OBLIGATION juridical necessity to give, to do or not 2.

If debtor fails to do, it shall be DONE AT HIS

to do (Article 1156) EXPENSE, same with doing the contravention; poorly
done be undone.
4 ELEMENTS OF OBLIGATION 3. In obligation not to do, and obligor does what is
1. ACTIVE SUBJECT (creditor/obligee) whose forbidden, shall be UNDONE AT HIS EXPENSE.
obligation is constituted
2. PASSIVE SUBJECT (debtor/obligor) has duty to give, 4 GROUNDS; debtor liable for damages
to do or not to do 1. Default/mora
3. OBJECT/PRESTATION subject matter 2. Fraud/dolo
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) 3. Negligence/culpa
reason 4. Contrary to terms of obligation

CIVIL OBLIGATION NATURAL OBLIGATION 1. DEFAULT/MORA delay

derived from positive law derived from equity & justice 3kinds
enforceable by court action not enforceable by court a. Mora solvendi debtors delay to give (real ob.),
action to do (personal ob.)
b. Mora accipiende creditors delay to accept
5 SOURCES OF OBLIGATION c. Compensatio Morae delay of both in reciprocal
1. LAW obligation
2. CONTRACTS
3. QUASI-CONTRACTS arise from lawful, voluntary CONCEPT OF DELAY
acts; no one shall be unjustly enriched... General Rule: No demand, No delay
2Kinds Exceptions:
a. Solutio indebiti something received (delivered 1. Law states
on a mistake), no right to demand it 2. Obligation states
b. Negotiorum gestio voluntary mgt of 3. Time is the essence
property/affairs of another w/o his knowledge/consent 4. Demand be useless if delay
4. QUASI-DELICT/TORTS/CULPA AQUILIANA arise from 5. Debtor guilty of delay
damage; fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law arise EFFECTS OF DELAY
from civil liability that is a consequence of a criminal 1. Damages
offense 2. When to deliver determinate thing, STILL LIABLE in
fortuitous event.
DILIGENCE OF A GOOD FATHER OF A FAMILY 2. FRAUD/DOLO conscious, deliberate, intentional
- care need to be exercised by a debtor to evasion of fulfillment
deliver/give determinate thing 2Kinds
Exception: When law/stipulation of parties requires a a. Dolo causante/Causal fraud fraud in obtaining
differnt standard of care (slight/extraordinary consent; consent is defective, contract is voidable.
diligence). Remedy: annulment
b. Dolo incidente/Incidental fraud fraud w/c
When creditor is entitled to the fruits vitiates consent. Remedy: damages
Rule: The creditor has personal right (right to ask for
delivery) from the time the obligation to deliver arises. 3. NEGLIGENCE/CULPA voluntary act/omission; no
But NO real right (right enforceable against the whole bad faith intended
world) until it is delivered. 3Kinds
a. Culpa aquiliana/Civil negligence quasi-
3 KINDS OF FRUITS delict/torts
1. NATURAL w/o human intervention b. Culpa contractual/Contractual negligence
2. INDUSTRIAL w/ human intervention breach
3. CIVIL derived by virtue of juridical relation c. Culpa criminal/Criminal negligence crime/delict

Creditors rights if debtor fails to comply w/ the 4. Contrary to the terms of obligation
obligation
1. Determinate 2 RULES OF PRINCIPAL & INSTALLMENT
a. Performance 1. Receipt of principal w/o mention of interest,
b. Damages presumed interest is paid also.
2. Generic 2. Receipt of latter installment w/o mention of prior
a. Performance installment, presumed prior installment is paid also.
b. Damages
c. Obligation be complied at debtors expense 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy
claim against DEBTOR
Creditors rights if debtor does in contravention 1. Exact payment
1. Damages 2. Attach debtors properties
2. Ask it be UNDONE at debtors expense 3. Accion subrogatoria exercise rights & actions
except inherent in person
FORTUITOUS EVENT cannot be foreseen, if 4. Accion pauliana cancel acts/contracts by debtor to
foreseen, inevitable defraud creditor
General Rule: No person liable to fortuitous event.
