Law - any rule of action or any system of uniformity - in general, determines the activity of men as a rational beings and

the movements or motions of all objects of creation, whether animate or inanimate. GENERAL DIVISIONS OF LAW (1) Law (in srict legal sense) - promulgated and enforced by state. (2) Law (non-legal sense) - not promulgated and enforced by state. Divine Law - law of religion and faith which concerns itself with the concept of sin and salvation (1) source - promulgated by od and revealed by means of direct revelation to man!ind (2) sanction - assurance of rewards and punishments in the present life or in the life to come Natural Law - the divine inspiration in man in the sense of justice, fairness and righteousness by internal dictates of reason alone. (1) binding force - ever present ans binding on all men everywhere at all times. "nward instinct of justice, fairness and righteousness (2) compared to divine law - divine law is the law of religious faith made !nown by direct revelation. #atural law is impressed in man as the core of his higher self. Moral Law - the totality of the norms of good and right conduct growing out of the collective sense of right and wrong of community. (1) sanction - no definite legal sanction. $ spontaneous social reacton is produced in the form of public displeasure, contempt or even indignation. (2) binding force - it varies with the changing times, conditions or convictions of the people. (%) place in the state law - moral law, to a great e&tent, influences or shapes state law. Physical Law - uniformities of actions and order of se'uence which are the physical phenomena that we sense and feel. State Law - the law that is promulgated and enforced by state. (1) other terms - !nown as positive, municipal, civil, or imperative law. (2) binding force - as a rule of action, only state law is enforced by the state with the aid of physical force if necessary. (%) concern of state law - state law does not concern itself with violations of the latter rules of action unless they also constitute violations of its commands. CONCEPTS OF STATE LAW (1) "n its general sense, (the mass of obligatory rules establised for the purpose of governing the relations of persons in society( (2) "n its specific sense, (a rule of conduct, just, obligatory, promulgated by legitimate authority, and of common observance and benefit. CHARACTERISTICS OF LAW (1) $ rule of conduct (2) )bligatory (%) *romulgated by legitimate authority (+) "t is of common observance and benefit SOURCES OF LAW (1) Constitution - the written instrument by which the fundamental powers of the government are established, limited and defined, and by which these powers are distributed among the several departments for their safe and useful e&ercise for the benefit of the people.

(2) Legislation - consist in the decleration of legal rules by a competent authority. $cts passed by the legislative are so-called enacted law or statute law. (%) Administrative or executive orders, regulations and rulings - administrative rules and regulations are intended to clarify or e&plain the law and carry into effect its general provision. (+) Juridicial decision or Jurispridence - the decisions of a superior court on a point of law are binding on all subordinate courts which is called doctrine of precedent or stare decisis (,) Custom - it consist of those habits and practices which through long and uninterrupted usage have become ac!nowledged and approved by society as binding rules of conduct Differences of law wi ! o !er "eans of social con rol (1) Laws are made and administered by the only institutions in society authori-ed to act in behalf of the entire citi-enry. (2) )nly the legal institutions within the society can ma!e rules, regulations and other with which the entire citi-enry must comply. (%) *eople associated with an organi-ation can ordinarily terminate their relationship and thereby free themselves from the impact of its rules and regulations. (+) .he sanction or techni'ues of control through law are more varied and comple& than the techni'ues available to organi-ations. (,) /efore the law operates against an individual, various procedural steps are re'uired. .his is called the (due process( of law. ORGANI#ATION OF COURTS (1) egular Courts - 0upreme 1ourt, 1ourt of $ppeals, 2egional .rial 1ourts (2) Special Courts - 0andiganbayan, 1ourt of .a& $ppeals, 1ourt of $ppeals (%) !uasi"#udicial Agencies - #at(l Labor 2elations 1ommission, 031, L.42/, "nsurance 1ommission CLASSIFICATIONS OF LAW (1) $s to its purpose (a) Su$stantive Law - portion of the body of law creating and defining rights and duties which may either be public or private in character. (b) Ad#ective Law - portion of the body of law prescribing the manner or procedure by which rights may be enforced or their violations redressed. "t is also called remedial or procedural law. (2) $s to its subject matter (a) Pu$lic Law - body of legal rules which regulates the rights and duties arising from the relationship of the state to the people. 3&amples of *ublic Law5 (1) Criminal Law - the law which defines crimes and provides for their punishments. (2) %nternational Law - the law which governs the relations among nations or states. (%) Constitutional Law - governs the relations between the state ant its citi-ens. (+) Administrative Law - governs the methods by which the fuctions of administrative authorities are to be performed. (,) Criminal Procedure - that branch of private law which governs the method of trial and punishment in criminal cases. (b) Private Law - body of rules which regulates the relations of individuals with one another for purely private ends. THE LAW ON O$LIGATION AND CONTRACTS -the body of rules which deals with the nature and sources of obligations and the rights and duties arising from agreements and the particular contracts6

