OBLIGATION – juridical necessity to give, 5.

CRIMES/ACTS/OMISSIONS punished by law –

to do or not to do arise from civil liability that is a
consequence of a criminal offense

4 ELEMENTS OF OBLIGATION
1. ACTIVE SUBJECT (creditor/obligee) –
whose obligation is constituted
2. PASSIVE SUBJECT (debtor/obligor) – has
duty to give, to do or not to do
3. OBJECT/PRESTATION – subject matter
DILIGENCE OF A GOOD FATHER OF A FAMILY
- care need to be exercised by a debtor to
deliver/give determinate thing
Exception: When law/stipulation of parties
requires a differnt standard of care
(slight/extraordinary diligence).

4. JURIDICAL/LEGAL TIE (vinculum/efficient

cause) – reason
When creditor is entitled to the fruits

Rule: The creditor has personal right

CIVIL OBLIGATION (right to ask for delivery) from the time
the obligation to deliver arises.
NATURAL OBLIGATION
But NO real right (right enforceable
derived from positive law against the whole world) until it is
delivered.
derived from equity & justice

enforceable by court action

3 KINDS OF FRUITS
not enforceable by court action
1. NATURAL – w/o human intervention

2. INDUSTRIAL – w/ human intervention

5 SOURCES OF OBLIGATION
3. CIVIL – derived by virtue of juridical
1. LAW
relation
2. CONTRACTS

3. QUASI-CONTRACTS – arise from lawful,

Creditor’s rights if debtor fails to comply
voluntary acts; no one shall be unjustly
w/ the obligation
enriched...
1. Determinate
2Kinds
a. Performance
a. Solutio indebiti – something
received (delivered on a mistake), no right b. Damages
to demand it
2. Generic
b. Negotiorum gestio – voluntary mgt
of property/affairs of another w/o his a. Performance
knowledge/consent
b. Damages
4. QUASI-DELICT/TORTS/CULPA AQUILIANA –
arise from damage; fault/negligence c. Obligation be complied at debtor’s
expense
Creditor’s rights if debtor does in 4 GROUNDS; debtor liable for damages
contravention
1. Default/mora
1. Damages
2. Fraud/dolo
2. Ask it be UNDONE at debtor’s expense
3. Negligence/culpa

4. Contrary to terms of obligation

FORTUITOUS EVENT – cannot be foreseen, if
foreseen, inevitable

General Rule: No person liable to 1. DEFAULT/MORA – delay

fortuitous event.
3kinds
Exceptions:
a. Mora solvendi – debtor’s delay to
1. Law states give (real ob.), to do (personal ob.)

2. Stipulation/contract states b. Mora accipiende – creditor’s delay

to accept
3. Assumption of risk
c. Compensatio Morae – delay of both
4. Delay in reciprocal obligation

5. Debtor promises deliver to 2/more

persons who do not have same interest (bad
faith) CONCEPT OF DELAY

General Rule: No demand, No delay

EFFECTS OF FORTUITOUS EVENT to thing to be Exceptions:

delivered
1. Law states
- extinguish the obligation if determinate;
generic does not extinguish the obligation 2. Obligation states

3. Time is the essence

3 MISCELLANEOUS RULES ON PERFORMANCE OF 4. Demand be useless if delay

OBLIGA-TION
5. Debtor guilty of delay
1. When to deliver determinate, accessions
(additions/ improvements) and accessories
(joined/included with the principal) are EFFECTS OF DELAY
INCLUDED even not mentioned.
1. Damages
2. If debtor fails to do, it shall be DONE
AT HIS EXPENSE, same with doing the 2. When to deliver determinate thing, STILL
contravention; poorly done be undone. LIABLE in fortuitous event.