Exceptions: TRANSMISSIBILITY OF RIGHTS
1. Law states General Rule: ALL RIGHTS are transmissible.
2. Stipulation/contract states Exceptions:
3. Assumption of risk 1. Law states
4. Delay 2. Contract states
5. Debtor promises deliver to 2/more persons who do 3. Obligation is purely personal
not have same interest (bad faith)
10 Kinds of Obligation
EFFECTS OF FORTUITOUS EVENT to thing to be 1. Pure
delivered 2. Conditional
- extinguish the obligation if determinate; generic does 3. Alternative
not extinguish the obligation 4. Facultative
5. Joint
3 MISCELLANEOUS RULES ON PERFORMANCE OF 6. Solidary
OBLIGA-TION 7. Divisible
1. When to deliver determinate, accessions (additions/ 8. Indivisible
improvements) and accessories (joined/included with 9. Obligation w/ a period
the principal) are INCLUDED even not mentioned. 10. Obligation w/ a penal clause

1. PURE OBLIGATION
- w/o condition, demandable at once (pure has 1. Little by little
resolutory condition/period) 2. In partial payment
3. Payable ASAP
2. CONDITIONAL OBLIGATION 4. When I can afford it
- there is condition in performance; future & uncertain 5. When I have the money
2Kinds 6. When I am able to
a. Suspensive condition happening of condition 7. When my means permit me to do so
gives RISE to obligation
b. Resolutory condition happening of condition PERIOD CONDITION
EXTINGUISHES obligation certain uncertain
future only future/past but unknown
6 MISCELLANEOUS RULES ON CONDITIONAL (*influence upon obligation) (*) on the very existence of
OBLIGATION only upon its demandability obligation itself
1. Impossible conditions, contrary to law, shall ANNUL
obligation.
FOR WHOSE BENEFIT IS THE PERIOD?
2. The condition not to do an impossible thing is
General Rule: Both the debtor & creditor.
considered not agreed upon.
Therefore, NEITHER of them can demand performance
3. The condition that happens in determinate time,
of obligation.
EXTINGUISHES obligation.
Exception: If the term of obligation has to favor one of
4. The condition that happens in INDETERMINATE time,
them.
obligation only effective at arrival.
5. The condition is fulfilled if DEBTOR prevents
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO
fulfillment.
USE PERIOD
6. The effect of conditional obligation, once fulfilled:
1. Debtor is insolvent.
- to give: retroact to the day of constitution of
2. Debtor attempts to abscond.
obligation
3. Impairment of guarantees/securities.
- has reciprocal prestations: fruits & interests be
4. Failure to furnish guarantees/securities promised.
mutually compensated
5. Violation of undertaking.
- has unilateral obligation: debtor shall give fruits &
interests
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
RULES in case of Loss, Improvement, or
Deterioration of thing during the pendency of
5. FACULTATIVE OBLIGATION
condition
- w/ ONLY 1 prestation but can be substituted.
1. LOST
a. w/ debtors fault damages
ALTERNATIVE prestations LOST w/ debtors fault
b. w/o debtors fault extinguishes obligation
Creditor entitled to damages but needs ff requisites:
1. Debtor can choose.
2. DETERIORATION
2. All prestations lost/become impossible due to
a. w/ debtors fault - (1) cancel obligation & damages;
debtors fault.
or (2) fulfill obligation w/ damages
b. w/o debtors fault creditor suffer impairment
ALTERNATIVE FACULTATIVE OBLIGATION
OBLIGATION
3. IMPROVEMENT
a. By nature/time benefit to creditor several prestations due, one prestation due, but can
b. at expense of debtor debtor no right than that giving one is sufficient be subtituted
granted to usufructuary (debtor no right to compensate right to choose (debtor) right to choose DEBTOR
amount for improvement) unless granted to creditor ONLY
If 1 of the prestation is nullity of principal carries w/
EFFECTS OF FULFILLMENT OF SUSPENSIVE illegal, others may be valid, it nullity of accessory/
CONDITION obligation remains substitute
General Rule: The obligation becomes effective loss/impossibility of ALL loss/impossibility of presta-
retroactively to the day obligation was constituted. prestations due, w/o tion due, w/o debtors fault,
Exceptions: debtors fault, extinguishes extinguishes obligation
1. In reciprocal obligation, fruits & interests during obligation
pendency of condition shall compensate each other.