CHAPTER % - GENERAL PROVISIONS

Ar icle %%&'( An o)li*a ion is a +,ri-ical necessi . o *i/e0 o -o or no o -o( &$ligation - derived from the Latin word obligatio which means tying and binding. - it is a tie or bond recogni-ed by law by virtue of which one is bound in favor of another to render something. Juridical necessity - obligation is a juridical necessity because in the case of noncompliance, the courts of justice may be called upon by the aggrieved party to enforce its fulfillment or, in default therof, the economic value that it represents. Civil o$ligations - obligations which give to the creditor or obligee a right under the law to enforce their performance in courts of justice. ESSENTIAL RE1UISITES OF AN O$LIGATION (1) $ passive su$#ect (debtor or obligor) - the person who is bound to the fulfillment of the obligation. (2) $n active su$#ect (creditor or obligee) - the person who is entitled to demand the fulfillment of the obligation. (%) &$#ect or Prestation (subject matter of the obligation) - the conduct re'uired to be observed by the debtor. (+) $ #uridical or legal tie (efficient cause) - that which binds or connects the parties to the oblgation. 'orm o( an o$ligation - refers to the manner in which an obligation is manifeste or incurred. &$ligation - is the act or performance which the law will enforce. ight - the power which a person has under the law, to demand from another any prestation. )rong - an act or omission of one party in violation of the legal right or rights of another. 3ssential elements of legal wrong or injury (a) a legal right in favor or a person (b) a correlative legal obligation on the part of anoother7 to respect or not to violate said right (c) an act or omission by the latter in violation of said right with resulting injury or damage to the former. - a wrong or cause of action only arises at the moment a right has been transgressed or violated. 2in- of O)li*a ion accor-in* o !e s,)+ec "a er3 (1) eal o$ligation (obligation to give) - the subject matter is a thing which the obligor must deliver to obligee. (2) Personal o$ligation (obligation to do or not to do) - the subject matter is an act to be done or not to be done. .wo !inds of personal obligation5 (a) Positive personal o$ligation - obligation to do or to render services. (b) Negative personal o$ligation - obligation not to do. ART( %%&4( O)li*a ions arise fro" 5%6 Law 576 Con rac s

