!

' EReformation:'written'instrument'is'amended'to'express'the'real'agreement'
'
EIf'the'true'intention'is'not'expressed'in'the'instrument'by'reason'of'mistake,'fraud,'
inequitable'conduct'or'accident,'the'parties'may'ask'for'the'reformation'of'the'contract.'
(assuming'that'there'was'already'a'meeting'of'the'minds)'(1359)'
'
EIf'one'of'the'parties'was'mistaken,'and'the'other'acted'fraudulently'or'inequitably'
wherein'the'true'intention'was'now'shown'in'the'instrument,'only'the'mistaken'party'
can'ask'for'the'reformation.'(1362)'
'
ECases'when'reformation'is'not'allowed:'(1366)'
! Simple'donations'inter'vivos'(during'the'lifetime'of'the'donor)'with'no'
condition'
! Wills'
! Real'agreement'is'void'
'
EReformation'may'be'ordered'by'either'party'or'his'successors'in'interest'if'the'mistake'
was'mutual;'otherwise,'upon'the'petition'of'the'injured'party,'or'his'heirs'and'assigns'
(1368)'
'
Chapter!5*!Interpretation!of!Contracts!
''
EInterpretation:'determination'of'the'meanings'of'the'terms'and'words'used'in'the'
contract'
'
EThe'literal'meaning'of'the'stipulations'shall'control,'if'the'terms'are'clear'and'leave'no'
doubt'on'the'true'intention;'in'case'the'words'are'contrary'to'the'intention,'intention'
prevails.'(1370)'
'
EThe'subsequent'and'contemporaneous'(happening'at'the'same'time)'acts'of'the'
contracting'parties'shall'be'considered'when'judging'the'intention'of'the'contract.'
(1371)'
EFor'general'terms'in'the'contract,'things'that'are'distinct'and'cases'different'from'the'
intention'shall'not'be'considered.'(1372)'
'
EIn'case'of'the'stipulation'having'several'meanings,'the'one'which'would'render'it'
effectual'shall'have'that'interpretation.'(1373)'
'
EThe'various'stipulations'of'the'contract'shall'be'interpreted'together.'(1374)'
'
EInterpretation'of'obscure'words'or'stipulations'shall'not'favor'the'party'who'caused'
the'obscurity.'(1377)'
'
 EIn'case'it'is'absolutely'impossible'to'settle'doubts'by'the'previous'rules'in'the'chapter:'
(1378)'
For'those'concerning'gratuitous'contractsE'least'transmission'of'rights'and'
interest'shall'prevail'
' ' For'those'concerning'onerous'contractsE'in'favor'of'greatest'reciprocity'of'rights'
For'those'cast'upon'the'object'wherein'the'intention'cannot'be'knownE'contract'
becomes'void'
'
Chapter!6*!Rescissible!Contracts!
!
' EContracts'which'are'rescissible'(1381)'
Those'entered'into'by'guardians'when'the'wards'they'represent'
suffer'lesion'by'more'than'oneEfourth'of'the'value'of'the'object'
Those'agreed'upon'in'representation'of'absentees,'who'suffered'
lesion'by'more'than'oneEfourth'of'the'value'of'the'object'
Those'undertaken'in'fraud'of'creditors'
Those'which'refers'to'things'in'litigation'if'they'have'been'entered'
into'without'the'knowledge'and'approval'of'the'litigants'or'
competent'authority'
All'other'contracts'declared'by'law'to'be'subject'to'rescission'
*For'the'first'two'bullet'points,'rescission'cannot'take'place'if'they'were'
approved'by'the'courts'(1386)'
'
EPayments'made'by'insolvent'debtors'which'was'made'when'he'couldnt'be'compelled'
to'pay'at'the'time'they'were'effected'are'rescissible.'(1382)'
'
ERescission'can'only'be'instituted'when'the'party'suffering'damage'has'no'or'legal'
means'to'obtain'reparation'for'the'same;'therefore,'it'is'subsidiary.'(1383)'
'
ERescission'shall'be'only'to'the'extent'necessary'to'cover'the'damages'caused.'
