" b# a !ontra!t o+ *ortgag"%
it is "ss"ntial t,at t,"r" b" an agr""*"nt on 7OTH transa!tions.
Ot,"r3is"% t,"r" !an b" as #"t no *""ting o+ t," *ins. (S"" B
&anr"sa 656).G
V"nturanHa an Pri!" $. CaniHar"s% "t al.
L.199A6% O!t. 66% 1A5B
I+ an o++"r is *a" to bu# 1ro1"rt# at a !"rtain 1ri!" but -in
t," "$"nt t,at t," bi o+ an# ot,"r o++"ror s,all b" !onsi"r"
to b" t," b"st in t"r*s o+ t," a*ount o++"r" an t," !oni.
tions sti1ulat" t,"r"in%/ t," o++"r"r is -3illing an agr""abl"
to "Eual or to i*1ro$" t," sai Ob"st o++"r8 b# aing anot,"r
!"rtain a*ount%/ it !annot b" "ni" t,at t," a*ount o++"r"
is s1"!ulati$" an not a "+init" o++"r 3,i!, is "+init" an not
s1"!ulati$".
Consoliat" &ills% In!. $. 5"1arations Co**ission
C6 SC5A 1B
7"+or" t," !o*1l"tion o+ t," st"1s +or t," 1ur!,as" o+
r"1aration goos% an# agr""*"nt b"t3""n t," 5"1arations
Co**ission an t," "n.us"r is t,"r"b# a si*1l" 1r"li*inar#
transa!tion t,at ,as no obligator# "++"!t. T," agr""*"nt b"!o*"s
!o*1l"t" 3,"n t," 1ro!ur"*"nt o+ t," goos in b",al+ o+ t,"
1?@1
Art. 191A
"n.us"r b"!o*"s absolut"l# !"rtain 3it, t," a$ailabilit# o+ t,"
r"1aration goos.
1?@6
Art. 191A
(6) An A!!"1tan!" T,at Is ;N:;ALIFIED an A7SOL;TE
(a) I+ t,"r" is !o*1l"t"l# no a!!"1tan!" or i+ t," o++"r is "4.
1r"ssl# r"j"!t"% t,"r" is no *""ting o+ t," *ins. (L"o.
Euin!o $. Postal Sa$ings 7an<% @C P,il. CC6 an >a*boa
$. >onHal"s% 1C P,il. 9B1). I+ t," a!!"1tan!" b" Euali+i"
or not absolut"% t,"r" is no !on!urr"n!" o+ *ins. T,"r"
*"r"l# is a !ount"r.o++"r. (7atangan $. Cojuang!o% CB P,il.
@B1 an Art. 19A1% Ci$il Co"). I+ on" 1ro*is"s to a!t as
sur"t# +or anot,"r8s obligation as an ag"nt% ," o"s not
ans3"r +or t," latt"r8s obligation as a 1ur!,as"r. (Pa!i+i!
Toba!!o Cor1oration $. Court o+ A11"als M &anila Sur"t#
M Fi"lit# Co.% In!.% L.1?BA@% &ar. 6@% 1A5B).
(b) E4a*1l"s
A 3"nt to a stor" an o++"r" to bu# a !"rtain 3at!, +or
P1??%???. T," s"ll"r sai ," 3as 3illing to gi$" it +or
P16?%???. I,"r"u1on% A turn" to go a3a# b"!aus" ,"
i not 3ant to 1a# t,at 1ri!". T," s"ll"r !all" ,i* ba!<
an sai ," 3as 3illing to s"ll t," 3at!, +or P1??%???. Is
A allo3" not to bu# sai 3at!,J
ANS.' K"s. A8s o++"r 3as P1??%???. T,is 3as not a!.
!"1t". Or granting t,at t," 1ro1osal o+ P16?%??? 3as a
sort o+ a!!"1tan!"% t," stat"*"nt t,at t," bu#"r !oul ,a$"
it +or P16?%??? 3as not absolut". It 3as a Euali+i" a!!"1t.
an!" an ,"n!"% un"r t," la3% !onstitut"s a !ount"r.o++"r.
H"n!"% 3,"n t," s"ll"r sai P16?%???% ," 3as not r"all#
a!!"1ting t," o++"r to bu#. No3% 3,"n ," 3as going to gi$"
it +or P1??%???% ," 3as not r"all# a!!"1ting t," o++"r o+ A%
but 3as *a<ing anot,"r o++"r% a !ount"r.o++"r sin!" t,"
o++"r *a" b# A 1r"$iousl# ,a b""n r"j"!t" b# ,i* (t,"
s"ll"r).
FNOTE' A !ount"r.o++"r as a *att"r o+ +a!t "4tin.
guis,"s t," o++"r. &or"o$"r% it *a# or *a# not b" a!!"1t"
b# t," original o++"ror. (S"" Trillana $. :u"Hon Coll"g"s%
L.5??9% =un. 6C% 1A59).G
Corn"jo $. Calu1itan
@B O.>. 661% F"b. 1A56
1?@9
Art. 191A
FACTS' On =an. @% 1A@5% Corn"jo o++"r" to bu# Ca.
lu1itan8s lan +or P65?%??? (in =a1an"s" *on"#) 3it, a
1?@@
Art. 191A
"1osit o+ PC?%???. T," balan!" 3as to b" 1ai on or b"+or"
=an. 1A% 1A@5. Calu1itan agr"". 7ut on =an. 6% 1A@5% t,"
bu#"r ga$" onl# P65%??? as "1osit inst"a o+ PC?%???% an
," 3rot" to Calu1itan t,at t," balan!" 3as to b" 1ai on
=anuar# 65% 1A@5. Calu1itan agr"" to t,is n"3 1lan% but
i*1os" t," !onition t,at sai balan!" s,oul b" gi$"n
in g"nuin" P,ili11in" *on"#. On =an. 66% 1A@5% Corn"jo
3ant" to gi$" t," balan!" in =a1an"s" *on"# but ," !oul
not +in Calu1itan% so ," !onsign" sai balan!" in !ourt.
At t," sa*" ti*"% ," su" Calu1itan +or s1"!i+i! 1"r+or*.
an!" an a*ag"s.
HELD' T," a!tion 3ill not 1ros1"r. T," +irst agr"".
*"nt 3as abanon" b# Corn"jo ,i*s"l+ 3,"n ," i not
!o*1l# 3it, ,is 1ro*is". T," s"!on 1ro1osal 3as not
1"r+"!t"% +or t," a!!"1tan!" 3as !onitional% na*"l#% t,"
gi$ing o+ t," balan!" in g"nuin" P,ili11in" !urr"n!#.
Ta#!o $. S"rra
@@ P,il. 966
FACTS' S"rra o++"r" to s"ll a C"ntral "it,"r +or !as,%
or on an install*"nt basis% t," balan!" to b" 1ai in t,r""
#"ars. T," total 1ri!" 3as P1%???%???. Ta#!o% to 3,o* t,"
C"ntral 3as o++"r"% 3rot" to S"rra stating a*ong ot,"r
t,ings t,at ," 3as gi$ing P1??%??? or 1U1? o+ t," 1ri!" as
o3n1a#*"nt% t," balan!" to b" 1ai in so*" ot,"r 3a#.
Issu"' Ias t,"r" a *""ting o+ t," *insJ
HELD' No% t,"r" 3as no *""ting o+ t," *ins +or
3,"n Ta#!o o++"r" P1??%??? as o3n1a#*"nt% t,is 3as
r"all# a Euali+i" a!!"1tan!"% b"!aus" S"rra8s o++"r i not
s1"!i+# ,o3 *u!, s,oul b" t," initial 1a#*"nt. I,"n
Ta#!o o++"r" P1??%??? an not an# ot,"r a*ount as o3n.
1a#*"nt% t,is 3as in t," natur" o+ a 1ro1osal b# its"l+.
&"as $. Lan S"ttl"*"nt an
D"$"lo1*"nt Cor1oration
AB P,il. 11A
1?@5
Art. 191A
FACTS' In an o++"r o+ bart"r in$ol$ing s"!on.,an
sa3*ill "Eui1*"nt an aitional s1ar" 1arts $alu"
1?@6
Art. 191A
at P16%??? on t," on" ,an an an as #"t un"t"r*in"
nu*b"r o+ tra!tors o+ $arious Eualiti"s on t," ot,"r ,an%
t," o++"r""% t," Lan S"ttl"*"nt an D"$"lo1*"nt Cor.
1oration% ans3"r"' -I" ar" 3illing to a!!"1t t," 1ro1osi.
tion% in 3,i!, !as" 1l"as" s"" our &r. F.=. Do*ata#% o+ t,"
Pro1"rt# D"1art*"nt +or 1ossibl" arrang"*"nt./ Issu"'
Ias t,"r" a *""ting o+ t," *ins ,"r"J
HELD' No% t,"r" 3as no *""ting o+ t," *ins +or
t," abo$".*"ntion" !laus" i not in an# *ann"r s,o3
t,at t," !or1oration ,a "+init"l# a!!"1t" t," o++"r. T,"
1,ras" -3illing to a!!"1t/ *"r"l# ini!at" a is1osal to
a!!"1t in 1rin!i1l" subj"!t to !"rtain !onsi"rations% su!,
as t," "4a*ination o+ t," s"!on.,an sa3*ill an t,"
s1ar" 1arts2 t," "t"r*ination o+ t," nu*b"r an Eual.
it# o+ tra!tors to b" gi$"n in "4!,ang"% t," 1ossibilit# o+
bargaining 0 all o+ 3,i!, r"Euir" !onsultations an -a
1ossibl" arrang"*"nt./
7atangan $. Cojuang!o
CB P,il. @B1
FACTS' An att"*1t" !o*1ro*is" at t," +igur" o+
P1%5?B.6B in !as, 3as *"t 3it, a t"n"r an 1a#*"nt o+
PB??. Issu"' Ias t,"r" a *""ting o+ t," *insJ
HELD' No% b"!aus" o+ t," substantial $arian!" in t,"
a*ount !ontain" in t," o++"r% an in t," a*ount t"n"r".
For 1"r+"!tion% t," o++"r"r ,as +irst to ass"nt to t," sug.
g"st" *oi+i!ation !aus" b# t," r"u!tion in t," 1ri!".
Dato! $. &"noHa% "t al.
(C.A.) @C O.>. 6@6C
FACTS' Ioul.b" bu#"rs% <no3ing +ull# 3"ll t,at
t,"# !oul not 1a# t," r"Euir" P6%??? as<" o+ t,"* at
on!" an totall#% n"$"rt,"l"ss ans3"r" KES% <""1ing
t,is *"ntal r"s"r$ation to t,"*s"l$"s. Issu"' Ias t,"r" a
*""ting o+ t," *insJ
HELD' T,"r" 3as no *""ting o+ t," *ins in $i"3 o+
t," *"ntal r"s"r$ation. An granting t,at t,"r" 3as% still
1?@C
Art. 191A
t," 1r"s"n!" o+ !ausal +rau (olo !ausant") n"!"ssaril#
$ois t," !ontra!t.
1?@B
Art. 191A
Halili $. Llor"t% "t al.
A5 P,il. CB
FACTS' I,il" still in t," 1ro!"ss o+ n"gotiation% t,"
o++"r"" l"gall# sus1"n" t," 1a#*"nt o+ t," !,"!< it ,a
issu" +or +ailur" o+ t," o++"r"r to sign !"rtain o!u*"nts.
Issu"' Ias t,"r" a !ontra!t ,"r"J
HELD' No% b"!aus" t," l"gal sus1"nsion o+ t," !,"!<
1a#*"nt !l"arl# ini!at"s t,at t," transa!tion 3as *"r"l#
in t," stag" o+ n"gotiation2 ot,"r3is"% t," o++"r"" 3oul
not ,a$" b""n allo3" to l"gall# 3it,ra3 +ro* t," 1a#.
*"nt.
&ontinola $. Vi!torias &illing Co.% "t al.
5@ P,il. CB6
FACTS' In or"r to "n!ourag" "++i!i"nt sugar 1rou!.
tion% t," Vi!torias &illing Co*1an#% 3,i!, 3as o1"rating
a sugar !"ntral% !onu!t" a !ont"st% !o*1l"t" 3it, 3ritt"n
rul"s. &ontinola join" t," !ont"st% but b"!aus" ," +ail"
to +ollo3 so*" o+ t," rul"s% t," Co*1an# ,a no alt"rna.
ti$" "4!"1t to isEuali+# ,i* +or an# 1riH". H" no3 all"g"s
la!< o+ aut,orit# on t," 1art o+ t," Co*1an# to isEuali+#
,i*.
HELD' ;n"r t," la3% t," o++"r"r *a# +i4 t," ti*"%
1la!"% an *ann"r o+ a!!"1tan!". (S"" Art. 1961). 7"!aus"
&ontinola $iolat" t," rul"s% it !annot b" sai t,at t,"r"
3as a *""ting o+ t," *ins. T,"r"+or"% ," !oul 1ro1"rl# b"
isEuali+i". In""% t," basis o+ t," rig,t to a r"3ar is in
t," natur" o+ a !ontra!t an r"sts on on" si" u1on !oni.
tions. (9@ C#!. 1C91). In !o*1"titi$" !ont"sts +or r"3ars%
t," a!!"1tan!" *ust b" in stri!t !on+or*it# 3it, t," o++"r%
an a Euali+i" a!!"1tan!" o"s not !r"at" a !ontra!t.
A*"ri!an Pr"si"nt Lin"s% Lt.
$. 5i!,ar A. Dl"11"r
L.156C1% No$. 6A% 1A6?
1?@A
Art. 191A
T," a!t o+ t," o3n"r in s,i11ing ,is goos on boar
t," s,i1 o+ t," !arri"r% an in 1a#ing t," !orr"s1oning
1?5?
Art. 191A
+r"ig,t t,"r"on% s,o3s t,at ," i*1li"l# a!!"1t" t,"
!ontra!t 0 t," bill o+ laing 0 3,i!, ,a b""n issu" in
!onn"!tion 3it, t," s,i1*"nt in Eu"stion. It *a# b" sai
t,"r"+or" t,at t," sa*" is bining u1on ,i* as i+ it ,a
b""n a!tuall# sign" b# ,i* or b# an# ot,"r 1"rson in ,is
b",al+.
Clarin $. 5ulona
L.9?CB6% F"b. 6?% 1AB@
(1) I,"r" a 1art# to a !ontra!t o+ sal" a!!"1ts 1a#*"nt%
t,is is an ini!ation t,at sai 1art# ,as gi$"n ,is
!ons"nt to t," !ontra!t.
(6) T," !ontra!t is $ali "$"n i+ on" o+ t," 1arti"s stat"s
t,at ," "nt"r" into it against ,is b"tt"r jug*"nt.
(9) A !o.o3n"r !annot s"ll a "+init" 1art o+ t," !o.o3n.
"rs,i1. (NOTE' In t," instant !as"% ,o3"$"r% t,"
Su1r"*" Court un+ortunat"l# +orgot t,at t," s,ar"
b"ing sol b# t," !o.o3n"r !on!"rn" 3as a "+init"
1art sin!" t," s,ar" r"+"rr" to t,at 1ortion on 3,i!,
,is ,ous" ,a b""n !onstru!t" as alr"a# inti*at"%
t," sal" 3as ""*" VALID).
(C) :u"r#
A o++"r" 6? +ountain 1"ns to 7 +or P1%??? "a!,. 7 ans3"r"
b# l"tt"r t,at ," 3as 3illing to 1ur!,as" 9? +ountain 1"ns at
sai 1ri!" at P1%??? "a!,. Is t," !ontra!t 1"r+"!t"J
ANS.' It "1"ns'
(a) I+ 7 3ant" 9? 1"ns an 3oul not b" satis+i" 3it, l"ss%
t," a!!"1tan!" !an b" !onsi"r" as Euali+i"% so t,"r" ,as
b""n no 1"r+"!tion #"t.
(b) I+ 7 3as !ont"nt" 3it, 6? 1"ns% but "sir"% i+ 1ossibl" to
g"t 1? *or"% t,"r" is a 1"r+"!t" sal" r"garing t," original
6?% an an o++"r 3it, r"s1"!t to t," "4tra t"n. ;nl"ss a!.
!"1t" in turn% t,"r" 3oul b" NO !ontra!t #"t 3it,
1?51
Art. 191A
r"s1"!t to t," aitional 1? +ountain 1"ns. (S""
Tol"ntino% Ci$il Co" o+ t," P,il.% Vol. V% 1. @19).
1?56
Art. 191A
FNOTE'
I+ an o++"r"r o++"rs s"$"ral istin!t an s"1arat" it"*s%
an t," o++"r"" a!!"1ts on" o+ t,"*% t," !ontra!t is 1"r+"!t" as
to t," it"* a!!"1t". T,us% i+ a !ontra!tor o++"rs to t," 5FC to
!onstru!t a builing +or P9BA%AB? !o*1l"t" 3it, all installations2
+or P1B%A?? i+ no builing but onl# "l"!tri!al installations ar" to
b" *a"2 +or P16%6?? i+ no builing but onl# +or 1lu*bing instal.
lations an t," 5FC a3ars it a !ontra!t onl# +or t," 1lu*bing
installations (P16%6??)% t," !ontra!t is 1"r+"!t" inso+ar as sai
1lu*bing installations ar" !on!"rn". T,is is so b"!aus" t,"
1ro1osal o+ t," !ontra!tor !onsist" o+ s"$"ral it"*s% "a!, on" o+
t,"* !o*1l"t" in its"l+% an istin!t% s"1arat"% an in"1"n"nt
+ro* t," ot,"r it"*s. It !annot b" sai t,at t,"r" 3as a *oi+i.
!ation o+ t," o++"r or onl# a 1artial a!!"1tan!" t,"r"o+. In""%
t," a3ar gi$"n b# t," 5FC 3as an unEuali+i" a!!"1tan!" o+
t," t,ir it"*% 3,i!, it"* !onstitut" a !o*1l"t" o++"r b# its"l+.
(Val"n!ia $. 5",abilitation Finan!" Cor1oration% "t al.% L.1?C@A%
A1r. 65% 1A5B).G
(B) A!!"1tan!" T,ru Corr"s1on"n!"
(a) 5ul"' -A!!"1tan!" *a" b# l"tt"r or t"l"gra* o"s not bin
t," o++"r"r "4!"1t +ro* t," ti*" it !a*" to ,is <no3l"g".
T," !ontra!t in su!, a !as" is 1r"su*" to ,a$" b""n "n.
t"r" into in t," 1la!" 3,"r" t," o++"r 3as *a"./
(b) T," <no3l"g" *a# b" a!tual or !onstru!ti$" (as 3,"n t,"
l"tt"r o+ a!!"1tan!" ,as b""n r"!"i$" in t," ,ous" o+ t,"
o++"r"r b# a 1"rson 1oss"ss" o+ r"asonabl" is!"rn*"nt).
I+ a!tual <no3l"g" b" r"Euir"% 1roo+ o+ t,is 3oul b"
al*ost i*1ossibl"% +or "$"n 3,"n t," l"tt"r !ontaining t,"
ans3"r ,as b""n o1"n" an r"a% t," o++"r"r !an al3a#s
!lai*% in so*" !as"s trut,+ull#% t,at 3,il" ," 3as r"aing
t," sa*"% ,is *in 3as "ls"3,"r"% an ," i not a!tuall#
<no3 t," !ont"nts o+ sai ans3"r.
(A) Cas"s
Laui!o $. Arias
@9 P,il. 6C?
1?59
Art. 191A
FACTS' On F"b. 5% 1A1A% Arias 3rot" Laui!o a l"tt"r% o+.
+"ring a l"as" !ontra!t. On &ar. 6% 1A1A% Laui!o 3rot" a l"tt"r
1?5@
Art. 191A
o+ !o*1l"t" a!!"1tan!"% 3,i!, 3as r"!"i$" b# Arias t,at sa*"
a+t"rnoon. 7ut t,at sa*" *orning Arias ,a alr"a# 3ritt"n
Laui!o a l"tt"r 3it,ra3ing t," o++"r. Issu"' Ias t,"r" a !on.
tra!t ,"r"J
HELD' No% b"!aus" 1rior to r"!"i1t o+ t," l"tt"r o+ a!!"1t.
an!"% t," o++"r ,a alr"a# b""n 3it,ra3n. In ot,"r 3ors% it
o"s not *att"r t,at t," l"tt"r o+ 3it,ra3al *a# ,a$" b""n
r"!"i$" lat"r b# t," o++"r"" t,an r"!"i1t o+ t," l"tt"r o+ a!.
!"1tan!" b# t," o++"r"r. I,at is i*1ortant is t,at t," l"tt"r o+
3it,ra3al 3as &ADE 1rior to t," <no3l"g" o+ a!!"1tan!".
Sa*brano $. Court o+ Ta4 A11"als
1?1 P,il. 1
FACTS' Sa*brano 3as in"bt" to t," go$"rn*"nt +or
P1B@%??? b# 3a# o+ ta4 liabiliti"s. To guarant"" t,is ta4 obliga.
tion% ," "4"!ut" a !,att"l *ortgag". 7"!aus" o+ ,is inabilit# to
1a# ," o++"r" b# 3a# o+ !o*1ro*is"% t," 1a#*"nt o+ PC?%???
in !as,% an P1?%??? 1a#abl" 3it,in 9? a#s. T," S"!r"tar# o+
Finan!" +a$orabl# r"!o**"n" t," a11ro$al o+ t," o++"r% an
on S"1t. A% 1A5@% t," Coll"!tor o+ Int"rnal 5"$"nu" in+or*"
Sa*brano8s attorn"# o+ t," a!!"1tan!" o+ t," o++"r. A11ar"ntl#
una3ar" o+ t," a!!"1tan!"% sai attorn"# 3it,r"3 t," o++"r on
S"1t. 6@% 1A5@. Ha$ing b""n a11ris" o+ t,is *o$"% t," S"!r"tar#
o+ Finan!" or"r" t," Coll"!tor to "++"!t t," !oll"!tion o+ t,"
"ntir" ta4 liabilit#. Issu"' Ias t,"r" a *""ting o+ t," *ins on
t," !o*1ro*is" 1lanJ
(NOTE' A !o*1ro*is" is !onsi"r" b# t," Co" to b" a
!ontra!t.)
HELD' No% t,"r" 3as no *""ting o+ t," *ins b"!aus"
Sa*brano t,ru ,is !ouns"l r"$o<" t," o++"r b"+or" ," l"arn"
o+ its a!!"1tan!" b# t," S"!r"tar# o+ Finan!" an t," Coll"!tor
o+ Int"rnal 5"$"nu".
5a*on &agsa#sa# A3ar Founation $. CA
>5 55AAB% =an. 1C% 1AB5
E$"n i+ t," ra+t r"n"3al !ontra!t ,a not b""n sign" b#
t," l"ssor% t," 1arti"s *a# b" ""*" to ,a$" agr"" to r"n"3
1?55
Art. 191A
t,"ir l"as" !ontra!t !onsi"ring t," "4!,ang"s o+ l"tt"rs b"t3""n%
an t," i*1l"*"nting a!ts o+% t," 1arti"s.
1?56
Art. 191A
(1?) 5ul" i+ L"tt"r o+ A!!"1tan!" Is Iit,ra3n or 5"$o<"
A l"tt"r o+ a!!"1tan!" *a# in turn b" 3it,ra3n or r".
$o<".
P5O7LE&'
A o++"r" on =an. 1. 7 a!!"1t" on =an. B. T," l"tt"r o+ a!.
!"1tan!" 3as r"!"i$" b# A on =an. 15. 7ut on =an. 16% 7 ,a
alr"a# 3ritt"n a l"tt"r r"$o<ing t," a!!"1tan!". Ias t,"r" a
*""ting o+ t," *insJ
ANS.'
1) I+ t," l"tt"r r"$o<ing t," a!!"1tan!" 3as r"!"i$" b# A 7E.
FO5E =an. 15 (r"!"i1t o+ t," l"tt"r o+ a!!"1tan!")% t,"r" is
no Eu"stion t,at t,"r" 3as no *""ting o+ t," *ins. (5"#"s
M Puno% su1ra.% 1. 1B62 &anr"sa an Tol"ntino% su1ra% 1.
@1B).
6) 7ut i+ t," l"tt"r r"$o<ing t," a!!"1tan!"% alt,oug, *a"
1r"$iousl#% 3as n"$"rt,"l"ss r"!"i$" b# A onl# AFTE5
=an. 15 (r"!"i1t o+ t," l"tt"r o+ a!!"1tan!")% 5"#"s% Puno
an Tol"ntino b"li"$" t,at t,"r" 3as alr"a# a *""ting o+
t," *ins. T,us% Pro+s. 5"#"s an Puno sa# t,at t,"
r"$o!ation o+ t," a!!"1tan!" -*ust r"a!, an b" l"arn" b#
t," o++"r"r a,"a o+ t," a!!"1tan!"./ (5"#"s an Puno% o1.
!it.% 1. 1B6). Pro+. Tol"ntino in turn sa#s' -I,"r" t,"
o++"r"" ,as s"nt ,is a!!"1tan!"% but t,"n s"ns a r"j"!tion
or a r"$o!ation o+ t," a!!"1tan!"% 3,i!, r"a!,"s t,"
o++"r"r 7EFO5E t," a!!"1tan!"% t,"r" is NO *""ting o+
t," *ins% b"!aus" t," r"$o!ation ,as !an!"ll" or
nulli+i" t," a!!"1tan!" 3,i!, t,"r"b# !"as" to ,a$" an#
l"gal "++"!t./ (Tol"ntino% o1. !it.% 1. @1B). On t," ot,"r ,an%
&anr"sa *aintains t," !ontrar# $i"3% +or 3,at is
i*1ortant is t,at at t," ti*" o+ r"!"i1t o+ t," l"tt"r o+
a!!"1tan!"% t,"r" ,a alr"a# b""n a 1rior r"$o!ation o+
sai a!!"1tan!". In ot,"r 3ors% at t," "4a!t *o*"nt o+
all"g" *""ting o+ t," *ins (=an. 15)% t,"r" r"all# 3as
NO !on!urr"n!" o+ *ins or 3ills.
An o++"r b# t"l"gra* is go$"rn" NOI b# t," sa*"
rul"s +or l"tt"rs% but t,"r" 3as a ti*" 3,"n to b" $ali it
,a to b" +ollo3" b# a l"tt"r o+ !on+ir*ation% unl"ss t,"
1?5C
Art. 191A
*o" o+ !o**uni!ating b# t"l"gra* ,a 1r"$iousl# b""n
agr"" u1on in a 3ritt"n !ontra!t. (S"" Eng"l $. &ariano
V"las!o an Co.% @C P,il. 115).
1?5B
Art. 196?
Art. 196?. An a!!"1tan!" *a# b" "41r"ss or i*1li".
CO&&ENT'
(1) For*s o+ A!!"1tan!"
A!!"1tan!" *a# b"'
(a) "41r"ss (Art. 196?)2
(b) i*1li" (Art. 196?) +ro* !onu!t% or a!!"1tan!" o+ unsoli!.
it" s"r$i!"s (P"r"H $. Po*ar% 6 P,il. 6B6)2
(!) 1r"su*" (b# la3) as 3,"n t,"r" is +ailur" to r"1uiat"
,"r"itar# rig,ts 3it,in t," 1"rio +i4" b# la3 (S"" Art.
1?5C% Ci$il Co")2 or 3,"n t,"r" is SILENCE in !"rtain
s1"!i+i! !as"s as 3oul t"n to *isl"a t," ot,"r 1art#% an
t,us 1la!" t," sil"nt 1"rson in "sto11"l. (S"" Arts. 16C?%
1BC?% 1BC1% 1BC6 an 1BC9% Ci$il Co").
(6) E4a*1l"s o+ I*1li" A!!"1tan!"
(a) An o++"r b# t," Ar*# to r"3ar 1"rsons gi$ing in+or*ation
t,at 3oul l"a to t," a11r","nsion o+ !"rtain Hu<s *a#
b" !onsi"r" i*1li!itl# a!!"1t" 3,"n t," a!t r"+"rr" to
it is 1"r+or*" b# *"*b"rs o+ t," 1ubli!.
(b) In t," sa*" 3a#% 1arti!i1ation in a !ont"st% 3it, +ull !o*1li.
an!" o+ its rul"s% is i*1li" a!!"1tan!" o+ t," o++"r. T,us%
on on" o!!asion% t," Su1r"*" Court ,as sai t,at -u" to
t," +a!t t,at t," ban< start"% an a$"rtis" t," !ont"st
o++"ring 1riH"s% un"r !"rtain !onitions an t," 1lainti++
1r"1ar"% b# labor an "41"ns"% an too< 1art in sai !on.
t"st% t," ban< is boun to !o*1l# 3it, its 1ro*is" *a"
in t," rul"s an !onitions 1r"1ar" an a$"rtis" b# it./
(D" la 5osa $. 7an< o+ t," P,il. Islans% 51 P,il. A66).
(9) I*1li" 5"j"!tion
;1on t," ot,"r ,an% r"+usal or r"j"!tion o+ an o++"r *a#
also b" in+"rr" +ro* a!ts an !ir!u*stan!"s% li<" t," +ailur"
to a!t on an o++"r o+ !o*1ro*is" b"+or" t," !ourt "nt"rs +inal
jug*"nt on a !as". (7atangan $. Cojuang!o% CB P,il. @B1).
1?5A
Art. 196?
Si*ilarl#% an o++"r to r"*it int"r"st% 1ro$i" t," 1rin!i1al is
1ai% is ""*" r"j"!t" 3,"n t," "btor +ails to 1a# t," "bt%
1?6?
Art. 1961
an t," !r"itor 3as !onstrain" to su" +or !oll"!tion t,"r"o+.
(>a*boa $. >onHal"s% 1C P,il. 9B1).
Art. 1961. T," 1"rson *a<ing t," o++"r *a# +i4 t," ti*"%
1la!"% an *ann"r o+ a!!"1tan!"% all o+ 3,i!, *ust b" !o*.
1li" 3it,.
CO&&ENT'
(1) T,ings t,at &a# 7" Fi4" b# t," O++"r"r
(a) t," ti*"
(b) t," 1la!"
(!) t," *ann"r o+ a!!"1tan!"
An# a!t !ontrar# to t," 1r"s!rib" t"r*s r"all# !on.
stitut"s a !ount"r.o++"r or !ount"r.1ro1osal.
(6) Au!tion Sal"
T," rul" stat" in t,is Arti!l" a11li"s also to an au!tion
sal"% 3,"t,"r it b" a 1ubli! or a 1ri$at" on". (L"oEuin!o $. Postal
Sa$ings 7an<% @C P,il. CC6).
(9) Contra!t to Pur!,as"
Consoliat" &ills% In!. $.
5"1arations Co**ission
C6 SC5A 1B
A -!ontra!t to 1ur!,as"/ 3,i!, o"s not gi$" s1"!i+i! ".
s!ri1tion o+ t," obj"!ts to b" 1ur!,as" nor t," 1ri!" nor t," rat"
o+ "4!,ang" to b" us" is a *"r" 1r"li*inar# agr""*"nt.
(@) Cas"
Douglas &illar"s an 5og"lio Laga $. NL5C%
Trans.>lobal &ariti*" Ag"n!#% In!.% M Esso
Int"rnational S,i11ing Co.% Lt.
>5 11?56@% =ul. 6A% 6??6
1?61
Art. 1961
T," Ci$il Co" ,as al3a#s r"!ogniH"% an !ontinu"s to
r"!ogniH"% t," $aliit# an 1ro1ri"t# o+ !ontra!ts an obligations
1?66
Art. 1966
3it, a +i4" or "+init" 1"rio% an i*1os"s no r"straints on t,"
+r""o* o+ 1arti"s to +i4 t," uration o+ a !ontra!t% 3,at"$"r
its obj"!t% b" it s1"!i+i!% goos or s"r$i!"s% "4!"1t t," g"n"ral
a*onition against sti1ulations !ontrar# to la3% *orals% goo
!usto*s% 1ubli! or"r% or 1ubli! 1oli!#.
;n"r t," Ci$il Co"% t,"r"+or"% an as a g"n"ral 1ro1osi.
tion% +i4".t"r* "*1lo#*"nt !ontra!ts ar" not li*it"% as t,"#
ar" un"r t," 1r"s"nt Labor Co"% to t,os" b# natur" s"asonal
or +or s1"!i+i! 1roj"!ts 3it, 1r"."t"r*in" at"s o+ !o*1l"tion2
t,"# also in!lu" t,os" to 3,i!, t," 1arti"s b# +r"" !,oi!" ,a$"
assign" a s1"!i+i! at" o+ t"r*ination.
FNOTE' So*" +a*iliar "4a*1l"s *a# b" !it" o+ "*1lo#.
*"nt !ontra!t 3,i!, *a# b" n"it,"r +or s"asonal 3or< nor +or
s1"!i+i! 1roj"!ts% but to 3,i!, a +i4" t"r* is an "ss"ntial an
natural a11urt"nan!"' o$"rs"as "*1lo#*"nt !ontra!ts% +or on"%
to 3,i!,% 3,at"$"r t," natur" o+ t," "ngag"*"nt% t," !on!"1t o+
r"gular "*1lo#*"nt 3it, all t,at it i*1li"s o"s not a11"ar
"$"r to ,a$" b""n a11li". (&illar"s% "t al. $. NL5C% "t!.%
su1ra).G
FNOTE' Art. 6B? o+ t," Labor Co" not3it,staning% also
a11oint*"nts to t," 1ositions o+ "an% assistant "an% !oll"g"
s"!r"tar#% 1rin!i1al% an ot,"r a*inistrati$" o++i!"rs in "u.
!ational institutions% 3,i!, ar" b# 1ra!ti!" or traition rotat"
a*ong t," +a!ult# *"*b"rs% an 3,"r" +i4" t"r*s ar" a n"!"s.
sit# 3it,out 3,i!, no r"asonabl" rotation 3oul b" 1ossibl".
Si*ilarl#% "s1it" t," 1ro$isions o+ Art. 6B?% Poli!# Instru!tions
B o+ t," &inist"r (S"!r"tar#) o+ Labor i*1li!itl# r"!ogniH" t,at
!"rtain !o*1an# o++i!ials *a# b" "l"!t" +or 3,at 3oul a*ount
to +i4 1"rios% at t," "41iration o+ 3,i!, t,"# 3oul ,a$" to
stan o3n% in 1ro$iing t,at t,"s" o++i!ials% *a# los" t,"ir
jobs as 1r"si"nt% "4"!uti$" $i!".1r"si"nt or $i!".1r"si"nt% "t!.
b"!aus" t," sto!<,ol"rs or t," boar o+ ir"!tors +or on" r"ason
or anot,"r i not r""l"!t t,"*. (&illar"s% "t al. $. NL5C% "t!.%
su1ra.).G.
Art. 1966. An o++"r *a" t,roug, an ag"nt is a!!"1t"
1?69
Art. 1966
+ro* t," ti*" a!!"1tan!" is !o**uni!at" to ,i*.
1?6@
Art. 1969
CO&&ENT'
(1) A!!"1tan!" o+ an O++"r &a" T,ru an Ag"nt
(a) T," Arti!l" a11li"s 3,"n 7OTH t," o++"r an t," a!!"1t.
an!" ar" *a" t,ru an A>ENT (3,o is an "4t"nsion o+
t," 1"rsonalit# o+ t," 1rin!i1al. (Art. 1A1?% 1ar. @% Ci$il
Co").
(b) An# ot,"r int"r*"iar# (3,o is not an ag"nt% 3it, 1o3"r to
bin) is *"r"l# a sort o+ *"ss"ng"r% 3,o *ust !o**uni!at"
to t," 1"rson 3,o s"ns ,i*2 ot,"r3is"% t,"r" is as #"t no
*""ting o+ t," *ins.
(6) :u"r#
Su11os" t," 1rin!i1al ,i*s"l+ *a" t," o++"r% an a!!"1t.
an!" is !o**uni!at" to t," ag"nt% 3oul t," Arti!l" a11l#J In
ot,"r 3ors% 3oul t,"r" alr"a# b" a *""ting o+ t," *insJ
ANS.' It is sub*itt" t,at as a g"n"ral rul"% t,"r" 3oul
as #"t b" no *""ting o+ t," *ins% +or t," ag"nt *a# b" an
orinar# on"% not aut,oriH" to r"!"i$" t," a!!"1tan!" +or t,"
PA5TIC;LA5 transa!tion. Ho3"$"r% i+ t," ag"nt 3as "41r"ssl#
aut,oriH" to r"!"i$" t," a!!"1tan!"% or i+ t," o++"r"" ,a b""n
tol t,at a!!"1tan!" !oul b" *a" ir"!t 3it, t," ag"nt% 3,o
3oul t,"n b" gi$"n +r""o* to a!t or to 1ro!""% t,"r" !an b"
a *""ting o+ t," *ins an a 1"r+"!tion o+ t," !ontra!t.
Art. 1969. An o++"r b"!o*"s in"++"!ti$" u1on t," "at,%
!i$il int"ri!tion% insanit#% or insol$"n!# o+ "it,"r 1art#
b"+or" a!!"1tan!" is !on$"#".
CO&&ENT'
(1) I,"n O++"r 7"!o*"s In"++"!ti$"
Art. 1969 gi$"s @ instan!"s 3,"n t," o++"r b"!o*"s in"+.
+"!ti$".
(6) E4a*1l"
A *a<"s an o++"r to 7 on =an. 1. 7 *a<"s <no3n ,is a!!"1t.
an!" in a l"tt"r r"!"i$" at t," ,ous" o+ A on =an. 5. Ho3"$"r%
1?65
Art. 1969
on =an. @% A ,a i". H"r"% t," o++"r is in"++"!ti$" b"!aus" t,"r"
3as no *""ting o+ t," *ins.
1?66
Art. 196@
(9) Anot,"r E4a*1l"
A *a<"s an o++"r to 7 on =an. 1. 7 3rit"s a l"tt"r on =an.
9% a!!"1ting t," o++"r. T,is l"tt"r is r"!"i$" b# A on =an. 5. 7ut
on =an. @% 7 ,a i". H"r" t," o++"r is also in"++"!ti$"% b"!aus"
t,"r" 3as no *""ting o+ t," *ins.
(NOTE' I+ on" o+ t," 1arti"s at t," ti*" o+ *a<ing t," o+.
+"r O5 t," a!!"1tan!" 3as alr"a# insan"% it *a# b" sai t,at
t,"r" is a *""ting o+ t," *ins% in a s"ns"% b"!aus" t," !ontra!t
is not $oi% but *"r"l# VOIDA7LE% t,at is% it is $ali until an.
null".)
(@) Ot,"r Instan!"s
T,"r" ar" ot,"r instan!"s 3,"n t," o++"r b"!o*"s in"++"!.
ti$"% na*"l#'
(a) I,"n t," o++"r"" "41r"ssl# or i*1li"l# r"j"!ts t," o++"r.
(b) I,"n t," o++"r is a!!"1t" 3it, a Euali+i!ation or !onition
(+or ,"r"% t,"r" 3oul *"r"l# aris" a !ount"r.o++"r).
(!) I,"n b"+or" a!!"1tan!" is !o**uni!at"% t," subj"!t *at.
t"r ,as b"!o*" ill"gal or i*1ossibl".
() I,"n t," 1"rio o+ ti*" gi$"n to t," o++"r"" 3it,in 3,i!,
," *ust signi+# ,is a!!"1tan!" ,as alr"a# la1s".
(") I,"n t," o++"r is r"$o<" in u" ti*" (t,at is% b"+or" t,"
o++"ror ,as l"arn" o+ its a!!"1tan!" b# t," o++"r""). (S""
Laui!o $. Arias% @9 P,il. 6C?).
Art. 196@. I,"n t," o++"r"r ,as allo3" t," o++"r""
!"rtain 1"rio to a!!"1t% t," o++"r *a# b" 3it,ra3n at an#
ti*" b"+or" a!!"1tan!" b# !o**uni!ating su!, 3it,ra3al%
"4!"1t 3,"n t," o1tion is +oun" u1on a !onsi"ration% as
so*"t,ing 1ai or 1ro*is".
CO&&ENT'
(1) >"n"ral 5ul" on O1tions
1?6C
Art. 196@
I+ t," o++"r"r ,as allo3" t," o++"r"" a !"rtain 1"rio to
a!!"1t% t," o++"r *a# b" 3it,ra3n at an# ti*" b"+or" a!!"1t.
1?6B
Art. 196@
an!" (or t," t,ing b"ing o++"r") b# !o**uni!ating su!, 3it,.
ra3al.
E4a*1l"'
7% int"r"st" in a 1arti!ular !ar at a !ar "4!,ang" !o*1an#%
as<" S +or t," 1ri!". S sai' -P9%5??%???./ 7 ,o3"$"r !oul not
*a<" u1 ,is *in 3,"t,"r to bu# or not. So S tol 7% -7% I8ll
gi$" #ou a 3""< to *a<" u1 #our *in. In t," *"anti*"% I 3ill
r"s"r$" t,is !ar +or #ou./ 7"+or" t," 3""< is o$"r% !an S 3it,ra3
t," o++"r to s"ll t," !ar +or P9%5??%???J
ANS.' K"s% 1ro$i" 7 ,as not #"t signi+i" ,is a!!"1tan!"
o+ t," o++"r to s"ll% t,at is% 7 ,as not #"t boug,t t," !ar% an
1ro$i" t,at S !o**uni!at"s su!, 3it,ra3al to 7. T,us% S
*a#% 3it,out liabilit# to 7% s"ll to anot,"r.
Anot,"r E4a*1l"'
7A5
A o++"r" to s"ll ,is ,ous" an lot +or P1?& to 7% 3,o 3as
int"r"st" in bu#ing t," sa*". In ,is l"tt"r to 7% A stat" t,at
," 3as gi$ing 7 a 1"rio o+ on" *ont, 3it,in 3,i!, to rais"
t," a*ount% an t,at as soon as 7 is r"a#% t,"# 3ill sign t,"
"" o+ sal". On" 3""< b"+or" t," "41iration o+ t," on".*ont,
1"rio% A 3"nt to 7% an tol ,i* t,at ," is no long"r 3illing to
s"ll t," 1ro1"rt# unl"ss t," 1ri!" is in!r"as" to P15&. &a# 7
!o*1"l A to a!!"1t t," P1?& +irst o++"r"% an "4"!ut" t," sal"J
5"asons.
ANS.' No% b"!aus" ,"r" t," 1ro*is" to s"ll (or t," o1tion
grant" 7 to bu#) ,a no !aus" or !onsi"ration istin!t +ro*
t," s"lling 1ri!". (Arts. 1@CA an 196@% Ci$il Co"2 S"" &"noHa%
"t al. $. Co*1l"% L.1A911% O!t. 6A% 1A65).
CB SC5A 991
To b" bining on t," 1"rson 3,o *a" a unilat"ral 1ro*.
1?6A
Art. 196@
is"% t," 1ro*is" *ust b" su11ort" b# a !aus" or !onsi"ration
istin!t +ro* t," 1ri!".
1?C?
Art. 196@
(6) E4!"1tion
I,"n t," o1tion is +oun" u1on a !onsi"ration as so*".
t,ing 1ai or 1ro*is".
E4a*1l"' I+% in t," 1r"!"ing "4a*1l"% S ,a b""n gi$"n
P6?%??? b# 7 in !onsi"ration +or t," o1tion% S !annot 3it,.
ra3 t," o++"r to s"ll until a+t"r t," "41iration o+ t," on".3""<
1"rio.
(9) OO1tion8 D"+in"
It is a !ontra!t granting a 1"rson t," 1ri$il"g" to bu# or
not to bu# !"rtain obj"!ts at an# ti*" 3it,in t," agr"" 1"rio
at a +i4" 1ri!". T," !ontra!t o+ o1tion is a s"1arat" an istin!t
!ontra!t +ro* t," !ontra!t 3,i!, t," 1arti"s *a# "nt"r into u1on
t," !onsu**ation o+ t," !ontra!t. T,"r"+or"% an o1tion *ust
,a$" its o3n !aus" or !onsi"ration (EnriEu"H " la Ca$aa $.
DiaH% 9C P,il. AB6)% a !aus" istin!t +ro* t," s"lling 1ri!" its"l+.
(S"" &illar $. Nar"s% C@ P,il. 9?C). O+ !ours"% t," !onsi"ration
*a# b" 1ur" lib"ralit#.
(@) P"r+"!tion o+ an O1tion
Sin!" an o1tion is b# its"l+ a !ontra!t% it is not 1"r+"!t"
unl"ss t,"r" is a *""ting o+ t," *ins on t," o1tion. T,us% t,"
o++"r to grant an o1tion% "$"n i+ +oun" on a istin!t !aus" or
!onsi"ration% *a# its"l+ b" 3it,ra3n b"+or" t," a!!"1tan!" o+
t," o++"r o+ an o1tion.
E4a*1l"'
In t," 1r"!"ing "4a*1l" un"r !o**"nt No. (1)% i+ S ,a
o++"r" to grant 7 a 3""<8s ti*" i+ 7 3oul gi$" P6?%??? *a# S
still 3it,ra3 t," o++"r o+ o1tion b"+or" 7 signi+i"s ,is a!!"1t.
an!" t,"r"o+J
ANS.' K"s% b"!aus" ,"r" t," o1tion o"s not #"t "4ist.
(NOTE' I,"n t," la3 t,"r"+or" sa#s -"4!"1t 3,"n t," o1tion is
+oun" u1on a !onsi"ration% as so*"t,ing 1ai or 1ro*is"%/
1?C1
Art. 196@
t," 3or -o1tion/ ,"r" r"+"rs to a -1"r+"!t" !ontra!t o+ o1tion%/
t,at is% t," o1tion alr"a# "4ists.)
1?C6
Art. 196@
FNOTE' T,"r" is t,"r"+or" a i++"r"n!" b"t3""n a!!"1tan!"
o+ t," o++"r o+ o1tion (3,i!, r"sults in t," !ontra!t o+ o1tion)% an
a!!"1tan!" o+ t," obj"!t b"ing o++"r" +or sal" or a!!"1tan!" o+ t,"
o++"r o+ sal" (3,i!, r"sults in t," !ontra!t o+ sal").G
At<ins% Droll% an Co. $. Cua Hian T"<
L.ABC1% =an. 91% 1A5B
FACTS' On S"1t. 19% 1A51% At<ins% Droll an Co.% In!or.
1orat" o++"r" to s"ll to 7. Cua Hian T"< 1??? !artons o+ sar.
in"s subj"!t to r"1l# b# S"1t. 69% 1A51. T," r"s1on"nt o++"r""
a!!"1t" t," o++"r un!onitionall# an "li$"r" ,is l"tt"r o+
a!!"1tan!" on S"1t. 61% 1A51. In $i"3 ,o3"$"r o+ t," s,ortag"
o+ t," !at!, o+ sarin"s b# t," Cali+ornia 1a!<"rs% At<ins% Droll%
an Co. +ail" to "li$"r t," !o**oiti"s it ,a o++"r" +or sal".
O++"r"" no3 !lai*s t,at a!!"1tan!" o+ t," o++"r onl# !r"at" an
o1tion to bu# 3,i!,% la!<ing !onsi"ration istin!t +ro* t,"
1ri!"% ,a no obligator# +or!".
HELD' T," o++"r"r is 3rong. T," argu*"nt is unt"nabl"%
b"!aus" a!!"1tan!" o+ t," o++"r to s"ll b# s,o3ing t," int"ntion
to bu# +or a 1ri!" !"rtain !r"at"s bilat"ral !ontra!t to s"ll an
bu#. T," o++"r""% u1on a!!"1tan!"% i1so +a!to assu*"s t," obliga.
tion o+ a bu#"r% so *u!, so t,at ," !an b" su" s,oul ," ba!<
out a+t"r a!!"1tan!"% b# "it,"r r"+using to g"t t," t,ing sol or
r"+using to r"!"i$" t," 1ri!" agr"" u1on. ;1on t," ot,"r ,an%
t," o++"r"r 3oul b" liabl" +or a*ag"s% i+ ," +ails to "li$"r t,"
t,ing ," ,a o++"r" +or sal".
E$"n granting t,at an o1tion is grant" 3,i!, is not bin.
ing +or la!< o+ !onsi"ration% t," aut,oriti"s ,ol t,at -i+ t,"
o1tion is gi$"n 3it,out a !onsi"ration% it is a *"r" o++"r o+ a
!ontra!t o+ sal"% 3,i!, is not bining until a!!"1t"./ I+ ,o3"$"r
a!!"1tan!" (o+ t," sal"% as istinguis," +ro* t," a!!"1tan!"
*"r"l# o+ t," o1tion) is *a" b"+or" a 3it,ra3al% it !onstitut"s
a bining !ontra!t o+ sal"% "$"n i+ t," o1tion 3as not su11ort"
b# a su++i!i"nt !onsi"ration./ (C Cor1us =uris S"!unu*% 1.
656).
(NOTE' T," rul" in t," instant !as" r"$"rs"s t," 1rin!i1l"
1?C9
Art. 196@
,"l in Sout,3"st"rn Sugar M &olass"s Co. $. Atlanti! >ul+ M
Pa!i+i! Co.% AC P,il. 6@A.)
1?C@
Arts. 1965.1966
Art. 1965. ;nl"ss it a11"ars ot,"r3is"% busin"ss a$"r.
tis"*"nts o+ t,ings +or sal" ar" not "+init" o++"rs% but *"r"
in$itations to *a<" an o++"r.
CO&&ENT'
7usin"ss A$"rtis"*"nts
Ar" busin"ss a$"rtis"*"nts o+ t,ings +or sal" "+init" o+.
+"rsJ
ANS.' It "1"ns'
(a) I+ a11"ars to b" a "+init" o++"r !ontaining all t," s1"!i+i!
1arti!ulars n""" in a !ontra!t% it r"all# is a "+init" o+.
+"r.
E4a*1l"'
-For Sal"' A?? sE. *"t"r lot 3it, a bran n"3 1.1U6
stor"# ,ous" at 1@@5 P"rigon% Pa!o% &anila +or P1? *illion
!as,./ T,is is a "+init" o++"r% +ro* 3,i!, t," a$"rtis"r
!annot ba!< out% on!" it is a!!"1t" b# anot,"r.
(b) I+ i*1ortant "tails ar" l"+t out% t," a$"rtis"*"nt is not
a "+init" o++"r% but a *"r" in$itation to *a<" an o++"r.
E4a*1l"'
-For Sal"' 1??? sE. *"t"r lots at P1?? *illion to P15?
*illion a lot at Sout, Forb"s Par< T"l. BB.??.??./ T,is is
!l"arl# *"r"l# an in$itation to *a<" an o++"r% 3,i!, t,"
a$"rtis"r is +r"" to a!!"1t or to r"j"!t.
Art. 1966. A$"rtis"*"nts +or bi"rs ar" si*1l# in$ita.
tions to *a<" 1ro1osals% an t," a$"rtis"r is not boun to
a!!"1t t," ,ig,"st or lo3"st bi"r% unl"ss t," !ontrar# a1.
1"ars.
CO&&ENT'
(1) A$"rtis"*"nt +or 7i"rs
Not" t,at as a g"n"ral rul"% t," a$"rtis"r is NOT boun
1?C5
Arts. 1965.1966
to a!!"1t t," ,ig,"st or lo3"st bi"r.
1?C6
Art. 1966
(6) Probl"*
In an a$"rtis"*"nt +or bi"rs% t,"r" 3as NO r"s"r$ation
b# t," a$"rtis"r t,at ," !oul r"j"!t an# an all bis. No3 t,"n%
is ," still gi$"n t," rig,t to r"j"!t "$"n t," ,ig,"st bi"r (as
3,"n t," o++"r is to s"ll) or t," lo3"st bi"r (as 3,"n ,is o++"r
is to bu#)J
ANS.' K"s% +or t," rul" is t,at -t," a$"rtis"r is not boun
to a!!"1t t," ,ig,"st or lo3"st bi"r% unl"ss t," !ontrar# a1.
1"ars.88 (Art. 1966% Ci$il Co").
(9) A!!"1tan!" o+ a 7i
T," *"r" "t"r*ination o+ a 1ubli! o++i!ial or boar to a!.
!"1t t," 1ro1osal o+ a bi"r o"s NOT !onstitut" a !ontra!t2
t," "!ision *ust b" !o**uni!at" to t," bi"r. (=alanoni $.
National 5"s"ttl"*"nt M 5",abilitation A*.% "t al.% L.151AB%
&a# 9?% 1A6?).
(@) 7i"r Sub*its to Conitions
An#bo# 1arti!i1ating in t," biing at a 1ubli! au!tion is
un"rstoo to ,a$" sub*itt" ,i*s"l+ to all t," !onitions s"t
+ort, at su!, sal". (L"oEuin!o $. Postal Sa$ings 7an<% @C P,il.
CC6).
L"oEuin!o $. Postal Sa$ings 7an<
@C P,il. CC6
FACTS' T," 7oar o+ Dir"!tors o+ t," Postal Sa$ings 7an<
aut,oriH" t," sal" at 1ubli! au!tion o+ a 1ar!"l o+ lan it
o3n" at Na$otas% 5iHal. T," 7oar "41r"ssl# r"s"r$" -t,"
rig,t to r"j"!t an# an all bis./ T," au!tion noti!" also
!ontain" su!, r"s"r$ation. L"oEuin!o o++"r" t," ,ig,"st bi
(P6C%???) but t,is 3as r"j"!t" b# t," 7oar. L"oEuin!o t,"n
su" to !o*1"l t," 7an< to "4"!ut" an "li$"r t," "" o+ sal"%
3it, a*ag"s.
HELD' T," a!tion 3ill not 1ros1"r% +or t,"r" r"all# 3as
no sal". 7# 1arti!i1ating in t," au!tion an o++"ring ,is bi%
Art. 1966
," $oluntaril# sub*itt" to t," t"r*s an !onitions o+ t,"
au!tion sal" announ!" in t," noti!"% an ," t,"r"+or" !l"arl#
a!<no3l"g" t," rig,t o+ t," 7oar to r"j"!t an# an all bis.
Art. 1966
T," o3n"r o+ 1ro1"rt# o++"r" +or sal" at a 1ubli! or 1ri$at"
au!tion ,as t," rig,t to 1r"s!rib" t," *ann"r% !onitions% an
t"r*s o+ su!, sal". H" *a# "$"n 1ro$i" t,at all o+ t," 1ur!,as"
1ri!" s,all b" 1ai at t," ti*" o+ sal"% or an# 1ortion t,"r"o+% or
t,at ti*" 3ill b" gi$"n +or t," 1a#*"nt. (7losso* $. &il3au<""
an C,i!ago 5ailroa Co.% 9 Ialla!" ;.S. 1A6). T," !onitions
ar" bining u1on t," 1ur!,as"r% 3,"t,"r ," <n"3 t,"* or not.
(5) Probl"*
In an a$"rtis"*"nt +or bi"rs% it 3as stat" t,at t,"
a3ar s,oul b" gi$"n not to t," -lo3"st bi"r%/ not to t,"
-lo3"st r"s1onsibl" bi"r%/ but to t," -lo3"st an b"st bi"r./
Distinguis, t," t"r*s us".
ANS.' T," -lo3"st bi"r/ is ," 3,o o++"rs t," lo3"st 1ri!"
(as in t," !as" o+ a 1ur!,as" b# t," bi"r% or a !ontra!t +or 3or<
b# t," bi"r). T," t"r* -lo3"st r"s1onsibl" bi"r/ in!lu"s not
onl# +inan!ial abilit#% but also t," s<ill an !a1a!it# n"!"ssar#
to !o*1l"t" t," job +or 3,i!, t," bi"r 3oul b"!o*" ans3"r.
abl". T," "41r"ssion -lo3"st an b"st bi"r/ is "$"n 3i"r an
in!lu"s not onl# +inan!ial r"s1onsibilit#% s<ill% an !a1a!it#%
7;T ALSO t," r"1utation o+ t," bi"rs +or "aling +airl# an
,on"stl# 3it, t," go$"rn*"nt% t,"ir *"!,ani!al +a!iliti"s% an
busin"ss organiHation t"ning to s,o3 is1at!, in t,"ir 3or<
an ,ar*onious r"lations 3it, t," go$"rn*"nt% t," *agnitu"
an urg"n!# o+ t," job% t," <in an Eualit# o+ *at"rials to b"
us"% an ot,"r +a!tors as to 3,i!, a bi"r *a# o++"r gr"at"r
a$antag"s t,an anot,"r. (S"" 7orro*"o $. Cit# o+ &anila% 66
P,il. 516).
(6) 7is at E4"!ution Sal"s
In an "4"!ution sal" o+ 1ro1"rti"s atta!," +or t," 1a#*"nt
o+ "bts% it is g"n"rall# un"rstoo t,at t," 1ro1"rt# s,oul b"
gi$"n to t," ,ig,"st bi"r. In t," !as" o+ t," "4"!ution sal"
o+ t," "4trajui!ial +a*il# ,o*" 3,os" $alu" is b"li"$" to b"
*or" t,an t," P9?%??? or P6?%??? +i4" b# la3% t," lo3"st bi
t,at !an b" a!!"1t" is on" t,at "4!""s su!, $alu"s2 t,"r"+or"%
Art. 1966
t," ,ig,"st bi t,"r"on *ust n"!"ssaril# b" ,ig,"r t,an sai
$alu"s. (S"" Art. 6@A% Ci$il Co").
Art. 196C
Art. 196C. T," +ollo3ing !annot gi$" !ons"nt to a !on.
tra!t'
(1) ;n"*an!i1at" *inors2
(6) Insan" or "*"nt" 1"rsons% an "a+.*ut"s 3,o
o not <no3 ,o3 to 3rit".
CO&&ENT'
(1) T3o Class"s o+ Voiabl" Contra!ts
(a) T,os" 3,"r" on" 1art# is in!a1a!itat" to gi$" !ons"nt.
(Art. 196C% Ci$il Co").
(b) T,os" 3,"r" t," !ons"nt o+ on" 1art# ,as b""n $itiat"
(su!, as b# "rror% +rau% $iol"n!"% inti*iation% an unu"
in+lu"n!"). (Arts. 199?.199@% Ci$il Co").
FNOTE' T,"s" !ontra!ts in g"n"ral ar" $ali until
annull"2 ,o3"$"r% annul*"nt !annot 1ros1"r 3,"n t,"#
,a$" b""n rati+i". (S"" Art. 19A?% Ci$il Co").G
(6) P"rsons In!a1a!itat" to Cons"nt
(a) ;n"*an!i1at" *inors.
(b) Insan" or "*"nt" 1"rsons (unl"ss t,"# a!t" uring a
lu!i int"r$al)% run<s an t,os" ,#1notiH". (Art. 196B%
Ci$il Co").
(!) D"a+.*ut"s 3,o o not <no3 ,o3 to 3rit" (an r"a).
(NOTE' I+ t,"# <no3 ,o3 to r"a% but o not <no3
,o3 to 3rit"% it is sub*itt" t,at t," !ontra!t is $ali% +or
t,"n t,"# ar" !a1abl" o+ un"rstaning% an t,"r"+or"
!a1a!itat" to gi$" !ons"nt.)
(9) ;n"*an!i1at" &inors
(a) T,"s" ar" t," *inors 3,o ,a$" not b""n "*an!i1at" b#
*arriag"% attain*"nt o+ t," ag" o+ *ajorit#% or b# 1ar"ntal
or jui!ial aut,orit#. (Art. 19AC% Ci$il Co").
Art. 196C
FNOTE' T," Stat" b# $irtu" o+ t," 1rin!i1l" o+ 1a.
r"ns 1atria" is oblig" to *ini*iH" t," ris< to t,os" 3,o%
Art. 196C
b"!aus" o+ t,"ir *inorit#% ar" as #"t unabl" to ta<" !ar"
o+ t,"*s"l$"s +ull#. (P"o1l" $. 7a#lon% L.95CB5% &a# 6A%
1AC@). T,is 1r"rogati$" o+ 1ar"ns 1atria" is in,"r"nt in t,"
su1r"*" 1o3"r o+ "$"r# stat". (Cabanas $. Pila1il% L.65B@9%
=ul. 65% 1AC@).G
FNOTE' As b"t3""n t," *ot,"r an t," un!l" o+
a *inor% t," +or*"r is 1r"+"rr" to a!t as trust"" o+ t,"
1ro!""s o+ t," insuran!" 1oli!# o+ t," "!"as" +at,"r
in t," abs"n!" o+ "$i"n!" ini!ating t,at sai *ot,"r is
in!o*1"t"nt. (Ibi.).G
(b) In g"n"ral% t," !ontra!ts 3,i!, t,"# "nt"r into ar" VOID.
A7LE unl"ss'
1) ;1on r"a!,ing t," ag" o+ *ajorit#% t,"# rati+# t,"
sa*". (Iban"H $. 5origu"H% @C P,il. 55@).
6) T,"# 3"r" "nt"r" into t,ru a guarian% an t," !ourt
,a$ing jurisi!tion ,a a11ro$" t," sa*". (5oa $.
5oa% 56 P,il. BCA).
9) T,"# 3"r" !ontra!ts o+ li+" insuran!" in +a$or o+ t,"ir
1ar"nts% s1ous"% !,ilr"n% brot,"rs% sist"rs% an 1ro.
$i"% +urt,"r*or"% t,at t," *inor is 1B #"ars ol or
abo$". (S"" A!t No. 9BC?).
@) T,"# 3"r" in t," +or* o+ sa$ings a!!ount in t," Postal
Sa$ings 7an<% 1ro$i" +urt,"r*or" t,at t," *inor
3as at l"ast s"$"n #"ars ol. (S"" S"!. 6??C% 5"$. A*.
Co").
5) T,"# 3"r" !ontra!ts +or n"!"ssiti"s su!, as +oo% but
,"r" t," 1"o1l" 3,o ar" l"gall# boun to gi$" t,"*
su11ort s,oul 1a# t,"r"+or. (S"" Arts. 1@BA% 616@%
Ci$il Co").
6) T,"# 3"r" !ontra!ts 3,"r" t," *inor *isr"1r"s"nt"
,is ag"% an 1r"t"n" to b" on" o+ *ajor ag" an is%
t,us% in ESTOPPEL. (&ar!"lo $. Es1iritu% 9C P,il. 9C2
Sia Suan $. Al!antara% @C O.>. @5612 an H"r*osa $.
Tob"l% L.11B95% O!t. 9?% 1A5B). It is% ,o3"$"r% "ss"ntial
Art. 196C
,"r" t,at t," ot,"r 1art# *ust ,a$" b""n &ISLED.
(7a*balan $. &ara*ba% 51 P,il. @1C).
Art. 196C
(!) &arri" *inors !an $alil# ali"nat" or "n!u*b"r 1"rsonal
1ro1"rt# 3it,out 1ar"ntal !ons"nt% but in t," !as" o+ r"al
1ro1"rt# or i+ t,"# 3ant to borro3 *on"#% t,"# n"" su!,
1ar"ntal !ons"nt% 3it,out 3,i!, t," transa!tion is $oi.
abl". (S"" Art. 9AA% Ci$il Co").
() I+ bot, 1arti"s to a !ontra!t ar" *inors% t," !ontra!t is
un"n+or!"abl". (Art. 1@?9% No. F9G stat"s t,at !ontra!ts
-3,"r" bot, 1arti"s ar" in!a1abl" o+ gi$ing !ons"nt to a
!ontra!t/ ar" ;NENFO5CEA7LE.)
(@) Insan" or D"*"nt" P"rsons (;nl"ss T,"# A!t" During
a Lu!i Int"r$al)
(a) 5"ason' P"o1l" 3,o !ontra!t *ust <no3 3,at t,"# ar"
"nt"ring into.
(b) No 1ro1"r "!laration o+ insanit# b# t," !ourt is r"Euir"%
as long as it is s,o3n t,at at t," ti*" o+ !ontra!ting% t,"
1"rson 3as r"all# insan". (1B &anr"sa 66?).
(!) E$"n i+ a 1"rson ,a alr"a# b""n "!lar" insan"% t,is
o"s not n"!"ssaril# *"an t,at at t," ti*" o+ !ontra!ting%
sai 1"rson 3as still insan". (Du*aguin $. 5"#nols% @B
O.>. 9BBC).
() ;1on t," ot,"r ,an% i+ t," !ontra!t 3as *a" b"+or" t,"
"!laration o+ insanit#% t," 1r"su*1tion is t,at ," 3as
still SANE at t," ti*" o+ !ontra!ting. H" 3,o all"g" t,"
insanit# o+ anot,"r at t," ti*" o+ !ontra!ting is ut#.
boun to 1ro$" t," sa*"% ot,"r3is"% t," latt"r8s !a1a!it#
*ust b" 1r"su*". (Carillo $. =ao!o% @5 P,il. 5AC).
(5) D"a+.&ut"s I,o Do Not Dno3 Ho3 to Irit" (an 5"a)
(a) For*"rl#% a "a+.*ut" 3as 1r"su*" to b" an iiot. (S""
Dir"!tor o+ Lans $. Ab"laro% 5@ P,il. 9BC).
(b) I+ a "a+.*ut" o"s not <no3 ,o3 to 3rit" but ," <no3s
,o3 to r"a% ," s,oul b" !onsi"r" !a1a!itat".
(6) P"rsons S1"!iall# DisEuali+i"
Art. 196C
T,"r" ar" 1"o1l" 3,o ar" SPECIALLK DIS:;ALIFIED in
!"rtain t,ings. H"r"% t," transa!tion is VOID b"!aus" t," rig,t
Art. 196B
its"l+ is r"stri!t"% t,at is% t," rig,t is IITHHELD. (In t," !as"
o+ *"r" l"gal in!a1a!it#% t," transa!tion is VOIDA7LE b"!aus"
t," rig,t its"l+ is not r"stri!t"% but *"r"l# its ENE5CISE% t,at
is% it !an still b" "4"r!is" but un"r !"rtain !onitions% su!, as
3,"n t," 1ar"nts o+ an un"*an!i1at" *inor !ons"nt.)
(C) E4a*1l"s o+ P"rsons S1"!iall# DisEuali+i"
(a) As a g"n"ral rul"% t," ,usban an 3i+" !annot s"ll to "a!,
ot,"r (Art. 1@A?% Ci$il Co")% nor !an t,"# onat" to "a!,
ot,"r. (Art. 19@% Ci$il Co"). Violations ar" !onsi"r"
VOID !ontra!ts% but onl# t,os" 1r"jui!" !an assail t,"
$aliit# o+ t," transa!tion. (Haring $. Co**"r!ial ;nion
Assuran!" Co.% 9B P,il. @6@ an Coo< $. &!&i!<ing% 6C
P,il. 1?).
(b) Insol$"nts b"+or" t,"# ar" is!,arg" !annot% +or "4a*1l"%
*a<" 1a#*"nts. (S"" Insol$"n!# La3% S"!. 6@).
(!) P"rsons isEuali+i" b"!aus" o+ +iu!iar# r"lations,i1% su!,
as t," guarian% 3,o is not allo3" to 1ur!,as" t," 1ro1.
"rt# o+ ,is 3ar2 or jug"s% 3it, r"+"r"n!" to t," 1ro1"rt#
un"r litigation. (Art. 1@A1% Ci$il Co").
() Contra!ts "nt"r" into 3it, non.C,ristians ("4!"1t !on.
tra!ts o+ 1"rsonal s"r$i!" an t," bart"r or sal" o+ 1"rsonal
1ro1"rt#) ar" VOID unl"ss a11ro$" b# t," go$"rnor or ,is
r"1r"s"ntati$". (S"!s. 1@6 an 1@C% A*. Co" o+ &in.
anao an Sulu). 5"ason' To 1r"$"nt t,"ir ignoran!" +ro*
b"ing 1r"#" u1on. (Por<"n $. Kat!o% C? P,il. 161). It is
un"rstoo% ,o3"$"r% t,at t," rul" a11li"s onl# to t,os"
"nt"r" into 3it,in t," t"rritor# !o$"r" b# t," +or*"r
"1art*"nt o+ &inanao an Sulu. (S"" Cit# o+ &anila $.
Nar$asa% L.B5@5% D"!. 6A% 1A552 S"" also &anga#ao $. D"
>uH*an% L.6@CBC% F"b. 66% 1AC@).
Art. 196B. Contra!ts "nt"r" into uring a lu!i
int"r$al ar" $ali. Contra!ts agr"" to in a stat" o+
run<"nn"ss or uring a ,#1noti! s1"ll ar" $oiabl".
Art. 196A
CO&&ENT'
(1) So*" Voiabl" Contra!ts b# 5"ason o+ In!a1a!it#
T," $oiabl" !ontra!ts r"+"rr" to in t,is Arti!l" ar" t,os"
"nt"r" into b#'
(a) Insan" or "*"nt" 1"rsons (unl"ss t,"# a!t" uring a
lu!i int"r$al)2
(b) T,os" in t," stat" o+ run<"nn"ss (3,i!, t"*1oraril# r".
sults in !o*1l"t" loss o+ un"rstaning% an *a# t,"r"+or"
b" "Eui$al"nt to t"*1orar# insanit#). (TS% No$. 6% 1B5B an
TS% A1r. 61% 1A11)2
(!) T,os" "nt"r" into uring a ,#1noti! s1"ll (inu!" b#
rugs% or b# "lib"rat" or unint"ntional ,#1notis*) or
3,il" a 1"rson 3al<s uring ,is sl""1% so*na*bulis*% +or
in t,"s" !as"s% a 1"rson is in!a1abl" o+ int"llig"nt !ons"nt.
(S"" B &anr"sa 66?.661).
(6) Lu!i Int"r$als
E$"n i+ a 1"rson ,as alr"a# b""n jui!iall# "!lar" in.
san"% an is a!tuall# no3 un"r guarians,i1% ," *a# still "nt"r
into a $ali !ontra!t% 1ro$i" t,at it !an b" s,o3n t,at at t,"
ti*" o+ !ontra!ting% ," 3as in a lu!i int"r$al. O+ !ours" ,"r"%
," is alr"a# 1r"su*" insan"% an t,"r"+or" t," sanit# *ust
b" 1ro$". (Du*aguin $. 5"#nols% "t al.% A6 P,il. 66).
(9) Insanit# in So*" T,ings% 7ut Sanit# in Ot,"r T,ings
T,"r" ar" !ountl"ss instan!"s o+ ini$iuals 3,o ar" *"n.
tall# "rang"% an ,a$" obs"ssions an "lusions r"garing
!"rtain subj"!ts an situations an #"t ar" still *"ntall# soun
in ot,"r r"s1"!ts. (Du*aguin $. 5"#nols% "t al.% A6 P,il. 66).
Art. 196A. T," in!a1a!it# "!lar" in Arti!l" 196C is sub.
j"!t to t," *oi+i!ations "t"r*in" b# la3% an is
un"rstoo to b" 3it,out 1r"jui!" to s1"!ial
Art. 196A
isEuali+i!ation "stablis," in t," la3s.
Art. 196A
CO&&ENT'
(1) &oi+i!ations 5" In!a1a!it#
(a) For a is!ussion o+ -s1"!ial isEuali+i!ations/ s"" !o**"nt
Nos. C an B un"r Art. 196C.
(b) 5"garing !ontra!ts "nt"r" into b# non.C,ristians% a1.
1ro$al b# t," o++i!ials !on!"rn" is r"Euir" "$"n i+ 7OTH
1arti"s ar" non.C,ristians% b"!aus" bot, i*1osition an
+rau ar" still 1ossibl" in t,is !as". (&aal"% "t al. $. 5a#a%
"t al.% A6 P,il. 55B).
(6) In!o*1"t"nts ;n"r t," 5ul"s o+ Court
;n"r t," 5ul"s o+ Court% t," +ollo3ing ar" !onsi"r"
in!o*1"t"nts% an *a# b" 1la!" un"r guarians,i1'
(a) t,os" un"r !i$il int"ri!tion
(b) ,os1italiH" l"1"rs
(!) 1roigals (s1"nt,ri+ts)
() "a+ an u*b 3,o ar" unabl" to r"a an 3rit"
(") t,os" o+ unsoun *in "$"n t,oug, t,"# ,a$" lu!i int"r.
$als
(+) t,os" 3,o b# r"ason o+ ag"% is"as"% 3"a< *in% an ot,"r
si*ilar !aus"s% !annot 3it,out outsi" ai% ta<" !ar" o+
t,"*s"l$"s an *anag" t,"ir 1ro1"rt#% b"!o*ing t,"r"b#
an "as# 1r"# +or "!"it an "41loitation. (S"!. 6% 5ul" A6%
5"$is" 5ul"s o+ Court).
(9) Probl"*
I+ a ,os1italiH" l"1"r or a $"r# ol *an ,as not b""n
1la!" un"r guarians,i1% *a# ," still "nt"r into a bining
!ontra!tJ
ANS.' K"s% b"!aus" ," 3oul still b" 1r"su*" !a1a!itat"
to "nt"r into a !ontra!t (alt,oug, !lassi+i" as an -in!o*1"t"nt/).
O+ !ours"% i+ it !an b" s,o3n t,at int"llig"nt !ons"nt 3as abs"nt%
t," !ontra!t !an b" !onsi"r" VOIDA7LE. (S"" Cui% "t al. $.
Cui% "t al.% 1?? P,il. A19).
(NOTE' T,"r" is% t,"r"+or"% a i++"r"n!" b"t3""n an -in.
Art. 196A
!o*1"t"nt/ un"r t," 5ul"s o+ Court% an a 1"rson -3,o !annot
gi$" !ons"nt to a !ontra!t/ un"r t," Ci$il Co".)
Art. 199?
Art. 199?. A !ontra!t 3,"r" !ons"nt is gi$"n t,roug,
*ista<"% $iol"n!"% inti*iation% unu" in+lu"n!"% or +rau is
$oiabl".
CO&&ENT'
(1) Caus"s o+ Vitiat" Cons"nt
Asi" +ro* -in!a1a!it# to gi$" !ons"nt%/ t," +ollo3ing ar"
!aus"s o+ $itiat" !ons"nt' (T,"# ar" also r"+"rr" to as -$i!"s o+
!ons"nt./)
(a) *ista<" (or "rror)
(b) +rau (or "!"it)
(!) $iol"n!"
() inti*iation
(") unu" in+lu"n!"
FNOTE' &ista<" an +rau a++"!t t," INTELLECT (3,i!,
is t," +a!ult# in t," *in o+ *an% t," 1ro1"r obj"!t o+ 3,i!, is
t," T5;TH. T,"# t,us a++"!t CO>NITION.) Cognition *ust b"
int"llig"nt.G
FNOTE' Viol"n!"% inti*iation% an unu" in+lu"n!" a++"!t
t," IILL (3,i!, is t," +a!ult# in t," *in o+ *an% t," 1ro1"r
obj"!t o+ 3,i!, is t," >OOD. T,"# t,us a++"!t VOLITION.) Voli.
tion *ust b" +r"".G
FNOTE' &ista<" an +rau r"sult in "+"!ts o+ t," int"ll"!t2
t," ot,"rs r"sult in "+"!ts o+ t," 3ill.G
(6) Natur" o+ a Voiabl" Contra!t
A $oiabl" !ontra!t is bining an $ali% unl"ss annull"
b# a 1ro1"r a!tion in !ourt. It is% ,o3"$"r% sus!"1tibl" o+ rati+i!a.
tion b"+or" annul*"nt. (Art. 19A?% Ci$il Co"). Annul*"nt *a#
b" ,a "$"n i+ t,"r" b" NO a*ag" to t," !ontra!ting 1arti"s.
(Art. 19A?% 1st 1aragra1,% Ci$il Co").
(9) Cl"ar an Con$in!ing E$i"n!" on t," Vi!" o+ Cons"nt
T,"r" *ust b" !l"ar an !on$in!ing "$i"n!" o+ t," 1r"s.
Art. 199?
"n!" o+ $itiat" !ons"nt. &"r" 1r"1on"ran!" o+ "$i"n!" on t,is
*att"r is not su++i!i"nt. (C"nt"n"ra $. Pali!io% 6A P,il. @C?).
Art. 1991
Art. 1991. In or"r t,at *ista<" *a# in$aliat" !ons"nt% it
s,oul r"+"r to t," substan!" o+ t," t,ing 3,i!, is t,"
obj"!t o+ t," !ontra!t% or to t,os" !onitions 3,i!, ,a$"
1rin!i1all# *o$" on" or bot, 1arti"s to "nt"r into t,"
!ontra!t.
&ista<" as to t," i"ntit# or Euali+i!ations o+ on" o+ t,"
1arti"s 3ill $itiat" !ons"nt onl# 3,"n su!, i"ntit# or Euali.
+i!ations ,a$" b""n t," 1rin!i1al !aus" o+ t," !ontra!t.
A si*1l" *ista<" o+ a!!ount s,all gi$" ris" to its !orr"!.
tion.
CO&&ENT'
(1) O&ista<"8 or OError8 D"+in"
It is a +als" b"li"+ about so*"t,ing.
(6) 5"Euisit"s +or &ista<" to Vitiat" Cons"nt
(a) T," "rror *ust b" substantial r"garing'
1) t," obj"!t o+ t," !ontra!t
6) t," !onitions 3,i!, 1rin!i1all# *o$" or inu!" on"
o+ t," 1arti"s ("rror in Eualit# or in Euantit# 0 "rror
in Eualitat" or in Euantitat").
9) i"ntit# or Euali+i!ations ("rror in 1"rsona")% but onl#
i+ su!, 3as t," 1rin!i1al !aus" o+ t," !ontra!t.
(b) T," "rror *ust b" "4!usabl" (not !aus" b# n"glig"n!"). (!)
T," "rror *ust b" a *ista<" o+ +a!t% an not o+ la3. (Luna
$. Linato!% C@ P,il. 15).
(9) Substantial Error
T," "rror is substantial i+ b"!aus" o+ it% t," 1art# ga$" ,is
!ons"nt. T,"r"+or"% i+ a 1art# 3oul still ,a$" "nt"r" into t,"
!ontra!t "$"n i+ ," ,a <no3n o+ t," "rror% t," "rror is NOT
substantial. (B &anr"sa 666).
(@) Error 5"garing t," Obj"!t o+ t," Contra!t
Art. 1991
E4a*1l"' A 1"rson sign" a !ontra!t o+ sal" t,in<ing it
3as onl# a !ontra!t o+ loan. (Du*asag $. &o"lo% 9@ P,il. 6562
Trans1ort" $. 7"ltran% FC.AG 51 O.>. 1@9@% &ar!,% 1A55G.)
Art. 1991
(5) Error 5"garing t," Conitions T,at Prin!i1all# Inu!"
t," Part# to Ent"r Into t," Contra!t
E4a*1l"' Error in <no3l"g" about t," tru" bounari"s
o+ a 1ar!"l o+ lan o++"r" +or sal". (&ariano $. Linton% @5 P,il.
659).
(NOTE' Error as to 1"rsonal *oti$" o"s not $itiat" !ons"nt.
E4a*1l"' a bo# bu#s an "ngag"*"nt ring in t," +als" b"li"+ t,at
,is girl lo$"s ,i*.)
5ural 7an< o+ Caloo!an $. Court o+ A11"als
L.96116% A1r. 61% 1AB1
FACTS' T,ru all"g" +rau !o**itt" b# a t,ir 1art#
(t," Val"n!ia s1ous"s)% &a4i*a Castro +oun ,"rs"l+ in"bt"
to a 5ural 7an< +or a total "bt o+ P6%??? (P9%???.?? 3as 3,at
s," int"n" to borro32 t," Val"n!ias a" anot,"r P9%???.??
+or t,"*s"l$"s% 3it, Castro signing t," 1ro*issor# not" as !o.
*a<"r). Issu"' For ,o3 *u!, is Castro liabl"J
HELD' Onl# +or P9%???. T," !ontra!t !an b" 1artiall#
annull" inso+ar as Castro is !on!"rn"% not b"!aus" o+ +rau
(n"it,"r 1art# 0 t," 7an< nor Castro ,a !o**itt" +rau)%
but b"!aus" o+ *utual "rror !aus" b# t," +rau attributabl" to
t," Val"n!ias. T," *ortgag" o$"r Castro8s lot is r"u!" inso+ar
as it "4!""s Castro8s 1"rsonal loan.
(6) Error in :ualit#
E4a*1l"s' A 1"rson bu#s a +ountain 1"n t,in<ing it to b"
*a" o+ soli gol 3,"n as a *att"r o+ +a!t% it is *"r"l# gol.
1lat"2 a 1"rson bu#s a CD r"!or t,in<ing it to b" Stat"si"%
but it turns out to b" *"r"l# a lo!al i*itation% a 1irat" on".
(C) Error in :uantit#
E4a*1l"' A 1"rson "siring to bu# lan !onsisting o+ 1??
,"!tar"s is!o$"rs t,at t," lan ,as onl# 6? ,"!tar"s. (S"" Asian
$. =alanoni% @5 P,il. 6A6).
FNOTE' A si*1l" *ista<" as to a!!ount% !aus" +or "4a*1l"
Art. 1991
b# 3rong arit,*"ti!al !o*1utation% 3oul orinaril# gi$" ris"
*"r"l# to !orr"!tion% an not annul*"nt o+ t," !ontra!t.
Art. 1991
E4a*1l"'
I+ A boug,t 1? not"boo<s at P5.6? "a!,% an *ista<"nl#%
t," !ontra!t s,o3" a total $alu" o+ P55 inst"a o+ P56% t,is is
*"r"l# an "rror in !o*1utation% an "rror in a!!ount% an 3ill
t,"r"+or" r"Euir" onl# !orr"!tion. (B &anr"sa 66A.6C?). 7ut "$"n
,"r"% ,a t," s"ll"r sol t," not"boo<s onl# b"!aus" ," t,oug,t
," 3oul g"t P55% an a*ount ," n""" bal# (an 3oul not
,a$" sol ,a a l"ss"r 1ri!" b""n o++"r")% t,is 3oul b" not a
*"r" "rror o+ a!!ount% but trul# a substantial "rror in Euantit#.G
FNot"% t,"r"+or"% t," i++"r"n!" b"t3""n "rror in Euantit#
an "rror in a!!ount. (H" 3,o all"g"s *ust 1ro$" t," sa*").
(>uti"rr"H Hnos. $. Oria Hnos.% 9? P,il. @A1).G
(B) Error in I"ntit# or in :uali+i!ations
T,is $itiat"s !ons"nt onl# 3,"n su!, i"ntit# or Euali+i!a.
tions ,a$" b""n t," 1rin!i1al !aus" o+ t," !ontra!t.
E4a*1l"s' Hiring o+ a 1r".bar r"$i"3"r% a 1arti!ular sing"r
+or a !on!"rt% !ontra!ts in$ol$ing 1artn"rs,i1% ag"n!#% "1osit
0 sin!" t,"s" r"Euir" trust an !on+i"n!". (S"" B &anr"sa 66C.
66A).
(NOTE' I+ an# 1aint"r or sing"r 3oul o% "rror as to t,"
i"ntit# o+ t," 1arti!ular 1aint"r or sing"r ,ir" 3oul b" i*.
*at"rial.)
(A) E4!usabl" Error
T," "rror o"s not $itiat" !ons"nt i+ t," 1art# in "rror
3as n"glig"nt% or i+ ,a$ing ,a an o11ortunit# to as!"rtain t,"
trut,% ," i not o so. (S""% ,o3"$"r% Art. 1996% Ci$il Co").
&or"o$"r% t,"r" is no *ista<" i+ t," 1art# all"ging it <n"3 t,"
oubt% !onting"n!# or ris< a++"!ting t," obj"!t o+ t," !ontra!t.
(Art. 1999% Ci$il Co"). Error as to ,o3 *u!, 1ro+it a 1"rson
!an *a<" b"!aus" o+ t," transa!tion% !annot annul t," !ontra!t
b"!aus" in *an# !as"s% t,is is *"r"l# s1"!ulati$". (S"" TS% =an.
15% 1A1?).
(1?) Error o+ Fa!t% Not o+ La3
T," "rror *ust b" on" o+ +a!t% not o+ la3. T,is is b"!aus"
Art. 1991
ignoran!" o+ t," la3 o"s not "4!us" an#on" +ro* !o*1lian!"
t,"r"3it,. (Art. 9% Ci$il Co" an B &anr"sa 6@6). T,us% i+ on"
Art. 1996
s"lls 1ro1"rt# in t," +als" b"li"+ t,at !onjugal 1ro1"rt# !oul
b" 1artition" uring a *arriag"% t," sal" !annot b" annull".
(Luna% "t al. $. Linato!% C@ P,il. 15). Error o+ la3% ,o3"$"r% on a
oubt+ul or i++i!ult Eu"stion !an "4ist tog"t,"r 3it, goo +ait,.
(Art. 566% Ci$il Co" an Dasilag $. 5origu"H% 6A P,il. 61C).
FNOTE' -&utual "rror as to t," l"gal "++"!t o+ an agr""*"nt
3,"n t," r"al 1ur1os" o+ t," 1arti"s is +rustrat"% *a# $itiat"
!ons"nt./ (Art. 199@% Ci$il Co"). -L"gal "++"!t/ ,"r" r"+"rs to t,"
rig,ts o+ t," 1arti"s as stat" in t," l"gal 1ro$isions.G
Art. 1996. I,"n on" o+ t," 1arti"s is unabl" to r"a% or
i+ t," !ontra!t is in a languag" not un"rstoo b# ,i*% an
*ista<" or +rau is all"g"% t," 1"rson "n+or!ing t,"
!ontra!t *ust s,o3 t,at t," t"r*s t,"r"o+ ,a$" b""n +ull#
"41lain" to t," +or*"r.
CO&&ENT'
(1) 5ul" in Cas" o+ Inabilit# to 5"a or ;n"rstan
5"ason +or t," Arti!l"'
-T,is rul" is "s1"!iall# n"!"ssar# in t," P,ili11in"s 3,"r"
un+ortunat"l# t,"r" is still a +airl# larg" nu*b"r o+ illit"rat"s%
an 3,"r" o!u*"nts ar" usuall# ra3n u1 in Englis, or S1an.
is,./ (5"1ort o+ t," Co" Co**ission% 1. 196).
(6) Pr"su*1tion
T," natural 1r"su*1tion% o+ !ours"% is t,at on" al3a#s
a!ts 3it, u" !ar" an signs 3it, +ull <no3l"g" o+ all t,"
!ont"nts o+ a o!u*"nt. An t,is is tru" "$"n i+ t," *in o+ t,"
1art# signing 3as !on+us" at t," ti*" o+ signing% as long as ,"
still <n"3 3,at ," 3as oing. H"% t,us% !annot r"1uiat" t,"
transa!tion. (Aba#a $. Stanar Va!uu* Oil Co.% L.A511% Aug.
9?% 1A5C2 =a$i"r $. =a$i"r% C P,il. 6612 an Tan Tua $. =# Liao
Sontua% 56 P,il. C?).
Art. 1996
T," 1r"su*1tion r"+"rr" to !annot a11l# in t," !as"s
!ont"*1lat" un"r t,is Arti!l"'
Art. 1996
(a) 3,"n on" o+ t," 1arti"s is unabl" to r"a (in!luing a blin
1"rson) (Trans1ort" $. 7"ltran% FC.A.G 51 O.>. 1@9@)2
(b) or i+ t," !ontra!t is in a languag" not un"rstoo b# on" o+
t," 1arti"s. (Art. 1996% Ci$il Co").
In 7OTH !as"s% -t," 1"rson "n+or!ing t," !ontra!t
*ust s,o3 t,at t," t"r*s t,"r"o+ ,a$" b""n +ull# "41lain"
to t," +or*"r./ (Art. 1996% Ci$il Co" an A#ola $. Val.
"rra*a Lu*b"r &anu+a!tur"rs Co.% In!.% FC.A.G @A O.>.
AB?).
(@) Cas"s
A#ola $. Val"rra*a Lu*b"r
&anu+a!tur"rs Co.% In!. (C.A.)
@A O.>. AB?
FACTS' A#ola% an illit"rat" 1"rson% sign" a o!u*"nt
in t," b"li"+ t,at it 3as a r"!"i1t o+ a 1art 1a#*"nt% 3,"n as
a *att"r o+ +a!t it 3as so*"t,ing "ls". T," o11osit" 1art# (t,"
Lu*b"r Co*1an#) !ont"n" ,o3"$"r% t,at 3,at 3as i*1ortant
is t,at A#ola ,a sign" it% an t,"r"+or" t," sa*" is bining on
,i*. It s,oul b" not" t,at in A#ola8s 1l"aings ," "41r"ssl#
sai ," ,a sign" t," $ou!,"r -3it,out <no3ing its !ont"nts
3,i!, ,a not b""n "41lain" to ,i*./ Issu"' I,o ,a t," bur"n
o+ 1ro$ing t,at A#ola ,a +ull# un"rstoo t," !ont"nts o+ t,"
o!u*"ntJ
HELD' T," Lu*b"r Co*1an# ,a t," bur"n o+ 1ro$.
ing t,at A#ola ,a +ull# un"rstoo t," o!u*"nt8s !ont"nts%
b"!aus" ,is 1l"a 3as "Eui$al"nt to an all"gation o+ *ista<" or
+rau. Ha$ing +ail" to o so% t," 1r"su*1tion o+ *ista<" (i+ not
+rau) stans unr"butt" an !ontrolling.
Trans1ort" $. 7"ltran
(C.A.) 51 O.>. 1@9@
FACTS' 7oni+i!ia Trans1ort"% blin sin!" 1A9?% an alr"a#
C? #"ars% a++i4" on Aug. 69% 1A@5 ,"r t,u*b*ar< to a "" o+
sal" b"!aus" s," t,oug,t it 3as a "" o+ *ortgag". T," sal"
Art. 1996
3as in +a$or o+ ,"r son.in.la3 an 3as on" t,ru a 1ubli! instru.
*"nt. Issu"' &a# t," "" o+ sal" b" annull"J
Arts. 1999.199@
HELD' K"s% t," "" o+ sal" !an b" annull" b"!aus" o+
+ailur" on t," 1art o+ t," son.in.la3 to 1ro$" t,at ," i not
ta<" a$antag" o+ ,is +a$or" situation as a son.in.la3 to "n.
ri!, ,i*s"l+ at t," "41"ns" o+ an un+ortunat" r"lati$". T," +a!t
t,at t," "" 3as in a 1ubli! instru*"nt is o+ no !ons"Eu"n!"%
+or "$"n ,"r"% !ourts ar" gi$"n a 3i" latitu" in "t"r*ining
3,at a!tuall# o!!urr"% !onsi"ring t," ag"% 1,#si!al in+ir*it#%
int"llig"n!"% an r"lations,i1 o+ t," 1arti"s.
Art. 1999. T,"r" is no *ista<" i+ t," 1art# all"ging it
<n"3 t," oubt% !onting"n!# or ris< a++"!ting t," obj"!t o+
t," !ontra!t.
CO&&ENT'
(1) Dno3l"g" o+ Doubt or 5is< Do"s Not Vitiat" Cons"nt
It is to b" assu*" ,"r" t,at t," 1art# 3as 3illing to ta<"
t," ris<. T,is is 1arti!ularl# tru" in !ontra!ts 3,i!, ar" "$i"ntl#
al"ator# in natur".
(6) E4a*1l"
A boug,t a +ountain 1"n 3,i!, 3as r"1r"s"nt" as 1ossibl#
b"ing abl" to 3rit" "$"n un"r3at"r. A also <n"3 t,at t," 1"n8s
abilit# 3as Eu"stionabl"% an #"t A boug,t sai 1"n. H"r"% A
!annot all"g" *ista<" sin!" ," <n"3 b"+or",an o+ t," oubt%
ris<% or !onting"n!# a++"!ting t," obj"!t o+ t," !ontra!t.
(9) &ista<" Caus" b# In"4!usabl" N"glig"n!"
I+ *ista<" is !aus" b# in"4!usabl" n"glig"n!"% t," !ontra!t
!annot b" annull".
Art. 199@. &utual "rror as to t," l"gal "++"!t o+ an
agr"". *"nt 3,"n t," r"al 1ur1os" o+ t," 1arti"s is
+rustrat"% *a# $itiat" !ons"nt.
CO&&ENT'
(1) 5"Euisit"s +or &utual Error to Vitiat" Cons"nt
Arts. 1999.199@
(a) T,"r" *ust b" *utual "rror.
Art. 1995
(b) T," "rror *ust r"+"r to t," l"gal "++"!t o+ t," agr""*"nt.
(!) T," r"al 1ur1os" o+ t," 1arti"s is +rustrat".
E4a*1l"' A an 7 "nt"r" into a !ontra!t% 3,i!, t,"# in.
t"n" s,oul r"sult in a !o.o3n"rs,i1 b"t3""n t,"*% but 3,i!,
turn" out lat"r to b" a *ortgag"% as a r"sult o+ t,"ir *utual
"rror as to t," l"gal "++"!t o+ t," agr""*"nt. H"r" t," !ontra!t
is $oiabl".
-&ista<" o+ la3 o"s not g"n"rall# $itiat" !ons"nt% 7;T
3,"n t,"r" is a *ista<" on a oubt+ul Eu"stion o+ la3% or on t,"
!onstru!tion or a11li!ation o+ la3% t,is is analogous to a *ista<"
o+ +a!t% an t," *a4i* Oignorantia l"gis n"*in"* "4!usat8 s,oul
,a$" no 1ro1"r a11li!ation. I,"n "$"n t," ,ig,"st !ourts ar"
so*"ti*"s i$i" u1on i++i!ult l"gal Eu"stions% an 3,"n
on".,al+ o+ t," la3#"rs in all !ontro$"rsi"s on a l"gal Eu"stion
ar" 3rong% 3,# s,oul a la#*an b" ,"l a!!ountabl" +or ,is
,on"st *ista<" on a oubt+ul l"gal issu"J/ (5"1ort o+ t," Co"
Co**ission% 1. 196).
(9) Distinguis," +ro* t," 5"*"# o+ 5"+or*ation
T,is Arti!l" *ust b" istinguis," +ro* Art. 1961 3,"r"
t," r"*"# is r"+or*ation% not annul*"nt. T,us% Art. 1961 o+
t," Ci$il Co" r"as' -I,"n a *utual *ista<" o+ t," 1arti"s
!aus"s t," +ailur" o+ t," instru*"nt to is!los" t,"ir r"al agr"".
*"nt% sai instru*"nt *a# b" r"+or*"./
(NOTE' ;n"r Art. 1961% t," r"al agr""*"nt is not is.
!los"2 in Art. 199@% t," "rror is as to t," l"gal "++"!t o+ t,"
agr""*"nt. E4a*1l"' A an 7 agr"" on a sal"% but as 3ritt"n%
t," o!u*"nt s,o3s a *ortgag". H"r"% t,"r" 3as a *""ting o+
t," *ins% but t," instru*"nt o"s not s,o3 t," r"al int"ntion.
H"n!"% t," r"*"# is r"+or*ation. I+ on t," ot,"r ,an% bot,
agr"" on a sal"% an as 3ritt"n% t," o!u*"nt is on" o+ sal"% but
bot, 1arti"s t,oug,t "rron"ousl# t,at it ,a t," sa*" "++"!ts as
a *ortgag"% t,"r" is no *""ting o+ t," *ins% an t," r"*"#
is annul*"nt.)
Art. 1995
Art. 1995. T,"r" is $iol"n!" 3,"n in or"r to 3r"st !on.
s"nt% s"rious or irr"sistibl" +or!" is "*1lo#".
Art. 1995
T,"r" is inti*iation 3,"n on" o+ t," !ontra!ting 1ar.
ti"s is !o*1"ll" b# a r"asonabl" an 3"ll.groun" +"ar o+
an i**in"nt an gra$" "$il u1on ,is 1"rson or 1ro1"rt#% or
u1on t," 1"rson or 1ro1"rt# o+ ,is s1ous"% "s!"nants or
as!"nants% to gi$" ,is !ons"nt.
To "t"r*in" t," "gr"" o+ t," inti*iation% t," ag"% s"4
an !onition o+ t," 1"rson s,all b" born" in *in.
A t,r"at to "n+or!" on"8s !lai* t,roug, !o*1"t"nt au.
t,orit#% i+ t," !lai* is just or l"gal% o"s not $itiat" !ons"nt.
CO&&ENT'
(1) Viol"n!" an Inti*iation
Viol"n!" r"+"rs to 1,#si!al !o"r!ion2 inti*iation% to *oral
!o"r!ion.
E4a*1l"' I+ a 1"rson signs a !ontra!t onl# b"!aus" a gun
is 1oint" at ,i*% t,is is inti*iation b"!aus" ," is a+rai ,"
3oul b" <ill". 7ut i+ ," signs b"!aus" ,is l"+t ,an is b"ing
t3ist" 1ain+ull#% t,is is $iol"n!" or +or!".
(6) 5"Euisit"s +or Viol"n!" to Vitiat" Cons"nt
(a) E*1lo#*"nt o+ s"rious or irr"sistibl" +or!"2
(b) It *ust ,a$" b""n t," r"ason 3,# t," !ontra!t 3as "nt"r"
into.
(9) 5"Euisit"s +or Inti*iation to Vitiat" Cons"nt
(a) r"asonabl" an 3"ll.groun" +"ar
(b) o+ an i**in"nt an gra$" "$il
(!) u1on ,is 1"rson% 1ro1"rt#% or u1on t," 1"rson or 1ro1"rt#
o+ ,is s1ous"% "s!"nants% or as!"nants
() it *ust ,a$" b""n t," r"ason 3,# t," !ontra!t 3as "nt"r"
into
(") t," t,r"at *ust b" o+ an unjust a!t% an a!tionabl" 3rong.
(T,"r"+or"% a t,r"at to "n+or!" on"8s !lai* t,ru !o*1"t"nt
aut,orit#% i+ t," !lai* is just or l"gal% o"s not $itiat" !on.
Art. 1995
s"nt.) (Art. 1995% last 1aragra1,). A t,r"at to 1ros"!ut" is
not !onsi"r" as inti*iation. (P. P. Agustinos $. D"l 5"#%
Art. 1995
56 P,il. 5162 Sotto $. &ariano% FC.A.G 96 O.>. 1?56.) 7ut%
o+ !ours"% an agr""*"nt not to 1ros"!ut" on a!!ount o+ a
!ri*" is against 1ubli! 1oli!#. (Arro#o $. 7"r3in% 96 P,il.
9B6 an Hibb"r $. 5,o"% 96 P,il. @C6).
(@) 5"asonabl" an I"ll.>roun" F"ar
(a) I,"t,"r t," +"ar is r"asonabl" an 3"ll.groun" or not
"1"ns u1on *an# !ir!u*stan!"s% in!luing t," ag"%
!onition% an s"4 o+ t," 1"rson !on!"rn". (Art. 1995% 1ar.
9).
(b) A t,r"at uring t," =a1an"s" o!!u1ation to "li$"r t," 1"r.
son to t," =a1an"s" *ilitar# aut,oriti"s 3oul !onstitut"
inti*iation (5origu"H $. D" L"on% @C O.>. 66A6)% but not
t," *"r" +"ar t,at on" *a# b" so r"1ort"% in t," abs"n!"
o+ an a!tual t,r"at. H"n!"% t," !ourts ,a$" ,"l t,at t,"r"
3as !oll"!ti$" -ur"ss/ uring t," =a1an"s" o!!u1ation%
in t," abs"n!" o+ an a!tual t,r"at. (F"rnan"H% "t al. $.
7ro3n"ll% 51 O.>. C19 an P,il. Trust Co. $. Luis Aran"ta%
B9 P,il. 196). &"r" <no3l"g" t,at s"$"r" 1"nalti"s *ig,t
b" i*1os" is not "noug,. (Val"ab"lla $. &arEu"H% FC.A.G
@B O.>. C1A). In""% in or"r to !aus" t," nulli+i!ation o+
!ontra!ts "4"!ut" uring t," =a1an"s" o!!u1ation% t,"
ur"ss or inti*iation *ust b" *or" t,an t," -g"n"ral
+""ling o+ +"ar/ on t," 1art o+ t," o!!u1i" o$"r t," s,o3
o+ *ig,t b# t," o!!u1ant. (La!son% "t al. $. >ranaa% "t al.%
L.16?95% &ar. 6A% 1A61% !iting P"o1l" $. :uill#o% L.6919%
=an. 1?% 1A51 an ot,"r !as"s).
(!) T," +"ar is r"asonabl" an 3"ll.groun" 3,"n t,os" 3,o
t,r"at"n ,a$" 1o3"r% an 3,"n *altr"at*"nt ,as a!!o*.
1ani" t," t,r"at. (D"r"Euito $. Dolutan% FC.A.G @5 O.>.
1951).
() T," +"ar is not 3"ll.groun" 3,"n t," 1"rson 3,o t,r"at.
"n" +or instan!" to initiat" "41ro1riation 1ro!""ings
b# t," go$"rn*"nt% i+ t," ot,"r 1art# 3oul not !ons"nt%
is in no 1osition to a!!o*1lis, t," sa*"% !onsi"ring ,is
1osition as *"r" +or"*an in t," 7ur"au o+ Publi! Ior<s.
(Alar!on $. Dasilag% FC.A.G @? O.>. FSu1. 11G% 1. 6?9). T,"
sa*" t,ing *a# b" sai o+ a $agu" t,r"at to 1r"$"nt an
Art. 1995
ali"n +ro* "ngaging in busin"ss in t," P,ili11in"s. (7"rg
$. Nat. Cit# 7an<% L.A916% O!t. 91% 1A5C).
Art. 1995
(5) I**in"nt an >ra$" E$il
T,is again "1"ns on t," !ir!u*stan!"s% 1arti!ularl#% t,"
ag"% s"4% or !onition o+ t," 1"rson t,r"at"n". T,us% "41osur"
o+ a 1ubli! o++i!ial8s nig,tl# inis!r"tions or i**oraliti"s is *or"
s"rious to ,i* t,an t," t,r"at is to a !o**on a# labor"r.
(6) Natur" o+ t," T,r"at on P"rson an Pro1"rt# o+ t," P"r.
sons Enu*"rat"
(a) It is b"li"$" t,at t,r"at to ,onor% !,astit#% an ignit#
*a# b" !lassi+i" un"r t,r"at to -1"rson./
(b) :u"r#' Is t," "nu*"ration o+ 1"rsons "4!lusi$" in t,at a
t,r"at% +or "4a*1l"% to t," li+" o+ on"8s +ian!""% is not !onsi.
"r" inti*iationJ It is sub*itt" t,at t," 1ro$ision *ust
b" lib"rall# int"r1r"t" +or in"" !ons"nt ,"r" is $itiat"
just t," sa*".
(C) 5"ason +or Ent"ring Into t," Contra!t
I+ t," 1"rson !on!"rn" 3oul ,a$" "nt"r" into t," !on.
tra!t "$"n 3it,out t," 1r"s"n!" o+ inti*iation% it is !l"ar t,at
t," !ontra!t s,oul b" !onsi"r" $ali% +or t," !ons"nt !"rtainl#
!annot b" !onsi"r" $itiat".
(B) T,r"at o+ an ;njust A!t or an A!tionabl" Irong
(a) I+ a *an *arri"s a girl 3,o t,r"at"n" to r"1ort ,i* to
t," Courts +or i**oralit#% an t,us 1r"$"nt ,is a*ission
to t," bar% t," *arriag" !annot b" annull" on t," groun
o+ inti*iation b"!aus" ,"r" t," girl ,a t," l"gal rig,t
to o 3,at s," t,r"at"n". (5uiH $. Ati"nHa% O.>. Aug. 9?%
1A@1% 1. 1A?9).
(b) A t,r"at to 1ros"!ut" unl"ss t," "btor signs a !ontra!t is
not inti*iation. (Sotto $. &ariano% FC.A.G 96 O.>. 1?56).
(!) I+ a "btor !ons"nts to 1a# un"r a t,r"at o+ r"!ours" to t,"
!ourts% t," "41"ns"s o+ litigation% ," !annot *aintain t,at
,is !ons"nt 3as $itiat"2 7;T it 3ill b" ot,"r3is" i+% 1ass.
ing b"#on t," li*its o+ ,is rig,ts% a !r"itor ,as "4a!t"
Art. 1995
+ro* a "btor 3it, t,"s" sa*" l"gal t,r"ats% a no$ation o+
t," !ontra!t or a !on+"ssion o+ a larg"r in"bt"n"ss. (=al.
Art. 1995
bu"na $. L""s*a% B P,il. 6?1% !iting Aa*s $. Ir$ing N.
7an<% 116 N.K. 6?6% 3,i!, ,ols t,at t," t,r"at o+ l"gal
1ros"!ution o+ a ,usban a*ounts to inti*iation o+ ,is
3i+" 3,o is !onstrain" t,"r"b# to b"!o*" ,is sur"t#.)
FNOTE' I+ ,o3"$"r a 3i+" o"s 3,at s," o"s% not
b"!aus" o+ +"ar% but b"!aus" o+ !o**on s"ns"% +air 1la#%
an a s"ns" o+ justi!"% an u1on t," a$i!" o+ !o*1"t"nt
!ouns"l% t," !ontra!t is $ali "$"n i+ it 3as "nt"r" into
r"lu!tantl#. (&artin"H $. Hong<ong M S,ang,ai 7an<%
15 P,il. 6592 s"" also Ta1is $. Car*an an Els"r% 6? P,il.
A56).G
() T," rig,t to "n+or!" on"8s !lai* t,ru !o*1"t"nt aut,orit#
*ust not b# its"l+ !onstitut" an unla3+ul a!t. E4a*1l"' A
3itn"ss to a !ri*" t,r"at"ns to r"1ort t," !ri*inal to t,"
1oli!" unl"ss sai !ri*inal gi$"s *on"# to ,i*. T,is is a
!l"ar !as" o+ bla!<*ail.
(A) Cas"s
Taba!al"ra $. Coll"!tor
L.A?C1% =an. 91% 1A5C
FACTS' Taba!al"ra an Co. "nt"r" into a !ontra!t o+ guar.
ant#% all"g"l# b"!aus" t," !usto*s in$"stigator t,r"at"n" to
1r"$"nt t," sailing o+ its $"ss"l unl"ss t," s1"!i+i! ta4"s an ot,"r
!,arg"s on t," i*1orts 3"r" +irst 1ai. A+t"r t," s,i1 sail"% t,"
Co*1an#% 1ursuant to t," guarant#% *a" 1a#*"nt.
Issu"' Ias t," !ontra!t $aliJ
HELD' >ranting t,at t," t,r"at 3as *a"% still it 3as
a justi+i" an l"gal t,r"at. &or"o$"r% it s,oul b" not" t,at
3,"n t," s,i1 ,a sail"% t," ur"ss no long"r "4ist" an #"t
1a#*"nt 3as still *a". T,is "$i"ntl# is a $ali rati+i!ation o+
t," 1ro*is".
7"rg $. National Cit# 7an<
L.A916% O!t. 91% 1A5C
FACTS' 7"rg sign" a !o*1ro*is" agr""*"nt 3it, t,"
Art. 1995
National Cit# 7an< b"!aus" t," ban< ,a t,r"at"n" to bring
an a!tion against ,i* an ,is brot,"r +or non.1a#*"nt% an to
Art. 1995
r"+us" ,i* an# +urt,"r !r"it +a!iliti"s. Issu"' Is t," agr""*"nt
$aliJ
HELD' K"s% b"!aus" t," t,r"at o+ !ourt a!tion 3as 1ro1"r
3it,in t," r"al* o+ la3 as a *"ans to "n+or!" !oll"!tion. T,"
t,r"at to !ut o++ !r"it is also 1ro1"r b"!aus" t," ban< *"r"l#
3ants to 1rot"!t its in$"st*"nt. T," !ourt Euot" Iilliston on
Contra!ts% Vol. 5% 11. @5??.@5?6' -On" "l"*"nt o+ t," "arl# la3
o+ ur"ss !ontinu" to "4ist% ,o3"$"r its bounari"s *a# b"
ot,"r3is" "4t"n". T," 1r"ssur" *ust b" 3rong+ul% an not
all 1r"ssur" is 3rong+ul. T," la3 1ro$i"s !"rtain *"ans +or
t," "n+or!"*"nt o+ t,"ir !lai*s b# !r"itors. It is not ur"ss to
t,r"at"n to bring a !i$il a!tion an to r"sort to r"*"i"s gi$"n
b# t," !ontra!t is not su!, ur"ss as to justi+# r"s!ission o+ a
transa!tion inu!" t,"r"b#% "$"n t,oug, t,"r" is no l"gal rig,t
to "n+or!" t," !lai*% 1ro$i" t," t,r"at is *a" in goo +ait,2
t,at is% in t," b"li"+ t,at a 1ossibl" !aus" o+ a!tion "4ists. 7ut i+
t," t,r"at is *a" 3it, t," !ons!iousn"ss t,at t,"r" is no r"al
rig,t o+ a!tion% an t," 1ur1os" o+ !o"r!ion% a 1a#*"nt or !on.
tra!t inu!" t,"r"b# is $oiabl". In t," +or*"r !as"% it *a# b"
sai t,at t," t,r"at"n" a!tion is rig,t+ul2 in t," latt"r !as"% it
is not./
(1?) 5"$"r"ntial F"ar
I+ a !ontra!t is sign" *"r"l# b"!aus" o+ -+"ar o+ is1l"asing
1"rsons to 3,o* ob"i"n!" an r"s1"!t ar" u"%/ t," !ontra!t
is still $ali% +or b# its"l+ r"$"r"ntial +"ar is not 3rong.
Sabal$aro $. Erlang"r M >aling"r% In!.
6@ P,il. 5BB
FACTS' Sabal$aro sign" a !ontra!t all"g"l# b"!aus" ,"
3as a+rai ," 3oul b" is*iss" b# ,is "*1lo#"r% s,oul ,"
r"+us" to sign. Ias t,"r" inti*iation i+ t," t,r"at o+ is*issal
is not 1ro$"J
HELD' Sin!" t," t,r"at o+ is*issal 3as not 1ro$"% it
+ollo3s t,at t," +"ar 3as un+oun"2 an i+ ," 3"r" to all"g"
t,at ," +"ar" in!urring t," is1l"asur" o+ ,is "*1lo#"rs% still
Art. 1995
r"$"r"ntial +"ar o"s not b# its"l+ s"r$" as a groun +or t," an.
nul*"nt o+ a !ontra!t.
Arts. 1996.199C
FNOTE' T," sa*" t,ing *a# b" sai o+ r"$"r"ntial +"ar in
a !li"nt (Turn"r $. Casabar% 65 P,il. @A?)% in t," abs"n!" o+ an
a!tual t,r"at.G
Art. 1996. Viol"n!" or inti*iation s,all annul t,"
obliga. tion% alt,oug, it *a# ,a$" b""n "*1lo#" b# a t,ir
1"rson 3,o i not ta<" 1art in t," !ontra!t.
CO&&ENT'
Viol"n!" or Inti*iation Caus" b# T,ir P"rson
E$"n i+ a t,ir 1"rson "4"r!is" t," $iol"n!" or inti*ia.
tion% t," !ontra!t *a# b" annull". T,is is b"!aus" t," !ons"nt
is still $itiat". (D" Asis $. 7u"n$iaj"% FC.A.G @5 O.>. 91C).
Art. 199C. T,"r" is unu" in+lu"n!" 3,"n a 1"rson ta<"s
i*1ro1"r a$antag" o+ ,is 1o3"r o$"r t," 3ill o+ anot,"r%
"1ri$ing t," latt"r o+ a r"asonabl" +r""o* o+ !,oi!". T,"
+ollo3ing !ir!u*stan!"s s,all b" !onsi"r"' t,"
!on+i"ntial% +a*il#% s1iritual an ot,"r r"lations b"t3""n
t," 1arti"s% or t," +a!t t,at t," 1"rson all"g" to ,a$" b""n
unul# in+lu"n!" 3as su++"ring +ro* *"ntal 3"a<n"ss% or
3as ignorant or in +inan!ial istr"ss.
CO&&ENT'
(1) 5"Euisit"s +or ;nu" In+lu"n!" to Vitiat" Cons"nt
(a) i*1ro1"r a$antag"
(b) 1o3"r o$"r t," 3ill o+ anot,"r (r"+l"!t" +or "4a*1l" in a
su1"rior bargaining 1o3"r). (S"" &artin"H $. Hong<ong
an S,ang,ai 7an<% 15 P,il. 656).
(!) "1ri$ation o+ t," latt"r8s 3ill o+ a r"asonabl" +r""o* o+
!,oi!"
(T," in+lu"n!" "4"rt" *ust b" o+ a <in t,at o$"r1o3.
Arts. 1996.199C
"rs t," *in as to "stro# t," 1art#8s +r"" ag"n!#.) (Coso
$. F"rnan"H D"Ha% @6 P,il. 5A6).
Art. 199C
(6) E4a*1l"s o+ Cir!u*stan!"s to b" Consi"r"
(a) !on+i"ntial% +a*il#% s1iritual% an ot,"r r"lations b"t3""n
t," 1arti"s
(b) *"ntal 3"a<n"ss
(!) ignoran!"
() +inan!ial istr"sss
FNOTE' To $itiat" !ons"nt% t," in+lu"n!" *ust b"
;ND;E. I+ t," in+lu"n!" is D;E or ALLOIA7LE% as 3,"n
!aus" b# soli!itation% i*1ortunit#% argu*"nt an 1"rsua.
sion% sa*" is not 1ro,ibit" b# la3% *orals% or "Euit#. (&ar.
tin"H $. Hong<ong an S,ang,ai 7an<% 15 P,il. 656).G
Cui% "t al. $. Cui% "t al.
1?? P,il. A19
FACTS' An B9.#"ar.ol +at,"r "4"!ut" in +a$or o+ on" o+
,is aug,t"rs% as 3"ll as a son% a "" o+ sal". At t," ti*" o+
t," sal"% ," ,a li$" in t," ,ous" o+ sai aug,t"r uring t,"
1r"!"ing *ont,. (It 3as ,is ,abit to li$" 3it, ,is !,ilr"n at
t,"ir ini$iual ,o*"s% on" at a ti*".) T," son% 3,o 3as t," onl#
la3#"r in t," +a*il#% ,a b""n a11oint" b# ,i* si4 a#s b"+or"
t," sal" as ,is attorn"#.in.+a!t to *anag" !"rtain 1ro1"rti"s o+
,is. It 3as 1ro$" t,at at t," ti*" o+ sal"% ," <n"3 3,at ," 3as
oing% alt,oug, t,r"" #"ars lat"r% ," 3as "!lar" an in!o*1"t"nt
an 1la!" un"r guarians,i1. Issu"' Is t," sal" $aliJ
HELD' ;n"r t," 1r"*is"s% t," sal" is $ali b"!aus" t,"
+a!ts 1ro$" o not s,o3 unu" in+lu"n!" or insiious *a!,ina.
tions nor 3"a<n"ss o+ *in% "s1it" t," "!laration lat"r on o+
subs"Eu"nt in!o*1"t"n!".
(9) ;nu" In+lu"n!" Caus" b# T,ir P"rson
;nu" in+lu"n!" "4"r!is" b# a t,ir 1art# $itiat"s !ons"nt%
just li<" in t," !as" o+ $iol"n!" an inti*iation. (S"" &"*o.
ranu* to t," =oint Congr"ssional Co**itt"" on Coi+i!ation%
&ar. B% 1A51).
(@) Contra!ts o+ A,"sion
Art. 199C
Contra!ts 3,"r" on" 1art# *"r"l# signs !ar"+ull# 1r"1ar"
!ontra!ts b# big !o*1ani"s (a,"sion !ontra!ts or !ontra!ts o+
Art. 199B
a,"r"n!"% li<" insuran!" or trans1ortation !ontra!ts) s,oul b"
stri!tl# int"r1r"t" against t," !o*1an#% an lib"rall# in +a$or
o+ t," ini$iual% b"!aus" t," ini$iual is -usuall# ,"l1l"ss to
bargain +or b"tt"r t"r*s./ (S"" Obs"r$ations on t," N"3 Ci$il
Co" b# =usti!" =.7.L. 5"#"s% La3#"r8s =ournal% =an. 91% 1A51%
1. @A).
Art. 199B. T,"r" is +rau 3,"n% t,roug, insiious 3ors
or *a!,inations o+ on" o+ t," !ontra!ting 1arti"s% t," ot,"r
is inu!" to "nt"r into a !ontra!t 3,i!,% 3it,out t,"*% ,"
3oul not ,a$" agr"" to.
CO&&ENT'
(1) Dins o+ Frau
(a) Frau in t," CELE75ATION o+ t," !ontra!t (t,is is +rau
1ro1"r)'
1) Dolo !ausant" (or !ausal +rau)' H"r"% 3"r" it not +or
t," +rau% t," ot,"r 1art# 3oul not ,a$" !ons"nt".
(T,is is t," +rau r"+"rr" to in Art. 199B% Ci$il Co".)
E++"!t o+ t,is <in o+ +rau' T," !ontra!t is VOID.
A7LE.
6) Dolo in!i"nt" (or in!i"ntal +rau)' H"r"% "$"n 3it,.
out t," +rau t," 1arti"s 3oul ,a$" agr"" just t,"
sa*"% ,"n!" t," +rau 3as onl# in!i"ntal in !ausing
!ons"nt. V"r# li<"l# t,oug,% i++"r"nt t"r*s 3oul
,a$" b""n agr"" u1on. E++"!t o+ t,is <in o+ +rau'
T," !ontra!t is $ali% but t,"r" !an b" an a!tion +or
a*ag"s. (S"" Ioo,ous" $. Halili% A9 P,il. 566).
(b) Frau in t," PE5FO5&ANCE o+ t," obligations sti1ulat"
in t," !ontra!t.
(NOTE' T,is <in o+ +rau 1r"su11os"s t," "4ist"n!"
o+ an alr"a# 1"r+"!t" !ontra!t.)
(E4a*1l"' Alt,oug, r"al $in"gar 3as sol% 3,at 3as
r"all# "li$"r" 3as ilut" $in"gar.)
(6) Dolo Causant"
Art. 199B
T,is is t," us" o+ insiious 3ors an *a!,inations b# on"
o+ t," !ontra!ting 1arti"s to inu!" t," ot,"r 1art# to "nt"r into
Art. 199B
a !ontra!t% 3,i!,% 3it,out t,"*% ," 3oul not ,a$" agr"" to.
(Art. 199B% Ci$il Co").
(9) 5"Euisit"s o+ Dolo Causant"
(a) T," +rau *ust b" *at"rial an s"rious% t,at is% it r"all#
inu!" t," !ons"nt. (Art. 19@@% Ci$il Co").
(b) T," +rau *ust ,a$" b""n "*1lo#" b# onl# on" o+ t,"
!ontra!ting 1arti"s% b"!aus" i+ bot, !o**itt" +rau% t,"
!ontra!t 3oul r"*ain $ali. (S"" Art. 19@@% Ci$il Co").
(!) T,"r" *ust b" a "lib"rat" int"nt to "!"i$" or to inu!"2
t,"r"+or"% *isr"1r"s"ntation in >OOD FAITH is not +rau.
(S"" Art. 19@9% Ci$il Co").
() T," ot,"r 1art# *ust ,a$" r"li" on t," untru" stat"*"nt%
an *ust ,i*s"l+ not b" guilt# o+ n"glig"n!" in as!"rtaining
t," trut,. (S"" Song!o $. S"lln"r% 9C P,il. 65@).
(NOTE' In *arriag" !ontra!ts% olo !ausant" is li*.
it" to t," t,r"" !as"s s1"!i+i" in Art. B6.)
(@) &at"rial an S"rious Frau
E4a*1l"s'
(a) A 3ant" to ,a$" ,i*s"l+ insur"% but b"!aus" ," 3as
a+rai ," !oul not 1ass t," *"i!al "4a*ination% ," ,a
anot,"r 1"rson "4a*in" in ,is 1la!". H"r" t," !ontra!t
o+ insuran!" is $oiabl". (Eguaras $. >r"at East"rn Li+"
Assuran!" Co.% 99 P,il. 669).
(b) Con!"al*"nt b# t," a11li!ant +or insuran!" t,at ," ,a
su++"r" +ro* a nu*b"r o+ ail*"nt% in!luing in!i1i"nt
1ul*onar# tub"r!ulosis% an o+ t," na*" o+ t," ,os1ital
an o+ t," 1,#si!ian 3,o ,a tr"at" ,i*. (&usngi $. I"st
Coast Li+" Insuran!" Co.% 61 P,il. B6@).
(!) &isr"1r"s"ntation b# t," $"nor o+ t," bounari"s o+ ,is
lan b# s,o3ing $aluabl" 1ro1"rti"s not r"all# in!lu" in
,is titl". (>o*"H &arino $. Linton% @5 P,il. 656).
() &isr"1r"s"ntation o+ la3. (>onHal"s $. >onHal"s% Llor"t%
Art. 199B
=an. 1C% 1A66 an 5.>. 1656 L. =. &a# 91% 1A9B% 11. @66.
@6C).
Art. 199B
Tuason $. &arEu"H
@5 P,il. 9B1
FACTS' I,"n an "l"!tri! lig,t 1lant 3as sol% t,"
s"ll"r i not r"$"al t,at ," ,a gi$"n u1 t," +ran!,is". T,"
+ran!,is"% ,o3"$"r% 3as NOT t," "t"r*ining !aus" o+ t,"
1ur!,as" o+ t," 1lant. Issu"' &a# t," sal" b" annull"J
HELD' No% +or t," abs"n!" o+ t," +ran!,is" 3as i**a.
t"rial in t,is 1arti!ular 1ur!,as". &or"o$"r% as!"rtain*"nt
o+ t," status o+ t," +ran!,is" !oul ,a$" b""n ,a b# si*1l#
inEuiring at t," O++i!" o+ t," Publi! S"r$i!" Co**ission.
(") T," *"r" ins"rtion in a "" o+ sal" t,at t," $"nor is
*arri" 3,"n as a *att"r o+ +a!t ," is not% is NOT su+.
+i!i"nt "$i"n!" o+ +rau i+ t,is +a!t 3as not t," inu!ing
+a!tor t,at l" to t," sal". (Por!iun!ula% "t al. $. Aa*os%
L.1151A.6?% A1r. 9?% 1A5B).
(+) I,"n a *arri" *an !on!"als "lib"rat"l# ,is *arriag"
so as to b" abl" to !arnall# ,a$" anot,"r girl an t," latt"r
is +or!" to gi$" u1 ,"r "*1lo#*"nt b"!aus" o+ su!, +a*.
il# troubl"% ," !o**its a!tual +rau u1on ,"r% an s,oul
t,"r"+or" b" liabl" +or a*ag"s. (Sil$a% "t al. $. P"ralta%
L.1911@% No$. 65% 1A6?).
(5) Fault o+ Part# Injur"
AHarraga $. >a#
56 P,il. 5AA
FACTS' A bu#"r o+ lan b"+or" bu#ing 3as allo3" to
in$"stigat" +or ,i*s"l+ t," bounari"s an t," tru" natur" o+
t," lan% "$"n a+t"r t," s"ll"r ,a tol ,i* about it. T," s"ll"r
i not,ing to 1r"$"nt t," in$"stigation +ro* b"ing !o*1l"t".
Lat"r t," bu#"r broug,t an a!tion to annul t," !ontra!t%
all"ging t,at +als" r"1r"s"ntations ,a b""n *a" to ,i*. Issu"'
Iill t," a!tion 1ros1"rJ
HELD' No. T," a!tion 3ill not 1ros1"r inas*u!, as ," (t,"
Art. 199B
bu#"r) ,a t," o11ortunit# to $"ri+# +or ,i*s"l+ t," r"1r"s"nta.
tions o+ t," s"ll"r.
Art. 199B
>r"gorio Aran"ta% In!. $. Tuason " Pat"rno
A1 P,il. 6B6
FACTS' T," $"nor 3as int"llig"nt an 3"ll."u!at". S,"
3as a!!usto*" to ,anling ,"r o3n busin"ss a++airs. S," 3as
abl# assist" b# l"gal !ouns"l. H"r son 3as a l"aing busin"ss.
*an. Issu"' ;n"r t," !ir!u*stan!"s% !an s," orinaril# sa# t,at
s," 3as "!"i$" 3,"n s," "nt"r" into a r"al "stat" "alJ
HELD' No. In a !as" li<" t,is% t," 1art# 3,o all"g"s t,"
+rau *ust 1r"s"nt +ull an !on$in!ing "$i"n!" t,"r"o+.
(a) I+ on" 1art# is abl" to r"a an un"rstan% an #"t a++i4"s
,is signatur" 3it,out r"aing% ,is n"glig"n!" 3ill 1r"$"nt
t," annul*"nt o+ t," !ontra!t. (S"" A#ola $. Val"rra*a
Lu*b"r &anu+a!turing Co.% In!.% FC.A.G @A O.>. AB?).
(b) Su11osing bot, 1arti"s ,a t," o11ortunit# to <no3 t,"
"4a!t natur" o+ t," subj"!t *att"r o+ t," !ontra!t% 3ill an
a!tion +or annul*"nt u" to "!"it 1ros1"rJ
ANS.' No% t," a!tion +or annul*"nt 3ill not li". I,"r" t,"
*"ans o+ <no3l"g" ar" at ,an an "Euall# a$ailabl" to bot,
1arti"s% t," bu#"r 3ill not b" ,"ar to sa# ," ,as b""n "!"i$".
An i+ an# a!t is on" b# t," !o*1laining 1art# a+t"r is!o$"r.
ing t," all"g" +rau or *utual *ista<" to3ar !arr#ing out
t," !ontra!t% it s,o3s an irr"$o!abl" "l"!tion to abi" b# t,"
!ontra!t.
(6) Entran!" Into a 5ii!ulous Contra!t
Su11os" a *an "nt"rs into a rii!ulous !ontra!t b"!aus"
o+ a 3rong jug*"nt alt,oug, ," is 3"ll in 1oss"ssion o+ ,is
*"ntal +a!ulti"s% 3ill t," !ourt grant a r"li"+ b# annulling t,"
!ontra!tJ
ANS.' No% +or in t,is !as"% it 3as t," *an8s o3n +ault. T,"
Su1r"*" Court sai' -All *"n ar" 1r"su*" to b" san" an
nor*al an subj"!t to b" *o$" b# substantiall# t," sa*" *o.
ti$"s. I,"n o+ ag" an san"% t,"# *ust ta<" !ar" o+ t,"*s"l$"s.
In t,"ir r"lations 3it, ot,"rs in t," busin"ss o+ li+"% 3its% s"ns"%
int"llig"n!"% training% abilit#% an jug*"nt *""t an !las, an
Art. 199B
!ont"st% so*"ti*"s 3it, gain an a$antag" to all% so*"ti*"s
to a +"3 onl#% 3it, loss an injur# to ot,"rs.
Art. 199A
-In t,"s" !ont"sts% *"n *ust "1"n u1on t,"*s"l$"s%
u1on t,"ir o3n abiliti"s. T," +a!t t,at on" *a# b" 3orst" b#
anot,"r% o+ its"l+% +urnis,"s no !aus" o+ !o*1laint. On" *an
!annot !o*. 1lain b"!aus" anot,"r is *or" abl"% or b"tt"r
train"% or ,as a b"tt"r s"ns" o+ jug*"nt t,an ," ,as2 an
3,"n t," t3o *""t on +air +i"l% t," in+"rior !annot *ur*ur i+
t," battl" go"s against ,i*. T," la3 +urnis,"s no 1rot"!tion to
t," in+"rior si*1l# b". !aus" ," is in+"rior% an#*or" t,an it
1rot"!ts t," strong% b"!aus" ," is strong. T," la3 +urnis,"
1rot"!tion to bot, ali<"% to on" no *or" or l"ss t,an t," ot,"r.
It *a<"s no istin!tion b"t3""n t," 3is" an t," +oolis,% t,"
gr"at an t," s*all% t," strong an t," 3"a<. T," +oolis, *a#
los" all t,"# ,a$" to t," 3is"2 but t,at o"s not *"an t,at t,"
la3 3ill gi$" it ba!< to t,"* again.88
-Courts !annot +ollo3 "$"r# st"1 o+ on"8s li+" an "4tri!at"
,i* +ro* ba bargains% 1rot"!t ,i* +ro* un3is" in$"st*"nts%
r"li"$" ,i* +ro* on".si" !ontra!ts% or annul t," "++"!ts o+
+oolis, a!ts. Courts o1"rat" not b"!aus" on" 1"rson ,as b""n
"+"at" or o$"r!o*" ill"gall#.88
-&"n *a# o +oolis, t,ings% *a<" rii!ulous !ontra!ts% us"
*is"rabl" jug*"nt% an los" *on"# on t,"* 0 in""% all t,"#
,a$" in t," 3orl but not +or t,at alon" !an t," la3 int"r$"n"
an r"stor". T,"r" *ust b"% in aition% a $iolation o+ la3% t,"
!o**ission o+ 3,at t," la3 <no3s as an a!tionabl" 3rong%
b"+or" t," !ourts ar" aut,oriH" to la# ,ol o+ t," situation an
r"*"# it./ (Val"s $. Villa% 95 P,il. C6A).
Art. 199A. Failur" to is!los" +a!ts% 3,"n t,"r" is a ut#
to r"$"al t,"*% as 3,"n t," 1arti"s ar" boun b#
!on+i"ntial r"lations% !onstitut"s +rau.
CO&&ENT'
(1) Failur" to Dis!los" Fa!ts
(a) Failur" to is!los" +a!ts (CONCEAL&ENT) !onstitut"s
F5A;D% 3,"n t,"r" is a ut# to r"$"al t,"*.
(b) T,"r" is a ut# to r"$"al in t," +ollo3ing !as"s% +or "4a*1l"'
Art. 199A
3,"n t," 1arti"s ar" boun b# !on+i"ntial r"lations (Art.
199A) as in t," !as" o+ 1artn"rs. (Poss $. >ottli"b% 11B &is!.
91B).
Art. 199A
Poss $. >ottli"b
11B &is!. 91B
FACTS' A an 7 3"r" r"al "stat" 1artn"rs. A ,"ar
o+ a 1ossibl" 1ur!,as"r o+ a !"rtain 1ar!"l o+ lan o3n"
b# t," +ir*. 7ut A i not in+or* 7. Inst"a% A 1"rsua"
7 to s"ll to ,i* (A) 78s s,ar" at a no*inal a*ount% a+t"r
3,i!, A sol t," 3,ol" 1ar!"l at a big 1ro+it. 7 su" A +or
a*ag"s +or all"g" "!"it. A8s "+"ns" 3as t,at ," a+t"r
all ,a not b""n as<" b# 7 about 1ossibl" 1ur!,as"rs.
HELD' A is liabl"% +or ," s,oul not ,a$" *a" an#
!on!"al*"nt. >oo +ait, not onl# r"Euir"s t,at a 1artn"r
s,oul not *a<" an# +als" !on!"al*"nt% but ," also s,oul
abstain +ro* all !on!"al*"nt.
Ca3alla"r an Co. $. S*it,% 7"ll an Co.
C P,il. @61
FACTS' An ag"nt 1"rsua" ,is 1rin!i1al to s"ll
!"rtain 1ro1"rti"s to ,i*s"l+ at a lo3 1ri!". T," ag"nt i
not r"$"al t,at t," go$"rn*"nt 3as int"r"st" in a!Euiring
sai 1ro1"rti"s at *u!, ,ig,"r 1ri!"s. Issu"' Is t," sal" to
t," ag"nt $oiabl"J
HELD' K"s% b"!aus" o+ ,is +rauul"nt !on!"al*"nt.
Strong $. >uti"rr"H 5"1i"
@1 P,il. A@C
FACTS' A *"*b"r o+ t," boar o+ ir"!tors o+ a
!or1oration% t,ru an ag"nt% 1ur!,as" t," sto!<s o+ a
!"rtain sto!<,ol"r 3it,out r"$"aling to t," latt"r t,at
n"gotiations 3"r" b"ing *a" to "n,an!" t," $alu" o+ t,"
!or1orat" sto!<. Issu"' Is t," 1ur!,as" +rauul"ntJ
HELD' K"s% in $i"3 o+ t," +rauul"nt !on!"al*"nt.
(6) O11on"nts in a Litigation
T,"r" 3oul s""* to b" no ut# to is!los" +a!ts% as b".
t3""n o11on"nts in a litigation +or t,"ir r"lations% +ar +ro* b"ing
Art. 199A
+ri"nl# or !on+i"ntial% ar" o1"nl# antagonisti!. (Es!u"ro% "t
al. $. Flor"s% "t al.% AC P,il. 6@?).
Arts. 19@?.19@1
Art. 19@?. T," usual "4agg"rations in tra"% 3,"n t,"
ot,"r 1art# ,a an o11ortunit# to <no3 t," +a!ts% ar" not in
t,"*s"l$"s +rauul"nt.
CO&&ENT'
;sual E4agg"rations in Tra"
(a) T,is Arti!l" str"ss"s t," rul" o+ -!a$"at "*1tor/ (l"t t,"
bu#"r b"3ar").
Da!usin $. Court o+ A11"als
B? SC5A BA
T," *a4i* -!a$"at "*1tor/ si*1l# *"ans t,at a bu#"r
*ust b" on ,is guar. It is ,is ut# to !,"!< t," titl" o+
t," s"ll"r% ot,"r3is" t," bu#"r g"ts t," obj"!t at ,is o3n
ris<.
(b) T," -usual "4agg"rations in tra"/ ("al"r8s tal<) !onstitut"
tol"rat" +rau% 3,"n t," ot,"r 1art# ,a an o11ortunit#
to <no3 t," +a!ts.
(!) T," la3% a!!oring to t," Su1r"*" Court in t," !as" o+
Song!o $. S"lln"r% 9C P,il. 65@% allo3s !onsi"rabl" lati.
tu" to s"ll"r8s stat"*"nt or "al"r8s tal<2 -an "41"ri"n!"
t"a!,"s t,at it is "4!""ingl# ris<# to a!!"1t it at its +a!"
$alu"./ T,is is 1arti!ularl# so 3,"n a "al"r r"+us"s to 3ar.
rant ,is "sti*at". A *an 3,o r"li"s u1on an a++ir*ation
*a" b# a 1"rson 3,os" int"r"st *ig,t so r"ail# 1ro*1t
,i* to "4agg"rat" t," $alu" o+ ,is 1ro1"rt#% o"s so at ,is
o3n ris<. H" *ust t,"r"+or" ta<" t," !ons"Eu"n!"s o+ ,is
o3n i*1ru"n!".
() Orinaril#% 3,at o"s not a11"ar on t," +a!" o+ t," 3ritt"n
!ontra!t s,oul b" r"gar" as -tra"r8s tal</ or -"al"r8s
tal<./ (Pu#at $. Ar!o A*us"*"nts Co.% C6 P,il. @?6).
Art. 19@1. A *"r" "41r"ssion o+ an o1inion o"s not sig.
Arts. 19@?.19@1
ni+# +rau% unl"ss *a" b# an "41"rt an t," ot,"r 1art# ,as
r"li" on t," +or*"r8s s1"!ial <no3l"g".
Art. 19@6
CO&&ENT'
(1) &"r" E41r"ssion o+ an O1inion
(a) E4a*1l"' A% on bu#ing a 3at!,% 3as assur" b# t," s"ll"r
t,at it 3as a goo 3at!,% an !oul run 3it,out r"3ining
+or on" 3""<% in t," o1inion o+ t," s"ll"r. T,is is a *"r"
"41r"ssion o+ o1inion t,at is not +rauul"nt. 7ut i+ t,"
s"ll"r 3as a 3at!, "41"rt% an t," onl# r"ason 3,# A
boug,t t," 3at!, 3as t,is o1inion o+ t," s"ll"r% t,"
!ontra!t is $oiabl" on t," groun o+ +rau.
(b) I+ a s"ll"r sa#s t,at in ,is o1inion ,is lan is +irst !lass% but
it turns out to b" s"!on !lass% t," sal" is not +rauul"nt%
1arti!ularl# 3,"n t," bu#"r ,a o11ortunit# to "4a*in"
t," lan +or ,i*s"l+. (Puato $. &"noHa% 6@ P,il. @5C).
(!) 5"ason +or t," rul" on an "41"rt8s o1inion'
T," o1inion o+ an "41"rt is al*ost in t," sa*" !at"gor# as
a +a!t% 1arti!ularl# 3,"n t,is "41"rt8s <no3l"g" is r"li"
u1on b# t," ot,"r 1art#.
(6) Probl"*
N% "siring to bu# !"rtain 1ro1"rt#% ,ir" an "41"rt to
as!"rtain its tru" $alu". 7ut t," "41"rt8s o1inion turn" out to
b" 3rong an N 3as% t,"r"+or" *isl". &a# N as< +or t," annul.
*"nt o+ t," !ontra!tJ
ANS.' No% b"!aus" ,is o3n "41"rt (an t,"r"+or" ,is "*.
1lo#"") !o**itt" t," "rror. (S"" Co**ission &"*oranu* to
t," =oint Co**itt"" on Coi+i!ation% &ar. B% 1A51).
Art. 19@6. &isr"1r"s"ntation b# a t,ir 1"rson o"s not
$itiat" !ons"nt% unl"ss su!, *isr"1r"s"ntation ,as !r"at"
substantial *ista<" an t," sa*" is *utual.
CO&&ENT'
(1) &isr"1r"s"ntation b# a T,ir P"rson
Ho3 o"s t," 1arti!i1ation o+ a t,ir 1"rson in +or!" an
Art. 19@6
in +rau or *isr"1r"s"ntation i++"rJ
Art. 19@9
ANS.'
(a) For!" or inti*iation b# a t,ir 1"rson *a<"s t," !ontra!t
$oiabl".
(b) Frau b# a t,ir 1"rson o"s not *a<" t," !ontra!t $oiabl"
unl"ss 0
1) t," r"1r"s"ntation ,as !r"at" substantial *ista<"%
an
6) t," *ista<" is *utual. (Art. 19@6).
In t,is !as"% t," !ontra!t *a# b" annull"% not 1rin.
!i1all# on t," groun o+ +rau% but on t," groun o+ "rror
or *ista<".
(6) :u"r#
Is it not b"tt"r to !onsi"r *isr"1r"s"ntation b# a t,ir
1"rson as a groun +or annul*"nt "$"n i+ t," sa*" ,as not
r"sult" in *utual *ista<"J A+t"r all% it !annot b" "ni" t,at
,"r"% t," !ons"nt is $itiat" just t," sa*".
(9) Cas"
Hill $. V"loso
91 P,il. 16?
FACTS' A an 7 "nt"r" into a !ontra!t 3it, N. A8s !ons"nt
3as obtain" onl# b"!aus" 7 ,a "!"i$" or "+rau" ,i*.
&a# A as< +or annul*"nt o+ t," !ontra!t 3it, NJ
HELD' No% b"!aus" N 3as not a 1art# to t," +rau.
Art. 19@9. &isr"1r"s"ntation *a" in goo +ait, is not
+rauul"nt but *a# !onstitut" "rror.
CO&&ENT'
&isr"1r"s"ntation &a" in >oo Fait,
E4a*1l"' A boug,t a !"rtain arti!l" +ro* 7. T," arti!l"
3as n""" +or A8s raio. 7 ,on"stl# but *ista<"nl# assur" A
Art. 19@9
t,at t," arti!l" 3as t," 1ro1"r obj"!t. &a# t," !ontra!t b" an.
null"J
Arts. 19@@.19@5
ANS.' K"s% not on t," groun o+ +rau% +or t," *isr"1r".
s"ntation 3as ,on"st% but on t," groun o+ substantial "rror.
Art. 19@@. In or"r t,at +rau *a# *a<" a !ontra!t
$oi. abl"% it s,oul b" s"rious an s,oul not ,a$" b""n
"*1lo#" b# bot, !ontra!ting 1arti"s.
In!i"ntal +rau onl# oblig"s t," 1"rson "*1lo#ing it to
1a# a*ag"s.
CO&&ENT'
(1) 5"Euisit"s +or Frau to Vitiat" Cons"nt
T3o r"Euisit"s +or +rau as a groun +or annul*"nt ar"
gi$"n in t,is Arti!l"'
(a) t," +rau *ust b" s"rious2
(b) t," 1arti"s *ust not b" in 1ari "li!to (*utual guilt)% ot,.
"r3is"% n"it,"r 1art# *a# as< +or annul*"nt. T," !ontra!t
3oul% t,"r"+or"% b" !onsi"r" $ali. (S"" Val"H $. Sibal%
@6 P,il. A9?).
(6) In!i"ntal Frau Do"s Not Vitiat" Cons"nt
In!i"ntal +rau s,oul not b" !on+us" 3it, !ausal +rau.
In!i"ntal +rau is not a !aus" +or annul*"nt.
Art. 19@5. Si*ulation o+ a !ontra!t *a# b" absolut" or
r"lati$". T," +or*"r ta<"s 1la!" 3,"n t," 1arti"s o not in.
t"n to b" boun at all2 t," latt"r% 3,"n t," 1arti"s !on!"al
t,"ir tru" agr""*"nt.
CO&&ENT'
(1) OSi*ulation o+ a Contra!t8 D"+in"
It is t," 1ro!"ss o+ int"ntionall# "!"i$ing ot,"rs b# 1ro.
u!ing t," a11"aran!" o+ a !ontra!t t,at r"all# o"s not "4ist
Arts. 19@@.19@5
(absolut" si*ulation) or 3,i!, is i++"r"nt +ro* t," tru" agr"".
*"nt (r"lati$" si*ulation). (S"" TS% D"!. 1A% 1A51).
Art. 19@6
(6) 5"Euisit"s +or Si*ulation
(a) An out3ar "!laration o+ 3ill i++"r"nt +ro* t," 3ill o+
t," 1arti"s2
(b) T," +als" a11"aran!" *ust ,a$" b""n int"n" b# *utual
agr""*"nt2
(!) T," 1ur1os" is to "!"i$" t,ir 1"rsons.
Art. 19@6. An absolut"l# si*ulat" or +i!titious !ontra!t
is $oi. A r"lati$" si*ulation% 3,"n it o"s not 1r"jui!" a
t,ir 1"rson an is not int"n" +or an# 1ur1os" !ontrar#
to la3% *orals% goo !usto*s% 1ubli! or"r% or 1ubli! 1oli!#
bins t," 1arti"s to t,"ir r"al agr""*"nt.
CO&&ENT'
(1) Dins o+ Si*ulat" Contra!ts
(a) Absolut"l# si*ulat" (si*ulaos) +i!titious !ontra!ts'
1) H"r"% t," 1arti"s o not int"n to b" boun.
6) E++"!t' T," !ontra!t is VOID.
(b) 5"lati$"l# si*ulat" (isi*ulaos) isguis" !ontra!ts'
1) H"r"% t," 1arti"s !on!"al t,"ir tru" agr""*"nt.
6) E++"!t' T," 1arti"s ar" boun to t," r"al or tru" agr"".
*"nt "4!"1t 0
a) i+ t," !ontra!t s,oul 1r"jui!" a t,ir 1"rson2
b) or i+ t," 1ur1os" is !ontrar# to la3% *orals% goo
!usto*s% 1ubli! or"r% or 1ubli! 1oli!#.
(6) E4a*1l"s
(a) Absolut"l# Si*ulat"'
As a jo<"% A an 7 "4"!ut" a "" o+ sal" alt,oug,
t,"# i not int"n to b" boun at all b# t," !ontra!t.
FNOTE' An absolut"l# si*ulat" !ontra!t is in"4ist.
Art. 19@6
"nt an VOID. (D" 7"l"n $. Coll"!tor o+ Custo*s% @6 P,il.
6@1).G
Art. 19@6
(b) 5"lati$"l# Si*ulat"'
Alt,oug, a "" o+ sal" 3as *a"% t," 1arti"s r"all#
int"n" a onation but t,"# 3ant" to !on!"al t," "4ist.
"n!" o+ t," onation (si*ulation o+ t," NAT;5E o+ t,"
!ontra!t)2 or a tru" sal" at a i++"r"nt 1ri!" ,a r"all# b""n
agr"" u1on (si*ulation o+ t," CONTENT or TE5&S o+
t," !ontra!t).
(NOTE' T,ir 1"rsons s,oul not b" 1r"jui!"2 t,"r".
+or"% as to t,"*% t," a11ar"nt or ost"nsibl" !ontra!t is t,"
on" $ali. 5"ason' T," !ontra!ting 1arti"s ar" in "sto11"l%
an t,"# s,oul b" 1"naliH" +or t,"ir "!"1tion.)
(9) OAbsolut"l# Si*ulat" Contra!t8 Distinguis," +ro* an
Ill"gal Contra!t
In 5origu"H $. 5origu"H% >5 L.69??6% =ul# 91% 1A6C% t,"
Su1r"*" Court ,"l t,at in si*ulation% t," !ontra!t is not r".
all# "sir" to 1rou!" an ill"gal "++"!t or in an# 3a# alt"r t,"
jurii!al situation o+ t," 1arti"s2 3,"r"as an ill"gal !ontra!t is
int"n" to b" r"al an "++"!ti$"% an "nt"r" in su!, +or* as to
!ir!u*$"nt a 1ro,ibit" a!t.
(@) Cas"
Eilb"rto CruH an Si*1li!iano CruH $. 7an!o*
Finan!" Cor1. (;nion 7an< o+ t," P,ils.)
>5 1@CCBB% &ar. 1A% 6??6
FACTS' Alt,oug, t," D"" o+ Sal" b"t3""n 1"tition"rs
an Can"laria San!,"H sti1ulat" a !onsi"ration o+ P15?%???%
t,"r" 3as a!tuall# no "4!,ang" o+ *on"# b"t3""n t,"*. 5".
s1on"nt n"$"r o++"r" an# "$i"n!" to r"+ut" t," +or"going. On
t," !ontrar#% it "$"n a*itt" t,at t," sti1ulat" !onsi"ration
o+ P15?%??? in t," D"" o+ Sal" ,a n"$"r b""n a!tuall# 1ai b#
San!,"H to 1"tition"rs.
HELD' T," D"" o+ Sal" 3"r" absolut"l# si*ulat"% ,"n!"%
null an $oi. (Fran!is!o $. Fran!is!o.Al+onso% >5 19BCC@%
Art. 19@6
&ar!, B% 6??1). T,us% it i not !on$"# an# rig,ts t,at !oul
ri1"n into a $ali titl"s. (V"lasEu"H $. CA% 9@5 SC5A @6B F6???G).
Art. 19@C
T,"r" b"ing no $ali r"al "stat" *ortgag"% t,"r" !oul also b"
no $ali +or"!losur" or $ali au!tion sal"% "it,"r. At botto*%
r"s1on"nt !annot b" !onsi"r" "it,"r as a *ortgag"" or as a
1ur!,as"r in goo +ait,. T,is b"ing so% 1"tition"rs 3oul b" in
t," sa*" 1osition as t,"# 3"r" b"+or" t,"# "4"!ut" t," si*u.
lat" D"" o+ Sal" in +a$or o+ San!,"H2 t,"# ar" still t," o3n"rs
o+ t," 1ro1"rt#. (>SIS $. CA% 6BC SC5A 6?@ F1AABG).
FNOTE' A "" o+ sal"% in 3,i!, t," stat" !onsi"ration
,a not% in +a!t% b""n 1ai% 3as -a +als" !ontra!t% -i.".% $oi ab
initio. (5ongarilla $. CA% 6A@ 6BA F1AABG). -A !ontra!t o+ 1ur!,as"
an sal" is null an $oi an 1rou!"s no "++"!t 3,atso"$"r
3,"r" it a11"ars t,at Ft,"G sa*" is 3it,out !aus" or !onsi"ra.
tion 3,i!, s,oul ,a$" b""n t," *oti$" t,"r"o+% or t," 1ur!,as"
1ri!" 3,i!, a11"ars t,"r"on as 1ai but 3,i!,% in +a!t% ,as n"$"r
b""n 1ai b# t," 1ur!,as"r to t," $"nor. (O!"jo $. Flor"s% B?