3. In obligation not to do, and obligor 2. FRAUD/DOLO – conscious, deliberate,

does what is forbidden, shall be UNDONE AT intentional evasion of fulfillment
HIS EXPENSE.
2Kinds
 a. Dolo causante/Causal fraud – fraud General Rule: ALL RIGHTS are transmissible.
in obtaining consent; consent is defective,
contract is voidable. Remedy: annulment Exceptions:

b. Dolo incidente/Incidental fraud – 1. Law states

fraud w/c vitiates consent. Remedy: damages
2. Contract states

3. Obligation is purely personal

3. NEGLIGENCE/CULPA – voluntary
act/omission; no bad faith intended

3Kinds 10 Kinds of Obligation

a. Culpa aquiliana/Civil negligence – 1. Pure

quasi-delict/torts
2. Conditional
b. Culpa contractual/Contractual
3. Alternative
negligence – breach
4. Facultative
c. Culpa criminal/Criminal negligence
– crime/delict 5. Joint

6. Solidary

4. Contrary to the terms of obligation 7. Divisible

8. Indivisible

2 RULES OF PRINCIPAL & INSTALLMENT 9. Obligation w/ a period

1. Receipt of principal w/o mention of 10. Obligation w/ a penal clause

interest, presumed interest is paid also.

2. Receipt of latter installment w/o

mention of prior installment, presumed 1. PURE OBLIGATION
prior installment is paid also.
- w/o condition, demandable at once (pure
has resolutory condition/period)

4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy

claim against DEBTOR
2. CONDITIONAL OBLIGATION
1. Exact payment
- there is condition in performance; future
2. Attach debtor’s properties & uncertain

3. Accion subrogatoria – exercise rights & 2Kinds

actions except inherent in person
4. Accion pauliana – cancel acts/contracts
by debtor to defraud creditor
a. Suspensive condition – happening of
condition gives RISE to obligation
b. Resolutory condition – happening of
condition EXTINGUISHES obligation

TRANSMISSIBILITY OF RIGHTS
6 MISCELLANEOUS RULES ON CONDITIONAL
OBLIGATION
1. Impossible conditions, contrary to law,
shall ANNUL obligation.
2. The condition not to do an impossible
thing is considered not agreed upon.
3. The condition that happens in
determinate time, EXTINGUISHES obligation.
4. The condition that happens in
INDETERMINATE time, obligation only
effective at arrival.
5. The condition is fulfilled if DEBTOR
prevents fulfillment.
6. The effect of conditional obligation,
once fulfilled:
- to give: retroact to the day of
constitution of obligation
- has reciprocal prestations: fruits &
interests be mutually compensated
- has unilateral obligation: debtor shall
give fruits & interests
RULES in case of Loss, Improvement, or
Deterioration of thing during the pendency
of condition
1. LOST
a. w/ debtor’s fault – damages
b. w/o debtor’s fault – extinguishes
obligation
2. DETERIORATION
a. w/ debtor’s fault - (1) cancel
obligation & damages; or (2) fulfill
obligation w/ damages
b. w/o debtor’s fault – creditor suffer
impairment
3. IMPROVEMENT
a. By nature/time – benefit to creditor
b. at expense of debtor – debtor no right
than that granted to usufructuary (debtor
no right to compensate amount for
improvement)
EFFECTS OF FULFILLMENT OF SUSPENSIVE
CONDITION
General Rule: The obligation becomes
effective retroactively to the day
obligation was constituted.
Exceptions:
1. In reciprocal obligation, fruits &
interests during pendency of condition
shall compensate each other.
2. In unilateral obligation, debtor gets
fruits & interests unless there is a
contrary intent.
3 EFFECTS OF FULFILLMENT OF RESOLUTORY
CONDITION
1. Extinguish obligation.
2. Both parties restore what they received
plus fruits & interests.
3. The rule on L, D, or I will apply to
person who has to return the thing.
When one of debtors in reciprocal
obligation does not comply w/ his
obligation
1. The right of injured party is (1) cancel
contract & damages; or (2) fulfill
obligation & damages
3 Kinds of Obligation (Accdng to PERSON
OBLIGED)
1. UNILATERAL – only 1 party obliged to
comply
2. BILATERAL – both parties; performance
not same time
3. RECIPROCAL – both parties; performance
same time
3. OBLIGATION W/ A PERIOD
- demandability/extinguishment subject to
the expiration of period
PERIOD – interval of time; either suspends
demandability or produces extinguishment
DAY CERTAIN – must come, not known when
7 CASES CONSIDERED TO BE “OBLIGATION W/ A
PERIOD”
1. Little by little
2. In partial payment
3. Payable ASAP
4. When I can afford it
5. When I have the money
6. When I am able to
7. When my means permit me to do so
PERIOD
CONDITION
certain
uncertain
future only
future/past but unknown
(*influence upon obligation) only upon its
demandability
(*) on the very existence of obligation
itself
FOR WHOSE BENEFIT IS THE PERIOD?
General Rule: Both the debtor & creditor.
Therefore, NEITHER of them can demand
performance of obligation.
Exception: If the term of obligation has to
favor one of them.
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE
“PERIOD”
1. Debtor is insolvent.
2. Debtor attempts to abscond.
3. Impairment of guarantees/securities.
4. Failure to furnish guarantees/securities
promised.
5. Violation of undertaking.
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be
substituted.
ALTERNATIVE prestations LOST w/ debtor’s
fault
Creditor entitled to damages but needs ff
requisites:
1. Debtor can choose.
2. All prestations lost/become impossible
due to debtor’s fault.
 But if substitution is already made, debtor
is liable for loss of substitute when in
ALTERNATIVE OBLIGATION DELAY, NEGLIGENCE, or FRAUD.