2. In unilateral obligation, debtor gets fruits & interests (3) SUMMARY OF RULES, OBLIGATIONS, &
unless there is a contrary intent. RIGHTS OF DEBTOR IN ALTERNATIVE OBLIGATION
1. If 1 of prestations lost through fortuitous event, shall
3 EFFECTS OF FULFILLMENT OF RESOLUTORY still be perform by choosing (creditor) from the
CONDITION remainder.
1. Extinguish obligation. 2. If 1 of prestations lost through debtors fault,
2. Both parties restore what they received plus fruits & creditor may claim any of remainders w/ damages.
interests. 3. If ALL prestations lost through debtors fault, creditor
3. The rule on L, D, or I will apply to person who has to choose price w/ damages.
return the thing.
When one of debtors in reciprocal obligation RULES on LOSS/DETERIORATION of the thing
does not comply w/ his obligation intended as SUBSTITUTE in FACULTATIVE
1. The right of injured party is (1) cancel contract & OBLIGATION
damages; or (2) fulfill obligation & damages 1. If there is a loss/deterioration of thing intended as
substitute, debtor is NOT liable if NOT HIS FAULT.
3 Kinds of Obligation (Accdng to PERSON But if substitution is already made, debtor is liable for
OBLIGED) loss of substitute when in DELAY, NEGLIGENCE, or
1. UNILATERAL only 1 party obliged to comply FRAUD.
2. BILATERAL both parties; performance not same
time 6. JOINT OBLIGATION
3. RECIPROCAL both parties; performance same time - obligation is to be paid proportionately by debtors or
to be demanded proportionately by creditors
3. OBLIGATION W/ A PERIOD
- demandability/extinguishment subject to the 7. SOLIDARY OBLIGATION
expiration of period - each one of debtors has right to render or each one of
creditors has right to demand the entire compliance w/
PERIOD interval of time; either suspends prestation
demandability or produces extinguishment
MAXIMS & SYNONYMS
DAY CERTAIN must come, not known when MAXIMS SYNONYMS
JOINT Obligation To each his own proportionate
7 CASES CONSIDERED TO BE OBLIGATION W/ A SOLIDARY One for all, all individually &
PERIOD
 Obligation for one collectively 3. If debtor accepts the receipt, he cannot complain
unless THERE IS just cause to invalidate the contract.
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states b. CESSION
2. Stipulation states - debtor abandons ALL his property for creditors
3. Nature of obligation requires benefit to obtain payment from proceeds of his
property
2 PRESUMPTIONS THAT OBLIGATION IS JOINT
1. The debts be divided as many shares as there are 5 REQUISITES OF VALID CESSION
debtors/creditors. 1. 1 debtor & 2 or more creditors
2. The debtors/creditors are distinct from one another. 2. Debtor is in partial/total insolvency.
3. Debtor to deliver ALL his property to creditors
8. DIVISIBLE OBLIGATION 4. Debt is due & demandable.
- prestation is capable of partial performance 5. Creditors must sell the properties & apply the
proceeds to their respective credits proportionately.
