HRIM 160 Lecture Notes and Codals  ***Bill of Exchange: “May utang si A kay B, may utang si B

Law and the Management of Hotels, Restaurants and Related Institutions kay C, so A please pay B.”
 Labor Relations, Unions
01/12/18  Sexual Harassment
Class Orientation  Building Code (Section 1 and all of its subsections)
 Atty. Percival U. Cortez  Fire Code
 UP Diliman Legal Office  Food Safety Act
 L/G Quezon Hall  No required specific textbook/s
 Consultation Availability: Wednesday, 8:00am-5:00pm; by appointment  Use bluebook for exams
 Index Card (3x5) – next week
o Surname, FN MI (+1x1 Pic – should look like you currently) 01/19/19
o Student Number (Absent – Update notes)
o Course
o Graduating/Not Graduating A. INTRODUCTION AND PRELIMINARY TITLE OF THE NEW CIVIL CODE (NCC)
 Rule: No talking if Sir (or anyone else) is talking
 No use of phones – just take it outside Republic Act No. 386
o 1st time: warning An Act to Ordain and Institute the Civil Code of the Philippines
o 2nd time: will be asked to leave Preliminary Title
o 3rd time: 5.00 grade
 Exams will be in English  Official Gazette
 Manner of discussion: o five years delayed, Pres. Corazon Aquino added newspaper called
o Lecture – questions will be asked then answered General
o Minimum objective – to be able to understand that the law at o Before 1986, only the official gazette was used
minimum says *this* o If anyone complained about being detained without compliance
 Breakdown of Grades with the law, he would simply make a law
o Recitation – 20%  Newspapers of Nationwide General Circulation
o Midterm Exam – 20% o while magazines feature articles, newspapers keep people updated
o Final Exam – 20% o Ask the publisher who will then issue a certification, then you can
o Individual Project (written provisions) – 40% publish a law in that newspaper which will take effect 15 days after.
 Assignment: Write provisions in a notebook/any bound paper (Individual  ***Panorama or People’s Tonight, People’s Journal, Abante
Project); use only black/blue inked pen  ***Everyone has access to the law.
o Provisions can be used during exams
o No additional notes in the notebook during exams Chapter 1
 ***Section 1 and all of its subsections of noted provision/article Effect and Application of Laws
 Topic Outline (photox w/ Gertie):
o Sexual Harassment will be discussed first for the sake of working Art. 2. Laws shall take effect after fifteen days following the completion of their
students publication in the Official Gazette, unless it is otherwise provided. This Code shall
o Coverage: 1987 Constitution take effect one year after such publication. (1a)
 Civil Code
 Corporation Code Art. 3. Ignorance of the law excuses no one from compliance therewith. (2)
 ***Promissory Note: “I will promise to pay at ____”  Everyone has access to the law – It is made available for everyone.
 Even if you do not know that there is such law, you are not excused.
Art. 4. Laws shall have no retroactive effect, unless the contrary is provided. (3) However, intestate and testamentary successions, both with respect to the order of
 Applies to all laws succession and to the amount of successional rights and to the intrinsic validity of
 A law which makes a penalty lighter will have a retroactive effect testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
Art. 5. Acts executed against the provisions of mandatory or prohibitory laws shall be regardless of the country wherein said property may be found. (10a)
void, except when the law itself authorizes their validity. (4a)
Art. 17. The forms and solemnities of contracts, wills, and other public instruments
Art. 7. Laws are repealed only by subsequent ones, and their violation or non- shall be governed by the laws of the country in which they are executed.
observance shall not be excused by disuse, or custom or practice to the contrary.
When the acts referred to are executed before the diplomatic or consular officials of
When the courts declared a law to be inconsistent with the Constitution, the former the Republic of the Philippines in a foreign country, the solemnities established by
shall be void and the latter shall govern. Philippine laws shall be observed in their execution.

Administrative or executive acts, orders and regulations shall be valid only when they Prohibitive laws concerning persons, their acts or property, and those which have, for
are not contrary to the laws or the Constitution. (5a) their object, public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions
Art. 8. Judicial decisions applying or interpreting the laws or the Constitution shall agreed upon in a foreign country. (11a)
form a part of the legal system of the Philippines. (n)
Art. 18. In matters which are governed by the Code of Commerce and special laws,
Art. 10. In case of doubt in the interpretation or application of laws, it is presumed their deficiency shall be supplied by the provisions of this Code. (16a)
that the lawmaking body intended right and justice to prevail. (n)
Chapter 2
Art. 13. When the laws speak of years, months, days or nights, it shall be understood Human Relations (n)
that years are of three hundred sixty-five days each; months, of thirty days; days, of
twenty-four hours; and nights from sunset to sunrise. Art. 19. Every person must, in the exercise of his rights and in the performance of his
duties, act with justice, give everyone his due, and observe honesty and good faith.
If months are designated by their name, they shall be computed by the number of
days which they respectively have. Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another, shall indemnify the latter for the same.
In computing a period, the first day shall be excluded, and the last day included. (7a)
Art. 21. Any person who willfully causes loss or injury to another in a manner that is
Art. 14. Penal laws and those of public security and safety shall be obligatory upon contrary to morals, good customs or public policy shall compensate the latter for the
all who live or sojourn in the Philippine territory, subject to the principles of public damage.
international law and to treaty stipulations. (8a)
Art. 22. Every person who through an act of performance by another, or any other
Art. 15. Laws relating to family rights and duties, or to the status, condition and legal means, acquires or comes into possession of something at the expense of the latter
capacity of persons are binding upon citizens of the Philippines, even though living without just or legal ground, shall return the same to him.
abroad. (9a)
Art. 23. Even when an act or event causing damage to another's property was not
Art. 16. Real property as well as personal property is subject to the law of the country due to the fault or negligence of the defendant, the latter shall be liable for indemnity
where it is stipulated. if through the act or event he was benefited.
  Due process
Art. 24. In all contractual, property or other relations, when one of the parties is at a o Basic requirement: given notice and hearing
disadvantage on account of his moral dependence, ignorance, indigence, mental  Notice – must be in writing and say what law was violated,
weakness, tender age or other handicap, the courts must be vigilant for his the manner and time when it was violated, and must give
protection. time to respond to the notice (e.g. say why you should not
be issued it); may be given an option to seek counsel
Chapter 3 (noted at the bottom of the notice)
Juridical Persons  ***notice must be filed/issued by the disciplining
authority
Art. 44. The following are juridical persons:  ***if magsusumbong officemate/etc., dapat under
(1) The State and its political subdivisions; oath kasi baka mag-file ng notice tapos hindi
(2) Other corporations, institutions and entities for public interest or naman totoo
purpose, created by law; their personality begins as soon as they  ***case of perjury sa person na nagsumbong if
have been constituted according to law; hindi naman totoo
(3) Corporations, partnerships and associations for private interest or  ***always have the person receive the notice
purpose to which the law grants a juridical personality, separate and (bring a receiving copy)
distinct from that of each shareholder, partner or member. (35a)  ***court always gives employee benefit over
employer, except if class suits)
B. Constitutional Provisions  Hearing – in court (if case) or administrative tribunal (if
administrative case
The 1987 Constitution of the Republic of the Philippines  Hindi pwedeng “narinig” lang but must be listened
to talaga
Art. 2. Declaration of Principles and State Policies
 Must be unbiased
o You cannot just say na unbiased ka
Section 1. The Philippines is a democratic and republican State. Sovereignty resides
o It should be in the records, so you can
in the people and all government authority emanates from them.
say that this is this and that is that
o “put into record that the judge and
Section 4. The prime duty of the Government is to serve and protect the people. The
counsel is talking about their families...”
Government may call upon the people to defend the State and, in the fulfillment
etc.
thereof, all citizens may be required, under conditions provided by law, to render
o ***acquittal at first level cannot be
personal, military or civil service.
appealed
o Must not only be unbiased per se, but
Section 20. The State recognizes the indispensable role of the private sector,
must also look/seem unbiased
encourages private enterprise, and provides incentives to needed investments.
 Opportunity to present evidence
 Must not consider anything outside of the
evidence even if you know it personally
01/16/19
o if defense did not present any evidence
otherwise for protection, judge cannot
Art. 3. Bill of Rights
dismiss case because of that kasi hindi
presented through evidence, esp. if
Section 1. No person shall be deprived of life, liberty, or property without due process
yung nagp-prosecute has a very strong
of law, nor shall any person be denied the equal protection of the laws.
and believable case
 o Judge can decrease punishment/etc.  Kung meron kang private property, hindi ‘yan pwede gamitin ng government
o “Personal considerations” nang walang bayad
 Decision must be personal and through own  Ang pagtatalunan dito is kung magkano
considerations and not made by anyone else  E.g. may two roads na hindi ma-connect because may bahay sa gitna
o ***If you have not violated any law, then there should be no o Hindi makuha ng government ‘yung right of way kasi may bahay
notice/you can’t issue a notice o Ayaw magbenta ng may-ari kasi bahay niya ‘yun
o In labor, meron kang notice which must be in writing, you have a o Dapat kasi kinuha muna nila ‘yung road right of way bago ginawa
hearing, then a second notice that tells the person concerned the ‘yung road
decision on his case and his status right now o Bakit hindi na lang inusog nang konti para hindi directly sa bahay,
 “effective immediately upon receipt of this notice” may lupa naman at the sides
 You have the right to appeal to a higher authority, if it is o They couldn’t agree to a value of the house esp. since may
possible to appeal sentimental value ‘yung house
 ***If judging authority made a mistake in the decision,  E.g. Valuation of Philcoa
must be given every chance there is to correct it o Dati 2 roads pa lang, wala pang Technohub, etc.
 Equal protection o Zone valuation was dati pa pero ngayon kasi highway na, may
o Everybody in similar conditions and circumstances must be given establishments na, etc.
equal and fair treatment  The intent is what is important – will be for the use of the public, so public
o ***Contractual obligation between prof and student: prof to teach use will win and private should sell
and student to learn/study o What if few private families lang makakagamit – it is not important
o All people situated in similar conditions must be treated alike both that not all, but that it is intended for the use of the public
in rules imposed and rights given o ***Minsan pabago-bago talaga ang decisions ng judges
o ***If people are to be classified, dapat objective ‘yung pagka- o ***If may mali sa law, you go to the Congress and tell them to
classify (e.g. Single Parent Act, classifying women into income change the law. Until then, you have no choice but to follow it.
brackets and not by hair length, etc.)  Eminent domain - the right of a government or its agent to expropriate
o ***Look at: Quinto and Tolentino vs Comelec private property for public use, with payment of compensation.
o ***Gov’t imposes a law that will place higher tax on motor vehicles Section 10. No law impairing the obligation of contracts shall be passed.
 Graduated increase in tax with increase in price, except  Essentially, once you enter into a contract, you have a vested right to the
for most expensive one which have a lower tax rate obligations of that contract
 Hindi pwede kasi hindi naman reasonable  The government cannot pass a law that will threaten that contract
o There should be reasonable basis for the imposition/reasonable  Because you have that previous contract before the passing of the law, the
classification law cannot prohibit the performance of that contract
 There must be substantial basis for the classification
 E.g. Dati pwede ka magbenta ng firearms and then tsaka na mamroblema to
 Dapat may kinalaman sa law ‘yung reason/basis
get a license for that
o Treatment should always be the same for people in the same
o A law was passed na pwede ka lang magbenta to licensed firearms
class/category
holders
 ***Steps o If may contract ka na to sell this to the person before the law was
o Notice and receipt of notice passed, vested right nang mabenta ‘yung firearm
o Complainant present complaint
 ***If illegal ‘yung contract to begin with, wala siyang vested rights. From the
o Respondent given chance to refute
very start, no rights were ever established/obtained from that contract
o Decision to the hearing
Section 11. Free access to the courts and quasi-judicial bodies and adequate legal
Section 9. Private property shall not be taken for public use without just
assistance shall not be denied to any person by reason of poverty.
compensation.
 Court made additional filing fees, etc. so walang magagawa yung mahihirap
  If mahirap talaga, you can file a petition sa court na wala kang pambayad, citizen (?)
kaso may mga filing fees pa rin para ma-declare ka as *insert term here* (na  After she renounced her US citizenship, she
wala kang means to pay) should be a resident of the PH for X years, pero
Section 16. All persons shall have the right to a speedy disposition of their cases she wasn’t
before all judicial, quasi-judicial, or administrative bodies.  No issue nung tumakbo for senator because 24
positions naman to fill, so walang nag-complain
Section 20. No person shall be imprisoned for debt or non-payment of a poll tax.  She sold to the PH, etc. even before renouncing,
 E.g. May utang sa credit card ta’s hindi nakabayad, hindi pwedeng so there was the intent to renounce even
makulong dahil lang hindi makabayad. beforehand, and that’s what’s important
o ***what if nagsinungaling sa filing ng documents for a credit card  Supreme Court: The fact that she renounced was
application, tapos hindi nakabayad simply the culmination of the renunciation, so
o You can now be imprisoned because fraud na siya sa application she’s of Filipino citizenship
o It’s misrepresentation/false pretenses, kaya ka lang na-issue-an ng o Second problem: Daughter of FPJ and Susana Roces, but
credit card one of them was infertile, so possible na hindi siya Filipino
 Debt is merely a civil liability, but fraud is a criminal liability citizen
 E.g. what if na-max out mo ‘yung credit card ta’s never ka nagbayad, it will  In the PH, citizenship is by blood, so question
be a criminal case because it’s estafa – you promised to pay but there was ‘yung citizenship niya, and do not take citizenship
never an intention to pay ; there’s an intention to create fraud. of parents since nobody knows kung sino parents
 Poll tax – community tax (cedula?) niya
 Some people insist na baka foreigner parents
Art. 4. Citizenship  Supreme Court decision: Filipino siya
 Bakit important ang citizenship? – Because wherever you are, ipprotect ka  Foundling – several days old baby abandoned and found lang
ng country/state mo somewhere like a church, etc.
 You are protected by and given rights by the Constitution you are a citizen of o ***the baby (found without any proof of citizenship) must
 E.g. In the PH, there are companies should only be owned by Filipinos, etc. have the protection of Filipino citizenship kasi baby pa
lang naman siya, not their fault na inabandon sila, so
Section 1. The following are citizens of the Philippines: they’re granted the citizenship unless the contrary is
(1) Those who are citizens of the Philippines at the time of the adoption of this proven
Constitution; o ***other side of the other argument: hindi pa napprove na
(2) Those whose fathers or mothers are citizens of the Philippines; PH citizen sila so hindi dapat protectahan muna (WHY!!!!)
(3) Those born before January 17, 1973, of Filipino mothers, who elect
Section 2. Natural-born citizens are those who are citizens of the Philippines from
Philippine citizenship upon reaching the age of majority; and
birth without having to perform any act to acquire or perfect their citizenship. Those
 Because under 1973 Consti, as long as you’re born of Filipino
who elect Philippine citizenship in accordance with paragraph (3), Section 1 hereof
parents, you are a Filipino
shall be deemed natural-born citizens.
 But if you’re only of a Filipino mother but of a foreign father, you are
Filipino until before age 18, upon which you need to elect to be of
Section 3. Philippine citizenship may be lost or reacquired in the manner provided by
Filipino citizenship
law.
(4) Those who are naturalized in accordance with law.
 Grace Poe issue when she was running for president Section 4. Citizens of the Philippines who marry aliens shall retain their citizenship,
o Issue on citizenship + several disqualification cases ; unless by their act or omission, they are deemed, under the law, to have renounced
Naturalization issues; Residency issues it.
o First problem: US citizenship because she married a US
Section 5. Dual allegiance of citizens is inimical to the national interest and shall be The State shall promote industrialization and full employment based on sound
dealt with by law. agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
Art. 6. The Legislative Department domestic and foreign markets. However, the State shall protect Filipino enterprises
against unfair foreign competition and trade practices.
Section 1. The legislative power shall be vested in the Congress of the Philippines
which shall consist of a Senate and a House of Representatives, except to the extent In the pursuit of these goals, all sectors of the economy and all regions of the country
reserved to the people by the provision on initiative and referendum. shall be given optimum opportunity to develop. Private enterprises, including
corporations, cooperatives, and similar collective organizations, shall be encouraged
Art. 7. Executive Department to broaden the base of their ownership.

Section 1. The executive power shall be vested in the President of the Philippines. ***Hindi naman sinusunod ng gobyerno

Art. 8. Judicial Department Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora
Section 1. The judicial power shall be vested in one Supreme Court and in such lower and fauna, and other natural resources are owned by the State. With the exception of
courts as may be established by law. agricultural lands, all other natural resources shall not be alienated. The exploration,
development, and utilization of natural resources shall be under the full control and
Judicial power includes the duty of the courts of justice to settle actual controversies supervision of the State. The State may directly undertake such activities, or it may
involving rights which are legally demandable and enforceable, and to determine enter into co-production, joint venture, or production-sharing agreements with Filipino
whether or not there has been a grave abuse of discretion amounting to lack or citizens, or corporations or associations at least sixty per centum of whose capital is
excess of jurisdiction on the part of any branch or instrumentality of the Government. owned by such citizens. Such agreements may be for a period not exceeding twenty-
 Looks for grave abuse of discretion five years, renewable for not more than twenty-five years, and under such terms and
 ***everyone has the right to abuse of discretion (kasi lahat naman ng conditions as may be provided by law. In cases of water rights for irrigation, water
decisions are upon our discretion) is allowed but not grave abuse supply fisheries, or industrial uses other than the development of water power,
beneficial use may be the measure and limit of the grant.
Art. 9. Constitutional Commissions
The State shall protect the nation's marine wealth in its archipelagic waters, territorial
A. Common Provisions sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to
Section 1. The Constitutional Commissions, which shall be independent, are the Civil Filipino citizens.
Service Commission, the Commission on Elections, and the Commission on Audit.
The Congress may, by law, allow small-scale utilization of natural resources by
Art. 12. National Economy and Patrimony Filipino citizens, as well as cooperative fish farming, with priority to subsistence
 Mga pag-aari ng government na pwede gamitin, ibenta fishermen and fish- workers in rivers, lakes, bays, and lagoons.
 Also there for the government to develop, etc.
The President may enter into agreements with foreign-owned corporations involving
Section 1. The goals of the national economy are a more equitable distribution of either technical or financial assistance for large-scale exploration, development, and
opportunities, income, and wealth; a sustained increase in the amount of goods and utilization of minerals, petroleum, and other mineral oils according to the general
services produced by the nation for the benefit of the people; and an expanding terms and conditions provided by law, based on real contributions to the economic
productivity as the key to raising the quality of life for all, especially the under- growth and general welfare of the country. In such agreements, the State shall
privileged. promote the development and use of local scientific and technical resources.
 Title I. Obligations
The President shall notify the Congress of every contract entered into in accordance
with this provision, within thirty days from its execution. Chapter 1
General Provisions
***Sinusunod because mga pag-aari ng gobyerno
Art. 1156. An obligation is a juridical necessity to give, to do or not to do. (n)
Section 3. Lands of the public domain are classified into agricultural, forest or timber,
mineral lands and national parks. Agricultural lands of the public domain may be Art. 1157. Obligations arise from:
further classified by law according to the uses to which they may be devoted. (1) Law;
Alienable lands of the public domain shall be limited to agricultural lands. Private (2) Contracts;
corporations or associations may not hold such alienable lands of the public domain (3) Quasi-contracts;
except by lease, for a period not exceeding twenty-five years, renewable for not more (4) Acts or omissions punished by law; and
than twenty-five years, and not to exceed one thousand hectares in area. Citizens of (5) Quasi-delicts. (1089a)
the Philippines may lease not more than five hundred hectares, or acquire not more
than twelve hectares thereof, by purchase, homestead, or grant. Art. 1158. Obligations derived from law are not presumed. Only those expressly
determined in this Code or in special laws are demandable, and shall be regulated by
Taking into account the requirements of conservation, ecology, and development, the precepts of the law which establishes them; and as to what has not been
and subject to the requirements of agrarian reform, the Congress shall determine, by foreseen, by the provisions of this Book. (1090)
law, the size of lands of the public domain which may be acquired, developed, held,
or leased and the conditions therefor. Art. 1159. Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. (1091a)
Section 7. Save in cases of hereditary succession, no private lands shall be
transferred or conveyed except to individuals, corporations, or associations qualified Chapter 2
to acquire or hold lands of the public domain. Nature and Effect of Obligations
 If you are a foreigner, you are not allowed to own land, etc. unless you are a
retired […] because you are bringing money to the PH imbis na sa ibang Art. 1163. Every person obliged to give something is also obliged to take care of it
bansa mo gagastusin ‘yung retirement money mo with the proper diligence of a good father of a family, unless the law or the stipulation
 Son of a Filipino but you are a US citizen, you can still own the property of the parties requires another standard of care. (1094a)
(yung mamanahin) because it is through hereditary succession
Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation
Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born to deliver it arises. However, he shall acquire no real right over it until the same has
citizen of the Philippines who has lost his Philippine citizenship may be a transferee been delivered to him. (1095)
of private lands, subject to limitations provided by law.
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in
addition to the right granted him by Article 1170, may compel the debtor to make the
02/02/19 delivery.
(Absent – Update notes)
If the thing is indeterminate or generic, he may ask that the obligation be complied
C. OBLIGATIONS with at the expense of the debtor.

Obligations and Contracts If the obligor delays, or has promised to deliver the same thing to two or more
persons who do not have the same interest, he shall be responsible for any fortuitous
event until he has effected the delivery. (1096) obligation is also demandable, but such liability may be regulated by the courts,
according to the circumstances. (1103)
Art. 1166. The obligation to give a determinate thing includes that of delivering all its
accessions and accessories, even though they may not have been mentioned. Art. 1173. The fault or negligence of the obligor consists in the omission of that
(1097a) diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence shows
Art. 1167. If a person obliged to do something fails to do it, the same shall be bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.
executed at his cost.
If the law or contract does not state the diligence which is to be observed in the
This same rule shall be observed if he does it in contravention of the tenor of the performance, that which is expected of a good father of a family shall be required.
obligation. Furthermore, it may be decreed that what has been poorly done be (1104a)
undone. (1098)
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise
Art. 1168. When the obligation consists in not doing, and the obligor does what has declared by stipulation, or when the nature of the obligation requires the assumption
been forbidden him, it shall also be undone at his expense. (1099a) of risk, no person shall be responsible for those events which could not be foreseen,
or which, though foreseen, were inevitable. (1105a)
Art. 1169. Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their Art. 1175. Usurious transactions shall be governed by special laws. (n)
obligation.
Art. 1176. The receipt of the principal by the creditor without reservation with respect
However, the demand by the creditor shall not be necessary in order that delay may to the interest, shall give rise to the presumption that said interest has been paid.
exist:
(1) When the obligation or the law expressly so declare; or The receipt of a later installment of a debt without reservation as to prior installments,
(2) When from the nature and the circumstances of the obligation it appears that shall likewise raise the presumption that such installments have been paid. (1110a)
the designation of the time when the thing is to be delivered or the service is
to be rendered was a controlling motive for the establishment of the contract; Art. 1177. The creditors, after having pursued the property in possession of the
or debtor to satisfy their claims, may exercise all the rights and bring all the actions of
(3) When demand would be useless, as when the obligor has rendered it the latter for the same purpose, save those which are inherent in his person; they
beyond his power to perform. may also impugn the acts which the debtor may have done to defraud them. (1111)

In reciprocal obligations, neither party incurs in delay if the other does not comply or Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are
is not ready to comply in a proper manner with what is incumbent upon him. From the transmissible, if there has been no stipulation to the contrary. (1112)
moment one of the parties fulfills his obligation, delay by the other begins. (1100a)
Chapter 3
Art. 1170. Those who in the performance of their obligations are guilty of fraud, Different Kinds of Obligations
negligence, or delay, and those who in any manner contravene the tenor thereof, are
liable for damages. (1101) Section 1. - Pure and Conditional Obligations

Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any Art. 1179. Every obligation whose performance does not depend upon a future or
waiver of an action for future fraud is void. (1102a) uncertain event, or upon a past event unknown to the parties, is demandable at once.

