Article 1305
By name
March 26, 2016
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. (125a)
Ang kontrata ay pagpupulong ng
kaisipan sa pagitan ng dalawang tao na
kung saan ang isa ay binibigkis ang
kanyang sarili sa isa na magbigay o
maggawad ng serbisyo.
Discussion:
Dean Ernesto Pineda, in his book,
suggested a definition of a contract:
It is a meeting of the minds between two or
more parties, whereby one party binds
himself with respect to the other, or where
both parties bind themselves reciprocally, in
favor of one another, to fulfill a prestation to
give, to do or not to do.
Three stages in making a contract:
1. Conception or Generation – This
is the stage where the parties
begin their intial negotiation,
bargaining for the formation of the
contract and ending at the
moment of agreement.  It is also
called the preparatory stage.
2. Perfection or Birth – This is
the stage where the contract is
said to have been born,  where
the parties had a meeting of minds
as to the object, cause or
consideration and other terms and
conditions of the contract.  It has
passed the preparatory state, thus
giving birth to the contract.
3. Consummation or Fulfillment –
This is the last stage which
consists the performance or
fulfillment by the parties of their
obligations under the terms of the
perfected contract.
Consummation means
the accomplishment, death or
termination of the contract where
the parties cease to be
contractually related to one
another.
Classifications of contracts
1.
a.  Nominate – those which have been
given particular names (i.e. sale, barter,
mortgage, lease, carriage, agency, etc.)
b.  Innominate – those which have not
been given a particular name and not
regulated by special provision of law.
Roman law has classified them as
follows:   Do ut des (I give that you may
give); Do ut facias (I give that you may
do); Facio ut facias (I do that you may
do); Facio ut des (I do that you may
give).
     2.  By subject matter
a.  Contracts covering things (i.e.
contract of sale, deposit, pledge)
b. Contracts covering services (i.e.
contract of carriage)
c. Contracts covering tranmissible rights
or credits (i.e. contract of usufruct,
assignment of credits.)
      3.  By formation or perfection
 a. Consensual – perfected by mere
consent (i.e. sale)
 b. Real – cannot be perfected without
delivery (i.e. commodatum, depositum,
pledge, loan)
 c. Formal or Solemn- cannot be
perfected without compliance with the
special formalities or solemnities required
by law, otherwise they are void  (i.e.  
donations, mortgages of real property)
      4.  By  Cause       
 a. Onerous – contracts that provide for
exchange of valuable considerations (i.e.
sale where the seller delivers the object
of the contract and the buyer pays  the
purchase price)
 b. Gratuitous – contracts where one of
the parties gives something or renders
service to the other without receiving any
equivalent or compensation (i.e.  pure
donation, commodatum).  It is also called
the lucrative contract because it provides
gain to the other party for free.
 c. Remunerative – contracts where one
party gives something or renders service
to another in consideration of a previous
or past deeds of the other.
      5.  By vinculum produced or
according to the party or parties
obligated
 a. Unilateral – contracts where only one
of the parties is bound to fulfill and
obligation (i.e. commodatum, promissory
note)
 b. Bilateral – contracts where both
parties have reciprocally bound
themselves to fulfill their obligations in
favor of the other (i.e. sale) Also known
as synalagmatic contracts.
      6.  By certainty or fulfillment
 a. Commutative – contracts where the
contracting parties contemplate the
assured fulfillment of the terms and
conditions of their agreement, and there
is no risk to anticipate (i.e. contracts of
mortgage and pledge)
 b.  Aleatory – contracts where the
fulfillment is dependent on chance or
event which may not happen within the
period stipulated, and the loss
contempated may not happen.  (i.e.
insurance contract)
      7.  By completion or performance
  a. Exceuted – contracts which are
already completed when formally entered
into (i.e. sale of a thing)
  b. Executory – contracts where the
prestation promised by the parties have
yet to be fulfilled at some future date (i.e.
a unilateral promise to sell which has
been accepted, but the sale is not yet
executed)
      8.  By dependence of one contract on
the other
  a. Principal – contracts which can exist
by themselves alone without depending
on another (i.e. sale, lease, deposit,
commodatum)
  b. Accessory – contracts which cannot
exist alone but mut depend on another
contract (i.e. mortgage – depends on the
contract of loan)
  c. Preparatory – contracts entered into
for the creation of another contract  (i.e.
agency, the principal gives authority to
the agent through a Special Power of
Attorney)
      9.  By the actual number of person/s
participating in the contract
  a.  Ordinary – contracts where two (or
more) parties are represented by
different persons (i.e. sale – there is a
seller and a buyer)
  b.  Auto-contracts – contracts where the
two parties are represented by the one
and the same person, who represents
and acts in different capacities  (i.e.
agent representing his principal who
authorized him to borrow money)
     10.  By the dignity accorded by law
   a.  Institutional – contracts which are
given special digniy by law (i.e. contract
of marriage which is considered a “social
inviolable institution)
   b. Ordinary – contracts which are not
institutional (i.e. sale, lease, deposit, etc)
     11.  By freedom of bargain
   a.  Ordinary – contracts where both
parties are palce on equal footing in the
negotiation and perfection stages.
   b.  Contracts of adhesion – contracts
where one of the parties had drafted the
contract for the other party to accept or
not to accept (i.e. insurance contract
which is already printed)
      12.  By the evidence needed to prove
their existence
   a.  Contracts covered by the Statute of
Frauds – requires written evidence, note
or memorandum to prove their existence
   b.  Contracts which be be proven by
oral or parol evidence  (i.e. lease contract
for one year)
      13.  By the personality of the parties
    a.  Personal – contracts where the
person of the party is essential to the
existence of teh contract (i.e. contract for
life insurance where the contract shall
cease to exist upon the death of the
insured)
    b.  Impersonal – contracts where the
person/s of a part or parties are not
essential to the continuity of the contract
(i.e. contract of lease – the heirs may
continue the contract)
      14.  By manner the consent is given
     a.  Express – contracts where the
consent of the parties is given expressly
in writing or verbally
     b.  Implied – contracts where the
consent of the parties is not given
expressly but is deducible from the
conduct or acts of the parties (i.e. implied
agency when the principal fails to
repudiate the acts of the person on his
behalf)
     c.  Presumed – contracts where the
consent was not given by the parties but
is presumed or provided by the law itself,
to prevent unjust enrichment on the part
of one party to the prejudice of the other,
such as quasi-contracts
Case Illustration: Ong Yiu vs. CA (91
SCRA 223)
Art. 1491. The following persons cannot
acquire by purchase, even at a public or
judicial auction, either in person or through
the mediation of another:
(1) The guardian, the property of the person
or persons who may be under his
guardianship;
(2) Agents, the property whose
administration or sale may have been
entrusted to them, unless the consent of the
principal has been given;
(3) Executors and administrators, the
property of the estate under administration;
(4) Public officers and employees, the
property of the State or of any subdivision
thereof, or of any government-owned or
controlled corporation, or institution, the
administration of which has been intrusted
to them; this provision shall apply to judges
and government experts who, in any manner
whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys,
clerks of superior and inferior courts, and
other officers and employees connected with
the administration of justice, the property
and rights in litigation or levied upon an
execution before the court within whose
jurisdiction or territory they exercise their
respective functions; this prohibition
includes the act of acquiring by assignment
and shall apply to lawyers, with respect to
the property and rights which may be the
object of any litigation in which they may
take part by virtue of their profession.
(6) Any others specially disqualified by law.
(1459a)
Art. 1459. The thing must be licit and the
vendor must have a right to transfer the
ownership thereof at the time it is delivered.
(n)
Art. 1646. The persons disqualified to buy
referred to in Articles 1490 and 1491, are
also disqualified to become lessees of the
things mentioned therein. (n)
Art. 1490. The husband and the wife cannot
sell property to each other, except:
(1) When a separation of property was
agreed upon in the marriage settlements; or
(2) When there has been a judicial
separation or property under Article 191.
(1458a)
Art. 1458. By the contract of sale one of the
contracting parties obligates himself to
transfer the ownership and to deliver a
determinate thing, and the other to pay
therefor a price certain in money or its
equivalent.
A contract of sale may be absolute or
conditional. (1445a)
Art. 1445. No trust shall fail because
the trustee appointed declines the
designation, unless the contrary
should appear in the instrument
constituting the trust.
Art. 1890. If the agent has been
empowered to borrow money, he may
himself be the lender at the current
rate of interest. If he has been
authorized to lend money at interest,
he cannot borrow it without the
consent of the principal. (n)
The Essential Elements Of Contracts
 
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o both contracting parties. One person
 
