Article 1305.

 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. (1254a)

Article 1319 Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute. A qualified acceptance constitutes a counter-offer.

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 in the place where
the offer was made. (1262a)

Requisites of a Contract:

a.) Consent – ito yung pahintulot ng isang party into entering into a contract
b.) Object – ito po yung kailangan ibigay or gawin sa isang contract
c.) Cause – ito yung reason ng isang party kung bakit nya po pinasok ang isang contract.

What is a consent?

- Ito yung pahintulot ng isang party into entering into a contract.

What is cause?

- Ito yung reason bakit nageenter into a contract ang isang party

Requisites of cause

1. It must exist at the time the contract is entered into.

2. It must be lawful.
3. It must be true or real.

Onerous contract – there is an exchange. Both have an obligation or reciprocally obligated.

Remuneratory contract – are those contracts for the past reward as service being rendered.

Gratuitous contracts – pure beneficiaries. It is opposite of onerous / kawang gawa / no

compensation at all (ex: donation)

How is contract being perfected?

- When there is a birth of a contract and when the parties are about to sign the contract
- By mere consent or by meeting of minds between contracting party
- However, in real right, especially in pledge, deposit, comodatum, there is a need for the
delivery of the thing before there can be a perfection of the contract.

Who is offeror and offeree? What does offeror and offeree do?

- Offeror is the one who makes an offer. Offeree is the one who accepts the offer.

What is prestation?
 - It is the object or the subject matter

What is object?

- Ito yung subject matter ng isang kontrata

2 kinds of obligation

- Real and Personal Obligation

What are the stages in a life of a contract?

- Preparation – there is negotiation, there is a meeting of minds

- Perfection – birth of a contract (terms and conditions, subject matter that involved amount,
witnesses,and everything)
- when the parties are about to sign the contract
- Consumation – termination of a contract or kapag nafulfill na yung contract
- pagperform ng obligation para mag-end na yung contract

*When there is negotiation, it means that there is offered being made by the offerer and there is
acceptance by the offeree. (Ex. Buyer and seller)

Vices of a contract

a.) Error or mistake

b.) Violence or force
c.) Intimidation or threat or duress
d.) Undue influence
e.) Fraud or deceit

What is the very reason why the contracting parties are allowed to reform the instrument?

- Its purpose is to correct and to express the true intention of the agreement

Who vitiates consent?

- Mistake of fact

What is intimidation?

- This is more of threat of the life. This can affect the mental well-being of a person.

Real right – it affects the whole nation

Personal right – it affects one party only

Rescissible – it is valid at first but can be declared void

Ratification – is a universal act

Why is mistake of fact vitiates consent?

- Kasi ginagawang vice ng consent (vice means this is the means) para makuha ng isang tao
yung pagpayag ng isang kabilang partido na pumasok sa isang kontrata. Hindi pwedeng
mistake of fact kasi ignorance of the law excuses no one from compliance there with.

Forms of contract. (Oral or written)

 (1) The contract may be (a) parol or oral, or (b) in writing, or (c) partly oral and partly in
writing. If in writing, it may be in a public or a private instrument.

(2) A contract need not be contained in a single writing. It may be collected from different
writings which do not conflict with each other and which when connected, show the parties, subject
matter, terms and consideration, as in contracts entered into by correspondence.

(3) A contract may be encompassed in several instruments even though every instrument is
not signed by the parties since it is sufficient if the unsigned instruments are clearly identified or
referred to and made part of the signed instrument or instruments.

(4) Similarly, a written agreement of which there are two copies, one signed by each of the
parties is binding on both to the same extent as though there had been only one copy of the
agreement and both had signed.

Characteristics of contracts.

