OBLIGATIONS AND CONTRACTS DEFINED Obligation – A Juridical relation whereby a person may demand from another the observance

of a determinative conduct (giving, doing, not doing), and in case of breach, may demand satisfaction from the assets of the latter. Contract – Meeting of the mind between two persons whereby one binds himself, with respect to the other, to give something or to render some service. A contract necessarily gives rise to an obligation but an obligation does not always need to have a contract. OBLIGATIONS General Provisions, Nature and Effects of Obligations Juridical Necessity – enforce compliance; seek damages To give, to do, and not to do • Four essential requisites of an obligation 1. A passive subject (Debtor – to give; Obligor – to do) 2. An active subject (Creditor/Obligee) 3. Object (Prestation) – subject matter 4. Juridical tie (Vinculum) – Source of Obligation

Sources of Obligation L LAW - mposed by law. Obligations derived from law are not presumed. C Contracts -Have the force of law between the contracting parties and should be complied with in good faith. Q Quasi-Contracts -Juridical relations based on the principle that no one shall be unjustly enriched or benefited at the expense of another. • Negotiorum Gestio – When a person voluntarily takes charge of the management of a business or property of another that has been neglected or abandoned, without any power from the latter, as a consequence of which, he is obliged to continue the same until the termination of the affair or to require the owner to substitute him • Solutio indebiti – When a person unduly delivers a thing through mistake to another who has no right to demand it. A Acts or omissions punished by law -If you commit a crime, you are liable both criminally and civilly for the consequence of your acts or omissions such as restitution, reparation for damages caused and indemnification for consequential damages Q Quasi-delicts -The fault or negligence of a person who, by his act or omission, independent from any contractual relation, causes damage to another person -3-year-old child was bitten by a dog of her neighbor. As a result, she died. Owner liable

Nature and Effect of Obligations Generic Thing Definition Generic refers to a class or genus and cannot be determined with particularity Duties of • To deliver a thing which must debtor to neither be of superior nor inferior deliver quality • To pay damages in case of breach

Remedies of • Creditors

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Specific Thing Specific is designated or physically segregated from others of the same class • To deliver the thing which he has obligated himself to give • To take care of the thing with the proper diligence of a good father of a family • The ordinary care that an average or reasonably prudent person exercises over his property • Another standard of care may be required by law or by stipulation of the parties • To deliver all the accessions and accessories • To pay damages in case of breach To ask for performance of the • To Give Determinate Thing obligation • To compel specific performance To ask that obligation be complied • To recover damages with by another at expense of debtor To recover damages Not to Do Undone at his debtor expense To recover damages

To Do To have the obligation performed at • debtor’s expense • If done in contravention of tenor of obli or poorly done, be undone To recover damages

Rules on Fruits Creditor has rights to the fruits from the time the obligation to deliver arises. Real rights (right over a specific thing without any passive subject, directed against the whole word) acquired only when delivered to him Accessions and accessories Accessions – fruits of a thing or additions to or improvement upon a thing Accessories – joined to or included with the principal thing for better use or completion • Even if not mentioned, accessories follow the principal • But obligation to deliver accessions or accessories does not include the principal Legal Delay - From the time obligee judicially or extra-judicially demand fulfillment; not mere notice. In reciprocal obligation, from the moment one party fulfills his obligation, delay by the other begins. L T U No demand from creditor necessary in following cases • When obligation or law expressly so declares • Time is of the essence (controlling motive) • When demand would be useless