'
ERescission'creates'the'obligation'to'return'the'object'of'the'contract,'with'its'fruits,'and'
price'with'interest,'but'can'only'be'carried'out'if'he'who'demands'rescission'can'return'
whatever'he'is'obliged'to'restore.'(1385)'
'
ERescission'will'not'take'place'if'the'object'is'legally'in'the'possession'of'third'persons'
who'did'not'act'in'bad'faith;'in'this'case,'indemnity'for'damages'may'be'demanded'
from'the'person'causing'the'loss.'(1385)'
'
EContracts'which'are'presumed'to'have'been'entered'into'in'fraud'of'creditors'(1387):'
! Debtor'alienates'property'by'gratuitous'title'when'he'did'not'
reserve'enough'property'to'pay'the'debt'contracted'before'
donation'
 ! Debtor'alienates''property'by'onerous'title'when'made'by'
persons'against'whom'some'judgement'has'been'rendered'in'any'
instance'or'some'writ'of'attachment'has'been'issued'
*The'decision'or'attachment'need'not'refer'to'the'
property'alienated,'and'need'not'have'been'obtained'by'
the'party'seeking'rescission'
! The'design'to'defraud'creditors'may'be'proved'in'any'other'
manner'recognized'by'the'law'of'evidence'
! '
EThe'third'person'who'acquires'the'alienated'thing'in'fraud'of'creditors'in'bad'faith'is'
liable'for'damages'to'the'creditors'who'suffered'alienation,'if'it'is'impossible'to'return'
the'thing.'(1388)'
*If'there'are'2'or'more'alienations,'the'first'acquirer'shall'be'liable'first,'and'so'
on'successively'
'
' EThe'action'to'claim'rescission'must'be'commenced'within'4'years.'(1389)'
*For'persons'under'guardianship'and'for'absentees,'the'period'begins'from'the'
termination'of'the'guardians'incapacity,'or'until'the'domicile'of'the'absentee'is'
known'
!
Chapter!7*!Voidable!Contracts!
!
EVoidable'contractsEhas'all'the'requisites'of'a'valid'contract'but'one'of'the'parties'is'
incapable'of'giving'consent,'or'consent'is'vitiated'by'mistake,'violence,'intimidation,'
undue'influence,'or'fraud'
' *Void'for'contract'of'marriage'
'
EContracts'which'are'voidable'even'if'there'was'no'damage'to'both'parties'(1390):'
Those'where'one'of'the'parties'is'incapable'of'giving'consent''
Those'where'consent'is'vitiated'by'mistake,'fraud,'violence,'intimidation,'
undue'influence,'or'fraud'
*These'contracts'are'binding,'unless'annulled'in'court.'They'can'be'ratified.'