Art. 1172. Responsibility arising from negligence in the performance of every kind of Every obligation which contains a resolutory condition shall also be demandable,
without prejudice to the effects of the happening of the event. (1113)
In every case, the courts shall determine such period as may under the
Art. 1189. When the conditions have been imposed with the intention of suspending circumstances have been probably contemplated by the parties. Once fixed by the
the efficacy of an obligation to give, the following rules shall be observed in case of courts, the period cannot be changed by them. (1128a)
the improvement, loss or deterioration of the thing during the pendency of the
condition: Chapter 4
(1) If the thing is lost without the fault of the debtor, the obligation shall be Extinguishment of Obligations
extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay General Provisions
damages; it is understood that the thing is lost when it perishes, or goes out Art. 1231. Obligations are extinguished:
of commerce, or disappears in such a way that its existence is unknown or it (1) By payment or performance:
cannot be recovered; (2) By the loss of the thing due:
(3) When the thing deteriorates without the fault of the debtor, the impairment is (3) By the condonation or remission of the debt;
to be borne by the creditor; (4) By the confusion or merger of the rights of creditor and debtor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose (5) By compensation;
between the rescission of the obligation and its fulfillment, with indemnity for (6) By novation.
damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure Other causes of extinguishment of obligations, such as annulment, rescission,
to the benefit of the creditor; fulfillment of a resolutory condition, and prescription, are governed elsewhere in this
(6) If it is improved at the expense of the debtor, he shall have no other right Code. (1156a)
than that granted to the usufructuary. (1122)
Art. 1249. The payment of debts in money shall be made in the currency stipulated,
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one and if it is not possible to deliver such currency, then in the currency which is legal
of the obligors should not comply with what is incumbent upon him. tender in the Philippines.

The injured party may choose between the fulfillment and the rescission of the The delivery of promissory notes payable to order, or bills of exchange or other
obligation, with the payment of damages in either case. He may also seek rescission, mercantile documents shall produce the effect of payment only when they have been
even after he has chosen fulfillment, if the latter should become impossible. cashed, or when through the fault of the creditor they have been impaired.

The court shall decree the rescission claimed, unless there be just cause authorizing In the meantime, the action derived from the original obligation shall be held in the
the fixing of a period. abeyance. (1170)

This is understood to be without prejudice to the rights of third persons who have Art. 1250. In case an extraordinary inflation or deflation of the currency stipulated
acquired the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. should supervene, the value of the currency at the time of the establishment of the
(1124) obligation shall be the basis of payment, unless there is an agreement to the contrary.
(n)
Art. 1197. If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the
duration thereof. 02/09/19

The courts shall also fix the duration of the period when it depends upon the will of Section 2. - Loss of the Thing Due
the debtor.
Art. 1262. An obligation which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor, and Art. 1282. The parties may agree upon the compensation of debts which are not yet
before he has incurred in delay. due. (n)

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of Art. 1283. If one of the parties to a suit over an obligation has a claim for damages
the thing does not extinguish the obligation, and he shall be responsible for damages. against the other, the former may set it off by proving his right to said damages and
The same rule applies when the nature of the obligation requires the assumption of the amount thereof. (n)
risk. (1182a)
Art. 1284. When one or both debts are rescissible or voidable, they may be
Art. 1265. Whenever the thing is lost in the possession of the debtor, it shall be compensated against each other before they are judicially rescinded or avoided. (n)
presumed that the loss was due to his fault, unless there is proof to the contrary, and
without prejudice to the provisions of article 1165. This presumption does not apply in Art. 1285. The debtor who has consented to the assignment of rights made by a
case of earthquake, flood, storm, or other natural calamity. (1183a) creditor in favor of a third person, cannot set up against the assignee the
 When the loss of the thing due means obligation cannot be fulfilled, it compensation which would pertain to him against the assignor, unless the assignor
extinguishes the obligation was notified by the debtor at the time he gave his consent, that he reserved his right
 However, even if the thing due is lost but it Is due to your fault, obligation will to the compensation.
not be extinguished (payment of damages if irretrievable)
 ***it is presumed debtor is at fault if he did not exercise due diligence; you If the creditor communicated the cession to him but the debtor did not consent
have to prove that you are not at fault thereto, the latter may set up the compensation of debts previous to the cession, but
not of subsequent ones.
Section 5. Compensation
If the assignment is made without the knowledge of the debtor, he may set up the
Art. 1278. Compensation shall take place when two persons, in their own right, are compensation of all credits prior to the same and also later ones until he had
creditors and debtors of each other. (1195) knowledge of the assignment. (1198a)

Art. 1279. In order that compensation may be proper, it is necessary: Art. 1286. Compensation takes place by operation of law, even though the debts may
(1) That each one of the obligors be bound principally, and that he be at the be payable at different places, but there shall be an indemnity for expenses of
same time a principal creditor of the other; exchange or transportation to the place of payment. (1199a)
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the  ***item should be generic for compensation; e.g. Mona Lisa cannot ever be
latter has been stated; replaced or compensated for because it is one of its kind
(3) That the two debts be due;  Compensation should take place by operation of the law
(4) That they be liquidated and demandable;  ***personal agreements are allowed by the law (“areglo”)
(5) That over neither of them there be any retention or controversy, commenced
by third persons and communicated in due time to the debtor. (1196) Section 6. Novation – substitution of an old contract with a new one

Art. 1280. Notwithstanding the provisions of the preceding article, the guarantor may Art. 1291. Obligations may be modified by:
set up compensation as regards what the creditor may owe the principal debtor. (1) Changing their object or principal conditions;
(1197) (2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights of the creditor. (1203)
Art. 1281. Compensation may be total or partial. When the two debts are of the same
amount, there is a total compensation. (n)
  E.g. A will sell B a 2019 Model Toyota Land Cruiser for P5M, to be delivered o Yung person na magpapasa ng info will be your agent; you will be
to B’s home in Ilocos Norte Laoag entering a contract with your agent (which you are bound to)
o Changing price makes it possible na ‘di na afford nung bibili or hindi o Kapag nakipagsundo to your agent, bound ka na rin doon
na niya tanggapin o Whatever the agent does is your responsibility
o Changing object: e.g. Land Cruiser to Wigo; baka hindi na fit for the o However, it all depends on the explanation
purpose, totally overpriced for the original price (hindi na worth it for o But in terms of agency, bound ka na doon
the buyer), etc. o ***basta best efforts to conduct the contract, you cannot be
o Changing creditor/seller: will only be important if ‘yung pinalit is not chargeable with fraud or breach na
capable of the delivery; may not be a Toyota dealer but a
Mitsubishi dealer – will make a huge difference if it changes the Chapter 1
object of the contract General Provisions
o Changing the model: naiba na ‘yung object ng contract (so change
in price, maybe phased out na rin ‘yung object, etc.) Art. 1305. A contract is a meeting of minds between two persons whereby one binds
o Changing place of delivery/where it will take place: will only make a himself, with respect to the other, to give something or to render some service.
difference if the address is so far away from the new one; (1254a)
difference is pananagutan ‘yan ng seller until makarating sa buyer,
pero if e.g. sa seller’s house, once makaalis na from that address, Art. 1306. The contracting parties may establish such stipulations, clauses, terms and
cargo na ng buyer conditions as they may deem convenient, provided they are not contrary to law,
 It should be expressly mentioned na “Obligation A (old one) is hereby morals, good customs, public order, or public policy. (1255a)
extinguished” (that it is a novation) bc if not, baka naman new obligation na
pala siya talaga Art. 1307. Innominate contracts shall be regulated by the stipulations of the parties,
by the provisions of Titles I and II of this Book, by the rules governing the most
D. CONTRACTS analogous nominate contracts, and by the customs of the place. (n)

Title II. Contracts Art. 1308. The contract must bind both contracting parties; its validity or compliance
 “Pwede mo ba akong ilibre sa Jollibee mamaya” – request/question pa lang, cannot be left to the will of one of them. (1256a)
pero no agreement yet so not a contract
 ***gives a condition: “dapat uno ako” – pero dapat may Art. 1309. The determination of the performance may be left to a third person, whose
agreement/nagkasundo ‘yung parties sa terms ng agreement (hindi puro decision shall not be binding until it has been made known to both contracting parties.
offers and counteroffers pa lang) (n)
 There should be an unqualified acceptance of the offers; when there is
qualified acceptance, basta at the end, there should be a Yes Art. 1310. The determination shall not be obligatory if it is evidently inequitable. In
 If there is ignorance (hindi alam or hindi na-inform/nakarating sa person) of such case, the courts shall decide what is equitable under the circumstances. (n)
the contract, the person is not in breach of that contract
 ***it is presumed/implied na alam mo or nakarating sa’yo ‘yung acceptance Art. 1311. Contracts take effect only between the parties, their assigns and heirs,
of the person of the contract if nakarating ka except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
 Does acceptance have to come immediately? No.
liable beyond the value of the property he received from the decedent.
 Does it have to be verbal? It can be implied from the actions of the person
na makakarating sa’yo. However, it cannot be presumed that he has
If a contract should contain some stipulation in favor of a third person, he may
accepted the contract unless it has actually reached you.
demand its fulfillment provided he communicated his acceptance to the obligor before
 What if pinapasa ‘yung info na hindi matutuloy ‘yung isang person, breach of its revocation. A mere incidental benefit or interest of a person is not sufficient. The
contract ba siya?
contracting parties must have clearly and deliberately conferred a favor upon a third and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
person. (1257a)
Acceptance made by letter or telegram does not bind the offerer except from the time
Art. 1312. In contracts creating real rights, third persons who come into possession of it came to his knowledge. The contract, in such a case, is presumed to have been
the object of the contract are bound thereby, subject to the provisions of the Mortgage entered into in the place where the offer was made. (1262a)
Law and the Land Registration Laws. (n)
Art. 1320. An acceptance may be express or implied. (n)
Art. 1313. Creditors are protected in cases of contracts intended to defraud them. (n)
Art. 1321. The person making the offer may fix the time, place, and manner of
Art. 1314. Any third person who induces another to violate his contract shall be liable acceptance, all of which must be complied with. (n)
for damages to the other contracting party. (n)
Art. 1322. An offer made through an agent is accepted from the time acceptance is
Art. 1315. Contracts are perfected by mere consent, and from that moment the communicated to him. (n)
parties are bound not only to the fulfillment of what has been expressly stipulated but
also to all the consequences which, according to their nature, may be in keeping with Art. 1323. An offer becomes ineffective upon the death, civil interdiction, insanity, or
good faith, usage and law. (1258) insolvency of either party before acceptance is conveyed. (n)

Art. 1316. Real contracts, such as deposit, pledge and Commodatum, are not Art. 1324. When the offerer has allowed the offeree a certain period to accept, the
perfected until the delivery of the object of the obligation. (n) offer may be withdrawn at any time before acceptance by communicating such
withdrawal, except when the option is founded upon a consideration, as something
Art. 1317. No one may contract in the name of another without being authorized by paid or promised. (n)
the latter, or unless he has by law a right to represent him.
Art. 1325. Unless it appears otherwise, business advertisements of things for sale are
A contract entered into in the name of another by one who has no authority or legal not definite offers, but mere invitations to make an offer. (n)
representation, or who has acted beyond his powers, shall be unenforceable, unless
it is ratified, expressly or impliedly, by the person on whose behalf it has been Art. 1326. Advertisements for bidders are simply invitations to make proposals, and
executed, before it is revoked by the other contracting party. (1259a) the advertiser is not bound to accept the highest or lowest bidder, unless the contrary
appears. (n)
Chapter 2
Essential Prerequisites of Contracts Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors; ***wala na because now, once you turn 18, you are
General Provisions automatically emancipated (and wala nang pwedeng magpakasal under 18)
(2) Insane or demented persons, and deaf-mutes who do not know how to write.
Art. 1318. There is no contract unless the following requisites concur: (1263a)
(1) Consent of the contracting parties;  There must be an official finding by a doctor to be declared “insane” (insane
(2) Object certain which is the subject matter of the contract; – walang ability to give consent)
(3) Cause of the obligation which is established. (1261)  E.g. MDS was never declared insane so she is presumed to be sane
 ***lucid interval – insane people who are sane for a period of time
Section 1. Consent  Demented – not same as autistic, etc.; cannot give consent/will not
remember giving consent
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon  Deaf-mutes who do not know how to write – how will you know what they
the thing and the cause which are to constitute the contract. The offer must be certain think if they have no means to communicate; what if they could sign
 language? What is important is that there is some way they can o Although may nag-accept ng offer (hence, a contract). It is still void
communicate their consent. because the object of the contract is illegal
o Anything against the commerce of man cannot be the object of a
Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to contract
in a state of drunkenness or during a hypnotic spell are voidable. (n)  Take note: one exception is human organs can be subject to donation

Art. 1329. The incapacity declared in Article 1327 is subject to the modifications Art. 1347. All things which are not outside the commerce of men, including future
determined by law, and is understood to be without prejudice to special things, may be the object of a contract. All rights which are not intransmissible may
disqualifications established in the laws. (1264) also be the object of contracts.

Art. 1330. A contract where consent is given through mistake, violence, intimidation, No contract may be entered into upon future inheritance except in cases expressly
undue influence, or fraud is voidable. (1265a) authorized by law.
 Supposing tinutukan ka ng baril para pakasalan si someone at pumayag ka,
is it valid? Voidable All services which are not contrary to law, morals, good customs, public order or
 What if nagpakasal ka sa lalaki na babae pala dati, void from the very start public policy may likewise be the object of a contract. (1271a)
bc under marriage sa PH, illegal ang same-sex marriage
o If both nagpa-sex change, valid kasi technically one guy, one girl Art. 1348. Impossible things or services cannot be the object of contracts. (1272)
o ***status at birth ‘yung cinoconsider bc chromosomes
o ***incapable of procreation so invalid Art. 1349. The object of every contract must be determinate as to its kind. The fact
o However it is possible to babae ka noon and lalaki ka ngayon that the quantity is not determinate shall not be an obstacle to the existence of the
(hermaphrodite? Or not) contract, provided it is possible to determine the same, without the need of a new
o E.g. Olympics issue na women’s division tas nagtransition to guy contract between the parties. (1273)
after (bc of a disease) – ruling is that she was a female during the
competition so her medal was not revoked Section 3. Cause of Contracts
o E.g. undescended testes – pwede palitan bc kasalanan ng doctor
na during the birth, hindi agad na-detect na hindi siya female Art. 1350. In onerous contracts the cause is understood to be, for each contracting
 E.g. Lasing nagpautang sa hindi lasing – is it valid? Yes bc you did not void party, the prestation or promise of a thing or service by the other; in remuneratory
the contract upon reaching sobriety so it still exists ones, the service or benefit which is remunerated; and in contracts of pure
 E.g. Lasing pareho – is it unenforceable because both were unable to give beneficence, the mere liberality of the benefactor. (1274)
consent? Should 10k be paid for? Yes because Article 19 (give everyone his
due) Art. 1351. The particular motives of the parties in entering into a contract are different
 ***If the law is silent or hirap kayo, always fall back to article 19 from the cause thereof. (n)
 ***Pwede ka tumanggi if wala pa namang nawawala sa isa’t isa, like if nag-
agree nung lasing na magpapautang but nung sober na, ayaw na (and wala Art. 1352. Contracts without cause, or with unlawful cause, produce no effect
pang nabibigay na money) whatever. The cause is unlawful if it is contrary to law, morals, good customs, public
 ***unenforceable contracts can be ratified (cannot give consent before but order or public policy. (1275a)
afterwards, pumayag pa rin naman later on)
Art. 1353. The statement of a false cause in contracts shall render them void, if it
Section 2. Object of Contracts should not be proved that they were founded upon another cause which is true and
 E.g. naglabas/offer ako ng reward para sa ulo ni someone tas may nag- lawful. (1276)
deliver – valid ba ‘yung object of the contract? No it is not valid because it is
against the law Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists
and is lawful, unless the debtor proves the contrary. (1277)  ***Art. 1403 Statute of frauds – it should be in written terms for proof of
existence of contract
Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not  ***otherwise, there is no proof of the contract
invalidate a contract, unless there has been fraud, mistake or undue influence. (n)
Chapter 5
 False cause renders a contract void, unless a consideration is involved Interpretation of Contracts
o ***e.g. hindi humingi ng bayad bigla for a sale of house, is it void?
It’s not sale but a donation Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of
o Lack of a consideration (or very small consideration (money, etc.)) the contracting parties, the literal meaning of its stipulations shall control.
does not render a contract void; maybe ibang contract lang ang
pinasok If the words appear to be contrary to the evident intention of the parties, the latter
 But if iba talaga ang intent, to sell talaga ang intent and it is grossly shall prevail over the former. (1281)
underpriced, it is voidable bc baka may ibang forces in action (grave
threat/intimidation, etc.); void na siya agad sa batas and ikaw ang dapat Art. 1371. In order to judge the intention of the contracting parties, their
mag-prove na walang bad intentions and na to sell for that amount talaga contemporaneous and subsequent acts shall be principally considered. (1282)
ang intent (for your protection)
Art. 1372. However general the terms of a contract may be, they shall not be
Chapter 3 understood to comprehend things that are distinct and cases that are different from
Form of Contracts those upon which the parties intended to agree. (1283)

Art. 1357. If the law requires a document or other special form, as in the acts and Art. 1373. If some stipulation of any contract should admit of several meanings, it
contracts enumerated in the following article, the contracting parties may compel shall be understood as bearing that import which is most adequate to render it
each other to observe that form, once the contract has been perfected. This right may effectual. (1284)
be exercised simultaneously with the action upon the contract. (1279a)
Art. 1374. The various stipulations of a contract shall be interpreted together,
Art. 1358. The following must appear in a public document: attributing to the doubtful ones that sense which may result from all of them taken
(1) Acts and contracts which have for their object the creation, transmission, jointly. (1285)
modification or extinguishment of real rights over immovable property; sales
of real property or of an interest therein a governed by Articles 1403, No. 2, Art. 1375. Words which may have different significations shall be understood in that
and 1405; which is most in keeping with the nature and object of the contract. (1286)
(2) The cession, repudiation or renunciation of hereditary rights or of those of
the conjugal partnership of gains; Art. 1376. The usage or custom of the place shall be borne in mind in the
(3) The power to administer property, or any other power which has for its interpretation of the ambiguities of a contract, and shall fill the omission of stipulations
object an act appearing or which should appear in a public document, or which are ordinarily established. (1287)
should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a public Art. 1377. The interpretation of obscure words or stipulations in a contract shall not
document. favor the party who caused the obscurity. (1288)

All other contracts where the amount involved exceeds five hundred pesos must Art. 1378. When it is absolutely impossible to settle doubts by the rules established in
appear in writing, even a private one. But sales of goods, chattels or things in action the preceding articles, and the doubts refer to incidental circumstances of a gratuitous
are governed by Articles 1403, No. 2 and 1405. (1280a) contract, the least transmission of rights and interests shall prevail. If the contract is
onerous, the doubt shall be settled in favor of the greatest reciprocity of interests.
 o In 5 years’ time, ward is already age of majority and can take care
If the doubts are cast upon the principal object of the contract in such a way that it of own affairs and wants a rescission.
cannot be known what may have been the intention or will of the parties, the contract o Can buyer simply pay the P15M to the ward? Yes.
shall be null and void. (1289)  But why does the law allow the ward to reject/return the P5M and receive
back the building and lot?
Art. 1379. The principles of interpretation stated in Rule 123 of the Rules of Court o Supposing in that 5 years, value of lot becomes P100M, lugi na
shall likewise be observed in the construction of contracts. (n) ‘yung person kasi he can still receive P95 for that lot.
o However, lugi ba si buyer dito? Since gumastos siya for upkeep
 ***if ginawa mo na yung obligation, court presumes existence of contract bc and maintenance, etc.? Kumita na si buyer for the time the property
otherwise, bakit mo naman gagawin was with him, so hindi siya lugi doon.
 ***Substance of the contract prevails over the title, because it is more o ***court assumes he knows how take care of his affairs, and he
detailed than the title, so ‘yun ang masusunod gets his capital back wholly tas kumita na siya
 ***government allows rescission as long as it is at least 25% damage
Chapter 6  Ano mangyayari if hindi ka nag-rescind (within reasonable time, pagka-age
Rescissible Contracts of maturity na)? Pwede ka bang hindi mag-rescind? Yes because it is your
 ***Note: All reciprocal contracts are rescissible right. So what if you don’t? Continuation lang nung original contract.
 Rescission – when you return to the other party what you have received  ***they can enter into a separate contract (outside the rescission) agreed
upon by the parties
Art. 1380. Contracts validly agreed upon may be rescinded in the cases established
by law. (1290) Chapter 7
Voidable Contracts
Art. 1381. The following contracts are rescissible:
(1) Those which are entered into by guardians whenever the wards whom they Art. 1390. The following contracts are voidable or annullable, even though there may
represent suffer lesion by more than one-fourth of the value of the things have been no damage to the contracting parties:
which are the object thereof; (1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those agreed upon in representation of absentees, if the latter suffer the (2) Those where the consent is vitiated by mistake, violence, intimidation, undue
lesion stated in the preceding number; influence or fraud.
(3) Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them; These contracts are binding, unless they are annulled by a proper action in court.
(4) Those which refer to things under litigation if they have been entered into by They are susceptible of ratification. (n)
the defendant without the knowledge and approval of the litigants or of
competent judicial authority; Art. 1391. The action for annulment shall be brought within four years.
(5) All other contracts specially declared by law to be subject to rescission. This period shall begin: In cases of intimidation, violence or undue influence, from the
(1291a) time the defect of the consent ceases. In case of mistake or fraud, from the time of
the discovery of the same.
Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment
the debtor could not be compelled at the time they were effected, are also rescissible. And when the action refers to contracts entered into by minors or other incapacitated
(1292) persons, from the time the guardianship ceases. (1301a)