except: • Where expressly specified by law or stipulated in contract • When nature of the obligation requires assumption of risk • When debtor incurs delay • When debtor promises to deliver same thing to two or more persons • When obligation to deliver arises from criminal offense • When obligation is generic Fraud (deceit or dolo) . Waiver of future negligence allowed C Culpa contractual – Negligence in the performance of contractual obligation o Pre-existing contract o Liable for damages based on breach of contract o Proof of contract and breach is enough for recovery of damage o Negligence of employee conclusive presumption of employer’s negligence o Proof of due diligence in the selection of employee not a defense A Culpa aquiliana – Negligence between parties not so related by any pre-existing contract o Obligation for damages based on quasi delict o No pre existing contract o Negligence must be proved for recovery of damage o Negligence of employee prima facie presumption of employer’s negligence o Due diligence in the selection and supervision of employee is a valid defense Presumptions P Receipt of principal without reservation as to interest = presumption of interest paid I Receipt of later installment of debt without reservation of prior ones = presumption that prior ones paid Remedies to satisfy claim E Exhaust property of debtor S Subrogated to rights and actions of debtors.S A U Kinds of Delay • Mora solvendi – delay on the part of debtor • Mora acccipiendi – delay of creditor • Compensatio more – delay in reciprocal obligation Effects of Delay • Liable for interest and damages • Liable even for fortuitous event when the obligation is to delivery a determinate thing I F Fortuitous Events Any event which cannot be foreseen or which though foreseen is inevitable. Demandable in all obligations. but no malice. independent of the will or from aggravation of the debtor. except those inherent to person I Impugn all of acts by debtor done to defraud creditor . remedy is damages C • Dolo causante (Causal Fraud) – Fraud employed at the time of the execution of a contract in order to secure consent. Waiver of future fraud is void I • Dolo incidente (Incidental Fraud) . rendering impossible the fulfillment of obligation L A D T C G No person shall be responsible for fortuitous events. remedy is annulment bec of vitiation of consent Negligence (culpa) .committed in the performance of pre-existing obligation.Deliberate or intentional evasion of the normal fulfillment of an obligation.Omission of that diligence which is required by the nature of the obligation. Can be regulated by the Court depending on circumstance.

fulfillment extinguishes obligation – loss of rights acquired Mixed If suspensive condition depends on will of debtor. it is valid Potestative Depends on the will of one • of the contracting parties • • Impossible Conditions P • Physically Impossible or legally impossible T • If “to do”. obligation is valid. fruits and interest belongs to debtor deemed • Condition deemed fulfilled when obligor prevents its fulfillment Creditor may before the fulfillment of the condition bring appropriate actions for the preservation of the rights. fulfillment give • rise to an obligation – acquisition of rights Casual. Potestative. the fruits are mutually compensated Negative Condition (event will not happen) effective As soon as time expired without event taking place As soon as it becomes evident the event cannot occur Unilateral condition If unilateral. Past event and unknown to the parties Resolutory In resolutory condition. Debtor may recover what he has paid by mistake before the fulfillment of condition.DIFFERENT KINDS OF OBLIGATIONS Pure and Conditional Obligations Pure Obligations • One whose effectivity or extinguishments • does not depend upon the fulfillment or nonfulfillment of a condition or upon the expiration of a term or period • Characterized by Immediate Demandability Suspensive v. Negative Positive Condition • (event will happen) extinguished • • As soon as time expires without the event • taking place • As soon as it becomes indubitable that the • event will not take place Reciprocal v. whole obligation is void N • If “not to do”. as if not written D • If divisible. Unilateral Reciprocal condition • If reciprocal. the obligation is void If resolutory condition depends on will of debtor. Resolutory Suspensive • In suspensive condition. Effects of the fulfillment of a condition retroacts to the day of the constitution of the obligation . part not affected by impossible condition is valid Positive v. Mixed Causal • Depends on chance or will • of third party (Valid) Conditional Obligations Effectivity is subordinated to the fulfillment or non-fulfillment of a future or uncertain fact or event a. the obligation is valid If depends on will of creditor. Future and uncertain event or b.

unless he gives guaranty or security G • When debtor does not furnish guaranties or securities promised I • When guaranties or securities impaired or disappear V • When debtor violates an undertaking A • When debtor attempts to abscond Alternative Obligations • Alternative – several objects or prestations but performance of one sufficient • Facultative – One object or prestation but debtor may substitute. or by time. improvements of conditional obligation applicable • If paid or delivered before period arrives. inure to the benefit of creditor • When improved by debtor. debtor may recover the thing. but period o Period fixed by court cannot be changed Debtor loses right to make use of the period I • Debtor becomes insolvent. with fruits and interests • Established for the benefit of both debtor and creditor. creditor bores the impairment • When deteriorate with fault of debtor. unless expressly granted to creditor . or disappear in such a way that its existence unknown or cannot be recovered • If without the fault of debtor. liability of first infractor equitably tempered. no right to be indemnified. Must completely perform one of them Right of choice to debtor.Rule on loss or deterioration. the obligation is extinguished • If lost thru fault of debtor. unless otherwise stated • Court may fix period o If obligation does not fix a period o Depends on will of debtor o “When means permit” not condition. obliged to pay damages • When deteriorate without fault of debtor. where first infractor not known. option for rescission • Injured party must resort to judicial rescission o Except where automatic rescission expressly stipulated o Or where there is no performance yet • Power of the court to fix period • Subject to right of good faith third party • Substantial breach not slight breach • Where both parties have breach. creditor may rescind or fulfillment with damages • When improved by nature. go out of commerce. both parties bear own damages Obligations with a Period P • Demandability or extinguishments subject to expiration of a term or period • Term or period – future and certain event • Rules on loss. but may remove such improvement. deterioration. or set off against damage Remedies in reciprocal obligation P • Specific Performance or Rescission D • With damages in either case • Alternative remedy not cumulative – can choose one but not both • After action for specific performance impossible. improvements before the fulfillment of condition • E P I R I R Lost – when perished.