' EAnnulment'shall'be'brought'within'4'years.'The'period'shall'begin:'(1391)'
For'intimidation,'violence'or'undue'influence,'from'the'time'the'defect'of'
consent'ceases'
For'mistake'or'fraud,'from'the'time'of'discovery'of'the'same'
For'those'entered'into'by'minors'or'other'incapacitated'person,'from'the'
time'the'guardianship'ceases'
*AnnulmentE'remedy'for'the'declaration'of'the'inefficacy'of'a'contract'to'restore'
the'parties'to'their'original'position'before'the'contract'was'executed'
'
' ERatification'extinguishes'the'action'to'annul'a'void'contract.(1392)'
'
' ERatification'may'be'effected'expressly'or'tacitly/impliedly.'(1393)'
' ' *There'is'a'tacit'ratification'if'the'person'who'has'the'right'to'invoke'it:'
! He'has'knowledge'of'the'reason'why'the'contract'is'voidable'
! The'said'reason'has'ceased'
! He'executes'an'act'which'necessarily'implies'an'intention'to'
waive'his'act'
ERatification'may'be'effected'by'the'guardian'of'the'incapacitated'person.'(1394)'
'
ERatification'cleanses'the'contract'from'all'its'defects'from'the'moment'it'was'
constituted.'(1396)'
'
EAnnulment'can'be'instituted'by'those'obliged'principally'or'subsidiarily.'(1397)'
' *Persons'capable'cannot'allege'the'incapacity'of'those'they'contracted.'Also,''
those'who'exerted'intimidation,'violence,'undue'influence,'or'employed'fraud,'
or'caused'mistake,'cannot'base'their'action'upon'these'flaws'of'the'contract'
'
EWhen'annulment'happens,'both'parties'must'restore'to'each'other'the'things'which'
have'been'the'subject'matter'of'the'contract,'with'their'fruits,'and'price'with'its'
interest,'except'in'cases'provided'by'law.'(1398)'
*In'obligations'to'render'service,'the'value'of'the'service'shall'be'the'basis'for'
damages'
'
EWhen'the'defect'of'the'contract'is'due'to'incapacity'of'one'of'the'parties,'the'
incapacitated'person'isnt'obliged'to'make'a'restitution'insofar'as'he'has'been'benefited'
by'the'thing'or'price'received'by'him.'(1399)'
'
EIf'a'party,'who'is'obliged'to'return'a'thing'due'to'annulment,'cannot,'he'shall'return'the'
fruits'received'and'the'value'of'the'thing'at'the'time'of'loss,'with'interest'from'the'same'
date.'(1400)'
'
EThe'action'for'annulment'shall'be'extinguished'if'the'thing,'which'is'the'object'of'the'
contract,'is'lost'through'the'fault'or'fraud'of'the'person'who'has'the'right'to'have'the'
contract'annulled.'(1401)'
' *The'rule'is'the'same'for'the'case'of'incapacity'of'one'of'the'parties'
'
EAs'long'as'one'of'the'contracting'parties'doesnt'restore'what'he'is'bound'to'return'
because'of'annulment,'the'other'cannot'be'compelled'to'comply'with'what'is'
incumbent'upon'him.'(1402)'
'
Chapter!8*!Unenforceable!Contracts!
!
EUnenforceable'contracts:'those'that'cannot'be'enforced'in'court'or'sued'upon'by'
defects'provided'by'law'until'and'unless'ratification.'
'
EContracts'which'are'unenforceable'unless'ratified:'(1403)'
 Those'entered'into'in'the'name'of'another'person'by'one'who'has'been'
given'no'authority,'or'legal'representation,'or'has'acted'beyond'his'
powers'
Those'that'do'not'comply'with'the'Statute'of'Frauds'(agreement'must'be'
in'writing,'or'note'or'memorandum'thereof,'and'be'subscribed'by'the'
party'charged'or'his'agent)'
Those'where'both'parties'are'incapable'of'giving'consent'to'a'contract'
*Agreements'within'the'scope'of'the'Statute'of'Frauds'
! Agreement'not'to'be'performed'within'a'year'from'the'making'
thereof'
! A'special'promise'to'answer'for'the'debt,'default,'or'miscarriage'
of'another'
! Agreement'made'in'consideration'of'marriage,'other'than'a'
mutual'promise'to'marry'
! Agreement'for'the'sale'of'goods,'chattels,'of'things'in'auction,'at'
a'price'not'less'than'P500'
*Except'when'the'buyer'receives'part'of'the'
goods/chattels/things'in'auction,'or'pay'at'the'time'some'
part'of'the'purchase'money;'also,'when'the'sale'is'made'
by'auction,'and'the'auctioneer'records'the'details'
concerning'the'auction'and'property'
! Agreement'for'the'leasing'for'a'longer'period'than'one'year,'or'
sale'of'real'property,'or'interest'therein'
! Representation'as'to'the'credit'of'a'third'person'
'
EThe'contracts'under'the'scope'of'the'Statute'of'frauds'are'ratified'if'there'is'failure'to'
object'to'the'presentation'of'oral'evidence,'or'by'the'acceptance'of'benefits'under'
them.(1405)'
'
EIn'case'both'parties'are'incapable'of'giving'consent,'express'or'implied'ratification'by'
the'guardian'of'one'of'the'parties'makes'the'contract'voidable'(1407).'If'ratified'by'the'
guardians'of'both'parties,'the'contract'is'valid,'and'is'effective'from'the'time'it'was'
entered'in'to.''
