Section 3 Condonation or remission of the debt
) Partial- may either be a remission -Whenever the private document in
Article 1270
Remission-an act of liberality whereby the
creditor waives the enforcement of the
obligation contracted
in his favor.
*S.C def.
-an agreement between the creditor
and debtor,by virtue of which, the
former spontaneously remits an act of
liberality, in whole or in part, the
obligation of the debtor
*Puig Peňa def.
-bilateral nature of remission is not
lost since the legatee must still accept
the legacy in order to be
effective->legacy of remission of
debts which is logically a unilateral
act.
Note: If there is no
acceptance by the debtor,
there is no remission but
waiver of rights if the creditor
is simply renounces the
credit in favor of nobody,or of
the same may be
distinguished by prescription
through inaction by the
creditor.
Essential characteristic of
remission, it is gratuitous.
Kinds:
1.) As to effectivity into:
a.) Inter vivos
-when it takes effect during the
life time of the creditor.
b.) Mortis causa
-when it takes effect after the
deatyh of the creditor
-must naturally be expressed and
in the form of a will
2.) As to extent
a.) Total- if the whole obligation is
remitted
b.
of
b.1) a part of the amount
b.2) a part of the obligation such
as the accessory obligation of pledge
b.3) an aspect of the obligation
such as solidarity
3.) As to form
a.) Express-when made formally and
in the form required of ordinary donations
b.) Implied- when it can be inferred
from the actions of the parties
REQUISITES:
1.) Capacity of the parties
-creditor and debtor must have the
capacity to make and accept
fdonations
2.) Consent of the parties
-agreement and require acceptance
by the obligor
3.) Acceptance of the remission of the
debt
-all kinds of debts may be condoned
whether pure or conditional or with a
term
4.) Remission must be gratuitous
-otherwise it will be another
agreement such as dation, novation
or compromise
5.) In case of express remission,
-the formalities required by law for
ordinary donations must be complied
with.
Note: Governing rules-ordinary donations.
Article 1271
Implied remission
-basis: when the creditor delivers a
private document evidencing debt to
his debtor, he surrenders the weapon
for the enforcement of these rights.
Second par.
-remission is presumed from the
voluntary return of the title of credit and not
payment of the
debt unless the contrary is proved
Article 1272
which the debt appears is found in the
possession of the debtor, it shall be
presumed that the creditor delivered
it voluntarily, unless the contrary is
proved.
Article 1273
-The renunciation of the principal debt
shall extinguish the accessory
obligation;but the waiver of the latter
shall leave the former in force.
Article 1274
- It is presumed that the accessory
obligation of pledge has been
remitted when the thing pledged,
after its delivery to the creditor, is
found in the possession of the
debtor, or of a third person who
owns the thing.
Section 4. Confusion or merger of rights
Article 1275
Confusion or Merger
-meeting in one person of the qualities
of creditor and debtor of the same obligation.
-erases the plurality of objects of the
obligation, and hence it will be absurd for the
person to
Enforce an obligation against himself.
Requisites:
1.) Must take place between the
creditor and the principal debtor.
2.) Must be complete and definite.
Effect: Extinguishes the obligation either totally
or partially
-Partial confusion- joint obligation
-Debt is only extinguished
with regard to the share of
the person in whom the
characters of the debtor and
creditor concur.
-Solidary obligation
-Extinguishes the whole
obligation.
Revocation
 -Whom the act which occasions the
merger is susceptible to termination
or revocation, merger is also
terminated or revoked and the
obligation is re-created in the same
condition that it had when the merger
took place.
Article 1276
Merger which takes place in the
person of the principal debtor or
creditor benefits the guarantors.
Confusion which takes place in
the person of any of the latter does
not extinguish the obligation.
Effects of accessory obligations:
-extinguishment of accessory
obligations releases the guarantors,
following the general rule that the
accessory follows the principal.
-when confusion takes place in the
person of the guarantors, his
obligation as a guarantor, is
extinguished, but the principal
obligation subsists and can be
enforced against him by the debtor.