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance c. DACION IN PAYMENT (dacion en pago)
- alienation of property to the creditor in satisfaction of
10. OBLIGATION W/ A PENAL CLAUSE debt
- one w/ accessory undertaking attached to obligation
to assume greater liablity in case of breach/non- 3 REQUISITES OF DACION IN PAYMENT
fulfillment of obligation 1. Consent of creditor
2. NOT prejudicial to another creditor
3 PURPOSES OF PENAL CLAUSE 3. Debtor not insolvent declared by a judicial decree
1. Ensure performance of obligation
2. Substitute for damages & interest in case of CESSION DACION IN PAYMENT
noncompli-ance all properties NOT all properties
3. Penalize debtor in case of breach require more than 1 creditor NOT require all creditors
NOT act of novation act of novation
In case obligation has a PENAL CLAUSE NOT transfer ownership transfer ownership
General Rule: Penalty takes the place of damages & requires partial/total insol- may happen
interest in case of non-compliance. vency during solvency of debtor
Exceptions:
1. Stipulation states.
d. TENDER OF PAYMENT & CONSIGNATION
2. Debtor refuse to pay penalty.
TENDER OF PAYMENT act of offering the creditor
3. Debtor guilty of fraud in performance of obligation.
what is due to him w/ a demand that the creditor
accept it
NULLITY OF PRINCIPAL OBLIGATION OR THE
CONSIGNATION act of depositing thing due w/ the
PENAL CLAUSE
court when creditor cannot/refuses acceptance of
Nullity of principal obligation = nullity of penal clause
payment
Nullity of penal clause = NOT nullity of principal
obligation
5 REQUISITES OF CONSIGNATION
1. Debt due.
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
2. Creditor refused the tender of payment w/o just
1. Payment or performance
cause
2. Prescription
3. Notice of consignation already given to persons
3. Compensation
interested in fulfillment of obligation
4. Confusion/merger
4. Consignation of thing/amount due
5. Condonation/remission
5. Subsequent notice of consignation to interested
6. Fulfillment of resolutory condition
persons
7. Annulment
8. Rescission
5 VALID CONSIGNATION W/O PREVIOUS TENDER
9. Novation
OF PAYMENT
10. Loss of thing due
1. Creditor is absent/unknown.
2. Creditor is incapacitate to receive at time it is due.
1. PAYMENT/PERFORMANCE
3. Creditor refused give a receipt, w/o just cause.
- Payment means delivery of money & performance of
4. 2 or more persons claim the right to collect.
obligation
5. Title of obligation lost.
2 PLACE OF PAYMENT
2. LOSS OF THING DUE
1. At place agreed upon
- perishes, disappears, or goes out of commerce;
2. If w/o agreement
existence is unknown; cannot be recovered
a. Object is indeterminate paid at domicile of DEBTOR
b. Object is determinate place of thing at the time of
3 REQUISITES TO EXTINGUISH OBLIGATION DUE
constitution of obligation
TO LOSS
1. Determinate thing.
4 SPECIAL MODES OF PAYMENT
2. W/o debtors fault.
a. Application of payment
3. No delay.
b. Cession
c. Tender of payment & consignation
3. CONDONATION/REMISSION
d. Dacion in payment
- gratuitous abandonment of right by the creditor
a. APPLICATION OF PAYMENT
3 REQUISITES OF A VALID
- designation of debt to w/c payment must be
CONDONATION/REMISSION
applied when debtor has several obligations of same
1. It must be gratuitous.
kind in favor of same creditor.
2. Accepted by obligor.
3. Obligation is demandable.
3 REQUISITES OF APPLICATION OF PAYMENT
1. Only 1 debtor & 1 creditor
4. CONFUSION/MERGER
2. 2 or more debts, same kind
- meeting in 1 person of qualities of debtor & creditor
3. All debts are due
w/ same obligation
4. Insufficient payment to exinguish ALL debts
3 REQUISITES OF VALID CONFUSION/MERGER
3 RIGHTS TO MAKE APPLICATION OF PAYMENT
1. The merger of characters of debtor & creditor must
1. Right belongs to CREDITOR.
be in same person.
2. If debtor does not avail, creditor can give him receipt
2. Take place between principal debtor & creditor.
designating the debt from which payment will be
3. Clear & definite.
applied.
5. COMPENSATION
- 2 persons are debtors & creditors of each other
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
debtors 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/guardians 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 NOT the cause to enter into
ENTER into contract 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 ones 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
others 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 others 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. Agents authority in sale of land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on loans.
e. Stipulation to reduce common carriers
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 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.