o
o the contract. If a thing is deemed outside
 
o of property, render services and others.
Although a contract is just a piece of
paper that you sign to seal the deal, you
can still end up in court due to
misinterpretation. A poorly written
contract is not necessarily the reason a
person can face a lawsuit. Even if your
contract has been prepared by one of the
biggest law firms in the country, it is still
not immune to criminal charges if the
obligations that are stated have not been
fulfilled. There are basic elements in a
contract, which need to be present
before any deals can be made. 
A contract refers to an agreement of two
or more contracting parties on a
particular venture whereby one person
binds himself, with respect to the other,
to render services or give something. 
The contract must not be obtained
through undue influence, coercion,
misrepresentation and fraud. As a general
rule, the party who has suffered due to
breach of contract can claim money
damages from the other. The breaching
party will also be ordered by the court to
perform obligations that are stipulated in
the contract.  
Contracts cannot completed without
the following requisites:
(1) Contracting parties' consent; 
(2) subject matter of the contract; and 
(3) the cause of the obligation. 
The Basic Elements of Contracts
Consent
In general, when a consent is given, the
contract is considered perfected. It can
be deemed an oral contract that binds
must have a definite offer and the other
must have an absolute acceptance of the
offer. 
Object of the Agreement
The subject matter refers to the object of
the commerce of man, it will not be
accepted as the object of the contract.
Contracts are made to transfer the rights
However, the object of the contract must
not be contrary to law, good customs,
morals and public order. 
Consideration contracts law. We believe said video is
The cause of the contract will be based useful and we highly recommend that
on the type of contracts. For instance, you take time watching. <3
onerous contract's cause is the promise
of service or thing by the other person.
Remunatory contract's cause is the
benefit or service, which is being [1] OBLIGATORY FORCE
remunerated. For contracts of pure
beneficence, the cause is the benefactor's
liberality. The cause can only be defined Article 1159. Obligations arising from
based on the nature of the contract.  contracts have the force of law between
the contracting parties and should be
An oral contract may not suffice even if
both parties have made an agreement. A complied with in good faith. This one is
written contract is a strong proof that a actually under the law on obligations.
deal or agreement has been made. It
includes the necessary details that can be Obligations either arise from law or
used in court when the obligations have contracts and they are juridical
not been met. 
necessities. In other words, they have to
THE ONLY 5 THINGS TO REMEMBER RE be complied with. It follows that, under
CONTRACTS LAW
the law, obligations arising from
The law on contracts has 117 provisions. contracts and those arising from law are
However, it is an open secret that there viewed as having the same binding effect.
are only five basic things to keep in mind They are necessities the compliance with
when studying contracts. All other which may be enforced in court and
provisions (Articles 1305 to 1422) are noncompliance with the same has legal
either explanations or exceptions to these consequences.
five things.
Under this principle of obligatory force, it
can also be said that contracts are the law
First, what are these five things we are
and, as a result, courts must enforce
talking about? They are: (1) obligatory
them between the contracting parties.
force of obligations arising from
Also, courts cannot make a contract or a
contracts; (2) relativity of contracts; (3)
stipulation if there is none.
consensuality of contracts; (4) autonomy
of contracts; and (5) mutuality of
[2] RELATIVITY OF CONTRACTS
contracts. These are the five general
principles governing contracts.
Not all people can be harmed or
benefited by a contract. As a rule, only
the parties are affected. Of course, when
Below is a short discussion of each
rights under a contract are assignable
principle. Also shown below are
and assigned as such, the assignee may
provisions under the law on contracts
be harmed or affected. The same goes for
under the Civil Code of the Philippines
heirs of a contracting party who has died.
arranged in such a way that it shows
under which of these five general
Article 1311. Contracts take effect only
principles each provision falls.
between the parties, their assigns and
heirs, except in case where the rights and
IMPORTANT NOTE: At the end of this
obligations arising from the contract are
post, there is a two-hour video explaining
not transmissible by their nature, or by
stipulation or by provision of law. The
heir is not liable beyond the value of the
property he received from the decedent.
If a contract should contain some
stipulation in favor of a third person, he
may demand its fulfillment provided he
communicated his acceptance to the
obligor before its revocation. A mere
incidental benefit or interest of a person
is not sufficient. The contracting parties
must have clearly and deliberately
conferred a favor upon a third person.
Article 1312. 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. (n)
Article 1313. Creditors are protected in
cases of contracts intended to defraud
them.
Article 1314. Any third person who
induces another to violate his contract
shall be liable for damages to the other
contracting party.
Article 1317. No one may contract in the
name of another without being
authorized by the latter, or unless he has
by law a right to represent him.
A contract entered into in the name of
another by one who has no authority or
legal representation, or who has acted
beyond his powers, shall be
unenforceable, unless it is ratified,
expressly or impliedly, by the person on
whose behalf it has been executed, before
it is revoked by the other contracting
party.
[3] CONSENSUALITY OF
CONTRACTS
Contracts, as a general rule, are perfected
by the meeting of the minds of the
contracting parties. They are obligatory
in any form (oral or written) as long as
parties have agreed to undertake their
obligations under the contract. The clue
is "meeting of the minds."
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.
Article 1315. Contracts are perfected by
mere consent, and from that moment the
parties are bound not only to 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.
Article 1316. Real contracts, such as
deposit, pledge and commodatum, are
not perfected until the delivery of the
object of the obligation.
[4] AUTONOMY OF CONTRACTS
Contracting parties are the kings and
queens of their own kingdom which is the
contract. They are allowed to stipulate
anything as long as not contrary to
certain limitations.
Article 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.
Article 1307. Innominate contracts shall
be regulated by the stipulations of the
parties, by the provisions of Titles I and
II of this Book, by the rules governing the
most analogous nominate contracts, and
by the customs of the place.
[5] MUTUALITY OF CONTRACTS
The terms to remember here are
"mutual" and "unilateral." Contracts are
agreed upon by mutual consent.
Therefore, their compliance or validity
must also be mutual. There are also
instances when extinguishment of an
obligation arising from contract can be
terminated as long as such termination is
mutual (not unilateral). In fact, a party
cannot unilaterally give up or modify
what is incumbent upon him under the
contract.
Article 1308. The contract must bind
both contracting parties; its validity or
compliance cannot be left to the will of
one of them.
Article 1309. 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.
Article 1310. The determination shall not
be obligatory if it is evidently inequitable.
In such case, the courts shall decide what
is equitable under the circumstances.
To read to more about the rules
governing contracts, go
to: https://www.projectjurisprudence.co
m/2019/01/more-rules-under-contract-
law.html.
Contract is defined in the Civil Code as "a
meeting of the minds between two
persons whereby one binds himself, with
respect to the other, to give something or
to render some service."[1] There are four
characteristics of contracts:
Obligatory force of contracts, that is,
obligations arising from contracts have
the force of law between the parties and
should be complied with in good faith. [2]
Autonomy of contracts, that is, the
contracting parties may establish such
stipulations, clauses, terms and
conditions as they may deem convenient,
provided that they are not contrary to law,
morals, good customs, public order, or
public policy.[3]
Mutuality of contracts, that is, the
contract must bind both contracting
parties and the validity or compliance
cannot be left to the will of one of them.
[4]
Relativity of contracts, that is, contracts
take effect only between the parties, their
assigns and heirs, except in case where
the rights and obligations arising from the
contract are not transmissible by their
nature, or by stipulation or by provision of
law.[5]
[1] Art. 1305, NCC.
[2] Art. 1159, NCC.
[3] Art. 1306, NCC.
[4] Art. 1308, NCC.
[5] Art. 1311, NCC.
C. Classification of Contracts
1. according to degree of dependence.
a. preparatory – Arts. 1479, 1767, 1868
Preparatory – contracts entered into for
the creation of another contract (i.e.
agency, the principal gives authority to
the agent through a Special Power of
Attorney)
ARTICLE 1479. A promise to buy and sell
a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or
to sell a determinate thing for a price
certain is binding upon the promisor if
the promise is supported by a
consideration distinct from the price.
(1451a)
ARTICLE 1767. By the contract of
partnership two or more persons bind
themselves to contribute money,
property, or industry to a common fund,
with the intention of dividing the profits
among themselves.
Two or more persons may also form a
partnership for the exercise of a
profession. (1665a)
ARTICLE 1868. By the contract of agency,
a person binds himself to render some
service or to do something in
representation or on behalf of another,
with the consent or authority of the latter.
(1709a)
b. principal – Arts. 1458, 1638, 1642, 1933,
1962
 b. Principal – contracts which can exist
by themselves alone without depending
on another (i.e. sale, lease, deposit,
commodatum)
ARTICLE 1458. By the contract of sale
one of the contracting parties obligates
himself to transfer the ownership of and
to deliver a determinate thing, and the
other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or
conditional. (1445a)
ARTICLE 1638. By the contract of barter
or exchange one of the parties binds
himself to give one thing in consideration
of the other’s promise to give another
thing. (1538a)
ARTICLE 1642. The contract of lease
may be of things, or of work and service.
(1542)
ARTICLE 1933. By the contract of loan,
one of the parties delivers to another,
either something not consumable so that
the latter may use the same for a certain
time and return it, in which case the
contract is called a commodatum; or
money or other consumable thing, upon
the condition that the same amount of
the same kind and quality shall be paid, in
which case the contract is simply called
a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a
stipulation to pay interest.
In commodatum the bailor retains the
ownership of the thing loaned, while in
simple loan, ownership passes to the
borrower. (1740a)
ARTICLE 1962. A deposit is constituted
from the moment a person receives a
thing belonging to another, with the
obligation of safely keeping it and of
returning the same. If the safekeeping of
the thing delivered is not the principal
purpose of the contract, there is no
deposit but some other contract. (1758a)
c. accessory – Arts. 2047, 2085
  c. Accessory – contracts which cannot
exist alone but mut depend on another
contract (i.e. mortgage – depends on the
contract of loan)
ARTICLE 2047. By guaranty a person,
called the guarantor, binds himself to the
creditor to fulfill the obligation of the
principal debtor in case the latter should
fail to do so.
If a person binds himself solidarily with
the principal debtor, the provisions of
Section 4, Chapter 3, Title I of this Book
shall be observed. In such case the
contract is called a suretyship. (1822a)
ARTICLE 2085. The following requisites
are essential to the contracts of pledge
and mortgage: dtedru
(1) That they be constituted to secure the
fulfillment of a principal obligation;
(2) That the pledgor or mortgagor be the
absolute owner of the thing pledged or
mortgaged;
(3) That the persons constituting the
pledge or mortgage have the free
disposal of their property, and in the
absence thereof, that they be legally
authorized for the purpose.
Third persons who are not parties to the
principal obligation may secure the latter
by pledging or mortgaging their own
property. (1857)
2. according to perfection
a. consensual – Arts.1315, 1475
 a. Consensual – perfected by mere
consent (i.e. sale)
ARTICLE 1315. Contracts are perfected
by mere consent, and from that moment
the parties are bound not only to 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. (1258)
ARTICLE 1475. The contract of sale is
perfected at the moment there is a
meeting of minds upon the thing which is
the object of the contract and upon the
price.
From that moment, the parties may
reciprocally demand performance,
subject to the provisions of the law
governing the form of contracts. (1450a)
b. real – Arts. 1316, 1934
 b. Real – cannot be perfected without
delivery (i.e. commodatum, depositum,
pledge, loan)
ARTICLE 1316. Real contracts, such as
deposit, pledge and commodatum, are
not perfected until the delivery of the
object of the obligation. (n)
ARTICLE 1934. An accepted promise to
deliver something by way of
commodatum or simple loan is binding
upon the parties, but the commodatum or
simple loan itself shall not be perfected
until the delivery of the object of the
contract. (n)
c. formal – Arts. 1356
 c. Formal or Solemn- cannot be
perfected without compliance with the
special formalities or solemnities required
by law, otherwise they are void  (i.e.  
donations, mortgages of real property)
ARTICLE 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 be 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. (1278a)
3. according to solemnity or form – Arts.
1356
a.any form
b. special form
ARTICLE 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 be 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. (1278a)
ARTICLE 1278. Compensation shall take
place when two persons, in their own
right, are creditors and debtors of each
other. (1195)
ARTICLE 1195. Anything paid or delivered
before the arrival of the period, the
obligor being unaware of the period or
believing that the obligation has become
due and demandable, may be recovered,
with the fruits and interests. (1126a)
ARTICLE 1126. Against a title recorded in
the Registry of Property, ordinary
prescription of ownership or real rights
shall not take place to the prejudice of a
third person, except in virtue of another
title also recorded; and the time shall
begin to run from the recording of the
latter.
As to lands registered under the Land
Registration Act, the provisions of that
special law shall govern. (1949a)
ARTICLE 1949. The bailor shall refund
the extraordinary expenses during the
contract for the preservation of the thing
loaned, provided the bailee brings the
same to the knowledge of the bailor
before incurring them, except when they
are so urgent that the reply to the
notification cannot be awaited without
danger.
If the extraordinary expenses arise on the
occasion of the actual use of the thing by
the bailee, even though he acted without
fault, they shall be borne equally by both
the bailor and the bailee, unless there is a
stipulation to the contrary. (1751a)
ARTICLE 1751. The fact that the
common carrier has no competitor along
the line or route, or a part thereof, to
which the contract refers shall be taken
into consideration on the question of
whether or not a stipulation limiting the
common carrier’s liability is reasonable,
just and in consonance with public
policy.
4. according to purpose
a. transfer of ownership – Arts. 725, 1458,
1638
ARTICLE 725. Donation is an act of
liberality whereby a person disposes
gratuitously of a thing or right in favor of
another, who accepts it. (618a)
ARTICLE 1458. By the contract of sale
one of the contracting parties obligates
himself to transfer the ownership of and
to deliver a determinate thing, and the
other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or
conditional. (1445a)
ARTICLE 1638. By the contract of barter
or exchange one of the parties binds
himself to give one thing in consideration
of the other’s promise to give another
thing. (1538a)
b. conveyance of use – Arts. 562, 1642, 1933
ARTICLE 562. Usufruct gives a right to
enjoy the property of another with the
obligation of preserving its form and
substance, unless the title constituting it
or the law otherwise provides. (467)
ARTICLE 1642. The contract of lease
may be of things, or of work and service.
(1542)
ARTICLE 1933. By the contract of loan,
one of the parties delivers to another,
either something not consumable so that
the latter may use the same for a certain
time and return it, in which case the
contract is called a commodatum; or
money or other consumable thing, upon
the condition that the same amount of
the same kind and quality shall be paid, in
which case the contract is simply called
a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a
stipulation to pay interest.
In commodatum the bailor retains the
ownership of the thing loaned, while in
simple loan, ownership passes to the
borrower. (1740a)
c. rendition of service – Arts. 1642, 1868
ARTICLE 1642. The contract of lease
may be of things, or of work and service.
(1542)
ARTICLE 1868. By the contract of agency
a person binds himself to render some
service or to do something in
representation or on behalf of another,
with the consent or authority of the latter.
(1709a)
5. according to nature of obligation
produced
a. bilateral – Arts. 1642, 1458
 a. Unilateral – contracts where only one
of the parties is bound to fulfill and
obligation (i.e. commodatum, promissory
note)
ARTICLE 2047. By guaranty a person,
called the guarantor, binds himself to the
creditor to fulfill the obligation of the
principal debtor in case the latter should
fail to do so.
If a person binds himself solidarily with
the principal debtor, the provisions of
Section 4, Chapter 3, Title I of this Book
shall be observed. In such case the
contract is called a suretyship. (1822a)
ARTICLE 2093. In addition to the
requisites prescribed in article 2085, it is
necessary, in order to constitute the
contract of pledge, that the thing pledged
be placed in the possession of the
creditor, or of a third person by common
agreement. (1863)
b. unilateral – Arts. 2047, 2093
 b. Bilateral – contracts where both
parties have reciprocally bound
themselves to fulfill their obligations in
favor of the other (i.e. sale) Also known
as synalagmatic contracts.
ARTICLE 1642. The contract of lease
may be of things, or of work and service.
(1542)
ARTICLE 1458. By the contract of sale
one of the contracting parties obligates
himself to transfer the ownership of and
to deliver a determinate thing, and the
other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or
conditional. (1445a)
6. according to cause – Arts. 1350
 a. onerous – Arts. 1458, 1638, 1642
a. Onerous – contracts that provide for
exchange of valuable considerations (i.e.
sale where the seller delivers the object
of the contract and the buyer pays  the
purchase price)
ARTICLE 1458. By the contract of sale
one of the contracting parties obligates
himself to transfer the ownership of and
to deliver a determinate thing, and the
other to pay therefor a price certain in
money or its equivalent.
A contract of sale may be absolute or
conditional. (1445a)
ARTICLE 1638. By the contract of barter
or exchange one of the parties binds
himself to give one thing in consideration
of the other’s promise to give another
thing. (1538a)
ARTICLE 1642. The contract of lease
may be of things, or of work and service.
(1542)
 b. gratuitous or lucrative – Arts. 725, 1933
b. Gratuitous – contracts where one of
the parties gives something or renders
service to the other without receiving any
equivalent or compensation (i.e.  pure
donation, commodatum).  It is also called
the lucrative contract because it provides
gain to the other party for free.
ARTICLE 725. Donation is an act of
liberality whereby a person disposes
gratuitously of a thing or right in favor of
another, who accepts it. (618a)
ARTICLE 1933. By the contract of loan,
one of the parties delivers to another,
either something not consumable so that
the latter may use the same for a certain
time and return it, in which case the
contract is called a commodatum; or
money or other consumable thing, upon
the condition that the same amount of
the same kind and quality shall be paid, in
which case the contract is simply called
a loan or mutuum.
Commodatum is essentially gratuitous.
Simple loan may be gratuitous or with a
stipulation to pay interest.
In commodatum the bailor retains the
ownership of the thing loaned, while in
simple loan, ownership passes to the
borrower. (1740a)
c. remuneratory
 c. Remunerative – contracts where one
party gives something or renders service
to another in consideration of a previous
or past deeds of the other.
7. according to risk
a. commutative
 a. Commutative – contracts where the
contracting parties contemplate the
assured fulfillment of the terms and
conditions of their agreement, and there
is no risk to anticipate (i.e. contracts of
mortgage and pledge)
b. aleatory – Arts. 2010
 b.  Aleatory – contracts where the
fulfillment is dependent on chance or
event which may not happen within the
period stipulated, and the loss
contempated may not happen.  (i.e.
insurance contract)
ARTICLE 2010. By an aleatory contract,
one of the parties or both reciprocally
bind themselves to give or to do
something in consideration of what the
other shall give or do upon the happening
of an event which is uncertain, or which
is to occur at an indeterminate time.
(1790)
8. according to name
a.nominate
a.  Nominate – those which have been
given particular names (i.e. sale, barter,
mortgage, lease, carriage, agency, etc.)
b. Innominate – Arts. 1307
b.  Innominate – those which have not
been given a particular name and not
regulated by special provision of law.
Roman law has classified them as
follows:   Do ut des (I give that you may
give); Do ut facias (I give that you may
do); Facio ut facias (I do that you may
do); Facio ut des (I do that you may
give).
ARTICLE 1307. Innominate contracts
shall be regulated by the stipulations of
