EXTRACTS FROM THE NEW CIVIL CODE:

OBLIGATIONS AND CONTRACTS

TITLE I - OBLIGATIONS

Chapter 1: GENERAL PROVISIONS

Art. 1156. An obligation is a juridical necessity to give, to do or not to do.

Art. 1157. Obligations arise from:

* Law;

* Contracts;

* Quasi-contracts;

* Acts or omissions punished by law;

* Quasi-delicts. (1089a)

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 the precepts of the law which
establishes them; and as to what has not been foreseen, by the provisions. (1090)

ART. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith. (1091a)

ART. 1160. Obligations derived from quasi- contracts shall be subject to provisions.

ART. 1161. Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to
the provisions of article 2177, and of the pertinent provisions of Chapter 2, Preliminary Title, on Human
Relations, and of regulating damages. (1092a)

ART. 1162. Obligations derived from quasi-delicts shall be governed by the provisions of Chapter 2, Title
XVIII of this Book, and by special law. (1093a)

Chapter 2: NATURE AND EFFECT OF OBLIGATIONS

ART. 1163. Every person obliged to give something is also obliged to take care of it with the proper
diligence of a good father of a family, unless the law or the stipulation of the parties requires another
standard of care. (1904a)
ART. 1664. The creditor has a right to the fruits of the thing from the time the obligation to deliver it
arises. However, he shall acquire no real right over it until the same has been delivered to him. (1905)

ART. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the right
granted him by article 1170, and may compel the debtor to make the delivery.

If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense
of the debtor.

I 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 deliver.
(1906)

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. (1097a)

ART. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.

ART. 1168. When the obligation consists in not doing, and the obligor does has been forbidden him, it
shall also be undone at his expense, (1099a)

ART. 1169. Those oblige to deliver or to do something incur in delay from the time oblige judicially or
extra - judicially demands from theme the fulfillment of their obligation.

However, the demand by the creditor shall not be necessary in order that delay may exist:

(1) When the obligation or the law expressly declares; or

( 2 ) When from the nature and the circumstances of the obligation it appears that the destination of the
time when the thing is to be delivered or the service is to rendered was controlling motive for the
establishment of the contract; or

(3) When demand would be useless, as when the obligor has rendered it beyond his power to perform.

In reciprocal obligations, neither party incurs in delay if the other does not comply in a proper manner
with what is incumbent upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins. (1100a)

ART. 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor thereof, are liable for damages. (1101)

ART. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of an action for
future fraud is void. (1120a)

ART. 1172. Responsibility arising from negligence in the performance of every king of obligation is also
demandable, but such liability maybe regulated by the courts, according to the circumstances. (1130)
ART. 1173. The fault or negligence of the obligor consists in the omission of that 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 bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply.

If the law or contract does not state the diligence of which is to be observed in the performance, that
which is expected of a good father of a family shall be required. (1104a)

ART. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation,
or when the nature of the obligation requires the assumption of risk, no person shall be responsible for
those events which could not be foreseen, or which, though foreseen, were inevitable (1105a)

ART. 1175. Usurious transaction shall be governed by special laws.

ART. 1176. The receipt of the principal by the creditor without reservation with respect to the interest,
shall give rise to the presumption that said interest has been paid.

The receipt of a later installment of a debt without reservation as to prior installments, shall likewise
raise the presumption that such installments have been paid. (1110a)

Presumption means “the inference as to the existence of a certain fact which if not contradicted is
considered as true.”

ART. 1177. The creditors, after having pursued the property in possession of the debtor to satisfy their
claims, may exercise all the rights and bring all the actions of the latter for the same purpose, save those
which are inherent in his person; they may also impugn the acts which the debtor may have done to
defraud them. (1111)

Rights of Creditors – In order to satisfy their claims against the debtor, creditors have the following
successive rights:

1. To levy by attachment and execution upon all the property of the debtor, except such as are exempt
by law from execution;

2. To exercise all the rights and actions of the debtor, except, such as are inherently personal to him;

3. To ask for the rescission of the contracts made by the debtor in fraud of their rights.

ART. 1178. Subject to the laws, all rights acquired in virtue of an obligation are transmissible, if there
has been no stipulation to the contrary. (1112)