P,il. A61 X1A6?Y).G
S"!tion 6
O7=ECT OF CONT5ACTS
Art. 19@C. All t,ings 3,i!, ar" not outsi" t,"
!o**"r!" o+ *"n% in!luing +utur" t,ings% *a# b" t,"
obj"!t o+ a !on. tra!t. All rig,ts 3,i!, ar" not intrans*issibl"
*a# also b" t," obj"!t o+ !ontra!ts.
No !ontra!t *a# b" "nt"r" into u1on +utur" in,"ritan!"
"4!"1t in !as"s "41r"ssl# aut,oriH" b# la3.
All s"r$i!"s 3,i!, ar" not !ontrar# to la3% *orals% goo
!usto*s% 1ubli! or"r or 1ubli! 1oli!# *a# li<"3is" b" t,"
obj"!t o+ a !ontra!t.
CO&&ENT'
(1) Obj"!t (Subj"!t &att"r) o+ a Contra!t
T," obj"!t o+ a !ontra!t is r"all# to !r"at" or to "n obli.
gations 3,i!,% in turn% *a# in$ol$" t,ings or s"r$i!"s. H"n!"%
Art. 19@C
"lli1ti!all#% it *a# b" sai t,at t," obj"!t o+ a !ontra!t is a t,ing
or a s"r$i!".
Art. 19@C
(6) 5"Euisit"s
(a) t," t,ing or s"r$i!" *ust b" 3it,in t," !o**"r!" o+
*an2
(b) *ust b" trans*issibl"2
(!) *ust not b" !ontrar# to la3% *orals% goo !usto*s% 1ubli!
or"r% or 1ubli! 1oli!#2
() *ust not b" i*1ossibl" (Art. 19@B% Ci$il Co")2
(") *ust b" "t"r*inat" as to its <in or "t"r*inabl" 3it,out
t," n"" o+ a n"3 !ontra!t or agr""*"nt. (Art. 19@A% Ci$il
Co").
(9) Iit,in t," Co**"r!" o+ &an
I+ t," obj"!t is outsi" t," !o**"r!" o+ *an% su!, as si".
3al<s (&u#ot $. D" la Fu"nt"% FC.A.G @B O.>. @B66) or 1ubli!
1laHas (&un. o+ Ca$it" $. 5ojas% 9? P,il. 6?6)% or 1ubli! brig"s%
t,"# !annot b" t," obj"!t o+ !ontra!ts o+ ali"nation (but *a# b"
t," obj"!t% +or "4a*1l"% o+ a !ontra!t +or r"1air). Ta4"s ar" +i4"
b# la3% an ar" not subj"!t to !ontra!t b"t3""n t," ta41a#"r an
ta4 o++i!"r% "4!"1t 3,"n t,"r" is an a!tual !o*1ro*is". (Coll.
o+ Int. 5"$. $. Ell"n Ioo &!>rat,% L.16C1?% L.16C61% F"b. 6B%
1A61). T," rig,t to 1r"s"nt on"8s !ania!# +or a 1ubli! o++i!"
!annot b" t," obj"!t o+ a !ontra!t. H"n!"% a "+"at" !aniat"
in a 1art# !on$"ntion 3,o ,as 1r"$iousl# agr"" not to run +or
1ubli! o++i!" (i+ "+"at" in su!, !on$"ntion) !annot b" su!.
!"ss+ull# su" +or br"a!, o+ t," agr""*"nt. (Saura $. Sini!o%
L.19@?9% &ar. 69% 1A6?).
L"onaro Na$arro $. Luis L. LariHabal% "t al.
L.65961% S"1t. 6B% 1A6B
FACTS' =uanita Ca!,"ro% la3+ul ,ol"r o+ a stall in t,"
1ubli! *ar<"t in 7aguio Cit# allo3" L"onaro Na$arro to o!.
!u1# t," sa*" +or *or" t,an 6 *ont,s. Na$arro t,"n +or*all#
a11li" +or t," a3ar o+ t," stall to ,i*. T," Cit# &ar<"t Co*.
*itt"" 1ost1on" in"+init"l# t," a3aring o+ t," stall u1on t,"
1rot"st o+ a !"rtain D.7. 7aton. Na$arro su" +or 1ro,ibition
(to 1ro,ibit t," 7aguio Cit# o++i!ials +ro* "la#ing t," a3ar).
Issu"' Iill t," suit 1ros1"rJ
Art. 19@C
HELD' T," suit 3ill not 1ros1"r% +or Na$arro ,as not s,o3n
t,at ," alr"a# ,as a l"gal rig,t to t," stall% ,is a11li!ation
Art. 19@C
b"ing *"r"l# 1"ning. T," rig,t to l"as" an o!!u1# a stall in
a 1ubli! *ar<"t is not a !o**on rig,t% but a 1ur"l# statutor#
1ri$il"g"% go$"rn" b# la3s an orinan!"s. (Sa*son $. Fugoso%
@5 O.>. 9??). T," o!!u1an!# o+ t," stall !annot b" t," subj"!t
o+ a $ali !ontra!t as b"t3""n t," aut,oriH" stall,ol"r an
,is trans+"r""% unl"ss t," agr""*"nt is a11ro$" b# t," Cit#
aut,oriti"s !on!"rn".
Fran!is!o Cuison% "t al. $. =os" 5a*ol"t"
>5 516A1% &a# 6A% 1AB@
A 1robat" !ourt ,as NO jurisi!tion to or"r t," sal" o+
1ro1"rti"s b"longing to r"gist"r" o3n"rs (3it, C"rti+i!at"s o+
Titl")% i+ sai o3n"rs ar" not 1arti"s to t," 1ro!""ings% an t,is
is so "$"n i+ t," 1ro1"rti"s ,a b""n in!lu" in t," in$"ntor#
sub*itt" b# t," a*inistrator o+ t," "stat".
(@) Trans*issibl"
All rig,ts 3,i!, ar" not intrans*issibl" *a# b" t," obj"!t
o+ !ontra!ts. 7ut stri!tl# 1oliti!al rig,ts (li<" t," rig,t to $ot")
or stri!tl# 1"rsonal rig,ts (li<" 1ar"ntal aut,orit#) !annot b"
t," subj"!t o+ a !ontra!t.
(5) Not Contrar# to La3% &orals% "t!.
(a) Futur" t,ings *a# b" t," obj"!t o+ a !ontra!t2 t,us% t,"
+utur" ,ar$"st o+ sugar!an" in a s1"!i+i! +i"l *a# b" sol2
but b# "41r"ss 1ro$ision o+ la3% sai +utur" 1ro1"rt# *a#
not b" onat".
(b) Futur" in,"ritan!" (on" 3,"r" t," sour!" o+ 1ro1"rt# is still
ali$") !annot b" t," subj"!t o+ a !ontra!t "4!"1t'
1) in t," !as" o+ *arriag" s"ttl"*"nts. (S"" Art. 19?%
Ci$il Co")2
6) in t," !as" o+ 1artitions o+ 1ro1"rt# int"r $i$os b# t,"
"!"as". (S"" Art. 1?B?% Ci$il Co").
FNOTE' Futur" in,"ritan!" is an# 1ro1"rt# or
Art. 19@C
rig,t not in "4ist"n!" or !a1abl" o+ "t"r*ination% at
t," ti*" o+ t," !ontra!t% t,at a 1"rson *a# in t,"
Art. 19@C
+utur" a!Euir" b# su!!"ssion. (&aria >"r$a!io 7las%
"t al. $. 5osalina Santos% "t al.% L.1@?C?% &ar. 6A%
1A61).G
(!) Illustrati$" :u"stions'
1) I,"n ,is +at,"r i"% but b"+or" "li$"r# o+ t,"
1ro1"rt# to ,i*% a son sol ,is s,ar" o+ t," 1ro1"rt#
in,"rit". Is t," sal" $aliJ
ANS.' K"s% t," sal" is $ali. T," in,"ritan!"
,"r" is not +utur" in,"ritan!"% but "4isting in,"rit.
an!"% alt,oug, as #"t un"li$"r". O3n"rs,i1 is
trans+"rr" auto*ati!all# to t," ,"ir u1on t," "at,
o+ t," "!""nt. Sai t," Su1r"*" Court' -T," 1ro1"r.
ti"s o+ an "4isting in,"ritan!" !annot b" !onsi"r"
as anot,"r8s 1ro1"rt# 3it, r"lation to t," ,"irs 3,o%
t,roug, a +i!tion o+ la3% !ontinu" t," 1"rsonalit# o+
t," o3n"r. Nor o t,"# ,a$" t," !,ara!t"r o+ +utur"
1ro1"rt# b"!aus" t," 1r""!"ssor in int"r"st ,a$ing
alr"a# i"% ,is ,"irs a!Euir" a rig,t to su!!""
,i* +ro* t," *o*"nt o+ ,is "at,. An in,"ritan!"
alr"a# "4isting% 3,i!, is no long"r +utur" +ro* t,"
*o*"nt o+ "at, o+ t," 1r""!"ssor% *a# l"gall# b"
t," obj"!t o+ !ontra!t./ (Osorio $. Osorio an In!,austi
St"a*s,i1 Co.% @1 P,il. 519).
6) I,il" ,is +at,"r 3as still ali$"% A sol to 7 t," 1ro1.
"rt# ," (A) "41"!t" to r"!"i$" +ro* ,is +at,"r. Is t,"
!ontra!t $aliJ
ANS.' No% b"!aus" t," obj"!t o+ t," !ontra!t
,"r" is r"all# +utur" in,"ritan!"% an t," 1arti!ular
!ontra!t in t,is !as" is not on" o+ t,os" aut,oriH" b#
la3 r"garing in,"ritan!". (Torilla $. Torilla% 6?
P,il. 166).
9) So*" +utur" ,"irs i$i" t," 1ro1"rt# t,"# "41"!t"
to in,"rit +ro* t,"ir *ot,"r% at a ti*" 3,"n s," 3as
still ali$". Is su!, 1artition o+ 1ro1"rt# $aliJ
ANS.' No. T,is is a !ontra!t r"lating to a +utur"
in,"ritan!" (+or t," *ot,"r is still ali$") an o"s not
Art. 19@C
!o*" un"r t," !at"gor# o+ t,os" !ontra!ts aut,oriH"
b# la3 !on!"rning +utur" in,"ritan!". T," o3n"r (t,"
Art. 19@B
*ot,"r) !oul ,a$" *a" a 1artition a*ong t," ,"irs%
but sin!" t," 1artition 3as *a" ,"r" not b# ,"r%
but b# t," ,"irs% t," sa*" is $oi% un"r t," s"!on
1aragra1, o+ Art. 16C1 o+ t," ol Ci$il Co". (No3 t,"
s"!on 1aragra1, o+ Art. 19@C o+ t," N"3 Ci$il Co").
(Arro#o $. >"rona% 5B P,il. 666).
(6) No E4t"nsion A+t"r E41iration
>ino# $. Ta1u!ar
C6 SC5A 91
I+ a l"as" ,as "41ir"% t," trial !ourt !an no long"r "4t"n
t," sa*" 3it,out t," !ons"nt o+ bot, l"ssor an l"ss"".
(C) Hu*an 7loo is not an Obj"!t o+ Contra!t
T," ,u*an bloo% li<" ot,"r 1arts o+ t," ,u*an bo#%
!annot b" !onsi"r" obj"!t o+ !ontra!ts (Art. 19@C% Ci$il Co")
b"!aus" t,"# ar" outsi" t," !o**"r!" o+ *"n. As su!,% t,"
"4tra!tion% !oll"!ting% an s"lling o+ ,u*an bloo b# an# ini.
$iual or ag"n!# (".g.% P"o1l"8s 7loo 7an<) is an as1"!t o+ t,"
*"i!al 1ro+"ssion an s,oul not b" !onsi"r" a ta4abl" "ntit#
+or busin"ss ta4 1ur1os"s.
T," 3or -onation/ inst"a o+ -s"lling/ s,oul b" us"
as t," "u1,"*is*s +or t," a!t o+ -gi$ing a3a#/ or -trans+"rring
to anot,"r -an# 1art o+ t," ,u*an bo# +or s!i"nti+i! 1ur1os"s%
to sa$" li+" or to a$an!" t," !aus" o+ *"i!al s!i"n!". /Sal"/ o+
,u*an bloo is not ta4abl" a!ti$it# +or busin"ss ta4 1ur1os"s.
Art. 19@B. I*1ossibl" t,ings or s"r$i!"s !annot b" t,"
obj"!t o+ !ontra!ts.
CO&&ENT'
(1) I*1ossibl" T,ings or S"r$i!"s
I*1ossibilit# *a# b"'
(a) b"!aus" o+ t," natur" o+ t," transa!tion or b"!aus" o+ t,"
la32
Art. 19@B
(b) absolut" (obj"!ti$"l# i*1ossibl") (,"r"% NO ONE !an o
it)2
Art. 19@A
(!) r"lati$" (subj"!ti$"l# i*1ossibl") (,"r"% t," 1arti!ular
"btor !annot !o*1l#).
(NOTE' >"n"rall#% t," i*1ossibilit# r"+"rr" to b# t," la3
is absolut" i*1ossibilit#.)
FNOTE' I+ a blin *an "nt"rs into a !ontra!t 3,i!, r".
Euir"s t," us" o+ ,is "#"sig,t% t," !ontra!t is $oi alt,oug, in
t,is 1arti!ular !as"% 3" ,a$" onl# a r"lati$" i*1ossibilit#. (B
&anr"sa 6B5). T,is is b"!aus" ,"r"% t," r"lati$" i*1ossibilit#
is not *"r"l# t"*1orar#.G
(6) I*1ossibilit# Not to 7" Con+us" +ro* &"r" Di++i!ult#
I*1ossibilit# *ust not b" !on+us" 3it, i++i!ult#. H"n!"%
a s,o3ing o+ *"r" in!on$"ni"n!"% un"41"!t" i*1"i*"nts% or
in!r"as" "41"ns"s is not "noug,. (Castro% "t al. $. Longa% BA
P,il. 5B1).
Art. 19@A. T," obj"!t o+ "$"r# !ontra!t *ust b" "t"r.
*inat" as to its <in. T," +a!t t,at t," Euantit# is not "t"r.
*inat" s,all not b" obsta!l" to t," "4ist"n!" o+ t," !ontra!t%
1ro$i" it is 1ossibl" to "t"r*in" t," sa*"% 3it,out t,"
n"" o+ a n"3 !ontra!t b"t3""n t," 1arti"s.
CO&&ENT'
Obj"!t o+ t," Contra!t
(a) T," obj"!t *ust b" "t"r*inat" or "t"r*inabl" (3it,out
n"" o+ a n"3 agr""*"nt).
(b) I+ t," obj"!t is not "t"r*inat" or "t"r*inabl"% t," !on.
tra!t is $oi +or 3ant o+ an "ss"ntial r"Euisit" 0 t," obj"!t
o+ t," !ontra!t.
(!) I+ A 1ro*is" to gi$" 7 t,is (blan<)% it is !l"ar t,at t,"r"
!an b" no obligation ,"r".
() 7ut i+ A sol to 7 t," +utur" (6??6) ,ar$"st in A8s +i"l +or
a "+init" 1ri!"% t," !ontra!t is $ali +or t,"r" is no n"" o+
Art. 19@A
a n"3 agr""*"nt.
Art. 195?
S"!tion 9
CA;SE OF CONT5ACTS
Art. 195?. In on"rous !ontra!ts t," !aus" is un"rstoo
to b"% +or "a!, !ontra!ting 1art#% t," 1r"station or 1ro*is"
o+ a t,ing or s"r$i!" b# t," ot,"r2 in r"*un"rator# on"s% t,"
s"r$i!" or b"n"+it 3,i!, is r"*un"rat"2 an in !ontra!ts o+
1ur" b"n"+i!"n!"% t," *"r" lib"ralit# o+ t," b"n"+a!tor.
CO&&ENT'
(1) OCaus"8 D"+in"
It is t," "ss"ntial an i*1"lling r"ason 3,# a 1art# as.
su*"s an obligation. (B &anr"sa 6CC). Stri!tl# s1"a<ing% t,"r"
is no !aus" o+ a !ontra!t% but t,"r" is a !aus" +or an obligation.
Pri$at" D"$"lo1*"nt Cor1. o+ t,"
P,ils. $. IAC M Ern"sto C. "l 5osario
>5 C91AB% S"1t. 6% 1AA6
Inas*u!, as t," loan agr""*"nt ,"r"in 3as "nt"r" into
on &a# 61% 1AC@% t," 1r"$ailing la3 a11li!abl" is A!t 6655% ot,.
"r3is" <no3n as t," ;sur# La3% as a*"n" b# PD 116% 3,i!,
too< "++"!t on =an. 6A% 1AC@.
S"!. 6 o+ A!t 6655 1ro$i"s t,at -FnGo 1"rson or !or1oration
s,all ir"!tl# or inir"!tl# ta<" or r"!"i$" *on"# or ot,"r 1ro1.
"rt#% r"al or 1"rsonal% or !,os"s in a!tion% a ,ig,"r rat" o+
int"r"st or gr"at"r su* or $alu" in!luing !o**issions%
1r"*iu*s% +in"s an 1"nalti"s% +or t," loan or r"n"3al t,"r"o+
or +orb"aran!" o+ *on"#% goos or !r"it% 3,"r" su!, loan or
r"n"3al or +orb"ar. an!" is s"!ur" in 3,ol" or in 1art b# a
*ortgag" u1on r"al "stat"% t," titl" to 3,i!, is ul#
r"gist"r" or b# a o!u*"nt !on$"#ing su!, r"al "stat" at an
int"r"st% ,ig,"r t,an t3"l$" 1"r!"nt 1"r annu*./
T," ;sur# La3% t,"r"+or"% as a*"n" b# PD 116% +i4" all
int"r"st rat"s +or all loans 3it, *aturit# o+ *or" t,an 96? a#s
at 16Q 1"r annu* in!luing 1r"*iu*s% +in"s an 1"nalti"s. It
is to b" not" t,at PDCP 3as !,arging 1"nalti"s at t," rat" o+
Art. 195?
6Q 1"r *ont, or an "++"!ti$" rat" o+ 6@Q 1"r annu* on t," 1"so
loan an 1U6Q 1"r *ont, or an "++"!ti$" 6Q 1"r annu* on t,"
Art. 195?
+or"ign !urr"n!# loan. It is% t,"r"+or"% $"r# !l"ar t,at PDCP ,as
b""n !,arging an i*1osing int"r"sts in $iolation o+ t," 1r"$ail.
ing usur# la3s. 7" it not" +urt,"r t,at in t," b"ginning% PDCP
3as !,arging a total o+ 1AQ int"r"st 1"r annu* on t," 1"so loan
an 1B 9U@Q on t," +or"ign !urr"n!# loan. Sin!" t," 1"nalt#
!,arg" 3as in!r"as" to 6Q 1"r *ont, 3it, r"gar to t," 1"so
loan% PDCP b"gan !,arging a total o+ @6Q 1"r annu* on t,"
1"so loan% !l"arl# in $iolation o+ t," ;sur# La3. For instan!"%
Da$ao Ti*b"r Cor1oration obtain" a loan o+ P@.@ *illion an
,as 1ai a total o+ about P9 *illion% t," r"*aining balan!" on
t," 1rin!i1al "bt l"+t un1ai is about P1.@ *illion% to 3,i!,
r"s1on"nts *ust still 1a# t," 1"tition"r. T," la3 s,oul not
b" int"r1r"t" to *"an +or+"itur" o+ t," 1rin!i1al loan as t,at
3oul b" unjustl# "nri!,ing t," borro3"r. T," un1ai 1rin!i.
1al "bt still stans an r"*ains $ali but t," sti1ulation as
to t," usurious int"r"st is $oi2 !ons"Eu"ntl#% t," "bt is to b"
!onsi"r" 3it,out sti1ulation as to t," int"r"st.
In a si*1l" loan 3it, sti1ulation o+ usurious int"r"st% t,"
1r"station o+ t," "btor to 1a# t," 1rin!i1al "bt% 3,i!, is t,"
!aus" o+ t," !ontra!t (Art. 195?% Ci$il Co")% is not ill"gal. T,"
ill"galit# li"s onl# as to t," 1r"station to 1a# t," sti1ulat" in.
t"r"st2 ,"n!"% b"ing s"1arabl"% t," latt"r onl# s,oul b" ""*"
$oi% sin!" it is t," onl# on" t,at is ill"gal. T," +or"going int"r.
1r"tation is r"a!," 3it, t," 1,iloso1,# o+ usur# l"gislation in
*in2 to is!ourag" sti1ulations on usurious int"r"st% sai sti1u.
lations ar" tr"at" as 3,oll# $oi% so t,at t," loan b"!o*"s on"
3it,out sti1ulation as to t," 1a#*"nt o+ int"r"st. It s,oul not%
,o3"$"r% b" int"r1r"t" to *"an +or+"itur" "$"n o+ t," 1rin!i1al%
+or t,is 3oul unjustl# "nri!, t," borro3"r at t," "41"ns" o+
t," l"n"r. Furt,"r*or"% 1"nal san!tions ar" a$ailabl" against a
usurious l"n"r% as a +urt,"r "t"rr"n!" to usur#. T," 1rin!i1al
"bt r"*aining 3it,out sti1ulation +or 1a#*"nt o+ int"r"st !an
t,us b" r"!o$"r" b# jui!ial a!tion.
(6) OCaus"8 an OSubj"!t &att"r8 Distinguis,"
T," i++"r"n!" is onl# a *att"r o+ $i"31oint in so*" 3a#%
b"!aus" 3,at *a# b" t," subj"!t *att"r +or on" 1art# 3ill b"
Art. 195?
t," !aus" or !onsi"ration +or t," ot,"r 1art#.
Art. 195?
E4a*1l"' A is oblig" to sing at a !on!"rt% in r"turn +or
3,i!, s," 3ill r"!"i$" a !ar +ro* 7.
5"garing A% t," subj"!t *att"r is t," singing2 t," !aus"
is t," !ar.
5"garing 7% t," subj"!t *att"r is t," !ar2 t," !aus" is t,"
singing.
H"n!"% 3" !an +or* t,is g"n"ral !on!lusion' In r"!i1ro!al
!ontra!ts% t," subj"!t *att"r +or on" is t," !aus" +or t," ot,"r%
an $i!" $"rsa.
(9) 7ar :u"stion
I+ a 1arti!ular 1iano is sol +or P5??%??? 3,at is t," obj"!t
an 3,at is t," !aus"J
ANS.' T,"r" ar" t3o s!,ools o+ t,oug,t ,"r".
(a) A!!oring to &anr"sa% +or t," s"ll"r t," obj"!t is t," 1iano
an t," !aus" is t," 1ri!"2 +or t," bu#"r t," obj"!t is t,"
1ri!" an t," !aus" is t," 1iano.
(b) A!!oring to ot,"rs% +or bot, t," s"ll"r an t," bu#"r% t,"r"
is just on" obj"!t% na*"l#% t," 1iano. T," !aus" +or t," s"ll"r
is t," 1ri!"2 t," !aus" +or t," bu#"r is t," "li$"r# o+ t,"
1iano.
(@) Classi+i!ation o+ Contra!ts as to Caus"
(a) On"rous 0 ,"r" t," !aus" is% +or "a!, !ontra!ting 1art#%
t," 1r"station or 1ro*is" o+ a t,ing or s"r$i!" b# t,"
ot,"r.
E4a*1l"' !ontra!t o+ sal"
(b) 5"*un"rator# 0 t," 1ast s"r$i!" or b"n"+it 3,i!, b# its"l+
is a r"!o$"rabl" "bt.
FNOTE' In a r"*un"rator# onation% t," 1ast s"r$i!" or
"bt is not b# its"l+ a r"!o$"rabl" "bt. (S"" Art. C66% Ci$il
Co").G
(!) >ratuitous (or !ontra!ts o+ 1ur" b"n"+i!"n!") 0 ,"r"% t,"
Art. 195?
!aus" is t," *"r" liabilit# o+ t," b"n"+a!tor.
E4a*1l"' 1ur" onation
Art. 195?
(5) Caus" in A!!"ssor# Contra!ts Li<" &ortgag" an
Pl"g"
H"r" g"n"rall#% t," !aus" is t," sa*" as t," !aus" +or
t," 1rin!i1al !ontra!t o+ loan. (C,ina 7an<ing Cor1oration $.
Li!,au!o% @6 P,il. @6?).
P,il. >uarant#% In!. $. Dino% "t al.
L.1?5@C% =an. 91% 1A5B
FACTS' T," P,il. >uarant# Co. 1ut u1 a bon +or Dino
in a !ourt a!tion. In turn% &analastas "4"!ut" a *ortgag" in
+a$or o+ t," P,il. >uarant# Co. as !ount"r.guarant# +or Dino8s
bon. Issu"' Do"s t," *ortgag" "4"!ut" b# &analastas ,a$"
an# !aus" or !onsi"rationJ
HELD' K"s. T," !aus" 3as t," "4"!ution o+ t," bon b#
t," !or1oration in +a$or o+ Dino. It is not n"!"ssar# t,at su!,
!onsi"ration s,oul r"oun ir"!tl# to t," b"n"+it o+ &analas.
tas2 it is "noug, t,at it b" +a$orabl" to Dino.
>arrio $. P"r"H Car"nas
6? P,il. A6@
I,"r" on" o+ t," sign"rs o+ a 1ro*issor# not" 3as in"bt"
to t," 1a#"" in t," a*ount o+ P6%??? an to s"!ur" its 1a#*"nt
t," "+"nant sign" t," not" tog"t,"r 3it, sai "btor in soli.
u*% t," sai "bt is su++i!i"nt !onsi"ration +or t," "4"!ution
o+ t," not" as to t," "+"nant.
(6) Caus" in A!!"ssor# Contra!ts o+ P"rsonal >uarant#
(>uarant# an Sur"t#s,i1)
H"r" t," !aus" is% g"n"rall#% 1ur" lib"ralit#. (Stanar Oil
Co. $. Ar"nas% 1A P,il. 969). As a *att"r o+ +a!t% t," !ontra!t o+
guarant# is gratuitous% unl"ss t,"r" is sti1ulation to t," !on.
trar#. (Art. 6?@B% Ci$il Co"). So*"ti*"s% ,o3"$"r% so*" *at".
rial !onsi"ration *a# b" gi$"n. (Stanar Oil Co. $. Ar"nas%
o1. !it.).
(C) &oral Obligation as a Vali Caus" o+ a Ci$il Obligation
Art. 195?
A *oral obligation *a# b" t," !aus" o+ a !i$il obligation.
(Villaro"l $. Estraa% C1 P,il. 1@?). O+ !ours"% i+ t," *oral obli.
Art. 195?
gation r"all# o"s not "4ist% t,"r" is no $ali !aus"% as 3,"n t,"
1ro*is" 3as *a" on t," "rron"ous b"li"+ t,at on" 3as *orall#
r"s1onsibl" +or t," +ailur" o+ a !"rtain 1arti!ular "nt"r1ris".
(Fis,"r $. 5obb% 6A P,il. 1?1).
&a!tal $. &"l"grito
L.1611@% &ar. 6@% 1A61
FACTS' &a!tal ga$" &"l"grito P1%CC? +or t," 1ur!,as" o+
1ala# in b",al+ o+ t," +or*"r% 3it, t," obligation o+ r"turning
t," a*ount 3it,in 1? a#s% i+ not s1"nt +or sai 1ur1os". T,"
ag"nt n"it,"r boug,t t," 1ala# nor r"turn" t," *on"#. &a!tal
t,us a!!us" ,i* o+ "sta+a. &"l"grito 1"rsua" &a!tal to ro1
t," !as"% an in turn ," (&"l"grito) "4"!ut" a 1ro*issor# not"
in +a$or o+ t," ot,"r +or t," a*ount in$ol$". Issu"' Is t,"
1ro*is. sor# not" $aliJ
HELD' K"s% +or its !aus" or !onsi"ration 3as not t," is.
*issal o+ t," "sta+a !as"% but t," 1r"."4isting "bt o+ &"l"grito
0 t," a*ount t,at ,a b""n gi$"n to ,i*.
(B) S,o!<ing Caus" or Consi"ration
=a$i"r $. Va. " CruH
B? SC5A 9@9
A su11os" sal" b# a #ing *an o+ a 1ar!"l o+ lan !onsist.
ing o+ *or" t,an 1B ,"!tar"s to ,is ,ous"bo# +or onl# PC??.?? is
s,o!<ing to t," !ons!i"n!" an $oi. 7"si"s% t," t,u*b*ar< o+
t," s"ll"r on t," "" !annot ,a$" b""n a++i4" $oluntaril# b#
sai s"ll"r.
Ong $. Ong
>5 6CBBB% O!t. B% 1AB5
In ""s o+ !on$"#an!" t,at a,"r" to t," Anglo.Sa4on
1ra!ti!"% it is not unusual to stat" t,at t," !onsi"ration gi$"n
is P1% alt,oug, t," a!tual !onsi"ration *a# b" *or". A on".
1"so !onsi"ration *a# b" sus1i!ious2 t,is alon" o"s not justi+#
on" to in+"r t,at t," bu#"rs ar" not bu#"rs in goo +ait, an
Art. 195?
+or $alu". N"it,"r o"s su!, in+"r"n!" 3arrant on" to !on!lu"
t,at t," sal" is $oi ab initio. 7a +ait, an ina"Eua!# o+
Art. 1951
*on"tar# !onsi"ration o not r"n"r a !on$"#an!" in"4ist"nt.
T," assignor8s lib"ralit# !oul b" a su++i!i"nt !aus" +or a $ali
!ontra!t.
Art. 1951. T," 1arti!ular *oti$"s o+ t," 1arti"s in "nt"r.
ing into a !ontra!t ar" i++"r"nt +ro* t," !aus" t,"r"o+.
CO&&ENT'
(1) &oti$"s o+ t," Parti"s +or Ent"ring Into a Contra!t
E4a*1l"' I bu# a gun +ro* a stor" +or P5?%??? b"!aus" I
3ant to <ill *#s"l+. T," !aus" o+ t," !ontra!t is t," gun (+or *")2
t," *on"# (+or t," s"ll"r). &# *oti$"% ,o3"$"r% is t," <illing o+
*#s"l+. &oti$"s o not "nt"r at all in t," $aliit# or in$aliit#
o+ !aus" or !onsi"ration.
(6) &oti$" Distinguis," +ro* Caus"
(a) T," *oti$" o+ a 1"rson *a# $ar# alt,oug, ," "nt"rs into
t," sa*" <in o+ !ontra!t2 t," !aus" is al3a#s t," sa*".
(b) T," *oti$" *a# b" un<no3n to t," ot,"r2 t," !aus" is
al3a#s <no3n.
(!) T," 1r"s"n!" o+ *oti$" !annot !ur" t," abs"n!" o+ !aus".
(9) Stat"*"nt o+ Distin!tion b# t," Su1r"*" Court
-T," *oti$"s 3,i!, i*1"l on" to a sal" or 1ur!,as" ar" not
al3a#s t," !onsi"ration (!aus") o+ t," !ontra!t as t,at t"r* is
un"rstoo in la3. On" *a# 1ur!,as" an arti!l" not b"!aus" it
is !,"a1% +or in +a!t% it *a# b" "ar% but b"!aus" ," *a# ,a$"
so*" 1arti!ular us" to 3,i!, it *a# b" 1ut b"!aus" o+ a 1ar.
ti!ular Eualit# 3,i!, t,at arti!l" ,as or t," r"lation to 3,i!,
it 3ill b" asso!iat". T,"s" !ir!u*stan!"s *a# !onstitut" t,"
*oti$" 3,i!, inu!"s t," 1ur!,as"% but t," r"al !onsi"ration
o+ t," 1ur!,as" is t," *on"# 3,i!, 1ass". Iit, on"8s *oti$"s
t," la3 !annot "al in !i$il a!tions o+ t,is !,ara!t"r% 3,il" 3it,
Art. 1951
t," !onsi"ration t," la3 is al3a#s !on!"rn"./ (D" ="sus $. >.
;rrutia M Co.% 99 P,il. C1C).
Art. 1956
(@) Ill"gal Caus" Distinguis," +ro* Ill"gal &oti$"
An ill"gal !aus" *a<"s a !ontra!t $oi2 an ill"gal *oti$"
o"s not n"!"ssaril# r"n"r t," transa!tion $oi. E4a*1l"' I+ I
bu# a <ni+" to <ill N% t," 1ur!,as" is still $ali. (S"" >onHal"s% "t
al. $. Trinia% "t al.% 6C P,il. 6B6). 7ut i+ t," 1ur1os" is to sti+l"
a !ri*inal 1ros"!ution% t," !ontra!t is $oi. (5"#"s $. >onHal"s%
FC.A.G @5 O.>. B91 an B &anr"sa 66C.)
Art. 1956. Contra!ts 3it,out !aus"% or 3it, unla3+ul
!aus"% 1rou!" no "++"!t 3,atso"$"r. T," !aus" is unla3+ul
i+ it is !ontrar# to la3% *orals% goo !usto*s% 1ubli! or"r or
1ubli! 1oli!#.
CO&&ENT'
(1) 5"Euisit"s +or Caus"
(a) It *ust b" 1r"s"nt (at t," ti*" t," !ontra!t 3as "nt"r"
into)2
(b) It *ust b" tru" (not +als")2
(!) It *ust b" la3+ul (not !ontrar# to la3% *orals% goo !us.
to*s% 1ubli! or"r% or 1ubli! 1oli!#).
(6) E4isting Caus"
(a) I+ t,"r" is no !aus" 3,atso"$"r% t," !ontra!t is VOID. T,us%
a +i!titious sal" is VOID. (Na$arro $. Di"go% FC.A.G @? O.>.
61?6).
(b) =ust b"!aus" t," s"ll"r 3as not t," o3n"r o+ t," t,ing sol%
it o"s not *"an t,at t,"r" 3as la!< o+ !aus"% +or a+t"r all%
t,"r" is a 3arrant# (S"" L"$# $. =o,nson% @@ P,il. @69)2 nor
o"s +ailur" to 1a# t," 1ri!" r"sult in a la!< o+ !aus". (D"
la CruH $. L"gas1i% 51 O.>. 6616).
FNOTE t,at t," !aus" *ust "4ist at t," ti*" o+
t," 1"r+"!tion o+ t," !ontra!t2 it n"" not "4ist lat"r. (S""
=uan S"rrano $. F""ri!o &ia$"% "t al.% L.1@6CB% &ar. 91%
Art. 1956
1A65).G
Art. 1956
Carant"s $. Court o+ A11"als
L.9996?% A1r. 65% 1ACC
FACTS' T," ,"irs o+ a "!"as" 1"rson assign" in 1A9A
t,"ir -5ig,t to In,"ritan!"/ in +a$or o+ a !o.,"ir in !onsi"ra.
tion o+ t," su* o+ P1.?? an in +urt,"r !onsi"ration o+ t," +a!t
t,at 3,il" t," "!"as" 3as still ali$"% ," ,a orall# "41r"ss"
t,at t," assign"" !o.,"ir 3as a!tuall# t," rig,t+ul o3n"r o+ t,"
1ro1"rt# b"ing assign" to ,i*. It 3as all"g" lat"r% in an a!.
tion to nulli+# t," assign*"nt% t,at t," "" o+ assign*"nt 3as
$oi% t,"r" b"ing no !onsi"ration t,"r"+or% an t,at t," a!tion
to ,a$" t," "" "!lar" $oi o"s not 1r"s!rib" b"!aus" t,"
"" its"l+ 3as $oi. Issu"s' Ias t," !ontra!t o+ assign*"nt
$aliJ Do"s t,is <in o+ a!tion 1r"s!rib"J
HELD'
(a) T," !ontra!t o+ assign*"nt is VALID% t,"r" b"ing su++i!i"nt
!onsi"ration t,"r"+or 0 t," P1.?? !onsi"ration an t,"
+a!t t,at t," "!"as" ,a 1r"$iousl# r"!ogniH" t," as.
sign"" to b" t," rig,t+ul o3n"r o+ t," 1ro1"rt#.
(b) Sin!" t," !ontra!t is not $oi% an a!tion to "!lar" its nul.
lit# *a# 1r"s!rib".
(9) 7ar Probl"*
On =an. 5% A sol an "li$"r" ,is tru!< tog"t,"r 3it,
t," !orr"s1oning !"rti+i!at" o+ 1ubli! !on$"ni"n!" to 7 +or t,"
su* o+ P1.6 *illion% 1a#abl" 3it,in 6? a#s. T3o 3""<s a+t"r
t," sal"% an 3,il" t," !"rti+i!at" o+ 1ubli! !on$"ni"n!" 3as
still in t," na*" o+ A% t," !"rti+i!at" 3as r"$o<" b# t," Lan
Trans1ortation Co**ission t,ru no +ault o+ A. ;1on t," "41i.
ration o+ t," 6?.a# 1"rio% A "*an" 1a#*"nt o+ t," 1ri!"
+ro* 7. 7 r"+us" to 1a#% all"ging t,at t," !"rti+i!at" o+ 1ubli!
!on$"ni"n!" 3,i!, 3as t," *ain !onsi"ration o+ t," sal" no
long"r "4ist". Is t," !ont"ntion o+ 7 t"nabl"J
ANS.' No% +or t," !"rti+i!at" 3as in "4ist"n!" at t," ti*" o+
t," 1"r+"!tion o+ t," !ontra!t. Its subs"Eu"nt r"$o!ation is o+ no
!ons"Eu"n!" inso+ar as t," $aliit# o+ t," !ontra!t is !on!"rn".
Art. 1956
7"si"s% 7 3as n"glig"nt in not ,a$ing !aus" t," i**"iat"
trans+"r o+ t," !"rti+i!at" to ,is na*". A+t"r all% it ,a alr"a#
Art. 1956
b""n "li$"r" to ,i*. (S"" =uan S"rrano $. F""ri!o &ia$"% "t
al.% L.1@6CB% &ar. 91% 1A65).
(@) Tru" Caus"
I+ t," !aus" is +als"% t," !ontra!t is not $ali unl"ss so*"
ot,"r !aus" 3,i!, is la3+ul r"all# "4ists. (S"" Art. 1959% Ci$il
Co").
(5) La3+ul Caus"
(a) I+ t," !aus" is unla3+ul% t," transa!tion is null an $oi.
(b) T,us% a !ontra!t to sti+l" !ri*inal 1ros"!ution +or t,"+t is
$oi b"!aus" t,is is *ani+"stl# !ontrar# to 1ubli! 1oli!#
an t," u" a*inistration o+ justi!". (Arro#o $. 7"r3in%
96 P,il. 9B6).
(!) A 1ro*issor# not" to !o$"r a ga*bling "bt (Pal*a $.
CaniHar"s% 1 P,il. 6?6)% or to !o$"r a!!u*ulat" usurious
"bts% is VOID. (&ul"t $. P"o1l"% C9 P,il. 69).
() A 1ro*is" o+ *arriag" bas" on s"4ual int"r!ours" is bas"
on an ill"gal !aus". (7atarra $. &ar!os% C P,il. 156).
(") I+ a 1"rson !lai*s t,at so*" 1arts o+ a !ontra!t ar" ill"gal
but t," r"st ar" $ali% ," ,as t," bur"n o+ s,o3ing 3,i!,
1arts ar" su11ort" b# a la3+ul !aus"2 ot,"r3is"% t," 3,ol"
!ontra!t s,all b" !onsi"r" VOID. (Li!,au!o $. &artin"H%
6 P,il. 6A@).
(+) I,il" an absolut"l# si*ulat" !ontra!t !an ,a$" no "++"!t%
a !ontra!t 3it, an ill"gal !aus" *a# 1rou!" "++"!ts un"r
!"rtain !ir!u*stan!"s 3,"r" t," 1arti"s ar" not o+ "Eual
guilt. (Ligu"H $. Court o+ A11"als% "t al.% L.116@?% D"!. 1B%
1A5C).
Ligu"H $. Court o+ A11"als% "t al.
L.116@?% D"!. 1B% 1A5C
FACTS' Sal$aor P. Lo1"H% a *arri" *an% ga$" Con!,ita
Art. 1956
Ligu"H% a 15.#"ar.ol girl% a onation o+ lan so t,at s," 3oul
,a$" s"4ual r"lations 3it, ,i* an so t,at ,"r 1ar"nts 3oul
Art. 1956
allo3 t,"* to li$" tog"t,"r. A+t"r Lo1"H8s "at,% Con!,ita
soug,t to g"t t," lan +ro* ,is ,"irs% but sai ,"irs r"+us" on
t," groun t,at t," !aus" or !onsi"ration o+ t," onation 3as
ill"gal% an t,at t,"r"+or" t," onation s,oul b" !onsi"r"
null an $oi. Con!,ita !ont"n" t,at 3,il" t," *oti$" *ig,t
,a$" b""n i**oral% still t," !aus" 0 -lib"ralit#/ 0 3as 1ro1"r%
an t,at t,"r"+or" t," onation s,oul b" !onsi"r" $ali.
HELD' T," onation 3as null an $oi. I,il" it is tru"
t,at *oti$" i++"rs +ro* !aus"% still a !ontra!t t,at is !onition"
u1on t," attain*"nt o+ an i**oral *oti$" s,oul b" !onsi"r"
$oi% +or ,"r" *oti$" *a# b" r"gar" as !aus" 3,"n it 1r""t"r.
*in"s t," 1ur1os"s o+ t," !ontra!t. H"r"% Lo1"H 3oul not ,a$"
!on$"#" t," 1ro1"rt# in Eu"stion ,a ," <no3n t,at Ligu"H
3oul not !o,abit 3it, ,i*2 it +ollo3s t,at t," !o,abitation
3as an i*1li" !onition to t," onation% an b"ing unla3+ul%
t," onation its"l+ *ust b" !onsi"r" unla3+ul. &or"o$"r% it
!annot b" sai ,"r" t,at t," onation 3as a -!ontra!t o+ 1ur"
b"n"+i!"n!"/ or a !ontra!t "sign" sol"l# an "4!lusi$"l# +or t,"
3"l+ar" o+ t," b"n"+i!iar#. In""% t," onation 3as *a" bot,
to b"n"+it Con!,ita an to grati+# ,is o3n s"4ual "sir"s. I"
,a$" t,us s""n t,at t," onation 3as i**oral. N"$"rt,"l"ss%
,a Lo1"H b""n ali$"% ," !oul not ,a$" in$o<" t," i**oralit#
o+ t," onation b"!aus" it 3as ," 3,o 3as at +ault2 t,us Con!,ita
is "ntitl" to t," lan.
FNOTE' T," los"rs% t," ,"irs o+ Lo1"H% +il" a *otion +or
r"!onsi"ration on t," +ollo3ing grouns'
(a) T," onation b"ing null an $oi% it s,oul ,a$" no "++"!t2
t,"r"+or"% Con!,ita !annot g"t t," lan2
(b) =ust b"!aus" Lo1"H is "sto11" +ro* Eu"stioning t," l"gal.
it# o+ t," onation% it o"s not *"an t,at ,is ,"irs !annot
Eu"stion its $aliit#2
(!) Sin!" bot, 1arti"s ar" "Euall# guilt#% t,"# ar" in 1ari "li!to
("Eual guilt)% t,"r"+or" t," la3 s,oul l"a$" t,"* as t,"#
ar"2 t,"r"+or"% Con!,ita% 3,o ,as not b""n gi$"n a!tual
1oss"ssion o+ t," 1ro1"rt#% !annot !lai* t," sa*"2
Art. 1956
() Finall#% sin!" Con!,ita ,as long "la#" ,"r r"!o$"r# o+
t," 1ro1"rt#% s," is no3 guilt# o+ "sto11"l b# la!,"s (un.
Art. 1956
r"asonabl" "la# in bringing a !ourt a!tion)2 an t,"r"+or"
s," s,oul not r"!o$"r t," 1ro1"rt#.
In a "!ision 1ro*ulgat" F"b. 16% 1A5B (Ligu"H $. Court
o+ A11"als% "t al.% L.116@?)% t," !ourt ans3"r" on" b# on"
t," abo$".*"ntion" !ont"ntions'
(a) T,"r" ar" t3o <ins o+ $oi onations' t,os" *a" 3it,out
t," 1ro1"r +or*aliti"s (in"4ist"nt !ontra!t)% an t,os" 3,i!,
ar" ill"gal. T," +irst <in is in"4ist"nt in la3% an is o1"n
to atta!< "$"n b# t," 1arti"s t,"r"to2 but t," s"!on <in is
not in"4ist"nt% it is ill"gal% an un"r t," Ci$il Co"% n"it,"r
1art# *a# in$o<" its unla3+ul !,ara!t"r as a groun +or
r"li"+.
(b) I+ Lo1"H !annot Eu"stion% ,is ,"irs !annot also Eu"stion +or
t,"# !an ,a$" no b"tt"r rig,t t,an t," 1r""!"ssor 3,o*
t,"# r"1la!". I+ at all t," ,"irs !an Eu"stion% it s,oul b"
on so*" ot,"r groun% li<" its b"ing ino++i!ious% +or instan!"
(on" t,at 3oul 1r"jui!" t,"ir l"giti*").
(!) T," 1ari "li!to rul" !annot a11l# b"!aus" t," guilt o+ a
*inor (Con!,ita 3as onl# 15) !annot b" jug" 3it, "Eual
s"$"rit# as t," guilt o+ an ault. &inors o!!u1# a 1ri$il"g"
1osition un"r t," la3.
() T," rul" o+ "sto11"l b# la!,"s !annot a11l# in t,is !as"
against Con!,ita2 ot,"r3is"% 3" 3oul b" 1r"$"nt" +ro*
"n+or!ing t," 1rin!i1l" t,at a 1art# to an ill"gal !ontra!t
!annot r"!o$"r 3,at ," ,as gi$"n 1ursuant t,"r"to. T,"
latt"r rul" is o+ su1"rior 1ubli! 1oli!#.G
(6) E++"!t i+ t," Caus" Is Ill"gal
(a) I+ on" 1art# is inno!"nt ," !annot b" !o*1"ll" to 1"r+or*
,is obligation% an ," *a# r"!o$"r 3,at ," ,as alr"a#
gi$"n. (S"" Art. 1@11% Ci$il Co").
(b) I+ bot, 1arti"s ar" guilt#% in g"n"ral% n"it,"r !an su" t,"
ot,"r% t," la3 l"a$ing t,"* as t,"# ar". 7ut !"rtain "4!"1.
tions "4ist. (S"" Arts. 1@1@% 1@16% "t!.% Ci$il Co").
Arts. 1959.195@
V"l"H $. 5a*as
@? P,il. CBC
FACTS' An "*1lo#"" in a 1a3ns,o1 na*" 5"stituta
:uirant" "*b"HHl" a su* o+ *on"# +ro* sai 1a3ns,o1% an
in or"r t,at s," 3oul not b" 1ros"!ut"% ,"r +at,"r an ,"r
,usban sign" a 1ro*issor# not" to 1a# t," a*ount "*b"HHl"%
3it, int"r"st to t," $i!ti*. I,"n t,"# i not 1a#% t," $i!ti*
institut" t,is a!tion to r"!o$"r t," sai a*ount. Issu"' Can
r"!o$"r# b" *a"J
HELD' No r"!o$"r# !an b" *a" b"!aus" t," !aus" o+ !on.
si"ration is illi!it% na*"l#% to 1r"$"nt a 1ros"!ution +or a !ri*".
T,is 3as !l"arl# t," 1ur1os" o+ t," +at,"r% an also t," 1ur1os"
o+ t," ,usban. An "$"n i+ t," $i!ti* 3"r" to !lai* t,at "$"n
3it,out t,at 1ur1os" t," ,usban8s int"ntion 3as *"r"l# to 1a#
t,at 3,i!, ," o3"s% as a *"*b"r o+ t," !onjugal 1artn"rs,i1%
+or ,is 3i+"8s a!t% still sin!" t," 3i+" 3as not *a" a "+"nant
in t," instant !as"% t," ,usban8s liabilit# !annot b" "n+or!"
in t," 1r"s"nt 1ro!""ing.
Art. 1959. T," stat"*"nt o+ a +als" !aus" in !ontra!ts
s,all r"n"r t,"* $oi% i+ it s,oul not b" 1ro$" t,at t,"#
3"r" +oun" u1on anot,"r !aus" 3,i!, is tru" an la3+ul.
CO&&ENT'
Stat"*"nt o+ a Fals" Caus"
(a) =ust b"!aus" t," !aus" stat" is +als" o"s not n"!"ssaril#
*"an t,at t," !ontra!t is $oi. 5"ason' T," 1arti"s ar"
gi$"n a !,an!" to s,o3 t,at a !aus" r"all# "4ists% an t,at
sai !aus" is tru" an la3+ul.
(b) T,us un"r t,is Arti!l"% it 3oul s""* t,at t," !ontra!t
3it, a stat"*"nt o+ a +als" !aus" is not $oi% but *"r"l#
r"$o!abl" or $oiabl". (Con!"1!ion $. Sta. Ana% BC P,il.
CBC).
Art. 195@. Alt,oug, t," !aus" is not stat" in t," !ontra!t%
it is 1r"su*" t,at it "4ists an is la3+ul% unl"ss t," "btor
Arts. 1959.195@
1ro$"s t," !ontrar#.
Art. 1955
CO&&ENT'
Pr"su*1tion T,at Caus" E4ists
(a) It is n"!"ssar# t,at t," !aus" *ust "4ist% 7;T it is not
n"!"ssar# to STATE t," !aus" in t," !ontra!t. 5"ason' It is
1r"su*" t,at t," !aus" ENISTS an is LAIF;L% unl"ss
t," "btor 1ro$"s t," !ontrar#. (S"" 5aio Cor1. $. 5oa% 66
P,il. 611).
(b) ;n"r t," Statut" o+ Fraus% !"rtain agr""*"nts ,a$" to
b" in 3riting. No3 t,"n% in t,"s" agr""*"nts% is it "ss"ntial
to 1ut o3n t," !onsi"ration in 3ritingJ
ANS.' No% b"!aus" o+ t," 1r"su*1tion un"r t,is
Arti!l" t,at t," !aus" "4ists. (7",n% &"#"r% M Co. $. Da$is%
9C P,il. @91).
(!) A *a" a 1ro*issor# not" in 78s +a$or. A% ,o3"$"r% all"g"
t,at t," !aus" 3as ,is ga*bling loss"s in a 1ro,ibit"
ga*". I,o ,as t," bur"n o+ 1ro$ing t,at t," ga*" 3as
in"" a 1ro,ibit" on"J
ANS.' A b"!aus" un"r t," la3% t," 1r"su*1tion is
t,at t," !aus" is la3+ul. (S"" 5origu"H $. &artin"H% 6 P,il.
5A@).
Art. 1955. E4!"1t in !as"s s1"!i+i" b# la3% l"sion or
ina. "Eua!# o+ !aus" s,all not in$aliat" a !ontra!t% unl"ss
t,"r" ,as b""n +rau% *ista<" or unu" in+lu"n!".
CO&&ENT'
(1) OL"sion8 D"+in"
It is ina"Eua!# o+ !aus"% li<" an insu++i!i"nt 1ri!" +or a
t,ing sol.
(6) 5ul"s on L"sion
>"n"ral 5ul" 0 L"sion or ina"Eua!# o+ 1ri!" o"s not
in$aliat" a !ontra!t.
Art. 1955
E4!"1tions'
(a) I,"n% tog"t,"r 3it, l"sion% t,"r" ,as b""n'
Art. 1955
1) +rau
6) *ista<"
9) or unu" in+lu"n!"
(b) In !as"s "41r"ssl# 1ro$i" b# la3 (in t," +ollo3ing% t,"
!ontra!ts *a# b" r"s!in")'
1) -T,os" 3,i!, ar" "nt"r" into b# guarians 3,"n"$"r
t," 3ars t,"# r"1r"s"nt su++"r l"sion b# *or" t,an
on".+ourt, o+ t," $alu" o+ t," t,ings 3,i!, ar" t,"
obj"!ts t,"r"o+./ (Art. 19B1% 1ar. 1% Ci$il Co").
6) -T,os" agr"" u1on in r"1r"s"ntation o+ abs"nt""s%
i+ t," latt"r su++"r t," l"sion stat" in t," 1r"!"ing
nu*b"r./ (Art. 19B1% 1ar. 6% Ci$il Co").
9) Partition a*ong !o.,"irs% 3,"n an#on" o+ t,"* r".
!"i$" t,ings 3it, a $alu" l"ss b# at l"ast on".+ourt,
t,an t," s,ar" to 3,i!, ," is "ntitl". (Art. 1?AB%
Ci$il Co").
(9) Probl"*
(a) A guarian o+ A sol A8s *ansion 3ort, P16? *illion +or
P6? *illion. &a# t," !ontra!t b" r"s!in" on t," groun
o+ l"sionJ
ANS.' K"s% su!, a !as" is "41r"ssl# 1ro$i" +or b#
t," la3 as on" o+ t," !ontra!ts t,at *a# b" r"s!in" on
t," groun o+ l"sion.
(b) A sol ,is *ansion 3ort, P16? *illion to 7 +or onl# P6?
*illion b"!aus" A i not <no3 t," tru" $alu" o+ t," ,ous".
&a# t," !ontra!t o+ sal" b" r"s!in"J
ANS.' No. As a rul" l"sion or ina"Eua!# o+ 1ri!"% b#
its"l+% o"s not in$aliat" a !ontra!t. 7ut i+ A ,a sol it
onl# +or t,is a*ount b"!aus" o+ +rau or *ista<" or unu"
in+lu"n!"% t," !ontra!t *a# b" annull". Sai t," Court'
-I,"t,"r or not t," 1ri!" 1ai +or t," ,ous" 3as
a"Euat" n"" not b" is!uss" +or "$"n granting t,at it
3as ina"Euat"% t,at 3oul not in$aliat" t," sal". T,"
Art. 1955
+a!t t,at t," bargain 3as a ,ar on" !ou1l" 3it, *"r"
ina"Eua!# o+ a 1ri!" 3,"n bot, 1arti"s ar" in a 1osition to
Art. 1955
+or* an in"1"n"nt jug*"nt !on!"rning t," transa!tion%
is not su++i!i"nt groun +or t," !an!"llation o+ a !ontra!t./
(>ar!ia $. &anas% FC.A.G @5 O.>. No. @% 1. 1B15% !iting As<a#
$. Cosalan% @6 P,il. 1CA).
(@) L"sion as E$i"n!" o+ Vitiat" Cons"nt
L"sion *a# b" EVIDENCE o+ t," 1r"s"n!" o+ +rau% *is.
ta<"% or unu" in+lu"n!". (5osal"s " E!,aus $. >an% 55 P,il.
56C).
Chapter 3
FOR" OF CONTRACTS
Art. 1956. Contra!ts s,all b" obligator#% in 3,at"$"r
+or* t,"# *a# ,a$" b""n "nt"r" into% 1ro$i" all t,"
"ss"ntial r"Euisit"s +or t,"ir $aliit# ar" 1r"s"nt. Ho3"$"r%
3,"n t," la3 r"Euir"s t,at a !ontra!t b" in so*" +or* in
or"r t,at it *a# b" $ali or "n+or!"abl"% or t,at a !ontra!t
b" 1ro$" in a !"rtain 3a#% t,at r"Euir"*"nt is absolut" an
inis1"nsabl". In su!, !as"s% t," rig,ts o+ t," 1arti"s stat"
in t," +ollo3ing arti!l" !annot b" "4"r!is".
CO&&ENT'
(1) >"n"rall#% For* Is Not 5"Euir"
In g"n"ral% +or* o"s not *att"r +or t," $aliit# o+ a !on.
tra!t. It is "noug, t,at t,"r" b" !ons"nt% subj"!t *att"r% an
!aus". T,is rul" a11li"s% ,o3"$"r% to CONSENS;AL CON.
T5ACTS.
FNOTE'
(a) FO5&AL CONT5ACTS (SOLE&N CONT5ACTS) r"Euir"
a !"rtain s1"!i+i" +or*% in aition to !ons"nt% subj"!t
*att"r% an !aus". (E4a*1l"' A onation o+ r"al 1ro1"rt#
*ust b" in a 1ubli! instru*"nt in or"r to b" $ali% "$"n
as b"t3""n t," 1arti"s.)
(b) 5EAL CONT5ACTS r"Euir" DELIVE5K to b" $ali as a
r"al !ontra!t "$"n as b"t3""n t," 1arti"s% in aition to
!ons"nt% subj"!t *att"r% an !aus".G
Art. 1956
&arl"n" Dau"n.H"rna"H $. Hon.
Ial+rio " los Ang"l"s% "t al. L.
6C?1?% A1r. 9?% 1A6A
FACTS' &arl"n" Dau"n.H"rna"H% a *o$i" a!tr"ss%
su" a *o$i" !o*1an# (t," Holl#3oo Far East Prou!.
tions% In!.) an its Pr"si"nt an >"n"ral &anag"r (5a*on
Val"nHu"la)% to r"!o$"r P1@%C?? r"1r"s"nting a balan!"
all"g"l# u" ,"r +or ,"r s"r$i!"s as a star in t3o *o$i"s%
an to r"!o$"r a*ag"s. T," !ontra!t 3as an O5AL on".
T," lo3"r !ourt is*iss" t," !as" on t," groun t,at
un"r Art. 195B o+ t," Ci$il Co"% sin!" t," !ontra!t 1ri!"
"4!""" P5??% t," sa*" s,oul ,a$" b""n "$i"n!" b#
a 3ritt"n instru*"nt' Issu"' Ias t," is*issal 1ro1"rJ
HELD' No% t," is*issal 3as not 1ro1"r. >"n"rall#%
un"r Art. 1956 all !ontra!ts ar" $ali% r"garl"ss o+ +or*.
T,"r" ar" onl# t3o "4!"1tions 0 +irst% 3,"n t," !ontra!tual
+or* is n""" +or VALIDITK as in t," !as" o+ a onation
o+ r"al 1ro1"rt# 3,i!, n""s a 1ubli! instru*"nt2 s"!onl#%
3,"n +or* is n""" +or ENFO5CEA7ILITK un"r t,"
Statut" o+ Fraus. T," !ontra!t +or ,"r s"r$i!"s +alls un.
"r n"it,"r "4!"1tion. T," !ontra!ts !o$"r" b# Art. 195B
(su!, as ,"r !ontra!t) ar" bining an "n+or!"abl" b# a!.
tion or suit "s1it" t," abs"n!" o+ an# 3riting b"!aus" sai
arti!l" no3,"r" 1ro$i"s t,at t," abs"n!" o+ 3ritt"n +or*
3ill *a<" t," agr""*"nt in$ali or un"n+or!"abl". In t,"
*att"r o+ +or*% t," !ontra!tual s#st"* o+ our Ci$il Co"
still +ollo3s t,at o+ t," S1anis, Ci$il Co" o+ 1BBA an o+
t," -Or"na*i"nto " Al!ala/ o+ u1,oling t," s1irit an
int"nt o+ t," 1arti"s o$"r +or*aliti"s2 ,"n!"% g"n"rall#% oral
!ontra!ts ar" $ali an "n+or!"abl".
DuEu" $. Do*ingo
B? SC5A 65@
It is i++i!ult to b"li"$" t,at r"gist"r" lan ,as b""n
1artition" orall#% +or to a++"!t t,ir 1arti"s an# transa!tion
a++"!ting r"gist"r" lan s,oul b" "$i"n!" b# a 1ubli!
Art. 1956
instru*"nt (so t,at t," o!u*"nt 3ill b" a r"gistrabl"
"").
Art. 1956
(NOTE' As b"t3""n t," 1arti"s% ,o3"$"r% t," oral
1artition *a# b" r"gar" as $ali.)
H"irs o+ "l 5osario $. Santos
L.@6BA6% S"1t. 9?% 1AB1
I,"n a 1art# a*its t," g"nuin"n"ss o+ a o!u*"nt%
," also a*its t,at t," 3ors an +igur"s o+ t," o!u*"nt
ar" s"t out !orr"!tl#% an t,at ," 3ai$"s all +or*al r"Eui.
sit"s r"Euir" b# la3% su!, as t," oat,% a!<no3l"g*"nt%
or r"$"nu" sta*1s.
(6) I,"n For* Is I*1ortant
For* *a# b" i*1ortant'
(a) For VALIDITK (T,is is tru" in +or*al or sol"*n !on.
tra!ts.)
(b) For ENFO5CEA7ILITK FT,is is tru" +or t," agr""*"nts
"nu*"rat" un"r t," Statut" o+ Fraus% but o+ !ours"
t,is r"Euir"*"nt *a# b" 3ai$" b# a!!"1tan!" o+ b"n"+its
(1artial) or b# +ailur" to obj"!t to t," 1r"s"ntation o+ oral
(1arol) "$i"n!". (S"" Art. 1@?9% Ci$il Co").G
(!) For CONVENIENCE (T,is is tru" +or t," !ontra!ts "nu.
*"rat" +or "4a*1l" un"r Art. 19B5% Ci$il Co").
(9) E4a*1l"s o+ For*al Contra!ts
(NOTE' I+ t," +or* is not !o*1li" 3it,% Art. 1@5C o+ t,"
Ci$il Co" !annot b" a$ail" o+.)
(a) Donations o+ r"al 1ro1"rt# (t,"s" r"Euir" a 1ubli! instru.
*"nt). (Art. C@A% Ci$il Co").
(b) Donations o+ 1"rsonal 1ro1"rt# (t,"s" r"Euir" a 3ritt"n
!ontra!t or o!u*"nt i+ t," onation "4!""s P5??). (Art.
C@B% Ci$il Co").
(!) Sti1ulation to 1a# int"r"st on loans% int"r"st +or t," ;SE
o+ t," *on"# (sai sti1ulation *ust b" in 3riting).
Art. 1956
() Trans+"r o+ larg" !attl" (t,is r"Euir"s t," trans+"r o+ t,"
!"rti+i!at" o+ r"gistration). (S"!. 569% 5"$. A*. Co").
Art. 1956
(") Sal" o+ lan t,ru an ag"nt (,"r"% t," aut,orit# o+ t," ag"nt
*ust b" in 3riting2 ot,"r3is"% t," sal" is null an $oi).
(Art. 1BC@% Ci$il Co").
(+) Contra!ts o+ anti!,r"sis (,"r" t," 1rin!i1al loan% an t,"
int"r"st i+ an#% *ust b" s1"!i+i" in 3riting2 ot,"r3is"% t,"
!ontra!t o+ anti!,r"sis is $oi). (Art. 1CC9% Ci$il Co").
(@) So*" Probl"*s
(a) A onat" r"al 1ro1"rt# to 7 in a 1ri$at" instru*"nt. 7
a!!"1t" t," onation. Is t," onation $aliJ
ANS.' No% b"!aus" t," onation 3as not *a" in a 1ubli!
instru*"nt. (Ca*aga# $. Lag"ra% C P,il. 9AC).
(b) 5"al 1ro1"rt# 3as onat" in a 1ubli! instru*"nt but a!.
!"1tan!" 3as *a" in a 1ri$at" instru*"nt. Is t," onation
$aliJ
ANS.' No% b"!aus" bot, t," gi$ing an t," a!!"1ting
*ust b" in a 1ubli! instru*"nt. (S"" Ab"llara $. 7alanag%
9C P,il. B65).
(NOTE' 5"gistration in t," 5"gistr# o+ Pro1"rt# o+
onations o+ r"al 1ro1"rt# is i*1ortant onl# +or "++"!ti$it#
as against t,ir 1"rsons2 as b"t3""n t," 1arti"s% a 1ubli!
instru*"nt is su++i!i"nt.)
(!) Is an oral sal" o+ lan $ali as b"t3""n t," 1arti"sJ
ANS.'
1) I+ t," lan ,a b""n "li$"r" or t," *on"# ,as b""n
1ai% t," sal" is !o*1l"t"l# $ali.
(NOTE' Alt,oug, t," Statut" o+ Fraus r"Euir"s t,is
!ontra!t to b" in 3riting% still sai statut" o"s not
a11l# to "4"!ut" or 1artiall# "4"!ut" !ontra!ts.)
6) I+ t," lan ,as not #"t b""n "li$"r" an t," 1ri!"
,as not #"t b""n 1ai% t," sal" is un"n+or!"abl"% t,at
is% n"it,"r 1art# *a# b" !o*1"ll" b# !ourt a!tion to
Art. 1956
1"r+or* unl"ss t," "+"ns" o+ t," Statut" o+ Fraus
is 3ai$".
Art. 1956
(5) Cas"
>allaro $. IAC
>5 6CC@6% O!t. 6A% 1ABC
FACTS' &"liton !lai*s t,at on Aug. 1?% 1A9C% P"ro sol
to ,i* (&"liton) in a 1ri$at" o!u*"nt% an unnotariH" "" o+
sal"% all"g"l# sign" b# P"ro% no3 "!"as"% t," 1ro1"rt# in
Eu"stion. 7as" on t," 1ri$at" o!u*"nt o+ sal"% t," Original
C"rti+i!at" o+ Titl" 3as !an!"ll" an a N"3 C"rti+i!at" o+ Titl"
issu" in t," na*" o+ &"liton. T," o++i!" o+ t," 5"gist"r o+ D""s
3,"r" t," r"!ors 3"r" <"1t 3"r" "stro#". So% b# an a++ia$it
o+ r"!onstitution% at" D"!. 6% 1A5B% an u1on 1r"s"ntation o+
t," O3n"r8s Du1li!at" C"rti+i!at" o+ Titl"% t," titl" 3as a*in.
istrati$"l# r"!onstitut" an t," 5"gist"r o+ D""s issu" t,"
!orr"s1oning trans+"r !"rti+i!at" o+ titl" in t," na*" o+ &"liton.
On No$. 1C% 1AC6% &arta% t," aug,t"r o+ P"ro% "4"!ut" an
+il" an a++ia$it o+ a$"rs" !lai* 3it, t," O++i!" o+ t," 5"gist"r
o+ D""s. On D"!"*b"r A% 1AC6% a "" o+ !on$"#an!" an r"l"as"
o+ !lai* 3as 1r"1ar" 3,i!, 1ro$i" t,at &arta is 3it,ra3.
ing t," a$"rs" !lai*. 7ut &arta r"+us" to sign t," a++ia$it
o+ Euit!lai*.
&"liton su" &arta b# +iling a !o*1laint +or Eui"ting o+
titl". &arta !ount"r" t,at t," "" o+ sal" b" "!lar" null
an $oi ab initio. T," trial !ourt "!lar" t," "" o+ sal" o+
August 1?% 1A9C as 3"ll as t," r"!onstitut" !"rti+i!at" o+ titl"
o+ &"liton $oi ab initio. T," Int"r*"iat" A11"llat" Court a+.
+ir*" t," trial !ourt. T," Su1r"*" Court sustain" bot, t,"
trial an a11"llat" !ourt.
HELD' T," "" o+ sal" is not r"gist"rabl" un"r t," Lan
5"gistration A!t. Tru"% a 1ri$at" !on$"#an!" o+ r"gist"r" 1ro1.
"rt# is $ali b"t3""n t," 1arti"s. 7ut t," onl# rig,t t," bu#"r o+
r"gist"r" 1ro1"rt# in a 1ri$at" o!u*"nt is to !o*1"l t,roug,
!ourt 1ro!"ss"s t," s"ll"r to "4"!ut" a "" o+ !on$"#an!" su+.
+i!i"nt in la3 +or r"gistration 1ur1os"s.
&"liton8s r"lian!" on Art. 1956 o+ t," Ci$il Co" is un+ortu.
nat". T," g"n"ral rul" "nun!iat" in Art. 1956 is t,at !ontra!ts
ar" obligator#% in 3,at"$"r +or* t,"# *a# ,a$" b""n "nt"r"%
Art. 1956
1ro$i" all t," "ss"ntial r"Euisit"s +or t,"ir $aliit# ar" 1r"s"nt.
T," n"4t s"nt"n!" 1ro$i"s t," "4!"1tion% 3,i!, r"Euir"s a !on.
Art. 195C
tra!t to b" in so*" +or* 3,"n t," la3 so r"Euir"s +or $aliit# or
"n+or!"abilit#. Sai la3 in S"!. 16C o+ A!t @A6 r"Euir"s t,at t,"
!on$"#an!" b" "4"!ut" -b"+or" t," jug" o+ a !ourt o+ r"!or or
!l"r< o+ a !ourt o+ r"!or or a notar# 1ubli! or a justi!" o+ t,"
1"a!"% 3,o s,all !"rti+# su!, a!<no3l"g*"nt substantiall# in
+or* n"4t ,"r"ina+t"r stat".88 Su!, la3 3as in$ol$" ,"r". T,"
5"gist"r o+ D""8s a!t in allo3ing t," r"gistration o+ t," 1ri$at"
"" o+ sal" 3as aut,oriH" an i not $aliat" t," "+"!ti$"
1ri$at" o!u*"nt o+ sal".
Art. 195C. I+ t," la3 r"Euir"s a o!u*"nt or ot,"r
s1"!ial +or*% as in t," a!ts an !ontra!ts "nu*"rat" in t,"
+ollo3. ing arti!l"% t," !ontra!ting 1arti"s *a# !o*1"l "a!,
ot,"r to obs"r$" t,at +or*% on!" t," !ontra!t ,as b""n
1"r+"!t". T,is rig,t *a# b" "4"r!is" si*ultan"ousl# 3it,
t," a!tion u1on t," !ontra!t.
CO&&ENT'
(1) 5ig,t o+ On" Part# to Co*1"l t," Ot,"r to E4"!ut" t,"
N"!"ssar# For*
T," Arti!l" a11li"s onl# 3,"n +or* is n""" onl# +or !on.
$"ni"n!"% not +or $aliit# or "n+or!"abilit#.
In ot,"r 3ors% b"+or" t," !ontra!ting 1arti"s *a# b"
!o*1"ll" to "4"!ut" t," n""" +or*% it is "ss"ntial t,at t,"
!ontra!t b"'
(a) 1"r+"!t" ($ali) (Art. 195C)2
(b) "n+or!"abl" un"r t," Statut" o+ Fraus. (Art. 1956).
FNOTE' Art. 1956 sa#s t,at 3,"n t," la3 r"Euir"s
t,at a !ontra!t b" in so*" +or* in or"r t,at it *a# b"
$ali or "n+or!"abl"% t,at r"Euir"*"nt is absolut" an in.
is1"nsabl". In su!, !as"s% t," rig,t o+ t," 1arti"s stat"
in t," +ollo3ing arti!l" (Art. 195C 0 t," rig,t to !o*1"l)
!annot b" "4"r!is".G
FNOTE' A !ontra!t 1artl# 3ritt"n an 1artl# oral is%
Art. 195C
in l"gal "++"!t% an O5AL !ontra!t. (&anu"l $. 5origu"H%
Sr.% L.19@95% =ul. 6C% 1A6?).G
Art. 195C
(6) E4a*1l"s
(a) A onat" lan to 7 in a 1ri$at" instru*"nt. 7 a!!"1t"
in t," sa*" 1ri$at" instru*"nt. 7 t,"n 3ant" to ,a$"
t," onation r"gist"r" but r"gistration r"Euir"s a 1ubli!
instru*"nt. So 7 r"Eu"st" A to 1ut o3n t," onation in
a 1ubli! instru*"nt. 7ut A r"+us". 7 t,"n su" to !o*1"l
A to obs"r$" t," n"!"ssar# +or*. D"!i".
ANS.' A !annot b" !o*1"ll" un"r Art. 195C b"!aus" t,"
onation is not $ali.
(b) Sa*" as 1robl"* (a) "4!"1t t,at t," lan ,as alr"a# b""n
a!tuall# "li$"r" to 7. &a# A b" !o*1"ll" to "4"!ut" t,"
n""" 1ubli! instru*"ntJ
ANS.' Again t," ans3"r is NO% +or t," si*1l" r"ason t,at
t," onation is null an $oi.
(!) A sol to 7 in a 1ri$at" instru*"nt ,is lan. Lat"r 7
3ant" to ,a$" t," sal" r"gist"r"% but r"gistration
r"Euir"s a 1ubli! instru*"nt. &a# 7 !o*1"l A to "4"!ut"
t," n""" 1ubli! instru*"ntJ
ANS.' K"s% b"!aus" t," !ontra!t is bot, $ali an "n+or!".
abl" un"r t," Statut" o+ Fraus.
() Sa*" as (!) "4!"1t t,at t," sal" 3as *a" orall#. &a# 7
!o*1"l A to "4"!ut" t," n""" 1ubli! instru*"ntJ
ANS.' It "1"ns'
1) I+ t," !ontra!t is still "4"!utor# 0 NO b"!aus" t," !on.
tra!t is not "n+or!"abl" un"r t," Statut" o+ Fraus%
3,i!, r"Euir"s sal"s o+ r"al 1ro1"rt# to b" in 3riting
to b" "n+or!"abl" b# !ourt a!tion.
6) I+ t," 1ri!" ,as b""n 1ai% or t," lan ,as b""n "li$.
"r" 0 KES% b"!aus" ,"r" t," !ontra!t is bot, $ali
an "n+or!"abl".
(9) Cas"s
=o*o! $. CA
>5 A6BC1% Aug. 6% 1AA1
Art. 195C
FACTS' T," subj"!t lot +or*s 1art o+ t," "stat" o+ t," lat"
Pantal"on =o*o!. 7"!aus" it 3as +i!titiousl# sol an trans.
Art. 195C
+"rr" to t,ir 1"rsons% &aria Va. =o*o!% as a*inistratri4
o+ t," "stat" an in b",al+ o+ all t," ,"irs% +il" suit to r"!o$"r
t," 1ro1"rt# b"+or" t," trial !ourt (Ci$il Cas" @C5?). &ariano
So% t," last o+ t," trans+"r""s an t," ,usban o+ &aura So%
int"r$"n". T," !as" 3as "!i" in +a$or o+ =o*o! an 3as a!.
!oringl# a11"al" b# &ariano So an on" >a3 Sur C,"ng to
t," Court o+ A11"als. In F"b. 1ACA% 1"ning t," a11"al% =o*o!
"4"!ut" a D"" o+ E4trajui!ial S"ttl"*"nt an Sal" o+ Lan
3it, &aura So +or P9??%???. T," o!u*"nt 3as not #"t sign"
b# all t," 1arti"s nor notariH" but% in t," *"anti*"% &aura
So ,a *a" 1artial 1a#*"nts a*ounting to P@A%???. In 1AB9%
&ariano So% t," a11"llant in t," r"!o$"r# 1ro!""ing% agr"" to
s"ttl" t," !as" b# "4"!uting a "" o+ r"!on$"#an!" o+ t," lan in
+a$or o+ t," ,"irs o+ Pantal"on =o*o!. T," r"!on$"#an!" 3as in
!o*1lian!" 3it, t," "!ision in t," r"!o$"r# !as" an r"sult" in
t," is*issal o+ ,is a11"al. On F"b. 6B% 1AB9% t," ,"irs o+ =o*o!
"4"!ut" anot,"r "4trajui!ial s"ttl"*"nt 3it, absolut" sal" in
+a$or o+ int"r$"nors Dang an Ding. &aura So "*an" +ro*
t," =o*o! +a*il# t," "4"!ution o+ a +inal "" o+ !on$"#an!".
T,"# ignor" t," "*an. T,us% &aura So su" =o*o! ,"irs
+or s1"!i+i! 1"r+or*an!" to !o*1"l t,"* to "4"!ut" an "li$"r
t," 1ro1"r r"gistrabl" "" o+ sal" o$"r t," lot (Ci$il Cas" BAB9).
S," t,"n +il" a noti!" o+ lis 1"n"ns 3it, t," 5"gist"r o+ D""s
on F"b. 6B% 1AB9. On t," sa*" at"% all"g"l# u1on =o*o!8s
b"li"+ t,at &aura So ,a ba!<" out +ro* t," transa!tion% t,"
=o*o!s "4"!ut" t," ot,"r "4trajui!ial s"ttl"*"nt 3it, sal" o+
r"gist"r" lan in +a$or o+ t," s1ous"s Li* +or P6??%??? 1art o+
3,i!, a*ount 3as all"g"l# int"n" to b" r"turn" to &aura
So as r"i*burs"*"nt. T," s1ous"s Li*% ,o3"$"r% r"gist"r"
t,"ir s"ttl"*"nt an sal" onl# on A1r. 6C% 1AB9. T," =o*o!s
as "+"nants% an t," s1ous"s Li* as int"r$"nors% all"g"
t,at !o*1lainant &aura So ba!<" out as "$i"n!" b# an oral
t"sti*on# t,at s," i so in a !on+"r"n!" 3it, =o*o!8s la3#"rs
3,"r" s," "41r"ss" +rustration in "$i!ting sEuatt"rs 3,o ".
*an" larg" su*s as a !onition +or $a!ating. T,"# all"g"
t," la!< o+ signatur"s o+ +our o+ t," ,"irs o+ =o*o! an &aura
So ,"rs"l+ as 3"ll as t," la!< o+ notariHation. T," lo3"r !ourt%
+ining t,at t,"r" 3as no su++i!i"nt "$i"n!" to s,o3 &ariano
So8s 3it,ra3al +ro* t," sal"% !on!lu" t,at' (1) t," !as" is
Art. 195C
on" o+ oubl" sal"2 (6) t," s1ous"s.int"r$"nors &ariano an
&aura So ar" r"gistrants in ba +ait, 3,o r"gist"r" t,"ir ""
Art. 195C
o+ sal" long a+t"r t," noti!" o+ lis 1"n"ns o+ Ci$il Cas" BAA9 3as
r"!or". T," Court o+ A11"als (CA) a++ir*" t," trial !ourt8s
"!ision% "4!"1t +or t," a3ar o+ *oral an "4"*1lar# a*ag"s%
attorn"#8s +""s an "41"ns"s +or litigation.
HELD' T," Su1r"*" Court a++ir*" t," CA8s "!ision an
,"l t,at Li* s1ous"s8 all"gation t,at t," !ontra!t o+ sal" b#
&aria =o*o! 3it, &aura So is "n+or!"abl" un"r t," Statut" o+
Fraus% is 3it,out *"rit. Li* s1ous"s o not "n# t," "4ist"n!"
o+ E4,ibit A% in!luing its t"r*s an !ont"nts% not3it,staning
t," in!o*1l"t"n"ss in +or*. T," *""ting o+ t," *ins an t,"
"li$"r# o+ su*s as 1artial 1a#*"nt is a*itt" b# bot, 1arti"s
to t," agr""*"nt. H"n!"% t,"r" 3as alr"a# a $ali an "4isting
!ontra!t% not *"r"l# 1"r+"!t" as t," trial !ourt sa3 it% but 1artl#
"4"!ut". It is o+ no *o*"nt 3,"t,"r or not it is "n+or!"abl" un.
"r t," Statut" o+ Fraus% 3,i!, rul" is not a11li!abl" b"!aus"
o+ 1artial 1a#*"nt o+ t," $"n""8s obligation an its a!!"1tan!"
b# t," $"nors.,"irs. T," !ontra!t o+ sal" o+ r"al 1ro1"rt# "$"n i+
not !o*1l"t" in +or*% so long as t," "ss"ntial r"Euisit"s o+ !on.
s"nt o+ t," !ontra!ting 1arti"s% obj"!t an !aus" o+ t," obligation
!on!ur an t,"# 3"r" !l"arl# "stablis," to b" 1r"s"nt% is $ali
an "++"!ti$" as b"t3""n t," 1arti"s. ;n"r Art. 195C o+ t," Ci$il
Co"% its "n+or!"abilit# is r"!ogniH" as "a!, !ontra!ting 1art#
is grant" t," rig,t to !o*1"l t," ot,"r to "4"!ut" t," 1ro1"r
1ubli! instru*"nt so t,at t," $ali !ontra!t o+ sal" o+ r"gist"r"
lan !an b" ul# r"gist"r" an !an bin t,ir 1"rsons. &aura
So !orr"!tl# "4"r!is" su!, rig,t si*ultan"ousl# 3it, a 1ra#"r
+or t," "n+or!"*"nt o+ t," !ontra!t in on" !o*1laint. S," i
not abanon ,"r int"ntion o+ 1ur!,asing t," subj"!t lot. T,"
!ontra!ting 1arti"s to E4,ibit A agr"" t,at -t," !onsi"ration
o+ P9??%??? or 3,at"$"r balan!" r"*ains a+t"r "u!ting t,"
a$an!" 1a#*"nts t,"r"on% s,all b" 1ai u1on t," t"r*ination
o+ (&ariano So8s) a11"al in t," !as" in$ol$ing t," 1ro1"rt# in
Eu"stion. E$"n i+ t," su*s 1ai b# &aura So 3"r" int"n" to
"41"it" t," is*issal o+ &ariano So8s a11"al% su!, 1a#*"nt
onl# ini!at" int"r"st in a!Euiring t," lot. In aition% t," !lai*
b# t," Li* s1ous"s t,at t," 1a#*"nts 3"r" +or t," gat,"ring o+
t," s"$"ral ,"irs +ro* +ar 1la!"s to sign E4,ibit A !on+ir*s
&aura So8s !ontinuing int"r"st. T," t"r*s o+ E4,ibit A an t,"
Art. 195C
a!tual int"ntion o+ t," 1arti"s ar" !l"ar an no r"+or*
r"Euiring 1arol "$i"n!" is b"ing soug,t to "lu!iat" t,"
int"ntion +urt,"r. T,"
Art. 195B
oral "$i"n!" o++"r" b# t," Li* s1ous"s to s,o3 a subs"Eu"nt
r"+usal to 1ro!"" 3it, t," sal" !annot b" !onsi"r" to r"$"rs"
t," "41r"ss int"ntion in t," !ontra!t.
Li* $. CA
6B SCAD 6CA
(1AA6)
A !ontra!t o+ ag"n!# to s"ll on !o**ission basis o"s not
b"long to an# o+ t," t,r"" !at"gori"s *"ntion" in Arts. 195C an
195B o+ t," Ci$il Co" an Art. 1@?9 o+ t," Statut" o+ Fraus2
,"n!"% it is $ali an "n+or!"abl" in 3,at"$"r +or* it *a# b"
"nt"r" into.
Art. 195B. T," +ollo3ing *ust a11"ar in a 1ubli! o!u.
*"nt'
(1) A!ts an !ontra!ts 3,i!, ,a$" +or t,"ir obj"!t t,"
!r"ation% trans*ission% *oi+i!ation or "4tinguis,*"nt o+ r"al
rig,ts o$"r i**o$abl" 1ro1"rt#2 sal"s o+ r"al 1ro1"rt# or o+
an int"r"st t,"r"in ar" go$"rn" b# Arti!l"s 1@?9% No. 6% an
1@?52
(6) T," !"ssion% r"1uiation or r"nun!iation o+ ,"r"i.
tar# rig,ts or o+ t,os" o+ t," !onjugal 1artn"rs,i1 o+ gains2
(9) T," 1o3"r to a*inist"r 1ro1"rt#% or an# ot,"r
1o3"r 3,i!, ,as +or its obj"!t an a!t a11"aring or 3,i!,
s,oul a11"ar in a 1ubli! o!u*"nt% or s,oul 1r"jui!" a
t,ir 1"rson2
(@) T," !"ssion o+ a!tions or rig,ts 1ro!""ing +ro* an
a!t a11"aring in a 1ubli! o!u*"nt.
All ot,"r !ontra!ts 3,"r" t," a*ount in$ol$" "4!""s
+i$" ,unr" 1"sos *ust a11"ar in 3riting% "$"n a 1ri$at"
on". 7ut sal"s o+ goos% !,att"ls or t,ings in a!tion ar"
go$"rn" b# Arti!l"s 1@?9% No. 6 an 1@?5.
CO&&ENT'
(1) For* +or Con$"ni"n!"
Art. 195B
T," n"!"ssit# +or t," 1ubli! o!u*"nt in t," !ontra!ts
"nu*"rat" ,"r" is onl# +or !on$"ni"n!"% not +or $aliit# or
Art. 195B
"n+or!"abilit#. (T,unga C,ui $. :u" 7"nt"!% 6 P,il. 5612 D"l
Castillo $. Es!ar"lla% 66 P,il. @?6 an >u"rr"ro $. &igu"l% 1?
P,il. 56).
(NOTE' T," ruling in :u" Kong D"ng $. Tan :ui!o% 1@ P,il.
1C9% ,oling t," !ontrar# rul" is I5ON>.)
Ful" $. CA
>5 116616% &ar. 6% 1AAB
Arti!l" 195B% 3,i!, r"Euir"s t," "*boi*"nt o+ !"rtain
!ontra!ts in a 1ubli! instru*"nt% is onl# +or !on$"ni"n!"% an
r"gistration o+ t," instru*"nt onl# a$"rs"l# a++"!ts t,ir 1ar.
ti"s.
For*al r"Euir"*"nts ar" +or t," b"n"+it o+ t,ir 1arti"s.
Non.!o*1lian!" t,"r"3it, o"s not a$"rs"l# a++"!t t," $aliit#
o+ t," !ontra!t nor t," !ontra!tual rig,ts an obligations o+ t,"
1arti"s t,"r"un"r.
(6) Probl"*
A loan 3as !ontra!t" orall#. I+ t," a*ount is PB??% *a#
t," l"n"r r"!o$"r t," su* l"ntJ
ANS.' K"s% b"!aus" alt,oug, t," la3 sa#s t,at !ontra!ts
in$ol$ing *or" t,an P5?? *ust a11"ar in 3riting% "$"n a 1ri.
$at" on"% still t,is r"Euir"*"nt is onl# +or !on$"ni"n!"% not +or
$aliit#. (T,unga C,ui $. :u" 7"nt"!% 6 P,il. 561 1ro$i"s t,"
!orr"!t rul" an not :u" Kong D"ng $. Tan :ui!o% 1@ P,il. 1C9%
3,i!, 1ro$i"s t," 3rong rul".)
FNOTE' All t," l"n"r ,as to o ,"r" is to a$ail ,i*s"l+
o+ Art. 195C% t," rig,t to !o*1"l t," "4"!ution o+ t," n"""
instru*"nt. &or"o$"r% -t,is rig,t *a# b" "4"r!is" si*ultan".
ousl# 3it, t," a!tion u1on t," !ontra!t./ (Art. 195C).G
FNOTE' A sti1ulation% ,o3"$"r% to 1a# int"r"st on loans
*ust b" in 3riting. I+ not% Art. 195C !annot b" a$ail" o+. I+ not
in 3riting% t," sti1ulation as to int"r"st is VOID% but t," loan
its"l+ is VALID. (S"" Art. 1A56).G
FNOTE' In t," !as" o+ S"guna Porn"llosa% "t al. $. T,"
Art. 195B
Lan T"nur" A*inistration% "t al.% L.1@?@?% =an. 91% 1A61% t,"
Su1r"*" Court sur1risingl# ,"l% !ontrar# to 1r"$ious !as"s%
Art. 195B
t,at 3,il" a sal" in a P5IVATE o!u*"nt o+ a lot an t," ,ous"
!onstru!t" t,"r"on is $ali u1on t," 1arti"s 3it, r"s1"!t to t,"
sal" o+ t," ,ous" "r"!t" t,"r"on% #"t it is not su++i!i"nt to !on$"#
titl" or an# rig,t to t," r"si"ntial lot in litigation. Citing Art.
195B(1) o+ t," Ci$il Co"% t," Court ,"l t,at a!ts an !ontra!ts
3,i!, ,a$" +or t,"ir obj"!t t," !r"ation% trans*ission% *oi+i!a.
tion or "4tinguis,*"nt o+ r"al rig,ts o$"r i**o$abl" 1ro1"rt#
*ust a11"ar in a 1ubli! o!u*"nt. It s,oul b" obs"r$" ,o3"$"r
t,at in t,is !as"% t," ruling a$"rt" to *a# b" !onsi"r" a
*"r" O7ITE5% sin!" un"r t," +a!ts o+ t," !as" t," s"ll"r 3as
NOT t," o3n"r o+ t," 1ro1"rt# in$ol$".G
(9) Pr"su*1tion o+ t," Valiit# o+ a Publi! Instru*"nt
Cabali3 an Saorra $. Saorra% "t al.
L.6565?% =un. 11% 1AC5
T," 1rin!i1l" t,at to "stro# t," $aliit# o+ an "4isting
1ubli! o!u*"nt% strong an !on$in!ing "$i"n!" is n"!"ssar#%
o1"rat"s onl# 3,"n t," a!tion is broug,t b# on" 1art# against
t," ot,"r to i*1ugn t," !ontra!t% an not 3,"n t," suit is
institut" b# a t,ir 1"rson% not a 1art# to t," !ontra!t% but
1r"!is"l# t," $i!ti* o+ it.
Castillo $. Castillo
L.1B69B% =an. 66% 1AB?
A r"!ital in a 1ubli! instru*"nt !"l"brat" 3it, all t,"
l"gal +or*aliti"s un"r t," sa+"guar o+ a notarial !"rti+i!at"
is "$i"n!" against t," 1arti"s an a ,ig, "gr"" o+ 1roo+ is
n"!"ssar# to o$"r!o*" t," l"gal 1r"su*1tion t,at su!, r"!ital
is tru". (S"" Val"n!ia $. Tanto!o% "t al.% AA P,il. B6@).
Chapter 4
REFOR"ATION OF INSTRU"ENTS $%&
(1) O5"+or*ation8 D"+in"
-5"+or*ation is t,at r"*"# in "Euit# b# *"ans o+ 3,i!,
a 3ritt"n instru*"nt is *a" or !onstru" so as to "41r"ss or
!on+or* to t," r"al int"ntion o+ t," 1arti"s 3,"n so*" "rror or
*ista<" ,as b""n !o**itt"./ (59 Cor1us =uris A?6).
(6) 5"ason +or 5"+or*ation
-EEuit# or"rs t," r"+or*ation o+ an instru*"nt in or"r
t,at t," tru" int"ntion o+ t," !ontra!ting 1arti"s *a# b" "4.
1r"ss". T," !ourts o not att"*1t to *a<" anot,"r !ontra!t
+or t," 1arti"s. T," rational" o+ t," o!trin" is t,at it 3oul b"
unjust an in"Euitabl" to allo3 t," "n+or!"*"nt o+ a 3ritt"n
instru*"nt 3,i!, o"s not r"+l"!t or is!los" t," r"al *""ting
o+ t," *ins o+ t," 1arti"s. T," rigor o+ t," l"galisti! rul" t,at
a 3ritt"n instru*"nt s,oul b" t," +inal an in+l"4ibl" !rit"rion
an *"asur" o+ t," rig,ts an obligations o+ t," !ontra!ting 1ar.
ti"s is t,us t"*1"r" to +or"stall t," "++"!ts o+ *ista<"% +rau%
in"Euitabl" !onu!t or a!!i"nt./ (5"1ort o+ t," Co" Co**is.
sion% 1. 56).
Art. 195A. I,"n% t,"r" ,a$ing b""n a *""ting o+ t,"
*ins o+ t," 1arti"s to a !ontra!t% t,"ir tru" int"ntion is
not "41r"ss" in t," instru*"nt 1ur1orting to "*bo# t,"
agr""*"nt% b# r"ason o+ *ista<"% +rau% in"Euitabl" !onu!t
or a!!i"nt% on" o+ t," 1arti"s *a# as< +or t," r"+or*ation
o+ t," instru*"nt to t," "n t,at su!, tru" int"ntion *a# b"
"41r"ss".
Art. 195A
I+ *ista<"% +rau% in"Euitabl" !onu!t% or a!!i"nt ,as
1r"$"nt" a *""ting o+ t," *ins o+ t," 1arti"s% t," 1ro1"r
r"*"# is not r"+or*ation o+ t," instru*"nt but annul*"nt
o+ t," !ontra!t.
CO&&ENT'
(1) Distin!tions 7"t3""n O5"+or*ation8 an OAnnul*"nt8
(a) I,"r" t,"r" ,as b""n a *""ting o+ t," *ins% but t,"r"
is *ista<"% +rau% in"Euitabl" !onu!t or a!!i"nt in t,"
!ontra!t as 3ritt"n% t," r"*"# is 5EFO5&ATION. I,"n
t,"r" ,as b""n no *""ting o+ t," *ins% b"!aus" o+ $itiat"
!ons"nt% t," 1ro1"r r"*"# is ANN;L&ENT.
E4a*1l"'
I+ t," s"ll"r 3as s"lling +or P1%???%??? but t," bu#"r
t,oug,t ," 3as bu#ing +or P5??%??? an t," !ontra!t stat"s
P1%???%???% t,"r" ,as b""n no *""ting o+ t," *ins an
t," r"*"# is annul*"nt2 but i+ bot, agr"" on P5??%???
an t," !ontra!t as 3ritt"n stat"s P1%???%???% t," r"*"#
is r"+or*ation% b"!aus" ,"r"% t,"r" ,as b""n a *""ting o+
t," *ins.
(b) 5"+or*ation o"s not in$aliat" a !ontra!t2 annul*"nt
in$aliat"s a !ontra!t.
(6) 5"Euisit"s +or t," A!tion +or 5"+or*ation
(a) T,"r" *ust b" a *""ting o+ t," *ins.
(b) T," tru" int"ntion is not "41r"ss" in t," instru*"nt.
Sar*ing $. D#
>5 1996@9% =un. 6% 6??6
All o+ t," r"Euisit"s r"garing an a!tion +or r"+or*a.
tion o+ instru*"nt 1ro$i" un"r Art. 195A o+ t," Ci$il
Co"% ar" 1r"s"nt in t," instant !as". T,us'
T,"r" 3as a *""ting o+ t," *ins b"t3""n t," 1ar.
Art. 195A
ti"s to t," !ontra!t but t," "" i not "41r"ss t," tru"
int"ntion o+ t," 1arti"s u" to *ista<" in t," "signation
Art. 195A
o+ t," lot subj"!t o+ t," "". T,"r" is no is1ut" as to t,"
int"ntion o+ t," 1arti"s to s"ll t," lan to Al"janra D"l+ino
but t,"r" 3as a *ista<" as to t," "signation o+ t," lot
int"n" to b" sol as stat" in t," S"ttl"*"nt o+ Estat"
an Sal".
(!) T,"r" *ust b" !l"ar an !on$in!ing 1roo+ t,"r"o+.
FNOTE' &"r" 1r"1on"ran!" o+ "$i"n!" ,"r" 3oul not b"
su++i!i"nt. (>onHal"s &onragon $. Santos% @B O.>. 56?).G
() It *ust b" broug,t 3it,in t," 1ro1"r 1r"s!ri1ti$" 1"rio.
(") T," o!u*"nt *ust not r"+"r to a si*1l" un!onitional
onation int"r $i$os (Art. 1966)% or to 3ills (Art. 1966)% or to
a !ontra!t 3,"r" t," r"al agr""*"nt is $oi. (Art. 1966).
7A Finan!" Cor1. $. IAC M 5"n" Tan
>5 C6@AC% =an. 6?% 1AA9
In t," !as" at bar% t,"r" is no is1ut" t,at t,"r" 3as
a *""ting o+ t," *ins 3it, r"s1"!t to t," arrang"*"nt
3,"r"b# t," 1ri$at" r"s1on"nt borro3s *on"# +ro* t,"
1"tition"r an t," subj"!t !ar s"r$"s as s"!urit# +or t,"
1a#*"nt o+ t," loan" a*ount. T," 1ri$at" r"s1on"nt ,a
insist" t,at 3,at ," *"r"l# int"n" in !ontra!ting 3it,
t," 1"tition"r 3as to s"!ur" a loan 3it, ,is Vol<s3ag"n
S"an as !ollat"ral. ;1on t," ot,"r ,an% t," 1"tition"r%
b# $irtu" o+ t," 1ri$at" r"s1on"nt8s loan a11li!ation%
1r"1ar" t," n"!"ssar# 1a1"rs 3,i!, in!lu" a D"" o+
Absolut" Sal" o+ t," subj"!t !ar in its +a$or in or"r t,at its
l"gal o3n"rs,i1 s,all s"r$" as t," s"!urit# +or t," r"1a#.
*"nt o+ t," a*ount b"ing loan" b# t," 1ri$at" r"s1on"nt
t,ru t," 1a#*"nt o+ *ont,l# r"ntals un"r a Contra!t o+
L"as" 3,i!, t," latt"r ul# sign".
In or"r t,at an a!tion +or r"+or*ation *a# 1ros1"r%
t,"r" *ust b" a *""ting o+ t," *ins o+ t," 1arti"s to a
!ontra!t% but t,"ir tru" int"ntion is not "41r"ss" t,"r"in
b# r"ason o+ *ista<"% +rau% in"Euitabl" !onu!t or a!.
!i"nt. Not3it,staning% t," 1ri$at" r"s1on"nt ,as not
su!!""" in 1ro$ing t," abo$" !ir!u*stan!"s to a$ail o+
Art. 195A
t," r"*"# o+ r"+or*ation. In att"*1ting to 1ro$" ,is al.
l"gation t,at a !ontra!t o+ si*1l" loan 3as int"n"% t,"
Art. 195A
1ri$at" r"s1on"nt 1oint" out t," is!r"1an!# b"t3""n
t," 1ur!,as" 1ri!" o+ P6?%??? as ini!at" in t," D"" o+
Absolut" Sal" an t," a*ount o+ P15%A19.?6 a!tuall# r".
!"i$" b# ,i* as "$i"n!" b# a !,"!< at" O!t. 66% 1AC6
issu" to &artina Inustri"s b# t," 1"tition"r 3it, r"gar
to t," +inan!ing arrang"*"nt agr"" u1on b# t,"*. Su!,
is!r"1an!# is*iss"s t," 1"tition"r8s 1osition t,at ," ,a
agr"" to s"ll ,is !ar to t," 1"tition"r2 ,"n!"% t," basis +or
t," +inan!ing l"as" !ontra!t as !lai*" b# t," 1"tition"r
is not "4ist"nt. For all int"nts an 1ur1os"s% a -+inan!ing
l"as"/ *a# b" s""n to b" a !ontra!t sui g"n"ris% 1oss"ssing
so*" but not n"!"ssaril# all o+ t," "l"*"nts o+ an orinar#
or !i$il la3 l"as". T,us% l"gal titl" to t," "Eui1*"nt l"as"
is log" in t," +inan!ial l"ssor. T," +inan!ial l"ss"" is "n.
titl" to t," 1oss"ssion an us" o+ t," l"as" "Eui1*"nt.
At t," sa*" ti*"% t," +inan!ial l"ss"" is obligat" to *a<"
1"rioi! 1a#*"nts "no*inat" as l"as" r"ntals% 3,i!, "n.
abl" t," +inan!ial l"ssor to r"!o$"r t," 1ur!,as" 1ri!" o+ t,"
"Eui1*"nt 3,i!, ,a b""n 1ai to t," su11li"r t,"r"o+.
(9) No N"3 Contra!t Is &a"
Cosio $. Palil"o
L.1B@56% &a# 91% 1A65
In r"+or*ing instru*"nts% !ourts o not *a<" anot,"r !on.
tra!t +or t," 1arti"s. T,"# *"r"l# inEuir" into t," int"ntion o+
t," 1arti"s an ,a$ing +oun it% r"+or* t," 3ritt"n instru*"nt
(not t," !ont"nt)% in or"r t,at it *a# "41r"ss t," r"al int"ntion
o+ t," 1arti"s.
(@) 5"+or*ation &a# Still Pros1"r E$"n I+ Pro1"rt# In$ol$"
Is Alr"a# &ortgag" b# 7u#"r to a T,ir P"rson
=a#*"% "t al. $. Ala*1a#% "t al.
L.9A5A6% =an. 6B% 1AC5
FACTS' A *arri" !ou1l" "nt"r" into a !ontra!t o+ *ort.
gag"% but t," instru*"nt sign" 3as on" o+ absolut" sal"% so an
Art. 195A
a!tion +or r"+or*ation 3as broug,t. A *otion to is*iss 3as
+il" on t," groun t,at t," 1ro1"rt# in$ol$" 3as alr"a#
a!tuall#
Arts. 196?.1961
*ortgag" b# t," ost"nsibl" bu#"r to a t,ir 1"rson. Issu"' Can
t," a!tion +or r"+or*ation still 1ros1"r "s1it" t," "4ist"n!" o+
t," *ortgag" in +a$or o+ a t,ir 1"rsonJ
HELD' K"s% t," a!tion +or r"+or*ation *a# still 1ros1"r
"s1it" t," *ortgag" in +a$or o+ t," t,ir 1"rson. I+ t," 1lainti++s
s,oul su!!"" in ,a$ing t," !ontra!t r"+or*"% an t,us g"t
ba!< t,"ir 1ro1"rt# (b# 1a#ing t," *ortgag" "bt)% t," 1ro1"rt#
3oul b" t,"irs% subj"!t onl# to t," *ortgag" rig,ts o+ t," t,ir
1"rson% or it *a# "$"n b" 1ossibl" t,at t," "+"nant 3oul b"
or"r" b# t," Court to +r"" t," 1ro1"rt# +ro* t," *ortgag" b".
+or" gi$ing t," 1ro1"rt# to t," 1lainti++s. T," *otion to is*iss
s,oul b" "ni".
Art. 196?. T," 1rin!i1l"s o+ t," g"n"ral la3 on t," r"+or.
*ation o+ instru*"nts ar" ,"r"b# ao1t" inso+ar as t,"#
ar" not in !on+li!t 3it, t," 1ro$isions o+ t,is Co".
CO&&ENT'
5ul" in Cas" o+ Con+li!t
In !as" o+ !on+li!t b"t3""n t," Ci$il Co" an t," 1rin!i1l"s
o+ t," g"n"ral la3 on r"+or*ation% t," +or*"r 1r"$ails. T," latt"r
3ill ,a$" onl# su11l"tor# "++"!t.
Art. 1961. I,"n a *utual *ista<" o+ t," 1arti"s !aus"s
t," +ailur" o+ t," instru*"nt to is!los" t,"ir r"al
agr""*"nt% sai instru*"nt *a# b" r"+or*".
CO&&ENT'
(1) I,"n 5"+or*ation &a# 7" As<" 7"!aus" o+ &utual
&ista<"
(a) ;n"r t,is Arti!l"% t," *ista<" *ust b" *utual.
(b) T," *ista<" *a# b" unilat"ral un"r t," !onitions s"t
+ort, in Arts. 1966 an 1969 o+ t," Ci$il Co".
(!) T," *ista<" *ust b" o+ +a!t 0 usuall#. T,"r"+or"%
Arts. 196?.1961
g"n"rall# an "rror o+ la3 is not "noug,. (7an< o+ t," P.I. $.
Fi"lit#
M Sur"t# Co. o+ t," P.I.% 51 P,il. 5C).
Art. 1961
(6) E4a*1l"
A sol to 7 orall# a ,ous" at 16 San Isiro% &alat". In t,"
3ritt"n 1ubli! o!u*"nt% bot, +orgot t," tru" nu*b"r o+ t,"
,ous" an inst"a 3rot" on t," !ontra!t -No. 1B San Isiro%
&alat"./ H"r"% r"+or*ation o+ t," instru*"nt is 1ro1"r.
(9) Anot,"r E4a*1l"
A *a" a !,"!< in +a$or o+ 7. C 3rot" in t," not" -I guaran.
t"" t,at A 3ill not su++"r an# ,ar*./ 7 no3 s""<s to r"+or* t,"
instru*"nt sa#ing t,at t," not" s,oul stat" -I guarant"" t,at
7 3ill not su++"r an# ,ar*/ an t,at t," *ista<" 3as *utual.
7ut 7 3as not abl" to satis+a!toril# 1ro$" t,at t,"r" 3as su!,
a *ista<". S,oul t," instru*"nt b" r"+or*"J
ANS.' No% t," instru*"nt s,oul not b" r"+or*". T,"
1lainti++ 7an< (7) ,as not "stablis," a *utual *ista<" b# 1roo+
o+ t," !l"ar"st an *ost satis+a!tor# !,ara!t"r !onstituting *or"
t,an a 1r"1on"ran!" o+ "$i"n!". To justi+# t," r"+or*ation o+
a 3ritt"n instru*"nt u1on t," groun o+ *ista<"% t," !on!ur.
r"n!" o+ t,r"" t,ings ar" n"!"ssar#'
First% t,at t," *ista<" s,oul b" o+ a +a!t2
S"!on% t,at t," *ista<" s,oul b" 1ro$" b# !l"ar an
!on$in!ing "$i"n!"2 an
T,ir% t,at t," *ista<" s,oul b" !o**on to bot, 1arti"s
to t," instru*"nt (3,"r" *utual *ista<" is all"g"). (7an< o+
t," P,ili11in" Islans $. Fi"lit# an Sur"t# Co*1an# o+ t,"
P.I.% 51 P,il. 5C).
(@) Cas"
San &igu"l 7r"3"r# $.
La ;nion an 5o!< Insuran!" Co.
@? P,il. 6C@
FACTS' In t," 1r"1arator# n"gotiations +or a !ontra!t o+
insuran!"% it 3as agr"" t,at t," int"r"st o+ bot, t," o3n"r an
Art. 1961
t," *ortgag"" o+ t," 1ro1"rt# s,oul b" 1rot"!t". Ho3"$"r% as
3ritt"n% b"!aus" o+ *ista<"% onl# t," int"r"sts o+ t," *ortgag""
Art. 1966
3"r" 1rot"!t". Issu"' Do"s t," !ourt ,a$" t," rig,t to r"+or*
t," !ontra!tJ
HELD' K"s% b"!aus" o+ t," *utual "rror.
Art. 1966. I+ on" 1art# 3as *ista<"n an t," ot,"r
a!t" +rauul"ntl# or in"Euitabl# in su!, a 3a# t,at t,"
instru*"nt o"s not s,o3 t,"ir tru" int"ntion% t," +or*"r
*a# as< +or t," r"+or*ation o+ t," instru*"nt.
CO&&ENT'
(1) ;nilat"ral &ista<"
In t,is Arti!l"% t," *ista<" is unilat"ral but t," ot,"r 1art#
a!t" +rauul"ntl# or in"Euitabl#.
(6) E4a*1l"
A agr"" 3it, 7 t,at A 3oul b" loan" P1?%???%??? b#
7. In t," !ontra!t sign" b# A an 7% it 3as stat" t,at A 3as
s"lling ,is ,ous" to 7 +or sai a*ount. A sign" t," !ontra!t
in t," b"li"+ t,at it 3as r"all# a !ontra!t o+ loan. I,o% i+ an#%
*a# as< +or t," r"+or*ation o+ t," instru*"nt i+ 7 ,a a!t"
+rauul"ntl#J
ANS.' A *a# as< +or t," r"+or*ation o+ t," instru*"nt
b"!aus" a+t"r t," *""ting o+ t," *ins% on" 1art# (7) a!t"
+rauul"ntl# or in"Euitabl# in su!, a 3a# t,at t," !ontra!t o"s
not s,o3 t,"ir r"al int"ntion. In su!, a !as"% t," la3 1ro$i"s
t,at t," 1"rson 3,o a!t" b# *ista<" *a# as< +or t," r"+or*a.
tion o+ t," instru*"nt.
(9) Cas"
Ong C,ua $. Carr% "t al.
59 P,il. AC5
FACTS' T"!< sol ,is lan to Ong 3it, t," rig,t to r".
1ur!,as" 3it,in @ #"ars. Ong sol t," lan to Carr 3it, t,"
Art. 1966
un"rstaning t,at Carr 3as bu#ing it% subj"!t to t," rig,t to
r"1ur!,as" on t," 1art o+ T"!<. At t,at ti*"% Carr i not ,a$"
Arts. 1969.196@
"noug, *on"#. So Carr as<" +or a loan +ro* an Asso!iation.
T," Asso!iation o++"r" to gi$" a loan 1ro$i" Carr !oul o+.
+"r% as s"!urit#% lan o+ 3,i!, ," 3as t," absolut" o3n"r% t,at
is% lan 3,i!, 3oul not b" subj"!t +or "4a*1l" to r"1ur!,as".
So Carr b"gan to t,in<. Iit, t," ,"l1 o+ a la3#"r 3,o ra+t"
t," ""% Carr an Ong (3,o i not <no3 Englis,) sign" a
!ontra!t in 3,i!, Carr 3as *a" out to b" t," absolut" o3n"r
o+ t," lan% an t," 3ors r"garing t," -rig,t to r"1ur!,as"/
o*itt". Lat"r T"!< 3as r"1ur!,asing t," 1ro1"rt# +ro* Ong%
an Ong "*an" t," r"!on$"#an!" o+ t," 1ro1"rt# +ro* Carr.
Carr r"+us" on t," groun t,at ," (Carr) 3as t," absolut"
o3n"r o+ t," lan. H"n!"% Ong broug,t t,is a!tion against Carr.
Issu"' &a# t," !ontra!t b" r"+or*"J I+ so% *a# Ong no3
"*an t," lan +ro* Carr so t,at it 3oul b" r"sol to T"!<J
HELD' K"s% t," !ontra!t *a# b" r"+or*" b"!aus" -i+ on"
1art# 3as *ista<"n an t," ot,"r a!t" +rauul"ntl# or in"E.
uitabl# in su!, a 3a# t,at t," instru*"nt o"s not s,o3 t,"ir
tru" int"ntion% t," +or*"r *a# as< +or t," r"+or*ation o+ t,"
instru*"nt./ (Art. 1966% Ci$il Co"). It +ollo3s% t,"r"+or"% t,at
Ong *a# no3 "*an t," r"!on$"#an!" o+ t," 1ro1"rt# to ,i*
so t,at t," lan *a# b" r"1ur!,as" b# T"!<.
Art. 1969. I,"n on" 1art# 3as *ista<"n an t," ot,"r
<n"3 or b"li"$" t,at t," instru*"nt i not stat" t,"ir
r"al agr""*"nt% but !on!"al" t,at +a!t +ro* t," +or*"r%
t," in. stru*"nt *a# b" r"+or*".
CO&&ENT'
;nilat"ral &ista<" Also
(a) H"r" again% t," *ista<" is unilat"ral but t," ot,"r 1art#
is guilt# o+ !on!"al*"nt.
(b) Onl# t," 1art# in goo +ait, !an as< +or r"+or*ation.
Art. 196@. I,"n t,roug, t," ignoran!"% la!< o+ s<ill%
n"glig"n!" or ba +ait, on t," 1art o+ t," 1"rson ra+ting
t," instru*"nt or o+ t," !l"r< or t#1ist% t," instru*"nt o"s
Arts. 1969.196@
not "41r"ss t," tru" int"ntion o+ t," 1arti"s% t," !ourts *a#
or"r t,at t," instru*"nt b" r"+or*".
Art. 1965
CO&&ENT'
(1) Failur" to Con$"# t," Tru" Int"nt
T," !ourt *a# or"r t," r"+or*ation o+ t," instru*"nt i+
t," instru*"nt o"s not !on$"# t," tru" int"ntion o+ t," 1arti"s
b"!aus" o+ t,"'
(a) ignoran!"
(b) la!< o+ s<ill
(!) ba +ait, o+
1) t," ra+t"r o+ t," instru*"nt
6) or t," !l"r<
9) or t," t#1ist.
(6) Cas"
&anila Engin""ring Co. $.
Cranston an H"a!o!<
@5 P,il. 16B
FACTS' In a !ontra!t% alt,oug, t," original ra+t r"a in
ollars% t," !ontra!t 3as *a" out in 1"sos t,roug, t," t#1ist8s
+ault. Issu"' &a# t," instru*"nt b" r"+or*"J
HELD' K"s. -It !on!lusi$"l# a11"ars +ro* t," !ollat"ral
+a!ts an surrouning !ir!u*stan!"s t,at it 3as int"n" t,at
t," ollar sign 3as to b" us" an t,at "+"nant <n"3 or in t,"
orinar# !ours" o+ busin"ss s,oul ,a$" <no3n t,at a *ista<"
3as *a". T," !ontra!t 3ill b" r"+or*" an t," ollar sign
substitut" +or t," 1"so sign./
Art. 1965. I+ t3o 1arti"s agr"" u1on t," *ortgag" or
1l"g" o+ r"al or 1"rsonal 1ro1"rt#% but t," instru*"nt
stat"s t,at t," 1ro1"rt# is sol absolut"l# or 3it, a rig,t o+
r"1ur. !,as"% r"+or*ation o+ t," instru*"nt is 1ro1"r.
CO&&ENT'
(1) Int"nt to Ha$" a &ortgag" or Pl"g"
E4a*1l"'
Art. 1965
7 3ant" to borro3 +ro* L% so ," o++"r" b# 3a# o+ *ortgag"
,is lan as s"!urit#. 7ot, 1arti"s agr"" on t,is 1oint but t,"
Art. 1966
!ontra!t as ra+t" !ontain" an absolut" sal". &a# t," instru.
*"nt b" r"+or*"J
ANS.' K"s2 ot,"r3is"% t," tru" int"ntion o+ t," 1arti"s
3oul b" +rustrat".
(6) Ho3 to =ug" t," Parti"s8 Int"nt
T," int"ntion o+ t," 1arti"s !an b" jug" +ro* t,"ir !on.
t"*1oran"ous an subs"Eu"nt a!ts. (V"lasEu"H $. T"ooro% @6
P,il. C5C).
Art. 1966. T,"r" s,all b" no r"+or*ation in t,"
+ollo3ing !as"s'
(1) Si*1l" onations int"r $i$os 3,"r"in no !onition
is i*1os"2
(6) Iill2
(9) I,"n t," r"al agr""*"nt is $oi.
CO&&ENT'
(1) I,"n 5"+or*ation Is Not Allo3"
T," Arti!l" gi$"s 9 instan!"s 3,"n r"+or*ation is not al.
lo3".
(6) 5"ason +or Instan!" No. 1 (Si*1l" Donations)
Donations ar" "ss"ntiall# a!ts o+ 1ur" lib"ralit#. Ho3"$"r%
i+ t," onation is !onitional% r"+or*ation *a# b" r"sort" to so
t,at t," r"al or tru" !onitions int"n" b# t," onor *ig,t b"
broug,t out. In !as" t," onation is an on"rous on"% r"+or*ation
is $"r# *u!, in or"r inas*u!, as in t,is !as"% sai onation
3oul 1arta<" $"r# *u!, o+ t," natur" o+ !ontra!ts.
(9) 5"ason +or Instan!" No. 6 (Iills)
T," *a<ing o+ a 3ill is stri!tl# a 1"rsonal a!t (Art. CB@%
Ci$il Co") 3,i!, is +r"". (Art. B9A% Ci$il Co"). &or"o$"r% a 3ill
*a# b" r"$o<" at an# ti*". (Art. B6B% Ci$il Co").
(NOTE' Ho3"$"r% a+t"r t," "at, o+ t," t"stator% "rrors or
Art. 1966
i*1"r+"!tions in "s!ri1tions *a# b" !orr"!t" un"r Art. CBA o+
t," Ci$il Co"% but not t," *ann"r o+ 1ro1"rt# is1osal.)
Arts. 196C.196B
(@) 5"ason +or Instan!" No. 9 (Voi Agr""*"nt)
5"+or*ation is not allo3" in !as" t," r"al agr""*"nt is
$oi b"!aus" su!, a 1ro!"ur" 3oul b" us"l"ss. On!" r"+or*a.
tion is *a"% t," n"3 instru*"nt 3oul b" $oi 1r"!is"l# b"!aus"
t," tru" agr""*"nt an int"ntion ar" $oi.
Art. 196C. I,"n on" o+ t," 1arti"s ,as broug,t an a!tion
to "n+or!" t," instru*"nt ," !annot subs"Eu"ntl# as< +or
its r"+or*ation.
CO&&ENT'
(1) E++"!t o+ an A!tion to En+or!" t," Instru*"nt
(a) T,is Arti!l" 1r"s"nts anot,"r instan!" 3,"n r"+or*ation
!annot 1ros1"r.
(b) 7asis is "sto11"l% 3ai$"r or rati+i!ation.
(6) E4a*1l"
A sol 7 a ,ous". A +rauul"ntl# *a" t," !ontra!t on" o+
*ortgag" inst"a o+ sal". 7ot, sign" t," !ontra!t o+ *ortgag"%
3it, 7 b"li"$ing all t," ti*" t,at it 3as a !ontra!t o+ sal". 7%
t,"r"+or"% ,as t," rig,t to bring an a!tion +or t," r"+or*ation
o+ t," instru*"nt2 but i+ 7 brings an a!tion to +or"!los" t,"
*ortgag"% ," is b# sai a!tion "n+or!ing t," instru*"nt. H"
!annot% t,"r"+or"% subs"Eu"ntl# as< +or t," r"+or*ation o+ t,"
instru*"nt to *a<" it on" o+ sal".
Art. 196B. 5"+or*ation *a# b" or"r" at t," instan!" o+
"it,"r 1art# or ,is su!!"ssors in int"r"st% i+ t," *ista<" 3as
*utual2 ot,"r3is"% u1on 1"tition o+ t," injur" 1art#% or ,is
,"irs an assigns.
CO&&ENT'
(1) Plainti++s in A!tion +or 5"+or*ation
Arts. 196C.196B
(a) I+ t," *ista<" is *utual% "it,"r 1art# or ,is su!!"ssors in
int"r"st2
Art. 196B
(b) In all ot,"r !as"s'
1) t," injur" 1art#2
6) ,is ,"irs an assigns.
(6) Probl"*
A an 7 agr"" on a !"rtain !ontra!t% but A +rauul"ntl#
*a" a o!u*"nt r"!iting anot,"r <in o+ !ontra!t. Lat"r% bot,
A an 7 i".
(a) &a# t," son o+ 7 bring an a!tion to r"+or* t," instru.
*"ntJ
(b) &a# t," son o+ A bring an a!tion to r"+or* t," instru.
*"ntJ
ANS.'
1) K"s% t," son o+ 7 *a# bring an a!tion to r"+or* t,"
instru*"nt b"!aus" ," is t," ,"ir o+ t," injur"
1art#.
6) No% t," son o+ A !annot bring a su!!"ss+ul a!tion to
r"+or* t," instru*"nt inas*u!, as it 3as t," +at,"r
3,o !aus" t," +rau.
:u"r#' 7ut su11os" t," son o+ A 3ant" to !or.
r"!t t," +rau *a" b# ,is +at,"rJ
ANS.' T,is is all rig,t but in su!, a !as"% no
!ourt a!tion is n""" an#*or"% sin!" bot, 1arti"s
!an agr"" to r"+or* t," instru*"nt b# t,"*s"l$"s.
(9) I,at Co*1laint &ust All"g"
7"+or" r"+or*ation !an b" grant"% t," !o*1laint *ust
all"g"'
(a) t,at t," instru*"nt to b" r"+or*" o"s not "41r"ss t,"
r"al agr""*"nt or int"ntion o+ t," 1arti"s (Ongsia<o% "t al.
$. Ongsia<o% "t al.% L.C51?% &ar. 9?% 1A5C)2
(b) 3,at t," r"al agr""*"nt or int"ntion 3as. (>ar!ia $.
Art. 196B
7isa#a% "t al.% AC P,il. 6?A).
Art. 196A
FNOTE'
1) It is not t," +un!tion o+ t," r"*"# o+ r"+or*ation to
*a<" a n"3 agr""*"nt% but to "stablis, an 1"r1"tu.
at" t," tru" "4isting on". (69 5CL% 1ar. @% 1. 911).
6) &or"o$"r% !ourts o not r"+or* instru*"nts *"r"l#
+or t," sa<" o+ r"+or*ing t,"*% but onl# to "nabl"
so*" 1art# to ass"rt rig,ts un"r t,"* as r"+or*".
(69 5CL% 1ar. 6).G
(@) Pr"s!ri1ti$" P"rio +or 5"+or*ation o+ a Contra!t
Antonio =a#*"% "t al. $. Hon. N"stor Ala*1a#
L.9A5A6% =an. 6B% 1AC5
T," 1"rio o+ 1r"s!ri1tion +or t," r"+or*ation o+ a !ontra!t
(su!, as on" ost"nsibl# an absolut" sal" but a!tuall# a *ortgag")
is t"n (1?) #"ars.
Art. 196A. T," 1ro!"ur" +or t," r"+or*ation o+ instru.
*"nts s,all b" go$"rn" b# 5ul"s o+ Court to b"
1ro*ulgat" b# t," Su1r"*" Court.
CO&&ENT'
Pro!"ural 5ul"s
T,"s" 1ro!"ural rul"s ar" su11os" to b" 1ro*ulgat" b#
t," Su1r"*" Court.
Chapter '
INTERPRETATION OF CONTRACTS
Art. 19C?. I+ t," t"r*s o+ a !ontra!t ar" !l"ar an l"a$"
no oubt u1on t," int"ntion o+ t," !ontra!ting 1arti"s% t,"
lit"ral *"aning o+ its sti1ulations s,all !ontrol.
I+ t," 3ors a11"ar to b" !ontrar# to t," "$i"nt int"n.
tion o+ t," 1arti"s% t," latt"r s,all 1r"$ail o$"r t," +or*"r.
CO&&ENT'
(1) 5"ason +or Int"r1r"tation o+ Contra!ts
I,at is t," us" o+ int"r1r"ting a !ontra!tJ S,oul 3" not
just a11l# t," t"r*s o+ t," !ontra!tJ It is tru" 3" *ust a11l#
t," t"r*s o+ t," !ontra!t% but onl# 3,"n t,"# ar" so !l"ar t,at
t,"r" is no oubt r"garing t," int"ntion o+ t," !ontra!ting
1arti"s. 7ut in ot,"r !as"s% 3" s,oul a11l# t," rul"s o+
int"r1r"tation.
(6) 5ul" in Cas" o+ Con+li!t
In !as" o+ !on+li!t b"t3""n t," 3ors o+ t," !ontra!t an
t," "$i"nt int"ntion o+ t," 1arti"s% 3,i!, on" *ust 1r"$ailJ
ANS.' T," int"ntion *ust 1r"$ail. -L"t us int"r1r"t not b#
t," l"tt"r t,at <ill"t, but b# t," s1irit t,at gi$"t, li+"./ -I+ t,"
3ors a11"ar to b" !ontrar# to t," "$i"nt int"ntion o+ t," 1ar.
ti"s% t," latt"r s,all 1r"$ail o$"r t," +or*"r./ (6n 1aragra1,%
Art. 19C?% Ci$il Co").
I,"r" t," t"r*s an 1ro$isions t,"r"o+ ar" !l"ar an
l"a$" no oubt as to t," int"ntion o+ t," !ontra!ting 1arti"s% t,"
lit"ral *"aning o+ its sti1ulation s,all !ontrol. (5 M & >"n"ral
&"r!,anis"% In!. $. CA% >5 1@@1BA% O!t. 5% 6??1).
Art. 19C?
(9) Cas"s
Ani$"rsario $. T"rnat"
1? P,il. 59
FACTS' A o!u*"nt r"as as +ollo3s' -5"!"i$" +ro* DoPa
&aria Ani$"rsario t," su* o+ P51?.??% in 1a#*"nt o+ t," 1ri!" o+
a 3,it" ,ors" 1ur!,as" at San =uan " 7o!obo!% &anila% No$.
65% 1A?6. (S>D). FLO5ENTINO TE5NATE./ Issu"' Ias t,"
*on"# 1ai +or a ,ors" alr"a# 1ur!,as" or +or a ,ors" still to
b" 1ur!,as"J
HELD' T," *on"# 3as 1ai +or a ,ors" alr"a# 1ur!,as".
T," o!u*"nt -"4,ibit" b# t," 1lainti++ in su11ort o+ ,"r a!.
tion o"s not 1ro$" t," all"gation o+ t," !o*1laint but t,os"
o+ t," ans3"r o+ t," "+"nant% to t," "++"!t t,at t," latt"r% on
t," abo$"*"ntion" at"% r"!"i$" t," su* o+ P51?.??% not to
1ur!,as" a ,ors" at t,at ti*"% as !ont"n" b# t," 1lainti++% but
in 1a#*"nt o+ t," 1ri!" o+ a 3,it" ,ors" alr"a# boug,t% as al.
l"g" b# t," "+"nant. T,is !onstru!tion b# t," lo3"r !ourt is
in !on+or*it# 3it, t," 1ro$isions o+ Art. 16B1 o+ t," Ci$il Co"
(no3 Art. 19C? o+ t," n"3 Ci$il Co") 3,i!, sa#s t,at -i+ t,"
t"r*s o+ a !ontra!t ar" !l"ar an l"a$" no oubt as to t," int"n.
tion o+ t," !ontra!ting 1arti"s% t," lit"ral s"ns" o+ its 1ro$isions
s,all b" obs"r$"./
7aluran $. Na$arro
CA SC5A 9?A
I+ t3o 1arti"s int"n to *"r"l# trans+"r to "a!, ot,"r t,"
*at"rial 1oss"ssion o+ t,"ir r"s1"!ti$" 1ar!"ls o+ lan% no bart"r
is 1r"su*".
Fran!is!o =. Ni!olas $.
T," 5"1arations Co**ission an P"ro Pastoral
L.6B6@A% &a# 61% 1AC5
FACTS' In a 3ritt"n !ontra!t% t," 1arti"s agr"" t,at -all
l"gal a!tions arising out o+ t,is !ontra!t. . . *a# b" broug,t in
an sub*itt" to t," jurisi!tion o+ t," 1ro1"r !ourts in t," Cit#
o+ &anila./ &a# t," 1arti"s su" in !ourts outsi" o+ &anila% as
Art. 19C?
in t," Court 3,"r" t," "+"nant or t," 1lainti++ r"si"s at t,"
"l"!tion o+ t," 1lainti++J
Art. 19C?
HELD' K"s% t," 1arti"s *a# su" "ls"3,"r" 0 t," !laus"
in Eu"stion b"ing 1"r*issi$" onl# in $i"3 o+ t," us" o+ t," 3or
-*a#./ V"nu" (or t," 1la!" o+ trial) in 1"rsonal a!tions is +i4"
+or t," !on$"ni"n!" o+ t," 1arti"s an to 1ro*ot" t," "ns o+
justi!". To !on+in" t," $"nu" ,"r" to &anila 3oul not s"r$" t,"
int"r"sts o+ justi!". In a si*ilar !as" 1r"$iousl# "!i"% r" t,"
sti1ulation t,at t," 1arti"s !ons"nt to su" or b" su" in &anila%
t," Court ,"l t,at su!, sti1ulation i not *a<" &anila t,"
obligator# $"nu". T," sti1ulation onl# ADDS &anila to t," i+.
+"r"nt 1ossibl" $"nu"s.
(NOTE' It 3oul ,a$" b""n i++"r"nt i+ t," 1arti"s ,a
!at"gori!all# stat" in t," !ontra!t t,at &anila 3oul b" t,"
ONLK $"nu".)
Pa# $. Va. " Palan!a
L.6AA??% =un. 6B% 1AC@
FACTS' A 1ro*issor# not" stat" t,at it 3as 1a#abl" u1on
r"!"i1t o+ t," "btor o+ !as, 1a#*"nt +ro* a !"rtain "stat"% or
u1on "*an. Issu"' Is t,is obligation "*anabl" at on!"J
HELD' K"s% b"!aus" o+ t," !l"ar i*1ort o+ t," 3ors -or
u1on "*an.88
Ab"lla $. >onHaga
56 P,il. 196
FACTS' A an 7 "nt"r" into a so.!all" !ontra!t o+ l"as"%
3,"r"b# 7 3oul 1a# !"rtain r"gular a*ounts as -r"ntals/ an
at t," "n o+ t," -l"as"%/ 7 3oul b"!o*" t," absolut" o3n"r
o+ t," 1ro1"rt#. Issu"' Is t,is r"all# a l"as" or a sal" in install.
*"ntsJ
HELD' T,is !ontra!t is r"all# a sal" in install*"nts +or
su!, 3as t," "$i"nt int"ntion o+ t," !ontra!ting 1arti"s.
-Alt,oug, in t," !ontra!t% E4,ibit A% t," usual 3ors
Ol"as"%8 Ol"ss""%8 an Ol"ssor8 3"r" "*1lo#"% t,at is not obsta!l"
to ,oling% as t," !ourt ,"r"b# ,ols% t,at sai !ontra!t 3as a
sal" on install*"nts% +or su!, 3as t," "$i"nt int"ntion o+ t,"
1arti"s in "nt"ring into sai !ontra!t./
Art. 19C?
FNOTE' -S"ll"rs "sirous o+ *a<ing !onitional sal"s o+
t,"ir goos% but 3,o o not 3is, o1"nl# to *a<" a bargain in
Art. 19C?
t,at +or*% +or on" r"ason or anot,"r% ,a$" +r"Eu"ntl# r"sort" to
t," "$i!" o+ *a<ing !ontra!ts in t," +or* o+ l"as"s "it,"r 3it,
o1tions to t," bu#"r to 1ur!,as" +or a s*all !onsi"ration at t,"
"n o+ t," t"r*% 1ro$i" t," so.!all" r"nt ,as b""n ul# 1ai%
or 3it, sti1ulations t,at i+ t," r"nt t,roug, t," t"r* is 1ai%
titl" s,all t,"r"u1on $"st in t," l"ss"". It is ob$ious t,at su!,
transa!tions ar" l"as"s onl# in na*". T," so.!all" r"nt *ust
n"!"ssaril# b" r"gar" as 1a#*"nt o+ t," 1ri!" in install*"nts%
sin!" u" 1a#*"nt o+ t," agr"" a*ount r"sults% b# t," t"r*s
o+ t," bargain% in t," trans+"r o+ titl" to t," l"ss""./ (Va. "
=os" $. V"loso 7arru"!o% 6C P,il. 1A1).G
AEuino $. D"ala
69 P,il. 5B6
FACTS' A n""" *on"# bal#. So ," as<" 7 +or a loan%
o++"ring ,is (A8s) ,ous" as s"!urit#. 7 i not 3ant to l"n 3it,
a *ortgag" as s"!urit#% but ," o++"r" to bu# t," ,ous"% 3it,
t," rig,t o+ r"1ur!,as" on t," 1art o+ A. T," *on"# 1ai 3as a
s*all su*% !onsi"ring t," $alu" o+ t," ,ous". I,"n t," 1"rio
+or r"1ur!,as" "n"% an A ,a not #"t r"""*" t," 1ro1"rt#%
t," titl" o+ absolut" o3n"rs,i1 3as $"st" in 7% t," $"n"" a
r"tro (t," bu#"r in a sal" 3it, t," rig,t o+ r"1ur!,as"). 7 t,"r".
u1on as<" A to l"a$" t," ,ous". A r"+us". H"n!"% 7 broug,t
t,is a!tion to oust A. Issu"' Is t," !ontra!t r"all# a sal" 3it, t,"
rig,t o+ r"1ur!,as" (1a!to " r"tro) or is it r"all# a *ortgag" (an
"Euitabl" *ortgag")J
I*1ortan!" o+ t," issu"' I+ it is r"all# a 1a!to " r"tro
!ontra!t% 7 is no3 t," o3n"r o+ t," 1ro1"rt# b"!aus" t," ,ous"
3as not r"""*" b# A uring t," 1"rio +or r"1ur!,as"% an
t,"r"+or" A s,oul b" oust". On t," ot,"r ,an% i+ t," !ontra!t
s,oul b" int"r1r"t" as an "Euitabl" *ortgag"% o3n"rs,i1 ,as
not #"t b""n $"st" on 7 b"!aus" +or"!losur" 1ro!""ings s,oul
still b" on"% an t,"r"+or" A s,oul still r"*ain in t," ,ous".
HELD' Alt,oug, a11ar"ntl# t,is is a 1a!to " r"tro% it r".
all# is an "Euitabl" *ortgag"% +or !onsi"ring t," !ir!u*stan!"s
o+ t," !as"% t," 1ur1os" o+ t," !ontra!t 3as r"all# to *a<" t,"
Art. 19C?
,ous" t," s"!urit# +or t," loan. T,"r" 3as no r"al int"ntion ,"r"
to s"ll t," ,ous".
Art. 19C?
=i*"n"H $. 7u!o#
L.1?661% F"b. 6B% 1A5B
FACTS' A 1ro*issor# not" stat"' -5"!"i$" +ro* &iss
Pa!i+i!a =i*"n"H t," total a*ount o+ P1?%??? 1a#abl" si4
*ont,s a+t"r t," 3ar% 3it,out int"r"st./ It 3as all"g" t,at
t," not" !ontain" no "41r"ss 1ro*is" to 1a#. Issu"' Ias t,"r" a
1ro*is" ,"r"J
HELD' K"s. I*1li!itl#% t,"r" 3as a 1ro*is" to 1a# t,"
a*ount stat". An a!<no3l"g*"nt *a# b"!o*" a 1ro*is" b#
t," aition o+ 3ors b# 3,i!, a 1ro*is" o+ 1a#*"nt is naturall#
i*1li"% su!, as -1a#abl"./
7ijis $. L"gas1i
L.1?C?5% &ar. 9?% 1A6?
FACTS' In a "" o+ sal"% a !"rtain lot No. 195C 3as *"n.
tion" as t," 1ar!"l sol% but bot, 1arti"s *"ant Lot No. 1155%
an in +a!t bu#"r too< 1oss"ssion o+ t," latt"r 3it, t," <no3l"g"
o+ t," s"ll"r.
HELD' Sin!" t," 1arti"s r"all# *"ant Lot No. 1155% t,is
s,oul b" !onsi"r" t," obj"!t o+ t," !ontra!t.
L"onor $. S#!i1
L.1@66?% A1r. 6A% 1A61
FACTS' A guarantor guarant"" t," 1a#*"nt o+ r"ntals
alr"a# u" at t," ti*" t," 1ro*is" 3as *a". Issu"' Is ," also
r"s1onsibl" +or subs"Eu"nt r"ntsJ
HELD' ;n"r t," +a!ts% it is !l"ar ," n"$"r ,a t," obliga.
tions to 1a# t," subs"Eu"nt r"nts.
Fi"l T"ooro $. F"li4 &a!ara"g
an Court o+ Agrarian 5"lations
L.6?C??% F"b. 6C% 1A6A
FACTS' A !ontra!t 3as "no*inat" b# t," 1arti"s as
a -Contra!t o+ L"as"/ but t," r"al agr""*"nt 3as to !r"at" a
Art. 19C?
-l"as",ol t"nan!# r"lation/ (Agri!ultural). Issu"' Ho3 s,oul
t," !ontra!t b" r"gar"J
Art. 19C?
HELD' T," !ontra!t s,oul b" r"gar" as a -l"as",ol
t"nan!# r"lation/ b"!aus" it is not t," na*" gi$"n b# t," 1arti"s
t,at !ontrols but t,"ir r"al int"nt as gl"an" +ro* t," 1ur1os"s
o+ t," !ontra!t.
As istinguis," +ro* an orinar# l"as" !ontra!t% t,"
+ollo3ing ar" t," 1rin!i1al "l"*"nts o+ a -l"as",ol t"nan!#
!ontra!t or r"lation/'
(a) T," obj"!t is agri!ultural lan l"as" +or agri!ultural
1rou!tion2
(b) T," siH" o+ t," lan,oling *ust b" su!, t,at it is sus.
!"1tibl" o+ 1"rsonal !ulti$ation b# a singl" 1"rson% 3it,
t," assistan!" +ro* t," *"*b"rs o+ ,is i**"iat" +ar*
,ous",ol2
(!) T," t"nant.l"ss"" *ust a!tuall# an 1"rsonall# till% !ul.
ti$at" or o1"rat" sai lan% sol"l# or 3it, t," ai o+ labor
+ro* ,is i**"iat" +ar* ,ous",ol2 an
() T," lanlor.l"ssor% 3,o is "it,"r t," la3+ul o3n"r or t,"
l"gal 1oss"ssor o+ t," lan% l"as"s t," sa*" to t," t"nant.
l"ss"" +or a 1ri!" !"rtain or as!"rtainabl" in an a*ount
"it,"r o+ *on"# or 1rou!".
5" &ario 7. C,anliong!o
CA SC5A 96@
I+ no b"n"+i!iar# is na*" +or t," r"tir"*"nt b"n"+its o+
a go$"rn*"nt "*1lo#""% it is un"rstoo t,at t," b"n"+its 3ill
a!!ru" to ,is "stat".
P"o1l" $. Hon. Constant" A. An!,"ta% "t al.
L.9AAA9% &a# 1A% 1AC5
FACTS' On" o+ t," r"asons gi$"n to isEuali+# =ug" Con.
stant" A. An!,"ta o+ t," Cri*inal Cir!uit Court o+ 7ula!an +ro*
,"aring a 1arti!ular !as" 3as t," +a!t t,at ," as<" s"ar!,ing
an *inut" Eu"stions o+ t," 3itn"ss"s in or"r to 1ro1"rl# in.
t"r1r"t t,"ir t"sti*oni"s an !l"ar u1 a*biguiti"s. Issu"' Is t,is
Art. 19C?
a 1ro1"r groun to isEuali+# sai jug"J
Art. 19C?
HELD' No% t,is 3oul not b" a 1ro1"r groun +or is.
Euali+i!ation2 ot,"r3is"% t," is!r"tion o+ a trial jug" 3oul
b" !urtail" i+ *inut" an s"ar!,ing Eu"ri"s +ro* t," b"n!,
3oul b" in$"st" 3it, a sinist"r signi+i!an!". Litigants s,oul
r"*"*b"r t,at a jug" is t,"r" 1r"!is"l# to as!"rtain t," trut,
o+ t," !ontro$"rs# b"+or" ,i*. H" "njo#s a gr"at "al o+ latitu"
t,"r"+or" in "4a*ining 3itn"ss"s 3it,in t," li*its o+ !ours"
o+ "$i"ntiar# rul"s. It is +itting an 1ro1"r t,at a t"sti*on#
s,oul not b" in!o*1l"t" or obs!ur". A+t"r all% t," jug" is t,"
arbit"r% an ," *ust b" in a 1osition to satis+# ,i*s"l+ as to t,"
r"s1"!ti$" *"rits o+ t," !lai*s o+ bot, 1arti"s. T,is is not to
"n#% o+ !ours"% t,at t,"r" *a# b" !as"s 3,"r" an anal#sis o+
t," Eu"stions as<" 3ill r"$"al bias.
>SIS $. CA
>5 56@CB% O!t. 9?% 1AB6
FACTS' T," *ortgag" !ontra!t 1ro$i"s t,at t," rat"
o+ int"r"st b" AQ 1"r annu* !o*1oun" *ont,l#% an an#
install*"nt or a*ortiHation t,at r"*ains u" an un1ai s,all
b"ar int"r"st at t," rat" o+ A 1U6Q 1"r *ont,. Lat"r% b"!aus" t,"
loan 3as in!r"as"% an -A*"n*"nt o+ 5"al Estat" &ortgag"/
3as "4"!ut". T," *ortgagor !lai*s t,at sin!" t," a*"n*"nt
!ontain" no sti1ulation on !o*1oun" int"r"st% sin!" t,"
a*"n*"nt su1"rs"" t," original !ontra!t% ," s,oul not b"
r"Euir" to 1a# !o*1oun" int"r"st on t," arr"arag"s.
HELD' T,"r" is no a*biguit# in t," t"r*s an !onitions
o+ t," a*"n*"nt o+ t," *ortgag" !ontra!t. T," 1rior% !ont"*.
1oran"ous an subs"Eu"nt a!ts o+ t," 1arti"s s,o3 t,at sai
a*"n*"nt 3as n"$"r int"n" to !o*1l"t"l# su1"rs"" t,"
original *ortgag" !ontra!t. First% t," a*"n*"nt r"!ogniH"s
t," "4ist"n!" an "++"!ti$it# o+ t," 1r"$ious !ontra!t. S"!on%
no3,"r" in t," a*"n*"nt i t," 1arti"s *ani+"st t,"ir int"n.
tion to su1"rs"" t," original !ontra!t. T,ir% t," a*"n*"nt
!on+ir*s an rati+i"s an !onsi"rs in +ull +or!" an "++"!t t,"
t"r*s an !onitions o+ t," original *ortgag" an ar" *a" an
int"gral 1art o+ t," a*"n*"nt. As a *att"r o+ 1oli!#% t," >SIS
i*1os"s uni+or* t"r*s an !onitions +or all its r"al "stat"
Art. 19C?
loans% 1arti!ularl# 3it, r"s1"!t to !o*1ouning o+ int"r"st.
Art. 19C?
;.P. Coll"g" o+ Agri!ultur" $. >abri"l
>5 C?B66% O!t. 16% 1ABC
FACTS' T," sub.!ontra!t b"t3""n t," !ontra!tor an
t," sub.!ontra!tor stat"s' -T," t"r*s o+ 1a#*"nt s,all b" on a
*ont,l# basis as 1"r +or* a!!o*1lis," an a11ro$" b# t,"
;ni$"rsit# o+ t," P,ili11in"s Coll"g" o+ Agri!ultur".88
HELD' T,is sti1ulation is !l"ar an l"a$"s no oubt as to
t," int"ntion o+ t," !ontra!ting 1arti"s. It is "ss"ntial t,at t,"
3or<s !o*1l"t" b# t," sub.!ontra!tor b" a11ro$" b"+or" ;.P.
!an b" *a" liabl" un"r t," sub.!ontra!t. It is o+ no *o*"nt
t,at t," sub.!ontra!tor 3rot" ;.P. t,at t," !ontra!tor ,a not
#"t 1ai all its obligations to t," +or*"r. T,is o"s not n"!"s.
saril# *"an a11ro$al o+ t," sub.!ontra!tor8s 3or<.
AH!ona $. =a*anr"
>5 9?5AC% =un. 9?% 1ABC
FACTS' T," agr"" #"arl# r"ntal +or an B?.,"!tar" lan
3as PC%6?? +or t," t,r"" agri!ultural #"ars b"ginning 1A6?%
"4t"nibl" at t," l"ss""8s o1tion to *or" agri!ultural #"ars u1
to 1A65. T," +irst annual r"ntal 3as u" on or b"+or" &ar!, 9?%
1A6?. T," l"ss"" a!tuall# "nt"r" t," 1r"*is"s onl# on O!t. 66%
1A6? a+t"r 1a#*"nt o+ t," su* o+ PC%???% 3,i!, 3as a!<no3l"g"
in a r"!"i1t 3,i!, stat"s' -T," a*ount o+ SEVEN THO;SAND
PESOS (PC%???)% . . . as 1a#*"nt +or t," r"ntal !orr"s1oning to
!ro1 #"ar 1A61.66/ . . . to r"ntal u" on or b"+or" =anuar# 9?% 1A61%
-as 1"r !ontra!t./ T," l"ssor !lai*s t,at t," l"ss"" "+ault" in
1a#*"nt b"!aus" t," latt"r 3as P6?? s,ort o+ su!, r"ntal% an
!on!lu"s t,at t," !ontra!t s,oul b" ""*" !an!"ll". T," trial
!ourt ,"l t,at t," P6?? ,as b""n !onon".
HELD' T," 3ors -as 1"r !ontra!t/ +oun in t," r"!"i1t o+
1a#*"nt sugg"st t,at t," 1arti"s 3"r" a3ar" o+ t," 1ro$isions
o+ t," agr""*"nt% 3,i!, 3as "s!rib" in "tail "ls"3,"r" in t,"
r"!"i1t. T," r"ntal sti1ulat" in t," !ontra!t 3as PC%6??. T," 1a#.
*"nt a!<no3l"g" in t," r"!"i1t 3as PC%??? onl#. K"t no *"ntion
3as *a" in t," r"!"i1t o+ t," is!r"1an!#. On t," !ontrar#% t,"
1a#*"nt 3as a!<no3l"g" -as 1"r !ontra!t./ T,is *"ans t,at t,"
Art. 19C?
1ro$isions o+ t," !ontra!t 3"r" b"ing *aintain" an r"s1"!t"
"4!"1t onl# +or t," r"u!tion o+ t," agr"" r"ntal.
Art. 19C?
T," P6?? 3as not !onon" as ,"l b# t," trial !ourt. T,"
r"Euisit"s o+ !ononation un"r Art. 16C? o+ t," Ci$il Co" ar"
not 1r"s"nt. I,at 3" s"" ,"r" is a *"r" r"u!tion o+ t," sti1u.
lat" r"ntal in !onsi"ration o+ t," 3it,ra3al o+ t," l"as"
1r"*is"s o+ t," 16 ,"!tar"s 3,"r" t," l"ssor int"n" to graH"
,is !attl". I,"n t," l"ssor a!!"1t" t," r"!"i1t% ," *ani+"st"
,is agr""*"nt on t," r"u!tion% 3,i!, *oi+i" t," l"as"
!ontra!t as to t," agr"" !onsi"ration 3,il" l"a$ing t," ot,"r
sti1ulations inta!t. T,at t," a*ount o+ PC%??? 3as -1a#*"nt in
+ull/ o+ t," r"ntal 3as a"Euat"l# !on$"#" in t,"
a!<no3l"g*"nt *a" b# l"ssor t,at t,is 3as -1a#*"nt +or
t," r"ntal !orr"s1oning to !ro1 #"ar 1A61.66/ an
-!orr"s1ons to t," r"ntals u" on or b"+or" =an. 9?% 1A61% as 1"r
!ontra!t./ T," r"lati$" insigni+i!an!" o+ t," all"g" balan!" is a
1altr# justi+i!ation +or annulling t," !ontra!t +or its su11os"
$iolation. I+ l"ssor is +uss# "noug, to in$o<" it no3% ," 3oul
,a$" +uss" o$"r it too in t," r"!"i1t ," 3illingl# sign" a+t"r
a!!"1ting% 3it,out r"s"r$ation% onl# PC%???. I,"n t," oblig""
a!!"1ts t," 1"r+or*an!"% <no3ing its in!o*1l"t"n"ss or
irr"gularit#% an 3it,out "41r"ssing an# 1ro. t"st or obj"!tion%
t," obligation is ""*" +ull# !o*1li" 3it,.
Si*"on D"l 5osario $. S,"ll Co.
o+ t," P,ils.% Lt.
L.6BCC6% Aug. 1A% 1ABB
I+ 1ro$i" +or in a !ontra!t% s,oul busin"ss r"ntals b"
ajust" in r"lation to t," 1"so $alu" $is.a.$is t," ;.S. ollar
un"r -"$aluation/ or -a11r"!iation/ (o11osit" o+ -"1r"!ia.
tion/)J
K"s. An# r"sultant "!r"as" (or in!r"as") in t," 1ar $alu"
o+ t," !urr"n!# is 1r"!is"l# t," situation or "$"nt !ont"*1lat"
b# t," 1arti"s in t,"ir !ontra!t2 a!!oringl#% an u13ar (or
o3n3ar) r"$ision o+ t," r"nt is !all" +or.
FNOTA 7ENE' It is int"r"sting to not" in t," abo$"!it"
!as" t,at t," !ontra!t at bar us" t," alt"rnati$" t"r* -a11r".
!iation./ An# i!tionar# "+in"s a11r"!iation as a ris" in $alu".
No3 i+ a!!oring to sai !ontra!t t,"r" s,all b" an ajust*"nt
Art. 19C?
o+ t," *ont,l# r"ntal in t," "$"nt o+ a ris" in t," $alu" o+ t,"
P,ili11in" !urr"n!#% 3,# s,oul t,"r" b" no si*ilar ajust*"nt
in t," "$"nt o+ a "!r"as" in $alu" o+ t," sa*" !urr"n!#JG
Art. 19C?
T," &anila 7an<ing Cor1. $. Anasta!io
T"ooro% =r. an >ra!" Anna T"ooro
>5 59A55% =an. 19% 1ABA
T," !,ara!t"r o+ t," transa!tion b"t3""n t," 1arti"s is to
b" "t"r*in" b# t,"ir int"ntion% r"garl"ss o+ 3,at languag"
3as us" or 3,at t," +or* o+ trans+"r 3as. I+ it 3as int"n" to
s"!ur" t," 1a#*"nt o+ *on"#% it *ust b" !onstru" as a 1l"g".
Ho3"$"r% "$"n t,oug, a trans+"r% i+ r"gar" b# its"l+% a11"ars
to ,a$" b""n absolut"% its obj"!t an !,ara!t"r *ig,t still b"
Euali+i" an "41lain" b# a !ont"*1oran"ous 3riting "!laring
it to ,a$" b""n a "1osit o+ t," 1ro1"rt# as !ollat"ral s"!urit#.