FACULTATIVE OBLIGATION

several prestations due, giving one is 6. JOINT OBLIGATION

sufficient
- obligation is to be paid proportionately
one prestation due, but can be subtituted by debtors or to be demanded
proportionately by creditors
right to choose (debtor) unless granted to
creditor

right to choose DEBTOR ONLY 7. SOLIDARY OBLIGATION

If 1 of the prestation is illegal, others
may be valid, obligation remains
nullity of principal carries w/ it nullity
of accessory/
- each one of debtors has right to render
or each one of creditors has right to
demand the entire compliance w/ prestation

substitute MAXIMS & SYNONYMS

loss/impossibility of ALL prestations due,

w/o debtor’s fault, extinguishes obligation
MAXIMS
loss/impossibility of presta-tion due, w/o
debtor’s fault, extinguishes obligation SYNONYMS

JOINT Obligation

(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS “To each his own”
OF DEBTOR IN ALTERNATIVE OBLIGATION
proportionate
1. If 1 of prestations lost through
fortuitous event, shall still be perform by SOLIDARY Obligation
choosing (creditor) from the remainder.
“One for all, all for one”
2. If 1 of prestations lost through
debtor’s fault, creditor may claim any of individually & collectively
remainders w/ damages.

3. If ALL prestations lost through debtor’s

(3) SOLIDARY OBLIGATION EXIST ONLY IF:
fault, creditor choose price w/ damages.
*RULES

1. Law states
RULES on LOSS/DETERIORATION of the thing
2. Stipulation states
intended as SUBSTITUTE in FACULTATIVE
OBLIGATION 3. Nature of obligation requires

1. If there is a loss/deterioration of
thing intended as substitute, debtor is NOT
liable if NOT HIS FAULT. 2 PRESUMPTIONS THAT OBLIGATION IS JOINT
1. The debts be divided as many shares as
there are debtors/creditors.
NULLITY OF PRINCIPAL OBLIGATION OR THE
2. The debtors/creditors are distinct from PENAL CLAUSE
one another.
Nullity of principal obligation = nullity
of penal clause

8. DIVISIBLE OBLIGATION Nullity of penal clause = NOT nullity of

principal obligation
- prestation is capable of partial
performance

10 MODES OF EXTINGUISHMENT OF OBLIGATIONS

9. INDIVISIBLE OBLIGATION 1. Payment or performance

- prestation incapable of partial 2. Prescription

performance
3. Compensation

4. Confusion/merger
10. OBLIGATION W/ A PENAL CLAUSE
5. Condonation/remission
- one w/ accessory undertaking attached to
obligation to assume greater liablity in 6. Fulfillment of resolutory condition
case of breach/non-fulfillment of
obligation 7. Annulment