 Supposing a guardian sells a building and lot for P5M to a buyer, however, Art. 1392. Ratification extinguishes the action to annul a voidable contract. (1309a)
actually value is P20M. How much damage does the ward suffer? ¾ the
value. Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there
is a tacit ratification if, with knowledge of the reason which renders the contract purchase money; but when a sale is made by auction and entry is made
voidable and such reason having ceased, the person who has a right to invoke it by the auctioneer in his sales book, at the time of the sale, of the
should execute an act which necessarily implies an intention to waive his right. amount and kind of property sold, terms of sale, price, names of the
(1311a) purchasers and person on whose account the sale is made, it is a
sufficient memorandum;
Art. 1394. Ratification may be effected by the guardian of the incapacitated person. (e) An agreement of the leasing for a longer period than one year, or for the
(n) sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
Art. 1395. Ratification does not require the conformity of the contracting party who (3) Those where both parties are incapable of giving consent to a contract.
has no right to bring the action for annulment. (1312)
 Kapag pinerform na ‘yung contract, then it is ratified
Art. 1396. Ratification cleanses the contract from all its defects from the moment it  Nagawa na so ibig sabihin, existing yung contract
was constituted. (1313)
Art. 1404. Unauthorized contracts are governed by Article 1317 and the principles of
 If at gunpoint for marriage: void siya agency in Title X of this Book.
 If at gunpoint for other type of contract: voidable siya
 ***as with unenforceable contracts, ratification of a contract makes it not Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article
voidable 1403, are ratified by the failure to object to the presentation of oral evidence to prove
the same, or by the acceptance of benefit under them.
Chapter 8
Unenforceable Contracts (n) Art. 1406. When a contract is enforceable under the Statute of Frauds, and a public
document is necessary for its registration in the Registry of Deeds, the parties may
Art. 1403. The following contracts are unenforceable, unless they are ratified: avail themselves of the right under Article 1357.
(1) Those entered into in the name of another person by one who has been
given no authority or legal representation, or who has acted beyond his Art. 1407. In a contract where both parties are incapable of giving consent, express or
powers; implied ratification by the parent, or guardian, as the case may be, of one of the
(2) Those that do not comply with the Statute of Frauds as set forth in this contracting parties shall give the contract the same effect as if only one of them were
number. In the following cases an agreement hereafter made shall be incapacitated.
unenforceable by action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party charged, or by his agent; If ratification is made by the parents or guardians, as the case may be, of both
evidence, therefore, of the agreement cannot be received without the contracting parties, the contract shall be validated from the inception.
writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from Art. 1408. Unenforceable contracts cannot be assailed by third persons.
the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of Chapter 9
another; Void and Inexistent Contracts
(c) An agreement made in consideration of marriage, other than a mutual
promise to marry; Art. 1409. The following contracts are inexistent and void from the beginning:
(d) An agreement for the sale of goods, chattels or things in action, at a (1) Those whose cause, object or purpose is contrary to law, morals, good
price not less than five hundred pesos, unless the buyer accept and customs, public order or public policy;
receive part of such goods and chattels, or the evidences, or some of (2) Those which are absolutely simulated or fictitious;
them, of such things in action or pay at the time some part of the (3) Those whose cause or object did not exist at the time of the transaction;
 (4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service; Title VI. Sales
(6) Those where the intention of the parties relative to the principal object of the
contract cannot be ascertained; Chapter 1
(7) Those expressly prohibited or declared void by law. Nature and Form of the Contract

These contracts cannot be ratified. Neither can the right to set up the defense of Art. 1458. By the contract of sale one of the contracting parties obligates himself to
illegality be waived. transfer the ownership and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent.
E. NATURAL OBLIGATIONS
A contract of sale may be absolute or conditional. (1445a)
Title III. Natural Obligations  A transfers ownership of rice for gas, is there a sale? No, it is not a sale
because they are not equivalent
 Natural obligations (equity and natural law) – not enforceable by law  It is only a trade and not a sale (if two commodities); barter
 Civil obligations (positive law) – enforceable by law  There should be an exchange of a commodity for money or its equivalent
 Voluntary fulfillment authorizes the retention of what has been delivered or (gas is not an equivalent of money)
rendered by reason; produces legal effects which the courts recognize and  Ano ang equivalent ng money? Promissory notes, etc. ***Check is not
protect equivalent until accepted by the bank, but can be accepted
 Natural obligations refer to those obligations without sanction, susceptible of  Uniform currency act – you cannot accept foreign currency (on the record)
voluntary performance, but not through compulsion by legal means as payment
 ***coin’s intrinsic value cannot be higher than its currency value, bc
Art. 1423. Obligations are civil or natural. Civil obligations give a right of action to ninanakaw na lang para tunawin and use elsewhere/sell
compel their performance. Natural obligations, not being based on positive law but on
equity and natural law, do not grant a right of action to enforce their performance, but  ***inheritance example na binenta (P10B sold for P500M), but buyer killed
after voluntary fulfillment by the obligor, they authorize the retention of what has been yung pagmamanahan – valid ba? Art. 1347, hindi siya valid (future
delivered or rendered by reason thereof. Some natural obligations are set forth in the inheritance cannot be sold) bc it will guarantee early death of person na
following articles. magpapamana

Art. 1424. When a right to sue upon a civil obligation has lapsed by extinctive Art. 1459. The thing must be licit and the vendor must have a right to transfer the
prescription, the obligor who voluntarily performs the contract cannot recover what he ownership thereof at the time it is delivered. (n)
has delivered or the value of the service he has rendered.
Art. 1460. A thing is determinate when it is particularly designated or physically
Art. 1425. When without the knowledge or against the will of the debtor, a third segregated from all other of the same class.
person pays a debt which the obligor is not legally bound to pay because the action
thereon has prescribed, but the debtor later voluntarily reimburses the third person, The requisite that a thing be determinate is satisfied if at the time the contract is
the obligor cannot recover what he has paid. entered into, the thing is capable of being made determinate without the necessity of
a new or further agreement between the parties. (n)
Art. 1428. When, after an action to enforce a civil obligation has failed the defendant
voluntarily performs the obligation, he cannot demand the return of what he has Art. 1461. Things having a potential existence may be the object of the contract of
delivered or the payment of the value of the service he has rendered. sale.

F. SALES AND LEASE The efficacy of the sale of a mere hope or expectancy is deemed subject to the
condition that the thing will come into existence. From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. (1450a)
The sale of a vain hope or expectancy is void. (n)
 As long as there is reason to believe that it will come to existence Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the
 Basta babayaran pa lang by the time na maibigay na, but yes, it may be a actual or constructive delivery thereof. (n)
contract of sale
Art. 1483. Subject to the provisions of the Statute of Frauds and of any other
applicable statute, a contract of sale may be made in writing, or by word of mouth, or
02/16/19 partly in writing and partly by word of mouth, or may be inferred from the conduct of
the parties. (n)
Eg.4 co-owners for a property, you decide to sell
 You can sell specified part (divided) for yourself Art. 1484. In a contract of sale of personal property the price of which is payable in
 You can sell undivided share wherein you do not know which part you own; installments, the vendor may exercise any of the following remedies:
you sell a “share” of the investment (1) Exact fulfillment of the obligation, should the vendee fail to pay;
o All profit from property will be divided four ways (2) Cancel the sale, should the vendee's failure to pay cover two or more
o Everybody has a right to their share of the property installments;
 If you are going to sell, priority is to sell to co-owners first; government’s goal (3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more
is to consolidate small properties into big property
installments. In this case, he shall have no further action against the
 ***when you die, ownership doesn’t always transfer to co-owners;
purchaser to recover any unpaid balance of the price. Any agreement to the
inheritance succession
contrary shall be void. (1454-A-a)
Art. 1462. The goods which form the subject of a contract of sale may be either
Art. 1487. The expenses for the execution and registration of the sale shall be borne
existing goods, owned or possessed by the seller, or goods to be manufactured,
by the vendor, unless there is a stipulation to the contrary. (1455a)
raised, or acquired by the seller after the perfection of the contract of sale, in this Title
called "future goods."
 Brevi Manu (Symbolic) vs Longa Manu (Actual)
There may be a contract of sale of goods, whose acquisition by the seller depends
upon a contingency which may or may not happen. (n) Chapter 2
Capacity to Buy or Sell
Art. 1463. The sole owner of a thing may sell an undivided interest therein. (n)
Art. 1489. All persons who are authorized in this Code to obligate themselves, may
enter into a contract of sale, saving the modifications contained in the following
Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as it
articles.
may indicate a defect in the consent, or that the parties really intended a donation or
some other act or contract. (n)
Where necessaries are those sold and delivered to a minor or other person without
capacity to act, he must pay a reasonable price therefor. Necessaries are those
Art. 1473. The fixing of the price can never be left to the discretion of one of the
contracting parties. However, if the price fixed by one of the parties is accepted by the referred to in Article 290. (1457a)
other, the sale is perfected. (1449a)
Chapter 4
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds Obligations of the Vendor
upon the thing which is the object of the contract and upon the price.
Section 1. General Provisions
 time of such delivery;
Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as (2) Where actual delivery has been delayed through the fault of either the buyer
warrant the thing which is the object of the sale. (1461a) or seller the goods are at the risk of the party in fault. (n)

Art. 1496. The ownership of the thing sold is acquired by the vendee from the Art. 1547. In a contract of sale, unless a contrary intention appears, there is:
moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or (1) An implied warranty on the part of the seller that he has a right to sell the
in any other manner signifying an agreement that the possession is transferred from thing at the time when the ownership is to pass, and that the buyer shall
the vendor to the vendee. (n) from that time have and enjoy the legal and peaceful possession of the
thing;
Section 2. - Delivery of the Thing Sold (2) An implied warranty that the thing shall be free from any hidden faults or
defects, or any charge or encumbrance not declared or known to the buyer.
Art. 1497. The thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee. (1462a) This Article shall not, however, be held to render liable a sheriff, auctioneer,
mortgagee, pledgee, or other person professing to sell by virtue of authority in fact or
Art. 1498. When the sale is made through a public instrument, the execution thereof law, for the sale of a thing in which a third person has a legal or equitable interest. (n)
shall be equivalent to the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot clearly be inferred. Subsection 2. Warranty Against Hidden Defects of or Encumbrances Upon the Thing
Sold
With regard to movable property, its delivery may also be made by the delivery of the
keys of the place or depository where it is stored or kept. (1463a) Art. 1561. The vendor shall be responsible for warranty against the hidden defects
which the thing sold may have, should they render it unfit for the use for which it is
Art. 1499. The delivery of movable property may likewise be made by the mere intended, or should they diminish its fitness for such use to such an extent that, had
consent or agreement of the contracting parties, if the thing sold cannot be the vendee been aware thereof, he would not have acquired it or would have given a
transferred to the possession of the vendee at the time of the sale, or if the latter lower price for it; but said vendor shall not be answerable for patent defects or those
already had it in his possession for any other reason. (1463a) which may be visible, or for those which are not visible if the vendee is an expert who,
by reason of his trade or profession, should have known them. (1484a)
Art. 1500. There may also be tradition constitutum possessorium. (n)
 ***Under Code of Commerce (?), “no return, no exchange” is illegal
Art. 1501. With respect to incorporeal property, the provisions of the first paragraph of  If it is in a form not for which it is intended, even if it isn’t hidden, hindi pa rin
article 1498 shall govern. In any other case wherein said provisions are not pwede
applicable, the placing of the titles of ownership in the possession of the vendee or  Purchase of fake product does not bind you to the properties of the original
the use by the vendee of his rights, with the vendor's consent, shall be understood as product
a delivery. (1464) o Warranty cannot be expected bc fake
o Fake products are not protected by law
Art. 1504. Unless otherwise agreed, the goods remain at the seller's risk until the
ownership therein is transferred to the buyer, but when the ownership therein is Title VIII. Lease
transferred to the buyer the goods are at the buyer's risk whether actual delivery has
been made or not, except that: Chapter 1
(1) Where delivery of the goods has been made to the buyer or to a bailee for General Provisions
the buyer, in pursuance of the contract and the ownership in the goods has
been retained by the seller merely to secure performance by the buyer of his Art. 1643. In the lease of things, one of the parties binds himself to give to another the
obligations under the contract, the goods are at the buyer's risk from the enjoyment or use of a thing for a price certain, and for a period which may be definite
or indefinite. However, no lease for more than ninety-nine years shall be valid. from the nature of the thing leased, according to the custom of the place;
(1543a) (3) To pay expenses for the deed of lease. (1555)

Section 2. Rights and Obligations of the Lessor and the Lessee Art. 1658. The lessee may suspend the payment of the rent in case the lessor fails to
make the necessary repairs or to maintain the lessee in peaceful and adequate
Art. 1654. The lessor is obliged: enjoyment of the property leased. (n)
(1) To deliver the thing which is the object of the contract in such a condition as
to render it fit for the use intended; Art. 1670. If at the end of the contract the lessee should continue enjoying the thing
(2) To make on the same during the lease all the necessary repairs in order to leased for fifteen days with the acquiescence of the lessor, and unless a notice to the
keep it suitable for the use to which it has been devoted, unless there is a contrary by either party has previously been given, it is understood that there is an
stipulation to the contrary; implied new lease, not for the period of the original contract, but for the time
(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease established in Articles 1682 and 1687. The other terms of the original contract shall
for the entire duration of the contract. (1554a) be revived. (1566a)
 Acquiescence – agreement
 ***object of a lease should be returnable  Implied new lease is dependent on how payment is made
 ***consumables cannot be an object of a lease bc they cannot be returned  Period of new implied lease is for the length at which payment is made (if
 Can dogs be leased? monthly ang payment for the lease, period is 1 month)
o E.g. bomb-sniffing dogs – lease of service is on person handling  Note that if magbebenta ng condo/lot/etc., the should be a change in titles
the dog and not the dog itself because unless there is a cancellation of old title and an issuance of a new
o E.g. Zoo (can animals be leased for this?) – anything can be the one, the old one stands
object of a lease, so long as it can be returned the way it was given  To ensure a sale to be valid, check registry to see if title is in their name
o ***If may pinaparent na room na hindi apt for the purpose you need
 If nag-agree pa rin yung lessee, ok lang naman Art. 1676. The purchaser of a piece of land which is under a lease that is not
 If need pa irenovate, sagot ni lessor dapat, unless agreed recorded in the Registry of Property may terminate the lease, save when there is a
otherwise stipulation to the contrary in the contract of sale, or when the purchaser knows of the
 Pwede naman si lessee magpagawa then bawas sa existence of the lease.
bayad kay lessor
If the buyer makes use of this right, the lessee may demand that he be allowed to
Art. 1655. If the thing leased is totally destroyed by a fortuitous event, the lease is gather the fruits of the harvest which corresponds to the current agricultural year and
extinguished. If the destruction is partial, the lessee may choose between a that the vendor indemnify him for damages suffered.
proportional reduction of the rent and a rescission of the lease. (n)
 Anything to do with structure itself, lessor to replace If the sale is fictitious, for the purpose of extinguishing the lease, the supposed
 Anything to do with wear and tear due to use, lessee vendee cannot make use of the right granted in the first paragraph of this article. The
sale is presumed to be fictitious if at the time the supposed vendee demands the
Art. 1656. The lessor of a business or industrial establishment may continue termination of the lease, the sale is not recorded in the Registry of Property. (1571a)
engaging in the same business or industry to which the lessee devotes the thing
leased, unless there is a stipulation to the contrary. (n) Section 4. Special Provisions of the Lease of Urban Lands

Art. 1657. The lessee is obliged: Art. 1687. If the period for the lease has not been fixed, it is understood to be from
(1) To pay the price of the lease according to the terms stipulated; year to year, if the rent agreed upon is annual; from month to month, if it is monthly;
(2) To use the thing leased as a diligent father of a family, devoting it to the use from week to week, if the rent is weekly; and from day to day, if the rent is to be paid
stipulated; and in the absence of stipulation, to that which may be inferred daily. However, even though a monthly rent is paid, and no period for the lease has
been set, the courts may fix a longer term for the lease after the lessee has occupied (d) As interest on a loan, though the amount of payment vary with the
the premises for over one year. If the rent is weekly, the courts may likewise profits of the business;
determine a longer period after the lessee has been in possession for over six (e) As the consideration for the sale of a goodwill of a business or other
months. In case of daily rent, the courts may also fix a longer period after the lessee property by installments or otherwise. (n)
has stayed in the place for over one month. (1581a)
Art. 1770. A partnership must have a lawful object or purpose, and must be
G. SINGLE PROPRIETORSHIP AND PARTNERSHIP established for the common benefit or interest of the partners.
 ***business name cannot be used when suing, but use the name of the
owner/s mismo When an unlawful partnership is dissolved by a judicial decree, the profits shall be
 Not a partnership without sharing of profits confiscated in favor of the State, without prejudice to the provisions of the Penal Code
governing the confiscation of the instruments and effects of a crime. (1666a)
Title IX. Partnership
Art. 1771. A partnership may be constituted in any form, except where immovable
Chapter 1 property or real rights are contributed thereto, in which case a public instrument shall
General Provisions be necessary. (1667a)

Art. 1767. By the contract of partnership two or more persons bind themselves to Art. 1772. Every contract of partnership having a capital of three thousand pesos or
contribute money, property, or industry to a common fund, with the intention of more, in money or property, shall appear in a public instrument, which must be
dividing the profits among themselves. recorded in the Office of the Securities and Exchange Commission.

Two or more persons may also form a partnership for the exercise of a profession. Failure to comply with the requirements of the preceding paragraph shall not affect
(1665a) the liability of the partnership and the members thereof to third persons. (n)
 Kahit hindi kayo registered, all your personal eme are still liable to your
Art. 1768. The partnership has a judicial personality separate and distinct from that of contracts, etc.
each of the partners, even in case of failure to comply with the requirements of Article  Industrial partners have to devote time and effort into the company but are
1772, first paragraph. (n) not liable for partnership finances
 Under the law, there are no silent partners (undeclared investor who uses a
Art. 1769. In determining whether a partnership exists, these rules shall apply: dummy in the partnership)
(1) Except as provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons; Art. 1773. A contract of partnership is void, whenever immovable property is
(2) Co-ownership or co-possession does not of itself establish a partnership, contributed thereto, if an inventory of said property is not made, signed by the parties,
whether such-co-owners or co-possessors do or do not share any profits and attached to the public instrument. (1668a)
made by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership, Art. 1774. Any immovable property or an interest therein may be acquired in the
whether or not the persons sharing them have a joint or common right or partnership name. Title so acquired can be conveyed only in the partnership name.
interest in any property from which the returns are derived; (n)
(4) The receipt by a person of a share of the profits of a business is prima facie
evidence that he is a partner in the business, but no such inference shall be Art. 1775. Associations and societies, whose articles are kept secret among the
drawn if such profits were received in payment: members, and wherein any one of the members may contract in his own name with
(a) As a debt by installments or otherwise; third persons, shall have no juridical personality, and shall be governed by the
(b) As wages of an employee or rent to a landlord; provisions relating to co-ownership. (1669)
(c) As an annuity to a widow or representative of a deceased partner;
Art. 1776. As to its object, a partnership is either universal or particular. As regards unless it is otherwise stipulated. (1679)
the liability of the partners, a partnership may be general or limited. (1671a)
Art. 1789. An industrial partner cannot engage in business for himself, unless the
Art. 1777. A universal partnership may refer to all the present property or to all the partnership expressly permits him to do so; and if he should do so, the capitalist
profits. (1672) partners may either exclude him from the firm or avail themselves of the benefits
which he may have obtained in violation of this provision, with a right to damages in
Art. 1778. A partnership of all present property is that in which the partners contribute either case. (n)
all the property which actually belongs to them to a common fund, with the intention
of dividing the same among themselves, as well as all the profits which they may Art. 1794. Every partner is responsible to the partnership for damages suffered by it
acquire therewith. (1673) through his fault, and he cannot compensate them with the profits and benefits which
he may have earned for the partnership by his industry. However, the courts may
Art. 1779. In a universal partnership of all present property, the property which equitably lessen this responsibility if through the partner's extraordinary efforts in
belongs to each of the partners at the time of the constitution of the partnership, other activities of the partnership, unusual profits have been realized. (1686a)
becomes the common property of all the partners, as well as all the profits which they
may acquire therewith. Art. 1796. The partnership shall be responsible to every partner for the amounts he
may have disbursed on behalf of the partnership and for the corresponding interest,
A stipulation for the common enjoyment of any other profits may also be made; but from the time the expense are made; it shall also answer to each partner for the
the property which the partners may acquire subsequently by inheritance, legacy, or obligations he may have contracted in good faith in the interest of the partnership
donation cannot be included in such stipulation, except the fruits thereof. (1674a) business, and for risks in consequence of its management. (1688a)

Art. 1780. A universal partnership of profits comprises all that the partners may Art. 1797. The losses and profits shall be distributed in conformity with the
acquire by their industry or work during the existence of the partnership. agreement. If only the share of each partner in the profits has been agreed upon, the
share of each in the losses shall be in the same proportion.
Movable or immovable property which each of the partners may possess at the time
of the celebration of the contract shall continue to pertain exclusively to each, only the In the absence of stipulation, the share of each partner in the profits and losses shall
usufruct passing to the partnership. (1675) be in proportion to what he may have contributed, but the industrial partner shall not
be liable for the losses. As for the profits, the industrial partner shall receive such
Art. 1781. Articles of universal partnership, entered into without specification of its share as may be just and equitable under the circumstances. If besides his services
nature, only constitute a universal partnership of profits. (1676) he has contributed capital, he shall also receive a share in the profits in proportion to
his capital. (1689a)
Art. 1782. Persons who are prohibited from giving each other any donation or
advantage cannot enter into universal partnership. (1677) Art. 1800. The partner who has been appointed manager in the articles of partnership
may execute all acts of administration despite the opposition of his partners, unless
Art. 1783. A particular partnership has for its object determinate things, their use or he should act in bad faith; and his power is irrevocable without just or lawful cause.
fruits, or specific undertaking, or the exercise of a profession or vocation. (1678) The vote of the partners representing the controlling interest shall be necessary for
such revocation of power.
Chapter 2
Obligations of the Partners A power granted after the partnership has been constituted may be revoked at any
time. (1692a)
Section 1. Obligations of the Partners Among Themselves
Art. 1801. If two or more partners have been intrusted with the management of the
Art. 1784. A partnership begins from the moment of the execution of the contract, partnership without specification of their respective duties, or without a stipulation that
one of them shall not act without the consent of all the others, each one may partnership of which he is a member binds the partnership, unless the partner so
separately execute all acts of administration, but if any of them should oppose the acting has in fact no authority to act for the partnership in the particular matter, and
acts of the others, the decision of the majority shall prevail. In case of a tie, the matter the person with whom he is dealing has knowledge of the fact that he has no such
shall be decided by the partners owning the controlling interest. (1693a) authority.