the parties, by the provisions of Titles I
and II of this Book, by the rules governing
the most analogous nominate contracts,
and by the customs of the place. (n)
     9. according to subject matter
a.thing
b.right
c. service
a.  Contracts covering things (i.e.
contract of sale, deposit, pledge)
b. Contracts covering services (i.e.
contract of carriage)
c. Contracts covering tranmissible rights
or credits (i.e. contract of usufruct,
assignment of credits.)
     Three stages in making a contract:
1. Conception or Generation – This
is the stage where the parties
begin their intial negotiation,
bargaining for the formation of the
contract and ending at the
moment of agreement.  It is also
called the preparatory stage.
ARTICLE 1324. When the offerer has
allowed the offeree a certain period to
accept, the offer may be withdrawn at
any time before acceptance by
communicating such withdrawal, except
when the option is founded upon a
consideration, as something paid or
promised. (n)
ARTICLE 1479. A promise to buy and sell
a determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or
to sell a determinate thing for a price
certain is binding upon the promisor if
the promise is supported by a
consideration distinct from the price.
(1451a)
ARTICLE 1482. Whenever earnest money
is given in a contract of sale, it shall be
considered as part of the price and as
proof of the perfection of the contract.
(1454a)
2. Perfection or Birth – This is
the stage where the contract is
said to have been born,  where
the parties had a meeting of minds
as to the object, cause or
consideration and other terms and
conditions of the contract.  It has
passed the preparatory state, thus
giving birth to the contract.
3. Performance
4. Consummation or Fulfillment –
This is the last stage which
consists the performance or
fulfillment by the parties of their
obligations under the terms of the
perfected contract.
Consummation means
the accomplishment, death or
termination of the contract where
the parties cease to be
contractually related to one
another.
E. Essential Elements of Contracts – Arts.
1318
ARTICLE 1318. There is no contract
unless the following requisites concur:
dstwmi
(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. (1261)
1. consent of the contracting parties –
Arts. 1319-1346, 37-42, 739, 1476(4), 1490-
1491, 1533(5), 1646, 1782, 1409(7), 5
SECTION 1
Consent
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)
ARTICLE 1320. An acceptance may be
express or implied. (n)
ARTICLE 1321. The person making the
offer may fix the time, place, and manner
of acceptance, all of which must be
complied with. (n)
ARTICLE 1322. An offer made through an
agent is accepted from the time
acceptance is communicated to him. (n)
ARTICLE 1323. An offer becomes
ineffective upon the death, civil
interdiction, insanity, or insolvency of
either party before acceptance is
conveyed. (n)
ARTICLE 1324. When the offerer has
allowed the offeree a certain period to
accept, the offer may be withdrawn at
any time before acceptance by
communicating such withdrawal, except
when the option is founded upon a
consideration, as something paid or
promised. (n)
ARTICLE 1325. Unless it appears
otherwise, business advertisements of
things for sale are not definite offers, but
mere invitations to make an offer. (n)
ARTICLE 1326. Advertisements for
bidders are simply invitations to make
proposals, and the advertiser is not
bound to accept the highest or lowest
bidder, unless the contrary appears. (n)
ARTICLE 1327. The following cannot give
consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and
deaf-mutes who do not know how to
write. (1263a)
ARTICLE 1328. Contracts entered into
during a lucid interval are valid. Contracts
agreed to in a state of drunkenness or
during a hypnotic spell are voidable. (n)
ARTICLE 1329. The incapacity declared
in article 1327 is subject to the
modifications determined by law, and is
understood to be without prejudice to
special disqualifications established in
the laws. (1264)
ARTICLE 1330. A contract where consent
is given through mistake, violence,
intimidation, undue influence, or fraud is
voidable. (1265a)
ARTICLE 1331. In order that mistake may
invalidate consent, it should refer to the
substance of the thing which is the
object of the contract, or to those
conditions which have principally moved
one or both parties to enter into the
contract.
Mistake as to the identity or
qualifications of one of the parties will
vitiate consent only when such identity or
qualifications have been the principal
cause of the contract.
A simple mistake of account shall give
rise to its correction. (1266a)
ARTICLE 1332. When one of the parties
is unable to read, or if the contract is in a
language not understood by him, and
mistake or fraud is alleged, the person
enforcing the contract must show that
the terms thereof have been fully
explained to the former. (n)
ARTICLE 1333. There is no mistake if the
party alleging it knew the doubt,
contingency or risk affecting the object
of the contract. (n)
ARTICLE 1334. Mutual error as to the
legal effect of an agreement when the
real purpose of the parties is frustrated,
may vitiate consent. (n)
ARTICLE 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 grave 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. (1267a)
ARTICLE 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.
(1268)
ARTICLE 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: the
confidential, family, spiritual and other
relations between the parties, or the fact
that the person alleged to have been
unduly influenced was suffering from
mental weakness, or was ignorant or in
financial distress. (n)
ARTICLE 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. (1269)
ARTICLE 1339. Failure to disclose facts,
when there is a duty to reveal them, as
when the parties are bound by
confidential relations, constitutes fraud.
(n)
ARTICLE 1340. The usual exaggerations
in trade, when the other party had an
opportunity to know the facts, are not in
themselves fraudulent. (n)
ARTICLE 1341. A mere expression of an
opinion does not signify fraud, unless
made by an expert and the other party
has relied on the former’s special
knowledge. (n)
ARTICLE 1342. Misrepresentation by a
third person does not vitiate consent,
unless such misrepresentation has
created substantial mistake and the
same is mutual. (n)
ARTICLE 1343. Misrepresentation made
in good faith is not fraudulent but may
constitute error. (n)
ARTICLE 1344. In order that fraud may
make a contract voidable, it should be
serious and should not have been
employed by both contracting parties.
Incidental fraud only obliges the person
employing it to pay damages. (1270)
ARTICLE 1345. Simulation of a contract
may be absolute or relative. The former
takes place when the parties do not
intend to be bound at all; the latter, when
the parties conceal their true agreement.
(n)
ARTICLE 1346. An absolutely simulated
or fictitious contract is void. A relative
simulation, when it does not prejudice a
third person and is not intended for any
purpose contrary to law, morals, good
customs, public order or public policy
binds the parties to their real agreement.
(n)
ARTICLE 37. Juridical capacity, which is
the fitness to be the subject of legal
relations, is inherent in every natural
person and is lost only through death.
Capacity to act, which is the power to do
acts with legal effect, is acquired and
may be lost. (n)
ARTICLE 38. Minority, insanity or
imbecility, the state of being a deaf-mute,
prodigality and civil interdiction are mere
restrictions on capacity to act, and do not
exempt the incapacitated person from
certain obligations, as when the latter
arise from his acts or from property
relations, such as easements. (32a)
ARTICLE 39. The following
circumstances, among others, modify or
limit capacity to act: age, insanity,
imbecility, the state of being a deaf-mute,
penalty, prodigality, family relations,
alienage, absence, insolvency and
trusteeship. The consequences of these
circumstances are governed in this Code,
other codes, the Rules of Court, and in
special laws. Capacity to act is not
limited on account of religious belief or
political opinion.
A married woman, twenty-one years of
age or over, is qualified for all acts of civil
life, except in cases specified by law. (n)
CHAPTER 2
Natural Persons
ARTICLE 40. Birth determines
personality; but the conceived child shall
be considered born for all purposes that
are favorable to it, provided it be born
later with the conditions specified in the
following article. (29a)
ARTICLE 41. For civil purposes, the
foetus is considered born if it is alive at
the time it is completely delivered from
the mother’s womb. However, if the
foetus had an intra-uterine life of less
than seven months, it is not deemed born
if it dies within twenty-four hours after its
complete delivery from the maternal
womb. (30a)
ARTICLE 42. Civil personality is
extinguished by death.
The effect of death upon the rights and
obligations of the deceased is
determined by law, by contract and by
will. (32a)
ARTICLE 739. The following donations
shall be void:
(1) Those made between persons who
were guilty of adultery or concubinage at
the time of the donation;
(2) Those made between persons found
guilty of the same criminal offense, in
consideration thereof;
(3) Those made to a public officer or his
wife, descendants and ascendants, by
reason of his office.
In the case referred to in No. 1, the action
for declaration of nullity may be brought
by the spouse of the donor or donee; and
the guilt of the donor and donee may be
proved by preponderance of evidence in
the same action. (n)
ARTICLE 1476. In the case of a sale by
auction:
(1) Where goods are put up for sale by
auction in lots, each lot is the subject of a
separate contract of sale.
(2) A sale by auction is perfected when
the auctioneer announces its perfection
by the fall of the hammer, or in other
customary manner. Until such
announcement is made, any bidder may
retract his bid; and the auctioneer may
withdraw the goods from the sale unless
the auction has been announced to be
without reserve.
(3) A right to bid may be reserved
expressly by or on behalf of the seller,
unless otherwise provided by law or by
stipulation.
(4) Where notice has not been given that
a sale by auction is subject to a right to
bid on behalf of the seller, it shall not be
lawful for the seller to bid himself or to
employ or induce any person to bid at
such sale on his behalf or for the
auctioneer, to employ or induce any
person to bid at such sale on behalf of
the seller or knowingly to take any bid
from the seller or any person employed
by him. Any sale contravening this rule
may be treated as fraudulent by the
buyer. (n) Iddids
ARTICLE 1490. The husband and the wife
cannot sell property to each other,
except:
(1) When a separation of property was
agreed upon in the marriage settlements;
or temuim
(2) When there has been a judicial
separation of property under article 191.
(1458a)
ARTICLE 1491. The following persons
cannot acquire by purchase, even at a
public or judicial auction, either in person
or through the mediation of another:
(1) The guardian, the property of the
person or persons who may be under his
guardianship;
(2) Agents, the property whose
administration or sale may have been
intrusted to them, unless the consent of
the principal has been given;
(3) Executors and administrators, the
property of the estate under
administration;
(4) Public officers and employees, the
property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation, or institution, the
administration of which has been
intrusted to them; this provision shall
apply to judges and government experts
who, in any manner whatsoever, take part
in the sale;
(5) Justices, judges, prosecuting
attorneys, clerks of superior and inferior
courts, and other officers and employees
connected with the administration of
justice, the property and rights in
litigation or levied upon an execution
before the court within whose jurisdiction
or territory they exercise their respective
functions; this prohibition includes the
act of acquiring by assignment and shall
apply to lawyers, with respect to the
property and rights which may be the
object of any litigation in which they may
take part by virtue of their profession;
(6) Any others specially disqualified by
law. (1459a)
ARTICLE 1533. Where the goods are of
perishable nature, or where the seller
expressly reserves the right of resale in
case the buyer should make default, or
where the buyer has been in default in
the payment of the price for an
unreasonable time, an unpaid seller
having a right of lien or having stopped
the goods in transitu may resell the
goods. He shall not thereafter be liable to
the original buyer upon the contract of
sale or for any profit made by such
resale, but may recover from the buyer
damages for any loss occasioned by the
breach of the contract of sale.
Where a resale is made, as authorized in
this article, the buyer acquires a good
title as against the original buyer.
It is not essential to the validity of resale
that notice of an intention to resell the
goods be given by the seller to the
original buyer. But where the right to
resell is not based on the perishable
nature of the goods or upon an express
provision of the contract of sale, the
giving or failure to give such notice shall
be relevant in any issue involving the
question whether the buyer had been in
default for an unreasonable time before
the resale was made.
It is not essential to the validity of a
resale that notice of the time and place
of such resale should be given by the
seller to the original buyer.
The seller is bound to exercise
reasonable care and judgment in making
a resale, and subject to this requirement
may make a resale either by public or
private sale. He cannot, however, directly
or indirectly buy the goods. (n)
ARTICLE 1646. The persons disqualified
to buy referred to in articles 1490 and
1491, are also disqualified to become
lessees of the things mentioned therein.
(n)
ARTICLE 1782. Persons who are
prohibited from giving each other any
donation or advantage cannot enter into
universal partnership. (1677)
ARTICLE 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.
ARTICLE 5. Acts executed against the
provisions of mandatory or prohibitory
laws shall be void, except when the law
itself authorizes their validity. (4a)
Arts. 87, 124, 234 FC; RA 6809; Art. XII, Secs.
7 & 8 1987 Constitution
ARTICLE 87. The action for annulment of
marriage must be commenced by the
parties and within the periods as follows:
(1) For causes mentioned in number 1 of
article 85, by the party whose parent or
guardian did not give his or her consent,
within four years after attaining the age
of twenty or eighteen years, as the case
may be; or by the parent or guardian or
person having legal charge, at any time
before such party has arrived at the age
of twenty or eighteen years;
(2) For causes mentioned in number 2 of
article 85, by the spouse who has been
absent, during his or her lifetime; or by
either spouse of the subsequent
marriage during the lifetime of the other;
(3) For causes mentioned in number 3 of
article 85, by the sane spouse, who had
no knowledge of the other’s insanity; or
by any relative or guardian of the party of
unsound mind, at any time before the
death of either party;
(4) For causes mentioned in number 4, by
the injured party, within four years after
the discovery of the fraud;
(5) For causes mentioned in number 5, by
the injured party, within four years from
the time the force or intimidation ceased;
(6) For causes mentioned in number 6, by
the injured party, within eight years after
the marriage. (31a)
ARTICLE 124. If the marriage is between
a citizen of the Philippines and a
foreigner, whether celebrated in the
Philippines or abroad, the following rules
shall prevail:
(1) If the husband is a citizen of the
Philippines while the wife is a foreigner,
the provisions of this Code shall govern
their property relations;
(2) If the husband is a foreigner and the
wife is a citizen of the Philippines, the
laws of the husband’s country shall be
followed, without prejudice to the
provisions of this Code with regard to
immovable property. (1325a)
ARTICLE 234. When there is danger that
a person obliged to give support may
lose his or her fortune because of grave
mismanagement or on account of riotous
living, his or her spouse, if any, and a
majority of those entitled to be supported
by him or by her may petition the Court of
First Instance for the creation of the
family home.
Section 7. Save in cases of hereditary
succession, no private lands shall be
transferred or conveyed except to
individuals, corporations, or associations
qualified to acquire or hold lands of the
public domain.
Section 8. Notwithstanding the
provisions of Section 7 of this Article, a
natural-born citizen of the Philippines
who has lost his Philippine citizenship
may be a transferee of private lands,
subject to limitations provided by law.
Cognition Theory
Cognitive theory suggests that the
human mind is like a computer that is
constantly processing and encoding
data. According to cognitive theory, when
a person experiences stimuli, their minds
will look toward prior schema (or internal
frameworks created by memories) to
help them understand this information.
Manifestation Theory
The manifestation theory is a coverage
trigger theory in latent injury cases that
holds that injury occurs when the injury
becomes known, manifests itself to the
injured party, is diagnosed by a physician,
etc.
2. object certain which is the subject matter
of the contract –
Arts. 1347-1349, 1311, 1178
ARTICLE 1347. All things which are not
outside the commerce of men, including
future things, may be the object of a
contract. All rights which are not
intransmissible may also be the object of
contracts.
No contract may be entered into upon
future inheritance except in cases
expressly authorized by law.
All services which are not contrary to law,
morals, good customs, public order or
public policy may likewise be the object
of a contract. (1271a)
ARTICLE 1348. Impossible things or
services cannot be the object of
contracts. (1272)
ARTICLE 1349. The object of every
contract must be determinate as to its
kind. The fact that the quantity is not
determinate shall not be an obstacle to
the existence of the contract, provided it
is possible to determine the same,
without the need of a new contract
between the parties. (1273)
ARTICLE 1311. Contracts take effect only
between the parties, their assigns and
heirs, except in case where the rights and
obligations arising from the contract are
not transmissible by their nature, or by
stipulation or by provision of law. The
heir is not liable beyond the value of the
property he received from the decedent.
If a contract should contain some
stipulation in favor of a third person, he
may demand its fulfillment provided he
communicated his acceptance to the
obligor before its revocation. A mere
incidental benefit or interest of a person
is not sufficient. The contracting parties
must have clearly and deliberately
conferred a favor upon a third person.
(1257a)
ARTICLE 1178. Subject to the laws, all
rights acquired in virtue of an obligation
are transmissible, if there has been no
stipulation to the contrary. (1112)
3. cause of the obligation_– Arts. 1350-1355
ARTICLE 1350. In onerous contracts the
cause is understood to be, for each
contracting party, the prestation or
promise of a thing or service by the other;
in remuneratory ones, the service or
benefit which is remunerated; and in
contracts of pure beneficence, the mere
liberality of the benefactor. (1274)
ARTICLE 1351. The particular motives of
the parties in entering into a contract are
different from the cause thereof. (n)
ARTICLE 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. (1275a)
ARTICLE 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 lawful. (1276)
ARTICLE 1354. Although the cause is not
stated in the contract, it is presumed that
it exists and is lawful, unless the debtor
proves the contrary. (1277)
ARTICLE 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. (n)
4. Delivery
5. Due observance of prescribed formalities
Clemente v. CA, Jalandoon. G.R. No. 175483,
October 14, 2015
Pentacapital Investment Corp. vs Mahinay
GR No. 171736 July 5, 2010
Ong Yiu v. CA, 91 SCRA 223
Weldon v. CA, 154 SCRA 618
C & C Commercial Corp. v. Menor, 120 SCRA
112
Tang v. CA, 90 SCRA 236
Cariño v. CA, 152 SCRA 529
Lagunzad v. Gonzales, 92 SCRA 476
Law v. Olympic Sawmill, 129 SCRA 439
F. Form of Contracts – Arts. 1356-1358
ARTICLE 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 be 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. (1278a)
ARTICLE 1357. If the law requires a
document or other special form, as in the
acts and contracts enumerated in the
following article, the contracting parties
may compel each other to observe that
form, once the contract has been
perfected. This right may be exercised
simultaneously with the action upon the
contract. (1279a)
ARTICLE 1358. The following must
appear in a public document:
(1) Acts and contracts which have for
their object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sales of
real property or of an interest therein are
governed by articles 1403, No. 2, and
1405;
(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. (1280a)
1. any form – oral
2. special form
a. validity – Arts. 748, 749, 1744, 1773, 1874,
1956, 2134,
Act 1147, Sec. 22
ARTICLE 748. The donation of a movable
may be made orally or in writing.
An oral donation requires the
simultaneous delivery of the thing or of
the document representing the right
donated.
If the value of the personal property
donated exceeds five thousand pesos,
the donation and the acceptance shall be
made in writing. Otherwise, the donation
shall be void. (632a)
ARTICLE 749. In order that the donation
of an immovable may be valid, it must be
made in a public document, specifying
therein the property donated and the
value of the charges which the donee
must satisfy.
The acceptance may be made in the
same deed of donation or in a separate
public document, but it shall not take
effect unless it is done during the lifetime
of the donor.
If the acceptance is made in a separate
instrument, the donor shall be notified
thereof in an authentic form, and this
step shall be noted in both instruments.
(633)
ARTICLE 1744. A stipulation between the
common carrier and the shipper or owner
limiting the liability of the former for the
loss, destruction, or deterioration of the
goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or
owner;
(2) Supported by a valuable
consideration other than the service
rendered by the common carrier; and
(3) Reasonable, just and not contrary to
public policy.
ARTICLE 1773. A contract of partnership
is void, whenever immovable property is
contributed thereto, if an inventory of
said property is not made, signed by the
parties, and attached to the public
instrument. (1668a)
(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;

