Pointers For Finals

“The Law on Obligations and Contracts” (2014)
By: Hector S. De Leon & Hector M. De Leon Jr.
Pointers for Review

(CONTRACTS)
DEFINITION
Art. 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.
This definition emphasizes the meeting of minds between two

contracting parties which takes place when one party’s offer is
accepted by the other.
CONTRACT vs. OBLIGATION AND AGREEMENT
Contract is one of the sources of the obligations while Obligation, on

the other hand, is the legal tie or relation itself that exists after a
contract has been entered into. Hence, contract will not exist if there is
no obligation to begin with but an obligation may exist even without a
contract.
In addition, contracts are agreements enforceable through legal

proceedings while those agreements which cannot be enforced by
action in the courts of justice are mere moral or social agreements. An
agreement is broader than a contract because the former may not
have all the elements of a contract.
Thus, all contracts are agreements but not all agreements are
contracts.
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ELEMENTS OF A CONTRACT
1. Essential Elements - those, without which, there can be no

contract. (ex: consent, object, cause or consideration)
2. Natural Elements - exist as part of the contract even if

the parties do not provide for them, because the law, as
suppletory to the contract, creates them. (ex: warranty against
eviction and against hidden defects in the contract of sale)
3. Accidental Elements - agreed upon by the parties and

which cannot exist without being stipulated. (ex: stipulation to
pay interest)
FREEDOM & LIMITATIONS ON CONTRACTUAL STIPULATIONS
Art. 1306 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.
The right to enter into contract is one of the liberties guaranteed to the
individual by the Constitution (Art. III, Sec. 10 thereof) but this refers
only to legally valid contracts.
Limitations on Contractual Stipulations: (LMGPP)
1. Should not be contrary to law;

2. Should not be contrary to morals;
3. Should not be contrary to good customs;
4. Should not be contrary to public order;
5. Should not be contrary to public policy;
◎ The contracts of the parties must conform with the law in

force at the time the contract was executed.
◎ A penalty clause providing for the payment of 30% per

annum in case of delay after the maturity of a loan was held
immoral inequitable, shocking to the human conscience, and void.
CHARACTERISTICS (PRINCIPLES) OF A CONTRACT
1. Obligatory Force – the contract is regarded as the law between

the parties and should be complied with in good faith.
2. Mutuality - validity and performance of the contractual

stipulations cannot be left to the will of only one of the parties. By the
mutuality of contracts, both parties are bound to comply with the
provisions of the contract. The principle is based on the essential
equality of the parties. It is repugnant to bind one party, and yet leave
the other free.
◎ The rule that the obligation of contracts should not be

impaired is not absolute. Thus, the free exercise of religious beliefs
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is superior to contractual rights. An example is the belief of a

religious sect that its members should not join a labor organization
or participate in a collective bargaining agreement.
3. Relativity – As a general rule, contracts are binding only

between the PARTIES, their ASSIGNS, and HEIRS, except:
a. Intransmissible Contracts:
 Purely personal contracts (e.g. death of a partner generally

dissolves the contract of partnership);
 Very nature of obligation that requires special personal
qualifications of the obligor;
 Payment of money debts not transmitted to the heirs but
to the estate or the property left by the decedent.
b. Contract in the name of another
As a general rule, person is not bound by the contract of

another of which he has no knowledge or to which he has not
given consent.
This contract is unenforceable unless it is ratified.
CLASSIFICATION OF CONTRACTS
1. According to subject matter:
a. Things (like Sale)

b. Services (like agency, lease of services, a contract of
common carriage
c. Rights or credits (provided these are transmissible, like a
contract of usufruct, or assignment of credits)
2. According to name
a. Nominate Contracts - that which has a specific name or

designation in law.
 If a person pays rents in consideration of the use of the

property, then it is contract of lease.
 If a person borrows purely sum of money to the creditor, it is
regarded as contract of loan.
 If a person buys a particular things to the buyer for a definite
price, it is a contract of sale.
b. Innominate Contracts - that which has no specific name or

designation in law.
 Do ut facias (I give that you may do)

 Facto ut des (I do that you may give)
 Facto ut facias (I do that you may do)
◎ If an attorney renders legal services for a close friend, the

former can still charge attorney’s fees even in the absence of any
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agreement thereon. This is because of the innominate contract of

facio ut des (I do that you may give) which, in turn, is based on
the principle that one cannot unjustly enrich himself at another’s
expense.
3. According to perfection
a. Consensual Contract - that which is perfected by mere

consent (e.g. sale, lease, agency). They are perfected from the
moment there is agreement (consent) on the subject matter, and
the cause or consideration.
Art.1315 Contracts are perfected by mere consent, and

from that moment, the parties are bound not only to
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.
b. Real Contract - that which is perfected by the delivery of

the thing subject matter of the contract (e.g. depositum, pledge,
commodatum)
Art.1316 Real contracts, such as deposit, pledge and

commodatum, are not perfected until the delivery of the
object of the obligation.
c. Solemn Contract - that which requires compliance with

certain formalities prescribed by law, such prescribed form
being thereby an essential element thereof (e.g. donation of real
property which must be in a public instrument, otherwise
unenforceable) (see Art. 1356)
STAGES OF CONTRACTS
1. Preparation or Negotiation - This includes all the steps taken

by the parties leading to the perfection of the contract. (i.e., mere
inquiry as to the price of the property or manner of payment, without
any close deal between the parties)
2. Perfection or Birth - This is when the parties have come to a

definite agreement or meeting of the minds regarding the subject
matter and cause of the contract. (i.e., when the both parties agree
for the definite price of the particular thing or when the offer by one
party is accepted, expressly or impliedly by the other party)
The parties are bound to the fulfillment of what has been EXPRESSLY
STIPULATED (Art. 1315, Civil Code), and compliance thereof must be
in GOOD FAITH) (Art. 1159, Civil Code)
3. Consummation or Termination - This is when the parties

have performed their respective obligations and the contract may be
said to have been fully accomplished or executed, resulting in the
extinguishment or termination thereof. (i.e., delivery of the thing in
favor of the buyer; transfer of ownership to the buyer)
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THIRD PERSON IN A CONTRACT
As a general rule, a third person has no rights and obligations under a

contract since he has taken no part in a contract and is, therefore, a
stranger to it.
Exceptions - There are cases, however, when third persons may be

affected by a contract. Among such cases are the following:
(a) In contracts containing a stipulation in favor of a third person