Article 1277
Confusion does not extinguish a
joint obligation except as regards the
share corresponding to the creditor or
debtor in whom the two characters
concur.
Section 5 Compensation
Article 1278
Compensation shall take place
when two persons, in their own right,
are creditors and debtors of each
other.
COMPENSATION
-extinction in the concurrent amounts
of the obligations of those persons
who are reciprocally debtors and
creditors of each other.
Advantage to the creditors
-facility of payment
-guarantee for the effectiveness of the
credit since if one of the parties
should pay the obligation without
waiting for the payment of the other,
he might be the victim of fraud or
insolvency of the other since the later
may dissipate the amount received
without paying his corresponding
obligation.
DISTINGUISHED FROM MERGER
1.) Compensation
-two persons who are debtors and
creditors of each other
MERGER
-only one person in whom is merged
the character of both debtor and creditor
2.) Compensation-two debts
Merger- one debt
DISTINGUISHED FROM PAYMENT
1.) Compensation
-capacity of the parties is not
necessary since it takes place by
operation of law
Payment
-debtor must have the capacity to
dispose of the thing paid and the
creditor must have the capacity to
require payment
2.) Compensation
-there can be partial extinguishment of
the obligation as happens when the
two debts compensated are of unequal
amounts
Payment
-to be valid, it must be complete, that
is, invisible
CLASSIFICATION
1.) As to its effect into:
a.) Total- two obligations are of the
same amount
b.) Partial-when the two amounts are
not equal
2.) As to its origin
a.) Legal- when it takes place by
operation of law because all the
requisites are present
b.) Conventional-when the parties
agree to the compensation of
their mutual obligations even
though all the requisites required
by law for compensation are not
present
c.) Judicial-when the compensation is
decreed by the court when there
is a counterclaim or set off
interposed by a party
d.) Facultative- when the
compensation can be claimed by
the party who can be claimed by
the party who can oppose it and
who is the only party prejudiced
by the compensation as happens
when one of the obligations has a
period for the benefit of one party
clone and the latter renounces the
period with the effect of making
the obligation due and therefore
compensate.
Article 1279
Requisites of legal compensation
1.) That each of the obligors be bound
principally and that he be at the
same time a principal creditor of the
other.
a.) Mutually debtors and creditors of
each other
b.) In their own right
c.) Principals
 2.) That both debts consist in a sum of The parties may agree upon the -Reason: before judicial rescission or
money, or if the things due are compensation of debts which are not yet due. annulment, the debts can be compensated but
consumable, they be of the same the same is
kind, and also of the same quality if Voluntary Compensation cancelled the moment the court
the latter has been stated -arises from the mere agreement of decrees the rescission or annulment
3.) That the two debts are due the parties since the effect of the court’s decree
4.) That they be liquidated and -not only obligations which are not is retroactive.
demandable due but all obligations which lack the
5.) That over neither of them there be requisites of legal compensation may Article 1285
any retention or controversy, be compensated by agreement of the The debtor who has consented
commenced by third persons and parties. to the assignment of rights made by a
communicated in due time to the Reason: to eliminate the obstacles to creditor in favor of a third person,
debtor. legal compensation which prevent the cannot set up against the assigned
Reason: There is a sort of right extinguishment ipso jure of the the compensation which would pertain
acquired by the third parties that obligation to him against the assignor, unless
would obstruct compensation by Requisites: the assignor was notified by the
converting the debtor into a judicial 1.) Each of the parties can dispose of debtor at the time he gave his
depository of the thing due, thereby the credit be seeks to consent, that he reserved his right to
preventing him from delivering the compensate the compensation.
thing to the creditor. 2.) Parties agree to mutually If the creditor communicated
6.) That compensation if the debt be not extinguish the credits the cessions to him but the debtor did
prohibited by law not consent thereto,
Obligations that are prohibited by law Article 1283 The latter may set up the
from being compensated: If one of the parties to a suit over an compensation of the debts previous to
a.) When the obligations arises from obligation has a claim for damages against the the cession but not of subsequent
a depositum or from an other, the dues.