ARTICLE 1874. When a sale of a piece of
land or any interest therein is through an
agent, the authority of the latter shall be
in writing; otherwise, the sale shall be
void. (n)
ARTICLE 1956. No interest shall be due
unless it has been expressly stipulated in
writing. (1755a)
ARTICLE 2134. The amount of the
principal and of the interest shall be
specified in writing; otherwise, the
contract of antichresis shall be void. (n)
Section 22 of Act No. 1147, enacted May
3, 1904, provides that, "No transfer of
large cattle shall be valid unless
registered, and a certificate of transfer
secured as herein provided."
b. enforceability – Arts. 1403, 1878
(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 for 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.

ARTICLE 1403. The following contracts (3) Those where both parties are
are unenforceable, unless they are incapable of giving consent to a contract.
ratified:
ARTICLE 1878. Special powers of
(1) Those entered into in the name of attorney are necessary in the following
another person by one who has been cases:
given no authority or legal representation,
(1) To make such payments as are not
or who has acted beyond his powers;
usually considered as acts of
(2) Those that do not comply with the administration;
Statute of Frauds as set forth in this
(2) To effect novations which put an end
number. In the following cases an
to obligations already in existence at the
agreement hereafter made shall be
time the agency was constituted;
unenforceable by action, unless the
same, or some note or memorandum,
(3) To compromise, to submit questions
thereof, be in writing, and subscribed by
to arbitration, to renounce the right to
the party charged, or by his agent;
appeal from a judgment, to waive
evidence, therefore, of the agreement
objections to the venue of an action or to
cannot be received without the writing, or
abandon a prescription already acquired;
a secondary evidence of its contents:
(4) To waive any obligation gratuitously;
(a) An agreement that by its terms is not
to be performed within a year from the
making thereof;
(5) To enter into any contract by which
the ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration;
(6) To make gifts, except customary ones
for charity or those made to employees in
the business managed by the agent;
(7) To loan or borrow money, unless the
latter act be urgent and indispensable for
the preservation of the things which are
under administration;
(8) To lease any real property to another
person for more than one year;
(9) To bind the principal to render some
service without compensation;
(10) To bind the principal in a contract of
partnership;
(11) To obligate the principal as a
guarantor or surety; musawi
(12) To create or convey real rights over
immovable property;
(13) To accept or repudiate an
inheritance;
(14) To ratify or recognize obligations
contracted before the agency;
(15) Any other act of strict dominion. (n)
c. greater efficacy or convenience – Arts.
1358
ARTICLE 1358. The following must
appear in a public document:
(1) Acts and contracts which have for
their object the creation, transmission,
modification or extinguishment of real
rights over immovable property; sales of
real property or of an interest therein are
governed by articles 1403, No. 2, and
1405;
(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. (1280a)
G. Reformation of Contracts – Arts. 1359-
1369
CHAPTER 4. REFORMATION OF
INSTRUMENTS
Article 1359. When, there having been a
meeting of the minds of the parties to a
contract, their true intention is not
expressed in the instrument purporting to
embody the agreement, by reason of
mistake, fraud, inequitable conduct or
accident, one of the parties may ask for the
reformation of the instrument to the end
that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or
accident has prevented a meeting of the
minds of the parties, the proper remedy is
not reformation of the instrument but
annulment of the contract.
By: Johannes Aquino
Kapag ang magkabilang partido ay
namayagan sa kasunduan, ngunit ang
kanilang dokumento ay naiiba sa kanilang
napagkasunduan, ito ay maaring ipabago
ng kahit sinong partido. Ngunit kapag
magkaiba ang iniisip na napagkasunduan
ng magkabilang panig, ang kasunduan ay
maari lamang ipawalang bisa.
Meaning of reformation.
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.
Reason for reformation.
“Equity orders the reformation of an
instrument in order that the intention of the
contracting parties may be expressed.
The courts do not attempt to make another
contract for the parties. The rationale of the
doctrine is that it would be unjust and
inequitable to allow the enforcement of a
written instrument which does not reflect or
disclose the real meeting of the minds of the
parties. The rigor of the legalistic rule that the
written instrument should be the final and
inflexible criterion and measure of the rights
and obligations of the contracting parties is
thus tempered, to forestall the effects of
mistake, fraud, inequitable conduct, or
accident.”
Requisites of reformation.
In order that reformation may be availed of as
a remedy, the following requisites must be
present:
(1) There is a meeting of the minds of the
parties to the contract;
(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;(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 evidence1
(which is more than mere preponderance of
evidence) of the mistake, fraud, inequitable
conduct, or accident.
Reformation and annulment distinguished.
In reformation, there has been a meeting of
the minds of the parties (Art. 1359, par. 1.);
hence, a contract exists but the written
instrument purporting to embody the contract
does not express the true intention of the
parties by reason of mistake, fraud,
inequitable conduct, or accident. Under the
technical rules of law, the real contract
cannot be enforced until it is reformed.
In annulment, there has been no meeting of
the minds, the consent of one of the parties
being vitiated by mistake, etc.
Reformation and annulment are thus
inconsistent with each other. While the first
gives life to a contract upon certain
conditions, the second involves a complete
nullification of it.
Illustration:
Cedie sold his mansion to Princess Sarah. It
was agreed that the sale will include all the
furniture and appliances inside the mansion.
However, the contract as signed by the
parties, states that the mansion is being sold
is excluding the furniture pieces and
appliances. In this case, the remedy is
reformation because there has been a meeting
of the minds.
If Cedie was willing to sell the mansion
excluding the furniture and appliances, while
B was willing to buy the mansion including
the furniture and appliances, there has been
no meeting of the minds and therefore the
remedy is annulment.
Article 1360. The principles of the general
law on the reformation of instruments are
hereby adopted insofar as they are not in
conflict with the provisions of this Code.
By: Kristia Capio
Artikulo 1360. Ang prinsipyo ng
pangkalahatang batas sa repormasyon ng
instrumento ay pinagtibay hangga’t ito ay
hindi laban sa probisyon ng kodigo.
PRINCIPLES OF THE GENERAL LAW
ON REFORMATION
In case of conflict between the provisions of
the new Civil Code and the principles of the
general law on reformation, the former
prevail. The latter will have only suppletory
effect.
REQUISITES OF REFORMATION

1. Kapag ang parihong pagkakamali ng mga

1. There must have partido ay nagdulot ng pagkabigo ng
been a meeting of instrumento na ihayag ang tunay na
minds upon the kasunduan, and nasabing instrumento ay
contract maaring baguhin.
1.
1. Instrument or
document
evidencing the Comment:
contract does not
express the true
agreement Reformation is a remedy in equity by means
between the of which a written instrument is made or
parties construed so as to express or confirm the real
intention of the parties when some error or
1. Failure of the instrument to mistake is committed.
express the agreement must be
due to mistake, fraud, This article applies when the mistake is
inequitable conduct, or mutual that is both parties committed the
accident. same mistake which caused the failure of the
instrument to express their true agreement.
The Chapter on Reformation of Instruments
is based on American Law. The prevailing Illustration:
jurisprudence in America will be persuasive
but not necessarily binding, provided the
Salvy sold to Ben lot no. 5 which was
same does not contradict with the provisions
erroneously designated as lot number 10 in
of the code and other Philippine laws.
the deed of sale. Subsequently, Salvy sold to
Catherine lot number 5 in the deed of sale. In
The governing law is: Article 17. this case reformation is proper because there
is a simple mistake in drafting the documents
The forms and solemnities of contracts, wills, of sale. There being meeting of the minds of
and other public instruments shall be the parties to their contracts.
governed by the laws of the country in which
they are executed.

When the acts referred to are executed before

Article 1362. If one party was mistaken
the diplomatic or consular officials of the
and the other acted fraudulently or
Republic of the Philippines in a foreign
inequitably in such a way that the
country, the solemnities established by
instrument does not show their true
Philippine laws shall be observed in their
intention, the former may ask for the
execution.
reformation of the instrument.