(stipulation pour autrui) (Art.1311, par.2);
(b) In contracts creating real rights (Art.1312);
(c) In contracts entered into to defraud creditors (Art.1313); and
(d) In contracts which have been violated at the inducement of a

third person (Art.1314).
ESSENTIAL REQUISITES OF CONTRACTS
Art. 1318 There is no contract unless the following

requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the
contract;
(3) Cause of the obligation which is established.
A. CONSENT
Art. 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.
1. Consent - is the conformity or occurrence of wills (offer and

acceptance) and with respect to contracts, it is the agreement of the
will of one contracting party with that of another or others, upon the
object and terms of the contract.
It presupposes legal capacity of the parties. (must be of legal age and

not insane)
(a) If there is absolutely no consent, there is no contract. The

agreement may be considered inexistent or non-existent or VOID.
(The same rule applies in the case of absolutely simulated contract,
one where the parties never intended to be bound by the stipulations
thereof.)
(b) If there is consent, but the same is defective or there is vice of

consent (vitiated consent) such as error, fraud, or undue influence,
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etc., the contract is not void; it is merely VOIDABLE, or valid until

annulled.
Offer - is a proposal made by one party to another to enter into a

contract.
Acceptance - is the manifestation by the offeree of his assent to the

terms of the offer. Without acceptance, there can be no meeting of the
minds between the parties. (Art.1305)
Example: X offered to sell Z a particular house for P

3,000,000.00. Before Z could consent, X withdrew the offer.
Was X allowed to do so?
ANS: Yes, because there was NO meeting of the minds yet,

hence no contract had been perfected.
The Civil Code does not define who has/have capacity. It defines on
the contrary who have no capacity, by which it can be inferred that
capacity is the general rule; the burden of proof is on the party who
asserts incapacity.
WHO CANNOT GIVE CONSENT:
Art.1327 The following cannot give consent to a contract:

1. Unemancipated minors;
2. Insane or demented persons;
3. Deaf-mutes who do not know how to write.
When offer and/or acceptance is made:
1. During a lucid interval: VALID (sane)

2. In a state of drunkenness: VOIDABLE (there is consent but
defective because of error or mistake)
3. During a hypnotic spell: VOIDABLE (there is consent but
defective because of undue influence)
The consent must be INTELLIGENT, FREE, SPONTANEOUS AND

REAL
Art.1330 A contract where consent is given through mistake,

violence, intimidation, undue influence, or fraud is VOIDABLE.
Characteristic of consent:
1. It is intelligent - there is capacity to act (Art.1327-1329);
2. It is free and voluntary - there is no vitiation of consent by reason

of violence or intimidation (Art.1330); and
3. It is conscious or spontaneous - there is no vitiation of consent by

reason of mistake, undue influence, or fraud.
Effect of Defective Consent: Contract is VIODABLE (Art.1330)
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Example: If a hospitalized leper or a very old man has not

been placed under guardianship, may he still enter into a
binding contract?
ANS: Yes, because he would still be presumed capacitated to
enter into a contract (although classified as an incompetent).
Of course, if it can be shown that intelligent consent was
absent, the contract can be considered VOIDABLE.
VICES OF CONSENT
1. Error or Mistake (Art.1331)
Mistake as contemplated here is a mistake of fact which may

arise from ignorance or lack of knowledge of a certain. It must
be substantial mistake of fact, that is, the party would not have
given his consent had he known of the mistake. Hence, not
every mistake will vitiate consent and make a contract
voidable.
Error of law is mistake as to the existence of a legal provision

or as to its interpretation or application.
General Rule: Ignorance of the law excuses no one from

compliance therewith. (Art.3)
Exception: Mutual error of law under Art.1334 which states

that Mutual error as to the legal effect of an agreement
when the real purpose of the parties is frustrated, may
vitiate consent.
2. Violence/Force and Intimidation/Threat
Art.1335 There is VIOLENCE when in order to wrest

consent, serious or irresistible force is employed.
There is INTIMIDATION when one of the contracting

parties is compelled by a reasonable and well-grounded
fear of an imminent and grace evil upon his person or
property, or upon the person or property of his spouse,
descendants or ascendants, to give his consent.
To determine the degree of intimidation, the age, sex,

and condition of the person shall be borne in mind.
A threat to enforce one’s claim through competent

authority, if the claim is just or legal, does NOT vitiate
consent.
(a) Violence or force requires the employment of physical

force. To make consent defective, the force employed must be
either serious or irresistible. In either case, consent is not free.
Such force must be the determining cause in giving consent to
the contract.
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(b) Intimidation or threat need not resort to physical

force since intimidation is internal while violence is external. To
vitiate consent, the following requisites must be present:
i. It must produce a reasonable* and well-grounded fear of an

evil;
ii. The evil must be imminent and grave;
iii. The evil must be upon his person* or property, or that of his
spouse, descendants, or ascendants; and
iv. It is the reason why he enters into the contract.
* “Reasonable Fear”- fear that must be commensurate with

the threat.
* “Person” - not limited to life and physical integrity but also

includes liberty and honor
Art.1336 Violence or intimidation shall ANNUL the obligation,

although it may have been employed by a third person who did
not take part in the contract.
3. Undue Influence (Art.1337) 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.
The following circumstances shall be considered:
(a) Confidential, family, spiritual and other relations between the

parties;
(b) Mental weakness or ignorance; or
(c) Financial distress of the person alleged to have been unduly
influenced.
4. Fraud or Deceit (Art.1338) There is FRAUD when, through