It ,as b""n sai t,at a trans+"r o+ 1ro1"rt# b# t," "btor
to a !r"itor% "$"n i+ su++i!i"nt on its +a!" to *a<" an absolut"
!on$"#an!"% s,oul b" tr"at" as a 1l"g" i+ t," "bt !ontinu"s
in "4ist"n!" an is not is!,arg" b# t," trans+"r% an t,at a!.
!oringl#% t," us" o+ t," t"r*s orinaril# i*1orting !on$"#an!"
o+ absolut" o3n"rs,i1 3ill not b" gi$"n t,at "++"!t in su!, a
transa!tion i+ t,"# ar" also !o**onl# us" in 1l"g"s an *ort.
gag"s an% t,"r"+or"% o not unEuali+i"l# ini!at" a trans+"r o+
absolut" o3n"rs,i1% in t," abs"n!" o+ !l"ar an a*biguous lan.
guag" or ot,"r !ir!u*stan!"s "4!luing an int"nt to 1l"g".
D"+init"l#% t," assign*"nt o+ t," r"!"i$abl"s i not r"sult
+ro* a sal"s transa!tion. It !annot b" sai to ,a$" b""n !on.
stitut" b# $irtu" o+ a ation in 1a#*"nt +or a11"llant8s loans
3it, t," ban< "$i"n!" b# 1ro*issor# not"s 3,i!, ar" t,"
subj"!t o+ t," suit +or !oll"!tion. At t," ti*" t," "" o+ assign.
*"nt 3as "4"!ut"% sai loans 3"r" non."4ist"nt #"t. At *ost%
it 3as a ation in 1a#*"nt +or P1?%???% t," a*ount o+ !r"it
+ro* a11"ll"" ban< ini!at" in t," "" o+ assign*"nt. At t,"
ti*" t," assign*"nt 3as "4"!ut"% t,"r" 3as no obligation to
b" "4tinguis," "4!"1t t," a*ount o+ P1?%???. &or"o$"r% in
or"r t,at an obligation *a# b" "4tinguis," b# anot,"r 3,i!,
substitut"s t," sa*"% it is i*1"rati$" t,at it is so "!lar" in
un"Eui$o!al t"r*s% or t,at t," ol an t," n"3 obligations b" on
"$"r# 1oint in!o*1atibl" 3it, "a!, ot,"r. Ob$iousl#% t," ""
o+ assign*"nt 3as int"n" as !ollat"ral s"!urit# +or t," ban<
loans o+ a11"llants% as a !ontinuing guarant# +or 3,at"$"r su*s
Art. 19C?
3oul b" o3ing b# "+"nants to 1lainti++.
Art. 19C?
Filoil &ar<"ting Cor1. (no3 P"tro1,il Cor1.)
$. IAC an =os"+ina Alb"rto D" Pabalan >5
6C115% =an. 6?% 1ABA
Cor1orations an busin"ss*"n s,oul "4"r!is" *or" +air.
n"ss in "aling 3it, orinar# 1"rsons% "s1"!iall# i+ t,"# o not
,a$" t," assistan!" an a$i!" o+ !ouns"l. Su!, 1"rsons ar" not
li<"l# to r"a t," +in" 1rint in a !ontra!t or to un"rstan t,"
instru*"nts t,"# ar" signing unl"ss t,"# ar" 1ro1"rl# in+or*"
o+ t," i*1li!ations o+ t,"ir unsus1"!ting an ,""l"ss a!ts.
T,is is not to sa# t,at su!, instru*"nts ar" 1"r s" in$ali
3it,out su!, "41lanation. I,at it si*1l# *"ans is t,at in 1ro1"r
!as"s% !ontra!ts s,oul b" r"a in t," lig,t o+ t," la#*an8s un.
"rstaning o+ t,"ir "sot"ri! l"gal languag"% t,at t,"# *a# not
"nsnar" ,i*% b"!aus" o+ ,is trusting la!< o+ !aution% in t,"ir
intri!at" sti1ulations.
7ali3ag Transit $. CA% "t al.
>5 B?@@C% =an. 91% 1ABA
T," 1,ras"log# -an# an all !lai*s or !aus"s o+ a!tion/
is broa "noug, to in!lu" all a*ag"s t,at *a# a!!ru" to t,"
injur" 1art# arising +ro* t," un+ortunat" a!!i"nt.
Lu!io Tan Ali* $. CA
>5 A9619% Aug. A% 1AA1
FACTS' Pa!i+i! Coast Ti*b"r Prou!ts% In!.% as l"ssor% "n.
t"r" into a !ontra!t o+ l"as" 3it, o1tion to bu#% 3it, Lu!io Tan
Ali*% as l"ss""% +or a t"r* o+ 15 *ont,s o$"r a unit o+ tra!tor
at a *ont,l# r"ntal o+ P1?%???% subj"!t to t," sti1ulation t,at
a+t"r 1a#*"nt o+ +i$" *ont,s% t," l"ss"" is gi$"n t," o1tion to
bu# t," "Eui1*"nt at P15%???% in 3,i!, "$"nt t," r"ntal 1ai
s,all b" !onsi"r" as 1art o+ t," !onsi"ration an t,at t,"
"Eui1*"nt ,as to r"*ain at t," l"ss""8s jobsit". Ho3"$"r% u1on
its "li$"r#% t," tra!tor 3as is!o$"r" to b" "+"!ti$". So Ali*
tol Pa!i+i!8s *anag"r o+ su!, +a!t% r"la#ing also t," n"" +or
t," tra!tor8s r"!onitioning or r"1la!"*"nt 3it, anot,"r unit in
goo running !onition an t," i**"iat" r"1air t,"r"o+ as *a#
Art. 19C?
b" arrang" b# ,i* 3it, t," &anila O++i!". Lat"r% t," 1arti"s
a*"n" t," l"as" !ontra!t% 3it, Ali*8s obligation to "4"!ut" a
Art. 19C?
D"" o+ C,att"l &ortgag" +or ,is t,r"" *otor $",i!l"s in +a$or
o+ Pa!i+i! to guarant"" ,is un"rta<ing in t," a*"n" l"as"
!ontra!t. Pa!i+i!8s la3#"r in+or*" Ali* t,at un"r t," a*"n"
!ontra!t 3,"r"in 1a#*"nts o+ r"ntals start" in Aug. 1ACC% t,"
latt"r +ail" to 1a# r"ntals +or s"$"n *ont,s in t," a*ount o+
PC?%???% +or 3,i!, r"ason t," !ontra!t o+ l"as"% as 3"ll as t,"
o1tion to bu#% ar" auto*ati!all# t"r*inat". T," la3#"r also
s"nt a noti!" o+ "+ault in obligation s"!ur" b# t," C,att"l
&ortgag". Ho3"$"r% t," S,"ri++ r"turn"% unsatis+i"% a 1"tition
+or "4trajui!ial +or"!losur" t,"r"on. T,"r"a+t"r% Pa!i+i! +il" a
!o*1laint +or r"!o$"r# o+ 1oss"sssion 3it, r"1l"$in (o+ a unit o+
tra!tor) u" to Ali*8s r"+usal to 1a# t," arr"ars an to "li$"r
t," "Eui1*"nt. ;1on t," +iling o+ a bon b# Pa!i+i!% in t," su* o+
P9??%???% t," trial !ourt issu" a 3rit o+ r"1l"$in +or t," s"iHur"
an "li$"r# o+ t," 1ro1"rt# on A1r. 19% 1ACB. T," S,"ri++ s"iH"
t," tra!tor +ro* Ali* an turn" it o$"r to Pa!i+i! on A1r. 66%
1ACB. On t," s!,"ul" ,"aring o+ =ul# 1@% 1AB1% bot, 1arti"s
+ail" to att"n. H"n!"% t," is*issal o+ t," !as". Ho3"$"r% t,"
or"r o+ is*issal 3as r"!onsi"r" u1on "41lanation o+ t,"
1arti"s. T," !as" 3as +inall# r"sol$" in +a$or o+ Ali* on =ul.
91% 1AB5 b# t," trial !ourt. T," "!ision 3as lat"r *oi+i" b#
t," trial !ourt. Ali* a11"al"% !lai*ing a*ag"s b"!aus" o+
t," 3rong+ul s"iHur" o+ t," tra!tor% but t," Court o+ A11"als
(CA) a++ir*" t," trial !ourt8s "!ision% "n#ing t," !lai* +or
!o*1"nsation. Issu"' I,"t,"r or not t," 15.*ont, l"as" 1"rio
,a !o**"n!" +ro* Aug. 1ACC an "41ir" in O!t. 1ACB.
HELD' 7ot, t," trial !ourt an t," CA ar" o+ t," $i"3
t,at no a*"n*"nt as to t," uration o+ t," !ontra!t o+ l"as"
"4ist"2 t,at t," !ontra!t "41ir" as originall# sti1ulat" on
A1r. 5% 1ACB an t,at t," tra!tor 3as s"iH" b# $irtu" o+ a 3rit
o+ r"1l"$in on Aug. 16% 1ACB% t," !ontra!t o+ l"as" ,a "41ir"
an t," l"ss"" Ali* 3as !ons"Eu"ntl# not "ntitl" to a*ag"s.
In t," original !ontra!t% it 3as "41r"ssl# sti1ulat" t,at t,"
l"as" s,all b" +or a 1"rio o+ +i+t""n *ont,s an t,at t," l"ss""
is gi$"n an o1tion to 1ur!,as" t," "Eui1*"nt +or on" ,unr"
+i+t# t,ousan 1"sos% a+t"r Ali* ,as !o*1l"t" an r"ligiousl#
1ai t," 5.*ont, r"ntals 3,i!, s,all b" !onsi"r" as 1art o+
t," 1a#*"nt o+ t," !onsi"ration.
Art. 19C?
;1on t," ot,"r ,an% t,"r" is no 1ro$ision in t," a*"n"
!ontra!t as to t," 1"rio o+ l"as". Inst"a% it 1ro$i"s t,at -all
Art. 19C?
1ro$isions o+ t," original l"as" !ontra!t not a*"n" b# t,"
+or"going 1ro$ision s,all r"*ain in +ull +or!" an "++"!t. T,"
alt"ration is "$i"ntl# +o!us" on t," 1"rio +or t," rig,t to "4"r.
!is" t," o1tion to bu#. Originall#% t," 1"rio 3as +i$" (5) *ont,s%
unEu"stionabl# in!luing t," 1"rio +ro* !o**"n!"*"nt o+
t," original !ontra!t on =an. C% 1ACC% as s1"!i+i!all# 1ro$i" in
1aragra1, @ t,"r"o+% 3,i!, stat"s' -T," *ont,l# r"ntals o+ t,"
"Eui1*"nt 3,i!, on t," at" o+ t," "4"!ution o+ t,is a*"n.
*"nt o+ t," original l"as" !ontra!t ,a$" not b""n 1ai s,all b"
!onsi"r" as 1ai obligation o+ l"ss"" to l"ssor% t," 1a#*"nt o+
3,i!, 3ill b" t," subj"!t o+ n"gotiation b"t3""n l"ssor an l"s.
s""./ T," l"tt"r o+ Pa!i+i!8s !ouns"l% on 3,i!, Ali* ,"a$il# r"li"
in ,is argu*"nts in ,is +a$or% !on+ir*s t," +a!t o+ non."4t"nsion
o+ t," l"as" agr""*"nt 3,"n ," s1o<" o+ t," !o**"n!"*"nt o+
t," 1a#*"nt o+ t," r"ntals% not on t," !o**"n!"*"nt o+ t," n"3
1"rio o+ l"as". In"$itabl#% t," !ourts !annot go b"#on 3,at
a11"ars in t," o!u*"nts sub*itt" b# t," 1arti"s. T,us% t,"r"
is no *"rit in Ali*8s all"gation t,at t," s"iHur" 3as 3rong+ul
+or 3,i!, ," *ust b" !o*1"nsat". T," o3n"rs,i1 or rig,t o+
1oss"ssion o$"r t," "Eui1*"nt b"long" to Pa!i+i! at t," ti*"
it 3as s"iH". T," s"iHur" o+ t," "Eui1*"nt 3as or"r" b# t,"
trial !ourt +or its r"storation b# *"ans "stablis," in t," la3s
o+ 1ro!"ur". T,us% t," r"Euisit"s +or t," issuan!" o+ t," 3rit
o+ r"1l"$in ,a$" b""n satis+i". (S"!. 6% 5ul" 6?% 5"$is" 5ul"s
o+ Court).
&oji!a $. Court o+ A11"als
>5 A@6@C% S"1t. 11% 1AA1
Contra!ts 3,i!, ar" not a*biguous ar" to b" int"r1r"t"
a!!oring to t,"ir lit"ral *"aning an s,oul not b" int"r1r"t"
b"#on t,"ir ob$ious int"n*"nt. T,us% 3,"r" t," int"nt o+
t," 1arti"s ,as b""n s,o3n un*ista<abl# 3it, !larit# b# t,"
languag" us"% t," lit"ral *"aning s,all !ontrol. Corr"s1on.
ingl#% sti1ulations in t," *ortgag" o!u*"nt !onstitut" t," la3
b"t3""n t," 1arti"s% 3,i!, *ust b" !o*1li" 3it, +ait,+ull#.
5"1ubli! $. Saniganba#an
>5 A?6C% No$. 5% 1AA1
Art. 19C?
I,"n t," 3ors o+ a !ontra!t ar" 1lain an r"ail# un"r.
stanabl"% t,"r" is no roo* +or !onstru!tion. I,"r" t," 1arti"s8
Art. 19C1
agr""*"nt ,as b""n r"u!" to 3riting% t," rul" a11li"s t,at
t,"ir agr""*"nt is to b" !onsi"r" as !ontaining all su!, t"r*s
an t,"r" !an b" b"t3""n t," 1arti"s an t,"ir su!!"ssors.in.
int"r"st no "$i"n!" o+ t," t"r*s o+ t," agr""*"nt ot,"r t,an
t," !ont"nts o+ t," 3riting.
Oil M Natural >as Co**ission $.
CA M Pa!i+i! C"*"nt Co.% In!. >5
11@969% =ul. 69% 1AAB
T," o!trin" o+ nos!itur a so!iis% alt,oug, a rul" in t,"
!on. stru!tion o+ statut"s% is "Euall# a11li!abl" in t,"
as!"rtain*"nt o+ t," *"aning an s!o1" o+ $agu" !ontra!tual
sti1ulations.
A!!oring to t," *a4i*% 3,"r" a 1arti!ular 3or or 1,ras"
is a*biguous in its"l+ or is "Euall# sus!"1tibl" o+ $arious *"an.
ings% its !orr"!t !onstru!tion *a# b" *a" !l"ar an s1"!i+i! b#
!onsi"ring t," !o*1an# o+ t," 3ors in 3,i!, it is +oun or
3it, 3,i!, it is asso!iat"% or stat" i++"r"ntl#% its obs!urit#
or oubt *a# b" r"$i"3" b# r"+"r"n!" to asso!iat" 3ors.
P"tro1,il Cor1. $. CA
>5 166CA6% D"!. 1?% 6??1
FACTS' T," !ontra!t 1ro$i" +or !aus"s +or t"r*ination%
alt,oug, it also stat" t,at t," !ontra!t 3as +or an in"+init"
t"r* subj"!t to t," rig,t o+ 1"tition"r to t"r*inat" it an# ti*"
a+t"r a 3ritt"n noti!" o+ 9? a#s.
HELD' T," !ontra!t !l"arl# 1ro$i" +or t3o 3a#s o+
t"r*i. nating t," !ontra!t% an% on" *o" o"s not "4!lu" t,"
ot,"r.
I,"n t," languag" o+ a !ontra!t is !l"ar% it r"Euir"s no
int"r1r"tation. T," +ining t,at t," t"r*ination o+ t," !ontra!t
3as -+or !aus"%/ is i**at"rial. I,"n 1"tition"r t"r*inat" t,"
!ontra!t -3it,out !aus"%/ it 3as r"Euir" onl# to gi$" 1ri$at"
r"s1on"nt a 9?.a# 1rior 3ritt"n noti!"% 3,i!, it i in t,is
!as".
Art. 19C1
Art. 19C1. In or"r to jug" t," int"ntion o+ t,"
!ontra!t. ing 1arti"s% t,"ir !ont"*1oran"ous an
subs"Eu"nt a!ts s,all b" 1rin!i1all# !onsi"r".
Art. 19C1
CO&&ENT'
(1) Ho3 to =ug" Int"nt o+ t," Parti"s
(a) I+ t," 1arti"s ,a$" t,"*s"l$"s 1la!" an int"r1r"tation to
t," t"r*s o+ t,"ir !ontra!t% su!, int"r1r"tation *ust in
g"n"ral b" +ollo3". (Val"H $. Sibal% @6 P,il. A9?).
(b) T," !ontra!t o+ t," 1arti"s *a# r"sult in "sto11"l. (Arts.
1@91.1@9A% Ci$il Co").
(!) T," !ourts *a# !onsi"r t," r"lations "4isting b"t3""n
t," 1arti"s an t," 1ur1os" o+ t," !ontra!t% 1arti!ularl#
3,"n it 3as *a" in goo +ait, b"t3""n *utual +ri"ns.
(Di3"ll $. Cart"s% @9 P,il. A59).
(6) Cas"s
&anila El"!tri! Co. $. Co**ission"rs
9? P,il. 9BC
FACTS' I,"n t," &"ral!o obtain" a +ran!,is" +ro* t,"
Cit# o+ &anila% +r"" trans1ortation 3as grant" in t," +ran!,is"
to "*1lo#""s o+ t," Cit# o+ &anila -3"aring o++i!ial bag"s./ T,"
Eu"stion to "t"r*in" is' I,at s,oul b" t," 1ro1"r int"r1r"ta.
tion o+ -3"aring%/ 3"aring so t,at it !oul b" s""n% or 3"aring
t," bag"% 3it,out t," bag" b"ing s""nJ Or s,oul t," t"r*
in!lu" bot,J To 1ro1"rl# sol$" t," Eu"stion% t," Su1r"*"
Court ,a to loo< into t," a!tions o+ t," !ontra!ting 1arti"s at
t," ti*" o+ an subs"Eu"nt to t," granting o+ t," +ran!,is". It
3as 1ro$" to t," satis+a!tion o+ t," !ourt t,at +or nin" #"ars
t," 1arti"s int"r1r"t" t," 1,ras" to *"an -t," 3"aring o+ t,"
o++i!ial bag"s so t,at t,"# !oul b" s""n./
HELD' Su!, int"r1r"tation o+ t," 1arti"s s,oul b" t,"
int"r1r"tation b# t," !ourt% b"!aus" -t," !ourts ar" NOT at
lib"rt# to ao1t a !onstru!tion o11os" to t,at 3,i!, t," 1arti"s
,a$" 1la!" on t,"ir !ontra!t./
Aurora Ca1ulong $. Court o+ A11"als
L.6199C% =un. 6A% 1AB@
Art. 19C1
I+ t3o o!u*"nts ar" "4"!ut" on t," sa*" a# b# t,"
sa*" 1arti"s 0 on" b"ing an absolut" sal"% an t," ot,"r% an
Art. 19C1
o1tion to r"1ur!,as"% t," t3o o!u*"nts 3ill b" !onsi"r" as
on" !ontra!t% na*"l#% a sal" 3it, t," rig,t o+ r""*1tion.
I"lon Constru!tion Cor1. $. CA
>5 95C61% O!t. 16% 1ABC
A!ts on" b# t," 1arti"s to a !ontra!t in t," !ours" o+ its
1"r+or*an!" ar" a*issibl" in "$i"n!" u1on t," Eu"stion o+
*"aning as b"ing t,"ir o3n !ont"*1oran"ous int"r1r"tation
o+ its t"r*s.
(9) So*" Obs"r$ations
As a g"n"ral rul"% 3,"n t," t"r*s o+ a !ontra!t ar" !l"ar
an una*biguous about t," int"ntion o+ t," !ontra!ting 1ar.
ti"s% t," lit"ral *"aning o+ its sti1ulations s,all !ontrol. 7ut
i+ t," 3ors a11"ar to !ontra$"n" t," "$i"nt int"ntion o+ t,"
1arti"s% t," latt"r s,all 1r"$ail o$"r t," +or*"r. (Art. 19C?). T,"
r"al natur" o+ a !ontra!t *a# b" "t"r*in" +ro* t," "41r"ss
t"r*s o+ t," agr""*"nt% as 3"ll as +ro* t," !ont"*1oran"ous
an subs"Eu"nt a!ts o+ t," 1arti"s t,"r"to. (Art. 19C1). (CruH $.
CA% 6A9 SC5A 69A F1AABG2 Si!a $. CA% 6A@ SC5A 1B9 F1AABG2
an P"o1l"8s Air!argo M Iar",ous" Co.% In!. $. CA% 6AC SC5A
1C? F1AABG).
;1on t," ot,"r ,an% si*ulation ta<"s 1la!" 3,"n t,"
1arti"s o not r"all# 3ant t," !ontra!t t,"# ,a$" "4"!ut" to
1rou!" t," l"gal "++"!ts "41r"ss" b# its 3orings. (Villa+lor $.
CA% 6B? SC5A 6AC F1AACG2 Tongo# $. CA% 169 SC5A AA F1AB9G%
an 5origu"H $. 5origu"H% 6? SC5A A?B F1A6CG). Si*ulation
or $i!"s o+ "!laration *a# b" "it,"r -absolut"/ or -r"lati$"./
Art. 19@5 istinguis,"s an absolut" si*ulation +ro* a r"lati$"
on" 3,il" Art. 19@6 is!uss"s t,"ir "++"!ts. Stat" in anot,"r
*oalit#% an absolut"l# si*ulat" !ontra!t o+ sal" is $oi ab
initio an trans+"r no o3n"rs,i1 rig,t. T," 1ur1ort" bu#"r% not
b"ing t," o3n"r% !annot $alil# *ortgag" t," subj"!t 1ro1"rt#.
Cons"Eu"ntl#% n"it,"r o"s t," bu#"r at t," +or"!losur" sal"
a!Euir" an# titl" t,"r"to. (Eilb"rto CruH M Si*1li!io CruH $.
7an!o* Finan!" Cor1. F;nion 7an< o+ t," P,ils.G% >5 1@CCBB%
Art. 19C1
&ar. 1A% 6??6).
Art. 19C6
Art. 19C6. Ho3"$"r g"n"ral t," t"r*s o+ a !ontra!t *a#
b"% t,"# s,all b" un"rstoo to !o*1r","n t,ings t,at ar"
istin!t an !as"s t,at ar" i++"r"nt +ro* t,os" u1on 3,i!,
t," 1arti"s int"n" to agr"".
CO&&ENT'
(1) E++"!t o+ t," ;s" o+ >"n"ral T"r*s
E4a*1l"'
A sol 7 ,is ,ous" in!luing -all t," +urnitur" t,"r"in./
Su11os" 1art o+ t," +urnitur" b"long" to a r"lati$" o+ A 3,o ,a
as<" ,i* (A) +or 1"r*ission to l"a$" t,"* t,"r" t"*1oraril#%
s,oul su!, +urnitur" b" in!lu"J
ANS.' No% su!, +urnitur" s,oul not b" in!lu"% b"!aus"
alt,oug, t," t"r* -all/ is g"n"ral% still it s,oul -not b" un"r.
stoo to !o*1r","n t,ings t,at ar" istin!t an !as"s t,at ar"
i++"r"nt +ro* t,os" u1on 3,i!, t," 1arti"s int"n" to agr""./
(Art. 19C6% Ci$il Co").
In on" !as"% t," Su1r"*" Court sai' -Consi"ring t,at
t," lan o+ t," a11li!ant 3as not t," subj"!t o+ t," !ontra!t%
an t,at it !oul not b" so +or t," r"ason t,at it i not b"long
to t," $"nor% it !an in no 3is" b" un"rstoo as in!lu" in t,"
instru*"nt o+ sal" 3,i!, a11"ars at +olio 66% no *att"r 3,at
*a# b" t," t"r*s o+ t," o!u*"nt./ (5"#"s $. Li*ja1% 15 P,il.
@6?)
(6) Cas"s
P,il. Trust Co. $. E!,aus
56 P,il. B56
FACTS' A *ortgag" ,is lan to C to s"!ur" or guarant""
78s "bt. 7 !oul not 1a#% so t," *ortgag" 3as +or"!los"% but
t,"r" 3as a "+i!i"n!#. Issu"' Is A r"s1onsibl" 1"rsonall# +or t,"
"+i!i"n!#J
Art. 19C6
HELD' No% b"!aus" it 3as onl# ,is lan t,at 3as o++"r"
as s"!urit#.
Art. 19C6
NAESS S,i11ing P,ils.% In!. $. NL5C
>5 C9@@1% S"1t. @% 1ABC
FACTS' D ,a b""n ,ir" b# NAESS to s"r$" aboar a
s,i1 un"r an "*1lo#*"nt !ontra!t 3,i!, in!or1orat" as
1art t,"r"o+ t," S1"!ial Agr""*"nt b"t3""n t," Int"rnational
Ior<"rs F""ration an NAESS. Sai agr""*"nt boun NAESS
to 1a# !as, b"n"+its +or loss o+ li+" to 3or<"rs "nroll" t,"r"in
1ursuant to t," +ollo3ing 1ro$isions'
-Par. 1C 0 Cas, b"n"+its
Co*1"nsation +or loss o+ li+"'
i) To "a!, "1"n"nt !,il 0 S6@%B@@.??.
ii) To "a!, "1"n"nt !,il un"r t," ag" o+ 1B 0 ;S
SC%11B.88
On" nig,t% 3,il" on boar t," $"ss"l o+ NAESS% D +atall#
stabb" t," s"!on !oo< uring a Euarr"l% t,"n ran to t," "!<
+ro* 3,i!, ," ju*1" or +"ll o$"rboar. H" 3as n"$"r s""n
again "s1it" ilig"nt s"ar!,. NAESS "ni" liabilit# on t,"
groun t,at D ,a ta<"n ,is o3n li+" an t,at sui!i" 3as not
!o*1"nsabl" un"r t," agr""*"nt in$o<". T," POEA r"n"r"
jug*"nt +or t," ,"irs o+ D% ,oling D8s "at, !o*1"nsabl"
un"r t," agr""*"nt. T," NL5C sustain" t," POEA. T,"
Su1r"*" Court u1,"l t," "!ision.
HELD' It *a<"s no i++"r"n!" 3,"t,"r D int"ntionall#
too< ,is o3n li+"% or ," <ill" ,i*s"l+ in a *o*"nt o+ t"*1orar#
ab"rration trigg"r" b# r"*ors" o$"r t," <illing o+ t," s"!on
!oo<% or ," a!!i"ntall# +"ll o$"rboar 3,il" tr#ing to +l"" +ro*
an i*agin" 1ursuit. It is onl# logi!al to assu*" t,at i+ it ,a
b""n int"n" to subj"!t NAESS8 liabilit# +or "at, b"n"+its to
an# !onition% su!, as on" barring !o*1"nsation +or "at, b#
t," "*1lo#""8s o3n ,an% 3,"t,"r int"ntional or ot,"r3is"% t,"
!ontra!t 3oul ,a$" s1"!i+i!all# so 1ro$i". No la3 or rul" ,as
b""n !it" 3,i!, 3oul *a<" ill"gal +or an "*1lo#"r to assu*"
su!, obligation in +a$or o+ ,is or its "*1lo#"" in t,"ir !ontra!t
o+ "*1lo#*"nt. In an# !as"% t," Court is not 1r"1ar" to rul"
t,at a !ontra!t !ontra$"n"s 1ubli! 1oli!# an is t,"r"+or" $oi
Art. 19C6
3,i!,% b# not s1"!i+i!all# "4!"1ting sui!i" in a !laus" obligat.
ing on" o+ t," 1arti"s to 1a# !o*1"nsation +or t," "at, o+ t,"
Arts. 19C9.19C@
ot,"r% *a# in t,"or# "nabl" t," latt"r8s "stat"% or ,is ,"irs% to
1ro+it +ro* ,is s"l+.i**olation.
(9) S1"!ial Int"nt Pr"$ails O$"r a >"n"ral Int"nt
=ust as a s1"!ial 1ro$ision !ontrols a g"n"ral 1ro$ision% a
s1"!ial int"nt 1r"$ails o$"r a g"n"ral int"nt. (Hibb"r $. Estat"
o+ &!Elro#% 65 P,il. 16@).
Art. 19C9. I+ so*" sti1ulation o+ an# !ontra!t s,oul
a*it o+ s"$"ral *"anings% it s,all b" un"rstoo as
b"aring t,at i*1ort 3,i!, is *ost a"Euat" to r"n"r it
"++"!tual.
CO&&ENT'
(1) Sti1ulation A*itting o+ S"$"ral &"anings
E4a*1l"'
A 3i+" "4!,ang" -,"r ,ous"/ +or a ia*on ring. No3
t," 3i+" ,a a ,ous" 3,i!, 3as ,"r 1ara1,"rnal 1ro1"rt#%
an anot,"r ,ous"% 3,i!,% ,o3"$"r% b"long" to t," !onjugal
1artn"rs,i1. T," !ontra!t "nt"r" into b# t," 3i+" 3as against
t," !ons"nt o+ t," ,usban. To 3,i!, ,ous" s,oul -,"r ,ous"/
r"+"rJ
ANS.' It s,oul r"+"r to ,"r 1ara1,"rnal ,ous"% b"!aus" t,is
3oul $aliat" t," !ontra!t. I+ t," ot,"r int"r1r"tation 3oul
b" +ollo3"% t," "4!,ang" 3oul not b" $ali sin!" t," ,usban
,a not gi$"n !ons"nt.
(6) E++"!t o+ an Int"r1r"tation ;1,oling t," Valiit# o+ t,"
Contra!t
I+ on" int"r1r"tation *a<"s a !ontra!t $ali an ill"gal% t,"
+or*"r int"r1r"tation *ust 1r"$ail. (Luna $. Linato!% C@ P,il.
15).
Arts. 19C9.19C@
Art. 19C@. T," $arious sti1ulations o+ a !ontra!t s,all b"
int"r1r"t" tog"t,"r% attributing to t," oubt+ul on"s t,at
s"ns" 3,i!, *a# r"sult +ro* all o+ t,"* ta<"n jointl#.
Art. 19C@
CO&&ENT'
Sti1ulations To 7" 5"a Tog"t,"r
7an< o+ t," P.I. $. T# Ca*!o Sobrino
5C P,il. B?1
FACTS' A *ortgag" ,is 1ro1"rt# to 7. In t," !ontra!t% it
3as stat" t,at a s"!on *ortgag" 3as 1ro,ibit"% "4!"1t 3it,
t," 3ritt"n !ons"nt o+ 7. T," !ontra!t +urt,"r stat" t,at t,"
1"nalt# +or su!, a $iolation 3oul b" t,at 7 !an i**"iat"l#
+or"!los" t," *ortgag". Iit,out t," !ons"nt o+ 7% A *ortgag"
t," 1ro1"rt# a s"!on ti*" to C. Has 7 t," rig,t to !onsi"r t,"
s"!on *ortgag" null an $oiJ
HELD' No% 7 ,as no rig,t to !onsi"r t," s"!on *ortgag"
null an $oi. His onl# rig,t is to +or"!los" t," +irst *ortgag"
rig,t no3. T," 3,ol" *ortgag" !ontra!t *ust b" r"a. Sai t,"
Su1r"*" Court'
-T," *ortgag" !ontra!t s,oul b" r"a in its "ntir"t#. I+
so r"a% it is at on!" s""n t,at 3,il" t," *a<ing o+ t," s"!on
*ortgag" "4!"1t 3it, t," 3ritt"n !ons"nt o+ t," *ortgag"" is
1ro,ibit"% t," !ontra!t !ontinu"s an stat"s t," 1"nalt# +or su!,
a $iolation% na*"l#% it gi$"s t," *ortgag"" (7) t," rig,t to i*.
*"iat"l# +or"!los" t," *ortgag". It o"s not gi$" t," *ortgag""
t," rig,t to tr"at t," s"!on *ortgag" as null an $oi./
Nort, N"gros Sugar Co. $.
Co*1ania >"n. " Taba!os
L.A6CC% &ar. 6A% 1A5C
FACTS' A s"ll"r sol !o1ra in ,is bo"ga to a bu#"r% to
3,o* ," issu" a Eu"an (a o!u*"nt aut,oriHing t," bu#"r
to g"t t," !o1ra t,"r"in% an gi$ing its is1osal to t," bu#"r).
Ho3"$"r% in a l"tt"r t,at a!!o*1ani" t," Eu"an% t," s"ll"r
r"s"r$" t," rig,t to g"t t," !o1ra +ro* its ot,"r bo"gas. T,"
Eu"stion at issu" 3as 3,"t,"r or not% in t," +a!" o+ t," t3o
!on+li!ting 1ro$isions% "li$"r# o+ t," !o1ra in t," +irst bo"ga
,a r"all# b""n *a" u1on t," issuan!" o+ t," Eu"an.
HELD' T," $arious sti1ulations in a !ontra!t *ust b" r"a
Art. 19C@
tog"t,"r to gi$" "++"!t to all. T,us% to r"!on!il" t,"*% t," 1ro1"r
int"r1r"tation is t,is' "li$"r# o+ t," !o1ra 3as in +a!t *a"
Art. 19C5
u1on t," "li$"r# o+ t," Eu"an% but sai "li$"r# 3as subj"!t
to t," rig,t o+ t," s"ll"r to substitut" t," sa*" 3it, !o1ra +ro*
t," ot,"r bo"gas.
S,"ll Co. $. Fir"*"n8s Ins.% "t!.% "t al.
L.B16A% =an. 6A% 1A5C
ISS;E' I+ t,"r" s,oul b" a !ontro$"rs# as to 3,at t,"
1arti"s r"all# int"n" to "nt"r into% 3,at s,oul 1r"$ail% t,"
na*" gi$"n to t," !ontra!t b# t," !ontra!ting 1arti"s or t," 3a#
t," 1arti"s 1"r+or*" t,"ir r"s1"!ti$" obligationsJ
HELD' T," latt"r 1r"$ails% +or 1"r+or*an!" *or" !l"arl#
ini!at"s t,"ir int"ntion t,an t," na*" or titl" gi$"n t," !ontra!t
b# t," 1arti"s.
ISS;E' I,"n"$"r on" !ontra!t is in!or1orat" into an.
ot,"r% ,o3 s,oul bot, !ontra!ts b" int"r1r"t"J
HELD' Co*1l"*"ntar# !ontra!ts *ust o+ !ours" b" !on.
stru" tog"t,"r so as to gi$" "++"!t as *u!, as 1ossibl" to t,"
1ro$isions o+ bot, agr""*"nts.
Carlos 7unalion $. Court o+ A11"als
L.56C9A% =un. 66% 1AB@
I+ in a sal" a r"tro t," r""*1tion 1ri!" is "s!alat" "$"r#
*ont,% 3" !an 1r"su*" t,at t," transa!tion is *"r"l# an "Eui.
tabl" *ortgag".
Art. 19C5. Iors 3,i!, *a# ,a$" i++"r"nt signi+i!ations
s,all b" un"rstoo in t,at 3,i!, is *ost in <""1ing 3it,
t," natur" an obj"!t o+ t," !ontra!t.
CO&&ENT'
(1) Iors to 7" Int"r1r"t" in D""1ing 3it, t," Natur" an
Obj"!t o+ t," Contra!t
E4a*1l"'
I+ aut,orit# is gi$"n -to "4a!t 1a#*"nt b# l"gal
Art. 19C5
*"ans%/ o"s t,is in!lu" aut,orit# to +il" a!tions in !ourt
+or t," r"!o$"r# o+ su*s o+ *on"#J
Art. 19C6
ANS.' K"s. T," !laus" in Eu"stion *"ans -t," 1o3"r
to "4a!t 1a#*"nt o+ "bts u" t," !on!"rn" b# *"ans o+
t," institution o+ suits +or t,"ir r"!o$"r#. I+ t,"r" !oul
b" an# oubt as to t," *"aning o+ t,is languag" ta<"n b#
its"l+% it 3oul b" r"*o$" b# a !onsi"ration o+ t," g"n"ral
s!o1" an 1ur1os" o+ t," instru*"nt in 3,i!, it !on!urs./
(>"r*an M Co. $. Donalson% Si* M Co.% 1 P,il. 69).
(6) &"aning o+ t," Arti!l"
I+ a 3or is sus!"1tibl" o+ t3o or *or" *"anings% 3,at
*"aning s,oul b" us"J
ANS.'
(a) T,at in <""1ing 3it, t," natur" an obj"!t o+ t," !ontra!t.
(Art. 19C5% Ci$il Co").
(b) I+ t,is !annot b" "t"r*in"% t,"n t," -t"r*s o+ a 3rit.
ing ar" 1r"su*" to ,a$" b""n us" in t,"ir 1ri*ar# an
g"n"ral a!!"1tation./ (S"!. 16% 5ul" 19?% 5"$is" 5ul"s o+
Court).
(9) ;s" o+ Ot,"r &"anings
D"s1it" t," +a!t t,at t," t"r*s ar" 1r"su*" to ,a$" b""n
us" in t,"ir 1ri*ar# an g"n"ral a!!"1tation% *a# ot,"r *"an.
ings or signi+i!ations b" 1ro$"J
ANS.' K"s. -E$i"n!" is a*issibl" to s,o3 t,at t,"# ,a$"
a lo!al% t"!,ni!al or ot,"r3is" 1"!uliar signi+i!ation% an 3"r" so
us" an un"rstoo in t," 1arti!ular instan!"% in 3,i!, !as"
t," agr""*"nt *ust b" !onstru" a!!oringl#./ (S"!. 16% 5ul"
19?% 5"$is" 5ul"s o+ Court).
Art. 19C6. T," usag" or !usto* o+ t," 1la!" s,all b"
born" in *in in t," int"r1r"tation o+ t," a*biguiti"s o+ a
!ontra!t% an s,all +ill t," o*ission o+ sti1ulations 3,i!, ar"
orinaril# "stablis,".
CO&&ENT'
(1) E++"!t o+ ;sag" or Custo* o+ t," Pla!"
Art. 19C6
E4a*1l"s'
(a) A *a" a !ontra!t 3it, 7 r"garing -1"s"tas./ In t," 1la!"
Art. 19CC
3,"r" t," !ontra!t 3as *a"% &"4i!an 1"s"tas 3"r" *or"
!o**onl# us" t,an S1anis, 1"s"tas. T," Su1r"*" Court
,"l t,at t," t"r* -1"s"tas/ s,oul b" !onstru" to *"an
&"4i!an 1"s"tas. (KaP"H " 7arnu"$o $. Fust"r% 6A P,il.
6?6).
(b) I+ a !ontra!t +or a l"as" o+ s"r$i!"s o"s not stat" ,o3 *u!,
!o*1"nsation s,oul b" gi$"n% t," !usto* o+ t," 1la!"
3,"r" t," s"r$i!"s 3"r" r"n"r" s,oul "t"r*in" t,"
a*ount. (Arro#o $. AHur% C6 P,il. @A9).
(6) Pl"aing an Proo+ o+ Custo*s an ;sag"s
S,oul !usto*s an usag"s b" 1l"a" (all"g" in t,"
1l"aing)J
ANS.' Distinguis,'
I+ t," !usto*s an usag"s ar" g"n"ral% t,"# n"" not b"
1l"a". H"n!"% "$"n 3it,out 1r"$iousl# b"ing all"g"% t,"# *a#
b" 1ro$" in !ourt.
I+ t," !usto*s an t," usag"s ar" *"r"l# lo!al% t,"n t,"#
,a$" to b" bot, all"g" (1l"a") an 1ro$".
FNOTE' T," Su1r"*" Court ,as *a" t," +ollo3ing ob.
s"r$ation' -I+ a !usto* b" g"n"ral in !,ara!t"r% an t,"r"+or"
1r"su*" to b" <no3n b# t," 1arti"s% t," rul" is t,at su!, !us.
to* *a# b" 1ro$" 3it,out b"ing s1"!i+i!all# 1l"a". T,is is
1arti!ularl# tru" 3,"n a g"n"ral !usto* is o++"r" in "$i"n!"
to t,ro3 lig,t u1on a !ontra!t% t," t"r*s o+ 3,i!, ar" obs!ur"%
an 3,i!, is "1"n"nt u1on "$i"n!" o+ su!, g"n"ral !usto*
to *a<" it 1lain. I+% on t," ot,"r ,an% t," !usto*s b" lo!al in
!,ara!t"r% t," 1art# 3,o 1ro1os"s to r"l# u1on it s,oul a$"r it
in ,is 1l"aings% an a lo!al !usto* or usag" a11l#ing to a s1"!ial
or 1arti!ular <in o+ busin"ss (li<" t," !usto* o+ -is!ounting
not"s/) *a# not b" 1ro$" to "41lain "$"n t," a*biguous t"r*s
o+ a !ontra!t% unl"ss t," "4ist"n!" o+ su!, !usto* or usag" is
1l"a"./ (Anr"as $. 7an< o+ t," P,ili11in" Islans% @C P,il.
CA5).G
Art. 19CC. T," int"r1r"tation o+ obs!ur" 3ors or
Art. 19CC
sti1ula. tions in a !ontra!t s,all not +a$or t," 1art# 3,o
!aus" t," obs!urit#.
Art. 19CC
CO&&ENT'
(1) Int"r1r"tation to 7" Against Part# I,o Caus" Obs!u.
rit#
5"asons +or t," la3' Sin!" ," !aus" t," obs!urit#% t,"
1art# 3,o r"3 u1 t," !ontra!t 3it, a*biguous t"r*s s,oul
b" r"s1onsibl" t,"r"+or2 so t," obs!urit# *ust b" !onstru"
against ,i*. (>onHal"s $. La Pro$isora Fili1ina% C@ P,il. 165).
T," ra+t"r o+ t," t"r*s o+ t," !ontra!t s,oul% t,"r"+or"% b"
!ar"+ul.
(6) Cas"s
>o$8t. o+ t," P,il. $. D"r,a* 7ros.
96 P,il. A6?
FACTS' In a !ontra!t% it 3as agr"" t,at a *"tall" roa.
3a# 3oul b" built on t," str""t 3,"r" t," r"al 1ro1"rt# 3as
lo!at" to -its "ntir" l"ngt,./ No3 t," 1ronoun -its/ *a# r"+"r
"it,"r to t," str""t or t," r"al 1ro1"rt#. T," go$"rn*"nt !on.
t"n" t,at t," 3,ol" str""t s,oul b" *"tall"% all"ging t,at
t," ant"!""nt o+ -its/ 3as t," str""t. ;1on t," ot,"r ,an% t,"
!ontra!tor sai t,at -its/ r"+"rr" t,roug,out t," l"ngt, o+ t,"
r"al 1ro1"rt# (an not t," 3,ol" str""t) s,oul b" *"tall". It
3as t," go$"rn*"nt t,at ra+t" t," !ontra!t. Issu"' I,o is
!orr"!t% t," go$"rn*"nt or t," !ontra!torJ
HELD' T," !ontra!tor is !orr"!t. It 3as t," go$"rn*"nt
t,at !aus" t," a*biguit#% so t," int"r1r"tation o+ -its/ s,oul not
b" in t," go$"rn*"nt8s +a$or an% t,"r"+or"% it *a# b" !on!lu"
t,at it 3as not int"n" b# t," !ontra!ting 1arti"s t,at t," 3,ol"
str""t 3oul b" *"tall". I,"n i++"r"nt int"r1r"tations o+ a
1ro$ision ar" ot,"r3is" "Euall# 1ro1"r% t,at !onstru!tion is to
b" ta<"n 3,i!, is t," *ost +a$orabl" to t," 1art# in 3,os" +a$or
t," 1ro$ision 3as *a"% an i not !aus" t," a*biguit#.
EnriEu"H $. A.S. Iatson an Co.
66 P,il. 669
Art. 19CC
FACTS' In a !ontra!t o+ l"as"% it 3as 1ro$i" t,at t," l"s.
s"" !oul *a<" -obras/ (i*1ro$"*"nts) on t," 1ro1"rt# o+ t,"
Art. 19CC
l"ssor 3it,out t," n"!"ssit# o+ as<ing t," l"ssor8s 1"r*ission
"$"r# ti*" an i*1ro$"*"nt is to b" *a". T," l"ss"" "*olis,"
an ol 3all an "r"!t" on" o+ r"in+or!" !on!r"t" in its 1la!".
T," l"ssor is no3 bla*ing t," l"ss"" +or ,a$ing "*olis," t,"
ol 3all% !lai*ing t,at t," l"ss"" 3as allo3" to *a<" onl# i*.
1ro$"*"nts% not "*olitions. Issu"' Di t," "*olition o+ t," ol
on" an its substitution b# a n"3 on" !onstitut" -i*1ro$"*"nts/
or -obras/J
HELD' T," t"r* -obras/ or -i*1ro$"*"nts/ is sus!"1tibl"
o+ i++"r"nt int"r1r"tations% an sin!" t," a*biguit# ,"r" 3as
!aus" b# t," l"ssor% t," t"r* s,oul not b" int"r1r"t" in ,is
+a$or. H"n!"% it 3as all rig,t +or t," l"ss"" to o 3,at ," i.
Pao C,uan I"i $. 5o*"rosa an
>"n"ral In"*nit# Co.% In!.
L.1?6A6% F"b. 6B% 1A5B
FACTS' A sur"t# bon agr""*"nt 1ro$i" t,at t," sur"t#
-3ill not b" liabl" +or an# !lai* not is!o$"r" an 1r"s"nt"
to t," !o*1an# 3it,in t,r"" *ont,s +ro* t," "41iration o+ t,"
bon% an t,at t," oblig"" 3ai$"s ,is rig,t to +il" an# !ourt
a!tion against t," sur"t# a+t"r t," t"r*ination o+ t," t,r""
*ont,s a+or"*"ntion"./ Issu"' I+ a !lai* is 1r"s"nt" 3it,in
t,r"" *ont,s% *a# a !ourt a!tion b" still institut" a+t"r sai
t,r"" *ont,sJ
HELD' K"s% in $i"3 o+ t," +ollo3ing r"asons'
(1) To ,ol t,at t," 1r"s!ri1ti$" 1"rio s,oul b" onl# t,r""
*ont,s 3oul b" unr"asonabl" an absur +or i+ a !lai*
is 1r"s"nt" to t," Co*1an#% sa# on t," last a# o+ t,"
1"rio% t," Co*1an# 3oul still ,a$" to a11ro$" or "n#
t," !lai*. I+ 3" 3ill ,ol t,at sai a# 3oul also b" t,"
last a# to +il" a !as" in !ourt% !l"arl# t," Co*1an# is not
gi$"n t," !,an!" to a11ro$" or to "n#2 an t," oblig"" is
gi$"n $"r# littl" ti*" to +il" a !ourt !lai*. T,is !oul not
,a$" b""n t," int"ntion o+ t," 1arti"s.
(6) I+ a sti1ulation in a sur"t# bon !an b" int"r1r"t" as a
!onition 1r"!""nt (1r"1arator# to a !ourt suit)% or as bot,
a !onition 1r"!""nt an 1r"s!ri1tion% t," a*biguit#% i+
Art. 19CC
an#% *ust b" int"r1r"t" against t," sur"t# 3,o 1r"1ar"
t," +or* on 3,i!, t," bon 3as "4"!ut".
Art. 19CC
Lu!io Tan $. CA M San!,"H
>5 1??A@6% Aug. 16% 1AA6
T," 1ri$at" r"s1on"nt !orr"!tl# obs"r$"s t,at it
3oul ,a$" b""n a si*1l" *att"r +or t," 1ro*isor to stat"
!l"arl# in t," 1ro*issor# not" t,at ," 3oul 1a# t," bal.
an!" o+ P5?%??? onl# on !onition t,at ," 3oul !ontinu"
to *anag" an o1"rat" t," r"staurant uring t,at t3o.#"ar
1"rio o+ t," l"as". H" i not s"" +it to in!lu" t,is !oni.
tion in t," 1ro*issor# not" ," sign".
Assu*ing an a*biguit# in t," instru*"nt% Art. 19CC
o+ t," Ci$il Co" is a11li" in t,at t," a*biguit# *ust b"
r"sol$" against t," 1"rson 3,o !aus" it% in t,is !as"% t,"
1ro*isor.
Fin*an >"n. Ass. Cor1. $. CA M Sur1osa
>5 1??AC?% S"1t. 6% 1AA6
FACTS' D"!"as" Carli" Sur1osa 3as insur" 3it,
1"tition"r Fin*an >"n"ral Assuran!" Cor1. 3it, ,is
1ar"nts an brot,"rs 0 all surna*" Sur1osa% as b"n"+i.
!iari"s. I,il" sai insuran!" 1oli!# 3as in +ull +or!" an
"++"!t% t," insur" i" on O!t. 1B% 1ABB as a r"sult o+ a stab
3oun in+li!t" b# on" o+ t,r"" uni"nti+i" *"n 3it,out
1ro$o!ation an 3arning on t," 1art o+ t," +or*"r as ,"
an ,is !ousin 3"r" 3aiting +or a ri" on t,"ir 3a# ,o*"
a+t"r att"ning t," !"l"bration o+ t," -&as<ara Annual
F"sti$al./ T,"r"a+t"r% 1ri$at" r"s1on"nt an t," ot,"r
b"n"+i!iari"s o+ sai insuran!" 1oli!# +il" a 3ritt"n noti!"
o+ t," !lai* 3it, t," 1"tition"r insuran!" !o*1an# 3,i!,
"ni" sai !lai*% !ont"ning t,at -*ur"r/ an -assault/
ar" not 3it,in t," s!o1" o+ t," !o$"rag" o+ t," insuran!"
1oli!#.
HELD' T," insuran!" !o*1an# is liabl" to 1a# r".
s1on"nt an t," ot,"r b"n"+i!iari"s t," su* o+ P15%???
r"1r"s"nting t," 1ro!""s o+ t," 1oli!# 3it, int"r"st. T,"
1rin!i1l" o+ "41r"sso unius "st "4!lusio alt"rius 0 t," *"n.
tion o+ on" t,ing i*1li"s t," "4!lusion o+ anot,"r t,ing 0
Art. 19CC
is% t,"r"+or"% a11li!abl" in t," instant !as" sin!" *ur"r
an assault% not ,a$ing b""n "41r"ssl# in!lu" in t,"
"nu.
Art. 19CC
*"ration o+ t," !ir!u*stan!"s t,at 3oul n"gat" liabilit#
in sai insuran!" 1oli!#% !annot b" !onsi"r" b# i*1li!a.
tion to is!,arg" t," 1"tition"r insuran!" !o*1an# +ro*
liabilit# +or an# injur#% isabilit# or loss su++"r" b# t,"
insur". T," +ailur" o+ t," 1"tition"r insuran!" !o*1an#
to in!lu" "at, r"sulting +ro* *ur"r or assault a*ong
t," 1ro,ibit" ris<s l"as in"$itabl# to t," !on!lusion t,at
it i not int"n to li*it or "4"*1t its"l+ +ro* liabilit# +or
su!, "at,. T,us% Art. 19CC o+ t," Ci$il Co" 1ro$i"s t,at
-FtG," int"r1r"tation o+ obs!ur" 3ors on sti1ulations in a
!ontra!t s,all not +a$or t," 1art# 3,o !aus" t," obs!u.
rit#./ &or"o$"r% it is 3"ll.s"ttl" t,at !ontra!ts o+ insur.
an!" ar" to b" !onstru" lib"rall# in +a$or o+ t," insur"
an stri!tl# against t," insur"r. A*biguit# in t," 3ors
o+ an insuran!" !ontra!t s,oul b" int"r1r"t" in +a$or o+
its b"n"+i!iar#.
(9) 5ul" in Contra!ts o+ A,"sion
Art. 199C o+ t," Ci$il Co" a11li"s 3it, "$"n gr"at"r +or!"
in !ontra!ts o+ a,"sion 3,"r" t," !ontra!t is alr"a# 1r"1ar"
b# a big !on!"rn% an t," ot,"r 1art# *"r"l# a,"r"s to it% li<"
insuran!" or trans1ortation !ontra!ts% or bills o+ laing. (S"" 6
5.C.L. B5@2 S"" also :ua C,"" >an $. La ;nion M 5o!<% Co.%
In!. Co.% Lt.% AB P,il. B5).
E4a*1l"' Obs!ur" t"r*s in an insuran!" 1oli!# ar" !on.
stru" stri!tl# against t," insur"r% an lib"rall# in +a$or o+ t,"
insur". T,is is to "++"!tuat" t," o*inant 1ur1os" o+ insuran!"
in"*ni+i!ation. T,is in"" is 1arti!ularl# tru" in !as"s 3,"r"
+or+"itur" is in$ol$". (Calano! $. Court o+ A11"als% AB P,il.
CA).
National Po3"r Cor1. $. CA
>5 @9C?6% No$. 1@% 1AB6
Contra!ts o+ insuran!" ar" to b" !onstru" lib"rall# in +a$or
o+ t," insur" an stri!tl# against t," insur"r. T,us% a*biguit#
Art. 19CC
in t," 3ors o+ t," insuran!" !ontra!t s,oul b" int"r1r"t" in
+a$or o+ its b"n"+i!iar#.
Art. 19CB
P,il. A*"ri!an >"n. Ins. Co. $. S3""t Lin"s% In!.
>5 BC@9@% Aug. 5% 1AA6
Contra!ts o+ a,"sion 3,"r"in on" 1art# i*1os"s a r"a#.
*a" +or* o+ !ontra!t on t," ot,"r ar" !ontra!ts not "ntir"l#
1ro,ibit". T," on" 3,o a,"r"s to t," !ontra!t is in r"alit# +r""
to r"j"!t it "ntir"l#2 i+ ," a,"r"s% ," gi$"s ,is !ons"nt.
In t," 1r"s"nt !as"% not "$"n an all"gation o+ ignoran!" o+ a
1art# "4!us"s non.!o*1lian!" 3it, t," !ontra!tual sti1ulations
sin!" t," r"s1onsibilit# +or "nsuring +ull !o*1r","nsion o+ t,"
1ro$isions o+ a !ontra!t o+ !arriag" "$ol$"s not on t," !arri"r
but on t," o3n"r% s,i11"r% or !onsign""% as t," !as" *a# b".
T,us% 3,il" it is tru" t,at substantial !o*1lian!" 3it,
1ro$isions on +iling o+ !lai* +or loss o+% or a*ag" to% !argo
*a# so*"ti*"s su++i!"% t," in$o!ation o+ su!, an assu*1tion
*ust b" $i"3" $is.a.$is t," obj"!t or 1ur1os" 3,i!, su!, a
1ro$ision s""<s to attain% an t,at is to a++or t," !arri"r a
r"asonabl" o11ortunit# to "t"r*in" t," *"rits an $aliit# o+
t," !lai* an to 1rot"!t its"l+ against un+oun" i*1ositions.
Art. 19CB. I,"n it is absolut"l# i*1ossibl" to s"ttl"
oubts b# t," rul"s "stablis," in t," 1r"!"ing arti!l"s%
an t," oubts r"+"r to in!i"ntal !ir!u*stan!"s o+ a
gratuitous !ontra!t% t," l"ast trans*ission o+ rig,ts an
int"r"sts s,all 1r"$ail. I+ t," !ontra!t is on"rous% t," oubt
s,all b" s"ttl" in +a$or o+ t," gr"at"st r"!i1ro!it# o+
int"r"sts.
I+ t," oubts ar" !ast u1on t," 1rin!i1al obj"!t o+ t,"
!ontra!t in su!, a 3a# t,at it !annot b" <no3n 3,at *a#
,a$" b""n t," int"ntion or 3ill o+ t," 1arti"s% t," !ontra!t
s,all b" null an $oi.
CO&&ENT'
(1) Doubts as to Prin!i1al Obj"!t or In!i"ntal Cir!u*.
stan!"s
T,"r" *a# b" oubts as to'
Art. 19CB
(a) t," 1rin!i1al obj"!t
(b) or t," in!i"ntal !ir!u*stan!"s (as to 3,"t,"r% +or
"4a*1l"% a sal" or a *ortgag" is in$ol$")
Art. 19CB
(6) Doubt as to t," Prin!i1al Obj"!t
H"r"% t," !ontra!t is $oi.
E4a*1l"' N 1ro*is" to gi$" K t,is ( ). Sin!"
t," obj"!t is un<no3n% it is !l"ar t,at t,"r" !oul not ,a$" b""n
an# *""ting o+ t," *ins.
(9) Doubts as to t," In!i"ntal Cir!u*stan!"s
A11l# t," +ollo3ing rul"s'
(a) I+ gratuitous% a11l# t," rul" o+ -l"ast trans*ission o+ rig,ts
an int"r"st./
(b) I+ on"rous% a11l# t," rul" o+ t," -gr"at"st r"!i1ro!it# o+
int"r"sts./
E4a*1l"' I+ A n""s a +ountain 1"n an 7 gi$"s it
to ,i* +r""l# (gratuitousl#)% is t,is a *"r" onation or a
!o**oatu*J
ANS.' A *"r" !o**oatu* (loan) +or t,is 3oul
trans*it l"ss"r rig,ts t,an a onation.
Anot,"r "4a*1l"' It is +air"r% in !as" o+ oubt% to
int"r1r"t a *ortgag" !ontra!t as on" 3,i!, is gratuitous
rat,"r t,an on" 3,i!, is on"rous. (7ruis"r $. Cabr"ra% B1
P,il. 66A).
Anot,"r "4a*1l"' I+ a 1a!to " r"tro !ontra!t is not
!l"ar as to "4a!tl# 3,"n r""*1tion ,as to b" *a"% 3"
s,oul int"r1r"t t," 1"rio as an in"+init" on" (,"n!"% t,"
*a4i*u* 1"rio is 1? #"ars% rat,"r t,an @ #"ars). T,is
is i*1ortant to "++"!tuat" t," l"ast trans*ission o+ rig,ts.
(Tu*an"ng $. Aba% A6 P,il. 1B).
Anot,"r "4a*1l"' I,"n 3,at ,as b""n r"!"i$" +or
,is ,ous" b# a 1"rson n""ing *on"# is $"r# *u!, l"ss
t,an t," $alu" o+ t," ,ous"% t," !ourts 3ill b" in!lin" to
int"r1r"t t," transa!tion *or" as an "Euitabl" *ortgag"%
t,an as a sal" 3it, t," rig,t o+ r"1ur!,as"% t," r"ason
b"ing t,at in an "Euitabl" *ortgag"% t,"r" is in t,is !as"
gr"at"r r"!i1ro!it# o+ int"r"sts% !onsi"ring t," a*ount o+
Art. 19CB
*on"# r"!"i$". Sai t," Su1r"*" Court' -E$"n i+ t,"r"
3"r" a oubt as to 3,"t,"r t," !ontra!t "nt"r" into b#
Vi!"nt"
Art. 19CA
P"r"H 3as on" o+ *ortgag" or on" o+ sal"% on t," ,#1ot,"sis
t,at ," !oul is1os" o+ t," 1ro1"rt#% 3,il" it is not 1ossibl"
to "!i" t," Eu"stion b# t," languag" o+ t," o!u*"nt%
in justi!"% it *ust b" assu*" t,at t," "btor assu*" a
l"ss"r obligation% an t,at in a!!or 3it, t," !r"itor ,"
boun ,i*s"l+ to "4"!ut" a *ortgag" 3,i!, ,as a gr"at"r
r"!i1ro!it# o+ int"r"sts t,an a !ontra!t o+ sal" un"r 1a!to
" r"tro% in s1it" o+ t," +a!t t,at bot, t," latt"r an t,at o+
*ortgag" in$ol$" a $aluabl" !onsi"ration in a!!oran!"
3it, t," 1ro$isions o+ Art. 16BA o+ t," Ci$il Co"/ (no3
Art. 19CB o+ t," n"3 Ci$il Co"). (P"r"H $. Cort"H% 15 P,il.
611).
Olino $. &"ina
19 P,il. 9CA
FACTS' A 3as in"bt" to 7 +or P1C5. 7"!aus" A ,a
no *on"#% C o++"r" to 1a#% an a!tuall# 1ai P1C5 to 7.
7"!aus" ," 3as grat"+ul% A !ons"nt" to t," trans+"r o+ ,is
lan to C. Issu"' Is t,is to b" !onsi"r" as a sal"% or as a
*"r" loan 3it, t," lan as s"!urit#J
HELD' T,is s,oul b" !onsi"r" as a *"r" loan 3it,
t," lan as s"!urit# inst"a o+ a sal" to C% inas*u!, as t,"
+or*"r in$ol$"s bot, t," l"ss"r trans*ission o+ rig,ts as
3"ll as gr"at"r r"!i1ro!it# o+ int"r"st. Sai t," Su1r"*"
Court' -Inas*u!, as 3" ar" in oubt as to 3,i!, o+ t," t3o
!ontra!ts it 3as b# r"ason o+ 3,i!, &"ina (C) +urnis,"
t," P1C5% 3it, 3,i!, Olino (A) r"""*" ,is lan +ro*
Isiora 5"non (7)% an Olino in turn !ons"nt" to t,"
trans+"r o+ t," lan to &"ina% t," 1art# 3,o +urnis," t,"
*on"#% 3" "l"!t to !onsi"r t,at sai !ontra!t 3as t,at o+
loan% b"!aus" su!, a !ontra!t in$ol$"s a s*all"r trans*is.
sion o+ rig,ts an int"r"st% an t," "btor o"s not surr"n.
"r all rig,ts to ,is 1ro1"rt#% but si*1l# !on+"rs u1on t,"
!r"itors t," rig,t to !oll"!t 3,at is o3ing +ro* t," $alu"
o+ t," t,ing gi$"n as s"!urit#% t,"r" "4isting b"t3""n t,"
1arti"s a gr"at"r r"!i1ro!it# o+ rig,ts an obligations./
Art. 19CA. T," 1rin!i1l"s o+ int"r1r"tation stat" in 5ul"
Art. 19CA
169 o+ t," 5ul"s o+ Court s,all li<"3is" b" obs"r$" in t,"
!onstru!tion o+ !ontra!ts.
Art. 19CA
CO&&ENT'
(1) Su11l"tor# ;s" o+ t," Prin!i1l"s o+ Int"r1r"tation in t,"
5ul"s o+ Court
5ul" 169 as stat" in t," Arti!l" s,oul b" !onstru" to
r"+"r to 5ul" 19? o+ t," N"3 5ul"s on E$i"n!".
(6) Languag" in t," Pla!" o+ E4"!ution
-T," languag" o+ a 3riting is to b" int"r1r"t" a!!oring
to t," l"gal *"aning it b"ars in t," 1la!" o+ its "4"!ution% unl"ss
t," 1arti"s int"n" ot,"r3is"./ (S"!. B% 5ul" 19?% 5"$is" 5ul"s
o+ Court).
(9) &"aning o+ Iors ;s"
-T," t"r*s o+ a 3riting ar" 1r"su*" to ,a$" b""n us"
in t,"ir 1ri*ar# an g"n"ral a!!"1tation% but "$i"n!" is a.
*issibl" to s,o3 t,at t,"# ,a$" a lo!al% t"!,ni!al% or ot,"r3is"
1"!uliar signi+i!ation% an 3"r" so us" an un"rstoo in t,"
1arti!ular instan!"% in 3,i!, !as"% t," agr""*"nt *ust b"
!onstru" a!!oringl#./ (S"!. 16% 5ul" 19?% 5"$is" 5ul"s o+
Court).
(@) Con+li!t 7"t3""n Print" an Iritt"n (Not Print")
Iors
-I,"n an instru*"nt !onsists 1artl# o+ 3ritt"n 3ors
an 1artl# o+ a 1rint" +or*% an t," t3o ar" in!onsist"nt% t,"
+or*"r !ontrols t," latt"r./ (S"!. 19% 5ul" 19?% 5"$is" 5ul"s o+
Court).
=arEu" $. S*it,% 7"ll an Co.
56 P,il. C5B
FACTS' A insur" ,is s,i1 3it, an insuran!" !o*1an#. In
t," 1rint" 1oli!#% t," $"ss"l is su11os" to b" insur" against
loss. 7ut atta!," to t," 1oli!# is a -ri"r%/ a t#1"3ritt"n !laus"
3,i!, stat"s t,at t," insuran!" is onl# against absolut" total
Art. 19CA
loss o+ t," $"ss"l onl#% an t,at t," insuran!" !o*1an# 3as
su11os" to 1a# onl# t," 1ro1ortionat" sal$ag" !,arg"s o+ t,"
Art. 19CA
"!lar" $alu". At t," botto* o+ sai ri"r ar" +oun t," 3ors
-Atta!,ing to an +or*ing 1art o+ t," National ;nion Fir" In.
suran!" Co.% Hull Poli!# No. 1?55./ Issu"' I,i!, s,oul 1r"$ail%
t," 1rint" 3ors or t," t#1" -ri"r/J
HELD' -It is a 3"ll.s"ttl" rul" t,at in !as" r"1ugnan!"
"4ists b"t3""n 3ritt"n an 1rint" 1ortions o+ a 1oli!#% t," 3rit.
t"n 1ortion 1r"$ails% an t,"r" !an b" no Eu"stion t,at as +ar
as an# in!onsist"n!# "4ists% t," abo$".*"ntion" t#1" Ori"r8
1r"$ails o$"r t," 1rint" !laus"./
(5) ;s" o+ E41"rts an Int"r1r"t"rs
-I,"n t," !,ara!t"rs in 3,i!, an instru*"nt is 3ritt"n
ar" i++i!ult to b" "!i1,"r"% or t," languag" is not un"rstoo
b# t," Court% t," "$i"n!" o+ 1"rsons s<ill" in "!i1,"ring t,"
!,ara!t"rs% or 3,o un"rstoo t," languag"% is a*issibl" to
"!lar" t," !,ara!t"rs or t," *"aning o+ t," languag"./ (S"!.
1@% 5ul" 19?% 5"$is" 5ul"s o+ Court).
(6) Int"r1r"tation in Fa$or o+ a Natural 5ig,t
-I,"n an instru*"nt is "Euall# sus!"1tibl" o+ t3o int"r.
1r"tations% on" in +a$or o+ a natural rig,t an t," ot,"r against
it% t," +or*"r is to b" ao1t"./ (S"!. 1@% 5ul" 19?% 5"$is" 5ul"s
o+ Court).
FNOTE' T," rig,t to r"""* is a natural rig,t. (Tu*an"ng
$. Aba% A6 P,il. 1B).G
(C) ;sag" or Custo*s
-An instru*"nt *a# b" !onstru" a!!oring to usag"% in
or"r to "t"r*in" its tru" !,ara!t"r./ (S"!. 1C% 5ul" 19?% 5"$is"
5ul"s o+ Court).
Chapter (
RESCISSIBLE CONTRACTS
(1) T," Four Dins o+ D"+"!ti$" Contra!ts
T,"r" ar" +our <ins o+ "+"!ti$" !ontra!ts (!ontra!ts 3,i!,
*a# b" in$aliat")'
(a) r"s!issibl"
(b) $oiabl"
(!) un"n+or!"abl"
() $oi (3,i!, *a# b" in"4ist"nt or ill"gal)
FNOTE' In g"n"ral 0
(a) T," r"s!issibl" !ontra!t is $ali until r"s!in"2 t,"r" is a
sort o+ "4trinsi! "+"!t !onsisting o+ an "!ono*i! a*ag"
or l"sion.
(b) T," $oiabl" !ontra!t is $ali till annull". It !an b" an.
null". It !annot b" annull"% ,o3"$"r% i+ t,"r" ,as b""n
a rati+i!ation. T," "+"!t is *or" or l"ss intrinsi!% as in t,"
!as" o+ $itiat" !ons"nt.
(!) T," un"n+or!"abl" !ontra!t !annot b" su" u1on or "n.
+or!"% unl"ss it is rati+i". In a 3a#% it *a# b" !onsi"r"
as a $aliabl" transa!tion% t,at is% it ,as no "++"!t no3% but
it *a# b" "++"!ti$" u1on rati+i!ation.
(NOTE' On t," ot,"r ,an% a $oiabl" !ontra!t ,as
"++"!t no3% but it *a# b" in$aliat"2 ,"n!"% it is ""*"
$ali unl"ss annull".)
() T," $oi !ontra!t is on" t,at ,as no "++"!t at all2 it !annot
b" rati+i" or $aliat".G
(NOTE' T," abo$".na*" "+"!ti$" !ontra!ts ar"
arrang" in t," or"r o+ "!r"asing $aliit#.)
-A gr"at "al o+ !on+usion ,as b""n !r"at" b# t," +ault#
t"r*inolog# us" b# t," ol Co" as r"gars "+"!ti$" !ontra!ts
. . . In or"r to 1ut an "n to t," +or"going un!"rtaint# an ot,"r
a*biguiti"s in t," ol Co"% t," Proj"!t o+ t," n"3 Ci$il Co"% in
a !l"ar.!ut an un"Eui$o!al 3a#% !lassi+i"s an "+in"s t," $ari.
ous <ins o+ "+"!ti$" !ontra!ts% an stat"s t,"ir !ons"Eu"n!"s.
T,"r" ar" +our <ins o+ su!, !ontra!ts% na*"l#'
(1) r"s!issibl"2
(6) $oiabl"2
(9) un"n+or!"abl"2
(@) $oi or in"4ist"nt !ontra!ts.88
-T," +irst !lass% r"s!issibl"% r"*ains as t,"# ar" +oun in
t," ol Co". All t," "ss"ntial r"Euisit"s o+ a !ontra!t "4ist an
t," !ontra!t is $ali% but b# r"ason o+ injur# or a*ag" to t,ir
1"rsons% su!, as !r"itors% t," !ontra!t *a# b" r"s!in".88
-T," s"!on <in% $oiabl" !ontra!ts% ar" s1"!i+i!all# s"t
+ort, in Art. 19A? o+ t," n"3 Ci$il Co".88
-T,us% +ro* $arious sour!"s in P,ili11in" la3s an +ro*
"!isions o+ t," Su1r"*" Court o+ t," P,ili11in"s% a n"3 !lass
o+ "+"!ti$" !ontra!ts is to a !"rtain "4t"nt !r"at". T," t"r*
-un"n+or!"abl"/ is us"% as istinguis," +ro* O$oiabl".8 T,"
latt"r ar" bining% unl"ss annull" b# 1ro1"r a!tion in !ourt%
3,il" t," +or*"r !annot b" su" u1on or "n+or!" unl"ss t,"#
ar" rati+i". As r"gar t," "gr"" o+ "+"!ti$"n"ss% $oiabl" !on.
tra!ts ar" +art,"r a3a# +ro* absolut" nullit# t,an un"n+or!"abl"
!ontra!ts. In ot,"r 3ors% an un"n+or!"abl" !ontra!t o!!u1i"s
an int"r*"iat" groun b"t3""n $oiabl" an $oi !ontra!ts.88
-Lastl#% t,"r" ar" t," $oi or in"4ist"nt !ontra!ts. T,"#
ar" absolut"l# null an $oi.88
-It 3ill t,us b" s""n t,at t," $arious !ontra!ts% in t," or"r
("!r"asing) o+ t,"ir "+"!ti$"n"ss% ar" t," +ollo3ing'
Art. 19B?
(1) r"s!issibl"
(6) $oiabl"
(9) un"n+or!"abl"
(@) $oi or in"4ist"nt.88
-It is b"li"$" t,at 3it, t," "41li!it 1ro$isions o+ t,"
n"3 Ci$il Co" u1on t," subj"!t o+ "+"!ti$" !ontra!ts% t," ol
n"bulous stat" o+ t," la3 ,as b""n is1"ll". It is n"it,"r 3is"
nor just t,at 1arti"s s,oul b" l"+t in oubt as to t," "gr"" o+
"++"!ti$"n"ss o+ t," !ontra!tual r"lations.88
-T," l"gal 1ro+"ssion is "ntitl" to <no3 in a 1ositi$" an
un"Eui$o!al *ann"r 3,at !ontra!ts ar" r"s!issibl"% $oiabl"%
un"n+or!"abl"% an $oi. It is ,o1" t,at t,is !lari+i!ation o+
t," la3 on t,is *ost +ar.r"a!,ing subj"!t 3ill go +ar to3ar
+or"stalling *an# !ontro$"rsi"s an litigations./ (5"1ort o+ t,"
Co" Co**ission% 11. 19B.1@?).
Art. 19B?. Contra!ts $alil# agr"" u1on *a# b"
r"s!in" in t," !as"s "stablis," b# la3.
CO&&ENT'
(1) O5"s!ission8 D"+in"
(a) S!a"$ola'
-5"s!ission is a 1ro!"ss "signat" to r"n"r in"++i!a.
!ious a !ontra!t $alil# "nt"r" into an nor*all# bin.
ing% b# r"ason o+ "4t"rnal !onitions% !ausing an "!ono*i!
1r"jui!" to a 1art# or to ,is !r"itors./
(b) B &anr"sa% 11. C@B.C@A'
-5"s!ission is a r"*"# grant" b# la3 to t," !on.
tra!ting 1arti"s bot, to !ontra!ting 1arti"s an to t,ir
1"rsons in or"r to s"!ur" r"1aration o+ a*ag"s !aus"
t,"* b# a !ontra!t% "$"n i+ t," !ontra!t b" $ali% b# *"ans
o+ t," r"storation o+ t,ings to t,"ir !onition 1rior to t,"
!"l"bration o+ sai !ontra!t./
(!) Su1r"*" Court'
Art. 19B?
It is a r"li"+ to 1rot"!t on" o+ t," 1arti"s or a t,ir
1"rson +ro* all injur# an a*ag"s 3,i!, t," !ontra!t
Art. 19B?
*a# !aus"% to 1rot"!t so*" 1r"+"r"ntial rig,t. (S"" AEuino
$. TaP"o% 9A P,il. 51C).
(NOTE' E$"n a $oiabl" !ontra!t *a# b" r"s!in"% +or
"4a*1l"% b# 1r"jui!" !r"itors. T,is is 1arti!ularl# tru"
i+ t," injur" 1art# o"s not !ar" to as< +or annul*"nt.)
(6) 5"Euisit"s +or 5"s!ission
(a) T,"r" *ust b" at t," b"ginning "it,"r a $ali or a $oiabl"
!ontra!t (not a $oi on")2
(b) 7ut t,"r" is an "!ono*i! or +inan!ial 1r"jui!" to so*"on"
(a 1art# or a t,ir 1"rson)2
(!) 5"Euir"s *utual r"stitution.
(9) T3o Dins o+ 5"s!ission
(a) T," r"s!ission *"ntion" in Art. 19B? o+ t," N"3 Ci$il
Co". T,is is% 1ro1"rl# s1"a<ing% -r"s!ission./
(b) T," r"s!ission *"ntion" in Art. 11A1 o+ t," N"3 Ci$il
Co". Alt,oug, in t,is arti!l"% t," n"3 Co" us" t,"
t"r* -r"s!ission%/ t," t"r*% 1ro1"rl# s1"a<ing% s,oul b"
-r"solution./
FNOTE'
1) 5"s!ission in g"n"ral (Art. 19B?)
a) is bas" on l"sion or +rau u1on !r"itors2
b) ,"r"% t," a!tion is institut" b# "it,"r o+ t,"
!ontra!ting 1arti"s or b# t,ir 1"rsons2
!) ,"r"% t," !ourts !annot grant a 1"rio or t"r*
3it,in 3,i!, to !o*1l#2
) ,"r"% non.1"r+or*an!" b# t," ot,"r 1art# is i*.
*at"rial.
6) 5"s!ission un"r Art. 11A1 (r"solution)
Art. 19B?
a) is bas" on non.1"r+or*an!" or non.+ul+ill*"nt
o+ t," obligation2
Art. 19B?
b) ,"r"% t," a!tion *a# b" institut" onl# b# t,"
injur" 1art# to t," !ontra!t2
!) ,"r"% in so*" !as"s% t," !ourts *a# grant a
t"r*2
) ,"r"% non.1"r+or*an!" b# t," ot,"r 1art# is
i*1ortant.G
L"gara H"r*anos $. Sulano
L.665CB% =an. 6B% 1AC@
FACTS' A $"nor sol t3o lots on t," install*"nt 1lan to
a bu#"r 3,o subs"Eu"ntl# 3as abl" to 1a# (in install*"nts) an
a*ount% 3,i!, b# its"l+ alr"a# "4!""" t," 1ur!,as" 1ri!" o+
on" o+ t," lots. I+ t," bu#"r o"s not !ontinu" 1a#ing% *a# t,"
$"nor su!!"ss+ull# as< +or t," r"s!ission (a!tuall#% r"solution)
o+ t," sal" o+ t," t3o lotsJ
HELD' No% ot,"r3is" un+airn"ss 3oul r"sult. H"r"% t,"
$"nor 3as or"r" to !on$"# to t," bu#"r on" o+ t," t3o lots.
(@) &utual Diss"nt
:u"r#' Su11os" t," 1arti"s to a !ontra!t *utuall# agr""
to !an!"l t," !ontra!t% is t,is -r"s!ission/ 1ro1"rl# so.!all"J
ANS.' No. O+ !ours"% in a loos" s"ns" -r"s!ission/ *a# b"
us" ,"r". 7ut stri!tl# s1"a<ing% t,is is -*utual ba!<ing out%/
an not t," r"s!ission r"+"rr" to in Art. 19B? o+ t," n"3 Ci$il
Co". In *utual 3it,ra3al% it is t," 3ill o+ t," 1arti"s t,at
!onstitut"s t," basis% 3,"r"as in r"s!ission (1ro1"rl# !all")% it
is t," la3 t,at !onstitut"s t," basis.
Aut,orit#'
-T," r"s!ission o+ t," !ontra!t b"t3""n t," 1lainti++ an
t," "+"nant 3as not originat" b# an# o+ t," !aus"s s1"!i+i"
in Arts. 16A1 an 16A6 (no3 Arts. 19B1 an 19B6 o+ t," n"3
Ci$il Co")% nor is it a r"li"+ +or t," 1ur1os"s soug,t b# t,"s"
arti!l"s. It is si*1l# anot,"r !ontra!t +or t," issolution o+ t,"
1r"$ious on"% an its "++"!ts% in r"lation to t," !ontra!t so is.
Art. 19B?
sol$"% s,oul b" "t"r*in" b# t," agr""*"nt *a" b# t,"
1arti"s% or b# t," a11li!ation o+ ot,"r l"gal 1ro$isions% but not b#
Art. 19B?
Arti!l" 16A5 (no3 Art. 19B5 o+ t," n"3 Ci$il Co") 3,i!, is not
a11li!abl"./ (AEuino $. TaP"o% 9A P,il. 51C% 3,i!, 3as about a
sal" *utuall# !an!"ll" b# bot, 1arti"s. A Eu"stion aros" as to
3,"t,"r t," bu#"r ,a to r"turn t," +ruits% sai obligation b"ing
r"Euir" in an orinar# !as" +or r"s!ission. H"r"% t," Court sai
t,at t," ut# to r"turn t," +ruits "1"n" on t," agr""*"nt
o+ t," 1arti"s an not on t," l"gal 1ro$isions on r"s!ission% an
t,is is so% "$"n i+ t," 1arti"s ,a "rron"ousl# r"+"rr" to t,"ir
a!t as on" o+ r"s!ission.)
(5) Cas"s
Lun"ta &otor Co. $. =.7. 5i!,"#
(C.A.) 9A O.>. 11?1
FACTS' A boug,t a !ar +ro* 7% a "al"r o+ !ars% on t,"
install*"nt 1lan. A+t"r a 3,il"% A broug,t ba!< t," !ar to t,"
s,o1 o+ 7% sa#ing ," !oul not 1a# +or it. 7 a!!"1t" t," !ar an
r"gist"r" it un"r its (78s) na*". For a long ti*"% 7 i not
!o**uni!at" 3it, A an as<" +or t," un1ai balan!". Lat"r% A
r"!"i$" an a!!ount +or t," !osts o+ s1ar" 1arts an +or gasolin". 7
t,"n broug,t t,is a!tion to r"!o$"r bot, t," un1ai balan!" an
t," n"3 a!!ount. Issu"' Has A8s obligation b""n "4tinguis,"J
HELD' K"s% A8s obligation ,as alr"a# b""n "4tinguis,".
Tru" t,"r" ,a b""n a !ontra!t% but in $i"3 o+ 3,at lat"r ,a1.
1"n"% sai obligation 3as !an!"ll".
T," !ontra!t 3as 1"r+"!tl# l"gal an bining. Non" o+ t,"
1arti"s s,oul b" allo3" to isr"gar it 3it,out a l"gal an
$ali groun t,"r"+or. 7ot, 1arti"s *a#% ,o3"$"r% agr"" to
r"s!in (!an!"l) it. T," Eu"stion to b" "t"r*in" t,"n% is% i
t," 1lainti++ agr"" to r"s!in (!an!"l) t," !ontra!tJ I+ t," $"nor
,a not agr"" or !ons"nt" to t," r"turn o+ t," !ar% 3,# i it
r"gist"r t," !ar in its na*"J Also% i+ t," $"nor ,a not agr""
to r"s!in (!an!"l) t," !ontra!t 3,"n t," 1ur!,as"r r"turn" t,"
!ar% 3,# i it not r"Euir" i**"iat"l#% or 3it,in a r"asonabl"
ti*"% t," 1ur!,as"r to 1a# t," un1ai balan!" o+ t," not"% or to
ta<" t," !ar +ro* its s,o1 or 1r"*is"s or to 1a# storag" !,arg"sJ
T," !ontra!t 3as r"s!in" (!an!"ll").
Art. 19B?
(NOTE' In t," abo$" !it" !as"% t," us" o+ t," t"r* -r".
s!in/ is in"4a!t. I,at t," Court o+ A11"als s,oul ,a$" sai
Art. 19B?
3as -!an!"ll"%/ in $i"3 o+ t," +a!t t,at 1ro1"rl# s1"a<ing% t,is
t#1" o+ -r"s!ission/ is onl# -r"s!ission/ in t," loos" s"ns"% an
not t," -r"s!ission/ s1o<"n o+ b# t," la3 un"r t," !,a1t"r o+
r"s!issibl" !ontra!ts.)
Nobl" $. Cit# o+ &anila
6C P,il. 1
FACTS' T," Cit# o+ &anila ,as a !ontra!t 3it, Nobl"
sti1ulating t,at t," Cit# 3oul bu# a !"rtain 1i"!" o+ lan. It
3as also agr"" t,at 3,il" t," 1ur!,as" 1ri!" 3as not #"t 1ai%
t," Cit# 3oul o!!u1# t," lan as a t"nant an 3oul 1a# r"nt.
als t,"r"+or. Lat"r% t," Cit# r"+us" to 1a# t," 1ur!,as" 1ri!"
ass"rting t,at it 3as "4!"ssi$" !onsi"ring t," a*ount it ,a
alr"a# 1ai b# 3a# o+ r"ntals% an t,at t,"r"+or" t," !ontra!t
s,oul b" r"s!in" b"!aus" t," !ontra!t 3as +ar *or" +a$orabl"
+or Nobl" t,an +or t," Cit# o+ &anila. Issu"' S,oul r"s!ission
b" grant"J
HELD' No% r"s!ission s,oul not b" grant". T,at t," !on.
tra!t !on+"rr" *or" +a$ors u1on on" 1art# t,an u1on anot,"r
is not a groun +or r"s!ission. 7"si"s% "$"n 3it, t," r"ntals
alr"a# 1ai% t," 1ur!,as" 1ri!" !annot b" !onsi"r" "4!"s.
si$" b"!aus" t," r"ntals% tog"t,"r 3it, t," 1ri!"% r"1r"s"nt"
*"r"l# a r"asonabl" 1ro+it. O+ !ours"% "$"n ,a t," 1ro+it b""n
"4!"ssi$"% t," "4!"ssi$"n"ss o+ t," 1ri!" is b# its"l+ not a groun
+or r"s!ission b"!aus" t," onl# grouns +or r"s!ission ar" t,os"
"nu*"rat" b# t," la3.
(6) 5"s!issibl" Contra!t Is Not a Voi Contra!t
A r"s!issibl" !ontra!t is not $oi2 it is $ali until r"s!in".
T,us% in t," *"anti*"% it !an !on$"# titl". &or"o$"r% a r"s!is.
sibl" !ontra!t !annot b" atta!<" !ollat"rall# (in!i"ntall#) u1on
t," grouns +or r"s!ission in t," !ours" o+ a lan r"gistration
!as". (A ir"!t a!tion to r"s!in is r"Euir".) To a$oi injusti!"%
,o3"$"r% t," !ourt *a# allo3 t," aggri"$" 1art# to r"gist"r ,is
r"s"r$ation o+ t," rig,t to r"s!in. T," r"s"r$ation *a# in +a!t
b" not" on t," !"rti+i!at"s o+ titl". (7orja $. Aison% @@ P,il.
Art. 19B?
BA5).
Art. 19B1
(C) Fi!titious Contra!ts Cannot 7" 5"s!in"
A 1art# broug,t an a!tion to r"s!in a +i!titious !ontra!t.
Is r"s!ission t," 1ro1"r r"*"#J
ANS.' No% r"s!ission is not t," 1ro1"r r"*"# b"!aus"
3,il" t," !ontra!t ,"r" is +i!titious an% t,"r"+or"% null an $oi%
r"s!ission 1r"su11os"s a $ali !ontra!t. (Ongl"ng!o $. OHa"ta M
H"rnan"H% C? P,il. @9).
(B) E4trajui!ial 5"s!ission
&ari*1"rio $. CA >5
@?69@% D"!. 1@% 1ABC
A !,art"r 1art# *a# b" r"s!in" "4trajui!iall#. A jui!ial
a!tion +or t," r"s!ission o+ a !ontra!t is not n"!"ssar# 3,"r"
t," !ontra!t 1ro$i"s t,at it *a# b" r"$o<" an !an!"ll" +or
$iolation o+ an# o+ its t"r*s an !onitions% -3it,out noting an#
1rot"st an 3it,out int"r+"r"n!" b# an# !ourt or an# +or*alit#
3,atso"$"r an 3it,out 1r"jui!" t," O3n"rs *a# ot,"r3is"
,a$" on t," C,art"r"rs un"r t," C,art"r./
(A) 5ig,t o+ First 5"+usal
5i$i"ra Fili1ina $. CA
>5 11C955% A1ril 5% 6??6
T," 1r"$ailing o!trin" is t,at a rig,t o+ +irst r"+usal
*"ans i"ntit# o+ t"r*s an !onitions to b" o++"r" to t,"
l"ss"" an all ot,"r 1ros1"!ti$" bu#"rs.
An a !ontra!t o+ sal" "nt"r" into in $iolation o+ a rig,t
o+ +irst r"+usal o+ anot,"r 1"rson% 3,il" $ali% is r"s!issibl".
Art. 19B1. T," +ollo3ing !ontra!ts ar" r"s!issibl"'
(1) T,os" 3,i!, ar" "nt"r" into b# t," guarians
3,"n"$"r t," 3ars 3,o* t,"# r"1r"s"nt su++"r l"sion b#
*or" t,an on".+ourt, o+ t," $alu" o+ t," t,ings 3,i!, ar"
t," obj"!t t,"r"o+2
Art. 19B1
(6) T,os" agr"" u1on in r"1r"s"ntation o+ abs"nt""s%
i+ t," latt"r su++"r t," l"sion stat" in t," 1r"!"ing
nu*b"r2
Art. 19B1
(9) T,os" un"rta<"n in +rau o+ !r"itors 3,"n t,"
lat. t"r !annot in an# ot,"r *ann"r !oll"!t t," !lai*s u"
t,"*2
(@) T,os" 3,i!, r"+"r to t,ings un"r litigation i+ t,"#
,a$" b""n "nt"r" into b# t," "+"nant 3it,out t," <no3l.
"g" an a11ro$al o+ t," litigants or o+ !o*1"t"nt jui!ial
aut,orit#2
(5) All ot,"r !ontra!ts s1"!iall# "!lar" b# la3 to b"
subj"!t to r"s!ission.
CO&&ENT'
(1) Enu*"ration o+ t," 5"s!issibl" Contra!ts
T," Arti!l" "nu*"rat"s t," $arious !ontra!ts t,at *a# b"
r"s!in".
(6) First Cas" 0 In 7",al+ o+ Iars
(a) L"sion 0 a*ag" or injur# to t," 1art# as<ing +or r"s!ission
(g"n"rall#% is1arit# b"t3""n t," 1ri!" an t," $alu").
(b) &o"rn l"gislation g"n"rall# o"s not +a$or r"s!ission on
a!!ount o+ l"sion% b"!aus" -goos o not ,a$" a +i4" tru"
$alu"2 $alu" is al3a#s $ariabl" an +lu!tuating% b"ing a
+un!tion o+ su11l# an "*an. T," *o"rn !o"s t"n to
$i"3 l"sion o+ !"rtain 1ro1ortions (1U@% 1U6% "t!.) as *"r"l#
raising a 1r"su*1tion o+ unu" in+lu"n!" t,at $itiat"s
!ons"nt an r"n"rs t," !ontra!t $oiabl" 3,"n"$"r t,"
l"sion is !ou1l" 3it, "41loitation b# t," ot,"rs. (C+% >"r.
*an Ci$il Co"% Art. 19B2 &"4i!o% Art. 1C). (=.7.L. 5"#"s%
Obs"r$ations on t," n"3 Ci$il Co"% La3#"r8s =ournal% =an.
91% 1A51% 11. 9A.5?). In""% *"r" ina"Eua!# o+ 1ri!"% un.
l"ss s,o!<ing to t," !ons!i"n!"% is not a su++i!i"nt groun
+or s"tting asi" a sal"% i+ t,"r" is no s,o3ing t,at% in t,"
"$"nt o+ a r"sal"% a b"tt"r 1ri!" !an b" obtain". (Cu 7i"%
1)
I+ an a!t o+ o3n"rs,i1% !ourt a11ro$al is r"Euir"2
C@?
Art. 19B1
"t al. $. Court o+ A11"als2 Sal$a!ion S. Ta#"ng!o% "t al. $.
Con!,ita S#"!o,aut"a% "t al.% L.1C6A@ an L.1C9B5% No$.
6A% 1A65).
(!) E++"!t o+ Contra!ts Ent"r" into in 7",al+ o+ Iar
1)
I+ an a!t o+ o3n"rs,i1% !ourt a11ro$al is r"Euir"2
C@?
Art. 19B1
ot,"r3is"% !ontra!t is un"n+or!"abl" (Art. 1@?9)%
3,"t,"r t,"r" is l"sion or not.
6) I+ *"r"l# an a!t o+ a*inistration 0
a) i+ 3it, !ourt a11ro$al 0 $ali% r"garl"ss o+ l"sion.
(Art. 19B6).
b) i+ 3it,out !ourt a11ro$al 0 r"s!issibl"% i+ l"sion is
*or" t,an on".+ourt,. (Art. 19B1% No. 1).
(NOTE' E4a*1l" o+ a!t o+ o3n"rs,i1' sal" or *ortgag"
o+ *inor8s lan. E4a*1l" o+ a!t o+ a*inistration' bu#ing
o+ +"rtiliH"rs +or lan !ulti$ation% or *at"rials +or r"1air.)
(9) S"!on Cas" 0 In 5"1r"s"ntation o+ Abs"nt""s
Sa*" !o**"nt as in t," +irst !as".
FNOTE' Anot,"r !ontra!t 3,i!, *a# b" r"s!in" on t,"
groun o+ l"sion is a 1artition o+ in,"ritan!"% 3,"n t," l"sion is
1U@ or *or" +or on" ,"ir. (Art. 1?AB% Ci$il Co").G
(@) T,ir Cas" 0 -T,os" ;n"rta<"n in Frau o+ Cr"itors%
I,"n t," Latt"r Cannot in An# Ot,"r &ann"r Coll"!t
Clai*s Du" T,"*/
(a) T," a!tion to r"s!in !ontra!ts *a" in +rau o+ !r"itors
is !all" -a!!ion 1auliana./
(b) 5"Euisit"s b"+or" a!!ion 1auliana !an b" broug,t'
1) T,"r" *ust b" a !r"itor 3,o b"!a*" su!, P5IO5 to
t," !ontra!t soug,t to b" r"s!in" (3,"t,"r t," 1art#
as<ing +or r"s!ission is a jug*"nt !r"itor alr"a#
or not% is li<"3is" i**at"rial).
6) T,"r" *ust b" an ali"nation *a" subs"Eu"nt to su!,
!r"it.
9) T," 1art# ali"nating *ust b" in 7AD FAITH (t,at is%
," <n"3 t,at a*ag"s 3oul b" !aus" ,is !r"itors
!r"itor 0 -inabilit# to !oll"!t t," !lai*s u" t,"*./
C@1
Art. 19B1
3,"t,"r or not ," int"n" to !aus" su!, a*ag").
@) T,"r" *ust b" no ot,"r r"*"# +or t," 1r"jui!"
!r"itor 0 -inabilit# to !oll"!t t," !lai*s u" t,"*./
C@1
Art. 19B1
(T,us% r"s!ission is *"r"l# a subsiiar# r"*"#). (S""
Panlilio $. Vi!toria% 95 P,il. C?6).
FNOTE' An a!tion to r"s!in *a# b" broug,t
"$"n i+ t," "btor ,as not b""n jui!iall# "!lar" in.
sol$"nt (TS% =un. 6B% 1A16) an "$"n i+ t," !r"itor ,as
not #"t broug,t an a!tion to !oll"!t ,is !r"it. (TS% D"!.
19% 1A1@). Sin!" t," la3 *a<"s no istin!tion% bot,
s"!ur" an uns"!ur" !r"itors *a# bring t," a!tion2
t," i*1ortant t,ing is t,at t,"# b" 1r"jui!".G
FNOTE' >"n"rall#% t," 1art# "siring to r"s!in
*ust s,o3 t,at t," !on$"#an!" or ali"nation 3as
+rauul"nt. H" ,as t," bur"n o+ 1roo+% "4!"1t in t,"
!as"s 3,"n t,"r" is a 1r"su*1tion o+ +rau. (S"" Art.
19BC% Ci$il Co"2 &"nHi M Co. $. 7astia% 69 P,il. 162
an A#l"s $. 5"#"s% 1B P,il. 6@9).G
(!) Probl"*'
To "+rau ,is !r"itor% A sol ,is ,ous" to N. I,"n
,o3"$"r t," !r"itor 3ant" to !oll"!t ,is !r"it% so*"bo#
l"nt A "noug, *on"#. S,oul t," sal" o+ t," ,ous" still b"
r"s!in"J
ANS.' No% it s,oul not b" r"s!in"% b"!aus" ,"r"
t," !r"itor !an !oll"!t t," !lai* u" ,i*.
(5) Fourt, Cas" 0 T,ings in Litigation
(a) E4a*1l"'
A su"s 7 +or r"!o$"r# o+ a ia*on ring. P"n"nt" lit"%
7 s"lls t," ring to C 3it,out t," a11ro$al o+ A or o+ t,"
!ourt. T," sal" to C is r"s!issibl" at A8s instan!" in !as" A
3ins in t," original litigation% unl"ss C is in goo +ait,.
(b) T," 1ro1"rt# is sai to b" in litigation ,"r" a+t"r t," ".
+"nant ,as r"!"i$" t," s"r$i!" o+ su**ons. (TS% =an. 65%
1A19).
(!) To 1rot"!t ,i*s"l+% t," 1lainti++ *ust r"gist"r ,is !lai* in
t," r"gistr# o+ 1ro1"rt#% 1"ning litigation% i+ t," suit is
1916
Art. 19B1
about r"al 1ro1"rt#. T,is is t," noti!" o+ lis 1"n"ns. T,"
1ur1os" is to gi$" noti!" to t," 3,ol" 3orl. I+ 1"rsonal
191C
Art. 19B6
1ro1"rt# is in$ol$"% t," 1ro1"rt# *a# b" l"$i" u1on b#
a 3rit o+ 1r"li*inar# atta!,*"nt (S"!s. 1 an 6% 5ul" 5C%
5"$is" 5ul"s o+ Court)2 or "ls"% it *a# b" 1la!" in t,"
,ans o+ a r"!"i$"r. (5ul" 5A% 5"$is" 5ul"s o+ Court).
&ort"ra $. &artin"H
1@ P,il. 5@1
FACTS' A 1i"!" o+ lan 3as t," subj"!t o+ a litigation
b"t3""n &artin"H an t," &uni!i1alit# o+ San Pablo. A+t"r t,"
!as" ,a b""n "!i" in +a$or o+ &artin"H% ," sol it to anot,"r.
Issu"' Is t," sal" r"s!inabl" on t," groun t,at t," 1ro1"rt#
3as in litigationJ
HELD' No% t," sal" !annot b" r"s!in". Tru"% it ,a b""n
t," subj"!t o+ a litigation% but t,at litigation ,a alr"a# b""n
"!i" in +a$or o+ &artin"H 1rior to t," sal".
(6) Fi+t, Cas" 0 Ot,"r Instan!"s
E4a*1l"s ar" agr""*"nts r"+"rr" to in Arts. 1?AB (1arti.
tion)% 11BA (r"sult o+ "t"rioration)% 1566 an 159@ (rig,t gi$"n
to an un1ai s"ll"r)% an 159A (sal" o+ r"al "stat") o+ t," Ci$il
Co". S"" also Art. 19B6.
Art. 19B6. Pa#*"nts *a" in a stat" o+ insol$"n!# +or
obligations to 3,os" +ul+ill*"nt t," "btor !oul not b"
!o*. 1"ll" at t," ti*" t,"# 3"r" "++"!t"% ar" also
r"s!issibl".
CO&&ENT'
(1) Pr"*atur" Pa#*"nts &a" in a Stat" o+ Insol$"n!#
T3o r"Euisit"s ar" "ss"ntial un"r t,is Arti!l"'
(a) t," "btor.1a#"r *ust ,a$" b""n insol$"nt (t," insol$"n!#
n"" not b" a jui!iall# "!lar" on")2
(b) t," "bt 3as not #"t u" an "*anabl".
191B
Art. 19B6
(NOTE' 7ot, !onitions ar" r"Euir"2 ot,"r3is"% Art.
19B6 !annot a11l#.)
191A
Art. 19B6
(NOTE' Art. 19B6 o"s not "4a!tl# s1"a< o+ a !ontra!t2
it r"+"rs to a 1a#*"nt2 ,"n!"% it is not in!lu" un"r Art.
19B1.)
(6) Cas"s
Asia 7an<ing Cor1oration $. Cor!u"ra
51 P,il. CB1
FACTS' T," Li!,au!o Cor1oration o3" Nobl" =os"
PC?%???. T," Cor1oration 3as in$ol$"nt an alt,oug, t," "bt
3as not #"t "n+or!"abl"% t," Cor1oration ga$" to Nobl" =os" a
"" o+ sal" to on" o+ its 1ro1"rti"s (t," $alu" o+ 3,i!, 3as
*u!, gr"at"r t,an t," "bt) in 1a#*"nts +or t," "bt. At t,"
sa*" ti*"% t," Cor1oration 1ai o++ a !"rtain Cor!u"ra its "bt
o+ P6@%??? b# gi$ing ,i* a 1i"!" o+ lan. T,is latt"r "bt 3as
alr"a# u" an "*anabl" at t," ti*" 1a#*"nt 3as *a".
Issu"' Ar" t," t3o transa!tions r"s!inabl"J
HELD' T," +irst is r"s!inabl" b"!aus" it 3as *a" in a
stat" o+ insol$"n!# +or an obligation to 3,os" +ul+ill*"nt t,"
"btor !oul not b" !o*1"ll" at t," ti*" it 3as "++"!t". 7ut
t," s"!on "bt is not r"s!inabl" b"!aus" at t," ti*" o+ 1a#.
*"nt% "$"n i+ t," Cor1oration 3as alr"a# insol$"nt% t," "bt
3as alr"a# u"% o3ing an "n+or!"abl".
Pili1inas 7an< $. IAC
>5 6CBB1% =un. 9?% 1ABC
FACTS' H7% In!. sol to =ID a 5%???.sEuar".*"t"r lot +or
P@C%??? 1a#abl" in install*"nts. On *an# o!!asions% H7% In!.
s"nt l"tt"rs o+ "*an to 1a# t," balan!" or un1ai install*"nts
an on "a!, o!!asion% H7% In!. grant" =ID "4t"nsions an
n"$"r !all" att"ntion to t," 1ro$iso on -auto*ati! r"s!ission./
Finall#% H7% In!. 3rot" a l"tt"r to =ID t"lling t,at t," !ontra!t
to s"ll ,a b""n r"s!in"U!an!"ll" b# a notarial a!t% to 3,i!,
l"tt"r 3as ann"4" a -"*an +or r"s!ission o+ !ontra!t./ =ID
+il" a !o*1laint +or s1"!i+i! 1"r+or*an!" 3it, a*ag"s to !o*.
196?
Art. 19B6
1"l H7% In!. to "4"!ut" a "" o+ sal" in ,is +a$or an to "li$"r
to ,i* t," titl" o+ t," lot in Eu"stion.
1961
Art. 19B9
T," trial !ourt ,"l t,at H7% In!. !annot r"s!in t," !on.
tra!t to s"ll b"!aus" it 3ai$" t," auto*ati! r"s!ission !laus"
an b# s"ning l"tt"rs a$ising =ID o+ t," balan!"s u"% t,us
loo<ing +or3ar to r"!"i$ing 1a#*"nts on it. &or"o$"r% 3,"n
=ID *a" arrang"*"nt +or t," a!Euisition o+ aitional BC?
sEuar" *"t"rs% H7% In!. !oul not ,a$" "li$"r" t," "ntir"
ar"a !ontra!t" +or% so n"it,"r !oul t," bu#"r (=ID) b" liabl"
in "+ault.
HELD' T," trial !ourt is !orr"!t. T,"r" is ,"r" a !l"ar 3ai$.
"r o+ t," sti1ulat" rig,t o+ -auto*ati! r"s!ission%/ as "$i"n!"
b# t," *an# "4t"nsions grant" t," bu#"r b# t," s"ll"r.
Art. 19B9. T," a!tion +or r"s!ission is subsiiar#2 it
!annot b" institut" "4!"1t 3,"n t," 1art# su++"ring
a*ag" ,as no ot,"r l"gal *"ans to obtain r"1aration +or
t," sa*".
CO&&ENT'
(1) 5"s!ission Not a Prin!i1al 5"*"#
5"s!ission is not a 1rin!i1al r"*"#2 it is onl# subsiiar#
an *a# onl# b" a$ail" o+ b# t," injur" 1art# i+ it ,as no ot,"r
l"gal *"ans o+ s""<ing r"r"ss or r"1aration +or t," a*ag"s
!aus". I+% t,"r"+or"% it is +oun out t,at t," "btor ,as no ot,"r
1ro1"rt# t,an t,at 3,i!, is t," obj"!t o+ t," r"s!inabl" !ontra!t%
r"s!ission *a# *"r"l# b" a11li" 1ro$i" t,at all t," "ss"ntial
r"Euisit"s +or r"s!ission ar" 1r"s"nt. (5"galao $. Lu!,sing"r M
Co.% 5 P,il. 665).
In on" !as"% t," Su1r"*" Court ,"l t,at 3,"n a !r"itor
s""<s to s"t asi" a !ontra!t as +rauul"nt% ," *ust 1ro$" +irst
t,at ," r"all# is a !r"itor% an s"!onl#% t,at ," !annot !oll"!t
,is "bt in an# ot,"r 3a#. (Du"nHl" M Str"i++ $. Iatson M Co.%
19 P,il. 66).
(6) Cas"s
Panlilio $. Vi!toria
1966
Art. 19B9
95 P,il. C?6
FACTS' I,"n t," o3n"r o+ a rug stor" b"gan to r"aliH"
t,at as a r"sult o+ a jug*"nt against ,i*% ,is rug stor" 3oul
1969
Art. 19B@
b" sol to 1a# ,is !r"itors% t," o3n"r !onni$" 3it, a +ri"n b#
s"lling to t," latt"r +or a s*all su* t," rug stor". T," !r"i.
tors 3"r" not in an# 3a# abl" to r"!o$"r +ro* t," o3n"r% so t,"#
as<" +or t," r"s!ission o+ sai sal" o+ t," rug stor". Issu"' Iill
r"s!ission 1ros1"rJ
HELD' K"s% t," r"s!ission 3ill 1ros1"r b"!aus" t,is is
t," onl# 3a# t," !r"itors !an obtain t," satis+a!tion o+ t,"ir
!r"its.
Contr"ras an >ing!o $. C,ina 7an<ing Cor1.
C6 P,il. C?A
FACTS' A an 7% a !r"itor o+ t," +or*"r b"!aus" o+ !"rtain
"bts% 3"r" "!lar" b# t," !ourt to b" t," !o.o3n"rs o+ a !"r.
tain r"al 1ro1"rt#. T," !as" 3as a11"al". P"ning jug*"nt%
A *ortgag" t," 3,ol" 1ro1"rt# to a 7an< to g"t so*" *on"#.
Lat"r% t," "!ision r"garing !o.o3n"rs,i1 3as a++ir*". Issu"'
&a# 7% 3,o ,as $ainl# "4,aust" ot,"r *"ans% no3 as< +or t,"
r"s!ission o+ t," *ortgag"J
HELD' T,at 1art o+ t," *ortgag" r"+"rring to t," ,al+ s,ar"
o+ 7 n"" not b" r"s!in" sin!" it is alr"a# $oi% !onsi"ring
t," +a!t t,at A ,a no rig,t to *a<" t," *ortgag".
T,at 1art o+ t," *ortgag" r"+"rring to t," ,al+ s,ar" o+ A
*a# b" r"s!in" b"!aus" it 3as on" in +rau o+ ,i*% an t,"r"
is no ot,"r 3a# to !oll"!t ,is !r"it.
Art. 19B@. 5"s!ission s,all b" onl# to t," "4t"nt
n"!"ssar# to !o$"r t," a*ag"s !aus".
CO&&ENT'
(1) Partial 5"s!ission
T,is is a n"3 1ro$ision o+ t," N"3 Ci$il Co"% *a<ing
1ossibl" 1artial r"s!ission% sin!" a+t"r all% t," onl# 1ur1os" o+
r"s!ission is to r"1air or !o$"r t," a*ag"s !aus". Co*1l"t"
r"s!ission 3ill not t,"r"+or" b" allo3"% i+ it is not justi+i" b#
196@
Art. 19B@
t," !ir!u*stan!"s o+ t," !as". Inso+ar as it is not r"s!in"% t,"
ali"nation is $ali.
1965
Art. 19B5
(6) P"rson 7"n"+it"
Onl# t," !r"itor 3,o ,as as<" +or r"s!ission% not t,"
ot,"r !r"itors% b"n"+its +ro* t," r"s!ission.
Art. 19B5. 5"s!ission !r"at"s t," obligation to r"turn t,"
t,ings 3,i!, 3"r" t," obj"!t o+ t," !ontra!t% tog"t,"r 3it,
t,"ir +ruits% an t," 1ri!" 3it, its int"r"st2 !ons"Eu"ntl#% it
!an b" !arri" out onl# 3,"n ," 3,o "*ans r"s!ission
!an r"turn 3,at"$"r ," *a# b" oblig" to r"stor".
N"it,"r s,all r"s!ission ta<" 1la!" 3,"n t," t,ings
3,i!, ar" t," obj"!t o+ t," !ontra!t ar" l"gall# in t,"
1oss"ssion o+ t,ir 1"rsons 3,o i not a!t in ba +ait,.
In t,is !as"% in"*nit# +or a*ag"s *a# b" "*an"
+ro* t," 1"rson !ausing t," loss.
CO&&ENT'
(1) N"!"ssit# o+ &utual 5"stitution
T," obligation o+ r"stitution o"s not ob$iousl# a11l#
to !r"itors 3,o s""< to i*1ugn +rauul"nt transa!tions o+
t,"ir "btors. (TS% &ar!, 66% 1A69). T," obligation o+ *utual
r"stitution a11li"s to OTHE5S so t,at t," status Euo *a# b"
r"stor".
(6) 5"Euisit"s 7"+or" t," A!tion +or 5"s!ission Can 7"
7roug,t
(a) >"n"rall#% t," 1lainti++ *ust b" abl" to 5ET;5N 3,at ,as
b""n r"!"i$" b# $irtu" o+ t," r"s!issibl" !ontra!t. (E4!"1.
tion' 1r"jui!" !r"itors.)
(b) T," t,ing obj"!t o+ t," !ontra!t is not in t," l"gal 1oss"ssion
o+ t,ir 1"rsons in goo +ait,.
(NOTE' E4a*1l" o+ l"gal 1oss"ssion' r"gistration in
t," 5"gistr# o+ Pro1"rt#.)
(NOTE' In or"r t,at t," 1ro1"rt# b" not ta<"n a3a#
+ro* a t,ir 1"rson% sai 1"rson *ust not onl# b" in l"gal
1966
Art. 19B5
1oss"ssion2 ," *ust also b" in goo +ait,. >oo +ait, alon"%
,o3"$"r% 3it,out l"gal 1oss"ssion is not su++i!i"nt.)
196C
Art. 19B5
(!) T,"r" *ust b" no ot,"r l"gal r"*"#. (Art. 19B9% Ci$il Co"
an Du"nHl" M Str"i++ $. Iatson an Co.% 16 P,il. 66).
() T," a!tion *ust b" broug,t 3it,in t," 1ro1"r 1r"s!ri1ti$"
1"rio. (S"" Art. 19BA% Ci$il Co").
(9) Illustrati$" :u"stions
(a) I,at s,oul b" r"turn" in r"s!ining a !ontra!tJ
ANS.'
1) T," obj"!t o+ t," !ontra!t% 3it, its +ruits% *ust b"
r"turn".
6) T," 1ri!"% 3it, its int"r"st% *ust b" r"turn".
(b) A boug,t r"al 1ro1"rt# +ro* 7. A broug,t a!tion to r"s!in
t," !ontra!t on t," groun o+ non."li$"r# o+ t," 1ro1"rt#.
Do"s 7 ,a$" to gi$" also t," +ruits r"!"i$" in t," *"an.
ti*"J
ANS.' No% t," +ruits r"!"i$" n"" not b" gi$"n to A
b"!aus" t," rig,t ta<"s 1la!" onl# 3,"n -"li$"r# o+ t,"
t,ing sol ,as b""n *a"./ (Hog"s $. >ranaa% 5A P,il.
@6A).
(!) A sol to 7 a 1i"!" o+ lan in +rau o+ ,is (A8s) !r"itors. 7
too< l"gal 1oss"ssion. I+ no ot,"r *"ans ar" +oun to "4a!t
t," satis+a!tion o+ t," !r"its o3ing t," !r"itors% *a# t,"
sal" to 7 b" r"s!in"J
ANS.' It "1"ns u1on 3,"t,"r 7 3as in goo +ait,
or in ba +ait,.
1) I+ 7 3as in goo +ait,% r"s!ission !annot ta<" 1la!"%
b"!aus" t," obj"!t o+ t," !ontra!t is l"gall# in t,"
1oss"ssion o+ a t,ir 1"rson 3,o i not a!t in ba
+ait,.
6) I+ 7 3as in ba +ait,% r"s!ission is 1ro1"r.
() To "+rau ,is !r"itors A sol to 7 a 1i"!" o+ lan. 7 is
an inno!"nt 1ur!,as"r in goo +ait,% 3,o ta<"s l"gal 1os.
s"ssion o+ t," lan. Sin!" t," !r"itors !annot r"s!in t,"
196B
Art. 19B5
!ontra!t% 3,at is t,"ir r"*"#J
196A
Arts. 19B6.19BC
ANS.' T,"ir r"*"# in t,is !as" 3oul b" to "*an
in"*nit# +or a*ag"s +ro* t," 1"rson !ausing t," loss.
(Last s"nt"n!"% Art. 19B5% Ci$il Co").
(") To r"all# 1rot"!t ,i*s"l+ against r"s!ission% 3,at s,oul
an inno!"nt t,ir 1art#% 3,o in goo +ait, 1ur!,as"s r"al
1ro1"rt#% o a+t"r ,a$ing a!Euir" t," 1ro1"rt#J
ANS.' H" *ust r"gist"r t," r"alt# 1ur!,as" in t,"
r"gistration o++i!". (Coro$"ro M Al"aHar $. VillaruH M
7orro*"o% @6 P,il. @C9).
(+) To "+rau ,is !r"itor% A sol ,is 1ro1"rt# to 7 (3,o is in
goo +ait,). Lat"r 7 sol t," 1ro1"rt# to C% 3,o is in ba
+ait,. &a# t," !r"itor r"s!in% alt,oug, t," 1ro1"rt# is
no3 in t," 1oss"ssion o+ CJ
ANS.' No% +or it o"s not *att"r 3,"t,"r C is in goo
or ba +ait,% sin!" ," obtain" t," sa*" +ro* 7 3,o is in
goo +ait,. It is 78s goo +ait, t,at is i*1ortant.
Art. 19B6. 5"s!ission r"+"rr" to in Nos. 1 an 6 o+ Arti!l"
19B1 s,all not ta<" 1la!" 3it, r"s1"!t to !ontra!ts a11ro$"
b# t," !ourts.
CO&&ENT'
E++"!t i+ Contra!ts I"r" =ui!iall# A11ro$"
S"" !o**"nts un"r No. (1) o+ Art. 19B1.
Art. 19BC. All !ontra!ts b# $irtu" o+ 3,i!, t," "btor
ali"nat"s 1ro1"rt# b# gratuitous titl" ar" 1r"su*" to ,a$"
b""n "nt"r" into in +rau o+ !r"itors% 3,"n t," onor i
not r"s"r$" su++i!i"nt 1ro1"rt# to 1a# all "bts !ontra!t"
b"+or" t," onation.
Ali"nations b# on"rous titl" ar" also 1r"su*" +rauu.
l"nt 3,"n *a" b# 1"rsons against 3,o* so*" jug*"nt
,as b""n r"n"r" in an# instan!" or so*" 3rit o+
atta!,*"nt ,as b""n issu". T," "!ision or atta!,*"nt
199?
Arts. 19B6.19BC
n"" not r"+"r to t," 1ro1"rt# ali"nat"% an n"" not ,a$"
b""n obtain" b# t," 1art# s""<ing t," r"s!ission.
1991
Art. 19BC
In aition to t,"s" 1r"su*1tions% t," "sign to
"+rau !r"itors *a# b" 1ro$" in an# ot,"r *ann"r
r"!ogniH" b# t," la3 o+ "$i"n!".
CO&&ENT'
(1) Pr"su*1tions o+ Frau
T,is Arti!l" "stablis,"s 1r"su*1tions o+ +rau in t," !as"
o+'
(a) gratuitous ali"nations2
(b) on"rous ali"nations.
(6) >ratuitous Ali"nations
(a) Pr"su*" +rauul"nt 0 3,"n t," "btor i not r"s"r$"
su++i!i"nt 1ro1"rt# to 1a# all "bts !ontra!t" 7EFO5E
t," onation.
(b) E4a*1l"'
A onat" ,is lan to 7. 7"+or" t," ti*" ," *a"
t," onation% ," ,a s"$"ral "bts% but ," i not r"s"r$"
"noug, 1ro1"rt# to 1a# all t,"s" "bts. Inst"a% ," *a"
t," onation. Is t," onation 1r"su*" +rauul"nt.
ANS.' K"s% t," onation is 1r"su*" in +rau o+ !r"i.
tors. 7ut% o+ !ours"% t,is 1r"su*1tion *a# b" r"butt" b#
a"Euat" 1roo+.
(!) Probl"*'
A *a" a onation to 7. Lat"r A !ontra!t" s"$"ral
"bts. I,at A ,as l"+t as ass"ts ar" *u!, l"ss t,an ,is
1r"s"nt liabiliti"s. &a# t," onation to 7 b" r"s!in"J
ANS.' No% b"!aus" t," "bts ,"r" o+ A 3"r" in!urr"
a+t"r t," onation ,a b""n *a". As a *att"r o+ +a!t% t,"
1r"su*1tion o+ +rau o"s not "$"n aris" in t,is !as". Ho3.
"$"r% un"r t," o!trin" o+ -anti!i1ator# +rau%/ r"s!ission
*a# still 1ros1"r i+ it !an b" s,o3n t,at t," onation ,a
1996
Art. 19BC
b""n "lib"rat"l# *a" b"+or",an to a$oi t," 1a#*"nt
o+ "bts still to b" !ontra!t".
1999
Art. 19BC
(9) On"rous Ali"nations
(a) Pr"su*" +rauul"nt 0 3,"n *a" b# 1"rsons'
1) against 3,o* so*" jug*"nt ,as b""n r"n"r"
in an# instan!" (t,us% "$"n i+ not #"t a +inal jug.
*"nt)2
6) or against 3,o* so*" 3rit o+ atta!,*"nt ,as b""n
issu". (Art. 19BC% Ci$il Co").
(b) E4a*1l"'
A+t"r a jug*"nt ,a b""n r"n"r" against ,i*% A
sol ,is 1ro1"rt# to 7. Is t," sal" 1r"su*" +rauul"ntJ
ANS.' K"s% t," sal" ,"r" is 1r"su*" +rauul"nt b".
!aus" it 3as *a" a+t"r a jug*"nt ,a b""n issu" against
A. (S"" >aston $. H"rna"H% 5B P,il. B69). ;1on t," ot,"r
,an% i+ t," sal" ,a b""n *a" 7EFO5E t," jug*"nt%
t," 1r"su*1tion o+ +rau !annot a11l#. T,is is so "$"n i+%
un<no3n to t," bu#"r% t," suit ,a alr"a# b""n broug,t%
but STILL PENDIN> as long as o+ !ours" no atta!,*"nt
,a b""n issu". (Aol+o >as1ar $. L"o1olo Dorao% "t al.%
L.1CBB@% No$. 6A% 1A65).
Isiora L. Cabali3 an Sol"a Saorra $.
Sot"ro Saorra% "t al.
L.6565?% =un. 11% 1AC5
FACTS' A+t"r a jug*"nt +or su11ort 3as r"n"r"
against a ,usban an in +a$or o+ ,is 3i+"% t," ,usban sol
in a 1ubli! instru*"nt t3o 1ar!"ls o+ !onjugal lan (t,"r"
3"r" onl# t3o 1ar!"ls) to ,is son.in.la3. T,is 3as about
s"$"n (C) *ont,s a+t"r t," jug*"nt ,a b""n r"n"r".
Ho3"$"r% t," sal" 3as *a" in 1A99 an% t,"r"+or"% +"ll
un"r t," ol Ci$il Co" 3,i!, aut,oriH" in Art. 1@19
t,"r"o+ a ,usban as a*inistrator o+ t," !onjugal 1art.
n"rs,i1 to ali"nat" b# on"rous titl" !onjugal 1ro1"rt# "$"n
3it,out t," 3i+"8s !ons"nt. Issu"' Is t," sal" $aliJ
HELD' T," sal" s,oul b" in$aliat" b"!aus" it is
199@
Art. 19BC
1r"su*" to ,a$" b""n *a" in +rau o+ t," jug*"nt
!r"itor 3,o ,a11"ns to b" t," 3i+"% t," sal" ,a$ing b""n
1995
Art. 19BC
*a" to a$oi 1a#*"nt o+ t," jug*"nt "bt +or su11ort.
T," 1r"su*1tion o+ a +rauul"nt transa!tion "stablis,"
b# s1"!i+i! 1ro$ision o+ la3 (Art. 19BC% N"3 Ci$il Co"2
Art. 16AC% ol Ci$il Co") !annot b" o$"r!o*" b# t," *"r"
+a!t t,at t," "" o+ sal" in Eu"stion is in t," natur" o+ a
1ubli! instru*"nt. T," 1rin!i1l" t,at strong an !on$in!.
ing "$i"n!" is n"!"ssar# to o$"rt,ro3 an "4isting 1ubli!
o!u*"nt o"s not a11l# to t,ir 1"rsons (3,o *ig,t b"
a$"rs"l# 1r"jui!") but onl# to t," 1arti"s to a !ontra!t.
Clos" r"lations,i1 b"t3""n t," $"nor an t," $"n"" is
on" o+ t," <no3n bag"s o+ +rau. T," bur"n o+ r"butting
t," 1r"su*1tion o+ +rau "stablis," b# la3 r"sts on t,"
trans+"r"" 3,o !lai*s ot,"r3is". Art. 1@19 o+ t," ol Ci$il
Co" o"s not a11l# b"!aus" ,"r" t," aggri"$" 1art# 3as
1r"jui!" as a jug*"nt !r"itor% but "$"n 3"r" it to a1.
1l#% still a 1r"jui!" 3i+" *a# s""< r"r"ss in !ourt.
(!) T," "!ision or atta!,*"nt n"" not r"+"r to t," 1ro1"rt#
ali"nat"% an n"" not ,a$" b""n obtain" b# t," 1art#
s""<ing t," r"s!ission. (Art. 19BC% Ci$il Co").
() E4a*1l"'
A broug,t an a!tion against 7% ,is "btor. A 3on. A+t"r
jug*"nt% 7 sol ,is 1ro1"rt# to C. N% anot,"r !r"itor o+
7% 3ants to r"s!in t,is sal" to C. 7ot, C an 7 !lai* t,at
N o"s not ,a$" t," rig,t to int"r+"r" b"!aus"% a+t"r all% it
3as A% not N% 3,o ,a 3on a jug*"nt against 7. Ar" C
an 7 justi+i"J
ANS.' No% C an 7 ar" not justi+i". It is tru" t,at it
3as A% not N% 3,o 3on t," jug*"nt% but t,is is i**at".
rial sin!" t," la3 sa#s t,at t," "!ision n"" not ,a$" b""n
obtain" b# t," 1art# s""<ing t," r"s!ission. (6n s"nt"n!"%
s"!on 1aragra1,% Art. 19BC% Ci$il Co").
(") Anot,"r "4a*1l"'
In a !as"% A8s ,ous" at 11 L"$"riHa Str""t 3as atta!,"
b# t," !ourt. A sol ,is ,ous" at 66 San &igu"l Str""t to
7% a+t"r t," atta!,*"nt on t," +irst ,ous" ,a b""n *a".
C% a !r"itor o+ A% no3 sa#s t,at t," sal" is 1r"su*"
+rauul"nt. A !ount"rs b# sa#ing t,at t,"r" is no su!,
1996
Art. 19BC
1r"su*1tion b"!aus" a+t"r all t," ,ous" 3,i!, ,a b""n
atta!," 3as not t," on" sol to 7. Is A justi+i"J
199C
Art. 19BC
ANS.' No% A is not justi+i". It is tru" t,at t," ,ous"
," sol ,a not b""n l"$i" u1on or atta!,"% but t," +a!t
r"*ains t,at A is a 1"rson against 3,o* so*" 3rit o+
atta!,*"nt ,as b""n issu". T," la3 sa#s t,at t," at.
ta!,*"nt n"" not r"+"r to t," 1ro1"rt# ali"nat". (6n
s"nt"n!"% 6n 1aragra1,% Art. 19BC% Ci$il Co").
D" ="sus $. >. ;rrutia an Co.
99 P,il. 1C1
FACTS' A ,as 6 1ar!"ls o+ lan. T," +irst 3as *ort.
gag" to 7. During t," *ortgag"% A sol t," s"!on 1ar!"l
to C. I,"n t," *ortgag" "bt +"ll u"% A !oul not 1a#2
,"n!"% t," *ortgag" 3as +or"!los". Sin!" t," lan 3as sol
in t," +or"!losur" 1ro!""ings +or an a*ount l"ss t,an t,"
$alu" o+ t," "bt% 7 3as gi$"n t," rig,t to g"t t," balan!"
+ro* A. 7ut A ,a no *or" *on"#. 7 no3 s""<s to r"s!in
t," sal" to C o+ t," s"!on 1ar!"l o+ lan% all"ging t," sal"
3as on" to "+rau ,i*. Issu"' Is t," sal" to C 1r"su*"
+rauul"ntJ
HELD' No% t," sal" to C is not 1r"su*" +rauul"nt.
It is tru" t,at t," sal" 3as *a" a+t"r t," *ortgag" o+ t,"
+irst 1ar!"l o+ lan% but 3" !annot a11l# t," +irst 1r"su*1.
tion in t," 1"rtin"nt arti!l" o+ t," Ci$il Co"% b"!aus"
t," !ontra!t 3as not gratuitous. T," s"!on 1r"su*1tion
(about on"rous !ontra!ts) !annot b" also a11li" b"!aus"
in t,is !as"% t," sal" ,a b""n *a" 1rior to t," jug*"nt
against A% t," jug*"nt "btor.
(@) 7ag"s o+ Frau
T,"r" ar" so*" !ir!u*stan!"s ini!ating t,at a !"rtain
ali"nation ,as b""n *a" in +rau o+ !r"itors. T,"s" ar" !all"
7AD>ES OF F5A;D.
Oria $. &!&i!<ing
61 P,il. 6@9
FACTS' To "+rau ,is !r"itors% a +at,"r sol a !"rtain r"al
199B
Art. 19BC
1ro1"rt# to ,is son +or a $"r# s*all su*. T," 1ro1"rt#% alt,oug,
a11ar"ntl# sol% 3as n"$"rt,"l"ss still o!!u1i" b# t," +at,"r.
199A
Art. 19BC
T," trans+"r 3as *a" a+t"r suit b# t," !r"itors ,a b""n
institut" against t," +at,"r. It 3as also 1ro$" t,at t," +at,"r
,a no ot,"r 1ro1"rt#. Issu"' &a# t," !ontra!t b" r"s!in"J
HELD' K"s% t," !ontra!t *a# b" r"s!in" as b"ing in +rau
o+ !r"itors. T," Su1r"*" Court *a" t," +ollo3ing obs"r$a.
tions'
-In "t"r*ining 3,"t,"r or not a !"rtain !on$"#an!" is
+rauul"nt% t," Eu"stion in "$"r# !as" is 3,"t,"r !on$"#an!"
3as a bona +i" transa!tion or a tri!< an !ontri$an!" to "+"at
!r"itors% or 3,"t,"r it !ons"r$"s to t," "btor a s1"!ial rig,t.
It is not su++i!i"nt t,at it is +oun" on goo !onsi"ration% or
is *a" 3it, bona +i" int"nt2 it *ust ,a$" bot, "l"*"nts. I+
"+"!ti$" in "it,"r o+ t,"s" 1arti!ulars% alt,oug, goo b"t3""n
t," 1arti"s% it is r"s!inabl" as to !r"itors. T," rul" is uni$"rsal
bot, in la3 an in "Euit# t,at 3,at"$"r +rau !r"at"s% justi!" 3ill
"stro#. T," t"st as to 3,"t,"r or not a !on$"#an!" is +rauul"nt
is' Do"s it 1r"jui!" t," rig,ts o+ !r"itorsJ
-In t," !onsi"ration o+ 3,"t,"r or not !"rtain trans+"rs
3"r" +rauul"nt% !ourts ,a$" lai o3n !"rtain rul"s b# 3,i!,
t," +rauul"nt !,ara!t"r o+ t," transa!tion *a# b" "t"r.
*in". T," +ollo3ing ar" so*" o+ t," !ir!u*stan!"s att"ning
sal"s 3,i!, ,a$" b""n "no*inat" b# t," !ourts as bag"s o+
+rau'
1) T," +a!t t,at t," !onsi"ration o+ t," !on$"#an!" is
+i!titious or ina"Euat"2
6) A trans+"r *a" b# a "btor a+t"r suit ,as b""n b"gun
an 3,il" it is 1"ning against ,i*2
9) A sal" u1on !r"it b# an insol$"nt "btor2
@) T," trans+"r o+ all or n"arl# all o+ ,is 1ro1"rt# b#
a "btor% "s1"!iall# 3,"n ," is insol$"nt or gr"atl#
"*barrass" +inan!iall#2
5) E$i"n!" o+ larg" in"bt"n"ss or !o*1l"t" insol.
$"n!#2
6) T," +a!t t,at t," trans+"r is *a" b"t3""n +at,"r
19@?
Art. 19BC
an son (3,"n t,is +a!t is !onsi"r" tog"t,"r 3it,
1r"!"ing !ir!u*stan!"s)2
19@1
Art. 19BC
C) T," +ailur" o+ t," $"n"" to ta<" "4!lusi$" 1oss"ssion
o+ all t," 1ro1"rt#.
-T," !as" at bar 1r"s"nts "$"r#on" o+ t," bag"s o+ +rau
abo$" "nu*"rat". T"st" b# t," inEuir#% o"s t," sal" 1r"jui!"
t," rig,ts o+ !r"itorJ T," r"sult is !l"ar. T," sal" in t," +or* it
3as *a" l"a$"s t," !r"itors substantiall# 3it,out r"!ours".
T," 1ro1"rt# o+ t," !o*1an# is gon"% t," busin"ss its"l+ is li<"l#
to +ail% t," 1ro1"rt# is b"ing issi1at" an is "1r"!iating in
$alu". As a r"sult% "$"n i+ t," !lai*s o+ t," !r"itors s,oul li$"
t3"l$" #"ars% an t," !r"itors t,"*s"l$"s 3ait t,at long% it is
*or" t,an li<"l# t,at not,ing 3oul b" +oun to satis+# t,"ir
!lai*s at t," "n o+ t," long 3ait./ (5"galao $. Lu!,sing"r M
Co.% 5 P,il. 665 an &anr"sa8s Co**"ntari"s% Vol. B% 11. C19.
C1A).
Al1u"rto $. P"r"H Pastor an 5oa
9B P,il. CB5
FACTS' P"ning t," t"r*ination o+ a !ourt litigation
3it, ,i* as "+"nant% a 1"rson s"!r"tl# sol to ,is son.in.la3
substantiall# all ,is 1ro1"rt# +or l"ss t,an ,al+ t," $alu" o+
sai 1ro1"rti"s. Lat"r% 3,"n t," !as" 3as "!i" t," 1lain.
ti++.!r"itor !oul not r"!o$"r an#t,ing +ro* t," "+"nant.
H"n!"% ," broug,t an a!tion +or t," r"s!ission o+ t," sal". T,"
"+"ns" stat" t,at t," transa!tion ,a b""n *a" 1rior to t,"
1ro*ulgation o+ t," "!ision% an t,at t,"r"+or" t,"r" !an b"
no 1r"su*1tion o+ -+rau o+ !r"itors./ Issu"' &a# t," sal" b"
r"s!in"J
HELD' K"s% t," sal" *a# b" r"s!in". Asi" +ro* t," 1r".
su*1tions gi$"n b# t," Co" r"garing +rauul"nt !on$"#an!"s%
t," "signs to "+rau !r"itors *a# b" 1ro$"% as it ,as b""n
1ro$" in t,is !as"% in an# ot,"r *ann"r r"!ogniH" b# t," la3
o+ "$i"n!". Sai t," Su1r"*" Court'
-T," 1ur!,as"r i not satis+a!toril# 1ro$" t,at ," 3as a
1ur!,as"r in goo +ait,. T," s"!r"!# o+ t," 1ur1ort" sal" an
t," r"lation o+ <ins,i1 "4isting b"t3""n t," 1arti"s ar" !ir!u*.
stan!"s ini!ati$" o+ !ollusion./
FNOTE' 5"lations,i1 alon" o"s not b# its"l+ !onstitut"
19@6
Art. 19BC
a bag" o+ +rau. (S*o. No*br" " ="sus $. San!,"H% XC.A.Y @?
O.>. 16B5).G
19@9
Art. 19BC
FNOTE' I+ t,"r" is gr"at is1arit# b"t3""n t," 1ri!" an
t," r"al $alu" o+ t," 1ro1"rt#% t,is is an ini!ation o+ bag"s o+
+rau. (Asia 7an< $. Nobl" =os"% 51 P,il. C96).G
(5) 5ul" in Cas" o+ 5"gist"r" Lans
Aba#a $. EnriEu"H% "t al.
L.BABB% &a# 1C% 1A5C
(Illustrating t," 1rin!i1l" t,at t," 1r"su*1tion o+ +rau
"stablis," in Art. 19BC o"s not a11l# to r"gist"r" lans un"r
t," Torr"ns S#st"* IF t," jug*"nt or atta!,*"nt *a" is not
also r"gist"r".)
FACTS' EnriEu"H o3" Aba#a a su* o+ *on"# "$i"n!" b#
a 1ro*issor# not". Aba#a obtain" a jug*"nt% an 1art 1a#*"nt
3as *a" b# EnriEu"H% l"a$ing t," jug*"nt 1artiall# unsatis.
+i". Subs"Eu"ntl#% EnriEu"H sol t3o r"gist"r" 1ar!"ls o+ lan
to t," s1ous"s Art"*io an N"ra =ong!o% !o*1l"t" strang"rs to
t,"*. T," jug*"nt in +a$or o+ Aba#a an t," 3rit o+ "4"!u.
tion issu" 3"r" n"$"r annotat" at t," ba!< o+ t," Trans+"r
C"rti+i!at" o+ Titl" to t," lan. Aba#a assail" t," $aliit# o+
t," ali"nation on t," groun t,at sa*" ,as b""n *a" in +rau
o+ ,is rig,ts% t," transa!tion ,a$ing b""n "++"!t" a+t"r a jug.
*"nt an an atta!,*"nt ,a b""n issu". T,us% ," su" +or t,"
r"s!ission o+ t," sal".
HELD' T," r"s!ission 3ill not 1ros1"r% +or t," 1r"su*1tion
"stablis," in Art. 19BC o"s not a11l# in t,is !as" +or t3o r"asons'
Firstl#% t," s1ous"s =ong!o ,a no !o*1li!it# at all in t," +rau
i*1ut" to EnriEu"H2 s"!onl#% t," "n!u*bran!" o+ t," jug*"nt
an t," atta!,*"nt% not ,a$ing b""n r"gist"r" an annotat" on
t," !"rti+i!at"% !annot 1r"jui!" an inno!"nt 1ur!,as"r +or $alu"
o+ r"gist"r" lan. T," Ci$il Co" *ust #i"l to t," &ortgag" an
to t," 5"gistration La3s% 3,i!, ar" s1"!ial la3s.
(6) Vali 7"+or" 5"s!ission
7orja $. Aison
@@ P,il. BA5
19@@
Art. 19BC
FACTS' To "+rau ,is !r"itors% A sol r"al 1ro1"rt# to
7. Issu"' 7"+or" t," sal" is r"s!in"% is it $aliJ
19@5
Art. 19BB
HELD' K"s% it is $ali. Sal"s o+ r"al 1ro1"rt# +or t,"
1ur1os" o+ "+"ating or +rustrating jug*"nt !r"itors ar" not
$ali. ;n. til t,"# ar" r"s!in"% t,"# ar" l"gall# "++"!ti$" an
!an !on$"# titl".
(C) N"!"ssit# o+ a Dir"!t A!tion +or 5"s!ission
To "+rau ,is !r"itors% A sol r"al 1ro1"rt# to 7. 7 no3
s""<s to r"gist"r t," lan. N% a !r"itor% s""<s to 1r"$"nt t,"
r"gistration on t," groun t,at t," transa!tion is r"s!inabl".
D"s1it" N8s obj"!tion% *a# t," lan b" r"gist"r" in 78s na*"J
ANS.' K"s. N s,oul ,a$" broug,t +irst t," a!tion +or r".
s!ission. 7"+or" a sal" is r"s!in"% it is $ali% an its $aliit#
!annot b" atta!<" !ollat"rall# (in a 1ro!""ing i++"r"nt +ro* an
a!tion to r"s!in) in a 1ro!""ing li<" lan r"gistration. (7orja
$. Aison% @@ P,il. BA5).
(B) Pr"su*1tion o+ Valiit#
A gratuitous !on$"#an!" or onation $alil# "4"!ut" is%
on its +a!" (1ri*a +a!i")% 1r"su*" $ali an goo as b"t3""n
t," 1arti"s. It !annot b" "!lar" +rauul"nt an% t,"r"+or"%
subj"!t to r"s!ission unl"ss it !an b" s,o3n t,at at t," ti*" o+
t," "4"!ution o+ t," !on$"#an!"% t,"r" 3as a !r"itor or !r"itors
3,o* sai transa!tion *a# a++"!t a$"rs"l#. (Solis $. C,ua Pua
Hnos.% "t al.% 5? P,il. 696).
(A) Frau Alon" Not Su++i!i"nt +or 5"s!ission
:;ES.' =ust b"!aus" a !ontra!t is *a" to "+rau !r"i.
tors% o"s t,is n"!"ssaril# *"an t,at it !an b" r"s!in"J
ANS.' No% +or a+t"r all t," trans+"r"" *a# ,a$" b""n in
goo +ait, an is no3 in l"gal 1oss"ssion o+ t," 1ro1"rt#. (S""
Art. 19B5% 6n 1aragra1,% Ci$il Co").
Art. 19BB. I,o"$"r a!Euir"s in ba +ait, t," t,ings
ali"n. at" in +rau o+ !r"itors% s,all in"*ni+# t," latt"r
+or a*. ag"s su++"r" b# t,"* on a!!ount o+ t," ali"nation%
19@6
Art. 19BB
3,"n"$"r% u" to an# !aus"% it s,oul b" i*1ossibl" +or ,i*
to r"turn t,"*.
19@C
Art. 19BB
I+ t,"r" ar" t3o or *or" ali"nations% t," +irst a!Euir"r
s,all b" liabl" +irst% an so on su!!"ssi$"l#.
CO&&ENT'
(1) E++"!t o+ 7a Fait,
(a) T," a!Euir"r *ust r"turn or in"*ni+#.
(b) -Du" to an# !aus"/ in!lu"s a +ortuitous "$"nt.
(!) E4a*1l"'
To "+rau ,is !r"itors% N sol ,is ,ous" to K% 3,o
<n"3 o+ N8s 1ur1os". I+ t," sal" is r"s!in"% K *ust
in"*. ni+#% "$"n i+ t," ,ous" b" "stro#" b# a +ortuitous
"$"nt% but onl# i+ N ,i*s"l+ !annot 1a#. (5"*"*b"r t,at
r"s!is. sion is *"r"l# a s"!onar# r"*"# a$ailabl" onl#
3,"n N !annot 1a#.)
(6) Subs"Eu"nt Trans+"rs
(a) I+ t," +irst trans+"r"" is in goo +ait,% t," goo or ba +ait,
o+ t," n"4t trans+"r"" is not i*1ortant.
(b) I+ t," +irst trans+"r"" is in ba +ait,% t," n"4t trans+"r"" is
liabl" onl# i+ ," is also in ba +ait,.
(!) E4a*1l"'
A% in +rau o+ !r"itors% sol ,is ,ous" to 7% 3,o is in
ba +ait,. 7 in turn ali"nat" it in +a$or o+ C% 3,o lat"r sol
it to D. 7ot, C an D 3"r" also in ba +ait,. T," !ontra!t
is r"s!in" but t," ,ous" is "stro#". I,o% i+ an#% ar"
liabl" +or a*ag"sJ
ANS.' 7 is liabl" +irst. I+ ," !annot 1a#% t,"n C 3ill b"
liabl". I+ C !annot 1a#% D 3ill b" liabl". T," la3 sa#s t,at
-i+ t,"r" ar" t3o or *or" ali"nations% t," +irst a!Euir"r s,all
b" liabl" +irst% an so on su!!"ssi$"l#./ (6n 1aragra1,% Art.
19BB% Ci$il Co").
(9) Con!"1t o+ -7a Fait,/
19@B
Art. 19BB
-7a Fait,/ ,as b""n "+in" as a stat" o+ *in a++ir*a.
ti$"l# o1"rating 3it, +urti$" "sign or 3it, so*" *oti$" or
19@A
Art. 19BA
s"l+.int"r"st or ill.3ill or +or an ult"rior 1ur1os"% an i*1li"s
a !ons!ious an int"ntional "sign to o a 3rong+ul a!t +or a
is,on"st 1ur1os" or *oral obliEuit#. (S"" 5"1ubli! $. D"si"rto%
@B1 SC5A 159 F6??6G2 an >at*aitan $. >onHal"s% @A6 SC5A
5A1 F6??6G).
Non!,alan!" in 1"r+or*ing an urg"nt obligation ini!at"s
gross n"glig"n!" a*ounting to ba +ait,. (5aio Co**uni!a.
tions o+ t," P,ils.% In!. $. V"r!,"H% @B1 SC5A 9B@ F6??6G). Non".
t,"l"ss% in as!"rtaining t," int"ntion o+ t," 1"rsons a!!us" o+
a!ting in ba +ait,% !ourts *ust !ar"+ull# "4a*in" t," "$i"n!"
as to t," !onu!t an out3ar a!ts +ro* 3,i!, t," in3ar *oti$"
*a# b" "t"r*in". (Fran!is!o $. Co% @B1 SC5A 6@1 F6??6G).
&IAA $. 5origu"H
@B9 SC5A 61A (6??6)
5"garl"ss o+ 3,"t,"r or not a 1"rson a!t" in ba +ait, in
bu#ing 1ro1"rt# 3,i!, ," <n"3 $"r# 3"ll to ,a$" b""n o!!u1i"
+or so*"ti*" b# t," &IAA% all t,at su!, 1"rson 3ill b" "ntitl"
to is t," $alu" o+ t," 1ro1"rt# at t," ti*" o+ ta<ing% 3it, l"gal
int"r"st t,"r"on +ro* t,at 1oint until 1a#*"nt o+ t," !o*1"nsa.
tion.
In t," instant !ontro$"rs#% t,"r" is not,ing 3rong+ul or
is,on"st in "41"!ting to 1ro+it +ro* on"8s in$"st*"nt.
Citiban<% N.A. $. Caba*ongan
@BB SC5A 51C (6??6)
T," a!t o+ t," ban<8s "*1lo#""s in allo3ing t," 1r"t"r*ina.
tion o+ a "1osition is a!!ount "s1it" t," not" is!r"1an!i"s
in t," "1ositor8s signatur" an 1,otogra1,% t," abs"n!" o+ t,"
original !"rti+i!at" o+ ti*" an "1osit an t," la!< o+ notariH"
3ai$"r or*ant% !onstitut"s gross n"glig"n!" a*ounting to ba
+ait, un"r Art. 666? o+ t," n"3 Ci$il Co".
Art. 19BA. T," a!tion to !lai* r"s!ission *ust b" !o*.
*"n!" 3it,in +our #"ars.
195?
Art. 19BA
For 1"rsons un"r guarians,i1 an +or abs"nt""s% t,"
1"rio o+ +our #"ars s,all not b"gin until t," t"r*ination o+
1951
Art. 19BA
t," +or*"r8s in!a1a!it#% or until t," o*i!il" o+ t," latt"r is
<no3n.
CO&&ENT'
(1) Pr"s!ri1ti$" P"rio +or 5"s!ission
(a) >"n"ral rul" 0 @ #"ars +ro* t," at" t," !ontra!t 3as
"nt"r" into.
(b) E4!"1tions'
1) 1"rsons un"r guarians,i1 0 @ #"ars +ro*
t"r*ina. tion o+ in!a1a!it#
6) abs"nt""s 0 @ #"ars +ro* t," ti*" t," o*i!il" is
<no3n
(6) E4a*1l"s
(a) Fi$" #"ars a+t"r a r"s!inabl" !ontra!t 3as *a"% a!tion
3as broug,t +or its r"s!ission. T," 1"rson 3,o as<" +or
t," r"s!ission 3as n"it,"r a 3ar nor an abs"nt"" at t,"
ti*" o+ t," transa!tion o+ t," r"s!inabl" !ontra!t. Iill
r"s!ission still b" allo3"J
ANS.' No% t," r"s!ission 3ill no long"r b" allo3"
b"!aus" t," a!tion ,as alr"a# 1r"s!rib". -T," a!tion to
!lai* r"s!ission *ust b" !o**"n!" 3it,in +our #"ars./
(1st 1aragra1,% Art. 19BA% Ci$il Co").
(b) At t," ti*" ," 3as 16 #"ars ol% A 3as un"r a guar.
ian 3,o sol% in b",al+ o+ t," 3ar but 3it,out jui!ial
aut,orit#% t," ,ar$"st o+ t," 3ar8s +ar*% an in so oing
t," 3ar su++"r" a l"sion o+ *or" t,an on".+ourt, o+ t,"
1ro1"rt#. Ho3 *an# #"ars 3ill b" gi$"n t," 3ar to r"s!in
t," !ontra!tJ
ANS.' T," 3ar 3ill b" gi$"n @ #"ars a+t"r r"a!,ing
t," ag" o+ *ajorit# (t," ti*" t," guarians,i1 !"as"s)2
,"n!"% b"+or" r"a!,ing 66 #"ars o+ ag"% t," +or*"r 3ar
s,oul alr"a# ,a$" su" +or t," r"s!ission o+ t," !ontra!t.
1956
Art. 19BA
(6n 1aragra1,% Art. 19BA% Ci$il Co").
1959
Art. 19BA
(3) Who Can Bring the Action?
(a) T," injur" 1art# (or t," "+rau" !r"itor).
(b) His ,"ir or su!!"ssor.in.int"r"st.
(!) Cr"itors o+(a) an (b) by $irtu" o+ Art. 11CC o+ t," Ci$il
Co" (aceion subrogatoria).
(4) Who May Be Defendants?
(S"" Art. 19BB o+t," Ci$il Co" an !o**"nts t,"r"on.)
195@
Chapter )
VOIDABLE CONTRACTS
Art. 19A?. T," +ollo3ing !ontra!ts ar" $oiabl" or an.
nullabl"% "$"n t,oug, t,"r" *a# ,a$" b""n no a*ag" to
t," !ontra!ting 1arti"s'
(1) T,os" 3,"r" on" o+ t," 1arti"s is in!a1abl" o+
gi$ing !ons"nt to a !ontra!t2
(6) T,os" 3,"r" t," !ons"nt is $itiat" b# *ista<"%
$iol"n!"% inti*iation% unu" in+lu"n!" or +rau.
T,"s" !ontra!ts ar" bining% unl"ss t,"# ar" annull" b# a
1ro1"r a!tion in !ourt. T,"# ar" sus!"1tibl" o+ rati+i!ation.
CO&&ENT'
(1) Distin!tions 7"t3""n a 5"s!issibl" an a Voiabl" Con.
tra!t
(B &anr"sa C@B2 Ongl"ng!o $. OHa"ta% C? P,il. @9).
5ESCISSION ANN;L&ENT
1955
(a) T," basis ,"r" is
l"sion
(a*ag").
(b) T," "+"!t ,"r" is
"4t"rnal or intrinsi!.
(!) T," a!tion is subsiiar#.
() T,is is a r"*"#.
(") Pri$at" int"r"st
go$"rns. (+) EEuit#
(a) T," basis ,"r" is $itiat"
!ons"nt or in!a1a!it# to
!on. s"nt.
(b) T," "+"!t ,"r" is intrinsi!
(in t," *""ting o+ t,"
*ins).
(!) T," a!tion is 1rin!i1al.
() T,is is a san!tion.
(") Publi! int"r"st
go$"rns. (+) La3
1956
Art. 19A?
(g) Plainti++ *a# b" a 1art# or
a t,ir 1"rson.
(,) T,"r" *ust b" a*ag" to
t," 1lainti++.
(i) I+ 1lainti++ is in"*ni+i"%
r"s!ission !annot 1ros1"r.
(j) Co*1atibl" 3it, t," 1"r+"!t
$aliit# o+ t," !ontra!t.
(<) To 1r"$"nt r"s!ission% rati.
+i!ation is not r"Euir".
(g) Plainti++ *ust b" a 1art# to
t," !ontra!t (3,"t,"r boun
1rin!i1all# or subsiiaril#).
(,) Da*ag" to t," 1lainti++ is i*.
*at"rial.
(i) In"*nit# ,"r" is no bar to t,"
1ros"!ution o+ t," a!tion.
(j) H"r"% a "+"!t is 1r"su1.
1os".
(<) To 1r"$"nt annul*"nt% rati+i.
!ation is r"Euir".
(6) Voiabl" Contra!t Not Voi Ab Initio
A !ontra!t 3,"r" !ons"nt is $itiat"% su!, as b# $iol"n!"
or inti*iation% is not $oi ab initio but onl# $oiabl"% an is
bining u1on t," 1arti"s unl"ss annull" b# 1ro1"r a!tion in
!ourt2 so% in a !as" 3,"r" t," 1lainti++ !or1oration8s sto!<,ol.