They are:

(1) Freedom or autonomy of contracts. — The 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, and public policy (Art. 1306.);

(2) Obligatoriness of contracts. — Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith (Arts. 1159, 1315.);

(3) Mutuality of contracts. — Contracts must bind both and not one of the contracting
parties; their validity or compliance cannot be left to the will of one of them (Art. 1308.);

(4) Consensuality of contracts. — Contracts are perfected, as a general rule, by mere

consent,4 and from that moment the parties are bound not only by the fulfillment of what has been
expressly stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law (Art. 1315.); and

(5) Relativity of contracts. — Contracts take effect only between the parties, their assigns
and heirs, except in cases where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation, or by provision of law.

Badges of Fraud

1) The fact that the consideration of the conveyance is fictitious or inadequate;

2) A transfer made by a debtor after suits has been begun and while it is pending against him;

3) A sale upon credit by an insolvent debtor.

4) The transfer of all of his property by a debtor, especially when he is insolvent or greatly
embarrassed financially;

5) The fact that the transfer is made between father and son, when there are present some or any of
the above circumstances;

6) The failure of the vendee to take exclusive possession of all property;

7) It was known to the vendee that the vendor had no properties other than that sold to him.

When is a contract become obligatory force?

 -
-

Meaning of mutuality

- Dapat both parties agreed to the contract with conformity

Joint and Solidary Obligation

- Joint - Proportionate portion of the debt

- Solidary – each one is liable for the whole obligation
-

Pure and Conditional Obligation

-
-
-

Obligations with a Period

-
-
-

Alternative Obligations

-
-
-

Divisible and Indivisible Obligations

- Divisible – one is bound for partial performance

- Indivisible – one that is not capable of partial performance
-

Obligations with a Penal Cause

-
-
-
 CHAPTER 6
Rescissible Contracts

Article 1383. The action for rescission is subsidiary; it cannot be instituted except when the party
suffering damage has no other legal means to obtain reparation for the same. (1294)

Article 1388. Whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify
the latter for damages suffered by them on account of the alienation, whenever, due to any cause, it
should be impossible for him to return them.

If there are two or more alienations, the first acquirer shall be liable first, and so on successively.
(1298a)

CHAPTER 7
Voidable Contracts

Article 1397. The action for the annulment of contracts may be instituted by all who are thereby
obliged principally or subsidiarily. However, persons who are capable cannot allege the incapacity of
those with whom they contracted; nor can those who exerted intimidation, violence, or undue
influence, or employed fraud, or caused mistake base their action upon these flaws of the contract.
(1302a)

Article 1398. An obligation having been annulled, the contracting parties shall restore to each other
the things which have been the subject matter of the contract, with their fruits, and the price with its
interest, except in cases provided by law.

CHAPTER 8
Unenforceable Contracts (n)

Article 1406. When a contract is enforceable under the Statute of Frauds, and a public document is
necessary for its registration in the Registry of Deeds, the parties may avail themselves of the right
under Article 1357.

Article 1407. In a contract where both parties are incapable of giving consent, express or implied
ratification by the parent, or guardian, as the case may be, of one of the contracting parties shall give
the contract the same effect as if only one of them were incapacitated.

If ratification is made by the parents or guardians, as the case may be, of both contracting parties,
the contract shall be validated from the inception.

CHAPTER 9
Void and Inexistent Contracts

Article 1414. When money is paid or property delivered for an illegal purpose, the contract may be
repudiated by one of the parties before the purpose has been accomplished, or before any damage
has been caused to a third person. In such case, the courts may, if the public interest will thus be
subserved, allow the party repudiating the contract to recover the money or property.

Article 1415. Where one of the parties to an illegal contract is incapable of giving consent, the
courts may, if the interest of justice so demands allow recovery of money or property delivered by
the incapacitated person.
Article 1383

- Speaks about the action for recission is subsidiary (meaning extra / karagdagan). Meaning to
say, subsidiary is not the principal action that should be taken. Hindi dapat ang action for
recission lang ang unang gagawin ng contracting parties to say, to request for the recission
of the contract.
- Rescission of the contract means there is a valid contract, all the elements of the contract
has been complied with. But because of the application of the law, there is a remedy where
in rescission can be avail of.
- Rescission means that the said contract can be terminated even if it is valid by reason and
grounds in accordance with the law.
- Sinasabi ng Article 1383 na hindi ito dapat ang unang gawin ng contracting parties if they
wanted to settle what is in the contract. Dapat yung contracting parties bago nila icancel
yung contract dapat meron muna silang gagawin na ibang remedy unless there is no more
way.