8. Rescission

3 PURPOSES OF PENAL CLAUSE 9. Novation

1. Ensure performance of obligation 10. Loss of thing due

2. Substitute for damages & interest in

case of noncompli-ance
1. PAYMENT/PERFORMANCE
3. Penalize debtor in case of breach
- Payment means delivery of money &
performance of obligation

In case obligation has a PENAL CLAUSE

General Rule: Penalty takes the place of 2 PLACE OF PAYMENT

damages & interest in case of non-
1. At place agreed upon
compliance.
2. If w/o agreement
Exceptions:
a. Object is indeterminate – paid at
1. Stipulation states.
domicile of DEBTOR
2. Debtor refuse to pay penalty.
b. Object is determinate – place of thing
3. Debtor guilty of fraud in performance of at the time of constitution of obligation
obligation.
4 SPECIAL MODES OF PAYMENT 1. 1 debtor & 2 or more creditors

a. Application of payment 2. Debtor is in partial/total insolvency.

b. Cession 3. Debtor to deliver ALL his property to

creditors
c. Tender of payment & consignation
4. Debt is due & demandable.
d. Dacion in payment
5. Creditors must sell the properties &
apply the proceeds to their respective
credits proportionately.
a. APPLICATION OF PAYMENT

- designation of debt to w/c payment must

be applied when debtor has several c. DACION IN PAYMENT (dacion en pago)
obligations of same kind in favor of same
creditor. - alienation of property to the creditor in
satisfaction of debt

3 REQUISITES OF APPLICATION OF PAYMENT

3 REQUISITES OF DACION IN PAYMENT
1. Only 1 debtor & 1 creditor
1. Consent of creditor
2. 2 or more debts, same kind
2. NOT prejudicial to another creditor
3. All debts are due
3. Debtor not insolvent declared by a
4. Insufficient payment to exinguish ALL judicial decree
debts

CESSION
3 RIGHTS TO MAKE APPLICATION OF PAYMENT
DACION IN PAYMENT
1. Right belongs to CREDITOR.
all properties
2. If debtor does not avail, creditor can
give him receipt designating the debt from NOT all properties
which payment will be applied.
require more than 1 creditor
3. If debtor accepts the receipt, he cannot
complain unless THERE IS just cause to NOT require all creditors
invalidate the contract.
NOT act of novation

act of novation
b. CESSION
NOT transfer ownership
- debtor abandons ALL his property for
creditor’s benefit to obtain payment from transfer ownership
proceeds of his property
requires partial/total insol-vency

may happen during solvency of debtor

5 REQUISITES OF VALID CESSION
d. TENDER OF PAYMENT & CONSIGNATION 3 REQUISITES TO EXTINGUISH OBLIGATION DUE
TO LOSS
TENDER OF PAYMENT – act of offering the
creditor what is due to him w/ a demand 1. Determinate thing.
that the creditor accept it
2. W/o debtor’s fault.
CONSIGNATION – act of depositing thing due
w/ the court when creditor cannot/refuses 3. No delay.
acceptance of payment

3. CONDONATION/REMISSION
5 REQUISITES OF CONSIGNATION
- gratuitous abandonment of right by the
1. Debt due. creditor

2. Creditor refused the tender of payment

w/o just cause
3. Notice of consignation already given to
persons interested in fulfillment of
obligation
3 REQUISITES OF A VALID
CONDONATION/REMISSION
1. It must be gratuitous.

4. Consignation of thing/amount due 2. Accepted by obligor.

5. Subsequent notice of consignation to 3. Obligation is demandable.

interested persons

4. CONFUSION/MERGER
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF
- meeting in 1 person of qualities of
PAYMENT
debtor & creditor w/ same obligation
1. Creditor is absent/unknown.