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.
Kinds of Fraud
(a) Causal Fraud - The fraud committed by one party before or

at the time of the celebration of the contract to secure the
consent of the other. It may be committed through insidious
words or machinations* or by concealment.
”Insidious words or machinations” include any

misrepresentation in words or actions done with a
fraudulent purpose.
(b) Incidental Fraud - That fraud that does not have such a decisive
influence and by itself cannot cause the giving of consent, but only
refers to some particular or accident of the person employing it to pay
damages.
General Rule: Fraud by third person does not vitiate the contract.
Exceptions:
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i) If third person is in collusion with one of the parties, he is

considered an accomplice to the fraud and contract becomes
VOIDABLE.
ii) If third person is not in connivance with any of the parties but
leads them both into error (mutual error), the consent is vitiated,
contract is VOIDABLE.
SIMULATION OF CONTRACTS
Declaration of a fictitious will, deliberately made by agreement of the

parties in order to produce, for the purposes of deception the
appearance of a juridical act which does not exist or is different from
that which was really executed.
Kinds and Effects of Simulated Contracts
(a) Absolute - Takes place when the parties do not intend to be

bound at all. An absolutely simulated or fictitious contract is void.
(b) Relative - Takes place when the parties conceal their true
agreement. A relatively simulated contract is valid, provided:
i. Does not prejudice a third person; and

ii. Not intended for any purpose contrary to law, morals, good
customs, public order or public policy.
B. OBJECT OF CONTRACTS
The object of a contract is its subject matter. (Art.1318 [2])

In reality, the object of every contract is the obligation created. But
since a contract cannot exist without an obligation, it may be said that
the thing, service, or right which is the object of the obligation is also
the object of the contract.
Requisites of Things as Object of Contract
(1) The thing must be within the commerce of men, that is, it can
legally be the subject of commercial transaction (Art.1347); i.e.,
moon, sun, planet, public property
(2) It must not be impossible, legally or physically (Art.1348);
(3) It must be in existence or capable of coming into existence (see
Arts.1461,1493,1495); and
(4) It must be determinate or determinable without the need of a new
contract between the parties. (Art.1349, 1460, par.2)
Requisites of Services as Object of Contract
(1) The service must be within the commerce of men;

(2) It must not be impossible, physically or legally (Art.1348); and
(3) It must be determinate or capable of being made determinate.
(Art.1318[2], 1349)
What may not be the Object of Contracts
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(1) Contrary to law, morals, good customs, public policy or public

order;
(2) Indeterminable as to their kind;
(3) Outside the commerce of man;
(4) Intransmissible rights;
(5) Future inheritance, except when authorized by law
No contract may be entered into upon future inheritance except in

cases expressly authorized by law.
(i) The succession must not have been opened at the time of the
contract
(ii) Exception to “future things”
(6) Impossible things or services
C. CAUSE OF CONTRACTS
Cause is the essential or more proximate purpose which

contracting parties have in view at the time of entering into the
contract.
Requisites of Cause: Existing, True and Licit or legal
Defective Causes and their Effects
Absence of cause or if cause is unlawful: the contract is void or

non-existent.
Art.1352 Contracts without cause, or with unlawful cause,

produce no effect whatever. The cause is unlawful if it is
contrary to law, morals, good customs, public order or public
policy.
Statement of a false cause in the contract: VOID if there is no

other true and lawful cause.
Art.1353 The Statement of a false cause in contracts shall

render them VOID, if it should not be proved that they were
founded upon another cause which is true and unlawful.
Lesion or inadequacy of cause: VALID unless fraud, mistake or

undue influence is present.
Art.1355 Except in cases specified by law, lesion or inadequacy

of cause shall not invalidate a contract, UNLESS there has been
fraud, mistake or undue influence.
◎ The inadequacy of the price would not invalidate the sale

when both parties are in a position to form an independent
judgment concerning the transaction, and therefore shall not be a
sufficient ground for the cancellation of a contract.
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FORM OF CONTRACTS
Art.1356 Contracts shall be obligatory in whatever form they

may have been entered into, provided all the essential
requisites for their validity are present. However, when the law
requires that a contract in some form in order that it may be
valid or enforceable, or that a contract be proved in a certain
way, that requirement is absolute and indispensable. In such
cases, the right of the parties stated in the following article
cannot be exercised.
First sentence: Principle of Obligatory Force of Contracts

Second sentence: Solemn Contracts
Last sentence: Effect if the form prescribed by law is not
complied with, the contract is UNEFORCEABLE.
General Rule - Contracts are binding and, therefore, enforceable to

the contracting parties, whatever may be the form in which the
contract has been entered into, provided all the three essential
requisites for their validity are present.
Exceptions - The form, however, is required in the following cases:

(i) When the law requires that a contract be in some form to be
valid;
(ii) When the law requires that a contract be in some form to be
enforceable or proved in a certain way; or
(iii) When the law requires that a contract be in some form for the
convenience of the parties or for the purpose of affecting third
persons. (Art.1356)
FORM FOR VALIDITY OF CONTRACT
There are rare cases when the law requires that a contract be in
certain form for the validity of the contract.[NOTE: If the form is not
complied with, Art. 1457 of the Civil Code cannot be availed of.]
1. Donation of Movable (Art.748)

2. Donation of Immovable (Art.749)
3. Sale of piece of land through an agent (Art.1874)
4. Contract of antichresis; amount of principal and of the interest
(Art.2134)
5. Partnership: immovable property or real rights are contributed
(Art.1771)
6. Partnership: Inventory of immovable property contributed
(Art.1773)
7. Chattel mortgage (Art.2140)
Art.1358 The following must appear in public document:
(1) Acts and contracts which have for their object the creation,
transmission, modification or extinguishment or real rights
over immovable property; sales of real property or of an
interest therein are governed by Articles 1403, No. 2, and
1405;
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(2) The cession, repudiation or renunciation of hereditary

rights or of those of the conjugal partnership of gains;
(3) The power to administer property, or any other power
which has for its object an act appearing or which should
appear in a public document, or should prejudice a third
person;
(4) The cession of actions or rights proceeding from an act

appearing in a public document.
All other contracts where the amount involved exceeds five

hundred pesos must appear in writing, even a private one. But
sales of goods, chattels or things in action are governed by
Articles 1403, No. 2 and 1405.
Form for Convenience
The necessity for the public document in the contracts enumerated

here is only for convenience, not for validity or enforceability.
Problem: A loan was contracted orally. If the amount is P1000, may

the lender recover the sum lent?
ANS: Yes, because although the law says that contracts involving
more than P500 must appear in writing, even a private one, still this
requirement is only for convenience, not for validity.
Presumption of the Validity of a Public Instrument
A recital in a public instrument celebrated with all the legal formalities