unless management was assumed to save thing from imminent danger o 2 or more persons liable for quasi delict o 2 or more payees when there has been payment of what is not due o Principal. irrevocable once communicated Debtor may rescind the contract with damages if thru creditor’s acts debtor cannot make a choice T O N If lost due to fortuitous event • If two or more objects remain. obligation is extinguished If lost due to fault of debtor  When right of choice belongs to debtor • If 2 or more objects remain. which could not have been the object of the obligation or only one prestation is practicable Choice no effect until communicated. the obligation subsists • If only one object remain. it becomes simple obligation • If none remains. not liable for damages • If only one remain. with the entire prestation. if creditor choose the remaining object. simple obligation to deliver remaining • If none remains.Except those impossible. and each debtor is bound to render compliance. accomplices. obligation extinguished. debtor not liable L • Debtor liable for loss due to his fault once substitution has been made F • If after substitution. “proportionately” Solidary Obligation – Each creditor has a right to demand. debtor can choose from remaining. unlawful. debtor cannot be liable for damages If none remains. but as to co-debtor he is liable only for his share S L Instances when obligation is solidary: • When obligation expressly states so • When law requires solidarity: o If 2 or more heirs take possession of estate o Partners in partnership o If principal allowed agent to act as though he has full power o If 2 or more appointed an agent for common undertaking or transaction o 2 or more bailees to whom a thing is loaned o 2 or more officious managers. and each debtor is bound to render compliance. “Pro rata”. and accessories of a felony . with his proportionate part of the prestation D • Default rule in obligation is JOINT R • Joint creditor cannot act in representation of the other creditors A • Joint debtor cannot be compelled to answer for liability of other debtors P • “Jointly”. debtor not liable Joint and Solidary Obligations Joint Obligation – Each of creditor has right to demand. creditor can choose the one lost and ask value of object lost and damages. it is lost thru fortuitous event. debtor indemnify damages based on value of last object • •  When right of choice belongs to creditor If alternative object still remain. debtor to indemnify for damages based on the price of the object chosen by the creditor plus consequential damages R S I C I Facultative Obligation D • Right of choice only to debtor S • If lost before substitution. “We promise to pay”.

confusion or remission of a solidary creditor shall extinguish the obligation but the creditor who did these acts shall be liable to the other creditors No re-imbursement if payment made after obligation prescribed or illegal Remission of the whole obligation obtained by a solidary debtor does not entitle him to reimbursement from his co-debtors Defenses available to solidary debtors N • Derived from nature of obligation o Payment. violence. the co-debtors bore his debt in proportion Solidary creditors may do whatever may be useful to others. prescription. compensation. “Jointly and severally”. illegality. only debtor guilty of breach of obligation is liable for damage I • In indivisible obligation.N • When nature of obligation requires solidarity o Ex. remission. if none demanded. fraud. mistake. except o When there is stipulation to the contrary o When obligor is sued for refusal to pay agreed penalty o When obligor is guilty of fraud P I U When court may reduce penalty • If principal obligation partly complied with • If principal obligation irregularly complied with • If penalty is iniquitous or unconscionable . except if to cocreditors Debtor must pay to the creditor who made demand. together and/or separately. In indivisibility. all debtors liable for breach of obligation. Accident fr “Kabit” system “Solidarily”. “I promise to pay” Creditors and debtors need not be bound in the same manner and by the same periods and conditions Not same as indivisible obligation V • Solidary refers to vinculum. but not anything which may be prejudicial to the others A solidary creditor cannot assign his rights without the consent of the others. if solidary debtor becomes insolvent. in solidum. other debtors not liable for insolvency. non performance of condition P • Personal to the debtor o Insanity. incapacity. then he may pay any one of the solidary creditor Novation. Indivisibility refers to prestation P • Solidary requires plurality of subjects L • In solidary. minority O • Personal to the other solidary debtors o Partial defense Obligations with a Penal Cause A • With accessory undertaking in case of breach of obligation o To insure performance o To liquidate the amount of damage to be awarded o To punish the obligor in case of breach P • No need to prove actual damage S • Shall substitute for damages and interest.