2. Creditor is incapacitate to receive at

3 REQUISITES OF VALID CONFUSION/MERGER
time it is due.
1. The merger of characters of debtor &
3. Creditor refused give a receipt, w/o
creditor must be in same person.
just cause.
2. Take place between principal debtor &
4. 2 or more persons claim the right to
creditor.
collect.
3. Clear & definite.
5. Title of obligation lost.

5. COMPENSATION
2. LOSS OF THING DUE
- 2 persons are debtors & creditors of each
- perishes, disappears, or goes out of
other
commerce; existence is unknown; cannot be
recovered

6 ESSENTIAL REQUISITES OF COMPENSATION

1. Parties both principal debtors &
creditors of each other.
2. Compensation is not prohibited by law.
3. No retention/controversy by 3rd person.
4. 2 debts are due & demandable.
5. 2 debts are liquidated.
6. 2 debts both in money/consumable things.
(2) CLASSES OF COMPENSATION
1. As to effect
a. TOTAL – obligations completely
extinguished.
b. PARTIAL – a balance remains
2. As to origin or cause
a. LEGAL – by law
b. VOLUNTARY/CONVENTIONAL – agreement of
parties
c. JUDICIAL – order from the court
d. FACULTATIVE – 1 of parties can
choose/oppose claiming compensation
6. NOVATION
- substitution/change of obligation
- substitution of debtor
- subrogation of creditor
(3) OBLIGATIONS MAY BE MODIFIED BY:
1. Changing object/principal conditions.
(REAL NOVATION)
2. Changing the person of debtor/creditor.
(PERSONAL NOVATION)
a. Substitution – change of debtor
b. Subrogation – change of creditor
3. Changing person of the parties & the
objects of principal condition. (MIXED
NOVATION)
4 REQUISITES OF NOVATION
1. Old valid obligation.
2. Agreement of parties to new obligation.
3. Extinguishment of old obligation.
4. Validity of new obligation.
2 FORMS OF NOVATION BY SUBSTITUTION OF
DEBTOR
1. EXPROMISION – w/ consent of creditor, NO
consent of old debtor
2REQUISITES
a. Initiative of 3rd person.
b. Consent of creditor.
2. DELEGACION – all must agree (creditor,
old debtor, new debtor)
3REQUISITES
a. Initiative from old debtor.
b. Consent of debtor.
c. Acceptance by creditor.
7. SUBROGATION
- change of creditor
2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original
parties & 3rd person
2. LEGAL – by law
a. creditor pays another preferred
creditor even w/o debtor’s knowledge
b. 3rd person pays the express
approval of debtor
c. 3rd person pays even w/o knowledge
of debtor
CONTRACT – meeting of minds between 2
persons to give something or to render
service.
3 ELEMENTS OF CONTRACT
1. ESSENTIAL – w/o them, contract cannot
exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN – subject matter
c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
d. FORM
e. DELIVERY
2. NATURAL – found in certain contract,
presumed to exist unless stipulated
3. ACCIDENTAL – various particular
stipulations that may be agreed upon by
contracting parties
(7) CLASSIFICATION OF CONTRACTS
According to:
1. PERFECTION/FORMATION
a. CONSENSUAL – perfected by mere
consent
b. REAL – perfected by delivery
c. FORMAL/SOLEMN – special formalities
are essential before perfection of contract
2. PARTIES OBLIGATED
a. UNILATERAL – only 1 has obligation
b. BILATERAL – both parties require to
render reciprocal prestations
3. CAUSE
a. ONEROUS – exchange of
considerations
b. GRATUITOUS – no consideration
received in exchange of what is given
c. REMUNERATORY – something is given
for benefit/service that had been rendered
previously
4. RISK OF FULFILLMENT
a. COMMUTATIVE – equivalent values are
given by both parties
b. ALEATORY – fulfillment of contract
depends on chance (eg. insurance)
5. IMPORTANCE
a. PRINCIPAL – contract may stand
alone (eg. sale, partnership)
b. ACCESSORY – existence depends on
another contract (pledge, guarantee)
c. PREPARATORY – contract not an end
by itself but a means thru w/c other
contracts may be made (eg. agency)