under the safeguard of a notarial certificate is evidence against the
parties and a high degree of proof is necessary to overcome the legal
presumption that such recital is true.
REFORMATION OF INSTRUMENTS
Reformation is that remedy by means of which a written instrument is

amended or rectified so as to express or conform to the real
agreement or intention of the parties when by reason of mistake,
fraud, inequitable conduct, or accident, the instrument fails to express
such agreement or intention.
Purpose: In order that the intention of the contracting parties may be

expressed.
REQUISITES OF REFORMATION
(1) Meeting of minds of the parties;
(2) The written instrument does not express the true agreement or
intention of the parties;
(3) The failure to express the true intention is due to mistake, fraud,
inequitable conduct, or accident;
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(4) The facts upon which relief by way of reformation of the

instrument is sought are put in issue by the pleadings; and
(5) There is clear and convincing evidence of the mistake, fraud,

inequitable conduct, or accident.
CASES WHERE NO REFORMATION IS ALLOWED
(1) Oral contracts - there is nothing to reform at all.
(2) Art. 1366 There shall be no reformation in the following

cases:
a. Simple donations inter vivos wherein no condition is
imposed;
b. Wills;
c. When the real agreement is void.
 Donation inter vivos – Donation which takes effect during the

lifetime of the donor;
 Donation mortis causa – Donation which takes effect after the
death of the decedent.
INTERPRETATION OF CONTRACTS
Art.1370 If the terms of a contract are clear and leave no doubt

upon the intention of the contracting parties, the literal
meaning of its stipulations shall control.
If the words appear to be contrary to the evident intention of

the parties, the latter shall prevail over the former.
RULES FOR INTERPRETATION OF CONTRACTS
1. The language of the contract shall be interpreted in its literal

sense, provided the terms thereof are clear and unequivocal.
2. However, the manifest intention of the parties shall prevail in
case of conflict with the words and clauses of a written contract.
It is a cardinal rule in the interpretation of contracts that the intention

of the contracting parties should always prevail because their will has
the force of law between them. (Art.1159)
RULES IN CASE DOUBT IS IMPOSSIBLE TO SETTLE
(1) Gratuitous contract - If the doubts refer to incidental

circumstances of a gratuitous contract (Art.1350), such interpretation
should be made which would result in the least transmission of rights
and interests.
(2) Onerous Contract - If the contract in question is onerous

(Art.1350), the doubt should be settled in favor of the greatest
reciprocity of interests.
(3) Principal object of the contract - If the doubt refers to the

principal object of the contract and such doubt cannot be resolved
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thereby leaving the intention of the parties unknown, the contract

shall be null and void.
RESCISSIBLE CONTRACTS
(Art.1380-Art.1389)
Art.1380 Contracts validly agreed upon may be

rescinded in the cases established by law.
A. Definition
Rescissible Contracts - are valid and enforceable because all the

essential requisites of a contract exist but by reason of injury or
damage to one of the parties or to third persons, such as creditors, the
contract may be rescinded.
Rescission - is a remedy granted by law to the contracting parties

and sometimes even to third persons in order to secure reparation of
damages caused them by a valid contract, by means of the restoration
of things to their condition in which they were prior to the celebration
of said contract.
B. Requisites of Rescission:
(1) Valid contract (Art.1380);

(2) Lesion or pecuniary prejudice to one of the parties or to a third
person (Art.1381);
(3) The rescission must be based upon a case especially provided by
law (Arts. 1380, 1381, 1382.);
(4) No other legal remedy to obtain reparation for the damage
(Art.1383);
(5) Party seeking for rescission must be able to return what he is
obliged to restore (Art.1385 par.1);
(6) Object of the contract must not legally be in the possession of
third persons who did not act in bad faith (Ibid., par. 2); and
(7) Period for filing the action must not have lapsed or prescribed
(Art.1389)
Example:
Kara sues Mia for the recovery of a parcel of land. In this case, the
land is a “thing under litigation.” If, during the pendency of the case,
Mia sells the land to a third party without the approval of Kara or of
the court, the sale is rescissible at the instance of Kara in case she
wins in her suit for the recovery of said land unless the third party is in
legal possession of the land in good faith.
Mutual Dissent:
Question: Suppose the parties to a contract mutually agreed to

cancel the contract, is this “rescission” properly so -called?
ANS: No. Of course, in a loose sense “rescission” may be used here.

But strictly speaking, this is “mutual backing out,” and not the
rescission referred to in Art. 1380 of the new Civil Code. In mutual
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withdrawal, it is the will of the parties that constitutes the basis,

whereas in rescission (properly called), it is the law that constitutes
the basis.
C. Nature of Rescission
Rescission is not a principal remedy. It is only subsidiary, meaning

that it can be availed of only if the injured party proves that he has no
other legal means aside from rescinding the contract to obtain redress
for the damage caused.
Question: Is the remedy of rescission subsidiary in nature?
ANS: Yes, for it cannot be instituted except when the party suffering
damage has no other legal means to obtain reparation for the same.
Extent of Rescission
The entire contract need not be set aside by rescission if the damage
can be repaired or covered by partial rescission. The rescission shall
only be to the extent of the creditor's unsatisfied credit. The policy of
the law is to preserve or respect the contract, not to extinguish it.
Example:
(1) Gino, the guardian of Mia, a minor was authorized by the court to
sell two parcels of land valued at P200,000.00 each. Gino sold the two
properties to Bitoy for only P200,000.00.
In this case, the entire contract need not be rescinded. Rescission may
properly be applied only to one parcel to cover the damage caused by
Gino. But if Gino or Bitoy is willing to pay the difference of
P200,000.00, rescission is precluded.
(2)Gardo is the guardian of Myrna, a minor. Gardo sells the ₱20,000-

worth property of Myrna only ₱15,000. Here, the contract of sale
CANNOT be rescinded because the lesion is NOT more than 1/4,
UNLESS the contract of sale is approved by the court.
HOWEVER, if the property is sold for less than ₱15,000, Myrna can
rescind the sale by proper action in court upon reaching the age of
majority.
CASES OF RESCISSBLE CONTRACTS
(1) Contracts entered into in behalf of wards. — A ward is a

person under guardianship by reason of some incapacity. As a rule,
the powers of the guardian with respect to the property of the ward
are limited to mere acts of administration.
EXAMPLE:
Gina is the guardian of Wendell (ward). Gina sells the property of
Wendell worth 20M for only 14M. The contract of sale can be rescinded
because the lesion is more than one-fourth. Wendell can rescind the
sale by proper action in court upon reaching the age of majority.
Page 15 of 28
(2) Contracts agreed upon in representation of absentees. — An

absentee is a person who disappears from his domicile, his
whereabouts being unknown, and without leaving an agent to
administer his property. Likewise, the absentee must suffer lesion by
more than one-fourth of the value of the property object of the
contract to entitle him to the remedy of rescission.
EXAMPLE:
Wendell, the owner of a resort in Laguna, left his property without
notice and without leaving a representative to take care of his
property.
Bea, a family friend, volunteered in taking over Wendell’s business.