As a rule, all rights acquired in virtue of an obligation are transmissible, except in the following cases:

1. When the law so provides.

2. When the parties stipulate otherwise

TITLE II: CONTRACTS

Chapter 1: GENERAL PROVISIONS

ARTICLE 1305. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render service. (1254a)

Elements of Contract:

1. Essential elements

2. Natural elements

3. Accidental elements

Stages of a Contract

1. Preparatory or conception

2. Perfection or birth

3. Consumption or death

Characteristics of Contract

1. Freedom to contract

2. Relativity

3. Obligatory Force

4. Mutuality

Classification of a Contract:

1. as to perfection

a. Consensual

b. Real Contract

2. as to dependence to other contract.

a. Principal

b. Accessory

c. Preparatory
3. According to name or designation

a. Nominate

b. Innominate

4. According to the nature of obligation

a. Unilateral

b. Bilateral

5. According to risk involved

a. Commutative

b. Aleatory

6. According to cause

a. Onerous

b. Gratuitous

7. According to form

a. Oral

b. Written

ART. 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy.(1255a)

ART. 1307 Innominate contracts shall be regulated by the stipulations of the parties, by the provisions of
Contracts, by the rules governing the most analogous nominate contracts, and by the customs of the
place.

ART. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to
the will of one of them. (1256a)

ART. 1309. The determination of the performance may be left to a third person, whose decision shall
not be binding until it has been made known to both contracting parties.

ART. 1310. The determination shall not be obligatory if it is evidently inequitable. In such case, the
courts shall decide what is equitable under the circumstances.

ART. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where
the rights and obligations arising from the contract are not transmissible by their nature, or by
stipulation, or by provision of law. The heir is not liable beyond the value of the property he perceived
from the decedent.

If a contact should contain some stipulation in favor of third person, he may demand its fulfillment
provided he communicated his acceptance to the obligor before its revocation. A mere incidental
benefit or interest of a person is not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person. (1257a)

ART. 1312 In contracts creating real rights, third persons who come into possession of the object of the
contract are bound thereby, subject to the provisions of the Mortgage Law and the Land Registration
Laws.

ART. 1313 Creditors are protected in cases of contracts intended to defraud them.

ART. 1314 Any third person who induces another to violate his contract shall be liable for damages to
the other contracting party.

ART. 1317 No one may contract in the name of another without being authorized by the latter, or unless
he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal representation, or
who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by
the person on whose behalf it has been executed, before it is revoked by the other contracting party.
(1259a)

CHAPTER 2: ESSENTIAL REQUISITES OF CONTRACTS

GENERAL PROVISIONS

ART. 1318 There is no contract unless the following requisites occur:

1. Consent of the contracting parties;

2. Object certain which is the subject matter of the contract;

3. Cause of the obligation which is established. (1261)

Section 1. Consent

ART. 1319 Consent is manifested by the meeting of the offer and the acceptance upon the thing and the
cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to his
knowledge. The contract in such a case, is presumed to have been entered into the place where the
offer was made. (1262a)

ART. 1320 An acceptance may be express or implied.

ART. 1321 The person making the offer may fix the time, place, and manner of acceptance, all of which
must be complied with.

ART. 1322 An offer made through an agent is accepted from the time acceptance is communicated to
him.

ART. 1323 An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of
either party before acceptance is conveyed.

ART. 1324 When the offerer has allowed the offeree ascertain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the option
is rounded upon a consideration, as something paid or promised.

ART.1325. Unless it appears otherwise, business advertisements of things for sale are not definite offers,
but mere invitations to make an offer.

ART. 1326. Advertisement for bidders are simply invitations to make proposals, and the advertiser is not
bound to accept the highest or lowest bidder, unless the contrary appears.

ART. 1327 The following cannot give consent to a contract:

1.) Unemancipated minors;

2.) Insane or demented persons, and deaf-mutes who do not know how to write. (1263a)

ART. 1328 Contracts entered into during a lucid interval are valid, contracts agreed to in a state of
drunkenness or during a hypnotic spell are voidable.

ART. 1329 The incapacity declared in article 1327 is subject to the modifications determined by law, and
is understood to be without prejudice to special disqualifications established in the laws.