except S • When there is stipulation to the contrary T • When third person has an interest in the fulfillment of obligation Rights available to third party who pays: R S If payment made with the consent of the debtor • Recover from debtor the entire amount • Subrogated to all the rights of creditor If payment made without the knowledge or against the will of debtor • he can recover only insofar as payment has been beneficial to the debtor B To whom payment must be made (1240) P • To the person in whose favor obligation has been constituted S • His Successor in interest A • Any person authorized to receive it T • Third person provided it has redounded to benefit of creditor P • Possessor of the credit A R C Payment to third person. checks not legal tender. Payment General Provisions Payment • Complete Delivery of money. obligor may recover as though there had been complete fulfillment less damages • Third party cannot compel creditor to accept payment or performance. performance of obligation • If substantially performed in good faith. bills of exchange. third person acquires creditor’s rights • If creditor ratifies payment to third party • If creditor’s conduct led debtor to believe that the third person had authority to receive payment Payment must be in Legal Tender F • Foreign currency may be used as currency of contract P • Promissory notes.EXTINGUISHMENTS OF OBLIGATIONS Modes of Extinguishing Obligations P • Payment or performance L • Loss of the thing due C • Condonation or remission M • Confusion or merger of the rights of creditor and debtor C • Compensation N • Novation D • Death of a party in personal obligation A • Annulment or Rescission of contract R • Arrival of Resolutory period or fulfillment of resolutory conditon I • Impossibility of fulfillment P • Prescription 1. Presumption of benefit in the following case: • If after payment. They produce effect of legal tender only when encashed or impaired thru the fault of creditor .

creditor may do it R • If creditor issues a receipt designating the debt to be applied.Assignment or abandonment of all the properties of the debtor for the benefit of his creditors in order that the latter may sell same and apply proceeds thereof to pay debt O • Cession does not make the creditors owners of the property B • Unless stipulation to contrary.I • In case of extraordinary inflation or deflation. debtor still required to pay balance I • Requires two or more creditors. Applied on debt most onerous: • Older debts more onerous than newer ones • One bearing interest more onerous than one that is not • Secured debt more onerous than unsecured • Debt as principal more onerous than debt as guarantor • Solidary obligation more onerous than sole debtor Payment by Cession . the basis is the value of currency at the time obligation is established Applications of Payments D • The right belongs to the debtor. payment shall be applied proportionately O I S P S Neither debtor nor creditor made a choice. cession accepted by creditors Dacion en pago . debtors insolvent. debtor can accept or reject O • Where neither debtor nor creditor made a choice. but if he does not exercise it.Dation in payment is the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of an obligation Governed by law on sales Dacion v. it shall be applied on the debt which is most onerous P • If similar nature and burden. Cession Dacion en pago • Dacion usually only one creditor • Dacion does not require insolvency • Dacion does not involve all the property of debtor • Dacion makes creditor owner of the property • Dacion is a novation Tender of Payment and Consignation Tender of payment – The act of the debtor of offering to the creditor the thing or amount due Consignation – Deposit of the object or the amount due with the proper court after refusal or inability of the creditor to accept the tender of payment Requisites of Consignation D • Debt Due T • Tender of payment by debtor and refusal by creditor to accept it without justifiable reason P • Previous notice of the consignation had been given to persons interested in fulfillment of obligation D • Thing or amount due has been deposited with judicial authority Cession Cession requires two or more creditors Requires insolvency of debtor Requires all the properties of debtor Not make creditors owners Not a novation • • • • • .