Due to a storm, Wendell’s business is greatly affected due to
destruction of some of the buildings of the resort and needs additional
funds to recover from such distress. Bes decided to sell one property
of Wendell worth 15M and sold it for only 10M. When Wendell
returned, Wendell can rescind the contract of sale made by Bea
because the lesion is more than one-fourth.
(3) Contracts undertaken in fraud of creditors. — The action to

rescind in fraud of creditors is known as accion pauliana. Here, the
remedy of rescission may be availed of by a third person. Such
contracts are usually made without the knowledge of the creditors.
EXAMPLE:
Gina made a donation of a parcel of land to Wendell. Before the date
of the donation, Gina had contracted several debts. With the donation
to Wendell, the remaining property of Gina is not sufficient to pay all
her debts. The donation can be rescinded because the alienation is
presumed in fraud of creditors.
(4) Contracts which refer to things under litigation. — In No. (3),

the purpose of the remedy is to secure the payment of an existing
credit of a third person against a party to a contract sought to be
rescinded. Here, the purpose is to make effective the claim of a party
litigant over a thing under litigation which was the object of a contract
entered into by the other party with another person.
EXAMPLE:
Sandy sues Ben for the recovery of a parcel of land. In this case, the
land is a “thing under litigation.”
If, during the pendency of the case, Ben sells the land to Cathy
without the approval of Sandy or of the court, the sale is rescissible at
the instance of Sandy in case she wins in her suit for the recovery of
said land unless Cathy is in legal possession of the land in good faith.
Sandy, however, may protect his right by filing a notice of lis
pendens.
D. When remedy of rescission is NOT allowed:
(1) If the party who demands rescission cannot return what he is

obliged to restore under the contract (Art.1385 par.1)
Page 16 of 28
(2) If the property is legally in the possession of a third person who

acted in good faith (Ibid. par.2)*
*The remedy in such a case would be to demand indemnity for

damages from the person who caused the loss. (Ibid. par. 3)
E. Badges of Fraud:
Art.1387 All contracts by virtue of which the debtor alienate

property by gratuitous title are presumed to have been
entered into in fraud of creditors, when the donor did not
reserve sufficient property to pay all debts contracted before
the donation.
Alienation by onerous title are also presumed fraudulently

when made by person against whom some judgment has been
rendered in any instance or some writ of attachment has been
rendered in any instance or some writ of attachment has been
issued. The decision or attachment need not refer to the
property alienated, and need not have been obtained by the
party seeking the rescission.
In addition to these presumptions, the design to defraud

creditors may be proved in any other manner recognized by
the law of evidence.
EXAMPLES:
(1) Alienation by gratuitous title. — Princess Sarah made a donation of
a parcel of land to Becky. Before the date of the donation, Princess
Sarah had contracted several debts. With the donation to Becky, the
remaining property of Princess Sarah is not sufficient to pay all her
debts.
Under the first paragraph, the donation is presumed to be fraudulent
unless proved otherwise.
(3) Alienation by onerous title. — (a) Suppose in the preceding

example, the contract is a sale. Under the second paragraph, the sale
to Becky is not presumed fraudulent. The creditors of Princess Sarah
must show that the conveyance will prejudice their rights.
However, the presumption of fraud will arise in case the sale was
made by Princess after some judgment has been rendered against him
or some writ of attachment has been issued against him.
(c) Suppose again that Cedie, a creditor of Princess Sarah, has

obtained a judgment or writ of attachment in his favor. Then Princess
sold to Heidi another parcel of land which has not been levied upon or
attached. The sale to Heidi is also presumed fraudulent because the
law says “the decision or attachment need not refer to the property
alienated.”
(c) Becky is another creditor of Princess Sarah. Does she have the
right to rescind the sale to Heidi? Yes, because the law says that “the
decision or attachment . . . need not have been obtained by the party
seeking the rescission.”
Page 17 of 28
F. Period for Filing Action for Rescission:
General Rule: The action to claim for rescission must be commenced

within 4 years from the date the contract was entered into.
Exception:
i. For persons under guardianship, the period shall begin from the
termination of incapacity; and
ii. For absentees, from the time the domicile is known. (Art.1389)
Question: Six years after a rescissible contract was made, action was
brought for its rescission. The person who asked for the rescission was
neither a ward nor an absentee at the time of the transaction of the
rescissible contract. Will rescission still be allowed?
ANS: No, the rescission will no longer be allowed because the action
has already prescribed. “The action to claim rescission must be
commenced within four years.”
Question: When Pedro was 13 years old, he was under a guardian

who sold, in his behalf but without judicial authority, the harvest in the
farm that Pedro owns, and in so doing the ward suffered a lesion of
more than one-fourth of the property. How many years will be given
Pedro to rescind the contract?
ANS: Pedro will be given four years after reaching the age of majority
(the time the guardianship ceases); hence, before reaching 22 years of
age, the former ward should already have sued for the rescission of
the contract.
G. Who Can Bring the Action?
(a) The injured party (or the defrauded creditor).