obligation of a depository or a Former may set it off by proving his If the assignment is made
bailee in commodatum right to said damages and amount thereof. without knowledge of the debtor, he
b.) Obligations that arises from may set up the compensation of all
future support due by gratuitous Judicial Compensation the credits prior to the same and also
title but support in appears may -there can be compensation of later ones until he had knowledge of
be compensated amounts not yet liquidated since the amount of the assignment.
c.) If the obligations consist I civil damages may be
liability arising from a penal Proved and ascertained in the very Effect of the assignment:
offense-satisfaction of such case where the set off is pleaded. 1.) Where the assignment was
obligations is imperative -other requisites must be present consented to by the debtor
d.) If the obligations consist in 2.) Where the debtor does not
damages caused to the Article 1284 consent to the assignment
partnership they are not When one or both debts are 3.) Where assignment is made
compensable with the guilty rescissible or voidable,they may be without the knowledge of the
partner’s share in the profits. compensated against each other debtor
7.) That compensation is not waived. before they are judicially rescinded or
avoided. Article 1286
Article 1281 Compensation takes place by
Compensation may be total or partial, operation of law, even though the
when the two debts are of the same debts may be payable a different
amount, there is a total places, but there shall be an
compensation. Compensation of rescissible or voidable debts indemnity for expenses of exchange
-valid unless the same is rescinded or or transportation to the place of
Article 1282 annulled by the court payment.
 c.) Implied-when there is such
Effects of compensation: Effects of compensation: incompatibility between the old
-not applicable to voluntary 1.) Both debts are extinguished to and the new obligations that
compensation the concurrent amount They cannot stand together.
2.) Interests on the obligation or the 3. ) As to its extent:
Article 1287 part of the obligation a.) total or extinctive or novation
Compensation shall not be extinguished stop running; proper
proper when one of the debts arises 3.) With regard to the obligation or -when the obligation is
from a depositum or from the the part of the obligations completely extinguished
obligations of a depository or of a extinguished the period for b.) partial or modificatory or
bailee in commodatum. prescription is ended improper novation
Neither can compensation be 4.) All accessory obligations -when there is only a modification
set up against a creditor who has a attendant to the principal or change in some principal
claim for support due by gratuitous obligation which has been conditions of the obligations
title, without prejudice to the extinguished are also
provisions of par. 2 of article 301. extinguished. 4.) As to its object
a.) real or objective-when there is a
Article 1288 Section 6. Novation change in the obligation itself
Neither shall there be compensation if either as to its cause, object or
one of the debts consists in civil liability arising Article 1291 Obligations may be modified by: principal conditions
from a 1.) Changing their object or principal b.) personal or subjective
penal offense. conditions -change is in the parties, may
2.) Substituting the person of the take place either by change of
Facultative compensation debtor debtor or change of creditor.
-compensation can only be set up by 3.) Subrogating a third person in the
one of the parties but the other is rights of the creditor
prohibited from interposing the
defense of compensation expromision or
Novation conventional; by agreement
- substitution or alteration of an
obligation by a subsequent one that by delegation or legal, by
cancels or modifies the preceding one subrogation
- a judicial act of dual function, in that Requisites:
Article 1289 at the time it extinguishes an
If a person should have against 1.) A previous valid obligation
obligation, it creates a new one in lieu 2.) Agreement of all the parties to
him several debts are susceptible of of the old.
compensation, the rules on the the new obligation
application of payments shall apply to Tin V. Habana
Classification of Novation 3.) Extinguishment of the old
the order of the compensation.
1. )As to its origin: obligation
Various compensable debts a.) Conventional-when agreed 4.) Validity of the new one
-article 1289 upon by the parties
b.) Legal-when it takes place by 1.) An old valid obligation
Article 1290 operation of law 2.) A new valid obligation
When all the requisites 2. ) As to its constitution: 3.) A substantial difference between
mentioned in article 1279 are present, a.) Express-when the parties the old and the new obligations
compensation takes effect by declare that the old obligation is extinguished Caston
operation of law, and extinguishes and substituted 4.) Capacity of the parties
both debts to the concurrent amount, by the new obligation. 5.) Crimus novandi-intenton to
even though the creditors and debtors extinguish or modify the
are not aware of the compensation. obligation

According to Caston
First req.-can also be voidable but not
void or inexistent obligation.