6. NAME
a. NOMINATE – contract given a
particular/special name (eg. partnership)
b. INNOMINATE – not given special name
(eg. I give that you may give)
7. SUBJECT MATTER
a. Contracts involving things
b. Contracts involving rights/credits
c. Contracts involving services
3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION – preparatory
steps to perfect contract
2. PERFECTION/BIRTH – meeting of minds
between 2 contracting parties
3. CONSUMMATION/TERMINATION – terms of
contract are performed, & contract is fully
executed
5 BASIC PRINCIPLES/CHARACTERISTICS OF A
CONTRACT
1. PRINCIPLE OF AUTONOMY (liberty to
contract)
Provided they are not contrary to:
a. Law
b. Morals
c. Good customs
d. Public order
e. Public policy
2. MUTUALITY OF CONTRACTS
- the contract must bind both parties; its
validity/compliance cannot be left to the
will of one of them
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the
parties, their assigns & heirs except when
there are rights & obligations not
transmissible:
a. by their nature
b. by stipulation (stipulation por
autri)
c. by provision of law
4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere consent
Exceptions:
a. REAL CONTRACTS – perfected by
delivery
b. FORMAL/SOLEMN CONTRACTS – special
form required for its perfection
5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the
force of law between parties which bound to
comply in good faith
4 KINDS OF INNOMINATE CONTRACTS
1. I give that you may give
2. I do that you may do
3. I give that you may do
4. I do that you may give
4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties
2. Law on Obligations & Contracts
3. Rules on most analogous nominate
contract
4. Customs of place
STIPULATION POR AUTRI
- stipulation in favor of 3rd person
5 REQUISITES OF STIPULATION POR AUTRI
1. Stipulation in favor of 3rd person
2. Stipulation is only PART, not the whole
of the contract.
3. Both parties must conferred upon a favor
of 3rd person
4. 3rd person must accept & say it to
debtor before its revocation/cancellation
5. Neither of both parties be the legal
representation/autho-rization of 3rd person
CONSENT
- meeting of offer (certain) & acceptance
(absolute) upon a thing
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in
contract
3. No vitiation of consent
4. No conflict between declared & intended
5. Legal formalities must be complied
7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are NOT
offers but ONLY invitations to make an
offer.
3. Advertisements for bidders are ONLY
invitations.
4. An acceptance made by letter/telegram
does NOT bind offeror EXCEPT from the TIME
it came to his knowledge.
5. An offer made through an agent is
accepted from the TIME the acceptance is
done through an agent.
6. An offer is ineffective upon death,
insanity, insolvency, of EITHER party
BEFORE acceptance is made.
7. When offeror allowed offeree a certain
period to accept, offer MAY be withdrawn AT
ANYTIME unless there is something
PAID/PROMISED.
3 persons who CANNOT GIVE CONSENT to a
contract (if entered into, contract is
voidable)
1. UNEMANCIPATED MINORS
2. INSANE/DEMENTED PERSONS (unless they
acted DURING LUCID INTERVAL)
3. DEAF-MUTES who DO NOT know how to write
DEMENTED PERSON – NOT exactly insane;
difficult to distin-guish right from wrong
LUCID INTERVAL – period when an INSANE has
acquired SANITY temporarily, therefore,
capacitated to enter into a valid contract
2 RULES on persons WHO CANNOT GIVE CONSENT
to a contract
1. Age of majority is 18 yrs old
2. A contract entered into by UNEMANCIPATED
MINOR w/o parents/guardian’s consent is
voidable, except:
a. Minor MISREPRESENTS his age
(estoppel)
b. Contract involves sale & delivery
of necessities to minor
5 VICES OF CONSENT
- NOTE: When there is a DEFECTIVE CONSENT
of EITHER of parties, contract is voidable;
Remedy: annulment of contract.
1. MISTAKE/ERROR
2. FRAUD/DECEIT