586 1,asi-Con rac s 596 Ac s or o"issions :,nis!e- ). law 5&6 1,asi-Delic s SOURCES OF O$LIGATIONS (1) Law - when they are imposed by law itself (2) Contracts - when they arise from stipulaton of the parties (%) !uasi"Contracts - when the arise from lawful, voluntary and unilateral acts which are enforceable to the end that no one shall be unjustly enriched or benefitted at the e&pense of another. (+) Acts or omissions punished $y law - arise from civil liability which is the conse'uence of a criminal offense. (,) !uasi"Delicts - arise fromdamage caused to another through an act or omission, there being fault or negligence, but no relation e&ist between the parties. So,rces Classifie(1) emanating from law (2) emanating from private acts (a) arising from licit acts, in the case of contracts and 'uasi-contracts (b) those arising from illicit acts, pinishable in the case of delicts or crimes, or not punishable in the case of 'uasi-delicts or torts. ART( %%&;( O)li*a ions -eri/e- fro" law are no :res,"e-( Onl. !ose e<:ressl. -e er"ine- in !is Co-e or in s:ecial laws are -e"an-a)le0 an- s!all )e re*,la e- ). !e :rece: s of !e law w!ic! es a)lis!es !e"= an- as o w!a !as no )een foreseen0 ). !e :ro/ision of !is $oo>( ART( %%&?( O)li*a ions arisin* fro" con rac s !a/e !e force of law )e ween !e con rac in* :ar ies an- s!o,l- )e co":lie- wi ! in *oo- fai !( Contract - is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. (1) Binding force - obligations arising from contracts have the force of law between the contracting parties, they have same binding effect of obligations imposed by laws. (2) Requirement of a void contract - a contract is valid if it is not contrary to law, morals, good customs, public order, and public policy. Compliance in *ood 'aith - means compliance or performance in accordance with the stipulations or terms of the contract or agreement. !uasi"Contract - the juridical relation resulting from lawful, voluntary, and unilateral acts by virtue of which the parties become bound to each other to the end that no one will be unjustly enriched or benefited at the e&pense of another. 2INDS OF 1UASI-CONTRACTS (1) Negotiorium gestio - the voluntary management of the property or affairs of another without the !nowledge or consent of the latter. (2) Solutio inde$iti - the juridical relation which is created when something is recieved when there is no right to demand it and it was uduly delivered through mista!e. .he re'uisites are5 (a) .here is a right to recieve the thing delivered. (b) .he thing was delivered through mista!e. ART( %%'%( Ci/il o)li*a ions arisin* fro" cri"inal offenses s!all )e *o/erne- ). !e :enal

laws0 s,)+ec o !e :ro/isions of ar icle 7%440 an- of !e :er inen :ro/isions of C!a: er 70 Preli"enar. Ti le0 on H,"an Rela ions0 an- Ti le @VII of !is $oo> re*,la in* -a"a*es( SCOPE OF CIVIL LIA$ILITA (1) estitution - to return the property or to pay its value if it was lost or destroyed (2) eparation (or the damage caused - to pay for the damage caused to the property (%) %ndemni(ication (or conse+uential damages - to pay other damages suffered as a conse'uence of the crime ART( %%'7( O)li*a ions -eri/e- fro" B,asi--elic s s!all )e *o/erne- ). !e :ro/ision of C!a: er 70 Ti le @VII of !is )oo>0 an- ). s:ecial laws( !uasi"delict - is an act or omission by a person (tortfeasor) which causes damage to another in his person, property, or rights giving rise to an obligation to pay for the damage done, there being fault or negligence but there is no pre-e&isting contractual relation between parties. RE1UISITES OF 1UASI-DELICT (1) there must be an act of omission (2) there must be fault or negligence (%) there must be damage caused (+) there is a direct relation or connection of cause and effect between the act or omission and the damage (,) there is no pre-e&isting contractual relation between the parties

CHAPTER 7 - NATURE AND EFFECT OF O$LIGATION Speci(ic or determinate thing - particularly designated or physically segregated others of the same class. - identified by its individuality. *eneric or indeterminate thing - refers only to a class or genus to which it pertains and cannot be pointed out with particularity. - identified only by its specie. D, ies of -e) or in o)li*a ion o *i/e a -e er"ina e !in* (1) *reserve the thing (2) 8eliver the fruits of the thing (%) 8eliver the accessions ad accessories (+) 8eliver the thing itself (,) $nswer for damages in case of non-fulfillment or breach D, ies of -e) or in o)li*a ion o -eli/er a *eneric !in* (1) .o deliver a thing which is of the 'uality intended by the parties ta!ing into consideration the purpose of the obligation and other circumstances (2) .o be liable for damages on case of fraud, negligence, or delay, in the performance of his obligation, or contravention of the tenor thereof ART( %%'9( T!e cre-i or !as a ri*! o !e fr,i s of !e !in* fro" !e i"e of !e o)li*a ion o -eli/er i arises( Howe/er0 !e s!all acB,ire no real ri*! o/er i ,n il !e sa"e !as )een -eli/ere- o !i"( DIFFERENT 2INDS OF FRUITS (1) Natural (ruits - the spontaneous products of the soil, and the young and other products of