Second req.-in order that an obligation
may be considered novated, it is
indispensable that the new obligation
which purports to annul the previous
one be valid and eefective.
Third req.- must be complied
otherwise there would be no reason
for novation.
Fourth req.-parties must have the
capacity to obligate themselves since
the new obligation must be valid in
order that there be novation.
Fifth req.- intention of the parties to
extinguish or modify the old obligation
is a necessary requisite for novation.
May be expressly or
impliedly
Article 1292 Ex. of No. 1
Real Novation to loan or vice versa
-cause, object or principal Ex. of No. 2
obligation is changed.
-never presumed.
-expressly or impliedly
Ex. of No. 3
Express Novation
-contracting parties explicitly
declare that their purpose in
establishing the new agreement
is to extinguish or modify the old
-no such explicit, o express
novation
-there may be, implied novation
Implied Novation
-essential that the old and the
new obligations be on every point
incompatible of each other.
-no specific form is requiredty
-it is sufficient if there is
incompatibility between the two
obligations.
-test to determine whether the
two obligations can stand
together. Each one having
independent and separate
existence.
-if they cannot, there
incompatibility and the second
obligation novates the first.
-if they can, no incompatibility
and there is no novation.
Possible Changes
1.) A change in the cause of the
obligation
2.) A change in the object of the
obligation
3.) A change in the principal
conditions
4.) Accidental changes or
accidental modifications
1 st obli.-sale or deposit converted
-when a thing or service owed is
substituted with another thing or
another serviceincomplete and
therefore novation.
-as to amount: reducing or
increasing itno novation
-when a condition is inserted into
a pure obligation or the condition in a
conditional obliga-
tion is eliminated.
no rule to incompatibility or
not
-lengthen the period no
incompatibility hence,no novation
-reduced or shortened the period
a there is extinctivew novation.
Ex. of No.4
-no incompatibility and no novation
-changes in the place of payment
or in the manner of fulfillment of the
obligation or in the
payment of interests, or those
which consists of in the addition of
guaranties or the elimi-
nation of guarantees.
is
Article 1293
Personal Novation
-change in the parties to the
agreement.
1.) by substitution of debtor
2.) by subrogation of creditor
Substitution of Debtor:
1.) Expromision
-When a third person, distinct from
the creditor and debtor
spontaneously assumes the
obligation of the latter, relieving
him of the same, with the creditor
accepting the change and without
any intervention on the part of the
original debtor.
2.) Delegacion
-when the old debtor presents a
third person who will assume the
obligation, relieving the debtor of
the same and with the change
being accepted by the creditor.
-whether by expromision or
delegacion, old debtor is released
from the obligation and the third
person or the new debtor takes his
place.
Article 1294-old debtor is not revived.

Article 1295-will not revive but with 2
exceptions:
1.) Where the insolvency of the new
debtor was already existing and of
public knowledge when the old
debtor delegated the debt
2.) Insolvency of the new debtor was
already existing and known to the
creditor at the time he delegated
the debt
Article 1296
Effect of novation on accessory
obligations
*If principal obligation is extinguished,
accessory obligation is also extinguished.
-extinguishment of the principal
obligation releases all pledges or mortgages,
as well as guaran-
tors and sureties, unless they agree
to be bound in the new obligation.
-also the obligation to pay interest.
Exception
1.) Where the accessory obligation
consists of a guaranty and the
guarantors and sureties agree to be
bound in the new obligation.
2.) Accessory obligation is in favor of a
third person who did not give his
consent to the novation because in
reality it is a distict obligation.
Article 1297
If the new obligation is void, the
original one shall subsist, unless the
parties intended that the former
relation should be extinguished in any
event.
Effect of invalidity of new obligations
-In order that a contract may be
considered as novated, it is
indispensable that the new contract
which purports to annul the previous
one be valid and effective in as much
as one of the requisites of novation is
a new valid contract.
