CONTRACTS | 193

CONTRACTS | 193
CONTRACTS
Contract, defined
A contract is a meeting of minds between two persons

whereby one binds himself, with respect to the other, to give
something or to render some service. (Art. 1305),
Elements of a contract
1. Essential elements - Those without which there will be no

contract -
a. _Consentof the contracting parties.
b. Object certain which is the subject matter of the
- contract.
c. Cause of the obligation which must be established.
(Art. 1318)
2, (Natural elements’ — Those found in certain contracts

unless set aside or suppressed by the parties (such as
warranty against eviction and warranty against hidden
defects in a contract of sale). (Art. 1547)
Accidental elements;— Those that refer to particular

Stipulations of the parties (such as terms of payment,
interest rate, place of payment).
Classification of contracts
1, 2 . s :
According to perfection or formation .: ne
a. Consensual: - Those that are perfected by mere
consent (such as sale and lease).
‘Real Those that are perfected by the delivery of

the object of the contract (such as depositum,
Pledge, and commodatum). (Art. 1316).
(Formal or solemn:- Those which must be in the
form provided by law for their perfection (such as

the donation of an immovable which, together with
Jb
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194
3.
c
—
4.
: by the donee, must be in g Public
eptanc :
the accep be valid).
instrument to
According to cause
Orierous* - Those where there is an exchange ‘

Valuable considerations (such as sale and barter,
For each contracting — party, the cause’ is th
prestation or the promise of a thing or service by
the other. (Art. 1350) et
<Gratutitous or lucrative - Those where one panty
receives no equivalent consideration (such ag

donation and commodatum). These contracts are
referred to as contracts of pure beneficence, the
cause of which is the liberality of the benefactor.
(Art. 1350)
Remuneratory - Those where the cause is the

service or benefit remunerated. (Art. 1350)
According to importance or dependence of one upon

another
a.
b.
»C.
b.
(Principal One that can stand by itself (such as
sale, loan).
‘Accessory’ - One whose existence depends-upo?
another contract (such as pledge or mortgagé
which is dependent upon a principal contract such

as loan).
«Preparatory - One which serves as a means.)

which other contracts may be entered into feu
agency and partnership).
According t , ;
ona ‘ ‘
a me or designation :
Nominate ~ Those which have a name under
a (such as sale, loan and barter).
* n + ee ¢
ee ~ Those without.any name under :
innomj uthorities in. Civil Law, list the followin’
Nominate contracts: ,
1) i
Di ‘ *
i 0 ut des (I Zive: that you may give)
Do ee ;
Mt facias (I give that you may 4°)
3) Facio ut des (I do that you may give)

4) Facio ut facias (I do that you may do)
wphis may actually be barter, hence, a nominate

contract. (See Art. 1636.)
Rules that govern innominate contracts

1) The stipulations of the parties;
2) The provisions of Obligations and

Contracts;
3) The rules governing the most analogous
nominate contracts; and

4) The customs of the place. (Art. 1307)
5. According to risk or fulfillment
&
‘4 4.
b.
a.
tt
a.
b,
_ 48 sale and barter).
Accord;
“ording to subject matter
‘Commutative - Those where the parties give
equivalent values (such as sale and barter); hence,
there is real fulfillment.
(Aleatory’— Those whose fulfillment depends upon

chance (such as an insurance contract).
According to the parties obligated
Unilateral'— Those where only one_of the parties is

obligated to give or do something (such as
commodatum and gratuitous deposit).
Bilateral (or synalagmatic)»- Those where both

Parties are required to give or do something (such
They may be reciprocal or
on-reciprocal. ;
Contracts involving things (such as sale or barter).

Contracts involving rights or credits » euch 3°
Usufruct or assignment of credits)-
rontrac
: ts involving service
se of service). “
Accor di
'Ng to the time of fulfillment
‘vices \(such as agency or :
NRT S
196
Executed One which has been performed,
a. tory = One that has not yet been perform ed.
b. _Execu
9. Other classifications
_ Auto-contract - Where only one person represent,

“the two opposite parties to the contract (such
when an agent lends money to his principal whom
he represents as borrower).
a.
b. -Contract of adhesion: - Where only one party

drafted the contract (such as insurance).
It is so-called because its terms ar

prepared by only one party, while the other party
merely affixes his signature signifying his adhesion
thereto. (Uy vs. People, G.R. No. 174899,
September 11, 2008) A contract of adhesion gives
no room for negotiation,and deprives the latter the
opportunity to bargain on equal footing. It
presupposes that the party adhering to the
contract is a weaker party. (Saludo, Jr., vs.
Security Bank Corporation, G.R. No. 184041,
October 13, 2010) The weaker party’s participation
is reduced to the alternative to take it or to leave it
Thus, contracts of adhesion are viewed as traps for
the weaker.party whom the courts of justice must
protect. (ACI Philippines, Inc. vs. Coquia, G.R. No

174466, July 14, 2008)
Stages of a contract
1. «Preparation or co
negotiations and
conditions, with n
Nception - This involves preliminay
bargaining, discussion of terms a
“Nepotiati nO arrival yet of a definite. agree™”,
conbeistn begins from the time the prospect"!
and ends eins manifest their interest in the cont

© moment of their agreement.
Perfect) .
On or ‘birth: ~ This is the point when the
matter and valid a cane the parties on a definite $
Consummiat; ° ;
be ation or Yq . ; : .
When the parties fata o. or termination — This °%
“Or perform the terms agreed ¥
re is a
ubje
curs
pon
pasic pr
1.
the contract, culminating in the extinguishment
reof. (See Navarra vs. Planters Development Bank, G.R.

ne 172674, July 12, 2007; XYST Corporation vs. DMC
tien Properties Development, Inc., G.R. No, 171968,
inciples of contract
Liberty. of con tract or freedom to stipulate
The contracting parties may establish. such

stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy. (Art.
1306)
The freedom to enter into a contract is, one of the

liberties guaranteed by the State subject only to the five
limitations. (People vs. Pomar, 46 Phil 440) The following
are some stipulations that have been held to bewoid:
ee
a. The stipulation that the creditor automatically

becomes the owner of the property pledged or
mortgaged if the debtor defaults in his payment.
(Declaro vs. Alpha Insurance, 58564-R, June 16,
1978) Such stipulation, known as pactum
. commissorium, is void for being contrary to law.

_(Art. 2088)
A stipulation in a mortgage contract providing for a

specified price (known as “tipo” or upset price)
below which the mortgaged property is not
supposed to be sold at the foreclosure sale is void
for being contrary to law. (Warner, Barnes and Co.
vs. Jaucian, 13 Phil 4)
An agreement to pay an unconscionable
interest is void for being contrary to moras:
(Spouses Albos vs. Spouses Embisan, G.R. No.
210831, November 26, 2014, and various cases.)
An agreement by the debtor to work without Pay

Until he could find money to pay the debt hal
for being contrary to morals as this aaa ‘ 16
voluntary servitude. ‘(Delos Reyes VS. Alojaco,
Phil. 499)"
rate of |
198
CONTRACT,
agreement to hide & crime, to suppre

e. ale and to stifle the prosecution of the
offender is void for being contrary to public Policy
(Hibberd vs. Rhode, 33 Phil 476; Arroyo vs, Berwin,
36 Phil 386)
Mutuality of contracts ‘
The contract must bind both contracting parties.

its validity or compliance cannot be left to the will of one of
them. (Art. 1308)
The binding effect of a contract on both parties jg

based on the principle that obligations arising from
contracts have the force_of law between the contracting
parties, and there must be mutuality between them based
essentially on their equality under which it is repugnant to
have one party bound by the contract while leaving the
other free therefrom. The ultimate purpose is to render
ioe ee
fulfillment dependent solely upon. the uncontrolled will of

one of the contracting parties. (Manila International
Airport Authority vs. Ding Velayo Sports Center, Inc., G.R.
No. 161718, December 14, 2011) Thus, if the fulfillment
of the suspensive condition of an obligation depends upon
the sole will of the debtor, the obligation and the condition
= void (See Art. 1182.) since compliance is dependent
eee niga Also, after a party has entered into 4
niiileter ally. will not be permitted to renounce i
a, a cnittract which appears to be heavily weighed
iwricone. of one of the parties so as to lead to
ae scionable result is yoid. Thus, the provision
fae tase de note authorizing the creditor
t.tine th ene, or otherwise change from timé
e of i e
“without advance be ee Sin te
event of change 0 : ‘bed by law
“Was agreed upon.

nting the creditor bank to make
cont
pacts , 199
monthly upward /downward adjustment of interest

rate violates the essence of mutuality of contract
(Floirendo, Jr. vs. Metrobank, G. R. No. 148325,
Sept ember 3, 2007) In loan contracts, the interest
ig undeniably always a vital component, so that
any change thereof must be mutually agreed upon:
otherwise, it produces no binding effect. x x x A
contracting party’s assent to the modifications in
interest rates cannot be implied from his/her lack
of response to the means sent by the other party.
(Philip pine Savings Bank vs. Sps. Castillo, G.R. No.
193178, May 30, 2011)
b. Determination of performance by a third person
The determination of the performance may

be left to a third person, whose decision shall not
be binding until it has been made known to both
contracting parties. (Art. 1309) However, such
determination shall not be obligatory if it is
evidently inequitable. In such a case, the courts
shall decide what is equitable under the
circumstances. (Art. 1310)
Relativity of contracts
_ Contracts take effect only between the parties,

their assigns and heirs, except where the rights and
obligations are not transmissible:
a. by law,
b. by stipulation, or
‘by nature. (Art. 1311) ‘

Note: With respect to the heir, he shall not. be_liable,
decedent. (Art. 1311)
Hustragi ve case
Lienado vs. Lienado

G.R. No, 145736, March 4, 2009
: T for a
Petiog Facts: ©, the owner of a lot, leased it to
Provig of 6 years and 9 months. The ee eee

€s that T, the tenant, shall have the opHon es.
‘yond the value of the property he received fromthe.

200
WS NTRACTS
expiration of the lease. T qj
oe eng or befor expiration of the lease, Ait

ute enjoy the lease and to renew it transmitted to the
heirs of T? ; .
Held: Yes. A contract of lease is 8enerally

transmissible to the heirs of the lessor or the lessee, It
involves a property right and, as such, the death of a party
does not excuse non-performance of the contract. The
rights and obligations pass to the heirs of the deceased
and heirs of the deceased lessor are bound to respect the
period of the lease. The same principle applies to the
option to renew the lease. As a general rule, covenants to
renew a lease are not personal but will run with the land,
Consequently, the successor-in-interest of the lessee are
entitled to the benefits, while that of the lessor are
burdened with the duties and obligations, which said
covenants conferred and imposed on the original parties.
When a contract may be enforced by or against a third

person. 2g
a. Where there is a stipulation in the contract that

clearly and deliberately confers a favor upon 4
third person (stipulation pour autrui). Such third
person may demand its fulfillment provided he has
communicated his acceptance to the obligor before
its revocation. (Art. 1311) A mere incidental
benefit or interest of a person is not sufficient.
Example: D obtained a loan from c

amounting to P100,000.00. The parties agree?
that the loan shall bear an interest of 1% Pe
month to be paid by D to X until the principal i
eh in full. The stipulation for the payment q
ses i X who is not a party to the contract 6 .
ipulation pour autrui, X can sue on the contre”
although he i , e
Giteran, he is not party if he does not receive i
Where a thi i"

Mird per : solate hi?
contract, in ec son induces another to viola y be
hi :
held fiable for - Case, such third person practi ng
Party. (Art, 1314) 8°* by the other con
sontrACT®
4.
Co ‘
"sensuality of contract
1 31 5)
“omply
“ut
Example: D has a contract for 5 ves
with XYZ Broadcasting Company. Durin righ
second year of the contract, RST Radio Compan
with knowledge of the existing contract betvieen.f

and XYZ, induced D to sign a contract as radio
talent of RST. XYZ may sue RST (and also D) for
damages under the contract between D and xyz -
although RST is not a party thereto. .
In contracts creating real rights, third persons who

come into possession of the object of the contract
are bound thereby, subject to the provisions of the
Mortgage Law and the Land Registration laws. (Art.
1312)
Example: D obtained a loan of

P200,000.00 from C. The loan is secured by a
mortgage of D’s lot, which C recorded with the
Register of Deeds. Later, D sold the lot to X who
was not aware of the mortgage. When D could not.
pay the loan on due date, C foreclosed the
mortgage on the lot. Here, X would be bound by
the mortgage although he was not a party thereto
because the mortgage created a real right in favor
of C. This is true even if X was not aware of it
since the registration of the mortgage operates as a
notice to the whole world of the existence thereof.
In contracts intended to defraud creditors, the law
gives them protection. (Art. 1313) This 1s true if
me third person acted in bad faith. (See Art.

388.)
Example: D owed C P100,000.00. To

defraud C, D sold his only lot to X who knew of D’s
fraudulent intent, i.e., in bad faith. Here, C may
sue for the rescission of the sale between D and X
although he was not a party to it.
consent (Art...
Con €
Sete. att penfacien ota which need
xcept in the following contracts

with additional requirements: .
=4 SA!
202
a H MUSTS
; as deposit, pled
1 contracts such as Be ap
7 In eomodatum, which are perfected upon the
delivery of the object of the obligation. (Art, 131)
i‘ In formal or solemn contracts, which are Tequires
to be in the form provided by law, to be Perfectes

such as the donation of an immovable which tus,
be in a public instrument together with the
acceptance thereof (Art. 749); otherwise, th.
contract is void.
Obligatory force of contract and compliance in good faith
Obligations arising from contracts shall have the

force of law between the contracting parties and should be
complied with in good faith. (Art. 1159) Upon the
perfection of the contract, the parties are bound to the

following:
a. The fulfillment of what has been expressly

stipulated.
b. All the consequences which, according to their
nature, may be in keeping with good faith, usage

and law. (Art. 1315)
Example: °
: . On June 1, S and B entered into a contract of sale

involving the horse of S for P10,000.00. The terms of the
contract provide that S must deliver the horse on June 30;
while B must pay the price on June 25. In the place of S
ee B, it is the usage that when one sells a horse, he mu*
al a horseshoe on its hooves. However, this is a
niu To what consequences are i
Answer: S must deliver the horse on June 30
Stinulated. B 2 rst
with the dina”, Wetivery, he must take care of the RO,
teemal ligence of a good father of a fanuly aithoug

k, Stipulated because this jx ded by law ane
FEBS Unt god fe; A we iS pow y whe
he faith He must place a horseshoe on
"Tse although this was not also st

Se ta!
the sarme js required by the usage of the P*
where they reside
cone
On the other hand, D must pay the price on June 25
as stipulated. He must pay the whole amount becdtise
or the requirement of the law that payment must be

complete.
pSSENTIAL REQUISITES OF CONTRACTS
Consent of the Contracting Parties
Consent, meaning
Consent is the manifestation of the meeting of the offer

een .
and the acceptance upon the thing and the cause which are to
constitute the contract. (Art. 1319)
Rules on offer
1,
The offer must be certain (Art. 1319) because there could

be no meeting of minds if it is vague or not definite. It
must be “definite, complete and intentional.” (Korean Air
Co., Ltd. vs. Yuson, G.R. No. 170369, June 16, 2010)
Thus, if S, who has several lots, offers to sell his lot

to B without designating which of the lots he is selling, the
offer is not certain.
Nature of advertisements
a. Business advertisements of things. for_sale.arenot

definite offers, but mere invitations to _make.an
offer unless it appears otherwise. (Art. 1325)
Examples: (1) An advertisement reads:

“For sale: residential house on a 200 square meter
lot at Green Valley Village for P3M. Call 723-4567
This is not an offer but a mere invitation to make
an offer. (2) “For sale: 3 bedroom bungalow on @
200 Square meter lot located at No. 123 a
Street, Bgy. Mayamoi, Antipolo City, for ee
cash.” Thig is a definite offer because 't contain
all the matters required of a contract.

3, . 2 invitations
Advertisements for bidders are merely OF oni
‘o inake proposals and the advertiser is 10
204
CONTRACT
est or lowest bidder, untes
(Art. 1326) * the
to accept the high

contrary appears.
mes ineffective upon the death, cin

a
An offer beco
interdiction,
acceptance is conveyed. (Art. 1323}
When the offerer has allowed the offeree a certain Periog

to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, extent
when the option is founded upon a consideration as
something paid or promised. (Art. 1324)
Option, concept
Option is a contract whereby the offeror gives the

offeree a certain period within which to buy or not to buy
a certain object for a fixed price. It may or may not be for
a valuable consideration.
Right of the offeror to withdraw the offer
a. If there is no consideration for the option, the »
offerer may withdraw the offer at anytime within
the option period provided there has not yet been

any acceptance.
if there is a consideration, the offerer may not

withdraw the offer before the lapse of the period
sored upon.} (Tuason vs. Del Rosario-Suarez, GR.
©. 168325, December 8, 2010). Otherwise, he
will be liable for damages to the offeree for breach

of contract, ,
Note: .
€: In both cases, the option is extinguished_upon the
has accepted the off in the meantime, the offere?
S promised to sell his car to B i

giving B 30 days to decide. B accepts th
S may wi }
May withdraw his promise even before ve
f
Period by informing B ° of
1B had given to S option mone
insanity or insolvency of either party before
0:
gales
L.
ao
ptance
nce must be absolute. (Art. 1319). If the

aries the offer, there is no contract since
ting of minds.
on acce
é accep! :
mreeptance .
there is no MES . ; .
if the acceptance is qualified, it constitutes 4
ee counter-offer, (Art. 1319) and has the effect of
rejecting the offer. (XYST Corporation vs. DMC
Urban Properties Development, Inc., supra)
Example: S offers to sell his car for

P100,000.00 to B. B accepts the offer but is
willing to pay the price of P95,000.00 only. The
acceptance made by B is a qualified acceptance
which constitutes a counter-offer. Accordingly, no
contract is perfected. However, If S accepts the
counter-offer, then there will be a_ perfected
contract at the price of P95,000.00.
b. If the offer fixes the time, place and manner of

acceptance, all must be complied with. (Art. 1321)
Otherwise, there will no meeting of minds.
Acceptance made by letter or telegram does not bind the

offerer except from the time it came to. his_knowledge.
The contract in such a case is presumed to have been

entered into the place where the offer was made. (Art.
1319)
The second sentence is important because a
contract is governed by the law of the place where it was

entered into.
“cceptance may be express or implied. (Art. 1320) *
.. The acceptance is express if made orally or in

“niting. It is implied if it can be.inferred from the conduct
of the parties
Thus, if S offers to sella kilo of his mangoes to B

wr P20.00, and B, without saying anything to S, ee
Ro0es and begins to eat one and offers the re
Othe
offer of bs en B is deemed to have imp
liedly accepted the
206
OT NSINTS
er made through an agent is accepted from the 4;
1 mmaunicated tohim. (Art. 1322) € time

Thus, a contract is binding upon the pring;
although the agent has not communicated the accéptars

to him. This is so because the agent is merely Ce
extension of the personality of the principal. Therefore
acceptance by the agent is deemed an acceptance by the
principal. K
Rules on consent
1.
The parties must have the capacity to enter into a

contract. The following cannot give consent to a contract:
a ° Unemancipated minors
; Sen takes place by the

attainment of the age of majority which is ei teen
years. (Art. 234, Family Code, as amended) *
b. Insane or demented persons
However, contracts entered i i

v4) ; i ed into during
lucid intervals are valid, (Art. 1328) ‘Lucid interval
“refers to the period

Fieane eee et OF temporary .san‘sy_of_en
Deaf-mutes who do not know how to-write.
A
contract entered into by the above-named
when Gin is Yidable: (Art. 1390) However,

contract, the aa t ole. of giving consent to 4
ct istinenforceable; (Art. 1403)
Seen ee
» an jt . er ;
raed Price for. frenated person must pay *
, The sale Hereecyeegoe other necessaries sold ¥
hand, a person may pone’ See Art, 1409.) On the othe
husban, trafgr punted but is disqualified
d and the ot / Such as in the case of the
€
frre yho, as a general rule,
|
cone
sited to sell to each other (Art. 1490) or do

pro ner. (Art. 87, Family Code) eee
ea
i tate of drunkenne i
tracts agreed to in as ss or during a
Con tic spell are voidable. (Art. 1328) This isco
sent given in such states is not freely and
t where consent is given through mistake,

violence, intimidation, undue influence, or fraud is
godable. (Art. 1330) These five are referred to as the
causes that vitiate consent or the vices of consent.
a Mistake .
1) When mistake will invalidate consent
aj If the mistake refers to the

substance of the thing which is the
object of the contract. {Art. 1331}
Example: If B bought a bot

on which he wanted to construct 4
factory believing that it was situated
in an industrial area, he can have
the contract annulled if the lot was
actually situated in a residential
area. 7
b) If the mistake refers to those

conditions which have principally
moved one or both parties to enter
into the contract. (Art. 1331)
Example: S sold his car to B

for P100,000.00 cash because he
needed the money to settle a debt.
The deed of sale signed by “him

showed, however, that the price
would be paid in 4 equal
> installments. S$ can have the sale
annulled because of
the condition of the cont
Cc) If the mistake refer
A contrac
ract. —
if such identity
a mistake as to
s to the identity 3
fications of one of the paruc®
208
‘¢
2)
a)
have been the principal caus,

contract. (Art. 1331) © Of the
Example: D donated g
C believing that C was
illegitimate son. D found out lat
however, that C was not his oe
The identity: of C was material to i j
contract; hence, D can have the
contract annulled on the groung of
mistake as to the identity of 4,
donee. ,
lot to
his
If the mistake refers to the legal

effect of an agreement when the real
purpose of the parties is frustrated

and the same is mutual. (Art. 1334)
This refers to mistake of law

which does not génerally vitiate
consent because of the rule that
ignorance of the law excuses no one
from compliance therewith.
However, the contract shall bk
voidable if the mistake as to the
legal effect of the agreement is
mutual and frustrates the red
purpose of the parties
Example: § and B entertd
into a contract of sale with a right t

Tepurchase believing that the
contract had the same effect a5 ®
contract of loan and mortgage- The
mistake here refers to the legal effet
of their agreement, Either party may
annul the contract on such ground:
Wh i
€n mistake does not vitiate consent
If the mistake refers to a simpy

oo of account which shall only
Corrected. (Art. 1331) 4

Thus, if 10 books were sd
st P567,80 each but the total price

as shown at P5,876.00 instead
(Ww
3)
b.
1)
5,678.00, the mistake in

computation will not render the
contract voidable but will only be
corrected.
b) If the party alleging it knew the
doubt, contingency or risk affecting

the object of the contract. (Art.
1333)
Thus, if B buys a brand new

car stereo for P500.00 when he
knows that the price of one is
P5,000.00, he cannot allege mistake
if the car stereo later turns out to
have been stolen. The fact that the
car stereo was offered to him at a
very low price should have put him
on guard that it might have come
from an illegal source.
Rule when one party is unable to read or
does not understand the language of the
contract ,
If mistake or fraud is alleged, the

person enforcing the contract must show
that the terms thereof have been fully
explained to the former. (Art. 1332)
This is an exception to the rule that

he who alleges fraud or mistake must prove
the same.
Violence or physical coercion
When violence vitiates consent
There is violence when in order to

wrest consent, serious OF irresistible force is
employed. (Art. 1335) This . ine
although it may have been employed y 2
third person who did not take part in ¢
contract, (Art. 1336)
Example: S signed
his land to B because
threatened to break his arm
B twisted and
a deed of sale of -
if he refused to
210
C. Intimic
1)
2)
3)
SAC TY
sign. Consent here is given because 3

violence,
jation or moral coercion
When intimidation vitiates consent
There is intimidation when one

the contracting partics is compelled by 4
feasonable and well-grounded fear of an
imminent and grave evil upon his person o
property, or upon the person or property of
his spouse, descendants or ascendants tg
give his consent. (Art. 1335) This
intimidation exists although it may have
been employed by a third person who did
not take part in the contract. (Art. 1336)
Example: In the example above, ifS

signed the deed of sale because B pointed a
gun on his head and threatened to shoot
him if he did not sign the deed of sale,
consent here is given by reason of
intimidation, There is likewise intimidation
if B threatened to burn the house of S, o
shoot S’s spouse, parent or child, if S did
not sign the deed of sale.
Factors to be considered in determining th¢

degree of intimidation
a) | age,
oad
b) sex, and
c) condition of the person. (Art. 1335)