Art. 1802. In case it should have been stipulated that none of the managing partners An act of a partner which is not apparently for the carrying on of business of the
shall act without the consent of the others, the concurrence of all shall be necessary partnership in the usual way does not bind the partnership unless authorized by the
for the validity of the acts, and the absence or disability of any one of them cannot be other partners.
alleged, unless there is imminent danger of grave or irreparable injury to the  Usually administrative acts
partnership. (1694)  ***Selling of real estate may be allowed without agreement from the partners
if it is the actual business of the company (i.e. it is administrative act)
Art. 1803. When the manner of management has not been agreed upon, the following
rules shall be observed: Except when authorized by the other partners or unless they have abandoned the
(1) All the partners shall be considered agents and whatever any one of them business, one or more but less than all the partners have no authority to:
may do alone shall bind the partnership, without prejudice to the provisions (1) Assign the partnership property in trust for creditors or on the assignee's
of Article 1801. promise to pay the debts of the partnership;
(2) None of the partners may, without the consent of the others, make any (2) Dispose of the good-will of the business;
important alteration in the immovable property of the partnership, even if it (3) Do any other act which would make it impossible to carry on the ordinary
may be useful to the partnership. But if the refusal of consent by the other business of a partnership;
partners is manifestly prejudicial to the interest of the partnership, the court's (4) Confess a judgment;
intervention may be sought. (1695a) (5) Enter into a compromise concerning a partnership claim or liability;
(6) Submit a partnership claim or liability to arbitration;
Section 3. Obligations of the Partners With Regard to Third Persons (7) Renounce a claim of the partnership.

Art. 1815. Every partnership shall operate under a firm name, which may or may not No act of a partner in contravention of a restriction on authority shall bind the
include the name of one or more of the partners. partnership to persons having knowledge of the restriction. (n)

Those who, not being members of the partnership, include their names in the firm  Sole Proprietorship
name, shall be subject to the liability of a partner. (n) o 1 owner, easier to make decisions bc wala kang kaaway
o Disadvantage: Difficult on capital, harder to get a bank loan bc of
Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their credit
property and after all the partnership assets have been exhausted, for the contracts o Personal liability
which may be entered into in the name and for the account of the partnership, under  Partnership
its signature and by a person authorized to act for the partnership. However, any o 2 or more partners, harder to make decisions bc may kaaway sa
partner may enter into a separate obligation to perform a partnership contract. (n) decisions, hirap mag-kasundo lahat
o Although no concrete upper limit on number of partners, difficulty in
Art. 1817. Any stipulation against the liability laid down in the preceding article shall making a decision agreed upon by the partners puts the actual limit
be void, except as among the partners. (n) on the number
o Making money/coming up with capital is easier
Art. 1818. Every partner is an agent of the partnership for the purpose of its business, o Personal Liability
and the act of every partner, including the execution in the partnership name of any o ***Sharing of profits – how do you know how much to give to the
instrument, for apparently carrying on in the usual way the business of the industrial partner/s
  Entering into the partnership, make sure to specify the thereof, has only transferred to the partnership the use or enjoyment of the
sharing of profits right away same; but the partnership shall not be dissolved by the loss of the thing
 Para hindi mahirap na sa dulo pa mag-aaway-away when it occurs after the partnership has acquired the ownership thereof;
 Once that agreement is signed, no more right to ask for (5) By the death of any partner;
more (6) By the insolvency of any partner or of the partnership;
 Corporation (7) By the civil interdiction of any partner;
o 5-15 incorporator shareholder (8) By decree of court under the following article. (1700a and 1701a)
o BOD/3 officers
o Easiest Capital H. AGENCY
o Shared liability
Title X. - Agency
Chapter 3  When one is acting in the name of the other
Dissolution and Winding Up  ***payment for Meralco – not agency because hindi naman tinatanong if
para kanino, etc. kahit na may name sa billing (they don’t really care)
Art. 1828. The dissolution of a partnership is the change in the relation of the partners  ***bili ng electric fan then nag-sign sa warranty in another’s name – it’s
caused by any partner ceasing to be associated in the carrying on as distinguished agency because you are signing for that person/in the name of that person
from the winding up of the business. (n)
Chapter 1
Art. 1829. On dissolution the partnership is not terminated, but continues until the Nature, Form and Kinds of Agency
winding up of partnership affairs is completed. (n)
Art. 1868. By the contract of agency a person binds himself to render some service or
Art. 1830. Dissolution is caused: 
 to do something in representation or on behalf of another, with the consent or
(1) Without violation of the agreement between the partners: authority of the latter. (1709a)
(a) By the termination of the definite term or particular undertaking specified
in the agreement; Art. 1869. Agency may be express, or implied from the acts of the principal, from his
(b) By the express will of any partner, who must act in good faith, when no silence or lack of action, or his failure to repudiate the agency, knowing that another
definite term or particular is specified; person is acting on his behalf without authority.
(c) By the express will of all the partners who have not assigned their Agency may be oral, unless the law requires a specific form. (1710a)
interests or suffered them to be charged for their separate debts, either
before or after the termination of any specified term or particular Art. 1870. Acceptance by the agent may also be express, or implied from his acts
undertaking; which carry out the agency, or from his silence or inaction according to the
(d) By the expulsion of any partner from the business bona fide in circumstances. (n)
accordance with such a power conferred by the agreement between the
partners; Art. 1871. Between persons who are present, the acceptance of the agency may also
(2) In contravention of the agreement between the partners, where the be implied if the principal delivers his power of attorney to the agent and the latter
circumstances do not permit a dissolution under any other provision of this receives it without any objection. (n)
article, by the express will of any partner at any time;
(3) By any event which makes it unlawful for the business of the partnership to Art. 1872. Between persons who are absent, the acceptance of the agency cannot be
be carried on or for the members to carry it on in partnership; implied from the silence of the agent, except:
(4) When a specific thing which a partner had promised to contribute to the (1) When the principal transmits his power of attorney to the agent, who
partnership, perishes before the delivery; in any case by the loss of the receives it without any objection;
thing, when the partner who contributed it having reserved the ownership (2) When the principal entrusts to him by letter or telegram a power of attorney
 with respect to the business in which he is habitually engaged as an agent, Art. 1882. The limits of the agent's authority shall not be considered exceeded should
and he did not reply to the letter or telegram. (n) it have been performed in a manner more advantageous to the principal than that
specified by him. (1715)
Art. 1874. When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be void. (n) Art. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such persons
Art. 1875. Agency is presumed to be for a compensation, unless there is proof to the against the principal.
contrary. (n)
In such case the agent is the one directly bound in favor of the person with whom he
Art. 1878. Special powers of attorney are necessary in the following cases: has contracted, as if the transaction were his own, except when the contract involves
(1) To make such payments as are not usually considered as acts of things belonging to the principal.
administration;
(2) To effect novations which put an end to obligations already in existence at The provisions of this article shall be understood to be without prejudice to the actions
the time the agency was constituted; between the principal and agent. (1717) 

(3) To compromise, to submit questions to arbitration, to renounce the right to
appeal from a judgment, to waive objections to the venue of an action or to Chapter 2
abandon a prescription already acquired; Obligations of the Agent
(4) To waive any obligation gratuitously;
(5) To enter into any contract by which the ownership of an immovable is Art. 1884. The agent is bound by his acceptance to carry out the agency, and is liable
transmitted or acquired either gratuitously or for a valuable consideration; for the damages which, through his non-performance, the principal may suffer.
(6) To make gifts, except customary ones for charity or those made to
employees in the business managed by the agent; He must also finish the business already begun on the death of the principal, should
(7) To loan or borrow money, unless the latter act be urgent and indispensable delay entail any danger. (1718)
for the preservation of the things which are under administration;
(8) To lease any real property to another person for more than one year; Chapter 3
(9) To bind the principal to render some service without compensation; Obligations of the Principal
(10) To bind the principal in a contract of partnership;
(11) To obligate the principal as a guarantor or surety; Art. 1910. The principal must comply with all the obligations which the agent may
(12) To create or convey real rights over immovable property; have contracted within the scope of his authority.
(13) To accept or repudiate an inheritance;
(14) To ratify or recognize obligations contracted before the agency; As for any obligation wherein the agent has exceeded his power, the principal is not
(15) Any other act of strict dominion. (n) bound except when he ratifies it expressly or tacitly. (1727)

Art. 1879. A special power to sell excludes the power to mortgage; and a special Art. 1911. Even when the agent has exceeded his authority, the principal is solidarily
power to mortgage does not include the power to sell. (n) liable with the agent if the former allowed the latter to act as though he had full
powers. (n)
Art. 1880. A special power to compromise does not authorize submission to
arbitration. (1713a) ***Example
 Principal asks agent to sell at 5M
Art. 1881. The agent must act within the scope of his authority. He may do such acts  Agent fixes up property, spends 5M to fix
as may be conducive to the accomplishment of the purpose of the agency. (1714a)  Agent sells for 30M
 Agent should always give the whole amount to the principal bc he is just an
 agent, an extension of the principal – kay principal pa rin ‘yung property
Art. 1926. A general power of attorney is revoked by a special one granted to another
agent, as regards the special matter involved in the latter. (n)
02/23/19
Art. 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it
Chapter 4 is the means of fulfilling an obligation already contracted, or if a partner is appointed
Modes of Extinguishment of Agency manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable. (n)
Art. 1919. Agency is extinguished:
(1) By its revocation; Art. 1928. The agent may withdraw from the agency by giving due notice to the
(2) By the withdrawal of the agent; principal. If the latter should suffer any damage by reason of the withdrawal, the
(3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent must indemnify him therefor, unless the agent should base his withdrawal upon
agent; the impossibility of continuing the performance of the agency without grave detriment
(4) By the dissolution of the firm or corporation which entrusted or accepted the to himself. (1736a)
agency;
(5) By the accomplishment of the object or purpose of the agency; Art. 1929. The agent, even if he should withdraw from the agency for a valid reason,
(6) By the expiration of the period for which the agency was constituted. (1732a) must continue to act until the principal has had reasonable opportunity to take the
necessary steps to meet the situation. (1737a)
Art. 1920. The principal may revoke the agency at will, and compel the agent to return
the document evidencing the agency. Such revocation may be express or implied. Art. 1930. The agency shall remain in full force and effect even after the death of the
(1733a) principal, if it has been constituted in the common interest of the latter and of the
agent, or in the interest of a third person who has accepted the stipulation in his favor.
Art. 1921. If the agency has been entrusted for the purpose of contracting with (n)
specified persons, its revocation shall not prejudice the latter if they were not given
notice thereof. (1734) I. EXTRA CONTRACTUAL OBLIGATIONS

Art. 1922. If the agent had general powers, revocation of the agency does not Section 1. Negotiorum Gestio
prejudice third persons who acted in good faith and without knowledge of the
revocation. Notice of the revocation in a newspaper of general circulation is a Art. 2144. Whoever voluntarily takes charge of the agency or management of the
sufficient warning to third persons. (n) business or property of another, without any power from the latter, is obliged to
continue the same until the termination of the affair and its incidents, or to require the
Art. 1923. The appointment of a new agent for the same business or transaction person concerned to substitute him, if the owner is in a position to do so. This juridical
revokes the previous agency from the day on which notice thereof was given to the relation does not arise in either of these instances:
former agent, without prejudice to the provisions of the two preceding articles. (1) When the property or business is not neglected or abandoned;
(1735a) (2) If in fact the manager has been tacitly authorized by the owner.

Art. 1924. The agency is revoked if the principal directly manages the business In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding
entrusted to the agent, dealing directly with third persons. (n) unauthorized contracts shall govern.

Art. 1925. When two or more principals have granted a power of attorney for a In the second case, the rules on agency in Title X of this Book shall be applicable.
common transaction, any one of them may revoke the same without the consent of (1888a)
the others. (n)
Section 2. - Solutio Indebiti Art. 2179. When the plaintiff's own negligence was the immediate and proximate
cause of his injury, he cannot recover damages. But if his negligence was only
Art. 2154. If something is received when there is no right to demand it, and it was contributory, the immediate and proximate cause of the injury being the defendant's
unduly delivered through mistake, the obligation to return it arises. (1895) lack of due care, the plaintiff may recover damages, but the courts shall mitigate the
 Exemption: Natural Obligation damages to be awarded. (n)
 ***if someone pays you voluntarily then changes mind, hindi na pwede  Proximate – has to do with distance
hingin ulit pabalik (e.g. mistake in accounting, etc.)  Immediate – has to do with time
 If it’s only his fault and not just contributory, proximate and immediate, he is
Chapter 2 liable for his own damages/he cannot recover damages
Quasi-Delicts  ***If it’s a chain of events, the one at the start of it is not necessarily liable for
 Example: Car A nasiraan pero hindi pumunta sa may shoulder, nag-stop the one at the end
lang bigla sa road. Naglagay lang ng sign na keep right. Natamaan ni Car B  Immediate and proximate cause of the injury/damage must always be
si Car A. identified
 Negligent si A kasi hindi siya tumabi sa dapat na tinabihan niya. o ***If multiple car collision, nakahinto lahat and then a truck at the
 Negligent si B bc he was outrunning his headlights (aka you should be back end hits the car in front of it and causes the cars in front to
running at a speed that you are able to stop kapag may nailawan headlights collide to the next car and so on, the truck is liable since he is the
mo) and he didn’t keep right (as the sign says); he also didn’t take his last immediate and proximate cause for the accident.
clear chance to avoid the accident o However, if start yung nagstop and then sunudsunod na
 ***Last clear chance – “a negligent plaintiff can nonetheless recover if he is nagtamaan, fault is bc of your inability to stop before hitting the car
able to show that the defendant had the last opportunity to avoid the in front of you, you are liable for the damages on your car and the
accident.” one in front of you; to each their own ‘yung fault per car
 Quasi delict bc no preexisting agreement between the parties; no breach  ***Contract must have to do with the damage for it not to be a quasi-delict
that you can anchor your claims on (possible na breach of contract, etc.)
 Both have faults so court can lessen damages
 ***“I will leave you as you as you are.” – bahala kayo sa buhay niyo Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's
 If pareho kayong may kasalanan, court will look for contributory negligence own acts or omissions, but also for those of persons for whom one is responsible.
 ***fire sale – nanggaling sa sunog ‘yung mga binebenta; there is possibility
of damages, no warranty because you knew beforehand The father and, in case of his death or incapacity, the mother, are responsible for the
damages caused by the minor children who live in their company.
Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if Guardians are liable for damages caused by the minors or incapacitated persons who
there is no pre-existing contractual relation between the parties, is called a quasi- are under their authority and live in their company.
delict and is governed by the provisions of this Chapter. (1902a)
The owners and managers of an establishment or enterprise are likewise responsible
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely for damages caused by their employees in the service of the branches in which the
separate and distinct from the civil liability arising from negligence under the Penal latter are employed or on the occasion of their functions.
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant. (n) Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
Art. 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi- not engaged in any business or industry.
delict. (n)
The State is responsible in like manner when it acts through a special agent; but not
when the damage has been caused by the official to whom the task done properly majeure or from the fault of the person who has suffered damage. (1905)
pertains, in which case what is provided in Article 2176 shall be applicable.
Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the
Lastly, teachers or heads of establishments of arts and trades shall be liable for former, who was in the vehicle, could have, by the use of the due diligence,
damages caused by their pupils and students or apprentices, so long as they remain prevented the misfortune. It is disputably presumed that a driver was negligent, if he
in their custody. had been found guilty or reckless driving or violating traffic regulations at least twice
within the next preceding two months.
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to If the owner was not in the motor vehicle, the provisions of Article 2180 are
prevent damage. (1903a) applicable. (n)
 Example: Owner, Server, Guest
 Guest goes in, Owner makes best server serve guest, server attacks guest Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a
bc may utang si guest sa kanya. motor vehicle has been negligent if at the time of the mishap, he was violating any
 All training and papers were done and cleared. traffic regulation. (n)
 Hindi liable si owner bc ginawa naman niya ‘yung duties niya and selecting
and training employees Art. 2186. Every owner of a motor vehicle shall file with the proper government office
 Magiging liable lang siya if there’s due negligence (e.g. hiring person a bond executed by a government-controlled corporation or office, to answer for
knowing bad track record, etc.) damages to third persons. The amount of the bond and other terms shall be fixed by
 ***Impossible crime: E.g. A steals watch of B. B steals watch from A, then the competent public official. (n)
realizes na sa kanya ‘yun. (“How do you steal something that belongs to
you?”) Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and
similar goods shall be liable for death or injuries caused by any noxious or harmful
 Example: Manufacturer of fish crackers na controversial na unhygienic. Nag- substances used, although no contractual relation exists between them and the
send ng investigative reporter and naprove na marumi nga (e.g. may ipis na consumers. (n)
tinanggal lang by hand, dogs sniffing the products, etc.)
Art. 2188. There is prima facie presumption of negligence on the part of the
 Naibalita and then pinasara ‘yung company.
defendant if the death or injury results from his possession of dangerous weapons or
 Question: Liable ba si manufacturer?
substances, such as firearms and poison, except when the possession or use thereof
 Quasi-delict will not apply bc wala namang na-damage. is indispensable in his occupation or business. (n)
 There must have someone who did a negligent act and someone who was
damaged by that act. Art. 2189. Provinces, cities and municipalities shall be liable for damages for the
death of, or injuries suffered by, any person by reason of the defective condition of
Art. 2181. Whoever pays for the damage caused by his dependents or employees roads, streets, bridges, public buildings, and other public works under their control or
may recover from the latter what he has paid or delivered in satisfaction of the claim. supervision. (n)
(1904)
Art. 2190. The proprietor of a building or structure is responsible for the damages
Art. 2182. If the minor or insane person causing damage has no parents or guardian, resulting from its total or partial collapse, if it should be due to the lack of necessary
the minor or insane person shall be answerable with his own property in an action repairs. (1907)
against him where a guardian ad litem shall be appointed. (n)
Art. 2191. Proprietors shall also be responsible for damages caused:
Art. 2183. The possessor of an animal or whoever may make use of the same is (1) By the explosion of machinery which has not been taken care of with due
responsible for the damage which it may cause, although it may escape or be lost. diligence, and the inflammation of explosive substances which have not
This responsibility shall cease only in case the damage should come from force
 been kept in a safe and adequate place;
(2) By excessive smoke, which may be harmful to persons or property; Art. 2198. The principles of the general law on damages are hereby adopted insofar
(3) By the falling of trees situated at or near highways or lanes, if not caused by as they are not inconsistent with this Code.
force majeure;
(4) By emanations from tubes, canals, sewers or deposits of infectious matter, Chapter 2
constructed without precautions suitable to the place. (1908) Actual or Compensatory Damages

Art. 2192. If damage referred to in the two preceding articles should be the result of Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate
any defect in the construction mentioned in Article 1723, the third person suffering compensation only for such pecuniary loss suffered by him as he has duly proved.
damages may proceed only against the engineer or architect or contractor in Such compensation is referred to as actual or compensatory damages.
accordance with said article, within the period therein fixed. (1909)
Art. 2200. Indemnification for damages shall comprehend not only the value of the
Art. 2193. The head of a family that lives in a building or a part thereof, is responsible loss suffered, but also that of the profits which the obligee failed to obtain. (1106)
for damages caused by things thrown or falling from the same. (1910)
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
J. DAMAGES acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
Title XVIII. Damages could have reasonably foreseen at the time the obligation was constituted.

Chapter 1 In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
General Provisions for all damages which may be reasonably attributed to the non-performance of the
obligation. (1107a)
Art. 2195. The provisions of this Title shall be respectively applicable to all obligations
mentioned in Article 1157. Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages
which are the natural and probable consequences of the act or omission complained
Art. 2196. The rules under this Title are without prejudice to special provisions on of. It is not necessary that such damages have been foreseen or could have
damages formulated elsewhere in this Code. Compensation for workmen and other reasonably been foreseen by the defendant.
employees in case of death, injury or illness is regulated by special laws. Rules
governing damages laid down in other laws shall be observed insofar as they are not Art. 2203. The party suffering loss or injury must exercise the diligence of a good
in conflict with this Code. father of a family to minimize the damages resulting from the act or omission in
question.
Art. 2197. Damages may be:
(1) Actual or compensatory; ‘Yung nawala lang talaga sa’yo Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or
(2) Moral; physical suffering, mental anguish, etc. lessened according to the aggravating or mitigating circumstances.
(3) Nominal; “in name only” and para lang masabi that the other party is guilty; a
legal wrong has occurred, but where there was no actual financial loss as a Art. 2205. Damages may be recovered:
result of that legal wrong, but plaintiff is awarded a small amount (1) For loss or impairment of earning capacity in cases of temporary or
(4) Temperate or moderate; An approximation but not an exact computation of permanent personal injury;
what you might have lost (2) For injury to the plaintiff's business standing or commercial credit.
(5) Liquidated; or Agreed upon the entrance of the contract
(6) Exemplary or corrective. “to make an example of”; “’wag niyong gayahin”; Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall
punitive damages be at least three thousand pesos, even though there may have been mitigating
circumstances. In addition: In all cases, the attorney's fees and expenses of litigation must be reasonable.
(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor
indemnity shall in every case be assessed and awarded by the court, unless incurs in delay, the indemnity for damages, there being no stipulation to the contrary,
the deceased on account of permanent physical disability not caused by the shall be the payment of the interest agreed upon, and in the absence of stipulation,
defendant, had no earning capacity at the time of his death; the legal interest, which is six per cent per annum. (1108)
(2) If the deceased was obliged to give support according to the provisions of
Article 291, the recipient who is not an heir called to the decedent's Art. 2210. Interest may, in the discretion of the court, be allowed upon damages
inheritance by the law of testate or intestate succession, may demand awarded for breach of contract.
support from the person causing the death, for a period not exceeding five
years, the exact duration to be fixed by the court; Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a
(3) The spouse, legitimate and illegitimate descendants and ascendants of the proper case, be adjudicated in the discretion of the court.
deceased may demand moral damages for mental anguish by reason of the
death of the deceased. Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded,
although the obligation may be silent upon this point. (1109a)
Art. 2207. If the plaintiff's property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach of Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except
contract complained of, the insurance company shall be subrogated to the rights of when the demand can be established with reasonably certainty.
the insured against the wrongdoer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover the injury or loss, the Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the
aggrieved party shall be entitled to recover the deficiency from the person causing the damages that he may recover.
loss or injury.
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, mitigate the damages under circumstances other than the case referred to in the
other than judicial costs, cannot be recovered, except: preceding article, as in the following instances:
(1) When exemplary damages are awarded; (1) That the plaintiff himself has contravened the terms of the contract;
(2) When the defendant's act or omission has compelled the plaintiff to litigate (2) That the plaintiff has derived some benefit as a result of the contract;
with third persons or to incur expenses to protect his interest; (3) In cases where exemplary damages are to be awarded, that the defendant
(3) In criminal cases of malicious prosecution against the plaintiff; acted upon the advice of counsel;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (4) That the loss would have resulted in any event;
(5) Where the defendant acted in gross and evident bad faith in refusing to (5) That since the filing of the action, the defendant has done his best to lessen
satisfy the plaintiff's plainly valid, just and demandable claim; the plaintiff's loss or injury.
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and Chapter 3
skilled workers; Other Kinds Of Damages
(8) In actions for indemnity under workmen's compensation and employer's
liability laws; Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal,
(9) In a separate civil action to recover civil liability arising from a crime; temperate, liquidated or exemplary damages, may be adjudicated. The assessment
(10) When at least double judicial costs are awarded; of such damages, except liquidated ones, is left to the discretion of the court,
(11) In any other case where the court deems it just and equitable that attorney's according to the circumstances of each case.
fees and expenses of litigation should be recovered.
Section 1. Moral Damages
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious Art. 2223. The adjudication of nominal damages shall preclude further contest upon
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, the right involved and all accessory questions, as between the parties to the suit, or
and similar injury. Though incapable of pecuniary computation, moral damages may their respective heirs and assigns. 

be recovered if they are the proximate result of the defendant's wrongful act for
omission. Section 3. Temperate or Moderate Damages

Art. 2218. In the adjudication of moral damages, the sentimental value of Art. 2224. Temperate or moderate damages, which are more than nominal but less
property, real or personal, may be considered. than compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount can not, from the nature of the case,
Art. 2219. Moral damages may be recovered in the following and analogous cases: be provided with certainty.
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries; Art. 2225. Temperate damages must be reasonable under the circumstances. 