- Should the new obligation be not
totally void but merely voidable
obligation is valid until annuled by
the court.
-However, should the new obligation
be annulled, it will also render in
effective the novation and the original
will subsist unless the parties intended
to extinguish it in any event.
Effect on the old obligations
-Should the new obligation be void,
there is no novation and hence,
original obligation shall subsist.
-However, if the parties intended that
the former obligation should be
extinguished and therefore, there will
be novation.
Effect if original obligation voidable
-should the original obligation be not
void but merely voidable, there will be
a valid novation if there has been a
ratification of the obligation prior to
the novation in as much as the
ratification would purge the obligation
of its debtors, rendering it valid from
its inception.
-no ratification of the voidable
obligation, then the consent of the
debtor to the new obligation is
tantamount to a waiver of the action
to annul the old obligation and will
consequently be a ratification of the
same.Novation is by substitution and
delegacion
-expromisionno ratification of the
old obligation and hence, should the
new debtor demand reimbursement
from him, he can still interpose the
nullity of the original obligation.
Effect on a prescribed debt
-can still be novated because a
prescribed debt is a moral obligation
which is a sufficient consideration for
the new contract.
-however, novation of a prescribed
debt is valid in as much as
prescription being a defense is
available only to thedebtor. It can be
waived by the debtor and he does so
by voluntary promising to pay
prescribed debt in case of a novation.
Article 1299
If the original obligation was subject to
a suspensive or resolutory condition, the new
obligation
shall be under the same
condition,unless it is otherwise stipulated.
Conditional Obligations
4 Possible Situations:
1.) Where the original obligation is
conditional and the new obligation
pure
2.) Where the old obligation is pure
and the new obligation is
conditional
3.) Where both the original and the
new obligations are conditional
4.) Where the object of the new
obligation is to remove the
condition in an original conditional
obligation.
Old obligation conditional, new obligation pure.
*existence of novation will depend on the
happening of the event constituting the
condition.
-original obligation:
-suspensive condition which is not yet
performed, no old valid obligation.
-resolutory condition: happening of
the event could resolve the old
obligation and therefore there
would be no obligation.
-old obligation is conditional, novation itself
must be held conditional also and its efficacy
depends upon whether the condition which
affects the former is complied with or not.
New obligation conditional,old obligation pure
*same principle is applicable.
*if the condition on which the new obligation is
made to depend is suspensive,before the
happening of the event, there would be no new
valid obligation and if the condition is resolutor,
the happening of the event would extinguish
the obligation.
Both obligations conditional
*novation would depend on whether the two
obligations are incompatible with each other or
not.
If the conditions in both obligations are not
incompatible with each other and that both
obligations can stand together, the effectivity
of novation would depend on the happening of
all the conditions in both obligations,
because,
if only the conditions affecting the old
obligation are fulfilled and those affecting the
new obligation are not, then there would be
lacking a new valid obligation and hence no
novation.
Likewise, if only the conditions affecting
the new obligation are fulfilled but the
conditions affecting the old obligation are not,
then again, there is no novation, because of
the lack of an old valid obligation.
Suppression of condition
*where the old obligation is conditional, but the
new obligation is pure and the intention of the
parties is to substitute a pure obligation for a
conditional one, then clearly, there is a
novation and the old obligation disappears and
the new one is substituted in its place.
Article 1300
Subrogation of a third person in the rights
of the creditor is either legal or
conventional.The former is not presume,
except in cases expressly mentioned this Code,
the latter must be clearly established in order
that it may take effect.
Subrogation
-transfer of all the rights of the creditor to
a third person, who thereby acquires all his
rights against
the debtor or against third persons.
*1.) Legal
2.) Conventional
Legal Subrogation
-takes place by operation of law
Conventional Subrogation
-takes place by agreement of all the
parties
-presumption is against subrogation
-may take place only when so expressly
provided by the Civil Code
Article 1301
Conventional subrogation of a third
person requires the consent of the
original parties and if the third person.