Article 1388 - it talks about the effect of bad faith

- Speaks about simply dun mga tao na gumawa ng kalokohan para makuha yung object ng
contract, para lokohin ang creditor. beccause may intention at ginawang bad faith then liable
itong gumawa ng hindi maganda dun sa damages na pwedeng mangyari dun sa pagkuha
- Alienation is something getting the object. It is something to make hold or make into a
possession of an object of a contract.
- Indemnify the latter - means to pay or to pay the amount equivalent if impossible for it to
return
- Magbabayad siya ng damages even if it is impossible for him to return even if there is
fortuitous event because sinabi dyan is due to any cause magiging liable parin siya.

2nd paragraph

- It speaks about na kung sino yung unang gumawa ng hindi maganda, yun ang unang liable. Then
sunod-sunod na non.

- Ex: In fraud of his creditors, Pogi sold his Property to Beauty, then Beauty sold to Ganda then the
defrauded creditors file for rescission of the contract, and the contract was rescinded.

- Beauty will be liable, then si Ganda, and so on.

Article 1397

The action for the annulment of contracts may be instituted by all who are thereby obliged
principally or subsidiarily. However, persons who are capable cannot allege the incapacity of
those with whom they contracted; nor can those who exerted intimidation, violence, or undue
influence, or employed fraud, or caused mistake base their action upon these flaws of the
contract. (1302a)

- It provides an answer sino nga ba ang pwede magfile ng annulment. (Only the injured party)
- Ano nga ba ang annulment? Ito yung pagpapawalang bisa sa isang contract dahil nakagawa
ang kabilang partido ng fraud,violence,mistake, intimidation and undue influence.
 - Sa article 1397 it gives an answer sino ang mga pwedeng mag file ng annulment, ito is yung
mga injured party lamang. Hindi pwedeng kasama yung guilty party or yung gumawa ng
kasalanan.
- Sino ang guilty person? It is the one who executed intimidation, violence, undue influence o
kung sino mang gumawa ng fraud or mistake o kaya nagkaroon ng vitiated consent. Kung
sino man yung guilty sa ganon hindi sila pwedeng mag file or mag ask for annulment.
- A third person or stranger has no legal capacity to challenge the validity of a contract.

HALIMBAWA: SI KATE AY IBINENTA NIYA YUNG SASAKYAN NIYA KAY JUSTINE. TAPOS
BINENTA NIYA NANAMAN ITO KAY JEROME

SI JEROME NON PWEDE SIYANG MAG FILE NG ANNULMENT KASI MERONG FRAUD NA
NAGANAP

Article 1398

An obligation having been annulled, the contracting parties shall restore to each other the
things which have been the subject matter of the contract, with their fruits, and the price with
its interest, except in cases provided by law.

- What is the meaning of annulled? Kapag napawalang bisa na ang isang contract
- Sa article 1398 naman, it gives an answer what are the effects of annulment or anong mga
dapat gawin kapag napawalang bisa na.
- First if yung contract ay hindi panaman nacocomply it simply means na yung mga parties are
excuse in performing their obligation. Wala silang gagawin.
- However, if meron ng compliance then magkakaroon tayo ng recession. Magkakaroon ng
mutual restitution and ano yung ibabalik or irerestore.
- First yung thing with fruits. Second, price with interest and incase naman sa personal
obligation which in obligation is to render service. Ang magiging basis is yung value ng
service para sa damages.

Halimbawa : Bumili ako ng cellphone sa powermac kaso may sira sya sa screen. Eh syempre mag
rereklamo ako sa powermac mag pa file ako ng petition. Then, ang maaring gawin non ng store ay
ibalik niya yung pera ko or palitan niya ng bago yung phone.