animals (2) %ndustrial (ruits - produced by lands of any !ind through cultivation or labor (%) Civil (ruits - derived by virtue of a juridical relation W!en o)li*a ion o -eli/er fr,i s arises (1) .he obligation arises to deliver the thing due and, conse'uently, the fruits thereof, if any, arises from the time of the (perfection of the contract(. Per(ection - refers to the birth of the contract or to the meeting of the minds between the parties. (2) .he obligation is is subject to a susensive condition or period, it arises upon the fulfillment of the condition or arrival of the term (%) "n a contract sale, it arises from the perfection of the contract (+) "n obligations to give arising from law, 'uasi-contracts, delicts, and 'uasi-delicts, the time of performance is determined by the specific provisions of the law applicable Personal right - the right or power of a person to demand from another. eal right - the right or interest of a person over a specific thing. Personal ri*! an- Real ri*! -is in*,is!e(1) "n personal right, there is a definite active subject and a definite passive subject, while in real right, there is a definite active subject without anu definite passive subject. (2) $ personal right is binding or enforceable only against a particular person while a real right is directed against the whole world. ART( %%'&( W!en w!a is o )e -eli/ere- is a -e er"ina e !in*0 !e cre-i or0 in a--i ion o !e ri*! *an e- !i" ). Ar icle %%4C0 "a. co":el !e -e) or o "a>e !e -eli/er.( If !e !in* is in-e er"ina e or *eneric0 !e "a. as> !a e! o)li*a ion )e co":lie- wi ! a !e e<:ense of !e -e) or( If !e o)li*or -ela.s0 or !as :ro"ise- o -eli/er !e sa"e !in* o wo or "ore :ersons w!o -o no !a/e !e sa"e in eres 0 !e s!all )e res:onsi)le for for ,i o,s e/en ,n il !e !as effec e- !e -eli/er.( Re"e-ies of cre-i or in real o)li*a ion (1) Speci(ic real o$ligation (obligation to deliver a determinate thing) - the creditor may e&ercise the following5 (a) demand specific performance or fulfillment of the obligation with a right to indemnity for damages (b) demand rescission or cancellation of the obligation also with a right to recover damages (c) demand payment of damages only, where it is the only feasible remedy (2) *eneric real o$ligation (obligation to deliver a generic thing) - can be performed by a third person since it is from the same genus or family. "t is not necessary for the creditor to compel the debtor to ma!e the delivery, although he may as! for performance of the obligation. ART( %%''( T!e o)li*a ion o *ie a -e er"ina e !in* incl,-es !a of -eli/erin* all i s accessions an- accessories0 e/en !o,*! !e. "a. no !a/e )een "en ione-( Accessions - the fruits of a thing or additions to or improvements upon a thing Accessories - things joined to or included with the principal thing for the latter(s embellishment, better use, or completion ART( %%'4( If a :erson o)li*e- o -o so"e !in* fails o -o i 0 !e sa"e s!all )e e<ec, e- a