Co-debtor. storm or other natural calamity Creditor shall have right to go against any third person responsible for the loss. 2. 3. creditor lose preference over the thing. guarantors. Except earthquake.S • Subsequent notice of consignation to interested parties Exception to requirement for tender of payment: A • When creditor is absent or unknown or does not appear at place of payment I • When he is incapacitated to receive payment R • When he refuses to give receipt. or so difficult as to be manifestly beyond the contemplation of the parties The obligation to deliver specific thing is extinguished if F • Without the fault of debtor. or disappear in such a way that its existence unknown or cannot be recovered Or becomes legally or physically impossible to perform. Condonation or Remission of Debt Condonation . except: L • Where expressly specified by law or stipulated in contract A • When nature of the obligation requires assumption of risk F • When debtor is at fault. presumption is it is his fault. Loss of the Thing Due Lost – when perished. without just cause T • When two or more persons claim same right to collect L • When title of the obligation has been lost Expenses of consignation for Creditor’s account . go out of commerce. partly D • When debtor incurs delay T • When debtor promises to deliver same thing to two or more persons C • When obligation to deliver arises from criminal offense G • When obligation is generic In case of partial loss the court shall determine whether it is so important as to extinguish the obligation When the thing is in the possession of debtor.If creditor allows debtor to withdraw the consignation. Confusion or Merger of Rights Creditor and Debtor merged in the same person . and D • Debtor not in delay No person shall be responsible for fortuitous events. sureties shall be released.Act of liberality by virtue of which creditor abandons his right G • Gratuitous A • Accepted by debtor D • Obligation must be demandable C • Parties must be capacitated I • Donation not inofficious F • Forms in express condonation Implied remission D • Delivery of private document evidencing credit P • If thing pledge is found in the possession of debtor or owner of thing P • Renunciation of principal extinguish accessory obligation 4. flood.

Novation Novation – extinction of an obligation through the creation of a new one which substitutes it P A E C Requisites: • Previous valid obligation • Agreement to enter new obligation • Extinguishments of old • Creation of new valid obligation . not bank deposits) C • Debts from Commodatum (One person delivers to another something for him to use and return it) S • Claims for support due by gratuitous title C • Debts from Criminal offense T • Taxes 5.P C • • Between principal debtor and principal creditor Complete and definite merger Merger of debtor and creditor benefits the guarantor Extinguish only the portion of the joint obligation corresponding to the creditor and debtor merged Merger of one solidary debtor with creditor extinguishes obligation 5. Compensation Persons who in their own rights are debtors and creditors of each other extinguishes the debts to the concurrent amount Guarantor can set up compensation of what principal debtor may owe creditor Compensation may be total or partial Parties may agree to compensate debts not yet due When one or both debts are rescissible or voidable. they may be compensated before they are judicially rescinded or avoided Requisites of legal compensation (by operation of law ): P • Parties are principal creditors and debtors of each other C • Both debts consist in sum of money or consumable of same kind and quality D • Both debts are due and demandable L • Two debts are liquidated (amount is certain) R • No retention or controversy commenced by 3rd party Compensation after assignment C • Assignment made with consent of debtor o Debtor cannot set up compensation against previous creditor K • Assignment with knowledge but without consent o Debtor can set up compensation for debts before the notification o Debtor cannot set up compensation with respect to debts which matured after notification W • Assignment without knowledge of debtor o Debtor can set up compensation for debts maturing before he learned of assignment Compensation cannot take place in following cases: D • Debts from Contracts of Depositum (A person receives a thing belonging to another for safekeeping and of returning the same.

novation is void. at the instance of the new debtor • Payment by new debtor gives him right to beneficial reimbursment • Insolvency or non fulfillment of obligation by new debtor will not give rise to liability of old debtor Delegacion – Substitution made at the instance of old debtor • Payment by new debtor entitles him to reimbursement and subrogation • Non fulfillment of obligation by new debtor will not give rise to liability of old debtor • Insolvency of new debtor will revive action against old debtor if insolvency was already existing and of public knowledge. the original one shall subsists If original obligation is void.Must be declared in unequivocal terms Or incompatible on every point – Test: Whether old and new contract can stand together each having its own independent existence Substitution of Debtor Expromision – Without the knowledge or consent of debtor. not interested in the obligation. pays with the express or tacit approval of debtor T • When a third person interested in the fulfillment of obligation pays. even without the knowledge of debtor . or known to the debtor when he delegated his debt R I R N I If new obligation is void. even without the debtor’s knowledge A • When a third person. by operation of law P • When creditor pays another creditor who is preferred. except when annulment may be claimed only by debtor or when voidable acts have been ratified Subrogation – Substitution of Debtor Conventional – By express agreement of the old creditor. debtor and the new creditor Legal –Without agreement.