Conventional Subrogation
-original creditor, the new creditor and
the debtor must give their consent
-old creditor must give his consent,
because his credit is extinguished
-consent of the new creditor is required,
because he becomes a party to a legal
relation and the consent of the debtor is
required because he becomes liable
under a new obligation
Convention subrogation and assignment of
credits distinguished
1.) Subrogation-debtor’s consent
necessary
Assignment-it is not
2.) Subrogation-creates a new
obligation and at the same time
extinguishes the old one
Assignment-same right exists but
there is only in change in the
person of the creditor
3.) Subrogation-defects in the old
obligation may be cured
Assignment-defects in the old
obligation are not remedied
assignment of credit
Article 1302
Legal subrogation is not presumed
except in the cases expressly mentioned by
law.
These are:
1.) When a creditor pays another
creditor who is preferred, even
without the debtor’s knowledge
Which creditor is preferred over
another and is found in the Title XIV of
our Civil Code.
2.) When a third person, not interested
in the obligation, pays with the
express or treat approval of the
debtor.
-Article 1237
-Therefore, a sensu contrano,
should the debtor give his consent
whether express or implied, the
third person may compel the
creditor to subrogate him in his
rights.
3.) When, even without the knowledge
of the debtor, a person interested in the
fulfillment of the
Obligationpays, without prejudice to
the effects of confusion as to the latter’s
share.
*persons who have an interest in the
fulfillment of the obligation are those
who would be benefited by the
is extinguishment of the obligation,
such as co-
debtors,sureties,guarantors.
Article 1303
Subrogation transfers to the person
subrogated the credit with all the rights
thereto,appertaining either against the
debtor or against third persons, be they
guarantors or possessors of mortgages
subject to stipulation in a conventional
subrogation.

Effect of Subrogation
-subrogation transfers to the person
subrogation, the credit with all the rights
thereto appertaining, either against the
debtor or against third persons, be they
guarantors or possessors of mortgages,
subject to stipulation in a conventional
subrogation.
-subrogation is modificatory novation
and not extinctive novation, because the
old obligation is not extinguished and a
new one created, but the same
obligation is transferred to the new
creditor.
Article 1304
Partial Subrogation
-the original creditor shall have
preference to the person who has been
subrogated in his place in
Virtue of the partial payment of the
same credit.
TITLE II Contracts
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 some
service.
*definition is a restrictive one, giving
emphasis t the obligatory concept of
contracts and to the consensual nature
of contracts.
*phraseology of the article becomes
misleading because:
1.) excludes formal contracts
2.) it seems to limit the definition to a
unilateral contract, excluding the
bilateral or reciprocal one
3.) exclude agreements where the
purpose is not create or modify a
relation but to destroy the relation exposition of the facts and antecedents
extinguish upon which it is based.
Contract distinguished from other terms Number of parties in a contract-two
Contracta convention, not every parties
convention is a contract since it is limited to
agreements which Can there be a contract even though
Produce patrimonial liabilities. there is only one person? Yes, because
that same person may represent two
Contract creates obligations which are parties because he may act in his own
particular, concrete, and transitory right as representative of another.
(AUTO-CONTRACT)
Other Conventionscreate relations
which are permanent Stages in the life of a contract:
Contractsmeeting of the minds and 1.)preparation,conception or generation
the intention of the parties is the -period from the start of negotiations
determinitative factor until the moment just before the
agreement of the parties
2.) perfection or birth of the contract
Othersmeeting of the minds is merely
-precise moment when the parties
secondary
come into agreement on the terms of
the contract
Contractswill of the parties is supreme
3.) consummation or death
and the law is merely suppletory
-when the contract is fully executed,
that is, when the terms agreed upon
Other Conventionslaw is the principal in the contract are completely fulfilled
source of the rights and obligations. or formed
Elements of a contract
1.) Essential elements
-those without which there can be
Contract from imperfect promise or policitacion no contract such as consent, subject
matter or cause.