When no intimidation exists
th No intimidation exists in case a

reat to enforce one’s claim throué
competent authority, if the claim is just or
legal. (Art. 1335)
_. Example: C threatened to §
he did not pay his debt to him. D, afraid :
tree tion, thus made a dacion en pat

sferri ;
erring his lot to C to settle
ere, the contract (dacion en pag?
ue DE
we
Undue
1)
2)
Fraud
not voidable as there is no intimidation

when one secks the aid of the courts to
enforce his rights.
influence
When undue influence vitiates consent
There is undue influence when a
person takes improper advantage of his”
power over the will of another, depriving the

latter of a reasonable freedom of choice,
(Art. 1337) For it to be present, the
influence exerted must have 50
overpowered or subjugated the mind of a
contracting, party as to destroy his free
agency, making him express the will of
another rather than his own. (Naranja vs.
Court of Appeals, G.R. No. 160132, April
17, 2009)
Example: If a church minister

improperly takes advantage of his power
over a member of his congregation who
regularly confides in him by persistently
telling the member to sell his property to
him, the contract if entered into will be
voidable at the instance of the member on
the ground of undue influence.
Factors to be considered in determining the

existence of undue influence:
a). Confidential, family, spiritual and
other relations of the parties, 7
‘b) ' Mental weakness,
-¢) Ignorance, or
qd) Financial distress of the person
alleged to have been unduly
influenced. (Art. 1337)

When fraud exists (dolo cqusantel.
a) © When, through the insidiou

or machinations of OnE
g words
of the
212
ac OF NN amg
b)
2)
a)
Téaso
eo
~ONTRACIg
contracting parties, the other ;

induced to enter into a contr iy
which, without them, he would a
have agreed to. (Art, 1338) The
fraud here is active fraud.
Examples: (1) S induced B

to buy a ring which S claimed y,
made of pure gold. However ‘
knew all along that the ring ar
only gold-plated. B can have the
contract annulled on the ground of
fraud.
When there is a failure to disclose

facts, when there is a duty to reveal
them, as. when the parties are
bound by confidential relations,
(Art. 1339) The fraud here is passive
fraud.
Example: A and B were

partners in a real estate business.
During the existence of _ the
partnership, A met X who told A
that he was interested in buying 4
large tract of land. A did not inform
B about X’s proposal. Instead, he
persuaded B to sell his share in the
partnership to him. After A became
the sole owner of the business, }¢
sold real property to X realizing ¢
huge profit. The contract betwee? A
and B for the sale of B’s interest ®
voidable on the ground of fraud. A
was duty bound to disclose the
Proposal of X to B= since a
partners, they are bound by trust
and confidence.
Requisites to make a contract voidable.

nof fraud
The fraud should be serious.
ae
co
b)
Incidental fraud only obliges

the person employing it to pay
damages.
The fraud should. not have been
parties. (1344) "SH
If both parties employed

fraud, the bad faith of one will
negate the bad faith of the other.
The law will consider both of them
in good faith; hence, the contract
will be valid.
3) When no fraud exists
a)
b)
But if Sis a gemologist
In case of the usual exaggerations

in trade, when the other party had
an opportunity to know the facts.
(Art. 1340)
This is to give allowance to

dealer’s talk or sales talk such as
“The liquid soap that can wash a
thousand plates” or “The fuel that
can give you the extra mile. ,
In case of a mere expression of an

opinion, unless made by an expert
and the other party has relied on
the former’s special knowledge.
(Art. 1341) .
Example: S, a farmer, who
knows nothing about gems, tells B
that in his (S’s) opinion, his ring is
embellished with diamond and that —
he is selling it. B buys the ring

believing that the ring is adorned
with diamond. Later,
that the gemstone is really emerald.
There is no misrepresentation here
because § is not an expert in gems.
However, B can have the contract
annulled on the ground of mistake.

(an expert 1n
he discovers.
214
q)
ome a » MACTS
gems), B can annul the contrag
the ground of fraud. t on
In case of misrepresentation by
third person, unless euch

misrepresentation has create,
substantial mistake and the same;
mutual. (Art, 1342) .
Consent will “likewise ty,

vitiated if the third person conniveg
with a party to the contract ip
making the misrepresentation.
Example: B wants to buy

the land of S because he is
interested in putting up a factory,
However, S and B do not know the
classification of the area where the
land is located. So they consult T,a
third person, who tells them that
the land is situated in an industrial
area. S and B thus proceed with the
sale. Later, however, B finds out
that he could not put up a factory
because the land is situated in 4
residential area. Is the contract
between S and B voidable?
; Answer: Although generally,

misrepresentation by a third perso"
does not affect the validity of the
contract, the contract. in this case 8
voidable because the misrepresent
ation by T, a third person, has
created a substantial mistake that
mutual.
if the misrepresentation was made

in good faith, However, the same
May constitute error. (Art. 1343)
__ Example: S has 4 rine

which he honestly _ believes :
adored with diamond. He offers .
sell the ring to B telling B that
Ce
gemstone is diamond. B buys the

ring believing it to be so. Later. he
discovers that the gemstone is
emerald. No fraud exists here
because S was in good faith.
However, B may annul the contract
on the ground of mistake.
4) Kinds of dolo or fraud
a) Fraud in obtaining consent

1) Causal fraud or dolo
causante - Fraud without
which consent would not

have been given. It renders
the contract yoidable.
2) Incidental fraud or dolo

incidente - Fraud without
which consent would have
still been given but the
person giving it would have
agreed on different terms.
The contract is valid but the
party. employing it - shall be

liable for damages.
, Example: S sold his -
lot for P100,000.00 to B who

stated in the deed of sale
that he was married: The
price. was fixed by S at the
said amount in consideration
of B’s ‘having @ family to
support. In reality, how-
ever, B.was single. If S
would have sold the lot to B
whether B was married or,
single but that he would
have given a higher price.
say P105,000.00, _had he
known that B was single, the
fraud here is only incidental.
The contract js not vitiated
ecco
Ff
CONTRACT,
vy fraud but S can Teeny

damages in the amount fe
—Jeast P5,000.00. t
rs] Fraud in the performance of the

obligaton
This is the deliberate act ¢
evading fulfillment of an obligatio,
in a normal manner. This pre
supposes an existing obligation:
hence, the fraud has no effect on the
validity of the contract since it was
émployed after perfection. However,
the party employing it shall be liable
for damages. (Art. 1170)
Simulated contract, concept and kinds
A simulated contract)is one that_does not intend to have

any_legal effect on_or a change in the juridical situation of the
parties. (Amistad vs. Baltazar, 59635-R, Oct. 24, 1979). They are
of two kinds:
1. Absolutely simulated contract - One where the parties do

not intend to be bound at all. (Art. 1345). Being fictitious
it is void, (Art. 1346) The parties may thus recover from
each other what they may have given under the contract.
(Heirs of Dr. Mario S. Intac vs. Court of Appeals, G.R. No.
173211, October 11, 2012) The main characteristic of aM
absolute simulation is that the apparent contract_is not
really desired or intended to produce. legal effect or in any
Way alter the juridical situation of the parties. (De Leo"
vs. Dela Liana, G.R. No. 212277, February 11, 2015) The
ae ation must be on the part of both parties. Where
y one simulates, there is deceit or fraud, and the
contract is re : ; jv
Salvador, 60900-R, Apa ogee, not void. (Bacal ¥°
tells B ements Bis interested in buying the lot of S. :
present his & ie capacity to buy the lot by asking B
bank accoy records. B, however, does not have # my
manager who - So he asks XYZ Bank through
the bank. ae friend to certify that Bisa deposito
Bank issues the certification whe” the
rot j
C0’
me
Vhat May be.
l,
gracTs
order
dan ace
iiae OS has never opene Ount and made a
e Sabie bank. The contract of bank deposit is
ly simulated.
ty simulated contract - One where the parties

Rete ar true agreement. (Art. 1345) The artis
CON ‘pound by their real agreement provided it does
here rejudice @ third person and is not intended for any
not - contrary to law, morals, good customs, public
per public policy. (Art. 1346) If the parties state a
false cause in the contract to conceal their real agreement,
dhe contract is only relatively simulated and the parties
are still pound by their real agreement. Hence, where the
essential requisites of a contract are present and the
simulation refers only to the content or terms of the
contract, the agreement is absolutely binding and
enforceable between the parties and their successors in
interest. (De Leon vs. Dela Llana, supra)
Example: S and B made it appear that S sold his

car to B for P100,000.00. In reality, however, S donated
the car to B. The sale is relatively simulated. S and B will
be bound by the contract of donation. However, they will
be bound by the sale if B is a public official since donation
to a public official is void for being contrary to public
Policy (See Art. 789.); or if as a result of the donation, the
compulsory heirs of S could not receive their legitime, in
Which case, the heirs can demand the price from B.
Object of Contracts
the object of contracts
ing ines which are not outside the commerce of men,

“Siding future things. (Art. 1347) :
the Obj
that = of contracts. Future things,such as the crops
ay thereaft s that may be

Prody er be harvested, or egg
Contracts by a poultry farm, may be the object of
by. law (Art. 1347) such as in the marriage
Settlen .
ments or in partition of the estate by the testator.
Thus, public plazas, streets, sidewalks may not be .
Provide ’ but not future inheritance...except. in. Cases
ih
218
2.
CO NTRACTg
The contract involving future

when the following requisites concur:
a The succession has not been opened.
‘. The object of the contract forms part of the
, inheritance; and
The promissor has, with respect to the object, an
expectancy or right which is purely hereditary in
nature. (Arrogante vs. Deliarte, G.R. No. 152139,
July 24, 2007) ‘
All rights which are not intransmissible, (Art. 1347) |
Thus, a credit right may be the object of deed of

assignment; so also are leasehold rights to a certain
building. However, strictly personal rights, such as
parental authority, or political rights such as the right to
vote or to run for public office, may not be the object of
contracts, as they are intransmissible.
All services which are not contrary to law, morals, good

customs, public order or public policy. (Art. 1347)
Thus, contracting the service of person for the
slaughter of a dog contrary to Animal Welfare Act of 1998,

is yoid,
Requisites of object of a contract
i
A.
It must be within the commerce of men. (Art. 1347)

It must be transmissible. (Art. 1347)
It must not be con

: trary to law, morals, good custom”
public order or public policy. (Art. 1347) .
It must not be impossible. (Art. 1348)
It m 4 2 nd
not deter ne terminate as to its kind or if its quantity ©
same withone «it must be possible to determine

ithout the the
_ Parties, (Art, 1349) of a new contract betwee?
Thus, if gi,
determinate as ; sells to B a "car stereo”, the obj
© its kind although it has not
contra”
jeutarize d. If the object stated in the contract is “all
part ia in the piggery”, the fact that the quantity is not
the pinate shall not be an obstacle to the existence of
detetract because such quantity can be determined by
os parties without the need of entering into another
contract. |
on internal organs as objects of a contract

Hus a A. No. 9208 penalizes human trafficking for the
Ree the removal or sale of internal organs. The law

Paes that the human body and its parts cannot be the subject
Pe ommercial transactions. Giving or receiving payment includ-
a any other compensation or reward for organs is prohibited
slong with advertising the need for or availability of organs, with a
view to offering or seeking payment.
Under the law, however, a living and related voluntary

donor or a living and non-related voluntary donor may be allowed
to donate organs, but no living minor is allowed to donate any
organ for the purpose of transplant. Organ donations under the
said law are subject to the World Health Organization’s Guiding
Principles on Human Organ Transplantation which was forged by
member countries in 1981. Under the international agreement,
organs for transplant should be removed preferably from the
bodies of deceased persons, and that adult living persons may
al
hone ¢ organs but such donors should be genetically related
the recipients.
Cause of Contracts
no
Cause, Conce pt
It j :
Yntrag | the essential. reason. why..a_partyentersinto~a ,
Cans
eo
1, «contracts
Onerg yess nies
Patty ig qeeoeact ~ Here, the cause for each contact
the ot. © Prestation or promise of a thing or service DY

“her. (Art. 1350)
The bei “amples: (1) 'S sold his car to B for P100,000.00.
Se for s is the payment of, or the promise to pay
CONTRACTS
220
B; while the cause for B is the delivery 7

P00, 00 ee t deliver, the car by S. (2) Ga oo
0 tered into a contract with B, a businessman, to adh
ine books of the latter, for a professional fee :
P10,000.00. The cause for Cc is the payment of n
professional fee of P10,000.00, while the cause for R
the audit of his books by Cc.
2 Remuneratory contract + Here, the cause is the service or

‘ Senefit which is remunerated. (Art. 1350)
Example: C saves D from drowning, and as

reward, D gives C P5,000.00. The saving of D from
drowning is the service remunerated. The service ‘here js
not a recoverable debt to distinguish it from an onerous
contract where there is a promise of service by a party.
» is
3. Gratuitous, lucrative or contract of pure beneficence — The

cause is the liberality of the benefactor. (Art. 1350) An
example is donation whose cause is the liberality of the
donor; or commodatum whose cause is the liberality of

the lender.
Requisites of cause
1." It must exist.
a. It is presumed that the cause exists and it is

lawful, even if not stated in the contract, unless
the debtor proves the contrary. (Art. 1354)
b. Contracts without cause produce no effect

whatsoever, (Art.1352)
It must be lawful.
Contracts
whatsoever,
morals, good
1352)
’”
with unlawful cause produce 1° elie

The causé is unlawful if it is contrary t© we
customs, public order or public policy: (
It must be true.
The stateme
render them void. if;
founded upon pe! it sho
(Art. 1553)
shall
- wer
uld not be proved that they wa)
her cause which is true and la
nt of a false cause in a contract
woman
S
3
a
caus
1.
lesion, concept and effect on contract. -
shall not”
1,
e and motive distinguished
je: A contract stated that S sold his car

B90.00. The fact, however, is that B did not te
’ put a diamond ring. The cause of the
However, the contract is not rendered
ge the false cause, the giving of P100,000.00, is
ded upon another cause, the giving of a diamond ring,
founc® rue and lawful.
However, if what B actually gave to S was several
5 of “ shabu’, the contract will be rendered void.

gram
Cause is the essential reason of the contract, while‘motivé

ie the private or secret reason or intention of a contracting
party. (Lui vs. De Ocampo, 55 O.G. 1778) k
The contract is void if the cause is illegal; the validity of
ae ie
the contract is not affected by the illegality of the«motive-
Example: S sold his car to B for P100,000.00 «.),

because he wanted to have funds for the purchase of A+
dangerous drug. The motive of S is illegal. However, its ae
illegality does not affect the validity of the contract which eh og
has a lawful cause, i.e., the payment of P100,000.00.
The cause of a contract is always known to the contracting
parties, while the motive’of one party may not be known. to,
the other. eee a
Lesion is the inadequacy of cause. As a general rule, lesion
invalidate a contract except in the following:

When there was fraud, mistake and undue influence.
(Art. 1355) «
i cases provided by law, such as when the ward oF
weentee suffer lesion by more than one-fourth of the

Ue of the object of the contract. (Art. 1381)
DEFECTIVE CONTRACTS
Cisssification of defective contracts
The following are the defective contracts, arrana;
dae
‘ aims to the gravity of ther defect, ic., from the ke 2 7
i. Rescissiole comtrect
2. Voidable contract
3. Unenforceable contract
4
. Void contract
Rescissible Contracts
Rescissible contract, concept
__A t@Scissible contract is one which has all the essential

requisites of a contract but which may be set aside by reason of
equity on account of damage to one of the parties or upon a third
The following are rescissible contracts (Art. 1381)
1. Those entered into by guardians whenever the ward whom

they represent suffer lesion by more than one-fourth of the
value of the things which are the object thereof.
eo the guardian, of M, sold the ne

7 S farm for P40,000.00. The value °
lesio 1s P60,000.00. The sale is rescissible because ee
me n of P20,000.00 is More than 1/4 of P60 900.00, °
000.00, 7 —
Example:
harvested from M’
Re
cont
An absentee is a person who disappears. from his

ae his whereabouts being unknown, and Without
pmicies - agent to administer his property. (Art. 381).
jeavind "as the representative of an absentee who soki
Tus. the preceding number, the sale is rescissible.
the co
aken in fraud of creditors when the latter
yndert :
Those un janner collect the claims due them.
* sannot in any 7 °
ee egample: D owes C. To defraud C, D sells his only
T ate knows of the fraudulent mtention of D. The
= = ‘rescissible. However, the sale is not rescissible tf T
= cood faith, ie., he was not aware of D's fraudulent
was ~ = +. .
intention when he bougnt the property.
Those which refer to things under litigation it they have
been entered into by the defendant without the knowledge
and approval of the litigants or of competent judicial
authority.
2, =
Example: C sued D to recover some pieces “

jewelry. While the case was pending, D, without authority
from the court or from C, sold the jewelry to T who -
aware that the jewelry was the subject of litigation. e
sale is rescissible.
5. All other contracts specially declared by law to be rate

torescission. (Art. 1381)
Tote: Reinse.< .
tke Rescission with respect to lesion in items 1 and 2 re
mee eae if the contract is approved by the court which is
interest ‘o have taken appropriate steps to safeguard the

of the ward or the absentee.
Rercissn,
1 le Payment, requisites
Th is i
j - debtor is insolvent.
a
; obligation is not yet due.
Th
“debtor makes the payment. (Art. 1382)
Son, Soncent
Reggie coos tin
and’ aon is the remedy allowed by. law_t0 on of

TSB to third persons, to secure the reper
Reseis
ties
hes,
OQ
924 NTRACh,
caused to them by @ contract, even if it shoulg
: . be vay
eT of the restoration of things to their condition a
pment prior to the celebration of said contract. It isa remedy
: ive a contract, validly entered into and ¢

a det normal conditions, by reason of external ®t
resulting in a pecuniary prejudice to one of the contractin
parties or their creditors. (Ada vs. Baylon, G.R. No,. 182436
August 13, 2012).
Requisites for rescission
1. The party suffering damage must have no other legal

means to obtain reparation for the same. (Art. 1383)
The action for rescission is subsidiary. Hence,

the debtor has property other than that for which
rescission is being brought, rescission will not prosper.
2. The party demanding rescission must be able to retum

whatever he may be obliged to restore. (Art. 1385)
; Rescission creates the obligation to return the

things which were the object of the contract, together with
their fruits, and the price with its interest. Henct
rescission is not available if the party seeking it cannot
comply with such obligation. (Art. 1385). However, the
obligation to return does not apply to prejudiced creditors
as there is nothing to be returned by them.
The thing object of the contract must not be legally in th
ee of a third person who acted in good faith. (At
In - this case, indemni y

’ nity for damages ™ay
demanded from the person causing the loss. (Art. 1385]
The action for ae 3 er the

” rescission within
Period allowed by law, (Art. 1389) ee
of
Th fide on cadet
the sides Risscriptive period ist4 years>from_ the des
~osmmeract, except in the following:
a. KF |
oe under guardianship - 4 years es
: : ination of incapacity |
ie or -
sheet ntnes ~ 4 years from the time z
e's domicile is known, .
jssion
‘on shall only be to the extent necessary to cover
pescist sed. (Art. 1384)
le. |G guardian, sold 100 sacks of rice harvested

gxamp of M, his ward, for P700.00 per sack, or a total
‘nit the far 900.00 to B. However, the value of each sack is
ine of P79 total value of P100,000.00. The rescission of the
sof rice is sufficient to cover the damage of
h is more than one-fourth of the total value of
B must return 30 sacks of rice to M.
of 0 sack
0.00 (whic
: 0.00). Thus,
Mienations in fraud of creditors
1, Alienations by gratuitous title

Gratuitous alienations are presumed to have been
entered into in fraud of creditors if the debtor did not
reserve sufficient property to pay all debts contracted
before the donation. (Art. 1387) .
Example: D owes his creditors P500,000.C0. He

has assets of P700,000.00. If D donates assets amounting
to P300,000.00, such donation is presumed fraudulent
because it leaves D with assets of only P400,000,00,
which amount is not enough to pay his debts of
P500,000.00.
Alienations by onerous title (such as sale or exchange)
whi (Onerous alienations are presumed fraudulent

ten, made by persons against whom some judgment has
it, bee in any instance or some writ of attachment
Tefer tet issued. The decision or attachment need not
obtaine, the property alienated, and need not have been
ed by the party seeking rescission. (Art. 1387)

Examples:
a.
D dwes C P100,0C0.00. When D defaults, © 5ue®

him and obtains a favorable judgment against him.
ED sells properties, say to T; the sale is presumed

dovdulent because it was made by a ther
€cision rendered against him. Gor. any Os
“teditor may ask for the rescission of the sale.

xv
226 a
complaint against D tg
b. F 90. 000:00 He asks the court to attach a]

(Lot 1). The court issues a writ of attac
Later, D sells another lot of his (Lot 2) to T. Th
sale of Lot 2 is presumed fraudulent because «
was made by D against whom a writ of attachme ‘
has been issued. X, another creditor of D, may es
for the rescission of the sale of Lot 2. Thi, i
possible because the law says that “(T)he decision
or attachment need not refer to the Property
alienated, and need not have been obtained by the
party seeking rescission”. (Art. 1387)
Colles
Ot of b
hmens
Liability for damages of persons acquiring things jy

alienations in fraud of creditors
1, If the purchase was made in bad faith
The purchaser in bad faith shall indemnify the

creditors for damages suffered by them on account of the
alienation whenever due to any cause, it would &
impossible for him to return them. (Art. 1388) This mule
applies even if the cause of the loss is a fortuitous event.
; If there are two or more alienations, the first

acquirer shall be liable first, and so on successively (At
1388) provided they are also in bad faith.
If the purchase was made in good faith
notwi The purchaser in good faith shall not be liab¥

diopome ending the fraudulent intention of the debtor 8
as ne the property. Hence, rescission will not OF
# If there are subsequent transfers,
faith. “tees shall not be liable even if they were in bad
Voldable contract
se “= CONCept
fvidable contra: |
the incapacity ome ie one that is defective by reason t

ont consent of one to the parties:
aie
33 annulled by a proper action in court.
it is
pi’ see atification. (Art. 1390}
voidable or annullable contracts
where one of the parties is incapable of- giving
I Moen to a contract.
The following are incapable of giving consent to a
contract:
Unemancipated minors.
Insane or demented persons.
Deaf-mutes who do not know how to write. (Art.

1327)
9, | Those where the consent is vitiated by mistake, violence,

"intimidation, undue influence or fraud. {Art. 1390)
a.
b.
c.
3, Those where consent is given in a state of drunkenness.

(Art. 1328)
4, Those where consent is given during a hypnotic spell. (Art.