ART. 1330 A contract where consent is given through mistake, violence, intimidation, undue influence or
fraud is voidable.

ART. 1331 In order that mistake may invalidate consent, it should refer to the substance of the thing
which is the object of the contract, or to those conditions which have principally moved one or both
parties to enter into the contract.

Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such
identity or qualifications have been the principal cause of contract.
A simple mistake of account shall give rise to its correction. (1226a)

ART. 1332 When one of the parties is unable to read, or if the contract is in a language not understood
by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former.

ART. 1333 There is no mistake if the party alleging it know the doubt, contingency, or risk affecting the
object of the contract.

ART. 1334. Mutual error as to the legal effect of an agreement when the real purpose of the parties is
frustrated may vitiate consent.

ART. 1335. There is violence when in order to wrest consent, serious or irresistible force is employed.

There is intimidation when one of the contracting parties is compelled by a reasonable and well-
grounded fear of an imminent and grave peril upon his person or property, or upon the person or
property of his spouse, descendants or ascendants, to give his consent.

To determine the degree of the intimidation, the age, sex and condition of the person shall be borne in
mind.

A threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate
consent. (1267a)

ART. 1336. Violence or intimidation shall annul the obligation, although it may have been employed by
third Person who did not take part in the contract. (1268)

ART. 1337. There is undue influence when a person takes improper advantage of his power over the will
of another, depriving the latter of a reasonable freedom of choice.

The following circumstances shall be considered: the confidential, family, spiritual, and other relations
between the parties, or the fact that the person alleged to have been unduly influenced was suffering
from mental weakness, or was ignorant or in financial distress.

ART. 1338. There is fraud when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into contract which, without them, he would not have agreed to.
(1269)

ART. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound
by confidential relations, constitutes fraud.

ART. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts,
are not in themselves fraudulent.

ART. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the
other party has relied on the former’s special knowledge.
ART. 1342. Misrepresentation by a third person does novitiate consent, unless such misrepresentation
has created substantial mistake and the same is mutual Art. 1343. Misrepresentation made in good faith
is not fraudulent but may constitute error.

ART. 1344. In order that fraud may make a contract voidable, it should be serious and should not have
been employed by both contracting parties.

Incidental fraud only obliges the person employing it to pay damages.

ART. 1335. Simulation of a contract may be absolute or relative. The former takes place when the
parties do not intend to be bound at all; the latter, when the parties conceal their true agreement.

ART. 1346. An absolutely simulated or fictitious contracts void. A relative simulation, when it does not
prejudice third person and is not intended for any purpose contrary to law, morals, good customs, public
order or public policy binds the parties to their real agreement.

Section 2. Object of Contracts

ART. 1347. All things which are not outside the commerce of men, including future things, may be the
object of contract. All rights which are not in transmissible may also be the object of contracts.

No contract may be entered into upon future inheritance except in cases expressly authorized by law.

All services which are not contrary to law, morals, good customs, public order or public policy may
likewise be the object of a contract. (1271a)

ART. 1348. Impossible things or services cannot be the object of contracts. (1272)Art. 1349. The object
of every contract must be determinate so as to its kind. The fact that the quantity is not determinate
shall not be an obstacle to the existence of a contract, provided it is possible to determine the same,
without the need of a new contract between the parties. (1273)

Section 3. Cause of Contracts

ART. 1350. In onerous contracts the cause is understood to be, for each contracting party, the
prostration or promise of a thing or service by the other; in remunerator ones, the service or benefit
which is remunerated; and in contrast of pure beneficence, the mere liberality of the benefactor.
(1274)Art. 1351. The particular motives of the parties in entering into a contract are different from the
cause thereof.

ART. 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The cause is
unlawful if is contrary to law, morals, good customs, public order or public policy. (1275a)
ART. 1353. The statement of a false cause in contracts shall render them void, if it should not be proved
that they were rounded upon another cause which is true and lawful.

ART. 1354. Although the cause is not stated in the contract, it is presumed that it exist and is lawful,
unless the debtor proves the contrary. (1277)

ART 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract,
unless there has been fraud, mistake or undue influence.

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