*Policitacion-merely an offer that has 2.) Natural elements
not yet been accepted -those which usually accompany a
*Contracts-there is the meeting of the contract and are derived from its nature and
minds are presumed
by law, but which can be waived by
Perfect promise-merely preparatory to the contracting parties such as warranty in
the contract and merely paves way for sales
the celebration of the contract in the 2.) Accidental elements
future. -those which can only exist when
the parties expressly so provide for
Pact-a special part of the contract which the purpose of limiting or modifying
is merely incidental and separable from the normal effects of their rights,
the principal agreement. such as a condition or a period
Stipulation-essential and dispositive Characteristic of contracts
part, as distinguished from the
 1.) Autonomy of the will of parties in
contracts
-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
2.) Obligatory force of contracts
-parties are bound not only to the
fulfillment of what has been expressly
stipulated but also to
all theconsequences which,
according to their nature may be in keeping
with the good faith,
usage and law
3.)Mutuality of contracts
-contracts must bind both
contracting parties and the validity and
compliance cannot be left
to the will of one of them
4.)Relativityof contracts
-contracts take effect only between
the parties,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
Classification of contracts
1.) According to the nature of the tie
that they produce:
a.)Unilateral-those which produce
an obligation(one or various) for
only one of the contracting parties
b.)Bilateral-those which produce
reciprocal obligations between both
parties
2.) According to the title:
a.)Gratuitous-those where one of
the contracting parties gives to the
other an advantage without
receiving any equivalent
i)those which diminish the
patrimony of the giver-typified by
donation intervivos
ii)those which do not
diminish the patrimony of the giver
b.)Onerous-where one of the parties
desires to get an advantage through
an equivalent or a compensation
i)Commutative-those which
each of the parties takes into
consideration the acquisition
of an equivalent of his
prestation which is pecuniarily
valuable and definition from the
moment of the celebration of
the contract
ii)Alectory-each of the parties
also takes into consideration the
acquisition of an equiva-
lent of his prestation which is
pecuniarily valuable but not
determined or definite at the
moment of the celebration of
the contract but dependaent on the
happening of an
uncertain event and with the
parties running the risk of profit or
loss
3.) According to the incorporation or
non-incorporation of the clause:
a.)Casual-contain not only
the naked promise of a
protestation but also an
agreement embodying the
juridical intention which is
the cause of the giving and
receipt of the promise
b.) Abstract-exclude from the
manifestation of the will of
the parties any reference to
casual relations
4.) According to the form
a.)Consensual-perfected by the
mere consent of the parties
b.)Real-in addition to the consent,
require the delivery of a thing by
one of the parties to the other
b.)Solemn-require a special form for
its celebration or strictly those
which require a notarial form
5.) According to its nature
a.) Preparatory-those which have for
their object the creation of a
juridical state as a necessary
preliminary to the celebration of a
posterior
contract,e.g.partnership,agency
b.)Principal-those which have in
themselves their own proper and
subsisting contractual end or
purpose without depending on any
other contract,e.g.,purchase and
sale,lease
c.)Accessory-those which can only
exist by reason of or in relation to a
prior
contract,e.g.,guaranty,pledge,mortg
age.
6.) According to name
a.)Nominate-those which have an
individuality of their own and are
governed by special rules of law
b.)Innominate-those without any
individual or their own special rules
and are governed by the general
rules ofcontracts
FOUR KINDS:
1.) Do ut des, I give that you give
2.) Do ut facias, I give that you do
3.) Facio ut des, I do that you give
4.) Facio ut facias, I do that you do
Article 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.