(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage; Section 4. Liquidated Damages
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search; 
 Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to
(7) Libel, slander or any other form of defamation; be paid in case of breach thereof.
(8) Malicious prosecution;
(9) Acts mentioned in Article 309; Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. be equitably reduced if they are iniquitous or unconscionable.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 Art. 2228. When the breach of the contract committed by the defendant is not the one
of this article, may also recover moral damages. contemplated by the parties in agreeing upon the liquidated damages, the law shall
determine the measure of damages, and not the stipulation.
The spouse, descendants, ascendants, and brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order named. Section 5. Exemplary or Corrective Damages

Art. 2220. Willful injury to property may be a legal ground for awarding moral Art. 2229. Exemplary or corrective damages are imposed, by way of example or
damages if the court should find that, under the circumstances, such damages are correction for the public good, in addition to the moral, temperate, liquidated or
justly due. The same rule applies to breaches of contract where the defendant acted compensatory damages.
fraudulently or in bad faith. 

Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may
Section 2. Nominal Damages be imposed when the crime was committed with one or more aggravating
circumstances. Such damages are separate and distinct from fines and shall be paid
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which to the offended party.
has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him. Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence.
Art. 2222. The court may award nominal damages in every obligation arising from any
source enumerated in Article 1157, or in every case where any property right has Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages
been invaded. if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner. Section 1. Nature of Commodatum
 Ownership stays with the original owner and not transferred to the borrower
Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will  Exact, particular item/etc. to be returned to the owner
decide whether or not they should be adjudicated.  If it is meant to be returned, title does not transfer
 ***It is not to be judged or assumed from the nature of the object if it is
Art. 2234. While the amount of the exemplary damages need not be proved, the mutuum or commodatum, but it you are not sure, just ask to make it clear
plaintiff must show that he is entitled to moral, temperate or compensatory damages
before the court may consider the question of whether or not exemplary damages Art. 1935. The bailee in commodatum acquires the use of the thing loaned but not its
should be awarded. In case liquidated damages have been agreed upon, although no fruits; if any compensation is to be paid by him who acquires the use, the contract
proof of loss is necessary in order that such liquidated damages may be recovered, ceases to be a commodatum. (1941a)
nevertheless, before the court may consider the question of granting exemplary in
addition to the liquidated damages, the plaintiff must show that he would be entitled to Chapter 2
moral, temperate or compensatory damages were it not for the stipulation for Simple Loan Or Mutuum
liquidated damages.  Title moves to the borrower, in such that when s/he returns it to the owner, it
is of the same value
Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall  E.g. Money borrowed
be null and void. 
  ***However, just because it is fungible doesn’t mean it is automatically
mutuum. (e.g. show money)

03/02/19 Art. 1953. A person who receives a loan of money or any other fungible thing
acquires the ownership thereof, and is bound to pay to the creditor an equal amount
K. LOAN, PLEDGE AND MORTGAGE of the same kind and quality. (1753a)

Title XI. Loan Chapter 1

Deposit in General and its Different Kinds
General Provisions
Art. 1962. A deposit is constituted from the moment a person receives a thing
Art. 1933. By the contract of loan, one of the parties delivers to another, either belonging to another, with the obligation of safely keeping it and of returning the
something not consumable so that the latter may use the same for a certain time and same. If the safekeeping of the thing delivered is not the principal purpose of the
return it, in which case the contract is called a commodatum; or money or other contract, there is no deposit but some other contract. (1758a)
consumable thing, upon the condition that the same amount of the same kind and  E.g. Pinaayos yung laptop and then napatagal for another 6 days yung
quality shall be paid, in which case the contract is simply called a loan or mutuum. laptop dun sa person – not deposit because primary purpose is for repair
and not for safekeeping; incidental lang ‘yung pagpapa-safekeep
Commodatum is essentially gratuitous.  E.g. Parking in mall parking lots – is it deposit, wherein if something
happens to your car, liable agad ang management?
Simple loan may be gratuitous or with a stipulation to pay interest. o They ask for payment for parking lots para hindi siya deposit
In commodatum the bailor retains the ownership of the thing loaned, while in simple o If they don’t ask for payment, they will be liable for all cars in there
loan, ownership passes to the borrower. (1740a) o They ask for payment so it will become lease for space – and as
lessee, you are responsible for your cars
Chapter 1 o ***’Yung iba kahit free parking, may security guard so if anything
Commodatum happens, ‘yung security agency ‘yung mananagot
Title XV. Guaranty
Chapter 2
Chapter 1 Effects of Guaranty
Nature And Extent Of Guaranty
 Two contracts: Section 1. Effects of Guaranty Between the Guarantor and the Creditor
o Creditor and debtor
o Debtor and guarantor Art. 2058. The guarantor cannot be compelled to pay the creditor unless the latter has
 E.g. Debtor borrows (a loan) 5M from a creditor in one year exhausted all the property of the debtor, and has resorted to all the legal remedies
o Guarantor: If debtor is unable to pay, guarantor has one defense – against the debtor. (1830a)
excussion
o If debtor still has other properties (real or personal) that amounts to Art. 2059. The excussion shall not take place:
5M, the guarantor is still not liable to pay (1) If the guarantor has expressly renounced it;
o However, you cannot appropriate a debtor’s property unto yourself. (2) If he has bound himself solidarily with the debtor;
It must be sold at a public auction in which case, the amount they (3) In case of insolvency of the debtor;
were sold for will be credited to the creditor. (4) When he has absconded, or cannot be sued within the Philippines unless he
o Supposing it were still insufficient, the guarantor will be liable to pay has left a manager or representative;
for the remaining amount. (5) If it may be presumed that an execution on the property of the principal
o If it were sold for a higher amount, only the amount borrowed will debtor would not result in the satisfaction of the obligation. (1831a)
be given to the creditor, and the rest will be to the debtor, since it is
rightfully his. Art. 2060. In order that the guarantor may make use of the benefit of exclusion, he
o ***If guarantor pays the 5M to the creditor, siya ‘yung mags-step must set it up against the creditor upon the latter's demand for payment from him, and
into the shoes of the creditor and claim 5M worth from properties of point out to the creditor available property of the debtor within Philippine territory,
the debtor, then same process again. sufficient to cover the amount of the debt. (1832)
 ***real property – any property right that has to do with land; immovable
property; also includes anything that is planted on the ground Art. 2061. The guarantor having fulfilled all the conditions required in the preceding
 ***personal property – movable property; not planted on the ground article, the creditor who is negligent in exhausting the property pointed out shall suffer
 E.g. fish in the fish pond – when they are in the fish pond, they are real the loss, to the extent of said property, for the insolvency of the debtor resulting from
property, but once they are removed from the fish pond, they become such negligence. (1833a)
movable property
Art. 2062. In every action by the creditor, which must be against the principal debtor
Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to alone, except in the cases mentioned in Article 2059, the former shall ask the court to
fulfill the obligation of the principal debtor in case the latter should fail to do so. notify the guarantor of the action. The guarantor may appear so that he may, if he so
desire, set up such defenses as are granted him by law. The benefit of excussion
If a person binds himself solidarily with the principal debtor, the provisions of Section mentioned in Article 2058 shall always be unimpaired, even if judgment should be
4, Chapter 3, Title I of this Book shall be observed. In such case the contract is called rendered against the principal debtor and the guarantor in case of appearance by the
a suretyship. (1822a) latter. (1834a)
 Suretyship – pwedeng ikaw ang singilin kahit na hindi ikaw ang nakakuha ng
pera Art. 2071. The guarantor, even before having paid, may proceed against the principal
 ***If hindi pa rin magbayad si suretyship, pwede pa ring bayaran ni debtor:
guarantor (1) When he is sued for the payment;
(2) In case of insolvency of the principal debtor;
 Essentially, suretyship = co-maker of the obligation
(3) When the debtor has bound himself to relieve him from the guaranty within a
 ***Usually only pay a part of the loan (nowadays)
 specified period, and this period has expired; pledging or mortgaging their own property. (1857)
(4) When the debt has become demandable, by reason of the expiration of the
period for payment; Art. 2088. The creditor cannot appropriate the things given by way of pledge or
(5) After the lapse of ten years, when the principal obligation has no fixed period mortgage, or dispose of them. Any stipulation to the contrary is null and void. (1859a)
for its maturity, unless it be of such nature that it cannot be extinguished
except within a period longer than ten years; Chapter 2
(6) If there are reasonable grounds to fear that the principal debtor intends to Pledge
abscond;  Pledgor = debtor
(7) If the principal debtor is in imminent danger of becoming insolvent.  Pledgee = creditor
 E.g. Resto owned by X, Y ate but forgot wallet, left watch and mobile
In all these cases, the action of the guarantor is to obtain release from the guaranty, number and said na babalik na lang tomorrow
or to demand a security that shall protect him from any proceedings by the creditor o Hindi bumalik si Y the next day
and from the danger of insolvency of the debtor. (1834a) o Is it a pledge? – No. It was left there as security of a principal
obligation, na babalik siya and not na you can sell it if hindi siya
bumalk
 Accessory Contracts = May need for principal contracts o Does X have a right to sell the item of Y since he didn’t return? No.
 Guaranty, surety, pledge, mortgage, chattel mortgage are all accessory  Pledge – there must be an agreement na ibebenta kapag hindi na-fulfill
contracts ‘yung obligation; personal property lang pwede
 If principal contracts are extinguished, all accessory contracts are also o ***you cannot appropriate it as your own; it must be sold at a public
extinguished unless otherwise agreed upon auction and given the best price for it without any emotional
 If second agreement is silent while the principal is abolished, the second baggage;
agreement is also abolished o ***kapag nabenta na at a public auction, excess amount will be
 ***Kailangan pumayag lahat including the guarantor – if the guarantor does given to the debtor pa rin
not agree (second contract is silent), the second contract is abolished kahit  E.g. Selling an object to a pawnshop
na okay sa creditor and debtor o In public (sa harap mo), they will compute for how much they’re
willing to give you (usually bawas agad ng first interest, minsan
benta rin insurance)
Title XVI. Pledge, Mortgage and Antichresis o Principal obligation: the money loaned; paper given is loan
agreement and pledge agreement
Chapter 1 o Pledge: item pawned is to be sold if you were unable to pay the
Provisions Common to Pledge and Mortgage amount loaned

Art. 2085. The following requisites are essential to the contracts of pledge and Art. 2093. In addition to the requisites prescribed in Article 2085, it is necessary, in
mortgage: order to constitute the contract of pledge, that the thing pledged be placed in the
(1) That they be constituted to secure the fulfillment of a principal obligation; possession of the creditor, or of a third person by common agreement. (1863)
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged; Art. 2115. The sale of the thing pledged shall extinguish the principal obligation,
(3) That the persons constituting the pledge or mortgage have the free disposal whether or not the proceeds of the sale are equal to the amount of the principal
of their property, and in the absence thereof, that they be legally authorized obligation, interest and expenses in a proper case. If the price of the sale is more
for the purpose. than said amount, the debtor shall not be entitled to the excess, unless it is otherwise
agreed. If the price of the sale is less, neither shall the creditor be entitled to recover
Third persons who are not parties to the principal obligation may secure the latter by the deficiency, notwithstanding any stipulation to the contrary. (n)
 growing fruits, and the rents or income not yet received when the obligation becomes
Chapter 3 due, and to the amount of the indemnity granted or owing to the proprietor from the
Mortgage insurers of the property mortgaged, or in virtue of expropriation for public use, with
 ***basically almost same as pledge – creditor, debtor, money, time to pay – the declarations, amplifications and limitations established by law, whether the estate
but mortgages are for real property and cannot be delivered to the person remains in the possession of the mortgagor, or it passes into the hands of a third
 What you do is there is a Deed of Real Estate Mortgage (all DREM are to be person. (1877)
done in a public instrument/document)
 ***Usually, owner of real property and debtor are one and the same, but they Art. 2128. The mortgage credit may be alienated or assigned to a third person, in
do not need to be – pwedeng third party whole or in part, with the formalities required by law. (1878)
 ***If magkaiba ‘yung owner and debtor tas nabenta for higher than loan,
excess will go to the owner and not the debtor Art. 2129. The creditor may claim from a third person in possession of the mortgaged
 ***Kailangan may annotation sa likod of the DREM because it should be property, the payment of the part of the credit secured by the property which said
sold with consent of the creditor kasi kung hindi, it is a fraud; third person possesses, in the terms and with the formalities which the law
o However, it can still be sold to a third party, basta noted lang establishes. (1879)
(because why??? Something about napapasa sa buyer ‘yung
obligation din with the property) Art. 2130. A stipulation forbidding the owner from alienating the immovable
o Dapat may annotation bc if wala tas nabenta to a third party, the mortgaged shall be void. (n)
third party is not obligated to the creditor
 ***Title remains to you but they have a right to pull it off you if you don’t fulfill Art. 2131. The form, extent and consequences of a mortgage, both as to its
your obligation constitution, modification and extinguishment, and as to other matters not included in
this Chapter, shall be governed by the provisions of the Mortgage Law and of the
Art. 2124. Only the following property may be the object of a contract of mortgage: Land Registration Law. (1880a) 

(1) Immovables;
(2) Alienable real rights in accordance with the laws, imposed upon Chapter 5
immovables. Chattel Mortgage
 Like a normal mortgage but with movable property
Nevertheless, movables may be the object of a chattel mortgage. (1874a)  However, you cannot move the property to another city, or you will be
criminally liable
Art. 2125. In addition to the requisites stated in Article 2085, it is indispensable, in  ***Not really that much regarded by law anymore
order that a mortgage may be validly constituted, that the document in which it  Chattel mortgage – you retain possession of property, at the same time, you
appears be recorded in the Registry of Property. If the instrument is not recorded, the are restricted by law to what you can do with the property; vs Pledge –
mortgage is nevertheless binding between the parties. possession is with pledgee
 ***Title remains to you but they have a right to pull it off you if you don’t fulfill
The persons in whose favor the law establishes a mortgage have no other right than your obligation, just same as sa mortgage
to demand the execution and the recording of the document in which the mortgage is
formalized. (1875a) Art. 2140. By a chattel mortgage, personal property is recorded in the Chattel
Mortgage Register as a security for the performance of an obligation. If the movable,
Art. 2126. The mortgage directly and immediately subjects the property upon which it instead of being recorded, is delivered to the creditor or a third person, the contract is
is imposed, whoever the possessor may be, to the fulfillment of the obligation for a pledge and not a chattel mortgage. (n)
whose security it was constituted. (1876)
Art. 2141. The provisions of this Code on pledge, insofar as they are not in conflict
Art. 2127. The mortgage extends to the natural accessions, to the improvements, with the Chattel Mortgage Law shall be applicable to chattel mortgages. (n)
 o Only house of reps can pass laws to finance something
 Executive Department – power of the sword
03/09/19  Judiciary Department – power of the pen
Review:  Obligation – juridical necessity to give, to do, or to not give
 ***Get start notes from Yana/whomever o Based on law
 E.g. Wanted person poster – any info for the arrest of o If a provision of law does not necessitate, there is no obligation
o Dapat hindi because wala naman siya and all, so hindi siya due  Standard of care you should exercise if you are to ______ an obligation
process – parang sa police to drug users issue lang o Due diligence
o Additional info: what if may info na that from a judge, he was o You should be able to prove that you did all you can to prevent the
prosecuted for this and that, and may arrest warrant na rin action/etc.
 This is allowed already since may ruling na ng appropriate o Extraordinary diligence – diligence expected of carriers, etc
court/s  if hindi makarating yung bagay/service, liable ka agad;
 So long as sumusunod pa rin sa due process  no need to prove, unlike if due diligence lang na ikaw hindi
 Pwede maglabas ng reward money but still for everything nakarating/nakareceive, ikaw pa mag-pprove
na legal under law o fortuitous events
 ***Work/living wage is a living property  may be used for defense na even despite fortuitous
o part of due process is for a hearing events, hindi talaga kaya
o lahat ng gagamitin sa’yo should be presented under law and should  kailangan mo ma-prove na despite everything, you really
not be based on personal knowledge only did everything you could to minimize the damage, to
 Equal protection deliver your obligation
o Could this be applied to narconists?  ***always state na when there is a payment and/or mispayment, either of the
o Violation under equal protection yung pag-differentiate between two
drug smugglers, etc. o State na, e.g. no payment for feb-april, payment made for may
o Bakit yung iba may public shaming, yung iba diretso kulong, etc., o First in, first out: payment for feb received in may, hindi pa bayad
may under due process yung march-may
o Dapat hindi nagcclassify between classes  Obligation with a suspensive condition
o Notices should always be in writing o Suspensive condition - suspends rights and obligations until the
 Just compensation – declared price or ______ evaluation, whichever is uncertain future event occurs
lower o Obligation will be carried out lang if mangyari ‘yung suspensive
 Impairment of vested right – no law shall be passed impairing obligation of condition
contracts; future contracts will be void but for those existing, it should not be o “walang mangyayari until mangyari ito”
affected o E.g. insurance – no payment will be done unless event happens
 ***You cannot be put into jail for legit debts; different from estafa  Obligation with a resolutory condition
 ***Cedula – what used to be/considered to be community tax certificate; tax o condition whereby upon fulfillment terminates an already
simply because you are there (“poll tax”? enforceable obligation
 Citizens of the Philippines o E.g. may scholarship ka na pagaaralin ka until gumraduate ka
o If you are entering/building (?) a corporation in the PH, citizenship  ***rescission of obligation due to condonation – sasabihin ni creditor na okay
is important wag mo na bayaran
o Nireregulate ‘yung citizen composition/ownership here in the PH  ***rescission of obligation due by compensation – magcacancel out yung
 Legislative power utang from both sides tas yung may kulang, siya na lang magbabayad
o Calls for the power of the purse  ***Dapat may official pronouncement because of extraordinary inflation
o All money eme only emanates from Congress o 10M utang example (to pay in 5 years)
 o From 50 naging 500 = $1 dividends or allotments of the surplus profits on the basis of the shares held are stock
o If may pronouncement, ang babayaran is 100M na corporations. All other corporations are non-stock corporations.
o Because x10 yung conversion na
 ***Object of the contact should always be clear to all parties involved Sec. 4. Corporations created by special laws or charters. Corporations created by
 Rescissible vs Voidable (binding until declared void, may be ratified) vs special laws or charters shall be governed primarily by the provisions of the special
Unenforceable (both consent cannot be given, etc., may be ratified) vs Void law or charter creating them or applicable to them, supplemented by the provisions of
and Inexistent this Code, insofar as they are applicable.
 ***Solutio indebiti – a payment of what is not due (when through ignorance
or by mistake, the amount paid might be recovered back by “condition Sec. 5. Corporators and incorporators, stockholders and members. Corporators are
indebiti”) those who compose a corporation, whether as stockholders or as members.
 Brevi Manu (Symbolic Delivery) vs Longa Manu (Actual Delivery) Incorporators are those stockholders or members mentioned in the articles of
 Undivided interest vs Whole interest (?) incorporation as originally forming and composing the corporation and who are
o If may ¼ share ka, you have a right to ¼ of income/whatever from signatories thereof.
the whole
o If you subdivide/nagkaroon ng division sa property, you will only get Corporators in a stock corporation are called stockholders or shareholders.
the income that corresponds sa mismong property niya Corporators in a non-stock corporation are called members.
o ***Also applies to the expenses
 Express warranties that you have the right to sell (***check sales provisions Sec. 6. Classification of shares. The shares of stock of stock corporations may be
na lang) divided into classes or series of shares, or both, any of which classes or series of
 Excussion – process or proceedings whereby a creditor must proceed shares may have such rights, privileges or restrictions as may be stated in the articles
against a principal debtor before proceeding against a surety or subsidiary of incorporation: Provided, That no share may be deprived of voting rights except
debtor those classified and issued as "preferred" or "redeemable" shares, unless otherwise
provided in this Code: Provided, further, That there shall always be a class or series
 ***Be exact what article of law you are citing (consti vs civil code, etc.)
of shares which have complete voting rights. Any or all of the shares or series of
 ***Bring blue book
shares may have a par value or have no par value as may be provided for in the
articles of incorporation: Provided, however, That banks, trust companies, insurance
companies, public utilities, and building and loan associations shall not be permitted
03/16/19 – LE #1 to issue no-par value shares of stock.

Preferred shares of stock issued by any corporation may be given preference in the
L. CORPORATIONS (CORPORATIONS COD) distribution of the assets of the corporation in case of liquidation and in the
distribution of dividends, or such other preferences as may be stated in the articles of
The Corporation Code of the Philippines incorporation which are not violative of the provisions of this Code: Provided, That
[Batas Pambansa Blg. 68] preferred shares of stock may be issued only with a stated par value. The board of
directors, where authorized in the articles of incorporation, may fix the terms and
Sec. 2. Corporation defined. A corporation is an artificial being created by operation conditions of preferred shares of stock or any series thereof: Provided, That such
of law, having the right of succession and the powers, attributes and properties terms and conditions shall be effective upon the filing of a certificate thereof with the
expressly authorized by law or incident to its existence. Securities and Exchange Commission.