"rs sol t,"ir "ntir" sto!<s to a =a1an"s" !or1oration in 1A@9%
it !annot r"!o$"r its +or*"r 1ro1"rti"s 3,i!, 3"r"% a+t"r lib"ra.
tion% turn" o$"r to t," 5"1ubli! as "n"*#.o3n" 1ro1"rti"s.
A *"r" all"gation t,at t," sal" to t," =a1an"s" +ir* ,a b""n
1"r+"!t" t,ru inti*iation 3ill not i1so +a!to r"$"rt to sto!<.
,ol"rs o+ t," 1lainti++ t," o3n"rs,i1 o+ t," sto!<s 3it,out an#
jui!ial "!laration. In""% on" 3,o "sir"s to r"!o$"r lans
as t," o3n"r +ro* anot,"r u1on t," t,"or# t,at t," ""s ,"l
b# t," ot,"r ar" null an $oi% *ust +irst as< t,at su!, all"g"
+rauul"nt ""s b" s"t asi". (Pio >ran" 5ubb"r Estat"% In!.
$. 7oar o+ LiEuiators% "t al.% L.11961% No$. 6B% 1A5B).
(9) >rouns +or Annul*"nt (D"!laration o+ Nullit#)
(a) in!a1a!it# to !ons"nt
(b) $itiat" !ons"nt
NOTE' 5"1"ntan!" at ,a$ing "nt"r" into t," trans.
195C
Art. 19A?
a!tion is NOT a groun +or annul*"nt. (>o*"H $. 5ono%
FC.A.G @5 O.>. 9A6A% !iting Val"s $. Villa% 95 P,il. C6A).
195B
Art. 19A?
T," r"ason gi$"n is t,at it is not t," +un!tion o+ t," la3
to 1rot"!t or r"li"$" a *an +ro* t," !ons"Eu"n!"s o+ a ba
bargain.
&"r!""s Canullas $. Hon. Iill"l*o Fortun
L.5C@AA% =un" 66% 1AB@
I+ a ,ous" is built 3it, !onjugal +uns on t," ,usban8s
lot% t," ,ous" an t," lot 3ill b" bot, !onsi"r" !onjugal%
3it, t," ,usban b"!o*ing t," !r"itor o+ t," !onjugal
1artn"rs,i1 to t," "4t"nt o+ t," $alu" o+ t," lot. S,oul t,"
,usban s"ll t," ,ous" an lot 3it,out ,is 3i+"8s !ons"nt%
t," sal" 3oul b" $oiabl".
(@) T," A!tion to 7ring
(a) For POSITIVE 5ED5ESS% an a!tion (!o*1laint% or !oun.
t"r!lai*) *ust b" +il"2 ot,"r3is"% t," !ontra!t r"*ains
bining. (Art. 19A?% Ci$il Co"2 Lla!"r $. &uPoH% 16 P,il.
96B2 an 5on" $. Claro% A1 P,il. 65?).
(b) For us" as a DEFENSE 0 orinaril#% no a++ir*ati$" a!tion
is n""".
Lo1"H $. =i**# Ong
L.A?61% &a# 91% 1A5C
FACTS' Ong l"as" a t,"at"r b"ginning S"1t"*b"r 1A51. In
t," l"as" !ontra!t 3it, t," o3n"r% Ong agr"" to allo3 a !"rtain
"*1lo#"" na*" Lo1"H to !ontinu" 3it, ,is job till D"!"*b"r
91% 1A51. Lo1"H subs"Eu"ntl# *a" Ong sign a o!u*"nt 3,i!,
!ontinu" Lo1"H8s "*1lo#*"nt till 1A56% but 3,i!, Lo1"H ,a
+rauul"ntl# tol Ong (3,o i not un"rstan Englis,% t,"
languag" o+ t," o!u*"nt) *"r"l# !ontinu" Lo1"H8s job till D"!.
91% 1A51. On =an. 91% 1A56% Ong is*iss" Lo1"H. Lo1"H +il" an
a!tion +or a*ag"s on t," groun t,at ," ,a b""n is*iss"
unjusti+iabl# b"+or" 1A56.
HELD' T," !ontra!t is $oiabl" b"!aus" o+ +rau2 t,"r".
+or"% Ong !an $alil# is*iss Lo1"H. T," +a!t t,at is*issal
3as *a" on =an. 91% 1A56 inst"a o+ D"!. 91% 1A51 !annot b#
Art. 19A?
its"l+ b" !onsi"r" a rati+i!ation sin!" t," 1"rio is too s,ort to
3arrant a $aliation o+ t," !ontra!t.
Art. 19A1
Art. 19A1. T," a!tion +or annul*"nt s,all b" broug,t
3it,in +our #"ars.
T,is 1"rio s,all b"gin'
In !as"s o+ inti*iation% $iol"n!" or unu" in+lu"n!"%
+ro* t," ti*" t," "+"!t o+ t," !ons"nt !"as"s.
In !as" o+ *ista<" or +rau% +ro* t," ti*" o+ t,"
is!o$"r# o+ t," sa*".
An 3,"n t," a!tion r"+"rs to !ontra!ts "nt"r" into
b# *inors or ot,"r in!a1a!itat" 1"rsons% +ro* t," ti*" t,"
guarians,i1 !"as"s.
CO&&ENT'
(1) Histori!al Not"s on Pr"s!ri1ti$" P"rio +or Annul*"nt
T,is is a substantial r"stat"*"nt o+ Art. 19?1 o+ t," ol
Ci$il Co"% 3it, t," +ollo3ing !,ang"s'
(a) -;nu" in+lu"n!"/ ,as b""n a" in t," t,ir 1aragra1,.
In t," ol Ci$il Co"% t,is 3as not +oun.
(b) In t," +ourt, 1aragra1,% t," ol Ci$il Co" 1ro$ision r"as
as +ollo3s' -In t,os" o+ "rror or "!"it or +alsit# o+ !onsi.
"ration% +ro* t," at" o+ t," !onsu**ation o+ !ontra!t./
(!) T," 1ro$ision in t," ol arti!l" 3,i!, r"as -3,"n t,"
1ur1os" o+ t," a!tion is to in$aliat" t," unaut,oriH"
!ontra!ts o+ a *arri" 3o*an% +ro* t," at" o+ t," isso.
lution o+ t," *arriag"/ ,as b""n "li*inat" b"!aus"% as a
rul"% *arri" 3o*"n ar" no long"r !lass" tog"t,"r 3it,
1"rsons not !a1a!itat" to gi$" !ons"nt.
(6) E++"!t o+ Pr"s!ri1tion
I+ t," a!tion ,as 1r"s!rib"% t," !ontra!t !an no long"r b"
s"t asi". (Villanu"$a $. Villanu"$a% A1 P,il. @9).
(9) Illustrati$" Probl"*s
Art. 19A1
(a) A 3as inti*iat" into signing a !ontra!t on =un" 1% 1AAA.
T," inti*iation !ontinu" until S"1t. 1% 6??1. Fro* 3,at
Art. 19A1
ti*" s,oul 3" !o*1ut" t," +our.#"ar 1"rio +or annul.
*"ntJ
ANS.' Fro* S"1t. 1% 6??1% t," ti*" t," inti*iation
!"as".
(b) On =un" 1% 6??5% A "nt"r" into a !ontra!t 3it, 7. On =an.
@% 6??6% A is!o$"r" t,at +rau ,a b""n 1r"s"nt at t,"
ti*" ," "nt"r" into t," !ontra!t. Su!, a +rau $itiat"
,is !ons"nt. Iit,in 3,at ti*" *ust A bring t," a!tion +or
annul*"ntJ
ANS.' Iit,in @ #"ars +ro* =an. @% 6??6 A *ust bring
a!tion +or annul*"nt2 ot,"r3is"% ,is rig,t to su" +or sai
annul*"nt 3ill ,a$" 1r"s!rib". =an. @% 6??6 s,oul b" t,"
starting 1oint b"!aus" it 3as on t,is at" t,at t," +rau
3as is!o$"r".
(!) In t," !as" o+ !ontra!ts "nt"r" into b# *inors or in!a1a!i.
tat" 1"rsons% +ro* 3,at ti*" 3ill t," 1"rio 3it,in 3,i!,
to bring t," annul*"nt b"ginJ
ANS.' Fro* t," ti*" t," guarians,i1 !"as"s. (S""
;ll*an $. H"rna"H% 9? P,il. 6A).
L.9996?% A1r. 65% 1ACC
FACTS' C"rtain !o.,"irs assign"% in 1A9A in +a$or
o+ a !o.,"ir% a 1ar!"l o+ lan in Loa<an% 7aguio. T," o!u.
*"nt 3as r"gist"r" in 1A@?. T," assignors su" in 1A5B
+or t," annul*"nt o+ t," assign*"nt% !lai*ing t,at t,"#
t,oug,t t,"# 3"r" signing a *"r" aut,orit# to s"ll% not t,"
sal" its"l+. Issu"' Has t," a!tion 1r"s!rib"J
HELD' K"s. Consi"r" as a +rauul"nt !ontra!t%
t," 1"rio allo3" +or bringing t," a!tion is onl# @ #"ars%
!ount" +ro* r"gistration in 1A@? o+ t," "" o+ assign*"nt2
!onsi"r" as a !onstru!ti$" trust% t," 1"rio is 1? #"ars.
&"tro1olitan Iat"r3or<s an
S"3"rag" S#st"* $. CA
>5 166?? an 16B56?% O!t. C% 1AAB
Art. 19A1
FACTS' In 1A65% t," &ISS l"as" a 1i"!" o+ lan
to Ca1itol Hills >ol+ Club% In!. (CH>CI) 3it, a rig,t o+
Art. 19A1
+irst r"+usal in !as" t," 1ro1"rt# is sol. A+t"r Pr"si"nt
F"rinan E. &ar!os issu" L"tt"r o+ Instru!tion @@? in
1AC6% &ISS o++"r" to s"ll to Ca1itol Hills t," 1ro1"rt#
at P@?.?? 1"r sEuar" *"t"r.
T," 7oar o+ Trust""s o+ &ISS a11ro$" t," sal"
in +a$or o+ Sil,ou"tt" Traing Cor1. (STC)% as assign"" o+
CH>CI. T," !ontra!t 3as sign" in 1AB9. In 1AB@% STC sol
1art o+ t," 1ro1"rt# to A#ala Lan% In!. (ALI) 3,i!, 1ai
P11?.?? 1"r sE. *. In 1AA9% &ISS +il" an a!tion against
ALI% STC% an CH>CI to r"!o$"r t," 1ro1"rt# 0 all"ging
t,at t," &ISS 7oar o+ Trust""s 3as unul# in+lu"n!"
b# &ar!os in a11ro$ing t," sal". On *otion o+ t," "+"n.
ants% t," !o*1laint 3as is*iss" on t," groun% int"r
alia% t,at t," a!tion ,a 1r"s!rib".
HELD' ;n"r Art. 19A1 o+ t," Ci$il Co"% !ontra!ts
3,"r" !ons"nt is gi$"n t,ru *ista<"% $iol"n!"% inti*ia.
tion% unu" in+lu"n!" or +rau 0 ar" $ali until t,"# ar"
annull". As t," !ontra!t in Eu"stion is *"r"l# $oiabl"% t,"
1"rio 3it,in 3,i!, to annul t," sa*" is @ #"ars% !ount"%
in !as"s o+ inti*iation% $iol"n!"% or unu" in+lu"n!"% +ro*
t," ti*" t," "+"!t o+ t," !ontra!t !"as"s% an in !as" o+
*ista<" or +rau% +ro* t," ti*" o+ is!o$"r#.
In t," !as" at b"n!,% t," 1r"s!ri1ti$" 1"rio to an.
nul t," sal" 3oul ,a$" b"gun on F"b. 66% 1AB6 3,"n
&ar!os 3as "1os". Pr"s!ri1tion 3oul ,a$" s"t in b#
F"b. 66% 1AA? or *or" t,an 9 #"ars b"+or" &ISS +il" its
!o*1laint. Ho3"$"r% i+ &ISS8 !ons"nt 3as $itiat" b#
+rau% t,"n t," 1r"s!ri1ti$" 1"rio !o**"n!" u1on is.
!o$"r#. Dis!o$"r# !o**"n!" +ro* t," at" o+ "4"!ution
o+ t," sal" o!u*"nts as 1"tition"r 3as 1art# t,"r"to. At
t," l"ast% is!o$"r# is ""*" to ,a$" ta<"n 1la!" on t,"
at" o+ r"gistration o+ t," ""s 3it, t," 5"gist"r o+
D""s as r"gistration is !onstru!ti$" noti!" to t," 3orl.
>i$"n t,"s" t3o 1rin!i1l"s on is!o$"r#% t," 1r"s!ri1ti$"
1"rio !o**"n!" in 1AB9 as &ISS a!tuall# <n"3 o+ t,"
sal"% or in 1AB@ 3,"n t," agr""*"nts 3"r" r"gist"r" an
titl"s t,"r"a+t"r 3"r" issu" to STC. At t," lat"st% t,"
Art. 19A1
a!tion 3oul ,a$" 1r"s!rib" in 1ABB% or about 5 #"ars
b"+or" t," !o*1laint 3as institut".
Art. 19A6
Art. 19A6. 5ati+i!ation "4tinguis,"s t," a!tion to annul
a $oiabl" !ontra!t.
CO&&ENT'
(1) Con+ir*ation% 5ati+i!ation% A!<no3l"g*"nt Distin.
guis,"
T"!,ni!all# an 1ro1"rl#% t," +ollo3ing t"r*s *ust b"
us"'
(a) Con+ir*ation 0 to !ur" a "+"!t in a $oiabl" !ontra!t. (Art.
19A6% Ci$il Co").
(b) 5ati+i!ation 0 to !ur" t," "+"!t o+ la!< o+ aut,orit# in an
aut,oriH" !ontra!t ("nt"r" into b# anot,"r). (Arts. 191C
an 1@?5% Ci$il Co").
(!) A!<no3l"g*"nt 0 to r"*"# a "+i!i"n!# o+ 1roo+ (Art.
1@?5% Ci$il Co") (t,us% an oral loan *a# b" 1ut in 3riting%
or 3,"n a 1ri$at" instru*"nt is *a" a 1ubli! instru*"nt).
(Luna $. Linato!% C@ P,il. 15).
(6) T"r* in t," Ci$il Co"
;n"r t," N"3 Ci$il Co"% all t," t,r"" t"r*s ar" no3
uni+or*l# !all" 5ATIFICATION.
FNOTE' A sal" *a" to a bu#"r b# a s"ll"r 3,o 3oul b"
"ntitl" to t," lan onl# 3,"n a !"rtain sus1"nsi$" !onition
is +ul+ill"% but 3,i!, sal" 3as *a" 1rior to t," +ul+ill*"nt o+
sai !onition is !on+ir*" 3,"n% a+t"r t," +ul+ill*"nt o+ t,"
!onition% t," s"ll"r "4"!ut"s an a++ia$it a!<no3l"ging t,"
trans+"r o+ t," 1ro1"rt# to t," bu#"r. (Dala# $. AEuiatin% @C
P,il. A51).G
(9) E++"!ts o+ 5ati+i!ation
(a) T," a!tion to annul is "4tinguis," (Art. 19A6% Ci$il Co")2
t,us% t," !ontra!t b"!o*"s a !o*1l"t"l# $ali on". (>uti"r.
r"H Hnos. $. Or"ns"% 6B P,il. C51).
Art. 19A6
(b) T," !ontra!t is !l"ans" o+ its "+"!t +ro* t," b"ginning.
(Art. 19A6% Ci$il Co").
Art. 19A9
(@) 5"Euisit"s o+ 5ati+i!ation (Pro1"rl#% Con+ir*ation o+ a
Voiabl" Contra!t)
(a) T," !ontra!t *ust b" a $oiabl" on".
(b) T," 1"rson rati+#ing *ust <no3 t," r"ason +or t," !ontra!t
b"ing $oiabl" (t,at is% t," !aus" *ust b" <no3n).
(!) T," !aus" *ust not "4ist or !ontinu" to "4ist an#*or" at
t," ti*" o+ rati+i!ation.
() T," rati+i!ation *ust ,a$" b""n *a" "41r"ssl# or b# an
a!t i*1l#ing a 3ai$"r o+ t," a!tion to annul.
(") T," 1"rson rati+#ing *ust b" t," injur" 1art#.
Art. 19A9. 5ati+i!ation *a# b" "++"!t" "41r"ssl# or ta!.
itl#. It is un"rstoo t,at t,"r" is a ta!it rati+i!ation i+% 3it,
<no3l"g" o+ t," r"ason 3,i!, r"n"rs t," !ontra!t
$oiabl" an su!, r"ason ,a$ing !"as"% t," 1"rson 3,o
,as a rig,t to in$o<" it s,oul "4"!ut" an a!t 3,i!,
n"!"ssaril# i*1li"s an int"ntion to 3ai$" ,is rig,t.
CO&&ENT'
(1) Dins o+ 5ati+i!ation
(a) E41r"ss (oral or 3ritt"n)
(b) Ta!it (i*1li" 0 as +ro* !onu!t i*1l#ing a IAIVE5).
(6) E4a*1l"s o+ Ta!it 5ati+i!ation
(a) A *inor boug,t lan% but sol t," sa*"% a+t"r r"a!,ing 61
#"ars o+ ag"% to a 9r 1"rson. (5osal"s $. 5"#"s% 65 P,il.
@A5 an Ata!aor $. Sila#an% 6C P,il. 6C@).
(b) A *inor sol lan% an u1on r"a!,ing *ajorit# ag"% !ol.
l"!t" t," un1ai balan!" o+ t," s"lling 1ri!" (Ta!alinar
$. Corro% 9@ P,il. BAB)% or s1"n t," gr"at"r 1art o+ t,"
1ro!""s o+ t," sal". (;# Soo Li* $. Tan ;n!,uan% 9B P,il.
556).
(!) ;s" o+ t," 1ro!""s b# a 1"rson 3,o ,a b""n 1r"$iousl#
Art. 19A9
inti*iat" into s"lling ,is 1ro1"rt#. (&ala*ba#an $.
AEuino% FC.A.G 51 O.>. 1A65% A1r. 1A55).
Arts. 19A@.19A5
() Voluntar# 1"r+or*an!" b# t," injur" 1art# o+ ,is o3n
obligation% a+t"r t," !aus" o+ t," nullit# 3as <no3n to ,i*.
(Tan A, C,an $. >onHal"s% 56 P,il. 1B?).
(9) La1s" o+ Ti*"
In t," !as" o+ Ti1ton $. V"las!o (6 P,il. 6C)% t," Su1r"*"
Court sai t,at *"r" la1s" o+ ti*" o"s not l"galiH" a $oiabl"
!ontra!t2 but in Fabi" $. Kulo (6@ P,il. 6@?)% it 3as ,"l t,at
r"*aining sil"nt +or a !"rtain 1"rio o+ ti*" rati+i"s su!, a !on.
tra!t.
Art. 19A@. 5ati+i!ation *a# b" "++"!t" b# t," guarian
o+ t," in!a1a!itat" 1"rson.
CO&&ENT'
(1) 5ati+i!ation b# >uarian
(a) T,is Arti!l" r"+"rs to t," rati+i!ation o+ a !ontra!t "nt"r"
into b# t," in!a1a!itat" 1"rson.
(b) Sin!" t," 1"rson "ntitl" to rati+# is still in!a1a!itat"% ,is
guarian a!ts in ,is b",al+. (S"" Es!oto $. Ar!illa% BA P,il.
1AA).
(6) 5ati+i!ation b# t," Injur" Part# Hi*s"l+
5ati+i!ation !an b" *a" b# t," injur" 1art# ,i*s"l+%
1ro$i" ," is !a1a!itat"% or ,as b"!o*" !a1a!itat".
(9) Distinguis," +ro* A!tion to 5"s!in
Art. 19A@ o"s not r"+"r to a r"s!issibl" !ontra!t "nt"r"
into b# t," guarian in b",al+ o+ ,is 3ar.
Art. 19A5. 5ati+i!ation o"s not r"Euir" t," !on+or*it#
o+ t," !ontra!ting 1art# 3,o ,as no rig,t to bring t,"
a!tion +or annul*"nt.
CO&&ENT'
Arts. 19A@.19A5
Con+or*it# o+ >uilt# Part# Not N"""
5"ason' T," guilt# 1art#8s !ons"nt is not n"""2 ot,"r3is"%
Arts. 19A6.19AC
," *a# +in a 3a# o+ g"tting out o+ t," !ontra!t b# t," si*1l"
"41"i"nt o+ r"+using to rati+#.
Art. 19A6. 5ati+i!ation !l"ans"s t," !ontra!t +ro* all its
"+"!ts +ro* t," *o*"nt it 3as !onstitut".
CO&&ENT'
(1) 5"troa!ti$" E++"!t o+ 5ati+i!ation
(a) Not" t," r"troa!ti$" "++"!t2 t,us% on!" rati+i!ation ,as ta<"n
1la!"% annul*"nt bas" on t," original "+"!ts !annot
1ros1"r. (Tan A, C,an $. >onHal"s% 56 P,il. 1B?).
(b) Alt,oug, t,"r" is a r"troa!ti$" "++"!t% t," rig,ts o+ inno!"nt
t,ir 1"rsons *ust not b" 1r"jui!".
(6) E4a*1l"
A *inor sol ,is lan to N. I,"n ," b"!a*" 66 #"ars ol%
," b"!a*" in"bt" to K. To a$oi 1a#ing K% t," +or*"r *inor
"!i" to rati+# t," sal" o+ t," lan. H" t,"n ,a no ot,"r
1ro1"rt#. &a# K still r"s!in t," sal" alt,oug, at t," ti*" it
3as *a" ," 3as not #"t a !r"itorJ
ANS.' K"s. Alt,oug, rati+i!ation ,as a r"troa!ti$" "++"!t%
still ,is rig,ts as an inno!"nt t,ir 1"rson *ust not b" 1r"ju.
i!".
Art. 19AC. T," a!tion +or t," annul*"nt o+ !ontra!ts
*a# b" institut" b# all 3,o ar" t,"r"b# oblig"
1rin!i1all# or subsiiaril#. Ho3"$"r% 1"rsons 3,o ar"
!a1abl" !annot all"g" t," in!a1a!it# o+ t,os" 3it, 3,o*
t,"# !ontra!t"2 nor !an t,os" 3,o "4"rt" inti*iation%
$iol"n!"% or unu" in+lu"n!"% or "*1lo#" +rau% or !aus"
*ista<" bas" t,"ir a!tion u1on t,"s" +la3s o+ t," !ontra!t.
CO&&ENT'
(1) P"rsons I,o &a# As< +or Annul*"nt
T," $i!ti* (1rin!i1al or subsiiar# 1art#) *a# as< +or
annul*"nt% not t," guilt# 1"rson or ,is su!!"ssor. 5"ason' H"
Arts. 19A6.19AC
3,o !o*"s to "Euit# *ust !o*" 3it, !l"an ,ans. (7astia $.
D# 7un!io an Co.% A9 P,il. 1A5).
Art. 19AC
&"noHa $. D" >uH*an
(C.A.) 9A O.>. &a# 6C% 1A@1% 1. 15?5
FACTS' A *inor !ontra!t" 3it, N. N8s ,"ir% K% su"s +or
annul*"nt on t," groun t,at t," ot,"r 1art# 3as a *inor.
HELD' Annul*"nt !annot 1ros1"r% +or just as N ,as no
rig,t to su"% b"ing t," !a1a!itat" 1art#% so also K% 3,o *"r"l#
"ri$"s an# rig,t ," ,as +ro* ,is 1r""!"ssor.in.int"r"st% N.
D"$"lo1*"nt 7an< $. Court o+ A11"als
L.6BCC@% F"b. 6B% 1AB?
T," g"n"ral rul" is t,at t," a!tion +or t," annul*"nt o+
!ontra!ts !an onl# b" *aintain" b# t,os" 3,o ar" boun "it,"r
1rin!i1all# or subsiiaril# b# $irtu" t,"r"o+. (Art. 19AC% Ci$il
Co"). T,"r" is% ,o3"$"r% an "4!"1tion to t," rul"' A 1"rson
3,o is not oblig" 1rin!i1all# or subsiiaril# in a !ontra!t *a#
"4"r!is" an a!tion +or nullit# o+ t," !ontra!t i+ ," is 1r"jui!"
in ,is rig,ts 3it, r"s1"!t to on" o+ t," !ontra!ting 1arti"s% an
!an s,o3 t," "tri*"nt 3,i!, !oul 1ositi$"l# r"sult to ,i* +ro*
t," !ontra!t in 3,i!, ," ,a no int"r$"ntion. (T"$"s $. P"o1l"8s
HHC% L.61@AB% =un. 6C% 1A6B2 D" Santos $. Cit# o+ &anila% L.
616CC% =un. 6A% 1AC6 an 7aP"H $. Court o+ A11"als% L.9?951%
S"1t. 11%
1AC@).
D"$"lo1*"nt 7an< o+ t," P,ili11in"s $.
Court o+ A11"als
L.6BCC@% F"b. 6B% 1AB?
A 1"rson not oblig" 1rin!i1all# or subsiiaril# in a !ontra!t
*a# n"$"rt,"l"ss as< +or its annul*"nt i+ ," is 1r"jui!" in ,is
rig,ts r"garing on" o+ t," !ontra!ting 1arti"s. (S"" also 7aP"H
$. Court o+ A11"als% L.9?951% S"1t. 11% 1AC@).
CFI o+ 5iHal an El"na Ong Es!utin $.
Court o+ A11"als an F"li4 Ong
=ul. 65% 1AB1
A 1ri$at" sal" aut,oriH" b# a 1robat" !ourt (an 3it,out
Art. 19AC
obj"!tion on t," 1art o+ t," ,"irs or !r"itors) !annot b" assail"
b# a 1"rson 3,o is not an -int"r"st" 1art#/ (su!, as an ,"ir or
!r"itor). On" 3,o *"r"l# o++"r" a ,ig,"r 1ri!" (3it,out a!tu.
Art. 19AC
all# bu#ing t," 1ro1"rt#) is not -an int"r"st" 1art#.88 It 3oul
,a$" b""n i++"r"nt ,a t,"r" b""n a 1ubli! au!tion.
Eart, &in"rals E41loration $. D"1ut#
E4"!uti$" S"!. Catalino &a!araig% =r.
>5 CB56A% F"b. 11% 1AA1
FACTS' Ta*bal"s C,ro*it" is t," "4!lusi$" o3n"r o+ t"n
1at"ntabl" !,ro*it" *ining !lai*s. Ta*bal"s C,ro*it" as !lai*
o3n"r% on on" ,an% an P,ilH"a &ining as o1"rator% on t,"
ot,"r% "nt"r" into a -!ontra!t o+ "$"lo1*"nt% "41loitation an
1rou!ti$" o1"ration on t," *ining !lai*s.88 During t," li+"ti*"
o+ su!, !ontra!t% Eart, &in"rals sub*itt" a l"tt"r o+ int"nt to
Ta*bal"s C,ro*it"% 3,"r"b# t," +or*"r 1ro1os"% an t,"
latt"r agr""% to o1"rat" t," sa*" *ining ar"a subj"!t o+ t,"
"arli"r agr""*"nt b"t3""n Ta*bal"s C,ro*it" an P,ilH"a
&ining. Cons"Eu"ntl#% t," sa*" *ining 1ro1"rt# o+ Ta*bal"s
b"!a*" t," subj"!t o+ i++"r"nt agr""*"nt 3it, t3o s"1arat" an
istin!t o1"rators. Eart, &in"rals +il" 3it, t," 7ur"au o+
&in"s a 1"ti. tion +or !an!"llation o+ t," !ontra!t b"t3""n
Ta*bal"s C,ro*it" an P,ilH"a &ining% 1ursuant to S"!tion C%
Pr"si"ntial D"!r""
16B1. Eart, &in"rals all"g" t,at P,ilH"a !o**itt" gra$"
$io. lations o+ t," latt"r8s !ontra!t 3it, Ta*bal"s C,ro*it"%
a*ong 3,i!, ar"' +ailur" to 1rou!" t," agr"" $olu*" o+
!,ro*it" or"s2 +ailur" to 1a# a $alor"* ta4"s2 +ailur" to 1ut
u1 assa# builings an o++i!"s% all r"sulting in t," non.
1rou!ti$it# an non."$"lo1*"nt o+ t," *ining ar"a. P,ilH"a
*o$" to is*iss on t," grouns t,at Eart, &in"rals is not
t," 1ro1"r 1art# in int"r"st an t,at t," 1"tition la!<s a !aus"
o+ a!tion. T," 7ur"au o+ &in"s "ni" t," *otion ,oling t,at
-t,"r" a11"ars so*" !olor o+ rig,t/ on Eart, &in"rals to
initiat" t," 1"tition +or !an. !"llation. P,ilH"a "l"$at" t," !as"
to t," &inistr# o+ Natural 5"sour!"s 3,i!, is*iss" t,"
a11"al +or t," r"ason t,at t," 7ur"au8s or"r 3as an
int"rlo!utor# or"r t,at !oul not b" t," 1ro1"r subj"!t o+ an
a11"al. P,ilH"a a11"al" to t," o++i!" o+ t," Pr"si"nt. During
t," 1"n"n!# t,"r"o+% Eart, &in"rals +il" 3it, t," &N5 a
*otion +or "4"!ution o+ t," &inistr# o+ Natural 5"sour!"s8
(&N5) or"r is*issing P,ilH"a8s a11"al. T," &N5 ir"!t" t,"
Art. 19AC
7ur"au o+ &in"s to !onu!t t," n"!"ssar# in$"stiga. tion to
,ast"n t," "$"lo1*"nt o+ t," *ining !lai*s. In !o*1li. an!"
t,"r"3it,% t," 7ur"au o+ &in"s or"r" P,ilH"a to +il" its
ans3"r to Eart, &in"rals8 1"tition +or r"s!ission. P,ilH"a i not
Art. 19AC
sub*it its ans3"r. So% t," 7ur"au o+ &in"s r"sol$" t," 1"tition
bas" on t," o!u*"nts sub*itt" b# Eart, &in"rals. Fining
t,at P,ilH"a $iolat" t," t"r*s an !onitions o+ t," *ining
!ontra!t b"t3""n P,ilH"a an Ta*bal"s% t," 7ur"au o+ &in"s
!an!"ll" sai *ining !ontra!ts. T," O++i!" o+ t," Pr"si"nt s"t
asi" t," "!ision o+ t," &inist"r o+ Natural 5"sour!"s an t,"
7ur"au o+ &in"s. As to 3,"t,"r Eart, &in"rals is t," 1ro1"r
1art# to s""< !an!"llation o+ t," o1"rating agr""*"nt b"t3""n
P,ilH"a &ining an Ta*bal"s C,ro*it"% t," E4"!uti$" S"!r".
tar# argu"s t,at Eart, &in"rals is not t," 1ro1"r 1art# to +il"
t," 1"tition +or !an!"llation o+ t," !ontra!t b"t3""n Ta*bal"s
C,ro*it" an P,ilH"a &in"ral% !iting Arti!l" 1911 o+ t," Ci$il
Co" 3,i!, 1ro$i"s t,at a !ontra!t ta<"s "++"!t onl# b"t3""n
t," 1arti"s% t,"ir assigns an ,"irs.
HELD' S"tting asi" t," "!ision o+ t," E4"!uti$" S"!r".
tar# an r"instating t," or"rs o+ t," 7ur"au o+ &in"s an t,"
&inist"r o+ Natural 5"sour!"s% t," Su1r"*" Court ,"l t,at t,"
!ont"ntion is unt"nabl". Eart, &in"rals s""<s t," !an!"llation
o+ t," !ontra!t b"t3""n Ta*bal"s C,ro*it" an P,ilH"a
&ining% not as a 1art# to t," !ontra!t but b"!aus" its rig,ts ar"
1r"jui!" b# sai !ontra!t. T," 1r"jui!" an "tri*"nt to t,"
rig,ts an int"r"st o+ Eart, &in"rals st"* +ro* t," !ontinu"
"4ist"n!" o+ t," !ontra!t b"t3""n Ta*bal"s C,ro*it" an
P,ilH"a. ;n. l"ss an until t," !ontra!t b"t3""n Ta*bal"s
C,ro*it" an P,ilH"a &ining is !an!"ll"% Eart, &in"rals8
!ontra!t 3it, t," +or*"r in$ol$ing t," sa*" *ining ar"a
!annot b" in "++"!t an it !annot 1"r+or* its o3n obligations
an "ri$" b"n"+its un"r t," !ontra!t. &or"o$"r% t," "!ision
o+ t," Dir"!tor o+ &in"s as a++ir*" b# t," &inist"r o+ Natural
5"sour!"s 3as su11ort" b# substantial "$i"n!". T,"
$iolations !o**itt" b# P,ilH"a &ining 3"r" not onl#
$iolations o+ its o1"rating agr""*"nt 3it, Ta*bal"s C,ro*it"
but o+ *ining la3s as 3"ll.
(6) Cr"itors o+ t," Vi!ti*
T," !r"itors o+ t," $i!ti* !annot as< +or annul*"nt +or
t,"# ar" not boun b# t," !ontra!t.
Art. 19AC
Illustrati$" Probl"*'
A 3as +or!" b# 7 to sign a !ontra!t. C% a !r"itor o+ A%
3ants to annul t," !ontra!t. Is C allo3" to o soJ
Art. 19AB
ANS.' No% C is not allo3" to o so. I+ t," !ontra!t 1r"ju.
i!"s ,i*% an A ,as no ot,"r 1ro1"rt#% t,"n C *a# as< +or t,"
r"s!ission o+ t," !ontra!t% not its annul*"nt. C !annot as< +or
annul*"nt b"!aus" ," is not oblig" b# t," t"r*s o+ sai !on.
tra!t% "it,"r 1rin!i1all# or subsiiaril#.
Probl"*' A *inor +or!"s N to sign a !ontra!t. &a# t,"
*inor lat"r on as< +or annul*"ntJ
ANS.' No% b"!aus" ," ,i*s"l+ is at +ault.
(9) Inti*iation or Frau b# a &inor
I+ a *inor *isr"1r"s"nts ,is ag" an t," ot,"r 1art# is *is.
l" as to ,is ag"% *a# t," *inor lat"r on su" +or annul*"ntJ
(a) No% b"!aus" o+ "sto11"l. (&"r!ao $. Es1iritu% 9C P,il.
9C).
(b) Lat"r on% t," Su1r"*" Court ,a a i++"r"nt $i"3 an
ans3"r" KES% b"!aus" a!!oring to it% a *inor !an n"$"r
b" guilt# o+ "sto11"l sin!" ," is not liabl" +or ,is !onu!t
or a!t. (Koung $. T"!son% 9A O.>. A59).
(!) Still lat"r on% t," Court again !,ang" its *in an an.
s3"r" NO% r"it"rating t," &"r!ao !as". (Sia Suan M
C,ao $. Al!antara% >5 L.1C6?% &ar!, @% 1A5?% @C O.>.
@561% 3,"r" t," *inor% n"arl# 6? #"ars ol% a11"ar" to
b" $"r# !l"$"r.)
Art. 19AB. An obligation ,a$ing b""n annull"% t,"
!ontra!t. ing 1arti"s s,all r"stor" to "a!, ot,"r t," t,ings
3,i!, ,a$" b""n t," subj"!t *att"r o+ t," !ontra!t% 3it,
t,"ir +ruits% an t," 1ri!" 3it, its int"r"st% "4!"1t in !as"s
1ro$i" b# la3.
In obligations to r"n"r s"r$i!"% t," $alu" t,"r"o+ s,all
b" t," basis +or a*ag"s.
CO&&ENT'
(1) E++"!ts o+ Annul*"nt
Art. 19AB
(a) I+ t," !ontra!t ,as not #"t b""n !o*1li" 3it,% t," 1arti"s
ar" "4!us" +ro* t,"ir obligations.
Art. 19AB
(b) I+ t," !ontra!t ,as alr"a# b""n 1"r+or*"% t,"r" *ust b"
&;T;AL 5ESTIT;TION (in g"n"ral) o+'
1) t," t,ing% 3it, +ruits2
6) t," 1ri!"% 3it, int"r"st.
(6) E4a*1l"s
(a) &un. o+ Ca$it" $. 5ojas
9? P,il. 6?6
FACTS' A l"as" a 1ar!"l o+ lan +ro* t," &uni!i1al.
it# o+ Ca$it". Lat"r t," l"as" 3as annull". Issu"' I,at
s,oul "a!, o+ t," 1arti"s o no3J
HELD' -T," "+"nant *ust r"stor" an "li$"r
1oss"ssion o+ t," lan "s!rib" in t," !o*1laint to t,"
&uni!i1alit# o+ Ca$it"% 3,i!, in turn *ust r"stor" to t,"
sai "+"nant all t," su*s it *a# ,a$" r"!"i$" +ro* ,"r
in t," natur" o+ r"ntals just as soon as s," r"stor"s t,"
lan i*1ro1"rl# l"as"./
(b) I+ a sal" o+ lan is annull"% t," s"ll"r *ust r"turn t,"
1ur!,as" 1ri!" 3it, l"gal int"r"st an t," bu#"r *ust
r"turn t," lan 3it, its +ruits. (Labraor $. D" los Santos%
66 P,il. 5CA an Du*asug $. &o"lo% 9@ P,il. 656).
(!) Ho3"$"r% in t," !as" o+ La1"ral $. 5og"rs% L.165A?% =an.
9?% 1A65% t," Su1r"*" Court ,"l t,at t," bu#"r o+ a 1ar.
!"l o+ lan o"s not ,a$" to 1a# r"nt% uring t," ti*" ,"
is in 1oss"ssion ("$"n i+ t," sal" is "$"ntuall# !an!"ll")
+or t," si*1l" r"ason t,at t," s"ll"r 3as ,i*s"l+ alr"a#
"njo#ing t," us" o+ t," *on"#% "li$"r" to su!, s"ll"r%
as t," 1ur!,as" 1ri!". T," Court +urt,"r ,"l t,at in t,"
abs"n!" o+ a s,o3ing t,at t,"r" is !onsi"rabl" is1arit#
in t," b"n"+its "ri$" b# bot, 1arti"s% "Euit# 3ill 1r"su*"
t,at t,"# ar"% *or" or l"ss% t," sa*".
Tan :u"to $. Court o+ A11"als
>5 956@B% &a# 16% 1AB9
Art. 19AB
I+ a ,usban bart"rs a3a# ,is 3i+"8s 1ara1,"rnal
1ro1"rt#% t," bart"r ,as -no "++"!t%/ i+ ,is 3i+" i not
Art. 19AA
!ons"nt to t," transa!tion. T," 1"rson 3,o a!Euir"s t,"
lan <no3ing t,at t," sa*" is o3n" b# t," 3i+" an !on.
stru!ts a builing t,"r"on *a# b" r"gar" as a buil"r
in ba +ait,. H" !an% t,"r"+or"% r"!o$"r no r"i*burs"*"nt
+or su!, !onstru!tion. (Art. @@A% Ci$il Co").
(9) Non.a$ailabilit# to Strang"rs
Art. 19AB !annot b" a$ail" o+ b# strang"rs to t," !ontra!t.
(>o$8t. $. Iagn"r% 5 P,il. 196). Inno!"nt t,ir 1arti"s !annot b"
oblig" to r"stor". (Dia $. Finan!" M &ining% In!.% Cor1.% FC.A.G
@6 O.>. 16C).
(@) E++"!t o+ 5"gistration o+ t," Lan
E$"n i+ t," lan ,as alr"a# b""n r"gist"r"% Art. 19AB still
a11li"s% 1ro$i" t,"r" ,as b""n no "sto11"l. (Tinsa# $. Kusa#
an Kusa#% @C P,il. 69A).
(5) E4tra Liabilit# o+ t," >uilt# Part#
A guilt# 1art# 3,o% +or "4a*1l"% us" +or!" !an b" ,"l
liabl" +or a*ag"s un"r Arts. 6? an 61 o+ t," Ci$il Co"'
Art. 6?. E$"r# 1"rson 3,o% !ontrar# to la3% 3ill.
+ull#% or n"glig"ntl# !aus"s a*ag" to anot,"r% s,all
in"*ni+# t," latt"r +or t," sa*".
Art. 61. An# 1"rson 3,o 3ill+ull# !aus"s loss or
injur# to anot,"r in a *ann"r t,at is !ontrar# to *or.
als% goo !usto*s or 1ubli! 1oli!# s,all !o*1"nsat"
t," latt"r +or t," a*ag".
(6) P"rsonal Obligations
H"r" t," $alu" o+ t," s"r$i!" s,all b" t," basis +or
a*ag"s.
(Art. 19AB% 6n 1ar.).
Art. 19AA. I,"n t," "+"!t o+ t," !ontra!t !onsists in t,"
Art. 19AA
in!a1a!it# o+ on" o+ t," 1arti"s% t," in!a1a!itat" 1"rson is
not oblig" to *a<" an# r"stitution "4!"1t inso+ar as ,"
,as b""n b"n"+it" b# t," t,ing or 1ri!" r"!"i$" b# ,i*.
Art. 19AA
CO&&ENT'
(1) >"n"rall#% No 5"stitution b# In!a1a!itat" Part#
(a) T," Arti!l" a11li"s onl# i+ t," "+"!t is INCAPACITK.
(b) T,is !onstitut"s an "4!"1tion to t," obligation o+ *utual
r"stitution un"r Art. 19AB.
(!) H"r" in Art. 19AA% r"stitution is onl# to t," "4t"nt o+ "nri!,.
*"nt (1"!uniar# or ot,"r3is").
(6) No Pr"su*1tion o+ Enri!,*"nt
T," la3 o"s not 1r"su*" t,is "nri!,*"nt or b"n"+it2
t,"r"+or"% t," !a1a!itat" 1"rson ,as t," bur"n o+ s,o3ing
su!, "nri!,*"nt. =ust b"!aus" t," 1ro1"rt# ,a b""n "li$"r"%
it o"s not n"!"ssaril# +ollo3 t,at t,"r" 3as "nri!,*"nt. (TS%
O!t. 66% 1AB@).
O+ !ours"% i+ t," in!a1a!itat" 1"rson still ,as t," 1ro1"rt#%
t,is b# its"l+ is a b"n"+it 3,i!, ," *ust r"turn an not sEuan"r2
ot,"r3is"% t,is 3ill a*ount to a rati+i!ation. (;# Soo Li* $. Tan
;n!,uan% 9B P,il. 556).
(9) Cas"
;# Soo Li* $. Tan ;n!,uan
9B P,il. 556
FACTS' A% a *inor% "nt"r" into a !ontra!t 3it, a 1"rson
sui juris. A+t"r r"a!,ing *ajorit# ," sEuan"r" t," *on"#
r"!"i$". Issu"' I,# is t,is an i*1li" rati+i!ationJ
HELD' -T," 1ri$il"g" grant" *inors in isa++ir*ing t,"ir
!ontra!ts u1on r"a!,ing t," ag" o+ *ajorit# is subj"!t to 1ro*1t
"l"!tion on t," *att"r. . . T," "4!"1tion o+ in+ants +ro* liabilit#
on t,"ir !ontra!ts 1ro!""s sol"l# u1on t," 1rin!i1l" t,at su!,
"4"*1tion is "ss"ntial to t,"ir 1rot"!tion% an t," la3 o+ in+an!#
s,oul b" so a*inist"r" t,at t," r"sult *a# b" s"!ur". 7ut
it ,as not in+r"Eu"ntl# ,a11"n" t,at !ourts% in t,"ir an4i"t#
to 1rot"!t t," rig,ts o+ in+ants in t," *att"r o+ !ontra!ts *a"
Art. 19AA
b# t,"* uring non.ag"% ,a$"% a+t"r t,"# ,a$" b"!o*" aults%
tr"at" t,"* to t," sa*" "4t"nt as in+ants still% "4"*1ting
t,"*
Art. 1@??
+ro* t," o1"ration o+ t," rul"s o+ la3. T," strong t"n"n!# o+
t," *o"rn "!ision% ,o3"$"r% is to li*it t," "4"*1tions o+
in+an!#% to t," 1rin!i1l" u1on 3,i!, t," isabilit# 1ro!""s./
(@) T," Ca1a!itat" P"rson &ust 5"stor" I,"t,"r H" 7"n.
"+it" or Not% E4!"1t i+ Art. 1@6C o+ t," Ci$il Co" A1.
1li"s
Art. 1@6C r"as' -I,"n a *inor b"t3""n 1B an 61 #"ars
o+ ag" 3,o ,as "nt"r" into a !ontra!t 3it,out t," !ons"nt o+
t," 1ar"nt or guarian $oluntaril# 1a#s a su* o+ *on"# or ".
li$"rs a +ungibl" t,ing in +ul+ill*"nt o+ t," obligation (natural
obligation)% t,"r" s,all b" no rig,t to r"!o$"r t," sa*" +ro* t,"
oblig"" 3,o ,as s1"nt or !onsu*" it in goo +ait,./
Art. 1@??. I,"n"$"r t," 1"rson oblig" b# t," "!r"" o+
annul*"nt to r"turn t," t,ing !annot o so b"!aus" it ,as
b""n lost t,roug, ,is +ault% ," s,all r"turn t," +ruits
r"!"i$" an t," $alu" o+ t," t,ing at t," ti*" o+ t," loss%
3it, int"r"st +ro* t," sa*" at".
CO&&ENT'
(1) Valu" &a# 7" Substitut" +or T,ing Its"l+
In t," ut# o+ *utual r"stitution% t," $alu" o+ t," t,ing
3it, int"r"st substitut"s +or t," t,ing its"l+ t,at 3as lost t,ru
t," 1art#8s +ault.
(6) E4a*1l"
A +or!" 7 to s"ll ,i* (A) t," ,ous" o+ 7. 7 broug,t an
a!tion to annul t," !ontra!t. T," !ontra!t 3as annull" on t,"
groun o+ +rau. A 3as as<" b# t," !ourt to r"turn to 7
3,at"$"r ," (A) ,as r"!"i$". 7ut t," ,ous" ,a b""n
"stro#" t,roug, t," +ault o+ A. I,at s,oul A no3 gi$"J
ANS.' A s,oul gi$" all o+ t," +ollo3ing'
Art. 1@??
(a) t," +ruits or r"ntals o+ t," ,ous" r"!"i$" +ro* t," ti*"
t," ,ous" 3as gi$"n to ,i* to t," ti*" o+ its loss2
Art. 1@?1
(b) t," $alu" o+ t," ,ous" at t," ti*" o+ t," loss2
(!) int"r"st at 6Q 1"r annu* on t," $alu" o+ t," ,ous" +ro*
t," ti*" t," ,ous" 3as "stro#".
(9) Cas"
Du*asug $. &o"lo
9@ P,il. 656
FACTS' A !ontra!t b"t3""n A an 7 3as annull" b# t,"
!ourt. 7ut t," obj"!t o+ t," !ontra!t% a !arabao% ,a i" 3,il"
in 78s 1oss"ssion. Issu"' I,at s,oul 7 r"turnJ
HELD' -Iit, r"s1"!t to t," 1lo3 !arabao t,at i" 3,il"
in "+"nant8s 1oss"ssion% t," $alu" o+ 3,i!, is P16?% "+"nant
is oblig" 1ursuant to t," 1ro$ision o+ Art. 19?C (no3 Art. 1@??
o+ t," N"3 Ci$il Co") to 1a# an "li$"r to 1lainti++ t," $alu"
o+ sai ani*al% 3it, int"r"st as an in"*nit# +or t," "tri*"nt
!aus" to its o3n"r./
Art. 1@?1. T," a!tion +or annul*"nt o+ !ontra!ts s,all
b" "4tinguis," 3,"n t," t,ing 3,i!, is t," obj"!t t,"r"o+
is lost t,roug, t," +rau or +ault o+ t," 1"rson 3,o ,as a
rig,t to institut" t," 1ro!""ings.
I+ t," rig,t o+ a!tion is bas" u1on t," in!a1a!it# o+
an# on" o+ t," !ontra!ting 1arti"s% t," loss o+ t," t,ing s,all
not b" an obsta!l" to t," su!!"ss o+ t," a!tion% unl"ss sai
loss too< 1la!" t,roug, t," +rau or +ault o+ t," 1lainti++.
CO&&ENT'
(1) Histori!al Not"s on E++"!t o+ Loss o+ Obj"!t T,roug,
Frau or Fault o+ t," Vi!ti*
(a) T,is is a substantial r"stat"*"nt o+ Art. 191@ o+ t," ol
Ci$il Co"% "4!"1t t,at t," 1,ras" -a+t"r ,a$ing a!Euir"
!a1a!it#/ a+t"r t," 3or -1lainti++/ in t," s"!on 1aragra1,
,as b""n o*itt"% i*1l#ing t,at un"r t," n"3 Ci$il Co"%
+rau or +ault on t," 1art o+ t," aggri"$" 1art# *a# "4ist
Art. 1@?1
"$"n uring ,is *inorit#. I,"r"as Art. 1@?1 o+ t," n"3
Ci$il Co" r"+"rs to +rau or +ault on t," 1art o+ t," 1"rson
Art. 1@?1
3,o !an bring t," a!tion +or annul*"nt% Art. 1@?? o+ t,"
n"3 Ci$il Co" r"+"rs to t," +ault on t," 1art o+ t," 1"rson
3,o !annot bring t," a!tion to ,a$" t," !ontra!t "!lar"
annull".
(b) As t,ings no3 stan% t," t3o 1aragra1,s in Art. 1@?1 *"an
t," sa*" t,ing.
(6) :u"r# on SEuan"ring b# Insan" P"rson
An insan" 1"rson sol ,is ,ous"% an sEuan"r" t,"
1ro!""s 3,il" insan". Can ," as< +or annul*"nt lat"r on an
r"!o$"r t," ,ous"J
ANS.' ;n"r t," s"!on 1aragra1, o+ Art. 1@?1% ," !annot
su" +or annul*"nt an r"!o$"r t," ,ous" b"!aus" t," 1ro!""s
3"r" sEuan"r" a3a# b# ,i*. T,us% a!!oring to t," *"*b"rs
o+ t," Co" Co**ission% t," a!tion !annot 1ros1"r% "$"n i+ at
t," ti*" o+ loss% t," 1lainti++ 3as still insan" or a *inor. (&"*o.
ranu* to t," =oint Congr"ssional Co**itt"" on Coi+i!ation%
&ar. B% 1A51).
AND KET% t,is 3oul !ontrai!t Art. 19AA% b"!aus" t,"r"%
t," in!a1a!itat" 1"rson is not oblig" to *a<" an# r"stitution
"4!"1t inso+ar as ," ,as b""n b"n"+it" b# t," t,ing or 1ri!"
r"!"i$" b# ,i*. 7"ing insan"% ," !oul not ,a$" 1ro+it" b#
sEuan"ring t," *on"#.
It is t,us b"li"$" t,at t," ans3"r o+ t," Co" Co**is.
sion is NOT a!!urat" +or "$"n 3"r" 3" to a11l# Art. 1@?1 (6n
1aragra1,)% it is !l"ar t,at t," loss uring t," insanit# !oul
not b" u" to -+rau/ or -+ault./
(9) Probl"*s
(a) A 3as +or!" to sign a !ontra!t 3it, 7. In sai !ontra!t% A
3as gi$"n a ,ous". 7ut A "stro#" t," ,ous". &a# A still
bring t," a!tion +or annul*"ntJ
ANS.' No *or". His a!t o+ "stro#ing t," ,ous" "4.
tinguis," ,is rig,t to bring t," a!tion +or annul*"nt.
(b) A% a *inor% 3as sol a ,ous" b# 7. T," ,ous" 3as "stro#"
Art. 1@?1
b# a +ortuitous "$"nt. &a# A still annul t," !ontra!t so as to
r"!o$"r +ro* 7 t," 1ri!" (an int"r"st) ," (A) ,a gi$"nJ
Art. 1@?6
ANS.' K"s. As a rul"% i+ t," rig,t o+ a!tion is bas"
u1on t," in!a1a!it# o+ an#on" o+ t," !ontra!ting 1arti"s%
t," loss o+ t," t,ing s,all not b" an obsta!l" to t," su!!"ss
o+ t," a!tion. H"r"% t," *inor 3as not guilt# o+ +rau or
+ault. (Art. 1@?1% 6n 1ar.)
Art. 1@?6. As long as on" o+ t," !ontra!ting 1arti"s o"s
not r"stor" 3,at in $irtu" o+ t," "!r"" o+ annul*"nt ," is
boun to r"turn% t," ot,"r !annot b" !o*1"ll" to !o*1l#
3it, 3,at is in!u*b"nt u1on ,i*.
CO&&ENT'
(1) 5"ason I,# On" Part# Cannot 7" Co*1"ll" i+ Ot,"r
Part# Do"s Not 5"stor"
A r"!i1ro!al obligation o+ r"stitution ,as b""n !r"at".
(6) E4a*1l"
A +or!" 7 to ta<" A8s !ar in "4!,ang" +or 78s ring. 7 as<"
+or annul*"nt% an t," !ourt ga$" t," "!r"" o+ annul*"nt or.
"ring "a!, to r"turn 3,at ,a b""n r"!"i$". 7 r"+us" to gi$"
A t," !ar. &a# A b" !o*1"ll" to gi$" ba!< t," ringJ No.
(9) E++"!t o+ Loss T,ru Fortuitous E$"nt
Su11os" t," inno!"nt 1art# !annot r"stor" b"!aus" o+ a loss
t,ru a +ortuitous "$"nt% *a# ," still !o*1"l t," ot,"r to r"turn
3,at ," ,a gi$"nJ
ANS.' It 3oul s""* t,at t," ans3"r is NO% b"!aus" b"+or"
annul*"nt% t," !ontra!t is $ali% an t," inno!"nt 1art#% b"ing
t," o3n"r o+ t," t,ing lost b# a +ortuitous "$"nt% *ust b"ar t,"
loss. T,"r" is ,o3"$"r an "4!"1tion% an it o!!urs 3,"n ," o++"rs
to gi$" t," $alu" o+ t," t,ing. (H" o"s not ,a$" to gi$" int"r"st
in $i"3 o+ t," +ortuitous "$"nt.) H" *ust b" allo3" t,is r"*"#2
ot,"r3is"% ," 3oul b" in a 3ors" 1osition t,an on" 3,o ,a
"stro#" t," t,ing t,ru ,is +ault. On!" ," "4"r!is"s t,is
Art. 1@?6
r"*"#% ," !an r"!o$"r +ro* t," ot,"r 3,at ,as b""n
1r"$iousl# gi$"n.
Art. 1@?6
(@) Probl"*
A +or!" 7 to s"ll to ,i* (A) ,is (78s) ring. 7 su" +or an.
nul*"nt% but A ,a alr"a# lost t," ring t,ru a +ortuitous "$"nt.
I,at is 78s r"*"#J
ANS.' A !an b" !o*1"ll" to 1a# its $alu" or a*ag"s% +or
it is as i+ A 3as a 1oss"ssor in ba +ait, 3,o b"ars t," loss "$"n
in !as" o+ a +ortuitous "$"nt. (S"" Art. 1566% Ci$il Co").
Chapter *
UNENFORCEABLE CONTRACTS $%&
(1) ;n"n+or!"abl" Contra!ts Distinguis," +ro* Voiabl"
an 5"s!issibl" Contra!ts
;n"n+or!"abl" !ontra!ts !annot b" su" u1on or "n+or!"
unl"ss rati+i"2 t,us% it is as i+ t,"# ,a$" no "++"!t #"t. 7ut t,"#
*a# b" rati+i"2 ,"n!"% t,"# !an ,a$" in su!, a !as" t," "++"!t
o+ $ali !ontra!ts. In on" s"ns"% t,"r"+or"% t,"# *a# b" !all"
$aliabl".
Voiabl" an r"s!issibl" !ontra!ts% u1on t," ot,"r ,an%
1rou!" l"gal "++"!ts until t,"# ar" annull" or r"s!in".
T,us% un"n+or!"abl" !ontra!ts ar" n"ar"r absolut" nul.
lit# t,an t," ot,"r t3o. (S"" 5"1ort o+ t," Co" Co**ission% 1.
19?).
(6) Dins o+ ;n"n+or!"abl" Contra!ts
(a) ;naut,oriH" !ontra!ts.
(b) T,os" t,at +ail to !o*1l# 3it, t," Statut" o+ Fraus.
(!) T,os" 3,"r" bot, 1arti"s ar" in!a1abl" o+ gi$ing !ons"nt
to a !ontra!t.
Art. 1@?9. T," +ollo3ing !ontra!ts ar" "n+or!"abl"%
unl"ss t,"# ar" rati+i"'
(1) T,os" "nt"r" into in t," na*" o+ anot,"r 1"rson
b# on" 3,o ,as b""n gi$"n no aut,orit# or l"gal
r"1r"s"ntation% or 3,o ,as a!t" b"#on ,is 1o3"rs2
Art. 1@?9
(6) T,os" t,at o not !o*1l# 3it, t," Statut" o+ Fraus
as s"t +ort, in t,is nu*b"r. In t," +ollo3ing !as"s an agr"".
*"nt ,"r"a+t"r *a" s,all b" un"n+or!"abl" b# a!tion%
unl"ss t," sa*"% or so*" not" or *"*oranu* t,"r"o+% b" in
3riting% an subs!rib" b# t," 1art# !,arg"% or b# ,is ag"nt2
"$i"n!"% t,"r"+or"% o+ t," agr""*"nt !annot b" r"!"i$"
3it,out t," 3riting% or a s"!onar# "$i"n!" o+ its !ont"nts'
(a) An agr""*"nt t,at b# its t"r*s is not to b"
1"r. +or*" 3it,in a #"ar +ro* t," *a<ing t,"r"o+2
(b) A s1"!ial 1ro*is" to ans3"r +or t," "bt% ".
+ault% or *is!arriag" o+ anot,"r2
(!) An agr""*"nt *a" in !onsi"ration o+ *ar.
riag"% ot,"r t,an a *utual 1ro*is" to *arr#2
() An agr""*"nt +or t," sal" o+ goos% !,att"ls or
t,ings in a!tion% at a 1ri!" not l"ss t,an +i$" ,unr"
1"sos% unl"ss t," bu#"r a!!"1t an r"!"i$" 1art o+ su!,
goos an !,att"ls% or t," "$i"n!"s% or so*" o+ t,"*%
o+ su!, t,ings in a!tion% or 1a# at t," ti*" so*" 1art o+
t," 1ur!,as" *on"#2 but 3,"n a sal" is *a" b# au!tion
an "ntr# is *a" b# t," au!tion""r in ,is sal"s boo<% at
t," ti*" o+ t," sal"% o+ t," a*ount an <in o+ 1ro1"rt#
sol% t"r*s o+ sal"% 1ri!"% na*"s o+ t," 1ur!,as"rs an
1"rson on 3,os" a!!ount t," sal" is *a"% it is a
su++i!i"nt *"*oranu*2
(") An agr""*"nt +or t," l"asing +or a long"r
1"rio t,an on" #"ar% or +or t," sal" o+ r"al 1ro1"rt#
or o+ an int"r"st t,"r"in2
(+) A r"1r"s"ntation as to t," !r"it o+ a t,ir 1"r.
son.
(9) T,os" 3,"r" bot, 1arti"s ar" in!a1abl" o+ gi$ing
!ons"nt to a !ontra!t.
CO&&ENT'
(1) ;naut,oriH" Contra!ts
Art. 1@?9
(a) T,"s" ar" -t,os" "nt"r" into in t," na*" o+ anot,"r
1"rson b# on" 3,o ,as b""n gi$"n no aut,orit# or l"gal
r"1r"s"nta.
Art. 1@?9
tion% or 3,o ,as a!t" b"#on ,is 1o3"rs./ (Art. 1@?9% No.
1).
L"abr"s $. CA
>5 @1B@C% D"!. 16% 1AB6
A su11os" sal" o+ a 1i"!" o+ lan b"longing to t,"
"stat" o+ t," "!"as" un"r !ustoia l"gis o+ t," Probat"
Court *a" b# t," S1"!ial A*inistrator in ,is o3n 1"r.
sonal !a1a!it# an 3it,out !ourt a11ro$al !annot bin
t," "stat". T," -bu#"r/ s,oul ,a$" sub*itt" t," r"!"i1t
o+ t," all"g" sal" to t," Probat" Court +or its a11ro$al
o+ t," transa!tion in or"r t,at ,is rig,t o$"r t," subj"!t
lan !oul b" r"!ogniH"% assu*ing t,at t," r"!"i1t !oul
b" r"gar" as su++i!i"nt 1roo+.
(b) E4a*1l"'
Iit,out *# aut,orit#% *# brot,"r sol *# !ar% in *#
na*"% to N. T," !ontra!t is unaut,oriH" an !annot a++"!t
*" unl"ss I rati+# t," sa*" "41r"ssl# or i*1li!itl#% as b#
a!!"1ting t," 1ro!""s o+ t," sal".
7u*anlag $. AlHat"
>5 9A11A% S"1t. 66% 1AB6
A !o*1ro*is" agr""*"nt sign" in b",al+ o+ t," !li"nt
b# ,is la3#"r 3,o i so 3it,out aut,oriHation o+ sai !li.
"nt is *"r"l# un"n+or!"abl" (not $oi) an *a#% t,"r"+or"%
b" rati+i" b# sai 1art# "41r"ssl# or i*1li!itl#.
(!) &"r" la1s" o+ ti*"% no *att"r ,o3 long% is not t," rati+i!a.
tion r"Euir" b# la3 o+ an un"n+or!"abl" !ontra!t. (Ti1ton
$. V"las!o% 6 P,il. 6C).
() Iit,out rati+i!ation% t," -ag"nt/ assu*"s 1"rsonal liabilit#.
(6 A*. =ur. 651).
(6) T," Statut" o+ Fraus
(a) Pur1os" 0 to 1r"$"nt +rau% an not to "n!ourag" t," sa*".
T,us% !"rtain agr""*"nts ar" r"Euir" to b" in 3riting so
Art. 1@?9
t,at t,"# *a# b" "n+or!". (S"" S,o"*a<"r $. La Ton"Pa%
6B P,il. 6@).
Art. 1@?9
H"irs o+ C"!ilio Clau"l% "t al. $.
Court o+ A11"als
>5 B56@?% =ul. 16% 1AA1
FACTS' As "arl# as D"!"*b"r 6B% 1A66% 7asilio a.<.a.
C"!ilio Clau"l a!Euir" +ro* t," 7ur"au o+ Lans a 1?%1?C
sE. *"t"r lot. H" s"!ur" a trans+"r !"rti+i!at" o+ titl" +or it
in 1A99. H" "!lar" t," lot in ,is na*" an 1ai t," r"al
"stat" ta4"s t,"r"on until ,is "at, in 1A9C. T,"r"a+t"r%
,is 3io3 7asilia an lat"r% ,"r son =os"% on" o+ t," 1".
tition"rs% 1ai t," ta4"s. T3o brot,"rs o+ C"!ilio8s +a*il#
!ont"st" t," o3n"rs,i1 o$"r t," lan. On on" ,an t,"
!,ilr"n o+ C"!ilio% t," 1"tition"rs% t," H"irs o+ C"!ilio% an
on t," ot,"r ,an% ,is brot,"rs an sist"rs% t," Siblings
o+ C"!ilio. In 1AC6% t," H"irs o+ C"!ilio 1artition" t," lot
a*ong t,"*s"l$"s an obtain" t," !orr"s1oning titl"s
on t,"ir s,ar"s. Four #"ars lat"r% on D"!. C% 1AC6% t," Sib.
lings o+ C"!ilio +il" a !o*1laint +or !an!"llation o+ titl"s
an r"!on$"#an!" 3it, a*ag"s% all"ging t,at in 1A9?
t,"ir 1ar"nts boug,t +ro* C"!ilio s"$"ral 1ortions o+ t,"
lot +or P9?. T,"# a*itt" t,at t," transa!tion 3as $"rbal.
Ho3"$"r% as 1roo+ o+ t," sal"% t," Siblings o+ C"!ilio 1r".
s"nt" a subi$ision 1lan o+ t," lan% at" &ar. 65% 1A9?%
ini!ating t," 1ortions all"g"l# sol to t," Siblings. T,"
trial !ourt is*iss" t," !o*1laint% isr"garing t," sol"
"$i"n!" (subi$ision 1lan) 1r"s"nt" b# t," Siblings. T,"
Court o+ A11"als r"$"rs" t," trial !ourt on t," +ollo3ing
grouns' (1) t," +ailur" to bring an 1ros"!ut" t," a!tion
in t," na*" o+ t," r"al 1art# in int"r"st% na*"l#% t," 1ar.
ti"s t,"*s"l$"s% 3as not a +atal o*ission sin!" t," !ourt
a Euo !oul ,a$" ajui!at" t," lots to t," siblings% t,"
1ar"nts o+ t," ,"irs% l"a$ing it to t,"* to ajui!at" t,"
1ro1"rt# a*ong t,"*s"l$"s2 (6) t," +a!t o+ r"si"n!" in t,"
is1ut" 1ro1"rt# b# t," ,"irs ,a b""n *a" 1ossibl" b#
t," tol"ration o+ C"!ilio2 (9) t," Statut" o+ Fraus a11li"s
onl# to "4"!utor# !ontra!ts an not to !onsu**at" sal"s
as in t," !as" at bar 3,"r" oral "$i"n!" *a# b" a*itt"2
(@) t," "+"ns" o+ 1r"s!ri1tion !annot b" s"t u1 against t,"
Siblings "s1it" t," la1s" o+ o$"r @? #"ars +ro* t," ti*"
Art. 1@?9
t," all"g" sal" in 1A9? u1 to t," +iling o+ t," !o*1laint +or
!an!"llation an r"!on$"#an!" in 1AC6. T," a!tion% sai t,"
Art. 1@?9
Court o+ A11"als% 3as not +or t," r"!o$"r# o+ 1oss"ssion o+
r"al 1ro1"rt# but +or t," !an!"llation o+ titl"s issu" to t,"
,"irs in 1AC9. Sin!" t," Siblings !o**"n!" t," !o*1laint
+or !an!"llation o+ titl"s an r"!on$"#an!" 3it, a*ag"s
on D"!. C% 1AC6% onl# +our #"ars a+t"r t," ,"irs 1artition"
t," lot a*ong t,"*s"l$"s an obtain" t," !orr"s1oning
trans+"r !"rti+i!at"s o+ titl"s% t,"n t,"r" is no 1r"s!ri1tion
o+ a!tion #"t. So% t," Court o+ A11"als or"r" t," !an!"l.
lation o+ t," Trans+"r C"rti+i!at"s o+ Titl" issu" in t,"
na*"s o+ t," ,"irs an% !orollaril#% t," "4"!ution o+ t,"
""s o+ r"!on$"#an!" in +a$or o+ t," siblings.
ISS;ES' I,"t,"r a !ontra!t o+ sal" o+ lan *a# b"
1ro$"n orall#2 an 3,"t,"r t," 1r"s!ri1ti$" 1"rio +or +iling
an a!tion +or !an!"llation o+ titl"s an r"!on$"#an!" 3it,
a*ag"s s,oul b" !ount" +ro* t," all"g" sal" u1on
3,i!, t,"# !lai* t,"ir o3n"rs,i1 in 1A9? or +ro* t," at"
o+ t," issuan!" o+ t," titl"s soug,t to b" !an!"ll" in +a$or
o+ t," ,"irs in 1AC6.
HELD' T," Su1r"*" Court r"$"rs" t," "!ision o+
t," Court o+ A11"als% an r"instat" t,at o+ t," trial
!ourt% 3,i!, rul" +or t," is*issal o+ t," suit +or
!an!"llation o+ titl"s an r"!on$"#an!". It ,"l t,at a sal"
o+ lan% on!" !onsu**at"% is $ali r"garl"ss o+ t," +or*
it *a# ,a$" b""n "nt"r" into. No3,"r" o"s la3 an
juris1ru"n!" 1r"s!rib" t,at t," !ontra!t o+ sal" b" 1ut in
3riting b"+or" su!, !ontra!t !an $alil# !"" or trans*it
rig,ts o$"r a !"rtain r"al 1ro1"rt# b"t3""n t," 1arti"s
t,"*s"l$"s. 7ut i+ a t,ir 1art#% as in t,is !as"% is1ut"s
t," o3n"rs,i1 o+ t," 1ro1"rt#% t," 1"rson against 3,o*
t,at !lai* is broug,t !annot 1r"s"nt an# 1roo+ o+ su!,
sal" an% ,"n!"% ,as no *"ans to "n+or!" t," !ontra!t.
T,us% t," statut" o+ +raus 3as 1r"!is"l# "$is" to
1rot"!t t," 1arti"s in a !ontra!t o+ sal" o+ r"al 1ro1"rt# so
t,at no su!, !ontra!t is "n+or!". abl" unl"ss !"rtain
1AC6 to "n+or!" a rig,t a!Euir" all"g"l# as "arl# as 1A9?%
is i++i!ult to !o*1r","n. T," Ci$il Co" stat"s' T," +ol.
CBB
Art. 1@?9
r"Euisit"s% +or 1ur1os"s o+ 1roo+% ar" *"t. T,"r"+or"%
"4!"1t un"r t," !onitions 1ro$i" b# t," Statut" o+
Fraus% t," "4ist"n!" o+ t," !ontra!t o+ sal" *a" b#
C"!ilio 3it, ,is siblings !annot b" 1ro$". T," b"lat"
!lai* o+ t," siblings 3,o +il" a !o*1laint onl# in
1AC6 to "n+or!" a rig,t a!Euir" all"g"l# as "arl# as 1A9?%
is i++i!ult to !o*1r","n. T," Ci$il Co" stat"s' T," +ol.
CBB
Art. 1@?9
lo3ing a!tions *ust b" !o**"n!" 3it,in si4 #"ars' (1)
u1on an oral !ontra!t. I+ t," Siblings ,a all"g"l# "ri$"
t,"ir rig,t o+ a!tion +ro* t," oral 1ur!,as" *a" b# t,"ir
1ar"nts in 1A9?% t,"n t," a!tion +il" in 1AC6 3oul ,a$"
1r"s!rib". &or" t,an si4 #"ars ,a "la1s".
(b) Ho3 t," Statut" o+ Fraus Pr"$"nts Frau
Sin!" *"*or# is *an# ti*"s unr"liabl"% oral agr"".
*"nts *a# so*"ti*"s r"sult in injusti!". To ai ,u*an
*"*or#% to 1r"$"nt t," !o**ission o+ injusti!"s u" to
+ault# *"*or#% to is!ourag" int"ntional *isr"1r"s"nta.
tions% ar" t," 1rin!i1al ai*s o+ t," Statut" o+ Fraus.
(Fa!turan $. Sabanal% B1 P,il. 516).
(!) First Countr# to Ena!t Statut"
Englan 3as t," +irst !ountr# to ao1t a Statut" o+
Fraus. In 16C6% t," Englis, Parlia*"nt 1ass" a la3 or
statut" r"Euiring !"rtain agr""*"nts to b" in 3riting.
Sin!" t,at ti*"% t," statut" ,as b""n !all" Statut" o+
Fraus. (National 7an< $. P,ili11in" V"g"tabl" Oil Co.%
@A P,il.
B5C).
() Histor#% C,i"+ C,ara!t"risti!s% an Obj"!t o+ t," Statut" o+
Fraus'
1) T," Statut" o+ Fraus is t," !o**on "signation
o+ a $"r# !"l"brat" Englis, Statut" (6A Car II C%
9)% 1ass" in 16C6% an 3,i!, ,as b""n ao1t" in a
*or" or l"ss *oi+i" +or*% in n"arl# all o+ t," ;nit"
Stat"s (an in t," P,ili11in"s).
6) Its !,i"+ !,ara!t"risti! is t," 1ro$ision t,at no suit
or a!tion s,all b" *aintain" on !"rtain !lass"s o+
!ontra!ts or "ngag"*"nts unl"ss t,"r" is a not" or
*"*oranu* t,"r"o+ in 3riting sign" b# t," 1art#
to b" !,arg" or b# ,is aut,oriH" ag"nt.
t,an t," *"r" r"!oll"!tion o+ 3itn"ss"ss. It is *or"
+ull# na*" as -t," Statut" o+ Fraus an P"rjuri"s./
CBA
Art. 1@?9
9) Its obj"!t 3as to !los" t," oor to t," nu*"rous +raus
3,i!, 3"r" b"li"$" to b" 1"r1"trat" an t," 1"rju.
ri"s 3,i!, 3"r" b"li"$" to b" !o**itt" 3,"n su!,
obligations !oul b" "n+or!" u1on no ot,"r "$i"n!"
t,an t," *"r" r"!oll"!tion o+ 3itn"ss"ss. It is *or"
+ull# na*" as -t," Statut" o+ Fraus an P"rjuri"s./
CBA
Art. 1@?9
(7la!<8s La3 Di!tionar#% 11. B19.B1@2 S*it, $. &or.
ton% C? O<l. 15C% 1C9% 11. 56?% 5162 an Hous"l"# $.
Stra3n &"r!,anis" Co.% FT"4. Co*. A11.G 6A1 S.I.
B6@% B6C).
(") So*" 7asi! an Funa*"ntal Prin!i1l"s Con!"rning t,"
Statut" o+ Fraus (>"n"ral 5ul"s o+ A11li!ation)
1) T," Statut" o+ Fraus a11li"s onl# to "4"!utor#
!ontra!ts (!ontra!ts 3,"r" no 1"r+or*an!" ,as #"t
b""n *a") an not 1artiall# or !o*1l"t"l# "4"!ut"
(!onsu**at" !ontra!ts). (Al*irol M Carino $.
&ons"rrat% @B P,il. 6C2 Asturias Sugar C"ntral% In!.
$. &ontinola% 6A P,il. C65 an Fa!turan $. Sabanal%
B1 P,il. 516). I+ oral "$i"n!" 3ill not b" allo3" to
1ro$" an agr""*"nt 3,"r" on" 1art# ,as 1"r+or*"
,is obligation% un+airn"ss 3oul r"sult. (National
7an< $. P,il. V"g. Oil Co.% @A P,il. B5C). In""% oral
or 1arol "$i"n!" *a# b" introu!" to 1ro$" 1artial
1"r+or*an!". I+ o!u*"ntar# or 3ritt"n "$i"n!"
3oul still b" r"Euir" +or t," 1roo+ o+ 1artial 1"r.
+or*an!"% t," 1r"!is" "$il soug,t to b" a$oi" b#
t," Statut" o+ Fraus 3oul b" 1r"s"nt% na*"l#% on"
3,o ,as r"!"i$" so*" b"n"+its 3oul b" allo3" to
"+rau t," grantor t,"r"o+. (Carbon"l $. Pon!io% "t
al.% L.11691% &a# 16% 1A5B).
6) T," Statut" o+ Fraus !annot a11l# i+ t," a!tion is
n"it,"r +or a*ag"s b"!aus" o+ t," $iolation o+ an
agr""*"nt nor +or t," s1"!i+i! 1"r+or*an!" o+ sai
agr""*"nt. (Li* $. Li*% 1? P,il. 695 an Fa!turan
$. Sabanal% B1 P,il. 516).
9) T," Statut" o+ Fraus is "4!lusi$"% t,at is% it a11li"s
onl# to t," agr""*"nts or !ontra!ts "nu*"rat"
,"r"in. (S"" :uintos $. &orata% 5@ P,il. @B12 also t,"
@)
T," "+"ns" o+ t," Statut" o+ Fraus *a# b" 3ai$".
(S"" Art. 1@?5% Ci$il Co"2 s"" also Conlu $. Aran"ta M
CA?
Art. 1@?9
rul" o+ Statutor# Constru!tion 3,i!, stat"s' -In!lusio
unios "st "4!lusio alt"rius/ 0 3,at t," la3 o"s not
in!lu"% it "4!lu"s. Or% t," "nu*"ration o+ !"rtain
t,ings "4!lu"s all t,os" not so "nu*"rat".)
@)
T," "+"ns" o+ t," Statut" o+ Fraus *a# b" 3ai$".
(S"" Art. 1@?5% Ci$il Co"2 s"" also Conlu $. Aran"ta M
CA?
Art. 1@?9
>uan<o% 15 P,il. 9BC2 &agalona $. Para#!o% 5A P,il.
@592 an Tang!o $. VianHon% 5? P,il. 6AB).
5) T," Statut" o+ Fraus is a 1"rsonal "+"ns"% t,at is%
a !ontra!t in+ringing it !annot b" assail" b# t,ir
1"rsons. (Art. 1@?B% Ci$il Co"2 s"" &oor" $. Cra3+or%
19? ;.S. 166).
6) Contra!ts in+ringing t," Statut" o+ Fraus ar" not
$oi2 t,"# ar" *"r"l# un"n+or!"abl". (Art. 1@?9% Ci$il
Co").
C) T," Statut" o+ Fraus is a 5ul" o+ E4!lusion% i.".% oral
"$i"n!" *ig,t b" r"l"$ant to t," agr""*"nts "nu.
*"rat" t,"r"in an *ig,t t,"r"+or" b" a*issibl"
3"r" it not +or t," +a!t t,at t," la3 or t," statut"
"4!lu"s sai oral "$i"n!". (S"" =on"s on E$i"n!"%
S"!. 1@65).
B) T," Statut" o+ Fraus o"s not "t"r*in" t," !r".
ibilit# or 3"ig,t o+ "$i"n!". It *"r"l# !on!"rns its"l+
3it, t," a*issibilit# t,"r"o+.
A) T," Statut" o+ Fraus o"s not a11l# i+ it is !lai*"
t,at t," !ontra!t o"s not "41r"ss t," tru" agr""*"nt
o+ t," 1arti"s. As long as t," tru" or r"al agr""*"nt
is not !o$"r" b# t," Statut" o+ Fraus% it is 1ro$abl"
b# oral "$i"n!". (Ca#ugan $. Santos% 9@ P,il. 1??).
(9) E4a*1l"s o+ t," First Prin!i1l" 0 T," Statut" o+ Fraus
a11li"s onl# to "4"!utor# !ontra!ts'
(a) A sol to 7 r"al "stat" +or a sti1ulat" 1ri!". T," agr""*"nt
3as oral. A ,as not #"t "li$"r" t," r"al "stat". 7 ,as not
#"t 1ai t," 1ri!". 7 o++"r" to bu#% but A r"+us" to go
a,"a 3it, t," agr""*"nt. ;n"r t," Statut" o+ Fraus%
to b" "n+or!"abl"% an agr""*"nt +or t," sal" o+ r"al "stat"
*ust b" in 3riting (Art. 1@?9% F6"G)2 7 su" +or s1"!i+i!
1"r+or*an!". A8s attorn"# obj"!t"% s"tting u1 t," Statut"
o+ Fraus as t," r"ason +or t," obj"!tion. &a# t," !ontra!t
b" 1ro$" b# oral "$i"n!"J
!o*1"ll" to "li$"r. (S"" Santos $. 5i$"ra% 99 P,il. 1).
CA1
Art. 1@?9
ANS.' No. T," agr""*"nt b"ing *"r"l# "4"!utor#% t,"
agr""*"nt !annot b" 1ro$". T,"r"+or" also% A !annot b"
!o*1"ll" to "li$"r. (S"" Santos $. 5i$"ra% 99 P,il. 1).
CA1
Art. 1@?9
FNOTE' Ha A8s attorn"# not obj"!t"% t," "+"ns"
3oul ,a$" b""n 3ai$"% an s1"!i+i! 1"r+or*an!" !oul
,a$" b""n or"r". (Art. 1@?5% Ci$il Co" an Conlu $.
Aran"ta M >uan<o% 15 P,il. 9BC).G
(b) Su11os" in 1robl"* (a)% t," 1ri!" ,a alr"a# b""n 1ai%
3oul #our ans3"r b" t," sa*"J
ANS.' No% t," ans3"r 3oul not b" t," sa*". H"r"
t," obj"!tion o+ A8s la3#"r 3ill not 1ros1"r. T," Statut"
o+ Fraus 3ill not a11l# b"!aus" t," !ontra!t ,as alr"a#
b""n "4"!ut" or 1"r+or*"% at l"ast on t," si" o+ 7. (S""
Al*irol% "t al. $. &ons"rrat% @B P,il. 6C2 5obl"s $. LiHarraga
5a*os% 5? P,il. 9BC2 s"" also Art. 1@?5 o+ t," Ci$il Co"
3,i!, sa#s t,at -!ontra!ts in+ringing t," Statut" o+ Fraus
. . . ar" rati+i" . . . b# t," a!!"1tan!" o+ b"n"+its un"r
t,"*.)
FNOTE' I,# is t," Statut" a11li!abl" onl# to "4.
"!utor# !ontra!ts an not to t,os" +ull# or 1artiall# 1"r.
+or*"J
ANS.' 7"!aus" t," 1ossibilit# +or +rau in "4"!utor#
!ontra!ts is *u!, gr"at"r. As a r"sult% 3"r" t," rul" ot,"r.
3is"% *an# 3oul 1"rjur" t,"*s"l$"s on t," 3itn"ss stan.
(S"" H"rnan"H $. Anal% CB P,il. 1A62 s"" also C,ason $.
C,""l"#% 6 >a. 55@).G
(!) 7# $irtu" o+ an oral !ontra!t o+ sal"% s"ll"r "li$"r" to
bu#"r a 1i"!" o+ lan 3,i!, 3as 1artiall# 1ai. &a# s"ll"r
r"!o$"r balan!" o+ 1ri!"J
ANS.' K"s% sin!" t," !ontra!t ,as alr"a# b""n 1ar.
tiall# "4"!ut". (Al*irol M Carino $. &ons"rrat% @B P,il.
6C).
() T,roug, t," +ailur" o+ t," 3oul.b" bu#"r% t," &anila 5ail.
roa Co.% to a!!"1t t," "" a+t"r ,a$ing orall# o++"r" to bu#
t," ,ous" subj"!t" t," 1lainti++ (3oul.b" s"ll"r) to *u!,
troubl" an anno#an!" an *a# t,"r"+or" b" subj"!t to !riti.
!is*% still 1lainti++ ,as no !aus" o+ a!tion +or t," Statut" o+
Fraus ,as b""n ti*"l# 1l"a" in "+"ns" b# t," 5ailroa
Co. (7arr"to $. &anila 5ailroa Co.% @6 P,il. A6@).
1@1@
Art. 1@?9
(") Statut" o+ Fraus a11li"s onl# to "4"!utor# !ontra!ts an
t,"ir "n+or!"*"nt. 7ot, t," "4t"nsions o+ t," 1"rio o+
1@15
Art. 1@?9
r"1ur!,as" an t," "4t"nsions o+ t," l"as" !ontra!ts ar"
no long"r "4"!utor#% b"!aus" t,"# ,a$" alr"a# b""n 1"r.
+or*" an !onsu**at". (>o"jin $. Libo% L.@65?% Aug.
61% 1A59).
&aria Pat"rno% "t al. $. =ao Kan
L.1661B% F"b. 6B% 1A61
FACTS' A 3ritt"n !ontra!t o+ l"as" 3as *a" +or
s"$"n (C) #"ars 3it, t," l"ss"" bining ,i*s"l+ to !onstru!t
a builing o+ strong IOODEN *at"rials on t," l"as"
1r"*is"s% 3,i!, 3oul lat"r b"!o*" t," 1ro1"rt# o+ t,"
l"ssor at t," "n o+ t," l"as". Inst"a o+ !onstru!ting a
3oo"n stru!tur"% t," l"ss"" built a SE&I.CONC5ETE on"
o+ *u!, bigg"r $alu"% all"g"l# b"!aus" o+ an O5AL "4t"n.
sion o+ t," l"as" to t"n (1?) #"ars% inst"a o+ t," original
s"$"n #"ars. Issu"' &a# t"sti*onial "$i"n!" b" gi$"n in
su11ort o+ su!, O5AL "4t"nsionJ
HELD' K"s% +or 1artial 1"r+or*an!" ta<"s an oral
!ontra!t out o+ t," s!o1" o+ t," Statut" o+ Fraus. (6C C.=.
6?6 an H"rnan"H $. Anal% CB P,il. 1A6). T," rul"
a11li"s to a l"as" 3,"r" t," ta<ing o+ 1oss"ssion an t,"
*a<ing o+ $aluabl" i*1ro$"*"nts an t," li<" on t,"
+ait, o+ an oral agr""*"nt *a<"s t," statut" ina11li!abl"2
ot,"r3is"% +rau 3ill b" !o**itt" against l"ss"". Oral
t"sti*on# *a# t,us b" a*itt" to s,o3 t,at 1artial
1"r+or*an!" ,as b""n *a".
(@) E4a*1l"s o+ Prin!i1l" No. 6 0 T," Statut" o+ Fraus is not
a11li!abl" 3,"n t," a!tion is n"it,"r +or a*ag"s b"!aus" o+
t," $iolation o+ an agr""*"nt nor t," s1"!i+i! 1"r+or*an!" o+
sai agr""*"nt.
(a) T"nant an lanlor ,a an oral !ontra!t o+ l"as" +or t3o
#"ars. F;n"r t," Statut"% to b" "n+or!"abl"% t,is *ust b"
in 3riting (Art. 1@?9% No. 6).G It 3as also orall# agr"" t,at
,al+ o+ t," !ro1s s,oul b"long to t," t"nant2 t," ot,"r ,al+%
to t," lanlor. Lanlor% in $iolation o+ t,is agr""*"nt%
1@16
Art. 1@?9
sol all t," !ro1s an r"+us" to gi$" t"nant t," latt"r8s
s,ar". Statut" o+ Fraus in "+"ns". D"!i".
1@1C
Art. 1@?9
ANS.' T"nant !an r"!o$"r. I,il" it is tru" t,at t,"
l"as" s,oul ,a$" b""n in 3riting% t"nant is not as<ing +or
a*ag"s b"!aus" o+ t," br"a!, o+ t," !ontra!t o+ l"as". (As
a *att"r o+ +a!t% ," 3as o!!u1#ing t," lan.) 5at,"r% t,"
t"nant is as<ing +or a*ag"s% b"!aus" o+ t," $iolation o+
t," agr""*"nt r"garing t," !ro1s. Statut" o+ Fraus is
not t,"r"+or" a11li!abl". (Li* $. Li*% 1? P,il. 695).
(b) Lanlor orall# agr"" 3it, t"nant t,at t," +or*"r 3oul
s"ll +or a !"rtain 1ri!" t," ,ous" o!!u1i" b# t"nant to t,"
latt"r% at t," "n o+ t," l"as". 7"!aus" o+ sai agr""*"nt%
t"nant introu!" i*1ro$"*"nts a*ounting to P@%5??.
I,"n l"as" "41ir"% lanlor 3ant" a ,ig,"r r"nt. T"n.
ant r"+us". T"nant 3ants to r"!o$"r t," $alu" o+ t," i*.
1ro$"*"nts% an tri"s to 1ro$" t," oral agr""*"nt o+ sal".
Lanlor s"ts u1 t," Statut" o+ Fraus. D"!i".
ANS.' T"nant !an 1ro$" b# 1arol (oral) "$i"n!" t,"
oral agr""*"nt o+ sal"2 a+t"r all ," 3as not int"r"st" in
t," sal"% but *"r"l# broug,t it out to justi+# ,is !lai* +or
r"i*burs"*"nt +or t," i*1ro$"*"nts introu!". (5obl"s%
"t al. $. LiHarraga% "t al.% @6 P,il. 5B@).
(!) I,"r" t," 1ur1os" o+ t," a!tion 3as to "n+or!" an all"g"
$"rbal agr""*"nt to s"ll to t," 1lainti++ a 1ar!"l o+ lan
3,i!, is !lai*" to ,a$" b""n o!!u1i" b# t," 1lainti++ as
a t"nant sin!" 1A16% t," !ourt is*iss" t," !as" on *otion
to is*iss% it a11"aring t,at un"r t," Statut" o+ Fraus%
sai $"rbal agr""*"nt !annot b" "n+or!"% nor "$i"n!"
t,"r"on 1r"s"nt"% b"!aus" it ,as not b""n *a" in 3riting%
nor o"s it a11"ar in a not" or *"*oranu* as r"Euir" b#
sai Statut". (Pas!ual $. 5"alt# In$"st*"nt% In!.% A1 P,il.
65C).
7;T 3,"r" a 1arol (oral) !ontra!t o+ sal" is au!"
not +or t," 1ur1os" o+ "n+or!ing it% but as a basis o+ t,"
1oss"ssion o+ t," 1"rson !lai*ing to b" t," o3n"r o+ t,"
lan% t," Statut" o+ Fraus is not a11li!abl".
() I,"r" t," !o*1laint o"s not !ontain all"gations to t,"
"++"!t t,at t," 1lainti++ ,as ta<"n 1oss"ssion o+ lan in
$i"3 o+ t," su11os" $"rbal !ontra!t ," ,a 3it, t," ".
1@1B
Art. 1@?9
+"nant to 1ur!,as" it% nor is t,"r" an# all"gation t,at t,"
1lainti++ ,as *a" i*1ro$"*"nts t,"r"on b"!aus"% an as
1@1A
Art. 1@?9
a !ons"Eu"n!"% o+ sai su11os" !ontra!t to s"ll2 an on
t," !ontrar#% it all"g"s t,at 1lainti++ o!!u1i" t," lan as
a t"nant sin!" 1A16% t," all"g" transa!tion o+ -sal"/ !o*"s
un"r t," Statut" o+ Fraus. (Ibi.).
(5) E4a*1l"s o+ Prin!i1l" No. 9 0 T," Statut" o+ Fraus is
"4!lusi$"% t,at is% it a11li"s onl# to t," agr""*"nt or !ontra!ts
"nu*"rat" t,"r"in'
(a) A loan o+ P1%??? o"s not ,a$" to b" in 3riting to b" "n.
+or!"abl" b"!aus" t," !ontra!t o+ loan is not on" o+ t,os"
"nu*"rat" in t," Statut". H"n!"% an oral loan o+ P1%???
is $ali an "n+or!"abl".
(b) An oral sal" o+ a transistor raio +or P@?? is $ali an "n.
+or!"abl"% sin!" t," 1ri!" is l"ss t,an P5??. (S"" Art. 1@?9%
No. 6.).
(!) A "+"!t in t," att"station !laus" o+ a 3ill 3as b"ing !ur"
b# oral "$i"n!". No obj"!tion 3as *a". Has t," "+"!t
b""n !ur"J
ANS.' No% t," "+"!t ,as not b""n !ur". 5"ason' T,"
Statut" o+ Fraus% its "+"ns"s% an its 3ai$"r ar" not a1.
1li!abl" to 3ills b"!aus" t," Statut" o+ Fraus r"+"rs onl#
to !"rtain !ontra!ts an agr""*"nts% 3,"r"as t," subj"!t
o+ 3ills an t"sta*"nts an t," +or*aliti"s 3,i!, surroun
t,"ir "4"!ution ar" go$"rn" b# s"1arat" an s1"!i+i! 1ro$i.
sions o+ la3. (:uintos $. &orata% 5@ P,il. @B1).
() A *utual 1ro*is" to *arr# is not go$"rn" b# t," Statut"
o+ Fraus2 ,"n!"% it *a# b" *a" orall#. (S"" Art. 1@?9% No.
6FaG). Not" ,o3"$"r% t,at "$"n i+ oral 1ro*is" to *arr# is
a!tionabl" in !as" o+ br"a!,% onl# a*ag"s *a# b" r"!o$.
"r"% not s1"!i+i! 1"r+or*an!"% +or s1"!i+i! 1"r+or*an!" is
g"n"rall# not a r"*"# in 1"rsonal obligations. (S"" Arts.
116C an 11C?% Ci$il Co").
(6) E4a*1l"s o+ Prin!i1l" No. @ 0 T," "+"ns" o+ t," Statut" o+
Fraus *a# b" 3ai$"'
1@6?
Art. 1@?9
(a) In an oral "4"!utor# !ontra!t o+ t," sal" o+ r"alt#% i+ on"
1art# +ails to ti*"l# obj"!t to oral "$i"n!" 1r"s"nt" b#
1@61
Art. 1@?9
t," ot,"r% it is as i+ t,"r" 3as a 3ai$"r% an t," agr""*"nt
!an b" !onsi"r" !o*1l"t"l# $ali% 1ro$i" all t," ot,"r
"ss"ntial r"Euisit"s +or t," transa!tion ar" 1r"s"nt. (S""
Conlu $. Aran"ta% "t al.% 15 P,il. 9BC an &a!+arlan" $.
>r""n% 5@ P,il. 551).
(b) T,"r" ar" t3o 3a#s to 3ai$" t,is "+"ns"'
1) Ti*"l# +ailur" to obj"!t to t," 1r"s"ntation o+ oral
"$i"n!" to 1ro$" t," oral agr""*"nt.
6) A!!"1tan!" o+ b"n"+its un"r t,"* (as 3,"n !ontra!t
is totall# or 1artiall# 1"r+or*"). (S"" Art. 1@?5% Ci$il
Co").
(!) I,at is *"ant b# a ti*"l# obj"!tion% or 3,"n *ust t,"
obj"!tion b" *a"J
ANS.' Eit,"r a+t"r t," Eu"stion about t," agr""*"nt
is *a" or a+t"r t," ans3"r to sai Eu"stion is *a"' a+t"r
t," Eu"stion% i+ +ro* t," Eu"stion t," "41"!t" ans3"r
is ob$ious2 a+t"r t," ans3"r% i+ t," Eu"stion its"l+ i not
r"$"al t," ans3"r. I+% +or "4a*1l"% t," Eu"stion is -DID
#ou "nt"r into t," !ontra!t o+ sal"J/ ,"r" ob$iousl#% a sal"
(oral) is about to b" 1ro$" an obj"!tion *ust at on!" b"
*a"2 i+ t," obj"!tion is rais" onl# a+t"r t," ans3"r -K"s
3" "nt"r" into it on =ul. 1% 1A51%/ t," obj"!tion is no long"r
ti*"l#% an t," "+"ns" o+ t," Statut" o+ Fraus s,oul b"
""*" 3ai$". (S"" Abr"ni!a $. >ona% "t al.% 9@ P,il.
C9A). Ha t," obj"!tion b""n ti*"l#% t," oral "$i"n!" o+
t," sal" s,oul ,a$" b""n ina*issibl". (S"" 7arr"tto $.
&anila 5ailroa Co.% @6 P,il. A6@).
(C) E4a*1l" o+ Prin!i1l" No. 5 0 T," Statut" o+ Fraus is a
1"rsonal "+"ns"% t,at is% an agr""*"nt in+ringing it !annot b"
assail" b# t,ir 1"rsons.
Probl"*' T"nant 3as o!!u1#ing lanlor8s ,ous" on a l"as"
!ontra!t 3,"n lanlor sol t," ,ous" to a bu#"r orall#. T,"
bu#"r ,as not #"t gi$"n t," 1ri!" an t," s"ll"r ,as not "li$.
"r" t," ,ous". I+ bu#"r as<s t"nant to 1a# t," r"nt to ,i*% an
1@66
Art. 1@?9
t"nant r"+us"s on t," groun t,at t," sal" is un"n+or!"abl"% 3ill
t," t"nant8s !ont"ntion 1ros1"rJ
1@69
Art. 1@?9
ANS.' No% b"!aus" not b"ing a 1art# to sai sal"% ," !annot
s"t u1 t," Statut" o+ Fraus. (S"" Art. 1@?B% Ci$il Co"2 s"" also
&oor" $. Cra3+or% 19? ;.S. 166).
(B) E4a*1l" o+ Prin!i1l" No. 6 0 Contra!ts in+ringing t,"
Statut" o+ Fraus ar" not $oi2 t,"# ar" *"r"l# un"n+or!"abl".
A an 7 "nt"r" into an oral "4"!utor# sal". T," sal" is not
$oi% +or i+ t,is 3"r" so% it !annot b" rati+i". As in t," "4a*1l"
gi$"n in No. (C)% t," !ontra!t o+ sal" ,a also so*" "++"!t% na*"l#%
t,at t," t"nant !annot r"+us" to 1a# r"nt to t," n"3 lanlor.
bu#"r.
(A) E4a*1l" o+ Prin!i1l" No. C 0 T," Statut" o+ Fraus is a
rul" o+ "4!lusion.
A orall# sol 7 a 1i"!" o+ lan. Agr""*"nt 3as still "4.
"!utor#. A as<" +or 1a#*"nt. 7 r"+us"% s"tting u1 Statut" o+
Fraus. In t," !ourt a!tion% A ,a 6 3itn"ss"s 3,o 3"r" r"a#
to t"sti+# t,at t,"# 3"r" 1r"s"nt 3,"n t," agr""*"nt 3as
*a". T,"ir t"sti*on# 3oul in"" b" r"l"$ant% but s,oul
t,"r" b" ti*"l# obj"!tion on t," 1art o+ 78s attorn"#% t,"ir
"$i"n!" 3oul not b" a*issibl" b"!aus" t," Statut" o+
Fraus "4!lu"s su!, t"sti*on# on a *att"r li<" t,is.
(1?) E4a*1l" o+ Prin!i1l" No. B 0 T," Statut" o+ Fraus o"s
not "t"r*in" t," !r"ibilit# or t," 3"ig,t o+ "$i"n!". It
*"r"l# !on!"rns its"l+ 3it, t," a*issibilit# t,"r"o+.
To 1ro$" an oral sal" o+ lan% N 3ant" to 1r"s"nt t," oral
t"sti*on# o+ !abin"t *"*b"rs% all o+ 3,o* ar" *"n o+ int"grit#.
Alt,oug, t,"# *a# b" $"r# trut,+ul% still t,"ir "$i"n!" 3ill not
b" a*itt".
(11) E4a*1l" o+ Prin!i1l" No. A 0 T," Statut" o+ Fraus o"s
not a11l# i+ it is !lai*" t,at t," !ontra!t o"s not "41r"ss t,"
tru" agr""*"nt o+ t," 1arti"s. As long as t," tru" or r"al
agr""*"nt is not !o$"r" b# t," Statut" o+ Fraus% it is
1ro$abl" b# oral "$i"n!".
A orall# sol 7 a ring all"g"l# +or PC??. T," !ontra!t is
1@6@
Art. 1@?9
un"n+or!"abl"% but i+ A insists t,at t," 1ri!" 3as onl# P@??% oral
"$i"n!" is allo3".
1@65
Art. 1@?9
(16) T," S1"!i+i! Agr""*"nts
T,"r" ar" si4 s1"!i+i! agr""*"nts r"+"rr" to un"r t,"
Statut" o+ Fraus. Ea!, on" 3ill b" illustrat" or "41lain"
,"r"in b"lo3.
(19) Illustration o+ S1"!i+i! Agr""*"nt No. 1 0 -An Agr""*"nt
t,at b# its t"r*s is not to b" 1"r+or*" 3it,in a #"ar +ro* t,"
*a<ing t,"r"o+./ (Art. 1@?9% No. 6.a% Ci$il Co").
(a) A an 7% n"ig,bors% orall# agr"" t,at A 3oul s"ll an 7
3oul bu# A8s transistor raio +or P6?? t,r"" #"ars +ro* t,"
at" o+ t," agr""*"nt. At t," "n o+ t,r"" #"ars% A r"+us"
to ,an o$"r t," raio alt,oug, 7 3as 3illing to 1a#. Is
t," agr""*"nt "n+or!"abl" un"r t," Statut" o+ FrausJ
ANS.' No% b"!aus" un"r t," t"r*s o+ t," !ontra!t%
t," sal" 3as to b" 1"r+or*" at t," "n o+ t,r"" #"ars. It
s,oul ,a$" b""n% t,"r"+or"% *a" in 3riting. T," Statut"
r"!ogniH"s t," +railt# o+ *an8s *"*or#% an a11ar"ntl#
onl# 1 #"ar is t," li*it.
Ha t," agr""*"nt b""n t,at 1"r+or*an!" 3oul b"
*a" 3it,in t,r"" *ont,s% t," agr""*"nt% "$"n i+ oral%
3oul ,a$" b""n "n+or!"abl". (S"" 7o#"ll $. Dru**on%
11 East 1@6).
(b) A an 7% n"ig,bors% orall# agr"" t,at +ro* t,at a#% 7
3oul not "r"!t a garag" on ,is 1ro1"rt# till a+t"r t,r""
#"ars. A 3""< lat"r% 7 b"gan to "r"!t t," garag" in
$iolation o+ t," agr""*"nt. A !o*1lains an 7 s"ts u1 t,"
Statut" o+ Fraus. D"!i".
ANS.' A is !orr"!t in !o*1laining. T,is agr""*"nt
o"s not !o*" un"r t," Statut" o+ Fraus% b"!aus" ,"r"
t," 1"r+or*an!" 3as to b"gin rig,t on t,at a# t,"#
agr""% na*"l#% t," obligation not to !onstru!t. T,is is not
an agr"". *"nt t,at 3ill b" 1"r+or*" a+t"r a #"ar2
1"r+or*an!" 3as to b"gin rig,t a3a#. (S"" Art. 1@?9 FNo.
6.aG% Ci$il Co".)
(!) A s"r$ant ,a an oral !ontra!t 3,i!, allo3" ,i* P1? a
1@66
Art. 1@?9
*ont, salar#. H" s"r$" !ontinuousl# +or t3"l$" #"ars.
&ast"r r"+us" 1a#*"nt on t," groun t,at t," !ontra!t
,a$ing last" +or *or" t,an 1 #"ar% t," sa*" s,oul ,a$"
1@6C
Art. 1@?9
b""n in 3riting to b" "n+or!"abl". :u"stion' Is t," s"r$ant
"ntitl" to b" 1aiJ
ANS.' K"s. Firstl#% t," Statut" o+ Fraus (Art. 1@?9% No.
6.a) is not a11li!abl" b"!aus" ,"r" t," 1"r+or*an!" b"gan
rig,t a3a#2 t,"r" 3as no 1ost1on"*"nt o+ 1"r+or*an!" +or
a #"ar. S"!onl#% t," Statut" is not a11li!abl" to "4"!ut"
or 1artiall# "4"!ut" !ontra!ts. T,irl#% t," Statut" 3as
"sign" to 1r"$"nt% not +ost"r% +rau. To 1r"$"nt t," s"r$.
ant +ro* !oll"!ting 3oul b" to "n!ourag" t," !o**ission
o+ +rau. (S"" Arro#o $. AHur% "t al.% C6 P,il. @A9).
() A an 7 orall# agr"" in 6??6 to *arr# "a!, ot,"r in 6???.
I,"n 6?1? !a*"% A r"+us" to *arr# 7% 3,o no3 s""<s
a*ag"s. :u"stion' Ioul 7 b" allo3" to 1ro$" t," oral
agr""*"ntJ
ANS.' No% b"!aus" sin!" t," 1"r+or*an!" 3as to b"
*a" @ #"ars a+t"r t," agr""*"nt% it ,a to b" in 3riting
to b" "n+or!"abl". Ha$ing b""n *a" orall#% it !annot b"
1ro$" o$"r an abo$" t," obj"!tion o+ A or A8s !ouns"l. FS""
Ati"nHa $. Castillo% "t al.% C1 P,il. 5BA2 =. &oran iss"nt"
on t," groun t,at in a *utual 1ro*is" to *arr#% it o"s
not *att"r ,o3 long t," *arriag" is "+"rr" b"!aus" t,"
+irst agr""*"nt in t," Statut" is not a11li!abl" but t,"
t,ir agr""*"nt o"s a11l# 0 -An agr""*"nt *a" in
!onsi"ration o+ *arriag"% ot,"r t,an a *utual 1ro*is" to
*arr#/ (no 1"rio o+ ti*" b"ing stat").G
(") I,"n A11li!abl" an I,"n Not A11li!abl"
-T," broa $i"3 is t,at t," Statut" o+ Fraus a11li"s
(in t,is agr""*"nt) onl# to agr""*"nts not to b" 1"r+or*"
on "it,"r si" 3it,in a #"ar +ro* t," *a<ing t,"r"o+. Agr"".
*"nts to b" +ull# 1"r+or*" on on" si" 3it,in a #"ar ar"
ta<"n out o+ t," o1"ration o+ t," Statut". T," Statut" o+
Fraus 3as "na!t" +or t," 1ur1os" o+ 1r"$"nting +raus.
It s,oul not b" *a" t," instru*"nt to +urt,"r t,"*./
(Nat. 7an< $. P,il. V"g. Oil Co.% @A P,il. B5C).
7abao $. P"r"H% "t al.
L.B99@% D"!. 6B% 1A5C
1@6B
Art. 1@?9
FACTS' An oral agr""*"nt 3as "nt"r" into in 1A6@
3,i!, all"g"l# r"Euir" 1lainti++ 7abao to i*1ro$" 156
1@6A
Art. 1@?9
,"!tar"s o+ +or"st lans b# l"$"lling an 1lanting t,"r"on
!o!onuts% ri!"% !orn an ot,"r !ro1s su!, as ba*boo an
banana tr""s% as 3"ll as to a!t as a*inistrator o+ sai lan.
In r"turn% t," "+"nant P"r"H boun ,"rs"l+ to gi$" an
"li$"r to 7abao or ,is 3i+" on".,al+ o+ t," 3,ol" ar"a o+
t," lan as i*1ro$"% 3it, all t," i*1ro$"*"nts t,"r"on%
u1on ,"r "at,. P"r"H i" in 1A@C. A 3itn"ss t"sti+i"
t,at P"r"H ,a tol 7abao% -Kou l"a$" t," Ilana "stat"%
an att"n to t,is lan. Ha$" it !l"ar" an 1lant" to
!o!onut% +or t,at lan 3ill "$"ntuall# +all in #our ,ans./
A $"r# s*all 1ortion o+ t," lan 3as t,"n i*1ro$" 3it,
!"rtain !ro1s. Issu"' &a# 7abao% a+t"r t," o3n"rs8 "at,%
g"t t," ,al+.s,ar" all"g"l# 1ro*is" ,i*J
HELD' No% b"!aus" t," !ontra!t is un"n+or!"abl" an
!annot b" 1ro$" b# 1arol or oral "$i"n!". E$"n i+ 7abao
,a 1artiall# 1"r+or*" t," !ontra!t 3it,in on" #"ar +ro*
t," *a<ing t,"r"o+% still t," Statut" 3oul a11l#% b"!aus"%
in or"r t,at 1artial 1"r+or*an!" o+ t," !ontra!t *a# ta<"
t," !as" out o+ t," o1"ration o+ t," Statut"% it *ust a11"ar
!l"arl# t,at +ull 1"r+or*an!" ,a b""n *a" b# on" 1art#
3it,in on" #"ar. All t,at is r"Euir" is !o*1l"t" 1"r+or*.
an!" ,as b""n *a" b# on" 1art#% no *att"r ,o3 *an#
#"ars *a# ,a$" to "la1s" b"+or" t," agr""*"nt is 1"r+or*"
b# t," ot,"r 1art#% but not,ing l"ss t,an +ull 1"r+or*an!"
b# on" 1art# 3ill su++i!". I+ an#t,ing r"*ains still to b"
on" a+t"r t," "41iration o+ t," #"ar b"si"s t," *"r" 1a#.
*"nt o+ *on"#% t," Statut" 3ill a11l#. (S,o"*a<"r $. La
Ton"Pa% 6B P,il. 6@ an Nat. 7an< $. P,il. V"g"tabl" Oil
Co.% @A P,il. B5C% B5B).
E$"n i+ 3" 3"r" to !onsi"r t," !as" as on" o+ sal" (in
3,i!, !as"% orinaril# 1artial 1"r+or*an!" b# on" 1art#
!oul *a<" sa*" "n+or!"abl")% still it !annot b" !ont"n"
t,at t," Statut" 3ill not a11l#% +or ,"r" t," agr""*"nt (to
b" on" o+ sal") *ust b" !"rtain% "+init"% !l"ar an una*.
biguous. &or"o$"r% it s,oul b" +air an r"asonabl". For
a+t"r all% t," Statut" is bas" on "Euit#. In t,is !as" ,"r"%
it is not !l"ar "4a!tl# ,o3 *an# ,"!tar"s 3oul b" 1lant"
to !orn% ,o3 *an# 3it, ri!"% ,o3 *an# 3it, ba*boo tr""s%
1@9?
Art. 1@?9
"t!. Ha 7abao 1lant" a $"r# s*all 1ortion 3it, !orn an
1@91
Art. 1@?9
ri!"% an t," r"st 3it, ba*boos an bananas% it is !l"arl#
unjust to gi$" ,i* ,al+ o+ t," "ntir" 1ro1"rt#.
(NOTE' It 3oul s""* +ro* t,is !as" t,at 3,il" in
g"n"ral 1artiall# "4"!ut" !ontra!ts ar" NOT !o$"r" b#
t," Statut" o+ Fraus% still un"r -No. 1% s1"!i+i!
agr""*"nt%/ onl# +ull or !o*1l"t" 1"r+or*an!" b# on" si"
3ill ta<" t," !as" out o+ t," o1"ration o+ t," Statut".)
(1@) Illustration o+ S1"!i+i! Agr""*"nt No. 6 0 -A s1"!ial 1ro*.
is" to ans3"r +or t," "bt% "+ault% or *is!arriag" o+ anot,"r./
(Art. 1@?9% No. 6.b% Ci$il Co").
(a) A borro3" *on"# +ro* 7% 3it, C as guarantor. T,"
!ontra!t o+ guarant# b"t3""n 7% t," !r"itor% an C% t,"
guarantor% *ust b" in 3riting to b" "n+or!"abl". (S"" >ull
$. Linsa#% @ E!,. @5).
(b) -S1"!ial 1ro*is"/ r"+"rs to a subsiiar# or !ollat"ral
1ro*is" to 1a#% li<" a !ontra!t o+ guarant#. (S"" 7ro3n $.
Col"*an D"$. Co.% 9@ Ont. L.61?).
(!) A 3as ,a$ing ,is ,ous" r"1air" b# 7% 3,o n""" !"rtain
*at"rials. So A tol stor"o3n"r (o+ *at"rials)% ->i$" 7 t,"
*at"rials. I s,all b" r"s1onsibl". I s,all stan goo./ T,is
3as orall# *a". Is t,is a s1"!ial 1ro*is"J Is t,is oral
agr""*"nt "n+or!"abl"J
ANS.' T,is is not a s1"!ial 1ro*is". T,is is not a
guarant#. Onl# A obligat" ,i*s"l+. Sin!" t,is is not a
guarant#% t," !ontra!t is "n+or!"abl"% so t,at t," s"ll"r
!an 1ro1"rl# su" A an 1ro$" t," oral agr""*"nt b# 1arol
"$i"n!"% o$"r an abo$" A8s obj"!tion. (S"" 5"iss $. &"*ij"%
15 P,il. 95?).
() A as<" 7 to 1ur!,as" !"rtain 1ro1"rti"s +ro* C 3,o 3as
orall# assur" b# A t,at ," (A) 3oul 1a# +or t,"*. Lat"r
C su" A% 3,o 1l"a" in "+"ns" t," Statut" o+ Fraus.
D"!i".
ANS.' T," 1ro*is" is "n+or!"abl" "$"n i+ orall# *a"%
+or A 3as not guarant""ing anot,"r8s "bt. H" *"r"l#
1@96
Art. 1@?9
1ro*is" to 1a# HIS OIN "bt. (Colb"rt $. 7a!,ra!,% 16
P,il. B9).
1@99
Art. 1@?9
(15) Illustration o+ S1"!i+i! Agr""*"nt No. 9 0 -An agr""*"nt
*a" in !onsi"ration o+ *arriag" ot,"r t,an a *utual
1ro*is" to *arr#./ (Art. 1@?9% No. 6.!% Ci$il Co").
(a) E4a*1l"s o+ agr""*"nts *a" in !onsi"ration o+ *ar.
riag"'
1) *arriag" s"ttl"*"nts. (Art. 166% Ci$il Co").
6) onations 1ro1t"r nu1tias. (Art. 16C% Ci$il Co").
(b) I,"n t," la3 sa#s -in !onsi"ration o+ *arriag"%/ it r".
all# *"ans -b# r"ason o+ t," *arriag"./ T,us% t," !aus" o+
t," onation 1ro1t"r nu1tias is not t," *arriag" but t,"
lib"ralit# or t," g"n"rosit# o+ t," gi$"r.
(!) Not" t,at t," la3 sa#s -ot,"r t,an a *utual 1ro*is" to
*arr#./ H"n!"% an oral *utual 1ro*is" to *arr# is not
"*bra!" b# t," Statut" o+ Fraus. T," injur" 1art# *a#
1r"s"nt oral "$i"n!" o+ t," 1ro*is" in an a!tion to obtain
a!tual a*ag"s +or br"a!, t,"r"o+. (Cabagu" $. Au4ilio% A6
P,il. 6A@).
() E4a*1l" o+ t," E4!"1tion'
A an 7 *utuall# 1ro*is" to *arr# "a!, ot,"r. T,"
1ro*is" n"" not b" in 3riting unl"ss t," *arriag" b" ".
+"rr" till a+t"r t," la1s" o+ on" #"ar +ro* t," agr""*"nt.
(S"" Ati"nHa $. Castillo% "t al.% C1 P,il. 5BA). For br"a!, o+ a
*utual 1ro*is" to *arr#% t," groo* *a# su" t," bri" +or
a!tual a*ag"s an oral "$i"n!" o+ su!, *utual 1ro*is"
is a*issibl". (Cabagu" $. Au4ilio% su1ra).
Cabagu" $. Au4ilio
A6 P,il. 6A@
FACTS' A ,as a son 72 C ,as a aug,t"r D. A% 7% C%
an D agr"" tog"t,"r t,at 7 3ill *arr# D. T," agr""*"nt
is oral. Issu"' I+ D lat"r on r"+us"s to *arr# 7 3,o ,as s1"nt
+or t," n"!"ssar# 3"ing 1r"1arations% an A an 7 bring
an a!tion against C an D% 3ill t," a!tion 1ros1"rJ
HELD' A an C s,oul st"1 out o+ t," 1i!tur"
1@9@
Art. 1@?9
b"!aus" it 3as not t,"# 3,o *utuall# 1ro*is" to *arr#
"a!, ot,"r an t,"r"+or"% to b" "n+or!"abl"% t," agr""*"nt
s,oul b" in
1@95
Art. 1@?9
3riting. T," agr""*"nt% inso+ar as t," !lai* +or a*ag"s
is !on!"rn"% is "n+or!"abl" b"t3""n 7 an D% "$"n i+ *a"
orall# onl#% b"!aus" ,"r" it is a *utual 1ro*is" to *arr#.
In t," !as" o+ A an C% t," agr""*"nt s,oul ,a$" b""n
r"u!" to 3riting b"!aus" it is an agr""*"nt bas" on t,"
!onsi"ration o+ *arriag"% ot,"r t,an a *utual 1ro*is" to
*arr#. (S"" Art. 1@?9% No. 6.!% Ci$il Co").
(16) Illustration o+ S1"!i+i! Agr""*"nt No. @ 0 -An agr""*"nt
+or t," sal" o+ goos% !,att"ls% or t,ings in a!tion% at a 1ri!" not
l"ss t,an +i$" ,unr" 1"sos unl"ss . . ./ (Art. 1@?9% No. 6.% Ci$il
Co").
(a) A sol 7 ,is 1"n +or P@??.?? orall#. Contra!t 3as still
"4"!utor#. T,is is un"n+or!"abl" unl"ss 7 g"ts t," 1"n or
1a#s +ull# or 1artiall# +or t," 1ri!". (S"" Art. 1@?9% No. 6
FG2 s"" also Eng"l% "t al. $. V"las!o M Co.% @C P,il. 115).
(b) &"aning o+ -t,ings in a!tion'/ in!or1orat" or intangibl"
1"rsonal 1ro1"rt# (E4a*1l"' !r"it).
(!) Not" t,at t," la3 sa#s -sal"%/ not ot,"r !ontra!ts. (Eng"l%
"t al. $. V"las!o M Co.% @C P,il. 115).
() Not" also t,at i+ t," 1ri!" is "4a!tl# P5??% t," !ontra!t *ust
b" in 3riting to b" "n+or!"abl".
(") Partial 1a#*"nt ta<"s t," !ontra!t a3a# +ro* t," Stat.
ut" "4!"1t i+ sai 1art 1a#*"nt !orr"s1ons to t," 1art
"li$"r"% in 3,i!, !as"% i+ t," !ontra!t is i$isibl"% t,"
r"*ain"r is !o$"r" b# t," Statut".
(+) 5ul" in !as" o+ au!tion sal"'
-I,"n a sal" is *a" b# au!tion% an "ntr# is *a" b# t,"
au!tion""r in ,is sal"s boo< at t," ti*" o+ t," sal"% o+
1) t," a*ount an <in o+ 1ro1"rt# sol
6) t," t"r*s o+ t," sal"
9) t," 1ri!"
@) t," na*"s o+ t," 1ur!,as"rs an 1"rsons on 3,os"
a!!ount t," sal" is *a" 0 t," "ntr# is !onsi"r" a
1@96
Art. 1@?9
S;FFICIENT *"*oranu* ("$"n i+ t," sa*" is not
sign" b# t," 1art# soug,t to b" !,arg").88
1@9C
Art. 1@?9
(1C) Illustration o+ S1"!i+i! Agr""*"nt No. 5 0 -An agr""*"nt
+or t," l"asing +or a long"r 1"rio t,an on" #"ar% or +or t," sal"
o+ r"al 1ro1"rt# or o+ an int"r"st t,"r"in.88 (Art. 1@?9% No. 6."%
Ci$il Co").
(a) T3o <ins o+ agr""*"nts ar" r"+"rr" to ,"r"'
1) l"as" o+ r"al 1ro1"rt# +or *or" t,an on" #"ar (not" o+
1"rsonal 1ro1"rt#)
6) sal" o+ r"al 1ro1"rt# (r"garl"ss o+ 1ri!")
(b) E4a*1l"'
A is 78s t"nant. L"as" is +or si4 *ont,s. I+ oral% l"as" is still
"n+or!"abl"% +or t," 1"rio o"s not "4!"" on" #"ar.
(!) I+ l"as" o+ r"al 1ro1"rt# is "4a!tl# on" #"ar% t," !ontra!t
*a# b" oral% sin!" ,"r" t," 1"rio o"s not "4!"" on"
#"ar.
() -Int"r"st/ in r"al 1ro1"rt# *a# in!lu" "as"*"nt or usu+.
ru!t.
(") A $"rbal agr""*"nt 3as *a" b"t3""n A an 7 3,"r"b#
A agr"" to s"ll an 7 agr"" to bu# A8s +ar* +or P1??%???.
T," 1ri!" 3as 1ai. Poss"ssion 3as not gi$"n nor 3as t,"
"" "li$"r"% bot, b"ing r"+us". 7 !o*"s to #ou an
3ants to <no3 i+ ," !an !o*1"l A to gi$" ,i* t," "" an
1oss"ssion. I,at 3oul #ou a$is"J
ANS.' I 3oul a$is" 7 to su" +or s1"!i+i! 1"r+or*.
an!" an also as< A to "4"!ut" t," "" o+ !on$"#an!". T,"
Statut" o+ Fraus r"+"rs onl# to 1ur"l# "4"!utor#
!ontra!ts2 ,"n!" t," Statut" 3ill not a11l# in t,is !as". (S""
Art. 1@?9% No. 6 F"G2 s"" also Fa!turan $. Sabanal% B1 P,il.
516). Sin!" t," !ontra!t is $ali an "n+or!"abl"% 3" !an
no3 a11l# Art. 195C o+ t," n"3 Ci$il Co" 3,i!, stat"s
t,at' -I+ t," la3 r"Euir"s a o!u*"nt or ot,"r s1"!ial
+or*% as in t," a!ts an !ontra!ts "nu*"rat" in t,"
+ollo3ing arti!l"% t," !ontra!ting 1arti"s *a# !o*1"l "a!,
ot,"r to obs"r$" t,at +or*% on!" t," !ontra!t ,as b""n
1"r+"!t". T,is rig,t *a# b" "4"r!is" si*ultan"ousl#
1@9B
Art. 1@?9
3it, t," a!tion u1on t," !ontra!t.88
1@9A
Art. 1@?9
I"st"rn &inanao Lu*b"r Co.% In!. $. &"all"
L.69619% O!t. 6B% 1ACC
T," Statut" o+ Fraus g"n"rall# o"s not r"+"r to t,"
!r"ation o+ an "as"*"nt o+ rig,t o+ 3a#% t," rig,t not b"ing
t," r"sult o+ a sal" o+ r"al 1ro1"rt# or int"r"st t,"r"in.
CruH $. =.&. Tuason an Co.% In!.
L.69C@A% A1r. 6A% 1ACC
FACTS' A all"g" t,at 7 1ro*is" to gi$" ,i* (A)
9%??? sEuar" *"t"rs o+ lan in !onsi"ration o+ A8s s"r$i!"s
in a !"rtain transa!tion. 7 1l"as in "+"ns" t,at sin!" t,"
1ro*is" 3as not in 3riting% it is un"n+or!"abl" un"r t,"
Statut" o+ Fraus.
HELD' T," Statut" o+ Fraus is ina11li!abl" ,"r"%
+irstl# b"!aus" t," 1ro*is" to gi$" t," lan is not a sal" o+
r"al 1ro1"rt# or an# int"r"st t,"r"in% an s"!onl#% b"!aus"
A8s s"r$i!"s ,as alr"a# b""n 1"r+or*". T," Statut" !an.
not a11l# to !o*1l"t"l# or 1artiall# "4"!ut" !ontra!ts.
S#Euia $. CA
>5 61A96% =un. 9?% 1ABC
;n"r sai arti!l"% all all"g" oral assuran!"s or
1ro*is"s o+ t," r"1r"s"ntati$"s o+ t," l"ssor t,at t," l"ss""
s,oul b" gi$"n 1riorit# or a r"n"3al o+ t," l"as" !ontra!t
!annot b" "n+or!"abl".
Also% un"r t," 1arol "$i"n!" rul"% t," l"ss""8s !lai*
t,at ," is "ntitl" to a r"n"3al o+ t," !ontra!t o+ l"as" +or
t," r"ason t,at t," l"ssors ,a gi$"n ,i* t," o1tion to
r"n"3 t," !ontra!t !annot b" *aintain".
(1B) Illustration o+ S1"!i+i! Agr""*"nt No. 6 0 -A r"1r"s"nta.
tion as to t," !r"it o+ a t,ir 1"rson./ (Art. 1@?9% No. 6.+% Ci$il
Co").
A 3as borro3ing *on"# +ro* 7% an ga$" C as ,is r"+"r"n!".
1@@?
Art. 1@?9
I,"n C 3as as<" r"garing A8s !r"it C sai' -Kou !an sa+"l#
l"n *on"# to A b"!aus" A is t," o3n"r o+ a 1ar!"l o+ lan an
1@@1
Art. 1@?9
I ,a$" t," titl" ""s in *# 1oss"ssion./ T,is 3as *a" orall#.
In!i"ntall#% A 3as C8s !li"nt% C b"ing a la3#"r. T,is r"1r"s"n.
tation b# C is not "n+or!"abl" against ,i* b"!aus" it is not in
3riting. A r"1r"s"ntation as to t," !r"it o+ a t,ir 1"rson *ust
b" in 3riting to b" "n+or!"abl". (S"" Art. 1@?9% No. 6.+% Ci$il Co"2
s"" also Coo< $. C,ur!,*an% 1?@ In. 1@1% 156).
FNOTE' T,is *ust not b" !on+us" 3it, a guarant#. H"r"
no 1ro*is" to ans3"r +or anot,"r8s "bt is *a"2 t,"r" is *"r"l#
an assuran!" t,at so*"bo# ,as a !"rtain a*ount o+ !r"it%
*a" 3it, t," int"ntion o+ "nabling t," 1"rson in 3,os" +a$or
it is *a" to obtain !r"it b# $irtu" o+ su!, assuran!" or r"1r".
s"ntation. (5"iss $. &"*ij"% 15 P,il. 95?).G
FNOTE +urt,"r t,at t," 1"rson *a<ing t," r"1r"s"nta.
tion o"s not ta<" 1art in t," !ontra!t 1ro1"r. Ho3"$"r% ,is
assuran!" to t," 1"rson about to gi$" !r"it *a# b" !onsi"r"
so*" +or* o+ agr""*"nt. A!!oring to =usti!" =.7.L. 5"#"s an
=usti!" Puno% ,o3"$"r% -T," liabilit# . . . is not "4 !ontra!tu but
on tort. T,is nu*b"r% t,"r"+or"% is i*1ro1"rl# in!lu" a*ong
un"n+or!"abl" !ontra!ts. In +a!t% t,"s" r"1r"s"ntations 3"r" not
in!lu" in t," original Statut" o+ Fraus (6A Cas. II) but 3"r"
"alt 3it, in Lor T"nt"r"n8s A!t (1B6B)/ (A >"org" IV C. 1@).
(5"#"s M Puno% Outlin" o+ Ci$il La3% Vol. IV% 1. 65@).G
(1A) E41r"ss Trust Con!"rning 5"al Pro1"rt#
It 3ill b" obs"r$" t,at 3,il" t," Statut" o+ Fraus *a<"s
no *"ntion o+ it% still un"r Art. 1@@9 o+ t," Ci$il Co"% -no "4.
1r"ss trusts !on!"rning an i**o$abl" or an# int"r"st t,"r"in
*a# b" 1ro$" b# 1arol (oral) "$i"n!"./ H"n!"% 3" !an sa+"l#
!on!lu" t,at t," Statut" o+ Fraus also a11li"s to su!, "41r"ss
(!on$"ntional) trust.
(6?) Dut# o+ t," Attorn"# +or t," D"+"nant
I+ an agr""*"nt $iolat"s t," Statut" o+ Fraus% but an
a!tion is n"$"rt,"l"ss broug,t against on" o+ t," 1arti"s% ,is
attorn"# !an o t," +ollo3ing'
1@@6
Art. 1@?9
(a) Fil" a *otion to is*iss. (5ul" 16% 1AAC 5ul"s o+ Ci$il
Pro!"ur")2
1@@9
Art. 1@?9
(b) Pl"a t," Statut" o+ Fraus as an a++ir*ati$" "+"ns". (S"!.
6% 5ul" 6% N"3 5ul"s o+ Ci$il Pro!"ur")2
(!) &a<" a ti*"l# obj"!tion in t," !ours" o+ t," trial. (S"" Art.
1@?5% Ci$il Co").
(61) Dut# o+ t," Attorn"# +or t," Plainti++
T," la3#"r +or a 1"rson 3,o s""<s to "n+or!" (or "*an
liabilit# +or) a !ontra!t "*bra!" un"r t," Statut" o+ Fraus
*ust o t," +ollo3ing'
(a) Pr"s"nt t," 3ritt"n agr""*"nt or !ontra!t2
(b) I+ t,is !annot b" on"% as 3,"n t," !ontra!t is lost% 1r"s"nt
a *"*oranu* or not" in 3riting (t,is *a# b" a 1ag" in a
boo< or in a not"boo<% "t!.) 3,"r" t," i*1ortant "tails o+
t," !ontra!t ar" s"t +ort, li<" "s!ri1tion o+ t," 1ro1"rt#%
t," na*"s o+ t," 1arti"s% "t!.% but *ost i*1ortant o+ all%
t," 1art# soug,t to b" !,arg" or ,is ag"nt *ust ,a$"
sign" t," not" or *"*oranu*. ;nl"ss t,"r" is t,"
signatur"% t," not" or *"*oranu* 3ill b" 1ra!ti!all#
us"l"ss. So an "ntr# in t," iar# o+ t," s"ll"r is not t,"
not" or *"*o. ranu* r"+"rr" to in t," la3. (E4!"1tion'
in t," !as" o+ -au!tion sal"./)
(!) I+ t," 3ritt"n agr""*"nt ,as b""n lost an t,"r" is no not"
or *"*oranu*% t,"r" is still a r"*"#2 1r"s"nt s"!onar#
"$i"n!" o+ t," 3ritt"n agr""*"nt. T,is s"!onar# "$i"n!"
*a# o+ !ours" b" in t," +or* o+ oral t"sti*on# or 1arol
"$i"n!". 7ut t,is o"s not *"an t,at an oral !ontra!t is
b"ing 1ro$". T," +a!t is% a 3ritt"n !ontra!t no3 lost or
"stro#"% is b"ing 1ro$" orall#. 7"+or" t,is !an b" on"%
o+ !ours"% 1roo+ *ust b" 1r"s"nt" t,at at on" ti*"% t,"r"
r"all# "4ist" sai 3ritt"n agr""*"nt% an t,at sai 3ritt"n
agr""*"nt is no3 *issing. A+t"r t,is% t," !ont"nts o+ sai
*issing o!u*"nt *a# no3 b" 1ro$" b# oral "$i"n!".
(S"" Art. 1@?9 FNo. 6G% o1"ning 1aragra1,2 s"" also 6C C.=.
65A.66?).
(66) Probl"* on -Su++i!i"nt &"*oranu*/
A t"l"gra* 3as s"nt a$ising a 3oul.b" bu#"r to !o*"
1@@@
Art. 1@?9
to a !"rtain 1la!" to !o*1l"t" t," 1ur!,as" o+ a 1ar!"l o+ lan
$"rball# 1ro*is" to sai bu#"r. 7;T 0
1@@5
Art. 1@?9
(a) T," t"l"gra* i not stat" t," 1ur!,as" 1ri!"2
(b) T," t"l"gra* i not "s!rib" t," 1ro1"rt#2
(!) T," t"l"gra* ,a not b""n sign" b# an# aut,oriH" ini.
$iual in b",al+ o+ t," s"ll"r.
:u"stion' Is t," sal" "n+or!"abl"J
ANS.' No% b"!aus" t," t"l"gra*% as a not" or *"*o.
ranu*% is !l"arl# insu++i!i"nt +or t," "tails abo$".*"n.
tion" 3"r" not 1la!". (S"" 7asa $. 5aEu"l% @5 P,il.
655).
(69) &"aning o+ For*al 5"Euir"*"nts o+ -Su++i!i"nt &"*o.
ranu*/
Our Su1r"*" Court% !onsist"nt 3it, a 3"ll."stablis,"
o!trin"% ,as ,"l t,at no 1arti!ular +or* o+ languag" or in.
stru*"nt is n"!"ssar# to !onstitut" a *"*oranu* or not" in
3riting un"r t," Statut" o+ Fraus2 an# o!u*"nt or 3riting
un"r t," !ontra!t or +or anot,"r 1ur1os"% 3,i!, !o*1li"s 3it,
all t," statutor# r"Euir"*"nts o+ t," statut" as to !ont"nts
an signatur"% *a# b" !onsi"r" as su++i!i"nt *"*oranu*
or not". T,us% t," *"*oranu* *a# b" 3ritt"n in 1"n!il or in
in<2 it *a# b" +ill" in or on a 1rint" +or*. It o"s not ,a$" to
b" !ontain" in a singl" instru*"nt% nor% 3,"n !ontain" in t3o
or *or" 1a1"rs% n"" "a!, 1a1"r b" su++i!i"nt as to !ont"nts an
signatur" to satis+# t," Statut". I+ t,"r" ar" t3o or *or" 3ritings
3,i!, ar" 1ro1"rl# !onn"!t"% t,"# *a# b" !onsi"r" tog"t,"r2
o*issions in on" *a# b" su11li" or !lari+i" b# t," ot,"r% an
t,"ir su++i!i"n!# 3ill "1"n as to 3,"t,"r or not% 3,"n !on.
stru" tog"t,"r% t,"# ar" abl" to satis+# t," r"Euir"*"nt o+ t,"
Statut" o+ Fraus as to signatur". (7"rg $. &agal"na% A6 P,il.
11?).
7"rg $. &agal"na Estat"
A6 P,il. 11?
FACTS' 7"rg an H"*a# (r"1r"s"nting t," &agal"na
Estat"% In!.)% s,ortl# a+t"r lib"ration% 3"r" a!!us" o+ tr"ason.
abl" !ollaboration% an in t," *"anti*"% t," D"1t. o+ Tr"asur#
1@@6
Art. 1@?9
o+ t," ;nit" Stat"s or"r" t,"ir 1ro1"rti"s +roH"n un"r t,"
Traing 3it, t," En"*# A!t. T,is A!t 1ro$i"% a*ong ot,"r
1@@C
Art. 1@?9
t,ings% t,at t," ini$iuals 3,os" ass"ts 3"r" +roH"n 3"r" not
allo3" to s"ll% ali"nat"% or ot,"r3is" is1os" o+ t,"ir 1ro1"r.
ti"s 3it,out 1rior 1"r*ission +ro* sai Tr"asur# D"1art*"nt.
In $i"3 o+ t,is r"Euir"*"nt% t," t3o% 7"rg an H"*a#% +il"
s"1arat"l# an a11li!ation 3it, t," D"1art*"nt +or t," 1ur!,as"
an sal" o+ t," 1ro1"rt# b"ing litigat" u1on% 3,i!, !o$"r" t,"
Cr#stal Ar!a". T,is 3as on" in =anuar#% 1A@6% 3,"r" t," s"ll.
ing 1ri!" o+ P6??%??? 3as +i4". T," o++"r b"ing a!!"1t"% t,"
bu#"r 3as t,"n gi$"n a 1"rio o+ ti*" 3it,in 3,i!, to 1a#.
7u#"r no3 as<s +or s1"!i+i! 1"r+or*an!". S"ll"r !lai*s t,at
t,"r" 3as no 3ritt"n !ontra!t o+ sal"% 1l"aing t,us t," Statut"
o+ Fraus in ,is "+"ns". D"!i".
HELD' T," sal" is "n+or!"abl" b"!aus" t,"r" 3as a su+.
+i!i"nt not" or *"*oranu* "$i"n!" b# t," a11li!ations +or
1ur!,as" an sal" *a" b# H"*a# an 7"rg 3it, t," Tr"as.
ur# D"1art*"nt. Sai a11li!ations !onstitut" a"Euat" 1roo+
to "$i"n!" t," agr""*"nt b"ing Eu"stion". Furt,"r*or"% all
t," !ontra!tual r"Euir"*"nts ar" 1r"s"nt' 1arti"s% !aus" or
!onsi"ration% an subj"!t *att"r. (S"" is!ussion in No. F69G).
Cirilo Par""s $. =os" L. Es1ino
L.69951% &ar. 19% 1A6B
FACTS' Cirilo Par""s +il" an a!tion against =os" L.
Es1ino to "4"!ut" a "" o+ sal" an to 1a# a*ag"s. In ,is
!o*1laint% Par""s all"g" t,at Es1ino ,as sol to ,i* Lot No.
66 o+ t," Pu"rto Prin!"sa Caastr" at P@.?? a sEuar" *"t"r2
t,at t," "al ,a b""n !los" b# -l"tt"r an t"l"gra*2/ but t,at
a!tual "4"!ution o+ t," "" o+ sal" an 1a#*"nt o+ t," 1ri!"
3"r" "+"rr" to t," arri$al o+ Es1ino at Pu"rto Prin!"sa% Pala.
3an2 t,at Es1ino u1on arri$al ,a r"+us" to "4"!ut" t," ""
o+ sal" alt,oug, Par""s 3as abl" an 3illing to 1a# t," 1ri!"2
t,at Es1ino !ontinu" to r"+us" "s1it" 3ritt"n "*ans b#
Par""s2 t,at as a r"sult% Par""s ,as lost "41"!t" 1ro+its +ro*
a r"sal" o+ t," 1ro1"rt#. As 1roo+ o+ t," sal"% Par""s ann"4"
t," +ollo3ing l"tt"r sign" b# Es1ino 0
-D"ar &r. Par""s.
. . . 1l"as" b" in+or*" t,at a+t"r !onsulting 3it, *# 3i+"% 3"
1@@B
Art. 1@?9
bot, "!i" to a!!"1t #our last o++"r o+ P@.?? 1"r sEuar" *"t"r
o+ t," lot 3,i!, !ontains 1%B66 sEuar" *"t"rs an on !as,
basis.
1@@A
Art. 1@?9
-In or"r t,at 3" !an +a!ilitat" t," transa!tion o+ t," sal"
in Eu"stion% 3" (&rs. Es1ino an I) ar" going t,"r" (Pu"rto
Prin!"sa% Pal.) to b" t,"r" uring t," last 3""< o+ &a#./
Par""s also atta!," bot, a 1r"$ious l"tt"r +ro* Es1ino
(r" t," o++"r) an a t"l"gra* +ro* Es1ino a$ising Par""s o+
Es1ino8s arri$al b# boat. Es1ino8s "+"ns" 3as t,at t,"r" 3as
no 3ritt"n !ontra!t o+ sal"% an t,at% t,"r"+or"% t," !ontra!t is
un"n+or!"abl" un"r t," Statut" o+ Fraus.
HELD' T," !ontra!t is "n+or!"abl". T," Statut" o+ Fraus
o"s not r"Euir" t,at t," !ontra!t its"l+ b" in 3riting. A 3ritt"n
not" or *"*oranu* sign" b# t," 1art# !,arg" (Es1ino) is
"noug, to *a<" t," oral agr""*"nt "n+or!"abl". T," l"tt"rs
3rit. t"n b# Es1ino tog"t,"r !onstitut" a su++i!i"nt
*"*oranu* o+ t," transa!tion2 t,"# ar" sign" b# Es1ino%
r"+"r to t," 1ro1"rt# sol% gi$" its ar"a% an t," 1ur!,as" 1ri!"
0 t," "ss"ntial t"r*s o+ t," !ontra!t. A -su++i!i"nt
*"*oranu*/ o"s not ,a$" to b" a singl" instru*"nt 0 it
*a# b" +oun in t3o or *or" o!u. *"nts.
(6@) 7A5 :;ESTION
O+ 3,at statut"s is t," t"r* -Statut" o+ Fraus/ "s!ri1.
ti$"J To 3,at <in o+ !ontra!t ar" t,"s" statut"s a11li!abl"% an
in 3,at <in o+ a!tions *a# t,"# b" in$o<"J
ANS.'
(a) T," t"r* -Statut" o+ Fraus/ is "s!ri1ti$" o+ t,os" la3s%
statut"s% or 1ro$isions 3,i!, r"Euir" !"rtain agr""*"nts
to b" in 3riting b"+or" t,"# !an b" "n+or!" in a jui!ial
a!tion. T," la3 !onsi"rs t," *"*or# o+ *an unr"liabl"%
,"n!" t," n"" +or t," 3riting. T," statut" 3as "sign"
to 1r"$"nt +rau an t," !o**ission o+ 1"rjur#. (S"" Nat.
7an< $. P,il. V"g. Oil Co.% @A P,il. B5C).
(b) T,"s" statut"s ar" a11li!abl" onl# to "4"!utor# !ontra!ts%
not to 1artiall# or totall# "4"!ut" or 1"r+or*" !ontra!ts.
(Fa!turan $. Sabanal% B1 P,il. 516).
(!) T,"s" statut"s *a# b" in$o<" in a!tions +or a*ag"s
+or br"a!, o+ sai agr""*"nt or +or s1"!i+i! 1"r+or*an!"
1@5?
Art. 1@?9
t,"r"o+% an not in an# ot,"r *att"r. (Fa!turan $.
Sabanal%
B1 P,il. 5162 s"" Li* $. Li*% 1? P,il. 695).
1@51
Art. 1@?9
(65) 7A5
In a !"rtain r"gistration 1ro!""ings% t," a11li!ant A t"sti.
+i" t,at ," ,a b""n in t," 1oss"ssion o+ t," lan soug,t to b"
r"gist"r" sin!" t," #"ar 1A16% 3,"n 7% o11ositor8s 1r""!"ssor
in int"r"st% sol t," sa*" to ,i* un"r a $"rbal !ontra!t +or
P1%???. T," o11ositor as<" +or t," stri<ing o++ o+ t," stat"*"nt
o+ A r"garing t," all"g" $"rbal !ontra!t o+ sal" o+ t," 1ro1"rt#
on t," groun t,at t," sa*" !annot b" 1ro$" un"r t," Statut"
o+ Fraus. Is t," o11ositor8s 1"tition t"nabl"J 5"ason out #our
ans3"r bri"+l#.
ANS.' I+ A8s 1oss"ssion 3as b"!aus" t," lan ,a b""n
"li$"r" to ,i* b# t," s"ll"r 7% t,"n t," !ontra!t is alr"a#
"4"!ut"% at l"ast on 78s 1art% an not *"r"l# "4"!utor#2 ,"n!"%
t," Statut" o+ Fraus is not a11li!abl". T," $"rbal !ontra!t o+
sal" !an t,us b" 1ro$"% an t," o11ositor8s !ont"ntion is not
t"nabl". (S"" Al*irol% "t al. $. &ons"rrat% @6 P,il. 6C an
Dia*a $. &a!alibo% C@ P,il. C?).
(66) 5ul" on Aut,orit# o+ t," Ag"nt to S"ll Lan or An#
Int"r. "st T,"r"in
;n"r t," Ci$il Co"% -3,"n a sal" o+ a 1i"!" o+ lan or an#
int"r"st t,"r"in is t,roug, an ag"nt% t," aut,orit# o+ t," latt"r
s,all b" in 3riting2 ot,"r3is"% t," sal" s,all b" $oi./ (Art. 1BC@).
Not" t,at t," la3 sa#s -$oi%/ not *"r"l# un"n+or!"abl".
(6C) Oral Pro*is" to Put in Iriting
An oral 1ro*is" to 1ut in 3riting an agr""*"nt t,at is
!o$"r" b# t," Statut" is its"l+ un"n+or!"abl". (9C C.=.S. C@5).
(6B) T," T,ir Din o+ ;n"n+or!"abl" Contra!t
T," t,ir <in o+ un"n+or!"abl" !ontra!t is on" 3,"r" bot,
1arti"s ar" in!a1a!itat" to gi$" !ons"nt.
E4a*1l"' A !ontra!t "nt"r" into b# t3o un"*an!i1at"
*inors 3it,out 1ar"ntal !ons"nt.
1@56
Arts. 1@?@.1@?5
(6A) N"3 =uris1ru"n!"
>"raro Corial $. Da$i &irana
>5 195@A6% D"!. 1@% 6???
;nl"ss ot,"r3is" 1ro$i" b# la3% a !ontra!t is obligator#
in 3,at"$"r +or* it is "nt"r" into% 1ro$i" all t," "ss"ntial
r"Euisit"s ar" 1r"s"nt. I,"n a $"rbal !ontra!t ,as alr"a# b""n
!o*1l"t"% "4"!ut" or 1artiall# !onsu**at"% its "n+or!"abilit#
3ill not b" barr" b# t," Statut" o+ Fraus% 3,i!, a11li"s onl#
to an "4"!utor# agr""*"nt.
Art. 1@?@. ;naut,oriH" !ontra!ts ar" go$"rn" b# Arti!l"
191C an t," 1rin!i1l"s o+ ag"n!# in Titl" N o+ t,is 7oo<.
CO&&ENT'
;naut,oriH" Contra!ts
(a) S"" !o**"nts un"r Art. 191C% Ci$il Co".
(b) 5ati+i!ation !ur"s an unaut,oriH" !ontra!t. ;nl"ss rati.
+i"% t," !ontra!t ,as no "++"!t. (Taga#ta# D"$. Co. $. Osorio%
6A P,il. 1B?).
Art. 1@?5. Contra!ts in+ringing t," Statut" o+ Fraus% r".
+"rr" to in No. 6 o+ Arti!l" 1@?9% ar" rati+i" b# t," +ailur" to
obj"!t to t," 1r"s"ntation o+ oral "$i"n!" to 1ro$" t,"
sa*"% or b# t," a!!"1tan!" o+ b"n"+its un"r t,"*.
CO&&ENT'
(1) 5ati+i!ation o+ Contra!ts In+ringing t," Statut" o+ Fraus
T3o 3a#s o+ rati+i!ation o+ !ontra!ts in+ringing t," Statut"
o+ Fraus ar" gi$"n ,"r"'
(a) +ailur" to obj"!t to t," 1r"s"ntation o+ oral "$i"n!" (t,is
is ""*" a 3ai$"r). (S"" Do*alagan $. 7oli+"r% 99 P,il.
@C1).
Arts. 1@?@.1@?5
(b) a!!"1tan!" o+ b"n"+its un"r t,"* (t,us% t," statut" o"s
Art. 1@?6
not a11l# to "4"!ut" or 1artiall# "4"!ut" or 1"r+or*"
!ontra!ts). (H"rnan"H $. Anal% CB P,il. 1A6).
FNOTE' Partial 1"r+or*an!" o+ a !ontra!t o+ sal"
o"s not onl# o!!ur 3,"n 1art o+ t," 1ur!,as" 1ri!" is
1ai. T,"r" ar" ot,"r a!ts o+ 1artial 1"r+or*an!" su!, as
1oss"ssion% 1a#*"nt o+ ta4"s% builing o+ i*1ro$"*"nts%
t"n"r o+ 1a#*"nt 1lus sur$"#ing o+ t," lots at t," bu#"r8s
"41"ns". (Ort"ga $. L"onaro% L.11911% &a# 6B% 1A5B).G
(6) E4a*1l" o+ Iai$"r
Cross."4a*ination o+ t," 3itn"ss"s t"sti+#ing orall# on t,"
!ontra!t a*ounts to a 3ai$"r or to a +ailur" to obj"!t. (Abr"ni!a
$. >ona M D" >ra!ia% 9@ P,il. C9A).
Art. 1@?6. I,"n a !ontra!t is "n+or!"abl" un"r t,"
Statut" o+ Fraus% an a 1ubli! o!u*"nt is n"!"ssar# +or
its r"gistration in t," 5"gistr# o+ D""s% t," 1arti"s *a#
a$ail t,"*s"l$"s o+ t," rig,t un"r Arti!l" 195C.
CO&&ENT'
(1) 5ig,t o+ On" Part# to Co*1"l t," Ot,"r to E4"!ut" t,"
N""" Instru*"nt
It *ust b" str"ss" ,"r" t,at t," rig,t o+ on" 1art# to
,a$" t," ot,"r "4"!ut" t," 1ubli! o!u*"nt n""" +or
!on$"ni"n!" in r"gistration% is gi$"n onl# 3,"n t," !ontra!t is
bot, $ali an "n+or!"abl". (S"" !o**"nts un"r Art. 195C%
Ci$il Co").
(6) E4a*1l"
A sal" o+ r"alt# in a 1ri$at" instru*"nt is not $ali an
"n+or!"abl"2 ,"n!"% a 1ubli! o!u*"nt *a# b" "4"!ut" so t,at
t," sal" !oul b" r"gist"r". An oral sal" o+ r"al 1ro1"rt# is not
"n+or!"abl"2 ,"n!"% on" 1art# !annot !o*1"l t," ot,"r to "4"!ut"
t," 1ubli! o!u*"nt. Ho3"$"r% i+ sai oral sal" o+ r"al 1ro1"rt#
,as b""n rati+i"% t,"n it is no3 bot, $ali an "n+or!"abl"% an
Art. 1@?6
a 1ubli! o!u*"nt *a# b" *a" so t,at t," sal" !an b" r"gis.
t"r".
Arts. 1@?C.1@?B
Art. 1@?C. In a !ontra!t 3,"r" bot, 1arti"s ar"
in!a1abl" o+ gi$ing !ons"nt% "41r"ss or i*1li" rati+i!ation
b# t," 1ar. "nt% or guarian% as t," !as" *a# b"% o+ on" o+ t,"
!ontra!ting 1arti"s s,all gi$" t," !ontra!t t," sa*" "++"!t
as i+ onl# on" o+ t,"* 3"r" in!a1a!itat".
I+ rati+i!ation is *a" b# t," 1ar"nts or guarians% as
t," !as" *a# b"% o+ bot, !ontra!ting 1arti"s% t," !ontra!t
s,all b" $aliat" +ro* t," in!"1tion.
CO&&ENT'
Contra!t I,"r" 7ot, Parti"s Ar" In!a1a!itat"
E4a*1l"' A an 7% bot, 15 #"ars ol% "nt"r" into a !ontra!t.