(b) His heir or successor-in-interest.
(c) Creditors of (a) and (b) by virtue of Art. 1177 of the Civil Code.
VOIDABLE CONTRACTS
(Art.1390-Art.1402)
A. DEFINITION
Voidable Contracts - are valid until annulled unless there has been
ratification. In a voidable contract, the defect is caused by vice of
consent.
Voidable Contract Not Void Ab Initio
A contract where consent is vitiated, such as by violence or

intimidation, is not void ab initio but only voidable, and is binding upon
the parties unless annulled by proper action in court.
Annulment - is a remedy provided by law, for reason of public

interest, for the declaration of the inefficacy of a contract based on a
defect or vice in the consent of one of the contracting parties in order
Page 18 of 28
to restore them to their original position in which they were before the
contract was executed.
B. Grounds for Annulment (Declaration of Nullity)

(a) incapacity to give consent
(b) vitiated consent
Example:
If a house is built with conjugal funds on the husband's lot, the house
and the lot will be both considered conjugal, with the husband
becoming the creditor of the conjugal partnership to the extent of the
value of the lot. Should the husband sell the house and lot without his
wife's consent, the sale would be voidable.
C. Period for Filing action for Annulment:
Art.1391 The action for annulment shall be brought within four

years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the

time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of

the same.
And when the action refers to contracts entered into by minors

or other incapacitated persons, from the time the guardianship
ceases.
The 4 year period for bringing an action for annulment of a voidable

contract is reckoned:
(1) In case of intimidation, violence, or undue influence, from the

time the intimidation, etc., ceases.
(2) In case of mistake or fraud, from the time it is discovered since

before the time of discovery, the innocent party is unaware of the
reason which renders the contract voidable and can't be exempted to
bring the action in court.
(3) In the case of contracts entered into by minors or incapacitated

persons, from the time the guardianship ceases. An incapacitated
person has no capacity to sue.
Article 1392. Ratification extinguishes the action to annul a

voidable contract.
Ratification means that one voluntarily adopts some defective or

unauthorized act or contract which, without his subsequent approval or
consent, would not be binding on him.
Page 19 of 28
It cleanses the contract from all its defects from the moment it was
constituted. Hence, the action to annul is extinguished.
Examples:
i. A minor bought a parcel of land, but sold the same, after reaching
21 years of age, to a 3rd person.
ii. Use of the proceeds by a person who had been previously
intimidated into selling his property.
iii. If Marimar, an insane person, entered into a contract with a
carpenter to repair the roof of her house, this contract can be
annulled as it has been entered into by a person who is
incapacitated. However, Marimar is Senyora Santibanez’s ward,
Senyora Santibanez can make an express or tacit ratification of
the repair, especially if it will redound to the benefit of her
incapacitated ward.
D. Effects of Annulment:
Duty of mutual restitution upon Annulment: (Art.1398)
(1) If the contract is annulled, the parties, as a general rule, must

restore to each other (a) the subject matter of the contract with its
fruits and (b) the price thereof with legal interest.
(2) In personal obligations (Art.1156) where the service had

already been rendered, the value thereof with the corresponding
interest, is the basis for damages (par.2) recoverable from the party
benefited by the service.
Examples:
i. If a sale of land is annulled, the seller must return the purchase

price with legal interest and the buyer must return the land with
its fruits.
ii. Sugar sold her plow carabao to Ben. On the petition of Sugar,
the contract was annulled by the court. BUT the carabao died in
the possession of Ben through his fault. Ben must pay the value
of the carabao at the time of its death, with interest from the
same date. If the carabao had given birth, the young must also
be delivered as the fruit of the said animal.
E. Effect of Loss Through Fortuitous Event
Question: Suppose the innocent party cannot restore because of a

loss through a fortuitous event, may he still compel the other to return
what he had given?
ANS: It would seem that the answer is NO, because before

annulment, the contract is valid, and the innocent party, being the
owner of the thing lost by fortuitous event, must bear the loss. There
is however an exception, and it occurs when he offers to give the value
of the thing. He must be allowed this remedy; otherwise, he would be
in a worse position than one who had destroyed the thing through his
fault. Once he exercises this remedy, he can recover from the other
what has been previously given.
Page 20 of 28
UNENFORCEABLE CONTRACTS
(Art.1403-Art.1408)
Art. 1403. The following contracts are unenforceable, unless

they are ratified:
(1) Those entered into in the name of another person by one

who has been given no authority or legal representation, or
who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set
forth in this number. In the following cases an agreement
hereafter made shall be unenforceable by action, unless the
same, or some note or memorandum, thereof, be in writing,
and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the
writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed

within a year from the making thereof;
(b) A special promise to answer for the debt, default, or

miscarriage of another;
(c) An agreement made in consideration of marriage, other

than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in

action, at a price not less than five hundred pesos, unless the
buyer accept and receive part of such goods and chattels, or
the evidences, or some of them, of such things in action or pay
at the time some part of the purchase money; but when a sale
is made by auction and entry is made by the auctioneer in his
sales book, at the time of the sale, of the amount and kind of
property sold, terms of sale, price, names of the purchasers
and person on whose account the sale is made, it is a sufficient
memorandum;
(e) An agreement of the leasing for a longer period than one

year, or for the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
(3) Those where BOTH parties are incapable of giving consent

to a contract.
A. DEFINITION
Unenforceable Contracts - cannot be sued upon or enforced unless

they are ratified. An unenforceable contract occupies an intermediate
ground between a voidable and void contract.
Page 21 of 28
Binding Force of Unenforceable Contracts - While rescissible and

voidable contracts are valid and enforceable unless they are rescinded
or annulled, unenforceable contracts, although valid are
unenforceable unless they are ratified.
B. Kind of Unenforceable Contracts:
Under Art. 1403, the following contracts are unenforceable:
(1) Those entered into in the name of another by one without, or

acting in excess of, authority (unauthorized contracts);
(2) Those that do not comply with the Statute of Frauds; and
(3) Those were both parties are incapable of giving.
Unauthorized Contracts - those entered into in the name of another

person by one who has been given no authority or legal
representation or who has acted beyond his powers.
Example:
Without Pedro's authority, his brother, Juan, sold his car, in Pedro's
name, to Maria. The contract is unauthorized and cannot and cannot
affect Pedro unless Pedro ratifies it expressly or implicitly, as by
accepting the proceeds of the sale.
Example:
A compromise agreement signed in behalf of the client by his lawyer
who did so without authorization of said client is merely
unenforceable (not void) and may, therefore, be ratified by said
party expressly or implicitly.
C. Modes of Ratification under the Statute
(1) By failure to object to the presentation of oral evidence to

prove the contract. The failure to so object amounts to a waiver and
makes the contract as binding as if it has been reduced to writing.
(2) By acceptance of benefits under the contract. In this case, the

contract is no longer executory and, therefore, the Statute does
not apply.
Unless otherwise provided by law, a contract is obligatory in whatever

form it is entered into, provided all the essential requisites are
present. When a verbal contract has already been completed,
executed or partially consummated, its enforceability will not be barred
by the Statute of Frauds, which applies only to an executory
agreement.
D. Contracts where BOTH parties are incapacitated
Art.1406 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.
Page 22 of 28
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.
When unenforceable contract becomes voidable or valid