1328)) -
Annulment, concept
wots (Annulment is the action brought to set aside a voidable
contract. ~ , rs ent
pment and rescission, distinguished
Annulment ig brought to declare the inefficacy inherent in

the contract. Rescission is availed of to produce the
nefficacy which did not exist in the contract.
ine nt is Based on vitiated consent; hence, damage 1S
3. trial. Rescission is based on lesion or damage.
In 2 * . the
act ulment, the action is principal. In rescisstom "©
On is subsidiary.
A ' fuss :
Regiment is a sanction where the law predominates
Cission, isa remedy where equity predominates.
A . is 4
prinalment is available only to the parties, Coe ane
“Pally or subsidiarily, Rescission is available N°"
228
6.
— NARSTY
to the contracting parties but also to third persons Whose

re affected.
interests &
is required to prevent annulment, whi
e
Ratification e
red to prevent rescission.
ratification is not requi
Rules on annulment of voidable contracts
lL,
haa ae ;
_ otherwise the contract can no longer be set aside
When action must be brought (prescriptive Period)

___.. The action for annulment must be brought with;
four (4) years which period shall begin: 2
a In cases of intimidation, violence or undue

influence, from the time the defect in the consent
ceases.
b. In case of mistake or fraud, from the time of

discovery of the same.
c. In cases of minority or other incapacity of a party,

from the time guardianship ceases. (Art. 1391)
Who may bring action for annulment
1397) Hoe obliged principally or subsidinrily. ‘ar

ce, it cannot be brought by third persons. It
may be brought by the following: uy wee
a, ‘ ,
The guardian of the incapacitated person during
the latter's incapacity,
b, The j
Nneapacitated pe , ined
ca acity, person after he has attain
ey ae consent is vitiated by mistake,

(Thus, ntimidation, undue influence or fraud
eaten pertons who employed such vices 3
Cannot base their actions on such flaws of
the . a
“lie whe This is based on the principle x

vho Omes to ¢ ; ith cle
court must come with
Principle j acl
Persn applies also to capa
contract On erent seek the annulment of oo
€ ground of the incapacity of
cor
Effe
300
a.
cts of a
obli
1)
2).
3)
4)
5)
nnulment
jgations created by annulment
In obligations to give, the contracting

parties shall restore to each other, except in
cases provided by law, the following:
a) The things which have been the

subject matter of the contract, with
their fruits.
b) The price with its interest. (Art.
1398)
In obligations to render service, the value
thereof shall be the basis of damages. (Art.
1398)
Restitution when one of the parties is
incapacitated
The incapacitated person is not

obliged to make any restitution except
insofar as he has been benefited by the
thing or price received by him, (Art. 1399)
When. the thing is lost through the fault of

the party obliged by the decree of
annulment to return it
The said party shall return the
following:
a) Fruits received.
b) Value of the thing at the time of the
loss,
c) Interest from the time of the loss.
(Art. 1400)
Mutual restitution
If one party can

is bound to return
annulment, the other cannot
to comply with what is incu
him . (Art. 1402)
not restore what he

in the decree of
be compelled
mbent upon
MERAY 8)
230 “ACTS
g while in the possession of the
of thin
4, Effect of loss g the action for annulment Party
who has right to brin ‘

if lost through his fault, the action for annulme
is extinguished, whether such party nt
incapacitated or his consent is vitiated,
b. If Jost without his fault and such party ;

incapacitated, he can still bring an action s
annulment. However, he will be required to rege
the value of the thing and its fruits (Art. 1398) a
only up to the extent that he has been benefited,
(Art. 1399)
a.
is
Ratification, concept
Ratification is the adoption or affirmation of a contract

which is defective because of a party’s vitiated consent or
incapacity.
Rules on ratification
1. How ratification is made
a. Express — When made orally or in writing.
‘ b. Implied or tacit - There is tacit ratification if with

knowledge of the reason which renders the
contract voidable and such reason having ceased,
the person who has a right to invoke it executes a1
act which necessarily implies an action to waive
his right. (Art. 1393)
ie Example: S, 17 years old, sold his

mputer to B, 25, for P50,000.00 payable in 10
ca monthly installments. When § turned 18
contin old, 6 installments were still due. I $
ues to collect the remaining installment®
instead of suin : : d to
& for annu deeme
have ratified the contract. inte
Who May
y Ta
contract) tify (the same persons who may annul e
a. The wae aig}
guard: agi di pirind
the latter's in, of the incapacitated person dun:
incapacity.
con
The incapacitated person after he has ica

b. capacity.
The party whee e consent is vitiated by mistake
violence, intimidation, undue influence or fraud
(hence, the “pene? who employed such vices of
consent cannot ratify).
Ratification does not require the conformity of the
te:
person who has no right to bring the action for
annulment. (Art. 1395)
Effects of ratification
It extinguishes the action to annul a voidable
contract. (Art. 1392) i
Once the party who has the right to seck
* annulment of the contract ratifies it, he can no
longer subsequently bring the action for
annulment.
b. It cleanses the contract from all its defects from the
moment it was constituted. In other words, the
contract is validated from inception.
a,
Unenforceable Contracts
v
wenforceable contract, concept
a
Unless ratiee able contract is one. be_entors
Right ¢ .
© defense of unenforceability
Unenfo y_to the ¢
re
8): cannot _k
The ¢
low; e
1. i RE are unenforceable contracts:

. hose e :
Who ha
' resentation,
or Who repress’ ane
S been given no authority or legal

has acted beyond his powers. (Art. 1403) .
This cere ; eae

his right is available only tothe contracting parties:
© > ae
Art. 149 able contracts cannot _be_assailed_by. third persons:
r person by on€ ~
232
NONE ET “ACTS
Under 1317, no one may contact in the name of

another without being authorized by t aie OF Unless
he has by law a right to represent him. Such contract, i
entered into, shall be unenforceable, unless it is ratified
expressly or impliedly, by the person in whose behalf i
has been executed, before it is revoked by the other
contracting party.
Examples:
“a. A sells P’s car to B in the name of P without ps,
authority. B cannot enforce the contract against p

unless P ratifies it.
b. P authorizes A to sell P’s car for P100,000.00 cash.

A sells the same to B for P100,000.00 in
installments. B cannot enforce the contract
against P unless P ratifies it because although A
had the authority to sell the car, he acted in excess

of authority.
Those that do not comply with the Statute of Frauds. (Art.

1403) ~
The Statute of Frauds is a statute designed-to

Prevent the commission of fraud’ by requiring certain
contracts to be in writing and be subscribed by the party
charged, It applies only to wholly executory contracts)
‘€., Contracts where no performance has yet been made
by both contracting parties. Contracts infringing the
Statute of Frauds cannot be sued upon either for damages

or specific performance.
The followin i ne
; & contracts must be in wu
othorwine they are unenforceable:
ay An. agreement
performed withi
that by its terms is not to ve
na year from the making thereof.
Example: On J dD
e: anuary 1, 2015, C anu
orally entered into a contract toe the constructio"
f C’s buila; d
oc =e which shall begin on February 1
against the Site ee may enforce the cont
farsiens Feb 1, 2016 as it ¥

not in writ on ruary l, th
parties, 8Md subscribed by either or P°
conTRAY
A special promise to answer for the debt, default,
or miscarriage of another. This is known as
guaranty.
Example: D borrowed from C P10,000.00

with G as guarantor.
orally. If D cannot pay, Cc cannot enforce the
guaranty against G since it was not in writing.
An agreement in consideration of marriage, other

than mutual promise to marry.
Examples: (1) F, the father of G, orally

agreed to give a house and lot to G, the groom,
and B, his bride, in consideration of their marriage.
The agreement is unenforceable against F since it
is not in writing. (2) M and W mutually agreed to
marry each other within 6 months. The agreement
was oral. At the end of 6 months, M refused to
marry W. If preparations have been made for the
wedding, M can enforce the contract for the
purpose of claiming damages although the mutual
promise was not in writing, but not for the specific
promise to marry.
Sale of goods, chattels or things in action at a price

not less than P500.00.
Things in action include credit, shares of.
stock and other incorporeal properties.
Example: S orally sold his radio for

P1,000.00 to B. The parties agreed that the radio
would be delivered and the price paid the ee
day. Here, neither party may enforce the eae
the following day or thereafter since it was an in
writing. However, if the price of the rac ’
P500.00 or less, the sale is enforceable although
is wholly executory.
Rule in sale by auction
yin’ his
If the auctioneer makes an ae nt sd

Sales book, at the time of sale, of re pane of
kind of property sold, terms of sale, ae ount the

the purchasers and person on whose acco’
hoes : andum, {Ar

Sale is made, it is a sufficient memot——" ©
The guaranty was made '
234
CONTRACT.
1403), i-e., the requisite that the contract MUSt

in writing is complied with; hence, the Sale ;
enforceable although not subscribed by the . is
sought to be held liable. ty
An agreement for the leasing of a real Property

of an interest therein for more than one year, *
The object of the lease must be req)
property and the term of lease must be for more

than one year. However, although the lease is not
in writing, it shall be enforceable if the lease Period
is one year or less, or even if the lease period is
more than one year but the object is personal
property.
Sale of real property or an interest therein

(regardless of price).
A representation as to the credit of a third person.
ra _ The representation must have the effect of

inducing the party to whom the representation is
made to grant credit to another.
_ Example: D wants to buy construction

materials on credit from C. T orally tells C that D
has a good credit standing and pays his loans
promptly. C thus sells on credit to D because of the
representation made by T as to D’s credit. If the
representation turns out to be false, C cannot
Prove such misrepresentation against T to recovel
ra because it is unenforceable not. being ™
PPheability of Statute of Frauds and ratification
‘con
a.
tracts. (Arr : :
14, 2007) Theyre” Deliarte, G.R. No. 152132,
of th
The Statute f : ys
comphint a. Frauds applies only to executory
cuted or partially consummate’
¢ follow; susceptible of ratification through any

ing means which will render them enforce@)!™
object to ion
evidence to Prove them. the presentati
When the
t eee
Person enforce Purpose of the testimony Of Ti.
"8 the contract or of his witnes
. ostracT®
being offered which is to prove the contract by ora!
evidence, the party against whom the contract jg
peing enforced should immediately object to such
purpose, or a8 soon as the question is asked the
witness which would allow him to present oral
evidence to prove the contract, the other party
should object to the witness answering the
question. Otherwise, such other party will be |

deemed to have waived his right to raise the
unenforceability of the contract.
b. By the acceptance of benefits under them. {Art.

1405). This will make the contract executed in
part.
Example: S orally sold to B a radio for
Pp800.00. The parties agreed that S would deliver
the radio the following day. B, however, gave a
down payment of P200.00. The sale is enforceable
because S had accepted a benefit under the
contract. 5
Problem:
S and B entered into a contract whereby S sold his

computer to B for P20,000.00. The parties agreed that S
Would deliver the computer, and that B would pay the
ture the following day. B signed the written agreement,
B mh to sign it saying that he would sign it when
place of gn Payment. The following day, B went to the
refuses 1 to get the computer and offered the payment. S
contraet © deliver the computer. May B enforce the
against S>?
Of the meee No. It is not enough that there ts a uwiting
be subser; hed he for it to be enforceable. It must poop
Subscribe to ay the party charged. So since S os
: Wainst him We agreement, the same cannot be enfe

Tho nine aac * ‘
toa cgtere beth parties are incapable of giving consent
estat. (Art. 1403} a
Aminor, wii te contract is unenforceable if one party 3S -
“Ts while ‘the other party is insane. ;
Be
erage Tes
; CONTRACT
pjfeet of ratification by parent or guardian
When only the parent or guardian of one
ratifies, the contract is voidable at the insta
the parent or guardian of the party who q
ratify the contract.
b. When the parents or guardians of both pattie

ratify, the contract shall be considered Validate
from inception, (Art. 1407) a
a. Party
id ng
Void or Inexistent Contracts
Void contract, concept
A void contract is one which has no force and effect fron

the very beginning, as if it had never been entered into, and
which cannot be validated either by time or ratification. (Moreno,
Philippine Law Dictionary). It is equivalent to nothing; it produces
no civil effect. It does not create, modify or extinguish a juridical
relation. (Queensland-Tokyo Commodities, Inc. vs. George, GR.
No. 172727, September 8, 2010)
Characteristics of a void contract
1, A void contract cannot be ratified. (Art. 1409)
Thus, unlike in an unenforceable contract,, 2 void

contract remains void even if a down payment has Ba
made or a benefit has been accepted by a party.
The right to set u : : not bt

waived. (Art 1409) the defense of illegality can
2.
even on eaeeet
Th i 2
imei nom Of defense for the declaration of o
nexistence of a contract does not prescribe. (Art. 1410)

The . 3d.
eee of illegality of contracts is not available "
NS whose interests are hot directly affect
(Art. 1421)
2 Example. H | gat?
is void, unless js . _ his land to W, his wife. Te
Person. cannot ac. 's under the exceptions. T ? "ps
25Saii the less e
nullity of the sale
Nee of
The followin
1409)
irectly affected such as if he is a creditor of
q he cannot collect from the latter because H has no
property
is void and inexistent if it is the direct result of
llegal contract. (Art. 1422)
Han
more
a contract 3
a previous 1
r contracts are void from the very beginning (Art.
those cause, object or purpose is contrary to law,

Te, goal customs, public order or public policy. (Art.
mi ,
1347, 1352)
Those which are absolutely simulated or fictitious. (Art.

1356)
Those whose object or cause did not exist at the time of

the transaction.
These should refer to things that are not capable of

coming into existence, and not to future goods or things
having a potential existence which may validly be the
object of a contract. (Art. 1347, 1461 and 1462)
Those whose object is outside the commerce of men. (Art.

1347)
Those which contemplate an impossible service. (Art.
1347, 1348)
Those where the intention of the parties relative to the
Principal object of the contract cannot be ascertained. ~~
(Art. 1378, par. 2)
ate €xpressly prohibited or declared void by law. -(Art.

law: The following are some contracts declared void’ By.
ay uri
A contract of donation between spouses during he
Marriage (except moderate ones made rentily
_- casion of a family rejoicing) (Art. 87 Pam
‘ Code.)
(except when °
1490). *
A contract of sale between sP Se

Separation of property)- OF:
there is
238
cGy
d. #
OU ™MACTS
A contract which stipulates that household sery;

shall be without any compensation. (Art. 1689) Ce
A contract upon future inheritance (except in oo

provided by law such as in the mar;
settlements}. SITiage
Kinds of illegal contracts; effect of illegality

Where the contract is a criminal offense (Art. 141 1)
1.
a.
If both parties are guilty (in pari delicto)
1) They shall have no right of action against

each other.
2) Both shall be criminally prosecuted.
3) The effects and instruments of the crime

(the things and price of the contract) shall
be confiscated in favor of the government.
. Example: S sold to B 10 ssticks of

marijuana at P50.00 per stick. S initially delivered
3 sticks to B who paid P150.00. B cannot compel '
S to deliver the remaining 7 sticks and S cannot
compel B to pay the balance of P350.00. S and B
will be criminally prosecuted, and the 3 sticks and
P150.00 will ‘be confiscated in favor of the

government.
If only one party is guilty
1) The guilty party will be criminally

Prosecuted,
2) Neither one may compel the other to comply

with his undertaking. :
” The instruments will be confiscated in favor

of the government,
4) The innocent party shall not be bound .

comply with his promise if he has 00! 0,
cele anything, and if he had given, he me
im for its return.
Exam : ot
leaves from ee B is buying a bale of toy |
0
Marijuana jeat However, S delivers to B @ Oe a
faves which B believes to be toP#
all
Where
a,
g will be prosecuted and he cannot compel B to

pay the price. If B has paid the price, he may
recover it. ‘The marijuana leaves will be
confiscated in favor of the government.
the contract is not a criminal offense (Art. 1412}
If both parties are guilty
Neither party may recover what he has

given OF demand the performance of the other’s
undertaking.
Example: W, a woman, agreed to live with

M, a man, as M’s wife without the benefit of
marriage in consideration of M’s giving a monthly .
support to W. Both M and W are single. The

contract is illegal for being immoral but the
illegality does not constitute a crime. Neither party
may ask for the fulfillment of the other’s promise
nor recover what he has given. If M has already
given support to W, M cannot recover it.
If only one party is.guilty

1) The guilty party cannot recover what he has
given nor can he ask for the fulfillment of |
what has been promised him.
2) The innocent party may demand the return

of what he has given without any obligation
to comply with his promise.
Example: S sold and delivered to B for

P3,000.00 a cow which S knew was suffering from
contagious disease, The sale is void under Art.
1575 of the Civil Code. However, the illegality does
Not constitute a crime. If B, the innocent party,
had paid the price, he can recover it. And if he had
Hot paid it yet, he cannot be compelled to make the
coment, S, the guilty party, cannot recover the
Cow. Since the animal is suffering from ‘8
“ontagious disease, it shall be condemned by i €
authorities, ‘ ;
240
Pari delicto, conceP ;
Pari delicto’is a universal doctrine which holds th

: : ity from an illegal contract:
‘on arises, in equity oF law, + NO gy

action. maintained for its specific performance, or to recover tke
roperty agreed to be sold or delivered, or the money agreed to be
aid, or damages for its violation; and where the parties are in
pari delicto, no affirmative relief of any kind will be given to one
against the other. (Rellosa vs. Gaw, 93 Phil 831) (See alsy
Gonzalo vs. Tarnate, Jr., G.R. No. 160600, January 15, 2014) (i,
pari delicto, Latin for.*in equal fault.”)
Pari delicto applies only when there is equal guilt, and ng

when one party is more guilty than the other.
Exceptions to the rule of pari delicto
As a rule, when the contract is unlawful, whether or notit

constitutes a criminal offense, recovery by either party is not
allowed if both parties are in pari delicto. The following are the
cases when recovery may be made despite the parties being in
pani delicto:
1, The payor may recover interest he paid in excess of the

interest allowed by usury laws together with ir.terest from
the date of payment. (Art. 1413)
a. Law governing usurious transactions
The law. governing usurious transactions is

the Usury Law. The following are the maximul
lawful rates of interest. under the Usury Law which
may be charged for loan or forbearance of money’
, a Twelve percent; (12%} per annum - If oe

Security given is a real estate the title ©
which is duly recorded or governme
Securities,
Q)- om, .
2 Fourteen percent (14%) per annum - If .
Security Riven is unregistered real. esta
Personal. property, or where there is
_ Security given,
. ey 3 For Pawnbrokers
at ng.
a) Two-and-a-half percent (2 4%) a
month - If the loan is less than
P500.00..
b) Two percent (2%) a month - If the

loan is P500.00 to P2,000.00.
c) Fourteen percent (14%) per annum -

If the loan is more than P2,000.00.
(Secs. 2, 3 and 4, Usury Law; P.D.
116; CB Circular 416 and 419)
Usury legally inexistent
With the promulgation of Central Bank

Circular No. 905, usury has become legally
inexistent. The lender and the borrower may thus
freely agree on the interest to be charged on the
loan (Verdejo vs. CA, 157 SCRA 743) However, .
nothing in the said circular grants lenders carte

blanche to raise interest rates to levels which will
either enslave their borrowers or lead ‘o a
hemorrhaging of their assets. Stipulations
authorizing such interest are contra bonos mores,
i.e., contrary to good customs, if not against the
law. They are inexistent and void from the
beginning. Thus, the interest rate of 10% per
month agreed upon by the parties is clearly
excessive, iniquitous and unconscionable and
cannot be sustained. (Svendsen vs. Peop.¢, G.R.
No. 175381, February 26, 2008.)
However, the Supreme Court. in certain

cases [Macalalag vs. People, 511 SCRA 400 2007:
[Dino vs, Jardines 481 ‘SCRA 226 (2006)]; an
[Cuaton vs, Salud, 41 SCRA 278 (2004)], a
10% interest learly excessi’s

per month clearly
reduced it to 12% per annum. In effect, bei
difference may We recovered by the debtor if he had
Paid such excessive interest.
.. Although interest rates —

Subject to a ceiling, the lender sti
*n Unbridled license to impose inc
‘ates. The lender and the borrowe
are no. longer

11 does not have
reased interest
r should agree:
242
nN
‘is not illegal pe
~ONTRAG},
on the imposed rate, and such imposeg
: iting. Solidbank Qo.

hould be in writing = [ orp,
Permanent Homes, Inc., G.R. No. 171925, July a
2010.)
(Note: The Monetary Board, through Circular 9,

799 declared that effective July 1, 2013, « © wal
of interest for loan or forbearance of money, py
or credits and the rate allowed in judgments, jp, a
absence of an express contract as to such raf of
interest, shall be 6 percent per annum.” Thy
amends the previous legal rate of 12% per ann.
fixed by the beard in 1974.) Pe:
A perty may recover, if public interest will be subse

money or property delivered for illegal purpose provided
repudiates the contract before the purpose has tes
acrcenpiehed or helore any damage has been caused to
third person. (Art. 1414)
Example: A hired B tc Lill X by giving P2000,

to B. Later, A changed his mind end told B not to Kit
anymore. A may be allowed by the court to recover tt

amount he gave to B.
An incapacitated person who is a party to an. ile

contract may recover, if the interest of justice so demands
money or property delivered by him. (Art. 1415)
Example: A, a minor of 17 years, gave P 10,0007

‘© B for a dangerous drug. The court may allow A
recover the amount : f justice 0

demands, he gave if the interest of J
A person ma ' icy is th
Y recover, if public policy is t

enhanced, what he has paid or delivered, if the a8" eae
Prohibition by
’ se but is merely prohibited, an (art

1416) ;
law is designed for his protection.

-ne of
. jec€
is allowed-to recover 4 P
4 ae
pines) he sold to Ay 9? | nce
the land to him woul
Tve lands for Filipinos-
PF, @ Filipi
land (located in the Philip
ee the Testoration of
public Policy to conse
erelf |
coe .
Any Pere
5. of the pn
1417)
ce fixed by law for any article or commodity. (Art.
r may demand additional compensation for service

A jar beyond the maximum number of hours of labor
ct where he undertakes to work longer than the
aximum hours fixed. (Art. 1418)
m
y recover the deficiency in a contract where
ma he
A ae ie a wage lower than the minimum wage set by
law. (Art. 1419)

' ct is divisible or indivisible and there are
pale when contra
legal terms antag -
1 If divisible - The jegal terms may be. enforced; the ille
terms are void, hence, they may not be enforced. (Art.
1420} - .
2. If indivisible - The whole contract is void; hence, no part

thereof may be enforced. {Art. 1420)
Example:
$ sells to B one carton of “Fortune” cigarettes and 20

sticks of marijuana for.a consideration of P500.00. _ The sale is
Ndwisible because there is only one consideration for the
Fortune” cigarettes and the 20 sticks of marijuana. Accordingly.
the whole contract is void because that which is legal cannot =
ee from that which is illegal. However, fB paid a 7
‘ole Fortune” cigarettes and P300.00 for the marijuan-, Lis
the site Sale of the “Fortune” cigarettes may be enforced. - es
Sparati 18 divisible with the part that is legal being capao
on from that which is illegal.
FORM OF CONTRACTS
Obi; :
Baty ns
Y force of contracts in whatever form, exceptio
Cont ,;
have been — shall be obligatory in whatever 1
" Validity arcd into, provided all the essen”
t present, (Art. 1356) This rule,
son may recover any amount he has paid in excess
requisites for
however, does
244 a
not apply when 4 certain

reasons:
i For validity
If the contract is not in the form provided wi
for its validity, the contract is void, i:
form is required by law for the follows

ng
bein
a certain form to be valid: oun
a. Contract of donation of an immovable which sigs

be in a public document together with the
acceptance thereof by the donee. (Art. 749)
b. Contract of donation of personal property whos

value exceeds P5,000.00 must be jin Writing
together with the acceptance of the donee. (Art.
748)
Cc; The authority of the agent to sell a piece of land
must be in .wrifing) otherwise, the sale is void.

(Art. 1874) “=~
d. Contract of partnership where immovable- property

is contributed must be in a public instrument to
which shall be attached a signed inventory of the
immovable property. (Art. 1771)
2... For enforceability
___ lf the contract is not in the form provided by lav

for its enforceability, the contract, though it has all the
essential requisites for validity, cannot be enforced against
the party sought to be charged. (See discussions 0? the
Statute of Frauds under Unenforceable Contracts.)

3. For.fonveniencs?
(Please see Succeeding topics.)
Right to :
| compel observance of the form required by la”
: If the contract j
in the form requines ge
uw
. § sells his land to B. The sale is in
“ ! a private
E xampl contract is valid and enforceable becau ’
The i ; : Se it was
iasirurnent However if B wants to register the sale with the
wntind pas he may compel S to execute the sale in a public
f
egister 0
Ree ment.
for
ntracts
Co public document
b The following contracts are required to appear in a
vat ‘they may be registered in the proper recording office

to adversely affect third persons (Zamora vs. Miranda,
G.R. 162930, December 5, 2012):

Acts and contracts which have for their object the
creation, ‘transmission, modification or
extinguishment of real rights over immovable
property.
Example: A deed of real estate mortgage

and its eventual cancellation must be in a public
instrument.
the convenience of the parties (Art. 1358)
a.
b. The cession, repudiation or renunciation of
hereditary rights or of those of conjugal -
partnership of gains.
c, The power to administer property, or any poe

power which has for its object an act appearing or
which should appear in a public document, or
Should prejudice a third person.
Example: The power given to another to

mortgage a real property must be in a public
instrument since the mortgage itself is an act that
must also appear in a public instrument
convenience of the parties.
The cession of actions or rights proceeding pi asa

act appearing in a public document.
Example: D mortgaged his lot in a the

to secure a debt. If C assigns the debt and in
Mortgage, the deed of assignment must —
for the
-°™M
nstrument since the mortgage it
a po be in a public instrument.
Self
required to ‘
2 Any writing, public or private
All other contracts where the amount involves

exceeds P500.00 must be in writing for the convenience i
the parties. However, the sale of goods, chattels or things
in action whose price is P500.00 or more Must be jn
writing to be enforceable.
Thus, the lease of personal property for a Period of

two years at a monthly rental of P1,000.00 must be ‘
writing for the convenience of the parties.
REFORMATION OF INSTRUMENTS
Reformation, concept
(Reformation is a remedy in equity by means of which a

written instrument is made or construed so as to express or
conform to the real intention of the parties when some error of
327 18-R, Nov. 24, 1975) .
ee
Requisites of reformation
i. There must be a meeting of minds of the parties to the
contract.
The true intention of the parties is not expressed in the

instrument.
The reason therefor is due to mistake, fraud, inequitab®

conduct or accident. (Art. 1359)
Example: s Sold to B his lot
was uae
meters for P100,000 consisting of 1,000 sa”
00 cash. However, the contract they sign’
erver, The parti Rh 200 square meters because of the cer

not show their true ne meeting of minds but the contrac
Party m i pith?
ay as . we
the actual ae feat eformation of the contract so as t? sad

a ms Square meters.
9.
When 20
1.
we
k for reformation
mistake was mutual, by either party, cr his

essors in interest, such as his heirs or assigns
gucc
in other cases, by the injured party, or his heirs or assigns

n
instrument may be reformed
nena mutual mistake of the parties causes the failure of

ve instrument to disclose their agreement. (Art. 1361)
When one party was mistaken and the other acted
fraudulently oF inequitably in such a way that the
castramient does not show their true intention. (Art. 1362)
When a party was mistaken and the other knew or

believed that the instrument did not state their real
agreement. (Art. 1363)
When through the ignorance, lack of skill, negligence ‘or

bad faith on the part of the person drafting the instrument
or of the clerk or typist, the instrument does not express
the intention of the parties. (Art. 1364)
If two parties agree upon the mortgage or pledge of real or

personal property, but the instrument states that the
property is sold absolutely or with right of repurchase.