Sec. 3. Classes of corporations. Corporations formed or organized under this Code Shares of capital stock issued without par value shall be deemed fully paid and non-
may be stock or non-stock corporations. Corporations which have capital stock assessable and the holder of such shares shall not be liable to the corporation or to
divided into shares and are authorized to distribute to the holders of such shares its creditors in respect thereto: Provided; That shares without par value may not be
issued for a consideration less than the value of five (P5.00) pesos per share:
Provided, further, That the entire consideration received by the corporation for its no- Sec. 11. Corporate term. A corporation shall exist for a period not exceeding fifty (50)
par value shares shall be treated as capital and shall not be available for distribution years from the date of incorporation unless sooner dissolved or unless said period is
as dividends. extended. The corporate term as originally stated in the articles of incorporation may
be extended for periods not exceeding fifty (50) years in any single instance by an
A corporation may, furthermore, classify its shares for the purpose of insuring amendment of the articles of incorporation, in accordance with this Code; Provided,
compliance with constitutional or legal requirements. That no extension can be made earlier than five (5) years prior to the original or
subsequent expiry date(s) unless there are justifiable reasons for an earlier extension
Except as otherwise provided in the articles of incorporation and stated in the as may be determined by the Securities and Exchange Commission.
certificate of stock, each share shall be equal in all respects to every other share.
Sec. 13. Amount of capital stock to be subscribed and paid for the purposes of
Where the articles of incorporation provide for non-voting shares in the cases allowed incorporation. At least twenty-five percent (25%) of the authorized capital stock as
by this Code, the holders of such shares shall nevertheless be entitled to vote on the stated in the articles of incorporation must be subscribed at the time of incorporation,
following matters: and at least twenty-five (25%) per cent of the total subscription must be paid upon
(1) Amendment of the articles of incorporation; subscription, the balance to be payable on a date or dates fixed in the contract of
(2) Adoption and amendment of by-laws; subscription without need of call, or in the absence of a fixed date or dates, upon call
(3) Sale, lease, exchange, mortgage, pledge or other disposition of all or for payment by the board of directors: Provided, however, That in no case shall the
substantially all of the corporate property; paid-up capital be less than five Thousand (P5,000.00) pesos. (n)
(4) Incurring, creating or increasing bonded indebtedness;
(5) Increase or decrease of capital stock; Sec. 14. Contents of the articles of incorporation. All corporations organized under
(6) Merger or consolidation of the corporation with another corporation or other this code shall file with the Securities and Exchange Commission articles of
corporations; incorporation in any of the official languages duly signed and acknowledged by all of
(7) Investment of corporate funds in another corporation or business in the incorporators, containing substantially the following matters, except as otherwise
accordance with this Code; and prescribed by this Code or by special law:
(8) Dissolution of the corporation. (1) The name of the corporation;
(2) The specific purpose or purposes for which the corporation is being
Except as provided in the immediately preceding paragraph, the vote necessary to incorporated. Where a corporation has more than one stated purpose, the
approve a particular corporate act as provided in this Code shall be deemed to refer articles of incorporation shall state which is the primary purpose and which
only to stocks with voting rights. is/are he secondary purpose or purposes: Provided, That a non-stock
corporation may not include a purpose which would change or contradict its
Sec. 9. Treasury shares. Treasury shares are shares of stock which have been nature as such;
issued and fully paid for, but subsequently reacquired by the issuing corporation by (3) The place where the principal office of the corporation is to be located, which
purchase, redemption, donation or through some other lawful means. Such shares must be within the Philippines;
may again be disposed of for a reasonable price fixed by the board of directors. (4) The term for which the corporation is to exist;
(5) The names, nationalities and residences of the incorporators;
Title II. Incorporation and Organization of Private Corporations (6) The number of directors or trustees, which shall not be less than five (5) nor
more than fifteen (15);
Sec. 10. Number and qualifications of incorporators. Any number of natural persons (7) The names, nationalities and residences of persons who shall act as
not less than five (5) but not more than fifteen (15), all of legal age and a majority of directors or trustees until the first regular directors or trustees are duly
whom are residents of the Philippines, may form a private corporation for any lawful elected and qualified in accordance with this Code;
purpose or purposes. Each of the incorporators of s stock corporation must own or be (8) If it be a stock corporation, the amount of its authorized capital stock in
a subscriber to at least one (1) share of the capital stock of the corporation. lawful money of the Philippines, the number of shares into which it is
 divided, and in case the share are par value shares, the par value of each, recommendation of the appropriate government agency to the effect that such articles
the names, nationalities and residences of the original subscribers, and the or amendment is in accordance with law.
amount subscribed and paid by each on his subscription, and if some or all
of the shares are without par value, such fact must be stated; Sec. 18. Corporate name. No corporate name may be allowed by the Securities and
(9) If it be a non-stock corporation, the amount of its capital, the names, Exchange Commission if the proposed name is identical or deceptively or confusingly
nationalities and residences of the contributors and the amount contributed similar to that of any existing corporation or to any other name already protected by
by each; and law or is patently deceptive, confusing or contrary to existing laws. When a change in
(10) Such other matters as are not inconsistent with law and which the the corporate name is approved, the Commission shall issue an amended certificate
incorporators may deem necessary and convenient. of incorporation under the amended name.

The Securities and Exchange Commission shall not accept the articles of Sec. 19. Commencement of corporate existence. A private corporation formed or
incorporation of any stock corporation unless accompanied by a sworn statement of organized under this Code commences to have corporate existence and juridical
the Treasurer elected by the subscribers showing that at least twenty-five (25%) personality and is deemed incorporated from the date the Securities and Exchange
percent of the authorized capital stock of the corporation has been subscribed, and at Commission issues a certificate of incorporation under its official seal; and thereupon
least twenty-five (25%) of the total subscription has been fully paid to him in actual the incorporators, stockholders/members and their successors shall constitute a body
cash and/or in property the fair valuation of which is equal to at least twenty-five politic and corporate under the name stated in the articles of incorporation for the
(25%) percent of the said subscription, such paid-up capital being not less than five period of time mentioned therein, unless said period is extended or the corporation is
thousand (P5,000.00) pesos. sooner dissolved in accordance with law.

Sec. 17. Grounds when articles of incorporation or amendment may be rejected or Title III. Board of Directors/Trustees/Officers
disapproved. The Securities and Exchange Commission may reject the articles of
incorporation or disapprove any amendment thereto if the same is not in compliance Sec. 23. The board of directors or trustees. Unless otherwise provided in this Code,
with the requirements of this Code: Provided, That the Commission shall give the the corporate powers of all corporations formed under this Code shall be exercised,
incorporators a reasonable time within which to correct or modify the objectionable all business conducted and all property of such corporations controlled and held by
portions of the articles or amendment. The following are grounds for such rejection or the board of directors or trustees to be elected from among the holders of stocks, or
disapproval: where there is no stock, from among the members of the corporation, who shall hold
(1) That the articles of incorporation or any amendment thereto is not office for one (1) year until their successors are elected and qualified.
substantially in accordance with the form prescribed herein;
(2) That the purpose or purposes of the corporation are patently Every director must own at least one (1) share of the capital stock of the corporation
unconstitutional, illegal, immoral, or contrary to government rules of which he is a director, which share shall stand in his name on the books of the
and regulations; corporation. Any director who ceases to be the owner of at least one (1) share of the
(3) That the Treasurer's Affidavit concerning the amount of capital capital stock of the corporation of which he is a director shall thereby cease to be a
stock subscribed and/or paid if false; director. Trustees of non-stock corporations must be members thereof. a majority of
(4) That the percentage of ownership of the capital stock to be owned the directors or trustees of all corporations organized under this Code must be
by citizens of the Philippines has not been complied with as residents of the Philippines.
required by existing laws or the Constitution.
Sec. 24. Election of directors or trustees. At all elections of directors or trustees, there
No articles of incorporation or amendment to articles of incorporation of banks, must be present, either in person or by representative authorized to act by written
banking and quasi-banking institutions, building and loan associations, trust proxy, the owners of a majority of the outstanding capital stock, or if there be no
companies and other financial intermediaries, insurance companies, public utilities, capital stock, a majority of the members entitled to vote. The election must be by
educational institutions, and other corporations governed by special laws shall be ballot if requested by any voting stockholder or member. In stock corporations, every
accepted or approved by the Commission unless accompanied by a favorable stockholder entitled to vote shall have the right to vote in person or by proxy the
number of shares of stock standing, at the time fixed in the by-laws, in his own name his election or appointment, shall qualify as a director, trustee or officer of any
on the stock books of the corporation, or where the by-laws are silent, at the time of corporation.
the election; and said stockholder may vote such number of shares for as many
persons as there are directors to be elected or he may cumulate said shares and give Sec. 28. Removal of directors or trustees. Any director or trustee of a corporation may
one candidate as many votes as the number of directors to be elected multiplied by be removed from office by a vote of the stockholders holding or representing at least
the number of his shares shall equal, or he may distribute them on the same principle two-thirds (2/3) of the outstanding capital stock, or if the corporation be a non-stock
among as many candidates as he shall see fit: Provided, That the total number of corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote:
votes cast by him shall not exceed the number of shares owned by him as shown in Provided, That such removal shall take place either at a regular meeting of the
the books of the corporation multiplied by the whole number of directors to be corporation or at a special meeting called for the purpose, and in either case, after
elected: Provided, however, That no delinquent stock shall be voted. Unless previous notice to stockholders or members of the corporation of the intention to
otherwise provided in the articles of incorporation or in the by-laws, members of propose such removal at the meeting. A special meeting of the stockholders or
corporations which have no capital stock may cast as many votes as there are members of a corporation for the purpose of removal of directors or trustees, or any
trustees to be elected but may not cast more than one vote for one candidate. of them, must be called by the secretary on order of the president or on the written
Candidates receiving the highest number of votes shall be declared elected. Any demand of the stockholders representing or holding at least a majority of the
meeting of the stockholders or members called for an election may adjourn from day outstanding capital stock, or, if it be a non-stock corporation, on the written demand of
to day or from time to time but not sine die or indefinitely if, for any reason, no a majority of the members entitled to vote. Should the secretary fail or refuse to call
election is held, or if there not present or represented by proxy, at the meeting, the the special meeting upon such demand or fail or refuse to give the notice, or if there
owners of a majority of the outstanding capital stock, or if there be no capital stock, a is no secretary, the call for the meeting may be addressed directly to the stockholders
majority of the member entitled to vote. or members by any stockholder or member of the corporation signing the demand.
Notice of the time and place of such meeting, as well as of the intention to propose
Sec. 25. Corporate officers, quorum. Immediately after their election, the directors of such removal, must be given by publication or by written notice prescribed in this
a corporation must formally organize by the election of a president, who shall be a Code. Removal may be with or without cause: Provided, That removal without cause
director, a treasurer who may or may not be a director, a secretary who shall be a may not be used to deprive minority stockholders or members of the right of
resident and citizen of 2the Philippines, and such other officers as may be provided representation to which they may be entitled under Section 24 of this Code.
for in the by-laws. Any two (2) or more positions may be held concurrently by the
same person, except that no one shall act as president and secretary or as president Sec. 29. Vacancies in the office of director or trustee. Any vacancy occurring in the
and treasurer at the same time. board of directors or trustees other than by removal by the stockholders or members
or by expiration of term, may be filled by the vote of at least a majority of the
The directors or trustees and officers to be elected shall perform the duties enjoined remaining directors or trustees, if still constituting a quorum; otherwise, said
on them by law and the by-laws of the corporation. Unless the articles of vacancies must be filled by the stockholders in a regular or special meeting called for
incorporation or the by-laws provide for a greater majority, a majority of the number of that purpose. A director or trustee so elected to fill a vacancy shall be elected only or
directors or trustees as fixed in the articles of incorporation shall constitute a quorum the unexpired term of his predecessor in office.
for the transaction of corporate business, and every decision of at least a majority of
the directors or trustees present at a meeting at which there is a quorum shall be A directorship or trusteeship to be filled by reason of an increase in the number of
valid as a corporate act, except for the election of officers which shall require the vote directors or trustees shall be filled only by an election at a regular or at a special
of a majority of all the members of the board. meeting of stockholders or members duly called for the purpose, or in the same
meeting authorizing the increase of directors or trustees if so stated in the notice of
Directors or trustees cannot attend or vote by proxy at board meetings. the meeting.

Sec. 27. Disqualification of directors, trustees or officers. No person convicted by final Sec. 31. Liability of directors, trustees or officers. Directors or trustees who willfully
judgment of an offense punishable by imprisonment for a period exceeding six (6) and knowingly vote for or assent to patently unlawful acts of the corporation or who
years, or a violation of this Code committed within five (5) years prior to the date of are guilty of gross negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty as such directors himself a business opportunity which should belong to the corporation, thereby
or trustees shall be liable jointly and severally for all damages resulting therefrom obtaining profits to the prejudice of such corporation, he must account to the latter for
suffered by the corporation, its stockholders or members and other persons. all such profits by refunding the same, unless his act has been ratified by a vote of
the stockholders owning or representing at least two-thirds (2/3) of the outstanding
When a director, trustee or officer attempts to acquire or acquires, in violation of his capital stock. This provision shall be applicable, notwithstanding the fact that the
duty, any interest adverse to the corporation in respect of any matter which has been director risked his own funds in the venture.

reposed in him in confidence, as to which equity imposes a disability upon him to deal
in his own behalf, he shall be liable as a trustee for the corporation and must account Sec. 35. Executive committee. The by-laws of a corporation may create an executive
for the profits which otherwise would have accrued to the corporation. committee, composed of not less than three members of the board, to be appointed
by the board. Said committee may act, by majority vote of all its members, on such
Sec. 32. Dealings of directors, trustees or officers with the corporation. A contract of specific matters within the competence of the board, as may be delegated to it in the
the corporation with one or more of its directors or trustees or officers is voidable, at by-laws or on a majority vote of the board, except with respect to: (1) approval of any
the option of such corporation, unless all the following conditions are present: action for which shareholders' approval is also required; (2) the filing of vacancies in
(1) That the presence of such director or trustee in the board meeting in which the board; (3) the amendment or repeal of by-laws or the adoption of new by-laws; (4)
the contract was approved was not necessary to constitute a quorum for the amendment or repeal of any resolution of the board which by its express terms is
such meeting; not so amendable or repealable; and (5) a distribution of cash dividends to the
(2) That the vote of such director or trustee was nor necessary for the approval shareholders.
of the contract;
(3) That the contract is fair and reasonable under the circumstances; and Title IV. Powers of Corporations
(4) That in case of an officer, the contract has been previously authorized by the
board of directors. Sec. 36. Corporate powers and capacity. Every corporation incorporated under this
Code has the power and capacity:
Where any of the first two conditions set forth in the preceding paragraph is absent, in (1) To sue and be sued in its corporate name;
the case of a contract with a director or trustee, such contract may be ratified by the (2) Of succession by its corporate name for the period of time stated in the
vote of the stockholders representing at least two-thirds (2/3) of the outstanding articles of incorporation and the certificate of incorporation;
capital stock or of at least two-thirds (2/3) of the members in a meeting called for the (3) To adopt and use a corporate seal;
purpose: Provided, That full disclosure of the adverse interest of the directors or (4) To amend its articles of incorporation in accordance with the provisions of
trustees involved is made at such meeting: Provided, however, That the contract is this Code;
fair and reasonable under the circumstances. (5) To adopt by-laws, not contrary to law, morals, or public policy, and to amend
or repeal the same in accordance with this Code;
Sec. 33. Contracts between corporations with interlocking directors. Except in cases (6) In case of stock corporations, to issue or sell stocks to subscribers and to
of fraud, and provided the contract is fair and reasonable under the circumstances, a sell stocks to subscribers and to sell treasury stocks in accordance with the
contract between two or more corporations having interlocking directors shall not be provisions of this Code; and to admit members to the corporation if it be a
invalidated on that ground alone: Provided, That if the interest of the interlocking non-stock corporation;
director in one corporation is substantial and his interest in the other corporation or (7) To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
corporations is merely nominal, he shall be subject to the provisions of the preceding mortgage and otherwise deal with such real and personal property, including
section insofar as the latter corporation or corporations are concerned. securities and bonds of other corporations, as the transaction of the lawful
business of the corporation may reasonably and necessarily require, subject
Stockholdings exceeding twenty (20%) percent of the outstanding capital stock shall to the limitations prescribed by law and the Constitution;
be considered substantial for purposes of interlocking directors. (8) To enter into merger or consolidation with other corporations as provided in
this Code;
Sec. 34. Disloyalty of a director. Where a director, by virtue of his office, acquires for (9) To make reasonable donations, including those for the public welfare or for
 hospital, charitable, cultural, scientific, civic, or similar purposes: Provided, of the outstanding capital stock at a regular or special meeting duly called for the
That no corporation, domestic or foreign, shall give donations in aid of any purpose. (16a)
political party or candidate or for purposes of partisan political activity;
(10) To establish pension, retirement, and other plans for the benefit of its Stock corporations are prohibited from retaining surplus profits in excess of one
directors, trustees, officers and employees; and hundred (100%) percent of their paid-in capital stock, except: (1) when justified by
(11) To exercise such other powers as may be essential or necessary to carry definite corporate expansion projects or programs approved by the board of directors;
out its purpose or purposes as stated in the articles of incorporation. or (2) when the corporation is prohibited under any loan agreement with any financial
institution or creditor, whether local or foreign, from declaring dividends without its/his
Sec. 39. Power to deny pre-emptive right. All stockholders of a stock corporation shall consent, and such consent has not yet been secured; or (3) when it can be clearly
enjoy pre-emptive right to subscribe to all issues or disposition of shares of any class, shown that such retention is necessary under special circumstances obtaining in the
in proportion to their respective shareholdings, unless such right is denied by the corporation, such as when there is need for special reserve for probable
articles of incorporation or an amendment thereto: Provided, That such pre-emptive contingencies. (n)
right shall not extend to shares to be issued in compliance with laws requiring stock
offerings or minimum stock ownership by the public; or to shares to be issued in good Sec. 45. Ultra vires acts of corporations. No corporation under this Code shall
faith with the approval of the stockholders representing two-thirds (2/3) of the possess or exercise any corporate powers except those conferred by this Code or by
outstanding capital stock, in exchange for property needed for corporate purposes or its articles of incorporation and except such as are necessary or incidental to the
in payment of a previously contracted debt. exercise of the powers so conferred. (n)

Sec. 42. Power to invest corporate funds in another corporation or business or for any Title V. By Laws
other purpose. Subject to the provisions of this Code, a private corporation may
invest its funds in any other corporation or business or for any purpose other than the Sec. 46. Adoption of by-laws. Every corporation formed under this Code must, within
primary purpose for which it was organized when approved by a majority of the board one (1) month after receipt of official notice of the issuance of its certificate of
of directors or trustees and ratified by the stockholders representing at least two- incorporation by the Securities and Exchange Commission, adopt a code of by-laws
thirds (2/3) of the outstanding capital stock, or by at least two thirds (2/3) of the for its government not inconsistent with this Code. For the adoption of by-laws by the
members in the case of non-stock corporations, at a stockholder's or member's corporation the affirmative vote of the stockholders representing at least a majority of
meeting duly called for the purpose. Written notice of the proposed investment and the outstanding capital stock, or of at least a majority of the members in case of non-
the time and place of the meeting shall be addressed to each stockholder or member stock corporations, shall be necessary. The by-laws shall be signed by the
at his place of residence as shown on the books of the corporation and deposited to stockholders or members voting for them and shall be kept in the principal office of
the addressee in the post office with postage prepaid, or served personally: Provided, the corporation, subject to the inspection of the stockholders or members during
That any dissenting stockholder shall have appraisal right as provided in this Code: office hours. A copy thereof, duly certified to by a majority of the directors or trustees
Provided, however, That where the investment by the corporation is reasonably countersigned by the secretary of the corporation, shall be filed with the Securities
necessary to accomplish its primary purpose as stated in the articles of incorporation, and Exchange Commission which shall be attached to the original articles of
the approval of the stockholders or members shall not be necessary. (17 1/2a) incorporation.