Prohibitive laws concerning persons, their

By: Janine Gumangol
acts or property, and those which have for
their object public order, public policy and
good customs shall not be rendered COMMENT:
ineffective by laws or judgments
promulgated, or by determinations or In this Article, the mistake is unilateral but
conventions agreed upon in a foreign country. the other party acted fraudulently or
inequitably.
Article 1361. When a mutual mistake of
the parties causes the failure of the Example:
instrument to disclose their real
agreement, said instrument may be
            Jean agreed with Rey that Jean would
reformed.
be loaned P5, 000, 000.00 by Rey. In the
contract signed by Jean and Rey, it was stated
by: Bryan Glenn Fabiaña that Jean was selling her house to Rey for
said amount. Jean signed the contract in the
belief that it was really a contract of loan.
Who may ask for the reformation of the
instrument if Rey had acted fraudulently?
Answer: Jean may ask for the reformation of
the instrument because after the meeting of
the minds, one party (Rey) acted fraudulently
or inequitably in such a way that the contract
does not show their real intention.  In such a
case, the law provides that the person who
acted by mistake may ask for the reformation
of the instrument.
Article 1363. When one party was
mistaken and the other knew or believed
that the instrument did not state their real
agreement, but concealed that fact from
the former, the instrument may be
reformed.
By: Algy Riguer
On this article if the party is guilty of
concealment and attended with bad faith
therefore reformation is authorized to avoid
injustice and inequity while if the second
party is not aware of the imperfection and
acted in good faith as the first party therefore
the mistake becomes mutual and reformation
is authorized.
The remedy of formation may be availed of
the party who acted in good faith. The
concealment mistake by the other party
constitute Fraud.
Examples:
Mrs. Dy owed 5M to Mrs. Gong and made a
promissory note that she will pay Mrs. Gong
her land title in Cavite which is equivalent to
the amount that she owed. Six months after
their contract was made Mrs. Dy delivered
her land title to Mrs. Gong as her payment for
her debt to the latter. Mrs. Gong accepted the
land title but she noticed that it was the land
title of Mrs. Dy in Ilocos Norte which is 3x
more than the amount that Mrs. Dy owed but
she concealed it to Mrs. Dy. Therefore Mrs.
Dy is entitled for the reformation of
instrument that they used in their contract.
Article 1364. 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 true intention of the
parties, the courts may order that the
instrument be reformed.
By: Rose Ann Villanueva
Nang dahil sa walang kaalaman, walang
kasanayan, kapabayaan, may masamang
intensiyon, sa panig ng taong nagsususog
ng kapamaraanan, o ang tagatala, ang
kapamaraanan o instrumento na hindi
nagpapahayag ng tunay na intensiyon ng
mga partido, ang hukuman ay pwedeng
mag-atas na baguhin ang kapamaraanan.
Ignorance, lack of skill, negligence or bad
faith must be on the part of a third person.
Under the above article, neither party is
responsible for the mistake. Hence, either
party may ask for reformation.
Article 1365. 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 a
right of repurchase, reformation of the
instrument is proper.
By: Jayson Calventas
Kung ang dalawang partido ay sumang-
ayon sa sangla o pangako ng tunay o
personal na ari-arian, ngunit ang
instrumento ay nagsasaad na ang ari-arian
ay ganap na naibenta o mayroong
karapatan na bilhin itong muli, ang
pagbabago ng instrumento ay angkop.
Article 1365 NCC | speaks of…
Mortgage or pledge stated as sale
 When any of the
circumstances enumerated in
the law exists, an instrument
 purporting to be a sale with
right of repurchase shall be
presumed to be an equitable
mortgage.
 The true intention of the
parties must prevail.
Article 1365 NCC | example:
 Angeles purchased a parcel of
land from Velasquez.
 By the terms of the document,
the contract is one of sale.
 Later on, Justo bought the
subject land from the heirs of
Angeles.
 The heirs of Velasquez sued
Justo contending that the
contract between Angeles and
Velasquez is a mortgage.
 Justo argued that it is a sale
with the right of repurchase
 HOWEVER, in one of the
clauses in the document, it
appears that Velasquez did
NOT reserve the right to
repurchase the property, but
bound himself to return the
principal interest.
 This contract is a mortgage.
Article 1366. There shall be no
reformation in the following cases:
(1) Simple donations inter vivos wherein
no condition is imposed;
(2) Wills;
(3) When the real agreement is void.
By: Johannes Aquino
Hindi maaring baguhin ang simple na
donasyon, pamana, at kung ang tunay na
kasunduan ay walang bisa.
Cases when reformation not allowed.
(1) Simple donations inter vivos where no
condition is imposed. — Donation is an act of
liberality whereby a person disposes
gratuitously of a thing or right in favor of
another, who accepts it. (Art. 725.) When the
donor intends that the donation shall take
effect during his lifetime, it is a donation inter
vivos. It is distinguished from donation
mortis causa in that this kind of donation
takes effect after the donor’s death.
(a) In donation, the act is essentially
gratuitous and the donee has, therefore, no
just cause for complaint. If in the deed of
donation, a mistake or defect has been
committed, it is a mere failure in a bounty
which, as the donor was not bound to make,
he is not bound to correct. (see 45 Am. Jur.
599.) Of course, the donor may ask for the
reformation of a deed of donation.
(b) If the donation is conditional or is onerous
in character, the deed may be reformed so
that the true conditions imposed by the donor
or the real intention of the parties might be
expressed.
(2) Wills. — A will is an act whereby a
person is permitted with the formalities
prescribed by law to control to a certain
degree the disposition of his estate, to take
effect after his death. (Art. 783.) Like a
donation, the making of a will is a strictly
personal and a free act which cannot be left to
the discretion of a third person (see Art.
784.); hence, upon the death of the testator,
the right to reformation is lost. Furthermore, a
will may be revoked by the testator any time
before his death and this right is not subject
to waiver or restriction. (see Art. 828.)
(3) Where the real agreement is void. — If
the real agreement is void, there is nothing to
reform. Reformation would be useless
because the real agreement being void, it is
unenforceable.
(4) Art. 1367
Illustration:
Jellybee donated the trademark for his fried
chicken to Mangdo without conditions. In
this case, the act is essentially gratuitous and
Mangdo has no just cause for complaint.
Article 1367. When one of the parties has
brought an action to enforce the
instrument, he cannot subsequently ask for
its reformation.
By: Kristia Capio
 Artikulo 1367. Kapag ang isa sa mga
partido ay nagsampa ng aksiyon upang
maipatupad ang instrumento, hindi siya
makakahiling ng malalim na pagbabago.
Article 1367 is based on estoppel (Art. 1431.)
or ratification. When a party brings an action
to enforce the contract, he admits its validity
and that it expresses the true intention of the
parties. The bringing of the action is thus
inconsistent with reformation. There is no
prohibition against joining in one action the
reformation of instrument and its
enforcement as reformed.
ILLUSTRATION
Anna who is need of money negotiated a
contract of chattel mortgage with Ben using
Anna’s Car for security. Through
machination perpetrated by Ben, Anna signed
a document of sale believing that it was a
chattel mortgage. Later Anna filed a case
against Ben for delivery of the car based on
the deed of sale. The action failed. Ben can
no longer seek the reformation of the
instrument to consider it a chattel mortgage.  Article 1369. The procedure for the
He is estopped for the law has deemed him to
have waived the action for reformation.
Art. 1368. Reformation may be ordered at
the instance of either party or his
successors in interest, if the mistake was
mutual; otherwise, upon petition of the
injured party, or his heirs and assigns.
by: Bryan Glenn Fabiaña
Ang pagbabago ay maaring ipag utos ng
sinuman sa partido o taga pagmana kapag
ang pagkakamali ay sa parihong partido, sa
petisyon ng partidong agrabyado o kanyang
tagapagmana o tinalaga.
Comment:
Reformation of an instrument cannot be just
be done according to the whims and caprice
of one or even both parties but it is done only
upon order of the court.
If by mutual mistake there in non meeting of
the minds of the parties, either parties or their
successor in interest or their heir may petition
the court for the reformation of the
instrument.
If mistake is not mutual, the reformation of
the instrument may be petition by the injured
party, his heirs or assigns. An action for
reformation of a contract prescribes after
ten(10) years.
Illustration:
“A” entered a contract to “B” for the
construction of a building. The parties agreed
that the payment be made in dollars.
However what was typewritten in the
contract occasioned by mistake was the peso
sign. Either party or the successor in interest
of A or B may petition the court for
reformation of the instrument within ten
years.
reformation of instrument shall be
governed by rules of court to be
promulgated by the Supreme Court.
By: Janine Gumangol
Ang proseso sa pagbabago ng instrumento
ay sinasaklawan ng mga alituntunin ng
korte na na ipapahayag ng korte suprema.
H. Interpretation of Contracts – Arts.
1370-1379
 CHAPTER 5. INTERPRETATION OF
CONTRACTS
Article 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. (1281)
By: Algy Riguer
Kung ang mga napagkasunduan sa
kontrata ay malinaw at hindi nang-iiwan ng
pagdududa sa intensyon ng mga partido,
ang literal na ibig sabihin ng mga
napagkusunduan ang mananaig.
Interpretation of a contract is the
determination of the meaning of the terms or
words used by the parties in their contract.
It is a cardinal rule in the interpretation of
contracts that if the terms of a contract are
clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of
its stipulation shall control. The Court must
not read into any other intention of the
contracting parties contradictory to the plain
meaning.
Example:
A contract was executed between Shiela and
Bon. The contract recites that it is a sale of
parcel of land belonging to Shiela for
Php100,000.00. In the contract Shiela
described as the vendor and Bon, the vendee.
The terms of the contract are clear and it does
not appear from the circumstances that the
intention of the parties is contrary to the
literal meaning of said terms.
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Article 1371. In order to judge the
intention of the contracting parties, their
contemporaneous and subsequent acts
shall be principally considered.
By: Rose Ann Villanueva
Upang hatulan ang intensyon ng mga
nagkasundo, ang kaalinsabay at kasunod
na kilos ang syang pangunahing
ikonsidera.
Example:
Kristia and Bryan entered into a contract
entitled Contract of Lease. Although the
contract refers to Kristia as lessor and to
Bryan as Lessee, it states that possession and
ownership of the land are transferred to
Bryan. The title to the land was given by
Kristia to Bryan who registered the land in
his name. Before the date of the contract,
Bryan wrote a letter to Kristia offering to buy
the land.
By their acts, the party clearly indicate that
their evident intention is to make Bryan the
owner of the land. Hence, the contract should
be interpreted as one of sale.
Article 1372. However general the terms of
a contract may be, they shall not be
understood to comprehend things that are
distinct and cases that are different from
those upon which the parties intended to
agree. 
By: Jayson Calventas
Gaanuman ka-pangkalahatan ang mga
tuntunin ng isang kontrata, hindi sila dapat
intindihin upang unawain ang mga bagay
na naiiba at mga kaso na iba mula sa mga
pinagkasunduan ng mga partido.
Article 1372 NCC | speaks of…
Special intent over general intent
 Even if the terms used in the
contract/agreement may be
general, the interpretation
should NOT ever be far from
the intention of the parties;
 that intention to
be determined
 accd. to
circumstances.
 GENERAL RULE | Where in
a contract there are general
and special provisions
covering the same subject
matter that are inconsistent,
 special provisions
prevail over
general provisions
when the two
CANNOT stand
together.
Article 1372 NCC | example:
 Charlie is building a house on
a 350 sqm. lot with an existing
structure that was less than
350 sqm. in area.
 Ben protested alleging that
Charlie could occupy ONLY
the space where the existing
structure lies.
 Charlie, however, argued that
accd. to their agreement, he
could occupy the lot.
 Ben’s interpretation is
erroneous because if that was
the intention, they could have
used the words “portion” or
“part” and not the word “lot”.
Article 1373. If some stipulation of any
contract should admit of several meanings,
it shall be understood as bearing that
import which is most adequate to render it
effectual.  STIPULATIONS OF A CONTRACT
By: Johannes Aquino
Kung ang kasunduan ay merong kahulugan
maliban sa isa, ang kahulugan na
magbibigay silbi dito ang masusunod.
Interpretation of stipulation with several
meanings.
When an agreement is susceptible of several
meanings, one of which would render it
effectual, it should be given that
interpretation. Thus, if one interpretation
makes a contract valid or effective and the
other makes it illegal or meaningless, the
former interpretation is one which is
warranted by the rule stated in Article 1373.
Illustration:
Sabit Singson owns two lands, one he owns
exclusively and one he co-owns with Irap
Estrada. Without specifying, Sabit sells “his
parcel of land” to Ate Glow. Irap did not give
his consent to the sale.
In this case, the sale should refer to the land
owned by Sabit Singson alone as this would
make the contract effectual.
Article 1374. The various stipulations of a
contract shall be interpreted together,
attributing to the doubtful ones that sense
which may result from all of them taken
jointly.
By: Kristia Capio
Artikulo 1374. Ang iba’t ibang kasunduan
ng isang kontrata ay dapat bigyang-
kahulugan ng magkasama, dahil sa
mga hindi tiyak sa diwa na maaaring
magresulta mula sa lahat ng mga ito na
kinuha magkasama.
INTERPRETATIONS OF VARIOUS
A contract must be interpreted as a whole and
the intention of the parties is to be gathered
from the entire instrument and not from
particular words, phrases, or clauses. All
provisions should, if possible, be so
interpreted as to harmonize with each other. 
CASE
THE BANK OF THE PHILIPPINE
ISLANDS vs TY CAMCO SOBRINO, ET
AL.
G.R. No. L-36524. February 6, 1933.
HULL, J.
Facts
Ty Camco Sobrino is the registered owner of
two parcels of land situated in the
municipality of Rosario, Province of
Pangasinan, described in Transfer Certificates
of Title Nos. 1803 and 1804.
On April 12, 1924 Ty Camco Sobrino
executed a deed of first mortgage on these
parcels of land in favor of the Philippine
National Bank, and the mortgage was noted
on the back of the transfer certificates of title.
On February 21, 1930, Ty Camco Sobrino
executed a deed of second mortgage on the
same properties in favor of Cu Yeg Keng and
Simon A. Chan Bona, without having secured
the written consent of the Philippine National
Bank. The mortgagor obtained the certificates
of title from this bank. The register of deeds
for Pangasinan registered and noted on the
Transfer Certificate of Title Nos. 1803 ad
1804 the second mortgage.
On April 14, 1931, the Philippine National
Bank filed in the Court of First Instance of
Pangasinan, a petition praying that the
annotation or inscription of the second
mortgage be declared null and void, and
ordered cancelled.
Issue
Whether or not that the 2nd mortgage is valid
in favor of the appellees.
Ruling
The mortgage contract should be read in its
entirely. If so read, it is at once seen that
while the making of the 2nd mortgage except
with the written consent of the mortgage is
prohibited , the contract continues and states
the penalty for such violation namely, it gives
to the mortgage the right immediately
foreclose mortgage. It does not give the
mortgages the right to treat the second
mortgage as null and void.
The orders of CFI of Pangasinan are affirmed
with cost against the appellant.
Article 1375. Words which may have
different significations shall be understood
in that which is most in keeping with the
nature and object of the contract. 
by: Bryan Glenn Fabiaña
Ang mga salitang may ibat-ibang
pakahulugan ay uunawain sa paraan na
kung saan pinakamalapit sa pinagmulat at
bagay ng kontrata.
Comment:
Words used in a contract which are
susceptible to two or more meanings shall be
understood to follow that meaning which is
most in keeping with the nature and object of
the agreement.
Illustration:
Romeo leased to Elena a roof for the purpose
of erecting and advertising sign. The contract
provides for the termination of the lease by
Elena if a building should be constructed on
an adjoining property of such height ans to
obscure the view of Elena’s sign. There was
erected on the roof of an adjoining building a
sign which obstructed the view of Elena’s
sign. In this case, the term building as the
term used in the contract may be interpreted
as to include the obstructing sign having in
mind the nature and object of the contract.
Article 1376. The usage or custom of the
place shall be borne in mind in the
interpretation of the ambiguities of a
contract, and shall fill the omission of
stipulations which are ordinarily
established. 
By: Janine Gumangol
         Ang dating kinasanayan o
kinaugalian ng lugar ay maaaring gamitin
sa pagbibigay kahulugan sa mga hindi
malinaw sa kontrata, at papalitan nito ang
mga naalis sa kasunduan na
napagkasunduan.
COMMENT:
1) Effect of Usage or Custom of the Place
Examples:  INCURRED AN OBLIGATION.
a) Rona made a contract with Ferdy regarding
“pesetas”. In the place where the contract was
made, Mexican pesetas were more commonly
used than Spanish pesetas. The Supreme
Court held that the term “pesetas” should be
construed to mean Mexican pesetas.  “ADHESION” THERETO ON THE “TAKE
b) If a contract for a lease of services does
not state how much compensation should be
given, the custom of the place where the
services were rendered should determine the
amount. (Arroyo versus Azur)
2) Pleading and Proof of Customs and
Usages
         Should customs and usages be pleaded
(alleged in the pleading)?
Answer: Distinguish:
          If the customs and usages are general,
they need not be pleaded. Hence, even
without previously being alleged, they may
be proved in court.
Article 1377. The interpretation of obscure
words or stipulations in a contract shall
not favor the party who caused the
obscurity.  operation of the conditions stated in the
By: Algy Riguer
Ang interpretasyon ng mga malabong salita
o nakasaad sa kontrata ay hindi papaburan
ang partido na responsable sa kalabuan
nito.
IT IS JUST FAIR NOT TO FAVOR THE
PARTY WHO CAUSES ANY TROUBLE
ARISING FROM THE CONTRACT.
CONTRA PROFERENTEM-BE
INTERRETED STRICTLY AGAINST THE
PARTY WHO HAS DRAWN IT, OR BE
GIVEN AN INTERPRETATION WHICH
WILL BE FAVORABLE TO THE OTHER
WHO, UPON FAITH OF WHICH, HAS
CONTRACTS OF ADHESION-ALL THEIR
PROVISIONS HAVE BEEN DRAFTED BY
ONE PARTY, AND THE ONLY
PARTICIPATION OF THE OTHER IS
SIGNING OF HIS SIGNATURE OR HIS
IT OR LEAVE IT” BASIS, WITHOUT THE
RIGHT TO MODIFY IT.
The ambiguity is in the application for
insurance. 
Facts: A provision in the application for
insurance with the GSIS states this condition:
“That any policy shall be made effective on
the first day of the month next following the
month the first premium is paid.” Another
provision states: “That failure to deduct from
my salary the monthly premiums shall not
make that policy lapse,” and that, “the
premium account shall be considered as
indebtedness which I bind myself to pay the
System.”
Elsa, an employee of the Bureau of Public
Works died in an airplane crash. It appears,
however, that the Bureau had not remitted to
GSIS even a single premium.
Issue: Has the insurance taken effect?
Held: Yes. The ambiguity created by the
application should be interpreted adversely
against the GSIS. (Landicho vs. GSIS, 44
SCRA 7 [1972].)
Article 1378. When it is absolutely
impossible to settle doubts by the rules
established in the preceding articles, and
the doubts refer to incidental
circumstances of a gratuitous contract, the
least transmission of rights and interests
shall prevail. If the contract is onerous, the
doubt shall be settled in favor of the
greatest reciprocity of interests.
If the doubts are cast upon the principal
object of the contract in such a way that it
cannot be known what may have been the
intention or will of the parties, the contract
shall be null and void.
By: Rose Ann Villanueva