whose decision shall be binding only when communicated to both parties . terms and conditions M • Mutuality – contract must bind both parties R • Relativity – takes effect only bet parties.Clauses and condtions must not be contrary to: • LAW • Morals • Good Customs • Public Order • Public Policy Mutuality – instance involving mutuality D • Determination can be left to third party.fulfillment Essential characteristics of Contracts O • Obligatory force – must be complied with in good faith A • Autonomy – parties are free to enter such stipulations. with respect to the other G • To give something or to render some service Different phases or stages in the life of a contract P • Preparation – Preliminary to formation P • Perfection – birth of the contract C • Consummation .CONTRACT Definition of a Contract M • A meeting of the minds B • Between two persons B • Whereby one binds himself. their assigns and heirs L M G O P Autonomy . clauses.

civil interdiction. like donation. accepted when communicated to the agent . unless option is founded on consideration • If offer made thru agent.certain subject matter of the contract Cause of the obligation which is established Elements of Consent O A C Q P W A Concurrence of the offer and the acceptance • Definite Offer that may be exactly fixed • Assent to the terms without qualifications or conditions • Conveyed before the death. or insolvency • Qualified acceptance is a counter offer • Perfected when acceptance comes to knowledge of offeror • Offer can be withdrawn anytime before acceptance. just pure liberality According to risks involved C Commutative – Prestation is pecuniarily appreciable and determined at the moment of celebration of contract A Aleatory – Pecuniarily appreciable but not yet determined at the moment of celebration. but also the delivery of the object According to form C Common – Do not require particular form F Formal – Those which require particular form. Ex. since it depends upon the happening of an uncertain event. Insurance According to name N Nominate – with specific names or designation in law I Innominate – no specific name Essential Requisites of Contracts C O C • • • Consent of the contracting parties Object . mortgage According to nature of vinculum U Unilateral – Obligation of one party only B Bilateral – Reciprocal obligations for both parties According to cause O Onerous – Giving of an equivalent or compensation G Gratuitous – Given without compensation. insanity.I • • • • • Unless such determination be evidently inequitable Relativity – instances involving relaitvity S P D I Stipulation pour autrui accepted by third party Where third persons comes into possesion of the object of contract creating real rights Where contract is to defraud a third person Where third person induces a contracting party to violate his contract a • Different Classes of Contracts According to perfection C Consensual – Perfected by mere agreement of the parties R Real – Requires not only consent.

Violence – Employment of external physical force. civil interdiction • Minor can be liable if he misrepresents his age H I P A C P F G A E P Prohibited by law from entering into contracts • Husband and Wife to each other • Insolvents • Persons prohibited from giving donations • Adultery.Intelligently. which without them he would not have agreed. by reason of office • Persons with fiduciary relations • Guardian. spouse. concubinage • In consideration of criminal offense • Made to public officer. remedy is annulment bec of vitiation of consent • Must be employed by one of the contracting parties. Undue Influence – Improper advantage of his power over the will of another depriving the latter of reasonable freedom of choice C • Confidential. for property entrusted to them • Executor/administrator • Public officers.By parties with legal capacity to contract • Not minors. Quantity only if principal reason • L • Mistake of Law . Condition. for property under his guardianship • Agents. judges. irresistible and serious to wrest consent S • Force employed must be serious or irresistible D • Determining cause for the party in entering into the contract 3. incompetents under guardianship. ignorant. insane or demented. but not by both or by third parties E .If such identity or qualification is principal cause of contract 2. Fraud – Insidious words or machinations of one of the contracting parties induced the other to enter into a contract. Simple mistake gives rise to correction Render voidable in following cases: O • Mistake as to object of the contract – Identity of thing. Mistake . Family. Substance. financial distress 5. freely given. consciously Vices of the will 1. Spiritual and other relations or M • Person influenced suffering from mental weakness.committed in the performance of pre-existing obligation. deaf-mutes who do not know how to write.False notion of a thing or a fact materrial to the contract. remedy is damages Dolo causante (Causal Fraud) – Fraud employed at the time of the execution of a contract in order to secure consent. Failure of one party to disclose facts to other party when there is a duty to reveal them Dolo incidente (Incidental Fraud) .Will not make it voidable except: Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated P • Mistake as to person • . Intimidation – Moral compulsion to influence another to give his consent thru fear of imminent or grave evil 4. for property under their jurisdiction Consent .