!is cos ( T!is sa"e r,le s!all )e o)ser/e- if !e -oes i in con ra/en ion of !e enor of !e o)li*a ion( F,r !er"ore0 i "a. )e -ecree- !a w!a !as )een :oorl. -one )e ,n-one( 9$rticle 11:; refers to an obligation to do, to perform an act or render a service. "t contemplates in three situations5 (1) .he debtor fails to perform an obligation to do. (2) .he debtor performs an obligation to do but contrary to the terms thereof (%) .he debtor performs an obligation to do but in poor manner Re"e-ies of cre-i or in :osi i/e :ersonal o)li*a ion (1) "f the debtor fails to comply with his obligation to do, the creditor has the right5 (a) to have the obligation performed by himself, or by another, unless personal considerations are involved, at the debtor(s e&pense (b) to recover damages (2) .he obligation is done in contravention of the terms of the same or is poorly done, it may be ordered that it be undone if it is still possible to undo what was done. ART( %%';( W!en !e o)li*a ion consis s in no -oin*0 an- !e o)li*or -oes w!a !as )een for)i--en !i"0 i s!all also )e ,n-one a !is e<:ense ART( %%'?( T!ose o)li*e- o -eli/er or o -o so"e !in* inc,r in -ela. fro" !e i"e !e o)li*ee +,-iciall. or e< ra-+,-iciall. -e"an-s fro" !e" !e f,lfill"en of !eir o)li*a ion( Howe/er0 !e -e"an- ). !e cre-i or s!all no )e necessar. in or-er !a -ela. "a. e<is 3 5%6 W!en !e o)li*a ion or !e law e<:ressl. so -eclares= or 576 W!en fro" !e na ,re an- !e circ,"s ances of !e o)li*a ion i a::ears !a !e -esi*na ion of !e i"e w!en !e !in* is o )e -eli/ere- or !e ser/ice is o )e ren-ere- was a con rollin* "o i/e for !e es a)lis!"en of !e con rac = or 586 W!en !e -e"an- wo,l- )e ,seless0 as w!en !e o)li*or !as ren-ere- i )e.on- !is :ower o :erfor"( In reci:rocal o)li*a ions0 nei !er :ar . inc,rs in -ela. if !e o !er -oes no co":l. or is no rea-. o co":l. in a :ro:er "anner wi ! w!a is inc,")en ,:on !i"( Fro" !e "o"en one of !e :ar ies f,lfills !is o)li*a ion0 -ela. ). !e o !er )e*ins( &rdinary delay - the failure to perform an obligation on time Legal delay or de(ault or mora - the failure to perform an abligation on time which failure constitutes a breach of the obligation 2INDS OF DELAA OR DEFAULT (1) Mora solvendi - the delay on the part of the debtor to fulfill his obligation (2) Mora accipiendi - the delay on the part of the creditor to accept the performance of the obligation (%) Compensatio morae - the delay of the obligors in recipreocal obligations ReB,isi es of -ela. or -efa,l ). !e -e) or (1) failure of the debtor to perform his obligation on the date agreed upon (2) demand made by the creditor upon the debtor to comply with his obligation which demand may either be judicial (when a complain is filed in court) or e&tra-judicial (when made outside of court, orally or in writing) (%) failure of the debtor to comply with such demand EFFECTS OF DELAA (1) <ora solvendi (a) the debtor is guilty of breach or violation of the obligation

(b) the debtor is liable to the creditor for interest or damages (c) the debtor is liable evern for a fortuitous event when the obligation is to deliver a determinate thing. (2) <ora accipiendi (a) the creditor is guilty of breach of obligation (b) he is liable for damages suffered, if any, by the debtor (c) he bears the ris! of loss of the thinf due (d) where the obligation is to pay money, the debtor is not liable for interest from the time of creditor(s delay (e) the debtor may release himself from the obligation ny the consignation or deposit in court of the thing or sum due (%) 1ompensatio morae (a) if the delay of one party is followed by that of the other, the liability shall be e'uitably tempered or balanced by the courts. (b) if it cannot be determined which of the party is guilty of delay, the contract shall be deemed e&tinguished and each shall bear his own damages. W!en -e"an- is no necessar. o :, -e) or in -ela. 8elay by the debtor begins only from the moment a demand for the fulfillment of the former(s obligation is made by teh creditor. 3&ceptions are5 (1) =hen the obligation so provides (2) =hen the law so provides (%) =hen time is of essence (+) =hen demand would be useless (,) =hen there is performance by a party in reciprocal obligations ART( %%4C( T!ose w!o in !e :erfor"ance of !eir o)li*a ions are *,il . of fra,-0 ne*li*ence0 or -ela. an- !ose w!o in an. "anner con ra/ene !e enor !ereof0 are lia)le for -a"a*es( GROUNDS FOR LIA$ILITA (1) 'raud ,deceit or dolo- - it is the deliberate or intentional evasion of the normal fulfillment of an obligation. %ncidental (raud ,dolo incidente- - commtted int the performance of an obligation already e&isting because of contract Casual (raud ,dolo causante- - fraud employed in the e&ecution of a contract under $rticle 1%%> which vitiates consent (2) Negligence ,(ault or culpa- - any voluntary act or omission, there being no bad faith or malice, which prevents the normal fulfillment of an obligation. (%) Delay ,mora(+) Contravention o( the terms o( the o$ligation - the violation of the terms and conditions stipulated in the oblgation ART( %%4%( Res:onsi)ili . arisin* fro" fra,- is -e"an-a)le in all o)li*a ions( An. wai/er of an ac ion for f, ,re fra,- is /oi-( ART( %%47( Res:onsi)ili . arisin* fro" ne*li*ence in !e :erfor"ance of e/er. >in- of o)li*a ion is also -e"an-a)le0 ), s,c! lia)ili . "a. )e re*,la e- ). !e co,r s0 accor-in* o !e circ,"s ances( 2INDS OF NEGLIGENCE ACCORDING TO SOURCE OF O$LIGATION (1) Contractual negligence ,culpa contractual- - negligence in contracts resulting in their breach. (2) Civil negligence ,culpa a+uiliana- - negligence by itself is the source of an obligation between the parties not so related before by any pre-e&isting contract.