Kung talagang imposibleng pagkasunduan
ang pagdududa gamit ang mga probisyon sa
nakaraang artikulo, at ang pagdududa ay
napapatungkol sa mga incidental
na pangyayari sa gratuitous na kontrata,
ang may pinakakukonti ang paglilipat ng
karapatan at interes ang masusunod. Kung
ang kontrata ay onerous, ang pagdududa
ay  isasaayos na ang pabor ay sa dalawang
may interes.
Kung may pagdududa sa mga principal na
dahilan ng kontrata sa pamamaraan na
hindi na maaring malaman kung ano ang
intensyon at lakas ng loob ng mga partido,
ang kontrata ay magiging labag sa batas.
Doubts in contract refer only to incidental
circumstances but cannot be settled in
accordance with previous provisions.
 If doubts refer to incidental circumstances of
a gratuitous contract, such interpretation
should be made which would result in the
least transmission of rights and interests.  dapat ding sundin sa paggawa ng mga
Example:
 Ana gave her car to Ben. It is not clear in the
contract whether it is commodatum or a pure
donation.
The Contract should be presumed as a mere
commodatum because it would transmit
lesser rights than a donation since Ana retains
ownership of her car.
 If the contract in question is onerous, the
doubt should be settled in favor of the
greatest reciprocity of interests.
 Example:
Ana borrowed from Ben P 5,000.00 at 12%
interest. It cannot be determined from the
terms of contract whether the loan is payable
in six months or in one year.
It must be assumed that the period agreed
upon is one year which results in a greater
reciprocity of interests since Ana can use the
money for one year, and Ben, on the other
hand, can earn interest due for one year
instead of only six months.
 If the doubt refers to the principal object of
the contract and such doubt cannot be
resolved thereby leaving the intention of the
parties unknown, the contract shall be null
and void.
Example:
 Ana sold her land to Ben. Ana 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.
Article 1379. The principles of
interpretation stated in Rule 123 of the
Rules of Court shall likewise be observed
in the construction of contracts. 
By: Jayson Calventas
Ang mga prinsipyo ng interpretasyon na
nakasaad sa Rule 123 ng Rules of Court ay
kasunduan.
Article 1379 NCC | speaks of…
Interpretation of Documents under Rule
130
 Section 10. Interpretation of a
writing according to its legal
meaning.  — The language of
a writing is to be interpreted
according to the legal meaning
it bears in the place of its
execution, unless the parties
intended otherwise.
 Section 11. Instrument
construed so as to give effect
to all provisions. — In the
construction of an instrument,
where there are several
provisions or particulars, such
a construction is, if possible,
to be adopted as will give
effect to all.
 Section 12. Interpretation
according to intention;
general and particular
 provisions. — In the
construction of an instrument,
the intention of the parties is
to be pursued; and when a
general and a particular
provision are inconsistent, the
latter is paramount to the
former. So a particular intent
will control a general one that
is inconsistent with it.
 Section 13. Interpretation
according to
circumstances. — For the
proper construction of an
instrument, the circumstances
under which it was made,
including the situation of the
subject thereof and of the
parties to it, may be shown, so
that the judge may be placed
in the position of those who
language he is to interpret.
 Section 14. Peculiar
signification of terms. — The
terms of a writing are
presumed to have been used in
their primary and general
acceptation, but evidence is
admissible to show that they
have a local, technical, or
otherwise peculiar
signification, and were so used
and understood in the
particular instance, in which
case the agreement must be
construed accordingly.
 Section 15. Written words
control printed. — When an
instrument consists partly of
written words and partly of a
printed form, and the two are
inconsistent, the former
controls the latter.
 Section 16. Experts and
interpreters to be used in
explaining certain writings. —
When the characters in which
an instrument is written are
difficult to be deciphered, or
the language is not understood
by the court, the evidence of
persons skilled in deciphering
the characters, or who
understand the language, is
admissible to declare the
characters or the meaning of
the language.
 Section 17. Of two
constructions, which
preferred. — When the terms
of an agreement have been
intended in a different sense
by the different parties to it,
that sense is to prevail against
either party in which he
supposed the other understood
it, and when different
constructions of a provision
are otherwise equally proper,
that is to be taken which is the
most favorable to the party in
whose favor the provision was
made.
 Section 18. Construction in
favor of natural right. —
When an instrument is equally
susceptible of two
interpretations, one in favor of
natural right and the other
against it, the former is to be
adopted.
 Section 19. Interpretation
according to usage. — An
instrument may be construed
according to usage, in order to
determine its true character.
Article 1379 NCC | example:
 Genjo and Deshi are both
Chinese immigrants who
acquired Filipino citizenship.
 Genjo wants to buy the parcel
of land of Deshi for the
construction of his commercial
building.
 Being both ethnically and
culturally Chinese, they wrote
their document of sale in
Cantonese.
 If ever there will be a
litigation between the two
parties with regards to this
contract, experts and
interpreters may be asked to
declare the characters or the
meaning of the language used
as it is NOT understood by the
court (Sec 10, Rule 130).
I. Kinds of Contracts as to Validity
1. Valid and binding
2. Valid but defective
i) Rescissible Contracts – Arts. 1380-
1389, 1191
 CHAPTER 6. RESCISSIBLE
CONTRACTS
Article 1380. Contracts validly agreed
upon may be rescinded in the cases
established by law.  (3) The rescission must be based upon a case
By: Johannes Aquino
Ang pagpapawalang bisa sa isang wastong
kasunduan ay maari lamang gawin sa mga
kasong naaayon sa batas.
Meaning of rescissible contracts.
Rescissible contracts are those validly agreed
upon because all the essential elements exist
and, therefore, legally effective, but in the
cases established by law, the remedy of
rescission is granted in the interest of equity.
Binding force of rescissible contracts.
They are valid and enforceable although
subject to rescission by the court when there
is damage or prejudice to one of the parties or
to a third person. In a rescissible contract,
there is no defect at all but by reason of some
external facts, its enforcement would cause
injustice.
Meaning of rescission.
Rescission is an equitable 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 prior to the celebration of
said contract.
This remedy should be distinguished from
rescission under Article 119 in case of breach
of obligation (infra.), or rescission of a
contract by mutual consent of the parties
(infra.) which shall be governed by their
agreement or other legal provisions but not
by Chapter 6. Requisites of rescission.
The following are the requisites in order that
the remedy of rescission under this Chapter
may be availed of:
(1) The contract must be validly agreed upon;
(2) There must be lesion or pecuniary
prejudice or damage to one of the parties or
to a third person (Art. 1381.);
especially provided by law (Arts. 1380, 1381,
1382.);
(4) There must be no other legal remedy to
obtain reparation for the damage (Art. 1383.);
(5) The party asking for rescission must be
able to return what he is obliged to restore by
reason of the contract (Art. 1385, par. 1.);
(6) The 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) The period for filing the action for
rescission must not have 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.
Article 1381. The following contracts are
rescissible:
(1) Those which are 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 thereof;
(2) Those agreed upon in representation of
absentees, if the latter suffer the lesion
stated in the preceding number;
(3) Those undertaken in fraud of creditors
when the latter cannot in any other
manner collect the claims due them;
(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;
 (5) All other contracts specially declared
by law to be subject
to rescission.
By: Kristia Capio
Artikulo 1381. Ang sumusunod na mga
kontrata ay maaring ikansila:
(1) Yaong mga ipinasok ng mga
tagapangalaga kapag ang kanilang
inaalagaan na kanilang kinakatawan ay
walang kakayahan mahigit sa ika apat ng
halaga ng mga bagay na siyang
kadahilanan;
(2) Yaong mga napagkasunduan na
patungkol sa wala, kung ang huli ay
mayroon kwalang kakayahan na nakasaad
sa naunang bilang;
(3) Yaong mga pagsasaayos na
maypanlinlang sa mga nagpapautang ang
nahuli ay hindi na sa anu man paraan
makaka singil pa;
(4) Yaong mga nauukol sa mga bagay na
napapailalim ng hukuman kung iyon ay
pinasok ng nasasakdal na walang kaalaman
at pagsang-ayon ng mga nasasakdal  o ng
hukuman may karampatan kapangyarihan;
(5) Lahat nang ibang mga kontrata na
lalong itinakda ng batas na maaring
ipawalang bisa/ ikansila.
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.
(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.
It must be noted that paragraphs 1 and 2 refer
only to transactions by guardians and
absentees’ representatives. Rescission cannot
take place if the contracts have been
approved by the court. As a general rule,
lesion does not invalidate a contract except
only in special cases specified by law.
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, as in No. (4), the remedy of rescission
may be availed of by a third person. Such
contracts are usually made without the
knowledge of the creditors. In order that
fraud of creditors may be a valid ground for
rescission, the following requisites must also
be present:
(a) There must be an existing credit prior to
the contract to be rescinded, although it is not
yet due or demandable later;
(b) The subsequent contract made by the
debtor conveys a patrimonial benefit to a
third person;
(c) There must be fraud on the part of the
debtor which may be presumed or proved;
(d) The creditor has no other legal remedy to
satisfy his claim, that is, he cannot recover
his credit in any other manner, it not being
required that the debtor be insolvent.
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.
The right to file the action for rescission
arises in favor of the plaintiff when the
defendant enters into a contract over the thing
in litigation without the knowledge or
approval of the plaintiff or the court.
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. 
 
Article 1382. Payments made in a state of
insolvency for obligations to whose
fulfillment the debtor could not be
compelled at the time they were effected,
are also rescissible. 
by: Bryan Glenn Fabiaña
Kabayaran na ginawa noong siya ay walang
pambayad sa obligasyon na kung saan ang
pagsasakatuparan, ang nangungutang ay
hindi marring pilitin sa panahon ang mga
ito ay epektibo at maari ring ipawalang
bisa.
Comment:
This article deals with rescission of
payments. There are two conditions that must
concur for the article to be applicable.
1st – the debtor must be in a state of
insolvency and insolvency need not be
judicially declared;
2nd- the payment exacted from him is for a
debt not yet due and demandable.
Rescissible contracts are those validly agreed
upon because all the essential elements exist
and therefore legally effective but in the cases
establish by law, the remedy of rescission is
granted in the interest of equity.
A debtor is insolvent if he does not have
sufficient properties to meet his obligations.
Illustration:
ABC an insolvent corporation owed Jose one
hundred thousand pesos. although the debt is
not yet enforceable, the corporation delivered
a deed of sale covering one of its properties
to Jose as payment for the debt. However the
value of the property is much greater that the
amount rescissible because it was made by
the debtor who is in a state of insolvency in
payment of an obligation which is not yet
due.
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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.
By Janine Gumangol
          Ang pagpapawalang-bisa ay
nakakatulong; hindi ito magagamit maliban
kung ang  panig na nagtitiis ng danyos ay
walang ibang makabatas na pamamaraan
na makakuha ng kabayaran o kapalit nito.

COMMENT:
Rescission is not a principal remedy; it is
only subsidiary and may only be availed of
by the injured party if has no other legal
means of seeking redress or reparation for the
damages caused. If, therefore, it is found out
that the debtor has no other property than that
which is the object of the resindable contract,
rescision may merely be applied, provided
that all the essential requisites for rescission
are present. (Regalado v. Luchsinger and Co.,
5 Phil 625)
          When a creditor seeks to set aside a
contract as fraudulent, he must prove first
that he really is a creditor, and secondly, that
he cannot collect his debt in any other way.
Article 1384. Rescission shall be only to the
extent necessary to cover the damages
caused. 
By: Algy Riguer
Ang pagpapawalang bisa ay dapat lamang
na kung kinakailangan na maisama ang
pinsala na nagging sanhi.
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.
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. (see Art. 1381[1].)
But if Gino or Bitoy is willing to pay the
difference of P200,000.00, rescission is
precluded.
Article 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;
consequently, it can be carried out only
when he who demands rescission can
return whatever he may be obliged to
restore.
Neither shall rescission take place when
the things which are the object of the
contract are legally in the possession of
third persons who did not act in bad faith.
In this case, indemnity for damages may
be demanded from the person causing the
loss.
By: Rose Ann Villanueva
Ang pagwawalang bisa sa kontrata ay
gumagawa ng obligasyon na ibalik ang mga
bagay na tinutukoy sa kontrata, kasama ng
kanyang bunga, at ng halaga pati interes;
dahil dito, magagawa lamang ito kung ang
humingi ng pagwawalang bisa ay
maibibigay ang anumang obligahin niyang
ibalik.
Hindi mapapawalang bisa ang kontrata
kapag ang mga bagay na kailangang ibalik
ay nasa legal na pagmamay-ari na ng ibang
taong wala namang masamang intensyon.
Rescission creates an obligation of mutual
restitution.
When the court declares a contract rescinded,
the parties must return to each other (1)
object of the contract with its fruits (2) the
price thereof with legal interest.
Purpose:
Restore the parties to their original situation.
The law presumes that the party who received
the object of the contract has enjoyed the
fruits thereof while the other has used the
money which is the price of the object. With
respect to the fruits, the rules on possession
shall govern.
Mutual restitution also applies to voidable unenforceable,
contracts. whether there is
lesion or NOT.
Article 1386. Rescission referred to in Nos.
1 and 2 of Article 1381 shall not take place Article 1386 NCC | example:
with respect to contracts approved by the
courts.   Gardo is the guardian of
Myrna, a minor.
By: Jayson Calventas  Gardo sells the ₱20,000-worth
property of Myrna only
₱15,000.
 Here, the contract of sale
CANNOT be rescinded
Ang pagbawi na tinutukoy sa Blg. 1 at 2 ng because the lesion is NOT
Artikulo 1381 ay hindi magaganap sa mga more than 1/4,
kasunduang inaprubahan ng hukuman.  UNLESS the
contract of sale is
approved by the
court.

Article 1386 NCC | speaks of…  HOWEVER, if the property is

sold for less than ₱15,000,
Myrna can rescind the sale by
Contracts approved by the courts
proper action in court upon
reaching the age of majority.
 These are contracts entered
into by the guardian OR Article 1387. All contracts by virtue of
representative where the ward which the debtor alienates property by
OR absentee suffers a lesion gratuitous title are presumed to have been
of more than 1/4 of the value entered into in fraud of creditors, when the
of the property. donor did not reserve sufficient property
 If the contract is to pay all debts contracted before the
approved by the donation.
court, rescission
CANNOT be
Alienations by onerous title are also
availed of even if
presumed fraudulent when made by
lesion of more
persons against whom some judgment has
than 1/4 the value
been issued. The decision or attachment
of the property be
need not refer to the property alienated,
suffered by the
and need not have been obtained by the
ward OR
party seeking the rescission.
absentee.