(Art. 1365)
bee reformation is not available
In the case of the following:
a Simple donations inter vivos wherein no condition

IS imposed.
This is so because a donation is Te

an act of liberality on the part of ;
i ion. .
However, if the donation is conditional, reformat
is allowed so as show the true intent of the. donor
4S regards the conditions.

Wills,
zf . : . is
f The reason is that the making of a will i
. Ss ; will
Strictly a personal act which is free eS rio:
May also be revoked at any time by the
wo
Arts. 784, 828 anc he de

Se tematti, the will shall also be scrutinized
probate proceedings where errors in descr;
may be rectified.
When the real agreement is void. (Art. 1366)
Here there is nothing to reform as the

contract is inexistent.
Ath of
iN the
Ptions
When one of the parties has brought an action to enforce

the contract, he cannot subsequently ask for it,
reformation. (Art. 1367)
This is equivalent to ratification, waiver o
_estoppel.
INTERPRETATION OF CONTRACTS
Rules on interpretation of contracts
1.
. Shall be princip
‘Stored in S’s
If the terms of a contract are clear and leave no doubt

upon the intention of the contracting parties, the literal
meaning of the stipulations shall control. (Art. 1370)
If the words appear to be contrary to the evident intention
1a70 parties, the latter shall prevail over the former. (Art.
__ In order to judge the intention of the contracting

Parties, their contemporaneous and subsequent acts
ally considered. (Art. 1371)
However, general the te

Shall not be understoo
distinct ang cases th
rms of a contract may be, they

d to comprehend things that ‘
which thi haan at are different from those UP?
7 Parties intended to agree. (Art. 1372)
us,
if'S sells “all the grains” in his warehouse ©

B, # the grains” in his ware
Such term does not include the grains which, thous!
warehouse, do not belong to S.
f the sti ;
meaninge iL pe of any contract should admit of sever
which is oak all be Understood as bearing that im
adequate to render it effectual, (art. 1374)
we
example: S has two cars. He sold one of the cars
: without indicating which. ; His ownership of one
to B but solute, while his ownership of the other car is

car 18 st The car that is deemed to have been sold is the
te * gece such is the import that will render the
ffectual.
ious stipulations of a contract shall be interpreted

The oe attributing to the doubtful ones that sense which
toe rear from all of them taken jointly. (Art. 1374)
m
ich may have different significations shall be

Od in that which is most in keeping with the
nature and object of the contract. (Art.1375)
le: P gave A, his agent, the authority “to

exact weapon by legal means” all the receivables of P.
With the authority, A, among other things, wrote demand
letters and called on P’s debtors including B. When A
could not collect from B, he filed a court action against
him. B, however, questioned the authority of A to sue
claiming that the authority given to him by P “to exact
payment by legal means” does not include the power to
sue. Here, the power to sue is deemed included because
it is in keeping within the nature and object of the
contract, which is for A to be able to collect all of P’s
teceivables. (See German and Co. vs. Donaldson, Sim and
Co., 1 Phil 63.)
The usage or custom of the place shall be borne in mind is

the interpretation’ of the ambiguities of a contract, an
shall fill the omission of stipulations which are ordinarily
‘stablished. (Art. 1376)
diq ¢,, 8U* if A hired the services of B but ue ak

ae hot indicate the compensation to be “a ae Tin the
‘reof shall be the rate that is customarily paid in
pace where the services were rendered. (Arroyo vs. AZUn
76 Phil. 498) i
The j
cor; uterpretation of obscure words oF
ONtract
(art, 134 Shall not favor a party who woe
stipulations in a
Bees
ed the obscurity- z
= ey » SACTS
ts
-~
5 97
g4, 828 and 839.) Upon the de

(See Arts. 7 the will shall also be scrutinized in of
the testator, E errors 3 SS IN the

probate proceedings where s in description,
may be rectified.
When the real agreement is void. (Art. 1 366)
Here there is nothing to reform as th

contract is inexistent.
2 When one of the parties has brought an action to enforce

: the contract, he cannot subsequently ask for it
reformation. (Art. 1367)
This is equivalent to ratification,
waiver or
estoppel.
INTERPRETATION OF CONTRACTS
Rules on interpretation of contracts
1. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal

meaning of the stipulations shall control. (Art. 1370)
If the words appear to be contrary to the evident intention
370 parties, the latter shall prevail over the former. (Art.
__ In order to judge the intention of the contracting

Parties, their
shall be principally considered. (Art. 1371)

However, general th
shall not be unders
distinct and cases
which the parties int
Thus, if § s
B, such term dies,
Stored in $’g wareh,
€ terms of a contract may Ber ait

tood to comprehend things tha pon
that are different from those ".
ended to agree. (Art. 1372)
Us “all the grains” in his wareh

not include the grains which,
Ouse, do not belong to S.
If fhe Shei
Pulat:
Meanings. ; aa
ouse ©
thous?
a)
: eve!
ny contract should admit of © pot
one it sh; a jmp?

Which is Most adegn aetderstood as bearing that 373
€ to render it effectual. (Art.
ts:
contemporaneous and subsequent
they
contrac’ bee ob
example: S ‘has two cars. He sold one of the cars
3 but without indicating which. His ownership of one

to b absolute, while his ownership of the other car is
car ite d, The car that is deemed to have been sold is the
dispar sinice such is the import that will render the
Mntcact effectual.
ious stipulations of a contract shall be interpreted

ea ther attributing to the doubtful ones that sense which
ey result from all of them taken jointly. (Art. 1374)
which may have different significations shall be

Wo estood in that which is most in keeping with the
nature and object of the contract. (Art.1375)
Example: P gave A, his agent, the authority “to

exact payment by legal means” all the receivables of P.
With the authority, A, among other things, wrote demand
letters and called on P’s debtors including B. When A
could not collect from B, he filed a court action against
him. B, however, questioned the authority of A to sue
claiming that the authority given to him by P “to exact
payment by legal means” does not include the power to
sue. Here, the power to sue is deemed included because
it is in keeping within the nature and object of the
contract, which is for A to be able to collect all of a
receivables. (See German and Co. vs. Donaldson, Sim an
Co., 1 Phil 63.)
The usage or custom of the place shall be borne in mind as

the interpretation’ of the ambiguities of a contract, a
shall fill the omission of stipulations which are ordinarily
established, (Art. 1376) , i
: Thus, if A hired the services of B but :
did not indicate the compensation to be paid, ect rer
thereof shall be the rate that is customarily p
Arroyo vs. AZUr,

Place where the services were rendered. (Arroyo v8: °°"
76 Phil. 498)
The interpretation of obscure words oT si

arent shall not favor a party who cause
1377)
obscurity,
the contract
tions in a
eh
Thus, in a contract of Sashes Which
contract of adhesion, any ambiguity rei be interp
against the insurer since the terms © the Policy a 7
result from mutual negotiation between the parties as the
are prescribed by the insurer in printed form to which =
‘insured may “adhere” if he chooses but which he cannot
change. (Del Rosario vs. Equitable Insurance and Casuat
Co., G.R. No. 16215, June 29, 1963) y
is a
Teteq
Rules when it is absolutely impossible to settle doubts unde;

the preceding rules (Art. 1378)
1,
When the doubts refer to the incidental circumstances of a

gratuitous contract, the least transmission of rights and
interests shall prevail.
Example: If C gave his bicycle to D, but it cannot

be determined whether C donated it (donation) or merely
lent it (commodatum), the contract should be interpreted
as commodatum rather than donation because
commodatum transmits lesser rights since the ownership
of the bicycle is retained by C.
If the contract is onerous, the doubt shall be settled in

favor of the greatest reciprocity of interests.
Example: D obtained from C a loan of

P500,000.00 which bears interest at 1% per month. It
cannot be determined, however, whether the loan is
at 7 interpreted at 3 years because D will have mor
€ the money, while C will earn more interest.

If the doubts are cast
we a way
have been -
upon the principal object -of he

that it cannot be known what m4)
“shall beg the intention or will of the parties, the contract
be null and woid.
Example: §
but it ple: S has several cars. He sold one car '° E
sold, The cos be determined which of the cars was peiné

€ contract of sale is void
cones
qesT
the letter
1.
I- MULTI
conTRACTS — DIAGNOSTIC EXERCISES
PLE CHOICE. Select the best answer by writing

of your choice.
A mecting of minds between two persons whereby one

binds himself with respect to the other to give something
or to render some service is known as:
obligation.
consent.
contract.
stipulation.
aa oP
The stages of a contract according to the order of their

occurrence are: .
a. birth, conception and consummation.
b. conception, consummation and birth.
& conception, birth and consummation.
d. consummation, conception and birth.
The elements of a contract without which a contract would

Not exist are known as:
a. accidental elements.
b. natural elements.
c. special elements.
o essential elements.
A consensual contract has the following" essential

elements: :
Fe consent of the contracting parties,
b. and cause or consideration. . zat

consent of the contracting parties, object certain,
Cause or consideration and delivery of the object.

Consent of the contracting parties,
object certain
Cause or consideration and forma
d law.
consent of the contracting partie
elivery of the object, and formal

WwW
object certain,
ities required by
5, object certain,
ities required by.
RACH
as the following essential elements.

consent of the contracting parties, object oa
and cause or consideration.
b consent of the contracting parties, object sei

? cause or consideration and delivery of the Object.”
consent of the contracting parties, object
wae Certa;
cause or consideration and formalities required
5 A real contract b
law. . . ;
d consent of the contracting parties, object ¢
erta;
delivery of the object, and formalities required
law. :
6. A solemn or formal contract has the following essential

elements:
a consent of the contracting parties, object certain
and cause or consideration.
b. consent of the contracting parties, object certain,

cause or consideration and delivery of the object.
consent of the contracting parties, object certain,
cause or consideration and formalities required by
law.
id. consent of the contracting parties, object certain,
law. ,
‘2
Elements that accompany certain contracts unless stt

aside or suppressed by the parties are known as:
a. natural elements, :
b. accidental elements.
c. essential elements.
d ‘original elements,
hidden defects in a contract of sale

1S an example of: ;
a, natural element,
b, accidental element.
: original clement,
: stipulated element,
‘They refer t
to icul: : . ,
contract, Particular stipulations ‘of the partie
ne
g, .
g in?
Accidental elements
con
11.
12.
13.
15,
Natural elements
Inherent elements
Essential elements
aos
of the following is a natural element of a sales

One
, act.
contr Terms of payment.
= Rate of interest.
i Place of delivery.
F warranty against eviction.

A contract that can stand by itself is known as:
accessory contract.
principal contract.
commutative contract.
gratuitous contract.
aos pS
Acontract that does not have any special name under the
law is known as:
a. nominate contract.
Bb. innominate contract.
c. special contract.
d. nominal contract. 3
A contract where both parties are required to do or give
something is known as a: :
A. bilateral contract.
b. unilateral contract.
c, gratuitous contract. _
d. commutative contract.
A contract where ‘the parties contemplate a -real
as: f
“ commutative contract.
" Gratuitous contract.
a. onerous contract.
aleatory contract.
pe Contracting parties may establish such |

con’: terms and conditions as they jaw
“'enient provided they:are not contrary to law,
may deem
morals,
stipulations, ;
16.
17.
18,
19,
A contract m
f when the benefi
OS TRAC TS
good customs. public order or public policy.

known as the principle of: ;
z liberty of contract.
b mutuality of contract.
c. relativity of contract.
d. obligatory force of contract.
This in
The contract must bind both contracting parties: its

validity or compliance cannot be left to the will of Oné
them. This is known as the principle of:
Be mutuality of contract.
b. relativity of contract.
c. consensuality of contract. _
d. freedom to contract.
Contracts take effect only between the contracting Parties,

their assigns and heirs, except in cases where the
obligations and rights arising from the contract are not
transmissible by their nature, or by stipulation or
provision of law. This principle of contract is known as:
A. relativity of contract.
b. mutuality of contract.
Cc. obligatory force of contract.
d. liberty of contract.
D borrowed P500,000.00 from C. D died without having

paid his loan obligation to C. He left S, his son and heir,
Properties worth P400,000.00.
a. S is liable to C for P500,000.00.
b. S is liable to C for P400,000.00.
. S is liable to C for P100,000.00.
, S$ is not liable at all because he should not b

made to shoulder the obligation of his father.
except: ay be enforced by or against a third perso™
a;
b in the case of stip
when a third pe
contract,
Im Case of con
ulation pour autrui’ me

Tson induces another to violate
a: tracts intended to defraud creditors.
= : ly
incidental. it to the third person is mere?
a
pant
iY
22.
& consumm
s:
js nowt ae ctency of contract.
lity of contract.
con 3
é mutuality of contract.
ations arising from contracts have the force of law

Qbligatio he ¢ ontracting parties and should be complied
between od faith. From perfection, the parties are bound
with ae ts the fulfillment of what has been expressly
not on . but also to all the consequences which,
stipulate to their nature, may be in keeping with good
en and law. This is known as the principle of:

a consummation of contract.
b consensuality of contract. :
of obligatory force of contract and compliance in good
° faith.
d. mutuality of contract.
One of the following is not a real contract.
a. Pledge
b. Commodatum
Cc. Deposit
a. Sale
D borrowed P100,000.00 from C. The obligation is

secured by a mortgage on D’s land and building. C
registered the mortgage with the Register of Deeds.
Thereafter, D sold the land and building to X who was not
Personally aware of the existence of the mortgage at the
ae of sale since only the photocopy of the transfer
“rtificate of title which did not yet contain the annotation
of the Mortgage was shown to him. It was only when he
rent to the Register of Deeds to register the sale of the
a sane building to him that he learned of the mortgage.
; C can collect from D and if D cannot pay,
foreclose the mortgage although the lan
b, building are’now owned by X.

C can collect from D, but if D can
foreclose the mortgage because X was
d and
Cc can’
not pay, C cannot.

not aware of
da,
256
24.
25.
26.
a.
b.
~ constitute the contract.
’ ~ONTR AC
the existence of the mortgage at the time h.
the land and building.
C cannot collect from D. He can only oe
mortgage which was given as security.
d, C cannot foreclose the mortgage becays

not a party thereto.
bough,
c.
fter the
© X was
It is the manifestation of the meeting of the offer
: a
acceptance upon the thing and the cause whic Nd the
h are
a. Consideration
b. Contract
ge Consent
d. Cause
On June 1, 2015, S offered to sell his only Car to B for
P100,000.00. B accepted the offer by mailing his letter of
acceptance on June 10, 2015. On June 12, 2015, B
revoked his previous acceptance and mailed his letter of
revocation on the same date. S received the letter of

-acceptance on June 14, 2015 and the letter of revocation’
on June 15, 2015. .
a. The contract was perfected on June 14, 2015 when
S received B’s letter of acceptance.
b. The contract was not perfected because at the time

the ‘acceptance was received, the parties *were 00
longer of one mind.
The Contract was perfected on June 10, 2015 when

B sent his letter of acceptance.
The perfection of the contract retroacts to June’),
- 2015 when the offer was made.
On M
P500,009 ~ oS S offered to sell a specific car to B i
8, 2015. ori i his letter of acceptance to S on WH
vehicular ac ay 10; 2015, however, S died ™ of
cid. a C
acceptance on on and his secretary received the letter
ay 12,2015 unaware that S had 4
The contract wa
Sent his letter
The contract
the secretary
died.
‘ B
8 perfected on May 8, 2015 whe?
' of acceptance, nes
was ‘perfected’on May 12, 2015 ve ”
Of S teceived the letter of acceptan
a7.
28.
29,
ewe
The contract was not perfected because the offer of

c g became ineffective when he died.
The contract was perfected on May 1, 2015
d. ' the acceptance made by B

pecause y B on May 8, 2
acts to the date of the offer. y 8, 2015
retro
nree of the following instances will render an offer
inetfective before acceptance is conveyed. Which one will
at? Civil interdiction of either party,
i. Insolvency of either party.
c. Insanity of either party.

a Intoxication of either party.
s offers to sell his car to B for P125,000.00 cash. B
accepts the offer but is willing to pay only P120,000.00,
a. The contract was perfected at the. price of

P125,000.00.
b. The contract was perfected at the price of
P120,000.00.
c. The contract was perfected at the. price of

P122,500.00, the average price of the offer and the
acceptance.
d. The contract was not perfected because - the

acceptance by B was qualified and it constituted a
counter-offer. ;
P appointed A as-his agent to sell P’s only Honda Civic car

for P400,000.00 cash. | On November 7, 2015, A,
Pursuant to the authority granted to him by P, offered to
Sell the car to B at the price of P400,000.00. B accepted
— offer on November 8, 2015 by sending a letter” of
“eeptance to A, which letter of acceptance was received
aonmed P that B had accepted the offer.
i The contract was perfected on November 8,
b. when B sent his letter of acceptance.
The contract was perfected on November 9, 2015
when A recei f acceptance. aa
c. eived the letter of accep
The contract was perfected on November. 10, 2015,

When A notified P, the true owner of the car
Bhad accepted the offer.
by A on November 9, 2015, On November 10, 2015, A’

2015.
that,
0 ny A SP i
2
J
os
31.
PONTRAGY
The contract Was perfected on November 29

acceptance by B retroacts to the. Oy
since the date y
the offer.
. ffered to sell his on]

July 1, 2015, Serrano 0 Y Mete
Benz car for P1,000,000.00 to Benitez who was interent
in buying the same. In his letter to Benitez, Ser ey
sos : ti
stated that he was giving Benitez up to July 31, 2015,
make up his mind whether to buy the car or not, 0,
July 25, 2015, Serrano personally went to Benitez {,

inform him that he was no longer willing to sell the Og
unless the price was increased to P1,400,000.00 becaus
another buyer was interested in buying the car for the
said amount of P1,400,000.00.
a. Benitez may compel Serrano to sell to him the cy
for P1,000,000.00.
b. Serrano may validly withdraw his offer to Benita

because the option was not founded upon a
consideration.
c. Serrano may not withdraw his offer until after th

lapse of the option period that he gave to Benitez
d. The increase in price made by Serrano was Mt),
valid because it was made within the option periad
Rockman and Company published an advertisement ™

the newspapers which reads as follows “{NVITATION
BID: Construction of the company’s warehouse located .
123 Luzon Street, Sta. Quiteria, Quezon City.”
advertisement also included the specifications of 4
warehouse to be constructed. Three companies submit
their bids: ABC Company, with a_ bid Pe of
P4,500,000.00; DEF Company, P4,750,000.00; and cid
Company, P5,000,000,00, After considering the fina”
i
ee reputation and experience of the bidders
Gaal and quality of materials to be used and other tar
Company, and Company accepted the bid aot
questions the
Company whi
a.
award made by Rockman Company °°
ue ch submitted a higher bid, se!

. © award to DEF Company is voida
as only the second lowest bidder.
ABC Company, the lowest bidder péf
32.
33.
34.
35.
36,
ABC Company should be the winning bidder
Bs having submitted the lowest bid,
The award to DEF Company is valid because

Gi Rockman Company was not bound to accept the
lowest bidder. ’
The award to DEF Company is void by reason of

d. Rockman’s violation of the terms of the invitation
to bid.
One of the following is not incapable of giving his consent.
Insane persons.
; Deaf-mutes who do not know how to write.
¢
f Deaf-mutes who know how to read.

th Unemancipated minors.
Acontract entered into by an incapacitated person is:

a. void.
be voidable.
*c. rescissible.
d. unenforceable.
Contracts entered into in a state of drunkenness or during

hypnotic spell are:
valid.
voidable.
rescissible.
° void.
a9 SP
A contract entered into by an insane person during a lucid
interval is:
B. valid.
’ voidable.
rescissible. n
void,
Aside fr
th
a,
> from fraud and undue influence, the

“vices of consent, except:
b violence,
- intimidation.
g’COMistake.
ne dealer’s talk.
following are
260
37.
CONTRAG Hy
rn
Mistake in three of the following w

yoidable. Which one will not?
a. Mistake as to the substance of the thing Which ;
the object of the contract. is
b. Mistake as to the principal conditions wh;
principally raoved one or both parties to enter arch
the contract. : Inty
c. Mistake as to the identity or qualifications of op,
the parties, which identity or qualifications :. of
been the principal cause of the contract. are
@. Simple mistake of account.
ill make a contr,

ct
It involves the employment of serious or irresistible fore

to obtain consent.
a Intimidation.
b&b Threat.
x. Wiolence.
d. Moral coercitor:.
ks present when ome cf the contracting parties &

compelled by a reasomable and well-grounded fear of a
imminent and =
immiment amd grave evil upon his person or property, &
> = the
upon the person or property of his spouse, descendants

and ascendants, to give his consent.
a Violence.
& Physical coercion.

x! Inurmidation.
c. Nistake
One of 3 > *
the following contracts is not vitiated bY
intimidation or violence, and hence valid.
a A contract of sal 7 pary

e which i ya "
because his arm was t ia hae ec he a third
: person. Stes =
Aco . 4
ntract of sale which was entered into becaus
the o c
ce. A mee Was pointing a gun at his wife.

his prope . ere a party was compelled to esi
the Siete the other to pay @ just debt bece® $
not pay hi eatened to sue him in court if he doe
ay his debt, f
cot
4).
42.
fe
bane
pac
{ donation of a parcel of 1 owe
A contract © P of land which
ty signed because the other party threatened ie
party ©
purn his house.
d.
hen a person takes improper advantage of his
ists W ; so
It exis the will of another depriving the latter of a
er over ;
por onable freedom of choice.
- Intimidation
p _- Duress
c Threat
4 Undue influence
Fraud exists in three of the following. Which is the
exception? eek
a. When through the insidious words or
machinations of one of the contracting parties, the

other is induced to enter into a contract which,
without them, he would not have agreed to.
b. When there is a failure to disclose facts, when
there is a duty to reveal them, as when the parties
are bound by confidential relations.
c When there is an expression of an opinion by an

expert which tured out to be wrong, and the other
party relied upon such expert knowledge.
@ | When the misrepresentation refers to the usual

exaggerations in trade, and the other party had an
opportunity to knew the facts. ,
ace who knew that his ring was embellished with

Ss, told Banzon that the embellishment was emerald.
Banzon, who knew that his watch was gold-plated. told
Abulenc
believin
em.
frald, and Abulencia, believing that Banzo
ia that it was made of pure gold. ‘Banzon,

§ that Abulencia’s ring was embellished with
wa
wherebe of pure gold, then entered into & penta 4

later 2 they exchanged their respective articles. _ ok 3
With an om discovered that the ring was adorned on :
ordinary glass.
The contract may be annulled at
ds nengon since he discovered the fraud.
| a contract may be: annulle
ulencia since Banzon also emp
joyed fraud.
n’s watch
the instance of
d at the instance of :
262
44,
45.
46.
47.
no G
is voi f the b
The contract 1S void because oO 2a
Cc. both parties; hence, it shall not Produce
effect. ny
d. Neither party may ask for annulment since ty
are guilty of fraud. The contract, therefore’
valid. . i
An absolutely simulated contract is:
A void.
b. voidable.
c. valid.
d. unenforceable.
One of the following statements does not pertain toa
relatively simulated contract.
a. The parties conceal their real agreement.
b. The parties are bound by their real agreement

provided it does not prejudice third persons,
c. The parties are bound by their real agreement

provided it is not contrary to law, morals, third
j persons, public order or public policy.

g- The parties do not intend to be bound at all.
Servando and Bernardo entered into a contract where they

made it appear that Servando was mortgaging his lot and
building to Bernardo to secure a contract of loan. The
truth, however, was that Servando was selling his lot and
building to Bernardo. Which of the followings statements
1s true? ’
7 The parties are bound by the contract of sale.
. The parties are bound by the contract of loan and

mortgage.
The parties are not bound at all.
The Parties are bound by the contract of sale onl
when third persons are affected.
One of the followi
d,
hg is not a requisite of the object off

contract. ‘
a. 5
Bs. i it ies te within the commerce of men.