(%) Criminal negligence ,culpa criminal- - negligence resulting in the commission of a crime. Effec of ne*li*ence on !e :ar of !e in+,re- :ar . $rticle 21;? of the 1ivil 1ode @=hen the plaintiff(s own negligence was the immediate and pro&imate cause of his injury, he cannot recover damages. /ut if his negligence was only contributory, the immediate and pro&imate cause of the injury being the defendant(s lac! of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded@ ART( %%48( T!e fa,l or ne*li*ence of !e o)li*or consis s in !e o"ission of !a -ili*ence w!ic! is reB,ire- ). !e na ,re of !e o)li*a ion an- corres:on-s wi ! !e circ,"s ances of !e :erson0 of !e i"e an- of !e :lace( W!en ne*li*ence s!ows )a- fai !0 !e :ro/isions of Ar icles %%4% an- 77C%0 :ara*ra:* 7 s!all a::l.( If !e law or con rac -oes no s a e !e -ili*ence w!ic! is o )e o)ser/e- in !e :erfor"ance0 !a w!ic! is e<:ec e- of a *oo- fa !er of a fa"il. s!all )e reB,ire-( FACTORS TO $E CONSIDERED IN DETERDING THE ISSUE OF NEGLIGENCE (1) #ature of the obligation (2) 1ircumstances of the person (%) 1ircumstances of time (+) 1ircumstances of the place Deas,re of lia)ili . for -a"a*es $rticle 22A1 of the 1ivil 1ode @"n contracts and 'uasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable conse'uences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. "n case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all the damages which may be reasonablt attributed to the non-performance of the obligation@ 2INDS OF DILIGENCE RE1UIRED (1) that agreed upon by the parties, orally or in writing (2) in the absence of stipulation, that re'uired by law in the particular case (%) if both the contact and law are silent, then the diligence e&pected of a good father of a family ART( %%49( E<ce: in cases e<:ressl. s:ecifie- ). !e law0 or w!en i is o !erwise -eclare). s i:,la on0 or w!en !e na ,re of !e o)li*a ion reB,ires !e ass,": ion of ris>0 no :erson s!all )e res:onsi)le for !ose e/en s w!ic! co,l- no )e foreseen0 or w!ic! !o,*! foreseen0 were ine/i a)le( 'ortuitous event - any event which cannot be foreseen, or which, though foreseen, is inevitable. $n event which is either impossible to foresee or impossible to avoid. For ,i o,s e/en -is in*,is!e- fro" force "a+e,re (1) Acts o( man - fortuitous event is an event independent of the will of the obligor but not of ther human wills. (2) Acts o( *od - they refer to what is called majeure or those events which are totally independent will of every human being. 2INDS OF FORTUITOUS EVENTS (1) &rdinary (ortuitous events - events which are common and which the contracting parties could reasonably foresee. (2) .xtra"ordinary (ortuitous events - events which are uncommon and which the contracting