 When a contract is entered In addition to these presumptions, the

into in behalf of a ward for an design to defraud creditors may be proved
act of ownership, the approval in any other manner recognized by the law
of the court is required. of evidence. 
 Absent this
approval, the By: Johannes Aquino
contract is
unenforceable,
whether there is
lesion or NOT.
Ang donasyon na kung saan ang nagbigay
 As regards a contract dealing ay hindi nag-iwan ng sapat na ari-arian
with an act of administration, upang mabayaran ang kanyang
court approval renders the pagkakautang ay hinihinalang ginawa
contract valid, lesion or NO upang makapanloko sa kayang mga
lesion. pinagkakautangan, gayundin ang
 Absent this pagbebenta na kung saan ang may utang ay
approval, the nahatulan na korte. Hindi kailangan na
contract is ang hatol ay para sa ari-ariang binenta, at
 hindi rin kailangan na ito ay ginawad sa
panig na gustong magpawalang bisa ng
kasunduan.
When alienation presumed in fraud of
creditors.
The general rule is that fraud is not presumed.
As fraud is criminal in nature, it must be
proved by clear and preponderance of
evidence.
(1) Instances not exclusive. — Article 1387
establishes presumptions of fraud in the case
of alienation by the debtor of his property.
(pars. 1 and 2.) However, the instances
mentioned are not exclusive of others that
may be proved in any other manner
recognized by the law of evidence. (par. 3;
see Art. 1177.) The presumptions are
disputable and may be rebutted by contrary
evidence. (infra.)
(2) Presumption not applicable in the absence
of transfer. — The presumption in Article
1387 applies only when there has in fact been
an alienation or transfer, whether gratuitously
or by onerous title. The effect of the
presumption is to shift the burden to the one
who alienated to prove that the transfer was
not fraudulently made.
(3) Only actual creditors can ask for
rescission. — Under the Civil Code (Arts.
1381[3], 1387.), only actual creditors can ask
for the rescission of the conveyance made by
their debtors in favor of strangers. The waiver
and release made previously by the creditor
of the credit he held against the debtor
operate to deprive the rescissory action of any
legal basis.
(4) Vendor, an indispensable party in action
for rescission of sale. — An action for
rescission of sale under Article 1387 cannot
be finally determined without the presence in
court of the vendor. For any decision on the
action or claim for damage would affect him.
He is entitled to be heard.
Test for determining whether a conveyance is
fraudulent.
“In determining whether or not a certain
conveyance is fraudulent, the question in
every case is whether the conveyance was a
bona fide transaction or a trick and
contrivance to defeat creditors, or whether it
conserves to the debtor a special right. It is
not sufficient that it is founded on good
consideration, or is made with bona fide
intent; it must have both elements. If
defective in either of these particulars
although good between the parties, it is
rescindible as to creditors. The rule is
universal both in law and in equity that
whatever fraud creates, justice will destroy.
The test as to whether or not a conveyance is
fraudulent is: Does it prejudice the right of
creditors?”
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.
(2) 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.
(b) 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.”
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.
By: Kristia Capio
Artikulo 1388. Kung sino man ang
nakakuha  na maymasamang hangarin sa
bagay na inalis na may panlilinlang sa mga
nagpapautang, ay magbabayad duon sa huli
ukol sa mga damyos na kanyang sinapit
dahil sa pagaalis, kung, sa anu man
kadahilanan, iyon ay imposible na naisauli
niya sa kanila.
Kapag mayroon dalawa o mahihgit pang
pag aalis, ang naunang nakakuha ng
pagaari ang siyang mananagot doon sa
nauna at doon sa ibang magkakasunod.
The purchaser in bad faith, who acquired the
object of the contract alienated in fraud of
creditors, must return the same if the sale is
rescinded (see Art. 1383.) and should it be
impossible for him to return it due to any
cause, he must indemnify the former.
Should there be two or more alienations, the
first acquirer shall be liable first, and so on
successively.
EXAMPLES:
(1) Sandy sold her car to Ben in order to
avoid the payment of her debt to Cathy, her
creditor. Ben knew of Sandy’s purpose.
If the sale is rescinded, Ben must return the
car. Should the car be destroyed with or
without his fault, then Cathy is entitled to be
indemnified for damages by Ben.
(2) Suppose, Ben transferred the car to Dan
who also acted in bad faith. Then Dan sold it
to Emma who did not know of the purpose
behind the previous conveyance.
As the first acquirer. Ben is liable first. If he
cannot pay, then Dan will be liable.
If Ben acted in good faith, the good or bad
faith of Dan is not important, except where
Dan connived with Sandy to make Ben a
mere innocent intermediary in which case
Dan can be held liable.
Article 1389. The action to claim rescission
must be commenced within four years.
For persons under guardianship and for
absentees, the period of four years shall
not begin until the termination of the
former’s incapacity, or until the domicile
of the latter is known. 
by: Bryan Glenn Fabiaña
Ang pag sasagawa sa pag wawalang bisa ay
dapat gawin sa loob ng apat na taon. Para
sa mga taong nasa pangangalaga pa, ang
panahon na apat na taon ay hindi
nagsisimula hanngang sa terminasyon ng
taong nabaggit sa kanyang kawalan ng
kakayahan o hanggang ang kinaroroonan
ng taon nawala sa matagal na panahon ay
tukoy.
Comment:
As a general rule, the prescriptive period
within which to file a rescissory action is four
years. the reckoning time however may vary
depending upon the circumstances:
(a) If the complaining party is a third person
who has no participation in the contract the
prescriptive period is four years reckoned
from the discovery of the fraudulent contract
or from the registration thereof if real
property is involved;
(b) If the complaining party is a minor or
people under guardianship the action to
rescind must be done within four years after
attaining the age of majority;
(c) If the complaining party is an absentee he
should file an action for rescission within
four years from the time his domicile has
been known.
An absentee is one who has disappears from
his domicile and his whereabouts are
unknown without leaving an agent to
administer his properties. Consequently,
when she appears in his domicile he ceases to
be an absentee as long as he informs the court
of his presence.
ARTICLE 1191. The power to rescind
obligations is implied in reciprocal ones,
in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between
the fulfillment and the rescission of the
obligation, with the payment of damages
in either case. He may also seek
rescission, even after he has chosen
fulfillment, if the latter should become
impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without
prejudice to the rights of third persons
who have acquired the thing, in
accordance with articles 1385 and 1388
and the Mortgage Law. (1124)
ii) Voidable Contracts – Arts. 1390-1402,
1327-1328, 1330
CHAPTER 7. VOIDABLE CONTRACTS
Article 1390. The following contracts are
voidable or annullable, even though there
may have been no damage to the
contracting parties:
(1) Those where one of the parties is
incapable of giving consent to a contract;
(2) Those where the consent is vitiated by
mistake, violence, intimidation, undue
influence or fraud.
These contracts are binding, unless they
are annulled by a proper action in court.
They are susceptible of ratification.
By: Janine Gumangol
          Ang mga sumusunod na kontrata ay
walang bisa , kahit na walang danyos sa
mga nagkasundong panig:
1) Kung isa sa mga panig ay walang
kakayahang  magbigay ng pahintulot sa
kontrata.
2) Kung saan ang pahintulot ay may
kamalian, karahasan, pananakot at hindi
karapat-dapat na impluwensiya o
pandaraya.
Ang mga kontratang ito ay mabisa,
maliban kung pinapawalang-bisa ng
akmang pagsampa sa korte. Madaling
ikiling ang mga pagbabago nito.
Distinctions Between a Rescissible and a
Voidable Contract
Article 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. 
By: Algy Riguer
Ang hakbang para sa pagpapawalang bisa
ay dapat gawin sa loob ng apat na taon.
Ito ay magsisimula, sa kaso ng
intimidasyon, dahas o hindi tamang pag
impluwensya, mula sa oras ng depekto ng
pagpayag ay natapos.
Sa kaso ng pagkakamali o panloloko,
magsimul ng oras ng pagka diskubre ng
pagkakamali o panloloko.
At kapag ang hakbang ay patukoy sa
kontratang pinasok ng mga menor de edad
o mga taong may kapansanan, mag simula
sa oras na ang guardianship ay natapos.
Discussion:
This article only applies to the parties in the
contract. It does not apply to a third person
when the law allows them to question the
validity of a contract.
Failure to pursue an action within the period
prescribed by law will have the effect of
extinguishing the action.
With regard to fraudulent conveyances with
the Registry of Property, the prescriptive
period is counted not from the actual
knowledge of the fraud by the plaintiff
but from the registration of the public
document with the said registry.  The act of
registration is a notice to the whole world.  It
is the operative acts that binds registered
lands under the Torrens System.
Facts: Petitioner M was forced, “through
threats and intimidation,’’ to sell at a grossly
low price his three parcels of land located
near Malacañang during the height of Martial
Law to Development Bank of the Philippines
(DBP) which, in turn, sold it to the
Government, through the Office of the
President. After the late President Marcos left
the country on February 14,1986 after the
EDSA Revolution M made repeated
extrajudicial demands upon respondents for
the return and reconveyance of subject
properties to them, the last being the demand
letters dated October 24, 1989. On March 23,
1990, M filed a complaint for annulment of
sale, reconveyance and damages against
respondents.
Issue: Has the action for annulment of the
contract of sale prescribed?
Held: Yes. (1) Alleged threat and
intimidation ceased when Marcos left on
February 24, 1986. — “Since an action for
the annulment of contracts must be filed
within four years from the time the cause of
vitiation ceases, the suit before the trial court
should have been filed anytime on or before
February 24, 1990. In this case, petitioner did
so only on March 23, 1990. Clearly, his
action had prescribed by then.’’
Article 1392. Ratification extinguishes the
action to annul a voidable contract.
By: Rose Ann Villanueva
Ang pagpapatibay ay mawawala ang
aksyon upang mapawalang bisa ang isang
kontrata.
1. Confirmation – to cure a
defect in a voidable contract.
2. Ratification– to cure the
defect of lack of authority in
an authorized contract (entered
into by another).
3. Acknowledgment– to remedy
a deficiency of proof (thus, an
oral loan may be put in
writing, or when a private
instrument is made a public
instrument).
Requisites of Ratification to be effective:
1. There must be a voidable or
annulable contract.
2. Ratification is made with the
knowledge of the cause of
nullity.
3. At the time of ratification, the
cause of nullity has already
ceased.
4. The ratifying party is the
injured party, or the prejudiced
party.
5. The ratification is
accomplished expressly or
impliedly by a waiver of
action to annul.
The right to ratify is transferrable to the heirs
of the party who has the right to ratify.
Article 1393. Ratification may be effected
expressly or tacitly. It is understood that
there is a 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 should execute an act which
necessarily implies an intention to waive
his right. 
By: Jayson Calventas
Ang ratipikasyon ay maaaring maipakita
nang hayag o hindi. Malinaw na mayroong
di-hayag na ratipikasyon kung,
 samantalang nababatid niya ang dahilan
kung bakit ang kasunduan ay
maipawawalang-bisa at ang dahilang iyon
ay hindi na umiiral, ang tao na may
karapatang mag-apila ay maghahain ng
aksyon na nagpapahiwatig ng kanyang
intensyong talikdan ang kanyang
karapatan.
Article 1393 NCC | speaks of…
Kinds of ratification
 Express ratification – when
the ratification is manifested
in words OR in writing
 Implied ratification – may take
diff. forms: by silence or
acquiescence, by acts showing
adoption or removal of the
contract, by acceptance and
retention of the benefits
flowing therefrom
 Requisites of implied
ratification
 Knowledge of the
reason which
renders the
contract voidable
 Such reason must
have ceased
 The injured party
must have
executed an act
which necessarily
implies an
intention to waive
his right
Article 1393 NCC | example:
 Arturo sold his property to
Ben.
 After the sale was concluded,
Arturo wants Ben to pay more
for the property thus sold.
 When Ben did NOT accede,
he threatened to sue Ben
contending that the contract of
sale is void.
 A seller of property CANNOT
negotiate for an increase in the
price in one breath and in the
same breath contend that the
contract of sale is void.
Article 1394. Ratification may be effected
by the guardian of the incapacitated
person.
By: Johannes Aquino
Ang mga nangangalaga sa mga taong
walang legal na kapasidad ay maaring
magpatibay ng kontrata na ginawa ng
kanilang alaga.
Party who may ratify.
(1) A contract entered into by an
incapacitated person may be ratified by:
(a) the guardian; or
(b) the injured party himself, provided, he is
already capacitated. As legal representatives
of their wards, guardians have the power to
contract on their behalf. Hence, they may also
ratify contracts entered into by their wards.
(2) In case the contract is voidable on the
ground of mistake, etc., ratification can be
made by the party whose consent is vitiated.
Example:
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
Article 1395. Ratification does not require
the conformity of the contracting party
who has no right to bring the action for
annulment.
By: Kristia Capio
Ang pagpapatibay ay hindi kaylangang
humingi ng pagsangayon ng nagkasundong
partido na walang karapatan na magdala
ng aksyon sa pag sasawalang bisa.

Ratification is a unilateral act by which a
party waives the defect in his consent. The
consent of the guilty party is not required;
otherwise, he can conveniently disregard his
contract by the simple expedient of refusing
to give his conformity.
The innocent party has the prerogative to
annul or not to annul a voidable contract.
“He who comes to the court, must come with
clean hands”
Further, there is also no need for the innocent
party to require the guilty party’s conformity
before he ratifies the defective contract.
ILLUSTRATION
Enrico is the owner of the famous hardware
in Laguna. He rented the warehouse of Danna
to become one of his bodega. Cesar buy the
materials that he needed for the construction
of his own house to Enrico, since the other
materials is on the warehouse of Danna and
Enrico already rented it therefore the consent
of Danna is not needed for the delivery of the
materials that Cesar needed.
Article 1396. Ratification cleanses the
contract from all its defects from the
moment it was constituted.  these flaws of the contract.
By: Bryan Glenn Fabiaña
Ang pag apruba ay nililinis ang kontrata
mula sa lahat ng depekto simula sa oras na
ito ay isinagawa.
Comment:
The act of ratification cures the defects of the
contract and so it is as if the same contract
had no infirmity from the very beginning.
The cleansing of voidable contract retroacts
to the time of its constitution.
An action for annulment of contract based on
its original curable defects can no longer
prosper after its due ratification or
confirmation.
Exception:
The rule of retroactivity shall not prejudice
the rights of innocent third persons for that
will result in injustice which is not the
intention of the law.
Illustration:
A who is a minor sold his property to B. The
sale is voidable due to A’s minority. After
reaching the age of majority, A borrowed
money from C. Disgusted wit C’s charges of
high interest, A ratified the sale he made in a
favor of B. A’s intention was to avoid paying
his obligation to C.
C may rescind the sale made by A when he
was still a minor. The retroactive effect of the
ratification which cleanses the voidable
contract of its defect from its inception will
not affect or prejudice the rights of C who is
an innocent third person.
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
 
By: Janine Gumangol
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.
In obligations to render service, the value
thereof shall be the basis for damages. 
 By: Algy Riguer
Kapag ang mga obligasyon kapag
naipawalang bisa na, ang mga partidong
nagkasundo ay maaaring magbalik ng mga
bagay na sumailalim sa kanilang
kasunduan noong mag bisa pa ang
kontrata, ang mga bunga nito, at mga
halaga ng mga interest, maliban sa mga
kaso na labag sa batas.
Sa mga obligayong serbisyo ang
pinagkasunduan, ang mga halaga ng
danyos perwisyo ang magiging batayan ng
mga pinsala dito.
Mutual Restitution upon annulment
If the contract is annulled, the parties, as a
general rule, must restore to each other the
subject matter of the contract with its fruits
and the price thereof with legal interest.
Unless there are fundamental reasons
recognized by the law which will prevent
such restitution.
Who may invoke Restitution
Only the between the parties who are privity
with the contract. A stranger to the actual
contractual relation cannot invoke the benefit
of this provision.
Contracts not covered
If one of the contracting parties received
some benefit, and he has not given anything
for it to the other, it is only equitable that he
should return the amount by which he
unjustly enriched.
If the parties had reciprocal prestations,
which can compensate each other, the excess
in value can be paid to the party to whom it
pertains.
Example:
If a piece of land is leased for one year, with
the land delivered and rent paid in advance
for full period, and then the contract is
annulled after four months, the mutual
restitution cannot be total.
The lessee has to return the land, but the
lessor should not be obliged to return the full
amount of rent received by him but only the
corresponding to the unexpired eight months.
Article 1399. When the defect of the
contract consists in the incapacity of one of
the parties, 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.
By: Rose Ann Villanueva
Kung ang depekto ng kontrata ay
naglalaman ng kawalan ng kapasidad ng
isang partido, ang may kapansanang tao ay
hindi kinakailangang gumawa ng ano
mang restitution maliban sa
napakinabangang bagay o premyong
natanggap niya.
The incapacity mentioned in the above article
is any form of incapacity or mental debility
and not merely minority.
This is an exception to the general rule of
mutual restitution. The incapacitated person
is obliged to make restitution only to the
extent that he was benefited by the thing or
the price received by him.
It results therefore, that if he was not
benefited, he is not obliged to restore what he
had received but the other contracting party is
still bound to return what he had received,
whether he has benefited or not.
If at the time the incapacity ceases and the
thing received still exists, the presumption is
that he benefited, so that should he ask for
annulment, he must return the same to the
other party. If he alienates or squanders the
thing instead of annulling, he is deemed to
have ratified the contract.
Article 1400. Whenever the person obliged
by the decree of annulment to return the
thing can not do so because it has been lost
through his fault, he shall return the fruits
received and the value of the thing at the
time of the loss, with interest from the
same date. 
By: Jayson Calventas
  BUT the carabao died in the
possession of Ben through his
fault.
Sa tuwing ang taong obligadong magpasya  Ben must pay the value of the
dala ng kautusan ng pagpapawalang-bisa carabao at the time of its
na ibalik ang isang bagay ay hindi ito death, with interest from the
magagawa dahil sa ito ay nawala dala ng same date.
kanyang pagkakamali, kailangan niyang  If the carabao had
ibalik ang mga bungang natanggap niya at given birth, the
ang halaga ng bagay sa oras ng pagkawala, young must also
kasama ang interes mula sa nabanggit na be delivered as
petsa. the fruit of the
said animal.