Sec. 43. Power to declare dividends. The board of directors of a stock corporation Notwithstanding the provisions of the preceding paragraph, by-laws may be adopted
may declare dividends out of the unrestricted retained earnings which shall be and filed prior to incorporation; in such case, such by-laws shall be approved and
payable in cash, in property, or in stock to all stockholders on the basis of outstanding signed by all the incorporators and submitted to the Securities and Exchange
stock held by them: Provided, That any cash dividends due on delinquent stock shall Commission, together with the articles of incorporation.
first be applied to the unpaid balance on the subscription plus costs and expenses,
while stock dividends shall be withheld from the delinquent stockholder until his In all cases, by-laws shall be effective only upon the issuance by the Securities and
unpaid subscription is fully paid: Provided, further, That no stock dividend shall be Exchange Commission of a certification that the by-laws are not inconsistent with this
issued without the approval of stockholders representing not less than two-thirds (2/3) Code.
 majority of the members in non-stock corporations, shall so vote at a regular or
The Securities and Exchange Commission shall not accept for filing the by-laws or special meeting.
any amendment thereto of any bank, banking institution, building and loan
association, trust company, insurance company, public utility, educational institution Whenever any amendment or new by-laws are adopted, such amendment or new by-
or other special corporations governed by special laws, unless accompanied by a laws shall be attached to the original by-laws in the office of the corporation, and a
certificate of the appropriate government agency to the effect that such by-laws or copy thereof, duly certified under oath by the corporate secretary and a majority of
amendments are in accordance with law. (20a) the directors or trustees, shall be filed with the Securities and Exchange Commission
the same to be attached to the original articles of incorporation and original by-laws.
Sec. 47. Contents of by-laws. Subject to the provisions of the Constitution, this Code,
other special laws, and the articles of incorporation, a private corporation may provide The amended or new by-laws shall only be effective upon the issuance by the
in its by-laws for: Securities and Exchange Commission of a certification that the same are not
(1) The time, place and manner of calling and conducting regular or inconsistent with this Code. (22a and 23a)
special meetings of the directors or trustees;
(2) The time and manner of calling and conducting regular or special Title VI. Meetings
meetings of the stockholders or members;
(3) The required quorum in meetings of stockholders or members and Sec. 49. Kinds of meetings. Meetings of directors, trustees, stockholders, or members
the manner of voting therein; may be regular or special. (n)
(4) The form for proxies of stockholders and members and the manner
of voting them; Sec. 50. Regular and special meetings of stockholders or members. Regular
(5) The qualifications, duties and compensation of directors or trustees, meetings of stockholders or members shall be held annually on a date fixed in the by-
officers and employees; laws, or if not so fixed, on any date in April of every year as determined by the board
(6) The time for holding the annual election of directors of trustees and of directors or trustees: Provided, That written notice of regular meetings shall be sent
the mode or manner of giving notice thereof; to all stockholders or members of record at least two (2) weeks prior to the meeting,
(7) The manner of election or appointment and the term of office of all unless a different period is required by the by-laws.
officers other than directors or trustees;
(8) The penalties for violation of the by-laws; Special meetings of stockholders or members shall be held at any time deemed
(9) In the case of stock corporations, the manner of issuing stock necessary or as provided in the by-laws: Provided, however, That at least one (1)
certificates; and week written notice shall be sent to all stockholders or members, unless otherwise
(10) Such other matters as may be necessary for the proper or provided in the by-laws.
convenient transaction of its corporate business and affairs. (21a)

 Notice of any meeting may be waived, expressly or impliedly, by any stockholder or
member.
Sec. 48. Amendments to by-laws. The board of directors or trustees, by a majority
vote thereof, and the owners of at least a majority of the outstanding capital stock, or Whenever, for any cause, there is no person authorized to call a meeting, the
at least a majority of the members of a non-stock corporation, at a regular or special Secretaries and Exchange Commission, upon petition of a stockholder or member on
meeting duly called for the purpose, may amend or repeal any by-laws or adopt new a showing of good cause therefor, may issue an order to the petitioning stockholder
by-laws. The owners of two-thirds (2/3) of the outstanding capital stock or two-thirds or member directing him to call a meeting of the corporation by giving proper notice
(2/3) of the members in a non-stock corporation may delegate to the board of required by this Code or by the by-laws. The petitioning stockholder or member shall
directors or trustees the power to amend or repeal any by-laws or adopt new by-laws: preside thereat until at least a majority of the stockholders or members present have
Provided, That any power delegated to the board of directors or trustees to amend or been chosen one of their number as presiding officer. (24, 26)
repeal any by-laws or adopt new by-laws shall be considered as revoked whenever
stockholders owning or representing a majority of the outstanding capital stock or a Sec. 51. Place and time of meetings of stockholders or members. Stockholders' or
members' meetings, whether regular or special, shall be held in the city or meeting for which it is intended. No proxy shall be valid and effective for a period
municipality where the principal office of the corporation is located, and if practicable longer than five (5) years at any one time. (n)
in the principal office of the corporation: Provided, That Metro Manila shall, for
purposes of this section, be considered a city or municipality. Title VII. Stocks and Stockholders

Notice of meetings shall be in writing, and the time and place thereof stated therein. Sec. 60. Subscription contract. Any contract for the acquisition of unissued stock in
an existing corporation or a corporation still to be formed shall be deemed a
All proceedings had and any business transacted at any meeting of the stockholders subscription within the meaning of this Title, notwithstanding the fact that the parties
or members, if within the powers or authority of the corporation, shall be valid even if refer to it as a purchase or some other contract. (n)
the meeting be improperly held or called, provided all the stockholders or members of
the corporation are present or duly represented at the meeting. (24 and 25) Sec. 61. Pre-incorporation subscription. A subscription for shares of stock of a
corporation still to be formed shall be irrevocable for a period of at least six (6)
Sec. 52. Quorum in meetings. Unless otherwise provided for in this Code or in the by- months from the date of subscription, unless all of the other subscribers consent to
laws, a quorum shall consist of the stockholders representing a majority of the the revocation, or unless the incorporation of said corporation fails to materialize
outstanding capital stock or a majority of the members in the case of non-stock within said period or within a longer period as may be stipulated in the contract of
corporations. (n) subscription: Provided, That no pre-incorporation subscription may be revoked after
the submission of the articles of incorporation to the Securities and Exchange
Sec. 53. Regular and special meetings of directors or trustees. Regular meetings of Commission. (n)
the board of directors or trustees of every corporation shall be held monthly, unless
the by-laws provide otherwise. Sec. 62. Considering for stocks. Stocks shall not be issued for a consideration less
than the par or issued price thereof. Consideration for the issuance of stock may be
Special meetings of the board of directors or trustees may be held at any time upon any or a combination of any two or more of the following:
the call of the president or as provided in the by-laws. (1) Actual cash paid to the corporation;
(2) Property, tangible or intangible, actually received by the corporation and
Meetings of directors or trustees of corporations may be held anywhere in or outside necessary or convenient for its use and lawful purposes at a fair valuation
of the Philippines, unless the by-laws provide otherwise. Notice of regular or special equal to the par or issued value of the stock issued;
meetings stating the date, time and place of the meeting must be sent to every (3) Labor performed for or services actually rendered to the corporation;
director or trustee at least one (1) day prior to the scheduled meeting, unless (4) Previously incurred indebtedness of the corporation;
otherwise provided by the by-laws. A director or trustee may waive this requirement, (5) Amounts transferred from unrestricted retained earnings to stated capital;
either expressly or impliedly. (n) and
(6) Outstanding shares exchanged for stocks in the event of reclassification or
Sec. 54. Who shall preside at meetings. The president shall preside at all meetings of conversion.
the directors or trustee as well as of the stockholders or members, unless the by-laws
provide otherwise. (n) Where the consideration is other than actual cash, or consists of intangible property
such as patents of copyrights, the valuation thereof shall initially be determined by the
Sec. 57. Voting right for treasury shares. Treasury shares shall have no voting right incorporators or the board of directors, subject to approval by the Securities and
as long as such shares remain in the Treasury. (n) Exchange Commission.

Sec. 58. Proxies. Stockholders and members may vote in person or by proxy in all Shares of stock shall not be issued in exchange for promissory notes or future
meetings of stockholders or members. Proxies shall in writing, signed by the service.
stockholder or member and filed before the scheduled meeting with the corporate
secretary. Unless otherwise provided in the proxy, it shall be valid only for the The same considerations provided for in this section, insofar as they may be
applicable, may be used for the issuance of bonds by the corporation. The records of all business transactions of the corporation and the minutes of any
meetings shall be open to inspection by any director, trustee, stockholder or member
The issued price of no-par value shares may be fixed in the articles of incorporation of the corporation at reasonable hours on business days and he may demand,
or by the board of directors pursuant to authority conferred upon it by the articles of writing, for a copy of excerpts from said records or minutes, at his expense.
incorporation or the by-laws, or in the absence thereof, by the stockholders
representing at least a majority of the outstanding capital stock at a meeting duly Any officer or agent of the corporation who shall refuse to allow any director, trustees,
called for the purpose. (5 and 16) stockholder or member of the corporation to examine and copy excerpts from its
records or minutes, in accordance with the provisions of this Code, shall be liable to
Sec. 63. Certificate of stock and transfer of shares. - The capital stock of stock such director, trustee, stockholder or member for damages, and in addition, shall be
corporations shall be divided into shares for which certificates signed by the president guilty of an offense which shall be punishable under Section 144 of this Code:
or vice president, countersigned by the secretary or assistant secretary, and sealed Provided, That if such refusal is made pursuant to a resolution or order of the board
with the seal of the corporation shall be issued in accordance with the by-laws. of directors or trustees, the liability under this section for such action shall be imposed
Shares of stock so issued are personal property and may be transferred by delivery upon the directors or trustees who voted for such refusal: and Provided, further, That
of the certificate or certificates endorsed by the owner or his attorney-in-fact or other it shall be a defense to any action under this section that the person demanding to
person legally authorized to make the transfer. No transfer, however, shall be valid, examine and copy excerpts from the corporation's records and minutes has
except as between the parties, until the transfer is recorded in the books of the improperly used any information secured through any prior examination of the
corporation showing the names of the parties to the transaction, the date of the records or minutes of such corporation or of any other corporation, or was not acting
transfer, the number of the certificate or certificates and the number of shares in good faith or for a legitimate purpose in making his demand.
transferred.
Stock corporations must also keep a book to be known as the "stock and transfer
No shares of stock against which the corporation holds any unpaid claim shall be book", in which must be kept a record of all stocks in the names of the stockholders
transferable in the books of the corporation. (35) alphabetically arranged; the installments paid and unpaid on all stock for which
subscription has been made, and the date of payment of any installment; a statement
Sec. 64. Issuance of stock certificates. - No certificate of stock shall be issued to a of every alienation, sale or transfer of stock made, the date thereof, and by and to
subscriber until the full amount of his subscription together with interest and expenses whom made; and such other entries as the by-laws may prescribe. The stock and
(in case of delinquent shares), if any is due, has been paid. (37) transfer book shall be kept in the principal office of the corporation or in the office of
its stock transfer agent and shall be open for inspection by any director or stockholder
Title VIII. Corporate Books and Records of the corporation at reasonable hours on business days.

Sec. 74. Books to be kept; stock transfer agent. Every corporation shall keep and No stock transfer agent or one engaged principally in the business of registering
carefully preserve at its principal office a record of all business transactions and transfers of stocks in behalf of a stock corporation shall be allowed to operate in the
minutes of all meetings of stockholders or members, or of the board of directors or Philippines unless he secures a license from the Securities and Exchange
trustees, in which shall be set forth in detail the time and place of holding the meeting, Commission and pays a fee as may be fixed by the Commission, which shall be
how authorized, the notice given, whether the meeting was regular or special, if renewable annually: Provided, That a stock corporation is not precluded from
special its object, those present and absent, and every act done or ordered done at performing or making transfer of its own stocks, in which case all the rules and
the meeting. Upon the demand of any director, trustee, stockholder or member, the regulations imposed on stock transfer agents, except the payment of a license fee
time when any director, trustee, stockholder or member entered or left the meeting herein provided, shall be applicable. (51a and 32a; B. P. No. 268.)
must be noted in the minutes; and on a similar demand, the yeas and nays must be
taken on any motion or proposition, and a record thereof carefully made. The protest Sec. 75. Right to financial statements. Within ten (10) days from receipt of a written
of any director, trustee, stockholder or member on any action or proposed action request of any stockholder or member, the corporation shall furnish to him its most
must be recorded in full on his demand. recent financial statement, which shall include a balance sheet as of the end of the
last taxable year and a profit or loss statement for said taxable year, showing in
reasonable detail its assets and liabilities and the result of its operations. the holder thereof. If payable to bearer, it is negotiated by delivery; if payable to order,
it is negotiated by the indorsement of the holder and completed by delivery.
At the regular meeting of stockholders or members, the board of directors or trustees
shall present to such stockholders or members a financial report of the operations of Sec. 31. Indorsement; how made. The indorsement must be written on the instrument
the corporation for the preceding year, which shall include financial statements, duly itself or upon a paper attached thereto. The signature of the indorser, without
signed and certified by an independent certified public accountant. additional words, is a sufficient indorsement.

However, if the paid-up capital of the corporation is less than P50,000.00, the Sec. 33. Kinds of indorsement. An indorsement may be either special or in blank; and
financial statements may be certified under oath by the treasurer or any responsible it may also be either restrictive or qualified or conditional.
officer of the corporation. (n)
Sec. 34. Special indorsement; indorsement in blank. A special indorsement specifies
M. NEGOTIABLE INSTRUMENTS (NEGOTIABLE INSTRUMENTS LAW) the person to whom, or to whose order, the instrument is to be payable, and the
indorsement of such indorsee is necessary to the further negotiation of the
Act No. 2031 instrument. An indorsement in blank specifies no indorsee, and an instrument so
February 03, 1911 indorsed is payable to bearer, and may be negotiated by delivery.

The Negotiable Instruments Law Sec. 35. Blank indorsement; how changed to special indorsement. The holder may
convert a blank indorsement into a special indorsement by writing over the signature
I. Form and Interpretation of the indorser in blank any contract consistent with the character of the indorsement.

Sec. 1. Form of negotiable instruments. An instrument to be negotiable must conform Sec. 36. When indorsement restrictive. An indorsement is restrictive which either:
to the following requirements: (a) Prohibits the further negotiation of the instrument; or
(a) It must be in writing and signed by the maker or drawer; (b) Constitutes the indorsee the agent of the indorser; or
(b) Must contain an unconditional promise or order to pay a sum (c) Vests the title in the indorsee in trust for or to the use of some other
certain in money; persons.
(c) Must be payable on demand, or at a fixed or determinable future
time; But the mere absence of words implying power to negotiate does not make an
(d) Must be payable to order or to bearer; and indorsement restrictive.
(e) Where the instrument is addressed to a drawee, he must be named
or otherwise indicated therein with reasonable certainty. Sec. 37. Effect of restrictive indorsement; rights of indorsee. A restrictive indorsement
confers upon the indorsee the right:
Sec. 23. Forged signature; effect of. When a signature is forged or made without the (a) to receive payment of the instrument;
authority of the person whose signature it purports to be, it is wholly inoperative, and (b) to bring any action thereon that the indorser could bring;
no right to retain the instrument, or to give a discharge therefor, or to enforce (c) to transfer his rights as such indorsee, where the form of the indorsement
payment thereof against any party thereto, can be acquired through or under such authorizes him to do so.
signature, unless the party against whom it is sought to enforce such right is
precluded from setting up the forgery or want of authority. But all subsequent indorsees acquire only the title of the first indorsee under the
restrictive indorsement.
III. Negotiation
Sec. 38. Qualified indorsement. A qualified indorsement constitutes the indorser a
Sec. 30. What constitutes negotiation. An instrument is negotiated when it is mere assignor of the title to the instrument. It may be made by adding to the
transferred from one person to another in such manner as to constitute the transferee indorser's signature the words "without recourse" or any words of similar import. Such
an indorsement does not impair the negotiable character of the instrument. stipulation negativing or limiting his own liability to the holder.

Sec. 39. Conditional indorsement. Where an indorsement is conditional, the party Sec. 62. Liability of acceptor. The acceptor, by accepting the instrument, engages
required to pay the instrument may disregard the condition and make payment to the that he will pay it according to the tenor of his acceptance and admits:
indorsee or his transferee whether the condition has been fulfilled or not. But any (a) The existence of the drawer, the genuineness of his signature, and
person to whom an instrument so indorsed is negotiated will hold the same, or the his capacity and authority to draw the instrument; and
proceeds thereof, subject to the rights of the person indorsing conditionally. (b) The existence of the payee and his then capacity to indorse.

Sec. 40. Indorsement of instrument payable to bearer. Where an instrument, payable Sec. 63. When a person deemed indorser. A person placing his signature upon an
to bearer, is indorsed specially, it may nevertheless be further negotiated by delivery; instrument otherwise than as maker, drawer, or acceptor, is deemed to be indorser
but the person indorsing specially is liable as indorser to only such holders as make unless he clearly indicates by appropriate words his intention to be bound in some
title through his indorsement. other capacity.

IV. Rights of the Holder Sec. 64. Liability of irregular indorser. Where a person, not otherwise a party to an
instrument, places thereon his signature in blank before delivery, he is liable as
Sec. 52. What constitutes a holder in due course. A holder in due course is a holder indorser, in accordance with the following rules:
who has taken the instrument under the following conditions: (a) If the instrument is payable to the order of a third person, he is liable to
(a) That it is complete and regular upon its face; the payee and to all subsequent parties.
(b) That he became the holder of it before it was overdue, and without (b) If the instrument is payable to the order of the maker or drawer, or is
notice that it has been previously dishonored, if such was the fact; payable to bearer, he is liable to all parties subsequent to the maker or
(c) That he took it in good faith and for value; drawer.
(d) That at the time it was negotiated to him, he had no notice of any (c) If he signs for the accommodation of the payee, he is liable to all parties
infirmity in the instrument or defect in the title of the person negotiating subsequent to the payee.
it.
Sec. 65. Warranty where negotiation by delivery and so forth. Every person
Sec. 57. Rights of holder in due course. A holder in due course holds the instrument negotiating an instrument by delivery or by a qualified indorsement warrants:
free from any defect of title of prior parties, and free from defenses available to prior (a) That the instrument is genuine and in all respects what it purports to be;
parties among themselves, and may enforce payment of the instrument for the full (b) That he has a good title to it;
amount thereof against all parties liable thereon. (c) That all prior parties had capacity to contract;
(d) That he has no knowledge of any fact which would impair the validity of
V. Liabilities of Parties the instrument or render it valueless.

Sec. 60. Liability of maker. The maker of a negotiable instrument, by making it, But when the negotiation is by delivery only, the warranty extends in favor of no
engages that he will pay it according to its tenor, and admits the existence of the holder other than the immediate transferee.
payee and his then capacity to indorse.
The provisions of subdivision (c) of this section do not apply to a person negotiating
Sec. 61. Liability of drawer. The drawer by drawing the instrument admits the public or corporation securities other than bills and notes.
existence of the payee and his then capacity to indorse; and engages that, on due
presentment, the instrument will be accepted or paid, or both, according to its tenor, Sec. 66. Liability of general indorser. Every indorser who indorses without
and that if it be dishonored and the necessary proceedings on dishonor be duly qualification, warrants to all subsequent holders in due course:
taken, he will pay the amount thereof to the holder or to any subsequent indorser who (a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next
may be compelled to pay it. But the drawer may insert in the instrument an express preceding section; and
 (b) That the instrument is, at the time of his indorsement, valid and subsisting; requires:
(a) "Acceptance" means an acceptance completed by delivery or notification;
And, in addition, he engages that, on due presentment, it shall be accepted or paid, (b) "Action" includes counterclaim and set-off;
or both, as the case may be, according to its tenor, and that if it be dishonored and (c) "Bank" includes any person or association of persons carrying on the
the necessary proceedings on dishonor be duly taken, he will pay the amount thereof business of banking, whether incorporated or not;
to the holder, or to any subsequent indorser who may be compelled to pay it. (d) "Bearer" means the person in possession of a bill or note which is payable
to bearer;
Bills of Exchange (e) "Bill" means bill of exchange, and "note" means negotiable promissory
note;
IX. Form and Interpretation (f) "Delivery" means transfer of possession, actual or constructive, from one
person to another;
Sec. 126. Bill of exchange, defined. A bill of exchange is an unconditional order in (g) "Holder" means the payee or indorsee of a bill or note who is in possession
writing addressed by one person to another, signed by the person giving it, requiring of it, or the bearer thereof;
the person to whom it is addressed to pay on demand or at a fixed or determinable (h) "Indorsement" means an indorsement completed by delivery;
future time a sum certain in money to order or to bearer. (i) "Instrument" means negotiable instrument;
(j) "Issue" means the first delivery of the instrument, complete in form, to a
XVI. Promissory Notes and Checks person who takes it as a holder;
(k) "Person" includes a body of persons, whether incorporated or not;
Sec. 184. Promissory note, defined. A negotiable promissory note within the meaning (l) "Value" means valuable consideration;
of this Act is an unconditional promise in writing made by one person to another, (m) "Written" includes printed, and "writing" includes print.
signed by the maker, engaging to pay on demand, or at a fixed or determinable future
time, a sum certain in money to order or to bearer. Where a note is drawn to the Sec. 192. Persons primarily liable on instrument. The person "primarily" liable on an
maker's own order, it is not complete until indorsed by him. instrument is the person who, by the terms of the instrument, is absolutely required to
pay the same. All other parties are "secondarily" liable.
Sec. 185. Check, defined. A check is a bill of exchange drawn on a bank payable on
demand. Except as herein otherwise provided, the provisions of this Act applicable to N. LABOR CODE
a bill of exchange payable on demand apply to a check.
Presidential Decree No. 442
Sec. 186. Within what time a check must be presented. - A check must be presented The Labor Code of the Philippines
for payment within a reasonable time after its issue or the drawer will be discharged
from liability thereon to the extent of the loss caused by the delay. Title I. Working Conditions and Rest Periods

Sec. 187. Certification of check; effect of. Where a check is certified by the bank on Chapter I
which it is drawn, the certification is equivalent to an acceptance. Hours of Work

Sec. 188. Effect where the holder of check procures it to be certified. Where the Art. 82. Coverage. The provisions of this Title shall apply to employees in all
holder of a check procures it to be accepted or certified, the drawer and all indorsers establishments and undertakings whether for profit or not, but not to government
are discharged from liability thereon. employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
XVII. General Provisions personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
Sec. 191. Definition and meaning of terms. In this Act, unless the contract otherwise
As used herein, “managerial employees” refer to those whose primary duty consists Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day
of the management of the establishment in which they are employed or of a provided that the employee is paid for the overtime work, an additional compensation
department or subdivision thereof, and to other officers or members of the managerial equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work
staff. performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day
“Field personnel” shall refer to non-agricultural employees who regularly perform their plus at least thirty percent (30%) thereof.
duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall
certainty. not be offset by overtime work on any other day. Permission given to the employee to
go on leave on some other day of the week shall not exempt the employer from
Art. 83. Normal hours of work. The normal hours of work of any employee shall not paying the additional compensation required in this Chapter.
exceed eight (8) hours a day.
Art. 89. Emergency overtime work. Any employee may be required by the employer
Health personnel in cities and municipalities with a population of at least one million to perform overtime work in any of the following cases:
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (a) When the country is at war or when any other national or local
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, emergency has been declared by the National Assembly or the Chief
exclusive of time for meals, except where the exigencies of the service require that Executive;
such personnel in cities and municipalities with a population of at least one million (b) When it is necessary to prevent loss of life or property or in case of
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred imminent danger to public safety due to an actual or impending
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, emergency in the locality caused by serious accidents, fire, flood,
exclusive of time for meals, except where the exigencies of the service require that typhoon, earthquake, epidemic, or other disaster or calamity;
such personnel work for six (6) days or forty-eight (48) hours, in which case, they (c) When there is urgent work to be performed on machines, installations,
shall be entitled to an additional compensation of at least thirty percent (30%) of their or equipment, in order to avoid serious loss or damage to the employer
regular wage for work on the sixth day. For purposes of this Article, “health or some other cause of similar nature;
personnel” shall include resident physicians, nurses, nutritionists, dietitians, (d) When the work is necessary to prevent loss or damage to perishable
pharmacists, social workers, laboratory technicians, paramedical technicians, goods; and
psychologists, midwives, attendants and all other hospital or clinic personnel. (e) Where the completion or continuation of the work started before the
eighth hour is necessary to prevent serious obstruction or prejudice to
Art. 84. Hours worked. Hours worked shall include (a) all time during which an the business or operations of the employer.
employee is required to be on duty or to be at a prescribed workplace; and (b) all time
during which an employee is suffered or permitted to work. Any employee required to render overtime work under this Article shall be paid the
Rest periods of short duration during working hours shall be counted as hours additional compensation required in this Chapter.
worked.
Art. 90. Computation of additional compensation. For purposes of
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may computing overtime and other additional remuneration as required by this Chapter,
prescribe, it shall be the duty of every employer to give his employees not less than the “regular wage” of an employee shall include the cash wage only, without
sixty (60) minutes time-off for their regular meals. deduction on account of facilities provided by the employer.