'
Chapter!9*!Void!or!Inexistent!Contracts!
!
' EThese'contracts'produce'no'legal'effect.'
'
' EVoid/Inexistent'contracts:'(1409)'
Those'with'a'cause,'object'or'purpose'that'is'contrary'to'law,'morals,'good'
customs,'public'order,'or'public'policy'
Those'which'are'absolutely'simulated'or'fictitious'
Those'whose'cause'or'object'were'inexistent'at'the'time'of'transaction'
 Those'whose'object'is'outside'the'commerce'of'men'
Those'which'contemplate'an'impossible'service'
Those'where'the'intention'of'the'parties'relative'to'the'principle'object'cannot'
be'ascertained'
Those'expressly'prohibited'or'declared'void'by'law'
*These'contracts'cannot'be'ratified,'nor'can'the'right'to'set'up'the'defense'of'
illegality'be'waived'
'
EThe'action'or'defense'for'the'declaration'of'the'inexistence'of'a'contract'does'not'
prescribe'(expire'over'time).'
'
EWhen'the'nullity'proceeds'from'the'illegality'of'the'cause'or'object,'and'the'act'
constitutes'a'criminal'offense:'(1411)'
When'both'parties'are'in)pari)delicto)(equally'guilty)'
EThe'parties'shall'have'no'action'against'each'other,'both'shall'be'prosecuted,'
and'the'things'or'price'of'the'contract,'as'well'as'the'effects'and'instruments'of'
the'crime,'shall'be'confiscated'by'the'government'
When'only'one'party'is'guilty,'or'in)delicto'
EOnly'the'guilty'party'shall'have'no'action'against'the'other,'shall'and'be'
prosecuted'
'
' EIf'the'act'of'the'unlawful'cause'is'not'a'criminal'offense:'(1412)'
When'both'parties'are'in)pari)delicto'
ENeither'may'recover'what'he'has'given'by'virtue'of'contract,'or'demand'
performance'of'the'others'undertaking'
When'only'one'is'guilty'
EThe'guilty'party'loses'whatever'he'has'given,'and'cannot'ask'for'the'fulfilment'
of'the'others'undertaking.'The'innocent'party'may'demand'the'return'of'what'
he'has'given'and'he'cannot'be'compelled'to'comply'with'his'promise'
*Exceptions'to'1411'and'1412'
EIn'case'that'one'of'the'parties'in'an'illegal'contract'is'incapable'of'giving'
consent,'the'courts'may'allow'the'recovery'of'money'or'property'
delivered'by'the'incapacitated'person'(1415)'
EIf'the'agreement'is'not'illegal'per'se,'but'is'merely'prohibited'for'the'
protection'of'the'plaintiff,'he'may'recover'what'he'has'paid'or'delivered,'
if'public'policy'is'enhanced'(1416)'
'
EInterest'paid'in'excess'of'the'interest'allowed'by'the'usury'laws'may'be'recovered'by'
the'debtor,'with'interest'thereon'from'the'date'of'payment.'(1413)'
'
EWhen'money'is'paid'or'property'is'delivered'for'an'illegal'purpose,'the'contract'may'be'
rejected'by'one'of'the'parties'before'it'has'been'accomplished,'or'before'damage'is'
 caused'to'a'third'person.'The'courts'may'allow'the'party'repudiating'to'recover'the'
money'or'property.'