It ranet oa’ it must be intransmissible. goo!
customs Of be contrary to. law, morals,
Public order or public policy.
con
48.
49,
50.
31,
TR
it must be determinate as to. its kind or capable of
parties entering into a new agreement.
d. being made determinate without the need of the
q B orally entered into a contract whereby S sold his

g an at production of eggs in his poultry farm to B for
one 90.00 which amount B immediately gave in cash to
Ne contract between S and Bis:
5. T void because the object was not existing at the

a. time of execution of the contract.
valid because future things may be the object of

contracts.
rescissible because B will likely suffer damage if

the eggs do not come into existence.
unenforceable because the contract was not in
writing.
b.
A died leaving properties estimated at P1,000,000.00 to

his sons S and T. Subsequently, S sold one-half of his
inheritance to X for P300,000.00, although his share was
still to be delivered. ;
a The contract is valid since the inheritance is an
existing inheritance. :
b. The contract is void because what S sold is future

inheritance which may not be the object of a
contract as a rule.
c. The contract is rescissible.
d. The contract is unenforceable.
by the other party is:
an onerous contract.
4 gratuitous contract.
a lucrative contract.
a remuneratory contract.
Barr.
; a
Contract whose cause is the liberality of the benefacto
3. :
ax i ‘ :
a gratuitous contract or contract

b beneficence. Ls Da
c, & remuneratory contract.
an aleatory contract.
of pure
264
52,
53.
94.
55.
CONTRA
d an onerous contract.
i 00.00 to B. Unk
d his only car for P100,0 a
: Sonkt the car from him £o that he could use

in a bank robbery. What is the status of the sale att
car by S to B?
a. The sale is void because the motive of B is jy
b. The sale is valid because the illegality of the nes

of the parties to the contract does not have an
effect on its validity. y
Cc. The sale is voidable because of the failure of B to

disclose his motive to S.
d.: The sale is rescissible at the instance of § because

he would be damaged by the illegal motive of B,
N tog
One of the following is not a requisite of cause in a

contract. Which is it?
a. It must exist.
b. It must be lawful.
c. , It must not be false.
gag‘ It must be clearly stated in the contract.
D and C entered into a contract wherein D agreed to give
to C P50,000.00 within 30 days from the date of the
execution of their agreement, which, however, does not
state the consideration received by D from C. What is the
Status of the contract between D and C?
a. The contract is void because the cause is not
Stated in the contract.
b. . The contract is valid because the cause is
presumed to exist and that it is lawful.
The contract is rescissible because D suffered
3 eal by reason of absence of cause. is
t contract is valid provided another contract
xecuted between D and C to state the cause.
c,
oe oe epuracts arranged according to the degreé f

defective are: ness from the least defective to the ™°
BS voidable,
: Contracts,
issi roid
rescissible, unenforceable, and ¥
the Same
pont8o™
56.
57.
58,
éGg
rescissible, , unenforceable, voidable, ang void

b. tracts.
contrac .
rescissible, voidable, unenforceable, and void
ye
¥ ontracts. s.- .
Gnenforceable, rescissible, voidable, and void
d. contracts.
el ollowing are characteristics of rescissible contracts,

except: they may be set aside for equitable reasons.
= they are valid until rescinded.
b. the action to rescind them prescribes.
af the action to rescind them are not available to

7 third persons even if their interests are directly
affected.
The following contracts are rescissible, except:
Those entered into by guardians whenever the
wards whom they represent suffer lesion by more
than one-fourth of the value of the things which

are the object of the contract.
b. Those entered into in representation of absentees,

if the latter suffer lesion by more than one-fourth
of the value of the things which are the object of
the contract. .
& Those undertaken in fraud of creditors but the

latter can still collect the claims due them through
othermeans. . j a
4. Those which refer to things under litigation if they

have been entered into by the defendant without
the knowledge and approval of the litigants or of
competent judicial authority. -
a.
— Suardian of M, a minor, sold the fish harvested
ni the fishpond of M for P7,400.00. The fish, however,
8d a value of P10,000.00:
' The sale is rescissible because M 8
b More than one-fourth of the value ©
c_ the sale is voidable because M is a ™
The sale is unenforceable becaus¢ q

without approval of the courts.
3 uffered lesion by
f the fish sold.

inof. :
“gold the fish”.
z
=f
+
3
~ONTRAC TS
d.
commerce of men.
The following are the requisites of a rescissible Payment
except:
P the debt is already due.
4 the debtor is insolvent.

c, the debtor pays the debt.
d. the payment is not yet due.
Rescission of a contract will prosper in one of th,
following cases. Which is it?
a. When there are other legal means to obtain

reparation of the damages caused.
b. . When he who demands rescission cannot return

whatever he may be obliged to restore.
ge When the object of the contract is in the

possession of a third person who purchased the
property of the debtor in bad faith.
d. When the action to bring rescission has prescribed.
D owes the followir.g creditors: X, P50,000.00; Y,

P60,000.00; and Z, P90,000.00. He has assets valued at
P400,000.00. Subsequently, D donated, among his
assets, a parcel of land valued at P250,000.000 to C. The
donation and acceptance were made in a_ public
instrument. The donation of the land made by D to C is:
a. rescissible, because it was presumed to have been
made in fraud of creditors.
‘unenforceable, because D was not authorized by

his creditors,
void, because the donation and acceptance should

be registered,
Voidable, because D does not have the free disposal

of his Property,
b.
c.
d.
filed = : ,
@ complaint in court against D to collect 2 money
c
debt am ‘
ounting to P500,000.00. After due hearing, the
court rendered j . . the
rendition of { Judgment in favor of C.. Shortly afte i
debt, D series Wudement and beiore C has collected,

2 parcel of land to x, Zi; another cred)
The sale is void because the object is outside the
cor,
of the sale made by D to X and now files an
jase rescind the see

actio® The right to rescind the sale is exclusively granted
a to Z because it was he who first learned of the sale
and he has still to file a claim to collect D’s debt,
The right to T escind the sale is exclusively granted
b. to C because it was he who obtained a favorable
judgment and he has not yet collected D’s debt.
Both C and Z have a right to rescind the sale since
c. the sale is presumed in fraud of creditors having
heen made by party against whom judgment has
been rendered.
Neither C nor Z has a tight to rescind the sale.
d.
R, the representative of A, an absentee, sold the corn with
a value of P30,000.00 and the palay with a value of
p50,000.00, harvested from A’s agricultural farm for a
total price of PS0,000.00. A, whose domicile was
subsequently known, was informed of the sale made by G.
Based on the foregoing facts, which of the following
statements is incorrect?
a. A may seek payment of an additional P30,000.00
to recover the damages suffered.
b. A may just seek rescission of the sale of the corn to
recover the damages he suffered
¢. Amay seek rescission of the sale of part of the corn
and part of the rice to the extent of the damages he
sustained.
A may seek the rescission of the total sale to
recover the damages he suffered.
The f :
7 ollowing contracts are voidable, except: | -
aoe entered into during a_ State *
ce kenness or hypnotic spell.
c, ontracts entcred into during a lucid interval.
contracts where one of the parties is incapa
qa. —«-BVing consent. : |
: :
Ontracts where the consent of one
by vi oe ;
a ‘tolence, intimidation, mistake,
fluence,
ble of,
party is vitiated
fraud or unduc'
ho
>)
66.
67.
68.
CONTRAG,
ee nulment must be brought with;

vee Mon te following is false with respect bt
Feil of the beginning of the prescriptive Period> the
- In cases of intimidation, violence and Und,
F influence, the period begins from the time th
defect in the consent ceases. e
b. In case of fraud, the period begins to run from the
discovery thereof. »M the
Cs In case of mistake, the period begins to myn
the time it was committed.
In cases of contracts entered into by minors ¢
other incapacitated persons, the period nung fos
the time guardianship ceases.
A.
One of the following statements concerning ratification gf

a voidable contract is false. Which is it?
a. Ratification extinguishes the action to annul 4

voidable contract.
b. Ratification cleanses the contract from all its
defects from the moment it was constituted.
£. Ratification requires the conformity of the party

who has no right to bring the action for
annulment.
d. Ratification may be made by the guardian of the
incapacitated person, or the incapacitated perso
upon attaining capacity, or the party whos
consent was vitiated.
One of the following may not annul a voidable contract.

* The party whose consent is vitiated by violen
intimidation, mistake, fraud or undue influence.

The incapacitated person when he attains capacity
The guardian, during the ward’s incapacity.
b.
c..
a
contract.
: . : fot
@ private company, sold his me ov
whom he knew was only 17 yennout"
8, an employee of
P100,000.00 to B,
s delivered th
© Car
of P 1
branch pee Later, S was transferred 10 ane
hia-resite "Ss employer which was quite a distance ae
from
from
; sata fh
The Patty who is capable of entering into j
69.
70.
The
a.
Under the Statute of:Frauds, certain contracts must be in

Writing to be enforceable. of
's enforceable although not in writing.
a. Sale of movables at a price of not less than

P500.00. oe aia
a A representation as to the credit of a ee ee
rt An agreement made in consideration 0

other than mutual promise to marry. ad
* An agreement for ne leasing for = jonger perio’

than one year of a personal property:
Th : de i
a. © Statute of Frauds applies only to:
. ve something to use in going to and from his

will ha Neither B nor his guardian has registered the
‘Land Transportation Office,
a can file an action to annul the sale he made to B

- cause he was mistaken in selling the car which
i realized he badly needed.
n ask the court to annul the sale because B

2 a minor when the contract of sale was entered
wie and it has not yet been recorded with the Land
transportation Office.
Only B, when he attains the age of majority, or his
‘ while B is still a minor, can bring an
nul the contract.
The minority of B has no effect on the validity of

the contract since the parties entered into the
contract of sale freely. .
guardian,
action to an
i forceable, except:
following contracts are unen ,
those entered into by one who has no authority or
legal representation. :
those that do not comply with the Statute of
Frauds. 5
those where both parties are incapable of giving
consent to a contract. ‘a ented B

those where the consent of a party is vitiate ra
violence, intimidation, mistake, fraud or un
influence.
One of the following contracts

Which is it?
Wholly executed contracts.
270
72.
73.
contracts wholly or partially executed on the me

of the debtor. ; /
c contracts wholly or partially executed on the bi

of the creditor. ;
d/ wholly executory contracts.
b.
Severino, orally sold a one-square meter lot for P475.99 to

Benedicto, chairman of Barangay Mapayapa, who Wag
officially authorized in a barangay resolution to look for
and buy a lot where the barangay would construct g
barangay marker. Since Benedicto did not have
sufficient cash at that time, he told Severino that he would
give the amount the following day. The next day
Benedicto went to the place of Severino to pay the price of
the lot but Severino refused to accept it, saying that the
_ sale is unenforceable not being in writing.
a. The sale of the lot is enforceable although not in

writing because the price is less than P500.00.
b. The sale is enforceable because Benedicto was duly

authorized to buy the lot through a resolution
which is in writing.
c. The sale of the lot is void not being in a public

instrument. ;
The sale is unenforceable since the sale of real
property must be in writing regardless of the price

to be enforceable.
On June 1, 2014, Mother Lilac, a movie producer, met

Claudine Santos, a movie actress at the lobby of the
Manila Hotel. Mother Lilac informed Claudine Santos that
she was producing a movie the filming of which would
start on August 1, 2015 and that she was offering
oe Santos the starring role for a fee e
000,000.00. Claudine Santos accepted the offer and
shook h i ; ° bs
Hotrevers ae with Mother Lilac to seal their agreement
P200,000.0 ther Lilac gave Claudine Santos a check "4

Mother ia 0 as initial payment. On August 1, 201 1
movie out aed Claudine Santos for the shooting of
agreement sive: udine Santos refused to honor a
writing. & that it was not enforceable, not bein’
14.
4,
Lilac cannot enforce the contract against
Ma ve Santos because it was entered into orally.

a clau wy Lilac can enforce the contract against
5 Mother Santos because Claudine Santos had
clau ted benefits under the contract.
ee ue Santos may just return the payment
: Clee it was made in check which is not legal
A pecause
tet ae Santos is not bound under her
‘4. ceemen t with Mother Lilac because she did not
sign any writing.
iy] is way to Manila from the province

Dw te edie Lasted tire. Not having any spare tire,
vice to a nearby car spare parts store to buy a new
ie oe eve he did not have sufficient money with him
wh Howned G, his friend, who happened to know S, the
store owner. G then instructed Dp to give to S ne
telephone through which G told S “Don't hea be p
cannot pay, just charge me.” D was thus able to buy
new tire for P6,000.00 for which S issued D a sales.
invoice. ,
a. If D cannot pay, S can proceed against G to make

good his promise to pay D’s debt. . ;
b G’s promise cannot be enforced ae

because he did not execute any writing for ©
guaranty he made.
be 's debt
c. S can enforce G’s promise to answer for D’s debt .
since the guaranty was witnessed by D, vr

S can enforce G’s promise because there
tire, .
ree ago, S, 17 1/2 years old, orally sold os re

old 2,000.00 to B, his neighbor, who was only 6 ye nS
bingy.” the mother of S, learned about the sale by
€ ©
received cl demanded that S give
nes fo
&x pent the same
Purch’ F, the father of B, also learne
thej ase by B of the bicycle when be Se ace
and began using it almost daily
d about the
it parked at
T door B bought
i 4
4
4
§
272
76.
77.
78.
CONTRAG,
it, Based on the foregoing facts, what is now the

the sale entered into between S and BP
a Unenforceable because both parties ,
incapacitated to enter into the contract, try
b Unenforceable because the sale was nat in wr;
a Validated from inception because g |b
subsequent acts of the parent of the parties, the
d. Voidable because while B was only 16 years
sae . ol
was nearing the age of majority which is 1g feat
The following contracts are void or inexistent, except:
a. those whose cause, object or purpose is Contrary ty

law, morals, good customs, public order or public
policy.
b. those which are absolutely simulated or fictitious,
c. those whose cause or object didnot exist at the
, time of the transaction.

ad. those where one of the parties employed fraud to
‘ obtain the consent of the other,
The following contracts are void or inexistent, except:
a. those ‘whose object is outside the commerce d

men.
those which contemplate an impossible service.

c. those where the intention of the parties relative t0
the principal object of the contract cannot &

ascertained.
performing his obligation.
characteristics of void or
contracts, except:
i t . t
a. the right to set up the defense of illegality canne
be waived:
the action or defense. for the declaration of th

inexistence of a contract does not prescribe. f
ae contract can be ratified by the acceptance
oe under it by one or both of the parties: able

© defense of illegality of contracts is not avai#
to third
Persons w' i not
affected. hose Interests are
‘ those where one of the parties is, guilty. of fraud #
‘iret!
81.
82.
oe
‘ ail contract between the parties is a criminal

ff the ies poth parties are guilty (in pari delicto), such
€ anract shall produce the following effects, except;

j contrac
iileg4 ine parties shall have no right of action against

a. each other.
poth parties shall be criminally prosecuted.
b. he effects and instruments of the crime will be

c. : nfiscated in favor of the government.
parties may recover what they have given if it is
oot illegal in itself.
rties is a criminal
i 1 contract between the pa
: eat only one party is guilty, such illegal contract
oT roduce the following effects, except:
~ the guilty party will be criminally prosecuted. ;
b neither party may compel the other to comply with
, his undertaking. ;
c the instruments shall be confiscated in favor of the
government.
a the innocent party cannot recover what he has
given. .
If the contract is illegal but it does not CO ie
criminal offense and only one-party is guilty, aoen cB
contract shall produce the following aie eae ive
a. the guilty party cannot recover what he a
b. the guilty party cannot ask for the fulfillment of

what has been promised him.
c the innocent party cannot be compelled to comply

, . With his promise. ° uf i
the innocent party cannot demand the return: 0
what he has given. |
. . . hi
ite following contracts are required to appear in 2 Obey
may bent for the convenience of the parties so t
i : ti
a be registered into the proper recording ee creation
Contracts which have for their object
of real rights over immovable property. |
the acceptance of an inheritance.

the power to administer property.
the cession of actions or rights pro
Act appearing in a public document.
Pe
ceeding from an
274
83.
84.
85.
86.
ERY: SAC
Reformatio
except:
a.
eet instruments has the following requis:

Sitey
there must be a meeting of minds of the favigs)
the contract. PS fy
b. the true intention of the parties is not EXpregg

the instrument.
C. the failure of the instrument to express the

intention of the parties is due to mistake met
inequitable conduct or accident. » TTaug
ay the contract must be in a public instrument,
fe
Cd iy
Reformation of an instrument is available in the followin:
cases, except: ,
a. when a mutual mistake of the parties causes ty

failure of the instrument to disclose the;
agreement.
b. when one party was mistaken and the other pany

acted fraudulently or inequitably in such a wa
that the instrument does not show their tne
. intention.
c when a party was mistaken and the other knewor

believed that the instrument did not state their red
/ agreement.
f when one of the parties has brought an action to

enforce the contract.
Reformation is not available in the following cases, exce?!
S simple donations inter vivos wherein no condition

is Imposed.
b. wills.
a *ecset ait
.- When the real agreement is void.
ge When through the ignorance, lack of i

negligence or bad faith on the part of the a
drafting the instrument or of the clerk oF typ!
hy 1 i af
_the instrument does not express the intention
the parties,
As arule, a co
, ntract of sale is :
a. upcn complia perfected:
nce wit i nts 0

as to form vith the requireme
"PON delivery of the object of the contract:
f the Jae
ss f
WwW
97.
88.
89
ee
upon the meeting of the minds on the thing which js

fr the object of the contract and upon the price.
n demand.
0
g OUP
eh the intention of raising money to buy a gun which he

wit 4 use in killing X, his mortal enemy, S sold his only
woul . p100,000.00 cash to B who knew nothing of the
car ‘don of S in selling the car. After the sale, S was able
inten a gun complete with all the papers required by law.
to ae ie other hand, was able to register the car in his
B, o” at the | wand Transportation Office.
nam he sale of the car by S to B is valid provided S
does not kill X.
The sale of the car by S to B is void if S kills X.
The sale of the car by S to B is valid whether § kills,
X or not. ey 2
d. The sale of the car by S to Bis void whether S Riis:
X or not.
b.
c.
Six years ago, Marcelo, 17 years old, sold his one-hectare

agricultural lot to Bernardo for P100,000.00. Marcelo
invested the proceeds of the sale in a business which was
successful at the start but had gone through difficult
times as a result of the economic crisis. He thought of the
agricultural lot that he sold to Bernardo which had been
enjoying bumper crops since Bernardo bought it from him.
Marcelo now approaches you to seek your help on whether
it would still be possible to annul the sale of the
agricultural lot to Bernardo. What advice will you give to
Marcelo?
Re Only Marcelo may annul the sale on the ground of
t his incapacity. na
: Only Bernardo may annul the sale on the groune
of Marcelo’s incapacity. a
Neither Marcelo nor Bernardo may annul th
q on the ground of Marcelo’s incapacity.
; Both Marcelo and Bernardo may annu
the ground of Marcelo’s incapacity,
e sale
1 the sale on
A co vr : a
nt ac i
b. Principal contract. a he ek
Nominate contract... is
276
90.
91.
c consensual contract
a“ real contract.
Gregorio, a wealthy businessman, had often Paid th

‘debts of Demetrio, his younger brother, in order :
maintain the family’s good name. One day, Gregor,
received a text message in his cell phone from Bernards
a banker, informing Gregorio that Demetrio had obtaine 4
a loan from the bank but had fallen behing in his
payments. Gregorio texted back as follows: “Don* Worry
If he doesn’t pay in three months, I will be the one to pay,"
No other information was contained in the body of the tey
message. After three months, Bernardo sent again a tey
message to Gregorio to inform him that Demetrio had not
made any payments and that Bernardo was demanding
payment from Gregorio on account of the promise he had
made three months before. :
a. Bernardo may enforce payment against Gregorio
paying off the other dets of Demetrio.
b, Bernardo may not demand payment from Gregorio

because Gregorio’s promise is unenforceable.
c Bernardo may enforce payment against Gregorio as

long as Bernardo did not erase in his cell phone the
text message he received from Gregorio which is 4
written evidence of Gregorio’s promise. ;
d. Bernardo may enforce payment from Gregon0

because as a wealthy businessman, Gregor
should protect his name and that of his family.
Perfecto offered to sell his house and lot to Reynaldo ‘

P1,500,000.00. Perfecto told Reynaldo that he was sw"
Reynaldo thirty (30) days to decide whether to buy °° ii
Ak louse and lot. Reynaldo accepted the option be 10
rs give anything to Perfecio to support the option oe
m. Twenty days later, Perfecto found another 4)
7] ,
moons 00 Beri eg Oty the house and I oe

still withdraw th aoe wants to ask you whethet
a. Yes, Peng anet he made to Reynaldo. Decil® rg
: 7 etlecto may withdraw the offer becaue’
Sands to gain an added profit of P590.000
g are
on account of his promise since he had been

coN
72.
il
this will be more than enough to pay any damages

to Reynaldo. a
Yes, Perfecto may withdraw the offer by just
b. .nforming Reynaldo of such fact.
No, Perfecto may not withdraw the offer because
the option was accepted by Reynaldo although
Reynaldo did not give anything in support thereof,
No, Perfecto may not withdraw his offer until the
d. lapse of the period given to Reynaldo to exercise
his option.
‘seyred his house against fire with C Insurance

E a The insurance policy which was prepared and
cone by C Insurance Company was signed by D after
eS its terms. You are to determine which of the
a characterize the contract between D and Cc
Insurance Company.
I. Auto-contract.
IL. Contract of adhesion.

Ill. Aleatory contract.
IV. Nominate contract.
The contract between D and C Insurance Company 1s:

a. I, Wand III.
b. Il, HI and IV.
c. I, Tl and IV.
d, I, Ill and IV.
Datiles obtained from Cortez a loan of P50,000.00 which

was payable in 2 months. Datiles failed to pay the debt on
the due date despite repeated demands from Corte?.
When the debt was still outstanding after. 6 months,
Cortez asked his counsel, Atty. Antolin, to write a letter to
Datiles to demand payment within one.(1) week and ane
threat of court action if no payment was no
on the said period. Datiles, afraid of the threat aa

Urt action against him, was constrained to S76" a
5 ening his 1st in favor of Cortez to pay his debt.