3. VIOLENECE
4. INTIMIDATION
5. UNDUE INFLUENCE
1. MISTAKE/ERROR
- wrong conception & lack of knowledge upon
a thing
(2) MISTAKES W/C VITIATES CONSENT
It should refer to:
1. substance of thing that is the OBJECT of
contract
2. conditions w/c MOVED either/both parties
to enter into contract
4 RULES ON MISTAKE
1. Mistake to identity/qualifications of
either of parties will vitiate consent ONLY
when IT is the principal cause of contract.
2. Simple mistake of account must be
corrected.
3. No mistake if parties knew the
risk/doubt affecting OBJECT of contract.
4. When one of parties is unable to read or
the contract is in language not understood
by him, & mistake/fraud is alleged, the
person enforcing the contract must FULLY
explained the terms to him.
2. FRAUD/DOLO
- when through insidious words/machinations
of one of the parties, INDUCED the other to
enter into a contract, & w/o them, he will
not agree.
DOLO CAUSANTE
DOLO INCIDENTE
Serious
Not serious
cause induces party to ENTER into contract
NOT the cause to enter into contract
make contract voidable
contract is valid; liable for damages
7 RULES OF FRAUD
1. Failure to disclose facts when these
needs to be revealed, is a fraud.
2. Fraud should be SERIOUS (dolo causante)
& SHOULD NOT be done by BOTH parties to
make contract voidable.
3. Incidental fraud (dolo incidente) ONLY
obliges person to PAY DAMAGES.
4. Usual exaggerations in trade, when other
party know the “real” facts, is NOT FRAUD.
5. A mere expression of opinion is NOT
FRAUD UNLESS made by an expert & the other
party relies on his special knowledge.
6. Misrepresentation made in good faith is
NOT FRAUD but may constitute an error.
7. Misrepresentation by 3rd person DOES NOT
vitiate consent UNLESS it created
substantial mistake.
3. VIOLENCE
- serious/irresistible force is employed.
2 RULES ON VIOLENCE
1. Serious/irresistible force is employed
w/c constitutes the reason why one entered
into a contract.
2. Violence ANNULS obligation although it
is DONE by 3rd person not part of contract.
4. INTIMIDATION
- 1 of the parties is compelled by a
reasonable & well-grounded fear of an
imminent & grave evil upon his
person/property to give his consent.
3 RULES ON INTIMIDATION
1. Age, sex, & condition of person must
used to determine the degree of
intimidation.
2. Intimidation ANNULS obligation although
it is DONE by 3rd person not part of
contract.
3. A threat to enforce one’s claim (claim
must be just & legal), DOES NOT vitiate
consent.
VIOLENCE
INTIMIDATION
External
Internal
Physical contact/coercion
NO physical coercion; ONLY MENTAL/MORAL
coercion
5. UNDUE INFLUENCE
- a person takes improper advantage of his
power over other’s will, depriving the
other to his reasonable freedom of choice.
3 RULES ON UNDUE INFLUENCE
1. There is a person who takes improper
advantage of his power over other’s will,
depriving the other to his reasonable
freedom of choice.
2. Undue influence ANNULS obligation
although it is DONE by 3rd person not part
of contract.
3. To constitute undue influence, ff
circumstances must be considered: (1)
confidential, family, spiritual, & other
relations of parties; or (2) the aggrieved
party is suffering from mental weakness; or
(3) ignorant; or (4) in financial distress.
SIMULATION OF CONTRACT
- process of INTENTIONALLY deceiving others
by producing a contract not really exist
(absolute simulation), or w/c is different
from true agreement (relative simulation).
2 KINDS OF SIMULATED CONTRACT
1. ABSOLUTE SIMULATION (the parties DO NOT
intend to be bound at all)
- completely fictitious/make-believe; VOID
2. RELATIVE SIMULATION (parties conceal
their true/real agreement)
- parties are bound to real/true agreement,
EXCEPT:
a. contract prejudice 3rd person
b. purpose is contrary to law, morals,
good customs, public order, public policy
7 REQUISITES OF OBJECT OF CONTRACT
1. Specific & certain