T," !ontra!t is un"n+or!"abl" b"!aus" bot, 1arti"s !annot gi$"
!ons"nt. No3 i+ t," guarian or 1ar"nt o+ A rati+i"s "41r"ssl#
or i*1li"l# t," !ontra!t% it b"!o*"s $oiabl"% $ali unl"ss an.
null" b# t," guarian or 1ar"nt o+ 7. Ho3"$"r% i+ t," guarian
or 1ar"nt o+ 7 also rati+i"s% t," !ontra!t is $aliat" rig,t +ro*
t," ti*" it 3as +irst "nt"r" into.
Art. 1@?B. ;n"n+or!"abl" !ontra!ts !annot b" assail" b#
t,ir 1"rsons.
CO&&ENT'
Strang"rs Cannot Assail ;n"n+or!"abl" Contra!ts
=ust as strang"rs !annot atta!< t," $aliit# o+ $oiabl"
!ontra!ts% so also t,"# !annot atta!< a !ontra!t b"!aus" o+ its
un"n+or!"abilit#. In""% t," Statut" o+ Fraus !annot b" s"t
u1 as a "+"ns" b# strang"rs to t," transa!tion. (A#son $. Court
o+ A11"als% AC P,il. A65).
Chapter +
VOID OR INEISTENT CONTRACTS
$Ne,- e./ept Art0/1e2 1411 a%3 1412.&
(1) Voiabl" an Voi Contra!ts Distinguis,"
VOIDA7LE VOI
D
(a) *a# b" rati+i"
(b) 1rou!"s "++"!ts [til
an. null"
(!) "+"!t is u" to
in!a1a!it# or $itiat"
!ons"nt
() $ali [til annull"
(") *a# b" !ur" b#
1r"s!ri1. tion
(+) "+"ns" *a# b"
in$o<" onl# b# t,"
1arti"s (t,os"
1rin!i1all# or
subsiiaril# liabl")% or
t,"ir su!!"ssors in
int"r"st an 1ri$i"s
(a) !annot b" rati+i"
(b) g"n"rall#% "++"!ts ar"
not 1rou!" at all
(!) t," "+"!t ,"r" is t,at
ori. naril#% 1ubli! 1oli!#
is *ili. tat" against
() $oi +ro* t," $"r#
b"ginning so g"n"rall#%
no a!tion is r"Euir" to
s"t it asi"% un. l"ss t,"
!ontra!t ,as alr"a# b""n
1"r+or*"
(") !annot b" !ur" b#
1r"s!ri1. tion
(+) "+"ns" *a# b" a$ail"
o+ b# an#bo#% 3,"t,"r
," is a 1art# to t,"
!ontra!t or not% as long as
,is int"r"st is ir"!tl#
a++"!t". (Art. 1@61% Ci$il
Co").
(g) r"+"rr" to as absolut"
Art. 1@?A
(6) ;n"n+or!"abl" an Voi Contra!ts Distinguis,"
;NENFO5CEA7LE VOI
D
(a) *a# b" rati+i"
(b) t,"r" is a !ontra!t but
it !annot b" "n+or!" b#
a !ourt a!tion
(!) !annot b" assail" b#
t,ir 1arti"s
(a) !annot b" rati+i"
(b) no !ontra!t at all
(!) !an b" assail" b#
an#bo# ir"!tl# a++"!t"
Art. 1@?A. T," +ollo3ing !ontra!ts ar" in"4ist"nt an
$oi +ro* t," b"ginning'
(1) T,os" 3,os" !aus"% obj"!t or 1ur1os" is !ontrar#
to la3% *orals% goo !usto*s% 1ubli! or"r% or 1ubli! 1oli!#2
(6) T,os" 3,i!, ar" absolut"l# si*ulat" or +i!titious2
(9) T,os" 3,os" !aus" or obj"!t i not "4ist at t,"
ti*"
o+ t," transa!tion2
(@) T,os" 3,os" obj"!t is outsi" t," !o**"r!" o+
*"n2
(5) T,os" 3,i!, !ont"*1lat" an i*1ossibl" s"r$i!"2
(6) T,os" 3,"r" t," int"ntion o+ t," 1arti"s r"lati$"
to t," 1rin!i1al obj"!t o+ t," !ontra!t !annot b"
as!"rtain"2
(C) T,os" "41r"ssl# 1ro,ibit" or "!lar" $oi b#
la3.
T,"s" !ontra!ts !annot b" rati+i". N"it,"r !an t," rig,t
to s"t u1 t," "+"ns" o+ ill"galit# b" 3ai$".
CO&&ENT'
(1) Enu*"ration o+ t," Voi Contra!ts
Art. 1@?A
T," Arti!l" "nu*"rat"s t," $arious <ins o+ VOID !on.
tra!ts.
Art. 1@?A
(6) S1"!ial Classi+i!ation
In t," !as" o+ Ligu"H $. Lo1"H% 1?6 P,il. 5CC% t," Su1r"*"
Court% t,ru &r. =usti!" =.7.L. 5"#"s% stat" t,at t,"r" ar" t3o
<ins o+ VOID !ontra!ts'
(a) T," in"4ist"nt on"s (li<" t,os" 3,"r" "ss"ntial +or*aliti"s
ar" not !o*1li" 3it,2 "4a*1l"' a onation o+ lan in a
1ri$at" instru*"nt2 t,is 1rou!"s no "++"!t 3,atso$"r).
(b) T," ill"gal or illi!it on"s (li<" a onation *a" b"!aus" o+
an i**oral !onition% su!, as illi!it s"4ual int"r!ours").
(H"r"% in so*" 3a#% t," onation 1rou!"s so*" "++"!t in
t,at ," 3,o ga$" t," onation !annot g"t ba!< 3,at ,"
,as gi$"n.)
Iit, r"+"r"n!" to 1aragra1, (1) o+ Art. 1@?A 0 it
,as b""n ,"l t,at a subi$ision *a# 1ro1"rl# sti1ulat"
builing r"stri!tions (su!, as li*iting t," !onstru!tion o+
builings to t,os" o+ t," !,ara!t"r o+ r"si"n!"s). (5a+a"la
V. Trias $. >r"gorio Aran"ta% In!.% L.6?CB6% O!t. 9?% 1A65).
(9) Non.E4isting Caus" or Obj"!t
Paragra1, 9 s1"a<s o+ !ontra!ts -3,os" !aus" or obj"!t
i not "4ist at t," ti*" o+ t," transa!tion./ T,is is not "4a!tl#
!orr"!t b"!aus" t,"r" !an b" $ali !ontra!ts in$ol$ing +utur"
1ro1"rt#2 "4a*1l"' sal" o+ +utur" or a+t"r.a!Euir" 1ro1"rt#.
T,us% &r. =usti!" =.7.L. 5"#"s not"s' -Di not "4ist at t,"
ti*" o+ t," transa!tion/ s,oul b" -!oul not !o*" into "4ist"n!"
b"!aus" t," obj"!t *a# l"gall# b" a +utur" t,ing./ (S"" Arts. 19@C%
1@61% Ci$il Co"2 La3#"r8s =ournal% =an. 91% 1A51).
Singson $. 7abia
L.9??A6% S"1t. 6C% 1ACC
Sur"t# bons s,oul b" sign" not onl# b# t," sur"ti"s
but also b# t," 1rin!i1al obligors (t," "+"nants in a !as"% +or
"4a*1l"). I+ not sign" b# t," latt"r t," sur"t# bons ar" $oi%
t,"r" b"ing no 1rin!i1al obligation (3,i!, is% o+ !ours"% t,"
Art. 1@?A
!aus" or !onsi"ration o+ su!, sur"t# bons).
Art. 1@?A
5i$"ro $. Court o+ A11"als
L.9C15A% No$. 6A% 1ACC
A !ontra!t 3,"r"b# t," s"ll"r8s signatur" 3as obtain"
t,ru t," +rauul"nt *isr"1r"s"ntation t,at 3,at s," 3as
signing 3as a *"r" *ortgag" an not a "" o+ sal" is not
$ali.
(@) Si*ulat" Contra!ts
(a) I+ absolut"l# si*ulat"% t," !ontra!t is $oi +or utt"r la!<
o+ !ons"nt.
(b) I+ r"lati$"l# si*ulat"% t," ,i"n or int"n" !ontra!t is
g"n"rall# bining. (Ongl"ng!o $. OHa"ta% C? P,il. @9).
Castillo $. Castillo
L.B169B% =an. 66% 1AB?
I+ a *ot,"r s"lls to ,"r !,il% 1ro1"rt# at a 1ri!" $"r#
*u!, lo3"r t,an 3,at s," ,a 1ai +or it% onl# t,r""
*ont,s b"+or"% t,is is an ini!ation t,at t," sal" is
+i!titious.
CariPo $. CA
>5 @C661% =ul. 91% 1ABC
FACTS' P. En!abo +or*all# a11li" 3it, t," Lan
Estat"s Di$ision% 7ur"au o+ Lans% to 1ur!,as" a 1ar!"l
o+ lan. T,"r"a+t"r% En!abo% t,roug, C. Vi!"n!io% su11os.
"l# as -ag"nt%/ !a*" to an agr""*"nt 3it, =. :u"saa
trans+"rring rig,ts o$"r t," lot to t," latt"r% !onition"
on a11ro$al b# Lan T"nur" A*inistration (LTA). C.
Vi!"n!io8s ,usban (=. CariPo) is a r"lati$" o+ =. :u"saa.
T," trans+"r o+ rig,ts b# En!abo to :u"saa 3as not 1ut
in 3riting% but 1a#*"nt o+ t," 1ri!" +or t," rig,ts trans.
+"rr" 3as "$i"n!" b# r"!"i1ts on 3,i!, C. Vi!"n!io
sign" as a 3itn"ss. T," LTA una3ar" o+ t," trans+"r o+
rig,ts b# En!abo to =. :u"saa ajui!at" t," lot in
+a$or o+ En!abo. T," LTA an En!abo sign" an
Art. 1@?A
agr""*"nt to s"ll. T," LTA lat"r !a*" to <no3 about t,"
-trans+"r/ o+ rig,ts +ro* En!abo to :u"saa. It
isa11ro$" t," sa*" b"!aus" :u"saa 3as not Euali+i"
to a!Euir" t," lot sin!" ," 3as alr"a# a lot o3n"r. 7"+or"
LTA8s isa11ro$al o+
Art. 1@?A
t," trans+"r o+ En!abo8s rig,t to :u"saa% t," latt"r too<
1oss"ssion o+ t," lot. :u"saa also allo3" Vi!"n!io to o!.
!u1# it.
Lat"r% En!abo "4"!ut" a "" o+ sal" (E4,ibit D.1)
!on$"#ing ,is rig,ts to Vi!"n!io% subj"!t to LTA8s a11ro$al.
En!abo t,"n 3rot" t," LTA s""<ing 1"r*ission to trans+"r
,is rig,ts. T,"r"a+t"r% En!abo an :u"saa "4"!ut" a
o!u*"nt 3,"r" t," latt"r 1ur1ort"l# r"sol to En!abo
t," ,ous" an rig,ts o$"r t," lot. A+t"r3ars% CariPo
soug,t t," LTA8s a11ro$al o+ t," trans+"r o+ rig,ts to t,"
lot in Eu"stion on t," basis o+ t," D"" o+ Sal" "4"!ut"
b# En!abo. T," LTA ,"l t,at t," status Euo s,oul b"
*aintain". I,"n CariPo r"+us" to gi$" u1 1oss"ssion o+
t," lot% En!abo +il" an a!tion 3it, t," CFI to "!lar"
t,"* t," o3n"rs o+ t," lot. T," CFI r"n"r" a "!ision in
+a$or o+ En!abo. T," Court o+ A11"als sustain" t," CFI
(no3 5TC).
HELD' E4,ibit D.1 is si*ulat". T," CariPos !oul
not 1rou!" t," r"!"i1ts "$i"n!ing t,"ir all"g" 1a#*"nts
to t," Lan Aut,orit#. T," si*ulat" "" o+ sal" in +a$or
o+ CariPo 3as "4"!ut" to 1rot"!t t," *on"# :u"saa in.
$"st" in t," 1ur!,as" o+ t," rig,ts% 3,i!, trans+"r 3as
lat"r isa11ro$" b# t," LTA. T,"r" ,as b""n no l"gal
trans+"r o+ rig,ts in +a$or o+ CariPo b"!aus" n"it,"r t,"
LTA nor t," Lan Aut,orit# ,as a11ro$" or gi$"n u"
!ours" to su!, trans+"r o+ rig,ts. Sin!" no a11ro$al or u"
!ours" ,as b""n gi$"n b# t," LTA or LA% t," o!u*"nt is
un"n+or!"abl" against t," LTA.
(5) Contra!ts E41r"ssl# Pro,ibit" b# t," La3
(a) In t," !as" o+ &"ina $. Coll. o+ Int. 5"$.% "t al.% L.15119%
=an. 6B% 1A61% 1"tition"r% a +or"st !on!"ssionair"% SOLD
logs 1rou!" in ,is !on!"ssion to ,is IIFE% 3,o 3as "n.
gag" in busin"ss as a lu*b"r "al"r. T," 3i+" in turn
sol t," logs to ot,"rs t,ru ,"r ,usban8s ag"nt. Issu"'
I,i!, sal"s ar" ta4abl" 0 t,os" to t," 3i+"% or t,os" in
+a$or o+ t," strang"rsJ
Art. 1@?A
HELD' T," ta4abl" sal"s ar" t,os" *a" b# t," 3i+"
to strang"rs t,ru ,"r ,usban8s ag"nt b"!aus" t," sal"s
*a"
Art. 1@?A
b# ,"r ,usban to ,"r ar" VOID an "41r"ssl# 1ro,ibit"
b# t," la3. (S"" Art. 1@A?% Ci$il Co").
(b) In t," !as" o+ =os" C. AEuino% "t al. $. Pilar C,a$"s Conato
an t," Ior<*"n8s Co*1"nsation Co**ission% L.1B999%
D"!. 6A% 1A65% it 3as ,"l t,at un"r S"!. C o+ A!t 9@6B%
as a*"n" (T," Ior<*"n8s Co*1"nsation La3)% an#
!ontra!t% "$is" o+ an# sort% or 3ai$"r int"n" to "4"*1t
t," "*1lo#"r +ro* all or 1art o+ t," liabilit# !r"at" b#
sai A!t is null an $oi.
(!) In t," !as" o+ 5as $. Sua% L.699?6% S"1t. 65% 1A6B% it 3as
rul" t,at un"r 5A @CC% i+ t," a11li!ant +or 1ubli! lan
+ro* t," NAFCO (Nat. Aba!a an Ot,"r Fib"rs Cor1ora.
tion) *a<"s a trans+"r o+ ,is rig,ts 7EFO5E t," a3ar
or t," signing o+ t," !ontra!t o+ sal"% sai trans+"r is null
an $oi% an isEuali+i"s su!, a11li!ant +ro* +urt,"r
a!Euiring an# lan +ro* t," NAFCO. (S"" S"!. B% 6n
1aragra1,% 5A
@CC).
D" la CruH $. 7"tt"r Li$ing% In!.
L.66A96% Aug. 1A% 1ACC
In+lu"n!" 1"ling is 1ro,ibit" b# t," Anti.>ra+t
La3% but t," la3 o"s not ,a$" an# r"troa!ti$" "++"!t.
Insular Li+" Assuran!" Co.%
Lt. $. Ebrao
B? SC5A 1B1
A !o**on.la3 s1ous" o+ a ,usban% "$"n i+
"signat" as t," insuran!" b"n"+i!iar# o+ t," latt"r%
!annot r"!"i$" sai insuran!" 1ro!""s. Onl#
1r"1on"ran!" o+ "$i"n!" is r"Euir" to 1ro$" t,"
ault"r# or !on!ubinag" !o**it. t". No !ri*inal
!on$i!tion +or "it,"r !ri*" is n""". I+ sti1ulat" b# t,"
1arti"s% t," ault"r# or !on!ubinag" *a# b" r"gar" as a
jui!ial a*ission.
Tol"ntino $. =ug" Egaro L. Paras
>5 @9?A5% &a# 9?% 1AB9
Art. 1@?A
I+ a *arriag" is biga*ous an $oi +ro* t," b"gin.
ning% t,"r" is no n"" to ,a$" a jui!ial "!r"" to "!lar"
its in$aliit#.
Art. 1@?A
CO&ELEC% "t!. $. =ug" &a. Luisa :uijano.Pa.
illa 5TC o+ :C 7r. 615 M P,oto<ina &ar<"ting
Cor1oration
>5 151AA6% S"1. 1B% 6??6
FACTS' P,oto<ina8s bi is b"#on t," a*ount a11ro.
1riat" b# Congr"ss +or t," V5IS Proj"!t. V5IS stans +or
$ot"rs8 5"gistration an I"nti+i!ation S#st"*. T," V5IS
Proj"!t "n$isions a !o*1ut"riH" atabas" s#st"* +or t,"
&a# 6??@ El"!tions. T," i"a is to ,a$" a national r"gistra.
tion o+ $ot"rs 3,"r"b# "a!, r"gistrant8s +ing"r1rints 3ill
b" igitall# "nt"r" into t," s#st"* an u1on !o*1l"tion
o+ r"gistration% !o*1ar" an *at!," 3it, ot,"r "ntri"s
to "li*inat" oubl" "ntri"s. A ta*1"r.1roo+ an
!ount"r+"it. r"sistant $ot"r8s i"nti+i!ation !ar 3ill t,"n
b" issu" to "a!, r"gistrant as a $isual r"3or o+ t,"
r"gistration.
ISS;E' Can P,oto<ina% alt,oug, t," 3inning
bi"r% !o*1"l t," CO&ELEC to +or*aliH" t," !ontra!t
3it, it not3it,staning t,at its bi "4!""s t," a*ount
a11ro1ri. at" b# Congr"ss +or t," 1roj"!tJ
HELD' No. T," 1ro1os" !ontra!t is not bining
u1on t," CO&ELEC an is !onsi"r" $oi. V"ril#% t,"
!ontra!t is in"4ist"nt an $oi ab initio. (Art. 1@?A% Ci$il
Co").
T,is is to sa# t,at t," 1ro1os" !ontra!t is 3it,out
+or!" an "++"!t +ro* t," $"r# b"ginning or +ro* its in.
!i1i"n!#% as i+ it ,a n"$"r b""n "nt"r" into% an% ,"n!"%
!annot b" $aliat" "it,"r b# la1s" o+ ti*" or rati+i!ation.
(S"" &anila Log" $. CA% C9 SC5A 166 F1AC6G). (S"" also
Tongo# $. CA% 169 SC5A AA F1AB9G).
Ens,rin" in t," 1ABC P,ili11in" Constitution is t,"
*anat" t,at -no *on"# s,all b" 1ai out o+ t," Tr"asur#
"4!"1t in 1ursuan!" o+ an a11ro1riation *a" b# la3.
-(S"!.
6AF1G% T," 1ABC P,il. Const.). T,us% in t," "4"!ution o+ go$.
"rn*"nt !ontra!ts% t," 1r"!is" i*1ort o+ t,is
!onstitutional r"stri!tion is to r"Euir" t," $arious
Art. 1@?A
ag"n!i"s to li*it t,"ir "41"nitur"s 3it,in t,"
a11ro1riations *a" b# la3 +or "a!, +is!al #"ar.
Co*1l"*"ntar# to t," abo$"!it" !onstitutional in.
jun!tion ar" 1"rtin"nt 1ro$isions o+ la3 an a*inistrati$"
Art. 1@?A
issuan!"s "sign" to "++"!tuat" sai *anat" in a
"tail" *ann"r S"!s. @6 an @C% r"s1"!ti$"l#% C,a1t"r B%
Subtitl" 7% Titl" 1% 7oo< V o+ EO 6A6% ot,"r3is" <no3n as
t," -A*inistrati$" Co" o+ 1ABC./ S"!. @6 1ro$i"s t,at
-FnGo !ontra!t in$ol$ing t," "41"nitur" o+ 1ubli! +uns
s,all b" "nt"r" into unl"ss t,"r" is an a11ro1riation
t,"r"+or"% t," un"41"n" balan!" o+ 3,i!,% +r"" o+ ot,"r
obligations% is su++i!i"nt to !o$"r t," 1ro1os"
"41"nitur"s./ S"!. @C 1ro$i"s t,at -no !ontra!t
in$ol$ing t," "41"nitur" o+ 1ubli! +uns b# an#
go$"rn*"nt ag"n!# s,all b" "nt"r" into or aut,oriH"
unl"ss t," 1ro1"r a!!ounting o++i!ial o+ t," ag"n!#
!on!"rn" s,all ,a$" !"rti+i" to t," o++i!"r "nt"ring into
t," obligation t,at +uns ,a$" b""n ul# a1. 1ro1riat"
+or t," 1ur1os" an t,at t," a*ount n"!"ssar# to !o$"r t,"
1ro1os" !ontra!t +or t," !urr"nt !al"nar #"ar is
a$ailabl" +or "41"nitur" on a!!ount t,"r"+or" subj"!t to
$"ri+i!ation b# t," auitor !on!"rn"./
:uit" "$i"nt +ro* t," t"nor o+ t," languag" o+ t,"
la3 is t,at t," "4ist"n!" o+ a11ro1riations an t,"
a$ailabilit# o+ +uns ar" inis1"nsabl" 1r"r"Euisit"s to or
!onitions sin" Eua non For t," "4"!ution o+ go$"rn*"nt
!ontra!ts. T," ob$ious int"nt is to i*1os" su!, !onitions
as a 1riori r"Euisit"s to t," $aliit# o+ t," 1ro1os"
!ontra!t. ;sing t,is as 1r"*is"% t," Su1r"*" Court sai
it -!annot a!!"" to P,oto<ina8s !ont"ntion t,at t,"r" is
alr"a# a 1"r+"!t" !ontra!t./
E4tant on t," r"!or is t," +a!t t,at t," V5IS Proj"!t
3as a3ar" to P,oto<ina on a!!ount o+ its bi in t,"
a*ount o+ P6.5BB billion. Ho3"$"r% un"r 5A BC6?
(>"n"ral A11ro1riations A!t% FK 6???)% t," onl# +un
a11ro1riat" +or t," 1roj"!t 3as P1 billion an un"r t,"
C"rti+i!ation o+ A$ailabl" Funs (CAF) onl# P1.6 billion
3as a$ailabl". Cl"arl#% t," a*ount a11ro1riat" is
insu++i!i"nt to !o$"r t," !ost o+ t," "ntir" V5IS Proj"!t.
T,"r" is no 3a# t," CO&ELEC !oul "nt"r into a
!ontra!t 3it, P,oto<ina 3,os" a!!"1t" bi 3as 3a#
b"#on t," a*ount a11ro1ri. at" b# la3 +or t," 1roj"!t.
Art. 1@?A
T," obj"!tion o+ t,"n CO&ELEC !,air Harri"t O.
D"*"triou to t," i*1l"*"ntation o+ t," V5IS Proj"!t%
ar"ntl# !arri" on b# ,"r su!!"ssor% C,air Al+r"o L.
7"ni1a#o% ar"% t,"r"+or"% in or"r.
Art. 1@?A
7" t,is as it *a# t," Noti!" o+ A3ar% b"ing in t,"
"#"s o+ t," la3 null an $oi% t,"r" is aut,orit# t,at in
t," abs"n!" o+ an# r"s"r$ation in t," !ontra!t% 1ubli! au.
t,oriti"s !annot% 3it,out in!urring liabilit# +or br"a!, o+
!ontra!t% a+t"r a bi ,as b""n a!!"1t" an t," !ontra!t
a3ar"% r"s!in su!, a3ar an !ontra!t% "4!"1t +or
so*" !aus" 3,i!,% is t," "#" o+ t," la3% r"n"rs it $oi or
$oi. abl". (6@ A* =ur 6 S"!. CA !iting ;nit" Stat"s $.
Corliss St"a* Engin" Co.% A1 ;.S. 961% 69 L E 9AC2 an
Stat" "4 r"l. 5ob"rt &it!,"ll Furnitur" Co. $. Tool"% 66
&ont" 66% 66
P@A6).
P"tition"rs CO&ELEC Co**ission"rs ar"% t,"r"+or"%
justi+i" in r"+using to +or*aliH" t," !ontra!t 3it, P,o.
to<ina. Pru"n!" i!tat" t,"* not to "nt"r into a
!ontra!t not ba!<" u1 b# su++i!i"nt a11ro1riation an
a$ailabl" +uns. D"+init"l#% to a!t ot,"r3is" 3oul b" a
+util" "4"r!is" +or t," !ontra!t 3oul in"$itabl# su++"r t,"
$i!" o+ nullit#. A+t"r all% t," !ontra!ting 1r"rogati$" o+
1ubli! o++i!"rs is !ir!u*s!rib" 3it, a ,"a$# bur"n o+
r"s1onsibilit#. T,"# *ust "4"r!is" ut*ost !aution an
obs"r$" t," la3 in or"r to 1rot"!t t," 1ubli! +ro* unjust
an in"Euitabl" go$"rn. *"nt !ontra!ts. In su*% t," !as"
at bar 1ro$i"s o!!asion to str"ss t,at 3it, r"s1"!t to
go$"rn*"nt !ontra!ts% stat. ut"s ta<" 1r"!""n!" o$"r
t," 1ubli! o++i!"rs8 +r""o* to !ontra!t.
(6) Sal" to a Con!ubin" o+ Conjugal Abo" Is Consi"r"
VOID
&"r!""s Canullas $. Hon. Iill"l*o Fortun
L.5C@AA% =un. 66% 1AB@
I+ a ,usban abanons ,is +a*il# an lat"r s"lls t,"
!onju. gal ,o*" to ,is !on!ubin"% t," sal" is VOID b"!aus" it is
!ontrar# to goo *orals an 1ubli! 1oli!#.
(C) Contra!ts Pro,ibit" ;n"r t," Constitution
:u"r#' I,at ar" "4a*1l"s o+ t," !ontra!ts !ont"*1lat"
Art. 1@?A
b# t," !,art"rJ &a# a *"*b"r o+ Congr"ss borro3 *on"# +ro*
t," P,ili11in" National 7an< or t," 5",abilitation Finan!"
Cor1oration (no3 t," D"$"lo1*"nt 7an< o+ t," P,ili11in"s)J
Art. 1@?A
ANSIE5'
(a) T," +ra*"rs o+ t," Constitution !oul not ,a$" int"n" to
"1ri$" a *"*b"r o+ Congr"ss o+ t," +a!iliti"s an
s"r$i!"s o+ t," &anila Hot"l% t," Lig,t 5ail3a# Transit
(L5T)% "t!. K"t 3,"n a S"nator or 5"1r"s"ntati$" ,ir"s a
roo* in t," &anila Hot"l% ri"s in an air!ra+t o+ t,"
P,ili11in" Air For!"% or "1osits *on"# in t," P,ili11in"
National 7an<% a !ontra!t is *a" b"t3""n ,i* an t,"
go$"rn*"nt "ntit# !on!"rn"% an su!, a !ontra!t is
ob$iousl# NOT 3it,in t," 1ur$i"3 o+ t," 1ro,ibition in
Eu"stion. T," 1ro,ibit" !ontra!ts ar" t,os" t,at in$ol$"
a +inan!ial in$"st*"nt or busin"ss o+ 3,i!, t," *"*b"r
o+ Congr"ss "41"!ts to "ri$" gain2 +or instan!"% a
!ontra!t to !onstru!t a +l#.o$"r brig" or buil a roa% a
!ontra!t to +urnis, *at"rials or su11li"s% or a !ontra!t to
bu#% s"ll% or l"as" r"al or 1"rsonal 1ro1"rt#. H"r"% a
*"*b"r o+ Congr"ss *a# b" t"*1t" to *isus" ,is o++i!ial
1r"stig" an in+lu"n!".
(b) T,"r" is no oubt t,at a *"*b"r o+ Congr"ss *a# "1osit
*on"# 3it, t," P,ili11in" National 7an< alt,oug, ,"
*a# "arn int"r"st. H" o"s so b"!aus" to ,i*% t," PN7
*a# b" t," sa+"st 1la!" to <""1 ,is *on"#. I+ inst"a o+
"1ositing (l"ning) *on"#% ," borro3s *on"#% 3it,
su++i!i"nt guar. anti"s% ," in "++"!t *a<"s it 1ossibl" +or
t," 7an< its"l+ to 1ro+it +ro* its in$"st*"nt. It is !l"ar
t,"r"+or" t,at to obtain t," loan !oul not ,a$" b""n
int"n" b# t," ra+t. "rs o+ t," Constitution as a
1ro,ibit" transa!tion. (S"" O1inion o+ t," S"!r"tar# o+
=usti!"% O1inion No. @A% s"ri"s o+ 1A@B).
(B) So*" C,ara!t"risti!s o+ Voi Contra!ts
(a) T," rig,t to s"t u1 t," "+"ns" o+ ill"galit# !annot b"
3ai$" (Art. 1@?A% Ci$il Co")% an *a# b" !onsi"r" on
a11"al "$"n i+ not rais" in t," trial !ourt. (>arrio $.
P"r"H Car"nas% 6? P,il. A6@).
(b) T," a!tion or "+"ns" +or t,"ir "!laration as in"4ist"nt
o"s not 1r"s!rib". (Art. 1@1?% Ci$il Co").
Art. 1@?A
(!) T," "+"ns" o+ ill"galit# o+ !ontra!ts is not a$ailabl" to
t,ir 1"rsons 3,os" int"r"sts ar" not ir"!tl# a++"!t".
(Art. 1@61% Ci$il Co").
Art. 1@?A
() Cannot gi$" ris" to a !ontra!t2 t,us -a !ontra!t 3,i!, is
t," ir"!t r"sult o+ a 1r"$ious ill"gal !ontra!t is also $oi
an in"4ist"nt./ (Art. 1@66% Ci$il Co").
(") >"n"rall# 1rou!"s no "++"!t.
(+) >"n"rall#% no a!tion to "!lar" t,"* $oi is n"""% sin!"
t,"# ar" in"4ist"nt +ro* t," $"r# b"ginning.
(g) T,"# !annot b" rati+i". (Art. 1@?A% Ci$il Co").
(NOTE' I+ a n"3 an $ali !ontra!t is "nt"r" into
about t," sa*" t,ing% t," n"3 !ontra!t is o+ !ours"
bining% but t,is is not t"!,ni!all# t," -rati+i!ation/
r"+"rr" to in t," la3. T,us% a onation o+ lan in a
1ri$at" instru*"nt is $oi% but i+ a *ont, lat"r t,"
sa*" onation is *a" in a 1ubli! instru*"nt% t,"
onation b"!o*"s $ali% but t,is ti*"% t," n"3 !ontra!t
b"!o*"s $ali an "++"!ti$"% not +ro* t," at" o+ t,"
original agr""*"nt% but +ro* t," at" o+ t," n"3
agr""*"nt% +or t"!,ni!all# t,"r" ,as b""n no rati+i!ation.)
FNOTE' In t," !as" o+ >arrio $. P"r"H Car"nas% 6?
P,il. A6@% it 3as ,"l t,at i+ a !ontra!t is "nt"r" into an
t," obligation is assu*" b# t," "btor in or"r to 1r"$"nt
t," 1ros"!ution o+ t," "btor +or a !ri*inal o++"ns"% t,"
sa*" is $oi +or b"ing !ontrar# to la3 an 1ubli! or"r.
7ut i+ t," 1ur1os" b" i++"r"nt% t,"r" is a !,an!" t,at t,"
!ontra!t 3oul b" $ali. In t," >arrio !as"% a !"rtain
Att#. Ca*us 3as !,arg" b# >arrio 3it, s3inling ,i*
in t," a*ount o+ P6%???. T," +is!al (no3 1ros"!utor)
a$is" Ca. *us to s"ttl" t," *att"r 3it, >arrio%
ot,"r3is" ," 3oul 1ros"!ut" ,i* (Ca*us). So Ca*us
guarant"" 1a#*"nt o+ t," a*ount 3it, Att#. P"r"H
Car"nas% ,is "*1lo#"r% as !o.sign"r in soliu*. P"r"H
Car"nas n"$"r "alt 3it, >arrio. It 3as Ca*us 3,o
as<" ,is "*1lo#"r P"r"H Car"nas to sign t," not".
I,"n as<" 3,# ," sign" t," not"% Car"nas t"sti+i"
t,at ," i not "$"n <no3 t,at a !o*1laint +or s3inling
,a b""n +il" against Ca*us in t," +is!al8s (1ros"!utor8s)
o++i!" an 3as 1"ning2 t,at ," 3as *"r"l# a$is" b#
Art. 1@?A
Ca*us t,at ," ,a -a !"rtain obliga. tion in +a$or o+ &r.
>arrio an t,at ," (Ca*us) 3ant" to ,a$" an "4t"nsion
o+ ti*" 3it,in 3,i!, to 1a# it%/ an t,at
Art. 1@?A
," sign" b"!aus" ," t,oug,t ," !oul t,"r"b# ,"l1 t,"
#oung *an% 3,o 3as t,"n a la3#"r% "$"lo1 ,i*s"l+ into
a b"tt"r *an. It 3as ,"l t,at not b"ing !ontrar# to la3%
!usto*s% "t!. t," not" 3as $ali inso+ar as Car"nas 3as
!on!"rn". T," +a!t t,at subs"Eu"ntl# t," !ri*inal !as"
3as 3it,ra3n i not alt"r t," situation *at"riall#.G
FNOTE' In &a!tal $. &"l"grito% L.1611@% &ar!, 6@%
1A61% t," !ourt rul" t,at a 1ro*issor# not" to 1a# *on"#
ill"gall# !on$"rt" b# an ag"nt (a not" sign" so t,at t,"
"sta+a !as" against t," 1lainti++ 3oul b" 3it,ra3n) is
VALID b"!aus" t," r"al !onsi"ration +or t," not" 3as t,"
1r"."4isting "bt. T," is*issal o+ t," "sta+a !as" 3as not
t," !onsi"ration2 it *"r"l# +urnis," t," o!!asion +or t,"
"4"!ution o+ t," not".G
7obis $. Pro$. S,"ri++ o+ Ca*arin"s Nort"
>5 6AB9B% &ar. 1B% 1AB9
I+ a jug*"nt "btor !on$"#s 1ro1"rt# to anot,"r
b"+or" l"$# is *a" on sai 1ro1"rt#% an#bo# 3,o bu#s
t," sa*" at t," "4"!ution sal" a!Euir"s no rig,t o$"r t,"
1ro1"rt#.
Pili1inas S,"ll P"trol"u* Cor1. $.
D" la 5osa an t," Ior<*"n8s
Co*1"nsation Co**ission
L.@19?1% D"!. 15% 1AB6
T," Ior<*"n8s Co*1"nsation A!t (S"!. C% A!t 9@6C)
!on"*ns su!, !ontra!ts as -Do!u*"nt o+ Full Satis+a!.
tion%/ or -5"l"as"%/ or -5"l"as" o+ Clai*./ Sai la3 "!lar"s
null an $oi an# !ontra!t -o+ an# sort int"n" to "4"*1t
t," "*1lo#"r +ro* all or 1art o+ t," liabilit# !r"at" b#
FsaiG A!t./
(A) Sal" o+ Conjugal Pro1"rti"s
T," sal" o+ !onjugal 1ro1"rti"s !annot b" *a" b# t,"
sur$i$ing s1ous" 3it,out t," +or*aliti"s "stablis," +or t,"
Art. 1@?A
sal" o+ 1ro1"rt# o+ "!"as" 1"rsons% an su!, sal" is VOID
as to t," s,ar" o+ t," "!"as" s1ous". (O!a*1o $. Pot"n!iano%
Art. 1@?A
L.6669% &a# 9?% 1A51 an Talag $. Tan<"ng!o% A6 P,il. 1?66).
T," $"n"" b"!o*"s a trust"" o+ t," s,ar" o+ t," latt"r +or t,"
b"n"+it o+ ,is ,"irs% t," !"stui Eu" trust"nt. (S"" Art. 1@56% Ci$il
Co" an Cuison% "t al. $. F"rnan"H% "t al.% L.11C6@% =an. 91%
1A5A).
(1?) I,o &a# Atta!< Contra!ts All"g" to 7" Fi!titious or
Voi
>oros1" $. Santos
L.9??CA% =an. 9?% 1AC6
FACTS' A "btor 3,o ,a *ortgag" ,is lan 3as not
abl" to 1a# t," "bt% so t," *ortgag" 3as "4trajui!iall#
+or"!los". H" t,"n sol ,is rig,t to r"""* to a t,ir
1"rson% 3,o t,"n 1ro!""" to r"""* t," 1ro1"rt#. T,"
!r"itor.*ortgag"" 3,o ,a 1ur!,as" t," 1ro1"rt# at t,"
+or"!losur" Eu"stion" t,is r""*1tion b# t," "btor8s
assign"" on t," groun t,at t," trans+"r o+ t," rig,t to
r"""* 3as si*ulat" or +i!titious% but ," !oul not 1r"s"nt
1roo+ to o$"r!o*" t," 1ubli! instru*"nt r"s1"!ting t," sal" o+
assign*"nt o+ t," rig,t to r"""*. Issu"' Do"s t," r""*1tion
r"*ain $aliJ
HELD' K"s% +irstl# b"!aus" ," 3as not abl" to o$"r!o*" t,"
1robati$" $alu" o+ t," 1ubli! o!u*"nts% an s"!onl#% b"!aus"
3,"t,"r or not t," assign*"nt 3as +i!titious or +rauul"nt% ,"%
t," *ortgag""% !annot b" sai to ,a$" b""n a*ag".
(11) T," Cas" o+ Ab"laro Li*
Ab"laro Li* M Es*aito >unnaban $.
CA M Donato H. >onHal"s
>5 165B1C% =an. 16% 6??6
ISS;E' I,"n a 1ass"ng"r j""1n"# !o$"r" b# a !"rti+i!at"
o+ 1ubli! !on$"ni"n!" (CPC) is sol to anot,"r 3,o !ontinu"s
to o1"rat" it un"r t," sa*" CPC un"r t," so.!all" -<abit/
Art. 1@?A
s#st"*% an in t," !ours" t,"r"o+ t," $",i!l" *""ts an a!!i"nt
t,ru t," +ault o+ anot,"r $",i!l"% *a# t," n"3 o3n"r su" +or
a*ag"s against t," "rring $",i!l"J
Art. 1@?A
Ot,"r3is" stat"% o"s t," n"3 o3n"r ,a$" an# l"gal 1"r.
sonalit# to bring t," a!tion% or is ," t," r"al 1art#.in.int"r"st
in t," suit% "s1it" t," +a!t t,at ," is not t," r"gist"r" o3n"r
un"r t," CPCJ
HELD' K"s. In t," 1r"s"nt !as"% it is at on!" a11ar"nt t,at
t," "$il soug,t to b" 1r"$"nt" in "njoining t," <abit s#st"*
o"s not "4ist. T,r"" (9) r"asons ar" au!"% na*"l#.
First% n"it,"r o+ t," 1arti"s to t," 1"rni!ious <abit s#st"*
is b"ing ,"l liabl" +or a*ag"s.
S"!on% t," !as" aros" +ro* t," n"glig"n!" o+ anot,"r
$",i!l" in using t," 1ubli! roa to 3,o* no r"1r"s"ntation% or
*isr"1r"s"ntation% as r"gars o3n"rs,i1 an o1"ration o+ t,"
1ass"ng"r j""1n"# 3as *a" an to 3,o* no su!, r"1r"s"nta.
tion% or *isr"1r"s"ntation% 3as n"!"ssar#. T,us% it !annot b"
sai t,at 1ri$at" r"s1on"nt an t," r"gist"r" o3n"r o+ t,"
j""1n"# 3"r" "sto11" +or l"aing t," 1ubli! to b"li"$" t,at t,"
j""1n"# b"long" to t," r"gist"r" o3n"r.
T,ir% t," riing 1ubli! 3as not bot,"r" nor in!on$"n.
i"n!" at t," $"r# l"ast b# t," ill"gal arrang"*"nt. On t," !on.
trar#% it 3as 1ri$at" r"s1on"nt ,i*s"l+ 3,o ,a b""n 3rong"
an 3as s""<ing !o*1"nsation +or t," a*ag" on" to ,i*.
C"rtainl#% it 3oul b" t," ,"ig,t o+ in"Euit# to "n# ,i* ,is
rig,t.
In lig,t o+ t," +or"going% it is "$i"nt t,at 1ri$at"
r"s1on. "nt ,as t," rig,t to 1ro!"" against 1"tition"rs +or
t," a*ag" !aus" on ,is 1ass"ng"r j""1n"# as 3"ll as on ,is
busin"ss. An# "++ort t,"n to +rustrat" ,is !lai* o+ a*ag"s b#
t," ing"nuit# 3it, 3,i!, 1"tition"rs +ra*" t," issu" s,oul
b" is!ourag"% i+ not r"1"ll".
FNOTE' T," <abit s#st"* is an arrang"*"nt 3,"r"b# a
1"rson 3,o ,as b""n grant" a CPC allo3s ot,"r 1"rsons 3,o
o3n *otor $",i!l"s to o1"rat" t,"* un"r ,is li!"ns"%
so*"ti*"s +or a +"" or 1"r!"ntag" o+ t," "arnings. (Lita
Ent"r1ris"s% In!. $. S"!on Ci$il Cas"s Di$ision% IAC% >5
6@6A9% A1r. 6C 1AB@2 7ali3ag Transit% In!. $. CA% >5 5C@A9%
=anuar# C% 1ABC2 an T"ja &ar<"ting $. IAC% >5 6551?% &ar!,
Art. 1@?A
A% 1ABC). Alt,oug, t," 1arti"s to su!, an agr""*"nt ar" not
outrig,tl# 1"naliH" b# la3% t," <abit s#st"* is in$ariabl#
r"!ogniH" as b"ing !ontrar#
Art. 1@1?
to 1ubli! 1oli!# an% t,"r"+or"% $oi an in"4ist"nt un"r Art.
1@?A. (Li* M >unnaban $. CA M >onHal"s% su1ra).G
Art. 1@1?. T," a!tion or "+"ns" +or t," "!laration o+
t," in"4ist"n!" o+ a !ontra!t o"s not 1r"s!rib".
CO&&ENT'
(1) A!tion +or D"!laration o+ In"4ist"n!" o+ t," Contra!t Do"s
Not Pr"s!rib"
T,is Arti!l" is a n"3 1ro$ision o+ t," Ci$il Co". I+ a !on.
tra!t is null an $oi% t," a!tion to "!lar" it null an $oi or to
"!lar" its non."4ist"n!" is i*1r"s!ri1tibl". On t," ot,"r ,an%
t," ill"galit# o+ t," !ontra!t !an al3a#s b" s"t u1 as a "+"ns"%
"s1it" t," 1assag" o+ ti*". T,us% in t," !as" o+ Ang"l"s% "t al.
$. Court o+ A11"als% 1?6 P,il. 1??6% it 3as ,"l b# t," Su1r"*"
Court t,at t," sal" o+ a ,o*"st"a 1at"nt is !ontrar# to la3%
an $oi2 an t,"r"+or"% t," a!tion or "+"ns" +or t," "!laration
o+ its nullit# an in"4ist"n!" o"s not 1r"s!rib". &"r" la1s" o+
ti*" !annot gi$" "++"!t to !ontra!ts t,at ar" null an $oi.
Cara*% =r. $. Laur"ta
L.6BC@?% F"b. 6@% 1AB1
On" 3,o bu#s lan in ba +ait, (+or t," bu#"r s,oul ,a$"
<no3n t,at its 1oss"ssor ,a alr"a# boug,t t," sa*") "nt"rs
into 3,at is <no3n as a VOID% not *"r"l# $oiabl"% !ontra!t.
T,"r"+or"% an# a!tion or "+"ns" +or t," "!laration o+ t," "4ist.
"n!" o+ t," !ontra!t o"s not 1r"s!rib". (Art. 1@1?% Ci$il Co").
T," *"r" +a!t t,at Art. 15@@ o"s not "!lar" $oi a "" o+ sal"
r"gist"r" in ba +ait, o"s not *"an t,at sai !ontra!t is not
$oi.
7u"na$"ntura $. CA
>5 5?B9C% D"!. 6B% 1AA6
In !as" o+ +rau in t," trans+"r o+ t," 1ro1"rt# as all"g"
in 1"tition"r8s !o*1laint% Art. 1@1? o+ t," Ci$il Co" on i*1r".
s!ri1tibilit# o+ a!tions !annot b" ""*" a11li!abl".
Art. 1@1?
V"ril#% t," 1rin!i1l" on 1r"s!ri1tion o+ a!tions is "sign"
to !o$"r situations 3,"r" t,"r" ,a$" b""n a s"ri"s o+ trans+"rs
Art. 1@1?
to inno!"nt 1ur!,as"rs +or $alu". To s"t asi" t,"s" transa!.
tions onl# to a!!o**oat" a 1art# 3,o ,as sl"1t on ,is rig,ts
is anat,"*a to goo or"r. In"1"n"ntl# o+ t," 1rin!i1l" o+
1r"s!ri1tion o+ a!tions 3or<ing against 1"tition"r% t," o!trin"
o+ la!,"s *a# +urt,"r b" !ount" against t,"*% 3,i!, latt"r
t"n"t +ins a11li!ation "$"n to i*1r"s!ri1tibl" a!tions. T,us%
3,il" it is tru" t,at% t"!,ni!all#% t," a!tion to annul a $oi or
in"4ist"nt !ontra!t o"s not 1r"s!rib"2 it *a#% non"t,"l"ss% b"
barr" b# la!,"s.
H"irs o+ Ingjugtiro $. S1s. Casals
>5 19@C1B% Aug. 6?% 6??1
T," 1ositi$" *anat" o+ Art. 1@1? !on+"rring i*1r"s!ri1.
tibl# to a!tions +or "!laration o+ t," in"4ist"n!" o+ a !ontra!t
s,oul 1r""*1t an 1r"$ail o$"r all abstra!t argu*"nts bas"
onl# on "Euit#.
C"rtainl#% la!,"s !annot b" s"t u1 to r"sist t,"
"n+or!"*"nt o+ an i*1r"s!ri1tibl" l"gal rig,t% an 1"tition"rs
!an $alil# $ini!at" t,"ir in,"ritan!" "s1it" t," la1s" o+
ti*".
(6) :u"r# on I,"t,"r Voi Contra!t Still Has to 7" D"!lar"
Voi
T," Eu"stion *a# b" as<"' I+ a $oi !ontra!t is $oi +ro*
t," $"r# b"ginning% 3,at is t," us" o+ its b"ing "!lar" in"4ist.
"ntJ
Stri!tl# s1"a<ing% t,"r" is no us". 7ut +or 1ur1os"s o+ !on.
$"ni"n!"% or to a$oi ta<ing t," la3 into our o3n ,ans% t,"r"
is not,ing 3rong in ,a$ing a $oi !ontra!t "!lar" r"all# $oi.
For "4a*1l"' A s"lls 7 t," =on"s 7rig" an 7 gi$"s A t," 1ri!".
O+ !ours"% t,is !ontra!t is null an $oi% but su11os" A r"+us"s
to r"turn to 7 t," 1ri!"% stating t,at t,"r" is not,ing 3rong
3it, t," !ontra!t% 3,at s,oul 7 oJ 7 s,oul +il" an a!tion in
!ourt to "!lar" t," in"4ist"n!" o+ t," !ontra!t. T,is rig,t o+ 7
to bring t," a!tion o"s not 1r"s!rib". In""% t," "+"!t in t,is
<in o+ !ontra!t !annot b" !ur" b# 1r"s!ri1tion or b#
Art. 1@1?
rati+i!ation. (S"" Eug"nio $. P"rio% AC P,il. @1 an Dingl" $.
>uill"r*o% FC.A.G
@B O.>. @@1?.)
Art. 1@11
Tol"ntino $. Paras
>5 @9?A5% &a# 9?% 1AB9
A $oi biga*ous *arriag"% b"ing alr"a# $oi% o"s NOT
,a$" to b" "!lar" $oi b# t," !ourts.
S1s. Nar!iso 5onga$illa M Dolor"s
5onga$illa $. CA% "t al.
>5 B9AC@% Aug. 1C% 1AAB
T," "+"!t o+ in"4ist"n!" o+ a !ontra!t is 1"r*an"nt an
in!urabl"2 ,"n!"% it !annot b" !ur" "it,"r b# rati+i!ation or
b# 1r"s!ri1tion. T,"r" is no n"" o+ an a!tion to s"t asi" a $oi
or in"4ist"nt !ontra!t2 in +a!t su!, a!tion !annot logi!all#
"4ist.
An a!tion% ,o3"$"r% to "!lar" t," non."4ist"n!" o+ t,"
!ontra!t !an b" *aintain"2 an in t," sa*" a!tion% t,"
1lainti++ *a# r"!o$"r 3,at ," ,as gi$"n b# $irtu" o+ t,"
!ontra!t.
Art. 1@11. I,"n t," nullit# 1ro!""s +ro* t," ill"galit#
o+ t," !aus" or obj"!t o+ t," !ontra!t% an t," a!t
!onstitut"s a !ri*inal o++"ns"% bot, 1arti"s b"ing in 1ari
"li!to% t,"# s,all ,a$" no a!tion against "a!, ot,"r% an
bot, s,all b" 1ros"!ut". &or"o$"r% t," 1ro$isions o+ t,"
P"nal Co" r"la. ti$" to t," is1osal o+ "++"!ts or
instru*"nts o+ a !ri*" s,all b" a11li!abl" to t," t,ings or
t," 1ri!" o+ t," !ontra!t.
T,is rul" s,all b" a11li!abl" 3,"n onl# on" o+ t,"
1arti"s is guilt#2 but t," inno!"nt on" *a# !lai* 3,at ,"
,as gi$"n% an s,all not b" boun to !o*1l# 3it, ,is
1ro*is".
CO&&ENT'
T," OPari D"li!to8 5ul" 5"+us"s L"gal 5"*"# to Eit,"r
Part# to an Ill"gal Agr""*"nt an L"a$"s T,"*
Art. 1@11
I,"r" T,"# I"r"
T," raison O"tr"' Ours ar" !ourts o+ bot, la3 an "Euit#
RR t,"# !o*1"l +air "aling an o not ab"t !l"$"r att"*1ts to
"s!a1" just obligations. (Aba!us S"!uriti"s Cor1. $. A*1il% @B9
SC5A 915 F6??6G).
Art. 1@16
I,"r" t," a!t in$ol$" !onstitut"s a !ri*inal o++"ns"% i.".%
+orging a 1"rsonOs signatur" 1unis,abl" un"r S"!. @% Titl" IV o+
t," 5PC% t," a11li!abl" 1ro$ision is Art. 1@11 o+ t," N"3 Ci$il
Co". In 5a*ir"H $. 5a*ir"H (@B5 SC5A A6 F6??6G)% t," Su1r"*"
Court ,"l t,at obj"!t an !aus"% ar" t3o s"1arat" "l"*"nts o+
a onation an t," ill"galit# o+ "it,"r "l"*"nt gi$"s ris" to t,"
a11li!ation o+ t," o!trin" o+ 1ari "li!to.
Art. 1@16. I+ t," a!t in 3,i!, t," unla3+ul or +orbi"n
!aus" !onsists o"s not !onstitut" a !ri*inal o++"ns"% t," +ol.
lo3ing rul"s s,all b" obs"r$"'
(1) I,"n t," +ault is on t," 1art o+ bot, !ontra!ting
1arti"s% n"it,"r *a# r"!o$"r 3,at ," ,as gi$"n b# $irtu" o+
t," !ontra!t% or "*an t," 1"r+or*an!" o+ t," ot,"r8s un.
"rta<ing2
(6) I,"n onl# on" o+ t," !ontra!ting 1arti"s is at
+ault% ," !annot r"!o$"r 3,at ," ,as gi$"n b# r"ason o+
t," !on. tra!t% or as< +or t," +ul+ill*"nt o+ 3,at ,as b""n
1ro*is" ,i*. T," ot,"r% 3,o is not at +ault% *a# "*an
t," r"turn o+ 3,at ," ,as gi$"n 3it,out an# obligation to
!o*1l# 3it, ,is 1ro*is".
CO&&ENT'
(1) T3o Dins o+ Ill"gal Contra!ts
T,"r" ar" t3o <ins o+ ill"gal !ontra!ts'
(a) t,os" 3,"r" t,"r" is a !ri*inal o++"ns"2
(b) t,os" 3,"r" t,"r" is no !ri*inal o++"ns".
(6) Ill"gal an Cri*inal Contra!ts
T,os" !ontra!ts 3,"r" t,"r" is a C5I&INAL OFFENSE
*a# b" o+ t3o <ins'
(a) t,os" 3,"r" bot, 1arti"s ar" guilt# (in 1ari "li!to)2
(b) t,os" 3,"r" onl# on" is guilt# an t," ot,"r is inno!"nt.
NOTE'
Art. 1@16
(a) T,os" 3,"r" 7OTH ar" >;ILTK'
Art. 1@16
1) E4a*1l"' bot, "nt"r" into a !ontra!t +or s*uggling
or i*1ortation o+ !ontraban. (Iribar $. &illat% 5
P,il.
966).
6) E++"!ts'
a) Sin!" t,"# ar" in 1ari "li!to% t,"# s,all ,a$"
no a!tion against "a!, ot,"r.
b) 7ot, s,all b" 1ros"!ut".
!) T," "++"!ts or t," instru*"nts o+ t," !ri*"
(t,ings or 1ri!" o+ t," !ontra!t) s,all b" !on+is.
!at" in +a$or o+ go$"rn*"nt.
Pa!<aging Prou!ts Cor1. $. NL5C
>5 5?9B9% =ul. 69% 1ABC
FACTS' 7E 3as "*1lo#" b# PPC sin!"
1A5A. I,il" ,oling t," 1osition o+ >rou1 A!.
!ount E4"!uti$" in 1AC?% t," Cor1oration8s
7oar C,air*an assign" ,i* to ,anl" an
"$"lo1 t," a!!ount o+ LTI% 3,i!, r"Euir"s C
*illion !or. rugat" s,i11ing bo4"s a #"ar. On
a!!ount o+ t," 1ro+itabilit# o+ t," assign*"nt%
7E "*an" +or an 3as gi$"n an in!"nti$" in
t," +or* o+ CQ !o**ission% 3,i!, 3as
i++"r"nt an istin!t +ro* t," r"gular on".
,al+ 1"r !"nt (1U6Q) o+ t," aggr"gat" $alu" o+
t," a!tual *ont,l# sal"s to LTI. T,"
arrang"*"nt +or 1a#ing t,is !o**is. sion 3as
t,at t," !,"!<s 3"r" *a" 1a#abl" to 7E a+t"r
in$oi!" (an b"+or" 1a#*"nt) uring t," +irst
3""< o+ "$"r# su!!""ing *ont, 3it, t,"
+i!titious P5C a11"aring in t," !,"!<s as
1a#"". T," us" o+ t," +i!titious na*" 3as all"g.
"l# to !o$"r.u1 t," rat,"r ano*alous situation
3,"r" a *"r" sal"s*an o+ t," !or1oration !oul
a11"ar to b" "arning *or" t,an its o++i!"rs or
"4"!uti$"s.
Art. 1@16
7E s"r$" t," a!!ount o+ LTI until PPC
too< it a3a# +ro* ,i* in 1ACC. H" t,"r"+or"
!,arg" PPC guilt# o+ i*inution o+ t," b"n"+its
an !lai*" t,at PPC s,oul 1a# ,i* t," !o*.
Art. 1@16
*issions u" ,i* +ro* LTI% In!. PPC% on t,"
ot,"r ,an% !ont"ns% t,at t," CQ !o**ission
!onstitut" t," !o**ission r"bat"s gi$"n b#
PPC to !"rtain "*1lo#""s o+ LTI% an a*it.
t" t,at t," na*" o+ P5C 3as +i!titious% but
*aintains t,at t," na*" 3as us" *"r"l# to
+a!ilitat" t," issuan!" o+ $ou!,"rs an !,"!<s
!orr"s1oning to t," CQ !o**ission r"bat"s.
ISS;E' Is 7E "ntitl" to un1ai !o**is.
sions "Eui$al"nt to CQ o+ total sal"s ," "++"!t"%
asi" +ro* ,is r"gular 1U6Q !o**ission% bas"
on t," aggr"gat" $alu" o+ t," a!tual *ont,l#
sal"s to LTIJ
HELD' T," Su1r"*" Court !annot gi$"
1ositi$" r"li"+ to "it,"r 7E or PPC b"!aus" it
is as<" to int"r1r"t an "n+or!" an ill"gal an
i**oral arrang"*"nt. Di!<ba!< arrang"*"nt
in t," 1ur!,as" o+ *at"rials an ot,"r n""s o+
*anu+a!tur"rs ar" $oi. 7ot, 7E an PPC ar"
in 1ari "li!to. N"it,"r on" *a# "41"!t 1ositi$"
r"li"+ +ro* !ourts o+ justi!" in int"r1r"ting t,"ir
!ontra!t. T," !ourts 3ill l"a$" t,"* as t,"#
3"r" at t," ti*" t," !as" 3as +il".
T," subj"!t *att"r o+ t," agr""*"nt
soug,t to b" "n+or!" b"ing ill"gal an
i**oral% t," r"solution o+ t," NL5C
or"ring t," PPC to 1a# 7E un1ai
!o**issions in t," a*ount o+ P6C6%B9?% 1lus
l"gal int"r"st is "!lar" null an $oi.
(b) T,os" 3,"r" ONLK ONE is >;ILTK (or 3,"r"% "$"n i+
bot, ar" guilt#% t,"# ar" not "Euall# guilt#% t,"r"+or"% -not
in 1ari "li!to/ 0 -not in "Eual guilt/)'
1) E4a*1l"s' N sol go$"rn*"nt 1ro1"rt# to K% 3,o 3as
in goo +ait,2 or 3,"r" a 1"rson o+ ag" ga$" a onation
to a *inor +or t," 1ur1os" o+ illi!it s"4ual int"r!ours".
(S"" Ligu"H $. Lo1"H% 1?6 P,il. 5CC).
6) E++"!ts'
Art. 1@16
a) T," guilt# 1art# 3ill b" 1ros"!ut".
Art. 1@16
b) T," instru*"nt o+ t," !ri*" (or obj"!t o+ t,"
!ontra!t) 3ill b" !on+is!at" (as in t," !as" o+
go$"rn*"nt 1ro1"rt# ill"gall# sol).
!) T," inno!"nt on" *a# !lai* 3,at ," ,as gi$"n
(li<" t," 1ri!" ," 1ai +or t," go$"rn*"nt 1ro1.
"rt#)2 or i+ ," ,as not #"t gi$"n an#t,ing% ,"
s,all NOT b" boun to !o*1l# 3it, ,is
1ro*is".
FNOTE' E$"n i+ a !ontra!t in$ol$"s a !ri*"% still i+ a !aus"
o+ a!tion !an b" "stablis," 3it,out r"+"rring to t," ill"gal a!t
or *oti$"% r"li"+ !an b" grant" b# t," !ourts. (P"r"H $. H"rranH%
C P,il. 6A9).G
P"r"H $. H"rranH
C P,il. 6A9
FACTS' P"r"H% a Fili1ino% an H"rranH% a S1aniar%
3ant" to bu# a st"a*"r. So P"r"H !ontribut" 1U6 o+ t," 1ri!"%
an H"r. ranH !ontribut" 5U6. 7ut b"!aus" H"rranH% b"ing an
ali"n% !oul not bu# a P,ili11in" st"a*"r% bot, agr"" t,at
t," 1ur!,as" 3oul b" in t," na*" o+ P"r"H alon". So% a +als"
a++ia$it 3as *a"% an t,"# got t," st"a*"r. T," +als"
a++ia$it 3as o+ !ours" ill"gal. I,"n t," st"a*"r 3as gi$"n%
H"rranH too< 1oss"ssion o+ it% an 3,"n P"r"H 3ant" to g"t it
on t," groun t,at it 3as r"gist"r" in ,is na*"% H"rranH
r"+us". H"n!"% t,is a!tion +or r"!o$"r#.
HELD' Orinaril# in a !ri*inal an ill"gal !ontra!t as
t,is% t," 1arti"s s,oul b" l"+t as t,"# ar" b# t," !ourt% "a!,
,a$ing no a!tion against t," ot,"r. 7ut in t,is !as"% "$"n
3it,out r"+"rring to t," ill"gal a!t% a 1ro1"r !aus" o+ a!tion
!oul b" *a" out. P"r"H !oul 1r"s"nt a 1ri*a +a!i" !as" in ,is
+a$or b# 1r"s"nting t," "" o+ sal"2 H"rranH !oul all"g" t,at
it ,a b""n agr"" t,at !o.o3n"rs,i1 3as to "4ist b"t3""n
t,"*% an bot, all"ga. tions !an b" gi$"n "$"n 3it,out
r"+"rring to t," ill"gal a++ia$it or 1ur1os". T,us% inas*u!, as
!o.o3n"rs,i1 3as ul# 1ro$"% P"r"H an H"rranH 3"r"
"!lar" !o.o3n"rs in 1ro1ortion to t,"ir r"s1"!ti$"
!ontributions to t," 1ri!"' P"r"H 3as "!lar" o3n"r o+ 1U6%
Art. 1@16
H"rranH% o+ 5U6.
FNOTE' T,is 3as a !i$il !as". No !ri*inal a!tion 3as in.
stitut" b# t," go$"rn*"nt.G
Art. 1@16
(9) Ill"gal 7ut Not Cri*inal
Contra!ts
T,os" !ontra!ts 3,i!, ar" unla3+ul or +orbi"n 7;T
3,"r" t,"r" is NO !ri*inal o++"ns" *a# b" o+ t3o <ins'
(a) t,os" 3,"r" bot, ar" guilt#.
(b) t,os" 3,"r" onl# on" is guilt# or at +ault.
NOTE'
(a) T,os" 3,"r" bot, ar" guilt#.
1) E4a*1l"' A Fili1ino sol lan to a C,in"s" a+t"r t,"
"++"!ti$" at" o+ t," Constitution. (Planas $. >a3,o<%
FC.A.G 5? O.>. 916@% =ul. 1A5@ an Cabauatan $. ;#
Hoo% BB P,il. 1?9).
6) E++"!t' N"it,"r *a# r"!o$"r 3,at ," ,as gi$"n b#
$irtu" o+ t," !ontra!t or "*an t," 1"r+or*an!" o+
t," ot,"r8s un"rta<ing. (Art. 1@16% No. 1). (T,us% in
t," "4a*1l" gi$"n% t," Fili1ino $"nor o+ ,is lan
3as not allo3" to r"!o$"r t," lan ill"gall# sol2
n"it,"r !an t," C,in"s" r"!o$"r t," *on"# 1ai% +or
t," la3 3ill l"a$" t,"* as t,"# ar"% sin!" t,"# ar"
in 1ari "li!to). (S"" Planas $. >a3,o<% FC.A.G 5?
O.>. 916@% su1ra an Cabauatan $. ;# Hoo% su1ra.)
I+ a Fili1ino s"lls ,is lan to a C,in"s" !itiH"n%
but t," latt"r s"lls t," lan to a Fili1ino% as a r"sult
o+ 3,i!, a n"3 Torr"ns Trans+"r C"rti+i!at" o+ Titl"
is issu"% t," $aliit# o+ t," titl" !an no long"r b"
Eu"stion". (Nati$ia H"rr"ra% "t al. $. Lu# Di*
>uan% "t al.% L.1C?@9% =an. 19% 1A61).
P,ili11in" 7an<ing Cor1. $. Lui S,"
L.1C5BC% S"1t. 16% 1A6C
T," -1ari "li!to88 rul" o"s not a11l# i+ in a trans+"r
to an ali"n o+ P,ili11in" lan% t," go$"rn*"nt ta<"s no
st"1s to "s!,"at or to r"$"rt t," 1ro1"rt# to t," Stat". I+
t," ali"n !ontinu"s to ,ol on to t," lan% t,"r" 3oul b" a
Art. 1@16
!ontinuing $iolation o+ t," Constitution. H"n!"% t,"
Fili1ino assignor s,oul b" allo3" to g"t ba!< t,"
1ro1"rt#.
Art. 1@16
D" 5aEuiHa $. Cast"ll$i
CC SC5A BB
A 1art# 3,o ,as $oluntaril# "nt"r" into an ill"gal
an $oi !o*1ro*is" agr""*"nt !annot 3it,ra3 or
r"n"r in"++"!ti$"% a!ts alr"a# on" in !onn"!tion 3it,
t,"ir 1art o+ t," unla3+ul bargain.
T"ja &ar<"ting% "t al. $. Nal" an IAC
>5 6551?% &ar. A% 1ABC
FACTS' A 1ur!,as" a *otor!#!l" 3it, si".!ar
+ro* 7 to "ngag" in t," trans1ortation busin"ss. For t,is
1ur1os"% t," tri*obil" 3as atta!," to 78s trans1orta.
tion lin"% or +ran!,is"% so *u!, so t,at in t," r"gistration
!"rti+i!at" 7 a11"ars to b" t," o3n"r o+ t," unit. A 1ai a
o3n1a#*"nt o+ P1%C?? 3it, a 1ro*is" t,at ," 3oul 1a#
7 t," balan!" 3it,in si4t# a#s. T,"# agr"" t,at 7 3oul
un"rta<" t," #"arl# r"gistration o+ t," unit 3it, t,"
Lan Trans1ortation Co*1an#. E$"ntuall#% 7 su" A to
r"!o$"r t," un1ai balan!". T," Cit# Court 3,"r" t,"
a!tion 3as originall# +il" as 3"ll as t," Court o+ First
Instan!" (no3 5"gional Trial Court) to 3,i!, it 3as
a11"al" or"r" A to 1a# t," un1ai balan!"% an
is*iss" ,is !ount"r!lai*. T," Court o+ A11"als%
,o3"$"r% "!lar" t," agr""*"nt $oi% an t," 1arti"s
b"ing in 1ari "li!to% n"it,"r o+ t,"* *a# bring an a!tion
against t," ot,"r to "n+or!" t,"ir il. l"gal !ontra!t. 7
assail" t," Court o+ A11"al8s "!ision. T," Su1r"*"
Court sustain" t," Court o+ A11"als an is*iss" 78s
1"tition.
HELD' Alt,oug, not outrig,tl# 1"naliH" as a !ri*i.
nal o++"ns"% t," -<abit s#st"*/ is r"!ogniH" as !ontrar# to
1ubli! 1oli!# an% t,"r"+or"% $oi an in"4ist"nt. T," !ourt
3ill not ai "it,"r 1art# to "n+or!" an ill"gal !ontra!t. It
3ill l"a$" t,"* bot, 3,"r" it +ins t,"*. It 3oul%
t,"r"+or"% b" "rror to a!!or t," 1arti"s r"li"+ +ro* t,"ir
1r"i!a*"nt. Art. 1@16 "ni"s t,"* su!, ai.
Art. 1@16
T," -<abit s#st"*/ is an arrang"*"nt 3,"r"b# a
1"rson 3,o ,as b""n grant" a !"rti+i!at" o+ 1ubli! !on.
$"ni"n!" allo3s anot,"r 1"rson 3,o o3ns *otor $",i!l"s
Art. 1@16
to o1"rat" un"r su!, +ran!,is" +or a +"". A !"rti+i!at" o+
1ubli! !on$"ni"n!" is a s1"!ial 1ri$il"g" !on+"rr" b# t,"
go$"rn*"nt. Abus" o+ t,is 1ri$il"g" b# t," grant""s !an.
not b" !ount"nan!". T," -<abit s#st"*/ ,as b""n on" o+
t," root !aus"s o+ t," 1r"$al"n!" o+ gra+t an !orru1tion
in go$"rn*"nt trans1ortation o++i!"s.
(b) T,os" 3,"r" onl# on" is guilt# or at +ault (or 3,"r" on"
1art# is l"ss guilt# t,an t," ot,"r% ,"n!" t,"# ar" not in
1ari "li!to).
1) E4a*1l"' A ,usban an ,is 3i+" "4"!ut" a $oi
!ontra!t i$iing t,"ir !onjugal 1ro1"rti"s% as a r"sult
o+ 3,i!, t," 3i+" 3as gi$"n a !"rtain 1ar!"l o+ lan.
A !"rtain 7oug,% 3,o 3ant" to g"t t," lan% li" to
t," 3i+" an tol ,"r +als"l# t,at ,"r ,usban 3as in
to3n an 3as going to !ont"st t," "" o+ 1ro1"rt#
s"1aration% in an att"*1t to inu!" ,"r to trans+"r t,"
lan to ,i* (7oug,)% so t,at t," ,usban !oul not g"t
,ol o+ t," 1ro1"rti"s. So% t," 3i+" agr"" to
+i!titiousl# trans+"r t," lan to ,i*. Lat"r% 7oug,
broug,t t,is a!tion to r"!o$"r t," lan an
1r"s"nt" as 1roo+ t," "" o+ sal" to ,i*. T," 3i+"%
on t," ot,"r ,an% as<" +or t," "!laration o+ t,"
sal" as null an $oi.
HELD' Alt,oug, t," 3i+" 3as in "li!to% s," 3as
not in 1ari "li!to 3it, 7oug, 3,o% b# +rau% inu!"
,"r to "nt"r into an agr""*"nt t,at 3as against 1ub.
li! 1oli!#. T,"r"+or"% 7oug, !annot g"t t," lan% an
t," 3i+" 3ill r"tain 1oss"ssion o+ t," sa*". (7oug, $.
Canti$"ros% @? P,il. 6?A).
6) E++"!ts'
a) T," guilt# 1art# !annot r"!o$"r 3,at ," ,as
gi$"n b# r"ason o+ t," !ontra!t% or as< +or t,"
+ul+ill*"nt o+ 3,at ,a b""n 1ro*is" ,i*.
(T,us% in t," "4a*1l" gi$"n% 7oug, 3as not al.
lo3" to g"t t," lan.) (7oug, $. Canti$"ros% @?
P,il. 6?A).
Art. 1@16
b) T," 1art# not at +ault *a# "*an t," r"turn
o+ 3,at ," ,as gi$"n% 3it,out an# obligation to
!o*1l# 3it, ,is 1ro*is". (Art. 1@16% No. 6).
Art. 1@16
Lan O3n"rs,i1 b# A*"ri!ans
A+t"r t," E41iration o+ t," Laur"l.
Langl"# Agr""*"nt on =ul. 9% 1AC@
On August 1C% 1AC6% t," Su1r"*" Court in t," !as" o+
5"1ubli! $. Iillia* H. :uas,a rul" t,at t," -1arit# rig,ts/
a*"n*"nt to t," 1A95 Constitution i not grant A*"ri!an
!itiH"ns an "ntiti"s t," rig,t to a!Euir" an o3n 1ri$at" lans
"4!"1t in !as"s o+ ,"r"itar# su!!"ssion. ;n"r t," 1AC9 Constitu.
tion% t," P,ili11in" >o$"rn*"nt ,a t," rig,t +ro* =ul# @% 1AC@%
to ta<" 1ositi$" st"1s to a!Euir" t,"s" lans +ro* t,"ir
A*"ri!an ,ol"rs in $i"3 o+ Art. NVII% S"!. 6% 3,i!, stat"s
t,at -titl"s to 1ri$at" lans a!Euir" b# su!, 1"rsons. . . s,all b"
$ali as against 1ri$at" 1"rsons onl#/ (t,us% not $ali as against
t," Stat"2 t,us also% t," Stat" !an or"r t," r"$"rsion to t,"
Stat" o+ sai lans). In &a#% 1AC@% Pr"si"nt F"rinan &ar!os
announ!" t," 1oli!# o+ t," >o$"rn*"nt to r"+rain until &a# 6B%
1AC5 +ro* ta<ing an# a!tion on t," rig,ts o+ A*"ri!an
ini$iuals or "ntiti"s (in!luing r"ligious !or1orations an
asso!iations) 3it, A*"ri!an "Euit# 1ar. ti!i1ation b"#on @?Q.
(NOTE' A*"ri!an "ntiti"s ar" still allo3" to o3n sai lans i+
t,"ir "Euit# 1arti!i1ation or s,ar" is onl# u1 to @?Q.) &a# 6C%
1AC5 3as t," last a#% t,"r"+or"% o+ sai gra!" 1"rio. C"rtain
!o*1ani"s% ,o3"$"r% *"r"l# sub*itt" !on!r"t" 1ro1osals +or
i$"st*"nt (inst"a o+ i**"iat"l# "++"!ting i$"st. *"nt o+
t,"ir ,olings). T,"s" 1ro1osals ar" no3 b"ing "$aluat" b# t,"
>o$"rn*"nt as to t,"ir goo +ait,% r"asonabl"n"ss% an
!o*1lian!" 3it, P,ili11in" la3s an r"gulations. Sub*ission o+
sai 1ro1osals% !ou1l" 3it, "$"ntual a!tual trans+"r to
Fili1inos 3it,in a r"asonabl" 1"rio% is to b" !onsi"r"
su++i!i"nt !o*1li. an!" 3it, t," t"r*s o+ t," gra!" 1"rio%
a!!oring to Pr"si"nt &ar!os. Sai -r"asonabl" 1"rio o+ ti*"/
also a11li"s to A*"ri!an !itiH"ns% 3,o% in goo +ait, ,a
a!Euir" lans in t," P,ili11in"s not "4!""ing +i$" t,ousan
(5%???) sEuar" *"t"rs +or a +a*il# 3"lling an 3,o ,a$" ta<"n
su++i!i"nt a!tion to trans+"r o3n"r. s,i1 o$"r su!, lans to
Euali+i" 1"rsons or "ntiti"s. (S"" Dail# E41r"sss% &a# 6A%
1AC5).
&ass $. Dir"!tor o+ Lans
Art. 1@16
B? SC5A 66A
I,il" ali"ns 3"r" g"n"rall# not allo3" to a!Euir" lans
un"r t," 1A95 Constitution% ;.S. !itiH"ns !oul g"n"rall# o so%
Art. 1@16
an t,"ir 1ro1ri"tar# rig,ts 3"r" not i*1air" b# t," 1ro!la*a.
tion o+ P,ili11in" In"1"n"n!" on =ul# @% 1A@6.
A$ila $. CA
>5 @5655% No$. 1@% 1AB6
FACTS' A 1ar!"l o+ lan 3,i!, ,a b""n ajui!at" to
N b# t," Caastral Court 3as o++"r" +or sal" at 1ubli! au!tion
on a!!ount o+ r"alt# ta4 "linEu"n!#. K% a 1ubli! s!,ool t"a!,"r%
too< 1art in an 3on t," biing. D"s1it" t," 1ro$ision o+ S"!.
5CA o+ t," 5"$is" A*inistrati$" Co" 1ro,ibiting 1ubli! s!,ool
t"a!,"rs +ro* bu#ing "linEu"nt 1ro1"rti"s% nobo#% not "$"n
t," go$"rn*"nt Eu"stion" ,"r 1arti!i1ation in sai au!tion
sal". A+t"r t," r""*1tion 1"rio% t," 1ro$in!ial tr"asur"r
"4"!ut" in K8s +a$or t," +inal "" o+ sal". S"$"n #"ars lat"r% t,"
Original C"rti+i!at" o+ Titl" !o$"ring sai lan 3as issu" in
+a$or o+ N. K soug,t to r"$i"3 t," "!r"". T," Caastral
Court s"t asi" t," "!r"" an or"r" t,at t," lan b"
ajui!at" to K.
HELD' K8s 1ur!,as" is 1ro,ibit" un"r S"!. 5CA o+ t,"
5"$is" A*inistrati$" Co". T," sal" to ,"r 3as $oi. A $oi
!ontra!t is in"4ist"nt +ro* t," b"ginning. It !annot b" rati+i".
Its ill"galit# !annot b" 3ai$". 7"ing 1art# to an ill"gal trans.
a!tion% K !annot r"!o$"r 3,at s," ,as gi$"n b# r"ason o+ t,"
!ontra!t or as< +or t," +ul+ill*"nt o+ 3,at ,as b""n 1ro*is"
,"r.
(@) T," Pari D"li!to Do!trin"
(a) I+ t," t3o 1arti"s to a !ontra!t ar" in 1ari "li!to% t,"
o!trin" a11li"s "$"n to t," s1ous" o+ on" o+ t,"*% 3,o
alt,oug, not a signator# to t," !ontra!t% ,as su++i!i"ntl#
*ani+"st" b# a++ir*ati$" a!ts ,"r un"Eui$o!al !on!ur.
r"n!" to t," !ontra!t in !ontro$"rs#. (S"" &ont""ra*os
$. Knono#% 56 P,il. @5C an La ;rbana $. Villasor% 5A
P,il. 6@@). I+ t," s1ous"s b"n"+it +ro* t," transa!tion% t,"
a!!"1tan!" o+ sai b"n"+its rais"s a strong 1r"su*1tion o+
<no3l"g" an !ons"nt. (In!o% "t al. $. EnriEu"H% L.1996C%
F"b. 6A% 1A6?).
Art. 1@16
(b) T," o!trin" o"s not a11l# to +i!titious or absolut"l#
si*ulat" !ontra!ts (>onHal"s $. Trinia% 6C P,il. 6B6)%
Art. 1@16
sin!" t,"s" !ontra!ts ar" in"4ist"nt (S"" VasEu"H $. Porta%
56 O.>. C615)2 not to a !ontra!t 3,"r" on" 1art#% a *inor%
is *u!, l"ss guilt# t,an anot,"r% 3,o is o+ ag" (Ligu"H $.
Lo1"H% 1?6 P,il. 5CC)2 nor to a !as" 3,"r" t," go$"rn*"nt
is in$ol$" +or t," go$"rn*"nt is not "sto11" b# t,"
n"gl"!t o+ its o++i!"rs. (C"ntral AHu!ar"ra " Tarla! $.
Coll"!tor% L.11??6% S"1t. 9?% 1A5B)2 nor +inall# to a
!ontra!t o+ sal"% 3,"r" on a!!ount o+ a br"a!, o+
3arrant# u" to a oubl" sal" o+ t," sa*" 1ro1"rt#%
a*ag"s ar" su++"r" 0 in a !as" li<" t,is t," go$"rning
arti!l"s 3oul b" Arts. 1@A5% 15@C% an 1555 on t," la3
o+ Sal"s. (Diosao Sta. 5o*ana $. Carlos I*1"rio% "t al.%
L.1C6B?% D"!. 6A% 1A65).
(!) T," o!trin" o"s not a11l# 3,"r" a su1"rior 1ubli! 1oli!#
int"r$"n"s. T,us% "$"n i+ a ,o*"st"a o3n"r s"lls it
3it,in t," 1ro,ibit" 1"rio an 3it, 1r"su*"
<no3l"g" t,at it is ill"gal% still t," o3n"r or ,is ,"ir *a#
su" +or its r"!o$"r#% +or t," 1ur1os" o+ t," la3 is to grant
lan to sai o3n"r or ,is ,"ir. (S"" D" los Santos $.
5o*an Cat,oli! C,ur!,% A@
P,il. @?5 an Ang"l"s $. Court o+ A11"als% "t al.% L.11?6@%
=an. 91% 1A5B).
FNOTE' I,il" t," o!trin" o"s not a11l# to t," sal"
o+ t," ,o*"st"a% it a11li"s to t," loss o+ t," 1rou!ts
r"!"i$" b# t," bu#"r an t," $alu" o+ t," n"!"ssar#
i*1ro$"*"nts *a" b# ,i* on t," lan. T,us% sin!" bot,
t," ,o*"st"a"r an t," bu#"r ar" in ba +ait,% t,"
!lai* o+ t," ,"irs o+ t," ,o*"st"a"r +or t," 1rou!ts o+
t," lan an t,at o+ t," bu#"r +or t," "41"ns"s in t,"
!onstru!tion o+ t," i<"% s,oul b" "ni". (Ang"l"s $.
Court o+ A11"als% "t al.% L.
11?6@% =an. 91% 1A5B). &or"o$"r% 3,at t," ,o*"st"a"r
or ,is ,"irs *ust r"turn is not t," in!r"as" $alu" o+ t,"
1ro1"rt#% but onl# t," 1ur!,as" 1ri!" 1ai b# t," bu#"r.
(Santan"r% "t al. $. Villanu"$a an Asun!ion% L.61B@% F"b.
6B% 1A5B).G T,is ruling on t," r"1ur!,as" 1ri!" i+ *a" is
also a11li!abl" to t," sal" o+ t," ,o*"st"a AFTE5 t,"
5.#"ar 1"rio but 3it, t," l"gal rig,t o+ r""*1tion
Art. 1@16
3oul% ,o3"$"r% a11"ar to b" unjust i+ a ,o*"st"a"r% to
obtain *on"#% "lib"rat"l# s"lls ,is lan to a r"lu!tant
1ur!,as"r (3,o non"t,"l"ss bu#s t," sa*" on t," str"ngt,
o+ a 3ritt"n guarant"" on t," 1art o+ t," ,o*"st"a"r not
to r"1ur!,as" t," sa*"). In a !as" li<" t,is% t,"r" 3oul b"
F5A;D on t,"
Art. 1@16
1art o+ sai ,o*"st"a"r. In""% t," Court8s ruling 3oul
"n!ourag" t," 1ro1agation o+ a -ra!<"t/ b# ,o*"st"a"r
3,o *a<" it a 1ra!ti!" to s"ll% an r"""*% an lat"r s"ll
an r"""* again% "t!. (ta<ing a$antag" as t,"# o o+ t,"
ra1i in!r"as" o+ lan $alu"s). I,il" t," 1ur1os" o+ t,"
la3 is in"" to 1rot"!t t," ,o*"st"a"rs% t,"r" ar" also
instan!"s 3,"n it is A>AINST t,"* t,at sin!"r"
1ur!,as. "rs s,oul b" 1rot"!t".G
() T," -1ari "li!to/ rul" o"s not a11l# in !as" o+ $oi !on.
tra!ts 3,i!, ar" si*ulat" to !ir!u*$"nt a la3. For in.
stan!"% a onation b"t3""n s1ous"s is g"n"rall# $oi
un"r Art. 199 o+ t," Ci$il Co". An it ,as b""n rul"
t,at in su!, a !as"% t," 1ro1"rt# !an b" r"!lai*" at
an#ti*" b# t," onor or ,is ,"irs or b# an# 1"rson
1r"jui!" t,"r"b#. To a11l# t," -1ari "li!to/ rul" in su!,
a !as" 3oul b" to san!tion a !ir!u*$"ntion o+ t,"
1ro,ibition. (5origu"H $. 5origu"H% L.69??6% =ul. 91%
1A6C).
(5) So*" :u"stions on >a*bling
(a) I,at o"s t," la3 1ro$i" r"garing ga*bling loss"s an
gainsJ
ANS.' -No a!tion !an b" *aintain" b# t," 3inn"r
+or t," !oll"!tion o+ 3,at ," ,as 3on in a ga*" o+ !,an!".
7ut an# los"r in a ga*" o+ !,an!" *a# r"!o$"r ,is loss
+ro* t," 3inn"r% 3it, l"gal int"r"st +ro* t," ti*" ," 1ai
t," a*ount lost% an subsiiaril# +ro* t," o1"rator or
*anag"r o+ t," ga*bling ,ous"./ (Art. 6?1@% Ci$il Co").
(b) Su11os" in ga*bling t,"r" 3as !,"ating or "!"it% 3,at
s,oul b" on"J
ANS.' -I+ !,"ating or "!"it is !o**itt" b# t," 3in.
n"r% ,"% an subsiiaril#% t," o1"rator or *anag"r o+ t,"
ga*bling ,ous" s,all 1a# b# 3a# o+ "4"*1lar# a*ag"s%
not l"ss t,an t," "Eui$al"nt o+ t," su* lost% in aition to
t," latt"r a*ount. I+ bot, t," 3inn"r an t," los"r ,a$"
1"r1"trat" +rau% no a!tion +or r"!o$"r# !an b" broug,t
b# "it,"r./ (Art. 6?15% Ci$il Co").
Art. 1@16
(!) Su11os" t," los"r r"+us"s to bring t," a!tion to r"!o$"r%
3,at *a# b" on"J
Art. 1@16
ANS.' -I+ t," los"r r"+us"s or n"gl"!ts to bring an
a!tion to r"!o$"r 3,at ,as b""n lost% ,is or ,"r !r"itors%
s1ous"% "s!"nants% or ot,"r 1"rsons "ntitl" to b" su1.
1ort" b# t," los"r *a# institut" t," a!tion. T," su*
t,"r"b# obtain" s,all b" a11li" to t," !r"itors8 !lai*s%
or to t," su11ort o+ t," s1ous" or r"lati$"s% as t," !as"
*a# b".88 (Art. 6?16% Ci$il Co").
() Su11os" t," 3at!,"rs o+ a ga*" o+ !,an!" b"t on t," r"sult
o+ t," ga*" 3it,out% ,o3"$"r% ta<ing an a!ti$" 1art in t,"
ga*" its"l+% 3,at rul"s s,oul b" a11li"J
ANS.' -T," 1ro$isions o+ Arti!l"s 6?1@ an 6?16 a1.
1l# 3,"n t3o or *or" 1"rsons b"t in a ga*" o+ !,an!"%
alt,oug, t,"# ta<" no a!ti$" 1art in t," ga*" its"l+.88 (Art.
6?1C% Ci$il Co").
(") To 1r"$"nt 1ur" s1"!ulation 3,i!, r"all# a*ounts to ga*.
bling% 3,at o"s t," Ci$il Co" 1ro$i"J
ANS.' -I+ a !ontra!t 3,i!, 1ur1orts to b" +or t," ".
li$"r# o+ goos% s"!uriti"s or s,ar"s o+ sto!< is "nt"r" into
3it, t," int"ntion t,at t," i++"r"n!" b"t3""n t," 1ri!"
sti1ulat" an t," "4!,ang" or *ar<"t 1ri!" at t," ti*"
o+ t," 1r"t"n" "li$"r# s,all b" 1ai b# t," los"r to t,"
3inn"r% t," transa!tion is null an $oi% an t," los"r *a#
r"!o$"r 3,at ," ,as 1ai./ (Art. 6?1B% Ci$il Co").
(6) O>a*bling8 Distinguis," +ro* O7"tting8
I,il" g"n"rall# ga*bling on t," r"sults o+ a ga*" o+
!,an!" is 1ro,ibit"% b"tting (3,i!, !on!"rns its"l+ 3it, ga*"s
o+ s<ill% li<" !,"ss) is orinaril# allo3".
T,us% t," la3 sa#s'
-T," los"r in an# ga*" 3,i!, is not on" o+ !,an!"% 3,"n
t,"r" is no lo!al orinan!" 3,i!, 1ro,ibits b"tting t,"r"in% is
un"r obligation to 1a# ,is loss% unl"ss t," a*ount t,"r"o+ is
"4!"ssi$" un"r t," !ir!u*stan!"./ (Art. 6?6?% Ci$il Co").
(NOTE' T," 1ro$ision in t," 5"$is" P"nal Co" 1ro,ibit.
ing b"tting on t," r"sults o+ a s1orts !ont"st 3oul s""* to b"
Art. 1@16
ina11li!abl" in !as"s !o$"r" b# Art. 6?6?% ot,"r3is" sai Art.
6?6? 3oul b" r"n"r" nugator#.)
Art. 1@19
(C) 7A5 :;ESTION
A !,all"ng"s 7 to a !,"ss *at!,% los"r to 1a# t," 3inn"r
P1??%???. 7 a!!"1ts t," !,all"ng". A 3ins t," *at!, but 7
r"+us"s to 1a#. &a# A su" 7 +or t," P1??%???J I,#J
ANS.' ;nl"ss t,"r" is a lo!al orinan!" 1ro,ibiting b"tting
in a !,"ss *at!,% an unl"ss% !onsi"ring t," !ir!u*stan!"s o+
t," !as"% t," su* o+ P1??%??? is "4!"ssi$" (it 3oul not b" i+%
+or "4a*1l"% t," 1la#"rs 3"r" *illionair"s)% A *a# su!!"ss+ull#
su" 7 +or t," P1??%???. T,is is b"!aus" !,"ss is not a ga*" o+
!,an!".
(B) OIn 1ari "li!to8 5ul" Ina11li!abl" to In"4ist"nt an Voi
Contra!ts
T,is 1rin!i1l" o"s not a11l# 3it, r"s1"!t to in"4ist"nt
an $oi !ontra!ts. In 1ari "li!to non oritur a!tio "ni"s all
r"!o$"r# to t," guilt# 1arti"s int"r s". It a11li"s to !as"s 3,"r"
t," nullit# aris"s +or* t," ill"galit# o+ t," !onsi"ration or t,"
1ur1os" o+ t," !ontra!t. I,"n t3o 1"rsons ar" "Euall# at +ault%
t," la3 o"s not r"li"$" t,"*. T," "4!"1tion to t,is g"n"ral
rul" is 3,"n t," 1rin!i1l" is in$o<" 3it, r"s1"!t to in"4ist"nt
!ontra!ts. (Ku 7un >uan $. El$ira Ong% >5 1@@C95% O!tob"r 1B%
6??1).
Art. 1@19. Int"r"st 1ai in "4!"ss o+ t," int"r"st
allo3" b# t," usur# la3s *a# b" r"!o$"r" b# t," "btor%
3it, int"r. "st t,"r"on +ro* t," at" o+ t," 1a#*"nt.
CO&&ENT'
&"aning o+ E4!"ss
Stri!tl# s1"a<ing% an using t," +or*"r ;sur# La3 as a
basis% it 3oul s""* un"r t,is Arti!l" t,at t," "4!"ss r"+"rr"
to is t," a*ount in "4!"ss o+'
(a) 1@Q (in !as" o+ uns"!ur" loans)
(b) 16Q (in !as" o+ s"!ur" loans 3it, r"gist"r" r"al "stat"
as s"!urit#)
Art. 1@19
(!) 6.1U6Q 1"r *ont,2 6Q 1"r *ont,2 1@Q 1"r #"ar (in t," !as"
o+ 1a3ns,o1s)
Art. 1@19
T," onl# troubl" is t,at t,"r" is an in,"r"nt !on+li!t
in t," Ci$il Co" as to 3,i!, la3 1r"$ails% t," ;sur# La3
or t," Ci$il Co".
Not" also t,at un"r C"ntral 7an< Cir!ular A?5% t,"
;sur# La3 ,as b""n r"1"al"% "++"!ti$" =anuar# 1% 1AB9.
(a) ;n"r Arts. 11C5 an 1A5C o+ t," Ci$il Co"% in !as" o+
!on+li!t% t," ;sur# La3 1r"$ails.
(b) ;n"r Art. 1A61 o+ t," Ci$il Co"% in !as" o+ !on+li!t% t,"
Ci$il Co" a11li"s.
FNOTE' No3 t,"n% un"r S"!. 6 o+ A!t 6655 (<no3n
as t," ;sur# La3)% t," 1"rson 1a#ing t," usurious
int"r"st -*a# r"!o$"r t," 3,ol" int"r"st% !o**issions%
1r"*iu*s% 1"nalti"s% an sur!,arg"s 1ai an "li$"r"/
as long as t," a!tion +or r"!o$"r# is institut" 3it,in t3o
#"ars a+t"r su!, 1a#*"nt an "li$"r# (t,at is% all t,"
int"r"st 1ai 3it,in t," last t3o #"ars 1rior to litigation
*a# b" r"!o$"r").G
(NOTE' It s,oul b" not" t,at un"r bot, t,"ori"s%
l"gal int"r"st on t," int"r"st *a# also b" r"!o$"r".)
FNOTE' In on" !as"% t," Su1r"*" Court ,"l t,at
t," r"!o$"r# o+ t," int"r"st is go$"rn" b# t," Ci$il Co".
In sai !as"% ,o3"$"r% t," Eu"stion o+ t," -!on+li!t/ 3as
not is!uss". (C,"ri" Pal"l"o $. 7"atriH Cosio% L.C66C%
No$.
6B% 1A55).G
FNOTE' In t," !as"% ,o3"$"r% o+ Ang"l =os" Iar",ous.
ing Co. $. C,"la Ent"r1ris"s an Da$i S#jui!o% L.65C?@%
A1r. 6@% 1A6B (s"" t," !aus" as gi$"n in t," !o**"nts un"r
Art. 11C5)% t," Court ,"l t,at t," "ntir" int"r"st agr""
u1on *a# b" r"!o$"r"% not *"r"l# t,at in "4!"ss o+ 16Q
or 1@Q as t," !as" *a# b" 0 +or t," "ntir" int"r"st agr""
u1on is an ini$isibl" sti1ulation 3,i!, is VOID. On t,"
ot,"r ,an% t," 1rin!i1al loan *ust b" r"turn" b"!aus"
t,"r" is not,ing 3rong 3it, r"s1"!t to t,is 1rin!i1al obli.
gation. It is onl# t," a!!"ssor# obligation (r" t," int"r"st)
Art. 1@19
t,at is VOID. Ho3"$"r% int"r"st +or "+ault *ust b" 1ai
in aition to t," 1rin!i1al.G
Art. 1@1@
Art. 1@1@. I,"n *on"# is 1ai or 1ro1"rt# "li$"r" +or
an ill"gal 1ur1os"% t," !ontra!t *a# b" r"1uiat" b# on" o+
t," 1arti"s b"+or" t," 1ur1os" ,as b""n a!!o*1lis,"% or
b"+or" an# a*ag" ,as b""n !aus" to a t,ir 1"rson. In
su!, !as"% t," !ourts *a#% i+ t," 1ubli! int"r"st 3ill t,us b"
subs"r$"% allo3 t," 1art# r"1uiating t," !ontra!t to
r"!o$"r t," *on"# or 1ro1"rt#.
CO&&ENT'
(1) On" Instan!" I,"r" 5"!o$"r# Can 7" Ha E$"n in t,"
Pr"s"n!" o+ Pari D"li!to
T,is is on" !as" 3,"r" r"!o$"r# !an b" *a" "$"n i+ t,"
1arti"s b" in 1ari "li!to. Not"% ,o3"$"r% t,at r"!o$"r# !an b"
on" onl#'
(a) i+ t," 1ur1os" ,as not #"t b""n a!!o*1lis,"2
(b) or i+ a*ag" ,as not b""n !aus" an# t,ir 1"rson.
(6) E4a*1l"
For a r"3ar% A 1ro*is" to <ill C +or 7. 7 ga$" t," r"3ar.
7"+or" A !oul <ill C% 7 r"1uiat" t," !ontra!t. Is 7 allo3" to
o soJ K"s% b"!aus" ,"r"% t," 1ur1os" ,as not #"t b""n a!!o*.
1lis," an no a*ag" ,as as #"t b""n !aus" to a t,ir
1"rson. &a# 7 r"!o$"r 3,at ," ,as 1aiJ It "1"ns on t,"
is!r"tion o+ t," !ourt. I+ 1ubli! int"r"st allo3s t," 1art#
r"1uiating t," !ontra!t to r"!o$"r t," *on"# or 1ro1"rt#
gi$"n. I+% ,o3"$"r% t," r"1uiation too< 1la!" a+t"r t," !ri*"
,as b""n on"% su!, r"1uiation is in$ali an bot, 1arti"s
3ill b" guilt#.
T," Co" Co**ission ,as t,is to sa#' -Con!"rning ill"gal
!ontra!ts% Arti!l"s 1@1@ (su1ra.) an 1@16 (in+ra.) allo3 r"!o$.
"r# b# on" o+ t," 1arti"s "$"n t,oug, bot, o+ t,"* ,a$" a!t"
!ontrar# to la3./ (5"1ort o+ t," Co" Co**ission% 1. 6C).
(@) A11li!abl" E$"n i+ Parti"s Ar" Not EEuall# >uilt#
Art. 1@1@
T," Arti!l" also a11li"s i+ t," 1arti"s ar" not "Euall#
guilt#% an 3,"r" 1ubli! 1oli!# 3oul b" a$an!" b# allo3ing
t," suit +or r"li"+. (7oug, $. Canti$"ros% @? P,il. 6?A).
Arts. 1@15.1@16
Art. 1@15. I,"r" on" o+ t," 1arti"s to an ill"gal
!ontra!t is in!a1abl" o+ gi$ing !ons"nt% t," !ourts *a#% i+
t," int"r"st o+ justi!" so "*ans% allo3 r"!o$"r# o+ *on"#
or 1ro1"rt# "li$"r" b# t," in!a1a!itat" 1"rson.
CO&&ENT'
(1) E++"!t i+ On" Part# Is In!a1a!itat"
T,is is anot,"r instan!" 3,"n r"!o$"r# !an b" ,a.
(6) E4a*1l"
An insan" *an ga$" *on"# to anot,"r to <ill N. &a# t,"
insan" *an r"!o$"r 3,at ," ,as 1aiJ K"s% sin!" t," int"r"st
o+ justi!" so "*ans.
Art. 1@16. I,"n t," agr""*"nt is not ill"gal 1"r s" but
is *"r"l# 1ro,ibit"% an t," 1ro,ibition b# t," la3 is
"sign" +or t," 1rot"!tion o+ t," 1lainti++% ," *a#% i+
1ubli! 1oli!# is t,"r"b# "n,an!"% r"!o$"r 3,at ," ,as
1ai or "li$"r".
CO&&ENT'
(1) Contra!ts Ill"gal P"r S" an T,os" &"r"l# Pro,ibit"
T,is Arti!l" istinguis,"s b"t3""n !ontra!ts t,at ar"'
(a) ill"gal 1"r s"2
(b) an *"r"l# 1ro,ibit" !ontra!ts.
(6) Ill"gal P"r S"
Ill"gal 1"r s" !ontra!ts ar" t,os" +orbi"n b"!aus" o+
1ubli!
int"r"st.
(9) &"r"l# Pro,ibit"
&"r"l# 1ro,ibit" !ontra!ts ar" t,os" +orbi"n b"!aus"
o+ 1ri$at" int"r"sts. H"r" r"!o$"r# is 1"r*itt"% 1ro$i" t,at'
Arts. 1@15.1@16
(a) t," !ontra!t is not ill"gal 1"r s"%
(b) t," 1ro,ibition is "sign" +or t," 1rot"!tion o+ t," 1lain.
ti++%
Art. 1@16
(!) an 1ubli! 1oli!# 3oul b" "n,an!" b# allo3ing t," r".
!o$"r#.
(@) E4a*1l"s
A onat" to 7 "$"r#t,ing t,at ," (A) 1oss"ss" an
o3n"% l"a$ing not,ing +or ,i*s"l+. T,is is 1ro,ibit" but not
ill"gal 1"r s". Sin!" 1ubli! 1oli!# is ,"r"b# "n,an!"% A 3ill b"
allo3" to r"!o$"r% at l"ast t,at n"!"ssar# +or ,is o3n su11ort
an t," su11ort o+ ,is r"lati$"s.
Al"janro 5as $. Est"la Sua an 5a*on Sua
L.699?6% S"1t. 65% 1A6B
FACTS' Al"janro 5as% a+t"r ,a$ing a!Euir" a +our.,"!.
tar" 1ar!"l o+ lan +ro* t," National Aba!a an Ot,"r Fib"rs
Cor1oration (NAFCO)% l"as"% b"+or" t," "41iration o+ 1? #"ars
+ro* su!, a!Euisition% t," lan in +a$or o+ "+"nant s1ous"s
(5a*on an Est"la Sua). In $i"3 o+ t," +ailur" o+ t," l"ss""s to
!o*1l# 3it, t," t"r*s o+ t," l"as" !ontra!t (".g.% +ailur" to 1a#
r"ntals)% 5as su" +or t," r"s!ission o+ t," !ontra!t. T," l"ss""s
!ont"n"% a*ong ot,"r t,ings% t,at t," l"ssor 5as ,a no
rig,t to su" b"!aus" o+ a $iolation o+ 5"1. A!t @CC%
1ro,ibiting t," ali"nation or "n!u*b"ring o+ lan a!Euir"
+ro* t," NAFCO 3it,in 1? #"ars +ro* t," issuan!" o+ t,"
!orr"s1oning !"rti+i. !at" o+ titl". Issu"' Consi"ring t," 1ari
"li!to o!trin"% *a# 5as su!!"ss+ull# su" +or t," r"!o$"r# o+
t," lanJ
HELD' K"s% 5as *a# still su" +or t," r"!o$"r# o+ t," lan.
5A @CC is sil"nt as to t," !ons"Eu"n!" o+ t," "n!u*b"ring o+ t,"
lan 3it,in t," 1?.#"ar 1ro,ibit" 1"rio. 7ut !onsi"ring t,at
t," ai* o+ t," go$"rn*"nt in allo3ing t," istribution or sal" o+
is1osabl" 1ubli! lans to "s"r$ing a11li!ants is to "nabl" t,"
lanl"ss !itiH"ns to o3n lan t,"# !an 3or< on% an !onsi"ring
t,at t," r"$"rsion o+ t,"s" lans to t," go$"rn*"nt is 1"nal in
!,ara!t"r% r"$"rsion !annot b" !onstru" to b" i*1li" +ro* t,"
1ro$ision 1ro,ibiting !"rtain a!ts. I,"r"% as in t,is !as"% t,"
int"r"st o+ t," ini$iual out3"ig,s t," int"r"st o+ t," 1ubli!%
stri!t !onstru!tion o+ a 1"nal 1ro$ision is justi+i" un"r Art.
Art. 1@16
1@16 o+ t," Ci$il Co".
Arts. 1@1C.1@1B
Art. 1@1C. I,"n t," 1ri!" o+ an# arti!l" or
!o**oit# is "t"r*in" b# statut"% or b# aut,orit# o+
la3% an# 1"rson 1a#ing an# a*ount in "4!"ss o+ t,"
*a4i*u* 1ri!" allo3" *a# r"!o$"r su!, "4!"ss.
CO&&ENT'
(1) 5ul" in Cas" o+ Pa#*"nt in E4!"ss o+ &a4i*u* Pri!"
Pur1os" o+ t," Arti!l"' To !urb t," "$ils o+ 1ro+it""ring.
(6) E4a*1l"
I+ t," !"iling 1ri!" +or a 1a!< o+ !igar"tt"s is 1"gg" at
P9??.?? a !arton an #ou 1ai P@??.?? +or it% #ou *a# r"!o$"r
t," "4!"ss o+ P1??.??.
Art. 1@1B. I,"n t," la3 +i4"s% or aut,oriH"s t," +i4ing
o+ t," *a4i*u* nu*b"r o+ ,ours o+ labor% an a !ontra!t is
"nt"r" into 3,"r"b# a labor"r un"rta<"s to 3or< long"r
t,an t," *a4i*u* t,us +i4"% ," *a# "*an aitional
!o*1"nsation +or s"r$i!" r"n"r" b"#on t," ti*" li*it.
CO&&ENT'
(1) Hours o+ Labor
T,is !on!"rns ,ours o+ labor. It s,oul b" not" t,at
t," Eig,t.Hour Labor La3 a11li"s onl# to "*1lo#*"nts in
inustr# or o!!u1ation 1"r+or*" +or 1ro+it or gain.
(D"1art*"nt o+ Publi! S"r$i!" Labor ;nion $. CI5% "t al.% L.
15@5B% =an. 6B% 1A61).
(6) 7asis o+ &ini*u* Iag" 5at"s
T," basis o+ t," *ini*u* 3ag" rat"s is not *or" t,an
"ig,t ,ours ail# labor in t," !as" o+ "*1lo#""s 3or<ing in
non.agri!ultural "nt"r1ris"s% an not *or" t,an t," !usto*ar#
,ours o+ 3or< in t," !as" o+ agri!ultural 3or<"rs. (Art. 1% S"!.
Arts. 1@1C.1@1B
9% Co" o+ 5ul"s an 5"gulations to I*1l"*"nt t," &ini*u*
Iag" La3% as A*"n").
Art. 1@1A
(9) Si!< an Va!ation L"a$"s
5" &ario 7. C,anliong!o
CA SC5A 96@
I+ t," ,usban is an "*1lo#""% ,is unus" l"a$"s (3,"t,"r
$a!ation or si!< l"a$"s) ar" r"gar" as !onjugal% t," sa*" b".
ing !o*1"nsation +or s"r$i!"s r"n"r". T,"# ar"% t,"r"+or"%
not gratuiti"s.
Art. 1@1A. I,"n t," la3 s"ts% or aut,oriH"s t," s"tting
o+ a *ini*u* 3ag" +or labor"rs% an a !ontra!t is agr""
u1on b# 3,i!, a labor"r a!!"1ts a lo3"r 3ag"% ," s,all b"
"ntitl" to r"!o$"r t," "+i!i"n!#.
CO&&ENT'
(1) &ini*u* Iag" 0 No Iai$"r o+ 5ig,t
-No 3or<"r or organiHation o+ 3or<"rs *a# $oluntaril#
or ot,"r3is"% ini$iuall# or !oll"!ti$"l#% 3ai$" an# rig,ts "s.
tablis," un"r t,is A!t% an no agr""*"nt or !ontra!t% oral or
3ritt"n% to a!!"1t a lo3"r 3ag" or l"ss t,an an# ot,"r b"n"+it
r"Euir" un"r t,is a!t s,all b" $ali./ (&ini*u* Iag" La3).
In"!"ta Al+anta $. Nolas!o No"% "t al.
L.96966% S"1t. 1A% 1AC9
(So!ial Fun!tion o+ Pro1"rt# O3n"rs,i1)
;n"r t," Constitution% 1ro1"rt# o3n"rs,i1 ,as b""n i*.
1r"ss" 3it, a so!ial +un!tion. T,is i*1li"s t,at t," o3n"r ,as
t," obligation to us" ,is 1ro1"rt# not onl# to b"n"+it ,i*s"l+ but
so!i"t# as 3"ll. H"n!"% it 1ro$i"s t,at in t," 1ro*otion o+
so!ial justi!"% t," Stat" s,all r"gulat" t," a!Euisition%
o3n"rs,i1% us"% "njo#*"nt% an is1osition o+ 1ri$at"
1ro1"rt#% an "Euitabl# i++us" 1ro1"rt# o3n"rs,i1 an
1ro+its. T," Constitution also "nsur"s t,at t," 3or<"r s,all
,a$" a just an li$ing 3ag" 3,i!, s,oul assur" +or ,i*s"l+ an
,is +a*il# an "4ist"n!" 3ort,# o+ ,u*an ignit#% an gi$" ,i*
o11ortuniti"s +or a b"tt"r li+".
(6) &ini*u* Iag"s +or Hous",ol an Do*"sti! H"l1"rs
Art. 1@1A
;n"r Pr"si"ntial D"!r"" AA (also +oun in C,a1t"r III%
Titl" III% 7oo< III% Labor Co" o+ t," P,ili11in"s)% an# ,ous".
,"l1"r 3,o b"+or" t," 1ro*ulgation o+ t," "!r"" 3as alr"a#
Art. 1@1A
r"!"i$ing a !o*1"nsation ,ig,"r t,an t,at 1r"s!rib" t,"r"in%
s,all not su++"r an# "!r"as" in !o*1"nsation. Furt,"r*or"%
t," *ini*u* rat"s gi$"n ,"r" s,all b" in ADDITION to t,"
,ous","l1"r8s loging% +oo% an *"i!al att"nan!".
5"!"nt l"gislation ,as !aus" an u13ar r"$ision o+ t,"
*ini*u* 3ag".
(9) P"nalt#
-An# "*1lo#"r 3,o un"r1a#s an "*1lo#"" is liabl" to t,"
"*1lo#"" a++"!t" in t," a*ount o+ t," un1ai 3ag"s 3it, l"gal
int"r"st. A!tion to r"!o$"r su!, liabilit# *a# b" *aintain" in
an# !o*1"t"nt !ourt b# an# on" or *or" "*1lo#""s on b",al+ o+
,i*s"l+ or t,"*s"l$"s. T," !ourt in su!, a!tion s,all in
aition to an# jug*"nt a3ar" to t," 1lainti++ or
1lainti++s% allo3 a r"asonabl" attorn"#8s +""./
(@) I,"n Iag"s S,oul 7" Pai
-Iag"s s,all b" 1ai not l"ss o+t"n t,an on!" "$"r# t3o
3""<s or t3i!" a *ont, at int"r$als% not "4!""ing si4t""n
a#s. In t," !as" o+ "*1lo#""s ,ir" to 1"r+or* a tas<% t,"
!o*1l"tion o+ 3,i!, r"Euir" *or" t,an a +ortnig,t% an in
r"s1"!t o+ 3,o* int"r$als +or t," 1a#*"nt o+ 3ag"s ar" not
ot,"r3is" +i4" b# !oll"!ti$" bargaining or arbitration a3ar%
it s,all b" t," ut# o+ t," "*1lo#"r'
(a) to *a<" 1a#*"nt on a!!ount not l"ss o+t"n t,an on!"
"$"r# t3o 3""<s or t3i!" a *ont, at int"r$als not
"4!""ing si4t""n a#s2 an
(b) to *a<" a +inal s"ttl"*"nt 3it,in t3o 3""<s a+t"r t,"
!o*1l"tion o+ t," tas<.88 (5A 6?6% S"!. 1?FbG).
San &igu"l Cor1oration an Fran!is!o
Anr"s $. T," Hon. S"!r"tar# o+ Labor% "t al.
L.9A1A5% &a# 16% 1AC5
ISS;ES'
(1) I+ an "*1lo#""% b"!aus" o+ t," ,ig, !ost o+ li$ing an
Art. 1@1A
t," i++i!ulti"s o+ su11orting a +a*il# *isr"1r"s"nts
to t," rug !o*1an# 3,"r" ," 3or<s t,at ," n""s
Art. 1@1A
!"rtain rugs as *"i!in" 3,"n ,is 1ur1os" is to s"ll
t," sa*"% *a# ," b" 1unis," b# t," !o*1an#J
(6) Can a "!ision o+ t," National Labor 5"lations Co*.
*ission (NL5C) an o+ t," S"!r"tar# o+ Labor b"
subj"!t to jui!ial r"$i"3 i+ sai jui!ial r"$i"3 is
not 1ro$i" +or in t," Pr"si"ntial D"!r"" 0 on t,"
t,"or# o+ -s"1aration o+ 1o3"rs/J
HELD'
(1) K"s% t," "*1lo#"" *a# b" 1unis,"% +or ,is !onu!t
s,oul not b" tol"rat" 0 t," sa*" b"ing a *isr"1.
r"s"ntation or "!"1tion. On t," ot,"r ,an% in $i"3
o+ t," ,ig, !ost o+ li$ing an t," i++i!ulti"s o+ su1.
1orting a +a*il#% it is not sur1rising t,at *"*b"rs o+
t," 3ag"."arning !lass 3oul o an#t,ing 1ossibl" to
aug*"nt t,"ir s*all in!o*". Ho3"$"r% in $i"3 o+ t,"
stat" o+ n"!"ssit# ," +oun ,i*s"l+ in (an in !as" o+
a 1ro*is" on ,is 1art not to r"1"at t," o++"ns") is.
*issal 3oul b" a rasti! 1unis,*"nt. T,"
is*iss" "*1lo#"" s,oul b" r"instat"% but 3it,out
ba!<3ag"s b"!aus" ,is is*issal ,a b""n *a" in
goo +ait,. T," loss o+ 3ag"s +ro* ti*" o+ is*issal
to ti*" o+ r"instat"*"nt% un"r t," !ir!u*stan!"s%
3oul b" su++i!i"nt 1"nalt# (In t,is !as"% t," ti*"
int"r$al 3as aroun t,r"" #"ars).
(6) K"s% t," "!ision is subj"!t to jui!ial r"$i"3. It is g"n.
"rall# un"rstoo t,at as to a*inistrati$" ag"n!i"s
"4"r!ising Euasi.jui!ial or l"gislati$" 1o3"r% t,"r"
is an un"rl#ing 1o3"r in t," !ourts to s!rutiniH"
t," a!ts o+ su!, ag"n!i"s on Eu"stions o+ la3 an
juris1ru"n!"% "$"n t,oug, no rig,t o+ r"$i"3 is gi$"n
b# statut". (C9 C.=.S. 5?6% not" 56). T," 1ur1os" o+
jui!ial r"$i"3 is to <""1 t," a*inistrati$" ag"n!#
3it,in its jurisi!tion an to 1rot"!t t," substantial
rig,ts o+ t," 1arti"s a++"!t". T,is is 1art o+ t,"
s#st"* o+ !,"!<s an balan!"s. T,us% t," !ourts *a#
"!lar" an a*inistrati$" a!t ill"gal or !orru1t or
!a1ri!ious. (S"" 7orro*"o $. Cit# o+ &anila M
Art. 1@1A
5origu"H LanuHa%
66 P,il. 516 an Vill"gas $. Auitor.>"n"ral% L.
61956% No$. 6A% 1A66).
Arts. 1@6?.1@61
7a!ata $. Ior<*"n8s Co*1"nsation
Co**ission
L.69AA6% O!t. 6C% 1AC5
FACTS' D"!"as" 3as a ri$"r *"!,ani! o+ a
!o*1an# "ngag" in an ILLE>AL T5ADE% t,"
*anu. +a!tur" o+ blasting !a1s. On" a# ," i"s
b"!aus" o+ a #na*it" "41losion. Issu"' Is ,is "at,
!o*1"nsabl" un"r t," Ior<*"n8s Co*1"nsation
La3J
HELD' K"s% "$"n i+ t," tra" 3as ill"gal. A+t"r
all% it 3as ,is "*1lo#"rs% not ,"% 3,o 3"r" "ngag" in
ill"gal tra". &or"o$"r% t," Ior<*"n8s Co*1"nsation
La3 is a SOCIAL l"gislation.
Art. 1@6?. In !as" o+ a i$isibl" !ontra!t% i+ t," ill"gal
t"r*s !an b" s"1arat" +ro* t," l"gal on"s% t," latt"r *a#
b" "n+or!".
CO&&ENT'
Ill"gal T"r*s o+ a Contra!t
T," !ontra!t *a# b" ini$isibl" or i$isibl".
(a) I+ ini$isibl" t," 3,ol" !ontra!t is $oi% "$"n i+ onl# so*"
t"r*s ar" ill"gal.
(b) I+ i$isibl"% t," l"gal t"r*s *a# b" "n+or!" i+ sa*" !an b"
s"1arat" +ro* t," ill"gal t"r*s. (Art. 1@6?).
FNOTE' H" 3,o 3ants to "n+or!" a !ontra!t *ust s,o3
,o3 *u!, o+ t," !aus" is l"gal2 ot,"r3is"% i+ 1artl# l"gal an
1artl# ill"gal% it 3ill r"sult in t," !ontra!t b"ing !onsi"r"
as 3,oll# $oi. (Li!,au!o $. &artin"H% 6 P,il. 5A@).G
Art. 1@61. T," "+"ns" o+ ill"galit# o+ !ontra!ts is not
a$ailabl" to t,ir 1"rsons 3,os" int"r"sts ar" not ir"!tl#
a++"!t".
CO&&ENT'
Arts. 1@6?.1@61
D"+"ns" o+ Ill"galit# Not >"n"rall# A$ailabl" to T,ir
P"rsons
Art. 1@66
(a) E$"n i+ a !ontra!t is ill"gal% t," "+"ns" o+ ill"galit# *a#
b" s"t u1 onl# b# t,os" 3,os" int"r"st ar" ir"!tl#
a++"!t".
(b) Not" t," rul" +or annullabl" (Art. 19AC% Ci$il Co") an
un"n+or!"abl" !ontra!ts. (Art. 1@?B% Ci$il Co").
Art. 1@66. A !ontra!t 3,i!, is t," ir"!t r"sult o+ a
1r"$i. ous ill"gal !ontra!t% is also $oi an in"4ist"nt.
CO&&ENT'
Contra!t T,at Is t," Dir"!t 5"sult o+ a Pr"$ious Ill"gal
Contra!t
T,is Arti!l" is a n"3 1ro$ision o+ t," Ci$il Co". E4a*1l"'
A 1ro*is" to gi$" 7 a !ar as a r"3ar a+t"r 7 ,as <ill" C.
Lat"r% a+t"r t," <illing% t," !ontra!t 3as !,ang" to a l"as" o+
a big ,ous" +or a !"rtain 1"rio. T," s"!on !ontra!t ,"r" is t,"
ir"!t r"sult o+ a 1r"$ious ill"gal !ontra!t an is% t,"r"+or"%
null an $oi.
E. 5aHon% In!. $. P,il. Ports Aut,orit#% "t al.
>5 C51AC% =un. 66% 1ABC
FACTS' E5I is a !or1oration organiH" +or t," *ain 1ur.
1os" o+ biing +or t," !ontra!t to *anag" all t," 1i"rs in Sout,
Harbor% &anila. E5 all"g"l# o3n" 1??Q "Euit#. A+t"r a
1ubli! biing% E5I 3as a3ar" in 1A66 a 5.#"ar !ontra!t to
o1"rat" arrastr" s"r$i!" at t," Sout, Harbor. In 1AC1% t,"
7ur"au o+ Custo*s !all" +or a n"3 biing. E5I s"!ur" an
injun!tion in t," CFI (no3 5TC)% but t," Su1r"*" Court
or"r" t," ,oling o+ a 1ubli! biing. E5I "*"rg" as t,"
7iing Co**itt""8s unani*ous !,oi!". A n"3 !ontra!t +or 5
#"ars "++"!ti$" 1AC@% r"n"3abl" +or anot,"r 5 #"ars% 3as
"4"!ut" b"t3""n E5I an t," 7ur"au o+ Custo*s. In 1ACB%
E5I initiat" n"gotiations 3it, P,ili11in" Ports Aut,orit#%
"it,"r +or r"n"3al o+ !ontra!t +or 1ubli! biing. T," PPA
*anag"r i not a!t on t," r"Eu"st% u" to t," "sir" o+ 1"o1l"
!los" to t," Pr"si"nt to ta<" o$"r E5I.
Art. 1@66
T,"r"a+t"r% E5% t,"n o3n"r o+ A9Q o+ E5I8s "Euit# 3as al.
l"g"l# !o"r!" b# "*issari"s +ro* t," Pr"si"nt into inorsing
Art. 1@66
in blan< E5I8s sto!< !"rti+i!at"s !o$"ring 6?Q "Euit#% an E5
i not g"t a singl" !"nta$o +or t,"s" s,ar"s. T," 1art# !los" to
t," Pr"si"nt 3as t," latt"r8s brot,"r.in.la3. A+t"r t," trans+"r%
a n"3 grou1 too< !ontrol o$"r E5I. E5 3as% ,o3"$"r% r"tain"
as !o*1an# 1r"si"nt. I,"n t," !ontra!t o+ E5I "41ir"% it
3as "4t"n" +or a t"r* o+ B #"ars b"ginning =ul#% 1AB?.
On F"b. 66% 1AB6 a+t"r t," oust"r o+ t," +or*"r
go$"rn*"nt a*inistration% E5 too< a!ti$" !ontrol. In =ul#%
1AB6% t," PPA in+or*" E5I t,at it 3as !an!"lling t,"
*anag"*"nt !ontra!t an ta<ing o$"r t," !argo ,anling
o1"rations. E5I an E5 !ont"n t,at t,"# 3"r" "ni" t,"ir
rig,t to u" 1ro!"ss 3,"n PPA !an!"ll" t," &anag"*"nt
Contra!t 3it,out 1rior ,"aring an in$"stigation.
HELD' T," trans+"r o+ t," s,ar"s o+ sto!< r"1r"s"nting
6?Q "Euit# to 1"rsons +ronting +or Pr"si"nt &ar!os8 brot,"r.
in.la3 3as% at t," $"r# l"ast% $oiabl" +or la!< o+ !ons"nt% or
altog"t,"r $oi% b"ing absolut"l# +i!titious or si*ulat". T,"
in$aliit# s1rings not +ro* $itiat" !ons"nt nor absolut" 3ant
o+ *on"tar# !onsi"ration% but +or its ,a$ing ,a an unla3+ul
!aus" 0 t,at o+ obtaining a go$"rn*"nt !ontra!t in $iolation o+
la3.
I,il" g"n"rall#% t," !ausa o+ t," !ontra!t *ust not b"
!on+us" 3it, t," *oti$"s o+ t," 1arti"s% t,is !as" sEuar"l# +its
into t," "4!"1tion t,at t," *oti$" *a# b" r"gar" as !ausa
3,"n it 1r""t"r*in"s t," 1ur1os" o+ t," !ontra!t. On t," 1art
o+ t," Pr"si"nt8s brot,"r.in.la3% t," *oti$" 3as to b" abl" to
!ontra!t 3it, t," go$"rn*"nt 3,i!, ," 3as t,"n 1ro,ibit"
b# la3 +ro* oing. On E58s 1art% to b" abl" to r"n"3 ,is *an.
ag"*"nt !ontra!t. T,us% b# trans+"rring 6?Q o+ t," s,ar"s in
,is !o*1a# to t," Pr"si"nt8s brot,"r.in.la3% E5 3as abl" to
s"!ur" an B.#"ar !ontra!t 3it, PPA an% +or si4 #"ars b"+or"
its !an!"llation% b"n"+it +ro* its 1ro!""s. T," trans+"r o+ t,"
!ontrol o+ E5I +ro* E5 to t," Pr"si"nt8s brot,"r.in.la3% 3,i!,
is null an $oi% s"r$" as t," ir"!t lin< to E5I8s obtaining t,"
*anag"*"nt !ontra!t. 7"ing t," ir"!t !ons"Eu"n!" an r"sult
o+ a 1r"$ious ill"gal !ontra!t% t," &anag"*"nt Contra!t its"l+
is null an $oi as 1ro$i" in Art. 1@66.
TITLE III. NATURAL OBLIGATIONS
$Ne,- e./ept Art0/1e 142).&
Co**"nt o+ t," Co" Co**ission 5" Natural Obliga.
tions
In all t," s1"!i+i! !as"s o+ natural obligations r"!ogniH"
b# t," Ci$il Co"% t,"r" is a *oral ut#% but not a l"gal ut# to
1"r+or* or to 1a#% but t," 1"rson t,us 1"r+or*ing or 1a#ing
+""ls t,at in goo !ons!i"n!"% ," s,oul !o*1l# 3it, ,is
un"rta<ing 3,i!, is bas" on *oral grouns. I,# s,oul
t," la3 1"r*it ,i* to !,ang" ,is *in% an r"!o$"r 3,at ,"
,as "li$"r" or 1aiJ Is it not 3is"r an *or" just t,at t,"
la3 s,oul !o*1"l ,i* to abi" b# ,is ,onor an
!ons!i"n!"J EEuit#% *oralit#% natural justi!" 0 t,os" ar"
a+t"r all t," abiing +ounations o+ 1ositi$" la3. A broa
1oli!# justi+i"s as a l"gal 1rin!i1l" t,at 3oul "n!ourag"
1"rsons to +ul+ill t,"ir obligations. (Co**ission 5"1ort% 11. 5B.
5A).
Art. 1@69. Obligations ar" !i$il or natural. Ci$il
obliga. tions gi$" a rig,t o+ a!tion to !o*1"l t,"ir
1"r+or*an!". Natu. ral obligations% not b"ing bas" on
1ositi$" la3 but on "Euit# an natural la3% o not grant a
rig,t o+ a!tion to "n+or!" t,"ir 1"r+or*an!"% but a+t"r
$oluntar# +ul+ill*"nt b# t," obligor% t,"# aut,oriH" t,"
r"t"ntion o+ 3,at ,as b""n "li$"r" or r"n"r" b# r"ason
t,"r"o+. So*" natural obligations ar" s"t +ort, in t,"
+ollo3ing arti!l"s.
CO&&ENT'
(1) Ci$il an Natural Obligations Distinguis,"
T,is Arti!l" istinguis,"s b"t3""n !i$il an natural
obliga. tions.
Art. 1@69
(6) OVoluntar# Ful+ill*"nt8 D"+in"
-Voluntar# +ul+ill*"nt/ *"ans t,at t," "btor !o*1li"
3it, t," sa*" "$"n i+ ," <n"3 t,at ," !oul not ,a$" b""n l".
gall# +or!" to o so. T,us% 1a#*"nt t,roug, a !o"r!i$" 1ro!"ss
o+ t," 3rit o+ "4"!ution issu" at t," instan!" an insist"n!"
o+ t," 1r"$ailing 1art#% is NOT !onsi"r" $oluntar#% an t,"
1ro$isions o+ t," la3 on natural obligations !annot b" a11li"
t,"r"to. (&anila Sur"t# M Fi"lit# Co. $. Li*% L.A9@9% D"!. 6A%
1A5A). In !as" o+ 1artial $oluntar# +ul+ill*"nt% t," balan!" !an.
not b" r"!o$"r"% sin!" on sai balan!"% t,"r" ,as not #"t b""n
!r"at" a l"gal obligation.
(9) ;nu" Pa#*"nt Distinguis," +ro* Natural Obligation
I+ I 1a# a "bt t,at ,as 1r"s!rib" 0
(a) not <no3ing it ,as 1r"s!rib"% I !an r"!o$"r on t," groun
o+ unu" 1a#*"nt.
(b) <no3ing it ,as 1r"s!rib"% I !annot r"!o$"r +or t,is
3oul b" a !as" o+ a natural obligation.
FNOTE' Pa#*"nt t,ru a !o"r!i$" 1ro!"ss o+ t," 3rit
o+ "4"!ution issu" at t," instan!" an insist"n!" o+ t,"
1r"$ailing 1art#% is NOT !onsi"r" $oluntar# an t,"
1ro. $isions o+ t," la3 on natural obligations% !annot b"
a11li" t,"r"to. (&anila Sur"t# M Fi"lit# Co. $. Li*% L.
A9@9% D"!.
6A% 1A5A).G
(@) No =urii!al Ti" in &oral Obligations
I,il" t,"r" is a jurii!al ti" in natural obligations% t,"r"
is non" in *oral obligations. T,us% gi$ing a l"gal assistan!" to
on"8s "*1lo#"" (3,o ,as b""n a!!us" o+ a !ri*") is *"r"l# a
*oral obligation% an t," "*1lo#"" !annot r"!o$"r attorn"#8s
+"" +ro* t," "*1lo#"r. (D" la CruH $. Nort,"rn T,"atri!al
Ent"r1ris"s% In!.% "t al.% 5? O.>. @665% S"1t. 1A5@).
Si*ilarl#% a C,rist*as bonus% not #"t gi$"n to "*1lo#""s%
is not g"n"rall# a "*anabl" an "n+or!"abl" obligation2 nor
*a# it b" !onsi"r" a natural obligation +or t,"r" ,as b""n no
Art. 1@69
$oluntar# 1"r+or*an!" as #"t. T," Courts !annot or"r
t,"r"+or" t," grant o+ t," bonus (Ansa#% "t al. $. 7oar o+
Dir"!tors o+ t," NDC% L.1966C% A1r. 6A% 1A6A) unl"ss'
Art. 1@6@
(a) it ,a b""n *a" a 1art o+ t," 3ag" or salar# (PECO $.
CI5% L.51?9% D"!. 6@% 1A56)2
(b) or *a# b" grant" on "Euitabl" !onsi"rations% as 3,"n
it us" to b" gi$"n in t," 1ast% alt,oug, 3it,,"l in su!.
!""ing #"ars. (H"a!o!< $. NL;% L.55CC% =ul. 91% 1A5@).
(5) E4a*1l" o+ Ot,"r Natural Obligations
Art. 1@69 sa#s' -So*" natural obligations ar" s"t +ort,
in t," +ollo3ing arti!l"s./ H"n!"% t,"r" *a# b" ot,"r natural
obligations.
E4a*1l"s'
(a) obligation to 1a# int"r"st +or us" o+ *on"#% "$"n i+ not
agr"" u1on in 3riting. (S"" Arts. 1A56% 1A6?% Ci$il
Co").
(b) ut# to su11ort natural or s1urious !,ilr"n ("$"n i+ not
r"!ogniH" $oluntaril# or b# jui!ial !o*1ulsion an "$"n
i+ t,"r" is a jug*"nt "n#ing r"!ognition).
(!) gi$ing o+ *at"rial an +inan!ial assistan!" to !,ilr"n
u1on t,"ir *arriag".
(6) Con$"rsion o+ &oral Obligations to Ci$il Obligations
&oral obligations *a# b" !on$"rt" into !i$il obligations.
E4a*1l"' A!<no3l"g*"nt o+ a 1r"s!rib" "bt.
Art. 1@6@. I,"n a rig,t to su" u1on a !i$il obligation
,as la1s" b# "4tin!ti$" 1r"s!ri1tion% t," obligor 3,o
$oluntaril# 1"r+or*s t," !ontra!t !annot r"!o$"r 3,at ,"
,as "li$"r" or t," $alu" o+ t," s"r$i!" ," ,as r"n"r".
CO&&ENT'
(1) E++"!t o+ E4tin!ti$" Pr"s!ri1tion
7# $irtu" o+ "4tin!ti$" 1r"s!ri1tion% a rig,t or 1ro1"rt#
,as b""n lost. H"n!"% t," "4ist"n!" o+ t," Arti!l".
(6) E4a*1l" o+ t," Arti!l"8s A11li!ation
Art. 1@6@
A8s "bt to C ,as b""n "4tinguis," b# 1r"s!ri1tion. K"t
A% <no3ing o+ t," 1r"s!ri1tion% $oluntaril# 1ai t," 1r"s!rib"
Arts. 1@65.1@66
"bt. A !annot no3 r"!o$"r 3,at ," ,as 1ai C. Pr"s!rib"
"bt *a# in"" gi$" ris" to n"3 obligation. (Villaro"l $.
Estraa% C1
P,il. 1@?).
Art. 1@65. I,"n 3it,out t," <no3l"g" or against t,"
3ill o+ t," "btor% a t,ir 1"rson 1a#s a "bt 3,i!, t,"
obligor is not l"gall# boun to 1a# b"!aus" t," a!tion
t,"r"on ,as 1r"s!rib"% but t," "btor lat"r $oluntaril#
r"i*burs"s t," t,ir 1"rson% t," obligor !annot r"!o$"r
3,at ," ,as 1ai.
CO&&ENT'
(1) Pa#*"nt b# a T,ir P"rson
H"r" t," t,ir 1"rson 1a#s'
(a) 3it,out t," <no3l"g" (o+ t," "btor)2
(b) or against t," 3ill (o+ t," "btor).
(6) E4a*1l"
A o3"s 7 PC??%???. 7ut t," "bt soon 1r"s!rib"s. Lat"r C%
against t," !ons"nt o+ A% 1a#s 7 t," PC??%???. A ,"r" o"s not
,a$" to r"i*burs" C b"!aus" ," (A) ,as not at all b""n
b"n"+it" b# t," transa!tion. Ho3"$"r% A lat"r $oluntaril#
r"i*burs"s C. &a# A no3 r"!o$"r 3,at ," ,as gi$"n to CJ
ANS.' No *or". T,is is t," "41r"ss 1ro$ision o+ t," la3.
(9) Pa#*"nt Iit, D"btor8s Cons"nt
I+ 1a#*"nt is *a" 3it, t," !ons"nt o+ t," "btor% a !i$il
obligation aris"s.
Art. 1@66. I,"n a *inor b"t3""n "ig,t""n an t3"nt#.
on" #"ars o+ ag" 3,o ,as "nt"r" into a !ontra!t 3it,out
t," !ons"nt o+ t," 1ar"nt or guarian% a+t"r t," annul*"nt
Arts. 1@65.1@66
o+ t," !ontra!t $oluntaril# r"turns t," 3,ol" t,ing or 1ri!"
r"!"i$"% not3it,staning t," +a!t t,at ," ,as not b""n
b"n. "+it" t,"r"b#% t,"r" is no rig,t to "*an t," t,ing or
1ri!" t,us r"turn".
Art. 1@6C
CO&&ENT'
(1) Contra!ts b# &inors 7"t3""n 1B an 61 0 I,"n T,"r"
Has 7""n Annul*"nt
(a) T,is a11li"s to *inors b"t3""n 1B an 61 3,"n t," !on.
tra!t 3as 3it,out 1ar"ntal !ons"nt. (H"r" t," *inor is
!onsi"r" *atur" "noug,.)
(b) H"r" a+t"r annul*"nt% t,"r" 3as a VOL;NTA5K r"turn.
(6) E4a*1l"
A% a *inor% "nt"r" into a !ontra!t 3it, a sui juris%
3it,out t," !ons"nt o+ ,is (A8s) 1ar"nts. In sai !ontra!t% A
r"!"i$" a !ar. T,is !ar 3as a+t"r3ars "stro#" b# a
+ortuitous "$"nt. Lat"r 3,"n t," !ontra!t 3as annull"% A
r"turn" $oluntaril# t," $alu" o+ t," !ar alt,oug, ," ,a not
1ro+it" or b"n"+it" a singl" !"nta$o +ro* t," !ar. Has ," no3
t," rig,t to "*an t,at t," 1ri!" b" r"turn"J No *or".
(9) &ajorit# Ag"
T," ag" o+ *ajorit# toa# is 1B.
Art. 1@6C. I,"n a *inor b"t3""n "ig,t""n an t3"nt#.
on" #"ars o+ ag"% 3,o ,as "nt"r" into a !ontra!t 3it,out
t," !ons"nt o+ t," 1ar"nt or guarian% $oluntaril# 1a#s a
su* o+ *on"# or "li$"rs a +ungibl" t,ing in +ul+ill*"nt o+
t," obli. gation% t,"r" s,all b" no rig,t to r"!o$"r t," sa*"
+ro* t," oblig"" 3,o ,as s1"nt or !onsu*" it in goo
+ait,.
CO&&ENT'
(1) Contra!ts b# &inors 0 No Annul*"nt K"t
(a) >"n"rall#% annul*"nt r"Euir"s *utual r"stitution. H"r"%
t," oblig"" 3,o ,as s1"nt or !onsu*" t," obj"!t in goo
+ait, is not r"Euir" to r"stor".
(b) >oo +ait, o+ t," oblig"" *ust b" 1r"s"nt at t," ti*" o+
s1"ning or !onsu*ing.
Art. 1@6C
(!) Not" t,at t," *ajorit# ag" toa# is 1B. An -+ungibl"/ ,"r"
r"all# *"ans -!onsu*abl".88
Arts. 1@6B.1@6A
(6) :u"r#
Su11os" t," obj"!t is non.!onsu*abl"% o"s t," Arti!l"
a11l#J
ANS.' K"s% i+ t,"r" ,as b""n loss b# +ortuitous "$"nt or
ali"nation in goo +ait, (t,is is "Eui$al"nt to s1"ning or !on.
su*ing it)% i+ t," 1ro!""s t,"r"o+ ,a$" alr"a# b""n s1"nt in
goo +ait,.
Art. 1@6B. I,"n% a+t"r an a!tion to "n+or!" a !i$il
obliga. tion ,as +ail"% t," "+"nant $oluntaril# 1"r+or*s
t," obliga. tion% ," !annot "*an t," r"turn o+ 3,at ,"
,as "li$"r" or t," 1a#*"nt o+ t," $alu" o+ t," s"r$i!" ,"
,as r"n"r".
CO&&ENT'
(1) Iinn"r in an A!tion to En+or!" a Ci$il Obligation
H"r" t," "+"nant *a# ,a$" r"aliH" t,at ," s,oul
,a$" lost t," !as"% inst"a o+ 3inning it% t,us t," "4ist"n!"
o+ t," Arti!l".
(6) E4a*1l"
A o3"s 7 P5??%???. 7 brings a suit against A% but 7 los"s
t," !as" +or insu++i!i"nt "$i"n!". No a11"al is *a" +ro* t,"
"!ision% an t," jug*"nt b"!o*"s +inal. Lat"r% A 1ai 7
$oluntaril# t," "bt. &a# A no3 r"!o$"r +ro* 7 3,at ," (A) ,as
1aiJ No.
Art. 1@6A. I,"n a t"stat" or int"stat" ,"ir $oluntaril#
1a#s a "bt o+ t," "!""nt "4!""ing t," $alu" o+ t,"
1ro1"rt# 3,i!, ," r"!"i$" b# 3ill or b# t," la3 o+
int"sta!# +ro* t," "stat" o+ t," "!"as"% t," 1a#*"nt is
$ali an !annot b" r"s!in" b# t," 1a#"r.
CO&&ENT'
(1) 5ul" in Cas" o+ Pa#*"nt o+ D"bts 7"#on Valu" o+ t,"
D"!""nt8s Estat"
Arts. 1@6B.1@6A
H"irs in,"rit obligations onl# to t," "4t"nt o+ t," $alu" o+
t," in,"ritan!". T,is is t," r"ason +or t," Arti!l"% !ou1l" 3it,
t," basis +or t," natural obligation.
Art. 1@9?
(6) E4a*1l"
A i"s% l"a$ing an "stat" o+ P1?%???%??? an "bts
a*ount. ing to P15%???%???. His ,"ir ,"r" is not "41"!t" to
*a<" u1 +or t," i++"r"n!"% 7;T i+ ," o"s so $oluntaril#% t,"n
," !annot r"!o$"r sai i++"r"n!". A+t"r all% on" o"s ,a$" a
*oral ut# to s"" to it t,at t," "a r"lati$"8s or +ri"n8s
obligations in li+" ar" all !arri" out. H"r"% t," ,"ir is not
r"all# r"Euir" b# la3 to s,oul"r t," "+i!it% but sin!" ," o"s
so $oluntaril#% ," !annot no3 ba!< out.
Art. 1@9?. I,"n a 3ill is "!lar" $oi b"!aus" it ,as
not b""n "4"!ut" in a!!oran!" 3it, t," +or*aliti"s
r"Euir" b# la3% but on" o+ t," int"stat" ,"irs% a+t"r t,"
s"ttl"*"nt o+ t," "bts o+ t," "!"as"% 1a#s a l"ga!# in
!o*1lian!" 3it, a !laus" in t," "+"!ti$" 3ill% t,"
1a#*"nt is "++"!ti$" an irr"$o!abl".
CO&&ENT'
(1) Pa#*"nt o+ L"ga!i"s D"s1it" t," Fa!t T,at t," Iill Is
Voi
I+ t," 3ill is $oi% t," l"ga!# 3oul also b" $oi an t,"
"!"as" is !onsi"r" to ,a$" i" 3it,out a 3ill. T,is is t,"
r"ason +or t," "4ist"n!" o+ t," Arti!l".
(6) E4a*1l"
In a 3ill "+"!ti$" +or la!< o+ t," n""" l"gal +or*aliti"s%
N% a +ri"n% 3as gi$"n a l"ga!#. T," l"ga!# is $oi% an t," 3,ol"
"stat" s,oul go to t," int"stat" ,"irs. I+ ,o3"$"r% t," int"stat"
,"irs gi$" N t," l"ga!#% t,"# !annot g"t it ba!< no3% 1ro$i"
t,at t," "bts o+ t," "!"as" ,a$" b""n s"ttl".
(9) Analogous Cas"s
7# analog#% all ali"nations "+"!ti$" +or la!< o+ t," 1ro1"r
+or*aliti"s *a# b" in!lu" un"r Art. 1@9?.
TITLE IV. ESTOPPEL $%&
Co**"nt o+ t," Co" Co**ission on Esto11"l
-An i*1ortant bran!, o+ A*"ri!an La3 is "sto11"l. It
is a sour!" o+ *an# rul"s 3,i!, 3or< out justi!" b"t3""n t,"
1arti"s% t,ru t," o1"ration o+ t," 1rin!i1l" t,at an a*ission
or r"1r"s"ntation is r"n"r" !on!lusi$" u1on t," 1"rson *a<.
ing it% an !annot b" "ni" or is1ro$" as against t," 1"rson
r"l#ing t,"r"on./ (5"1ort o+ t," Co" Co**ission% 1. 5A).
Art. 1@91. T,roug, "sto11"l an a*ission or
r"1r"s"nta. tion is r"n"r" !on!lusi$" u1on t," 1"rson
*a<ing it% an !annot b" "ni" or is1ro$" as against
t," 1"rson r"l#ing t,"r"on.
CO&&ENT'
(1) Con!"1t o+ Esto11"l
-S1"a<ing g"n"rall#% it *a# b" sai t,at "sto11"l is a bar
3,i!, 1r"!lu" a 1"rson +ro* "n#ing or ass"rting an#t,ing
!ontrar# to t,at 3,i!, ,as b""n% in !ont"*1lation o+ la3% "stab.
lis," as t," trut, "it,"r b# a!ts o+ jui!ial or l"gislati$"
o++i!"rs% or b# ,is o3n "" or r"1r"s"ntation "it,"r "41r"ss or
i*1li"./ (1A A*. =ur. 6?1).
FNOTE' In Lo1"H $. O!,oa (L.CA55% &a# 9?% 1A5B)% t,"
Su1r"*" Court ,"l t,at 3ai$"r an "sto11"l ar" +r"Eu"ntl#
us" as !on$"rtibl" t"r*s. T," o!trin" o+ 3ai$"r b"longs to
t," +a*il# o+% is o+ t," natur" o+% is bas" on% "sto11"l. T,"
"ss"n!" o+ 3ai$"r is "sto11"l% an 3,"r" t,"r" is no "sto11"l%
t,"r" is no 3ai$"r. T,is is "s1"!iall# tru" 3,"r" t," 3ai$"r
r"li" u1on is !onstru!ti$" or i*1li" +ro* t," !onu!t o+ a
1art#. T,us% 3,"n it is ass"rt" t,at a -1art# is in "sto11"l%/
t,is is t," sa*" as sa#ing t,at sai 1art# ,a *a" a
3ai$"r.G
Art. 1@91
5o#al"s $. Int"r*"iat" A11"llat" Court
L.65?C6% =an. 91% 1AB@
I+ r"!ours" to t," baranga# !ourts is not a$ail" o+% t,"
!o*1laint *a# b" is*iss" +or la!< o+ a !aus" o+ a!tion% unl"ss
t," r"Euisit" ,as b""n 3ai$" b# +ailur" to s"t u1 a ti*"l#
obj"!. tion. T," aggri"$" 1"rson *a# b" ""*" to b" in
"sto11"l.
5u1"rto Pur"Ha $. CA% Asia Trust D"$"lo1*"nt
7an< an S1ous"s 7oni+a!io M Crisanta Al"janro
>5 166?59% &a# 15% 1AAB
A 1rin!i1l" o+ "Euit# an natural justi!"% t," a11li!ation
o+ t," 1rin!i1l" o+ "sto11"l is 1ro1"r an ti*"l# in ,"aing o++
1"tition"r8s s,r"3 "++orts at r"noun!ing ,is 1r"$ious a!ts to
t," 1r"jui!" o+ 1arti"s 3,o ,a "alt 3it, ,i* ,on"stl# an
in goo +ait,.
In t," !as" at bar% 1"tition"r ,a$ing 1"r+or*" a++ir*a.
ti$" a!ts u1on 3,i!, t," r"s1on"nts bas" t,"ir subs"Eu"nt
a!tions% !annot t,"r"a+t"r r"+ut" ,is a!ts or r"n"g" on t," "++"!ts
o+ t," sa*"% to t," 1r"jui!" o+ t," latt"r. To allo3 ,i* to o so
3oul b" tanta*ount to !on+"rring u1on ,i* t," lib"rt# to li*it
,is liabilit# at ,is 3,i* an !a1ri!"% 3,i!, is against t," $"r#
1rin!i1l"s o+ "Euit# an natural justi!" as abo$"stat".
Aora!ion E. CruH% "t al. $. CA an
S1s. Elis"o M Virginia &alolos >5
166C19% =ul. 6C% 1AAB
FACTS' P"tition"rs% in t,"ir transa!tions 3it, ot,"rs%
,a$" "!lar" t,at t," ot,"r lans !o$"r" b# t,"
&"*oranu* o+ Agr""*"nt ar" absolut"l# o3n"% 3it,out
ini!ating t," "4ist. "n!" o+ a !o.o3n"rs,i1 o$"r su!,
1ro1"rti"s.
Issu"' Ar" 1"tition"rs "sto11" +ro* !lai*ing ot,"r3is"J
HELD' K"s% b"!aus" t," 1"tition"rs8 $"r# o3n a!ts an r"1.
r"s"ntations% as "$i"n!" b# t," ""s o+ *ortgag" an o+
Art. 1@91
sal"% ,a$" "ni" su!, !o.o3n"rs,i1. ;n"r t," 1rin!i1l" o+
"sto11"l% 1"tition"rs ar" barr" +ro* !lai*ing !o.o3n"rs,i1 o+
t," lans in issu". In "sto11"l% a 1"rson% 3,o b# ,is "" or
!onu!t ,as inu!" anot,"r to a!t in a 1arti!ular *ann"r% is
barr" +ro*
Art. 1@91
ao1ting an in!onsist"nt 1osition% attitu" or !ours" o+ !onu!t
t,at t,"r"b# !aus"s loss or injur# to anot,"r. It +urt,"r bars
,i* +ro* "n#ing t," trut, o+ a +a!t 3,i!, ,as% in t,"
!ont"*1lation o+ la3% b"!o*" s"ttl" b# t," a!ts an
1ro!""ings o+ jui!ial or l"gislati$" o++i!"rs or b# t," a!t o+ t,"
1art# ,i*s"l+% "it,"r b# !on$"ntional 3riting or b#
r"1r"s"ntations% "41r"ss or i*1li" o+ in 1ais.
(6) Origin o+ Esto11"l
T," o!trin" o+ "sto11"l ,as its origin in "Euit#% an is
bas" on *oral rig,ts an natural justi!". Its a11li!abilit# to
an# 1arti!ular !as" "1"ns to a $"r# larg" "4t"nt u1on t,"
s1"!ial !ir!u*stan!"s o+ t," !as". (&irasol $. &uni!i1alit# o+
Taba!o%
@9 P,il. 61?).
(9) E4a*1l"s o+ Esto11"l
(a) I+ a ,usban in a s3orn "!laration !onstituting a +a*il#
,o*" ,as stat" in sai o!u*"nts t,at ," 3as *arri"%
na*ing ,is 3i+"% ," !annot t,"r"a+t"r b" ,"ar to sa# t,at
," an t," girl ar" not *arri". T,"r"+or"% t," +a*il# ,o*"
s,oul b" !onsi"r" as !onjugal 1ro1"rt#. (&onto#a $.
Igna!io% "t al.% L.1?51B% No$. 6A% 1A5C).
(b) A ,ol"r o+ a 1ro*issor# not" gi$"n b"!aus" o+ ga*bling
3,o inors"s t," sa*" to an inno!"nt ,ol"r +or $alu" an
3,o assur"s sai 1art# t,at t," not" ,as no l"gal "+"!t%
is "sto11" +ro* ass"rting t,at t,"r" ,a b""n an ill"gal
!onsi"ration +or t," not"% an so% ," ,as to 1a# its $alu".
(5origu"H $. &artin"H% 5 P,il. 6C).
(!) A 1"rson 3,o all"g" at on" ti*" in !ourt t,at ," 3as t,"
o3n"r o+ a !"rtain !abar"t !annot a+t"r3ars "n# ,is
o3n"rs,i1 t,"r"o+. (Patri!io $. Patri!io% CB P,il. C5A).
() A 1"rson !lai*ing +or ,is salar# 3as s"lling ,is int"r"st in
t," sto!< o+ a !or1oration to sai !or1oration. T," !or1ora.
tion r"+us" to !onsi"r t," sal" unl"ss t," !lai* +or salar#
3as o*itt". So% t," s"ll"r r"3 anot,"r !ontra!t% t,is
Art. 1@91
ti*" 3it, no *"ntion o+ t," salar#. H" !annot no3 !lai*
t," salar# in $i"3 o+ "sto11"l. (H"r*an $. 5aio
Cor1oration o+ t," P,il.% 5? P,il. @A?).
Art. 1@91
(") A $"n"" a r"tro 3,o at on" ti*" r"!ogniH" o3n"rs,i1 in
t," subj"!t *att"r b# t," $"nor a r"tro !annot no3 !lai*
o3n"rs,i1 o$"r t," sa*". (&ati"nHo M Palil"o $. CFI o+
Laguna% 6@ P,il. 5@6).