S I • • • Must be Serious Must have induced the other party to enter into the contract Vices of Declaration Simulated Contracts B V 1. Moral. Absolute • Contracting parties do not intend to be bound by the contract at all • Void 2. Public Order.Whatever may be the form. right or service which is the subject matter of the obligation created or established Thing or service must be within the commerce of man • The law prohibits future inheritance as object of contract • Transmissible and can be appropriated • Not contrary to Law.Thing. but not same as motive General rule: Particular motive of the party in entering into a contract are not material.Essential reason why the parties enter into the contract E • Cause should be in existence L • Licit or lawful T • True Interchangeable with consideration. Relative • Contracting parties conceal their true intentions • Real agreement binding on the parties if it does not prejudice third person • C R OBJECTS Object . Good Conduct. Except: When it predetermines the purpose of the contract FORM Form . Contract shall be obligatory on all provided all the essential requisites are present Two exceptions: • When Law requires a certain form for validity • When Law requires form for enforcement R R . Public Policy • Real or possible • Determinate or determinable P T C R D CAUSE Cause .

modification.D A A I Must appear in Writing to be valid: • Donation exceeding P 5. lack of skill. or those of conjugal partnership of gains • Power to administer property • Cession of actions or rights proceeding from an act appearing in a public document D P I H P C REFORMATION  Reformation .Creditor acquires rights to fruits of immovable but applying to payment of interest • Agreement regarding payment of interest Must appear in Public Instrument to be valid: • Donations of immovable property • Partnership where immovable or real rights are contributed Must appear in Public Instrument for Enforcement • Creation. negligence or bad faith on the part of person drafting it • Where parties agree on mortgage. yet concealed it • Ignorance. but instrument states property is sold absolutely or with right to repurchase What may not be reformed • Simple Donations with no condition • Wills • Those where real agreement is void M T F M F K I M S W R DEFECTIVE CONTRACTS . fraud. transmission. one of the party may ask for the instrument to be changed so that true intention may be expressed.. inequitable conduct or accident • What may be reformed • Mutual mistake of parties cause failure to disclose real agreements • One party mistaken and the other acted fraudulently or inequitably • One party was mistaken and the other knew that instrument did not state real agreement. sales or extinguishments of real rights over immovable properties • Cession. or renunciation of hereditary rights.000 • Sale of piece of land or interest therein by an agent • Antichresis .When the true intentions of the parties are not expressed in the instrument. repudiation. Requisites: • Must be a meeting of the minds of the parties • True intention is not expressed in the instrument • Failure due to mistake.

Lack of an element of a valid contract As to effect V • Rescissible and Voidable .As to defect R • Rescissible . lession of more than ¼ of the value of the thing In representation of absentee.Vitiation of consent or legal capacity U • Unenforceable .Cannot be enforced by action in court N • Void . with any of above circumstances Failure of vendee to take exclusive possession .In excess of authority or do not complyy with Statutes of Fraud V • Void .No legal effects at all As to parties who can file action • Rescissible and Void – May be attack directly by contracting parties or by third parties • Voidable and Unenforceable .Valid until annulled E • Unenforceable . entered into by defendant without approval of litigants and court Payment made in state of insolvency where debt not yet due Those which may be declared by law  Partition (1098)  Result of deterioration (1189) Unpaid seller (1526 and 1534)  Badges of Fraud  o o o o o o o o o o o o o o Cause or consideration is inadequate Transfer made after suit has begun or pending Sale on credit by an insolvent debtor Evidence of large indebtedness or complete insolvency Transfer of all or nearly all of debtor properties Between father and son.Injury or damage V • Voidable . only party to the contract Causes • Failure of one party to comply w/ obligation Kind of contract • Reciprocal obligation only Power of the courts • Can grant extension for performance Rescissible Contracts Guardian who represent ward. lession of ¼ In fraud of creditor who is unable to collect Things under litigation.Cannot be attacked by third persons Resolution (Rescission of reciprocal obligation) Party who may institute action • For resolution.

chattels. defaults or miscarriage of another – Agreement in consideration of marriage – Sales of goods. or public policy – Absolutely simulated or fictitious – Cause or object did not exist at the time of the transaction – Object outside commerce of men – Impossible service – Intention of the parties relative to principal object cannot be ascretained – Prohibited or declared void by law . public order. not to aid the commission of fraud – Basic and fundamental principles  Applies only to executory contracts  Cannot apply if action is not for damage bec of violation of agreement or for specific performance  Exclusive  May be waived  Personal defense  Contracts are not void  Rule of exclusion  Concerns admissibility of evidence. purpose contrary to law. things above P500 – Lease of more than one year –Representation as to credit of another Void Contracts – No concurrence of offer/acceptance – Cause. undue influence Convalidation  Prescription (Four years)  From time incapacity ceases  From discovery of such fraud or mistake  Ratification or confirmation  Loss of the thing by thru the fault of the person who has right to annul Effects of annulment of Voidable Contract – If not consummated. with fruits and interests. then parties are released from obligation – If consummated. parties are to restore to each other what they have given. violence. fraud. intimidation. good customs. there will be apportionment of damages –Incapacitated party not obliged to make restitution except for what he was benefited Unenforceable Contracts  Those entered into in the name of another person by one who has been given no authority or legal representation or who has acted beyond his powers  Those not complying with Statute of Frauds.Voidable Contracts  Where one party is incapable of giving consent to a contract  Where the consent is vitiated by mistake. plus damages – If to do or not to do. not credibility  Does not apply if action is to claim reformation – Following must be in writing or in some notes or memorandum: – Agreement not to be performed within a year from the making thereof – A special promise to answer for debt. morals. Statute of Fraud –Purpose is to prevent fraud. object.

2. Force. Fraud. (e) Action upon a quasi-delict. intimidation or undue influence.A party precluded from denying the truth of matters set forth in a record. (b) (b) Action for revocation of donation for acts of ingratitude. (a) (a) Action by husband against wife to impugn child’s legitimacy if husband is in the same place as wife. (a) Action upon oral contract. (a) Action for revocation or reduction of donation based on supervening birth. either with a statement of its area at a certain price for a unit of measure or number. (f) (f) All other actions whose periods are not fixed by law.A party to a deed. Action to impugn child’s legitimacy if husband is abroad. (b) Action for revocation of donation based on fulfillment of condition. (d) (d) Action for declaration of incapacity of heir. whether judicial or legislative. (a) (a) Action for legal separation. admissions or silence. (c) (c) Action for forcible entry or unlawful detainer. (a) Action for reduction of price for rescission in case of breach of sale of real estate. (e) (e) Action for rescission or for damages if immovable sold is encumbered with non-apparent burden or servitude. culpable negligience induces another to believe certain facts to exist and such other rightfully relies and acts on such belief. 1139-1155) Redhibitory action based on defects of animals. Lack of parental consent. (b) (b) Action for annulment of marriage based on 1. (b) Action upon a quasi-contract. 4. (d) (d) Action for defamation. (d) Action upon injury to rights of plaintiff. Estoppel by Record . Action to impugn child’s legitimacy if husband is in the Philippines but not in same place as wife. are precluded from aasserting against the other party to the deed any right or title in derogation of the deed. Physical incapacity and afflicted with a sexuality transmissible disease. or from denying any material fact asserted therein. (f) Action for rescission of rescissible contracts.by one’s conduct or acts.   Estoppel by Laches  Estoppel by Laches  Failure or neglect to enforce a right for an  Unreasonable and unexplained length of time  Despite knowledge or notice EXTINCTIVE PRESCRIPTION (Arts. appearance or adoption of a child.Estoppel  Estoppel in pais . (c) (c) Action to claim legitimacy if child should die during minority or in state of insanity. (c) Action for recovery of movable (replevin) if possessor is in good faith. (g) Action for annulment of voidable contracts. Estoppel by Deed . (e) (e) Action for warranty of solvency of debtor if credit is assigned to co-heir during partition. representatioons. Action for recovery of movables (replevin) if possessor is in bad 40 days 6 months 1 year 2 years 3 years 4 years 5 years 6 years 8 years . (b) Action for warranty against hidden defects of thing sold. 3.

Action to claim legitimacy. (f) Action upon a judgment.10 years (a) (b) (c) (d) (e) (f) (a) (b) Lifetime faith. (b) Action for recovery of ownership of immovables (accion reinvindicatoria) if possessor is in good faith. Action to obtain declaration of illegitimate filiation. . (a) Action for recovery of possession of immovables (accion publiciana) if real right of possession is lost. (e) Action upon an obligation created by law. (c) Action upon a mortgage contract. (d) Action upon a written contract.

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