parties could not have reasonably foreseen. RE1UISITES OF A FORTUITOUS EVENT (1) the event must be independent of the human will or at least of the debtor(s will (2) the event could not be foreseen, or if foresenn is inevitable (%) the event must be of such a character as to render it impossible for the debtor to comply with his obligation in a normal manner (+) the debtor must be free from any particiation in, or the aggravation of, the injury to the creditor, that is, there is no concurrent negligence on his part R,les as o lia)ili . in case of for ,i o,s e/en $ person is not responsible for loss or damage caused to another resulting from the nonperformance of his obligation due to a fortuitous event. .he following are e&ceptions (1) =hen e&pessly specified by law (a) the debtor is guilty of fraud, negligence, or delay or contravention of the tenor of the obligation (b) the debtor has promised to deliver the same (specific) thing to two or more persons who do not have the same interest (c) the obligation to deliver a specific thing arises from a crime (d) the thing to be deliverd id generic (2) =hen declared by stipulation - the basis rest upon the freedom of contract (%) =hen the nature of obligation re'uires the assumption of ris! - ris! of loss or damage is an essential element in the obligation Simple loan or mutuum - a contact whereby one f the parties delivers to another, money or other consumable thing, upon the condition that the same amount of the same !ind of 'uality shall be paid. /sury - contracting for or receiving interest in e&cess of the amount allowed by law for the loan or use of money, goods, chattels or credits. RE1UISITES FOR RECOVERA OF INTEREST (1) the payment of interest must be e&pressly stipulated (2) the agreement must be in writing (%) the interest must be lawful ART( %%4'( T!e recei: of !e :rinci:al ). !e cre-i or0 wi !o, reser/a ion wi ! res:ec o in eres 0 s!all *i/e rise o !e :res,": ion !a sai- in eres !as )een :ai-( T!e recei: of a la er ins all"en of a -e) wi !o, reser/a ion as o :rior ins all"en s0 s!all li>ewise raise !e :res,": ion !a s,c! ins all"en !as )een :ai-( Presumption - the inference of a fact not actually !nown arising from its usual connection with another which is !nown or proved. TWO 2INDS OF PRESUDPTION (1) Conclusive presumption - one which cannot be contradicted, li!e the presumption that everyone is conclusively presumed to !now the law (2) Disputa$le ,re$utta$le- presumption - one which can be contradicted or rebutted by presenting proof of the contrary W!en :res,": ons in Ar icle %%4' -o no a::l. (1) =ith reservation as the interest (2) 2eceipt without indication of particular instalment paid

(%) 2eceipt for a part of the principal (+) *ayment of ta&es (,) #on-payment proven ART( %%44( T!e cre-i ors0 af er !a/in* :,rs,e- !e :ro:er . in :ossession of !e -e) or o sa isf. !eir clai"s0 "a. e<ercise all !e ri*! s an- )rin* all !e ac ioons of !e la er for !e sa"e :,r:ose0 sa/e !ose w!ic! are in!eren in !is :erson= !e. "a. also i":,*n !e ac s w!ic! !e -e) or "a. !a/e -one o -efra,- !e"( Re"e-ies a/aila)le o ce-i ors for !e sa isfac ion of !eir clai"s (1) e&act fulfillment with the right to damages (2) pursue the leviable property of the debtor (%) e&ercise all the rights and bring all the actions of the debtor e&cept those inherent in or personal to the person of the latter (+) as! the court to rescind or impugn acs or contracts which the debtor may have done to defraud him when he cannot in any other manner recover his claim ART( %%4;( S,)+ec o !e laws0 all ri*! s acB,ire- in /ir ,e of an o)li*a ion are rans"issi)le0 if !ere !as )een no s i:,la ion o !e con rar.( Trans"issi)ili . of ri*! s $ll rights ac'uired in virtue of an obligation are generally transmissible. .he e&ceptions are5 (1) Prohi$ited $y law (a) by contracy of partnership, two or more persons bind themselves to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves. (b) by contract of agency, a person binds hemself to render some service or to do something on representation or on behalf of another, with the consent or authority of the latter (c) by contract of commodatum, one of the parties delivers to another something not consummable so that the latter may use the same for a certain time and return it. (2) Prohi$ited $y stipulation o( the parties - the stipulation that upon the death of the creditor, the obligation shall be e&tinguished, or that the creditor cannot assign his credit to another.