 Where both parties to a contract are incapable of giving consent,
i. The contract is unenforceable.
ii. HOWEVER, if the parent OR guardian of either party, OR if one
party after attaining/regaining capacity, ratifies the contract, it
becomes VOIDABLE.
 If the ratification is made by the parents or guardians of both

contracting parties, or by both contracting parties after
attaining/regaining capacity,
i. The contract is VALIDATED, and
ii. Its validity retroacts to the time it was entered into.
Example:
(1) Mary and John, both 16 years old, entered in a contract of sale.
The contract is unenforceable since both parties cannot give consent.
Now, suppose the guardian or parent of Mary ratifies expressly or
impliedly the said contract of sale, it becomes voidable, that is valid
until annulled by the guardian or parent of John. However, if the
guardian or parent of John also ratifies it, the contract is validated
right from the time it was first entered into.
(2) Emilia is a minor child of Arturo and Teresita. Arturo died. Teresita,
as the natural guardian of Emilia, entered into a deed of extrajudicial
partition and sale, conveying the inheritance of Emilia. Emilia was NOT
a party to the contract, never ratified the deed, and, in fact,
questioned its validity. The contract is unenforceable, NOT voidable.
Article 1408. Unenforceable contracts cannot be assailed by

third persons.
Right of third persons to assail an unenforceable contract.

Strangers to a voidable contract cannot bring an action to annul the
same (see Art. 1397.); neither can they assail a contract because of
its unenforceability. The benefit of the Statute can only be claimed or
waived by one who is a party or privy to the oral contract, not by a
stranger. An action for rescission may be brought by a third person.
EXAMPLE:
Manny Pakyawan owns a parcel of land, which is under the possession
of and being used by Sunny Angora as grazing land for native ducks
for his balot business.. Under a verbal contract, Manny Pakyawan sold
the land to real estate developer Mekeni Villar. In an action for
ejectment by Mekeni Villar against Sunny Angora, the person in
possession, the latter cannot set up the defense of the Statute of
Frauds because he is a third party to the contract.
Page 23 of 28
VOID OR INEXISTENT CONTRACTS

(Art.1409-Art.1422)
Art.1409 The following contracts are inexistent and void from
the beginning:
1. Those whose cause, object or purpose is contrary to law,

morals, good customs, public order, or public policy;
2. Those which are absolutely simulated or fictitious;
3. Those whose cause or object did not exist at the time of
the transaction;
4. Those whose object is outside the commerce of men;
5. Those which contemplate an impossible service;
6. Those where the intention of the parties relative to the
principal object of the contract cannot be ascertained;
7. Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set

up the defense of illegality be waived.
A. DEFINITION
Void or Inexsitent Contracts - are absolutely null and void. Void

contracts have no effect at all and cannot be ratified.
Characteristics of a void or inexistent contract:
(1) Generally, it produces no effect whatsoever;

(2) It cannot be ratified (Art.1409, par.2);
(3) The right to set up the defense of illegality cannot be waived;
(4) The action or defense for the declaration of its inexistence does
not prescribe (Art.1410);
(5) The defense of illegality is not available to third persons whose
interests are not directly affected (Art.1421); and
(6) It cannot give rise to a valid contract (Art. 1422).
VOID AND VOIDABLE CONTRACTS DISTINGUISHED
Page 24 of 28
Examples:
(1) Those whose cause, object or purpose is contrary to law,

morals, good customs, public order or public policy;
 Contrary to Law
An agreement whereby Anna is to render service as a servant to Ben
without compensation as long as Anna has not paid his debt is
reprehensible and censurable.
Contrary to Morals
A contract, whereby Anna promised to live as the common-law wife of
Ben without the benefit of marriage in consideration of P50,000.00, is
immoral and, therefore, void.
 Contrary to Good Customs

Anna entered into a contract whereby Anna binds herself to slap his
father. This contract is void because it is against the good custom of
showing respect to our parents.
 Contrary to Public Order

A stipulation in a contract of lease whereby the landlord can use force
to eject the tenant in case of failure of the latter to pay the rent
agreed upon is void as being against public order.
 Contrary to Public Policy

A condition in a contract of sale states: “In case of sale, the buyer
shall not sell to others the land sold but only to the seller, or to his
heirs or successors for the same price of P5,600.00 when the latter
shall be able to pay it.’’
The condition is contrary to public policy, because it virtually amounts

to a perpetual restriction on the right of ownership, specifically the
owner’s right to freely dispose of his property. Such a prohibition
Page 25 of 28
indefinite and unlimited as to time, so much so that it shall continue to

be applicable even beyond the lifetime of the original parties to the
contract is a nullity.
(2) Those which are absolutely simulated or fictitious;

Anna is indebted to Ben. Upon learning that Ben is going to enforce
her credit, Anna pretended to sell her land to Felimon, his father-in-
law. Anna did not receive a single centavo for the deed of sale she
executed and she continued in possession of the land as the contract
was merely simulated or fictitious.
There is no contract of sale in this case as the parties do not intend to

be bound at all. The sale is but a sham.
(3) Those whose cause or object did not exist at the time of the
transaction;
Sandra sells to Ben a parcel of land. In the deed of sale, P100,000.00
is stated as the price of the land. If this statement is false, then there
is no contract of sale.
(4) Those whose object is outside the commerce of men;

If the object is outside the commerce of man, such as sidewalks or
public plazas or public bridges, they cannot be the object of contracts
of alienation (but may be the object, for example, of a contract for
repair).
(5) Those which contemplate an impossible service;