; The deed of assignment is voidable bec
intimidati loved Datiles. Wate eee
bh ion employed upon : ble,
The deed of assignment is valid and tek
the threat of a court action made 2
ause of
t received
278
94,
95..,
through his lawyer being a legitimate Cxercigg

his right. : ;
The deed of assignment is voidable because 3

undue influence exerted by Atty. Antolin the
of
counsel of Cortez, on Datiles. + the
d. The deed of assignment Is void because Datiles 4

not give his consent voluntarily. 8 did
D obtained a loan of P100,000.00 from C. The lea

n
agreement showed that the loan was payable within
year with interest at 6% per annum, However, there *
no provision saying that the nghts and obligations of a
parties would be transmitted to their heirs or successors
in-interest. Before maturity, C died leaving his son § fe

heir. Which of the following statements is correct?
a. S cannot collect from D because no mention was

made in the agreement that the credit right would
be transmitted to the heirs of C.
b. S can collect from D although no mention was

made in the agreement that the credit right would
be transmitted to the heirs.
c, S cannot collect from D because the credit right is

personal to C.
d, S cannot collect from D because the law prohibits

the transmission of credit rights.
W, a woman, agreed to live with H, a man, as the wife of

H without the benefit of marriage in exchange for the
monthly support of P10,000.00 that H would give to W.
Both H and W are single, of legal age, and there is no legal
ob ediment for them to get married. Their parents have ™
he jections to the two getting married. Based on the
Oregoing information, which of the following statements §,
_ true?
i The agreement between H and W is valid becal®

: they can legally get married if they want to.
The agreement between H and W is void for peiné

bis
contrary to morals,
ae legally demand that W live with him 4
W may leg By
gally demand that H give her the mont
: SUPPort of P10,000.00 that he had promised.
97.
98.
99,
1 dela Guardia, guardian of Eduardo Menor, a minor

ange the palay harvested from the land belonging ta
do Menor for P42,000.00. The palay had a value of
At the time of the sale seven months 2g0

3 17 % years old. Eduardo wants to recover
he suffered under the contract entered into
ian. What is the remedy available to Eduardo
Annulment because Eduardo Menor was only 17 4

years old at the time the sale was made by Angel
dela Guardia. ;
Rescission because Eduardo Menor suffered lesion
of P§,000.00.
Both rescission and annulment.
C.
Neither rescission or annulment.
d.
Which of the following contracts is rescissible?

a. Contracts entered into during a hypnotic spell.
b. Contracts entered into in a state of drunkenness.

gi Contracts entered into to defraud creditors when
the latter cannot collect the claims due them.
d, Contracts where both parties are incapable of
giving consent.
A, a duly authorized agent of P, wrote a letter to B on

August 1, 2015 offering to sell P’s only Mercedes Benz car
for P200,000.00 cash. . On August 3, 2015, B wrote a
letter to A stating that he was accepting all the terms of
the offer, which letter was received by A on August 5,
2015. Before A could relay such acceptance to P, P died in
avehicular accident on August 6, 2015. ss
% The contract was not perfected because P, the rea
party to the sale, died before the acceptance came
to his knowledge.
The contract was perfected on.

The contract was perfected on
The contract was perfected on
b.
c.
d,
August 1, 2015. :
August 3, 2015.
August 5, 2015.
The cause of a contract differs from ‘th
batty. to the contract in that motive:
is an essential element of acon
e motive of each
tract.
SA
wife
280
100.
101.
102.
oO RACTS
py although illegal, does not affect the validity Of the
contract.
is always known by the other party.
when illegal will render the contract void,
pis a minister of & certain church whose members ing

xX. X regularly confides in Pp because of his many person,
problems. P is interested in buying the lot of X ang Ries
his position as elder of the church and confidant of x ;
convince X to sell to him the lot. Should X sell the lot top
by reason of P taking advantage of his confidential
relationship with X, the contract between them would
likely be voidable because of:
a. intimidation.
b. undue influence.
Cc. fraud.
d. mistake.
Tide
M, a movie actor who has fathered many children by

different women, donated a house and lot to X believing
that the latter was his illegitimate son. The deed of
donation and its acceptance were in a public instrument
and a new certificate of title to the house and lot was
issued in the name of X. A few months later, M
discovered that X was not his son but that of another
movie actor. M now wants to annul the contract.
Be M may no longer annul the contract because all

requisites have been complied with and a new title
already issued in the name of X.
b. M may annul the contract on the ground of
mistake as to the identity of X. .
_M may not annul the contract but he can rescind it
because he suffered damages. :
M need not annul the contract but he can have ;

declared void ab initio. |
Cc
d.
convinced B to buy a gold-plated bar which § told B
Was made of : a t
it. was really rigee B bought the thing beliewe ms
of pure gold. The contract betw
Bee valid. :
we Voidable,
S
contact
104.
los
reacissible.
Cs
d. ‘
Dp went to t
void.
he store of C and asked the latter to sell to him

uction materials on credit. Since C did not know
const denied D's request. R, a rich businessman in the
him, unity, happened to be at the store at that time and
comm ard the converse tion. He told C, “1 personally
He has a good credit reputation.” Accordingly,
credit sale to D. The sale was evidenced by an
ied by C. Later, however, C could not collect
ause it turned out that the representation
made by Ras to the credit of D was false.
a, c can go after R for damages by reason of the
Jatter’s misrepresentation.
C cannot go after R for damages because R’s
representation was not in writing.

C can go after R because there was a sales invoice
evidencing the sale.
d. C can go after R because it was R’s representation

that induced him to grant.a credit sale'to D. The
form of the representation is immaterial.
overhe
know dD.
Cc granted
jnvoice 18st
from D bec
b,
On June 1, 2015, S and B entered into an oral contract of

sale whereby S sold his computer to B for P50,000.00.
The parties agreed that S shall deliver the computer to B
on June 10, 2015 at the place of B. B, however, 1s
required to pay the price upon agreement. B complied
with his obligation by paying the price to B in cash on
June 1, 2015. As of June 1, 2015 -
S The contract of sale between S and B is wholly
executory. . oe
b. The contract of sale between S and B Is wholly
ts executed. . ate
The contract of sale between S and B is party
d executed. ee fore it
"The contract of sale should be in writing pe = ie

can be determined whether it IS © cue
B bought a baby boy from '§. B knew that the baby boy
Was hie :
8s his illegitimate son by a woman named,
Ww, and
106.
107.
"108.
109, :
CONTRACH
which W sold to S. The contract between B and § js;
a. valid:
b. void.
Cc unenforceable.
d voidable.
D, out of his love and affection for C, donated a Parcel

land to the latter who accepted it. The formalities requiet
by law were complied with. The contract between D anne
an onerous contract.
a gratuitous contract.
a remuneratory contract.
an accessory contract.
BOOP F
The cause of the contract in Number 106 is:
a. the parcel of land.
b. the acceptance of the donation by C.
c. the generosity of D.
d. the contract has no cause because C did not give

any consideration to D.
Which of the following contracts is valid, enforceable and

would not require any further act for the convenience of
the parties other than its registration with the proper
government office?
a. Oral sale of a piece of land made through an agent
. whose authority is in a public instrument.
. Sale of a piece of land in a public instrument made
through an agent whose authority was given orally
by the principal.
aaron piece of land in a private instrument
¢ through an agent whose authority is in *
B public instrument.
* Sale of a piece of land in a public instrument made
through an . - phic
inietnement agent whose authority is in a PU
S sold his 0
nereed ty ny horse: to B for P30,000.00. The partirt
at :
: te deliver the horse one week from fa
pay the pr agreement. B, however, is required
ice immediately in certified check. In the place
. the custom that anyon i

B, it was ; yone selling a ho:
ofS and jace Pa horseshoe on its hooves. However, a
shoul ted in the agreement including how the horse
was not red for before delivery.

would gis 0 ot obliged to place a horseshoe on the horse
- hough it was * he cus‘om in the place because

an B did not stipulate about it. P S
pliged to place a horseshoe on the horse
ig 0
b. - ecatite the observance of custom or usage in the
becomes part of the contract.
g js not obliged to take care of the horse before
¢. ‘lelivery because the caring of the horse was not
stipulated.
i g and B are bound only by the terms stated in
their agreement.
110. In January 2008, S, 17 years old, sold his only car to B,

21 years old. The sale was without the knowledge of G,
the guardian of S. Assuming that an annulment case is
filed today:
a. S may bring the action for annulment.

b. G may bring the action for annulment.
c. B may bring the action for annulment.
d. Annulment will not prosper whoever will file it.
il. Which among the following contracts is void?
a. A contract of barter between S, insane, and B, 17

years old.
b A contract of sale where B, the buyer, twisted the
arm of S, the seller, so that S would sign the deed
of sale.
A contract of sale where B, the buyer, aimed a gun
aes wife of S, so that S would sign the deed of
Sale. =,
. A contract for the sale of a cow which is suffering
from a contagious disease.
d and enforceable?
lig
* Which of ¢p : :
5. Of the following contracts is vali f
for the default ©
An oral promise to answer

b. another,
a donation and its acceptance

Strument of a parcel of land.
in. a private:
113.
114.
115.
CONTR «: b
“3
An oral lea
4 vo years.
he eal contract of sale of a TiINf Worth P4595
between an insane and a minor, U0
ered into a contract where they made jt
Sant ed to Ba parcel of land worth P50,000 ayn
reality, however, S borrowed from B P50,000 90 With ¢
mortgaging the parecl of land #8 security for the debt”
a. S and B are bound by the contract of loan and

mortgage,
b. § and B are bound by the contract of sale.
Cc. S and B are not bound at all.
d. $ and B are bound by the contract of loan and
mortgage if third persons are affected.
S, a store, owner owner, hired the services of E as a clerk

in the store at the minimum wage. E began to work
immediately although no employment papers were signed
by S and E. After 1 year and 2 months without £
receiving any compensation except free meals and lodging,
E demanded payment from S._ S refused to pay E on the
ground that their contract was unenforceable not being in
writing and that the employment already lasted more than
a year,
a. The contract is unenforceable because it is not in
time it was entered into.
b. - The contract is valid and enforceable although 0
in writing, t
c. The contract is void because an employment
contract must be in writing to be valid.
7 d
The contract is rescissible because E suffer
damages by reason of non-payment of m
compensation.
8 Sold 2 parcel of land to B for P100,000,00 with B Pave
. . i the
immediately. Although S delivered did
¢ of title of the land to B, the parties.

document at all for the sale cx Ce od
payment which S issued to B. e
er the sale with the Register of Deed’
the said amount

transfer certificat:
not execute any
receipt for the
Wants ta regist
se of a mining equipment for Morey

* thas
writing and it has already been one year from the.
116.
17.
B for
fallow’ i
a.
b.
Whic
a.
b!
g and Be
Resear
compel S to execute a Deed af Sale which jg

jotarized 90 that 8 can register the sate.
B gan
rT
duly compel S to execute a Peed of @
t al
anne sale
: use the contract 16 unenforceable,
pecat
, ween & and _—

ihe contract between © and Bos void because jt
a not it the form required by law
na nit | .
oe contract between Sand B is rescissible: hence
0 00 :
pcan
,aue for damages
ntered into a contract whereby S sold his car to

p100,000.00 Based on the foregoing, which of the
ng statements is incorrect? 7
The contract ts voidable if S is 17 years old, and B

ig 25 years old. .
The contract is unenforceable if S is 17 and B is

insane,
The contract is void if B, 25 years old, compelled S,

30 years old, to sign the deed of sale by
threatening to burn the house of S.
The contract is rescissible if at the time of the sale,

the car was the subject of litigation brought by X
against S to recover the car, and the court and X
did not give their authority to the sale.
h of the following contracts is valid and enforceable?

A contract where a party gave his consent in a
moment of drunkenness.
A contract where a party gave his consent because

the other party threatened to sue him for an
unpaid debt.
_Acontract where a party gave his consent because
the other party threatened to kill the first party's
Spouse. ,
A contract where there was inadequate cause
attended by mistake.
A ie, :
testify red into a contract with B whereby B agreed not to
P5,0
ls;
4,
b.
00.05 1 ‘timinal case filed against A in exchange -

Youd for being contrary to law.
Olid for being contrary to good customs.
0 to be given by A. The contract between Aand B-
Co) tA
286 Nt,
a
c yoid for being contrary to public Policy, :

d yalid because there is nothing wropn g
does not want to testify against anothe,; in ty
aon}
: “4: Re
_ Which of the following must be in writing to be
” as required by the Statute of Frauds? Snforeas
a A subscription for 100 shares of S80
corporation at P100.00 per share. kg,
b. A contract for the construction of a bm
scheduled to begin 3 months after the eiecn
the contract. tion g
c. A contract for the lease of an agriculty
period of 8 months. Tal lot for,
d. A contract whereby one agrees to pa
_debt if the latter defaults in his payment another,
120. Which of the following contracts is valid and enforceati
a. A written contract for the purchase of a new-bon
baby who is the illegitimate child of the buyer,
A written contract of employment where th
employee agreed voluntarily not to —demani
overtime payment for work rendered in excess ¢
3 the regular hours of work per day.
% An oral contract for the sale of a piece of land fm

P50,000.00 with the buyer giving a down paymetl
of P20,000.00.
An oral contract where the fruits of an immovabl
. belonging to the debtor are to be applied to t&
interest and principal of his obligation.
121. §, 17 1/2
b.
years old, sold his bicycle to B, 24

rors a The price is payable in 12 monty
remaining ‘s. After reaching 18, S continued to collet
a Set mstallments until the price was paid"
5 way still annul his contract with B.
c. Only Y no longer annul his contract with B. o
B may annul the contract with S

ground of incapacity of S.
S
besed B may annul the contract at the same ™
on the incapacity of S.
ey
123.
124,
contract between D and C, D is obliged to Geliver

ynder a ¢ detergent soap to C10 days after the exec
sO ement. On due date, D delivered to ¢ 19
ent S08P which he mixed with chalk.
af cere contract entered into between D and C is
a. a idable because of the fraud employed by D.
The contract is valid. The fraud employed by D
b. does not affect the validity of the contract but D is
obliged to pay damages to on
The contract Is void because of the fraud employed
by D in the performance of his obligation.
d The contract is rescissible because of the damages
suffered by C.
ution
bags
1, 2010, Berroya bought a parcel of land from

Salustiano who was insane. The deed of sale was duly
acknowledged before a notary public. Six months after
the sale, Berroya realized that he needed a larger area on
which to construct a commercial building. At about the
same time, Salustiano who had been undergoing
psychiatric treatment was declared of sound mind by his
psychiatrist. Should a court action be filed today:
a. Berroya may successfully prosecute a court action
to annul the contract on the ground of Salustiano’s
insanity.
b. — Salustiano may successfully prosecute a court
On January
action to annul the contract on the ground of his
insanity.
c. Neither Berroya nor Salustiano may successfully
prosecute a court action to annul the contract. —
Berroya may successfully prosecute a court action
to annul the contract on the ground of mistake BS
to the area of the parcel of land. ;
He requested one of his

finic was just 4
Later, Dr.
d .
oe a basketball game.
ston tes to call Dr. Ramos whose ¢

ne's throw from the basketball court.
Ram
°S Sent a bill t tin

Serj o Stanley amoun :
dame: he rendered. Stanley: refused . (Pay Ne
Wa ng that, as a minor, he was not liable. see
s
# reasonable amount.
Stanley, 17 years old, suffered a deep cut on ‘his eyebrow —
g to P500.00 for the
288
125.
126.
(327,
; qadeo, owed ‘Vacant lot as

tar Circus planned to put up a two-week performer’ j
i i he is a ‘3
js not liable because minor
a. Se eipeapedi of giving consent to engage a

services of the doctor. .
b.1 Stanley is liable although he is a minor becane
the contract involved a necessary,
a Stanley is liable only when he reaches the age of
majority. .
d. The teammate is the one liable because it was he
who personally called the doctor.
The following contracts are presented to you:
I. ‘A contract of savings deposit between A and xyz

Bank. The contract was executed so that A cay
present a certificate of bank deposit to the embassy
of foreign country since A is applying for a visa to
the said country. A has really no deposit in the
II. A contract where-S.and B made it appear that §

sold his car to B for P100,000.00, but -S actually
borrowed P100,000.00 from B and mortgaged his
car to secure the debt.
In your evaluation of the foregoing contracts:

a. Both contracts are absolutely simulated.
b. Both contracts are relatively simulated.
+a: Contract I is absolutely simulated; Contract Il is
relatively simulated, .
d. Contract I is relatively simulated; Contract II is

absolutely simulated. ,
Which of the following contracts involving real property
valid and enforceable although not in writing?
a. Sale ofa piece of land for P50,000.00.
b. Lease of an agricultural lot for a period of 2 yo

: an ea rental of P3,000.00. joan of
, e of aco i ee ©
; Pstianeon. | mmercial lot to secur
Donation and acceptance of a residential lot-
ere
adjacent to a. bigger lot wh
Provided in the lease contract which it executed ™
128.
129,
| the owner of the bigger lot. In expectation of

pegasPh, property for a parking lot, Tadeo leveled his lot
5 , small shed which cost him P20,000.00, an
t he had yet to pay the contractor. Later, however,

amount us cancelled the performance, so Tadeo brought a
“ee to recover P20,000.00 from it and Legaspi.
ged Of the foregoing information, which of the following

Ba
The circus contract took effect only between Star

a. Circus and Legaspi, the parties to the contract of
jease. . 5
Tadeo can recover damages from Star Circus and
Legaspi by reason of stipulation pour autrui. |
Tadeo must pay his own contractor the amount of
p20,000.00 because that is the obligation he alone
contracted to pay. . :
d Tadeo, as an incidental beneficiary, has no rights
under the circus contract.
An insurance policy which, in practice, is prepared by an

insurance company and all the insured has to do is to
sign thereon if he agrees with its terms, is an example of:
a. an auto-contract.
b. a contract of adhesion.
G a commutative contract.
d. a gratuitous contract.
Don Henrico was an 85-year-old C Saas

invalid who needed daily care. He hired Normita, a a
nurse to take care of him. After one year into apse
arrangement, Normita began to pressure Don Henrico into
signing a deed of donation giving Normita all oe pe
in exchange for her promise never to leave. ae
isolated Don Henrico from all his relatives and friends oaly
‘ald him that everyone had abandoned him and that
she cared about him. Convinced that he had been
i Henrico
ned by his family and friends, Don OF
donated all his property to Normita. Both the donatlo
: ent.
What’ acceptance were made in a public aga
a ‘the status of the donation? ocument together
Valid since it was in a public d

With the acceptance. *>
wheelchair-bound ©
290
130.
131,
. Sécretary of S, typed the
“Office of a new
MINT
Voidable by reason of the undue
employed by Normita on Don Henrico.
Voidable by reason of the intimidation employ
Normita on Don Henrico.
d Voidable since the old age of Don

: prohibited him from thinking intelligently,
MAUeneg
Henricg
D, the only daughter and heir of L, a lawyer, discoverey

shortly after L’s death that her father’s book, Legal Eagle
a rare collection, was missing from L’s library, After Boing
through L’s records, D traced the book to S, a law student
When D informed S that she wanted the book returned 5
refused claiming that L donated the book to him, D
however, protested saying that the book was merely lent tg
him by L.
a. D cannot ask for the return of the book although

she is the only heir because L.’s right over the book
was not transmitted to her.
b. D can ask for the return of the book because it

should be considered to have been lent only by L to
8, Le., the contract should be one of commodatum
only,
c. D cannot ask for the return of the book because

the same should be considered as having been
donated by L to S,
d, The contract involving the book is void since the

intent of L and S was ambiguous. Accordingly, D
can ask for the return of the book on the ground of

the nullity of the contract,
S sold one of his lots to B for P100,000.00, The let,

located beside a busy street, consisted of 1,200 square
mee and was covered by Transfer Certificate of Title
pou No. 12345, After registering the sale with the
veister of Deeds and the issuance to him by the at
iscovered transfer certificate of title in his name ?
toc the deed of sale and the new tite
of 1.200 * adjoining lot which, although also consists
eum Square meters, was covered by TCT No. 12348
and located £ ee :
ocated farther from the street. B learned that © .
v
«tong description on the deed
ed by
ete eri
d.
a.
C.
ches you for advice on which course of

What advice will you give to B?
iment of the contract because he did not

Annu t to the purchase of the lot covered by TCT
No. 1
Resciss
caused
Reform
show the truce
t. wt os
Oe eatioi of nullity of the contract because it is
e
yoid ab initio by reason of the wrong object.
ion because the erroneous description has.

him damages. :
ation because the deed of sale failed to

intention of the parties to the
i ontracts is rescissible?
“ Ce eee By guardian in behalf of his ward of
oe oe harvested from the ward’s corn field at a
price of p50,000.00. The corn had a value of
0.00.
yenier a piece of land made by D to defraud C,
his creditor. The buyer of the piece of land was
aware of the fraudulent intention of D when D
de the sale. ;
A donation made by D to X of his Guess wristwatch

worth P3,000.00 during a party where D was ina
state of drunkenness. X wrote his acceptance of
the donation on a table napkin.
A barter of D’s ring with C’s necklace. * e

publicly known to be insane but he was 1n his
lucid interval at the time of the exchange.
D was
3. Which of the following statements is true as regards a void

Contract?
a,
b.
‘2.
A void contract is ratified by the acceptanc® by a

Party to the contract of a benefit under its ae
The right to set up the defense of illegality 7 mise d
contract may be waived if the illegality 1s n°
within a reasonable time.

If there is a novation of a voi
Novation is valid provided the new
The right to set up the defense ©
Void contract does not prescribe.
contract is valid.
f illegallity of a
d contract, such
th
WO
No
134.
135.
136.
CONTRACTS
agreed to live with M, a man, as M's 2

benefit of oe exchange for i
ise to give a monthly support o ,000.00,
erties are gingle. After 3 years, M found another Wm
and stopped giving support to W. ; n
a. W can demand the continuation of the mo
support from M pursuant to their agreement.

b. M can demand the return of the support th
had given to W for the past 3 years.
c. Both M and W will be criminally prosecuted,
d. The agreement between M and Ww is illegal but the
illegality does not constitute a crime.
W, a woman,
without the
Nthly
at he
It is a contract by virtue of the terms of which the parties

thereto promise and obligate themselves to enter into
another contract at a future time, upon the happening of
certain events, or the fulfillment of certain conditions.
ay Contract of adhesion
E Contract of option
Cc Conract of sale
d. Auto-contract
O was cleaning the glass window of his building when a

large piece of broken glass fell down directly hitting the
roof of a car which was parked below. C, the owner of the
car, was not around. Sensing that he would be made
liable for the damage on the car, O immediately went
down and cleaned the mess. O, seeing that W had
witnessed all that happened, proposed to give W
P2,000.00 so that W would not testify in case a court cast
is filed. W agreed to the proposal and accepted the
money. Based on the foregoing facts, which of the
eee Statements is incorrect?

*. O's liability, if any, is based on quasi-delict.
The agreement between O and W is binding "

both of them.
c. a
: ne testify in court despite the agreement.
€ agreement between O and W is void for being
contrary to public policy.
Salendrez ‘a,
timed ‘17 soa to sell his car to Martinez wh?
tars old, for P100,000.00. Martinez 8#
just
ye @
conte
138.
139,
payment of P10,000.00 of the price. Shortly before

peduled delivery of the car, Salendrez received a
ffer from Tablizo. He thus attempted to annul the
ground that Martinez was a minor.
calendrez may annul the contract because the
of Martinez
minority rendered the contract

yoidable.
Only Martinez may annul the contract on the
P ground of his incapacity. ~
Martinez may no longer annul the contract
c. because he is deemed to have ratified it when he
gave a down payment at the time of the execution
of the contract of sale.
d Neither Salendrez nor Martinez may annul the
contract because the contract is partly executed. -
Torrente, a supplier of typewriters, sent to several

customers in various parts of the country a letter offering
to sell out “all his stock of 10 units of Olympia typewriter”
at the discounted price of P3,000.00 each. The offer
stated that the reply must be received by registered mail
not later than September 18. On September 14, Belleza
sent a registered letter.accepting the offer. The letter was
received by Torrente on September 19, On September 16,
Corpuz sent a telegram accepting the offer, The telegram
was received by Torrente on the same day. Whose
acceptance is binding on Torrente?
a. The acceptance by Belleza
first.
b. The acceptance by Corp
first by Torrente. (
. Neither acceptance is binding on Torrente.
d. Both the acceptance will be bir
with Belleza getting 5 typewriters,
getting the other 5.
uz because it was received
S and B signed a deed {a written contract) oo Othe

vehicle whereby S sold his car to B for p200,00 UY,
Parties agreed that S would deliver the car ek period
Pay the price, after two weeks. Before the * willing to. pay
Was over, § found another buyer who Was oy
because it was mailed |
d B would»
141.
b,
LUNN TRACT:
May $ validly withdraw from
P220,000.00 for the car. 4
contract with Tse B has not yet paid the price.

a
- ther buyer was willi

b. Yes, because the 0 TE to pay
sore. 7 . .
c No, because S was already bound by his con
with B and he-cannot unilaterally withdraw
a Yes, because S has not yet delivered the car
tract
D obtained a loan from C amounting to P200,000.00. To
secure the loan, D mortgaged his lot. C registereq the
mortgage with the Register of Deeds. Later, D sold the Io
to X who was not aware that the lot was mortgaged. Op
the due date of the loan, C demanded payment but p
could not pay. Accordingly, C decided to foreclose the
mortgage on the lot. X, however, opposed the foreclosure
claiming that he was not bound by the mortgage since he
was not a party thereto.
a. X was bound by the mortgage although he was not

aware of it because the same is registered.
b. X was not bound by the mortgage because he was

not a party thereto.
c. Only D and C were bound by the mortgage

contract because they were the only parties
thereto.
X was not bound by the mortgage because he was

not aware of it.
On June 1, S offered to sell a specific generator set to B
for P300,000.00. B sent his letter of acceptance to S on

tine . a dune 10, however, B became insane. On
a » 8 received B’s letter of acceptance.
; The contract. was perfected on June 8 when B sent
ees of acceptance, at which time he was still
qe contract was perfected on June 12 when :

earned of the acceptance.
The contract the

: ; was not cause
insanity of B occ perfected be
acceptance of his offer one
143.
cle
ont
contract was perfected on June 1 because the
j THe eptance made by B on June 8 retroacts to the
date of the offer. .
-a] power of attorney to A to sell P's house

p gave a sp6r500,000.00. On May 7, A, pursuant to the
32 and lot for "ted to him by P, offered to sell the house
authority Set the price of P2,000,000.00. B accepted the
and lot ay 8 by sending a letter of acceptance to A on
offer on * which letter of acceptance was received by Aon
such Sa On May 11, P revoked A’s authority before the

May e 1d inform him of B’s acceptance.
ae rae contract was perfected on May 8 when B sent
* i f acceptance.
letter 0
one contract was perfected on May 10 when A
eived the letter of acceptance. .
The contract was not perfected because P, the true
owner of the car that was sold, revoked A's
authority before he came to leam of B’s
acceptance.
d. The vearitcact was perfected on May 7 since the
acceptance by B retroacts to the date of the offer.
b.
On May 1, Sonora offered to sell his car for p500,000.08

to Balmores who was interested in buying the same.
his letter to Balmores, Sonora stated that he ee
Balmores up to May 31 to decide whether to buy gh his
ornot. On May 10, Balmores sent to Sonora throu the
Messenger a letter stating that he was accepting he
Promise of Sonora. Enclosed in the envelop May" 25
amount of P2,000.00 as option money. we chat he
Sonora personally went to Balmores to inform him ice was
Was no longer willing to sell the car unless the pr! r was
increased to P600,000.00 because another buy?
Mterested in buying the car for the said amount.
a. Balmores may compel Sonora to se

for P500,000,00 because they h
contract which was founded upon ee
. Consideration. 5 » Balmores
4 Sonora may validly withdraw his offer ean
and al! that Sonora needs to 2 he
Balmores of such withdrawal.
ave an option
a1 to him the car.
n val uable ;
296
144,
Sonora MAY withdraw his offer even befo

lapse of the aption period that he gave te TE the
because that is hia right ao owner and nelly

) Wig
car,
d. Gonora Is free to well the car to another oni
before the lapse of the option period that . vey,
to Balmores because he stands — ty © Ba,
P100,000,00 from the transaction.,, Pealy
D donated his lot to C because he thought that CG wae t;
iNegitimate son, The deed of donation was signed nee
and C, and acknowledged by them before a notary ne
before a new certificate of title to the lot was issued e :
Register of Deeds. Later, D learned that C was not =
son, but that of another man.
a, D can have the donation annulled on the ground g

mistake of identity.
b. D can no longer annul the donation because a ney

certificate of title has already been issued. ;
c. D cannot annul the donation because he freely

entered into it.
d. D cannot annul the donation because disregarding

it would be unfair to ©.
A has been for more than 20 years the legal cours tC

A talked to C almost everyday in the course of giving
ae to C to convince C to donate his lot to him. A
° C that it was only he who knew all of C’s cases and
ata only one who could handle them and C’s othet
him concerns. Because of the persistence of A in talking
into donating his lot, C finally signed the deed of
donation of the lot i q

- t in A’ : alities
required by law, 's favor with all the form
a.
The deed of donation is valid because ll the
formaliti $ i
+ ities required were complied with.
The deed of d : ‘ d of
: onation Ol e un
. Undue influence. is voidable on the gr
The deed of ets . na ol

ieee is voidable on the grou
The deed of g the
donation is valid because it W®
only wav :
nly Way by which Cc could keep Aas his lawyer
cont
46:
148.
149,
189.
pacts
f jJowi NF: are the essential elements of a conrensual

0 .
The except: ;
cont nent of the contracting, parties,
ay opject certain which is the subject matter of the
b tract
gnitravh: :
pelivery of the object of the contract,
d Cause of the contract which must be established.
¢ contract is:
atory contract,
set of adhesion,
An jnsurane
1 ale
a, ane
b a contré
of poth (a) and (by).
“4 neither (a) nor (b).
D borrowed P100,000.00 from C. On due date, C
demanded payment but D refused to pay. In view thereof,
C threatened to sue D. Afraid that he would be sued, D
executed a contract transferring his lot to C by way of

dacion en pago. What is the status of the dacion en pago?
a. Void because D did not give his consent freely.
b. Voidable because D gave his consent by reason of

the intimidation employed by C.
Cc. Valid because there was no intimidation when a

party seeks the aid of the courts to enforce his
right. :
d, Rescissible because D suffered damages.
On March 1, S sent a letter offering the sale of his car for

P200,000.00 cash to B. In his letter, 5 stated that B’s
acceptance should be sent by registered mail and must be
received by S not later than March 31. On March-20, B
feo the offer of S by sending an e-mail message On
the Same day to S whose e-mail address a
letter. S read the message the following ete : ar
a Was there a perfected contract between S and B:
b. Yes, on March 1.
«Yes, on March 20.
d Yes, on March 21.
No, no contract was perfected at all.
L they tetements are presented to you"
—* Option money is part of the purchase price.
s was indicated in -
151.
152.
153,
1, Earnest money is proof of the Perfection

contract of sale. of
In your evaluation of the foregoing statements;
a. Both statements are true.
b. Both statements are false.
C Only Statement I is true.
a Only Statement II is true,
D gave his US$100.00 bill to C to have it conver

pesos at the agreed rate of P55,00 to US$1,00.
received his money in pesos, he discovered that C
him P5,700.00 instead of P5,S00.00. No wri
agreement was executed by the parties. The only written
evidence of the transaction was the tape dispensed by the
adding machine showing the computation to be P5,500.09
and which was in the possession of D ,
a. The contract is voidable, C can have it annul
the ground of mistake,
b, The contract is valid. D must return the excess df

P200.00 to C,
The contract is unenforceable since it was not in

writing.
C can demand that a writing be executed to show

the true intention of the parties.
ted inty
When p
led on
Cc.
d,
P, the owner of a business, appointed A as his agent to

Manage it. P authorized A to borrow money for tht
business. A himself is the one who lends the money #
the current rate of interest. Thus, in the said contract of
loan, A enters into the contract in his own behalf’#
represents P as borrower. The contract of ms

in such a case is considered as:
as an auto-contract,
: an aleatory contract.
, ar atory ¢
t emuneratory contract.
4 gratuitous contract. !
conte
his predicament. T, through his cell phone,
explainet 4 C and told the latter to let D leave without
ghen C8 d that he would be the one to pay D’s bill if D
154.
155,
sae t, an
cider’ or cannot pay.
does 7 the promise of T can be enforced against him by C

a pecause the food sale was evidenced by the bill
jggued by C to D.
The promise of T can be enforced against him by C

b. because the food sale was Jess than P500.00.
The promise of T cannot be enforced against him
by C because it was not in the form required by
law to be enforceable.
The promise of T can be enforced against him by C
because D already benefited from the contract of
gale.
ig Jot consisting of 1,000 square meters to B.

ger, the deed of sale signed by the parties aan a
total area of 1,200 square meters due the secre ave
mistake. Later, S discovered the mistake. What remedy
available to either party?
a. Annulment
we Reformation
c Rescission
d, Declaration of nullity of the contract.
On August 1, 2015, Samonte sent a letter to Ba

In the letter, Samonte offered to sell his ao 00 00
located at Green Valley Subdivision for PL rived: by
cash and stated that the acceptance had to — reidez sent
Samonte not later than August 15, 2015. Bee oe
his acceptance on August 10, 2015, but due My ance 4a
ie mails, Samonte received the letter of ere
Ugust 18, 2015, idez was
a The contract between Samonte and Benavides
perfected on August 10, 2015.
b The contract between Samonte ap
perfected on August 15, 2015.
_ The contract between nee
perfected on August 18, © aa
a. No contract was perfected bet °
Benavidez. °
c,
d Benavidez was
e and Benavidez was
amonte and |
300
156.
oo RACT
; . lier of “ZZ” ,
a Agri-Products, a supp fertjj;
sermons wing io sl to Barbados Farms, 50 bage of
entitizer at the price of P100.00 per bag. The offer stain
that the price would be good for one week during Which
os Farms may decide to accept the offer,

i a and _ before Barbados could frnke
acceptance, the general market price went up. Sermo ny
attempted to revoke the offer by informing Barbados ne
Barbados claimed Sermonia could not do so, » but
a. Sermonia may withdraw the offer by =
informing Barbados since there has not yet p

any acceptance thereof, een
b. Sermonia may not withdraw the offer since th

one-week period within which . Barbados auf
decide had not yet lapsed. y
Cc. Sermonia may withdraw the offer only after the

expiration of the one-week period, unless Barbados
in the meantime has accepted the offer,
d. Sermonia may withdraw the offer because it would

suffer a loss if the sale was allowed to push
through,
D obtained a loan of P1,000,000.00 from C. To secure the

er D executed deed of mortgage covering two of his lots,
t A and Lot B, each of which is in the name of D_ in the

sestifeale of title, The mortgage of Lot A_was recorded
Aare week in the Office of the Register of Deeds, but
a t B could not be processed as other documents
haath by the Register of Deeds. In tht
nothin on aes Lot A to X, and Lot B to Y. X knew
eitete ae : nf iat rer teeee of Lot A, but Y was aware of the
a. Both X and Y are bound by the mortgage on the =

sold to each of them. : |
pa mand Y will not be bound. In the cas€ Y
at me Nothing of the mortgage. In the case *
b pares Bage was not registered. is not
bone pag by the mortgage of Lot A. yis no

oe iby the mortgage of Lot B. is
botund ound by the mortgage of Lot es

by the mortgage of Lot B.
b,
159.
169,
ced delivery from S of a Nikkon camera and an

revolver which he purchased from the latter at
ne price © was signed by th
t agreement was signed by the parties to keep the
ntract 4 secret. .
co The gale of the camera 1s unenforceable because it
was not in writing, while that of the revolver is

yoid because the object is illegal.
The sale of the camera is valid and enforceable,
b while that of the revolver is void.
The sale of both the camera and the revolver is
_ yalid because the parties are bound by their secret
agreement.
d The sale of both the camera and the revolver is
void because the contract 1s indivisible.
Which of the following contracts is valid and enforceable?
a. A contract of sale between S and B, both of legal
age, of a computer worth P20,000,00, No
document was signed by the 5, the seller, and B,
the buyer who has given a down payment of
P4,000.00. S is set to deliver the computer upon
full payment of the price.
b, Acontract of lease between S, 16, and B, 25. The
lease which was in writing and signed by both
parties, had for its object a drilling equipment, and
had a duration of 3 years. The drilling equipment
is now in the possession of B who has paid the
rental of P1,000.00 for the first month to S.
c A contract of donation of a lot between S, 30, and
B, 24. The donation and the acceptance aren a
private document. B has since occupied the lot.
A 6-month contract for the supply of carabao meat
by S to B. Although the slaughter of carabao is
Prohibited by law, the contract is now on its third
Month and § has made carabao meat deliveries
Worth P30,000.00.
P, the
1 oO
and iene.
8. §
"eceipt
instructed A, his agent

ds on credit from
Knowledged. the
Pp called S by
€r of a certain business,
Mager of the business to buy g0°
issued a sales invoice where A ac
of the goods’ by signing thereon.
¢ P1,500.00 and PS,000.00, respectively. No
302
161.
162,
CONTRAG,
Ss that he (P) would pa
phone and promised to Y fo
ate. S$ was not paid on q, "te

gpode on ne Sted P for the price of the goods. . nite
co defense of unenforceability under the Staturt
Frauds claiming that a representation as to credit mtg ‘
4 iar promise is enforceable against P although
, was not in writing. it
b. The promise is unenforceable against P because:
was not in writing. it
The promise is enforceable against A because
was he who signed the invoice,
d. The promise may be enforced both against P ang l
since they are the debtors in the transaction.
Cc. it
The following contracts, all of which are executory and mj
in writing, are presented to you for evaluation:
I. Sale of a piece of land for P50,000,00,
IL. Sale of a computer for P20,000.00.
Il. Lease of a delivery truck at P1,000.00 per month

for 2 years.

a. f and II are unenforceable.
b. II and lI are unenforceable,
Cc, I and II] are uneriforceable.
d, All contracts are unenforceable.
The following are characteristics of certain contracts:
I, Nominate ;
IL, Real
II Aleatory
IV. Commutative
savet if
A contract for the sale of a sweepstakes ticke
considered ag;
a, land Il.
b. Land Iv,
Pe Jand I,
d, Ill and Iv.
jot 07 5
163:
165.
he following does not apply to a relatively
3 of t
which ed contract? .
gimu The parties are bound by their real agreement.
a The parties are not bound at all.-
b. The parties are bound by their ostensible
C. agreement if the real agreement prejudices third
rsons. .
Se parties are bound by their ostensible
d. agreemen* if the real agreément is contrary to law,

morals, good customs, public order and public
policy.
the following, contracts are presented to you:
consent in a state of drunkenness.
1! A contract where one of the parties gave his

consent during a hypnotic spell.
IIL. A contract where both parties employed fraud to
obtain the consent of the other party.
4v. A contract where one of the parties gave his
consent because the other party threatened to suc
him.
In your evaluation of the foregoing contracts, which of the

said contracts are not voidable?
a, I and II.
b, land III.
Co II and IIT.
a Wand Iv,
S placed an advertisement in the Manila Bulletin as
follows: “INVITATION TO BID: For sale, house and 10"
Ccated at No. 120 Roxas Boulevard, Manila. Three
Persons submitted their bids as follows: A, P2 million; B,
P2.5 million; and C, P3 million. After studying the bids, §
awa ded the contract to B. C complained claiming ee

oe Contract should have been awarded to him since
a.’ the highest bidder. |
The award of the contract to B is not valid becanse

he was only the second highest bidder.
A contract where one of the parties gave his
304
166.
167.
168,
way “SACI,
ct should have been award
ontra .
7 6 s, as the advertiser, was bound
ighest bidder.
. “las not bound to accept the highest bidg
because advertisements for bidder tt
invitations to make proposals, unless
appears. .
d. The contract should have been awarded to ¢
because his bid was the most advantageous tos
to Recep
S are Mere
the COntrary
When a physician who takes improper advantage of his
power over the will of his patient in order to get the latter'y
consent to a contract between the two of them, the
contract will:
a. likely be voidable because of intimidation.
b. still be valid because the patient is merely

returning the favor to his physician who takes car
of his health.
c. likely be voidable because of undue influence.
d.
These statements are presented to you for evaluation:
I. Payment of option money by the buyer reduces the

purchase price that he will pay to the seller in cas
he accepts the offer..
Il. Payment of earnest money will make an oral sale!

an immovable enforceable.
In your evaluation of the said statements:

a. Both are true.
b. Lis true; Il is false.

Cy Both are false.
A. Lis false; I is true.

, Casin : fil . ; cout!
to collect €d against Delgado a complaint ee eae
ct Delgado’s debt of P200,000.00 an

Pendo * lot located at No. 120 Lepanto Street, SamPt" s
sltech The court accordingly issued th mje
case Was nen te Property against Delgado. Wh\

Scout Alm tine: Delgado sold his lot located at Miser
© Street, Quezon City. Torres,
ed to c
pone
169.
170,
sor of Delgado, now questions the sale as fraudulent
credito Ks to rescind it.

and eae may not question the sale because it was
m not he but Casimiro who obtained the writ of
attachment against Delgado.
Casimiro may not question the sale because it

b. referred to a lot which was not the object of
attachment. oo * :
Either Torres or Casimiro may question the sale.
c. Neither Casimiro nor Torres may question the sale,
d.
The following contracts are presented to you for

evaluation: .
if Pledge.
I. Commodatum
Il. Sale ;
lV. Donation of an immovable.
‘The real contracts among the four contracts enumerated
are:
ZB Tand II.
b. II and III.
c. I and III
d. Il and Iv.
e following cases are presented to you: :
S informed B that the house S was selling was

never infested by termites. The truth, however,
was that S had the house treated for termites 3
months before. B bought the house believing in the
words of B. ; :
S sold to B 10 bags of cement which were

Scheduled for delivery one week from’ their
agreement. On delivery, S delivered to B 10 bags
Tock, » :
Th
L
In r nen .
byg ee ‘valuation of the above cases, the fraud employed
a, dered voidable:
b. the contract of sale in Case I only.
t a contract of sale in both cases.
© Contract of sale in Case Il only.
. 306
171.
172,
173.
ORE “ACT
d neither of the two contracts.
. : ts are presented to you:

The following statemen : :
The illegality of the motive of a party toa be
I. renders the contract void. Ntray

Il. The motive of one party to a contract js a
known by the-other party. Way
In your evaluation of the foregoing statements:

a. Both are true.
pe Both. are false.
Cc. Only I is true.
d. Only II is true.
On March 25, 2014, Orlando and Timoteo entered into,

written contract of lease whereby Orlando as lessor leased
the third floor of his building to Timoteo, lessee. The
contract provides, among other terms and conditions, the
following: (a) The lessee shall give a rental deposit of tyo
months amounting to P40,000.00; and pay an advance
rental of one (1) month amounting to P20,000.00 upon the
execution of the contract; (b). The lessor shall keep the
leased premises in tenantable condition throughout the
period of the lease which is from April 1, 2014 to March
31, 2016; (c) At the end of the lease period, the lessor shal
return the rental deposit to the Iessee less any amount af
pemase that may be caused on the leased premises by tit

€.
Timoteo, pursuant to the contract, gave both the rental
deposit and advanc ion

e rental t the executl?
of the contract. o Orlando upon
The contract betweeh Orlando and Timoteo is:

ee nominate, onerous and commutative.
sah al, innominate, onerous, and aleatory:
inilaterst nominate, gratuitous, and commu
eral, innominate, onerous and commuta
Assume the same

was entered into ,
Such a case, the
tative
Boop
facts in No. 172 except that the conti
rally between Orlando and Timote?

contract between the parties iS:
tive:
ie
oN
75.
176,
nenforceable.
b rescissible.
A valid and enforceable.
efficient cause in the obligations in No. 172 is the:
The lease period of two (2) years.
a. contract of lease between Orlando and Timoteo.
b. obligation of Timoteo to give the rental deposit and
° the one (1) month advance rental.
d obligation of Orlando to keep the leased premises -

, in tenantable condition throughout the period of
the lease, and to return the rental deposit upon the
expiration of the lease.
D borrowed P50,000.00 from C. The debt, which is

payable within one year, is secured by a mortgage that D
constituted on his lot. The mortgage is recorded in the
Registry of Property. C dies before the due date of the
debt and was not able to collect any amount of his loan
receivable from D. He was survived by S, his only son
and heir. D, taking advantage of the situation, sold the lot
to T who was not aware of the mortgage constituted
thereon. .
a. The mortgage is not binding on T since he was not
aware of it at the time he bought the lot.
b S, the son of C, has the right to collect the
amount of the note from D, and foreclose the
Mortgage if D cannot pay. ae
The mortgage is not binding on T since D was In
d bad faith when he sold the lot to T.
; The right to collect the loan was extinguished upon
the death of C. :
B . “ee,
“ntered into a contract for the purchase of 5 rolls of
Cloth wort
to b h P20,000.00 from S. The materials which were

€ use
d by B in th king of school uniforms, were
Sc e€ maki 4
8 rated for delivery within 7 bays. On the seventh day,
result so deliver the cloth despite demands from B. Asa
and w Could not meet his commitment to his customers

as threatened with a court suit. S claimed that M
fro.
= a contract that, he
‘
29m he ordered the cloth under
’
ira
ry
om
MTR AO
2 inte, did mot finish manufactur,

2
3
Sj and M entered in accordance with the tem,

pend =. In this case, B may not sue M for damage
suck _ ‘contract between S and M under Whink
principle ofcontract?
Principle of Liberality of Contract.
> Principle of Relativity of Contract.
a Principle of Consensuality of Contract.
d. Principle of Obligatory Force of Contract.
The following contracts are presented to you:
Oi A contract of sale involving 100 sacks of rig
entered into by G, a guardian, in behalf of M, his

ward. The rice was worth P100,000.00 but was
sold by G for P85,000.00.
Il. A contract of sale made by D of his only lot to Xin

order to defraud C, his creditor. X was not aware
of the fraudulent intention of D when he sold the
lot to him.
OL A contract of sale made by D to X of jewelry which

C is trying to recover in a court case he filed
against D. X was not aware that the jewelry was
the subject of litigation between C and D.

Contracts [ and I are rescissible.
Contracts | and Ill are rescissible-
a
b
= Contracts fl and If are rescissible.
None of the chove contracts is rescissible-
Wig af +e, ~ ~ ~s ‘2
CSS ot the Towing contracts is not 2 void eomtract: 3
& © comract of sale of an anima! suffering is
&
om
Ci
Tiagous disease.
te, vs ae
= & porckase of am Glegitimete child by oof eats
, the fetes of ree eS “y

e AQ : . i.
~~ E - teers 2
WTS 2 Sittiremoe wierenr ime Sat cai
acccher +: the wo
= take Eis plece durme =
sen SS Seek a
ace
Marts STG
m z a 2
— ™% Sire | a x an
Oe ° Tet Detmees FL a Filipe and Be SO ee |
age rats — z =f
CD tye ae eel. £ a se iedner qe *
- SSCS + + ec
Tine esse o€ the right +
Fe OR a
180.
- act is one:
eatOry contrac . :
an ales the fulfillment of which depends upon chante
a. the parties of which are obliged to perio
a reciprecal prestations, om
where only one party actually and physically enters
- into the contract.
. for its perfection.
zenith Cars Corporation (Zenith) engaged the services of

stronghold Construction Corporation (Stronghold) for the
construction of its showroom. For this purpose,
Stronghold bought construction materials on a 60-day
credit from Durable Materials Corporation (Durable). On
due date, Durable demanded payment from Stronghold
but the latter contended that it could not make any
payment because it has not yet collected from Zenith. In
this case:
a. Durable can hold liable Stronghold only.
b. Durable can hold liable Zenith only.

c. Durable can hold liable both Stronghold and
Zenith.
d, Durable cannot hold liable neither Stronghold nor

Zenith.
For Items 181 to 199, state the status of the contract from among
‘ne following choices:
/ aa
a Valid and enforceable.

b Rescissible.
Voidable.
Unenforceable.
Void.
fp pp
—
7 Gra} . o + o Teh - :
» = Contract of sale of a computer worth £ Fh OC
= i -
— Th = Tee ae peta
a S {seller}. 2 minor, and B fbure:}. a2 =ser
= Th 5, Jove oc
es.
“Ss Seen Tre
Semen Contract of sale of a computer worth Pat x

P°TSon,
3 < fioye. an insert.