'
EIf'the'price'of'any'article'or'commodity'is'determined'by'law,'any'person'paying'the'
excess'of'the'maximum'price'allowed'may'recover'the'excess.'(1417)'
'
EIf'the'law'fixes,'or'authorizes'the'fixing'of'the'maximum'number'of'hours'of'labor,'and'
a'contract'is'entered'into'whereby'a'laborer'works'longer'than'the'maximum'fixed,'he'
may'ask'for'additional'compensation'for'the'service'rendered'beyond'the'time'limit.'
(1418)'
'
EWhen'the'law'sets'or'authorizes'the'setting'of'minimum'wage'for'laborers,'and'a'
contract'is'agreed'upon'wherein'the'laborer'accepts'a'lower'wage'than'the'minimum,'
he'is'entitled'to'recover'the'deficiency.'(1419)'
'
EIf'the'contract'is'divisible,'the'illegal'terms'can'be'separated,'and'the'legal'ones'
enforced.'(1420)'
'
EThird'persons'whose'interests'are'not'directly'affected'cannot'avail'of'the'defense'of'
illegality.'(1421)'
'
EA'contract'which'is'the'direct'result'of'a'previous'illegal'contract'is'also'void'and'
inexistent'(1422)'
'
'
'
'
Natural!Obligations!
'
Natural'ObligationsE'Do'not'grant'a'right'of'action'to'enforce'their'performance,'but'
after'a'voluntary'fulfilment'by'the'obligor,'they'authorize'the'retention'of'what'has'
been'delivered'or'rendered'by'reason'thereof'(1423)'
'
EWhen'a'right'to'sue'upon'a'civil'obligation'has'lapsed,'and'the'obligor'still'
performs'it,'he'cannot'recover'what'he'has'delivered,'or'the'value'of'the'service'
he'has'rendered.'(1424)'
'
EWhen'a'third'person'pays'the'debt'of'the'obligor'without'his'knowledge'or'
against'his'will'which'the'obligor'is'not'legally'bound'to'pay'because'the'action'
to'do'so'has'prescribed,'and'the'obligor'reimburses'the'third'person,'the'obligor'
cannot'recover'what'he'has'paid.'(1425)'
'
EWhen'a'minor'who'has'entered'into'a'contract'without'consent'from'the'parent'
or'guardian'voluntarily'returns'the'whole'thing'or'price'after'the'annulment'of'
the'contract,'and'he'has'not'benefited'from'it,'there'is'no'right'for'him'to'
demand'the'thing'or'price'returned.'(1426)'
'
EWhen'a'minor'who'has'entered'into'a'contract'without'consent'from'the'parent'
or'guardian'voluntarily'pays'money'or'delivers'a'fungible'thing'to'fulfil'an'
obligation,'he'shall'have'no'right'to'recover'it'from'the'obligee'if'the'obligee'has'
spent'or'consumed'it'good'faith.'(1427)'
'
EWhen'the'defendant'voluntarily'performs'the'obligation'which'was'failed'to'
have'been'enforced,'he'cannot'demand'the'return'of'what'he'has'delivered'or'
the'payment'of'the'value'of'the'service'he'has'rendered.'(1428)'
'
EWhen'an'heir'voluntarily'pays'for'a'debt'of'the'decedent'exceeding'the'value'of'
property'he'received'by'will'or'by'law'of'intestacy'from'the'deceased,'the'
payment'is'valid'and'cannot'be'rescinded'by'the'payer.'(1429)'
'
EWhen'a'will'is'declared'void'because'it'was'not'executed'in'accordance'with'
certain'formalities,'and'the'heirs,'after'settling'the'debts'of'the'deceased,'pays'a'
legacy'in'compliance'with'the'defective'will,'the'payment'is'effective'and'
irrevocable.'(1430)'
*LegacyE'act'of'disposition'by'the'testator'in'separating'his'inheritance'
for'definite'purposes,'such'as'to'reward'friends,'give'alms,'etc.'