Halimbawa naman sa personal obligation naman ay nag pa manicure si Alyssa kay Ikea kaso
nasugatan ni Ikea si Alyssa. Then si Ikea non yung liable for the damage kasi siya yung may
kasalanan. Pwedeng ibabalik niya yung pera ni Alyssa at bibigyan pa ng free treatment.

Article 1406

When a contract is enforceable under the Statute of Frauds, and a public document is
necessary for its registration in the Registry of Deeds, the parties may avail themselves of
the right under Article 1357.

- Kapag daw yung contract is enforceable under the statute of Fraud at kailangan ng public
document para maregister siya sa Registry of Deeds, then pwedeng icompel ng one party
yung ibang party to execute the needed instrument.
- Sinabi na din ito sa 1357, ito yung right of one party to compel the other to execute the
needed instrument. And yung dalawang kailangan lang naman don is, it must be VALID and
 ENFORCEABLE ang contracts. So yung public document is necessary lang for convenience
kaya yung remedy ng party is to compel the other party to execute the necessary instrument.

Example: Pogi and Ganda entered into a Contract of Deed of Sale. Pogi sold the property to Ganda
in private instrument, then Registration requires public instrument. Then Ganda may compell Pogi.

Article 1407

In a contract where both parties are incapable of giving consent, express or implied
ratification by the parent, or guardian, as the case may be, of one of the contracting parties
shall give the contract the same effect as if only one of them were incapacitated.

If ratification is made by the parents or guardians, as the case may be, of both contracting
parties, the contract shall be validated from the inception.

- Ito yung contract kung saan both parties is incapable of giving consent. Kapag kasi isa lang
yung incapacitated to give consent, yung status niya is voidable. Pero kapag yung dalawa
mismo yung incapacitated to give consent. yung status ng contract is unenforceable. So if
unenforceable yung contract, and yung guardian is niratify yung contract na inenter into ng
minor or nung incapacitated person then, magiging voidable ang Status nya meaning valid
until annulled.
- Tapos if both parents ang nagratify, then yung contract will be validated from the time of
inception

Example:

- Pogi and Ganda (both minor) entered into a contract, it is unenforceable.

- If parent of Ganda is miratify, then it is voidable.

- If both parent, then it is validated. Magkakaroon ng retroactive effect.

Article 1414

When money is paid or property delivered for an illegal purpose, the contract may be
repudiated by one of the parties before the purpose has been accomplished, or before any
damage has been caused to a third person. In such case, the courts may, if the public
interest will thus be subserved, allow the party repudiating the contract to recover the money
or property.

- This is actually an exemption dun sa rule under pari delicto. Kasi sa pari delicto walang
recovery dapat pero under Article 1414 it provides a case where recovery can be made even
if the parties are in pari delicto.

However, it can only be recovered only if: (Requisites)

1. The contract is for an illegal purpose;

2. The contract is repudiated before the purpose has been accomplished or before any
damage has been caused to a third person; and
3. The court considers that public interest will be subserved by allowing recovery.
Example: Inutusan ni Beauty si Pogi na patayin si Ganda kapalit ng Php 10,000. Beauty back out sa
plano.

- Pwedeng marecover ni beauty yung binigay niya kapag hindi siya pumayag na ituloy yung illegal
contract.

Article 1415

Where one of the parties to an illegal contract is incapable of giving consent, the courts may,
if the interest of justice so demands allow recovery of money or property delivered by the
incapacitated person.

- Ito ay another exemption dun sa rule under pari delicto. Wherein, yung batas is inaalow ang
recovery.
- sinasabi ng Article 1415 na if one party is incapacitated, pwede ring makarecover.

Example:

Si Beauty is 10yrs old and inutusan nya si Pogi na patayin si Ganda.

- If napatay ni Pogi. hindi na pwedeng irecover.

- If hindi napatay ni pogi, pwede niya pang irecover.