(+) -H" 3,o 1r"$"nts a t,ing +ro* b"ing on" *a# not a$ail
,i*s"l+ o+ t," non.1"r+or*an!" 3,i!, ," ,i*s"l+ ,as o!.
!asion"%/ +or t," la3 sa#s to ,i* in "++"!t% Ot,is is #our o3n
a!t% an t,"r"+or" #ou ar" not a*ni+i".8 I,"r"% t,"r"+or"%
a ta41a#"r r"1"at"l# r"Eu"st" +or r"in$"stigation o+ ,is
!as" an t,"r"+or" 1"rsua" t," go$"rn*"nt to 1ost1on"
!oll"!tion o+ t," ta4% ," !annot s"t u1 1r"s!ri1tion o+ t,"
a!tion. (Coll. $. Su#o! Consol% L.1156C% No$. 65% 1A5B).
(g) I+ t," r"gist"r" o3n"r o+ a 1ri$at" or 1ubli! $",i!l" s"lls
it to anot,"r% but o"s not !an!"l its r"gistration un"r ,is
na*"% ," 3ill still b" r"s1onsibl" i+ t," bu#"r !aus"s a*.
ag" or injur# to anot,"r. H" 3ill b" "sto11" +ro* ass"rting
t,at t," 1ro1"rt# ,a alr"a# b""n trans+"rr" b# ,i* to
anot,"r. T," &otor V",i!l" La3 r"Euir"s r"gistration so
as to i"nti+# t," o3n"r in !as" o+ an a!!i"nt or injur#
on t," ,ig,3a#s. 5"s1onsibilit# is t,us +i4" on a "+init"
ini$iual% t," r"gist"r" o3n"r. I+ t,is 3"r" not t," rul"%
it 3oul b" $"r# "as# +or t," r"gist"r" o3n"r to "s!a1"
r"s1onsibilit# b# si*1l# trans+"rring t," 1ro1"rt# to an
in"+init" 1"rson or to on" 3,o 1oss"ss"s no 1ro1"rt# 3it,
3,i!, to r"s1on +inan!iall# +or t," a*ag" or injur#
on". Ho3"$"r% t," r"gist"r" o3n"r 3,o ,as alr"a#
!on$"#" or trans+"rr" a $",i!l" ,as a rig,t to b"
in"*ni+i" b# t," $"n"" or trans+"r"" +or t," a*ount
t,at ," *a# b" r"Euir" to 1a# as a*ag"s to t,"
1"rson injur" b# t," $",i!l". (Er"Ho% "t al. $. ="1t"% L.
A6?5% S"1t. 9?% 1A5C2 s"" &onto#a $. Igna!io% L.5B6B% D"!.
6A% 1A592 5oEu" $. &ali. ba# Transit% L.B561% No$. 1B%
1A55 an Va. " &"sina $. Cr"s"n!ia% 56 O.>. No. 1?% 1.
@6?6).
(,) A go$"rn*"nt "*1lo#"" 3,o a!!"1ts t," b"n"+its a!!ruing
+ro* t," abolition o+ ,is o++i!" is "sto11" +ro* Eu"stioning
t," $aliit# o+ t," abolition an is ""*" to ,a$" 3ai$"
Art. 1@91
t," rig,t to !ont"st t," sa*". (&agana $. Agr"gao% "t al.%
L.161B?% A1r. 6A% 1A6?).
Art. 1@91
Fi"l*an8s Insuran!" Co.% In!. $.
&"r!""s Vargas Va. " Song!o% "t al.
L.6@B99% S"1t. 69% 1A6B
FACTS' F""ri!o Song!o% a *an o+ s!ant "u!ation
b"ing onl# a +irst gra"r% o3n" a 1ri$at" j""1n"#% 3,i!,
3as !o$"r" b# a !o**on !arri"r8s liabilit# insuran!" b#
t," Fi"l*an8s Insuran!" Co. T," !ontra!t 3as 1ro!ur"
b# t," !o*1an#8s ag"nt% 3,o inu!" F""ri!o to ,a$"
t," $",i!l" insur"% alt,oug, it 3as NOT a CO&&ON
CA55IE5% but a 1ri$at" on". In +a!t t," @6.#"ar.ol son
o+ F""ri!o ,a *isgi$ings% +or t," $",i!l" 3as *"r"l# +or
1ri$at" us". T," ag"nt assur" F""ri!o% ,o3"$"r% t,at
t," !ontra!t 3as $ali. So*"ti*" lat"r% t," $",i!l" 3as
in$ol$" in a !ollision% r"sulting in "at, to F""ri!o an
on" o+ ,is sons% an 1,#si!al injuri"s to t3o ot,"rs. I,"n
t," sur$i$ing 3io3 an ot,"r !,ilr"n su" t,"
Co*1an# un"r t," t"r*s o+ t," !ontra!t% t," latt"r
all"g" t,at t," sa*" 3as not $ali% +or it 3as not a
!o**on !arri"r. Issu"' Is t," Co*1an# liabl"J
HELD' K"s% t," Co*1an# is liabl" on a!!ount o+
"sto1. 1"l. &or"o$"r% t," !ontra!t o+ insuran!" is on" o+
1"r+"!t goo +ait, (ub"rri*a +i"s) not +or t," insur"
alon"% but "Euall# so +or t," insur"r2 in +a!t% it is *or" so
+or t," lat. t"r% sin!" its o*inant bargaining 1osition
!arri"s 3it, it stri!t"r r"s1onsibilit#. (S"" :ua C,"" >an
$. La ;nion M 5o!< Insuran!" Co.% Lt.% A9 P,il. B5
F1A55G.)
&anila El"!tri! Co. $. Court o+ A11"als
L.99CA@% &a# 91% 1AB6
I+ a 1art# +ails to obj"!t to t," !onstru!tion o+ an
"l"!tri! sub.station 3it,in ,is 1ro1"rt#% an onl# as<"
+or assuran!" t,at t," station 3oul not b" a nuisan!" or
ang"rous% ," !an b" sai to b" in -!ontra!tual "sto11"l./
Pantran!o $. Court o+ In. 5"l.
L.AC96% &a# 6?% 1A5C
Instan!" I,"r" Esto11"l Do"s Not A11l#
Art. 1@91
FACTS' ;n"r 1ubli! s"r$i!" r"gulations% a 1ubli!
s"r$i!" o1"rator is not allo3" to "*1lo# a 1"rson 3,o ,as
Art. 1@91
b""n !on$i!t" o+ t," !ri*" o+ t,"+t. No3% t,"n% a !"rtain
1ubli! s"r$i!" o1"rator "*1lo#" un<no3ingl# su!, a
!on$i!t. &a# ," no3 b" allo3" to is*iss sai !on$i!t in
!o*1lian!" 3it, t," r"gulationsJ
HELD' K"s% +or "sto11"l s,oul not a11l#. Ot,"r3is"%
t3o t,ings *a# r"sult. Firstl#% t," r"gulation *a# b" !ir.
!u*$"nt" 3"r" 3" to a11l# "sto11"l. S"!onl#% 3" 3oul
b" unn"!"ssaril# 1unis,ing an "*1lo#"r "s1it" ,is "sir"
to !o*1l# 3it, t," r"gulation u1on ,is is!o$"r# t,at a
isEuali+i!ation "4ist".
LuHon St"$"oring Co.% In!. $. LuHon
&arin" D"1t. ;nion% "t al.
1?1 P,il. 65C
Esto11"l b# la!,"s (unr"asonabl" "la# in *a<ing
a !lai* in !ourt) o"s not a11l# to "*1lo#""s in !lai*ing
o$"rti*" 1a#% +or to allo3 "sto11"l in t,is !as" 3oul b" to
bring about a situation 3,"r"b# t," "*1lo#"" or labor"r%
3,o !annot "41r"ssl# r"noun!" t," rig,t to "4tra !o*1"n.
sation un"r t," la3% *a# b" !o*1"ll" to a!!o*1lis,
t," sa*" t,ing b# *"r" sil"n!" or la1s" o+ ti*"% t,"r"b#
+rustrating b# inir"!tion t," 1ur1os" o+ t," la3.
Ho3"$"r% la!,"s *a# +a$or t," in+"r"n!" t,at no su!,
o$"rti*" 3or< ,a b""n *a"2 or t,at% "$"n i+ it "4ist"%
it ,as alr"a# b""n ul# !o*1"nsat".
No "sto11"l !an b" in$o<" i+ t," !o*1laining 1art#
,as not b""n *isl". (Cristobal $. >o*"H% 5? P,il. B1?).
I+ a 1ubli! o++i!"r *a<"s an "rron"ous a11li!ation an
"n+or!"*"nt o+ t," la3% ," is not !onsi"r" in "sto11"l.
(P,il. Long Distan!" T"l. Co. $. Coll. o+ Int. 5"$.% A? P,il.
6C@). Ho3"$"r% ot,"r a++ir*ati$" a!ts o+ o++i!ials *a# rais"
"sto11"l against t," go$"rn*"nt. (7a!,ra!, &otor Co. $.
;nson% 5? P,il. AB1 an 7oaa $. Posaas% 5B P,il. 1B@).
FNOTE' Ho3"$"r% o*ission or n"gl"!t o+ go$"rn*"nt
o++i!ials o"s not !r"at" "sto11"l against t," go$"rn*"nt.
(Ibi2 s"" also Pin"a $. Court o+ First Instan!"% 56 P,il.
Art. 1@91
B?9 an C"ntral AHu!ar"ra " Tarla! $. Coll"!tor% L.11??6%
S"1t. 9?% 1A5B).G
Art. 1@91
So!ial S"!urit# Co**ission $. Pon!iano L.
Al*"a an Eu+"*ia P. Al*"a
>5 C5@6B% D"!. 1@% 1ABB
I,"n r"s1on"nts n"gotiat" +or t," r"u!tion o+ t,"
attorn"#8s +""s% t,"# a!Eui"s!" to t," sti1ulation t,"r"+or
an !annot no3 Eu"stion its $aliit#. It is unis1ut" t,at
r"s1on"nts r"Eu"st" *"r"l# +or a r"u!tion o+ t," attor.
n"#8s +""s. In 5"solution 6B6% t," So!ial S"!urit# S#st"*
(SSS) a11ro$" r"s1on"nt8s r"Eu"st an r"u!" t," at.
torn"#8s +""s +ro* 6?Q to 15Q. 5"s1on"nts t,"r"a+t"r 1ai
3it,out 1rot"st t," total obligation% in!luing attorn"#8s
+""s "Eui$al"nt to 15Q. T," !lai* o+ r"s1on"nt Pon!iano
Al*"a t,at ," $"rball# 1rot"st" t," !oll"!tion o+
attorn"#8s +""s is b"li" b# t," abo$".!it" SSS 5"solution
3,i!, s,o3s t,at Al*"a *"r"l# r"Eu"st" t," r"u!tion
o+ attorn"#8s +""s. 7"t3""n Al*"a8s t"sti*on#% 3,i!, is
ob$iousl# s"l+.s"r$. ing% an t," SSS 5"solution% 3,i!, is
a 1ubli! o!u*"nt% t," latt"r !"rtainl# !arri"s gr"at"r
1robati$" $alu". Cl"arl# t,"n% r"s1on"nts 3"r" in"" in
"sto11"l.
Laur"l $. Ci$il S"r$i!" Co**ission
>5 C1566% O!t. 6B% 1AA1
FACTS' P"tition"r i not rais" t," issu" t,at t,"
1osition o+ Pro$in!ial A*inistrator is 1ri*aril# !on+i"n.
tial. On t," !ontrar#% ," sub*its t,at sai 1osition is not
1ri*aril# !on+i"ntial% +or it b"longs to t," !ar""r s"r$i!".
H" "$"n "*1,asiH" t,is +a!t 3it, an air o+ absolut" !"r.
taint#. H" !,ang" ,is *in onl# a+t"r t," Ci$il S"r$i!"
rul" t,at t," -1ro,ibiti$" *antl" on n"1otis* 3oul
in!lu" "signation% b"!aus" 3,at !annot b" on"
ir"!tl# !annot b" on" inir"!tl#/ an% *or" s1"!i+i!all#%
3,"n ," +il" ,is *otion to r"!onsi"r sai r"solution.
HELD' P"r Arti!l" 1@91 o+ t," Ci$il Co"% t,ru
"sto1. 1"l% an a*ission or r"1r"s"ntation is r"n"r"
!on!lusi$" u1on t," 1"rson *a<ing it% an !annot b"
"ni" or is. 1ro$" as against t," 1"rson r"l#ing
Art. 1@91
t,"r"on.
(<) A 1"tition"r !annot b" "sto11" in Eu"stioning t," $aliit#
o+ a !usto*"r8s agr""*"nt an +ro* "n#ing t," "++"!ts o+
Art. 1@91
,is !onu!t. (Li* $. :u""nslan To<#o Co**oiti"s% In!.%
>5 196?91% =anuar# @% 6??6).
="++"rson Li* $. :u""nslan To<#o
Co**oiti"s% In!.
>5 196?91% =an. @% 6??6
FACTS' Pri$at" r"s1on"nt :u""nslan To<#o
Co**oiti"s% In!. (:u""nslan) is a ul#.li!"ns" bro<"r
"ngag" in t," traing o+ !o**oiti"s +utur"s 3it, +ull
*"*b"rs,i1 an 3it, a +loor traing rig,t at t," &anila
Futur"s E4!,ang"% In!. (&FEI).
So*"ti*" in 1AA6% 7"nja*in S,ia% a *ar<"t anal#st
an tra"r o+ :u""nslan% 3as introu!" to 1"tition"r
="+. +"rson Li*. S,ia sugg"st" t,at Li* in$"st in t,"
+or"ign "4!,ang" (+or"4) *ar<"t% traing ;.S. ollar
against t," =a1an"s" #"n% 7ritis, 1oun% D"uts!,"*ar<%
an S3iss +ran!. 7"!aus" r"s1on"nt :u""nslan
"alt in 1"sos onl#% it ,a to !on$"rt S5%??? in *anag"r8s
!,"!< to 1"sos% a*ounting to P165%??? sin!" t," "4!,ang"
rat" at t,at ti*" 3as P65 to S1. To a!!o**oat"
1"tition"r8s r"Eu"st to tra" rig,t a3a#% it a$an!" t,"
P165%??? +ro* its o3n +uns 3,il" 3aiting +or t,"
*anag"r8s !,"!< to !l"ar. T,"r"a+t"r% a "1osit noti!" in
t," a*ount o+ P165%??? 3as issu" to :u""nslan% an
3,i!, 3as s"nt to Li* 3,o r"!"i$" it. T,"n% Li* sign"
a !usto*"r8s agr""*"nt. Soon t,"r"a+t"r% 1"tition"r Li*
3as allo3" to tra" 3it, r"s1on"nt !o*. 1an# 3,i!,
3as !ours" t,ru S,ia b# $irtu" o+ t," blan< or"r
+or*s. &"an3,il"% on O!tob"r 66% 1AA6% r"s1on"nt
l"arn" t,at it 3oul ta<" 1C a#s to !l"ar t," *anag"r8s
!,"!< gi$"n b# 1"tition"r. T,"r"u1on% r"s1on"nt as<"
S,ia to tal< to 1"tition"r +or a s"ttl"*"nt o+ ,is a!!ount
but 1"tition"r r"+us" to tal< 3it, S,ia. T," latt"r *a"
+ollo3.u1s +or *or" t,an a 3""< b"ginning O!tob"r 6C%
1AA6. O3ing to t," +a!t t,at 1"tition"r isr"gar" t,is
r"Eu"st% r"s1on"nt 3as !o*1"ll" to "ngag" t," s"r$i!"s
o+ a la3#"r% 3,o s"nt a "*an l"tt"r to 1"tition"r but
3,i!, 3"nt un,""". T,us% r"s1on"nt +il" a !o*1laint
against 1"tition"r% +or !oll"!tion o+ a su* o+ *on"#.
Art. 1@91
On A1ril 66% 1AA@% t," trial !ourt or"r" t,"
is*issal o+ t," !o*1laint as 3"ll as t,at o+ t,"
"+"nant8s !oun.
Arts. 1@96.1@99
t"r!lai*. On a11"al b# :u""nslan% t," Court o+ A11"als
r"$"rs" an s"t asi" t," trial !ourt8s "!ision.
ISS;E' Can 1"tition"r b" "sto11" in Eu"stioning
t," $aliit# o+ a !usto*"r8s agr""*"nt an +ro* "n#ing
t," "++"!ts o+ ,is !onu!tJ
HELD' No. It is un!ont"st" t,at 1"tition"r ,a% in
+a!t% sign" t," !usto*"r8s agr""*"nt in t," *orning o+
O!. tob"r 66% 1AA6% <no3ing +ull# 3"ll t," natur" o+ t,"
!ontra!t ," 3as "nt"ring into. T," !usto*"r8s agr""*"nt
3as ul#. notariH" an as a 1ubli! o!u*"nt it is
"$i"n!" o+ t," +a!t% 3,i!, ga$" ris" to its "4"!ution an
o+ t," at" o+ t," latt"r. (S"!. 69% 5ul" 196% 5ul"s o+
Court). N"4t% 1"tition"r 1ai ,is in$"st*"nt "1osit to
r"s1on"nt in t," +or* o+ a *anag"r8s !,"!< in t,"
a*ount o+ S5%??? as "$i"n!" b# PCI 7an< &anag"r8s
!,"!< 6A??C% at" O!tob"r 66% 1AA6. All t,"s" ar" ini!ia
t,at 1"tition"r tr"at" t," !usto*"r8s agr""*"nt as a
$ali an bining !ontra!t.
Cl"arl#% b# ,is o3n a!ts% 1"tition"r is "sto11" +ro*
i*1ugning t," $aliit# o+ t," !usto*"r8s agr""*"nt. For
a 1art# to a !ontra!t !annot "n# t," $aliit# t,"r"o+ a+.
t"r "njo#ing its b"n"+its 3it,out outrag" to on"8s s"ns" o+
justi!" an +airn"ss.
Art. 1@96. T," 1rin!i1l"s o+ "sto11"l ar" ,"r"b#
ao1t"% inso+ar as t,"# ar" not in !on+li!t 3it, t,"
1ro$isions o+ t,is Co"% t," Co" o+ Co**"r!"% t," 5ul"s o+
Court an s1"!ial la3s.
CO&&ENT'
(1) Su11l"tor# E++"!t o+ t," >"n"ral Prin!i1l"s o+ Esto11"l
T," 1rin!i1l"s o+ "sto11"l ar" onl# su11l"tor#.
(6) Pl"aing o+ All"g" Esto11"l
I+ +a!ts ar" all"g" as !onstituting "sto11"l% t,"# *ust b"
Arts. 1@96.1@99
"41r"ssl# 1l"a". (CastaP"a $. Ka1% @B O.>. 996@).
Art. 1@99. Esto11"l *a# b" in 1ais or b# "".
Art. 1@99
CO&&ENT'
(1) Dins o+ Esto11"l
(a) "sto11"l IN PAIS ("Euitabl" "sto11"l)2 t,is *a# b" "sto1.
1"l'
1) b# !onu!t or b# a!!"1tan!" o+ b"n"+its%
6) b# r"1r"s"ntation or !on!"al*"nt%
9) b# sil"n!"%
@) b# o*ission%
5) b# la!,"s (unr"asonabl" "la# in suing).
(b) "sto11"l 7K DEED (t"!,ni!al "sto11"l)2 t,is *a# b"'
1) "sto11"l b# "" 1ro1"r (3ritt"n instru*"nt *a# also
b" in t," +or* o+ a bon or a *ortgag").
6) "sto11"l b# jug*"nt as a !ourt r"!or (t,is ,a11"ns
3,"n t,"r" !oul ,a$" b""n 5ES =;DICATA). (S""
5ul" 191% S"!. 9F9G an 5ul" 9A% S"!. @C% 5"$is" 5ul"s
o+ Court)
FNOTE' I,il" r"s jui!ata *a<"s a jug*"nt
!on!lusi$" b"t3""n t," 1arti"s as to t,ings 3,i!,
3"r" ir"!tl# ajug"% "sto11"l b# jug*"nt 1r".
$"nts t," 1arti"s +ro* raising Eu"stions t,at !oul
,a$" b""n 1ut in issu" an "!i" in t," 1r"$ious
!as". (S"" P,il. Nat. 7an< $. 7arr"tto% 56 P,il. B1B
an Na*ar!o $. &a!aa"g% 56 O.>. 1B6).G
&a<ati L"asing an Finan!" Cor1oration $.
I"a$"r T"4til" &ills% In!. M
Court o+ A11"als
>5 5B@6A% &a# 16% 1AB9
A *a!,in" *o$abl" b# natur"% 3,i!, b"!o*"s
i**obiliH" b# "stination or 1ur1os"% *a# b" tr"at"
as *o$abl" 1ro1"rt#. On" 3,o agr""s to "4"!uting a
!,att"l *ortgag" is "sto11" +ro* "n#ing t," !,at.
Art. 1@99
t"l *ortgag" on t," groun t,at t," subj"!t *att"r
is i**o$abl" 1ro1"rt#.
Art. 1@99
(6) Esto11"l IN PAIS (EEuitabl" Esto11"l)
(a) D"+inition' It aris"s 3,"n on"% b# ,is a!ts% r"1r"s"ntations
or a*issions% or b# ,is sil"n!" 3,"n ," oug,t to s1"a<
out% int"ntionall# or t,ru !ul1abl" n"glig"n!"% inu!"s
anot,"r to b"li"$" !"rtain +a!ts to "4ist% an su!, ot,"r
rig,t+ull# r"li"s an a!ts on su!, b"li"+% so t,at ," 3ill b"
1r"jui!" i+ t," +or*"r is 1"r*itt" to "n# t,"
"4ist"n!" o+ su!, +a!ts. (91 Cor1us =uris S"!unu*
69C).
Carolina LiEu"t" >anHon $. CA
>5 196B91% =ul. 9?% 6??6
Esto11" in 1ais% or "Euitabl" "sto11"l aris"s 3,"n
on"% b# ,is a!ts% r"1r"s"ntations or a*issions or b# ,is
sil"n!" 3,"n ," oug,t to s1"a< out% int"ntionall# or t,ru
!ul1abl" n"glig"n!"% inu!"s anot,"r to b"li"$" !"rtain +a!ts
to "4ist an su!, ot,"r rig,t+ull# r"li"s an a!ts on su!,
b"li"+ so t,at ," 3ill b" 1r"jui!" i+ t," +or*"r is 1"r*it.
t" to "n# t," "4ist"n!" o+ su!, +a!ts. T," r"al o++i!" o+ t,"
"Euitabl" nor* o+ "sto11"l is li*it" to su11l#ing
"+i!i"n!# in t," la3% but it s,oul not su11lant 1ositi$"
la3.
In t," !as" at bar% t," r"Euisit"s +or t," "4ist"n!" o+
a t"nan!# r"lations,i1 ar" "41li!it in t," la3 an t,"s"
"l"*"nts !annot b" on" a3a# 3it, b# !onj"!tur"s.
FNOTE' It ta<"s 1la!" in a situation 3,"r" b"!aus"
o+ a 1art#8s a!tion or o*ission% ," is "ni" t," rig,t to
1l"a or 1ro$" a +a!t ot,"r3is" i*1ortant. (1A A*. =ur.
69@).G
FNOTE' Its 1ur1os" is to s"r$" t," obj"!ti$"s o+
justi!". It is +oun" on *oralit# an +air "aling. (1A
A*. =ur.
69@).G
FNOTE' Esto11"l s,oul not b" !on+us" 3it,
+rau.
Firstl#% "sto11"l "4ists 3it, or 3it,out a !ontra!t2
Art. 1@99
+rau 1r"su11os"s an att"*1t to "nt"r into a $ali agr"".
*"nt or !ontra!t.
S"!onl#% 3,il" "sto11"l *a# b" rais" as a "+"ns"%
+rau *a# 1ro1"rl# b" a !aus" o+ a!tion% on a!!ount o+ t,"
$itiat" !ons"nt t,at it 1rou!"s.G
Art. 1@99
(b) E4a*1l"s o+ "sto11"l in 1ais'
1) I+ a $"n"" a r"tro agr""s to a!!"1t a !,"!< in
1a#*"nt o+ t," r"1ur!,as" 1ri!"% ," !annot
a+t"r3ars all"g" t,at t," !,"!< is not l"gal t"n"r.
H" is boun b# ,is o3n a!t. (>uti"rr"H $. Car1io% 59
P,il. 99@).
6) I+ t," r"al o3n"r o+ a ,ous" 1r"t"ns to b" *"r"l# a
bro<"r in t," sal" t,"r"o+% ," is "sto11" +ro* ass"rt.
ing o3n"rs,i1 o$"r t," sa*". (7a!,ra!, &otor Co. $.
Dan"% 61 P,il. 5?@).
9) I+ t," NA&A5CO ,as "nt"r" into a $ali !ontra!t
3it, a !"rtain F""ration +or t," sal" o+ !"rtain
goos i*1ort" b# t," +or*"r% it (NA&A5CO)
!annot Eu"s. tion t," $aliit# o+ t," transa!tion
1arti!ularl# a+t"r it ,as r"!"i$" an a!!"1t"
!"rtain b"n"+its +ro* t," F""ration as a r"sult o+ t,"
!ontra!t. (NA&A5CO $. Tan% "t al.% L.1C?C@% &ar!,
91% 1A6@).
(!) So*" Do!trin"s
1) Conu!t b"!aus" o+ ignoran!" or *ista<" o"s not
r"sult in "sto11"l. (5a*iro $. >rano% 5@ P,il. C@@).
In"" i+ so*"on" 3as ignorant o+ t," trut, or 3as
*ista<"n% ," !annot b" sai to b" in "sto11"l. (Far
East"rn Sur"t# Co. $. Court o+ A11"als% L.16?1A% O!t.
16% 1A5B).
6) Esto11"l b# la!,"s (unr"asonabl" "la# in bringing
a !ourt a!tion% "$"n i+ t," 1"rio o+ 1r"s!ri1tion ,as
not #"t la1s") bars an a!tion to !r"at" a $"st" rig,t
("4"!utor# int"r"st) but o"s not bar an a!tion to
1rot"!t a $"st" rig,t ("4"!ut" int"r"st). (Inton $.
:uintana% B1 P,il. AC).
FNOTE' In Ligu"H $. Lo1"H% 1?6 P,il. 5CC% t,"
Su1r"*" Court ,"l t,at t," rul" o+ "sto11"l b#
la!,"s !annot a11l# to 1r"$"nt "n+or!"*"nt o+ t,"
1rin!i1l" t,at a 1art# to an ill"gal !ontra!t !annot
r"!o$"r 3,at ," ,as gi$"n 1ursuant t,"r"to% +or t,"
Art. 1@99
latt"r is a rul" o+ su1"rior 1ubli! 1oli!#.G
FNOTE' In Viloria $. S"!. o+ Agri!ultur" an
Natural 5"sour!"s% "t al.% L.11C5@% A1ril 6A% 1A6?%
Art. 1@99
t," Court ,"l t,at t," "Euitabl" "+"ns" o+ LACHES
r"Euir"s +our "l"*"nts'
a) !onu!t on t," 1art o+ t," "+"nant% or o+ on"
un"r 3,o* ," !lai*s% gi$ing ris" to t," situ.
ation o+ 3,i!, t," !o*1laint is *a" an +or
3,i!, t," !o*1laint s""<s a r"*"#2
b) "la# in ass"rting t," !o*1lainant8s rig,ts% t,"
!o*1lainant ,a$ing ,a <no3l"g" or noti!"
o+ t," "+"nant8s !onu!t an ,a$ing b""n a+.
+or" an o11ortunit# to institut" a suit2
!) la!< o+ <no3l"g" or noti!" on t," 1art o+ t,"
"+"nant t,at t," !o*1lainant 3oul ass"rt
t," rig,t on 3,i!, ," bas"s ,is suit2
) injur# or 1r"jui!" to t," "+"nant in t," "$"nt
r"li"+ is a!!or" to t," !o*1lainant% or t," suit
is not ,"l to b" barr". (S"" also &"jia " Lu!as
$. >a*1onia% 59 O.>. 66C2 s"" also &igu"l $.
Catalino% L.69?C6% No$. 6A% 1A6B).G
9) =ust b"!aus" a 1"rson is sil"nt o"s not n"!"ssaril#
*"an t,at ," 3ill b" in "sto11"l. T,"r" s,oul ,a$"
b""n a ut# or obligation to s1"a<. (1A A*. =ur. 669
an Lora $. D"l 5osario% "t al.% FC.A.G 56 O.>. 66B).
@) A *"r" 1ro*is" to 1"r+or* or to o*it at so*" +utur"
ti*" o"s not n"!"ssaril# r"sult in "sto11"l (1ro*is.
sor# "sto11"l). For t,is to "4ist% t," 1ro*is" *ust
,a$" b""n r"li" u1on% an 1r"jui!" 3oul r"sult
unl"ss "sto11"l is a11li". (S"" 1A A*. =ur. 65C.
65B).
N#!o Sal"s Cor1. $. 7A Finan!" Cor1.
>5 C16A@% Aug. 16% 1AA1
T," lo3"r !ourt obs"r$" t,at t,"r" 3as alr"a#
a 1r"$ious transa!tion o+ is!ounting o+ !,"!<s in.
"++"!ti$"l# 1la!"s N#!o un"r "sto11"l in 1ais 3,i!,
BC5
Art. 1@99
$ol$ing t," sa*" 1"rsonaliti"s 3,"r"in an# "nabling
r"solution +ro* N#!o 3as is1"ns" 3it, an #"t 7A
Finan!" 3as abl" to !oll"!t +ro* N#!o an Sans,"ll
3as abl" to is!,arg" its o3n un"rta<ings. Su!,
"++"!ti$"l# 1la!"s N#!o un"r "sto11"l in 1ais 3,i!,
BC5
Art. 1@99
aris"s 3,"n on"% b# ,is a!ts% r"1r"s"ntation or a.
*issions% or b# ,is sil"n!" 3,"n ," soug,t to s1"a<
out int"ntionall# or t,ru !ul1abl" n"glig"n!" inu!"s
anot,"r to b"li"$" !"rtain +a!ts to "4ist an su!, ot,"r
rig,t+ull# r"li"s an a!ts u1on su!, b"li"+% so t,at ,"
3ill b" 1r"jui!" i+ t," +or*"r is 1"r*itt" to "n#
t," "4ist"n!" o+ su!, +a!ts. N#!o r"*ain" sil"nt in
t," !ours" o+ t," transa!tion an s1o<" out onl# lat"r
to "s!a1" liabilit#. T,is !annot b" !ount"nan!".
(9) Esto11"l 7K DEED
(a) D"+inition' It is a bar 3,i!, 1r"!lu"s a 1art# to a ""
an ,is 1ri$i"s +ro* ass"rting as against t," ot,"r an ,is
1ri$i"s an# rig,t or titl" in "rogation o+ t," ""% or +ro*
"n#ing t," trut, o+ an# *at"rial +a!t ass"rt" in it. (91
C=S% 1. 1A5).
(NOTE' T,"r" *ust b" a 3ritt"n instru*"nt.)
(b) E4a*1l"s o+ "sto11"l b# ""'
1) I+ s"$"ral 1"rsons% "a!, !lai*ing o3n"rs,i1 o$"r !"r.
tain 1ro1"rt# "1osit" in a 3ar",ous"% in a 3ritt"n
o!u*"nt agr"" it s,oul b" sol% sai 1"rsons !an.
not lat"r on *oi+# t," t"r*s o+ t," agr""*"nt. (Cu
;nji"ng $. Asia 7an<ing Cor1oration% @5 P,il. C6A).
6) I+ a s,i11"r ,as ,is goos $alu" at onl# P6??% ," !an.
not lat"r on r"!o$"r a*ag"s +or its $alu" *or" t,an
3,at ," ,as "!lar" in t," bill o+ laing% "$"n i+ t,"
$alu" o+ t," goos b" 3ort, *u!, *or"% +or ," is in
"sto11"l. (Fri"4as an Co. $. Pa!i+i! &ail St"a*s,i1
Co.% @6 P,il. 1AB).
9) Pur!,as" in on"8s o3n na*" 3it, anot,"r8s *on"#
g"n"rall# gi$"s titl" to t," 1ur!,as"r% t,at is% to ,i*
3,o a11"ars in t," "" to ,a$" *a" t," 1ur!,as"
in ,is o3n na*". (S"" EnriEu"H $. Olagu"r% 65 P,il.
6@1 an Coll"!tor o+ Int"rnal 5"$"nu" $. Fa$is% "t al.%
1)
I+ t," "" or instru*"nt is null an $oi b"!aus" t,"
BC6
Art. 1@99
L.11551% &a# 9?% 1A6?).
(!) So*" Do!trin"s
1)
I+ t," "" or instru*"nt is null an $oi b"!aus" t,"
BC6
Art. 1@9@
!ontra!t% l"t us sa#% is ill"gal% t,"r" is NO "sto11"l.
(1C A*. =ur. 6?5).
6) Orinaril#% t," 1"rson "sto11" *ust b" !a1a!itat".
(1A A*. =ur. 6?@). 7ut i+ a *inor is !l"$"r "noug, to
"!"i$" ot,"rs% "sto11"l *a# r"sult. (S"" Sia Suan
$. Al!antara% @C O.>. @561). T,us% *inors 3,o s"ll
r"al "stat" 1r"t"ning% b# t," "4"!ution o+ a 1ubli!
instru*"nt% to ,a$" r"a!," t,"ir *ajorit#% !annot
b" 1"r*itt" a+t"r3ars to "4!us" t,"*s"l$"s +ro*
!o*1lian!" 3it, t," obligation assu*" b# t,"* or
to s""< t,"ir annul*"nt. An t," !ir!u*stan!" t,at
a+t"r t," !on$"#an!"% t,"# in+or* t," $"n"" o+ t,"ir
*inorit# is o+ no *o*"nt% b"!aus" t,"ir *isr"1r"s"n.
tation ,a alr"a# "sto11" t,"* +ro* isa$o3ing
t," !ontra!t. (H"r*osa $. Tob"l # 5o4as% L.11B95% O!t.
9?% 1A5B).
9) I+ a 1"rson notariH"s (an is not a 1art# to) t," in.
stru*"nt% ," is NOT in "sto11"l. (7orlasa $. 5a*os%
L.9@99% =ul. 16% 1A51).
Art. 1@9@. I,"n a 1"rson 3,o is not t," o3n"r o+ a
t,ing s"lls or ali"nat"s an "li$"rs it% an lat"r t," s"ll"r or
grantor a!Euir"s titl" t,"r"to% su!, titl" 1ass"s b# o1"ration
o+ la3 to t," bu#"r or grant"".
CO&&ENT'
(1) Sal" or Ali"nation b# Non.O3n"r
(a) E4a*1l"'
=os" sol in ,is o3n na*" 7rigitt"8s !ar to >ina. H"
also "li$"r" t," !ar to >ina. I+ lat"r on 7rigitt" onat"s
t," !ar to =os"% o3n"rs,i1 o$"r t," sa*" 1ass"s to >ina%
not b# traition or "li$"r#% but b# o1"ration o+ la3.
(b) In t,is <in o+ "sto11"l% 1r"jui!" is not "ss"ntial. (Va.
" CruH $. Ilagan% @6 O.>. No. 1% Su11. 956).
15B?
Art. 1@9@
(!) Art. 1@9@ a11li"s to t," sal" o+ -a+t"r.a!Euir" 1ro1"rt#./
T,is is allo3" b# t," la3 on Sal"s un"r t," Ci$il Co".
15B1
Art. 1@95
(6) Cas"s
InEui*bo# $. Pa"H Va. " CruH
L.19A59% =ul. 66% 1A6?
FACTS' InEui*bo# sol a 1ar!"l o+ lan to Alb"a in 1A@1%
3,o in turn% 3it,out ,a$ing +ull# 1ai t," 1ri!"% sol t," sa*"
lan to CruH in 1A@9. T," lan 3as r"gist"r" lan% an 3,"n
Alb"a sol it to CruH% t," lan 3as still r"gist"r" in
InEui*bo#8s na*". It 3as onl# in F"b. 1A@@ t,at t," sal" in
+a$or o+ Alb"a 3as r"!or". In &a# 1A@@% Alb"a8s titl" 3as
!an!"ll" an t," trans+"r !"rti+i!at" o+ titl" 3as issu" to
CruH. Di CruH r"all# a!Euir" titl" o$"r t," 1ro1"rt#J
HELD' K"s% b"!aus" alt,oug, Alb"a 3as not #"t t," r"gis.
t"r" o3n"r at t," ti*" ," sol it to CruH% t," +a!t r"*ains
t,at ," (Alb"a) subs"Eu"ntl# a!Euir" $ali titl" in ,is o3n
na*". T,is titl" 3as lat"r trans+"rr" to CruH. (S"" Art.
1@9@% Ci$il Co").
Lla!"r $. &uPoH " 7ustillo an A!,a$al
16 P,il. 96B
FACTS' At t," ti*" Lla!"r sol a 1i"!" o+ lan to &unoH%
Lla!"r 3as not #"t t," o3n"r t,"r"o+. Lat"r% Lla!"r a!Euir"
r". all# t," titl" o$"r t," lan. Issu"' Is t," sal" to &uPoH
$aliJ
HELD' K"s. Lla!"r8s subs"Eu"nt a!Euisition o+ t," lan
,as t," "++"!t o+ *a<ing ,is !on$"#an!" o+ t," sa*" to &uPoH
$ali. (S"" Pang Li* M >al$"H $. Lo S"ng% @6 P,il. 6B6).
FNOTE' I+% ,o3"$"r% t," "" o+ sal" is all"g" to b" a
+org"r#% t,is is a Eu"stion o+ +a!t t,at s,oul b" t,r"s," out
in t," trial !ourt. (F"li4 &olina $. Court o+ A11"als M &anjon%
L.1@56@% O!t. 6@% 1A6?).G
Art. 1@95. I+ a 1"rson in r"1r"s"ntation o+ anot,"r s"lls
15B6
Art. 1@95
or ali"nat"s a t,ing% t," +or*"r !annot subs"Eu"ntl# s"t u1
,is o3n titl" as against t," bu#"r or grant"".
15B9
Art. 1@96
CO&&ENT'
(1) Sal" or Ali"nation in 5"1r"s"ntation o+ Anot,"r
T,is is "sto11"l !r"at" in a r"1r"s"ntati$" !a1a!it#. In
t,is <in o+ "sto11"l% 1r"jui!" is also not "ss"ntial. (F"li4
&olina $. Court o+ A11"als M &anjon% L.1@56@% O!t. 6@% 1A6?).
(6) E4a*1l"
A*alia% in r"1r"s"ntation o+ 5o*"o% s"lls to =uanito a !ar.
A*alia !annot a+t"r3ars all"g" t,at s," 3as r"all# t," o3n"r
o+ t," !ar% an t,at% t,"r"+or"% t," sal" is not $ali.
Art. 1@96. A l"ss"" or a bail"" is "sto11" +ro*
ass"rting titl" to t," t,ing l"as" or r"!"i$"% as against
t," l"ssor or bailor.
CO&&ENT'
(1) Esto11"l on t," Part o+ a L"ss"" or a 7ail""
(a) ;n"r t," 5"$is" 5ul"s o+ Court% on" o+ t," instan!"s o+
!on!lusi$" 1r"su*1tions is in t," !as" o+ t," t"nant% 3,o
is not 1"r*itt" to "n# t," titl" o+ ,is lanlor at t,"
ti*" o+ t," !o**"n!"*"nt o+ t," r"lation o+ lanlor an
t"nant b"t3""n t,"*. (S"!. 9.b% 5ul" 191 an LiHaa $.
O*anan%
5A P,il. 5@C).
(b) Orinaril#% t,"r"+or"% it is "noug, +or t," lanlor to 1ro$"
t," "4ist"n!" o+ t," l"as" !ontra!t% +or t," 1r"su*1tion to
a11l#. (Pas!ual $. Ang"l"s% @ P,il. 6?@).
(!) Not" t,at t," la3 r"+"rs to a l"ss"" or bail"" (su!, as a ".
1ositor#). (S"" D"lgao $. 7onn"$i"% "t al.% 69 P,il. 9?B).
() T," 1r"su*1tion ,as also b""n a11li" to a on"" 3,o
,a a!!"1t" t," onation in u" +or* (Fran!o% "t al. $.
Tutaan% FC.A.G 5? O.>. @91C)% as 3"ll as to a s"r$ant or
ag"nt. (7arlin $. 5a*ir"H% "t al.% C P,il. @1).
15B@
Art. 1@96
I+ t," all"g" t"nant o"s not a*it "41r"ssl# or i*1li!itl#
t," "4ist"n!" o+ t," l"as" !ontra!t (su!, as 3,"n t," lanlor
15B5
Art. 1@9C
i not atta!, or 1l"a in ,is !o*1laint t," !ontra!t o+ l"as")%
t," 1r"su*1tion o"s not a11l#. (Anr"s $. =ug" Soriano% "t
al.% L.1?911% =un. 6A% 1A5C).
Art. 1@9C. I,"n in a !ontra!t b"t3""n t,ir 1"rsons
!on. !"rning i**o$abl" 1ro1"rt#% on" o+ t,"* is *isl" b#
a 1"r. son 3it, r"s1"!t to t," o3n"rs,i1 or r"al rig,t o$"r
t," r"al "stat"% t," latt"r is 1r"!lu" +ro* ass"rting ,is
l"gal titl" or int"r"st t,"r"in% 1ro$i" all t,"s" r"Euisit"s
ar" 1r"s"nt'
(1) T,"r" *ust b" +rauul"nt r"1r"s"ntation or
3rong. +ul !on!"al*"nt o+ +a!ts <no3n to t," 1art#
"sto11"2
(6) T," 1art# 1r"!lu" *ust int"n t,at t," ot,"r
s,oul a!t u1on t," +a!ts as *isr"1r"s"nt"2
(9) T," 1art# *isl" *ust ,a$" b""n una3ar" o+ t,"
tru" +a!ts2 an
(@) T," 1art# "+rau" *ust ,a$" a!t" in
a!!oran!" 3it, t," *isr"1r"s"ntation.
CO&&ENT'
(1) Esto11"l Con!"rning I**o$abl" Pro1"rt#
To a11l# t,is Arti!l"% on" s,oul ,a$" b""n *isl"% ot,.
"r3is" t,"r" is no "sto11"l. (Fabi"% "t al. $. Cit# o+ &anila% 1?
P,il. 6@ an Cristobal $. >o*"H% 5? P,il. B1?). Dno3l"g" o+
t," tru" +a!ts b# t," strang"r 1r"$"nts "!"1tion% so "sto11"l
!annot a11l#. (Vinluan $. &"rr"ra% A6 P,il. 1?CC). On t," 1art
o+ t," 1art# 3,o is to b" in "sto11"l% s,oul ,a$" *a" a
+rauul"nt r"1r"s"ntation or 3rong+ul !on!"al*"nt o+ +a!ts
<no3n to ,i*. (&oll"r $. Saril"% L.C?9B% Aug. 91% 1A55).
(6) Cas"s
Fabi"% "t al. $. Cit# o+ &anila
15B6
Art. 1@9C
1? P,il. 6@
FACTS' Prior to ,is a11li!ation +or titl"% Fabi" *a" a
1lan 3,"r" ," *"ntion" a !"rtain -"st"ro/ as t," bounar# o+
,is 1ro1"rt#% i*1l#ing t,at it 3as not in!lu" in t," "stat".
15BC
Art. 1@9B
Lat"r% ," sub*itt" a +or*al a11li!ation% t,is ti*" in!luing
t," -"st"ro/ insi" t," "stat". It 3as 1ro$" t,at t," Cit# o+
&anila% to 3,o* t," a11li!ation 3as sub*itt"% n"$"r sa3 t,"
1lan ,"r"inabo$" r"+"rr" to. Issu"' Is Fabi" in "sto11"lJ
HELD' No% +or t," Cit# !oul not ,a$" b""n *isl"% sin!"
its o++i!ials n"$"r sa3 t," 1lan.
Cristobal $. >o*"H
5? P,il. B1?
FACTS' To *isl" ot,"rs% t3o brot,"rs% E1i+anio an
&ar!"lino >o*"H% r"3 u1 a 1lan 3,"r"b# E1i+anio% alt,oug,
t," r"gist"r" o3n"r o+ a 1ar!"l o+ lan% a*itt" t,at &ar!".
lino 3as r"all# t," o3n"r. Issu"' &a# &ar!"lino >o*"H or ,is
su!!"ssors.in.int"r"st !lai* o3n"rs,i1 o$"r t," lan b# $irtu"
o+ su!, 3ritt"n a*ission b# E1i+anioJ
HELD' No% b"!aus" &ar!"lino 3as a 1art# to t,"
!ollusion% an t,"r"+or"% ," !oul not ,a$" b""n *isl". Ha
t,ir 1arti"s b""n *isl"% t,"r" 3oul ,a$" b""n "sto11"l.
(9) E++"!t o+ Cons"nt on t," Part o+ t," Tru" O3n"r
A!Eui"s!"n!" b# t," tru" o3n"r "sto1s ,i* +ro*
ass"rting an# rig,t o$"r t," 1ro1"rt#. (C"*"ntina% "t al. $.
Court o+ A1. 1"als% "t al.% A1 P,il. A66).
C"*"ntina% "t al. $. Court o+ A11"als% "t al.
A1 P,il. A66
FACTS' Ir"n"o an Isab"l C"r$ant"s o3n" !onjugal lan%
3,i!, 3as sol a+t"r Isab"l8s "at, to Pablo Con!"1!ion b# Ir".
n"o% 3it, ,is !,ilr"n8s !ons"nt. Lat"r t," !,ilr"n !lai*" 1art
o+ t," 1ro1"rt# stating t,at t," sal"% inso+ar as it r"+"rr" to
t," 1ortion in,"rit" b# t,"* +ro* t,"ir *ot,"r% Isab"l%
s,oul b" !onsi"r" $oi b"!aus" Ir"n"o !oul not $alil# s"ll
t," sa*".
HELD' T," !,ilr"n ar" "sto11" +ro* ass"rting t,"ir
rig,ts in $i"3 o+ t,"ir a!Eui"s!"n!" to t," sal".
15BB
Art. 1@9B
Art. 1@9B. On" 3,o ,as allo3" anot,"r to assu*"
a11ar. "nt o3n"rs,i1 o+ 1"rsonal 1ro1"rt# +or t," 1ur1os"
o+ *a<ing an# trans+"r o+ it% !annot% i+ ," r"!"i$" t," su*
+or 3,i!, a
15BA
Art. 1@9A
1l"g" ,as b""n !onstitut"% s"t u1 ,is o3n titl" to "+"at
t," 1l"g" o+ t," 1ro1"rt#% *a" b# t," ot,"r to a 1l"g""
3,o r"!"i$" t," sa*" in goo +ait, an +or $alu".
CO&&ENT'
(1) Allo3ing So*"on" to Assu*" A11ar"nt O3n"rs,i1 o+
P"rsonal Pro1"rt#
(a) T,is is "sto11"l t,at r"sults +ro* a!!"1tan!" o+ b"n"+its
(3it, <no3l"g" o+ t," tru" +a!ts).
(b) E4a*1l"'
A ,as a ia*on ring. H" allo3" 7 to assu*"
a11ar. "nt o3n"rs,i1 o$"r t," ring so t,at 7 *ig,t s"ll
t," sa*". Inst"a% 7 1l"g" t," ring 3it, C to obtain a
loan. T," *on"# l"nt 3as lat"r ,an" o$"r to A. Lat"r
A atta!<s t," $aliit# o+ t," 1l"g" !lai*ing t,at un"r
t," la3% t," 1l"g"" *ust b" t," o3n"r t,"r"o+% an sin!"
7 in t,is !as" a!t" 3it,out aut,orit#% t," 1l"g" is
in$ali. Is A allo3" to o t,isJ
ANS.' No% A is not allo3" to o t,is. His r"!"i1t
o+ t," su* +or 3,i!, t," 1l"g" 3as *a" is an i*1li"
rati+i!ation o+ t," 1l"g" an A is% t,"r"+or"% in "sto11"l.
(6) I,"n Esto11"l A11li"s E$"n i+ T,"r" 7" No 7"n"+its
E$"n i+ t,"r" b" NO b"n"+its% "sto11"l 3oul also a11l# i+
t," -ag"nt/ 3as gi$"n a11ar"nt aut,orit#% an t," ot,"r 1art#
3as *isl" into gi$ing ,i* !r"it. (Si# Cong 7i"ng $. Hong<ong
M S,ang,ai 7an<% 56 P,il. 5AB).
Art. 1@9A. Esto11"l is "++"!ti$" onl# as b"t3""n t," 1ar.
ti"s t,"r"to or t,"ir su!!"ssors in int"r"st.
CO&&ENT'
(1) P"rsons 7oun b# Esto11"l
7ot, 1arti"s ar"% ,o3"$"r% boun (Anr"s $. Pi*"nt"l% 61
15A?
Art. 1@9A
P,il. @91) su!, as 1arti"s to a sal". (7orlaHa $. 7orgonio% >5
9@99% =ul# 16% 1A51). Su!!"ssors.in.int"r"st (as 3"ll as 1ri$i"s
15A1
Art. 1@9A
an grant""s) ar" boun. (1A A*. =ur. B?A). 7ut t,ir 1arti"s
ar" not.
(6) Esto11"l on t," Part o+ a &inor
A *inor 1oss"ss" o+ is!r"tion an !l"$"rn"ss *a# b"
boun b# ,is o3n !ontra!t% "$"n i+ "nt"r" into 3it,out 1ar"ntal
aut,orit#. (Sia Suan $. Al!antara% @C O.>. @561).
(9) Is t," >o$"rn*"nt 7oun b# Esto11"lJ
>"n"rall#% t," >o$"rn*"nt is not boun b# "sto11"l%
1arti!ularl# so i+ t,"r" ,as b""n an "rron"ous a11li!ation an
"n+or!"*"nt o+ t," la3. (P,il. Long Distan!" T"l. Co. $. Coll. o+
Int. 5"$.% A? P,il. 6C@).
E4a*1l"s'
(a) In P"o1l" $. >o% "t al.% L.1196B.6A% O!t. 9?% 1A5A% t," Su.
1r"*" Court ,"l t,at t," +a!t t,at t," !l"r< o+ t," Su.
1r"*" Court s"r$" noti!" u1on t," a11"llant t,at its
bri"+ *ust b" 1rint" an +il" 3it, t," Court 3it,in @5
a#s +ro* r"!"i1t o+ noti!" o"s not an !annot !on+"r
a11"llat" jurisi!tion u1on sai Court% 3,"r" t," a11"al
3as ta<"n 7EKOND t," 1"rio 1r"s!rib" b# t," 5ul"s
o+ Court.
(b) An# "rror *a" b# a ta4 o++i!ial in t," ass"ss*"nt or
!o*1utation o+ ta4"s o"s NOT ,a$" t," "++"!t o+ r"li"$.
ing t," ta41a#"r +ro* t," +ull a*ount o+ liabilit# as +i4"
b# la3. Errors o+ ta4 o++i!"rs o not bin t," go$"rn*"nt
or 1r"jui!" its rig,t to t," ta4"s or u"s !oll"!tibl" b# it
+ro* t," !itiH"n. (L"3in $. >alang% L.15659% O!t. 91% 1A6?
an Coll"!tor o+ Int. 5"$. $. Ell"n Ioo &!>rat,% L.16C1?%
L.16C61% F"b. 6B% 1A61). Esto11"l !annot o1"rat" against a
!ourt an it !an t,"r"+or" is*iss a !as" an#ti*" it
is!o$. "rs it ,as no jurisi!tion. (P"r"H $. P"r"H% L.1@BC@%
S"1t. 9?%
1A6?).
FNOTE' In Nilo% "t al. $. 5o*"ro% L.151A5% &ar. 6A%
1A61% it 3as ,o3"$"r ,"l t,at 3,"r" t," "+"nant Cit#
15A6
Art. 1@9A
3as 3rongl# r"1r"s"nt" an its !it# attorn"# +ail" to +il"
a *otion to is*iss bas" on su!, groun% "sto11"l
o1"rat"s against sai "+"nant Cit#. T," "rron"ous
"signation o+ t," r"1r"s"ntati$" 3,"n t," "+"nant Cit#
its"l+ is na*"%
15A9
Art. 1@9A
is NOT su++i!i"nt to s"t asi" t," 1ro!""ing ,a in t,"
!as".G
Antonio Fa$is% "t al. $. &uni!i1alit# o+ Sabongan
L.66566% F"b. 6C% 1A6A
ISS;E' Do"s "sto11"l a11l# against a &uni!i1al Cor1ora.
tionJ
HELD' No. T," o!trin" o+ "sto11"l !annot b" a11li" as
against a &uni!i1al Cor1oration to $aliat" a !ontra!t 3,i!, it
,as no aut,orit# to *a<" 0 ot,"r3is"% it 3oul b" "nabl" to
o inir"!tl# 3,at it !annot o ir"!tl#. (S"" 7artolo*" E. San
Di"go $. &uni!i1alit# o+ Naujan% L.AA6?% F"b. 6A% 1A6A).
5"1ubli! $. Caball"ro
CA SC5A 1CC
I+ a go$"rn*"nt o++i!ial ill"gall# !on$"#s 1ubli! lan to
a 1"rson% t," go$"rn*"nt is not "sto11" +ro* r"!o$"ring t,"
sa*".
(@) A11li!abilit# to :u"stions o+ Fa!t
T," rul" on "sto11"l a11li"s onl# to Eu"stions o+ +a!t% not
o+ la3% about t," trut, o+ 3,i!, t," ot,"r 1art# is ignorant.
(Tanaa M &a!a1agal $. Cu"n!o% "t al.% 1?? P,il. 11?1).
Abin"s $. 7PI
@B6 SC5A @61 (6??6)
Not" ,"r" t,at t," 1ubli! 1oli!# !onsi"rations b",in
+oru* s,o11ing ar" su1"rior to t,at o+ a 1art#Os !lai* o+ "sto1.
1"l.
(5) Esto11"l b# 5"!or
T," o!trin" o+ "sto11"l b# r"!or onl# a11li"s as b"t3""n
t," sa*" 1arti"s or t,"ir 1ri$i"s an !annot b" us" against
strang"rs. I+ in t3o !as"s t," 1lainti++s b" i++"r"nt but t," ".
+"nants ar" t," sa*"% t," n"3 1lainti++s ar" n"it,"r boun b#
t," +irst 1ro!""ings% nor *a# t,"# ta<" a$antag" o+ t," sa*".
15A@
Art. 1@9A
(7"ltran% "t al. $. Es!u"ro% "t al.% AA P,il. 6@9).
15A5
Art. 1@9A
FNOTE' I+ 1art#.litigant sub*it a !as" +or "!ision 3it,out
obj"!tion t,"# !annot !lai*% +or t," +irst ti*" on a11"al% t,at
t,"# 3"r" "1ri$" o+ t," o11ortunit# to sub*it aitional
"$i"n!". T,"# ar" guilt# o+ "sto11"l. (7arai M 7onita $.
Igna!io% "t al.% L.B96@% =an. 1A% 1A56% O.>. 51C6).G
(6) Esto11"l Cannot Valiat" a Voi Contra!t
Pru"ntial 7an< $. Panis
>5 5???B% Aug. 91% 1ABC
T," o!trin" o+ "sto11"l *a# not b" in$o<" to $aliat" a
$oi !ontra!t. As b"t3""n 1arti"s to a !ontra!t% $aliit# !annot
b" gi$"n to it b# "sto11"l i+ it is 1ro,ibit" b# la3 or is against
1ubli! 1oli!#. No !itiH"n is !o*1"t"nt to bart"r a3a# 3,at
1ubli! 1oli!# b# la3 s""<s to 1r"s"r$".
(C) Pro*issor# Esto11"l
&"noHa $. Court o+ A11"als
>5 116C1?% =un. 65% 6??1
FACTS' P"tition"r obtain" loans +ro* a ban< s"!ur"
b# *ortgag"s on s"$"ral an 1"rsonal 1ro1"rti"s. Sin!" ," 3as
,a$ing i++i!ult# in *""ting 1a#*"nts% ," as<" +or r"stru!.
turing o+ t," loans. H" 3as tol b# t," ban< to sub*it !"rtain
o!u*"nts to "t"r*in" i+ ,is r"Eu"st 3oul b" justi+i". H"
sai t,at t," ban< a11ro$" ,is 1ro1osal +or r"stru!turing. For
t,is 1ur1os"% ," an ,is 3i+" sign" t3o blan< 1ro*issor# not"
+or*s in t," b"li"+ t,at sai not"s 3"r" to b" +ill" out b# t,"
ban< to !on+or* to a 5.#"ar r"stru!turing 1rogra* agr""
u1on $"rball#. Inst"a o+ t," 5.#"ar 1"rio% 1"tition"r !lai*"
t,at t," ban< !ontra$"n" t,"ir $"rbal agr""*"nt b# a++i4ing
at"s on t," t3o not"s to *a<" t,"* *atur" in 6% inst"a o+ 5
#"ars an ins"rting int"r"st rat"s o+ 61Q inst"a o+ 1BQ as
agr"" u1on. In a suit% 1"tition"r +il" +or s1"!i+i!
1"r+or*an!"% nulli+i!ation o+ "4trajui!ial +or"losur" o+ ,is
*ortgag" 1ro1"rt#% an a*. ag"s. H" !lai*" t,at t," ban<
Art. 1@9A
,a a!!"1t" ,is 1ro1osals +or r"stru!ting.
Art. 1@9A
T," 5"gional Trial Court (5TC) or"r" t," ban< to
r"stru!. tur" to 5 #"ars t," loan o+ 1"tition"r an to 1a# !"rtain
s1"!i+i" a*ag"s. T," Court o+ A11"als (CA) r"$"rs" t," trial
!ourt an rul" t,at t,"r" is no "$i"n!" o+ a 1ro*is" t,at t,"
ban< ,a a!!"1t" t," 1ro1osals o+ 1"tition"r +or t,"
r"stru!turing o+ ,is loans. It rul" +urt,"r 1"tition"r8s
!o**uni!ations 3"r" *"r" 1ro1osals an t," ban<8s
r"s1ons"s 3"r" not !at"gori!al t,at 1"tition"r8s r"Eu"st ,a
b""n +a$orabl# a!!"1t" b# t," ban<.
ISS;E' Is 1"tition"r !orr"!t in ,is argu*"nt t,at u1on
sub*ission o+ t," r"Euir" o!u*"nts +or r"stru!turing ,is
1ro1os" 5.#"ar r"stru!turing 1lan 3as ""*" auto*ati!all#
a11ro$" b# t," ban<J
HELD' T," 5TC8s ruling is bas" on t," o!trin" o+ 1ro*.
issor# "sto11"l "nun!iat" in 5a*os $. C"ntral 7an< (@1 SC5A
565). T,is o!trin" *a# aris" +ro* t," *a<ing o+ a 1ro*is"%
"$"n t,oug, 3it,out !onsi"ration% i+ it 3as int"n" t,at t,"
1ro*is" s,oul b" r"li" u1on% an i+ a r"+usal to "n+or!" it
3oul b" $irtuall# to san!tion t," 1"r1"tration o+ +rau or 3oul
r"sult in ot,"r injusti!". 5"lian!" b# 1ro*iss"" is g"n"rall#
"$i"n!" b# a!tion or +orb"aran!" on ,is 1art% an t," i"a
,as b""n "4. 1r"ss" t,at su!, a!tion or +orb"aran!" 3oul
r"asonabl# ,a$" b""n "41"!t" b# t," 1ro*issor.
Iit, t," o!trin" s"r$ing as an "4!"1tion to t," g"n"ral
rul" t,at a 1ro*is" o+ +utur" !onu!t o"s not !onstitut" "sto1.
1"l% !"rtain "l"*"nts% ,o3"$"r% ,a$" to b" "stablis," so as to
b" "ntitl" to its b"n"+it' (a) a 1ro*is" r"asonabl# "41"!t" to
inu!" a!tion or +orb"aran!"2 (b) su!, 1ro*is" i% in +a!t%
inu!" a!tion or +orb"aran!"2 an (!) t," 1art# su++"r" a
"tri*"nt as a r"sult. Cl"arl#% t,"n% t," o!trin" 1r"su11os"s
t," "4ist"n!" o+ a 1ro*is" on t," 1art o+ on" against 3,o*
"sto11"l is !lai*". T," 1ro*is" *ust b" 1lain an
una*biguous an su++i!i"ntl# s1"!i+i! so t,at t," jui!iar#
!an un"rstan t," obligations assu*" an "n+or!" t,"
1ro*is" a!!oring to its t"r*s.
In t," !as" at bar% t," 1"tition"r +ail" to 1ro$" t,at t,"
Art. 1@9A
ban< ,a 1ro*is" to a11ro$" t," 1lan in "4!,ang" +or t," sub.
*ission o+ t," 1ro1osal. 7"!aus" no su!, 1ro*is" 3as 1ro$"n%
t," o!trin" o"s not a11l#.
Art. 1@9A
(B) Con!"1t o+ an -Ag"n!# b# Esto11"l/
Litonjua% =r. $. Et"rnit Cor1.
@A? SC5A 6?@ (6??6)
For an -ag"n!# b# "sto11"l/ to "4ist% t," +ollo3ing *ust b"
"stablis,"'
1. t," 1rin!i1al *ani+"st" a r"1r"s"ntation o+ t,"
ag"nt8s aut,orit# or <no3ingl# allo3" t," ag"nt to
assu*" su!, aut,orit#2 or
6. t," t,ir 1"rson% in goo +ait,% r"li" u1on su!,
r"1r"s"ntation2 or
9. r"l#ing u1on sai r"1r"s"ntation% a t,ir 1"rson ,as
!,ang" ,is 1osition to ,is "tri*"nt.
An ag"n!# b# "sto11"l% 3,i!, is si*ilar to t," -o!trin" o+
a11ar"nt aut,orit#%/ r"Euir"s 1roo+ o+ r"lian!" u1on t," r"1r".
s"ntations% an t,at% in turn% n""s 1roo+ t,at t," r"1r"s"nta.
tions 1r"at" t," a!tion ta<"n in r"lian!".
TITLE V. TRUSTS
Chapter 1
GENERAL PROVISIONS
(1) OTrust8 D"+in"
(a) It is t," rig,t to t," b"n"+i!ial "njo#*"nt o+ 1ro1"rt#% t,"
l"gal titl" to 3,i!, is $"st" in anot,"r. (65 C.=. 616).
(b) It is a +iu!iar# r"lations,i1 !on!"rning 1ro1"rt# 3,i!,
oblig"s t," 1"rson ,oling it to "al 3it, t," 1ro1"rt# +or
t," b"n"+it o+ anot,"r. (Pa!,"!o $. Arro% B5 P,il. 5?5). T,"
1"rson ,oling% in $i"3 o+ ,is "Euitabl" titl"% is allo3" to
"4"r!is" !"rtain 1o3"rs b"longing to t," o3n"r o+ t,"
l"gal titl". (5@ A*. =ur. 61).
>"lano $. Court o+ A11"als
L.9A?5?% F"b. 6@% 1AB1
T," 3or -trust""/ as us" in t," !or1oration statut" *ust
b" un"rstoo in t," g"n"ral !on!"1t% an *a# in!lu" t," at.
torn"# 1ros"!uting t," !as" +il" b# t," Cor1oration.
(6) C,ara!t"risti!s o+ a OTrust8
(a) It is a +iu!iar# r"lations,i1. (Pa!,"!o $. Arro% B5 P,il.
5?5).
(b) Cr"at" b# la3 or b# agr""*"nt. (Art. 1@@1% Ci$il Co").
(!) I,"r" t," l"gal titl" is ,"l b# on"% an t," "Euitabl" titl"
or b"n"+i!ial titl" is ,"l b# anot,"r. (65 C.=. 616).
Art. 1@@?
(9) OTrust8 Distinguis," +ro* O>uarians,i18 or OE4"!utor.
s,i18
In a trust% t," trust"" or ,ol"r ,as LE>AL TITLE to
t," 1ro1"rt#2 a guarian% a*inistrator% or "4"!utor o"s not
,a$".
(@) OTrust8 Distinguis," +ro* a OSti1ulation Pour Autrui8
(a) A trust *a# "4ist b"!aus" o+ a l"gal 1ro$ision or b"!aus"
o+ an agr""*"nt2 a sti1ulation 1our autrui !an aris" onl#
in t," !as" o+ !ontra!ts.
(b) A trust r"+"rs to s1"!i+i! 1ro1"rt#2 a sti1ulation 1our autrui
r"+"rs to s1"!i+i! 1ro1"rt# or to ot,"r t,ings.
(5) Co.O3n"rs,i1 as a OTrust8
Sotto $. T"$"s
L.9B?1?% O!t. 91% 1ACB
A !o.o3n"rs,i1 is a +or* o+ trust% 3it, "a!, !o.o3n"r
b"ing a trust"" +or "a!, o+ t," ot,"rs.
Art. 1@@?. A 1"rson 3,o "stablis,"s a trust is !all"
t," trustor2 on" in 3,o* !on+i"n!" is r"1os" as r"gars
1ro1. "rt# +or t," b"n"+it o+ anot,"r 1"rson is <no3n as t,"
trust""2 an t," 1"rson +or 3,os" b"n"+it t," trust ,as
b""n !r"at" is r"+"rr" to as t," b"n"+i!iar#.
CO&&ENT'
(1) Parti"s to a OTrust8
(a) trustor or s"ttl"r 0 ," "stablis,"s t," trust
(b) trust"" 0 ,ols t," 1ro1"rt# in trust +or t," b"n"+it o+
anot,"r
(!) b"n"+i!iar# or !"stui Eu" trust 0 t," 1"rson +or 3,os" b"n.
"+it t," trust ,as b""n !r"at"
Art. 1@@?
(NOTE' T," trustor *a# at t," sa*" ti*" b" also
t," b"n"+i!iar#.)
Arts. 1@@1.1@@6
(6) El"*"nts o+ a OTrust8
(a) Parti"s to t," trust
(b) T," trust 1ro1"rt# or t," trust "stat" or t," subj"!t *att"r
o+ t," trust
Art. 1@@1. Trusts ar" "it,"r "41r"ss or i*1li".
E41r"ss trusts ar" !r"at" b# t," int"ntion o+ t," trustor
or o+ t," 1arti"s. I*1li" trusts !o*" into b"ing b#
o1"ration o+ la3.
CO&&ENT'
Classi+i!ation o+ Trusts
(a) E41r"ss trust 0 !r"at" b# t," 1arti"s% or b# t,"
int"ntion o+ t," trustor. (Art. 1@@1).
(b) I*1li" trust 0 !r"at" b# o1"ration o+ la3 (-trust b#
o1"ration o+ la3/).
FNOTE' T,"r" ar" t3o <ins o+ i*1li" trusts'
1) 5"sulting trust 0 (also !all" bar" or 1assi$" trust)
0 H"r"% t,"r" is an int"nt to !r"at" a trust but it is
not "++"!ti$" as an "41r"ss trust. FE4a*1l"' Art.
1@51% 3,"r" a 1"rson 3,o in,"rits 1ro1"rt#
r"gist"rs t," sa*" in anot,"r8s na*"% 3,o* ," o"s
not int"n to ,a$" an# b"n"+i!ial int"r"st t,"r"in +or
," 3ants t,is +or ,i*s"l+. (S"" S"$"rino $. S"$"rino%
@@ P,il. 9@92 S"" 65 C.=. 969).G
6) Constru!ti$" trust 0 H"r"% no int"ntion to !r"at" a
trust is 1r"s"nt% but a trust is n"$"rt,"l"ss !r"at"
b# la3 to 1r"$"nt unjust "nri!,*"nt or o11r"ssion.
FE4a*1l"' I+ a 1"rson a!Euir"s 1ro1"rt# b# *ista<"%
," is !onsi"r" b# t," la3 as a trust"" 3,il" ,"
,ols t," sa*". (Art. 1@56% Ci$il Co"). (S"" O!a*1o
$. Ta1ort"Ha% 59 P,il. @@6).G
Art. 1@@6. T," 1rin!i1l"s o+ t," g"n"ral la3 o+ trusts%
Arts. 1@@1.1@@6
inso+ar as t,"# ar" not in !on+li!t 3it, t,is Co"% t," Co"
o+ Co**"r!"% t," 5ul"s o+ Court an s1"!ial la3s ar"
,"r"b# ao1t".
Art. 1@@6
CO&&ENT'
(1) Su11l"tor# E++"!t o+ t," >"n"ral La3 o+ Trusts
T," 1rin!i1l"s o+ t," g"n"ral la3 o+ trusts ar" *"r"l# su1.
1l"tor#. (Art. 1@@6).
T,is Arti!l" in!or1orat"s a larg" 1art o+ t," A*"ri!an la3
on trusts% an t,"r"b# t," P,ili11in" l"gal s#st"* 3ill b" a*.
1li+i" an 3ill b" r"n"r" *or" suit" to a just an "Euitabl"
solution o+ *an# Eu"stions. (5"1ort o+ t," Co" Co*.% 1. 6?).
(9) Anglo.A*"ri!an Pr"!""nts
As t," la3 o+ trust ,as b""n *u!, *or" +r"Eu"ntl# a11li"
in t," ;.S. an in Englan t,an it ,as in S1ain% su!, *a# b"
ra3n +r""l# u1on Anglo.A*"ri!an 1r"!""nts. T,is is 1arti!u.
larl# so% b"!aus" Anglo.A*"ri!an trusts ar" "ri$" +ro*
5o*an an Ci$il La3 nations. (>o$8t. $. Abailla% @6 P,il.
6@6).
(@) Cas"s
>"lano $. Court o+ A11"als
L.9A?5?% F"b. 6@% 1AB1
A la3#"r 3,o ,as b""n "+"ning t," int"r"st o+ a
!or1ora. tion *a#% in t," !as" o+ a litigation in !ourt still
1"ning a+t"r t," "41iration o+ t," t,r"".#"ar 1"rio a+t"r
issolution% still !ontinu" as T5;STEE o+ t," !or1oration at
l"ast 3it, r"s1"!t to t," *att"r in litigation. T,is 3oul b" in
substantial !o*1lian!" 3it, t," Cor1oration Co" 3,i!,
allo3s t," !on$"#an!" o+ t," 1ro1"rti"s o+ a !or1oration to a
trust"" to "nabl" it to 1ros"!ut" an "+"n suits b# or against
t," !or1oration b"#on t," t,r"". #"ar 1"rio.
5iHal Sur"t# M Insuran!" Co. $. CA
C9 SCAD 6?6
(1AA6)
Art. 1@@6
T," so.!all" a$"rsar# 1ositions o+ t," 1arti"s ,a no "+.
+"!t on t," trust as it n"$"r !,ang" t," 1osition o+ t," 1arti"s
in r"lation to "a!, ot,"r an to t," ollar 1ro!""s.
Art. 1@@6
T," Loss an Subrogation 5"!"i1t i not "4!ul1at" 1"ti.
tion"r +ro* its liabilit# +or t," a!!ru" int"r"st as t,is obliga.
tion aros" in !onn"!tion 3it, its rol" as trust"". T," signing o+
sai r"!"i1t 3as a $ali 1r".!onition b"+or" 1"tition"r !oul b"
!o*1"ll" to turn o$"r t," 3,ol" a*ount o+ t," insuran!" to
t," t3o insur". It is grossl# un+air +or an#on" to "arn in!o*"
on t," *on"# o+ anot,"r an still r"+us" to s,ar" an# 1art o+
t,at in!o*" 3it, t," latt"r.
Chapter 2
EPRESS TRUSTS
Art. 1@@9. No "41r"ss trusts !on!"rning an i**o$abl"
or an# int"r"st t,"r"in *a# b" 1ro$" b# 1arol "$i"n!".
CO&&ENT'
(1) For*aliti"s 5" E41r"ss Trusts
T," la3 sa#s t,at -no "41r"ss trusts !on!"rning an i*.
*o$abl" or an# int"r"st t,"r"in *a# b" 1ro$" b# 1arol (oral)
"$i"n!"./
T,"r"+or"'
(a) t," r"Euir"*"nt t,at t," "41r"ss trust b" 3ritt"n is onl# +or
"n+or!"abilit#% not +or $aliit# b"t3""n t," 1arti"s. H"n!"%
t,is Arti!l" *a# b# analog# b" in!lu" un"r t," Statut"
o+ Fraus. (S"" >a*boa $. >a*boa% 56 P,il. 5?9).
(b) 7# i*1li!ation% +or a trust o$"r 1"rsonal 1ro1"rt# an oral
agr""*"nt is $ali an "n+or!"abl" b"t3""n t," 1arti"s.
(!) 5"garing t,ir 1"rsons% t," trust *ust b"' in a 1ubli!
instru*"nt an 5E>ISTE5ED in t," 5"gistr# o+
Pro1"rt#% i+ it !on!"rns 5EAL P5OPE5TK.
(6) Distinguis," +ro* t," For*aliti"s o+ an I*1li" Trust
An i*1li" trust (3,"t,"r r"al or 1"rsonal 1ro1"rt# is
in$ol$") *a# b" 1ro$" b# oral "$i"n!". (Art. 1@5C% Ci$il
Co").
Art. 1@@@. No 1arti!ular 3ors ar" r"Euir" +or t,"
!r"a. tion o+ an "41r"ss trust% it b"ing su++i!i"nt t,at a trust is
!l"arl# int"n".
Art. 1@@@
CO&&ENT'
(1) Ho3 an E41r"ss Trust Is Cr"at"
(a) 7# !on$"#an!" to t," trust"" b# an a!t int"r $i$os or *ortis
!ausa (as in a 3ill).
(b) 7# a*ission o+ t," trust"" t,at ," ,ols t," 1ro1"rt#% onl#
as trust"".
FIn t," !as" o+ >"roni*o M Isiro $. Na$a M AEuino%
L.16111% =an. 91% 1A5A% t," Su1r"*" Court ,"l t,at
3,"r"% 1ursuant to a !ourt "!ision% t," 1lainti++ not onl#
allo3" but "$"n ir"!t" t," t"nant to 1a# t," r"ntals to
t," "+"nants% an 1"r*itt" t," latt"r to o!!u1# an
ta<" 1oss"ssion o+ t," 1ro1"rt# 3,"n t," t"nant
iso!!u1i" it% su!, a!ts s,oul b" !onstru" as a
r"!ognition o+ t," +a!t t,at t," 1ro1"rt#% t,oug, still in
t," +or*"r8s na*"% 3as to b" ,"l in trust +or t,"
"+"nant% to b" !on$"#" to ,i* on 1a#*"nt o+ t,"
1ur!,as" 1ri!"% an su!, trust is an ENP5ESS on".G
=ulio $. Dalanan
L.1A?16% O!t. 6?% 1A6C
FACTS' T," "!"as" +at,"r o+ t," "+"nants "4.
"!ut" on S"1t. B% 1A5? an a++ia$it att"sting to t," +ol.
lo3ing +a!ts'
(a) t,at ," o3" so*"on" a su* o+ *on"#2
(b) t,at as s"!urit# t,"r"o+% ," ga$" a 1ar!"l o+ lan to t,"
!r"itor2
(!) t,at in $i"3 o+ ,is +ailur" to 1a# t," "bt% t," *ortgag"
3as +or"!los"2
() t,at ," +"lt boun b# su!, +or"!losur"2
(") t,at ," t,"r"+or" 1ro*is"s to r"1la!" sai lan b# anot,"r
lot or +ar* o+ a11ro4i*at"l# t," sa*" ar"a on t,"
!onition t,at ,is !,ilr"n s,oul not b" +or!" to gi$" t,"
,ar$"st% an on t," +urt,"r !onition t,at substitution
Art. 1@@@
s,oul not b" r"Euir" i**"iat"l#.
T,is 1ro*is" 3as a!!"1t" b# t," !r"itor.
Art. 1@@@
T," 1r"s"nt !as" 3as institut" b# t," !r"itor to "!lar"
,i* o3n"r o+ t," lan% an to +i4 t," 1"rio +or t," "li$"r# o+
t," lan to ,i*. A *otion to is*iss 3as +il" on t," groun o+
1r"s!ri1tion% *or" t,an 1? #"ars ,a$ing "la1s".
ISS;E' Has t," a!tion b# t," !r"itor 1r"s!rib"J
HELD' No% t," a!tion ,as not 1r"s!rib".
(a) In t," +irst 1la!"% t," !as" in$ol$"s an "41r"ss trust. ;n"r
Art. 1@@@ o+ t," Ci$il Co"% no 1arti!ular 3ors ar" n"""
+or t," !r"ation o+ an "41r"ss trust. In t,is !as" t," na<"
o3n"rs,i1 o+ t," lan 1ass" to t," !r"itor% 3,il" t,"
usu+ru!t r"*ain" 3it, t," !,ilr"n o+ t," "!"as" a++i.
ant +or an un"t"r*in" 1"rio o+ ti*". T," !,ilr"n ar"
""*" to ,a$" ,"l t," lan as trust""s o+ t," !r"itor.
In $i"3 o+ t," !r"ation o+ t," "41r"ss trust% it is !l"ar t,at
no 1"rio o+ 1r"s!ri1tion is in$ol$"% t," r"!o$"r# b"ing
i*1r"s!ri1tibl".
(b) In t," s"!on 1la!"% assu*ing t,at t,"r" is no trust
in$ol$" in t,is !as"% t," 1"rio o+ 1r"s!ri1tion is% un"r
t," +a!ts% a t"r* o+ 9? #"ars.
Obs"r$ations on t," =ulio $. Dalanan !as"'
(a) It is oubt+ul 3,"t,"r a trust 3as int"n" in t,is !as".
I,il" it is tru" t,at no 1arti!ular 3ors ar" n""" +or
t," !r"ation o+ an "41r"ss trust% still t,"r" *ust b" an
INTENT to !r"at" a +iu!iar# r"lations,i1 3it, r"s1"!t to
t," 1ro1"rt#. No su!, r"lations,i1 3as !ont"*1lat" in
t,is !as".
(b) In""% i+ it is tru" t,at t," na<" o3n"rs,i1 3as
i**"i. at"l# trans+"rr" to t," !r"itor% an t," !,ilr"n
3"r" t," usu+ru!tuari"s% it is t," !r"itor 3,o 3oul b"
t," trust"" an t," !,ilr"n 3oul b" t," usu+ru!tuar# 0
b"n"+i!iari"s or t," !"stui Eu" trust 0 not t," ot,"r 3a#
aroun.
(!) It is i*1ossibl" to r"gar t," !r"itor as t," na<" o3n"r%
+or t," a++ia$it (3,i!, 3as !on+or*" to b# t," !r"itor)
!l"arl# sti1ulat" t,at t," substitution (o+ t," lan +or t,"
Art. 1@@@
"bt) 3oul not b" r"Euir" i**"iat"l#.
() T," all"g" -substitution/ 3as r"all# in t," +or* o+ a a.
tion in 1a#*"nt or assign*"nt to ta<" 1la!" in t," +utur".
Art. 1@@@
T,"r"+or"% to "t"r*in" 3,"t,"r t," !r"itor8s rig,t ,a
alr"a# 1r"s!rib"% 3,at t," !ourt s,oul ,a$" on" 3as
to +irst +i4 a 1"rio +or t," trans+"r o+ t," 1ro1"rt#. Lat"r%
t," !ourt !oul "t"r*in" i+ *or" t,an 1? #"ars (not 9?
#"ars) ,a "la1s" +ro* t," at" t," trans+"r s,oul ,a$"
b""n on". (S"" Art. 11@@ o+ t," Ci$il Co").
(6) Cl"ar Int"nt
T,"r" *ust b" a CLEA5 INTENTION to !r"at" a trust.
(T,us% no 1arti!ular or t"!,ni!al 3ors ar" r"Euir".) (Lor"nHo
$. Posaas% 6@ P,il. 959).
(9) Ca1a!it#
(a) T," trustor *ust b" !a1a!itat" to !on$"# 1ro1"rt#. FH"n!"%
it ,as b""n ,"l t,at a *inor !annot !r"at" an "41r"ss or
!on$"ntional trust o+ an# <in. (>a#onato $. Tr"asur"r%
@A P,il. 6@@). Ho3"$"r% a joint o3n"r o+ a t,ing *a# b" a
trustor an t," ot,"r a trust"" o+ on"8s s,ar". (La$ai $.
D" &"noHa% C6 P,il. 1B6).G
(b) T," trust"" *ust b" !a1a!itat" to ,ol 1ro1"rt# an to
"nt"r into !ontra!ts.
(!) T," b"n"+i!iar# *ust b" !a1a!itat" to r"!"i$" gratuitousl#
+ro* t," trustor. (T,"r"+or"% i+ ," is in!a1a!itat" to b"
t," trustor8s on""% ,"ir or l"gat""% or "$is""% ," !annot
b"!o*" a b"n"+i!iar# o+ a gratuitous trust.)
(@) A*inistration o+ t," Trust
(a) T," trust"" *ust +il" a bon. (S"!. 5% 5ul" AB% 5ul"s o+
Court).
(b) T," trust"" *ust *a<" an in$"ntor# o+ t," r"al an
1"rsonal 1ro1"rt# in trust. (S"!. 6FaG% 5ul" AB% 5ul"s o+
Court).
(!) T," trust"" *ust *anag" an is1os" o+ t," "stat" an
+ait,+ull# is!,arg" ,is trust in r"lation t,"r"to%
a!!oring to la3 or a!!oring to t," t"r*s o+ t," trust
Art. 1@@@
instru*"nt as long as t,"# ar" l"gal an 1ossibl". (S"!.
6FbG% 5ul"s AB% 5ul"s o+ Court).
Art. 1@@5
() T," trust"" *ust r"n"r a tru" an !l"ar a!!ount. (S"!.
6F!G% 5ul" AB% 5ul"s o+ Court).
(") T," trust"" !annot a!Euir" t," 1ro1"rt# ,"l in trust b#
1r"s!ri1tion as long as t," trust is a*itt". (I+ ," r"1ui.
at"s% an t,is is *a" <no3n to t," 1art# in$ol$"% 1r".
s!ri1tion is 1"r*itt"). (S"" 7an!air"n $. Dion"s% AB P,il.
166).
FNOTE' In Es!obar $. Lo!sin% C@ P,il. B6% t," Court
,a o!!asion to rul" t,at a trust is sa!r" an in$iolabl"%
an t," !ourts s,oul t,"r"+or" s,i"l +iu!iar# r"lations
against "$"r# *ann"r o+ !,i!an"r#.G
:;E5K' &a# a trust"" o+ a trust "stat" b" 1"rsonall#
liabl"J HELD' In t," abs"n!" o+ an "41r"ss sti1ulation in
a !ontra!t "nt"r" into b# a trust"" +or a !or1oration t,at
t," trust "stat" an not t," trust"" s,oul b" liabl" on
t," !ontra!t% t," trust"" is liabl" in its ini$iual !a1a!it#.
(Tan S"nguan M Co. $. P,il. Trust Co.% 5B P,il. C??).
:;E5K' I,"n *a# a trust"" su" as su!,J HELD'
7"+or" a trust"" *a# su" or b" su" alon" as su!,% it is
"s. s"ntial t,at ,is trust b" ENP5ESS% t,at is% a trust
!r"at" b# t," ir"!t an 1ositi$" a!ts o+ t," 1arti"s% b#
so*" 3rit. ing% ""% or 3ill or b# 1ro!""ings in !ourt.
(P,ili11in" Air Lin"s% In!. $. H"al Lu*b"r Co.% L.11@CA%
Aug. 1A5C).
Art. 1@@5. No trust s,all +ail b"!aus" t," trust""
a11oint" "!lin"s t," "signation% unl"ss t," !ontrar#
s,oul a11"ar in t," instru*"nt !onstituting t," trust.
CO&&ENT'
E++"!t i+ Trust"" D"!lin"s
T," trust orinaril# !ontinu"s "$"n i+ t," trust""
"!lin"s. 5"ason 0 t," !ourt 3ill a11oint a n"3 trust""% unl"ss
ot,"r3is" 1ro$i" +or in t," trust instru*"nt. (S"!. 9% 5ul"
AB% 5ul"s o+ Court). A n"3 trust"" ,as to b" a11oint"%
ot,"r3is" t," trust 3ill not "4ist. (65 C.=. 699).
Art. 1@@5
FNOTE' As b"t3""n t," *ot,"r an t," un!l" o+ a *inor%
t," +or*"r oug,t to b" 1r"+"rr" as trust"" o+ t," 1ro!""s o+ an
Art. 1@@6
insuran!" 1oli!# o+ t," "!"as" +at,"r in t," abs"n!" o+
"$i"n!" t,at 3oul r"$"al t," in!o*1"t"n!" o+ t," *ot,"r.
(Cabanas $. Pila1il% L.65B@9% =ul# 65% 1AC@).G
Art. 1@@6. A!!"1tan!" b# t," b"n"+i!iar# is n"!"ssar#.
N"$"rt,"l"ss% i+ t," trust i*1os"s no on"rous !onition
u1on t," b"n"+i!iar#% ,is a!!"1tan!" s,all b" 1r"su*"% i+
t,"r" is no 1roo+ to t," !ontrar#.
CO&&ENT'
(1) N"!"ssit# o+ A!!"1tan!" b# t," 7"n"+i!iar#
For t," trust to b" "++"!ti$"% t," b"n"+i!iar# *ust a!!"1t'
(a) "41r"ssl#%
(b) or i*1li"l#%
(!) or 1r"su*abl#.
(6) I,"n A!!"1tan!" Is Pr"su*"
I+ t," granting o+ b"n"+it is P;5ELK >5AT;ITO;S (no
on"rous !onition)% t," a!!"1tan!" b# t," b"n"+i!iar# is 1r".
su*".
E4!"1tion' I+ t,"r" is 1roo+ t,at ," r"all# i NOT a!.
!"1t.
FNOTE' A!!"1tan!" b# t," b"n"+i!iar# o+ a gratuitous trust
is NOT subj"!t to t," rul"s +or t," +or*aliti"s o+ onations.
T,"r"+or"% "$"n i+ r"al 1ro1"rt# is in$ol$"% a!!"1tan!" b# t,"
b"n"+i!iar# n"" not b" in a 1ubli! instru*"nt. (Cristobal $.
>o*"H% 5? P,il. B1?). H"r"% t," !ourt ,"l t,at *"r"
a!Eui"s!"n!" in t," +or*ation o+ t," trust% an a!!"1tan!"
un"r t," s"!on 1aragra1, o+ Art. 1911 (r"garing a
sti1ulation 1our autrui) ar" su++i!i"nt.G
(9) Ho3 E41r"ss Trusts Ar" ENDED
(a) &utual agr""*"nt b# all t," 1arti"s
Art. 1@@6
(b) E41iration o+ t," t"r*
Art. 1@@6
(!) Ful+ill*"nt o+ t," r"solutor# !onition
() 5"s!ission or annul*"nt (as in ot,"r !ontra!ts)
(") Loss o+ subj"!t *att"r o+ t," trust (1,#si!al loss or l"gal
i*1ossibilit#)
(+) Or"r o+ t," !ourt (as 3,"n t," 1ur1os" o+ t," trust is b".
ing +rustrat")
(g) &"rg"r
(,) A!!o*1lis,*"nt o+ t," 1ur1os" o+ t," trust
FNOTE' A t"sta*"ntar# trust +or t," a*inistra.
tion an "$"ntual sal" o+ !"rtain 1ro1"rti"s o+ t," t"stator
"ns not at t," ti*" t," trust""8s 1"tition +or t," sal" o+
t," 1ro1"rt# is a11ro$" b# t," !ourt% but at t," ti*" sai
sal" is a!tuall# *a" an t," 1ro!""s t,"r"o+ istribut"
to t," 1ro1"r r"!i1i"nts. (Trust""s,i1 o+ Estat" o+ 7"nigno
DiaH% L.1?11% Aug. 91% 1A6?).G
Chapter 3
I"PLIED TRUSTS
Co**"nt o+ t," Co" Co**ission
T," o!trin" o+ i*1li" trust is +oun" on "Euit#. T,"
1rin!i1l" is a11li" in t," A*"ri!an l"gal s#st"* to nu*"r.
ous !as"s 3,"r" an injusti!" 3oul r"sult i+ t," l"gal "stat" or
titl" 3"r" to 1r"$ail o$"r t," "Euitabl" rig,t o+ t," b"n"+i!iar#.
(Co*. 5"1ort% 1. 6?). E$"n t,oug, t,"r" ,as b""n no +rau or
i**oralit# in$ol$"% still t,"r" is a *utual antagonis*
b"t3""n t," trust"" an t," b"n"+i!iar#. (65 C.=. 666). Fair
"aling ". *ans t," "stablis,*"nt o+ t," r"lation. (Di4on $.
Di4on% 16@
A. 1AB).
Art. 1@@C. T," "nu*"ration o+ t," +ollo3ing !as"s o+
i*. 1li" trust o"s not "4!lu" ot,"rs "stablis," b# t,"
g"n"ral la3 o+ trust% but t," li*itation lai o3n in arti!l"
1@@6 s,all b" a11li!abl".
CO&&ENT'
Enu*"ration o+ Instan!"s o+ I*1li" Trust
T," "nu*"ration is not "4!lusi$". 7ut trusts ar"
r"!ogniH" onl# i+ not in !on+li!t 3it,'
(a) t," Ci$il Co"%
(b) t," Co" o+ Co**"r!"%
(!) t," 5ul"s o+ Court%
() S1"!ial La3s.
Art. 1@@C
5abu!o $. Hon. Antonio Vill"gas
L.6@661% F"b. 6B% 1AC@
T," Cit# o+ &anila onl# ,ols in trust% +or t," National
>o$"rn*"nt% lans r"s"r$" +or !o**unal or !o**unit# 1ro1.
"rt#. T,"r"+or"% i+ t," national go$"rn*"nt "!i"s to s"ll t,"
1ar!"ls o+ lan to t,"ir o!!u1ants% it !annot b" sai t,at t,"
Cit# o+ &anila is b"ing "1ri$" o+ 1ro1"rt# 3it,out u"
1ro!"ss o+ la3.
Vi!torias $. L"u"nb"rg"r an CA
>5 911BA% &ar. 91% 1ABA
FACTS' In 1A9@% S>% t," a*inistratri4 o+ t," 1ro1"rt#
l"+t b# ,"r ,usban an o+ t," !onjugal 1artn"rs,i1 1ro1"rt#%
sol Lot A an Lot 7% a @.,"!tar" 1ortion o+ Lot 1@?% to t,"
&uni!i1alit# o+ Vi!torias. Sai *uni!i1alit# us" t,is lot as
!"*"t"r#. ;n+ortunat"l#% Vi!torias +ail" to r"gist"r t," "" o+
sal". I,"n S> i" in 1A@6% NL% t," granaug,t"r !lai*" to
,a$" in,"rit" t," lan +ro* t," +or*"r. In 1A69% s," ,a t,"
1ro1"rt# r"lo!at" an r"gist"r" in ,"r na*". 7ut t," *uni!i.
1alit# 1r"$"nt" ,"r +ro* !ulti$ating a 1ortion o+ t," lot% Lots
A an 7% b"!aus" t," sa*" ,a b""n sol to t," *uni!i1alit#.
So% NL su" t," *uni!i1alit# to r"!o$"r t," 1ortion o!!u1i" b#
t," latt"r.
HELD' As r"gist"r" o3n"r% NL is "ntitl" to t," 1rot"!.
tion a++or" to a ,ol"r o+ a Torr"ns Titl". ;n"r t," Torr"ns
s#st"*% "$"r# 1"rson r"!"i$ing a !"rti+i!at" o+ titl" in 1ursu.
an!" o+ a "!r"" o+ r"gistration s,all ,ol t," sa*" +r"" o+ all
"n!u*bran!"s "4!"1t t,os" not" in sai !"rti+i!at". (S"!. 9A%
Art. @A6% no3 S"!. @9% PD 156A). In t," instant !as"% ,o3"$"r%
NL a*itt" t,at s," in,"rit" t," lan +ro* ,"r
gran*ot,"r% 3,o ,a alr"a# sol t," lan to t," *uni!i1alit#
in 1A9@. H"n!"% s," *"r"l# st"11" into t," s,o"s o+ ,"r
gran*ot,"r an s," !annot !lai* a b"tt"r rig,t t,an ,"r
1r""!"ssor.in.int"r"st. I,"n s," a11li" +or r"gistration o+
t," is1ut" lan% s," ,a no l"gal rig,t to o so as s," ,a no
o3n"rs,i1 o+ t," lan sin!" lan r"gistration is not a *o" o+
a!Euiring o3n"rs,i1 but onl# o+ !on+ir*ing o3n"rs,i1 o+ t,"
lan.
Art. 1@@C
T," Torr"ns s#st"* 3as not "stablis," as a *"ans +or
t," a!Euisition o+ titl" to 1ri$at" lan. It is int"n" *"r"l# to
Art. 1@@B
!on+ir* an r"gist"r t," titl" 3,i!, on" *a# alr"a# ,a$" on
t," lan. I,"r" t," a11li!ant 1oss"ss"s no titl" or o3n"rs,i1
o$"r t," 1ar!"l o+ lan% ," !annot a!Euir" on" un"r t,"
Torr"ns s#st"* o+ r"gistration. I,il" an in,"r"ntl# "+"!ti$"
Torr"ns Titl" *a# not orinaril# b" !an!"ll" "$"n a+t"r 1roo+ o+
its "+"!t% t," la3 n"$"rt,"l"ss sa+"guars t," rig,t+ul 1art#8s
int"r"st in t," titl" lan +ro* +rau an i*1ro1"r us" o+
t"!,ni!aliti"s b# allo3ing su!, 1art#% in a11ro1riat" !as"s% to
jui!iall# s""< r"!on$"#an!" to ,i* o+ 3,at"$"r ," ,as b""n
"1ri$" o+ as long as t," lan ,as not b""n trans+"rr" or
!on$"#" to a 1ur!,as"r in goo +ait,.
T," lan in is1ut" is ,"l b# NL in trust +or t," &uni!i.
1alit# o+ Vi!torias% 3,i!, !an n"it,"r b" "1ri$" o+ its 1oss"s.
sion nor b" *a" to 1a# r"ntals on it. NL is% in "Euit#% boun
to r"!on$"# t," lan to t," !"stui Eu" trust% t," &uni!i1alit# o+
Vi!torias. T," Torr"ns s#st"* 3as n"$"r !al!ulat" to +o*"nt
b"tra#al in t," 1"r+or*an!" o+ a trust.
Art. 1@@B. T,"r" is an i*1li" trust 3,"n 1ro1"rt# is
sol% an t," l"gal "stat" is grant" to on" 1art# but t,"
1ri!" is 1ai b# anot,"r +or t," 1ur1os" o+ ,a$ing t,"
b"n"+i!ial int"r. "st o+ t," 1ro1"rt#. T," +or*"r is t,"
trust""% 3,il" t," latt"r is t," b"n"+i!iar#. Ho3"$"r% i+ t,"
1"rson to 3,o* t," titl" is !on$"#" is a !,il% l"giti*at" or
ill"giti*at"% o+ t," on" 1a#. ing t," 1ri!" o+ t," sal"% no
trust is i*1li" b# la3% it b"ing is1utabl# 1r"su*" t,at
t,"r" is a gi+t in +a$or o+ t," !,il.
CO&&ENT'
(1) Pur!,as" o+ Pro1"rt# I,"r" Titl" Is Not >i$"n to
Pa#"r but to Anot,"r
(a) T,is is a r"sulting trust (b"!aus" a trust is int"n").
(b) 5"ason' On" 3,o 1a#s +or so*"t,ing usuall# o"s so +or ,is
o3n b"n"+it. (S"" ;# Alo! $. C,o =an =ing% 1A P,il. 6?6).
(!) E4a*1l" o+ t," Arti!l"' A bu#s a 1i"!" o+ lan +ro* 7. A
Art. 1@@B
1a#s t," 1ri!" so t,at ," (A) *a# ,a$" t," b"n"+i!ial
int"r"st in t," lan 7;T t," l"gal titl" is gi$"n to C. C is
t," trust"" an A is t," b"n"+i!iar#.
Art. 1@@A
Su11os" in t," 1r"!"ing "4a*1l" C 3as t," l".
giti*at" or ill"giti*at" !,il o+ A% is an i*1li" trust still
1r"su*" in t,is !as"J
ANS.' No. H"r"% no trust is i*1li" b# la3% it b"ing
is1utabl# 1r"su*" t,at t,"r" is a gi+t in +a$or o+ t,"
!,il. (1st s"nt"n!"% Art. 1@@B).
FNOTE' It 3oul s""* t,at inas*u!, as a
1r"su*1. tion (r" t," "4ist"n!" o+ a onation) ,as b""n
*a" b# la3% t," +or*aliti"s o+ a onation (ini!at" in
Arts. C@B an C@A o+ t," Ci$il Co") ar" NOT
5E:;I5ED% +or i+ t," +or*aliti"s ar" to b" still !o*1li"
3it,% t,"r" 3oul b" no n"" +or t," 1r"su*1tion.G
(6) 5ul" i+ Do!u*"nt E41r"ss"s a Di++"r"nt Int"nt
T,"r" is no i*1li" trust i+ t," o!u*"nt "41r"ss"s a i+.
+"r"nt int"ntion.
E4a*1l"'
A 1ai t," *on"# +or t," 1ur!,as" o+ lan% but titl" 3as
gi$"n to 7. It 3as 1ro$" t,at A 1ai b"!aus" A 3as l"ning
t," a*ount to 7. (Ar*strong $. 7la!<% @6 AriH. 5?C).
Art. 1@@A. T,"r" is also an i*1li" trust 3,"n a
onation is *a" to a 1"rson but it a11"ars t,at alt,oug,
t," l"gal "stat" is trans*itt" to t," on""% ,"
n"$"rt,"l"ss is "it,"r to ,a$" no b"n"+i!ial int"r"st or onl#
a 1art t,"r"o+.
CO&&ENT'
I,"n Don"" Do"s Not >"t Full O3n"rs,i1 o+ 7"n"+it
T,is is again a -r"sulting trust%/ 3,"r" t," -on""/
b"!o*"s t," trust"" o+ t," r"al b"n"+i!iar#.
E4a*1l"'
A onat" lan to 7. 7ut it 3as agr"" t,at 7 is
Art. 1@@A
su11os" to ,a$" onl# on".t,ir o+ t," 1rou!ts o+ sai lan.
T,"r" is a trust ,"r"% 3it, 7 as t," trust"".
Art. 1@5?
Art. 1@5?. I+ t," 1ri!" o+ a sal" o+ 1ro1"rt# is loan" or
1ai b# on" 1"rson +or t," b"n"+it o+ anot,"r an t,"
!on$"#. an!" is *a" to t," l"n"r or 1a#or to s"!ur" t,"
1a#*"nt o+ t," "bt% a trust aris"s b# o1"ration o+ la3 in
+a$or o+ t," 1"rson to 3,o* t," *on"# is loan" or +or
3,o* it is 1ai. T," latt"r *a# r"""* t," 1ro1"rt# an
!o*1"l a !on$"#an!" t,"r"o+ to ,i*.
CO&&ENT'
(1) Con$"#an!" o+ Pro1"rt# so T,at It &a# S"r$" as S"!u.
rit#
(a) T,is is a -!onstru!ti$" trust%/ t," r"ason o+ t," la3 b"ing
to 1r"$"nt unjust "nri!,*"nt.
(b) E4a*1l"'
=os" 3ants to bu# a 1i"!" o+ lan +ro* P"ro% but =os"
,as no *on"#. So =os" as<s Carlos to 1a# +or t," lan. T,"
lan is t,"n gi$"n in Carlos8 na*". T,is is su11os" to b"
Carlos8 s"!urit# until t," "bt o+ =os" is 1ai. H"r" an i*.
1li" trust ,as b""n !r"at". Carlos is onl# a trust""% t,"
b"n"+i!iar# b"ing =os". I,"n =os" ,as t," *on"#% ," *a#
r"""* t," 1ro1"rt# +ro* Carlos an !o*1"l a !on$"#an!"
t,"r"o+ to ,i* (=os"). T," trust ,"r" is i*1li"% ,"n!" it
"4ists "$"n i+ in t," titl" ta<"n b# Carlos% t,"r" is no *"n.
tion o+ t," int"r"st o+ =os" or o+ ,is rig,t to r"""*.
(NOTE' Do not !on+us" t," abo$" "4a*1l" 3it, t," !as"2
=os" borro3s *on"# +ro* Carlos% an =os" lat"r bu#s lan in ,is
o3n na*". =os" t,"n "4"!ut"s a *ortgag" on t," lan in +a$or
o+ Carlos. T,is is NOT an i*1li" trust. It is !l"arl# a !as" o+
&O5T>A>E.)
C6 SC5A 51@
No +iu!iar# r"lations,i1 "4ists b"t3""n t," so.!all"
-trus. tor/ an t," so.!all" -trust""/ in a !onstru!ti$" trust.
(6) Trust 5"!"i1t
Art. 1@5?
In !onn"!tion 3it, Art. 1@5?% *"ntion *a# b" *a" o+
3,at 3as r"+"rr" to in P,il. Nat. 7an< $. Va. # Hijos "
Ang"l
Art. 1@5?
=os"% 69 P,il. B1@% as a -trust r"!"i1t./ T," Court sai' -A trust
r"!"i1t% as a !ontra!t% 1arta<"s o+ t," natur" o+ a !onitional
sal" t," i*1ort"r b"!o*ing t," absolut" o3n"r o+ t," i*1ort"
*"r!,anis" as soon as ," ,as 1ai its 1ri!"2 until t," o3n"r or
t," 1"rson 3,o a$an!" 1a#*"nt ,as b""n 1ai in +ull% or i+ t,"
*"r!,anis" ,as alr"a# b""n sol% t," 1ro!""s turn" o$"r to
,i*% t," o3n"rs,i1 !ontinu"s to b" $"st" in su!, 1"rson./
(9) OTrust 5"!"i1t8 D"+in"
A trust r"!"i1t is a s"!urit# transa!tion int"n" to ai in
+inan!ing i*1ort"rs an r"tail "al"rs 3,o o not ,a$"
su++i!i"nt +uns or r"sour!"s to +inan!" t," i*1ortation or
1ur!,as" o+ *"r!,anis"% an 3,o *a# not b" abl" to a!Euir"
!r"it "4!"1t t,ru utiliHation% as !ollat"ral% o+ t,"
*"r!,anis" i*1ort" or 1ur!,as". (Sout, Cit# Ho*"s% In!.%
Fortun" &otors FP,ils.G% Pala3an Lu*b"r &anu+a!turing
Cor1. $. 7A Finan!" Cor1.% >5 195@66% D"!. C% 6??1).
(@) Cas"
Sout, Cit# Ho*"s% In!.% Fortun" &otors (P,ils.)%
Pala3an Lu*b"r &anu+a!turing Cor1. $.
7A Finan!" Cor1. >5
195@66% D"!. C% 6??1
FACTS' P"tition"rs 1osit t,at as an "ntrust"r% r"s1on"nt
7A Finan!" Cor1. *ust +irst "*an t," r"turn o+ t," unsol
$",i!l"s +or* Fortun" &otors Cor1. (F&C% 1ursuant to t,"
t"r*s o+ t," trust r"!"i1ts.
HELD' Ha$ing +ail" to o so% 1"tition"rs ,a no !aus" o+
a!tion 3,atso"$"r against F&C an t," a!tion +or !oll"!tion o+
su* o+ *on"# 3as% t,"r"+or"% 1r"*atur".
(5) D"+ault or Failur" o+ Entrust"" to Co*1l# 3it, T"r*s
o+ Trust Agr""*"nt' Can!"llation o+ Trust Not
Absolut"l# N"!"ssar#
In t," "$"nt o+ "+ault b# t," "ntrust"" on ,is obligations
Art. 1@5?
un"r a trust r"!"i1t agr""*"nt% it is not absolut"l# n"!"ssar#
t,at t," "ntrust"r !an!"l t," trust an ta<" 1oss"ssion o+ t,"
Art. 1@51
goos to b" abl" to "n+or!" ,is rig,ts t,"r"un"r. (Sout, Cit#
Ho*"s% In!.% Fortun" &otor FP,ils.G% Pala3an Lu*b"r &anu+a!.
turing Cor1. $. 7A Finan!" Cor1.% >5 195@66% D"!. C% 6??1).
Signi+i!antl# t," la3 (PD 115) us"s t," 3or -*a#/ in
granting to t," "ntrust"r t," rig,t to !an!"l t," trust an ta<"
1oss"ssion o+ t," goos. Cons"Eu"ntl#% 1"tition"r ,as t," is!r".
tion to a$ail o+ su!, rig,t or s""< an# alt"rnati$" a!tion% su!,
as a t,ir 1art# !lai* or a s"1arat" !i$il a!tions 3,i!, it
""*s b"st to 1rot"!t its rig,t% at an# ti*" u1on "+ault or
+ailur" o+ t," "ntrust"" to !o*1l# 3it, an# o+ t," t"r*s an
!onitions o+ t," trust agr""*"nt. (Ibi.).
Art. 1@51. I,"n lan 1ass"s b# su!!"ssion to an#
1"rson an ," !aus"s t," l"gal titl" to b" 1ut in t," na*" o+
anot,"r% a trust is "stablis," b# i*1li!ation o+ la3 +or t,"
b"n"+it o+ t," tru" o3n"r.
CO&&ENT'
(1) I,"n Titl" to In,"rit" Lan Is Not in O3n"r8s Na*"
(a) T,is is a -r"sulting trust%/ +or a trust is int"n".
(b) E4a*1l"' A in,"rit" a 1i"!" o+ lan +ro* ,is +at,"r% but A
!aus" t," l"gal titl" to b" 1ut in t," na*" o+ N% a brot,"r.
H"r" a trust is i*1li"l# "stablis,"% 3it, N as trust""
an A as t," b"n"+i!iar#.
(6) 5ul" in Co.O3n"rs,i1
I+ a !o.o3n"r or !o.,"ir 1oss"ss"s !"rtain 1ro1"rt# o3n"
in !o**on b# ,i* an ot,"rs% ," is un"r t," sa*" situation
as a trust"" inso+ar as t," s,ar"s o+ t," ot,"r !o.o3n"rs ar"
!on!"rn". (7arga#o $. Ca*u*ot% @? P,il. B5C).
&ariano $. =ug" D" V"ra
>5 5AAC@% &ar. A% 1ABC
FACTS' H an I o3n"% as !onjugal 1ro1"rt#% uring
Art. 1@51
t,"ir li+"ti*"% 6A 1ar!"ls o+ unr"gist"r" lan. I i" int"stat"
in 1A?9 an 3it,out "bts. S," l"+t ,"r ,usban H% an t,"ir
Art. 1@51
t3o l"giti*at" !,ilr"n & an > as ,"r onl# +or!" ,"irs. In
1A56% H i" also int"stat" an 3it,out "bts% l"a$ing as ,is
onl# !o*1ulsor# ,"irs t," !,ilr"n o+ > 3,o% tog"t,"r 3it,
,"r sist"r &% ,a 1r""!"as" t,"ir +at,"r an ,is (H8s)
l"giti*at" !,ilr"n 3it, ,is s"!on 3i+".
In 1AB1 or 6A #"ars a+t"r H8s "at,% t," !,ilr"n o+ >
(gran. !,ilr"n o+ H) su" t," !,ilr"n o+ H (b"gott"n o+ t,"
s"!on 3i+") +or 1artition. Plainti++s all"g" t,at "+"nants ,a
ta<"n 1oss"ssion o+ t," 3,ol" !onjugal 1ro1"rt# an
a11ro1riat" to t,"*s"l$"s (to t," "4!lusion o+ 1lainti++s) t,"
1rou!ts o+ sai 1ro1"rt#. On *otion o+ "+"nants% t," trial
jug" is*iss" t," !o*1laint sa#ing t,at t," rig,t o+ a!tion
to "n+or!" an i*1li" or !onstru!ti$" trust 1r"s!rib"s in t"n
#"ars.
HELD' T," or"r o+ t," trial !ourt is*issing t," !o*.
1laint on t," groun o+ 1r"s!ri1tion un"r S"!tion @? o+ A!t 1A?
is 3rong. T,is !as" is go$"rn" b# t," rul"s on !o.o3n"rs,i1%
sin!" t," 1arti"s ar" !o.o3n"rs o+ t," is1ut" 1ro1"rti"s%
,a$ing in,"rit" t," sa*" +ro* a !o**on an!"stor. T,"
"4ist"n!" o+ !o.o3n"rs,i1 argu"s against t," t,"or# o+ i*1li"
trust. Sin!" "+"nants ,a not !l"arl# r"1uiat" t," !o.
o3n"rs,i1% nor ,a t,"# !o**uni!at" su!, r"1uiation% i+
an#% to 1lainti++s% t," +or*"r !annot a!Euir" t," s,ar"s o+ t,"
latt"r b# 1r"s!ri1tion.
(9) Para1,"rnal Pro1"rti"s 5"gist"r" ;n"r t," Husban8s
Na*"
I+ 1ro1"rti"s in,"rit" b# a 3i+" ar" r"gist"r" un"r t,"
,usban8s na*"% s," !an !lai* t,"* as ,"r o3n u1on ,is "at,
"$"n i+ s," o"s not r"+"r to t," situation as a trust. 5"ason'
H"r" !l"arl# a trust 3as int"n". In S"$"rino $. S"$"rino% @@
P,il.
9@9% it 3as !l"arl# rul" t,at t," r"gistration o+ 1ro1"rt# in t,"
na*" o+ on" 3,o ,ols in a trust !,ara!t"r o"s not "4tinguis,
t," trust or "stro# t," rig,ts o+ t," b"n"+i!iar#.
Art. 1@51
(@) Titl" in t," Na*" o+ t," Sur$i$ing Husban
In Flor"s $. Flor"s% @B P,il. 6BB% it 3as ,"l t,at -as long
as t," sur$i$ing ,usban r"tains t," 1ro1"rt# o+ t," !onjugal
"stat" its"l+% or its 1la!"% i+ sol% ," ,ols it in t," !,ara!t"r o+
a*inistrator an is $irtuall# a trust"" ("4!"1t 3it, r"+"r"n!"
Art. 1@56
to ,is s,ar") +or t,os" int"r"st" in t," !onjugal 1artn"rs,i1.
Nor o"s t," obtaining o+ a Torr"ns Titl" in an# 3a# !,ang" t,"
situation./
(5) 5ig,t o+ Co.,"irs
In Castro $. Castro% 5C P,il. 6C5% t," Su1r"*" Court ob.
s"r$" t,at' -On" 3,o a!Euir"s a Torr"ns Titl" in ,is o3n na*"
to 1ro1"rt# 3,i!, ," is a*inist"ring +or ,i*s"l+ an ,is
brot,"r an sist"rs as ,"irs +ro* a !o**on an!"stor% an in
!o**on "s!"nt% *a# b" !o*1"ll" to surr"n"r to "a!, o+ ,is
!o.,"irs ,is a11ro1riat" s,ar"2 an a 1ro!""ing +or 1artition
is an a1. 1ro1riat" r"*"# b# 3,i!, to "n+or!" t,is rig,t./
Art. 1@56. I+ t3o or *or" 1"rsons agr"" to 1ur!,as"
1ro1. "rt# an b# !o**on !ons"nt t," l"gal titl" is ta<"n in
t," na*" o+ on" o+ t,"* +or t," b"n"+it o+ all% a trust is
!r"at" b# +or!" o+ la3 in +a$or o+ t," ot,"rs in 1ro1ortion
to t," int"r"st o+ "a!,.
CO&&ENT'
(1) I,"n Pro1"rt# Is in t," Na*" o+ Onl# On" o+ t," Co.
7u#. "rs
(a) T,is is a r"sulting trust in $i"3 o+ t," int"nt to !r"at"
a trust.
(b) E4a*1l"'
;# Alo! $. C,o =an =ing
1A P,il. 6?6
FACTS' So*" C,in"s" *"r!,ants boug,t a lot 3it, a
,ous" on it so t,at t," sa*" !oul b" us" as t,"ir
!lub,ous". T," 1ro1"rt# 3as r"gist"r" un"r t," na*" o+ onl#
on" o+ t,"*. T," r"gist"r" o3n"r l"as" t," 1ro1"rt#%
!oll"!t" r"nts t,"r"+or% an 3,"n as<" +or an a!!ounting%
r"+us" to so a!!ount on t," groun t,at ," 3as t," o3n"r
t,"r"o+.
Art. 1@56
HELD' H" is a *"r" trust""% an is t,"r"+or" oblig" to
r"n"r 1ro1"r a!!ounting. T," b"n"+i!iari"s ar" all t,"
*"*b"rs o+ t," !lub.
Art. 1@59
(6) Pr"su*1tion T,at S,ar"s Ar" EEual
T," s,ar"s or int"r"st o+ !o.o3n"rs ar" 1r"su*" to b"
"Eual. (Art. @B5% 6n 1ar.% Ci$il Co").
Art. 1@59. I,"n 1ro1"rt# is !on$"#" to a 1"rson in
r"li. an!" u1on ,is "!lar" int"ntion to ,ol it +or% or
trans+"r it to anot,"r or t," grantor% t,"r" is an i*1li"
trust in +a$or o+ t," 1"rson 3,os" b"n"+it is !ont"*1lat".
CO&&ENT'
(1) I,"n a P"rson D"!lar"s His Int"nt to Hol Pro1"rt# +or
So*"on" Els"
(a) T,is is a -r"sulting trust/ in $i"3 o+ t," o3n"r8s int"ntion
to !r"at" a trust.
(b) E4a*1l"' =os" boug,t +ro* P"ro a 1ar!"l o+ lan an it
3as !on$"#" to ,i* (=os") on =os"8s stat"*"nt or "!lara.
tion t,at ," 3oul ,ol it in b",al+ o+ Carlos. H"r"% =os"
is *"r"l# t," trust""% 3,il" Carlos is t," b"n"+i!iar#.
(!) Su11os" in t," 1r"!"ing "4a*1l" =os" ass"rts t,at ," is
r"all# t," o3n"r% 3oul ," b" allo3" to o t,isJ
ANS.' No% +or ," 3oul b" in "sto11"l. (S"" Art. 1@91% Ci$il
Co").
() I+ a 1"rson 1ro*is"s to t"*1oraril# ,ol 1ro1"rt# an
a*inist"r t," sa*" [til it b" +r"" +ro* all "bts an "n.
!u*bran!"s% ," is a *"r" trust"" an *ust lat"r on
r"turn t," 1ro1"rt#. (&artin"H $. >rano% @6 P,il. 95).
(6) Cas"
H"irs o+ E*ilio Can"laria $. Lu!ia 5o*"ro% "t al.
L.161@A% S"1t. 9?% 1A6?
FACTS' T3o brot,"rs% E*ilio an Lu!as Can"laria% "a!,
1ur!,as" a lot on install*"nt. Du" to ,is inabilit# to 1a#%
Art. 1@59
Lu!as sol ,is int"r"st t,"r"in to E*ilio% 3,o !ontinu"
1a#*"nt o+ Lu!as8 lot in t," na*" o+ Lu!as until t," "ntir"
1ri!" 3as 1ai%
Arts. 1@5@.1@55
3it, t," un"rstaning t,at t," n"!"ssar# o!u*"nts 3oul
b" *a" lat"r. In 1A1B a Trans+"r C"rti+i!at" o+ Titl" +or t," lot
3as issu" in t," na*" o+ Lu!as. Lu!as an ,is ,"irs
a!<no3l"g" t," +a!t t,at t,"# ,"l t," titl" *"r"l# in
trust +or E*ilio. In
1A56% E*ilio8s ,"irs su" +or r"!on$"#an!" o+ t," titl" to t,"*.
Lu!as8 ,"irs r"+us"% +irstl#% on t," groun t,at t," trust 3as
an "41r"ss on" an t,"r"+or" not "n+or!"abl" b"!aus" it 3as
oral2 an s"!onl#% on t," groun o+ 1r"s!ri1tion (9B #"ars).
HELD' E*ilio8s ,"irs ar" "ntitl" to t," r"!on$"#an!".
Firstl#% t,is is not "41r"ss trust but an i*1li" on" un"r
Art.
1@59 an% t,"r"+or"% *a# b" 1ro$" b# 1arol "$i"n!".
S"!onl#% 3,il" i*1li" trusts *a# in"" 1r"s!rib"% in t,"
instant !as"% t,"r" 3as a !ontinuous a!<no3l"g*"nt on t,"
1art o+ Lu!as an ,is ,"irs2 ,"n!"% t,"r" 3as no 1r"s!ri1tion.
Art. 1@5@. I+ an absolut" !on$"#an!" o+ 1ro1"rt# is *a"
in or"r to s"!ur" t," 1"r+or*an!" o+ an obligation o+ t,"
gran. tor to3ar t," grant""% a trust b# $irtu" o+ la3 is
"stablis,". I+ t," +ul+ill*"nt o+ t," obligation is o++"r" b#
t," grantor 3,"n it b"!o*"s u"% ," *a# "*an t,"
r"!on$"#an!" o+ t," 1ro1"rt# to ,i*.
CO&&ENT'
Absolut" Con$"#an!" &a" +or S"!urit# Pur1os"
(a) T,is is a -!onstru!ti$" trust%/ t," 1ur1os" o+ t," la3 b"ing
to 1r"$"nt unjust "nri!,*"nt to t," 1r"jui!" o+ t," tru"
o3n"r.
(b) E4a*1l"' &arl"n" 3as in"bt" to Susan. For t," sol"
1ur1os" o+ guarant""ing ,"r "bt% &arl"n" sol ,"r
1ar!"l o+ lan to Susan. H"r"% a trust ,as b""n !r"at". I+
&arl"n" 1a#s ,"r "bt 3,"n it b"!o*"s u"% &arl"n" *a#
"*an t," r"sal" o+ t," 1ro1"rt# to ,"r.
Art. 1@55. I,"n an# trust""% guarian or ot,"r 1"rson
Arts. 1@5@.1@55
,oling a +iu!iar# r"lations,i1 us"s trust +uns +or t,"
1ur. !,as" o+ 1ro1"rt# an !aus"s t," !on$"#an!" to b"
*a" to ,i* or to a t,ir 1"rson% a trust is "stablis," b#
o1"ration o+ la3 in +a$or o+ t," 1"rson to 3,o* t," +uns
b"long.
Art. 1@55
CO&&ENT'
(1) ;s" o+ Trust Funs
T,is is a -!onstru!ti$" trust/ b"!aus" again% t," 1ur1os"
is to 1r"$"nt unjust "nri!,*"nt.
(6) A11li!abilit# o+ Arti!l"
T," Arti!l" a11li"s to'
(a) an# trust""
(b) guarian
(!) or ot,"r 1"rson ,oling a +iu!iar# r"lations,i1 (Art. 1@55)
(li<" an ag"nt2 t,"r"+or" t," a!Euisitions o+ t," ag"nt inur"
to t," b"n"+it o+ ,is 1rin!i1al). (S"$"rino $. S"$"rino% @@
P,il. 9@9).
(9) E4a*1l"
An ag"nt using ,is 1rin!i1al8s *on"# 1ur!,as"s lan in
,is o3n na*". H" also r"gist"rs it un"r ,is na*". H"r"% ,"
3ill b" !onsi"r" onl# a trust""% an t," 1rin!i1al is t,"
b"n"+i!iar#. T," 1rin!i1al !an bring an a!tion +or !on$"#an!" o+
t," 1ro1"rt# to ,i*s"l+% so long as t," rig,ts o+ inno!"nt t,ir
1"rsons ar" not a$"rs"l# a++"!t". (Ca*a!,o $. &un. o+
7ali3ag% 6B P,il.
@66).
(@) 5"asons +or t," 5ul"
(a) +iu!iar# or trust r"lations
(b) "sto11"l
(!) to r"*o$" t," t"*1tation to 1la!" s"l+.int"r"st abo$" all
ot,"r t,ings% an at t," "41"ns" o+ on"8s int"grit# an
ut# to anot,"r. (S"$"rino $. S"$"rino% @@ P,il. 9@9).
(5) Cas"s
Sing =o!o $. Sun#antung% "t al.
@9 P,il. 5BA
Art. 1@55
FACTS' A 3as a !on+i"ntial "*1lo#"" o+ 7. 7 int"n" to
1ur!,as" an ,a!i"na an ," tol A about it an o+ ,is o1tion
to
Art. 1@56
bu# t," sa*". T,in<ing t,at t," 1ur!,as" s""*s goo% A% in
,is 3i+"8s na*"% boug,t t," ,a!i"na% to t," 1r"jui!" o+ 7.
Issu"' Can 7 su" A +or a*ag"sJ
HELD' K"s% in $i"3 o+ t," br"a!, o+ trust.
Es!obar $. Lo!sin
C@ P,il. B6
FACTS' Lo!sin 3as ,"l1ing an illit"rat" o3n"r in ,is !lai*
+or a 1ar!"l o+ lan in$ol$" in !"rtain !aastral
1ro!""ings. Lo!sin8s ,"l1 3as at t," r"Eu"st o+ t," illit"rat"
o3n"r. Inst"a o+ r"all# ,"l1ing ,"r% Lo!sin !lai*" t," lan
+or ,i*s"l+. T," !lai* o+ Lo!sin 3as su!!"ss+ul an ," 3as
a3ar" t," lan. &a# ," b" or"r" to !on$"# t," lan to t,"
r"al o3n"rJ
HELD' K"s% +or a+t"r all% t,"r" 3as a !l"ar br"a!, o+ trust
,"r".
Art. 1@56. I+ 1ro1"rt# is a!Euir" t,roug, *ista<" or
+rau% t," 1"rson obtaining it is% b# +or!" o+ la3%
!onsi"r" a trust"" o+ an i*1li" trust +or t," b"n"+it o+
t," 1"rson +ro* 3,o* t," 1ro1"rt# !o*"s.
CO&&ENT'
(1) Pro1"rt# A!Euir" T,ru &ista<" or Frau
(a) T,is is anot,"r "4a*1l" o+ a !onstru!ti$" trust.
(b) E4a*1l"'
7"lla 3as gi$"n a !ar b# &ina alt,oug, it s,oul
,a$" b""n gi$"n to Erlina. 7"lla is !onsi"r" as
*"r"l# t," trust"" o+ t," !ar +or t," b"n"+it o+ Erlina.
Laur"ano $. St"$"nson
@5 P,il. 656
FACTS' 7# *ista<"% a 1i"!" o+ lan% b"longing to ,is
n"ig,bor Laur"ano% 3as r"gist"r" un"r t," Torr"ns s#st"*
Art. 1@56
(!aastral sur$"#) un"r Dila#!o8s na*"% alt,oug, Dila#!o
n"$"r !lai*" t," lan. Dila#!o8s !r"itors 3ant" to s"ll
t,is lan b"longing to Laur"ano. Issu"' Can t,"# o soJ
Art. 1@56
HELD' No. Sin!" Dila#!o n"$"r !lai*" t," lan% t," !ourt
,a no jurisi!tion to or"r its r"gistration in Dila#!o8s na*".
Dila#!o in "++"!t 3as onl# ,oling t," 1ro1"rt# in trust +or Lau.
r"ano.
(NOTE ,"r" t,at in !as" o+ a trust% t," tru" o3n"r is 1r".
+"rr" o$"r t," r"gist"r" o3n"r.)
FNOTE' It ,as b""n ,"l t,at a trust"" *a# b" !o*1"ll"
to "4"!ut" a "" o+ r"!on$"#an!" o+ 1ro1"rt# t,at ,as b""n
obtain" i*1ro1"rl# (O!a*1o $. Ta1ort"Ha% 59 P,il. @@6) 1ro.
$i"% o+ !ours"% t,at t," tru" o3n"r is not barr" b"!aus" o+
1r"s!ri1tion or b"!aus" o+ la!,"s.G
(6) Natur" o+ t," &ista<" or Frau
(a) T," *ista<" r"+"rr" to in Art. 1@56 is a *ista<" *a" b#
a t,ir 1"rson% not t,at *a" b# a 1art# to t," !ontra!t.
For i+ *a" b# a 1art#% no trust is !r"at". (Laur"ano $.
St"$"nson% @5 P,il. 656).
(b) Si*ilarl#% t," +rau r"+"rr" to in Art. 1@56 is "4tra.!on.
tra!tual +rau an t," "++"!ts ar" t,os" as *"ntion" in
Co**"nt No. @. (>"*ora $. Ka1 Ti!o% 56 P,il. 616).
(9) Against I,o* t," 5ig,t &ust 7" E4"r!is"
T," rig,t o+ a!tion in an i*1li" or !onstru!ti$" trust
s,oul b" "4"r!is" against t," trust""% 3,o *a# ,a$" !aus"
t," +rau an not against an inno!"nt 1ur!,as"r +or $alu". T,"
a!tion bas" on t," trust s,oul b" +il" 3it,in +our #"ars +ro*
t," is!o$"r# o+ t," +rau. O+ !ours"% i+ t," all"g" +rauul"nt
"" 3as r"!or" in t," 5"gistr# o+ Pro1"rt#% it is "ss"ntial
to !ount t," +our.#"ar 1"rio +ro* t," at" o+ t," r"gistration
inas*u!, as sai r"gistration o1"rat"s as a noti!" to t," 3,ol"
3orl. (A$"!illa $. Kat!o% L.115CB% &a# 1@% 1A5B an 5a#*uno%
"t al. $. A+abl"% "t al.% L.C651% F"b. 6B% 1A55).
(@) I,"n t," Arti!l" Do"s Not A11l#
Ongsia<o% "t al. $. Ongsia<o% "t al.
L.C51?% &ar. 1?% 1A5C
Art. 1@56
Art. 1@56 o"s not a11l# to a onation o+ 1ro1"rt# 3,i!,
t," on"" ,as a!Euir" t,ru a l"gal onation% "$"n i+ s,"
br"a<s an
Art. 1@56
i*1ortant !onition t,"r"o+. T,us% "$"n 3it, t," br"a!, !oni.
tion% s," o"s not b"!o*" a trust"". It is still ,"rs% subj"!t to an
a!tion +or r"$o!ation. I+ t," a!tion to r"$o<" ,as 1r"s!rib"% t,"
1ro1"rt# !annot b" ta<"n a3a# +ro* ,"r. I+ 1r"s!ri1tion runs
"$"n in a !as" o+ an i*1li" trust% 1r"s!ri1tion !"rtainl# runs
3it, gr"at"r r"ason in a !as" li<" t,is% 3,"r" as 3" ,a$" s""n%
no trust "$"r "4ist" or 3as !r"at".
Tibur!io Sa*ont" $. CA% "t al.
>5 1?@669% =ul. 16% 6??1
FACTS' P"tition"r% as su!!"ssor.in.int"r"st o+ t," =aol
s1ous"s% argu"s t,at t," r"s1on"nts8 a!tion +or r"!o$"#an!"%
+il" onl# in 1AC5% ,a long 1r"s!rib" !onsi"ring t,at t," =aol
s1ous"s !aus" t," r"gistration o+ a 1ortion o+ t," subj"!t lot in
t,"ir na*"s 3a# ba!< in August B% 1A5C. It is 1"tition"r8s
!ont"n. tion t,at sin!" 1B #"ars ,a alr"a# la1s" +ro* t,"
issuan!" o+ TCT 5T.@C6 until t," ti*" 3,"n r"s1on"nts +il"
t," a!tion in t," !ourt a Euo in 1AC5% t," sa*" 3as ti*".
barr". As it ,a b""n inubitabl# "stablis," t,at +rau
att"n" t," r"gistra. tion o+ a 1ortion o+ t," subj"!t 1ro1"rt#%
t," =aol s1ous"s 3"r" trust""s t,"r"o+% on b",al+ o+ t,"
sur$i$ing ,"irs o+ Abao. An a!tion bas" on i*1li" or
!onstru!ti$" trust 1r"s!rib"s in 1? #rs. +ro* t," ti*" o+ its
!r"ation or u1on t," all"g" +rauul"nt r"gistration o+ t,"
1ro1"rt#.
HELD' P"tition"r8s "+"ns" o+ 1r"s!ri1tion is unt"nabl".
T," g"n"ral rul" t,at t," is!o$"r# o+ +rau is ""*" to ,a$"
ta<"n 1la!" u1on t," r"gistration o+ r"al 1ro1"rt# b"!aus" it
is -!onsi"r" a !onstru!ti$" noti!" to all 1"rsons88 (S"!. 51 o+
A!t @A6% as a*"n" b# S"!. 56 o+ PD 156A) o"s not a11l# in
t,is !as". Inst"a t," Court o+ A11"als (CA) !orr"!tl# a11li"
t," ruling in Aill" $. CA (5C SC5A @55 F1ABBG)% 3,i!, is Euit"
a1ro1os to t," instant !as"% t,us' -It is tru" t,at r"gistration
un"r t," Torr"ns s#st"* is !onstru!ti$" noti!" o+ titl"% but it
,as li<"3is" b""n our ,oling t,at t," Torr"ns titl" o"s not
+urnis, a s,i"l +or +rau. It is% t,"r"+or"% no argu*"nt to sa#
t,at t," a!t o+ r"gistration is "Eui$al"nt to noti!" o+ r"1uiation%
Art. 1@56
assu*ing t,"r" 3as on"% not3it,staning t," long staning
rul" t,at r"gistration o1"rat"s as a uni$"rsal noti!" o+ titl".88 In
Aill"% 1"tition"r t,"r"in "4"!ut" a "" o+ "4trajui!ial 1arti.
Art. 1@56
tion *isr"1r"s"nting ,i*s"l+ to b" t," sol" ,"ir o+ ,is *ot,"r
3,"n% in +a!t% s," ,a ot,"r !,ilr"n. As a !ons"Eu"n!"% 1"ti.
tion"r t,"r"in 3as abl" to s"!ur" titl" to t," lan in ,is na*"
alon". His siblings t,"n +il" a !as" +or 1artition on t," groun
t,at sai 1"tition"r 3as onl# a trust"" on an i*1li" trust o+
t," 1ro1"rt#. A*ong t," issu"s r"sol$" b# t," Court in t,at
!as" 3as 1r"s!ri1tion. Sai 1"tition"r r"gist"r" t," 1ro1"rt# in
1A55 an t," !lai* o+ 1ri$at" r"s1on"nts t,"r"in 3as
1r"s"nt" in
1AC@. T,us% in !iting Aill"% t," Su1r"*" Court sai t,at in t,"
instant !as"% t," CA rig,t+ull# rul" t,at r"s1on"nts a!tion
+or r"!on$"#an!" ,a not #"t 1r"s!rib".
(5) :u"r# 0 Do Trusts Pr"s!rib"J
(a) E41r"ss trusts o NOT 1r"s!rib" as long as t,"# ,a$" not
b""n r"1uiat". (DiaH $. >arri!,o% L.1166A% &ar. 6?%
1A5B).
(b) T," rul" on i*1li" trusts is% ,o3"$"r% CONF;SIN>.
In DiaH% "t al. $. >arri!,o an Agriao% L.1166A% &ar. 6?%
1A5B% t," Court ga$" t," r"ason 3,#% as a rul"% "41r"ss trusts
ar" not subj"!t to 1r"s!ri1tion% 3,il" !onstru!ti$" trusts *a# b"
barr" b# la1s" o+ ti*". An t," r"ason is t,at in t," "41r"ss
trust% t,"r" is a 1ro*is" or a +iu!iar# r"lation% ,"n!" t," 1os.
s"ssion o+ t," trust"" is NOT ADVE5SE until an unl"ss t,"
b"n"+i!iar# is *a" a3ar" t,at t," trust ,as b""n r"1uiat".
7ut in t," !onstru!ti$" trust% i*1os" as it is b# la3% t,"r" is
no 1ro*is" or +iu!iar# r"lation2 t," so.!all" trust"" o"s not
r"!ogniH" an# trust an ,as no int"nt to ,ol +or t,"
b"n"+i!iar#2 t,"r"+or"% t," b"n"+i!iar# is not justi+i" in
"la#ing t," a!tion to r"!o$"r ,is 1ro1"rt#. It is ,is +ault i+ ,"
"la#s2 ,"n!"% ," *a# b" "sto11" b# ,is o3n la!,"s. (S""
A$"!illa $. Kat!o% L.115CB% &a# 1@% 1A5B).
Ho3"$"r% in Coro$a% "t al. $. Coro$a% "t al.% L.AA96%
=an. 1@% 1A5B% t," Court in an obit"r *a" t," stat"*"nt t,at
in a !onstru!ti$" trust (as in t," !as" o+ !o.,"irs,i1 3,"r" on"
,"ir or !o.o3n"r +rauul"ntl# "1ri$"s t," r"st o+ t,"ir s,ar"s)%
1r"s!ri1tion o"s not run. T,is o!trin" o+ i*1r"s!ri1tibilit# o+
Art. 1@56
a !onstru!ti$" trust 3as r"it"rat" in =uan $. TuPiga% L.1C?@@%
A1ril 6B% 1A66 an in =a!into $. =a!into% L.1CA55% L.1CA5C% &a#
91% 1A66% but is ir"!tl# AT VA5IANCE 3it, t," rul" stat" in
Art. 1@56
=.&. Tuason an Co. $. &a!a1agal% L.1559A% =an. 9?% 1A66% an
in t," !as" o+ Corn"lio AlHona% "t al. $. >r"goria Ca1unitan% "t
al.% L.1?66B% F"b. 6B% 1A66% 3,"r" t," Su1r"*" Court ,"l t,at
in"" 1r"s!ri1tion 5;NS in a !onstru!ti$" trust.
A "!ision o+ t," Su1r"*" Court r"it"rat"s t,is rul" t,at
a !onstru!ti$" trust is a++"!t" b# 1r"s!ri1tion. T,us% in
>"rona% "t al. $. Car*"n " >uH*an% "t al.% L.1A?6?% &a# 6A%
1A6@% t," Su1r"*" Court stat" t,at alt,oug, t,"r" ar" so*"
"!isions to t," !ontrar#% it is alr"a# s"ttl" t,at an a!tion
+or r"!on. $"#an!" o+ r"al 1ro1"rt# bas" u1on a !onstru!ti$"
or i*1li" trust% r"sulting +ro* +rau% *a# b" 7A55ED b#
1r"s!ri1tion. T," 1"rio is @ #"ars +ro* t," is!o$"r# o+ t,"
+rau. T," Court a11ar"ntl# o$"rloo<" t," +a!t t,at "4a!tl#
on" *ont, 1rior to sai "!ision% it ,a rul" in Calaiao $.
Va. " 7las% L.1A?69% A1r. 6A% 1A6@% t,at an a!tion to !o*1"l
r"!on$"#an!" o+ 1ro1"rt# 3it, a Torr"ns Titl" o"s not
1r"s!rib" i+ t," r"gist"r" o3n"r ,a obtain" r"gistration in
ba +ait,% an t," 1ro1"rt# is still in t," latt"r8s na*". T,"
r"ason is t,at t," r"gistration is in t," natur" o+ a !ontinuing
an subsisting trust.
Si*ilarl#% it ,as b""n ,"l t,at 1r"s!ri1tion !annot b" s"t
u1 as a "+"ns" in an a!tion t,at s""<s to r"!o$"r 1ro1"rt# ,"l
"41r"ssl# in trust +or t," b"n"+it o+ anot,"r2 n"it,"r !an la!,"s%
it b"ing si*ilar to 1r"s!ri1tion. (7a!,ra!, &otor Co. $. L"jano%
L.1?A1?% =an. 16% 1A5A).
(6) So*" Cas"s
5a*os% "t al. $. >r"goria 5a*os% "t al.
L.1A9C6% D"!. 9% 1AC@
ISS;E' Do trusts 1r"s!rib"J
HELD'
(1) E41r"ss trusts o not 1r"s!rib". T,is *"ans t,at t,"
b"n"+i. !iar# or !"stui Eu" trust !an r"!o$"r t," 1ro1"rt#
an#ti*". 5"ason +or t," rul" 0 t," 1oss"ssion o+ an
"41r"ss trust"" is not a$"rs". FNOTE' E4!"1tion to t,"
Art. 1@56
rul" 0 "$"n an "41r"ss trust *a# 1r"s!rib" i+ t,"r" ,as
b""n r"1uiation o+ t," sa*" 0 s"" Es!a# $. Court o+
A11"als% L.9C5?@% D"!.
1B% 1AC@.G
Art. 1@56
(6) Iit, r"s1"!t to i*1li" trusts% a istin!tion *ust b"
*a"'
(a) r"sulting trusts (t,os" 1r"su*" to ,a$" b""n !on.
t"*1lat" b# t," 1arti"s% but not so "41r"ss" in t,"
instru*"nt o+ !on$"#an!") ("4a*1l"s' t,os" r"+"rr"
to in Arts. 1@@B to 1@55% Ci$il Co") g"n"rall# also o
not 1r"s!rib" (a+t"r all t,"r" 3as t," int"nt to !r"at"
an "41r"ss trust). E4!"1tion 0 r"!o$"r# +ro* t,"
trust"" *a# 1r"s!rib" i+ t," trust"" ,as "41r"ssl#
r"1uiat" t," trust2
(b) !onstru!ti$" trusts (justi+i" *"r"l# b# "Euit# to
satis+# t," "*ans o+ justi!"% an t,"r"+or" ar" not
r"all# trusts in t," t"!,ni!al s"ns") o 1r"s!rib"% an
t,is rul" is 3"ll.s"ttl". (NOTE' I,"t,"r r"sulting
or !onstru!ti$"% its "n+or!"*"nt *a# b" barr" b#
LACHES.) (S"" Na!alaban $. Court o+ A11"als% B?
SC5A @6B an DuEu" $. Do*ingo% B? SC5A 65@).
Ar*a*"nto $. C"ntral 7an<
L.9@66B% F"b. 61% 1AB?
An a!tion +or r"!on$"#an!" o+ r"gist"r" lan bas" on an
i*1li" trust 1r"s!rib"s in 1? #"ars. T,is is so "$"n i+ t," "!r""
o+ r"gistration is no long"r o1"n to r"$i"3.
Es!a# $. Court o+ A11"als
L.9C5?@% D"!. 1B% 1AC@
FACTS' E*ilio Es!a# *ortgag" ,is "stat" to t," P,ili1.
1in" National 7an<. Ho3"$"r% in 1A6@% ," i"% 3it, ,is "bt
still "4isting. His brot,"r% =os" Es!a#% agr"" to assu*" t,"
"bt so t,at t,"r" 3oul b" no +or"!losur"% so t," o3n"rs,i1 o+
t," 1ro1. "rt# 3as trans+"rr" to =os" in !onsi"ration o+ ,is
assu*1tion o+ t," *ortgag" in"bt"n"ss but t,"r" 3as a
1ro$iso granting t," ,"irs o+ E*ilio t," rig,t to r"""* t,"
1ro1"rt# 3it,in 5 #"ars a+t"r =os" s,all ,a$" +ull# 1ai t,"
PN7. T,is agr""*"nt 3as a11ro$" b# t," 1robat" !ourt in
1A9@% t," a11ro$al o+ all 1arti"s ,a$ing b""n obtain"%
in!luing t," a11ro$al b# t," ,"irs o+ E*ilio t,ru E*ilio8s 3i+".
Art. 1@56
&an# #"ars lat"r% E*ilio8s !,ilr"n broug,t t," a!tion to
r"!o$"r t," "stat" +ro* =os"% stating t,at' (a) t,"ir 1r"$ious
!ons"nt ,as not b""n obtain" r" t," trans+"r
Art. 1@56
o+ t," 1ro1"rt# to =os"% (b) t," 1robat" !ourt ,as no 1o3"r to
aut,oriH" t," trans+"r as% in "++"!t% t,is 3oul b" t," sa*" as a
+or"!losur"% an (!) =os" r"+us" to allo3 t," ,"irs to r"""*.
HELD'
(a) T," ,"irs *a# b" sai to ,a$" !ons"nt"% t,ru t,"ir
*ot,"r
(t,"ir guarian a lit"*).
(b) T," 1robat" !ourt ,a t," 1o3"r to a11ro$" t," agr"".
*"nt% "$"n i+ t," sa*" a*ount" to a +or"!losur"% +or a+t"r
all 1ro!"ural rul"s !annot i*1air substanti$" rig,ts o+
1ro1"rt# o3n"rs to s"ll 3,at b"longs to t,"*.
(!) &or" t,an 65 #"ars ,a$" "la1s" sin!" =os" too< a$"rs"
1oss"ssion o+ t," 1ro1"rt#. It is !l"ar t,at t," a!tion ,as
1r"s!rib". ;n"r an "41r"ss trust% i+ r"1uiat"% *a#
"n a+t"r 1? #"ars (or 9? #"ars)% as t," !as" *a# b".
H"irs o+ Tana< Pangaaran Pati3a#on%
"t al. $. Hon. &artin"H% "t al.
>5 @A?6C% =un. 1?% 1AB5
I,"r" it a11"ars t,at t," lan in Eu"stion 3as ob.
tain" b# "+"nants t,roug, +rauul"nt *"ans o+ 3,i!,
a 1at"nt an titl" 3"r" issu" in t,"ir na*"% t,"# ar"
""*" to ,ol it in trust +or t," 1"rson 1r"jui!" b#
it. T,"r" b"ing an i*1li" trust% t," a!tion to r"!o$"r t,"
1ro1"rt# 1r"s!rib"s in 1? #"ars.
Hora!io >. AaHa M F"li!ia &arunan $.
CA M Viol"ta >. AaHa% Assist"
b# H"r Husban Lino A*or
L.@C95@% &ar. 61% 1ABA
In "t"r*ining 3,"t,"r "la# in s""<ing to "n+or!"
a rig,t !onstitut"s la!,"s% t," "4ist"n!" o+ a !on+i"ntial
r"lations,i1 bas" u1on% +or instan!"% !onsanguinit#% is
an i*1ortant !ir!u*stan!" +or !onsi"ration. D"la# in a
situation 3,"r" su!, a !ir!u*stan!" "4ists s,oul not b"
as stri!tl# !onstru"% as 3,"r" t," 1arti"s ar" !o*1l"t"
Art. 1@56
strang"rs $is.a.$is "a!, ot,"r. T," o!trin" o+ la!,"s is
not to b" a11li" *"!,ani!all# as b"t3""n n"ar r"lati$"s2
t," +a!t t,at t," 1arti"s in t," instant !as" ar" brot,"r
an
Art. 1@56
sist"r t"ns to "41lain an "4!us" 3,at 3oul ot,"r3is"
a11"ar as long "la#.
&or"o$"r% !ontinu" r"!ognition o+ t," "4ist"n!" o+
t," trust 1r"!lu"s t," "+"ns" o+ la!,"s. T," t3o (6) l"t.
t"rs s"nt b# r"s1on"nt Viol"ta to 1"tition"r Hora!io% on"
in 1A6A an t," ot,"r in 1AC1% s,o3 t,at Viol"ta as lat"
as 1AC1 ,a r"!ogniH" t," trust i*1os" on ,"r b# la3.
Con$"rs"l#% Hora!io8s r"lian!" u1on ,is bloo r"lations,i1
3it, ,is sist"r an t," trust an !on+i"n!" nor*all# !on.
not" in our !ultur" b# t,at r"lations,i1% s,oul not b"
ta<"n against ,i*. P"tition"r8s !ount"r!lai* in t," trial
!ourt +or 1artition an r"!on$"#an!" !annot b" r"gar"
as barr" 3,"t,"r b# la!,"s or b# 1r"s!ri1tion.
>onHal"s% "t al. $. IAC
>5 66@CA% No$. 61% 1AA1
FACTS' 5"s1on"nts ,a$" in$o<" Arti!l" 1@56 o+ t,"
Ci$il Co" 3,i!, stat"s t,at -i+ 1ro1"rt# is a!Euir" t,ru
*ista<" or +rau% t," 1"rson obtaining it is% b# +or!" o+
la3% !onsi"r" a trust"" o+ an i*1li" trust +or t,"
b"n"+it o+ t," 1"rson +ro* 3,o* t," 1ro1"rt# !o*"s./
HELD' T," trust allu" to in t,is !as" is a !onstru!.
ti$" trust arising b# o1"ration o+ la3. It is not a trust in
t," t"!,ni!al s"ns". E$"n assu*ing t,at t,"r" 3as an
i*1li" trust% r"s1on"nt8s att"*1t at r"!on$"#an!"
(+un!tionall#% an a!tion +or 1artition is bot, an a!tion
+or "!laration o+ o3n"rs,i1% an +or s"gr"gation o+
!on$"#an!" o+ a ". t"r*inat" 1ortion o+ t," subj"!t
1ro1"rt#) 3as barr" b# 1r"s!ri1tion. An a!tion +or
r"!on$"#an!" o+ r"al 1ro1"rt# to "n+or!" an i*1li"
trust 1r"s!rib"s in t"n #"ars% t," 1"rio r"!<on" +ro*
t," issuan!" o+ t," a$"rs" titl" to t," 1ro1"rt# 3,i!,
o1"rat"s as a !onstru!ti$" noti!". In t," !as" at bar% t,at
ass"rtion o+ a$"rs" titl"% 3,i!, 3as an "41li!it
ini!ation o+ r"1uiation o+ t," trust +or t," 1ur1os" o+
t," statut" o+ li*itations% too< 1la!" 3,"n OCT
@A6B16 3as issu" in t," na*" o+ Fausto So# in 1A96% to
Art. 1@56
t," "4!lusion o+ ,is t,r"" sist"rs. 7ut "$"n i+ t,"r" 3as no
r"1uiation 0 as r"s1on"nt 5osita Lo1"H 3oul ,a$" us
b"li"$" 3,"n s," t"sti+i" in !ourt t,at 3,il" Fausto So#
Art. 1@56
*ig,t ,a$" su!!""" in s"!uring titl" in ,is sol" na*"% ,"
non"t,"l"ss r"!ogniH" t," !o.o3n"rs,i1 b"t3""n ,i* an
,is sist"rs 0 t," rul" in t,is jurisi!tion is t,at an a!tion
to "n+or!" an i*1li" trust *a# b" !ir!u*s!rib" not onl#
b# 1r"s!ri1tion but also b# la!,"s% in 3,i!, !as"
r"1uiation is not "$"n r"Euir". Fro* 1A96 to 1A65% or a
1"rio o+ 99 #"ars% r"s1on"nts ,a sl"1t on t,"ir rig,ts%
1r"su*ing t,"# ,a an#. T,"# !an no long"r is1ut" t,"
!on!lusi$" an in!ontro$"rtibl" !,ara!t"r o+ Fausto So#8s
titl" as t,"# ar" ""*"% b# t,"ir unr"asonabl# long
ina!tion to ,a$" a!. Eui"s!" t,"r"in. &or"o$"r% t," la3
1rot"!ts t,os" 3,o ar" $igilant o+ t,"ir rig,ts. ;nu"
"la# in t," "n+or!"*"nt o+ a rig,t is strongl# ini!ati$"
o+ a la!< o+ *"rit in t," !lai*% sin!" it is ,u*an natur" +or
1"rsons to ass"rt t,"ir rig,ts *ost $igorousl# 3,"n
t,r"at"n" or in$a".
S1ous"s Hora!io M F"lisa 7"nito $.
Aga1ita SaEuitan.5uiH
>5 1@AA?6% D"!. 66% 6??6
FACTS' T," all"gations in t," !o*1laint !onstitut"
a suit +or r"!on$"#an!" an not an a!tion to in$aliat"
!"rti+i!at"s o+ titl" groun" on +rau.
Issu"' I,at is t," 1r"s!ri1ti$" 1"rioJ
HELD' T," 1r"s!ri1ti$" 1"rio is 1? #"ars% not on"
#"ar +ro* "ntr# o+ t," "!r"" o+ r"gistration. Ot,"r3is"
stat"% t," Court o+ A11"als is !orr"!t in ,oling t,at
r"s1on"nt8s !o*1laint is in r"alit# an a!tion +or r"!on.
$"#an!" bas" on i*1li" or !onstru!ti$" trust. T,is suit
1r"s!rib"s 1? #rs. +ro* issuan!" o+ titl" o$"r t," 1ro1"rt#.