Art. 86. Night shift differential. Every employee shall be paid a night shift differential of Chapter II
not less than ten percent (10%) of his regular wage for each hour of work performed Weekly Rest Periods
between ten o’clock in the evening and six o’clock in the morning.
Art. 91. Right to weekly rest day
 (a) It shall be the duty of every employer, whether operating for profit or contract stipulates the payment of a higher premium pay than that
not, to provide each of his employees a rest period of not less than prescribed under this Article, the employer shall pay such higher rate.
twenty-four (24) consecutive hours after every six (6) consecutive
normal work days. Holidays, Service Incentive Leaves and Service Charges
(b) The employer shall determine and schedule the weekly rest day of his
employees subject to collective bargaining agreement and to such rules Art. 94. Right to holiday pay
and regulations as the Secretary of Labor and Employment may (a) Every worker shall be paid his regular daily wage during regular holidays,
provide. However, the employer shall respect the preference of except in retail and service establishments regularly employing less than ten
employees as to their weekly rest day when such preference is based (10) workers;
on religious grounds. (b) The employer may require an employee to work on any holiday but such
Art. 92. When employer may require work on a rest day. The employer may require employee shall be paid a compensation equivalent to twice his regular rate;
his employees to work on any day: and
(a) In case of actual or impending emergencies caused by serious accident, fire, (c) As used in this Article, “holiday” includes: New Year’s Day, Maundy
flood, typhoon,earthquake, epidemic or other disaster or calamity to prevent Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
loss of life and property, or imminent danger to public safety; June, the fourth of July, the thirtieth of November, the twenty- fifth and
(b) In cases of urgent work to be performed on the machinery, equipment, or thirtieth of December and the day designated by law for holding a general
installation, to avoid serious loss which the employer would otherwise suffer; election.
(c) In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other Art. 95. Right to service incentive leave
measures; (a) Every employee who has rendered at least one year of service shall be
(d) To prevent loss or damage to perishable goods; entitled to a yearly service incentive leave of five days with pay.
(e) Where the nature of the work requires continuous operations and the (b) This provision shall not apply to those who are already enjoying the benefit
stoppage of work may result in irreparable injury or loss to the employer; and herein provided, those enjoying vacation leave with pay of at least five days
(f) Under other circumstances analogous or similar to the foregoing as and those employed in establishments regularly employing less than ten
determined by the Secretary of Labor and Employment. employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or
Art. 93. Compensation for rest day, Sunday or holiday work. financial condition of such establishment.
(a) Where an employee is made or permitted to work on his scheduled rest day, (c) The grant of benefit in excess of that provided herein shall not be made a
he shall be paid an additional compensation of at least thirty percent (30%) subject of arbitration or any court or administrative action.
of his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established Art. 96. Service charges. All service charges collected by hotels, restaurants and
rest day. similar establishments shall be distributed at the rate of eighty-five percent (85%) for
(b) When the nature of the work of the employee is such that he has no regular all covered employees and fifteen percent (15%) for management. The share of the
workdays and no regular rest days can be scheduled, he shall be paid an employees shall be equally distributed among them. In case the service charge is
additional compensation of at least thirty percent (30%) of his regular wage abolished, the share of the covered employees shall be considered integrated in their
for work performed on Sundays and holidays. wages.
(c) Work performed on any special holiday shall be paid an additional
compensation of at least thirty percent (30%) of the regular wage of the Chapter II
employee. Where such holiday work falls on the employee’s scheduled rest Unfair Labor Practices of Employers
day, he shall be entitled to an additional compensation of at least fifty per
cent (50%) of his regular wage. Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to
(d) Where the collective bargaining agreement or other applicable employment commit any of the following unfair labor practice:
 (a) To interfere with, restrain or coerce employees in the exercise of their right (a) To restrain or coerce employees in the exercise of their right to self-
to self- organization; organization. However, a labor organization shall have the right to prescribe
(b) To require as a condition of employment that a person or an employee shall its own rules with respect to the acquisition or retention of membership;
not join a labor organization or shall withdraw from one to which he belongs; (b) To cause or attempt to cause an employer to discriminate against an
(c) To contract out services or functions being performed by union members employee, including discrimination against an employee with respect to
when such will interfere with, restrain or coerce employees in the exercise of whom membership in such organization has been denied or to terminate an
their rights to self-organization; employee on any ground other than the usual terms and conditions under
(d) To initiate, dominate, assist or otherwise interfere with the formation or which membership or continuation of membership is made available to other
administration of any labor organization, including the giving of financial or members;
other support to it or its organizers or supporters; (c) To violate the duty, or refuse to bargain collectively with the employer,
(e) To discriminate in regard to wages, hours of work and other terms and provided it is the representative of the employees;
conditions of employment in order to encourage or discourage membership (d) To cause or attempt to cause an employer to pay or deliver or agree to pay
in any labor organization. Nothing in this Code or in any other law shall stop or deliver any money or other things of value, in the nature of an exaction,
the parties from requiring membership in a recognized collective bargaining for services which are not performed or not to be performed, including the
agent as a condition for employment, except those employees who are demand for fee for union negotiations;
already members of another union at the time of the signing of the collective (e) To ask for or accept negotiation or attorney’s fees from employers as part of
bargaining agreement. Employees of an appropriate bargaining unit who are the settlement of any issue in collective bargaining or any other dispute; or
not members of the recognized collective bargaining agent may be (f) To violate a collective bargaining agreement.
assessed a reasonable fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent, if such non-union The provisions of the preceding paragraph notwithstanding, only the officers,
members accept the benefits under the collective bargaining agreement: members of governing boards, representatives or agents or members of labor
Provided, that the individual authorization required under Article 242, associations or organizations who have actually participated in, authorized or ratified
paragraph (o) of this Code shall not apply to the non- members of the unfair labor practices shall be held criminally liable. (As amended by Batas
recognized collective bargaining agent; Pambansa Bilang 130, August 21, 1981).
(f) To dismiss, discharge or otherwise prejudice or discriminate against an
employee for having given or being about to give testimony under this Code; Title VII. Collective Bargaining and Administration of Agreements
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or agents as Art. 250. Procedure in collective bargaining. The following procedures shall be
part of the settlement of any issue in collective bargaining or any other observed in collective bargaining:
dispute; or (a) When a party desires to negotiate an agreement, it shall serve a written
(i) To violate a collective bargaining agreement. notice upon the other party with a statement of its proposals. The other party
shall make a reply thereto not later than ten (10) calendar days from receipt
The provisions of the preceding paragraph notwithstanding, only the officers and of such notice;
agents of corporations, associations or partnerships who have actually participated in, (b) Should differences arise on the basis of such notice and reply, either party
authorized or ratified unfair labor practices shall be held criminally liable. (As may request for a conference which shall begin not later than ten (10)
amended by Batas Pambansa Bilang 130, August 21, 1981). calendar days from the date of request.
(c) If the dispute is not settled, the Board shall intervene upon request of either
Chapter III or both parties or at its own initiative and immediately call the parties to
Unfair Labor Practices of Labor Organizations conciliation meetings. The Board shall have the power to issue subpoenas
requiring the attendance of the parties to such meetings. It shall be the duty
Art. 249. Unfair labor practices of labor organizations. It shall be unfair labor practice of the parties to participate fully and promptly in the conciliation meetings the
for a labor organization, its officers, agents or representatives: Board may call;
 (d) During the conciliation proceedings in the Board, the parties are prohibited
from doing any act which may disrupt or impede the early settlement of the Art. 282. Termination by employer. An employer may terminate an employment for
disputes; and any of the following causes:
(e) The Board shall exert all efforts to settle disputes amicably and encourage (a) Serious misconduct or willful disobedience by the employee of the lawful
the parties to submit their case to a voluntary arbitrator. (As amended by orders of his employer or representative in connection with his work;
Section 20, Republic Act No. 6715, March 21, 1989). (b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
Title I. Termination of Employment employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of
Art. 279. Security of tenure. In cases of regular employment, the employer shall not his employer or any immediate member of his family or his duly
terminate the services of an employee except for a just cause or when authorized by authorized representatives; and
this Title. An employee who is unjustly dismissed from work shall be entitled to (e) Other causes analogous to the foregoing
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary Art. 283. Closure of establishment and reduction of personnel. The employer may
equivalent computed from the time his compensation was withheld from him up to the also terminate the employment of any employee due to the installation of labor-saving
time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, devices, redundancy, retrenchment to prevent losses or the closing or cessation of
March 21, 1989). operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers
and the Ministry of Labor and Employment at least one (1) month before the intended
Art. 280. Regular and casual employment. The provisions of written agreement to the date thereof. In case of termination due to the installation of labor-saving devices or
contrary notwithstanding and regardless of the oral agreement of the parties, an redundancy, the worker affected thereby shall be entitled to a separation pay
employment shall be deemed to be regular where the employee has been engaged to equivalent to at least his one (1) month pay or to at least one (1) month pay for every
perform activities which are usually necessary or desirable in the usual business or year of service, whichever is higher. In case of retrenchment to prevent losses and in
trade of the employer, except where the employment has been fixed for a specific cases of closures or cessation of operations of establishment or undertaking not due
project or undertaking the completion or termination of which has been determined at to serious business losses or financial reverses, the separation pay shall be
the time of the engagement of the employee or where the work or service to be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
performed is seasonal in nature and the employment is for the duration of the season. service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of Art. 284. Disease as ground for termination. An employer may terminate the services
service, whether such service is continuous or broken, shall be considered a regular of an employee who has been found to be suffering from any disease and whose
employee with respect to the activity in which he is employed and his employment continued employment is prohibited by law or is prejudicial to his health as well as to
shall continue while such activity exists. the health of his co-employees: Provided, That he is paid separation pay equivalent
to at least one (1) month salary or to one-half (1/2) month salary for every year of
Art. 281. Probationary employment Probationary employment shall not exceed service, whichever is greater, a fraction of at least six (6) months being considered as
six (6) months from the date the employee started working, unless it is covered by an one (1) whole year.
apprenticeship agreement stipulating a longer period. The services of an employee
who has been engaged on a probationary basis may be terminated for a just cause or Art. 285. Termination by employee.
when he fails to qualify as a regular employee in accordance with reasonable (a) An employee may terminate without just cause the employee-employer
standards made known by the employer to the employee at the time of his relationship by serving a written notice on the employer at least one (1)
engagement. An employee who is allowed to work after a probationary period shall month in advance. The employer upon whom no such notice was served
be considered a regular employee. may hold the employee liable for damages.
 (b) An employee may put an end to the relationship without serving any notice An underground mining employee upon reaching the age of fifty (50) years or more,
on the employer for any of the following just causes: but not beyond sixty (60) years which is hereby declared the compulsory retirement
(1) Serious insult by the employer or his representative on the honor and age for underground mine workers, who has served at least five (5) years as
person of the employee; underground mine worker, may retire and shall be entitled to all the retirement
(2) Inhuman and unbearable treatment accorded the employee by the benefits provided for in this Article.
employer or his representative;
(3) Commission of a crime or offense by the employer or his representative Retail, service and agricultural establishments or operations employing not more than
against the person of the employee or any of the immediate members of ten (10) employees or workers are exempted from the coverage of this provision.
his family; and
(4) Other causes analogous to any of the foregoing. Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code.
Art. 286. When employment not deemed terminated. The bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months, or Nothing in this Article shall deprive any employee of benefits to which he may be
the fulfillment by the employee of a military or civic duty shall not terminate entitled under existing laws or company policies or practices. (As amended by
employment. In all such cases, the employer shall reinstate the employee to his Republic Act No. 7641 [January 7, 1993] and Republic Act No. 8558 [February 26,
former position without loss of seniority rights if he indicates his desire to resume his 1998]).
work not later than one (1) month from the resumption of operations of his employer
or from his relief from the military or civic duty. O. Sexual Harassment

Republic Act No. 7877

Title II. Retirement from the Service Anti-Sexual Harassment Act of 1995

Art. 287. Retirement. Any employee may be retired upon reaching the retirement age Sec. 3. Work, Education or Training-Related, Sexual Harassment Defined. Work,
established in the collective bargaining agreement or other applicable employment education or training-related sexual harassment is committed by an employer,
contract. In case of retirement, the employee shall be entitled to receive such employee, manager, supervisor, agent of the employer, teacher, instructor, professor,
retirement benefits as he may have earned under existing laws and any collective coach, trainor, or any other person who, having authority, influence or moral
bargaining agreement and other agreements: Provided, however, That an ascendancy over another in a work or training or education environment, demands,
employee’s retirement benefits under any collective bargaining and other agreements requests or otherwise requires any sexual favor from the other, regardless of whether
shall not be less than those provided herein. the demand, request or requirement for submission is accepted by the object of said
act.
In the absence of a retirement plan or agreement providing for retirement benefits of (a) In a work-related or employment environment, sexual harassment is
employees in the establishment, an employee upon reaching the age of sixty (60) committed when:
years or more, but not beyond sixty-five (65) years which is hereby declared the (1) The sexual favor is made as a condition in the hiring or in the
compulsory retirement age, who has served at least five (5) years in the said employment, re-employment or continued employment of said
establishment, may retire and shall be entitled to retirement pay equivalent to at least individual, or in granting said individual favorable compensation, terms
one-half (1/2) month salary for every year of service, a fraction of at least six (6) of conditions, promotions, or privileges; or the refusal to grant the
months being considered as one whole year. sexual favor results in limiting, segregating or classifying the employee
which in any way would discriminate, deprive or diminish employment
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month opportunities or otherwise adversely affect said employee;
salary’ shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and (2) The above acts would impair the employee's rights or privileges under
the cash equivalent of not more than five (5) days of service incentive leaves. existing labor laws; or
 (3) The above acts would result in an intimidating, hostile, or offensive
environment for the employee. In the case of a work-related environment, the committee shall be composed of at
(b) In an education or training environment, sexual harassment is least one (1) representative each from the management, the union, if any, the
committed: employees from the supervisory rank, and from the rank and file employees.
(1) Against one who is under the care, custody or supervision of
the offender; In the case of the educational or training institution, the committee shall be composed
(2) Against one whose education, training, apprenticeship or tutorship of at least one (1)representative from the administration, the trainors, instructors,
is entrusted to the offender; professors or coaches and students or trainees, as the case may be.
(3) When the sexual favor is made a condition to the giving of a
passing grade, or the granting of honors and scholarships, or the The employer or head of office, educational or training institution shall disseminate or
payment of a stipend, allowance or other benefits, privileges, or post a copy of this Act for the information of all concerned.
consideration; or
(4) When the sexual advances result in an intimidating, hostile or Sec. 5. Liability of the Employer, Head of Office, Educational or Training
offensive environment for the student, trainee or apprentice. Institution. The employer or head of office, educational or training institution shall
be solidarily liable for damages arising from the acts of sexual harassment committed
Any person who directs or induces another to commit any act of sexual harassment in the employment, education or training environment if the employer or head of
as herein defined, or who cooperates in the commission thereof by another without office, educational or training institution is informed of such acts by the offended party
which it would not have been committed, shall also be held liable under this Act. and no immediate action is taken.

Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Sec. 6. Independent Action for Damages. Nothing in this Act shall preclude the victim
Training Environment. It shall be the duty of the employer or the head of the work- of work, education or training-related sexual harassment from instituting a separate
related, educational or training environment or institution, to prevent or deter the and independent action for damages and other affirmative relief.
commission of acts of sexual harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual harassment. Sec. 7. Penalties Any person who violates the provisions of this Act shall, upon
conviction, be penalized by imprisonment of not less than one (1) month nor more
Towards this end, the employer or head of office shall: than six (6) months, or a fine of not less than Ten thousand pesos (P10,000) nor
(a) Promulgate appropriate rules and regulations in consultation with and jointly more than Twenty thousand pesos (P20,000), or both such fine and imprisonment at
approved by the employees or students or trainees, through their duly designated the discretion of the court.
representatives, prescribing the procedure for the investigation of sexual harassment
cases and the administrative sanctions therefor. Any action arising from the violation of the provisions of this Act shall prescribe in
three (3) years.
Administrative sanctions shall not be a bar to prosecution in the proper courts for
unlawful acts of sexual harassment. P. Building Code (search it up)
The said rules and regulations issued pursuant to this subsection (a) shall include,
among others, guidelines on proper decorum in the workplace and educational or Q. Fire Code
training institutions.
Republic Act No. 9514
(b) Create a committee on decorum and investigation of cases on sexual harassment. An Act Establishing a Comprehensive Fire Code of the Philippines
The committee shall conduct meetings, as the case may be, with officers and
employees, teachers, instructors, professors, coaches, trainors, and students or Sec. 7. Inspections, Safety Measures, Fire Safety, Constructions, and Protective
trainees to increase understanding and prevent incidents of sexual harassment. It and/or Warning Systems. As may be defined and provided in the Rules and
shall also conduct the investigation of alleged cases constituting sexual harassment. Regulations, owners, administrators or occupants of buildings, structures and their
premises or facilities and other responsible persons shall be required to comply with a) The chemical properties of the substance;
the following, as may be appropriate: b) The physical properties of the substance;
c) The biological properties of the substance. Without limiting the
(a.) Inspection Requirement - A fire safety inspection shall be conducted by the definition of hazardous material, all dangerous goods, combustible
Chief, BFP or his duly authorized representative as prerequisite to the grants of liquids and chemicals are hazardous materials.
permits and/or licenses by local governments and other government agencies
concerned, for the: (c.) Safety Measures for Hazardous Operation/Processes - Fire Safety measures
(1) Use or occupancy of buildings, structures, facilities or their premises shall be required for the following hazardous operation/processes:
including the installation or fire protection and fire safety equipment, and (1) welding or soldering;
electrical system in any building structure or facility; and (2) industrial baking and drying;
(2) Storage, handling and/or use of explosives or of combustible, flammable, (3) waste disposal;
toxic and other hazardous materials; (4) pressurized/forced-draft burning equipment;
(5) smelting and forging;
(b.) Safety Measures for Hazardous Materials - Fire safety measures shall be (6) motion picture projection using electrical arc lamps;
required for the manufacture, storage, handling and/or use of hazardous (7) refining, distillation and solvent extraction; and
materials involving: (8) such other operations or processes as may hereafter be prescribed in
(1) cellulose nitrate plastic of any kind; the Rules and Regulations.
(2) combustible fibers;
(3) cellular materials such as foam, rubber, sponge rubber and plastic foam; (d.) Provision on Fire Safety Construction, Protective and Warning System -
(4) flammable and combustible liquids or gases of any classification; Owners, occupants or administrator or buildings, structures and their premises or
(5) flammable paints, varnishes, stains and organic coatings; facilities, except such other buildings or structures as may be exempted in the
(6) high-piled or widely spread combustible stock; rules and regulations to be promulgated under Section 5 hereof, shall incorporate
(7) metallic magnesium in any form; and provide therein fire safety construction, protective and warning system, and
(8) corrosive liquids, oxidizing materials, organic peroxide, nitromethane, shall develop and implement fire safety programs, to wit:
ammonium nitrate, or any amount of highly toxic, pyrophoric, hypergolic, or (1) Fire protection features such as sprinkler systems, hose boxes, hose
cryogenic materials or poisonous gases as well as material compounds reels or standpipe systems and other fire fighting equipment;
which when exposed to heat or flame become a fire conductor, or generate (2) Fire Alarm systems;
excessive smoke or toxic gases; (3) Fire walls to separate adjoining buildings, or warehouses and storage
(9) blasting agents, explosives and special industrial explosive materials, areas from other occupancies in the same building;
blasting caps, black powder, liquid nitro-glycerine, dynamite, nitro cellulose, (4) Provisions for confining the fire at its source such as fire resistive floors
fulminates of any kind, and plastic explosives containing ammonium salt or and walls extending up to the next floor slab or roof, curtain boards and
chlorate; other fire containing or stopping components;
(10) fireworks materials of any kind or form; (5) Termination of all exits in an area affording safe passage to a public way
(11) matches in commercial quantities; or safe dispersal area;
(12) hot ashes, live coals and embers; (6) Stairway, vertical shafts, horizontal exits and other means of egress
(13) mineral, vegetable or animal oils and other derivatives/by products; sealed from smoke and heat;
(14) combustible waste materials for recycling or resale; (7) A fire exit plan for each floor of the building showing the routes from each
(15) explosive dusts and vapors; and other room to appropriate exits, displayed prominently on the door of such
(16) agriculture, forest, marine or mineral products which may undergo room;
spontaneous combustion. (8) Self-closing fire resistive doors leading to corridors;
(17) any other substance with potential to cause harm to persons, property (9) Fire dampers in centralized airconditioning ducts;
or the environment because of one or more of the following: (10) Roof vents for use by fire fighters; and
 (11) Properly marked and lighted exits with provision for emergency lights to (l) Removing. destroying, tampering or obliterating any authorized mark, seal,
adequately illuminate exit ways in case of power failure. sign or tag posted or required by the fire service for fire safety in any building,
structure or processing equipment; and
Sec. 8. Prohibited Acts. The following are declared as prohibited act and omission.
(m) Use of jumpers or tampering with electrical wiring or overloading the
(a) Obstructing or blocking the exit ways or across to buildings clearly marked for electrical system beyond its designated capacity or such other practices that
fire safety purposes, such as but not limited to aisles in interior rooms, any part of would tend to undermine the fire safety features of the electrical system.
stairways, hallways, corridors, vestibules, balconies or bridges leading to a
stairway or exit of any kind, or tolerating or allowing said violations; R. Food Safety Act

(b) Constructing gates, entrances and walkways to buildings components and Republic Act 10611
yards which obstruct the orderly and easy passage of fire fighting vehicles and Food Safety Act of 2013
equipment;
Sec. 4. Definition of Terms.
(c) Prevention, interference or obstruction of any operation of the Fire Service, or (b) Adulteration refers to an act which leads to the production of food which:
of duly organized and authorized fire brigades; (1) Bears or contains any poisonous or deleterious substance that may
render it injurious to the health of the public;
(d) Obstructing designated fire lanes or access to fire hydrants; (2) Bears or contains any added poisonous or deleterious substance in
amounts exceeding established maximum limits or standards for good
(e) Overcrowding or admission of persons beyond the authorized capacity in manufacturing practice;
movie houses, theaters, coliseums, auditoriums or other public assembly (3) Contains in whole or in part filthy, putrid or decomposed substance that
buildings, except in other assembly areas on the ground floor with open sides or is unfit for human consumption;
open doors sufficient to provide safe exits; (4) Has been prepared, packed or held under unsanitary conditions;
(5) In whole or in part, is the product of a diseased animal or an animal
(f) Locking fire exits during period when people are inside the building; which has died through ways other than slaughter;
(6) Is in a container having in whole or in part any poisonous or deleterious
(g) Prevention or obstruction of the automatic closure of fire doors or smoke substance;
partitions or dampers; (7) Has been intentionally subjected to radiation unless the use of radiation
is in conformity with an existing regulation or exemption;
(h) Use of fire protective of fire fighting equipment of the fire service other than (8) Becomes injurious to health because of the omission or abstraction of a
for fire fighting except in other emergencies where their use are justified; valuable constituent; or if any substance has been substituted wholly or in
part; or if damaged or made inferior which has been concealed in any
(i) Giving false or malicious fire alarms; manner; or if any substance has been added thereto or mixed or packed
therewith so as to increase its bulk or weight, or reduce its strength or to
(j) Smoking in prohibited areas as may be determined by fire service, or throwing make it appear better or greater than it is;
of cigars, cigarettes, burning objects in places which may start or cause fire; (9) Has not been prepared in accordance with current acceptable
manufacturing practice as promulgated by way of regulation; and
(k) Abandoning or leaving a building or structure by the occupant or owner (10) Uses expired ingredients.
without appropriate safety measures;
(d) Contaminant refers to any substance not intentionally added to food which is
present in such food as a result of the production (including operations carried
out in crop industry, animal husbandry and veterinary medicine) post harvest
handling, manufacturing, processing, preparation, treatment, packing, packaging,
transport or holding of such food as a result of environmental contamination.