Autonomy of the will of the parties
in contracts
 -right to enter into lawful contracts
constitutes one of the liberties of the people of
the state
-to enter into contracts freely is one
of the liberties guaranteed to the people of the
state
Modern limitations on autonomy
-state intervenes in cases where
contracts are affected by public
policy such as in labor contracts and
in contracts of insurance
Contracts of adhesion and regulated
contracts
-have the effect of weakening the
consensual nature of contracts by
giving undue advantage
To one of the contracting parties,
thereby requiring state intervention
in order to prevent injustice
Limitations on autonomy
-new civil code added 2
1.)good customs
2.)public policy
Contrary to public order
-Public order-public welfare
-public policy-a broader sope
-all considerations
which are moved by the common
good
Article 1307
Innominate Contracts
-those without any individuality or their
own special rules and are governed by
the general rules of contracts
FOUR CLASSES:
1.) Do ut des, I give that you give
2.) Do ut facias, I give that you do
3.) Facio ut des, I do that you give
4.) Facio ut facias, I do that you do
Article 1308
Article 1309
Article 3010
Mutuality of contracts 7.)in cases of negotiorum gestio
-contracts must bind both contracting
parties and the validity of or compliance with
the contract
Cannot be left to the exclusive will of
one of the parties
Enforcement of contracts
Article 1309 -may be maintained only by a party to a
-binding effect begins from the time the contract;
decision of the third person has been -a third person cannot ask for its
made known to both contracting parties annulment since nullity can be asserted
-prohibited in Article 1308effectivity of only by one who is a party thereto
the fulfillment of the contract will be left -however,creditors may rescind, impugn
to the will of one of the parties those contracts created in fraud of their
-however, termination of the contract rights
may be left to the will of one of the
parties in the negative form of rescission Transmissibility of contarcts
if that is so expressly stated in the -gen. rule:rights and obligations under a
contract contract are transmitted to the heirs of
the parties because there is privity of
Article 1311 interest between them and their
Relativity of contracts predecessor
-contracts take effect only between the -exception:contracts which are made
parties, their assigns and heirs, except intransmissible by their nature, by
in cases where the rights and obligations stipulation or by law
arising from the contract are not
transmissible by their nature, or by STIPULATIONS POUR AUTRUI
stipulation or by provision of the law -2nd par. Of Art. 1311-stipulation in favor
-however, it has been ruled that the of the 3rd person
obligation of a guarantor under a bond is -exception to the
not extinguished by the death of the rule of the 1st par. Of the said art.
guarantor since his liability is not made • Intended
personal and intransmissible by for the sole
agreement of the parties nor by law nor benefit of
by the nature of the obligation the 3rd
person
The contract may affect third persons in
the ff. cases: • Where an
1.)when the parties transfer to third obligation
persons the rights they acquired under is due from
the contract the
2.)when the contract contains a promise to
stipulation in favor of a third person the 3rd
3.)when the third person exercise the person
subrogatory action which the
4.)in suspension of payments and former
compositions under the insolvency law seeks to
5.)in labor contracts of collective discharge
bargaining under RA No.875 by means
6.)in contracts creating real right
 of such
stipulation
-benefit received by the 3rd person be
merely incidental-not considered a stipulation
pour autrui.
-parties in stipulation pour autrui
1.) Promisor(party obliged to perform
the prestation in favor of the 3rd person
2.) the Promisee(party who accept the
promise)
3.)Third Person of Benificiary(the party
who acquires the right to demand the
prestation from the promisor)
a.)determinate(e.g.a particular person)
b.)indeterminate(e.g. the prospective
beneficiary in life insurance
-once the stipulation in favor of the 3rd
person is accepted, he may demand
fulfillment thereof
-3rd person after acceptance has the
rights of the party to the contract, and
therefore may sue either for specific
performance or resolution, with
indemnity for damages
Article 1312
Contracts creating real right
Distinguished from real contracts.

Requisites in order that the stipulation in

favor of the third person may exist are:
1.)that the contracting parties must
have clearly and deliberately conferred
a favor upon the 3rd person
2.)no compensation for the stipulation in
favor of the third person
3.)stipulation in favor of the 3rd person
should not be the entire contract but
merely a part thereof
4.)neither of the contracting parties bear
the legal representation or authorization
of the 3rd person that is, there is no
agency
5.)the 3rd person communicated his
acceptance to the obligor
(promisor)before its revocation by the
original parties

Acceptance by 3rd person

-it is necessary that the 3rd person
accepts the stipulation in his favor and
communicates his acceptance to the
obligor before its revocation

Revocation
-power of revocation belongs to both
contracting parties
-unilateral revocation by one of the
parties does not constitute the
revocation referred to in law

Rights of the parties