(Villanu"$a.&ijar"s $. CA% 99? SC5A 9@A F6???G an &ar.
Eu"H $. CA% 9?? SC5A 659 F1AABG).
(C) Ho3 To Pro$" Trusts
Salao% "t al. $. Salao
L.666AA% &ar. 16% 1AC6
Art. 1@56
FACTS' A*brosia Salao an =uan Salao (sist"r an brot,.
"r) 1ur!,as" +ro* t," ,"irs o+ Engra!io Santiago t,"
Calunuran +is,1on% an 3"r" grant" a Torr"ns Titl" o$"r
sai 1ro1"rt#
Art. 1@56
in 1A1C. A+t"r A*brosia8s "at,% t," ,"irs o+ Val"ntin Salao% t,"
n"1,"3 o+ t," t3o !o.o3n"rs% su" in 1A56 +or r"!on$"#an!" o+
t," +is,1on 3,i!, t,"# !lai*" ,a b""n ,"l in trust +or t,"ir
+at,"r b# t," t3o r"gist"r" !o.o3n"rs. 7ut no o!u*"ntar# "$i.
"n!" 3as 1r"s"nt" to 1ro$" t," "4ist"n!" o+ an "41r"ss trust.
All t,at t,"# 1r"s"nt" 3as oral t"sti*on# to t," "++"!t t,at in
t," 1artition o+ ,is (Val"ntin8s) gran+at,"r8s "stat"% sai +is,.
1on ,a b""n assign" to ,i*. Issu"s' (1) Ias t,"r" an "41r"ss
trustJ (6) Ias t,"r" an i*1li" trustJ (9) Assu*ing t,"r" 3as
an i*1li" trust% ,as t," a!tion +or r"!on$"#an!" 1r"s!rib"J
HELD'
(1) T,"r" 3as no "41r"ss trust. Oral or 1arol "$i"n!"
!annot 1ro$" an "41r"ss trust. (Art. 1@@9% Ci$il Co").
(6) T,"r" 3as no i*1li" trust% 3,"t,"r r"sulting trust or
!onstru!ti$" trust. T,"r" 3as no r"sulting trust +or t,"r"
3as n"$"r an# int"ntion to !r"at" a trust an t,"r" 3as
no !onstru!ti$" trust% b"!aus" t," r"gistration o+ t,"
+is,1on un"r t," Torr"ns s#st"* 3as not initiat" b#
+rau or *ista<".
(9) Assu*ing t,at t,"r" 3as an i*1li" trust% t," a!tion is
alr"a# barr" b# 1r"s!ri1tion or la!,"s. (S"" Varsit#
Hills% In!. $. Na$arro% @9 SC5A 5?9 an AlHona $.
Ca1unitan M 5"#"s% 11@ P,il. 9CC). T," a!tion 3as +il"
onl# in 1A56 or +ort#.on" (@1) #"ars a+t"r t," r"gistration.
T," 1lainti++s% an t,"ir 1r""!"ssor in int"r"st
(Val"ntin Salao)% sl"1t on t,"ir rig,ts% i+ t,"# ,a an#
rig,ts at all. Vigilanti 1ros1i!iunt jura (-T," la3
1rot"!ts ,i* 3,o is 3at!,+ul o+ ,is rig,ts/). Furt,"r%
t,"r" 3as la!,"s or unr"asonabl" "la# in tr#ing to
"n+or!" a rig,t. I+ t,"r" b" la!,"s% t,is is not onl#
1"rsuasi$" o+ a 3ant o+ *"rit% but *a#% a!!or. ing to t,"
!ir!u*stan!"s% b" "stru!ti$" o+ t," rig,t its"l+.
(7u"na$"ntura $. Da$i% 9C P,il. @95).
FNOTE' Ho3"$"r% alt,oug, 1r"s!ri1tion an la!,"s *a#
"+"at an i*1li" trust% t,"r" is on" "4!"1tion to t," rul". &o$a.
bl"s a!Euir" t,ru a !ri*" !annot b" a!Euir" b# t," o++"n"r
Art. 1@56
t,ru 1r"s!ri1tion. (Art. 1199% Ci$il Co").G
FNOTE' I,il" Art. 1@56 is not r"troa!ti$" in !,ara!t"r%
still it *"r"l# "41r"ss"s a rul" alr"a# r"!ogniH" b# our
Courts
Art. 1@5C
"$"n 1rior to t," 1ro*ulgation o+ t," N"3 Ci$il Co". (DiaH $.
>arri!,o M Agriao% su1ra.).G
(B) Ho3 OCr"ati$" Trusts8 Ar" Cr"at"
T,is is b# 3a# o+ "Euit# to 1r"$"nt unjust "nri!,*"nt%
arising against on" 3,o% b# +rau% ur"ss or abus" o+
!on+i"n!"% obtains or ,ols t," l"gal rig,t to 1ro1"rt# 3,i!, ,"
oug,t not% in "Euit# an goo !ons!i"n!"% to ,ol. (Catalina Va.
" 5"tu"rto $. Ang"lo P. 7arH M &"rlina 7arH% >5 1@B1B?%
D"!. 1A% 6??1).
Art. 1@5C. An i*1li" trust *a# b" 1ro$" b# oral "$i.
"n!".
CO&&ENT'
(1) Proo+ o+ I*1li" Trust
(a) T,is Arti!l" a11li"s 3,"t,"r t," 1ro1"rt# is r"al or 1"r.
sonal.
(b) T," rul" in Art. 1@5C is i++"r"nt +ro* t,at "nun!iat" in
Art. 1@@9 3,i!, stat"s t,at -no "41r"ss trust !on!"rning
an i**o$abl" or an# int"r"st t,"r"in *a# b" 1ro$" b#
1arol "$i"n!"./
(6) Oral E$i"n!" +or Trust &ust 7" Trust3ort,#
Salao $. Salao
L.666AA% &ar. 16% 1AC6
I,il" an i*1li" trust *a# b" 1ro$" b# oral "$i"n!"%
still% sai "$i"n!" *ust b" a trust3ort,# oral "$i"n!"% +or
oral "$i"n!" *a# b" "asil# +abri!at".
Appe%30.
REPUBLIC ACT NO. *)+2
AN ACT P5OVIDIN> FO5 THE 5ECO>NITION AND ;SE OF
ELECT5ONIC CO&&E5CIAL AND NON.CO&&E5CIAL
T5ANSACTIONS AND DOC;&ENTS% PENALTIES FO5 ;N.
LAIF;L ;SE THE5EOF AND FO5 OTHE5 P;5POSES
7" it "na!t" b# t," S"nat" an Hous" o+ 5"1r"s"ntati$"s o+ t,"
5"1ubli! o+ t," P,ili11in"s in Congr"ss ass"*bl"'
PA5T I
SHO5T TITLE AND DECLA5ATION OF POLICK
S"!tion 1. S,ort Titl". 0 T,is A!t s,all b" <no3n as t," -El"!.
troni! Co**"r!" A!t o+ 6???/.
S"!. 6. D"!laration o+ Poli!#. 0 T," Stat" r"!ogniH"s t," $ital
rol" o+ in+or*ation an !o**uni!ations t"!,nolog# (ICT) in nation.
buil. ing2 t," n"" to !r"at" an in+or*ation.+ri"nl# "n$iron*"nt
3,i!, su11orts an "nsur"s t," a$ailabilit#% i$"rsit# an
a++orabilit# o+ ICT 1rou!ts an s"r$i!"s2 t," 1ri*ar#
r"s1onsibilit# o+ t," 1ri$at" s"!tor in !ontributing in$"st*"nts an
s"r$i!"s in t"l"!o**uni!ations an in+or*ation t"!,nolog#2 t," n""
to "$"lo1% 3it, a11ro1riat" training 1rogra*s an institutional
1oli!# !,ang"s% ,u*an r"sour!"s +or t," in+or*ation t"!,nolog# ag"%
a labor +or!" s<ill" in t," us" o+ ICT an a 1o1ulation !a1abl" o+
o1"rating an utiliHing "l"!troni! a11lian!"s an !o*1ut"rs2 its
obligation to +a!ilitat" t," trans+"r an 1ro*otion o+ aa1tation
t"!,nolog#% to "nsur" n"t3or< s"!urit#% !onn"!ti$it# an n"utralit#
o+ t"!,nolog# +or t," national b"n"+it2 an t," n"" to *ars,al%
organiH" an "1lo# national in+or*ation in+rastru!tur"s%
!o*1rising in bot, t"l"!o**uni!ations n"t3or< an strat"gi!
in+or*ation s"r$i!"s% in!luing t,"ir int"r!onn"!tion to t," global
in+or*ation n"t3or<s% 3it, t," n"!"ssar# an a11ro1riat"
APPENDIN
l"gal% +inan!ial% i1lo*ati! an t"!,ni!al +ra*"3or<% s#st"*s an
+a!iliti"s.
PA5T II
ELECT5ONIC CO&&E5CE IN >ENE5AL
S"!. 9. Obj"!ti$". 0 T,is A!t ai*s to +a!ilitat" o*"sti! an
int"r. national "alings% transa!tions% arrang"*"nts% agr""*"nts%
!ontra!ts an "4!,ang"s an storag" o+ in+or*ation t,roug, t,"
utiliHation o+ "l"!troni!% o1ti!al an si*ilar *"iu*% *o"%
instru*"ntalit# an t"!,nolog# to r"!ogniH" t," aut,"nti!it# an
r"liabilit# o+ "l"!troni! o!u*"nts r"lat" to su!, a!ti$iti"s an to
1ro*ot" t," uni$"rsal us" o+ "l"!troni! transa!tion in t,"
go$"rn*"nt an g"n"ral 1ubli!.
S"!. @. S1,"r" o+ A11li!ation. 0 T,is A!t s,all a11l# to an#
<in o+ ata *"ssag" an "l"!troni! o!u*"nt us" in t," !ont"4t
o+ !o**"r!ial an non.!o**"r!ial a!ti$iti"s to in!lu" o*"sti!
an int"rnational "alings% transa!tions% arrang"*"nts%
agr""*"nts% !ontra!ts an "4!,ang"s an storag" o+ in+or*ation.
S"!. 5. D"+inition o+ T"r*s. 0 For t," 1ur1os"s o+ t,is A!t% t,"
+ollo3ing t"r*s ar" "+in"% as +ollo3s'
a. -Ar"ss""/ r"+"rs to a 1"rson 3,o is int"n" b# t," origi.
nator to r"!"i$" t," "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt. T," t"r* o"s not in!lu" a 1"rson a!ting as an
int"r*"iar# 3it, r"s1"!t to t,at "l"!troni! ata *"ssag" or
"l"!troni! o!u*"nt.
b. -Co*1ut"r/ r"+"rs to an# "$i!" or a11aratus 3,i!,% b#
"l"!troni!%"l"!tro.*"!,ani!al or *agn"ti! i*1uls"% or b# ot,"r
*"ans% is !a1abl" o+ r"!"i$ing% r"!oring% trans*itting% storing%
1ro!"ssing% r"tri"$ing% or 1rou!ing in+or*ation% ata% +igur"s%
s#*bols or ot,"r *o"s o+ 3ritt"n "41r"ssion a!!oring to
*at,"*ati!al an logi!al rul"s or o+ 1"r+or*ing an# on" or *or" o+
t,os" +un!tions.
!. -El"!troni! Data &"ssag"/ r"+"rs to in+or*ation
g"n"rat"% s"nt% r"!"i$" or stor" b# "l"!troni!% o1ti!al or si*ilar
*"ans.
APPENDIN
. -In+or*ation an Co**uni!ations S#st"*/ r"+"rs to a
s#st"* int"n" +or an !a1abl" o+ g"n"rating% s"ning% r"!"i$ing%
storing or ot,"r3is" 1ro!"ssing "l"!troni! ata *"ssag"s or
"l"!troni! o!u*"nts an in!lu"s t," !o*1ut"r s#st"* or ot,"r
si*ilar "$i!" b# or in 3,i!, ata is r"!or" or stor" an an#
1ro!"ur"s r"lat"
APPENDIN
to t," r"!oring or storag" o+ "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt.
". -El"!troni! Signatur"/ r"+"rs to an# istin!ti$" *ar<%
!,ar. a!t"risti! anUor soun in "l"!troni! +or*% r"1r"s"nting t,"
i"ntit# o+ a 1"rson an atta!," to or logi!all# asso!iat" 3it, t,"
"l"!troni! ata *"ssag" or "l"!troni! o!u*"nt or an#
*"t,oolog# or 1ro!". ur"s "*1lo#" or ao1t" b# a 1"rson an
"4"!ut" or ao1t" b# su!, 1"rson 3it, t," int"ntion o+
aut,"nti!ating or a11ro$ing an "l"!troni! ata *"ssag" or
"l"!troni! o!u*"nt.
+. -El"!troni! Do!u*"nt/ r"+"rs to in+or*ation or t," r"1.
r"s"ntation o+ in+or*ation% ata% +igur"s% s#*bols or ot,"r *o"s o+
3ritt"n "41r"ssion% "s!rib" or ,o3"$"r r"1r"s"nt"% b# 3,i!, a
rig,t is "stablis," or an obligation "4tinguis,"% or b# 3,i!, a +a!t
*a# b" 1ro$" an a++ir*"% 3,i!, is r"!"i$"% r"!or"%
trans*itt"% stor"% 1ro!"ss"% r"tri"$" or 1rou!" "l"!troni!all#.
g. -El"!troni! D"#/ r"+"rs to a s"!r"t !o" 3,i!, s"!ur"s an
"+"ns s"nsiti$" in+or*ation t,at !ross"s o$"r 1ubli! !,ann"ls
into a +or* "!i1,"rabl" onl# 3it, a *at!,ing "l"!troni! <"#.
,. -Int"r*"iar#/ r"+"rs to a 1"rson 3,o in b",al+ o+ anot,"r
1"rson an 3it, r"s1"!t to a 1arti!ular "l"!troni! o!u*"nt s"ns%
r"!"i$"s anUor stor"s or 1ro$i"s ot,"r s"r$i!"s in r"s1"!t o+ t,at
"l"!troni! o!u*"nt.
i. -Originator/ r"+"rs to a 1"rson b# 3,o*% or on 3,os"
b",al+% t," "l"!troni! o!u*"nt 1ur1orts to ,a$" b""n !r"at"% g"n.
"rat" anUor s"nt. T," t"r* o"s not in!lu" a 1"rson a!ting as an
int"r*"iar# 3it, r"s1"!t to t,at "l"!troni! o!u*"nt.
j. -S"r$i!" Pro$i"r/ r"+"rs to a 1ro$i"r o+ .
(i) On.lin" s"r$i!"s or n"t3or< a!!"ss% or t," o1"rator
o+ +a!iliti"s t,"r"+or% in!luing "ntiti"s o++"ring t,"
trans*ission% routing% or 1ro$iing o+ !onn"!tions +or onlin"
!o**uni!ations% igital or ot,"r3is"% b"t3""n or a*ong 1oints
s1"!i+i" b# a us"r% o+ "l"!troni! o!u*"nts o+ t," us"r8s
!,oosing2 or
(ii) T," n"!"ssar# t"!,ni!al *"ans b# 3,i!, "l"!troni!
APPENDIN
o!u*"nts o+ an originator *a# b" stor" an *a" a!!"ssibl"
to a "signat" or un"signat" t,ir 1art#2
Su!, s"r$i!" 1ro$i"rs s,all ,a$" no aut,orit# to *oi+# or
alt"r t," !ont"nt o+ t," "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt
APPENDIN
r"!"i$" or to *a<" an# "ntr# t,"r"in on b",al+ o+ t," originator%
ar"ss"" or an# t,ir 1art# unl"ss s1"!i+i!all# aut,oriH" to o so%
an 3,o s,all r"tain t," "l"!troni! o!u*"nt in a!!oran!" 3it, t,"
s1"!i+i! r"Eu"st or as n"!"ssar# +or t," 1ur1os" o+ 1"r+or*ing t,"
s"r$i!"s it 3as "ngag" to 1"r+or*.
CHAPTE5 II
LE>AL 5ECO>NITION OF ELECT5ONIC I5ITIN>
O5 DOC;&ENT AND DATA &ESSA>ES
S"!. 6. L"gal 5"!ognition o+ Data &"ssag"s. 0 In+or*ation
s,all not b" "ni" l"gal "++"!t% $aliit# or "n+or!"abilit# sol"l# on
t," grouns t,at it is in t," ata *"ssag" 1ur1orting to gi$" ris"
to su!, l"gal "++"!t% or t,at it is *"r"l# r"+"rr" to in t,at "l"!troni!
ata *"ssag".
S"!. C. L"gal 5"!ognition o+ El"!troni! Do!u*"nts. 0 El"!troni!
o!u*"nts s,all ,a$" t," l"gal "++"!t% $aliit# or "n+or!"abilit# as an#
ot,"r o!u*"nt or l"gal 3riting% an .
(a) I,"r" t," la3 r"Euir"s a o!u*"nt to b" in 3riting% t,at
r"Euir"*"nt is *"t b# an "l"!troni! o!u*"nt i+ t," sai "l"!troni!
o!u*"nt *aintains its int"grit# an r"liabilit# an !an b" aut,"n.
ti!at" so as to b" usabl" +or subs"Eu"nt r"+"r"n!"% in t,at 0
(i) T," "l"!troni! o!u*"nt ,as r"*ain" !o*1l"t" an
unalt"r"% a1art +ro* t," aition o+ an# "nors"*"nt an an#
aut,oriH" !,ang"% or an# !,ang" 3,i!, aris"s in t," nor*al
!ours" o+ !o**uni!ation% storag" an is1la#2 an
(ii) T," "l"!troni! o!u*"nt is r"liabl" in t," lig,t o+ t,"
1ur1os" +or 3,i!, it 3as g"n"rat" an in t," lig,t o+ all t,"
r"l"$ant !ir!u*stan!"s.
(b) Paragra1, (a) a11li"s 3,"t,"r t," r"Euir"*"nt t,"r"in
is in t," +or* o+ an obligation or 3,"t,"r t," la3 si*1l# 1ro$i"s
!ons"Eu"n!"s +or t," o!u*"nt not b"ing 1r"s"nt" or r"tain" in its
original +or*.
(!) I,"r" t," la3 r"Euir"s t,at a o!u*"nt b" 1r"s"nt" or
r"tain" in its original +or*% t,at r"Euir"*"nt is *"t b# an "l"!troni!
APPENDIN
o!u*"nt i+ 0
(i) T,"r" "4ists a r"liabl" assuran!" as to t," int"grit#
APPENDIN
o+ t," o!u*"nt +ro* t," ti*" 3,"n it 3as +irst g"n"rat" in
its +inal +or*2 an
(ii) T,at o!u*"nt is !a1abl" o+ b"ing is1la#" to t,"
1"rson to 3,o* it is to b" 1r"s"nt"' Pro$i"% T,at no
1ro$ision o+ t,is A!t s,all a11l# to $ar# an# an all
r"Euir"*"nts o+ "4ist. ing la3s on +or*aliti"s r"Euir" in t,"
"4"!ution o+ o!u*"nts +or t,"ir $aliit#.
For "$i"ntiar# 1ur1os"s% an "l"!troni! o!u*"nt s,all b" t,"
+un!tional "Eui$al"nt o+ a 3ritt"n o!u*"nt un"r "4isting la3s.
T,is A!t o"s not *oi+# an# statutor# rul" r"lating to t,"
a*is. sibilit# o+ "l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts%
"4!"1t t," rul"s r"lating to aut,"nti!ation an b"st "$i"n!".
S"!. B. L"gal 5"!ognition o+ El"!troni! Signatur"s. 0 An "l"!.
troni! signatur" on t," "l"!troni! o!u*"nt s,all b" "Eui$al"nt to
t," signatur" o+ a 1"rson on a 3ritt"n o!u*"nt i+ t,at signatur" is
1ro$" b# s,o3ing t,at a 1r"s!rib" 1ro!"ur"% not alt"rabl" b# t,"
1arti"s int"r"st" in t," "l"!troni! o!u*"nt% "4ist" un"r 3,i!,
0
(a) A *"t,o is us" to i"nti+# t," 1art# soug,t to b" boun
an to ini!at" sai 1art#8s a!!"ss to t," "l"!troni! o!u*"nt n"!"s.
sar# +or ,is !ons"nt or a11ro$al t,roug, t," "l"!troni! signatur"2
(b) Sai *"t,o is r"liabl" an a11ro1riat" +or t," 1ur1os"
+or 3,i!, t," "l"!troni! o!u*"nt 3as g"n"rat" or !o**uni!at"% in
t," lig,t o+ all t," !ir!u*stan!"s% in!luing an# r"l"$ant
agr""*"nt2
(!) It is n"!"ssar# +or t," 1art# soug,t to b" boun% in or"r
to 1ro!"" +urt,"r 3it, t," transa!tion% to ,a$" "4"!ut" or
1ro$i" t," "l"!troni! signatur"2 an
() T," ot,"r 1art# is aut,oriH" an "nabl" to $"ri+# t,"
"l"!troni! signatur" an to *a<" t," "!ision to 1ro!"" 3it, t,"
transa!tion aut,"nti!at" b# t," sa*".
S"!. A. Pr"su*1tion 5"lating to El"!troni! Signatur"s. 0 In
an# 1ro!""ings in$ol$ing an "l"!troni! signatur"% it s,all b"
1r"su*" t,at 0
APPENDIN
(a) T," "l"!troni! signatur" is t," signatur" o+ t," 1"rson to
3,o* it !orr"lat"s2 an
(b) T," "l"!troni! signatur" 3as a++i4" b# t,at 1"rson 3it,
t," int"ntion o+ signing or a11ro$ing t," "l"!troni! o!u*"nt unl"ss
APPENDIN
t," 1"rson r"l#ing on t," "l"!troni!all# sign" "l"!troni! o!u*"nt
<no3s or ,as noti!" o+ "+"!ts in or unr"liabilit# o+ t," signatur"
or r"lian!" on t," "l"!troni! signatur" is not r"asonabl" un"r t,"
!ir!u*stan!"s.
SEC. 1?. Original Do!u*"nts. 0 (1) I,"r" t," la3 r"Euir"s
in+or*ation to b" 1r"s"nt" or r"tain" in its original +or*% t,at
r"Euir"*"nt is *"t b# an "l"!troni! ata *"ssag" or "l"!troni! o!u.
*"nt i+'
(a) t," int"grit# o+ t," in+or*ation +ro* t," ti*" 3,"n
it 3as +irst g"n"rat" in its +inal +or*% as an "l"!troni! ata
*"ssag" or "l"!troni! o!u*"nt is s,o3n b# "$i"n!" aliun"
or ot,"r3is"2 an
(b) 3,"r" it is r"Euir" t,at in+or*ation b" 1r"s"nt"%
t,at t," in+or*ation is !a1abl" o+ b"ing is1la#" to t," 1"rson
to 3,o* it is to b" 1r"s"nt".
(6) Paragra1, (1) a11li"s 3,"t,"r t," r"Euir"*"nt t,"r"in
!ons"Eu"n!"s +or t," in+or*ation not b"ing 1r"s"nt" or r"tain" in
its original +or*.
(9) For t," 1ur1os"s o+ sub1aragra1, (a) o+ 1aragra1, (1)'
(a) t," !rit"ria +or ass"ssing int"grit# s,all b" 3,"t,"r
t," in+or*ation ,as r"*ain" !o*1l"t" an unalt"r"% a1art
+ro* t," aition o+ an# "nors"*"nt an an# !,ang" 3,i!,
aris"s in t," nor*al !ours" o+ !o**uni!ation% storag" an is.
1la#2 an
(b) t," stanar o+ r"liabilit# r"Euir" s,all b" ass"ss"
in t," lig,t o+ t," 1ur1os" +or 3,i!, t," in+or*ation 3as g"n"r.
at" an in t," lig,t o+ all r"l"$ant !ir!u*stan!"s.
SEC. 11. Aut,"nti!ation o+ El"!troni! Data &"ssag"s an El"!.
troni! Do!u*"nts. 0 ;ntil t," Su1r"*" Court b# a11ro1riat" rul"s
s,all ,a$" so 1ro$i"% "l"!troni! o!u*"nts% "l"!troni! ata
*"ssag"s an "l"!troni! signatur"s% s,all b" aut,"nti!at" b#
"*onstrating% substantiating an $aliating a !lai*" i"ntit# o+ a
us"r% "$i!"% or anot,"r "ntit# in an in+or*ation or !o**uni!ation
s#st"*% a*ong ot,"r 3a#s% as +ollo3s'
APPENDIN
(a) T," "l"!troni! signatur" s,all b" aut,"nti!at" b# 1roo+
t,at a l"tt"r% !,ara!t"r% nu*b"r or ot,"r s#*bol in "l"!troni! +or*
APPENDIN
r"1r"s"nting t," 1"rsons na*" in an atta!," to or logi!all# asso.
!iat" 3it, an "l"!troni! ata *"ssag"% "l"!troni! o!u*"nt% or
t,at t," a11ro1riat" *"t,oolog# or s"!urit# 1ro!"ur"s% 3,"n
a11li!abl"% 3"r" "*1lo#" or ao1t" b# a 1"rson an "4"!ut" or
ao1t" b# su!, 1"rson% 3it, t," int"ntion o+ aut,"nti!ating or
a11ro$ing an "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt2
(b) T," "l"!troni! ata *"ssag" an "l"!troni! o!u*"nt
s,all b" aut,"nti!at" b# 1roo+ t,at an a11ro1riat" s"!urit#
1ro!"ur"% 3,"n a11li!abl" 3as ao1t" an "*1lo#" +or t,"
1ur1os" o+ $"ri+#. ing t," originator o+ an "l"!troni! ata *"ssag"
anUor "l"!troni! o!u. *"nt% or "t"!ting "rror or alt"ration in t,"
!o**uni!ation% !ont"nt or storag" o+ an "l"!troni! o!u*"nt or
"l"!troni! ata *"ssag" +ro* a s1"!i+i! 1oint% 3,i!,% using
algorit,* or !o"s% i"nti+#ing 3ors or nu*b"rs% "n!r#1tions%
ans3"rs ba!< or a!<no3l"g*"nt 1ro!"ur"s% or si*ilar s"!urit#
"$i!"s.
T," Su1r"*" Court *a# ao1t su!, ot,"r aut,"nti!ation
1ro!"ur"s% in!luing t," us" o+ "l"!troni! notariHation s#st"*s as
n"!"ssar# an a$isabl"% as 3"ll as t," !"rti+i!at" o+ aut,"nti!ation
on 1rint" or ,ar !o1i"s o+ t," "l"!troni! o!u*"nt or "l"!troni!
ata *"ssag"s b# "l"!troni! notari"s% s"r$i!" 1ro$i"rs an ot,"r
ul# r"!ogniH" or a11oint" !"rti+i!ation aut,oriti"s.
T," 1"rson s""<ing to introu!" an "l"!troni! ata *"ssag"
an "l"!troni! o!u*"nt in an# l"gal 1ro!""ing ,as t," bur"n o+
1ro$ing its aut,"nti!it# b# "$i"n!" !a1abl" o+ su11orting a +ining
t,at t," "l"!troni! ata *"ssag" an "l"!troni! o!u*"nt is 3,at
t," 1"rson !lai*s it to b".
In t," abs"n!" o+ "$i"n!" to t," !ontrar#% t," int"grit# o+ t,"
in+or*ation an !o**uni!ation s#st"* in 3,i!, an "l"!troni! ata
*"ssag" or "l"!troni! o!u*"nt is r"!or" or stor" *a# b" "stab.
lis," in an# l"gal 1ro!""ing 0
(a) 7# "$i"n!" t,at at all *at"rial ti*"s t," in+or*ation
an !o**uni!ation s#st"* or ot,"r si*ilar "$i!" 3as o1"rating in
a *ann"r t,at i not a++"!t t," int"grit# o+ t," "l"!troni! ata
*"s. sag" anUor "l"!troni! o!u*"nt% an t,"r" ar" no ot,"r
r"asonabl" grouns to oubt t," int"grit# o+ t," in+or*ation an
!o**uni!ation s#st"*2
APPENDIN
(b) 7# s,o3ing t,at t," "l"!troni! ata *"ssag" anUor "l"!.
troni! o!u*"nt 3as r"!or" or stor" b# a 1art# to t,"
1ro!""ings 3,o is a$"rs" in int"r"st to t," 1art# using it2 or
APPENDIN
(!) 7# s,o3ing t,at t," "l"!troni! ata *"ssag" anUor "l"!.
troni! o!u*"nt 3as r"!or" or stor" in t," usual an orinar#
!ours" o+ busin"ss b# a 1"rson 3,o is not a 1art# to t," 1ro!""ings
an 3,o i not a!t un"r t," !ontrol o+ t," 1art# using t," r"!or.
SEC. 16. A*issibilit# an E$i"ntial I"ig,t o+ El"!troni!
Data &"ssag" an El"!troni! Do!u*"nts. 0 In an# l"gal 1ro!""ings%
not,ing in t," a11li!ation o+ t," rul"s on "$i"n!" s,all "n# t,"
a*issibilit# o+ an "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt
in "$i"n!" 0
a. On t," sol" groun t,at it is in "l"!troni! +or*2 or
b. On t," groun t,at it is not in t," stanar 3ritt"n +or*
an "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt *""ting% an
!o*1l#ing 3it, t," r"Euir"*"nts un"r S"!tions 6 or C ,"r"o+ s,all
b" t," b"st "$i"n!" o+ t," agr""*"nt an transa!tion !ontain"
t,"r"in.
In ass"ssing t," "$i"ntial 3"ig,t o+ an "l"!troni! ata
*"ssag" or "l"!troni! o!u*"nt% t," r"liabilit# o+ t," *ann"r in
3,i!, it 3as g"n"rat"% stor" or !o**uni!at"% t," r"liabilit# o+
t," *ann"r in 3,i!, its originator 3as i"nti+i"% an ot,"r
r"l"$ant +a!tors s,all b" gi$"n u" r"gar.
SEC. 19. 5"t"ntion o+ El"!troni! Data &"ssag" an El"!troni!
Do!u*"nt. 0 Not3it,staning an# 1ro$ision o+ la3% rul" or
r"gulation to t," !ontrar# 0
(a) T," r"Euir"*"nt in an# 1ro$ision o+ la3 t,at !"rtain
o!u*"nts b" r"tain" in t,"ir original +or* is satis+i" b# r"taining
t,"* in t," +or* o+ an "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt 3,i!, 0
i. 5"*ains a!!"ssibl" so as to b" usabl" +or subs"Eu"nt
r"+"r"n!"2
ii. Is r"tain" in t," +or*at in 3,i!, it 3as g"n"rat"%
s"nt or r"!"i$"% or in a +or*at 3,i!, !an b" "*onstrat" to
a!!urat"l# r"1r"s"nt t," "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt g"n"rat"% s"nt or r"!"i$"2
iii. Enabl"s t," i"nti+i!ation o+ its originator an a.
APPENDIN
r"ss""% as 3"ll as t," "t"r*ination o+ t," at" an t," ti*"
it 3as s"nt or r"!"i$".
APPENDIN
(b) T," r"Euir"*"nt r"+"rr" to in 1aragra1, (a) is satis+i"
b# using t," s"r$i!"s o+ a t,ir 1art#% 1ro$i" t,at t," !onitions
s"t +ort, in sub1aragra1,s (i)% (ii) an (iii) o+ 1aragra1, (a) ar" *"t.
SEC. 1@. Proo+ 7# A++ia$it. 0 T," *att"rs r"+"rr" to in S"!tion
16% on a*issibilit# an S"!tion A% on t," 1r"su*1tion o+ int"grit#%
*a# b" 1r"su*" to ,a$" b""n "stablis," b# an a++ia$it gi$"n to
t," b"st o+ t," "1on"nt8s <no3l"g" subj"!t to t," rig,ts o+ 1arti"s
in int"r"st as "+in" in t," +ollo3ing s"!tion.
SEC. 15. Cross.E4a*ination. 0 (1) A "1on"nt o+ an a++ia$it
r"+"rr" to in S"!tion 1@ t,at ,as b""n introu!" in "$i"n!" *a#
b" !ross."4a*in" as o+ rig,t b# a 1art# to t," 1ro!""ings 3,o is
a$"rs" in int"r"st to t," 1art# 3,o ,as introu!" t," a++ia$it or
,as !aus" t," a++ia$it to b" introu!".
(6) An# 1art# to t," 1ro!""ings ,as t," rig,t to !ross.
"4a*in" a 1"rson r"+"rr" to in S"!tion 11% 1aragra1, @% sub.
1aragra1, !.
CHAPTE5 III CO&&;NICATION OF
ELECT5ONIC DATA
&ESSA>ES AND ELECT5ONIC DOC;&ENTS
SEC. 16. For*ation an Valiit# o+ El"!troni! Contra!ts. 0 (1)
E4!"1t as ot,"r3is" agr"" b# t," 1arti"s% an o++"r% t," a!!"1tan!"
o+ an o++"r an su!, ot,"r "l"*"nts r"Euir" un"r "4isting la3s +or
t," +or*ation o+ !ontra!ts *a# b" "41r"ss" in% "*onstrat" an
1ro$" b# *"ans o+ "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nts an no !ontra!t s,all b" "ni" $aliit# or "n+or!"abilit#
on t," sol" groun t,at it is in t," +or* o+ an "l"!troni! ata *"ssag"
or "l"!troni! o!u*"nt% or t,at an# or all o+ t," "l"*"nts r"Euir"
un"r "4isting la3s +or t," +or*ation o+ t," !ontra!ts is
"41r"ss"% "*onstrat" an 1ro$" b# *"ans o+ "l"!troni!
o!u*"nts.
(6) El"!troni! transa!tions *a" t,roug, n"t3or<ing a*ong
ban<s% or lin<ag"s t,"r"o+ 3it, ot,"r "ntiti"s or n"t3or<s% an $i!"
$"rsa% s,all b" ""*" !onsu**at" u1on t," a!tual is1"nsing
APPENDIN
o+ !as, or t," "bit o+ on" a!!ount an t," !orr"s1oning !r"it to
anot,"r% 3,"t,"r su!, transa!tion is initiat" b# t," "1ositor or b#
an aut,oriH" !oll"!ting 1art#' Pro$i"% t,at t," obligation o+ on"
ban<% "ntit#% or 1"rson si*ilarl# situat" to anot,"r arising
t,"r"+ro*
APPENDIN
s,all b" !onsi"r" absolut" an s,all not b" subj"!t" to t," 1ro!"ss
o+ 1r"+"r"n!" o+ !r"its.
SEC. 1C. 5"!ognition b# Parti"s o+ El"!troni! Data &"ssag" or
El"!troni! Do!u*"nt. 0 As b"t3""n t," originator an t,"
ar"ss"" o+ an "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt% a
"!laration o+ 3ill or ot,"r stat"*"nt s,all not b" "ni" l"gal "++"!t%
$aliit# or "n+or!"abilit# sol"l# on t," groun t,at it is in t," +or* o+
a "l"!troni! ata *"ssag".
SEC. 1B. Attribution o+ El"!troni! Data &"ssag". 0 (1) An "l"!.
troni! ata *"ssag" or "l"!troni! o!u*"nt is t,at o+ t," originator
i+ it 3as s"nt b# t," originator ,i*s"l+.
(6) As b"t3""n t," originator an t," ar"ss""% an "l"!troni!
ata *"ssag" or "l"!troni! o!u*"nt is ""*" to b" t,at o+ t,"
originator i+ it 3as s"nt'
(a) b# a 1"rson 3,o ,a t," aut,orit# to a!t on b",al+ o+
t," originator 3it, r"s1"!t to t,at "l"!troni! ata *"ssag" or
"l"!troni! o!u*"nt2 or
(b) b# an in+or*ation s#st"* 1rogra**" b#% or on b".
,al+ o+ t," originator to o1"rat" auto*ati!all#.
(9) As b"t3""n t," originator an t," ar"ss""% an ar"ss""
is "ntitl" to r"gar an "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt as b"ing t,at o+ t," originator% an to a!t on t,at
assu*1tion% i+'
(a) in or"r to as!"rtain 3,"t,"r t," "l"!troni! ata
*"ssag" or"l"!troni! o!u*"nt 3as t,at o+ t," originator% t,"
ar"ss"" 1ro1"rl# a11li" a 1ro!"ur" 1r"$iousl# agr"" to b#
t," originator +or t,at1ur1os"2 or
(b) t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt
as r"!"i$" b# t," ar"ss"" r"sult" +ro* t," a!tions o+ a
1"rson 3,os" r"lations,i1 3it, t," originator or 3it, an#
ag"nt o+ t," originator "nabl" t,at 1"rson to gain a!!"ss to a
*"t,o us" b# t," originator to i"nti+# "l"!troni! ata
*"ssag"s as ,is o3n.
(@) Paragra1, (9) o"s not a11l#'
(a) as o+ t," ti*" 3,"n t," ar"ss"" ,as bot, r"!"i$"
APPENDIN
noti!" +ro* t," originator t,at t," "l"!troni! ata *"ssag" or
"l"!troni! o!u*"nt is not t,at o+ t," originator% an ,as r"a.
sonabl" ti*" to a!t a!!oringl#2 or
APPENDIN
(b) in a !as" 3it,in 1aragra1, (9) sub.1aragra1, (b)% at
an# ti*" 3,"n t," ar"ss"" <n"3 or s,oul ,a$" <no3n% ,a
it "4"r!is" r"asonabl" !ar" or us" an# agr"" 1ro!"ur"%
t,at t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt 3as not
t,at o+ t," originator.
(5) I,"r" an "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt
is t,at o+ t," originator or is ""*" to b" t,at o+ t," originator% or
t," ar"ss"" is "ntitl" to a!t on t,at assu*1tion% t,"n% as
b"t3""n t," originator an t," ar"ss""% t," ar"ss"" is "ntitl"
to r"gar t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt as
r"!"i$" as b"ing 3,at t," originator int"n" to s"n% an to a!t on
t,at assu*1tion. T," ar"ss"" is not so "ntitl" 3,"n it <n"3 or
s,oul ,a$" <no3n% ,a it "4"r!is" r"asonabl" !ar" or us" an#
agr"" 1ro!"ur"% t,at t," trans*ission r"sult" in an# "rror in t,"
"l"!troni! ata *"ssag" or "l"!troni! o!u*"nt as r"!"i$".
(6) T," ar"ss"" is "ntitl" to r"gar "a!, "l"!troni! ata
*"ssag" or "l"!troni! o!u*"nt r"!"i$" as a s"1arat" "l"!troni!
ata *"ssag" or "l"!troni! o!u*"nt an to a!t on t,at
assu*1tion% "4!"1t to t," "4t"nt t,at it u1li!at"s anot,"r
"l"!troni! ata *"s. sag" or "l"!troni! o!u*"nt an t," ar"ss""
<n"3 or s,oul ,a$" <no3n% ,a it "4"r!is" r"asonabl" !ar" or
us" an# agr"" 1ro!". ur"% t,at t," "l"!troni! ata *"ssag" or
"l"!troni! o!u*"nt 3as a u1li!at".
SEC. 1A. Error on El"!troni! Data &"ssag" or El"!troni! Do!u.
*"nt. 0 T," ar"ss"" is "ntitl" to r"gar t," "l"!troni! ata
*"s. sag" or "l"!troni! o!u*"nt r"!"i$" as t,at 3,i!, t,"
originator int"n" to s"n% an to a!t on t,at assu*1tion% unl"ss
t," ar"ss"" <n"3 or s,oul ,a$" <no3n% ,a t," ar"ss""
"4"r!is" r"asonabl" !ar" or us" t," a11ro1riat" 1ro!"ur" .
(a) T,at t," trans*ission r"sult" in an# "rror t,"r"in or in
t," "l"!troni! o!u*"nt 3,"n t," "l"!troni! ata *"ssag" or "l"!.
troni! o!u*"nt "nt"rs t," "signat" in+or*ation s#st"*% or
(b) T,at "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt is
s"nt to an in+or*ation s#st"* 3,i!, is not so "signat" b# t,"
ar"ss"" +or t," 1ur1os"s.
SEC. 6?. Agr""*"nt on A!<no3l"g*"nt o+ 5"!"i1t o+ El"!troni!
APPENDIN
Data &"ssag"s or El"!troni! Do!u*"nts. 0 T," +ollo3ing rul"s s,all
a11l# 3,"r"% on or b"+or" s"ning an "l"!troni! ata *"ssag" or
"l"!.
APPENDIN
troni! o!u*"nt% t," originator an t," ar"ss"" ,a$" agr""% or in
t,at "l"!troni! o!u*"nt or "l"!troni! ata *"ssag"% t,"
originator ,as r"Eu"st"% t,at r"!"i1t o+ t," "l"!troni! o!u*"nt or
"l"!troni! ata *"ssag" b" a!<no3l"g"'
(a) I,"r" t," originator ,as not agr"" 3it, t," ar"ss""
t,at t," a!<no3l"g*"nt b" gi$"n in a 1arti!ular +or* or b# a 1ar.
ti!ular *"t,o% an a!<no3l"g*"nt *a# b" gi$"n b# or t,roug, an#
!o**uni!ation b# t," ar"ss""% auto*at" or ot,"r3is"% or an#
!on. u!t o+ t," ar"ss""% su++i!i"nt to ini!at" to t," originator
t,at t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt ,as b""n
r"!"i$".
(b) I,"r" t," originator ,as stat" t,at t," "++"!t or sig.
ni+i!an!" o+ t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt is
!onitional on r"!"i1t o+ t," a!<no3l"g*"nt t,"r"o+% t," "l"!troni!
ata *"ssag" or "l"!troni! o!u*"nt is tr"at" as t,oug, it ,as
n"$"r b""n s"nt% until t," a!<no3l"g*"nt is r"!"i$".
(!) I,"r" t," originator ,as not stat" t,at t," "++"!t or
signi+i!an!" o+ t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt
is !onitional on r"!"i1t o+ t," a!<no3l"g*"nt% an t," a!<no3l.
"g*"nt ,as not b""n r"!"i$" b# t," originator 3it,in t," ti*"
s1"!i+i" or agr"" or% i+ no ti*" ,as b""n s1"!i+i" or agr""% 3it,in
a r"asonabl" ti*"% t," originator *a# gi$" noti!" to t," ar"ss""
stating t,at no a!<no3l"g*"nt ,as b""n r"!"i$" an s1"!i+#ing a
r"asonabl" ti*" b# 3,i!, t," a!<no3l"g*"nt *ust b" r"!"i$"2 an
i+ t," a!<no3l"g*"nt is not r"!"i$" 3it,in t," ti*" s1"!i+i" in
sub1aragra1, (!)% t," originator *a#% u1on noti!" to t," ar"ss""%
tr"at t," "l"!troni! o!u*"nt or "l"!troni! ata *"ssag" as t,oug,
it ,a n"$"r b""n s"nt% or "4"r!is" an# ot,"r rig,ts it *a# ,a$".
SEC. 61. Ti*" o+ Dis1at!, o+ El"!troni! Data &"ssag"s or El"!.
troni! Do!u*"nts. 0 ;nl"ss ot,"r3is" agr"" b"t3""n t,"
originator an t," ar"ss""% t," is1at!, o+ an "l"!troni! ata
*"ssag" or "l"!. troni! o!u*"nt o!!urs 3,"n it "nt"rs an
in+or*ation s#st"* outsi" t," !ontrol o+ t," originator or o+ t,"
1"rson 3,o s"nt t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt
on b",al+ o+ t," originator.
SEC. 66. Ti*" o+ 5"!"i1t o+ El"!troni! Data &"ssag"s or El"!.
troni! Do!u*"nts. 0 ;nl"ss ot,"r3is" agr"" b"t3""n t,"
APPENDIN
originator an t," ar"ss""% t," ti*" o+ r"!"i1t o+ an "l"!troni!
ata *"ssag" or "l"!troni! o!u*"nt is as +ollo3s'
(a) I+ t," ar"ss"" ,as "signat" an in+or*ation s#st"* +or
t," 1ur1os" o+ r"!"i$ing "l"!troni! ata *"ssag" or "l"!troni!
o!u.
APPENDIN
*"nt% r"!"i1t o!!urs at t," ti*" 3,"n t," "l"!troni! ata *"ssag"
or "l"!troni!o!u*"nt "nt"rs t," "signat" in+or*ation s#st"*'
Pro$i"% ,o3"$"r% t,at i+ t," originator an t," ar"ss"" ar" bot,
1arti!i1ants in t," "signat" in+or*ation s#st"*% r"!"i1t o!!urs at
t," ti*" 3,"n t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt is
r"tri"$" b# t," ar"ss"".
(b) I+ t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt is
s"nt to an in+or*ation s#st"* o+ t," ar"ss"" t,at is not t,"
"signat" in+or*ation s#st"*% r"!"i1t o!!urs at t," ti*" 3,"n t,"
"l"!troni! ata *"ssag" or"l"!troni! o!u*"nt is r"tri"$" b# t,"
ar"ss""2
(!) I+ t," ar"ss"" ,as not "signat" an in+or*ation
s#st"*% r"!"i1t o!!urs 3,"n t," "l"!troni! ata *"ssag" or
"l"!troni! o!u. *"nt "nt"rs an in+or*ation s#st"* o+ t,"
ar"ss"".
T,"s" rul"s a11l# not3it,staning t,at t," 1la!" 3,"r" t,"
in+or*ation s#st"* is lo!at" *a# b" i++"r"nt +ro* t," 1la!" 3,"r"
t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt is ""*" to b"
r"!"i$".
SEC. 69. Pla!" o+ Dis1at!, an 5"!"i1t o+ El"!troni! Data &"s.
sag"s or El"!troni! Do!u*"nts. 0 ;nl"ss ot,"r3is" agr"" b"t3""n
t," originator an t," ar"ss""% an "l"!troni! ata *"ssag" or "l"!.
troni! o!u*"nt is ""*" to b" is1at!," at t," 1la!" 3,"r" t,"
originator ,as its 1la!" o+ busin"ss an r"!"i$" at t," 1la!" 3,"r"
t," ar"ss"" ,as its 1la!" o+ busin"ss. T,is rul" s,all a11l# "$"n i+
t," originator or ar"ss"" ,a us" a la1to1 or ot,"r 1ortabl" ".
$i!" to trans*it or r"!"i$" ,is "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt. T,is rul" s,all also a11l# to "t"r*in" t," ta4 situs o+
su!, transa!tion.
For t," 1ur1os" ,"r"o+ 0
a. I+ t," originator or t," ar"ss"" ,as *or" t,an on" 1la!"
o+ busin"ss%t," 1la!" o+ busin"ss is t,at 3,i!, ,as t," !los"st
r"lation. s,i1 to t," un"rl#ing transa!tion or% 3,"r" t,"r" is no
un"rl#ing transa!tion% t," 1rin!i1al 1la!" o+ busin"ss.
b. I+ t," originator o+ t," ar"ss"" o"s not ,a$" a 1la!" o+
APPENDIN
busin"ss% r"+"r"n!" is to b" *a" to its ,abitual r"si"n!"2 or
!. T," -usual 1la!" o+ r"si"n!"/ in r"lation to a bo# !or1o.
rat"% *"ans t," 1la!" 3,"r" it is in!or1orat" or ot,"r3is" l"gall#
!onstitut".
APPENDIN
SEC. 6@. C,oi!" o+ S"!urit# &"t,os. 0 Subj"!t to a11li!abl"
la3s anUor rul"s an gui"lin"s 1ro*ulgat" b# t," D"1art*"nt o+
Tra" an Inustr# 3it, ot,"r a11ro1riat" go$"rn*"nt ag"n!i"s% 1ar.
ti"s to an# "l"!troni! transa!tion s,all b" +r"" to "t"r*in" t," t#1"
an l"$"l o+ "l"!troni! ata *"ssag" an "l"!troni! o!u*"nt s"!urit#
n"""% an to s"l"!t an us" or i*1l"*"nt a11ro1riat"
t"!,nologi!al *"t,os t,at suit t,"ir n""s.
PA5T III
ELECT5ONIC CO&&E5CE IN SPECIFIC A5EAS
CHAPTE5 I.
CA55IA>E OF >OODS
SEC. 65. A!tions 5"lat" to Contra!ts o+ Carriag" o+ >oos.
0 Iit,out "rogating +ro* t," 1ro$isions o+ 1art t3o o+ t,is la3%
t,is !,a1t"r a11li"s to an# a!tion in !onn"!tion 3it,% or in
1ursuan!" o+% a !ontra!t o+ !arriag" o+ goos% in!luing but not
li*it" to'
(a) (i) +urnis,ing t," *ar<s% nu*b"r% Euantit# or 3"ig,t o+
goos2
(ii) stating or "!laring t," natur" or $alu" o+ goos2
(iii) issuing a r"!"i1t +or goos2
(i$) !on+ir*ing t,at goos ,a$" b""n loa"2
(b) (i) noti+#ing a 1"rson o+ t"r*s an !onitions o+ t,"
!ontra!t2
(ii) gi$ing instru!tions to a !arri"r2
(!) (i) !lai*ing "li$"r# o+ goos2
(ii) aut,oriHing r"l"as" o+ goos2
(iii) gi$ing noti!" o+ loss o+% or a*ag" to% goos2
() gi$ing an# ot,"r noti!" or stat"*"nt in !onn"!tion 3it,
t," 1"r+or*an!" o+ t," !ontra!t2
APPENDIN
(") un"rta<ing to "li$"r goos to a na*" 1"rson or a 1"r.
son
APPENDIN
(+) granting% a!Euiring% r"noun!ing% surr"n"ring%
trans+"rring or n"gotiating rig,ts in goos2
(g) a!Euiring or trans+"rring rig,ts an obligations un"r
t," !ontra!t.
SEC. 66. Trans1ort Do!u*"nts. 0 (1) I,"r" t," la3 r"Euir"s
t,at an# a!tion r"+"rr" to !ontra!t o+ !arriag" o+ goos b" !arri"
out in 3riting or b# using a 1a1"r o!u*"nt% t,at r"Euir"*"nt is
*"t i+ t," a!tion is !arri" out b# using on" or *or" ata *"ssag"s
or "l"!troni! o!u*"nts.
(6) Paragra1, (1) a11li"s 3,"t,"r t," r"Euir"*"nt t,"r"in
!ons"Eu"n!"s +or +ailing "it,"r to !arr# out t," a!tion in 3riting or
to us" a 1a1"r o!u*"nt.
(9) I+ a rig,t is to b" grant" to% or an obligation is to b" a!.
Euir" b#% on" 1"rson an no ot,"r 1"rson% an i+ t," la3 r"Euir"s
t,at% in or"r to "++"!t t,is% t," rig,t or obligation *ust b" !on$"#"
to t,at 1"rson b# t," trans+"r% or us" o+% a 1a1"r o!u*"nt% t,at r".
Euir"*"nt is *"t i+ t," rig,t or obligation is !on$"#" b# using on"
or *or" "l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts uniEu"2
(@) For t," 1ur1os"s o+ 1aragra1, (9)% t," stanar o+ r"li.
abilit# r"Euir" s,all b" ass"ss" in t," lig,t o+ t," 1ur1os" +or
3,i!, t," rig,t or obligation 3as !on$"#" an in t," lig,t o+ all t,"
!ir!u*stan!"s% in!luing an# r"l"$ant agr""*"nt.
(5) I,"r" on" or *or" ata *"ssag"s ar" us" to "++"!t an#
a!tion in sub1aragra1,s (+) an (g) o+ S"!tion 65% no 1a1"r o!u*"nt
us" to "++"!t an# su!, a!tion is $ali unl"ss t," us" o+ "l"!troni!
ata *"ssag" or "l"!troni! o!u*"nt ,as b""n t"r*inat" an
r"1la!" b# t," us" o+ 1a1"r o!u*"nts. A 1a1"r o!u*"nt issu"
in t,"s" !ir!u*stan!"s s,all !ontain a stat"*"nt o+ su!,
t"r*ination. T," r"1la!"*"nt o+ "l"!troni! ata *"ssag"s or
"l"!troni! o!u*"nts b# 1a1"r o!u*"nts s,all not a++"!t t," rig,ts
or obligations o+ t," 1ar. ti"s in$ol$".
(6) I+ a rul" o+ la3 is !o*1ulsoril# a11li!abl" to a !ontra!t o+
!arriag" o+ goos 3,i!, is in% or is "$i"n!" b#% a 1a1"r o!u*"nt%
t,at rul" s,all not b" ina11li!abl" to su!, a !ontra!t o+ !arriag" o+
APPENDIN
goos 3,i!, is "$i"n!" b# on" or *or" "l"!troni! ata *"ssag"s
or "l"!troni! o!u*"nts b# r"ason o+ t," +a!t t,at t," !ontra!t is
APPENDIN
"$i"n!" b# su!, "l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts
inst"a o+ b# a 1a1"r o!u*"nt.
PA5T IV
ELECT5ONIC T5ANSACTIONS IN >OVE5N&ENT
SEC. 6C. >o$"rn*"nt ;s" o+ El"!troni! Data &"ssag"s%
El"!troni! Do!u*"nts an El"!troni! Signatur"s. 0
Not3it,staning an# la3 to t," !ontrar#% 3it,in t3o (6) #"ars +ro*
t," at" o+ t," "++"!ti$it# o+ t,is A!t% all "1art*"nts% bur"aus%
o++i!"s an ag"n!i"s o+ t," go$"rn*"nt% as 3"ll as all go$"rn*"nt.
o3n" an.!ontroll" !or1ora. tions% t,at 1ursuant to la3 r"Euir" or
a!!"1t t," +iling o+ o!u*"nts% r"Euir" t,at o!u*"nts b" !r"at"%
or r"tain" anUor sub*itt"% issu" 1"r*its% li!"ns"s or !"rti+i!at"s
o+ r"gistration or a11ro$al% or 1ro$i" +or t," *"t,o an *ann"r
o+ 1a#*"nt or s"ttl"*"nt o+ +""s an ot,"r obligations to t,"
go$"rn*"nt% s,all 0
(a) a!!"1t t," !r"ation% +iling or r"t"ntion o+ su!, o!u*"nts
in t," +or* o+ "l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts2
(b) issu" 1"r*its% li!"ns"s% or a11ro$al in t," +or* o+
"l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts2
(!) r"Euir" anUor a!!"1t 1a#*"nts% an issu" r"!"i1ts a!.
<no3l"ging su!, 1a#*"nts% t,roug, s#st"*s using "l"!troni! ata
*"ssag"s or "l"!troni! o!u*"nts2 or
() transa!t t," go$"rn*"nt busin"ss anUor 1"r+or* go$.
"rn*"ntal +un!tions using "l"!troni! ata *"ssag"s or "l"!troni!
o!u*"nts% an +or t," 1ur1os"% ar" aut,oriH" to ao1t an
1ro*ul. gat"% a+t"r a11ro1riat" 1ubli! ,"aring an 3it, u"
1ubli!ation in n"3s1a1"rs o+ g"n"ral !ir!ulation% t," a11ro1riat"
rul"s% r"gulations% or gui"lin"s% to% a*ong ot,"rs% s1"!i+# 0
(1) t," *ann"r an +or*at in 3,i!, su!, "l"!troni! ata
*"ssag"s or "l"!troni! o!u*"nts s,all b" +il"% !r"at"%
r"tain" or issu"2
(6) 3,"r" an 3,"n su!, "l"!troni! ata *"ssag"s or
APPENDIN
"l"!troni! o!u*"nts ,a$" to b" sign"% t," us" o+ a "l"!troni!
signatur"% t," t#1" o+ "l"!troni! signatur" r"Euir"2
(9) t," +or*at o+ an "l"!troni! ata *"ssag" or "l"!troni!
APPENDIN
o!u*"nt an t," *ann"r t," "l"!troni! signatur" s,all b" a+.
+i4" to t," "l"!troni! ata *"ssag" or "l"!troni! o!u*"nt2
(@) t," !ontrol 1ro!"ss"s an 1ro!"ur"s as a11ro1riat"
to "nsur" a"Euat" int"grit#% s"!urit# an !on+i"ntialit# o+
"l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts or r"!ors or
1a#*"nts2
(5) ot,"r attribut"s r"Euir" o+ "l"!troni! ata
*"ssag"s or "l"!troni! o!u*"nts or 1a#*"nts2 an
(6) t," +ull or li*it" us" o+ t," o!u*"nts an 1a1"rs
+or !o*1lian!" 3it, t," go$"rn*"nt r"Euir"*"nts' Pro$i"%
T,at t,is A!t s,all b# its"l+ *anat" an# "1art*"nt o+ t,"
go$"rn*"nt% organ o+ stat" or statutor# !or1oration to a!!"1t
or issu" an# o!u*"nt in t," +or* o+ "l"!troni! ata *"ssag"s
or "l"!troni! o!u*"nts u1on t," ao1tion% 1ro*ulgation an
1ub. li!ation o+ t," a11ro1riat" rul"s% r"gulations% or
gui"lin"s.
SEC. 6B. 5PIE7 To Pro*ot" t," ;s" O+ El"!troni! Do!u*"nts
an El"!troni! Data &"ssag"s In >o$"rn*"nt an to t," >"n"ral
Publi!. 0 Iit,in t3o (6) #"ars +ro* t," "++"!ti$it# o+ t,is A!t% t,"r"
s,all b" install" an "l"!troni! onlin" n"t3or< in a!!oran!" 3it,
A*inistrati$" Or"r 996 an Hous" o+ 5"1r"s"ntati$"s 5"solution
BA?% ot,"r3is" <no3n as 5PIE7% to i*1l"*"nt Part IV o+ t,is A!t
to +a!ilitat" t," o1"n% s1""# an "++i!i"nt "l"!troni! onlin"
trans*is. sion% !on$"#an!" an us" o+ "l"!troni! ata *"ssag"s or
"l"!troni! o!u*"nts a*ongst all go$"rn*"nt "1art*"nts%
ag"n!i"s% bur"aus% o++i!"s o3n to t," i$ision l"$"l an to t,"
r"gional an 1ro$in!ial o++i!"s as 1ra!ti!abl" as 1ossibl"%
go$"rn*"nt o3n" an !ontroll" !or1orations% lo!al go$"rn*"nt
units% ot,"r 1ubli! instru*"ntaliti"s% uni$"rsiti"s% !oll"g"s an
ot,"r s!,ools% an uni$"rsal a!!"ss to t," g"n"ral 1ubli!.
T," 5PIE7 n"t3or< s,all s"r$" as initial 1lat+or* o+ t," go$.
"rn*"nt in+or*ation in+rastru!tur" (>II) to +a!ilitat" t," "l"!troni!
onlin" trans*ission an !on$"#an!" o+ go$"rn*"nt s"r$i!"s to
"$ol$" an i*1ro$" b# b"tt"r t"!,nologi"s or <ins o+ "l"!troni!
onlin" 3i" ar"a n"t3or<s utiliHing% but not li*it" to% +ib"r o1ti!%
sat"llit"% 3ir". l"ss an ot,"r broaban t"l"!o**uni!ation
APPENDIN
*"iu*s or *o"s. To +a!ilitat" t," ra1i "$"lo1*"nt o+ t," >II%
t," D"1art*"nt o+ Trans1ortation an Co**uni!ations%
National T"l"!o**uni!a. tions Co**ission an t," National
Co*1ut"r C"nt"r ar" ,"r"b#
APPENDIN
ir"!t" to aggr"ssi$"l# 1ro*ot" an i*1l"*"nt a 1oli!#
"n$iron*"nt an r"gulator# or non.r"gulator# +ra*"3or< t,at
s,all l"a to t," substantial r"u!tion o+ !osts o+ in!luing% but not
li*it" to% l"as" lin"s% lan% sat"llit" an ial.u1 t"l"1,on" a!!"ss%
!,"a1 broaban an 3ir"l"ss a!!"ssibilit# b# go$"rn*"nt
"1art*"nts% ag"n!i"s% bur"aus% o++i!"s% go$"rn*"nt o3n" an
!ontroll" !or1orations% lo. !al go$"rn*"nt units% ot,"r 1ubli!
instru*"ntaliti"s an t," g"n"ral 1ubli!% to in!lu" t,"
"stablis,*"nt o+ a go$"rn*"nt 3"bsit" 1ortal an a o*"sti!
int"rn"t "4!,ang" s#st"* to +a!ilitat" strat"gi! a!!"ss to
go$"rn*"nt an a*ongst ag"n!i"s t,"r"o+ an t," g"n"ral 1ubli!
an +or t," s1""i"r +lo3 o+ lo!all# g"n"rat" int"rn"t tra++i! 3it,in
t," P,ili11in"s.
T," 1,#si!al in+rastru!tur" o+ !abl" an 3ir"l"ss s#st"*s +or
!abl" TV an broa!ast "4!luing 1rogra**ing an !ont"nt an
t," *anag"*"nt t,"r"o+ s,all b" !onsi"r" as 3it,in t," a!ti$it#
o+ t"l"!o**uni!ations +or t," 1ur1os" o+ "l"!troni! !o**"r!" an to
*a4i*iH" t," !on$"rg"n!" o+ ICT in t," installation o+ t," >II.
SEC. 6A. Aut,orit# o+ t," D"1art*"nt o+ Tra" an Inustr#
an Parti!i1ating Entiti"s. 0 T," D"1art*"nt o+ Tra" an
Inustr# (DTI) s,all ir"!t an su1"r$is" t," 1ro*otion an
"$"lo1*"nt o+ "l"!troni! !o**"r!" in t," !ountr# 3it, r"l"$ant
go$"rn*"nt ag"n. !i"s% 3it,out 1r"jui!" to t," 1ro$isions o+
5"1ubli! A!t C659 (C,art"r o+ 7ang<o S"ntral ng Pili1inas) an
5"1ubli! A!t No. 99C (>"n"ral 7an<ing A!t)% as a*"n".
A*ong ot,"rs% t," DTI is "*1o3"r" to 1ro*ulgat" rul"s an
r"gulations% as 3"ll as 1ro$i" Eualit# stanars or issu" !"rti+i!a.
tions% as t," !as" *a# b"% an 1"r+or* su!, ot,"r +un!tions as *a#
b" n"!"ssar# +or t," i*1l"*"ntation o+ t,is A!t in t," ar"a o+
"l"!troni! !o**"r!" to in!lu"% but s,all not b" li*it" to% t,"
installation o+ an onlin" 1ubli! in+or*ation an Eualit# an 1ri!"
*onitoring s#st"* +or goos an s"r$i!"s ai*" in 1rot"!ting t,"
int"r"sts o+ t," !onsu*ing 1ubli! a$ailing o+ t," a$antag"s o+ t,is
A!t.
PA5T V
APPENDIN
FINAL P5OVISIONS
SEC. 9?. E4t"nt o+ Liabilit# o+ a S"r$i!" Pro$i"r. 0 E4!"1t as
ot,"r3is" 1ro$i" in t,is S"!tion% no 1"rson or 1art# s,all b" sub.
APPENDIN
j"!t to an# !i$il or !ri*inal liabilit# in r"s1"!t o+ t," "l"!troni! ata
*"ssag" or "l"!troni! o!u*"nt +or 3,i!, t," 1"rson or 1art# a!ting
as a s"r$i!" 1ro$i"r as "+in" in S"!tion 5 *"r"l# 1ro$i"s a!!"ss
i+ su!, liabilit# is +oun" on 0
(a) T," obligations an liabiliti"s o+ t," 1arti"s un"r t,"
"l"!troni! ata *"ssag" or "l"!troni! o!u*"nt2
(b) T," *a<ing% 1ubli!ation% iss"*ination or istribution
o+ su!, *at"rial or an# stat"*"nt *a" in su!, *at"rial% in!luing
1ossibl" in+ring"*"nt o+ an# rig,t subsisting in or in r"lation to
su!, *at"rial' Pro$i"% T,at'
i. T," s"r$i!" 1ro$i"r o"s not ,a$" a!tual
<no3l"g"% or is not a3ar" o+ t," +a!ts or !ir!u*stan!"s +ro*
3,i!, it is a11ar"nt% t,at t," *a<ing% 1ubli!ation%
iss"*ination or is. tribution o+ su!, *at"rial is unla3+ul
or in+ring"s an# rig,ts subsisting in or in r"lation to su!,
*at"rial2
ii. T," s"r$i!" 1ro$i"r o"s not <no3ingl# r"!"i$" a
+inan!ial b"n"+it ir"!tl# attributabl" to t," unla3+ul or
in+ring. ing a!ti$it#2 an
iii. T," s"r$i!" 1ro$i"r o"s not ir"!tl# !o**it an#
in+ring"*"nt or ot,"r unla3+ul a!t an o"s not inu!" or
!aus" anot,"r 1"rson or 1art# to !o**it an# in+ring"*"nt or
ot,"r unla3+ul a!t anUor o"s not b"n"+it +inan!iall# +ro* t,"
in+ringing a!ti$it# or unla3+ul a!t o+ anot,"r 1"rson or 1art#'
Pro$i"% +urt,"r% T,at not,ing in t,is S"!tion s,all a++"!t 0
a) An# obligation +oun" on !ontra!t2
b) T," obligation o+ a s"r$i!" 1ro$i"r as su!, un"r a
li!"nsing or ot,"r r"gulator# r"gi*" "stablis," un"r 3ritt"n
la32 or
!) An# obligation i*1os" un"r an# 3ritt"n la32
) T," !i$il liabilit# o+ an# 1art# to t," "4t"nt t,at
su!, liabilit# +or*s t," basis +or injun!ti$" r"li"+ issu" b# a
!ourt un"r an# la3 r"Euiring t,at t," s"r$i!" 1ro$i"r ta<" or
r"+rain +ro* a!tions n"!"ssar# to r"*o$"% blo!< or "n# a!!"ss
APPENDIN
to an# *at"rial% or to 1r"s"r$" "$i"n!" o+ a $iolation o+ la3.
SEC. 91. La3+ul A!!"ss. 0 A!!"ss to an "l"!troni! +il"% or an
"l"!. troni! signatur" o+ an "l"!troni! ata *"ssag" or "l"!troni!
o!u*"nt
APPENDIN
s,all onl# b" aut,oriH" an "n+or!" in +a$or o+ t," ini$iual or
"ntit# ,a$ing a l"gal rig,t to t," 1oss"ssion or t," us" o+ t,"
1laint"4t% "l"!troni! signatur" or +il" an sol"l# +or t," aut,oriH"
1ur1os"s. T," "l"!troni! <"# +or i"ntit# or int"grit# s,all not b"
*a" a$ailabl" to an# 1"rson or 1art# 3it,out t," !ons"nt o+ t,"
ini$iual or "ntit# in la3+ul 1oss"ssion o+ t,at "l"!troni! <"#.
SEC. 96. Obligation o+ Con+i"ntialit#. 0 E4!"1t +or t,"
1ur1os"s aut,oriH" un"r t,is A!t% an# 1"rson 3,o obtain"
a!!"ss to an# "l"!troni! <"#% "l"!troni! ata *"ssag"% or "l"!troni!
o!u*"nt% boo<% r"gist"r% !orr"s1on"n!"% in+or*ation% or ot,"r
*at"rial 1ursuant to an# 1o3"rs !on+"rr" un"r t,is A!t% s,all not
!on$"# to or s,ar" t," sa*" 3it, an# ot,"r 1"rson.
SEC. 99. P"nalti"s. 0 T," +ollo3ing A!ts s,all b" 1"naliH" b#
+in" anUor i*1rison*"nt% as +ollo3s'
(a) Ha!<ing or !ra!<ing 3,i!, r"+"rs to unaut,oriH" a!!"ss
into or int"r+"r"n!" in a !o*1ut"r s#st"*Us"r$"r or in+or*ation an
!o**uni!ation s#st"*2 or an# a!!"ss in or"r to !orru1t% alt"r%
st"al% or "stro# using a !o*1ut"r or ot,"r si*ilar in+or*ation an
!o**u. ni!ation "$i!"s% 3it,out t," <no3l"g" an !ons"nt o+ t,"
o3n"r o+ t," !o*1ut"r or in+or*ation an !o**uni!ations s#st"*%
in!luing t," introu!tion o+ !o*1ut"r $irus"s an t," li<"%
r"sulting in t," !orru1tion% "stru!tion% alt"ration% t,"+t or loss o+
"l"!troni! ata *"ssag"s or"l"!troni! o!u*"nt s,all b" 1unis,"
b# a *ini*u* +in" o+ on" ,unr" t,ousan 1"sos (P1??%???.??)
an a *a4i*u* !o**"nsurat" to t," a*ag" in!urr" an a
*anator# i*1rison. *"nt o+ si4 (6) *ont,s to t,r"" (9) #"ars2
(b) Pira!# or t," unaut,oriH" !o1#ing% r"1rou!tion%
iss"*i. nation% istribution% i*1ortation% us"% r"*o$al% alt"ration%
substitu. tion% *oi+i!ation% storag"% u1loaing% o3nloaing%
!o**uni!ation% *a<ing a$ailabl" to t," 1ubli!% or broa!asting o+
1rot"!t" *at"rial% "l"!troni! signatur" or !o1#rig,t" 3or<s
in!luing l"gall# 1rot"!t" soun r"!orings or 1,onogra*s or
in+or*ation *at"rial on 1rot"!t" 3or<s% t,roug, t," us" o+
t"l"!o**uni!ation n"t3or<s% su!, as% but not li*it" to% t,"
int"rn"t% in a *ann"r t,at in+ring"s int"ll"!tual 1ro1"rt# rig,ts
s,all b" 1unis," b# a *ini*u* +in" o+ on" ,unr" t,ousan 1"sos
APPENDIN
(P1??%???.??) an a *a4i*u* !o**"nsurat" to t," a*ag"
in!urr" an a *anator# i*1rison*"nt o+ si4 (6) *ont,s to t,r""
(9) #"ars2
APPENDIN
(!) Violations o+ t," Consu*"r A!t or 5"1ubli! A!t No. C9A@
an ot,"r r"l"$ant or 1"rtin"nt la3s t,roug, transa!tions !o$"r"
b# or using "l"!troni! ata *"ssag"s or "l"!troni! o!u*"nts% s,all
b" 1"naliH" 3it, t," sa*" 1"nalti"s as 1ro$i" in t,os" la3s2
() Ot,"r $iolations o+ t," 1ro$isions o+ t,is A!t% s,all b"
1"nal. iH" 3it, a *a4i*u* 1"nalt# o+ on" *illion 1"sos
(P1%???%???.??) or si4 (6) #"ars i*1rison*"nt.
SEC. 9@. I*1l"*"nting 5ul"s an 5"gulations. 0 T," DTI%
D"1art*"nt o+ 7ug"t an &anag"*"nt an t," 7ang<o S"ntral ng
Pili1inas ar" ,"r"b# "*1o3"r" to "n+or!" t," 1ro$isions o+ t,is A!t
an issu" i*1l"*"nting rul"s an r"gulations n"!"ssar#% in
!oorina. tion 3it, t," D"1art*"nt o+ Trans1ortation an
Co**uni!ations% National T"l"!o**uni!ations Co**ission%
National Co*1ut"r C"n. t"r% National In+or*ation T"!,nolog#
Coun!il% Co**ission on Auit% ot,"r !on!"rn" ag"n!i"s an t,"
1ri$at" s"!tor% to i*1l"*"nt t,is A!t 3it,in si4t# (6?) a#s a+t"r its
a11ro$al.
Failur" to issu" rul"s an r"gulations s,all not in an# *ann"r
a++"!t t," "4"!utor# natur" o+ t," 1ro$isions o+ t,is A!t.
SEC. 95. O$"rsig,t Co**itt"". 0 T,"r" s,all b" a Congr"s.
sional O$"rsig,t Co**itt"" !o*1os" o+ t," Co**itt""s on Tra"
an Inustr#UCo**"r!"% S!i"n!" an T"!,nolog#% Finan!" an A1.
1ro1riations o+ bot, t," S"nat" an Hous" o+ 5"1r"s"ntati$"s% 3,i!,
s,all *""t at l"ast "$"r# Euart"r o+ t," +irst t3o #"ars an "$"r#
s"*"st"r +or t," t,ir #"ar a+t"r t," a11ro$al o+ t,is A!t to o$"rs""
its i*1l"*"ntation. T," DTI% D7&% 7ang<o S"ntral ng Pili1inas%
an ot,"r go$"rn*"nt ag"n!i"s as *a# b" "t"r*in" b# t," Con.
gr"ssional Co**itt"" s,all 1ro$i" a Euart"rl# 1"r+or*an!" r"1ort
o+ t,"ir a!tions ta<"n in t," i*1l"*"ntation o+ t,is A!t +or t," +irst
t,r"" (9) #"ars.
SEC. 96. A11ro1riations. 0 T," a*ount n"!"ssar# to !arr# out
t," 1ro$isions o+ S"!s. 6C an 6B o+ t,is A!t s,all b" !,arg" against
an# a$ailabl" +uns anUor sa$ings un"r t," >"n"ral
A11ro1riations A!t o+ 6??? in t," +irst #"ar o+ "++"!ti$it# o+ t,is A!t.
T,"r"a+t"r% t," +uns n""" +or t," !ontinu" i*1l"*"ntation
s,all b" in!lu" in t," annual >"n"ral A11ro1riations A!t.
APPENDIN
SEC. 9C. Statutor# Int"r1r"tation. 0 ;nl"ss ot,"r3is" "41r"ssl#
1ro$i" +or% t," int"r1r"tation o+ t,is A!t s,all gi$" u" r"gar to
its int"rnational origin an t," n"" to 1ro*ot" uni+or*it# in its
APPENDIN
a11li!ation an t," obs"r$an!" o+ goo +ait, in int"rnational tra"
r"lations. T," g"n"rall# a!!"1t" 1rin!i1l"s o+ int"rnational la3 an
!on$"ntion on "l"!troni! !o**"r!" s,all li<"3is" b" !onsi"r".
SEC. 9B. Variation b# Agr""*"nt. 0 As b"t3""n 1arti"s in$ol$"
in g"n"rating% s"ning% r"!"i$ing% storing or ot,"r3is" 1ro!"ssing
"l"!troni! ata *"ssag" or "l"!troni! o!u*"nt% an# 1ro$ision o+ t,is
A!t *a# b" $ari" b# agr""*"nt b"t3""n an a*ong t,"*.
SEC. 9A. 5"!i1ro!it#. 0 All b"n"+its% 1ri$il"g"s% a$antag"s or
statutor# rul"s "stablis," un"r t,is A!t% in!luing t,os" in$ol$ing
1ra!ti!" o+ 1ro+"ssion% s,all b" "njo#" onl# b# 1arti"s 3,os" !ountr#
o+ origin grants t," sa*" b"n"+its an 1ri$il"g"s or a$antag"s to
Fili1ino !itiH"ns.
S"!. @?. S"1arabilit# Claus". 0 T," 1ro$isions o+ t,is A!t ar"
,"r"b# "!lar" s"1arabl" an in t," "$"nt o+ an# su!, 1ro$ision is
"!lar" un!onstitutional% t," ot,"r 1ro$isions% 3,i!, ar" not a++"!t"%
s,all r"*ain in +or!" an "++"!t.
S"!. @1. 5"1"aling Claus". 0 All ot,"r la3s% "!r""s% rul"s an
r"gulations or 1arts t,"r"o+ 3,i!, ar" in!onsist"nt 3it, t,"
1ro$isions o+ t,is A!t ar" ,"r"b# r"1"al"% a*"n" or *oi+i"
a!!oringl#.
S"!. @6. E++"!ti$it#. 0 T,is A!t s,all ta<" "++"!t i**"iat"l#
a+t"r its 1ubli!ation in t," O++i!ial >aH"tt" or in at l"ast t3o (6)
national n"3s1a1"rs o+ g"n"ral !ir!ulation.
A11ro$"'
(Sg.) P5ESIDENT =OSEPH E. EST5ADA
i
CIVIL CODE
o+ t,"
PHILIPPINES
ANNOTATED
7#
ED>A5DO L. PA5AS%
\
Litt. 7.% LL.7.% LL.&.% LL.D.
Asso!iat" =usti!" Su1r"*" Court
o+ t," P,ili11in"s (1AB6.1AA6)
SITEENT! EDITION
244*
VOLU"E FOUR
ARTS. 114(514')
$PRESCRIPTION6 OBLIGATIONS
AND CONTRACTS&
Published & Distributed by
*'( N0/a%7r Re8e2- Sr. St. Te1.
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"a%01a- Ph010pp0%e2
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ED>A5DO L. PA5AS
ISBN +)*5+)15235'1435)
No 1ortion o+ t,is boo< *a# b" !o1i" or
r"1rou!" in boo<s% 1a*1,l"ts% outlin"s or
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!o1i" in i++"r"nt "l"!troni! "$i!"s or in an# ot,"r
+or*% +or istribution or sal"% 3it,out t," 3ritt"n
1"r*ission o+ t," aut,or "4!"1t bri"+ 1assag"s in
boo<s% arti!l"s% r"$i"3s% l"gal 1a1"rs% an jui!ial
or ot,"r o++i!ial 1ro!""ings 3it, 1ro1"r !itation.
An# !o1# o+ t,is boo< 3it,out t,"
!orr"s1on. ing nu*b"r an t," signatur" o+ t,"
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no aut,orit# to is1os"
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iii
i$
PUBLIS!ER?S PREFACE TO T!E 244* EDITION
T,"r" ar" nu*"rous n"3 !as"s "!i" b# t," Su1r"*"
Court in t," *att"r o+ Obligations an Contra!ts. I,il" *an# o+
t,"s" "!i. sions *"r"l# r"it"rat" "4isting juris1ru"n!"% t,"r"
ar" so*"% non". t,"l"ss% 3,i!, illustrat" !o*1arati$"l# n"3
!on!"1ts. Ob$iousl#% 3it, t," a3ning o+ t," 61st !"ntur#% t,"r"
is *u!, jui!ial 1rogr"ss in t,is ,ig,l#.i*1ortant +i"l o+ la32
1rin!i1all# t," a$"nt o+ "l"!troni! !ontra!ts $is.a.$is ".!o**"r!"%
an t," s1a3ning o+ "ri$ati$"s (n"3 "4oti! +inan!ial instru*"nts
bas" on ,"ging) RR a n"3 1,"no*"non in !ontra!ts la3.
For t," "$"ntual r"aliHation o+ t,is r"$is" an "41an"
"i. tion% t," Publis,"r ,"r"b# $alu"s t," soli!itous ,"l1 r"n"r"
b# Dr. Egaro -Egi"/ C. Paras% =r. (LL.7.% LL.&.% an D.C.L.)% a
1rou!t o+ t," ;nit" Stat"s (Har$ar)% Euro1" (Hagu"
A!a"*# o+ Int"r. national La3)% an Asia (National ;ni$"rsit#
o+ Singa1or"% At"n"o " &anila% San 7"a% an ;ST >rauat"
S!,ool o+ La3). >rat"+ul a!<no3l"g*"nts ar" li<"3is" *a" to
Pro+. E**anu"l C. Paras (s"nior 1artn"r o+ S#!i1 SalaHar
H"rnan"H M >at*aitan la3 +ir*) an 5TC =ug" o+ &a<ati%
&"tro &anila% Eug"n" C. Paras% +or a. itional r"s"ar!,.
0 5EN 7OOD
STO5E
$
$i
CONTENTS
V71;>e
F7;r
Titl" V. 0 P5ESC5IPTION ...............................................................
1
CHAPTE5 1 0 >ENE5AL P5OVISIONS ........................................
1
A5TICLE 11?6 ................................................................................ 1
CO&&ENT' (1) D"+inition o+ Pr"s!ri1tion% 12 (6) Proo+
N"""%
62 (9) 5"asons or 7as"s +or Pr"s!ri1tion% 62 Dir"!tor o+
Lans% "t al. $. Funtillar% "t al.% >5 6B599% &a# 69% 1AB6% 62
(@) Classi+i!ation o+ Pr"s!ri1tion% 62 (5) La!,"s% 92 ArraaHa%
"t al. $. CA an LarraHabal% >5 5?@66% F"b. B% 1ABA% 92 (6)
5ational" +or La!,"s% 92 (C) OPr"s!ri1tion8 Distinguis,"
+ro* OLa!,"s8%
@2 &a1a III $. >uanHon% CC SC5A 9BC% @2 Da$i $.
7anin% >5 @B966% A1r. B% 1ABC% @2 >allaro $. IAC% >5
6CC@6% O!t.
6A% 1ABC% @2 Nar!iso 7u"na$"ntura M &aria 7u"na$"ntura
$. CA M &anoto< 5"alt#% In!.% >5 5?B9C% D"!. 6B% 1AA6% 52
(B) Constitutional Pro$ision% 52 (A) Cas"s% 52 5"1ubli! $.
Ani*as%
56 SC5A BC1% 52 Alo$ino $. Alunan% III% @A SCAD 9@?
(1AA@)%
52 Fran!is!o $. CA% 166 SC5A 59B% 52 (1?) Pr"s!ri1ti$"
P"rio on 5"gist"r" Lan !o$"r" b# Torr"ns S#st"*% 62
:uirino &at"o M &atias $. Dorot"o DiaH% "t al.% >5
19C9?5% =an. 1C%
6??6% 62 Far East 7an< M Trust Co. $. Estr"lla O.
:u"ri*it% >5 1@5B6% =an. 16% 6??6% C2 D"$"lo1*"nt 7an<
o+ t," P,ils. $. CA M Carlos Caj"s% >5 16A@C1% A1r. 6B% 6???%
1?2 (11) Pr"su*1ti$" P"rio r" Ill.gott"n 3"alt, or O7","st8
Loans%
1?2 Pr"si"ntial A Ho! Fa!t.Fining Co**itt"" on
7","st
Loans $. Aniano D"si"rto (5"!o$"r# o+ Ill.gott"n I"alt,)%
>5
19?9@?% O!t. 65% 1AAA% 11@ SCAD C?C%
$ii
1?.
A5TICLE 11?C ............................................................................... 11
CO&&ENT' (1) I,o &a# A!Euir" Pro1"rt# or 5ig,ts b#
Pr"s!ri1tion% 112 (6) 5"ason +or Par. 1 (T,os" Ca1abl" o+
A!Euiring Pro1"rt# or 5ig,ts T,ru t," Ot,"r &o"s)%
112 (9) :u"r# (5" Donation b# Para*our)% 112 (@) 5"ason
I,# &inors &a# A!Euir" P"rsonall#% 16.
A5TICLE 11?B ............................................................................... 16
CO&&ENT' (1) P"rsons Against I,o* Pr"s!ri1tion
&a# 5un% 162 (6) :u"r# (5" &inors Iit,out Par"nts% "t!.)
192 (9) Stat" an Its Subi$isions% 19.
$ii
A5TICLE 11?A ............................................................................... 19
CO&&ENT' (1) No Pr"s!ri1tion 7"t3""n Husban
an Ii+"% 1@2 (6) 7"t3""n Par"nts an C,ilr"n% 1@2 (9)
7"t3""n >uarian an Iar% 15.
A5TICLE 111? ................................................................................ 15
CO&&ENT' Pr"s!ri1tion in t," Cas" o+ a &arri"
Io*an%
1
5.
A5TICLE 1111 ............................................................................... 15
CO&&ENT' (1) Pr"s!ri1tion Obtain" b# Co.Pro1ri"tor
or
Co.O3n"r% 152 (6) Li*itation%
16.
A5TICLE 1116 ............................................................................... 16
CO&&ENT' (1) 5"Euisit"s +or 5"nun!iation o+ Pro1"rt#
A!Euir" b# Pr"s!ri1tion% 162 (6) For*% 162 (9) I*1li"
or Ta!it 5"nun!iation% 16.
A5TICLE 1119 ............................................................................... 1C
CO&&ENT' (1) T,ings T,at &a# 7" A!Euir" b#
Pr"s!ri1tion%
1C2 (6) Patri*onial Pro1"rt#% 1C2 (9) No Pr"s!ri1tion Iit,
5"s1"!t to Publi! Pro1"rt#% 1B2 (@) So*" Do!trin"s% 1A2
(5) T,ings or Pro1"rti"s T,at Cannot 7" A!Euir" b#
Pr"s!ri1tion%
1
A.
A5TICLE 111@ ................................................................................ 1A
CO&&ENT' (1) 5ig,t o+ Cr"itors to &a<" ;s" o+
Pr"s!ri1tion%
6?2 (6) E4a*1l"% 6?2 Sa*brano $. Court o+ Ta4 A11"als% "t
al.%
1?1 P,il. 1%
6?.
A5TICLE 1115 ................................................................................ 6?
CO&&ENT' (1) S1"!i+i! Pro$isions on Pr"s!ri1tion% 612 (6)
E4a*1l"s% 61.
A5TICLE 1116 ............................................................................... 66
CO&&ENT' (1) Transitional 5ul"s +or Pr"s!ri1tion% 662 (6)
E4a*1l" o+ t," First 5ul" >i$"n% 692 PaH Ongsia!o an
t," H"irs o+ t," Lat" Augusto Ongsia!o $. 5o*an D.
Dallo% "t al.% L.6C@51% F"b. 6B% 1A6A% 692 (9) E4a*1l" o+ t,"
T,ir 5ul" >i$"n% 692 7A5% 692 (@) E4a*1l" o+ t,"
E4!"1tion% 6@2 (5) So*" Do!trin"s% 6@.
1C61
CHAPTE5 6 0 P5ESC5IPTION OF OINE5SHIP
AND OTHE5 5EAL 5I>HTS ................................................... 6C
A5TICLE 111C ............................................................................... 6C
CO&&ENT' (1) 5"Euisit"s Co**on to Orinar#
an
E4traorinar# Pr"s!ri1tion% 6C2 (6) Aitional 5"Euisit"s%
6B.
A5TICLE 111B ............................................................................... 6B
1C66
CO&&ENT' (1) C,ara!t"risti!s o+ t," Poss"ssion N"""
+or Pr"s!ri1tion% 6B2 (6) Poss"ssor in t," Con!"1t o+ Hol"r%
6B2 (9) O3n"r.A*inistrator% 6B.
A5TICLE 111A ............................................................................... 6A
CO&&ENT' Poss"ssion b# Li!"ns" or Tol"ran!" o+ O3n"r%
6
A.
A5TICLE 116? ............................................................................... 6A
CO&&ENT' (1) Ho3 Poss"ssion Is Int"rru1t" +or Pur1os"s
o+ Pr"s!ri1tion% 6A2 (6) Natural Int"rru1tion% 6A2 (9)
Sus1"nsion o+ Pr"s!ri1tion% 6A.
A5TICLE 1161 ............................................................................... 9?
CO&&ENT' (1) ONatural Int"rru1tion8 D"+in"% 9?2 (6)
5"ason +or t," P"rio In$ol$"% 9?2 (9) 5"ason +or t," Non.
5"$i$al o+ t," Poss"ssion% 9?.
A5TICLE 1166 ................................................................................ 9?
CO&&ENT' T," Arti!l" "41lains its"l+%
9?.
A5TICLE 1169 ............................................................................... 9?
CO&&ENT' OCi$il Int"rru1tion8 D"+in"%
9?.
A5TICLE 116@ ............................................................................... 91
CO&&ENT' (1) I,"n =ui!ial Su**ons Cannot 7"
Consi. "r" Ci$il Int"rru1tion% 912 (6) A11ar"nt
Int"rru1tion% 912 (9) A11li!abilit# to A!Euisiti$"% Not
E4tin!ti$" Pr"s!ri1tion% 91.
A5TICLE 1165 ............................................................................... 91
CO&&ENT' (1) 5"!ognition b# Poss"ssor o+ O3n"r8s
5ig,t%
962 (6) E4a*1l"%
96.
A5TICLE 1166 ............................................................................... 96
CO&&ENT' (1) Pr"s!ri1tion o+ Titl"s 5"!or" in
5"gistr# o+ Pro1"rt#% 962 (6) Lans 5"gist"r" ;n"r t,"
Lan 5"gistration La3% 992 Al+onso $. =a#*"% L.16C5@%
=an. 9?%
1A6?% 992 =o!son% "t al. $. Silos% L.16AAB% =ul. 65% 1A6?%
9@.
A5TICLE 116C ............................................................................... 9@
CO&&ENT' O>oo Fait, o+ Poss"ssor8 D"+in"%
9@.
1C69
A5TICLE 116B ............................................................................... 9@
CO&&ENT' (1) Ot,"r 5"Euisit"s +or >oo Fait,% 9@2
(6) For Ho3 Long t," >oo Fait, &ust Last% 952 (9) >oo
Fait, C,anging to 7a Fait,% 95.
A5TICLE 116A ............................................................................... 96
CO&&ENT' O=ust Titl"8 D"+in"%
96.
1C6@
A5TICLE 119? ...............................................................................
96
CO&&ENT' Natur" o+ t," Titl" 5"Euir"%
96.
A5TICLE 1191 ............................................................................... 9C
CO&&ENT' N"!"ssit# o+ Pro$ing t," =ust Titl"%
9C.
A5TICLE 1196 ............................................................................... 9C
CO&&ENT' (1) P"rio o+ Pr"s!ri1tion +or &o$abl"s% 9C2
(6) 5ul" Iit, 5"s1"!t to Lost &o$abl"s an T,os" o+ I,i!,
t," O3n"r Has 7""n Ill"gall# D"1ri$"% 9B2 (9) 5ul" 3it,
5"s1"!t to Publi! Sal"s% Fairs% &ar<"ts% an &"r!,ant8s
Stor"% 9B.
A5TICLE 1199 ............................................................................... 9B
CO&&ENT' (1) &o$abl"s Poss"ss" T,roug, a Cri*"% 9B2
(6) 5ul" +or I**o$abl"s (I,"r" Cri*"s Ar" In$ol$")% 9A.
A5TICLE 119@ ............................................................................... 9A
CO&&ENT' Pr"s!ri1ti$" P"rios +or A!Euiring 5"al
Pro1"rt#%
9
A.
A5TICLE 1195 ............................................................................... 9A
CO&&ENT' I,"n Ar"a Poss"ss" Vari"s +ro* Ar"a in
Titl"%
9
A.
A5TICLE 1196 ............................................................................... 9A
CO&&ENT' (1) Poss"ssion in Iar Ti*"% @?2 (6) Fortuitous
E$"nt 0 E++"!t on Pr"s!ri1tion%
@?.
A5TICLE 119C ............................................................................... @?
CO&&ENT' (1) E4traorinar# Pr"s!ri1tion Iit, 5"s1"!t
to I**o$abl"s% @?2 (6) P"rio 5"Euir"% @?2 (9) I,at Ar"
Not N"""% @12 (@) 5"troa!ti$" E++"!t o+ t," Pr"s!ri1tion%
@1.
A5TICLE 119B ............................................................................... @1
CO&&ENT' 5ul"s +or Co*1utation o+ Ti*"%
@1.
CHAPTE5 9 0 P5ESC5IPTION OF ACTION .............................. @9
1C65
A5TICLE 119? ...............................................................................
96
A5TICLE 119A ............................................................................... @9
CO&&ENT' (1) Ho3 A!tions Pr"s!rib"% @92 (6) S!o1"
or Natur" o+ t," C,a1t"r% @92 (9) Pr"s!ri1tion as a D"+"ns"%
@92 (@) E++"!t o+ D"at, on Pr"s!ri1tion% @@2 (5) Con+li!t o+
La3s
0 Varian!" o+ For"ign an Lo!al La3 5" Pr"s!ri1tion%
@@2 (6) Ho3 Long Is a &ont,J% @52 :uiHon $. 7altaHar% C6
SC5A
56?%
@5.
A5TICLE 11@? ............................................................................... @5
CO&&ENT' 5"!o$"r# o+ &o$abl"s%
@5.
1C66
A5TICLE 11@1 ...............................................................................
@5
CO&&ENT' 5"!o$"r# o+ I**o$abl"s% @62 D" ="sus% "t al.
$. CA% "t al.% >5 5C?A6% =an. 61% 1AA9% @6.
A5TICLE 11@6 ............................................................................... @6
CO&&ENT' (1) Pr"s!ri1tion o+ &ortgag" A!tions% @62
(6) I,"n P"rio 7"gins% @C2 (9) Lans Iit, a Torr"ns Titl"%
@C2 (@) E++"!t i+ &ortgag" Is 5"gist"r"% @C2 (5) E++"!t on
Int"r"st on D"bt% @C.
A5TICLE 11@9 ................................................................................ @C
CO&&ENT' (1) 5ig,ts Not E4tinguis," b# Pr"s!ri1tion%
@C2 (6) So*" Ot,"r A!tions T,at Do Not Pr"s!rib"% @B2
7uiong $. Pano!% CA SC5A 6@% @B2 5oil $. 7"n"i!to% L.
6B616% =an.
66% 1AB?%
@A.
A5TICLE 11@@ ............................................................................... @A
CO&&ENT' (1) A!tions T,at Pr"s!rib" in 1? K"ars% 5?2
V"loso $. Ior<*"n8s Co*1"nsation Co**ission% CB SC5A
5?9% 5?2 N"gr" $. Ior<*"n8s Co*1"nsation Co**ission%
>5 @9CA5% A1r. 15% 1AB5% 5?2 Villa*or $. CA% >5 AC996%
O!t. 1?% 1AA1%
5?2 (6) E4a*1l" o+ a Iritt"n Contra!t% 512 (9) E4a*1l"s
o+ Obligations Cr"at" b# La3% 512 (@) A!tions 7as" on a
=ug. *"nt% 562 Ol"go $. 5"bu"no% L.9A95?% O!t. 6A% 1AC5%
592 (5) A!tion Not A!tuall# 7as" on Iritt"n Contra!t% 5@2
7u!ton% "t al. $. >abar% "t al.% L.9695A% =an. 91% 1AC@% 5@2 (6)
Pa#*"nt o+ Li+" Insuran!"% 552 P,il. A*"ri!an Li+" M >"n.
Insuran!" Co. $. =ug" Lor" 5. Val"n!ia.7agalas!a% 5TC o+
Lib*anan% Ca*arin"s Sur% 7r. 56% "t!.% >5 19ACC6% Aug. 1%
6??6% 55.
A5TICLE 11@5 ............................................................................... 5C
CO&&ENT' (1) A!tions T,at Pr"s!rib" in 6 K"ars% 5C2 (6)
E4a*1l"s% 5C2 (9) A!tions I,"r" P"rio Ar" Not Fi4"% 5C.
A5TICLE 11@6 ............................................................................... 5C
CO&&ENT' (1) A!tions T,at Pr"s!rib" in @ K"ars% 5B2 (6)
E4. a*1l" o+ -Injur# to t," 5ig,ts o+ t," Plainti++/% 5B2 (9)
5ul"s +or :uasi.D"li!ts% 5B2 Paulan% "t al. $. Sarabia% "t al.%
L.1?5@6% =ul. 91% 1A5B% 5A2 D"golla!ion $. Li C,ui% L.
116@?% &a# 66%
1A56% 5A2 (@) 5ul" ;n"r t," Co" o+ Ci$il Pro!"ur"%
6?2 La1uH $. S# ;#% L.1??CA% &a# 1C% 1A5C% 6?.
A5TICLE 11@C ............................................................................... 61
CO&&ENT' (1) A!tions T,at Pr"s!rib" in 1 K"ar% 612 (6)
1C6C
A5TICLE 11@1 ...............................................................................
@5
5ul" in Cas" o+ For!ibl" Entr# an D"tain"r% 662 (9) 5ul" in
Cas" o+ Lib"l% 662 (@) A!tions T,at Pr"s!rib" in Si4 (6)
&ont,s% 66.
A5TICLE 11@B ............................................................................... 69
CO&&ENT' (1) P"rios o+ Pr"s!ri1tion S1"!i+i"
Els"3,"r"%
692 7asa $. 5"1ubli!% >5 @56CC% Aug. 5% 1AB5% 692 5"1ubli!
$.
1C6B
5i!art"% >5 @6BA9% No$. 16% 1AB5% 692 7ali3ag Transit% In!.
$. CA% >5 5C@A9% =an. C% 1ABC% 692 (6) 5ul"s in Cas" o+
Frau%
6
@.
A5TICLE 11@A ............................................................................... 6@
CO&&ENT' (1) >"n"ral Pro$iso 0 5 #"ars% 6@2 Tol"ntino $.
CA an Da$i% L.@1@6C% =un. 1?% 1ABB% 652 (6) E4a*1l"s%
652 (9) :u"r# (5" Valiit# o+ Sti1ulation Con!"rning P"rio)%
65.
A5TICLE 115? ............................................................................... 66
CO&&ENT' (1) Fro* I,at Ti*" P"rio Is to 7" Count"%
662 (6) 5"ason +or t," La3% 662 (9) E4a*1l"s% 662 (@) So*"
Cas"s%
6C2 Li!,au!o $. Soriano% 95 P,il. 6?9% 6C2 Var"la $. &arajas%
"t al.% L.1A615% A1r. 9?% 1A5B% 6C2 Int"stat" Estat" o+
Fran!is!o ;bat% "t al. $. Atanasia ;bat " &ont"s% PN7% "t
al.% L.11699% =an. 91% 1A61% 6B2 Castrillo $. Court% L.1B?@6%
&ar. 91% 1A6@%
6B2 5"1ubli! $. Hon. Nu*"riano Est"nHo% L.6@656% S"1t.
65%
1A6B%
6A.
A5TICLE 1151 ............................................................................... 6A
CO&&ENT' Obligations to Pa# Prin!i1al Iit, Int"r"st
or
Annuit#%
6A.
A5TICLE 1156 ............................................................................... 6A
CO&&ENT' Obligations D"!lar" b# a =ug*"nt% 6A2
LuHon
Sur"t# Co. $. IAC% >5 C66@5% =un. 9?% 1ABC%
C?.
A5TICLE 1159 ............................................................................... C1
CO&&ENT' (1) A!tions to D"*an A!!ounting an
A!tions Arising +ro* 5"sult o+ t," A!!ounting% C12 (6)
A!!ounting an 5"liEuiation% C1.
A5TICLE 115@ ................................................................................ C1
CO&&ENT' E++"!t o+ a Fortuitous E$"nt%
C1.
A5TICLE 1155 ............................................................................... C6
CO&&ENT' (1) Ol La3 5" Int"rru1tion o+ Pr"s!ri1ti$"
P"rios% C62 (6) I,"n Pr"s!ri1tion o+ A!tions Is
Int"rru1t" ;n"r t," Ci$il Co"% C62 (9) 5"Euir"*"nt o+
4ii
Iritt"n D"*an or A!<no3l"g*"nt% C62 (@) &oratoriu*
La3 Sus1"n" 5ig,t to Su"% C92 (5) E++"!t o+ Pr"si"nt
Os*"Pa8s &oratoriu* Or"r (E4"!. Or"r 96)% an t,"
&oratoriu* La3 (5"1. A!t
9@6)% u1on t," Statut" o+ Li*itations +or D"bts
Contra!t" 7"+or" D"!. 91% 1A@1% C92 (6) Closur" o+
Courts During t," =a1an"s" O!!u1ation% C@2 (C) A!tions
;n"r t," Carriag" o+ >oos b# S"a A!t% C@2 Dol" P,ils.%
In!. $. &ariti*" Co. o+ t," P,ils.% >5 61956% F"b. 6C% 1ABC%
C@2 (B) 5ul" in Ta4ation Cas"s% C52 (A) E++"!t o+ a &otion +or
5"!onsi"ration% C52 (1?) So*" Cas"s% C52 7u!!at $. Dis1o%
L.@@99B% A1r. 15% 1ABB% C52 PDCP $. IAC% >5 C91AB% S"1t. 6%
1AA6% C6.
4ii
BOOK IV OBLIGATIONS AND
CONTRACTS
Titl" I. 0 O7LI>ATIONS ....................................................................
CC
CHAPTE5 1 0 >ENE5AL P5OVISIONS ........................................
CC
A5TICLE 1156 ...............................................................................
CC
CO&&ENT' (1) El"*"nts o+ an Obligation ("ri$" +ro*
t," Latin Oobligar"8 0 to bin)% CC2 (6) E4a*1l"% CB2 (9)
Con!"1t o+ Pr"station (7A5 :;ESTION)% CB2 &ataas na
Lu1a T"nants8 Asso!iation $. Carlos Di*a#uga an
=uliana Di"go Va. " >abri"l% L.96?@A% =un. 65% 1AB@% CB2
(@) Dins o+ Obligations%
CB2 (5) Criti!is* o+ t," D"+inition b# t," Co"% B?2 (6)
So*" Cas"s% B?2 P"la#o $. Lauron% 16 P,il. @59 (7A5)% B?2
Poss $. >ottli"b% 1A9 N.K.S. @1B% B12 =oaEuin P. N"*"nHo $.
7"rnab" Sabillano% L.6?ACC% S"1t. C% 1A6B% B12 L"oni"s
P"ngson $. Court o+ A11"als% >5 L.65666% =un. 6A% 1AB@%
B62 P,ili11in" National 7an< $. CA% C@ SCAD CB6 (1AA6)%
B62 (C) In an o1tion to 7u#% Pa#*"nt o+ Pur!,as" Pri!" b#
Cr"itor is Conting"nt ;1on E4"!ution an D"li$"r# o+ a
D"" o+ Sal" b# D"btor%
B62 (B) Cas"% B62 H"irs o+ Luis 7a!us% "t al. $. CA M
S1ous"s
Faustino an Vi!toriana Dura#% >5 16C6A5% D"!. 9% 6??1%
B6.
A5TICLE 115C ...............................................................................
B9
CO&&ENT' (1) Sour!"s o+ Obligations% B92 (6) Criti!is*
o+ t," Enu*"ration List" Do3n b# t," La3% B92 (9)
O++"rs o+ 5"3ar in N"3s1a1"r or Publi! Cont"st% B@2 (@)
E4!lusi$"n"ss o+ t," Enu*"ration% B@.
A5TICLE 115B ...............................................................................
B@
CO&&ENT' (1) Obligations E4 L"g"% B@2 CanoniHao
$. 7"nit"H% L.@A915% L.6?A66% F"b. 6?% 1AB@% B@2 Va. "
5"!into $. In!iong% CC SC5A 1A6% B52 S"rrano $. C"ntral
7an<% L.
9?511% F"b. 1@% 1AB?% B52 Santos $. Court o+ A11"als% L.
6?61?% &ar. 6C% 1AB@% B52 >onHal"s $. P,ili11in" National
1C91
7an<% >5
9996?% &a# 9?% 1AB9% B52 (6) &"aning o+ t," Arti!l" (7A5)%
B62 Hilario =ara$ata $. Saniganba#an% L.561C?% =an. 91%
1AB@%
B62 (9) Con+li!t 7"t3""n Ci$il Co" an S1"!ial La3s%
B6.
A5TICLE 115A ...............................................................................
B6
CO&&ENT' (1) Obligations E4.Contra!tu% BC2 (6)
&"aning o+ t," Arti!l"% BC2 &artin $. &artin% "t al.% L.
16@9A% &a# 69%
1A5A% BC2 National &ar<"ting Cor1. (NA&A5CO) $. Tan%
"t al.% L.1C?C@% &ar. 91% 1A6@% BB2 (9) T," 5ig,t to Ent"r
into Contra!ts% BB2 (@) Di++"r"n!"s 7"t3""n an Obligation
an a Contra!t% BB2 (5) So*" D"!i" Cas"s% BA2 D" los
5"#"s $. Al"jao% 16 P,il. @AA% BA2 &olina $. " la 5i$a%
6 P,il. 16%
BA2 7a!,ra!, $. >oling!o% 9A P,il. 19B% BA2 Conrao $.
=ug"
Tan% 51 O.>. 6A69% =un. 1A55% A?2 Al!antara $. Alin"a% B
P,il.
1C96
111% A?2 >anHon $. =ug" San!,o% >5 56@5?% =ul. 69%
1AB9%
A12 Oll"nor+ $. Abra,a*son% 9B P,il. 5B5% A12 H"r*inia
>ou!o $. Court o+ A11"als% "t al.% L.1C6@C% F"b. 6B% 1A6@%
A12 &ola$" &otor Sal"s% In!. $. Laron an >"*iniano% L.
659CC% &a# 6B% 1AB@% A12 7or!"na% "t al. $. IAC% >5
C??AA% =an. C%
1ABC% A62 PN7 $. S"% =r.% C? SCAD 969 (1AA6)% A62 (6) T,"
So. !all" Inno*inat" Contra!ts% A92 Vi!"nt" Alaba $.
Court o+ A11"als% "t al.% L.616C6% F"b. 6B% 1A6A% A9.
A5TICLE 116? ............................................................................... A9
CO&&ENT' (1) O:uasi.Contra!t8 D"+in"% A@2 (6) T,"
6
Prin!i1al Dins% A@2 (9) N"gotioru* >"stio% A@2 (@) Solutio
In"biti% A@2 Cit# o+ C"bu $. Pi!!io an Caball"ro% L.
19?16 an 1@BC6% D"!. 91% 1A6?% A@2 ;ST Coo1"rati$" Stor"
$. Cit# o+ &anila% "t al.% L.1C199% D"!. 91% 1A65% A52 (5)
:u"r#' Is a :uasi.Contra!t an I*1li" Contra!t% A52 (6)
Ot,"r E4a*1l"s o+ :uasi.Contra!ts% A52 (C) No ;njust
Enri!,*"nt% A62 Lirag T"4til" &ills% In!. $. 5"1arations
Co**ission% CA SC5A 6C5%
A
6.
A5TICLE 1161 ............................................................................... A6
CO&&ENT' (1) Obligations E4 D"li!to or E4 &al"+i!io%
A62 7aiong $. =ug" A1aliso<% >5 6?151% =un. 6@% 1AB9%
A62 (6) P"rtin"nt Pro$ision o+ t," 5"$is" P"nal Co"% A62
El!ano $. Hill% CC SC5A AB% AC2 (9) Liabilit# o+ an Insan"
Cri*inal%
AC2 (@) Cas"% AC2 Sal"s $. 7al!"% L.1@@1@% A1r. 6C% 1A6?%
AC2 (5) I,at Ci$il Liabilit# Arising +ro* a Cri*" In!lu"s%
AB2 (6) E++"!t o+ Aggra$ating an &itigating Cir!u*stan!"s%
AB2 (C) Da*ag"s in Cas" o+ D"at,% AB2 (B) Ci$il A!tion
I*1li!itl# Institut" in Cri*inal Cas"% AA2 (A) E++"!t o+
D"at, o+ t," Cri*inal O++"n"r P"ning Trial% AA2
7u"na$"ntura 7"la*ala $. &ar!"lino Polinar% L.6@?AB% No$.
1B% 1A6C% AA2 La*b"rto Torrijos $. Court o+ A11"als% L.
@?996% O!t. 6@% 1AC5% AA2 (1?) Din o+ Proo+ N"""% 1??2 (11)
E++"!t o+ A!Euittal in Cri*inal Cas"% 1??2 Co San $. Dir"!tor
o+ Pat"nts% "t al.% L.1?569% F"b.
69% 1A61% 1?12 (16) E4a*1l" o+ In"1"n"nt Ci$il A!tions%
1?12 (19) E++"!t o+ 5"s"r$ation o+ t," Ci$il As1"!t% 1?12
=o$"n!io Luansing $. P"o1l" o+ t," P,ili11in"s M Court o+
A11"als% L.696BA% F"b. 6B% 1A6A% 1?12 (1@) Is T,"r" N""
o+ &a<ing a 5"s"r$ation o+ t," Ci$il Cas" (I,"r" t," La3
>rants an In"1"n"nt Ci$il A!tion) i+ a Cri*inal Cas" is
First 7roug,t to Court% 1?62 >ar!ia $. Florio% L.95?A5%
Aug. 91% 1AC9% 1?62 Cris1in Ab"llana an Fran!is!o
Ab"llana $. Hon. >"roni*o 5. &arau" an >"roni*o
Co*1an"r% "t al.% L.6CC6?% &a# 6A%
1C99
1AC@% 1?92 (15) 5"!o$"r# o+ Da*ag"s in SA&E CASE
D"s1it" A!Euittal% 1?@2 5o# Pailla $. Court o+ A11"als%
L.9AAAA% &a# 91% 1AB@% 1?@2 P"o1l" $. CastaP"a% >5
@ACB1% =un. 6@%
1AB9% 1?@2 P"o1l" $. T"r"sa =alanoni% >5 5C555% Aug.
6B%
1AB@% 1?52 (16) A++ia$it o+ D"sistan!"% 1?52 P"o1l" $.
Ent"s% L.5?696% F"b. 6@% 1AB1% 1?52 P"o1l" $. &a#or
Carun!,o% =r.% L.5CB?@% =an. 69% 1AB@% 1?52 (1C) E++"!t o+
Non.All"gation o+
1C9@
Da*ag"s% 1?52 7aiong $. =ug" A1aliso<% >5 6?151%
=un.
6@% 1AB9%
1?5.
A5TICLE 1166 ............................................................................... 1?6
CO&&ENT' (1) Obligations E4 :uasi.D"li!ts or E4 :uasi.
&al"+i!io% 1?62 (6) Anot,"r Na*" +or :uasi.D"li!t% 1?62 (9)
D"+inition o+ a O:uasi.D"li!t8% 1?62 El!ano $. Hill% CC
SC5A
AB% 1?62 (@) E4a*1l"s% 1?C2 (5) D"+initions o+
N"glig"n!" (Cul1a)% 1?C2 (6) T"st +or D"t"r*ination o+
N"glig"n!"% 1?C2 (C) 5"Euir"*"nts 7"+or" a P"rson Can 7"
H"l Liabl" +or a :uasi.D"li!t% 1?C2 (B) Cul1a AEuiliana
o+ &arri" &inors%
1?B2 El!ano $. Hill% CC SC5A AB% 1?B2 (A) Violation o+
an
Obligation% 1?B2 &as!unana $. V"r"+lor% CA SC5A 99A%
1?B.
CHAPTE5 6 0 NAT;5E AND EFFECT OF
O7LI>ATIONS ............................................................................... 1?A
A5TICLE 1169 ............................................................................... 1?A
CO&&ENT' (1) Dut# to E4"r!is" Dilig"n!"% 1?A2 (6)
Dilig"n!"
N"""% 1?A2 (9) So*" Cas"s% 11?2 Ob"j"ra% "t al. $. Iga
S#%
C6 P,il. 5B?% 11?2 7is,o1 o+ =aro $. D" la P"Pa% 66 P,il.
1@@%
11?2 7"rnab" A+ri!a% "t al. $. Calt"4% "t al.% L.16AB6% &ar.
91%
1A66% 11?2 5onEuillo% "t al. $. Singson% CA% L.66616.5%
A1r.
66% 1A5A%
111.
A5TICLE 116@ ................................................................................ 111
CO&&ENT' (1) I,"n Cr"itor Is Entitl" to t," Fruits%
1112 (6) Latin &a4i* (5" D"li$"r# an O3n"rs,i1)% 1162 (9)
Dins o+ D"li$"r#% 1162 (@) D"li$"r# o+ I"al S,ar"% 1192
>at!,alian $. Arl"gui% C5 SC5A 69@% 1192 (5) I,"n Do"s
t," Obligation to D"li$"r Aris"% 119.
A5TICLE 1165 ................................................................................ 11@
CO&&ENT' (1) Classi+i!ation o+ Obligation +ro* t,"
Vi"31oint o+ Subj"!t &att"r% 11@2 (6) S1"!i+i! or
D"t"r*inat" T,ings% 11@2 (9) >"n"ri! or In"t"r*inat"
T,ings% 1152 (@) 5"*"i"s o+ t," Cr"itor I,"n t,"
D"btor Fails to Co*1l# Iit, His Obligation% 1152 ;# $.
PuHon% CA SC5A 5AB% 1152 (5) Cas" (5" I*1rison*"nt
7"!aus" o+ a D"bt)% 1162 5u+o :u"*u"l $. Court o+
1C95
A11"als% L.66CA@% =an. 16% 1A6B% 1162 (6) E++"!t o+
Fortuitous E$"nts% 11C2 (C) T3o Instan!"s I,"r" a
Fortuitous E$"nt Do"s Not E4"*1t% 11C2 (B) OOrinar#
D"la#8 Distinguis," +ro* OD"+ault8% 11C2 (A) E4a*1l"s%
11B2 (1?) So*" D"!i" Cas"s an Court 5ulings% 11B2 Ku
T"< $. >onHal"s% 6A P,il. 9B@% 11B2 5o*an $. >ri*alt% 6
P,il. A6%
11A2 >uti"rr"H 5"1i" $. AlH"lius% 9A P,il. 1A?%
11A.
A5TICLE 1166 ............................................................................... 11A
CO&&ENT' (1) I,at t," Obligation to >i$" a
D"t"r*inat" T,ing In!lu"s% 11A2 (6) A!!"ssori"s% 16?2 (9)
A!!"ssions% 16?2 (@) E++"!t o+ Sti1ulation% 16?.
1C96
A5TICLE 116C ...............................................................................
16?
CO&&ENT' (1) Positi$" P"rsonal Obligations% 16?2 (6)
5"*. "i"s o+ Cr"itor i+ D"btor Fails to Do% 16?2 C,a$"H $.
>onHal. "s% L.6C@5@% A1r. 9?% 1AC?% 1612 (9) I,"n a T,ing
&a# 7" Or"r" ;non"% 166.
A5TICLE 116B ................................................................................ 166
CO&&ENT' N"gati$" P"rsonal Obligations%
166.
A5TICLE 116A ................................................................................ 169
CO&&ENT' (1) D"+ault or &ora% 1692 (6) N"!"ssit# in
>"n. "ral o+ D"*an% 1692 (9) I,"n D"*an Is Not N"""
to Put D"btor in D"+ault% 1692 (@) Di++"r"nt Dins o+ &ora%
16@2 (5) &ora Sol$"ni% 1652 (6) &ora A!!i1i"ni% 1662 (C)
5"!i1ro!al Obligations% 16C2 &ariano 5origu"H% "t al. $.
Por+irio 7"lgi!a% "t al.% L.1?B?1% F"b. 6B% 1A61% 16B2 (B)
I,"n Da*ag"s or In. t"r"st &a# 7" Lost% 16B2 (A) So*"
D"!i" Cas"s% 16B2 Co*. 1ania >"n"ral " Taba!os $.
AraHa% C P,il. @55% 16B2 Pri!"% In!. $. 5illoraHa% "t al.% L.
B6?59% &a# 65% 1A55% 16A2 :u"blar $. >aruno an
&artin"H% 66 P,il. BCA% 16A2 Causing $. 7"n!. "r% 9C P,il.
@1C% 16A2 D" la 5osa $. 7an< o+ P.I.% 51 P,il. A66%
19?2 &ala#an Insuran!" Co.% In!. $. CA% >5 5AA1A% No$.
65%
1AB6% 19?2 S1ous"s Pu"rto $. CA% >5 19B61?% =un. 19%
6??6%
19?2 (1?) I*1osition o+ Int"r"st% 1912 7ang<o S"ntral ng
Pili. 1inas $. Santa*aria% >5 19ABB5% =an. 19% 6??9% 191.
A5TICLE 11C? ................................................................................ 196
CO&&ENT' (1) >rouns +or Liabilit# in t," P"r+or*an!"
o+ Obligations% 1962 >at!,alian $. Arl"gui% C5 SC5A 69@%
1992 (6) E4a*1l"s o+ Violation o+ a Contra!t (-In An#
&ann"r Contra$"n" t," T"nor T,"r"o+/)% 1992 Santiago $.
>onHal"s%
CA SC5A @A@% 19@2 (9) Liabilit# +or Da*ag"s% 1952
7ua#an Cattl" Co.% In!. $. :uintillan% L.66AC?% &ar!, 1A%
1AB@% 1952 7obis $. Pro$. S,"ri++ o+ Ca*arin"s Nort"% >5
6AB9B% &ar.
1B% 1AB9% 1952 P,il. Long Distan!" T"l"1,on" Co. $. National
Labor 5"lations Co**ission% >5 5B??@% &a# 9?% 1AB9%
1952 (@) Dins o+ Da*ag"s (D"#3or 0 &ENTAL)% 1952
Co*1ania &ariti*a $. Alli" Fr"" Ior<"rs8 ;nion% CC
SC5A 6@% 1962 Tra$"ll"rs8 In"*nit# Co. $. 7arb"r
St"a*s,i1 Lin"s% In!.%
CC SC5A 1?% 1962 7agu*ba#an Cor1oration $.
Int"r*"iat"
A11"llat" Court M L"lisa S"Pa% >5 666C@% S"1t. 9?%
1AB@%
1C9C
A5TICLE 116C ...............................................................................
16?
19C2 (5) Da*ag"s in &on"tar# Obligations% 19C2 (6)
5"*"i"s o+ Pro+"ssors an T"a!,"rs% 19C2 (C) Cr"itor o+ a
=ug"% 19C2 Taboaa $. Cabr"ra% CB SC5A 695% 19C.
A5TICLE 11C1 ................................................................................ 19B
CO&&ENT' (1) Liabilit# +or Frau or Dolo% 19B2 (6)
I,il" olo !ausant" is so i*1ortant a +rau t,at $itiat"s
!ons"nt (al. lo3ing t,"r"+or" annul*"nt)% olo in!i"nt" is
not i*1ortant%
19B2 7ango# $. P,il..A*"ri!an Li+" Insuran!" Co*1an#%
CA. >5 55656.5% 19B2 (9) Ta4 E$asion% 19A.
1C9B
A5TICLE 11C6 ...............................................................................
19A
CO&&ENT' (1) Frau Distinguis," +ro* N"glig"n!"%
19A2 Laur"l $. Abroga% @B9 SC5A 6@9 (6??6)% 19A2 (6)
Sti1ulations 5"garing N"glig"n!" (Futur" N"glig"n!")%
1@?2 P,o"ni4 Assuran!" Co. $. &a!onra# M Co.% In!.% L.
65?@B% &a# 19%
1AC5% 1@12 (9) 5ul" in Contra!ts o+ A,"sion% 1@62
D"lgao
7rot,"rs% In!. $. Court o+ A11"als% "t al.% L.1565@% D"!.
6A%
1A6?% 1@62 (@) Dins o+ Cul1a Classi+i" A!!oring to
t," Sour!" o+ t," Obligation% 1@92 (5) Distin!tions 5" t,"
T,r"" Dins o+ Cul1a% 1@92 (6) So*" Illustrati$" E4a*1l"s%
1@52 Antonio V. 5oEu" $. 7i"n$"nio P. 7uan% L.66@5A%
O!t. 91%
1A6C% 1@62 San P"ro 7us Lin" $. Na$arro% L.66A1% A1r.
6A%
1A5@% 1@C2 Lour"s &unsa#a! $. 7"n"i!ta " Lara% L.
61151% =un. 66% 1A6B% 1@B2 A*baan% "t al. $. 7"llosillo% "t
al.% CA. >5 56BC@.5% =ul. B% 1AB1% 1@A2 IbaP"H% "t al. $.
Nort, N"gros Sugar Co.% In!.% "t al.% L.6CA?% &ar. 6B% 1A55%
15?2 5a*os $. P"1si.Cola% L.66599% F"b. A% 1A6C% 15?2
Vinluan $. Court o+ A11"als% L.61@CC.B1% A1r. 6A% 1A66%
1512 P"o1l" $. Al"janro O. Tan% =r.% CA.>5 61A@C.C5% =ul.
61% 1AB1% 1562 (C) So*" Cas"s% 1592 7arr"o $. >ar!ia an
Al*ario% C9 P,il. 6?C% 1592 Nagrania $. &uluan"#% In!.% L.
B966% O!t. 6@% 1A55% 15@2 &aria Luisa &artin"H $. &anu"l 7.
7arr"o% "t al.% >5 @A9?B% 1552 P"o1l" o+ t," P,ili11in"s $.
="sus V"rano% L.15B?5% F"b. 6B%
1A61% 1562 Virata $. O!,oa% L.@61CA% =an. 91% 1ACB% 15C2
(B) E++"!ts o+ Vi!ti*8s O3n N"glig"n!" an o+ His
Contributor# N"glig"n!"% 15C2 Ong $. &"tro1olitan Iat"r
Distri!t% L.C66@% Aug. 6A% 1A6B% 15C2 5a<"s $. Atlanti! >ul+
an Pa!i+i! Co.% C
P,il. 95A% 15B2 (A) So*" Do!trin"s% 15A2 (1?) Liabilit# +or
t,"
Cul1a AEuiliana o+ Ot,"rs% 15A2 >olin $. Li1<in (Fla) @A
So.
6n 59A% 6C AL5 6 B16 (1A59)%
16?.
A5TICLE 11C9 ............................................................................... 16?
CO&&ENT' (1) D"gr""s o+ Cul1a ;n"r 5o*an La3%
1612 (6) Dins o+ Dilig"n!" ;n"r t," Ci$il Co"% 1612
>l"nn $. Ha#n"s% 1A6 Va. 5C@ (1A59)% 1662 Dr#broug, $.
V""!,% 69B SI
6% AA6 (1A59)% 1662 Da$ao >ul+ Lu*b"r Cor1. $. N. 7a"ns
"l 5osario% "t al.% L.15ACB% D"!. 6A% 1A6?% 1692 Far East
7an< an Trust Co. $. Estr"lla O. :u"ri*it% >5 1@B5B6%
=an. 16%
4$ii
A5TICLE 11C6 ...............................................................................
19A
6??6%
169.
A5TICLE 11C@ ................................................................................ 16@
CO&&ENT' (1) >"n"ral 5ul" +or Fortuitous E$"nts% 16@2
(6) E4!"1tions% 16@2 (9) EEui$al"nt T"r*s +or Fortuitous
E$"nt%
1652 =uan F. Na<1il an Sons% "t al. $. CA% "t al.% >5
@CB51% O!t. 9% 1AB6% 1652 (@) Ess"ntial C,ara!t"risti!s o+ a
Fortuitous E$"nt% 1652 (5) So*" Cas"s% 1662 Lasa* $. S*it,%
@5 P,il. 65C%
1662 5"1ubli! o+ t," P,ili11in"s $. Litton an Co.% A@ P,il.
56%
1662 Vi!torias Plant"rs Assn.% "t al. $. Vi!torias &illing
Co.% In!.% AC P,il. 91B% 16C2 Cran" S# Pau!o $. >onHaga% 1?
P,il.
6@6% 16C2 7ail"# $. L" Cr"s1ign#% La3 5"1orts% @? 7 1B?%
16B2
4$ii
Sian% "t al. $. Lo1"H% "t al.% L.59AB% O!t. 6?% 1A5@% 16B2
Pa!i+i!
V"g"tabl" Oil Cor1oration $. Singson% L.CA1C% A1r. 6A% 1A55%
16B2 Tan C,iong Sian $. In!,austi M Co.% 66 P,il. 156%
16B2 Soriano $. D" L"on% "t al.% (C.A.) @B O.>. 66@5% =un.
1A56% 16A2 ;.S. $. &a*bag% 96 P,il. 9B@% 16A2 Na<1il an
Sons $. CA% >5
@CB51% O!t. 9% 1AB6% 16A2 >at!,alian $. D"li*% >5 56@BC%
O!t.
61% 1AA1% 16A2 5ob"rto C. Si!a*% "t al. $. Lulu V. =org"% "t
al.% >5 15A61C% Aug. B% 6??C% 1C?2 (6) Loss in a S,i13r"!<%
1C12 (C) Loss 7"!aus" o+ an A!t o+ >o$"rn*"nt% 1C12 (B)
Co*bination o+ Fortuitous E$"nt an N"glig"n!"% 1C1.
A5TICLE 11C5 ................................................................................ 1C6
CO&&ENT' (1) O;sur#8 D"+in"% 1C62 (6) Dins o+
Int"r"st%
1C62 (9) 5"gar o+ P"o1l" +or ;sur#% 1C62 (@) D"+inition
o+
Si*1l" Loan (&utuu*)% 1C92 (5) La3+ul an L"gal
5at"s%
1C92 (6) I*1ortant Distin!tion 7"t3""n S"!ur" (S"!. 6)
an ;ns"!ur" (S"!. 9) Loans 0 ;n"r t," Ol ;sur# La3%
1C@2 (C) In!onsist"n!# in t," Co"% 1C@2 Ang"l =os"
Iar",ousing Co.% In!. $. C,"la Ent"r1ris"s an Da$i
S#jui!o% L.65C?@% A1ril 6@% 1A6B% 1C52 Lia* La3 $. Ol#*1i!
Sa3*ill% L.9?C11% &a# 6B% 1AB@% 1CC.
A5TICLE 11C6 ................................................................................ 1CC
CO&&ENT' (1) E4a*1l" o+ Par. 1 (5"!"i1t o+ Prin!i1al
Iit,out 5"s"r$ation as to Int"r"st)% 1CC2 (6) E4a*1l" o+
Par.
6 (5"!"i1t o+ a Lat"r Install*"nt)%
1CC.
A5TICLE 11CC ............................................................................... 1CB
CO&&ENT' (1) 5ig,ts o+ Cr"itors% 1CB2 5"galao $.
Lu!,a. sing!o an Co.% 5 P,il. 665% 1CA2 S"rrano $. C"ntral
7an<% "t al.% L.9?511% F"b. 1@% 1AB?% 1CA2 (6) E4a*1l"s o+
5ig,ts In,"r. "nt in t," P"rson o+ t," D"btor an I,i!,
T,"r"+or" Cannot 7" E4"r!is" b# t," Cr"itors% 1B?2 (9)
Pro1"rti"s E4"*1t +ro* E4"!ution% 1B?2 &uni!i1alit# o+ San
&igu"l $. Hon. Os. !ar F"rnan"H% L.61C@@% =un. 66% 1AB@%
1B12 (@) I,"n Fa*il# Ho*" Is Not E4"*1t" +ro*
Atta!,*"nt or E4"!ution% 1B12 (5) E4t"nt o+ D"btor8s
Liabilit#% 1B62 S1"!ial S"r$i!"s Cor1ora. tion $. C"ntro La
PaH% L.@@1??% A1r. 6B% 1AB9% 1B62 (6) 5ig,t o+ t," Cr"itor o+
an Insol$"nt Cor1oration% 1B62 East"rn S,i1. 1ing Lin"s%
In!. $. Sout, S"a E41orts% In!.% "t al.% 5i!aro V. Alina#u
an Ariano D. Isasos% CA.>5 5BBB9.5% =ul# 61%
1AB1%
1B6.
1C@1
A5TICLE 11CB ............................................................................... 1B9
CO&&ENT' (1) Trans*issibilit# o+ 5ig,ts% 1B92 (6) Non.
N"gotiabl" Pro*issor# Not"% 1B92 (9) Trans+"r o+
5ig,ts +ro* t," =a1an"s" to t," A*"ri!ans to t," Fili1inos%
1B92 5"1ubli! $. E*ilio >uanHon% L.669C@% D"!. 1B% 1AC@%
1B92 (@) Assign*"nt b# a >uarantor% 1B@2 Co 7un C,un $.
O$"rs"as 7an< o+ &anila% L.6C9@6% &a# 6@% 1AB@% 1B@.
1C@6
CHAPTE5 9 0 DIFFE5ENT DINDS OF
O7LI>ATIONS ............................................................................... 1B5
Classi+i!ation o+ Obligations% 1B52 5ogal"s $.
Int"r*"iat"
A11"llat" Court% L.65?66% =an. 91% 1AB@%
1B6.
S"!tion 1 0 P;5E AND CONDITIONAL
O7LI>ATIONS .............................................................................. 1BC
A5TICLE 11CA ............................................................................... 1BC
CO&&ENT' (1) Pur" Obligation% 1BC2 (6) Conitional
Obliga. tion% 1BC2 (9) D"+inition o+ Conition% 1BB2 (@)
D"+inition o+ a T"r* or P"rio% 1BB2 (5) I,"n an Obligation
Is D"*anabl" at On!"% 1BB2 (6) Past E$"nt ;n<no3n to t,"
Parti"s% 1BB2 (C) Classi+i!ation o+ Conitions% 1BA.
A5TICLE 11B? ............................................................................... 1A?
CO&&ENT' (1) D"btor to Pa# -I,"n His &"ans P"r*it/%
1A?2 (6) Si*ilar P,ras"s% 1A?2 (9) Ho3 Long Is t," T"r*%
1A?.
A5TICLE 11B1 ............................................................................... 1A1
CO&&ENT' (1) Sus1"nsi$" an 5"solutor# Conitions%
1A12 7"ngson $. C,an% CB SC5A 119% 1A12 San &igu"l $.
Elbinias% L.@B61?% =an. 91% 1AB@% 1A62 Aga1ito >uti"rr"H $.
Ca1ital In. suran!" an Sur"t# Co.% L.66B6C% =un. 6A%
1AB@% 1A62 Int". grat" Constru!tion $. 5"lo$a% >5 @111C%
D"!. 6A% 1AB6% 1A62 Par<s $. Pro$. o+ Tarla!% @A P,il. 1@6%
1A92 (6) Conitional P"r+"!tion o+ a Contra!t% 1A@2 (9) So*"
Cas"s an Do!trin"s%
1A@2 Panganiban $. 7atangas Trans. Co.% (C.A.) @6 O.>.
916C%
1A@2 Paulo Ang% "t al. $. Furton Fir" Insuran!" Co.% L.
15B66% =ul. 91% 1A61% 1A52 LuHon St"$"oring Cor1oration
$. CI5% L.1C@11% 1B6B1 an 1B6B9% D"!. 91% 1A65% 1A52
7"ngson $. C,an% L.6C6B9% =ul. 6A% 1ACC% 1A52 LuHon
Sur"t# Co.% In!. $. :u"brar% L.@?61C% =an. 91% 1AB@% 1A62 San
&igu"l $. Elbinias% L.@B61?% =an. 91% 1AB@% 1A6.
A5TICLE 11B6 ............................................................................... 1A6
CO&&ENT' (1) Pot"stati$"% Casual% &i4" Conitions%
1A62 (6) Pot"stati$" (Fa!ultati$") Conition% 1A62 (9) :u"r#%
1AC2 (@) Cas"s% 1AC2 S*it,% 7"ll an Co. $. Sot"lo &atti% @@
P,il.
BC@% 1AC2 =a!into $. C,ua L"ng% (C.A.) @5 O.>. 6A1A%
1AB2 Trillana $. :u"Hon Coll"g"s% In!.% A9 P,il. 9B9% 1AB.
A5TICLE 11B9 ............................................................................... 1AA
CO&&ENT' (1) I*1ossibl" an Ill"gal Conitions% 1AA2
1C@9
(6) Classi+i!ation% 1AA2 (9) E++"!ts% 1AA2 (@) So*" Cas"s% 6??2
Santos $. S"!. o+ Agri!ultur" an Natural 5"sour!"s an
Dir"!tor o+ Lans% A1 P,il. B96% 6??2 Lun"ta &otor Co. $.
F""ri!o Aba%
6C P,il. 69% 6??2 Litton% "t al. $. LuHon Sur"t#% In!.% A?
P,il.
CB9% 6?12 Fi"l*an8s Insuran!" Co.% In!. $. &"r!""s
Vargas
1C@@
Va. " Song!o an t," Court o+ A11"als% L.6@B99% S"1t.
69%
1A6B%
6?1.
A5TICLE 11B@ ............................................................................... 6?1
CO&&ENT' (1) Positi$" Conitions% 6?12 Aison $. F"li4%
9B
P,il. @?@% 6?12 (6) E++"!t i+ P"rio o+ Ful+ill*"nt Is Not
Fi4"%
6?62 &artin $. 7o#"ro% 55 P,il. C6?%
6?6.
A5TICLE 11B5 ............................................................................... 6?6
CO&&ENT' (1) N"gati$" Conitions% 6?62 (6) E4a*1l"%
6?6.
A5TICLE 11B6 ............................................................................... 6?9
CO&&ENT' (1) 5ul" I,"n D"btor Voluntaril# Pr"$"nts
Ful+ill*"nt o+ t," Conition% 6?92 (6) 5"Euisit"s% 6?92 (9)
E4a*1l"% 6?92 (@) Cas"s% 6?92 Laba#"n $. Talisa#% 56 P,il.
@@?% 6?92 Val"n!ia $. 5FC% L.1?C@A% A1ril 65% 1A5B%
6?@2 &ana $. LuHon Consoliat" &in"s M Co.% (C.A.) @?
O.>. (@t, S"ri"s) 16A% 6?@2 Ta#lor $. Ku Ti"ng Piao% @9 P,il.
BC9% 6?@2 (5) A11li!abilit# o+ t," Arti!l" to 5"solutor#
Conitions% 6?5.
A5TICLE 11BC ............................................................................... 6?5
CO&&ENT' (1) E++"!ts o+ Ful+ill*"nt o+ Sus1"nsi$"
Conition% 6?52 (6) E4a*1l"s o+ 5"troa!ti$" E++"!ts% 6?62
(9) No 5"troa!ti$" E++"!ts as to Fruits an Int"r"sts% 6?62
(@) S!o1" o+ -Fruits/% 6?C.
A5TICLE 11BB ............................................................................... 6?C
CO&&ENT' (1) First Paragra1, (A!tions to Pr"s"r$"
Cr"i. tor8s 5ig,ts)% 6?C2 P,il. Long Distan!" T"l"1,on" Co.
$. ="tu. rian% L.CC56% =ul. 9?% 1A55% 6?B2 (6) S"!on
Paragra1, (5ig,t o+ D"btor to 5"!o$"r I,at Ias Pai b#
&ista<")% 6?B.
A5TICLE 11BA ............................................................................... 6?A
CO&&ENT' (1) Loss% D"t"rioration% an
I*1ro$"*"nt
During t," P"n"n!# o+ Conition% 61?2 (6) -Loss/
D"+in"%
6112 (9) E++"!ts o+ Partial Loss% 6112 (@) Illustrati$"
Probl"*s%
611
.
A5TICLE 11A? ............................................................................... 619
1C@5
CO&&ENT' E++"!ts I,"n 5"solutor# Conition is
Ful+ill"%
61@2 (6) Probl"*s%
61@.
A5TICLE 11A1 ............................................................................... 615
CO&&ENT' (1) 5ig,t to 5"s!in% 6152 S1ous"s &ariano
T. V"lar" M A$"lina D. V"lar" $. CA% Da$i A. 5a#*uno
M >"org" 5a#*uno% >5 1?B9@6% =ul. 11% 6??1% 6152 (6)
5"!i1ro. !al Obligations% 6162 As1on Si*on $. Aa*os% L.
9A9CB% Aug.
6B% 1AB@% 6162 D&5C Ent"r1ris"s $. Est" "l Sol
&ountain 5"s"r$"% >5 5CA96% S"1t. 66% 1AB@% 61C2 (9)
E4a*1l"s% 61C2 Asturias Sugar C"ntral $. Pur" Can"
&olass"s Co.% 6? P,il.
1C@6
655% 61B2 Aba#a $. Stanar Va!uu* Oil Co.% L.A511% Aug.
9?% 1A5C% 61B2 Pio 7arr"to Sons% In!. $. Co*1ania
&ariti*a% L.6695B% =an. 6A% 1AC5% 61B2 Santiago $.
>onHal"s% L.9666C% O!t. 6?% 1ACC% 61A2 C"ntral 7an< $.
CA% >5 @5C1?% O!t. 9%
1AB5% 61A2 (@) C,ara!t"risti!s o+ t," 5ig,t to 5"s!in or
5". sol$" ;n"r T,is Arti!l"% 61A2 Ang% "t al. $. CA an L""
C,u# 5"alt# Cor1.% >5 B??5B% F"b. 19% 1ABA% 66?2 Filoil
&ar<"ting Cor1. $. IAC% "t al.% >5 6C115% =an. 6?% 1ABA%
66?2 Ang"l"s $. CalasanH% "t al.% >5 @66B9% &ar. 1B% 1AB5%
6662 :uano $. Court o+ A11"als% >5 A5A??% =ul. 69% 1AA6%
6662 (5) C,oi!" b# t," Injur" Part#% 6662 (6) Illustrati$"
Cas"s% 6692 5a*ir"H $. Court o+ A11"als% "t al.% AB P,il.
665 (Illustrating E++"!t o+ Loss in Conn"!tion 3it, Art.
11A1)% 6692 Song Fo M Co. $. Ha3aiian.P,il. Co.% @C P,il.
B61 (Illustrating E++"!t o+ a Slig,t 7r"a!,)% 66@2 P,ili11in"
A*us"*"nt Ent"r1ris"s% In!. $. Nati$ia% L.61BC6% S"1t.
6A% 1A6C% 6652 Asiati! Co*. Cor1. $. Ang% (C.A.) @? O.>. (11t,
Su11.% 1. 1?6) (Illustrating 5ig,ts o+ Inno!"nt T,ir
P"rsons)% 6652 >u"$ara $. Pas!ual% 16 P,il.
B11 (Illustrating N"!"ssit# o+ =ui!ial A!tion I,"n T,"r"
Has
7""n D"li$"r#)% 6662 &agal"na Estat" $. &#ri!<% C1 P,il.
9@@ (Illustrating E++"!t o+ &a<ing t," C,oi!"% E++"!t o+
5"s!ission an I,"n 5"s!ission &a# 7" Allo3" E$"n
Iit,out =ui!ial A11ro$al)% 66C2 Sol"a T. Consing $. =os"
T. =a*anr"% L.
6C6C@% &a# 16% 1AC5 (Illustrating I,"n =ui!ial 5"s!ission
is
;nn"!"ssar#)% 66B2 5a*os $. 7las% (C.A.) 51 O.>. 1A6?%
A1r.
1A55 (Illustrating I*1li" Iai$"r o+ t," 5ig,t to
5"s!in)%
66A2 Tan >uat $. Pa*intuan% (C.A.) 9C O.>. 6@A@
(Illustrat. ing Partial 5"s!ission an Partial P"r+or*an!")%
69?2 Ab"lla $. Fran!is!o% 55 P,il. @@C (5"s!ission I,"n
Ti*" Is o+ t," Ess"n!")% 69?2 (C) Da*ag"s +or 7r"a!, o+
L"as" Contra!t% 6912 5ios $. =a!into Pal*a% "t al.% @A P,il. C%
6912 S1ous"s &ariano T. V"lar" M A$"lina D. V"lar" $.
CA% Da$i A. 5a#*uno
M >"org" 5a#*uno% >5 1?B9@6% =ul. 11% 6??1% 6962 (B)
Da*.
ag"s in Cas" o+ 7r"a!, o+ E*1lo#*"nt% 6962 Sta. C"!ilia
Sa3. *ills% In!. $. CI5% L.1A6C9 an L.1A6C@% F"b. 6A%
1A6@% 6962 (A) Instan!" I,"r" Arti!l" Is Ina11li!abl"% 6962
Suria $. IAC% >5 C9BA9% =an. 9?% 1ABC% 6962 (1?)
E4trajui!ial 5"s!ission%
69@2 S1ous" 5"#nalo Al!araH M Es*"rala Al!araH $.
P"ro
&. Tangga.an% "t al.% >5 16B56B% A1r. A% 6??6%
69@.
A5TICLE 11A6 ............................................................................... 695
1C@C
CO&&ENT' 5ul" i+ 7ot, Parti"s Ha$" Co**itt" a
7r"a!,%
69
5.
S"!tion 6 0 O7LI>ATIONS IITH A PE5IOD ..............................
695
A5TICLE 11A9 ............................................................................... 695
CO&&ENT' (1) OP"rio8 D"+in"% 6952 (6) &anr"sa8s
D"+inition o+ a P"rio% 6962 A1arri $. Court o+ A11"als% L.
9??5C% =an. 91%
1AB@% 6962 (9) P"rio Distinguis," +ro* a Conition% 6962
(@) T," Di++"r"nt Dins o+ T"r*s or P"rios% 6962 (5)
E4a*1l" o+
1C@B
an Obligation 3it, a P"rio OE4 Di"8% 69C2 (6) E4a*1l" o+
an Obligation 3it, a P"rio OIn Di"*8% 69C2 N"3 Fronti"r
&in"s% In!. $. National Labor 5"lations Co**ission an
Crisanto 7rion"s% >5 515CB% &a# 6A% 1AB@% 69C2 (C) :u"ri"s%
69B2 (B) OA Da# C"rtain8 D"+in"% 69A2 (A) So*" Cas"s% 69A2
D" Cort"s $. V"nturanHa% CA SC5A C?A% 69A2 Lirag T"4til"
&ills% In!. an F"li4 D. Lirag $. Court o+ A11"als an
Cristan Al!antara% L.
9?C96% =ul. 11% 1AC5% 69A2 S*it,% 7"ll M Co. $. Sot"lo
&atti%
@@ P,il. BC@2 6@?2 Co*1ania >"n"ral " Taba!os $. AnoHa%
C
P,il. @55% 6@?2 7"rg $. &agal"na Estat"% In!.% A6 P,il.
11?%
6@12 Santos $. Court o+ A11"als% L.6?61?% &ar. 6C% 1AB@%
6@12 =. A*"ur+ina &"l"n!io.H"rr"ra (!on!urring an
iss"nting)%
6@12 7alu!anag $. =ug" Fran!is!o% >5 99@66% &a# 9?%
1AB9%
6@12 A!".Agro D"$"lo1*"nt Cor1. $. CA% >5 11AC6A% =an.
61%
1AAC% CB SCAD 1@6% 6@12 (1?) 5"Euisit"s +or a Vali P"rio
or T"r*% 6@62 (11) :u"r#% 6@62 (16) I,"n P"rio o+
Pr"s!ri1tion 7"gins% 6@62 (19) E4t"nsion o+ P"rio% 6@92 (1@)
T," &orato. riu* La3s o+ t," P,ili11in"s% 6@9.
A5TICLE 11A@ ............................................................................... 6@9
CO&&ENT' 5ul"s in Cas" o+ LOSS% D"t"rioration% or
I*. 1ro$"*"nt% 6@9.
A5TICLE 11A5 ............................................................................... 6@@
CO&&ENT' (1) Pa#*"nt or D"li$"r# &a" 7"+or" t,"
Arri$al o+ t," P"rio% 6@@2 (6) P"rio Iit,in I,i!, 5"!o$"r#
&a# 7" &a"% 6@52 (9) Pr"su*1tion t,at D"btor Dn"3 o+
Pr"*atur". n"ss% 6@62 (@) Di++"r"nt &"anings o+ P,ras"s%
6@6.
A5TICLE 11A6 ............................................................................... 6@6
CO&&ENT' (1) For I,os" 7"n"+it T"r* Has 7""n Estab.
lis,"% 6@62 (6) E4!"1tions% 6@62 (9) Cir!u*stan!"s I,i!,
In. i!at" For I,o* t," 7"n"+it o+ t," T"r* Is% 6@C2
Ni!olas% "t al. $. &atias% "t al.% BA P,il. 166% 6@C2 (@) So*"
D"!i" Cas"s% 6@B2 Sar*i"nto $. Villas"Por% @9 P,il. BB?%
6@B2 Pastor $. >as1ar% 6 P,il. 5A6% 6@A2 Illusorio an Via
$. 7usu"go% L.B66% 1A@A% 6@A2 O!,oa $. Lo1"H% (C.A.) 5?
O.>. 5BC1% D"!.
1A5@% 6@A2 N"1o*u!"no $. Nar!iso% "t al.% B@ P,il. 5@6%
65?2 (5) I,"n Pr"s!ri1ti$" P"rio 7"gins% 65?.
A5TICLE 11AC ............................................................................... 65?
CO&&ENT' (1) I,"n t," Court &a# Fi4 a P"rio% 6512
44ii
>r". gorio Aran"ta% In!. $. P,il. Sugar Estat"s
D"$"lo1*"nt Co.% L.6655B% &a# 91% 1A6C% 6562 (6) I,"n t,"
Court &a# Not Fi4 t," T"r*% 6592 7arr"tto $. Santa
&arina% 66 P,il. @@?% 6592 Ni!anor &. 7altaHar $. San
&igu"l 7r"3"r#% L.69?C6% F"b.
6C% 1A6A% 65@2 (9) A11li!abilit# o+ t," Arti!l" to t,"
Obliga. tions Cont"*1lat" T,"r"in% 6552 (@) T," A!tion to
7ring ;n. "r T,is Arti!l"% 6552 Tiglao% "t al. $. &anila
5ailroa Co.% AB
P,il. 1B1% 6562 E1i+anio Alano% "t al. $. Claro Cort"s% "t
al.%
44ii
L.156C6% No$. 6B% 1A6?% 65C2 (5) :u"r#' Iit,in I,at
P"rio &ust t," A!tion to Fi4 t," P"rio 7" 7roug,t% 65C2
(6) Ho3 t," Court Fi4"s t," P"rio% 65B2 (C) An E4a*1l"
I,"r" t," Arti!l" Is Not A11li!abl"% 65B2 &ilar" $.
H"rnano% >5 55@B?% =un. 9?% 1ABC% 65B.
A5TICLE 11AB ............................................................................... 65A
CO&&ENT' (1) I,"n t," D"btor Los"s t," 7"n"+it o+
t,"
P"rio% 65A2 (6) E4a*1l"s% 65A2 Song Fo an Co. $. Oria%
99
P,il. 9% 66?2 (9) Ho3 T"r*s or P"rios Ar" Co*1ut"%
6612 (@) So*" Cas"s% 6662 &o"sto Soriano $. Carolina
Abalos% "t al.% B@ P,il. 6?6% 6662 =os" L. >o*"H% "t al. $.
&igu"l Tabia%
B@ P,il. 66A%
669.
S"!tion 9 0 ALTE5NATIVE O7LI>ATIONS .................................
669
A5TICLE 11AA ............................................................................... 669
CO&&ENT' (1) OAlt"rnati$" Obligation8 D"+in"% 66@2 (6)
E4a*1l"% 66@2 (9) :u"r#% 66@.
A5TICLE 16?? ............................................................................... 66@
CO&&ENT' (1) I,o Has t," 5ig,t o+ C,oi!"% 66@2 (6)
E4a*1l"%
6652 (9) :u"r#% 6652 (@) So*" Cas"s% 6652 Agon!illo $. =a$i"r%
9? P,il. 16@% 6652 Ong >uan Can an 7an< o+ t," P,il.
Islans $. C"ntur# Insuran!" Co*1an#% @6 P,il. 5A6% 6662
EEuitabl" Insuran!" Casualt# Co.% In!. $. 5ural Insuran!"
an Sur"t# Co.% In!.% L.1C@96% =an. 91% 1A66% 66C2 (5)
Li*itation on t," D"btor8s C,oi!"% 66C2 (6) E4a*1l"% 66C.
A5TICLE 16?1 ............................................................................... 66C
CO&&ENT' (1) &"ans o+ Noti+i!ation or Co**uni!ation
to Ot,"r Part# o+ C,oi!"% 66B2 (6) E++"!t o+ Noti!" t,at
C,oi!" Has 7""n &a"% 66B2 (9) 5"ason +or
Co**uni!ating C,oi!" to Cr"itor% 66B2 (@) 5"Euisit"s +or
t," &a<ing o+ t," C,oi!"%
66
B.
A5TICLE 16?6 ............................................................................... 66A
CO&&ENT' I,"n D"btor Los"s t," 5ig,t o+ C,oi!"%
66A2 San =os" $. =a$i"r% L.6B?6% 1A5@% 66A.
A5TICLE 16?9 ............................................................................... 66A
CO&&ENT' 5ul" I,"n D"btor Cannot C,oos" 7"!aus"
1C51
o+
Cr"itor8s A!ts%
6C?.
A5TICLE 16?@ ............................................................................... 6C?
CO&&ENT' (1) Alt"rnati$" 5ig,ts o+ Cr"itor I,"n Loss
or I*1ossibilit# O!!urs 7"+or" D"btor8s C,oi!"% 6C?2 (6)
E4a*. 1l"% 6C1.
1C56
A5TICLE 16?5 ............................................................................... 6C1
CO&&ENT' (1) 5ul"s I,"n C,oi!" Has 7""n >i$"n to
Cr". itor% 6C62 (6) E4a*1l"% 6C62 (9) E++"!t i+ Cr"itor
D"la#s in &a<ing t," C,oi!"% 6C9.