2. Services not contrary to law, morals,
good customs, public order, public policy
3. Services/things must NOT be
legally/physically impossible
4. Services/things are w/in commerce of man
including future things
5. Rights are NOT TRANSMISSIBLE.
6. Determinate (kind) or determinable ( w/o
the need of new contract/agreement)
7. NO contract be entered for future
inheritance UNLESS law states
4 REQUISITES OF CAUSE
1. It is just & equitable.
2. It exists.
3. It is lawful.
4. It is true.
LESION
- inadequacy of cause (eg. insufficient
price for thing sold)
RULES ON LESION
- Lesion DOES NOT invalidate contract,
except there is:
a. Fraud b. Mistake c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
1. Contracts w/c must be IN WRITING to be
valid:
a. Donation of personal property
exceeds P5000.
b. Agent’s authority in sale of
land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on
loans.
e. Stipulation to reduce common
carrier’s extraordinary diligence & to
limit its liability.
2. Contracts w/c must be IN A PUBLIC
INSTRUMENT to be valid:
a. Donation of real property (both the
donation & accep-tance).
b. Sale of real property.
c. Partnership where real
property/rights is contributed; or when
capital contribution exceeds P3000.
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written
instrument is made/construed to the REAL
intention of parties when there is an
error/mistake.
(5) CASES REFORMATION OF INSTRUMENT IS
AVAILABLE
1. Mutual mistake of parties.
2. One party was mistaken & the other acted
fraud.
3. One party was mistaken & the other
knew/believed that the instrument did not
state their REAL agreement.
4. Ignorance, lack of skill, negligence, or
bad faith of person drafting the instrument
DOES NOT state the TRUE INTENTION of
parties
5. Two parties agree on mortgage/pledge of
personal/real property BUT the instrument
states the property is sold ABSOLUTELY, or
w/ the right to repurchase.
(3) NO REFORMATION OF INSTRUMENT WHEN:
1. Simple donation inter vivos where NO
CONDITION is imposed.
2. Will.
3. Real agreement is VOID.
4 KINDS OF DEFECTIVE CONTRACTS
1. RESCISSIBLE – valid until rescinded; has
ALL essential requisites but because of
injury/damage to one of the parties, the
contract may be rescinded.
2. VOIDABLE – valid until annulled; has ALL
essential requisites but because of defect
in consent, contract may be annulled.
3. UNENFORCEABLE – cannot be sued/enforced
unless ratified; no effect NOW but may take
effect upon ratification.
4. VOID – NO effect at all; cannot be
ratified/validated.
5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered
LESION by more than ¼ of value of the value
that is the OBJECT.
2. Those agreed upon in representation of
absentees, if the absentees suffered
LESION.
3. Those undertaken in FRAUD of creditors
when the creditors cannot further claim.
4. If entered into contract w/o
knowledge/approval of litigants under
litigation.
5. Contracts subjected to rescission
declared by law.
3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving
consent to a contract.
2. Those where consent vitiates by vices of
consent. (MFVIU)
3. Those agreed in the state of
drunkenness/hypnotic spell.
3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person,
or who acted BEYOND his powers.
2. Those who do not comply w/ the Statute
of Frauds.
3. Both parties are incapable of giving
consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY
simulated/fictitious.
2. Those w/c contemplate an impossible
service.
3. Those whose OBJECT is outside the
commerce of man.
4. Those whose CAUSE/OBJECT did not exist
at time of tran-saction.
5. Those whose CAUSE/OBJECT/PURPOSE is
contrary to law, morals, good customs,
public order, or public policy.
6. Those where INTENTION of parties to
principal object CANNOT be ascertained.
7. Those expressly prohibited/declared VOID
by law.