S {seller}, a minor, and B (buyer) 22 =
erect amd ihe
ioe ha The computer has not been deliv

Snot been paid.
© computer has been delivered anc fo FS
Pa) 008,08
310 MINE
1 sale of @ Jot worth P50,000.00 between Ss
S has not delivered the lot, but B ha

t of P5,000.00.
(Selle
183. *, An ora
8 Biven
and B (buyer):
a down paymen
« of a Jot worth P100,000.00 bety,
(buyer). S has not delivered the lot fen §
184.3, A deed of sal

» And B
" (seller) and B

has not given
not yet been. ac
public.
knowledged by the parties before q nota

ry
185. fA written contract of sale of a specific car between §
“ B. The car actually belonged to O and was sold by oo

the name of O without the lJatter’s authority. The ‘ack.
still in the possession of O although B has remitted the
price of P60,000.00 to S. .
186.7 A certificate of bank deposit entered into between p

depositor, and B, bank. D has really no deposit in the
bank but the bank made it appear that D had a deposit so
that D could use the certificate of bank deposit to appl
for a visa at a foreign embassy. a
187. 3A written contract of sale entered into by G, guardian, in

Lt of his ward M, a minor, and B, 25 years old. The
a hong for its object a specific ring with a value of
teen beoneing to M but was sold by G for only
000.00. as paid th ice i ined
possession of the fing. se
188.4 A wri
} ee contract of sale entered into by G, guardian, in
oak oa ward M, a minor, and B, 25 years old. The
mad Gn at its object a specific ring with a value
rv0.00 belonging to M but was sold by G for only
P30,000.00, B ‘ .
Possession of the ring the price in full and _=
189. 6 A wri
6 ritten co and B,
ntract of sale of a lot between S, seller,
buyer, f
se 000, the erate ol poe
fraudulent j aud C, his creditor. B was aware of
alent of S in selling the lot to him. -
RACty :
any payment. The, sale is in writing byt hos |

a9
cunt
RAG’
ontract of sale of a lot between S, seller, and B
jtten © ;
writ p50,000.00. The lot is the only property of §
yA for
0. ’
1" puyet id it to defraud C, his creditor. B was not aware of
191.
192.4
193.
194.
195.
196,
Oo . . :
whe eaudulent intent of S in selling the lot to him.

nA donation of a gold ring worth P4,000.00 made by D to C,
it rhe donation of the gold ring by D and its acceptance by C
were made orally with D simultaneously delivering the
ring to C:
A written contract of sale entered into between S (seller)

and B (buyer). The object of the sale is the right lung of S.
B has paid the price amounting to P200,000.00. —
act of commodatum whereby M, 17 years old,
(, An oral contr
~ none to B, 25 years old for a week.
Jent his cell p
1) A oral contract of lease of a lot by R (lessor) and E (lessee}

“ for a period of 2 years at a monthly rental of P20,000.00
with E being required to pay a one-month deposit of
p20,000.00. R has not delivered the lot. Neither has E
given the one-month deposit.
4A oral contract of lease of a delivery truck by R {lessor)

and E (lessee) for a period of 2 years at a monthly rental
of P20,000.00 with E being required to pay a two-month
deposit of P40,000.00. __R has not delivered the truck.
Neither has E given the two-month deposit.
} A written contract of lease of a lot by R (lessor) and E

ape for a period of 2 years at a monthly rental of
de 1000.00 with E being required to pay a one-month
Non of P20,000,00. R has not delivered the lot.

either has E given the one-month deposit. The contract
has n
public, ' been acknowledged by the parties before ony
contract of lease of a lot by R (lessor) and E (lessee)
fe ;
ce Period of 2 years at a monthly rental of P20,000 00

P29 ae being required to pay & one-month deposit -”.
900.00. E ‘has not given the one-
tarted occupying the lot. .
has Ss
month deposit, but
Cc
312 ONTRAG
tract of lease of a lot by R (lessor) an
d
d of 2 years ata monthly rental of Pas fettey
nes, 00
€posit 6
ft
has Riven
198, } A oral con
rio
with being required to pay @ one-month q,
p20,000.00. R has not delivered the lot, but. E

the one-month deposit.
199, } An oral contract of lease of a room between R (les

\ is 40 years old, and S (lessee), a 17-year old stoatet) te
period of one-year while S is studying at ABC Shing ma
monthly rental is P5,000.00. S has paid the first ;, he
rental in advance. Month
200. Erwin applied for an insurance with ABC Insuran

Company. The application required Erwin to undertakes
physical examination. However, since Erwin wag suffering
from asthma, he requested Edwin, his identical twin
brother who was very healthy, to go through the physical
examination and pretend that he was Erwin, ABC
Insurance thus approved the insurance policy believin
that Erwin had a clean bill of health. .
The fraud employed was dolo causante.
The fraud employed was dolo incidente.
The fraud committed is fraud in performance.
‘There was no fraud or misrepresentation at all

~ because Edwin is considered as'an agent of Erwin.
Re op
201. >, The insurance policy (contract) in No. 200 is:

a, Valid.
b. Voidable.
c. Rescissible,
d. Void.
P ‘oy oy .
by Ro dn accident and died while on board a taxi owned
enti masters Taxicab Company. Roadmasters has a
; NM Carrier insurance policy with ABC Insurance
for the rs is .
Passenger jn fone Sf cling Smlenunity: to any fare poy
202,
statements js inonkcte e Which of the following

a. The heirs of C
P can clai ity from AB
Insurance for the death of ae indemnity
203.
904.
205.
Mme
LO
the heirs cannot claim any indemnity because P
b= wag not a party to the contract of insurance
between Roadmasters and ABC Insurance,

me P rovision in the surance policy for the
pa yment of indemnity is an example of stipulation
pour autrut. . ‘
The right of P to claim for indemnity was

d. transmitted to his heirs upon his death,
C.
g shipped his goods in the vessel of V. The goods were

stined for Cebu. When the vessel reached Cebu, V hired
cha owned a special equipment for the unloading of the
cargoes that included the goods of S. The goods of S,
however, fell into the sea while being unloaded because of
the negligence of the operator of the equipment.
a S can go after T.
b. § can only go after V.
c. $ can go after both T and V.
d S cannot go after either T or V.
Acontract of pledge is perfected upon the:
a. meeting of minds of the parties. a

b, delivery of the object of the contract.
c. execution of the written agreement by the parties.
d, acknowledgment by the parties of the instrument
evidencing the contract before a notary public.
S, a store owner, sold a gallon of rat poison to B for

P1,000.00. B intended to pour the poison in the fishpond
of X, his enemy, to kill all the fish therein. The sale of
the rat poison is: ; i
a valid provided B does not pursue his motive to kill
b the fish in the fishpond of X.
. valid even if B pursues his motive
the fishpond of X. ;
void as it is immaterial whether or net oe the
fish in the fishpond of X since B’s motive 18 VOI
void if B pursues his motive to kill the fish in the
fishpond of X.
to kill the fish in
following contracts are voidable, except 4 Con tract:

‘ _between a minor and an insane. :
314
208.
209..
210,
where consent was given by a party while in

of drunkenness. Sta
where consent was given by a party while
hypnotic spell. ; Unde.
d. where a party was mistaken as to the substan
the thing object of the contract. C8 gf
It refers to a contract wherein one party imposes

made form of contract, which the other may Q
reject, but which the latter cannot modify. ~
Aleatory contract.
Contract of adhesion.
Auto-contract.
Innominate contract.
a Teady.
CCEpt gy
ap
ae
A provision in a promissory note authorizing the Creditor

to increase, decrease or otherwise change from time to
time the rate of interest and/or bank charges without
advance notice to the borrower is violative of which
principle of contract?
Relativity
Mutuality
Obligatory force
Consensuality.
BO pep
These statements are presented to you:

1. There may be more than two parties to a contract.
IL. A party to a contract may be composed of mort

than one person.
In your Sraliation of the foregoing statements:

tatement J is true; Statement II is false. P
b. i
: Seement lis false; Statement II is true.
5 oth statements are true.
qd. Both statements are false.
At i ing
theli pent of the flood, D saw C and his family ringing
ep Cae pal effects to a higher ground. He offeret 0
wie te vas accepted. Thereafter, C gave P. 500,00
between D ang c is, cting the payment. The ©”
a. ,
onerous,
0:
gil.
212.
213.
214,
yore"
rernuneratory.
b. ’ gratuitous.
C: There was no contract at all.
d.
No. 210. The cause is:
Refer M he payment of P500,00.
a the benefit received by C. —
b. the personal effects of C and his family.
i There is no cause because there is no contract
° petween D and C.
Rescission is different from annulment in that rescission:
a isa principal action.
b. may be availed of only by the parties whether

bound principally or subsidiarily.
c. is brought to declare the inefficacy inherent in the
contract.
a is based on lesion or damage.
These statements are presented to you:

L A sale by auction is enforceable between the seller
and the buyer although the memorandum made by

the auctioneer on the sale was not signed by the
seller and buyer.
I. Contracts that are unenforceable under the Statute

of Frauds are deemed ratified by the failure to
object to the presentation of oral evidence to prove
them. .
In your evaluation of the foregoing statements:
t Both statements are true.

° Both statements are false. ;
d Only Statement I is true.
* Only Statement II is true: |
_
1 Se statements are presented to you: ‘
Human hair may validly be the object of a cont

of sale,
The donation by a mother of a part of h
be transplanted to his son is valid.
Il,
In : . ;
Your evaluation of the-foregoing statements:
ract’.
er liver to
316 RAG ce
prone TAPE. Tat Your ansyer By wing
ements are true. si- genting Ue ‘ment or phrase that best
. oh ements are false. tut ines or explains the numbered items, ;
o. Only Statement Lis true. ae wn
d. Only Statement Il is true. erms is
215. These statements are presented to you: . sory contract 26." Voidable contract
i
1. Inneminate contracts, not having any name ya ft Ace tows contract 27.17
Essential elements of a
the law, are void because no law or rule UNde git or ral contract _contract
them. Soveny| 3.11 Bilate nsuality of contract 28.'° Perfection a
Il. Facio ut des and Do ut facias are innom; 4, G Cont ation pour autrul 29, Pan
delicto |
contracts. ina} 5, ft pa contract 30.5 Consensual contract Ph
' 63 F lence 31... Innominate contract
In your evaluation of the foregoing statements: i. \) seatot 32.{ Aleatory contract
: Both are true. = il Relatively simulated 33." Consent
: thare false. 9. ct 34.°7 Relativity of contract
c. Only Statement I is true. \ erie tion of contract 35.\; Lucid interval
‘i. Only Statement Il is true. ae 361" Fraud |
st 12." Annulment 37.:= Obligatory force ofcontract |
13.VVoid contract and compliance in good
14.0 Natural elements of a _, faith |
contract 38.’ Rescissible contract af ie
15.P Preparation of acontract 39.1! Ratification i
16.8 Formal contract 40. > Statute of Fraud
17.\ Contract 41N,-Accidental elements ofa
18.£8Nominate contract contract
sn ma tive contract 42, Consummation of contract
fl ne of contract 43,43 Real contract
ne mo interdiction 44,3 Intimidation
03. tee, 45. © Unilateral contract
: . ‘< Absolutely simulated 46. Principal contract
24.1), a a 47. ¢. Onerous contract -
25.4) Re eg 48, ££ Undue influence »
. ““emuneratory contract 49, (0 Mutuality of contract
50, x Cause . oe
h 6 ag & Statements
FH : oan mS cis
binetting of minds between two persons whereby Sa 2
Lo Aton imself with respect to the other to give aoe :
| 6 Sain some service. : ; :
ract that can stand by itself.
Cont,
318 Tag,
io : t to one party is the
{ic The cause, with respec . - pre ». te
em the promise of 8 thing or service by the other Party iy
4, a contract whose fulfillment depends upon chanc,
"Only one party is obligated to do or give somethin,
5: The contracting parties may establish such e

stipulations as they may deem convenient provide" tay
are not contrary to law, morals, good customs ed thy
order or public policy. * Pub
G.{) The principle that contracts are perfected by
consent. Mey
A stipulation that clearly and deliberately confers
-. upona third person. a

| & The offeree is given a certain period within which to
in not the thing being offered.
J.(09) A vice of consent where a person is com

1
vw reasonable and well-grounded fear of an innit!

grave evil upon his person or property, or upon the oo
63) or property of his spouse, ascendant or descendant
E pet, The parties do not intend to be bound at all, “
bast The remedy in equity by means of which a writtr
; instrument is made to conform to the real intention of th
Mt 3) mead when some error has been committed.
oe (0) a canse erent is the service remunerated.
0% th that is brought to set aside a voidable contract.
‘(uy Tney are inherent in a contr i
uo ontract unless set aside
p.&) ao by the parties. ;
“&’, Nvolves imina sys
Cyst a tetste eos ond baring, ih
Q.(\, They mu { agreement. .
~ having the pe he form provided by law, in addition
The term used « nel requisites of a contract.
en both parties to a contract are guilty:
ay
H. (3)
fay
buy
RY)
Ss. i? Aco .
7 w. Its cian 1s alae by mere consent. :
U.S The period o f beens § upon another contract.
porary sanity of an insane person.
Vi4) It exi
ts exists wh ‘ s
: €n serious or irresistible force is employed
Obtain consent,
Wir
x Te ctuaey of cause ina contract
ve) tial reaso in ¢
CH) It has all th n of a party in entering into 4 con
gesin en a ncracts to be in writing. °y

of the object is required for its perfection,
‘4] name under the law.
£ jg the liberality of the benefactor.

required to perform reciprocal
he substance of the thing which is the

t or the principal conditions which
in order tg vitiate
son of a party in entering into a
pecial name under the
hence, —
d both contracting
ce cannot be left to
jons to obtain
ves a person during the

f parental guthority, of
of the right to manage

of. such property
ood faith.
wf ys
ed a party into the contract,
gal) the particular rea
to third persons
1. GY
consent of one of the parties to a contract.
~ its accomplishment.
MM\\’ A contract where the parties give equivalent values,
acceptance upon the thing and the cause which are 40
Parties and that its validity or complian
z Consent,
QQ)
Suardianship, of marital authority,
tracting parties and must be complied

fo ust refer to t
pra) tm t of the contrac
move
consent.
contract. . . .
at) The remedy allowed by law to the contracting parties and
ny to repair the damages caused them by a
contract. ; S
It is defective by reason of the incapacity or vitiated
ula Elements without which a contract would not exist.
KK. f2\The terms of the contract have been fulfilled resulting in
Ls) A contract that does not have any s
_ law.
wD there is real fulfillment.
(Gy The manifestation of the meeting of the offer and the.
constitute the contract
00,4; ad Tact. .
~The principle that a contract must bin
PP. 4 . will of one of them. :
“ The use of insidious words or machinat
A é
con ee penalty which depri
of his sentence of the rights ©
hi L
by gr oPerty and of the right to dispos¢
a“
pa rson takes improper

Te qt is present when 4 pe roper ad
RREY his wer over the will of another depriving ¢ , ty
reasonable freedom of choice. ve
s.’4, The parties hide their real agreement to which ts
‘ pound as a rule. ay
TT. By The principle that contracts take effect only be
Vang
he lat 4
— contracting parties, their assigns and heirs. tween ty

uus3}) The adoption or affirmation of a contract which iS defen
because of a party’s vitiated consent or incapacj ty ety
vv?) A contract without any force and effect Ge
~~" beginning. ety
WW; They refer to the stipulations agreed upon 6
contracting parties such. as terms of payment: nd th
_ rate, etc. > Inteny
XX. £#The stage of a contract when there is a meeting of mi
between the parties on a definite subject matter and 1:
cause.
YY. None of the foregoing.
TEST Ill - TRUE OR FALSE. Write the word “TRUE” if the

statement is true, and the word FALSE’ if the statement is fale,
1.°“F The determination of the performance of a contract mayk
left to a third person, whose decision shall not be binding
until it has been made known to both contracting parties
A contract entered into in the name of another withotl
Se authority is unenforceable against the latter.
“1° Acceptance of a contract by letter or telegram does n0
bind the offerer exce t fi : ; hit

knowledge. Pt from the time it came to
4. Th When the acce

the contract is
Place wh
5, ThE Th aoe
2. TRVE
ptance of a contract is by letter or telegra®
Presumed to have been entered into int
€ offer was made.
e person makin
man a.
6. Fe An offer oe scePtance, all of which must be complied with
‘i acceptance ie noah an agent is accepted from the ir
7.7! When the offeree remicated to the principal by the a
8 the offer may fix the time, place, ast}
advertisements of things for sale dre definite

ot pusiness es it appears otherwise.
‘ we entered into during a lucid interval are valid.
“ mistake in the computation in a contract will
ontract voidable. ;
.. no mistake in a contract if the party alleging it
doubt, contingency or risk affecting the contract.
ror as to the legal effect of an agreement even if
12.7 al purpose of the parties is frustrated does not
the re consent since ignorance of the law excuses no one
vite compliance therewith.
‘18 a eat to enforce one’s claim through competent
gr "A vomie although the claim is just or legal, is
intimidation and vitiates consent.
aueViolence Or intimidation employed by a third person upon
7 a contracting party does not vitiate consent..
150: The contract a nor eek voidable if both parties
loyed fraud to 0 n co 7
16.7! srailiire to disclose facts, when there is a duty to reveal
them, as when the parties are bound by confidential
relations, does not constitute fraud. '
17.8? The usual exaggerations in trade, when the other party
had an opportunity to know the facts, are not in
themselves fraudulent.
181A mere expression of an opinion does not signify fraud if
not made by an expert although the party has relied on

___the knowledge of the said person expressing the op.nio”. |
19." Misrepresentation by a third person does not vitiate
consent, unless such misrepresentation |
te Substantial mistake and the same is mutual. eee
‘tIncidental fraud does not render a contract voidable
timag obliges the person employing it to pay damages..
ree relatively simulated contract is void:
AS a Tule, future inheritance may not

34,,- oNtract, :
Phe fact that the quantity of the object of a contract 1s ne

determinate does not affect the validity of @ ee
hevded that it is possible to determine the same, plea
ty mh, need of a new contract between the parties.
‘h. legality of the motive of a party to a co

ntract void.
be the object of
the co
has created.
ntract renders
“YU
322 my
cause is not stated in the Cont
557.) Although the cause os f Tact, 5.
i aon that it exists and is lawful, unlegs the aut
dey,
ves the contrary. , 8
proves th ce reguired te be in a certaj
tif a contract ts required. te ertain forn
26.7 perfection, that form ts indispensable and jf it int

followed, the contract is vow : ; t
wen $y a g y ac ‘ .
970 In onder that reformation a . contract may be wal
by a party, there should be’a meeting of minds ott
3 Or,
parties to the contrac t 7
IS) Reformation is not available if the contract is void,
Mei Wher ene party has brought an action to enfo

instrument, he cannot subsequently
reformation,
SOF Uf the terms of a contract are clear and leave

upon the intention of the contracting parties
meaning of the stipulation shall control,
SOs The interpretation of obscure words ar stipulations tha

oeontract shall not faver a party who caused the obscurity,
32507 The action for rescission is subsidiary; therefore, it canny

be instituted by a party if there are other legal means
obtain reparation for the damages he suffered.
Rescission of a contract shall be only to the exter
necessary to cover the damages caused.
S408" Rescission cannot be carried out if the one seeking

rescission cannot return whatever he may be obliged?
restore. .
35.7"\"Rescission cannot take place when the object of th
Contract is legally in the possession of third persons wh!

oe acted in bad faith. ‘
36-7F Alienations by gratuitous title are presumed fraudulent!
the donor did not reserve sufficient property to Pe ‘

37 eugene contracted before the donation, a
. “ ra. 10” {oF rescission must be commenced within th
ars,
38,7
Le i
EA voidable contract ig binding until it is annulled "
OU: Proper action in court,
‘ welt & party ratifies ay
eve _, Subsequently ask for it
YE Ratification requir
-. party who h
41. Mr Ratific
the m
TRE
ask for 4
NO doy
» The lites
S35
mt
r Lg
vidable contract, he ¢a"
8 annulment,
ay nee), ‘he conformity of the contr

nti ee NO right to by
ation Cleanse g the
Oment the ratifi
ent
. $
‘contract from all its defect
Sation was marle,
acting
ing the action for annulm from)
{a voidable contract is available only to those

anuiment bliged principally or subsidiarily; hence, it
sot ° ailed of by third persons.
are fect of the contract consists in the incapacity
me - contracting parties, the incapacitated person
ae make restitution only to the extent that he
js obliged benefited by the thing or the price received by
n bene
nas bee
him. tract. where both parties are incapable of giving
A con roldable.
consent is en ate required to be in writing under the
Contracts Prnuds may be enforced if benefits have been
~ y = v
statute r them,
oe ef contracts cannot be assailed by third
persons. t may be ratified, j

mw ee to eet up the defense of iNegality of a contract
4g. The 1 .
tape i atence
cn te ee defense for the declaration of the inexisten
4970. The ac
or nullity of a contract does not apgarereR offense and

s0,7E1f an illegal contract oe anal fl criminally prosecuted
both parties are guilty, : = ;
but they may keep the object of the ae es wiitveerved,
SL1A party may recover, if public reeeti an illegal purpose,
money or property delivered by him lor tract before the
provided that he repudiates a. my
urpose has been accomplished. ut is merely
S2}ive When the agreement is not illegal per ne for the
prohibited, and the prohibition by i ublic: policy is
protection of the plaintiff, he neue ieqveved.
enhanced, recover what he has er illegal terms can be
S3.1HZIn case of a divisible contract, if tter may be enforced.
ue SePAtated from the legal ones, the latter MUN" abte to
4.18 The defense of illegality of contre rectly affected.
sg, , third persons whose interests are no {a previous illegal
“LE A contract which is the direct rae |
fy gontract is also void and inexistent. ian
“Str party who employed violence, Kstakee 12
infl ho caused ms :
uence, or fraud, or wh¢ such ground. bie
87, , ection to annul the contract on any ugh a party gave
Tr A Contract is rendered voidable. a ee eti-grou
©onsent because of.a reasonable an
4a
45."
46,"
, undue
pring an
nded fear of
324 CONTR,
Ch
an imminent and grave evil upon the Prope

descendant. . TY, of hi
58.1) The donation by a person of his organ which ws
upon his death is valid. vil] ta
59.%a¢ Reformation is a remedy availed of to express
intent of the parties to a contract whether oral or
60.1t:f Rescission cannot be availed of in the case of
and testament. ‘
the
Written,
8 last Wil
Ss
contract
gnsWER
4 MULTIPL
sest | 36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49,
50.
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56.
57.
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59,
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131.¢
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30. TRUE
31. TRUE
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33, TRUE
34, TRUE
35. FALSE
36. TRUE
37. FALSE
38. TRUE
39. FALSE
40. FALSE
41. FALSE
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43. TRUE
44. FALSE
45. TRUE
327
46. TRUE
47. FALSE
48, FALSE
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50. FALSE
51. TRUE
52. TRUE
53. TRUE
54. TRUE
55. TRUE
56. FALSE
57, TRUE
58. TRUE
59. FALSE
60. TRUE

CONTRACTS | 193

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CONTRACTS | 193

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CONTRACTS | 193

A contract is a meeting of minds between two persons

something or to render some service. (Art. 1305),

1. Essential elements - Those without which there will be no

2, (Natural elements’ — Those found in certain contracts

Accidental elements;— Those that refer to particular

a. Consensual: - Those that are perfected by mere

consent (such as sale and lease).

‘Real Those that are perfected by the delivery of

(Formal or solemn:- Those which must be in the

form provided by law for their perfection (such as

: by the donee, must be in g Public

Orierous* - Those where there is an exchange ‘

<Gratutitous or lucrative - Those where one panty

receives no equivalent consideration (such ag

Remuneratory - Those where the cause is the

According to importance or dependence of one upon

(Principal One that can stand by itself (such as

which is dependent upon a principal contract such

«Preparatory - One which serves as a means.)

Nominate ~ Those which have a name under

a (such as sale, loan and barter).

3) Facio ut des (I do that you may give)

wphis may actually be barter, hence, a nominate

Rules that govern innominate contracts

2) The provisions of Obligations and

nominate contracts; and

5. According to risk or fulfillment

_ 48 sale and barter).

(Aleatory’— Those whose fulfillment depends upon

According to the parties obligated

Unilateral'— Those where only one_of the parties is

Bilateral (or synalagmatic)»- Those where both

Contracts involving things (such as sale or barter).

‘vices \(such as agency or :

Executed One which has been performed,

a. tory = One that has not yet been perform ed.

_ Auto-contract - Where only one person represent,

b. -Contract of adhesion: - Where only one party

It is so-called because its terms ar

protect. (ACI Philippines, Inc. vs. Coquia, G.R. No

Nception - This involves preliminay

bargaining, discussion of terms a

“Nepotiati nO arrival yet of a definite. agree™”,

conbeistn begins from the time the prospect"!

and ends eins manifest their interest in the cont

“Or perform the terms agreed ¥

the contract, culminating in the extinguishment

reof. (See Navarra vs. Planters Development Bank, G.R.

Liberty. of con tract or freedom to stipulate

The contracting parties may establish. such

The freedom to enter into a contract is, one of the

a. The stipulation that the creditor automatically

. commissorium, is void for being contrary to law.

A stipulation in a mortgage contract providing for a

An agreement by the debtor to work without Pay

agreement to hide & crime, to suppre

The contract must bind both contracting parties.

them. (Art. 1308)

The binding effect of a contract on both parties jg

fulfillment dependent solely upon. the uncontrolled will of

event of change 0 : ‘bed by law

“Was agreed upon.