A5TICLE 16?6 ............................................................................... 6C9
CO&&ENT' (1) OFa!ultati$" Obligation8 D"+in"% 6C92 (6)
Distin!tions 7"t3""n t," Alt"rnati$" an t," Fa!ultati$"
Obligations% 6C@2 :uiHana $. 5"ug"rio an Postrao% A@
P,il.
61B% 6C52 (9) :u"r#%
6C5.
S"!tion @ 0 =OINT AND SOLIDA5K O7LI>ATION .....................
6C5
A5TICLE 16?C ............................................................................... 6C5
CO&&ENT' (1) =oint Distinguis," +ro* Soliar#
Obligations%
6C62 (6) E4a*1l"s% 6C62 (9) >"n"ral 5ul" an E4!"1tions%
6C62 (@) So*" Instan!"s I,"r" t," La3 I*1os"s Soliar#
Liabilit#%
6CC2 (5) :u"r#% 6CC2 (6) So*" D"!i" Cas"s% 6CB2 ;<
Pa
L"ung $. Nigorra% A P,il. 9B1% 6CB2 Pi*"nt"l $.
>uti"rr"H%
1@ P,il. @A% 6CB2 D" L"on $. N"1o*u!"no an D" ="sus%
9C
P,il. 1B?% 6CA2 Parot $. >"*ora% C P,il. A@% 6CA2 Calo% =r.
$. Cabanos% L.1AC?@% O!t. 1A% 1A66% 6CA2 Ori"ntal
Co**"r!ial Co.% In!. $. F"li4 La+u"nt"% (C.A.) 9B O.>. A@C%
6B?2 Ior!"st"r $. O!a*1o% "t al.% 66 P,il. @6% 6B?2 Ab"lla $.
Co 7un Di*% "t al.% 1?? P,il. 1?1A% 6B?2 Ta*a#o $.
AEuino% L.1669@.16C6?% &a# 6A% 1A5A% 6B12 ="r"os $. Court
o+ A11"als% L.@BC@C% S"1t.
9?% 1AB6% 6B62 F" P"r"H $. =os"+ina >uti"rr"H% "t al.% L.
9?115% S"1t. 6B% 1AC9% 6B62 >onHal"s $. Halili% "t al.% L.
11561% O!t.
91% 1A5B% 6B92 5"1ubli! Plant"rs 7an< $. CA% >5 L.
A9?C9% D"!. 61% 1AA6% 6B9.
A5TICLE 16?B ............................................................................... 6B@
CO&&ENT' (1) Pr"su*1tion T,at Obligation Is =oint% 6B@2
(6) Distin!t S,ar"s% 6B@2 (9) So*" D"!i" Cas"s% 6B@2
Co*1ania >"n"ral " Taba!os $. Ob"% 19 P,il. 9A1% 6B@2
Ori"ntal Co**"r!ial Co. $. Ab"to% 6? P,il. C69% 6B52
Purita Ali1io $. CA% >5 19@1??% S"1t. 6A% 6???% 6B52 (@)
S#non#*s% 6B62 (5) So*" Cons"Eu"n!"s o+ =oint Liabilit#%
6B62 (6) Liabiliti"s o+ Partn"rs% 6BC2 Li3anag% "t al. $.
Ior<*"n8s Co*1"nsation Co**ission% L.1616@% &a# 66%
1C59
1A5A% 6BC2 (C) Liabiliti"s o+ Ag"nts% 6BB2 (B) Liabiliti"s o+
Co.Prin!i1als (In Ag"n!#)% 6BB2 (A) Liabiliti"s o+ Husban
an Ii+"% 6BB2 (1?) Liabiliti"s o+ Violators o+ Arts. 1A% 6?%
61% 66 (on Hu*an 5"lations) o+ t," Ci$il Co"% 6BB2 (11)
Liabiliti"s o+ E*1lo#"r an E*1lo#"" +or t," Latt"r8s
Tortious A!t% 6BA2 (16) :u"r#% 6BA.
A5TICLE 16?A ............................................................................... 6BA
CO&&ENT' (1) Ini$isibl" =oint Obligation% 6BA2 (6)
E4a*1l" o+ a =oint Ini$isibl" Obligation% 6BA2 (9) &anr"sa8s
Co**"nt%
1C5@
6A?2 (@) C,ara!t"risti!s% 6A?2 (5) E4a*1l"% 6A?2 (6) A
D"*an b# On" =oint Cr"itor Is Not a D"*an b# t,"
Ot,"rs% 6A1.
A5TICLE 161? ............................................................................... 6A6
CO&&ENT' (1) Ini$isibilit# as Distinguis," +ro*
Soliar. it#% 6A62 (6) E4a*1l"s% 6A62 (9) T," Di++"r"nt Dins
o+ Soliar. it#% 6A6.
A5TICLE 1611 ............................................................................... 6A9
CO&&ENT' (1) Soliarit# D"s1it" Di++"r"nt T"r*s or Coni.
tions% 6A92 (6) Cas"% 6A@2 In!,austi M Co. $. Kulo% 9@ P,il.
ACB%
6A@2 (9) Probl"*%
6A@.
A5TICLE 1616 ............................................................................... 6A5
CO&&ENT' Soliar# Cr"itors &a# Do ;s"+ul% Not
Pr"jui. !ial A!ts% 6A5.
A5TICLE 1619 ............................................................................... 6A5
CO&&ENT' (1) >"n"ral 5ul" About Non.Assign*"nt
o+ 5ig,ts b# Soliar# Cr"itor% 6A52 (6) Criti!is* b#
=usti!" =.7.L. 5"#"s% 6A6.
A5TICLE 161@ ............................................................................... 6A6
CO&&ENT' (1) To I,o* D"btor &ust Pa#% 6AC2 (6)
Probl"*s%
6A
C.
A5TICLE 1615 .............................................................................. 6AB
CO&&ENT' (1) E++"!t o+ No$ation% 6AB2 (6) E++"!t o+
Co*1"n. sation% 6AA2 (9) E++"!t o+ Con+usion (or &"rg"r)% 9??2
(@) E++"!t o+ 5"*ission (or Iai$"r)% 9??.
A5TICLE 1616 ............................................................................... 9?1
CO&&ENT' (1) Against I,o* Cr"itor &a# Pro!""%
9?62 Constant" A*or " Castro $. CA% >5 11B9B% =ul. 1B%
6??6% 9?62 (6) E++"!t o+ Not Pro!""ing Against All% 9?62 (9)
A11li!abilit# o+ Art. 1616% 9?62 P,il. National 7an< $.
Con!"1!ion &ining Co.% "t al.% L.16A6B% =ul. 91% 1A66% 9?62
P,il. Nat. 7an< $. Nu"$as% L.61655% No$. 6A% 1A65% 9?92
O1"rators In!or1orat" $. A*"ri!an 7is!uit Co.% In!.% >5
9@C6C% O!t. 69% 1ABC% 9?92 (@) Passi$" Soliarit#% 9?92 (5)
Passi$" Soliarit# an Sur"t#s,i1%
9?92 (6) E4a*1l"s% 9?@2 (C) Probl"*s%
9?@.
A5TICLE 161C ............................................................................... 9?5
CO&&ENT' (1) E++"!ts o+ Pa#*"nt% 9?52 (6) OPa#*"nt8
1C55
D"+in"% 9?52 (9) Probl"*s% 9?52 (@) Natur" o+ Liabilit#
+or 5"i*burs"*"nt% 9?62 In!,austi M Co. $. Kulo% 9@ P,il.
ACB%
9?C2 (5) 7asis o+ t," 5ig,t to b" 5"i*burs"% 9?C2 Iilson
$. 7"r<"n<ott"r% A6 P,il. A1B% 9?C2 (6) Substitution o+
Parti"s%
9?B2 (C) 7A5% 9?B2 (B) P5O7LE&% 9?A2 (A) ANOTHE5
P5O7LE&% 9?A.
1C56
A5TICLE 161B ............................................................................... 9?A
CO&&ENT' (1) E++"!t o+ Pa#*"nt o+ Pr"s!rib" D"bt% 9?A2
(6) E++"!t o+ Pa#*"nt o+ an Ill"gal Obligation% 91?.
A5TICLE 161A ............................................................................... 91?
CO&&ENT' (1) E++"!t o+ 5"*ission &a" A+t"r
Total Pa#*"nt Ha Alr"a# E4tinguis," t," Obligation%
9112 (6) 5"ason +or t," Pro$ision% 9112 (9) Probl"*s% 911.
A5TICLE 166? ............................................................................... 916
CO&&ENT' (1) 5"*ission o+ t," I,ol" Obligation% 916%
(6) E4a*1l"% 916.
A5TICLE 1661 ............................................................................... 916
CO&&ENT' (1) E++"!t o+ Loss or I*1ossibilit#% 9192 (6)
Probl"*s% 919.
A5TICLE 1666 ............................................................................... 91@
CO&&ENT' (1) D"+"ns"s in A!tions Fil"% 91@2 (6) Dins
o+ D"+"ns"s% 91@2 (9) E4a*1l"s% 9152 Probl"*% 9162 7raganHa
$. Villa Abrill"% L.16@C1% A1r. 19% 1A5C% 9162 Ouano
Arrastr" S"r$i!"% In!. $. Al"onor% "t al.% >5 AC66@% O!t. 1?%
1AA1% 91C2 (@) E++"!t o+ D"btor8s D"at,% 91B.
S"!tion 5 0 DIVISI7LE AND INDIVISI7LE O7LI>ATIONS ...
91B
A5TICLE 1669 ............................................................................... 91B
CO&&ENT' (1) Di$isibl" an Ini$isibl" Obligations
D"+in"%
91B2 (6) OIni$isibilit#8 Distinguis," +ro* OSoliarit#8% 91A2
(9) Class"s or Dins o+ Ini$isibilit#% 91A2 (@) Dins o+
Di$ision%
91
A.
A5TICLE 166@ ............................................................................... 96?
CO&&ENT' (1) =oint Ini$isibl" Obligation% 96?2 (6) E++"!t
o+
Non.Co*1lian!"%
96?.
A5TICLE 1665 ............................................................................... 961
CO&&ENT' (1) Obligations T,at Ar" D""*"
Ini$isibl"%
9612 (6) Obligations T,at Ar" D""*" Di$isibl"% 9612 (9)
E+. +"!t o+ Ill"galit# on a Di$isibl" Contra!t% 9662 (@) Cas"s%
9662 7losso* M Co. $. &anila >as Cor1.% 55 P,il. 666% 9662 L.
7u!<
1C5C
M Son Lu*b"r Co. $. Atlanti! Lu*b"r Co.% 1?A F""ral
@11%
96
9.
S"!tion 6 0 O7LI>ATIONS IITH A PENAL CLA;SE ...............
96@
A5TICLE 1666 ............................................................................... 96@
CO&&ENT' (1) OP"nal Claus"8 D"+in"% 96@2 (6) Dins
o+ P"nal Claus"s% 96@2 (9) P"nal Claus" Distinguis,"
+ro* a Conition% 9652 (@) Prin!i1al Pur1os" o+ t," P"nal
Claus"%
1C5B
9652 (5) E4a*1l"s% 9652 (6) E4!"1tions to t," >"n"ral
5ul" t,at t," P"nalt# Ta<"s t," Pla!" o+ In"*nit# +or
Da*ag"s an +or t," Pa#*"nt o+ Int"r"sts (stat"
ot,"r3is"% Instan!"s 3,"n ADDITIONAL a*ag"s *a# b"
r"!o$"r")% 9662 (C) &a# An# P"nalt# 7" D"*anabl"% 9662
(B) Cas"s% 96C2 Na$arro $. &allari% @5 P,il. 6@6% 96C2
La*b"rt $. Fo4% 66 P,il. 5BB% 96C2 &anila 5a!ing Club% In!.
$. &anila =o!<"# Club% 6A P,il. 55%
96C2 Na<1il an Sons% "t al. $. CA% >5 @CB51% 5"solution
on &otion +or 5"!onsi"ration% 96B2 Countr# 7an<"rs
Insuran!" Cor1. $. CA% >5 B5161% S"1. 11% 1AA1% 96A2 (A)
Obligations 3it, a P"nal Claus" Distinguis," +ro*
E4a*1l"s +ro* t," Fa!ultati$" an t," Alt"rnati$"
Obligations% 991.
A5TICLE 166C ............................................................................... 996
CO&&ENT' (1) >"n"rall#% D"btor Cannot Substitut"
P"nalt# +or t," Prin!i1al Obligation% 9962 (6) E4a*1l"%
9962 Cui $. Sun C,an% @1 P,il. 569% 9962 (9) >"n"rall#%
Cr"itor Cannot D"*an 7ot, Ful+ill*"nt an t," P"nalt#
at t," Sa*" Ti*"%
9992 Vitug Di*atula! $. Coron"l% @? P,il. 6B6% 99@2
Na$arro $. &allari% @5 P,il. 6@6% 99@.
A5TICLE 166B ............................................................................... 995
CO&&ENT' (1) No N"!"ssit# o+ Pro$ing A!tual
Da*ag"s%
9952 (6) 5"ason% 9952 La*b"rt $. Fo4% 66 P,il. 5BB%
996.
A5TICLE 166A ............................................................................... 996
CO&&ENT' (1) I,"n P"nalt# &a# 7" 5"u!" b# t,"
Court%
9962 (6) E4a*1l"s% 99C2 (9) Cas"s% 99C2 C,ua >ui S"ng
$. >"n"ral Sal"s Su11l# Co.% In!.% A1 P,il. 159% 99C2 Kulo $.
P"% L.1??61% A1r. 66% 1A5C% 99B2 ;*ali $. &i!lat% L.A666%
=ul. 1?%
1A5A% 99A2 5"#"s $. Viua # Hijos " For*oso% (C.A.) @6
O.>.
5661% 99A2 Co**"r!ial Cr"it Cor1. o+ Caga#an " Oro $.
CA
an t," Caga#an " Oro Colis"u*% In!.% >5 CB915% =an.
6%
1ABA% 9@?2 Insular 7an< o+ Asia an A*"ri!a $. SalaHar%
>5
B6?B6% &ar. 65% 1ABB%
9@?.
A5TICLE 169? ............................................................................... 9@?
CO&&ENT' (1) E++"!t o+ Nullit# o+ t," P"nalt# Claus"%
9@12 (6) E4a*1l"s% 9@1.
CHAPTE5 @ 0 ENTIN>;ISH&ENT OF O7LI>ATION ...............
9@6
>ENE5AL P5OVISIONS ....................................................................
9@6
A5TICLE 1691 ............................................................................... 9@6
CO&&ENT' (1) Classi+i!ation b# CASTAN o+ Caus"s o+
E4. tinguis,*"nt o+ Obligations% 9@62 (6) Classi+i!ation
A!!oring to t," Ci$il Co"% 9@92 Co**ission"r o+ Int"rnal
5"$"nu" $. Iillia* =. Sut"r an T," Court o+ Ta4 A11"als%
L.65596% F"b.
6B% 1A6A% 9@@2 La*b"rto Torrijos $. Court o+ A11"als% L.
@?996% O!t. 6@% 1AC5% 9@52 LaHaro $. Sagun% CB SC5A 1??%
9@6.
44$i
i
S"!tion 1 0 PAK&ENT O5 PE5FO5&ANCE ................................ 9@6
A5TICLE 1696 ............................................................................... 9@6
CO&&ENT' (1) OPa#*"nt8 D"+in"% 9@62 (6) Pr".E4isting
Obligation% 9@62 (9) A!!"1tan!" b# Cr"itor% 9@62 (@) E++"!t o+
Pa#*"nt &a" ;n"r a Voi =ug*"nt% 9@C.
A5TICLE 1699 ............................................................................... 9@C
CO&&ENT' (1) Co*1l"t"n"ss o+ Pa#*"nt% 9@C2 (6) Ho3
Pa#*"nt or P"r+or*an!" Is &a"% 9@C2 (9) 7ur"n o+
Proo+%
9@B2 (@) &"ans o+ Pro$ing Pa#*"nt% 9@B2 =a$i"r $.
7rinas% (C.A.) @? O.>. @t, Su11. No. B% 1. 6CA% 9@B2 >ui =ong
M Co. $. 5i$"ra an A$"llar% @5 P,il. CCB% 9@A.
A5TICLE 169@ ............................................................................... 9@A
CO&&ENT' Substantial P"r+or*an!" in >oo Fait,%
9@A2 5os"t"% "t al. $. P"rob"r D"$. Cor1.% CA.>5 61?96.5%
=ul. 91%
1AB1%
95?.
A5TICLE 1695 ............................................................................... 95?
CO&&ENT' (1) Esto11"l on t," Cr"itor8s Part in Vi"3
o+
His A!!"1tan!"% 95?2 (6) :uali+i" A!!"1tan!"% 95?2 (9)
Cas"%
9512 Constant" A*or " Castro $. CA% >5 115B9B% =ul.
1B%
6??6%
951.
A5TICLE 1696 ............................................................................... 951
CO&&ENT' (1) 5ig,t o+ Cr"itor to 5"+us" Pa#*"nt b#
T,ir P"rson% 9512 (6) Co**"nt o+ t," Co" Co**ission%
9562 (9) Obs"r$ation o+ =usti!" =.7.L 5"#"s% 9562 (@)
Pa#*"nt b# a T,ir P"rson (7A5)% 9592 (5) Cas"s% 95@2
Agon!illo $. =a$i"r%
9B P,il. @6@% 95@2 >onHaga $. >ar!ia% 6C P,il. C% 95@2
&itsui 7ussan Dais,a $. &"ral!o% 9A P,il. 66@% 9552
5",abilitation Finan!" Cor1. $. Court o+ A11"als% "t al.% A@
P,il. AB5% 9562 C,onn"# Li* $. CA% L"a Castro I,"lan M
D"it, La3r"n!" I,"lan% >5 1?@B1A.6?% =ul. 6?% 1AAB% 95C.
A5TICLE 169C ............................................................................... 95C
CO&&ENT' (1) I,"n No Subrogation E4ists% 95C2 (6)
OSubro. gation8 D"+in"% 95B2 (9) So*" 5ig,ts I,i!, &a# 7"
E4"r!is" b# t," P"rson Subrogat" in t," Pla!" o+ t,"
Cr"itor% 95B2 (@) Probl"*s% 95B2 (5) :u"stions% 95A2 (6)
OSubrogation8 Distin. guis," +ro* O5"i*burs"*"nt8% 96?2 (C)
Si*ilarit#% 96?.
1C61
A5TICLE 169B ............................................................................... 961
CO&&ENT' (1) I,"n Pa#*"nt b# Strang"r Is D""*" a
Donation% 9612 (6) E4a*1l"%
961.
A5TICLE 169A ............................................................................... 961
CO&&ENT' (1) Pa#*"nt b# an In!a1a!itat" P"rson% 9662
(6) E4a*1l" o+ t," E4!"1tion% 966.
1C66
A5TICLE 16@? ...............................................................................
966
CO&&ENT' (1) To I,o* Pa#*"nt &ust 7" &a"% 9692
(6) Cas"s% 9692 Harr# E. D""l"r El"!tri! Co. $. 5origu"H%
@@
P,il. 1A% 9692 Or*a!,"a $. Trillana% 19 P,il. 1A@% 96@2
Crisol $. Cla$"ron% 9B O.>. No. 156% 1. 9C9@% 96@2 (9)
Pa#*"nt &a" to Aut,oriH" Entiti"s% 9652 Ha3 Pia $.
C,ina 7an<ing Cor. 1oration% B? P,il. 6?@% 9652 E$"r"tt
St"a*s,i1 Cor1oration $. 7an< o+ t," P,ili11in" Islans% B@
P,il. 6?6% 9662 5"1ubli! $. >rijalo% L.6?6@?% D"!. 91% 1A65%
96C2 Ar!a!," $. LiHar"s M Co.% A1 P,il. 9@B% 96B2 P,il. Nat.
7an< $. Er"n"ta% "t al.% L.
19?5B% Aug. 6B% 1A5A% 96B2 =os"+ina 5uiH " LuHuriaga
7lan!o $. Co*1ania >"n"ral " Taba!os " Fili1inas% "t al.%
L.1?B1?% No$. 6A% 1A6?% 96B2 5io &ont"!illo $. Igna!ia
5"#n"s M S1s. 5""*1tor M Elisa Abu!a#% >5 19B?1B% =ul.
66% 6??6% 96A.
A5TICLE 16@1 ............................................................................... 96A
CO&&ENT' (1) Pa#*"nt to In!a1a!itat" or
;naut,oriH" P"rsons% 9C?2 (6) First Paragra1, 0
Pa#*"nt to an In!a1a!itat" P"rson% 9C?2 (9) S"!on
Paragra1, 0 Pa#*"nt to a T,ir Part# Not Dul#
Aut,oriH"% 9C12 P"o1l" $. Kabut% L.@6B@C% L.@6A?6% A1r. 6A%
1ACC% 9C6.
A5TICLE 16@6 ............................................................................... 9C6
CO&&ENT' (1) Pa#*"nt &a" in >oo Fait, to a P"rson
in Poss"ssion o+ t," Cr"it% 9C62 (6) 5"Euisit"s% 9C92 (9)
E4a*1l"s o+ a P"rson in Poss"ssion o+ t," Cr"it% 9C92 (@)
Cas"% 9C92 S1s. Al!araH $. Tangga.an% >5 16B56B% A1r. A%
6??9% 9C92 (5) 7"llig"r"nt O!!u1ant% 9C@2 Panganiban $.
Cu"$as% C P,il.
@CC%
9C@.
A5TICLE 16@9 ............................................................................... 9C5
CO&&ENT' (1) Pa#*"nt &a" A+t"r =ui!ial Or"r to
5". tain% 9C52 (6) O>arnis,*"nt8 D"+in"% 9C52 (9) E4a*1l" o+
>ar. nis,*"nt% 9C52 (@) OInt"r1l"a"r8 D"+in"% 9C62 (5)
E4a*1l" o+ Int"r1l"a"r% 9C62 (6) OInjun!tion8 D"+in"% 9CC2
(C) E4a*1l" o+ Injun!tion% 9CC.
A5TICLE 16@@ ............................................................................... 9CC
CO&&ENT' (1) D"btor Cannot Co*1"l Cr"itor to A!!"1t
a Di++"r"nt Obj"!t% 9CB2 (6) Instan!"s I,"n Art. 16@@ Do"s
Not A11l#% 9CB.
A5TICLE 16@5 ............................................................................... 9CB
1C69
A5TICLE 16@? ...............................................................................
966
CO&&ENT' (1) ODation in Pa#*"nt8 D"+in"% 9CB2 (6)
S#no. n#*s +or Dation in Pa#*"nt% 9CA2 (9) E4a*1l"s% 9CA2
(@) 5"asons I,# Dation in Pa#*"nt Is >o$"rn" b# t,"
La3 o+ Sal"s% 9CA2 (5) Sal" Distinguis," +ro* Dation in
Pa#*"nt%
9CA2 (6) Conitions ;n"r I,i!, a Dation in Pa#*"nt
Ioul
7" Vali%
9B?.
1C6@
A5TICLE 16@6 ...............................................................................
9B?
CO&&ENT' (1) Obligation to >i$" >"n"ri! T,ings% 9B12
(6) Iai$"r% 9B12 (9) I,"n Contra!t Is VOID% 9B1.
A5TICLE 16@C ............................................................................... 9B6
CO&&ENT' (1) D"btor Pa#s >"n"rall# +or E4trajui!ial
E41"ns"s% 9B62 (6) I,at >o$"rns =ui!ial Costs% 9B62 (9)
Ho3 =ui!ial Costs Ar" D"t"r*in"% 9B62 (@) >"n"rall# No
Costs Against t," >o$"rn*"nt% 9B6.
A5TICLE 16@B ............................................................................... 9B6
CO&&ENT' (1) P"r+or*an!" S,oul >"n"rall# 7"
Co*1l"t"%
9B92 (6) E4!"1tions%
9B9.
A5TICLE 16@A ............................................................................... 9B@
CO&&ENT' (1) OL"gal T"n"r8 D"+in"% 9B@2 (6) L"gal
T"n"r in t," P,ili11in"s% 9B@2 (9) Do!trin"s +or
Transa!tions During t," =a1an"s" O!!u1ation% 9B52
F"li!iano A. CruH $. Auitor >"n"ral% L.16699% &a# 9?%
1A5A% 9B62 (@) Illustrati$" Cas"s%
9A?2 Allison =. >ibbs% "t!. $. Eulogio 5origu"H% Sr.% "t!.%
L.
1@A@% August 9% 1A@A (Valiit# o+ =a1an"s"
Transa!tions)%
9A?2 Do*ingo Aurr"o!o"!,a $. Daban<alan Sugar Co.% In!.%
B1
P,il. @C6 (D"+"ns" o+ All"g" Dur"ss)% 9A12 P,ili11in"
Trust Co. $. Luis &a. Aran"ta% "t al.% B9 P,il. 196 (No
Coll"!ti$" or >"n"ral Dur"ss)% 9A12 D" Asis $. 7u"n$iaj"% "t
al.% @5 O.>. No.
1% 1. 91C (S"ll"r 7"n"+it" 3it, ;s" o+ =a1an"s" &on"#)%
9A62 &on"jar $. Ni!olo% @9 O.>. No. 16% 1. 5?AA (I,"n
-E*"rg"n!# Not"s/ C"as" to 7" L"gal T"n"r)% 9A62
F"rnan"H% "t al. $. Nat. Insuran!" Co. o+ t,"
P,ili11in"s% L.A1@6% =an. 6C%
1A5C% 9A92 (5) Sti1ulation o+ Anot,"r Curr"n!#% 9A92
P,o"ni4 Assuran!" Co*1an# $. &a!onra# an Co.% In!.%
L.65?@B% &a# 19% 1AC5% 9A@2 Tagala $. =i*"n"H% >5
99?5?% =ul# 69%
1ABC% 9A52 (6) ;ni+or* Curr"n!# La3% 9A62 C.F. S,ar1 M Co.
$. Nort,3"st Airlin"s% >5 199@AB% A1r. 1B% 6??6% 9A62 (C)
7ar%
9A62 (B) D"li$"r# o+ Co**"r!ial Instru*"nts% 9AC2
:uiros $. Tan >uinla#% 5 P,il. 6C5% 9AB2 (A) Postat"
C,"!<s% 9AA2 Ongsi1 $. Pru"ntial 7an<% >5 6C96B% &a# 9?%
1AB9% 9AA.
A5TICLE 165? ............................................................................... 9AA
1C65
A5TICLE 16@6 ...............................................................................
9B?
CO&&ENT' (1) OIn+lation8 D"+in"% 9AA2 (6) OD"+lation8
D"+in"%
9AA2 (9) Non.a11li!abilit# o+ t," Arti!l" Toa#% @??2 E$"l#n
=. Sangraor% =oin" b# ,"r ,usban 5origo Sangraor% =r.
$. S1ous"s Fran!is!o Val"rra*a an T"r"sita &.
Val"rra*a% >5 CA556% No$. 6A% 1ABB% @??2 Fili1ino Pi1"
an Founr# Cor1. $. National Iat"r3or<s an S"3"rag"
Aut,orit#% >5
@9@@6% &a# 9% 1ABB% @??2 (@) 7asis +or Pa#*"nt% @?12 Pan
A*"ri!an $. PAA E*1lo#""s% L.1B9@5% =an. 9?% 1A6@%
@?12 Co**ission"r o+ Publi! Hig,3a#s $. Hon. 7urgos% "t
al.% L.
96C?6% &ar. 91% 1AB?%
@?6.
1C66
A5TICLE 1651 ...............................................................................
@?9
CO&&ENT' (1) I,"r" Pa#*"nt &ust 7" &a"% @?92 (6)
E4. a*1l"s% @?@2 (9) Illustrati$" Cas"s% @?@2 &anala! $.
>ar!ia%
C6 P,il. 616% @?@2 >o*"H $. Ng Fat% C6 P,il. 555% @?52
East. boar Na$igation% Lt. $. Ks*a"l an Co.% L.A?A?%
S"1t. 1?%
1A5C% @?52 >onHaga an H"rnan"H $. 5",abilitation
Finan!"
Cor1.% L.BA@C% F"b. 6?% 1A5C%
@?5.
Subs"!tion 1 0 APPLICATION OF PAK&ENTS ............................
@?6
A5TICLE 1656 ............................................................................... @?6
CO&&ENT' (1) S1"!ial For*s o+ Pa#*"nt% @?C2 (6)
OA11li!ation o+ Pa#*"nts8 D"+in"% @?C2 (9) I*1ortan!"% @?C2
(@) 5"Euisit"s +or A11li!ation o+ Pa#*"nt to 7" &a" ;s"
o+% @?C2 (5) 5ul" I,"n D"bts Ar" Not K"t Du"% @?B2 (6)
Pr"+"r"ntial 5ig,t o+ D"btor% @?B2 (C) Ho3 A11li!ation o+
Pa#*"nt Is &a"% @?B2 (B) A11li!ation &a" b# Cr"itor%
@?A2 7an< o+ t," P,il. Islans $. Es1inosa% (C.A.) @? O.>.
Su1. @% 1. 6B% Aug. 69% 1A@1% @?A2 (A) 5"$o!ation o+ t,"
A11li!ation% @?A2 (1?) I,"n A11li!ation &ust 7" &a"% @1?2
(11) E4a*1l"s o+ Ho3 a Cr"itor &a<"s t," A11li!ation%
@1?2 Po3"ll $. Nat. 7an<% 5@ P,il. 5@% @1?2 (16) I,"n
A11li!ation o+ Pa#*"nts Cannot 7" A$ail" o+%
@1?2 5"1arations Co**ission $. ;ni$"rsal D""1.S"a
Fis,ing
Cor1.% L.61A?1% L.61AA6% =un" 6C% 1ACB%
@11.
A5TICLE 1659 ............................................................................... @11
CO&&ENT' (1) Int"r"st &ust 7" Pai First% @112 5os"t"%
"t al. $. P"rob"r D"$. Cor1.% CA.>5 61?96.5% =ul. 91% 1AB1%
@162 (6) E++"!t i+ Pa#*"nt Is Cr"it" to t," Prin!i1al%
@162 (9) I,at Int"r"st Is Su11os" to 7" Pai% @16.
A5TICLE 165@ ............................................................................... @16
CO&&ENT' (1) 5ul"s in Cas" No A11li!ation o+ Pa#*"nt
Has 7""n Voluntaril# &a"% @162 (6) Sa*1l"s o+ &or"
7ur"nso*" (&or" On"rous) D"bts% @192 Hong<ong an
S,ang,ai 7an< $. Alan"s"% @B P,il. AA?% @1@2 (9)
D"t"r*ination o+ I,i!, Obligation is &ost On"rous% @152
(@) Probl"*% @15.
Subs"!tion 6 0 PAK&ENT 7K CESSION .......................................
1C6C
A5TICLE 1651 ...............................................................................
@?9
@16
A5TICLE 1655 ............................................................................... @16
CO&&ENT' (1) C"ssion or Assign*"nt in Fa$or o+
Cr"itors D"+in"% @162 (6) Dins or Class"s o+ Assign*"nt%
@162 (9) 5"E. uisit"s +or Voluntar# Assign*"nt% @162 (@) E++"!t
o+ Voluntar# Assign*"nt% @1C2 (5) CESSION Distinguis,"
+ro* DACION EN PA>O% @1C.
1C6B
Subs"!tion 9 0 TENDE5 OF PAK&ENT AND
CONSI>NATION .......................................................................... @1B
INT5OD;CTO5K CO&&ENT ..........................................................
@1B (1) OT"n"r o+ Pa#*"nt8 D"+in"% @1B2 So!o $. =ug" &ilitant"%
>5 5BA61% =un. 6B% 1AB9% @1B2 (6) OConsignation8 D"+in"%
@1B2 D" V"ra% "t al. $. 5"1ubli!% "t al.% L.96AAB% =ul# 16% 1AC9%
@1A2 (9) OT"n"r o+ Pa#*"nt8 Distinguis," +ro*
OConsignation8%
@1A2 (@) 5ul"s on Pa#*"nt &ust 7" Co*1li" Iit,%
@1A.
A5TICLE 1656 ............................................................................... @1A
CO&&ENT' (1) E++"!t o+ T"n"r Iit,out Consignation% @6?2
V"l"H $. A$"lino% L.@B@@B% =an. 6?% 1AB@% @6?2 (6) I,"n Con.
signation Is Not 5"Euir"% @6?2 Vill"gas $. Ca1istrano% A
P,il.
@16% @612 Co $. PN7% L.61CBC% =un. 6A% 1AB6% @662 (9)
I,"n Cr"itor Is =usti+i" in 5"+using T"n"r o+ Pa#*"nt%
@662 Far East 7an< an Trust Co. $. DiaH 5"alt#% >5
19B5BB% Aug. 69%
6??1% @662 (@) 5unning o+ Int"r"st% @692 (5) I,"n
Consigna. tion Is Su++i!i"nt E$"n Iit,out a Prior T"n"r%
@6@2 5ural 7an< $. Court o+ A11"als% L.96116% A1ril 61%
1AB1% @6@.
A5TICLE 165C ............................................................................... @65
CO&&ENT' (1) Ess"ntial 5"Euisit"s +or Consignation% @652
(6) First 5"Euisit" 0 E4ist"n!" o+ a Vali D"bt% @652 (9)
S"!on 5"Euisit" 0 Vali Prior T"n"r ;nl"ss T"n"r Is
E4!us"% @662 Lu3ig Ha,n $. LaHatin% "t al.% L.119@6 an
L.
115@A% =un. 9?% 1A5A% @662 (@) T,ir 5"Euisit" 0 Prior
Noti!" to P"rsons Int"r"st"% @6C2 So!o $. =ug" &ilitant"%
>5 5BA61% =un. 6B% 1AB9% @6C2 HulganHa% "t al. $. CA% >5
56156% =an. C%
1ABC% @6B2 (5) Fourt, 5"Euisit" 0 A!tual D"1osit 3it, t,"
Pro1"r =ui!ial Aut,oriti"s% @6A2 St. Do*ini! Cor1. $. IAC%
>5
6C6?C% Aug. 66% 1AB5% @9?2 (6) Fi+t, 5"Euisit" 0
Subs"Eu"nt or S"!on Noti!" (&a" A+t"r t," D"1osit)% @9?.
A5TICLE 165B ............................................................................... @91
CO&&ENT' Ho3 Consignation Is A!tuall# &a"% @91.
A5TICLE 165A ............................................................................... @91
CO&&ENT' (1) Cr"itor >"n"rall# to 7"ar E41"ns"s o+
Consignation% @912 (6) T," E41"ns"s%
@96.
A5TICLE 166? ............................................................................... @96
444ii
CO&&ENT' (1) E++"!ts i+ Consignation Has 7""n Dul#
&a"%
@962 (6) 5is< o+ Loss% @962 (9) E++"!ts o+ I*1ro1"r
Consignation%
@992 (@) E++"!ts o+ Dis*issal o+ t," Cas"% @992 (5) :u"r#% @992
(6) I,"n D"btor &a# Iit,ra3 t," T,ing or Su*
Consign"%
@992 (C) :u"r#%
@9@.
A5TICLE 1661 ............................................................................... @9@
CO&&ENT' (1) Iit,ra3al b# D"btor A+t"r Consignation
Has 7""n &a"% @9@2 (6) E++"!ts%
@9@.
444ii
S"!tion 6 0 LOSS OF THE THIN> D;E .......................................... @95
INT5OD;CTO5K CO&&ENT ............................................................
@95 (1) I,at -Loss/ In!lu"s% @952 (6) I,"n Is T,"r" a Loss% @952
(9) I,at I*1ossibilit# o+ P"r+or*an!" In!lu"s% @952 Asia
7"
Fa!tor# $. National 7" Ior<"r8s ;nion% "t al.% L.A166% =an.
91% 1A5C% @962 Hous" $. Si4to " la Costa% 6B P,il. C@6%
@96.
A5TICLE 1666 ............................................................................... @9C
CO&&ENT' (1) T3o Dins o+ Obligations -To >i$"/% @9C2 (6)
E++"!t o+ Loss on an Obligation to D"li$"r a S1"!i+i!
T,ing%
@9C2 (9) I,"n Clai* o+ Loss &ust 7" &a"% @9B2 (@)
E4a*1l"s o+ Instan!"s I,"n t," La3 5"Euir"s Liabilit#
E$"n in t," Cas" o+ a Fortuitous E$"nt% @9A.
A5TICLE 1669 ............................................................................... @9A
CO&&ENT' (1) E++"!t o+ Loss on Obligation to D"li$"r a
>"n"ri! T,ing% @9A2 (6) E4!"1tions% @@?2 (9) &on"tar#
Obli. gations% @@?2 5"1ubli! o+ t," P,ili11in"s $. =os"
>rijalo% L.
6?6@?% D"!. 91% 1A65%
@@?.
A5TICLE 166@ ............................................................................... @@?
CO&&ENT' E++"!t o+ Partial Loss%
@@?.
A5TICLE 1665 ............................................................................... @@1
CO&&ENT' (1) Pr"su*1tion T,at Loss Ias Du" to D"btor8s
Fault% @@12 (6) I,"n Pr"su*1tion Do"s Not A11l#%
@@1.
A5TICLE 1666 ............................................................................... @@1
CO&&ENT' (1) Loss in P"rsonal Obligations% @@12 (6)
I,"n t," I*1ossibilit# &ust E4ist% @@62 (9) E4a*1l"s o+
I*1ossibilit#% @@62 &ilan $. 5io # Olabarri"ta% @5 P,il. C1B%
@@62 (@) E++"!t o+ Subj"!ti$" I*1ossibilit#% @@62 (5) E++"!t
o+ Loss T,ru a Fortuitous E$"nt in 5"!i1ro!al Obligations%
@@92 (6) Partial I*1ossibilit#% @@9.
A5TICLE 166C ............................................................................... @@9
CO&&ENT' (1) E++"!t o+ Di++i!ult# 7"#on t," Parti"s8 Con.
t"*1lation% @@92 (6) Non.A11li!abilit# to 5"al
Obligations%
@@@2 (9) Co**"nt o+ t," Co" Co**ission% @@@2 (@)
E4a*1l"s o+ &oral I*1ossibilit#% @@@.
1CC1
A5TICLE 166B ............................................................................... @@5
CO&&ENT' (1) E++"!t o+ Loss in Cri*inal O++"ns"s% @@52 (6)
Illustrati$" :u"stions% @@5.
A5TICLE 166A ............................................................................... @@6
CO&&ENT' (1) Trans+"r o+ 5ig,ts +ro* t," D"btor to t,"
Cr"itor in Cas" o+ Loss% @@62 (6) -5ig,ts o+ A!tion/% @@C2
;r. rutia M Co. $. 7a!o 5i$"r Plantation Co.% 66 P,il. 696%
@@C.
1CC6
S"!tion 9 0 CONDONATION O5 5E&ISSION OF
THE DE7T ...................................................................................... @@C
A5TICLE 16C? ................................................................................ @@C
CO&&ENT' (1) O5"*ission or Cononation8 D"+in"% @@C2
(6) E4a*1l"% @@B2 (9) Ess"ntial 5"Euisit"s +or 5"*ission%
@@B2 (@) Class"s o+ 5"*ission% @@A2 (5) 5"*ission &ust 7"
>ratuitous%
@5?2 L#ri! Fil* E4!,ang" $. Co31"r% (C.A.) 96 O.>. 16@6%
@5?2 (6) E++"!t i+ 5"*ission Is Not A!!"1t" b# t," D"btor%
@5?2 (C) I,at 5"*ission In!lu"s% @5?2 Fran!is!o PuHon $.
&ar!"lino >a"rlan% "t al.% L.1A5C1% D"!. 91% 1A65% @5?2 (B)
I,"n Iai$"r or Abanon*"nt Is D"+"!ti$"% @512
=o$"n!io Luansing $. P"o1l" o+ t," P,ili11in"s M Court o+
A11"als% L.696BA% F"b.
6B% 1A6A%
@51.
A5TICLE 16C1 ............................................................................... @51
CO&&ENT' (1) E++"!t o+ D"li$"r# o+ Pri$at" Do!u*"nt
E$i"n!ing t," Cr"it% @562 (6) E4a*1l"% @562 (9) I*1li"
5"*ission% @562 (@) Fals",oo Not Allo3"% @562 (5)
Con+li!t o+ Pr"su*1tion% @59.
A5TICLE 16C6 ............................................................................... @59
CO&&ENT' (1) Pr"su*1tion o+ Voluntar# D"li$"r#% @592
Lo1"H Vito $. Ta*bunting% 99 P,il. 666% @592 (6) 5ul" i+ t,"
Instru*"nt o+ Cr"it Is Still in Cr"itor8s Hans% @592
(9) Pr"su*1tion in =oint or Soliar# Obligations% @5@.
A5TICLE 16C9 ............................................................................... @5@
CO&&ENT (1) 5"nun!iation o+ Prin!i1al
E4tinguis,"s
A!!"sor#% 7ut Not Vi!".V"rsa% @5@2 (6) E4a*1l"% @5@.
A5TICLE 16C@ ............................................................................... @55
CO&&ENT' (1) 5"*ission o+ Pl"g"% @552 (6) 5"ason +or
t,"
Pr"su*1tion% @552 (9) Poss"ssion b# a T,ir P"rson%
@55.
S"!tion @ 0 CONF;SION O5 &E5>E5 OF 5I>HTS ..................
@55
A5TICLE 16C5 ............................................................................... @55
CO&&ENT' (1) O&"rg"r or Con+usion8 D"+in"% @562 (6)
5"ason or 7asis +or &"rg"r% @562 (9) 5"Euisit"s o+ a Vali
&"rg"r% @562 (@) E4a*1l" o+ &"rg"r% @562 (5) E++"!t o+
Trans+"r o+ 5ig,ts%
@5C2 (6) E4tin!tion o+ 5"al 5ig,ts% @5C2 (C) 5"$o!abilit# o+
Con+usion or &"rg"r% @5C2 (B) E++"!t i+ &ortgag""
1CC9
7"!o*"s t," O3n"r o+ t," &ortgag" Pro1"rt#% @5B.
A5TICLE 16C6 ............................................................................... @5B
CO&&ENT' (1) E++"!t o+ &"rg"r on >uarantors% @5B2 (6)
E4. a*1l"s% @5B2 (9) Probl"*s% @5A.
A5TICLE 16CC ............................................................................... @5A
CO&&ENT' &"rg"r in =oint Obligations%
@5A.
1CC@
S"!tion 5 0 CO&PENSATION ........................................................... @5A
A5TICLE 16CB ............................................................................... @5A
CO&&ENT' (1) OCo*1"nsation8 D"+in"% @6?2 (6) ;s"+uln"ss
o+ Co*1"nsation% @6?2 (9) OCo*1"nsation8 Distinguis,"
+ro*
OPa#*"nt8% @6?2 (@) OCo*1"nsation8 Distinguis," +ro*
O&"rg"r8%
@6?2 (5) OCo*1"nsation8 Distinguis," +ro* OCount"r!lai*8
or
OS"t.o++8% @612 (6) Dins or Class"s o+ Co*1"nsation% @612
(C) I,"n Co*1"nsation Cannot E4ist% @662 >ar!ia $. Li*
C,u Sing% 5A P,il. 566% @662 7ri*o $. >ol"nb"rg an Co.%
In!.%
6A P,il. 5?6% @692 Fran!ia $. IAC% >5 6C6@A% =un. 6B%
1ABB%
@6@2 Tan $. &"n"H% >5 19B66A% =un. 6% 6??6% @6@2 Carlos
$. Ab"laro% >5 1@65?@% A1r. A% 6??6% @6@.
A5TICLE 16CA ............................................................................... @65
CO&&ENT' (1) L"gal Co*1"nsation or Co*1"nsation b#
O1"ration o+ La3% @652 (6) A++ir*ati$" 5"Euisit"s +or L"gal
Co*1"nsation% @662 (9) N"gati$" 5"Euisit"s +or L"gal
Co*. 1"nsation% @662 (@) T," First A++ir*ati$" 5"Euisit"%
@6C2 (5) T," S"!on A++ir*ati$" 5"Euisit"% @6B2 (6) T," T,ir
A++ir*a. ti$" 5"Euisit"% @6B2 (C) T," Fourt, A++ir*ati$"
5"Euisit"% @6B2 Co*1ania >"n"ral " Taba!os $. Fr"n!, an
;nson% 9A P,il.
9@% @6A2 Salina1 $. =ug" "l 5osario% >5 5?69B% =ul#
65%
1AB9% @6A2 P"r"H $. Court o+ A11"als% L.561?1% F"b. 6?%
1AB@%
@6A2 (B) T," First N"gati$" 5"Euisit"%
@C?.
A5TICLE 16B? ............................................................................... @C?
CO&&ENT' (1) >uarantor &a# S"t ;1 Co*1"nsation Iit,
5"s1"!t to Prin!i1al D"bt% @C?2 (6) E4a*1l"s%
@C?.
A5TICLE 16B1 ............................................................................... @C1
CO&&ENT' Total or Partial Co*1"nsation%
@C1.
A5TICLE 16B6 ............................................................................... @C1
CO&&ENT' Con$"ntional or Voluntar# Co*1"nsation% @C1.
A5TICLE 16B9 ............................................................................... @C1
CO&&ENT' (1) =ui!ial Co*1"nsation or S"t.o++% @C62 (6)
=urisi!tion o+ t," Court 5"garing t," Valu" o+ t,"
D"*an%
1CC5
@C6
.
A5TICLE 16B@ ................................................................................ @C9
CO&&ENT' (1) Co*1"nsation in t," Cas" o+ 5"s!issibl" or
Voiabl" D"bts% @C92 (6) Pr"$"ntion o+ ;n+airn"ss%
@C9.
A5TICLE 16B5 ............................................................................... @C9
CO&&ENT' (1) E++"!t o+ Assign*"nt on Co*1"nsation o+
D"bts% @C@2 (6) T," T,r"" Cas"s Co$"r" b# t," Arti!l"%
@C@2 (9) T," First Cas" 0 T," Assign*"nt *a# b" &a"
Iit, t," Cons"nt o+ t," D"btor FS"" also Co**"nt No. (1)
un"r t,is
1CC6
Arti!l"G% @C@2 (@) T," S"!on Cas" 0 Assign*"nt &a"
3it, t," Dno3l"g" but Iit,out t," Cons"nt or Against t,"
Iill o+ t," D"btor% @C52 (5) T," T,ir Cas" 0 Assign*"nt
&a" Iit,out t," Dno3l"g" o+ t," D"btor% @C62 (6) 5"ason
+or t," Arti!l"% @CC.
A5TICLE 16B6 ............................................................................... @CC
CO&&ENT' (1) Co*1"nsation b# O1"ration o+ La3% @CC2 (6)
E4a*1l"% @CC2 (9) OFor"ign E4!,ang"8 D"+in"% @CC.
A5TICLE 16BC ............................................................................... @CC
CO&&ENT' (1) I,"n L"gal Co*1"nsation Cannot Ta<"
Pla!"% @CB2 (6) So*" Probl"*s% @CA2 (9) Obligations o+ a
D". 1ositar#% @CA.
A5TICLE 16BB ................................................................................ @B?
CO&&ENT' (1) Non.Co*1"nsation i+ On" D"bt Aris"s +ro*
a
Cri*"% @B?2 (6) 7ut Vi!ti* Can Clai* Co*1"nsation%
@B?.
A5TICLE 16BA ............................................................................... @B1
CO&&ENT' Not" t," !ross.r"+"r"n!" to a11li!ation o+
1a#. *"nts% @B12 St"$" Tan M &ar!iano Tan $. Fabian
&"n"H% =r.% >5 19B66A% =un. 6% 6??6% @B1.
A5TICLE 16A? ............................................................................... @B6
CO&&ENT' Auto*ati! Co*1"nsation i+ All 5"Euisit"s
Ar" Pr"s"nt% @B62 Int"rnational Cor1orat" 7an<% In!. $.
IAC% "t al.% >5 6A56?% =un. 9?% 1ABB% @B6.
S"!tion 6 0 NOVATION .....................................................................
@BB
A5TICLE 16A1 ............................................................................... @BB
CO&&ENT' (1) ONo$ation8 D"+in"% @BB2 (6) No Di++"r"n!" in
Ci$il an Co**on La3 Con!"1ts o+ No$ation% @BB2 (9)
Dual Pur1os" or Fun!tion o+ No$ation% @BA2 (@) Dins o+
No$ation%
@BA2 Iloilo Tra"rs Finan!"% In!. $. H"irs o+ Os!ar
Soriano% =r.% "t al.% >5 1@A6B9% =un. 16% 6??9% @A?2 (5)
5"Euisit"s +or No$ation (in >"n"ral)% @A12 7o#sa3% "t al. $.
Int"r1,il Pro*otions% "t al.% >5 665A?% &ar. 6?% 1ABC% @A12
Torr"s% "t al. $. CA% >5 A65@?% D"!. 11% 1AA6% @A62 (6)
No$ation Is Not On" o+ t," &"ans 5"!ogniH" b# t," 5PC
I,"r"b# Cri*inal Liabilit# !an b" E4tingis,"% @A62 SSS $.
D"1t. o+ =usti!"% "t al.% >5 15B191% Aug. B% 6??9% @A62 CruH
$. >angan% @@9 P,il.
B56% (6??9)%
@A9.
1CCC
A5TICLE 16A6 ............................................................................... @A@
CO&&ENT' (1) E41r"ss an I*1li" No$ation% @A@2 (6)
Ho3 I*1li" No$ation &a# 7" &a"% @A@2 (9) Cas"s% @A52
National E4!,ang" Co.% Lt. $. 5a*os% 51 P,il. 91?% @A52
5ios% "t al. $. =a!into% Pal*a # Honos% @A P,il. C% @A52
1"tt"rson $. AHaa%
1CCB
B P,il. @96% @A62 >anHon $. =ug" San!,o% >5 56@5?% =ul.
65%
1AB9% @A62 T"o+isto >uingona% =r. $. Cit# Fis!al o+ &anila%
L.
6??99% A1r. @% 1AB@% @A62 (@) Instan!"s I,"n t," Court
H"l t,at T,"r" Ias NO E4tin!ti$" No$ation% @A62 (5)
Cas"s% @AB2 Tiu Sui!o $. Habana% @5 P,il. C?C% @AB2 Asiati!
P"trol"u* Co. $. :ua# Si* Pao% (C.A.) @? O.>. Su11. No$. 1%
1A@1% 1. @@% @AA2 Ta1anta $. 5ota"!,"% 61 P,il. 15@% @AA2
Fua Ca* Lu $. Ka1 Fau!o% C@ P,il. 6BC% 5??2 In!,austi an
Co. $. Kulo% 9@ P,il.
ACB% 5??2 P"o1l" $. N"r#% L.1A56C% F"b. 5% 1A6@% 5?62
Carlos 7. >onHal"s $. Eulogio S"rrano% L.65CA1% S"1t. 69%
1A6B% 5?62 La Ca*1ana Foo Prou!ts% In!. $. PCI7% "t al.%
>5 @6@?5% =un. 9?% 1AB6% 5?92 7isa#a Lan
Trans1ortation Co.% In!. $. San!,"H% >5 C@669% Aug. 91%
1ABC% 5?@2 5"#"s $. CA% C6
SCAD 6A (1AA6)%
5?5.
A5TICLE 16A9 ................................................................................ 5?5
CO&&ENT' (1) P"rsonal or Subj"!ti$" No$ation% 5?52 D"
Cort"s $. V"nturanHa% CA SC5A C?A% 5?52 (6) Substitution
o+ D"btor% 5?62 (9) E41ro*ision% 5?62 (@) 5"Euisit"s +or
E41ro*ision% 5?C2 >il Villanu"$a $. Filo*"no >irg"%
L.
1515@% D"!. 6A% 1A6?% 5?C2 (5) D"l"ga!ion% 5?B2 C.N.
Hog"s $. &atias C. 5"#% L.1655@% F"b. 6B% 1A61% 5?B2 (6) T,"
Parti"s in D"l"ga!ion% 5?A2 (C) 5"Euisit"s +or D"l"ga!ion%
5?A2 (B) 5ig,ts o+ t," N"3 D"btor% 51?2 (A) No$ation Cannot
7in 5"s1on"nt% 51?2 Publi! Estat"s Aut,orit# $. El1iio
S. ;#% >5 1@CA99.9@% D"!. 16% 6??1% 51?.
A5TICLE 16A@ ............................................................................... 51?
CO&&ENT' (1) E++"!t o+ Insol$"n!# or Non.Ful+ill*"nt
b#
N"3 D"btor in E41ro*ision% 51?2 (6) :u"r#%
511.
A5TICLE 16A5 ............................................................................... 511
CO&&ENT' (1) E++"!t o+ Insol$"n!# b# N"3 D"btor
in
D"l"ga!ion% 5112 (6) 5"Euisit"s to Hol Ol D"btor
Liabl"%
5112 (9) Probl"*% 5162 (@) I,"n Arti!l" Do"s Not A11l#%
516.
A5TICLE 16A6 ............................................................................... 519
CO&&ENT' (1) E++"!t on A!!"ssor# Obligation% 5192 (6)
&oi+i!ator# No$ation% 5192 (9) Sti1ulation Contrar# to
Arti!l"
444$ii
16A6% 5192 (@) E++"!t on Sti1ulation Pour Autrui%
519.
A5TICLE 16AC ............................................................................... 51@
CO&&ENT' (1) E++"!t i+ t," N"3 Obligation Is Voi% 51@2 (6)
Ot,"r Fa!tors% 51@2 &artin"H $. Ca$i$"s% 65 P,il. 5B1% 51@2
(9) 5ul" i+ N"3 Obligation Is &"r"l# Voiabl"% 5152
En!o*i"na $. &"ni"ta% (C.A.) B A.C.5. @9B% 5152 (@)
E4!"1tion to t," 5ul" t,at T,"r" Is No No$ation i+ t,"
N"3 Obligation is VOID% 5152 (5) Probl"*% 515.
A5TICLE 16AB ............................................................................... 516
444$ii
CO&&ENT' (1) E++"!t i+ t," Ol Obligation Ias Voi% 5162
(6) 5ul" i+ t," Ol Obligation Ias Voiabl"% 5162 (9) 5ul"
i+ t," Ol Obligation Ias E4tinguis," b# Loss% 51C2
(@) &a# a Pr"s!rib" Obligation 7" t," Subj"!t o+
No$ation%
51C2 (5) E++"!t on a VOIDA7LE Obligation o+ No$ation
b#
ENP5O&ISION%
51C.
A5TICLE 16AA ............................................................................... 51B
CO&&ENT' (1) E++"!t i+ t," Original Obligation Ias Coni.
tional% 51B2 (6) 5"ason +or t," >"n"ral 5ul"% 51B2 (9)
Illustra. ti$" Probl"*s% 51B2 >o$"rn*"nt $. 7autista%
(C.A.)% 9C O.>. No. AC% 1. 1BB?% 51A.
A5TICLE 19?? ............................................................................... 51A
CO&&ENT' (1) OSubrogation8 D"+in"% 56?2 (6) Dins o+
Subrogation% 56?2 (9) L"gal Subrogation Not Pr"su*"%
56?2 (@) Con$"ntional Subrogation &ust 7" Establis,"%
56?.
A5TICLE 19?1 ............................................................................... 56?
CO&&ENT' (1) Con$"ntional or Voluntar# Subrogation%
5612 (6) Distin!tions 7"t3""n Con$"ntional Subrogation
an As. sign*"nt o+ Cr"it (S"" B &anr"sa% 1. @@B)% 561.
A5TICLE 19?6 ............................................................................... 566
CO&&ENT' (1) L"gal Subrogation% 5662 (6) First
Instan!"%
5662 (9) S"!on Instan!"% 56@2 (@) T,ir Instan!"%
56@.
A5TICLE 19?9 ............................................................................... 565
CO&&ENT' (1) E++"!ts o+ Subrogation% 5662 (6) E4a*1l"
o+ t," E++"!ts o+ Subrogation% 5662 (9) E++"!ts o+ Pr"s"n!"
o+ a Sus1"nsi$" Conition% 566.
A5TICLE 19?@ ............................................................................... 566
CO&&ENT' (1) Partial Subrogation% 5662 (6) E4a*1l"%
5662 (9) Pr"+"r"n!" in t," Ass"ts% 56C2 So*"s $. &olina% 15
P,il.
199%
56C.
Titl" II. 0 CONT5ACTS .....................................................................
56B
CHAPTE5 1 0 >ENE5AL P5OVISIONS .......................................
56B
1CB1
A5TICLE 19?5 ................................................................................ 56B
CO&&ENT' (1) OContra!t8 D"+in"% 56B2 Croni!o $. =.&. Tua.
son M Co.% In!.% L.956C6% Aug. 66% 1ACC% 56B2 5aio
Co**uni. !ations o+ t," P,ils.% In!. $. CA% >5 @@C@B% Aug.
6A% 1AB6% 56A2 (6) El"*"nts o+ a Contra!t% 56A2 (9)
Classi+i!ation o+ Contra!ts%
56A2 S"rrano $. C"ntral 7an<% "t al.% L.9?511% F"b. 1@%
1AB?%
59?2 >uingona% =r. $. Cit# Fis!al o+ &anila% L.6??99% A1r.
@%
1AB@% 5912 National Po3"r Cor1. $. EIN% >5 6@B56% No$.
1@%
1AB6% 5962 Lao So< $. Saba#saba#% >5 61BAB% Aug. A%
1AB5%
5992 S3""t Lin"s% In!. $. 7"rnaro T"$"s% "t al.% L.9CC5?%
&a#
1CB6
1A% 1ACB% 59@2 Ang"l"s $. CalasanH% >5 @66B9% &ar. 1B%
1AB5%
5952 ArEu"ro $. Hon. Flojo an 5CPI% >5 6B111% D"!. 6?%
1ABB%
5962 7PI E41r"ss Car Cor1. $. Ei" C. Olalia% >5
191?B6% D"!. 1@% 6??1% 59A2 Insular Li+" Assuran!"% Lt. $.
Ebrao% B?
SC5A 1B1% 5@?2 (@) Stag"s o+ a Contra!t% 5@?2 (5) Parti"s
to a Contra!t% 5@?2 &ari*1"rio Co*1ania Na$i"ra% S.A. $.
CA% >5 @?69@% D"!. 1@% 1ABC% 5@12 7ali3ag Transit% In!. $.
CA an S1ous"s Sot"ro Caili1an% =r. an T"naia Lo1"H
an >"org" L. Caili1an% >5 B?@@C% =an. 91% 1ABA% 5@12 (6)
7asi! Prin!i. 1l"s or C,ara!t"risti!s o+ a Contra!t% 5@62 (C)
Co."4ist"n!" o+ a Contra!t 3it, a :uasi.D"li!t (Tort)% 5@62
(B) L"gal E++"!ts o+ a Contra!t 0 Ho3 D"t"r*in"% 5@62
Aora!ion E. CruH% "t al. $. CA M S1ous"s Elis"o M Virginia
&alolos% >5 166C19% =ul. 6C%
1AAB% 5@62 (A) D"li$"r# o+ t," T,ing% 5@92 P"o1l" $. La!a1%
>5
19A11@% O!t. 69% 6??1% 5@92 (1?) O5"+or"station8 Contra!t%
5@@2 7ataan S""ling Asso!iation% In!. $. 5"1ubli! o+ t,"
P,ils.% >5 1@1??A% =ul. 6% 6??6% 5@@.
A5TICLE 19?6 ............................................................................... 5@5
CO&&ENT' (1) T," Prin!i1l" o+ Fr""o*% 5@52 D"nila%
>u. batanga an Ina#an $. 7"llosillo% L.9A56A% &a# 16%
1AC5 (Litigants &a# Ent"r Into a Contra!t o+
Co*1ro*is")% 5@52 Clarita Tan<iang San!,"H $. Court o+
A11"als an P"ro Cristobal% L.666C5% =un" 66% 1AB@%
5@62 (6) Li*itations on t," Natur" o+ t," Sti1ulations%
5@62 O!,"ng!o $. Cit# Court o+ Ta*boanga% L.@@65C% =an.
11% 1AB?% 5@C2 (9) Li*itations I*1os" b# La3% 5@B2 5CPI
$. CA% >5 @@C@B% Aug. 6A% 1AB6%
5@B2 Pal*a $. CaniHar"s% 1 P,il. 6?6% 5@A2 Cabatan $.
Court o+ A11"als% L.@@BC5.C6% L.@516?% L.@6611.16% =an.
66% 1AB?%
5@A2 (@) Li*itations I*1os" b# &orals% 5@A2 D" los 5"#"s
$. Alojao% 16 P,il. @AA% 5@A2 E*"t"rio Cui $. Ar"llano
;ni$"r. sit#% 6 SC5A 6?5% 55?2 Ibarra $. A$"#ro% 9C P,il. 6C9%
55?2 7a. tarra $. &ar!os% C P,il. 156% 55?2 >oros1"% "t al. $.
>o!,ang!o% L.16C95% O!t. 9?% 1A5A% 5512 Saturnino S"lano$a
$. Al"janro E. &"noHa% A*. &att"r.B?@.C=% &a# 1A% 1AC5%
5512 LL an Co*1an# D"$"lo1*"nt an Agro.Inustrial
Cor1. $. Huang C,o C,u* an Kang Tung Fa% >5 1@69CB%
&ar. C% 6??6% 5512 (5) Li*itations I*1os" b# >oo
Custo*s% 5592 (6) Li*ita. tions I*1os" b# Publi! Or"r%
5592 Villanu"$a $. CastaP"a% =r.% >5 61911% S"1t. 61% 1ABC%
55@2 (C) Li*itations I*1os" b# Publi! Poli!#% 55@2
Flor"ntino 7. "l 5osario $. Eug"nio &il. lao% A*. Cas"
C6@% =an. 91% 1A6A% 5552 L"al% "t al. $. IAC% >5 65@65% No$.
5% 1ABC% 5562 To1.I"l &anu+a!turing% In!. $. ECED% S.A.%
"t al.% >5 @@A@@% Aug. A% 1AB5% 5562 (B) E4a*. 1l"s o+
Sti1ulations I,i!, Ha$" 7""n D"!lar" Vali% 55C2 (A)
1CB9
D"signation o+ t," Na*" o+ a Contra!t% 55C2 (1?)
Insuran!" Contra!t% 55B2 ;CP7 >"n"ral Insuran!" Co.% In!.
$. &asagan T"l"*art% In!.% >5 19C1C6% A1r. @% 6??6% 55B.
A5TICLE 19?C ................................................................................ 55B
CO&&ENT' (1) >o$"rning 5ul"s +or Inno*inat"
Contra!ts%
55A2 (6) T," @ Dins o+ Inno*inat" Contra!ts% 55A2
San
1CB@
&igu"l Cor1. $. NL5C% >5 B?CC@% &a# 91% 1ABB% 55A2
Santos $. A!uPa% 59 O.>. 9B5% 55A2 (9) L"gal S"r$i!"s +or a
Fri"n%
56?2 Cor1us $. Court o+ A11"als% AB SC5A @6@%
56?.
A5TICLE 19?B ............................................................................... 56?
CO&&ENT' (1) &utualit# o+ Contra!ts% 56?2 Al!uaH $.
PS7A% "t al.% >5 C6959% &a# 6% 1ABB% 56?2 (6) Cons"Eu"n!"s
o+ &;. T;ALITK% 5612 &"l"n!io $. D# Tiao% 5 P,il. AA% 5662
PN7 $. CA% >5 BBBB?% A1r. 9?% 1AA1% 5662 (9) E4!"1tion to
In$iolabil. it# o+ Contra!tual Obligations% 56@2 Anu!"nsion
$. National Labor ;nion% B? SC5A 95?% 56@.
A5TICLE 19?A ............................................................................... 56@
CO&&ENT' (1) D"t"r*ination b# T,ir P"rson% 5652
(6) I,"n D"!ision Is 7ining% 5652 (9) E++"!t o+ Sti1ulation
5". garing Arbitration% 565.
A5TICLE 191? ............................................................................... 565
CO&&ENT' E$i"ntl# In"Euitabl" D"t"r*ination Is
Not
7ining%
565.
A5TICLE 1911 ............................................................................... 565
CO&&ENT' (1) Prin!i1l" o+ 5"lati$it#% 5662 :uano $. CA% "t
al.% >5 A5A??% =ul. 69% 1AA6% 5662 F>; Insuran!" Cor1. $.
>.P. Sar*i"nto Tru!<ing Cor1. M La*b"rt &. Erol"s% >5
1@1A1?% Aug. 6% 6??6% 5662 Sir"# Ent"r1ris"s% In!. $. CA%
Conrao " >uH*an% >5 16A?9A% S"1t. 1C% 6??6% 56C2 (6)
E4!"1tions to t," Prin!i1l" o+ 5"lati$it#% 56A2 (9) Dis!ussion
o+ t," >"n"ral 5ul"% 56A2 El Hogar Fili1ino $. Ang"l"s% L.
11619% S"1t. 9?%
1A5B% 5C?2 7obis $. Pro$in!ial S,"ri++ o+ Ca*arin"s Nort"%
>5
6AB9B% &ar. 1B% 1AB9% 5C12 &anila 5ailroa Co. $.
Co*1a. nia Transatlanti!a% 9B P,il. BC5% 5C12 C"lis $.
7"n"i!to% O.>. &ar!, 6% 1A@1% 1. 656% 5C12 Hous"
Int"rnational 7uiling T"n. ants Asso!iation% In!. $. IAC%
>5 C56BC% =un. 9?% 1ABC% 5C62 N"3 &anila Lu*b"r $.
5"1ubli! o+ t," P,ili11in"s% L.1@6@B% A1r. 6B% 1A6?% 5C92
>SIS $. Susana 5o*ualo% "t al.% L.661C?% =an. 6C% 1A6A%
5C@2 V"lar"% "t al. $. Pa"H% "t al.% L.A6?B to
A616% A1r. 9?% 1A5C% 5C52 (@) T," First E4!"1tion% 5C62 (5)
T," S"!on E4!"1tion 0 Sti1ulation Pour Autrui% 5C62
5"b"!!a C. Koung% "t al. $. CA% "t al.% >5 CA51B% =an. 19%
1ABA% 5CC2 Asso!iat" 7an< $. CA M Lor"nHo Sar*i"nto% =r.%
>5 169CA9% =un. 6A% 1AAB% 5CB2 Flor"ntino $. En!arna!ion%
Sr.% CA SC5A
1A5% 5CB2 &"l"!io CoEuia% "t al. $. Fi"l*"n8s Ins. Co.%
In!.% L.696C6% No$. 6A% 1A6B% 5CB2 Dau++*an $. P,il. Nat.
7an<%
1CB5
@6 P,il. 1B6% 5CA2 Vargas Plo3 Fa!tor#% In!. $. T," C"ntral
7an< o+ t," P,il.% L.65C96% F"b. 6C% 1A6A% 5B?2 Flor"ntino
$. En!arna!ion% Sr.% CA SC5A 1A6% 5B?2 Nort,"rn &otors%
In!. $. Prin!" Lin"% "t al.% L.19BB@% F"b. 6A% 1A6?% 5B?2
Croni!o $. =.&. Tuason M Co.% In!.% L.956C6% Aug. 66% 1ACC%
5B12 Tabar $. 7"!aa% @@ P,il. 16A% 5B12 (6) T," T,ir
E4!"1tion% 5B62 (C) T," Fourt, E4!"1tion% 5B62 (B) T," Fi+t,
E4!"1tion% 5B92 V". las!o% "t al. $. Court o+ A11"als% L.
@C5@@% =an. 6B% 1AB?% 5B9.
1CB6
A5TICLE 1916 ............................................................................... 5B@
CO&&ENT' (1) Contra!ts Cr"ating 5"al 5ig,ts% 5B@2
5"ason +or t," Arti!l"% 5B@2 (9) E4a*1l"% 5B@.
A5TICLE 1919 ............................................................................... 5B@
CO&&ENT' (1) 5ig,t o+ D"+rau" Cr"itors% 5B@2 (6) E4.
a*1l"% 5B5.
A5TICLE 191@ ................................................................................ 5B5
CO&&ENT' (1) 5ul" i+ Contra!t Is Violat" T,ru
Inu!"*"nt o+ a T,ir P"rson% 5B52 (6) E4a*1l"% 5B52 (9)
Cas"% 5B52 Ku $. CA% "t al.% >5 B66B9% =an. 61% 1AA9% 5B5.
A5TICLE 1915 ............................................................................... 5BC
CO&&ENT' (1) Cons"nsualit# o+ Contra!ts% 5BC2 Sal$aor
P. &albarosa $. CA an S.E.A. D"$"lo1*"nt Cor1.% >5
165C61% A1r. 9?% 6??9% 5BC2 (6) Ho3 Contra!ts Ar"
P"r+"!t"% 5BB2 (9) P"r+"!tion o+ Cons"nsual Contra!ts% 5BB2
Lirag T"4til" &ills% In!. $. 5"1arations Co**ission% L.
66C6B% O!t. 6B% 1ACC% 5BB2 (@) Cons"Eu"n!"s o+ P"r+"!tion%
5BB2 Va. " &ur!iano $. Au. >"n.% "t al.% L.11C@@% &a# 6B%
1A5B% 5BA2 Vi!"nt" M &i!,a"l Li* $. CA M Lib"rt# H.
Luna% >5 11B9@C% O!t. 6@% 1AA6% C5
SCAD 5C@%
5BA.
A5TICLE 1916 ............................................................................... 5A?
CO&&ENT' (1) P"r+"!tion o+ 5"al Contra!ts% 5A?2 (6)
D"li$"r# as a 5"Euisit"% 5A?2 (9) T," 5"al Contra!ts
5"+"rr" to% 5A?2 (@) Futur" 5"al Contra!ts as Cons"nsual
Contra!ts% 5A?2 (5) T," Contra!t o+ Carriag"% 5A1.
A5TICLE 191C ............................................................................... 5A1
CO&&ENT' (1) 5"Euisit" +or a P"rson to Contra!t in t,"
Na*" o+ Anot,"r% 5A62 &ont"$"r" $. Court o+ Inustrial
5"lations%
CA SC5A 66A% 5A62 (6) E4a*1l" o+ an ;NA;THO5ITED
(a
For* o+ ;NENFO5CEA7LE CONT5ACT)
CONT5ACT%
5A62 7aillo $. F"rr"r% >5 5196A% =ul. 6A% 1ABC% 5A92
(9) I*1li" 5ati+i!ation% 5A92 (@) E++"!t o+ 5ati+i!ation% 5A@2
(5) E++"!t I,"n an ;naut,oriH" P"rson Do"s Not 5"all#
N"" t," Aut,orit#% 5A@2 (6) Cas"% 5A@2 7"nja*in Coron"l M
E*ilia &"<ing Va. " Coron"l $. Flor"ntino Constantino%
Aur"a 7u"nsu!"so M CA% >5 161?6A% F"b. C% 6??9% 5A@.
CHAPTE5 6 0 ESSENTIAL 5E:;ISITES
OF CONT5ACTS ........................................................................... 5A6
>ENE5AL P5OVISIONS ...................................................................
1CBC
5A6
A5TICLE 191B ................................................................................ 5A6
CO&&ENT' (1) Ess"ntial 5"Euisit"s o+ Cons"nsual
Contra!ts%
5A62 (6) 5"al Contra!ts% 5A62 (9) Sol"*n or For*al
Contra!ts%
1CBB
5A62 (@) I,at Cons"nt Pr"su11os"s% 5AC2 (5) E++"!t o+
Non. Cons"nt% 5AC2 (6) Trans1ortation Ti!<"t as a
Contra!t% 5AC2 P"ralta " >u"rr"ro% "t al. $. &arigal
S,i11ing Co.% L.
16A51% No$. 1C% 1A5A% 5AC2 (C) La!< o+ Cons"nt is
S"1arat" an Distin!t +ro* La!< o+ Consi"ration% 5AC2 5io
&ont"!illo $. Igna!ia 5"#n"s M S1air"s 5""*1tor M Elisa
Abu!a#% >5
19B?1B% =ul. 66% 6??6%
5AC.
S"!tion 1 0 CONSENT ......................................................................
5AB
A5TICLE 191A ............................................................................... 5AB
CO&&ENT' (1) Cons"nt as an Ess"ntial 5"Euisit"% 5AB2
(6)
OCons"nt8 D"+in"% 5AB2 (9) 5"Euisit"s o+ Cons"nt% 5AA2
5ob"rto
Es!a#% "t al. $. Court o+ A11"als% "t al.% L.9C5?@% D"!. 1B%
1AC@%
5AA2 LCC Cor1oration $. Farral"s% L.9AB?@% A1r. 1C%
1AB@%
6??2 (@) 5"Euisit"s +or t," &""ting o+ t," &ins% 6??2 (5)
An
O++"r T,at Is CE5TAIN% 6??2 5os"nsto!< $. 7ur<"% @6 P,il.
61C% 6??2 V"nturanHa an Pri!" $. CaniHar"s% "t al.% L.199A6%
O!t. 66% 1A5B% 6?12 Consoliat" &ills% In!. $. 5"1arations
Co**ission% C6 SC5A 1B% 6?12 (6) An A!!"1tan!" T,at Is
;N:;ALIFIED an A7SOL;TE% 6?62 Corn"jo $.
Calu1itan%
@B O.>. 661% F"b. 1A56% 6?62 Ta#!o $. S"rra% @@ P,il. 966%
6?92 &"as $. Lan S"ttl"*"nt an D"$"lo1*"nt Cor1.% AB
P,il.
11A% 6?92 7atangan $. Cojuang!o% CB P,il. @B1% 6?@2 Dato!
$. &"noHa% "t al.% (C.A.) @C O.>. 6@6C% 6?@2 Halili $. Llor"t%
"t al.% A5 P,il. CB% 6?52 &ontinola $. Vi!torias &illing Co.% "t
al.%
5@ P,il. CB6% 6?52 A*"ri!an Pr"si"nt Lin"s% Lt. $.
5i!,ar A. Dl"11"r% L.156C1% No$. 6A% 1A6?% 6?52 Clarin $.
5ulona% L.9?CB6% F"b. 6?% 1AB@% 6?62 (C) :u"r#% 6?62 (B)
A!!"1tan!" T,ru Corr"s1on"n!"% 6?C2 (A) Cas"s% 6?C2
Laui!o $. Arias%
@9 P,il. 6C?% 6?C2 Sa*brano $. Court o+ Ta4 A11"als%
1?1
P,il. 1% 6?B2 5a*on &agsa#sa# A3ar Founation $. CA%
>5
55AAB% =an. 1C% 1AB5% 6?B2 (1?) 5ul" i+ L"tt"r o+ A!!"1tan!"
Is
Iit,ra3n or 5"$o<"%
6?A.
4lii
A5TICLE 196? ............................................................................... 61?
CO&&ENT' (1) For*s o+ A!!"1tan!"% 61?2 (6) E4a*1l"s
o+
I*1li" A!!"1tan!"% 61?2 (9) I*1li" 5"j"!tion%
61?.
A5TICLE 1961 ............................................................................... 611
CO&&ENT' (1) T,ings t,at &a# 7" Fi4" b# t,"
O++"r"r%
6112 (6) Au!tion Sal"% 6112 (9) Contra!t to Pur!,as"% 6112
Con. soliat" &ills% In!. $. 5"1arations Co**ission% C6
SC5A
1B% 6112 (@) Cas"% 6112 Douglas &illar"s an 5og"lio Laga
$. NL5C% Trans.>lobal &ariti*" Ag"n!#% In!. M Esso
Int"rna. tional S,i11ing Co.% Lt.% >5 11?56@% =ul. 6A% 6??6%
611.
A5TICLE 1966 ............................................................................... 616
CO&&ENT' (1) A!!"1tan!" o+ an O++"r &a" T,ru an
Ag"nt%
6192 (6) :u"r#%
619.
4lii
A5TICLE 1969 ............................................................................... 619
CO&&ENT' (1) I,"n O++"r 7"!o*"s In"++"!ti$"% 6192 (6)
E4a*1l"% 6192 (9) Anot,"r E4a*1l"% 61@2 (@) Ot,"r
Instan!"s%
61
@.
A5TICLE 196@ ............................................................................... 61@
CO&&ENT' (1) >"n"ral 5ul" on O1tions% 61@2 7A5% 6152
Croni!o $. =.&. Tuason M Co.% In!.% CB SC5A 991% 6152 (6)
E4!"1tion% 6162 (9) OO1tion8 D"+in"% 6162 (@) P"r+"!tion o+
an O1tion% 6162 At<ins% Droll% an Co. $. Cua Hian T"<% L.
ABC1% =an. 91% 1A5B% 61C.
A5TICLE 1965 ............................................................................... 61B
CO&&ENT' 7usin"ss A$"rtis"*"nts%
61B.
A5TICLE 1966 ............................................................................... 61B
CO&&ENT' (1) A$"rtis"*"nt +or 7i"rs% 61B2 (6)
Probl"*%
61A2 (9) A!!"1tan!" o+ a 7i% 61A2 (@) 7i"r Sub*its
to
Conitions% 61A2 L"oEuin!o $. Postal Sa$ings 7an<% @C
P,il.
CC6% 61A2 (5) Probl"*% 66?2 (6) 7is at E4"!ution Sal"s%
66?.
A5TICLE 196C ............................................................................... 661
CO&&ENT' (1) T3o Class"s o+ Voiabl" Contra!ts% 6612 (6)
P"rsons In!a1a!itat" to Cons"nt% 6612 (9) ;n"*an!i1at"
&inors% 6612 (@) Insan" or D"*"nt" P"rsons (;nl"ss
T,"# A!t" During a Lu!i Int"r$al)% 6692 (5) D"a+.
&ut"s I,o Do Not Dno3 Ho3 to Irit" (an 5"a)% 6692
(6) P"rsons S1"!iall# DisEuali+i"% 6692 (C) E4a*1l"s o+
P"rsons S1"!iall# DisEuali+i"% 66@.
A5TICLE 196B ................................................................................ 66@
CO&&ENT' (1) So*" Contra!ts Voiabl" b# 5"ason o+
In!a1a!it#% 6652 (6) Lu!i Int"r$als% 6652 (9) Insanit# in
So*" T,ings% 7ut Sanit# in Ot,"r T,ings% 665.
A5TICLE 196A ............................................................................... 665
CO&&ENT' (1) &oi+i!ations 5" In!a1a!it#% 6662 (6)
In!o*. 1"t"nts ;n"r t," 5ul"s o+ Court% 6662 (9) Probl"*%
666.
A5TICLE 199? ............................................................................... 66C
CO&&ENT' (1) Caus"s o+ Vitiat" Cons"nt% 66C2 (6) Natur"
o+ a Voiabl" Contra!t% 66C2 (9) Cl"ar an Con$in!ing
1CA1
E$i"n!" on t," Vi!" o+ Cons"nt% 66C.
A5TICLE 1991 ............................................................................... 66B
CO&&ENT' (1) O&ista<"8 or OError8 D"+in"% 66B2 (6)
5"Euisit"s +or &ista<" to Vitiat" Cons"nt% 66B2 (9)
Substantial Error%
66B2 (@) Error 5"garing t," Obj"!t o+ t," Contra!t% 66B2
(5) Error 5"garing t," Conitions T,at Prin!i1all#
Inu!" t,"
1CA6
Part# to Ent"r Into t," Contra!t% 66A2 5ural 7an< o+
Caloo!an $. Court o+ A11"als% L.96116% A1r. 61% 1AB1% 66A2
(6) Error in :ualit#% 66A2 (C) Error in :uantit#% 66A2 (B)
Error in I"ntit# or in :uali+i!ations% 69?2 (A) E4!usabl"
Error% 69?2 (1?) Error o+ Fa!t% Not o+ La3% 69?.
A5TICLE 1996 ............................................................................... 691
CO&&ENT' (1) 5ul" in Cas" o+ Inabilit# to 5"a or
;n"r. stan% 6912 (6) Pr"su*1tion% 6912 (9) I,"n
Pr"su*1tion Do"s Not A11l#% 6912 (@) Cas"s% 6912 A#ola $.
Val"rra*a Lu*b"r &anu+a!tur"rs Co.% In!.% (C.A.) @A O.>.
AB?% 6962 Trans1ort" $. 7"ltran% (C.A.) 51 O.>. 1@9@% 696.
A5TICLE 1999 ............................................................................... 699
CO&&ENT' (1) Dno3l"g" o+ Doubt or 5is< Do"s Not
Vitiat" Cons"nt% 6992 (6) E4a*1l"% 6992 (9) &ista<" Caus"
b# In"4!usabl" N"glig"n!"% 699.
A5TICLE 199@ ............................................................................... 699
CO&&ENT' (1) 5"Euisit"s +or &utual Error to
Vitiat" Cons"nt% 6992 (6) 5"ason +or t," Arti!l"% 69@2 (9)
Distinguis," +ro* t," 5"*"# o+ 5"+or*ation% 69@.
A5TICLE 1995 ............................................................................... 69@
CO&&ENT' (1) Viol"n!" an Inti*iation% 6952
(6) 5"Euisit"s +or Viol"n!" to Vitiat" Cons"nt% 6952 (9)
5"Euisit"s +or Inti*iation to Vitiat" Cons"nt% 6952 (@)
5"asonabl" an I"ll.>roun" F"ar% 6962 (5) I**in"nt an
>ra$" E$il% 69C2 (6) Natur" o+ t," T,r"at on P"rson an
Pro1"rt# o+ t," P"rsons Enu*"rat"% 69C2 (C) 5"ason +or
Ent"ring Into t," Contra!t%
69C2 (B) T,r"at o+ an ;njust A!t or an A!tionabl" Irong%
69C2 (A) Cas"s% 69B2 Taba!al"ra $. Coll"!tor% L.A?C1% =an. 91%
1A5C%
69B2 7"rg $. National Cit# 7an<% L.A916% O!t. 91% 1A5C%
69B2 (1?) 5"$"r"ntial F"ar% 69A2 Sabal$aro $. Erlang"r M
>aling"r% In!.% 6@ P,il. 5BB% 69A.
A5TICLE 1996 ................................................................................ 6@?
CO&&ENT' Viol"n!" or Inti*iation Caus" b# T,ir
P"rson%
6@?.
A5TICLE 199C ............................................................................... 6@?
CO&&ENT' (1) 5"Euisit"s +or ;nu" In+lu"n!" to
Vitiat"
Cons"nt% 6@?2 (6) E4a*1l"s o+ Cir!u*stan!"s to b"
Consi"r"%
6@12 Cui% "t al. $. Cui% "t al.% 1?? P,il. A19% 6@12 (9)
;nu" In+lu"n!" Caus" b# T,ir P"rson% 6@12 (@)
Contra!ts o+ A,"sion% 6@1.
1CA9
A5TICLE 199B ............................................................................... 6@6
CO&&ENT' (1) Dins o+ Frau% 6@62 (6) Dolo Causant"%
6@62 (9) 5"Euisit"s o+ Dolo Causant"% 6@92 (@) &at"rial an
S"rious
1CA@
Frau% 6@92 Tuason $. &arEu"H% @5 P,il. 9B1% 6@@2 (5)
Fault o+ Part# Injur"% 6@@2 AHarraga $. >a#% 56 P,il.
5AA% 6@@2 >r"gorio Aran"ta% In!. $. Tuason " Pat"rno% A1
P,il. 6B6%
6@52 (6) Entran!" Into a 5ii!ulous Contra!t%
6@5.
A5TICLE 199A ............................................................................... 6@6
CO&&ENT' (1) Failur" to Dis!los" Fa!ts% 6@62 Poss
$. >ottli"b% 11B &is!. 91B% 6@C2 Ca3alla"r an Co. $.
S*it,% 7"ll an Co.% C P,il. @61% 6@C2 Strong $. >uti"rr"H
5"1i"% @1
P,il. A@C% 6@C2 (6) O11on"nts in a Litigation%
6@C.
A5TICLE 19@? ............................................................................... 6@B
CO&&ENT' ;sual E4agg"rations in Tra"% 6@B2 Da!usin
$. Court o+ A11"als% B? SC5A BA% 6@B.
A5TICLE 19@1 ............................................................................... 6@B
CO&&ENT' (1) &"r" E41r"ssion o+ an O1inion% 6@A2 (6)
Probl"*% 6@A.
A5TICLE 19@6 ............................................................................... 6@A
CO&&ENT' (1) &isr"1r"s"ntation b# a T,ir P"rson% 6@A2
(6) :u"r#% 65?2 (9) Cas"% 65?2 Hill $. V"loso% 91 P,il. 16?%
65?.
A5TICLE 19@9 ............................................................................... 65?
CO&&ENT' &isr"1r"s"ntation &a" in >oo Fait,%
65?.
A5TICLE 19@@ ............................................................................... 651
CO&&ENT' (1) 5"Euisit"s +or Frau to Vitiat" Cons"nt%
6512 (6) In!i"ntal Frau Do"s Not Vitiat" Cons"nt% 651.
A5TICLE 19@5 ............................................................................... 651
CO&&ENT' (1) OSi*ulation o+ a Contra!t8 D"+in"% 6512
(6) 5"Euisit"s +or Si*ulation% 656.
A5TICLE 19@6 ............................................................................... 656
CO&&ENT' (1) Dins o+ Si*ulat" Contra!ts%
6562 (6) E4a*1l"s% 6562 (9) OAbsolut"l# Si*ulat"
Contra!t8 Distinguis," +ro* an Ill"gal Contra!t% 6592 (@)
Cas"% 6592 Eilb"rto CruH an Si*1li!iano CruH $.
7an!o* Finan!" Cor1. (;nion 7an< o+ t," P,ils.)% >5
1@CCBB% &ar. 1A% 6??6%
65
9.
S"!tion 6 0 O7=ECT OF CONT5ACTS ..........................................
1CA5
65@
A5TICLE 19@C ............................................................................... 65@
CO&&ENT' (1) Obj"!t (Subj"!t &att"r) o+ a Contra!t%
65@2 (6) 5"Euisit"s% 6552 (9) Iit,in t," Co**"r!" o+ &an%
6552 L"onaro Na$arro $. Luis L. LariHabal% "t al.% L.65961%
S"1t.
6B% 1A6B% 6552 Fran!is!o Cuison% "t al. $. =os" 5a*ol"t"%
>5
516A1% &a# 6A% 1AB@% 6562 (@) Trans*issibl"% 6562 (5)
Not
1CA6
Contrar# to La3% &orals% "t!.% 6562 (6) No E4t"nsion
A+t"r
E41iration% 65B2 >ino# $. Ta1u!ar% C6 SC5A 91%
65B.
A5TICLE 19@B ............................................................................... 65B
CO&&ENT' (1) I*1ossibl" T,ings or S"r$i!"s% 65B2 (6)
I*1ossibilit# Not to 7" Con+us" +ro* &"r" Di++i!ult#% 65A.
A5TICLE 19@A ............................................................................... 65A
CO&&ENT' Obj"!t o+ t," Contra!t%
65A.
S"!tion 9 0 CA;SE OF CONT5ACTS .............................................
66?
A5TICLE 195? ............................................................................... 66?
CO&&ENT' (1) OCaus"8 D"+in"% 66?2 Pri$at"
D"$"lo1*"nt
Cor1. o+ t," P,ils. $. IAC M Ern"sto C. "l 5osario%
>5
C91AB% S"1t. 6% 1AA6% 66?2 (6) OCaus"8 an OSubj"!t
&att"r8 Distinguis,"% 6612 (9) 7ar :u"stion% 6662 (@)
Classi+i!ation o+ Contra!ts as to Caus"% 6662 (5) Caus" in
A!!"ssor# Contra!ts Li<" &ortgag" an Pl"g"% 6692
P,il. >uarant#% In!. $. Dino% "t al.% L.1?5@C% =an. 91%
1A5B% 6692 >arrio $. P"r"H Car"nas% 6? P,il. A6@% 6692 (6)
Caus" in A!!"ssor# Contra!ts o+ P"rsonal >uarant#
(>uarant# an Sur"t#s,i1)% 6692 (C) &oral Obligation as a
Vali Caus" o+ a Ci$il Obligation%
6692 &a!tal $. &"l"grito% L.1611@% &ar!, 6@% 1A61% 66@2
(B) S,o!<ing Caus" or Consi"ration% 66@2 =a$i"r $. Va. "
CruH%
B? SC5A 9@9% 66@2 Ong $. Ong% >5 6CBBB% O!t. B% 1AB5%
66@.
A5TICLE 1951 ............................................................................... 665
CO&&ENT' (1) &oti$"s o+ t," Parti"s +or Ent"ring Into
a Contra!t% 6652 (6) &oti$" Distinguis," +ro* Caus"%
6652 (9) Stat"*"nt o+ Distin!tion b# t," Su1r"*" Court%
6652 (@) Ill"gal Caus" Distinguis," +ro* Ill"gal &oti$"%
666.
A5TICLE 1956 ............................................................................... 666
CO&&ENT' (1) 5"Euisit"s +or Caus"% 6662 (6) E4isting
Caus"%
6662 Carant"s $. Court o+ A11"als% L.9996?% A1r. 65%
1ACC%
66C2 (9) 7ar Probl"*% 66C2 (@) Tru" Caus"% 66B2 (5)
La3+ul
Caus"% 66B2 Ligu"H $. Court o+ A11"als% "t al.% L.116@?%
1CAC
D"!.
1B% 1A5C% 66B2 (6) E++"!t i+ t," Caus" Is Ill"gal% 6C?2 V"l"H $.
5a*as% @? P,il. CBC% 6C?.
A5TICLE 1959 ............................................................................... 6C1
CO&&ENT' Stat"*"nt o+ a Fals" Caus"%
6C1.
A5TICLE 195@ ............................................................................... 6C1
CO&&ENT' Pr"su*1tion T,at Caus" E4ists%
6C6.
A5TICLE 1955 ............................................................................... 6C6
CO&&ENT' (1) OL"sion8 D"+in"% 6C62 (6) 5ul"s on
L"sion%
6C62 (9) Probl"*% 6C92 (@) L"sion as E$i"n!" o+ Vitiat"
Con. s"nt% 6C@.
1CAB
CHAPTE5 9 0 FO5& OF CONT5ACTS .........................................
6C5
A5TICLE 1956 ............................................................................... 6C5
CO&&ENT' (1) >"n"rall#% For* Is Not 5"Euir"% 6C52 &ar.
l"n" Dau"n.H"rna"H $. Hon. Ial+rio " los Ang"l"s% "t
al.% L.6C?1?% A1ril 9?% 1A6A% 6C62 DuEu" $. Do*ingo% B?
SC5A
65@% 6C62 H"irs o+ "l 5osario $. Santos% L.@6BA6% S"1t.
9?%
1AB1% 6CC2 (6) I,"n For* Is I*1ortant% 6CC2 (9) E4a*1l"s
o+ For*al Contra!ts% 6CC2 (@) So*" Probl"*s% 6CB2 (5) Cas"%
6CA2 >allaro $. IAC% >5 6CC@6% O!t. 6A% 1ABC% 6CA.
A5TICLE 195C ............................................................................... 6B?
CO&&ENT' (1) 5ig,t o+ On" Part# to Co*1"l t," Ot,"r
to E4"!ut" t," N"!"ssar# For*% 6B?2 (6) E4a*1l"s% 6B12
(9) Cas"s% 6B12 =o*o! $. CA% >5 A6BC1% Aug. 6% 1AA1% 6B12
Li* $. CA% 6B SCAD 6CA (1AA6)% 6B@. .
A5TICLE 195B ............................................................................... 6B@
CO&&ENT' (1) For* +or Con$"ni"n!"% 6B@2 Ful" $. CA%
>5
116616% &ar. 6% 1AAB% 6B52 (6) Probl"*% 6B52 (9)
Pr"su*1tion o+ t," Valiit# o+ a Publi! Instru*"nt% 6B62
Cabali3 an Saorra $. Saorra% "t al.% L.6565?% =un.
11% 1AC5% 6B62 Castillo $. Castillo% L.1B69B% =an. 66% 1AB?%
6B6.
CHAPTE5 @ 0 5EFO5&ATION OF
INST5;&ENTS (n) ...................................................................... 6BC
INT5OD;CTO5K CO&&ENT .........................................................
6BC (1) O5"+or*ation8 D"+in"% 6BC2 (6) 5"ason +or 5"+or*ation%
6B
C.
A5TICLE 195A ............................................................................... 6BC
CO&&ENT' (1) Distin!tions 7"t3""n O5"+or*ation8
an
OAnnul*"nt8% 6BB2 (6) 5"Euisit"s +or t," A!tion +or
5"+or*ation%
6BB2 Sar*ing $. D#% >5 1996@9% =un. 6% 6??6% 6BB2 7A
Finan!" Cor1. $. IAC M 5"n" Tan% >5 C6@AC% =an. 6?%
1AA9% 6BA2 (9) No N"3 Contra!t Is &a"% 6A?2 Cosio $.
Palil"o% L.1B@56% &a# 91% 1A65% 6A?2 (@) 5"+or*ation &a#
Still Pros1"r E$"n i+ Pro1"rt# In$ol$" Is Alr"a#
&ortgag" b# 7u#"r to a T,ir P"rson% 6A?2 =a#*"% "t al.
$. Ala*1a#% "t al.% L.9A5A6% =an.
4l$ii
CHAPTE5 9 0 FO5& OF CONT5ACTS .........................................
6C5
6B% 1AC5%
6A?.
A5TICLE 196? ............................................................................... 6A1
CO&&ENT' 5ul" in Cas" o+ Con+li!t%
6A1.
A5TICLE 1961 ............................................................................... 6A1
CO&&ENT' (1) I,"n 5"+or*ation &a# 7" As<" 7"!aus"
o+
&utual &ista<"% 6A12 (6) E4a*1l"% 6A62 (9) Anot,"r
E4a*1l"%
6A62 (@) Cas"% 6A62 San &igu"l 7r"3"r# $. La ;nion an
5o!<
Insuran!" Co.% @? P,il. 6C@%
6A6.
4l$ii
A5TICLE 1966 ...............................................................................
6A9
CO&&ENT' (1) ;nilat"ral &ista<"% 6A92 (6) E4a*1l"%
6A92 (9) Cas"% 6A92 Ong C,ua $. Carr% "t al.% 59 P,il. AC5%
6A9.
A5TICLE 1969 ............................................................................... 6A@
CO&&ENT' ;nilat"ral &ista<" Also%
6A@.
A5TICLE 196@ ............................................................................... 6A@
CO&&ENT' (1) Failur" to Con$"# t," Tru" Int"nt% 6A52
(6) Cas"% 6A52 &anila Engin""ring Co. $. Cranston an
H"a!o!<%
@5 P,il. 16B%
6A5.
A5TICLE 1965 ............................................................................... 6A5
CO&&ENT' (1) Int"nt to Ha$" a &ortgag" or Pl"g"% 6A52
(6) Ho3 to =ug" t," Parti"s8 Int"nt% 6A6.
A5TICLE 1966 ............................................................................... 6A6
CO&&ENT' (1) I,"n 5"+or*ation Is Not Allo3"% 6A62
(6) 5"ason +or Instan!" No. 1 (Si*1l" Donations)% 6A62 (9)
5"ason +or Instan!" No. 6 (Iills)% 6A62 (@) 5"ason +or
Instan!" No. 9 (Voi Agr""*"nt)% 6AC.
A5TICLE 196C ............................................................................... 6AC
CO&&ENT' (1) E++"!t o+ an A!tion to En+or!" t,"
Instru*"nt%
6AC2 (6) E4a*1l"%
6AC.
A5TICLE 196B ............................................................................... 6AC
CO&&ENT' (1) Plainti++s in A!tion +or 5"+or*ation%
6AC2 (6) Probl"*% 6AB2 (9) I,at Co*1laint &ust All"g"%
6AB2 (@) Pr"s!ri1ti$" P"rio +or 5"+or*ation o+ a Contra!t%
6AA2 Antonio =a#*"% "t al. $. Hon. N"stor Ala*1a#% L.
9A5A6% =an.
6B% 1AC5%
6AA.
A5TICLE 196A ............................................................................... 6AA
CO&&ENT' Pro!"ural 5ul"s%
6AA.
CHAPTE5 5 0 INTE5P5ETATION OF
CONT5ACTS ................................................................................. C??
A5TICLE 19C? ............................................................................... C??
1B?1
A5TICLE 1966 ...............................................................................
6A9
CO&&ENT' (1) 5"ason +or Int"r1r"tation o+ Contra!ts%
C??2 (6) 5ul" in Cas" o+ Con+li!t% C??2 (9) Cas"s% C?12
Ani$"rsario $. T"rnat"% 1? P,il. 59% C?12 7aluran $. Na$arro%
CA SC5A 9?A%
C?12 Fran!is!o =. Ni!olas $. T," 5"1arations Co**ission
an P"ro Pastoral% L.6B6@A% &a# 61% 1AC5% C?12 Pa# $.
Va. " Palan!a% L.6AA??% =un. 6B% 1AC@% C?62 Ab"lla $.
>onHaga% 56
P,il. 196% C?62 AEuino $. D"ala% 69 P,il. 5B6% C?92
=i*"n"H $. 7u!o#% L.1?661% F"b. 6B% 1A5B% C?@2 7ijis $.
L"gas1i% L.
1?C?5% &ar. 9?% 1A6?% C?@2 L"onor $. S#!i1% L.1@66?% A1r.
1B?6
6A% 1A61% C?@2 Fi"l T"ooro $. F"li4 &a!ara"g an Court
o+ Agrarian 5"lations% L.6?C??% F"b. 6C% 1A6A% C?@2 5"
&ario 7. C,anliong!o% CA SC5A 96@% C?52 P"o1l" $. Hon.
Constant" A. An!,"ta% "t al.% L.9AAA9% &a# 1A% 1AC5% C?52
>SIS $. CA% >5 56@CB% O!t. 9?% 1AB6% C?62 ;.P. Coll"g" o+
Agri!ultur" $. >abri"l% >5 C?B66% O!t. 16% 1ABC% C?C2
AH!ona $. =a*anr"% >5 9?5AC% =un. 9?% 1ABC% C?C2
Si*"on D"l 5osario $. S,"ll Co. o+ t," P,ils.% Lt.% L.
6BCC6% Aug. 1A% 1ABB% C?B2 T," &anila 7an<ing Cor1. $.
Anasta!io T"ooro% =r. an >ra!" Anna T"ooro% >5 59A55%
=an. 19% 1ABA% C?A2 Filoil &ar<"ting Cor1. (no3 P"tro1,il
Cor1.) $. IAC an =os"+ina Alb"rto D" Pabalan% >5 6C115%
=an. 6?% 1ABA% C1?2 7ali3ag Transit $. CA% "t al.% >5
B?@@C% =an. 91% 1ABA% C1?2 Lu!io Tan Ali* $. CA% >5
A9619% Aug. A% 1AA1% C1?2 &oji!a $. Court o+ A11"als% >5
A@6@C% S"1t. 11% 1AA1% C162 5"1ubli! $. Saniganba#an% >5
A?6C% No$. 5% 1AA1% C162 Oil M Natural >as Co**ission $.
CA M Pa!i+i! C"*"nt Co.% In!.% >5 11@969% =ul. 69% 1AAB%
C192 P"tro1,il Cor1. $. CA% >5 166CA6% D"!. 1?% 6??1% C19.
A5TICLE 19C1 ............................................................................... C19
CO&&ENT' (1) Ho3 to =ug" Int"nt o+ t," Parti"s% C1@2
(6) Cas"s% C1@2 &anila El"!tri! Co. $. Co**ission"rs% 9?
P,il.
9BC% C1@2 Aurora Ca1ulong $. Court o+ A11"als% L.6199C%
=un.
6A% 1AB@% C1@2 I"lon Constru!tion Cor1. $. CA% >5
95C61% O!t. 16% 1ABC% C152 (9) So*" Obs"r$ations% C15.
A5TICLE 19C6 ............................................................................... C16
CO&&ENT' (1) E++"!t o+ t," ;s" o+ >"n"ral T"r*s%
C162 (6) Cas"s% C162 P,il. Trust Co. $. E!,aus% 56 P,il. B56%
C162 NAESS S,i11ing P,ils.% In!. $. NL5C% >5 C9@@1%
S"1t. @%
1ABC% C1C2 (9) S1"!ial Int"nt Pr"$ails O$"r a >"n"ral
Int"nt%
C1
C.
A5TICLE 19C9 ............................................................................... C1B
CO&&ENT' (1) Sti1ulation A*itting o+ S"$"ral
&"anings%
C1B2 (6) E++"!t o+ an Int"r1r"tation ;1,oling t," Valiit#
o+ t," Contra!t% C1B.
A5TICLE 19C@ ............................................................................... C1B
CO&&ENT' Sti1ulations To 7" 5"a Tog"t,"r% C1A2 7an< o+
t," P.I. $. T# Ca*!o Sobrino% 5C P,il. B?1% C1A2 Nort,
N"gros Sugar Co. $. Co*1ania >"n. " Taba!os% L.A6CC%
&ar. 6A%
1A5C% C1A2 S,"ll Co. $. Fir"*"n8s Ins. "t!.% "t al.% L.B16A%
1B?9
=an.
6A% 1A5C% C6?2 Carlos 7unalion $. Court o+ A11"als% L.
56C9A% =un" 66% 1AB@% C6?.
A5TICLE 19C5 ............................................................................... C6?
CO&&ENT' (1) Iors to 7" Int"r1r"t" in D""1ing 3it,
t," Natur" an Obj"!t o+ t," Contra!t% C6?2 (6) &"aning
o+ t," Arti!l"% C612 (9) ;s" o+ Ot,"r &"anings% C61.
1B?@
A5TICLE 19C6 ...............................................................................
C61
CO&&ENT' (1) E++"!t o+ ;sag" or Custo* o+ t," Pla!"%
C612 (6) Pl"aing an Proo+ o+ Custo*s an ;sag"s% C66.
A5TICLE 19CC ............................................................................... C66
CO&&ENT' (1) Int"r1r"tation to 7" Against t," Part#
I,o Caus" Obs!urit#% C692 (6) Cas"s% C692 >o$8t. o+ t,"
P,il. $. D"r,a* 7ros.% 96 P,il. A6?% C692 EnriEu"H $. A.S.
Iatson an Co.% 66 P,il. 669% C692 Pao C,uan I"i $.
5o*"rosa an >"n. "ral In"*nit# Co.% In!.% L.1?6A6% F"b.
6B% 1A5B% C6@2 Lu!io Tan $. CA M San!,"H% >5 1??A@6% Aug.
16% 1AA6% C652 Fin*an >"n. Ass. Cor1. $. CA M Sur1osa% >5
1??AC?% S"1t. 6% 1AA6%
C652 (9) 5ul" in Contra!ts o+ A,"sion% C662 National
Po3"r Cor1. $. CA% >5 @9C?6% No$. 1@% 1AB6% C662 P,il.
A*"ri!an >"n. Ins. Co. $. S3""t Lin"s% In!.% >5 BC@9@%
Aug. 5% 1AA6%
C6
C.
A5TICLE 19CB ............................................................................... C6C
CO&&ENT' (1) Doubts as to Prin!i1al Obj"!t or
In!i"ntal Cir!u*stan!"s% C6B2 (6) Doubt as to t," Prin!i1al
Obj"!t% C6B2 (9) Doubts as to t," In!i"ntal Cir!u*stan!"s%
C6B2 Olino $. &"ina% 19 P,il. 9CA% C6A.
A5TICLE 19CA ............................................................................... C6A
CO&&ENT' (1) Su11l"tor# ;s" o+ t," Prin!i1l"s o+
Int"r1r"tation in t," 5ul"s o+ Court% C9?2 (6) Languag" in
t," Pla!" o+ E4"!ution% C9?2 (9) &"aning o+ Iors ;s"%
C9?2 (@) Con+li!t 7"t3""n Print" an Iritt"n (Not
Print") Iors%
C9?2 =arEu" $. S*it,% 7"ll an Co.% 56 P,il. C5B% C9?2 (5)
;s" o+ E41"rts an Int"r1r"t"rs% C912 (6) Int"r1r"tation in
Fa$or o+ a Natural 5ig,t% C912 (C) ;sag" or Custo*s% C91.
CHAPTE5 6 0 5ESCISSI7LE CONT5ACTS ................................
C96
INT5OD;CTO5K CO&&ENT ..........................................................
C96 (1) T," Four Dins o+ D"+"!ti$" Contra!ts% C962 (6) Co**"nt
o+ t," Co" Co**ission%
C99.
A5TICLE 19B? ............................................................................... C9@
CO&&ENT' (1) O5"s!ission8 D"+in"% C9@2 (6) 5"Euisit"s
1B?5
A5TICLE 19C6 ...............................................................................
C61
+or 5"s!ission% C952 (9) T3o Dins o+ 5"s!ission% C952
L"gara H"r*anos $. Sulano% L.665CB% =an. 6B% 1AC@%
C962 (@) &utual Diss"nt% C962 (5) Cas"s% C9C2 Lun"ta &otor
Co. $. =.7. 5i!,"#% (C.A.) 9A O.>. 11?1% C9C2 Nobl" $. Cit# o+
&anila% 6C
P,il. 1% C9B2 (6) 5"s!issibl" Contra!t Is Not a Voi
Contra!t%
C9B2 (C) Fi!titious Contra!ts Cannot 7" 5"s!in"% C9A2
(B) E4trajui!ial 5"s!ission% C9A2 &ari*1"rio $. CA% >5
@?69@% D"!. 1@% 1ABC% C9A2 (A) 5ig,t o+ First 5"+usal% C9A2
5i$i"ra Fili1ina $. CA% >5 11C955% A1r. 5% 6??6% C9A.
1B?6
A5TICLE 19B1 ...............................................................................
C9A
CO&&ENT' (1) Enu*"ration o+ t," 5"s!issibl"
Contra!ts%
C@?2 (6) First Cas" 0 In 7",al+ o+ Iars% C@?2 (9)
S"!on
Cas" 0 In 5"1r"s"ntation o+ Abs"nt""s% C@12 (@) T,ir
Cas"
0 -T,os" ;n"rta<"n in Frau o+ Cr"itors% I,"n t,"
Lat. t"r Cannot in An# Ot,"r &ann"r Coll"!t Clai*s Du"
T,"*%/
C@12 (5) Fourt, Cas" 0 T,ings in Litigation% C@62 &ort"ra
$. &artin"H% 1@ P,il. 5@1% C@92 (6) Fi+t, Cas" 0 Ot,"r
Instan!"s%
C@
9.
A5TICLE 19B6 ............................................................................... C@9
CO&&ENT' (1) Pr"*atur" Pa#*"nts &a" in a Stat" o+
Insol$"n!#% C@92 (6) Cas"s% C@@2 Asia 7an<ing Cor1oration
$. Cor!u"ra% 51 P,il. CB1% C@@2 Pili1inas 7an< $. IAC% >5
6CBB1% =un. 9?% 1ABC% C@@.
A5TICLE 19B9 ............................................................................... C@5
CO&&ENT' (1) 5"s!ission Not a Prin!i1al 5"*"#% C@52
(6) Cas"s% C@52 Panlilio $. Vi!toria% 95 P,il. C?6% C@52
Contr"ras an >ing!o $. C,ina 7an<ing Cor1.% C6 P,il. C?A%
C@6.
A5TICLE 19B@ ............................................................................... C@6
CO&&ENT' (1) Partial 5"s!ission% C@62 (6) P"rson
7"n"+it"%
C@
C.
A5TICLE 19B5 ............................................................................... C@C
CO&&ENT' (1) N"!"ssit# o+ &utual 5"stitution% C@C2 (6)
5"Euisit"s 7"+or" t," A!tion +or 5"s!ission Can 7"
7roug,t%
C@C2 (9) Illustrati$" :u"stions%
C@B.
A5TICLE 19B6 ............................................................................... C@A
CO&&ENT' E++"!t i+ Contra!ts I"r" =ui!iall#
A11ro$"%
C@
A.
A5TICLE 19BC ............................................................................... C@A
CO&&ENT' (1) Pr"su*1tions o+ Frau% C5?2 (6)
>ratuitous Ali"nations% C5?2 (9) On"rous Ali"nations% C512
1B?C
A5TICLE 19B1 ...............................................................................
C9A
Isiora L. Cabali3 an Sol"a Saorra $. Sot"ro
Saorra% "t al.% L.
6565?% =un. 11% 1AC5% C512 D" ="sus $. >. ;rrutia an Co.%
99
P,il. 1C1% C592 (@) 7ag"s o+ Frau% C592 Oria $.
&!&i!<ing%
61 P,il. 6@9% C592 Al1u"rto $. P"r"H Pastor an 5oa% 9B
P,il.
CB5% C552 (5) 5ul" in Cas" o+ 5"gist"r" Lans% C562 Aba#a
$. EnriEu"H% "t al.% L.BABB% &a# 1C% 1A5C% C562 (6) Vali
7"+or" 5"s!ission% C562 7orja $. Aison% @@ P,il. BA5% C562
(C) N"!"s. sit# o+ a Dir"!t A!tion +or 5"s!ission% C5C2 (B)
Pr"su*1tion o+ Valiit#% C5C2 (A) Frau Alon" Not
Su++i!i"nt +or 5"s!ission%
C5
C.
A5TICLE 19BB ............................................................................... C5C
CO&&ENT' (1) E++"!t o+ 7a Fait,% C5B2 (6)
Subs"Eu"nt
Trans+"rs% C5B2 (9) Con!"1t o+ -7a Fait,/% C5B2 &IAA $.
5o.
1B?B
rigu"H% @B9 SC5A 61A (6??6)% C5A2 Citiban<% NA $.
Caba*on. gan% @BB SC5A 51C (6??6)% C5A.
A5TICLE 19BA ............................................................................... C5A
CO&&ENT' (1) Pr"s!ri1ti$" P"rio +or 5"s!ission% C6?2
(6) E4a*1l"s% C6?2 (9) I,o Can 7ring t," A!tion% C612 (@)
I,o &a# 7" D"+"nants% C61.
CHAPTE5 C 0 VOIDA7LE CONT5ACTS ......................................
C66
A5TICLE 19A? ............................................................................... C66
CO&&ENT' (1) Distin!tions 7"t3""n a 5"s!issibl"
an a Voiabl" Contra!t% C662 (6) Voiabl" Contra!t Not
Voi Ab Initio% C692 (9) >rouns +or Annul*"nt
(D"!laration o+ Nullit#)% C692 &"r!""s Canullas $. Hon.
Iill"l*o Fortun% L.
5C@AA% =un. 66% 1AB@% C6@2 (@) T," A!tion to 7ring% C6@2
Lo1"H $. =i**# Ong% L.A?61% &a# 91% 1A5C% C6@.
A5TICLE 19A1 ............................................................................... C65
CO&&ENT' (1) Histori!al Not"s on Pr"s!ri1ti$" P"rio
+or Annul*"nt% C652 (6) E++"!t o+ Pr"s!ri1tion% C652 (9)
Illustrati$" Probl"*s% C652 Carant"s $. Court o+ A11"als% L.
9996?% A1r. 65%
1ACC% C662 &"tro1olitan Iat"r3or<s an S"3"rag" S#st"*
$. CA% >5 166?? an 16B56?% O!t. C% 1AAB% C66.
A5TICLE 19A6 ............................................................................... C6B
CO&&ENT' (1) Con+ir*ation% 5ati+i!ation%
A!<no3l"g*"nt Distinguis,"% C6B2 (6) T"r* in t," Ci$il
Co"% C6B2 (9) E++"!ts o+ 5ati+i!ation% C6B2 (@) 5"Euisit"s o+
5ati+i!ation (Pro1"rl#% Con+ir*ation o+ a Voiabl" Contra!t)%
C6A.
A5TICLE 19A9 ................................................................................ C6A
CO&&ENT' (1) Dins o+ 5ati+i!ation% C6A2 (6) E4a*1l"s
o+
Ta!it 5ati+i!ation% C6A2 (9) La1s" o+ Ti*"%
CC?.
A5TICLE 19A@ ............................................................................... CC?
CO&&ENT' (1) 5ati+i!ation b# >uarian% CC?2 (6)
5ati+i!ation b# t," Injur" Part# Hi*s"l+% CC?2 (9)
Distinguis," +ro* A!tion to 5"s!in% CC?.
A5TICLE 19A5 ............................................................................... CC?
CO&&ENT' Con+or*it# o+ >uilt# Part# Not N"""%
CC?.
lii
A5TICLE 19A6 ............................................................................... CC1
CO&&ENT' (1) 5"troa!ti$" E++"!t o+ 5ati+i!ation% CC12 (6)
E4a*1l"% CC1.
A5TICLE 19AC ............................................................................... CC1
CO&&ENT' (1) P"rsons I,o &a# As< +or Annul*"nt%
CC12 &"noHa $. D" >uH*an% (C.A.) 9A O.>. &a# 6C% 1A@1% 1.
15?5%
lii
CC62 D"$"lo1*"nt 7an< $. Court o+ A11"als% L.6BCC@% F"b.
6B%
1AB?% CC62 D"$"lo1*"nt 7an< o+ t," P,ili11in"s $. Court
o+ A11"als% L.6BCC@% F"b. 6B% 1AB?% CC62 CFI o+ 5iHal an
El"na Ong Es!utin $. Court o+ A11"als an F"li4 Ong%
=ul. 65%
1AB1% CC62 Eart, &in"rals E41loration $. D"1ut#
E4"!uti$" S"!. Catalino &a!araig% =r.% >5 CB56A% F"b. 11%
1AA1% CC92 (6) Cr"itors o+ t," Vi!ti*% CC@2 (9) Inti*iation
or Frau b# a &inor% CC5.
A5TICLE 19AB ............................................................................... CC5
CO&&ENT' (1) E++"!ts o+ Annul*"nt% CC52 (6)
E4a*1l"s%
CC62 &un. o+ Ca$it" $. 5ojas% 9? P,il. 6?6% CC62 Tan
:u"to $. Court o+ A11"als% >5 956@B% &a# 16% 1AB9% CC62
(9) Non. a$ailabilit# to Strang"rs% CCC2 (@) E++"!t o+
5"gistration o+ t," Lan% CCC2 (5) E4tra Liabilit# o+ t,"
>uilt# Part#% CCC2 (6) P"rsonal Obligations% CCC.
A5TICLE 19AA ............................................................................... CCC
CO&&ENT' (1) >"n"rall#% No 5"stitution b# In!a1a!itat"
Part#% CCB2 (6) No Pr"su*1tion o+ Enri!,*"nt% CCB2 (9)
Cas"%
CCB2 ;# Soo Li* $. Tan ;n!,uan% 9B P,il. 556% CCB2 (@)
T," Ca1a!itat" P"rson &ust 5"stor" I,"t,"r H"
7"n"+it" or Not% E4!"1t i+ Art. 1@6C o+ t," Ci$il Co"
A11li"s% CCA.
A5TICLE 1@?? ............................................................................... CCA
CO&&ENT' (1) Valu" &a# 7" Substitut" +or T,ing
Its"l+%
CCA2 (6) E4a*1l"% CCA2 (9) Cas"% CB?2 Du*asug $. &o"lo%
9@
P,il. 656%
CB?.
A5TICLE 1@?1 ............................................................................... CB?
CO&&ENT' (1) Histori!al Not"s on E++"!t o+ Loss o+
Obj"!t T,roug, Frau or Fault o+ t," Vi!ti*% CB?2 (6)
:u"r# on SEuan"ring b# Insan" P"rson% CB12 (9) Probl"*s%
CB1.
A5TICLE 1@?6 ............................................................................... CB6
CO&&ENT' (1) 5"ason I,# On" Part# Cannot 7"
Co*1"ll" i+ Ot,"r Part# Do"s Not 5"stor"% CB62 (6)
E4a*1l"% CB62 (9) E++"!t o+ Loss T,ru Fortuitous E$"nt% CB62
(@) Probl"*% CB9.
CHAPTE5 B 0 ;NENFO5CEA7LE CONT5ACTS ........................
1B11
CB@
INT5OD;CTO5K CO&&ENT ..........................................................
CB@ (1) ;n"n+or!"abl" Contra!ts Distinguis," +ro* Voiabl"
an 5"s!issibl" Contra!ts% CB@2 (6) Dins o+
;n"n+or!"abl"
Contra!ts%
CB@.
A5TICLE 1@?9 ............................................................................... CB@
CO&&ENT' (1) ;naut,oriH" Contra!ts% CB52 L"abr"s $.
CA% >5 @1B@C% D"!. 16% 1AB6% CB62 7u*anlag $. AlHat"%
>5
9A11A% S"1t. 66% 1AB6% CB62 (6) T," Statut" o+ Fraus%
CB62
1B16
H"irs o+ C"!ilio Clau"l% "t al. $. Court o+ A11"als% >5
B56@?% =ul. 16% 1AA1% CBC2 (9) E4a*1l"s o+ t," First
Prin!i1l"% CA12 &aria Pat"rno% "t al. $. =ao Kan% L.1661B%
F"b. 6B% 1A61%
CA92 (@) E4a*1l"s o+ Prin!i1l" No. 6% CA92 (5) E4a*1l"s o+
Prin!i1l" No. 9% CA52 (6) E4a*1l"s o+ Prin!i1l" No. @% CA52
(C) E4a*1l" o+ Prin!i1l" No. 5% CA62 (B) E4a*1l" o+ Prin!i1l"
No.
6% CAC2 (A) E4a*1l" o+ Prin!i1l" No. C% CAC2 (1?) E4a*1l"
o+ Prin!i1l" No. B% CAC2 (11) E4a*1l" o+ Prin!i1l" No. A%
CAC2 (16) T," S1"!i+i! Agr""*"nts% CAB2 (19) Illustration o+
S1"!i+i! Agr""*"nt No. 1% CAB2 7abao $. P"r"H% "t al.% L.B99@%
D"!. 6B%
1A5C% CAA2 (1@) Illustration o+ S1"!i+i! Agr""*"nt No. 6%
B?12 (15) Illustration o+ S1"!i+i! Agr""*"nt No. 9% B?62
Cabagu" $. Au4ilio% A6 P,il. 6A@% B?62 (16) Illustration o+
S1"!i+i! Agr""*"nt No. @% B?92 (1C) Illustration o+ S1"!i+i!
Agr""*"nt No. 5% B?@2 I"st"rn &inanao Lu*b"r Co.% In!. $.
&"all"% L.
69619% O!t. 6B% 1ACC% B?52 CruH $. =.&. Tuason an Co.%
In!.% L.69C@A% A1r. 6A% 1ACC% B?52 S#Euia $. CA% >5 61A96%
=un.
9?% 1ABC% B?52 (1B) Illustration o+ S1"!i+i! Agr""*"nt No.
6%
B?52 (1A) E41r"ss Trust Con!"rning 5"al Pro1"rt#% B?62
(6?) Dut# o+ t," Attorn"# +or t," D"+"nant% B?62 (61) Dut#
o+ t," Attorn"# +or t," Plainti++% B?C2 (66) Probl"* on
-Su++i!i"nt &"*oranu*/% B?C2 (69) &"aning o+ For*al
5"Euir"*"nts o+ -Su++i!i"nt &"*oranu*/% B?B2 7"rg $.
&agal"na Estat"% A6
P,il. 11?% B?B2 Cirilo Par""s $. =os" L. Es1ino% L.69951%
&ar.
19% 1A6B% B?A2 (6@) 7A5 :;ESTION% B1?2 (65) 7A5% B112
(66) 5ul" on Aut,orit# o+ t," Ag"nt to S"ll Lan or An#
Int"r"st T,"r"in% B112 (6C) Oral Pro*is" to Put in Iriting%
B112 (6B) T," T,ir Din o+ ;n"n+or!"abl" Contra!t% B112
(6A) N"3 =uris1ru"n!"% B162 >"raro Corial $. Da$i
&irana% >5
195@A6% D"!. 1@% 6???%
B16.
A5TICLE 1@?@ ............................................................................... B16
CO&&ENT' ;naut,oriH" Contra!ts%
B16.
A5TICLE 1@?5 ............................................................................... B16
CO&&ENT' (1) 5ati+i!ation o+ Contra!ts In+ringing
t,"
Statut" o+ Fraus% B162 (6) E4a*1l" o+ Iai$"r%
B19.
A5TICLE 1@?6 ............................................................................... B19
1B19
CO&&ENT' (1) 5ig,t o+ On" Part# to Co*1"l t," Ot,"r
to
E4"!ut" t," N""" Instru*"nt% B192 (6) E4a*1l"%
B19.
A5TICLE 1@?C ............................................................................... B1@
CO&&ENT' Contra!t I,"r" 7ot, Parti"s Ar"
In!a1a!itat"%
B1
@.
A5TICLE 1@?B ............................................................................... B1@
CO&&ENT' Strang"rs Cannot Assail ;n"n+or!"abl"
Con. tra!ts% B1@.
1B1@
CHAPTE5 A 0 VOID O5 INENISTENT CONT5ACTS .................
B15
(N"3% "4!"1t% Arti!l"s 1@11 an 1@16.)
INT5OD;CTO5K CO&&ENT ...........................................................
B15 (1) Voiabl" an Voi Contra!ts Distinguis,"% B152 (6)
;n"n+or!"abl" an Voi Contra!ts Distinguis,"%
B15.
A5TICLE 1@?A ...............................................................................
B16
CO&&ENT' (1) Enu*"ration o+ t," Voi Contra!ts%
B162 (6) S1"!ial Classi+i!ation% B1C2 (9) Non.E4isting Caus"
or Obj"!t% B1C2 Singson $. 7abia% L.9??A6% S"1t. 6C% 1ACC%
B1C2 5i$"ro $. Court o+ A11"als% L.9C15A% No$. 6A% 1ACC%
B1B2 (@) Si*ulat" Contra!ts% B1B2 Castillo $. Castillo% L.
B169B% =an.
66% 1AB?% B1B2 CariPo $. CA% >5 @C661% =ul. 91% 1ABC% B1B2
(5) Contra!ts E41r"ssl# Pro,ibit" b# t," La3% B1A2 D" la
CruH $. 7"tt"r Li$ing% In!.% L.66A96% Aug. 1A% 1ACC% B6?2
Insular Li+" Assuran!" Co.% Lt. $. Ebrao% B? SC5A 1B1%
B6?2 Tol"ntino $. =ug" Egaro L. Paras% >5 @9?A5%
&a# 9?% 1AB9% B6?2 CO&ELEC% "t!. $. =ug" &a. Luisa
:uijano.Pailla 5TC o+ :C 7r. 615 M P,oto<ina &ar<"ting
Cor1oration% >5 151AA6% S"1t. 1B% 6??6% B612 (6) Sal" to a
Con!ubin" o+ Conjugal Abo" Is Consi"r" VOID% B692
&"r!""s Canullas $. Hon. Iill"l*o Fortun% L.5C@AA% =un.
66% 1AB@% B692 (C) Contra!ts Pro,ibit" ;n"r t,"
Constitution% B692 (B) So*" C,ara!t"risti!s o+ Voi
Contra!ts% B6@2 7obis $. Pro$. S,"ri++ o+ Ca*arin"s Nort"%
>5
6AB9B% &ar. 1B% 1AB9% B662 Pili1inas S,"ll P"trol"u* Cor1.
$. D" la 5osa an t," Ior<*"n8s Co*1"nsation
Co**ission% L.@19?1% D"!. 15% 1AB6% B662 (A) Sal" o+
Conjugal Pro1"rti"s%
B662 (1?) I,o &a# Atta!< Contra!ts All"g" to 7"
Fi!titious or Voi% B6C2 >oros1" $. Santos% L.9??CA% =an.
9?% 1AC6% B6C2 (11) T," Cas" o+ Ab"laro Li*% B6C2 Ab"laro
Li* M Es*aito >unnaban $. CA M Donato H. >onHal"s%
>5 165B1C% =an. 16%
6??6%
B6C.
A5TICLE 1@1? ...............................................................................
B6A
CO&&ENT' (1) A!tion +or D"!laration o+ In"4ist"n!" o+
t,"
Contra!t Do"s Not Pr"s!rib"% B6A2 Cara*% =r. $. Laur"ta%
1B15
L.
6BC@?% F"b. 6@% 1AB1% B6A2 7u"na$"ntura $. CA% >5
5?B9C% D"!. 6B% 1AA6% B6A2 H"irs o+ Ingjugtiro $. S1s.
Casals% >5
19@C1B% Aug. 6?% 6??1% B9?2 (6) :u"r# on I,"t,"r Voi
Con. tra!t Still Has to 7" D"!lar" Voi% B9?2 Tol"ntino $.
Paras% >5 @9?A5% &a# 9?% 1AB9% B912 S1s. Nar!iso
5onga$illa M Do. lor"s 5onga$illa $. CA% "t al.% >5 B9AC@%
Aug. 1C% 1AAB% B91.
A5TICLE 1@11 ...............................................................................
B91
CO&&ENT' Contra!ts I,i!, Ar" 7ot, Ill"gal an
Cri*inal%
B9
1.
A5TICLE 1@16 ...............................................................................
B96
CO&&ENT' (1) T3o Dins o+ Ill"gal Contra!ts% B962 (6)
Ill"gal an Cri*inal Contra!ts% B962 Pa!<aging Prou!ts
Cor1. $.
1B16
NL5C% >5 5?9B9% =ul. 69% 1ABC% B992 P"r"H $. H"rranH%
C
P,il. 6A9% B952 (9) Ill"gal 7ut Not Cri*inal Contra!ts%
B962 P,ili11in" 7an<ing Cor1. $. Lui S,"% L.1C5BC%
S"1t. 16%
1A6C% B962 D" 5aEuiHa $. Cast"ll$i% CC SC5A BB% B9C2
T"ja
&ar<"ting% "t al. $. Nal" an IAC% >5 6551?% &ar. A%
1ABC%
B9C2 Lan O3n"rs,i1 b# A*"ri!ans A+t"r t," E41iration
o+ t," Laur"l.Langl"# Agr""*"nt on =ul. 9% 1AC@% B9A2
&ass $. Dir"!tor o+ Lans% B? SC5A 66A% B9A2 A$ila $.
CA% >5
@5655% No$. 1@% 1AB6% B@?2 (@) T," Pari D"li!to
Do!trin"%
B@?2 (5) So*" :u"stions on >a*bling% B@62 (6) O>a*bling8
Distinguis," +ro* O7"tting8% B@92 (C) 7A5 :;ESTION%
B@@2 (B) OIn 1ari "li!to8 5ul" Ina11li!abl" to In"4ist"nt an
Voi Contra!ts% B@@.
A5TICLE 1@19 ............................................................................... B@@
CO&&ENT' &"aning o+ E4!"ss%
B@@.
A5TICLE 1@1@ ............................................................................... B@6
CO&&ENT' (1) On" Instan!" I,"r" 5"!o$"r# Can 7"
Ha E$"n in t," Pr"s"n!" o+ Pari D"li!to% B@62 (6)
E4a*1l"% B@62 (9) Co**"nt o+ t," Co" Co**ission% B@62
(@) A11li!abl" E$"n i+ Parti"s Ar" Not EEuall# >uilt#% B@6.
A5TICLE 1@15 ............................................................................... B@C
CO&&ENT' (1) E++"!t i+ On" Part# Is In!a1a!itat"% B@C2
(6) E4a*1l"% B@C.
A5TICLE 1@16 ................................................................................ B@C
CO&&ENT' (1) Contra!ts Ill"gal P"r S" an T,os"
&"r"l#
Pro,ibit"% B@C2 (6) Ill"gal P"r S"% B@C2 (9) &"r"l#
Pro,ibit"%
B@C2 (@) E4a*1l"s% B@B2 Al"janro 5as $. Est"la Sua%
an
5a*on Sua% L.699?6% S"1t. 65% 1A6B%
B@B.
A5TICLE 1@1C ............................................................................... B@A
CO&&ENT' (1) 5ul" in Cas" o+ Pa#*"nt in E4!"ss
o+
&a4i*u* Pri!"% B@A2 (6) E4a*1l"%
B@A.
A5TICLE 1@1B ............................................................................... B@A
1B1C
CO&&ENT' (1) Hours o+ Labor% B@A2 (6) 7asis o+
&ini*u* Iag" 5at"s% B@A2 (9) Si!< an Va!ation L"a$"s%
B5?2 5" &ario 7. C,anliong!o% CA SC5A 96@% B5?.
A5TICLE 1@1A ............................................................................... B5?
CO&&ENT' (1) &ini*u* Iag" 0 No Iai$"r o+ 5ig,t% B5?2
In"!"ta Al+anta $. Nolas!o No"% "t al.% L.96966% S"1t. 1A%
1AC9 (So!ial Fun!tion o+ Pro1"rt# O3n"rs,i1) B5?2 (6)
&ini*u* Iag"s +or Hous",ol an Do*"sti! H"l1"rs% B5?2
(9) P"nalt#%
B512 (@) I,"n Iag"s S,oul 7" Pai% B512 San &igu"l
Cor1oration an Fran!is!o Anr"s $. T," Hon. S"!r"tar#
o+ Labor% "t al.% L.9A1A5% &a# 16% 1AC5% B512 7a!ata $.
Ior<.
1B1B
*"n8s Co*1"nsation Co**ission% L.69AA6% O!t. 6C%
1AC5%
B5
9.
A5TICLE 1@6? ............................................................................... B59
CO&&ENT' Ill"gal T"r*s o+ a Contra!t%
B59.
A5TICLE 1@61 ............................................................................... B59
CO&&ENT' D"+"ns" o+ Ill"galit# Not >"n"rall# A$ailabl"
to
T,ir P"rsons%
B59.
A5TICLE 1@66 ............................................................................... B5@
CO&&ENT' Contra!t T,at Is t," Dir"!t 5"sult o+ a
Pr"$ious Ill"gal Contra!t% B5@2 E. 5aHon% In!. $. P,il. Ports
Aut,orit#% "t al.% >5 C51AC% =un. 66% 1ABC% B5@.
Titl" III. 0 NAT;5AL O7LI>ATIONS ............................................
B56
(N"3% "4!"1t Arti!l"
1@6C.)
INT5OD;CTO5K CO&&ENT ..........................................................
B56
Co**"nt o+ t," Co" Co**ission 5" Natural
Obligations%
B5
6.
A5TICLE 1@69 ............................................................................... B56
CO&&ENT' (1) Ci$il an Natural Obligations
Distinguis,"%
B562 (6) OVoluntar# Ful+ill*"nt8 D"+in"% B5C2 (9) ;nu"
Pa#*"nt Distinguis," +ro* Natural Obligation% B5C2 (@)
No =urii!al Ti" in &oral Obligations% B5C2 (5) E4a*1l" o+
Ot,"r Natural Obligations% B5B2 (6) Con$"rsion o+ &oral
Obligations to Ci$il Obligations% B5B.
A5TICLE 1@6@ ............................................................................... B5B
CO&&ENT' (1) E++"!t o+ E4tin!ti$" Pr"s!ri1tion% B5B2 (6)
E4a*1l" o+ t," Arti!l"8s A11li!ation% B5B.
A5TICLE 1@65 ............................................................................... B5A
CO&&ENT' (1) Pa#*"nt b# a T,ir P"rson% B5A2 (6)
E4a*1l"%
B5A2 (9) Pa#*"nt Iit, D"btor8s Cons"nt%
B5A.
l$ii
A5TICLE 1@66 ............................................................................... B5A
CO&&ENT' (1) Contra!ts b# &inors 7"t3""n 1B an 61
0 I,"n T,"r" Has 7""n Annul*"nt% B6?2 (6) E4a*1l"% B6?2
(9) &ajorit# Ag"% B6?.
A5TICLE 1@6C ............................................................................... B6?
CO&&ENT' (1) Contra!ts b# &inors 0 No Annul*"nt
K"t%
B6?2 (6) :u"r#%
B61.
A5TICLE 1@6B ............................................................................... B61
CO&&ENT' (1) Iinn"r in an A!tion to En+or!" a Ci$il
Obli. gation% B612 (6) E4a*1l"% B61.
l$ii
A5TICLE 1@6A ............................................................................... B61
CO&&ENT' (1) 5ul" in Cas" o+ Pa#*"nt o+ D"bts
7"#on
Valu" o+ t," D"!""nt8s Estat"% B612 (6) E4a*1l"%
B66.
A5TICLE 1@9? ............................................................................... B66
CO&&ENT' (1) Pa#*"nt o+ L"ga!i"s D"s1it" t," Fa!t
T,at t," Iill Is Voi% B662 (6) E4a*1l"% B662 (9) Analogous
Cas"s%
B6
6.
Titl" IV. 0 ESTOPPEL (n) .................................................................
B69
INT5OD;CTO5K CO&&ENT ...........................................................
B69
Co**"nt o+ t," Co" Co**ission on Esto11"l%
B69.
A5TICLE 1@91 ................................................................................ B69
CO&&ENT' (1) Con!"1t o+ Esto11"l% B692 5o#al"s $.
Int"r*". iat" A11"llat" Court% L.65?C6% =an. 91% 1AB@%
B6@2 5u1"rto Pur"Ha $. CA% Asia Trust D"$"lo1*"nt
7an<% an S1ous"s 7oni+a!io M Crisanta Al"janro% >5
166?59% &a# 15% 1AAB%
B6@2 Aora!ion E. CruH% "t al. $. CA an S1s. Elis"o M
Virgin. ia &alolos% >5 166C19% =ul. 6C% 1AAB% B6@2 (6) Origin
o+ Esto1. 1"l% B652 (9) E4a*1l"s o+ Esto11"l% B652 Fi"l*an8s
Insuran!" Co.% In!. $. &"r!""s Vargas Va. " Song!o% "t
al.% L.6@B99% S"1t. 69% 1A6B% B6C2 &anila El"!tri! Co. $.
Court o+ A11"als% L.99CA@% &a# 91% 1AB6% B6C2 Pantran!o $.
Court o+ In. 5"l.% L.AC96% &a# 6?% 1A5C% Instan!" I,"r"
Esto11"l Do"s Not A1. 1l#% B6C2 LuHon St"$"oring Co.% In!.
$. LuHon &arin" D"1t. ;nion% "t al.% 1?1 P,il. 65C% B6B2
So!ial S"!urit# Co**ission $. Pon!iano L. Al*"a an
Eu+"*ia P. Al*"a% >5 C5@6B% D"!. 1@% 1ABB% B6A2 Laur"l
$. Ci$il S"r$i!" Co**ission% >5
C1566% O!t. 6B% 1AA1% B6A2 ="++"rson Li* $. :u""nslan
To<#o
Co**oiti"s% In!.% >5 196?91% =an. @% 6??6%
BC?.
A5TICLE 1@96 ............................................................................... BC1
CO&&ENT' (1) Su11l"tor# E++"!t o+ t," >"n"ral Prin!i1l"s
o+
Esto11"l% BC12 (6) Pl"aing o+ All"g" Esto11"l%
BC1.
1B61
A5TICLE 1@99 ............................................................................... BC1
CO&&ENT' (1) Dins o+ Esto11"l% BC62 &a<ati L"asing
an Finan!" Cor1oration $. I"a$"r T"4til" &ills% In!. M
Court o+ A11"als% >5 5B@6A% &a# 16% 1AB9% BC62 (6)
Esto11"l IN PAIS (EEuitabl" Esto11"l)% BC92 Carolina
LiEu"t" >anHon $. CA% >5 196B91% =ul. 9?% 6??6% BC92
N#!o Sal"s Cor1. $. 7A Finan!" Cor1.% >5 C16A@% Aug. 16%
1AA1% BC52 (9) Esto11"l 7K DEED% BC6.
A5TICLE 1@9@ ............................................................................... BCC
CO&&ENT' (1) Sal" or Ali"nation b# Non.O3n"r% BCC2 (6)
Cas"s% BCB2 InEui*bo# $. Pa"H Va. " CruH% L.19A59%
=ul.
1B66
66% 1A6?% BCB2 Lla!"r $. &uPoH " 7ustillo an A!,a$al%
16
P,il. 96B%
BCB.
A5TICLE 1@95 ............................................................................... BCB
CO&&ENT' (1) Sal" or Ali"nation in 5"1r"s"ntation
o+
Anot,"r% BCA2 (6) E4a*1l"%
BCA.
A5TICLE 1@96 ............................................................................... BCA
CO&&ENT' (1) Esto11"l on Part o+ a L"ss"" or a 7ail""%
BCA2 (6) I,"n Pr"su*1tion Do"s Not A11l#% BCA.
A5TICLE 1@9C ............................................................................... BB?
CO&&ENT' (1) Esto11"l Con!"rning I**o$abl"
Pro1"rt#%
BB?2 (6) Cas"s% BB?2 Fabi"% "t al. $. Cit# o+ &anila% 1?
P,il.
6@% BB?2 Cristobal $. >o*"H% 5? P,il. B1?% BB12 (9) E++"!t
o+ Cons"nt on t," Part o+ t," Tru" O3n"r% BB12 C"*"ntina%
"t al. $. Court o+ A11"als% "t al.% A1 P,il. A66% BB1.
A5TICLE 1@9B ............................................................................... BB1
CO&&ENT' (1) Allo3ing So*"on" to Assu*" A11ar"nt
O3n"rs,i1 o+ P"rsonal Pro1"rt#% BB62 (6) I,"n Esto11"l
A11li"s E$"n I+ T,"r" 7" No 7"n"+its% BB6.
A5TICLE 1@9A ............................................................................... BB6
CO&&ENT' (1) P"rsons 7oun b# Esto11"l% BB62 (6)
Esto11"l on t," Part o+ a &inor% BB92 (9) Is t,"
>o$"rn*"nt 7oun b# Esto11"l% BB92 Antonio Fa$is% "t al.
$. &uni!i1alit# o+ Sabongan% L.66566% F"b. 6C% 1A6A% BB@2
5"1ubli! $. Caball"ro%
CA SC5A 1CC% BB@2 (@) A11li!abilit# to :u"stions o+ Fa!t%
BB@2 Abin"s $. 7PI% @B6 SC5A @61 (6??6)% BB@2 (5)
Esto11"l b# 5"!or% BB@2 (6) Esto11"l Cannot Valiat" a
Voi Contra!t%
BB52 Pru"ntial 7an< $. Panis% >5 5???B% Aug. 91% 1ABC%
BB52 (C) Pro*issor# Esto11"l% BB62 &"noHa $. CA% >5
116C1?% =un. 65% 6??1% BB52 (B) Con!"1t o+ an -Ag"n!# b#
Esto11"l% BBC2 Litonjua% =r. $. Et"rnit Cor1.% @A? SC5A 6?@
(6??6)% BBC.
Titl" V. 0 T5;STS (n) ........................................................................
BBB
CHAPTE5 1 0 >ENE5AL P5OVISIONS .......................................
BBB
1B69
INT5OD;CTO5K CO&&ENT ..........................................................
BBB (1) OTrust8 D"+in"% BBB2 >"lano $. Court o+ A11"als% L.9A?5?%
F"b. 6@% 1AB1% BBB2 (6) C,ara!t"risti!s o+ a OTrust8% BBB2
(9)
OTrust8 Distinguis," +ro* O>uarians,i18 or
OE4"!utors,i18%
BBA2 (@) OTrust8 Distinguis," +ro* a OSti1ulation Pour
Autrui8%
BBA2 (5) Co.O3n"rs,i1 as a OTrust8% BBA2 Sotto $. T"$"s%
L.
9B?1?% O!t. 91% 1ACB%
BBA.
A5TICLE 1@@? ............................................................................... BBA
CO&&ENT' (1) Parti"s to a OTrust8% BBA2 (6) El"*"nts o+
a
OTrust8%
BA?.
1B6@
A5TICLE 1@@1 ...............................................................................
BA?
CO&&ENT' Classi+i!ation o+ Trusts%
BA?.
A5TICLE 1@@6 ............................................................................... BA?
CO&&ENT' (1) Su11l"tor# E++"!t o+ t," >"n"ral La3
o+ Trusts% BA12 (6) Co**"nt o+ t," Co" Co**ission% BA12
(9) Anglo.A*"ri!an Pr"!""nts% BA12 (@) Cas"s% BA12
>"lano $. Court o+ A11"als% L.9A?5?% F"b. 6@% 1AB1% BA12
5iHal Sur"t# M Insuran!" Co. $. CA% C9 SCAD 6?6 (1AA6)%
BA1.
CHAPTE5 6 0 ENP5ESS T5;STS ...................................................
BA9
A5TICLE 1@@9 ............................................................................... BA9
CO&&ENT' (1) For*aliti"s 5" E41r"ss Trusts% BA92 (6)
Dis. tinguis," +ro* t," For*aliti"s o+ an I*1li" Trust%
BA9.
A5TICLE 1@@@ ............................................................................... BA9
CO&&ENT' (1) Ho3 an E41r"ss Trust Is Cr"at"% BA@2
=ulio $. Dalanan% L.1A?16% O!t. 6?% 1A6C% BA@2 (6) Cl"ar
Int"nt%
BA62 (9) Ca1a!it#% BA62 (@) A*inistration o+ t," Trust%
BA6.
A5TICLE 1@@5 ............................................................................... BAC
CO&&ENT' E++"!t i+ Trust"" D"!lin"s%
BAC.
A5TICLE 1@@6 ............................................................................... BAB
CO&&ENT' (1) N"!"ssit# o+ A!!"1tan!" b# t," 7"n"+i!iar#%
BAB2 (6) I,"n A!!"1tan!" is Pr"su*"% BAB2 (9) Ho3
E41r"ss
Trusts Ar" ENDED%
BAB.
CHAPTE5 9 0 I&PLIED T5;STS ..................................................
A??
INT5OD;CTO5K CO&&ENT ..........................................................
A??
Co**"nt o+ t," Co" Co**ission%
A??.
1B65
A5TICLE 1@@1 ...............................................................................
BA?
A5TICLE 1@@C ............................................................................... A??
CO&&ENT' Enu*"ration o+ Instan!"s o+ I*1li" Trust%
A??2 5abu!o $. Hon. Antonio Vill"gas% L.6@661% F"b. 6B%
1AC@% A?12 Vi!torias $. L"u"nb"rg"r an CA% >5 911BA%
&ar. 91% 1ABA%
A?
1.
A5TICLE 1@@B ............................................................................... A?6
CO&&ENT' (1) Pur!,as" o+ Pro1"rt# I,"r" Titl" Is
Not >i$"n to Pa#"r but to Anot,"r% A?62 (6) 5ul" i+
Do!u*"nt E41r"ss"s a Di++"r"nt Int"nt% A?9.
A5TICLE 1@@A ............................................................................... A?9
CO&&ENT' I,"n Don"" Do"s Not >"t Full O3n"rs,i1
o+
7"n"+it%
A?9.
1B66
A5TICLE 1@5? ...............................................................................
A?@
CO&&ENT' (1) Con$"#an!" o+ Pro1"rt# so T,at It &a#
S"r$" as S"!urit#% A?@2 Carant"s $. Court o+ A11"als% C6
SC5A
51@% A?@2 (6) Trust 5"!"i1t% A?@2 (9) OTrust 5"!"i1t8
D"+in"%
A?52 (@) Cas"% A?52 Sout, Cit# Ho*"s% In!.% Fortun"
&otors (P,ils.)% Pala3an Lu*b"r &anu+a!turing Cor1. $. 7A
Finan!" Cor1.% >5 195@66% D"!. C% 6??1% A?52 (5) D"+aut
or Failur" o+ Entrust"" to Co*1l# 3it, T"r*s o+ Trust
Agr""*"nt Can!"llation o+ Trust Not Absolut"l# N"!"ssar#%
A?5.
A5TICLE 1@51 ............................................................................... A?6
CO&&ENT' (1) I,"n Titl" to In,"rit" Lan Is Not
in O3n"r8s Na*"% A?62 (6) 5ul" in Co.O3n"rs,i1% A?62
&ariano $. =ug" D" V"ra% >5 5AAC@% &ar. A% 1ABC% A?62 (9)
Para1,"rnal Pro1"rti"s 5"gist"r" ;n"r t," Husban8s
Na*"% A?C2 (@) Titl" in t," Na*" o+ t," Sur$i$ing
Husban% A?C2 (5) 5ig,t o+ Co.,"irs% A?B.
A5TICLE 1@56 ............................................................................... A?B
CO&&ENT' (1) I,"n Pro1"rt# Is in t," Na*" o+ Onl#
On" o+ t," Co.7u#"rs% A?B2 ;# Alo! $. C,o =an =ing% 1A
P,il. 6?6%
A?B2 (6) Pr"su*1tion T,at S,ar"s Ar" EEual%
A?A.
A5TICLE 1@59 ............................................................................... A?A
CO&&ENT' (1) I,"n a P"rson D"!lar"s His Int"nt to
Hol Pro1"rt# +or So*"on" Els"% A?A2 (6) Cas"% A?A2 H"irs o+
E*ilio Can"laria $. Lu!ia 5o*"ro% "t al.% L.161@A% S"1t.
9?% 1A6?%
A?
A.
A5TICLE 1@5@ ............................................................................... A1?
CO&&ENT' Absolut" Con$"#an!" &a" +or S"!urit#
Pur1os"%
A1
?.
A5TICLE 1@55 ............................................................................... A1?
CO&&ENT' (1) ;s" o+ Trust Funs% A112 (6) A11li!abilit#
o+ Arti!l"% A112 (9) E4a*1l"% A112 (@) 5"asons +or t," 5ul"%
A112 (5) Cas"s% A112 Sing =o!o $. Sun#antung% "t al.% @9 P,il.
5BA%
A112 Es!obar $. Lo!sin% C@ P,il. B6%
A16.
1B6C
A5TICLE 1@5? ...............................................................................
A?@
A5TICLE 1@56 ............................................................................... A16
CO&&ENT' (1) Pro1"rt# A!Euir" T,ru &ista<" or
Frau%
A162 Laur"ano $. St"$"nson% @5 P,il. 656% A162 (6) Natur"
o+ t," &ista<" or Frau% A192 (9) Against I,o* t," 5ig,t
&ust 7" E4"r!is"% A192 (@) I,"n t," Arti!l" Do"s Not
A11l#% A192 Ongsia<o% "t al. $. Ongsia<o% "t al.% L.C51?%
&ar. 1?% 1A5C%
A192 Tibur!io Sa*ont" $. CA% "t al.% >5 1?@669% =ul. 16%
6??1%
A1@2 (5) :u"r# 0 Do Trusts Pr"s!rib"% A152 (6) So*"
Cas"s%
A162 5a*os% "t al. $. >r"goria 5a*os% "t al.% L.1A9C6%
D"!.
9% 1AC@% A162 Ar*a*"nto $. C"ntral 7an<% L.9@66B% F"b.
61%
1AB?% A1C2 Es!a# $. Court o+ A11"als% L.9C5?@% D"!. 1B%
1AC@%
1B6B
A1C2 H"irs o+ Tana< Pangaaran Pati3a#on% "t al. $.
Hon. &artin"H% "t al.% >5 @A?6C% =un. 1?% 1AB5% A1B2
Hora!io >. AaHa an F"li!ia &arunan $. CA an
Viol"ta >. AaHa% Assist" b# H"r Husban Lino A*or% L.
@C95@% &ar. 61% 1ABA%
A1B2 >onHal"s% "t al. $. IAC% >5 66@CA% No$. 61% 1AA1%
A1A2 S1ous"s Hora!io M F"lisa 7"nito $. Aga1ita
SaEuitan.5uiH% >5 1@AA?6% D"!. 66% 6??6% A6?2 (C) Ho3 to
Pro$" Trusts% A6?2 Salao% "t al. $. Salao% L.666AA% &ar. 16%
1AC6% A6?2 (B) Ho3
OCr"ati$" Trusts8 ar" Cr"at"%
A66.
A5TICLE 1@5C ...............................................................................
A66
CO&&ENT' (1) Proo+ o+ I*1li" Trust% A662 (6) Oral
E$i"n!" +or Trust &ust 7" Trust3ort,#% A662 Salao $.
Salao% L.666AA% &ar. 16% 1AC6% A66.
APPENDI
N
5"1ubli! A!t No. BCA6 (An A!t 1ro$iing +or t,"
r"!ognition an us" o+ "l"!troni! !o**"r!ial an non.
!o**"r!ial transa!tions
an o!u*"nts .........................................................................................
A69
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