If a blind man enters into a contract which requires the use of his
eyesight, the contract is void although in this particular case, we have
only a relative impossibility. This is because here, the relative
impossibility is not merely temporary.
(6) Those where the intention of the parties relative to the

principal object of the contract cannot be ascertained;
Anna sold his land to Ben. Anna has many lands. It cannot be
determined which land was intended by the parties to be the subject of
the sale.
Therefore, the contract shall be null and void and it is as if the parties
have not entered into any contract at all.
(7) Those expressly prohibited or declared void by law.
Contracts upon future inheritance except in cases expressly authorized
by law.
B. Imprescriptibility of action or defense
If a contract is void, a party thereto can always bring a court action to

declare it void or inexistent; and a party against whom a void contract
is sought to be enforced, can always raise the defense of nullity,
despite the passage of time. (Art.1410)
C. Rules where contract is illegal and the act constitutes a

criminal offense:
Page 26 of 28
The rule of In Pari Delicto-in equal fault; a universal doctrine which

holds that no action arises, in equity or at law, from an illegal contract.
The rule that parties to an illegal contract will not be aided by law. This
rule adopts the principle of “One who seeks equity and justice
must come to court with clean hands”.
Example:
If the two parties complain to a judge of the non-performance of a
contract by the other, the judge could refuse to provide remedy to
either of them because of in pari delicto: a finding that they were
equally at fault in causing the contract’s breach. This rule adopts the
principle of “One who seeks equity and justice must come to
court with clean hands”.
D. Rules where contract is illegal and the act does NOT

constitute a criminal offense:
1. When the parties are both in pari delicto and the cause of
contract is unlawful or forbidden but no criminal offense.
Example:
X agreed to live as the common law wife of Y in consideration
of the promise on the part of Y to donate a land to X. In this case, the
promise of Y has for its consideration an immoral act which does not
constitute a crime. Hence, there can be no recovery by one against the
other or they cannot ask the fulfillment of others promise.
2. When only one party is guilty:
1. The guilty party loses what he has given by reason of the

contract;
2. The guilty party cannot ask for the fulfillment of the other’s
undertaking;
3. The innocent party cannot be compelled to comply with his
promise.
4. The innocent party cannot be compelled to comply with his
promise.
Example:
In the preceding example, X was only a minor(16years old) at the time
of the contract and Y was a married man of mature years and
experience, the principle of in pari delicto is not applicable. Y cannot
recover the land given by him nor demand the performance of X’s
undertaking if the latter has not yet complied with her promise.
However, X may recover whatever property she may have given by
virtue of the contract without any obligation to comply with her
promise.
Article 1421. The defense of illegality of contract is not

available to third persons whose interests are not directly
affected.
Third persons are NOT allowed to bring an action to annul OR assail a

voidable and unenforceable contracts.
Page 27 of 28
HOWEVER, if the contract is illegal OR void, even a third person may

avail of the defense of illegality or set up its illegality as long as his
interest is directly affected by the contract.
Example:
Harold sold his parcel of land to his wife, Margarita. Under the law,
husband and wife CANNOT sell property to each other. Such sale is
illegal and void.
If Charlie, a third person, became a creditor of Harold before the

transaction, he can question the sale for the reason that his right OR
interest is directly affected. HOWEVER, if he became a creditor after
the transfer, the defense of illegality is NOT available to him.
Page 28 of 28

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“The Law on Obligations and Contracts” (2014)

By: Hector S. De Leon & Hector M. De Leon Jr.

Pointers for Review

Art. 1305 A contract is a meeting of minds between two

This definition emphasizes the meeting of minds between two

CONTRACT vs. OBLIGATION AND AGREEMENT

Contract is one of the sources of the obligations while Obligation, on

In addition, contracts are agreements enforceable through legal

1. Essential Elements - those, without which, there can be no

2. Natural Elements - exist as part of the contract even if

3. Accidental Elements - agreed upon by the parties and

FREEDOM & LIMITATIONS ON CONTRACTUAL STIPULATIONS

Art. 1306 The contracting parties may establish such

Limitations on Contractual Stipulations: (LMGPP)

1. Should not be contrary to law;

◎ The contracts of the parties must conform with the law in

◎ A penalty clause providing for the payment of 30% per

CHARACTERISTICS (PRINCIPLES) OF A CONTRACT

1. Obligatory Force – the contract is regarded as the law between

2. Mutuality - validity and performance of the contractual

◎ The rule that the obligation of contracts should not be

is superior to contractual rights. An example is the belief of a

3. Relativity – As a general rule, contracts are binding only

 Purely personal contracts (e.g. death of a partner generally

b. Contract in the name of another

As a general rule, person is not bound by the contract of

This contract is unenforceable unless it is ratified.

1. According to subject matter:

a. Things (like Sale)

a. Nominate Contracts - that which has a specific name or

 If a person pays rents in consideration of the use of the

b. Innominate Contracts - that which has no specific name or

 Do ut facias (I give that you may do)

◎ If an attorney renders legal services for a close friend, the

agreement thereon. This is because of the innominate contract of

a. Consensual Contract - that which is perfected by mere

Art.1315 Contracts are perfected by mere consent, and

b. Real Contract - that which is perfected by the delivery of

Art.1316 Real contracts, such as deposit, pledge and

c. Solemn Contract - that which requires compliance with

1. Preparation or Negotiation - This includes all the steps taken

2. Perfection or Birth - This is when the parties have come to a

3. Consummation or Termination - This is when the parties

THIRD PERSON IN A CONTRACT

As a general rule, a third person has no rights and obligations under a

Exceptions - There are cases, however, when third persons may be

(a) In contracts containing a stipulation in favor of a third person

(b) In contracts creating real rights (Art.1312);

(c) In contracts entered into to defraud creditors (Art.1313); and

(d) In contracts which have been violated at the inducement of a

ESSENTIAL REQUISITES OF CONTRACTS

Art. 1318 There is no contract unless the following

Art. 1319. Consent is manifested by the meeting of the offer

1. Consent - is the conformity or occurrence of wills (offer and

It presupposes legal capacity of the parties. (must be of legal age and

(a) If there is absolutely no consent, there is no contract. The

(b) If there is consent, but the same is defective or there is vice of

etc., the contract is not void; it is merely VOIDABLE, or valid until

Offer - is a proposal made by one party to another to enter into a

Acceptance - is the manifestation by the offeree of his assent to the

Example: X offered to sell Z a particular house for P

ANS: Yes, because there was NO meeting of the minds yet,

WHO CANNOT GIVE CONSENT: