Art. 1344.

In order that fraud may

make a contract voidable, it should
be serious and should not have been
employed by both contracting
parties.

Incidental fraud only obliges the

person employing it to pay
damages.
Two kinds of fraud in the
making of contract
Causal Fraud which is ground for
annulment of a contract, it may also give
rise to an action for damages.

Example:
Jose sold a Parcel of land to Wally.
Jose told Wally that there were 2,000
coconut trees on the land although he
knew that there were only 1,000.
Wally bought the land relying on the
statement of Jose.
Requisite of a causal fraud

It should be serious.
It should not have been employed
by both contracting parties.
It should no have been know by
other contracting party.
Incidental fraud which only renders the
party who employs it liable for damages.

Example:
Jose and Wally signed a contract which
states that Jose should deliver 50
sacks of rice on August 10 and that
Wally should pay the full amount before
the said date. Wally complied to the
agreement, but on the 10th of August,
Jose have only delivered 30 sacks of
rice due to fortuitous event and have
not given Wally prior notice.
Art. 1345. Stimulation of a
contract may be absolute or
relative. The former takes place
when parties do not intend to be
bound at all; the latter, when
parties conceal their true
agreement
Simulation simulation of a
contract is the act deliberately
deceiving others, by pretending by
agreement, the appearance of
transaction is either non-existent or
different from their true agreement
Kinds of simulation
Absolute simulation when parties do not
intend to be bound at all, void from the
beginning.
Example:

Nicole is indebted to Raycia. Upon knowing Raycia

is going to enforce her credit, Nicole pretended to
sell her land to Kris. Nicole did not receive any
centavo for the transaction and she continued in
possession of the land as the contract was merely
fictitious. There is no contract of sale in this case as
the parties do not intend to be bound at all.
Relative simulation when parties conceal their
true agreement. When not prejudicial to the third
person and not intended for any purpose contrary
to law, morals, good customs, public order or
public policy, binds the parties to their real
agreement.
Example:

Ivan owns a parcel of land which he wants to donate to

Del. To avoid the donors tax, Ivan entered into a
contract of sale with Del.

There are two acts involved; the apparent act (contract

of sale) and the concealed act (donors tax).
Art. 1346. An absolutely simulated
or fictitious contract is void. A relative
simulation, when it does not
prejudice the third person and not
intended for any purpose contrary to
law, morals, good customs, public
order or public policy, binds the
parties to their real agreement.
 Section 2. Objects of Contract
Art. 1347. All things which are not outside the
commerce of men, including future things, may
be the object of the contract. All rights which
are not intransmissible may also be the object
of the contracts.
No contract may be entered into upon future
inheritance except in cases expressly
authorized by the law.
All services which are not contrary to law,
morals, good customs, public order or public
policy, may like wise be the object of a contract.
The object of the contract is its subject matter. In
reality, the object of every contract is the obligation
created. But since a contract cannot exist without
an obligation, it may be said that the thing, service,
or right which is the object of the obligation is also
the object of the contract.

Kinds of object of contract

Things (as in sale)

Rights (assignment of contract)
Services (as in agency)
Requisite of things as object of contract

In order that things may be the object of a contract,

the following req. must be presented:

The thing must be within the commerce of men

It must not be impossible (legally of physically)
It must be in existence
It must be determinate
Requisite of things as object of contract

In order that things may be the object of a

contract, the following req. must be presented:
The thing must be within the commerce of men
It must not be impossible (legally of physically)
It must be in existence
Right as the object of a contract

As a general rule, all rights may be the

object of a contract. The exceptions
are when they are intransmissible by
their nature or by stipulation or by
provision of law.
Outside the commerce of men clings of public
ownership such as side walks, public places,
bridges, streets; things that are common to
everybody such as air, sunlight, rain, etc.
Future things things to be manufactured, raised,
or acquired after the perfection of the contract such
as wine that a vineyard is expected to produce and
wool that shall thereafter grow upon a sheep.
Intransmissible rights political rights such as the
right to vote; family, marital and parental rights etc.
Future inheritance is any property or right,
capable of determination at the time of the contract,
that a person may inherent in the future, such
person having only an expectancy of purely
hereditary right.
Art. 1348. Impossible things or
services cannot be the object of
the contract.
Kinds of impossibility
Physical when the thing or service in the very
nature of things cannot exist (e.g., monkey that
talks).
Absolute when the act cannot be done in any
case (e.g., fly like a bird).
Relative when it arises from special
circumstances (e.g., make payment to a dead
person).
Legal when the thing or service is contrary to
law, morals, good customs, public order or
public policy (e.g., sell shabu).
Art. 1349. The object of every
contract must be determinate as to
its kind. The fact that the quantity is
not determinate shall not be an
obstacle to the existence of the
contract, provided it is possible to
determine the same, without the
need of a new contract between the
parties.
Examples:
Phi sold all the chickens in his poultry to Jen.
Here, the object itself (chicken) is determinate
but the quantity though not yet determined can
be ascertained without the necessity of entering
into a new contract.

Rai binds himself to deliver one of his dogs to

Nich. Here, the object is determinable without
the need of a new contract between the parties.
Its becomes determinate the moment it was
delivered.