Article 1401. The action for annulment of

contracts shall be extinguished when the
Article 1400 NCC | speaks of… thing which is the object thereof is lost
through the fraud or fault of the person
Effect of loss of thing to be returned who has a right to institute the
proceedings.
 If the thing to be returned is
lost without the fault of the If the right of action is based upon the
person obliged to make incapacity of any one of the contracting
restitution, parties, the loss of the thing shall not be an
 there is NO more obstacle to the success of the action, unless
obligation to said loss took place through the fraud or
return such thing. fault of the plaintiff. 
 BUT in such case,
the other By: Johannes Aquino
CANNOT be
compelled to
restore what in
virtue of the
decree of Ang pagpapawalang bisa ng kontrata ay
annulment he is maaring mawala kung ang taong
bound to return. nagpapawalang bisa ay maypagkakamali na
nagresulta sa pagkawala o pagkasira ng
 If it is lost through his fault, bagay na tinutukoy sa kasunduan,
his obligation is NOT gayundin kung ang karapatan ay batay sa
extinguished BUT is kawalan ng kapasidad ng isang tao kung
converted into an indemnity siya mismo ang nagdulot sa pagkawala ng
for damages consisting of nasabing bagay.
 the value of the
thing at the time
of the loss with
interest from the
same date Extinguishment of action for annulment.
 and the fruits
received from the
time the thing was (1) If the person, who has a right to institute
given to him to an action for annulment (Art. 1397.), will not
the time of its be able to restore the thing which he may be
loss. obliged to return in case the contract is
annulled because such thing is lost through
Article 1400 NCC | example: his fraud or fault, his right to have the
contract annulled is extinguished. If the loss
is not due to his fault or fraud, Article 1402
 Sugar sold her plow carabao to applies. The action for annulment shall be
Ben. extinguished only if the loss is through the
 On the petition of Sugar, the fault or fraud of the plaintiff.
contract was annulled by the
court.
(2) Under the second paragraph, the right of
action is based upon the incapacity of any
one of the contracting parties. Whether the
right of action is based upon incapacity or
not, the rule is the same. It is no longer
necessary that the fraud or fault on the part of
the plaintiff (the incapacitated person)
resulting in the loss must have occurred “after
having acquired capacity” as under the old
Code. This qualification has been deleted in
the present article. The deletion has made the
second paragraph redundant.
Example:
Sabit Singson coerced Manny Pakyawan to
sell to him a car, Manny Pakyawan can seek
the annulment of the sale. However, if Manny
Pakyawan lost the car by intentionally
destroying it, he cannot file the annulment
case as such right will be considered
extinguished.
Article 1402. As long as one of the
contracting parties does not restore what
in virtue of the decree of annulment he is
bound to return, the other cannot be
compelled to comply with what is
incumbent upon him.
By: Kristia Capio
Artikulo 1402. Hangga’t isa sa mga partido
ay hindi pa binabalik ang kaniyang
responsibilidad na ibalik, ang kabilang
partido ay hindi pwedeng piliting gawin ang
nakatoka niyang gawain.
When a contract is annulled, a reciprocal
obligation of restitution is created. The return
by one party of what he is obliged to restore
by the decree of annulment may be regarded
as a condition to the fulfillment by the other
of what is incumbent upon him. 
In effect, there will be no annulment if the
party cannot restore what he is bound to
return. This is true even if the loss is due to a
fortuitous event. 
However, if the party who lost the thing
through a fortuitous event offers to pay its
value with the fruits received if any (there is
no liability to pay interest since the loss is
without his fault), the other can be required to
make restitution.
ILLUSTRATION
Jay entered into a contract with Zola whereby
he obliged himself to create a wooden statue
in the image of Zola’s mother. However, it
turned out that Zola is only 12 years old and
as such, he is incapacitated to enter into a
contract. The contract was annulled. Zola was
then obligated to return the statue while Jay
has the obligation of returning the money
payed by Zola for the statue. Since Jay did
not return the money, Zola cannot be
compelled to return the statue, as provided
for by Article 1402 of the New Civil Code.
ARTICLE 1327. The following cannot give
consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and
deaf-mutes who do not know how to
write. (1263a)
ARTICLE 1328. Contracts entered into
during a lucid interval are valid. Contracts
agreed to in a state of drunkenness or
during a hypnotic spell are voidable. (n)
ARTICLE 1330. A contract where consent
is given through mistake, violence,
intimidation, undue influence, or fraud is
voidable. (1265a)
iii) Unenforceable Contracts – Arts. 1403-
1408, 1317, 1878
CHAPTER 8. UNENFORCEABLE
CONTRACTS
Article 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.
By: Bryan Glenn Fabiaña
Comment:
This article is divided into two categories
namely:
1. Those that are unauthorized or even if
authorized but beyond the power or authority
given. (e.g.) The sale of a parcel of land made
by special administrator of an estate done in
his personal capacity without the approval of
the probate court having custodia legis over
the property. It is not binding upon estate.
2. Those who do not comply with the statute
of frauds.
The term statute of frauds is descriptive of
those laws, statutes or provisions which
require certain agreements to be in writing
before they can be proved and enforced in a
judicial action.
Article 1404. Unauthorized contracts are
governed by Article 1317 and the
principles of agency in Title X of this Book.
By: Janine Gumangol
          In relation to Article 1317, no one may
contract in the name of another without the
consent of whose behalf the agent is
representing.
Article 1405. Contracts infringing the
Statute of Frauds, referred to in No. 2 of
Article 1403, are ratified by the failure to
object to the presentation of oral evidence
to prove the same, or by the acceptance of
benefit under them.
By: Algy Riguer
Ang mga kontratang lumalabag sa batas ng
Statute of Frauds na tinutukoy sa No. 2 ng
artikulo 1403, ay pinagtibay ng kabiguan ng
pagtutol sa presentasyon ng pananalitang
ebidensiya upang patunayan ang
pandaraya, o dahil sa pagtanggap ng mga
kapakinabangan sa ilalim nito.
Unenforceable contracts (paragraph 2, Article
1403: Statute of Frauds) may be ratified in
two ways:
1. Failure to object to the presentation of oral
evidence. This is tantamount to a waiver.
Contracts that are infringed in the Statute of
Frauds are ratified by the failure to object to
the presentation of parol evidence and are
enforceable.
2. Acceptance of Benefits under these
contacts is equivalent to waiver or estoppel;
only applies to executor contracts. If the oral
contract was reduced into writing by the party
charged, this exercise is called recognition. It
is the express ratification of the contract.
If the party in whose favor the statute may be
invoked, cross examined the witness who is
testifying on the oral contract, the former is
deemed to have waived the right to object to
the admission of the testimonial evidence.
The party should promptly object to the
presentation of the witness once it becomes
apparent that no evidence in writing could be
presented to prove the contract. The objection
must be invoked during the “offer of the
testimony” of the witness or a motion to
dismiss may be filed before answer to the
complaint is filed.
G.R. No. L-10100            August 15, 1916
GALO ABRENICA, plaintiff-appellee,
vs.
MANUEL GONDA and MARCELO DE
GARCIA, defendants-appellees.
Marcelo Caringal for appellants.
Ramon Diokno for appellee.
ARAULLO, J.
Facts: This case was brought by the plaintiff
to compel the defendants to return the two
parcels of land described in the complaint
which he claimed were sold to the defendants
under the right of repurchase for seven years
and for the sum of 75Php. Further, the
plaintiff alleged that the defendant refused to
deliver the same when, upon the expiration of
the period, mentioned, he is entitled to
redeem the subject parcels of land upon the
payment of the amount agreed upon.
However, the plaintiff stated that the
agreement for the sale with right of
repurchase was done verbally between him
and Gonda (one of the defendants). When he
was placed on the stand as a witness, he
testified at length and answered all the
questions asked by his lawyer regarding the
said agreement/contract, including its details,
the persons who witnessed it, the place it was
made, and the various other circumstances
connected with its execution. The defendant’s
counsel failed to raise an objection to the
examination. The defendant’s lawyer also
challenged one of the questions as leading
and claimed another question was irrelevant.
Moreover, he only moved to strike out all of
the testimony and statements given by the
plaintiff when the examination was already
terminated on the ground that the period for
the fulfillment of the contract exceeded one
year and that it could not be proven except by
means of a written instrument. The lawyer
also did a cross examination and asked
several questions relative to the plaintiff’s
ownership of the parcels of land.
Issue: Whether the two parcels of land were
sold under the right of repurchase by the
plaintiff to the defendant.
Held: Yes. The two parcels of land were sold
under the right of repurchase by the plaintiff
to the defendant with the seven year term for
75 php. This agreement, though verbally
made is ratified by the failure of the
defendant’s party to object to the presentation
of oral evidence to prove the same as
expressed on Article 1405 of the New Civil
Code.
Moreover, the fact that the defendants’
counsel asked various cross-questions, both
of the plaintiff and of the other witness, in
connection with the answers given by them in
their direct examination, with respect to
particulars concerning the contract, implies a
waiver on his part to have the evidence
stricken out.
No timely objection or protest was made to
the admission of the testimony of the plaintiff
with respect to the contract; and as the
motion to strike out said evidence came to
late; and, furthermore, as the defendants
themselves, by the cross- questions put by
their counsel for the witnesses in respect to
said contract, tacitly waived their right to
have it stricken out, that evidence, therefore,
cannot be considered either inadmissible or
illegal. he plaintiff made use of his right to
recover the property within the period
stipulated by the contract and which did not
exceed ten years, and as he deposited with the
clerk of the court the sum of P75, the price of
the purchase, in due time, the defendant is not
entitled to oppose the recovery, and the said
parcels of land must be delivered to the
plaintiff, even though they be in the
possession of the other defendant, Marcelino
de Garcia, to whom they were sold by his
codefendant Gonda, for the latter could not
sell them to De Gracia except under the
condition that they could be repurchased by
the plaintiff within the said period of seven
years.
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.
By: Rose Ann Villanueva
Kung ang kasunduan ay kinakailangang
ipatupad sa ilalim ng kautusang nauukol sa
pandaraya, at kinakailangan iparehistro
ang dokumento, kailangang samantalahin
ng bawat partido ang karapatang ito. Ang
mga ito ay kinakailangan din upang
maproteksyunan ang kasunduan at ang
mga obligasyon ng bawat panig sa ilalim ng
Article 1357.
The party concerned may compel the other
party to effect the rendition of the agreement
in the form of a public document, to have it
notarized.
When a party brings an action on a contract,
he may simultaneously ask the court to
compel the other party to make the writing or
the memorandum in a public instrument.
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.
By: Jayson Calventas
Sa isang kasunduan na kung saan ang
dalawang partido ay walang kakayahan na
magbigay ng pahintulot, hayag o di-hayag
na ratipikasyon ng magulang, o tagapag-
alaga, ang isa sa mga partido ay
magbibigay sa kasunduan ng kaparehong
epekto ng kung sakaling isa lamang sa
kanila ang walang kakayahan .
Kung ang ratipikasyon ay ginawa ng mga
magulang o tagapag-alaga, ng parehong
mga partido, ang kontrata ay dapat
magpagbibisa mula sa umpisa.
Article 1407 NCC | speaks of…
When unenforceable contract becomes
voidable or valid
 Where both parties to a
contract are incapable of
giving consent,
 the contract is
unenforceable.
 HOWEVER, if
the parent OR
guardian of either
party, OR if one
party after
attaining/regainin
g 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,
 the contract is
VALIDATED,
 and its validity
retroacts to the
time it was
entered into.
Article 1407 NCC | example:
 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.
By: Johannes Aquino
Ang mga kasunduang hindi maaring
ipagtibay ay hindi maaring kastiguhin ng
mga taong hindi napapabilang sa
kasunduan.
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. (Ayson vs. Court of Appeals, 97
Phil. 965 [1953].) 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.
ARTICLE 1317. No one may contract in
the name of another without being
authorized by the latter, or unless he has
by law a right to represent him.
A contract entered into in the name of
another by one who has no authority or
legal representation, or who has acted
beyond his powers, shall be
unenforceable, unless it is ratified,
expressly or impliedly, by the person on
whose behalf it has been executed,
before it is revoked by the other
contracting party. (1259a)
ARTICLE 1878. Special powers of
attorney are necessary in the following
cases:
(1) To make such payments as are not
usually considered as acts of
administration;
(2) To effect novations which put an end
to obligations already in existence at the
time the agency was constituted;
(3) To compromise, to submit questions
to arbitration, to renounce the right to
appeal from a judgment, to waive
objections to the venue of an action or to
abandon a prescription already acquired;
(4) To waive any obligation gratuitously;
(5) To enter into any contract by which
the ownership of an immovable is
transmitted or acquired either
gratuitously or for a valuable
consideration;
(6) To make gifts, except customary ones
for charity or those made to employees in
the business managed by the agent;
(7) To loan or borrow money, unless the
latter act be urgent and indispensable for
the preservation of the things which are
under administration;
(8) To lease any real property to another
person for more than one year;
(9) To bind the principal to render some
service without compensation;
(10) To bind the principal in a contract of
partnership;
(11) To obligate the principal as a
guarantor or surety; musawi
(12) To create or convey real rights over
immovable property;
(13) To accept or repudiate an
inheritance;
(14) To ratify or recognize obligations 4.) Mga kontrata na ang layunin ay labas sa
contracted before the agency; komersyo ng sangkatauhan;

(15) Any other act of strict dominion. (n) 5.) Mga kontrata na nagmumungkahi ng
imposibleng gawain;

3. Void or Inexistent – Arts. 1409-1422, 6.) Mga kontrata na kung saan ang
intensiyon ng bawat partido tungkol sa
1318, 1353, 1378, 1491, 1898
pangunahing layunin nito ay hindi matiyak;
CHAPTER 9. VOID AND INEXISTENT
CONTRACTS 7.) Mga kontrata na hayagang
Article 1409. The following contracts are ipinagbabawal o dineklarang walang bisa
inexistent and void from the beginning: ng batas.
(1) Those whose cause, object or purpose is
contrary to law, morals, good customs,
Ang mga kontrata na ito ay hindi maaaring
public order or public policy;
ma-ratify, at ang karapatan na itaguyod ang
depensa o pagiging ilegal nito ay hindi
(2) Those which are absolutely simulated matatalikdan.
or fictitious;

(3) Those whose cause or object did not

exist at the time of the transaction;
Inexistent contracts refer to agreements
which lack one or some or all of the elements
(4) Those whose object is outside the
(i.e., consent, object, and cause) or do not
commerce of men;
comply with the formalities which are
essential for the existence of a contract.
(5) Those which contemplate an impossible
service;
CHARACTERISTICS OF A VOID
CONTRACTS
(6) Those where the intention of the parties
relative to the principal object of the
They are as follows:
contract cannot be ascertained;

(1) Generally, it produces no effect

(7) Those expressly prohibited or declared
whatsoever, being void or inexistent from the
void by law.
beginning;
(2) It cannot be cured or validated either by
These contracts cannot be ratified. Neither time or ratification;
can the right to set up the defense of (3) The right to set up the defense of
illegality be waived. illegality, inexistence, or absolute nullity
By: Kristia Capio cannot be waived;
(4) The action or defense for the declaration
of its illegality, inexistence, or absolute
nullity does not prescribe;
Ang mga sumusunod na kontrata ay walang
(5) The defense of illegality, inexistence, or
bisa sa simula’t sapul:
absolute nullity is not available to third
persons whose interests are not directly
1.) Mga kontrata na ang dahilan, layunin, affected;
at intensyon ay labag sa batas, moral, (6) It cannot give rise to a valid contract; and
mabuting pamantayan, pampublikong utos (7) Its invalidity can be questioned by anyone
o pampublikong patakaran; affected by it.

2.) Mga kontrata na walang dudang VOID AND VOIDABLE CONTRACTS

kunwarian or gawa-gawa lamang; DISTINGUISHED

3.) Mga kontrata na may dahilan at layunin

na hindi umiiral sa panahon ng
transaksiyon;

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
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.
Art. 1410. The action or defense for the
declaration of the inexistence of a contract
does not prescribe.
By: Bryan Glenn Fabiaña
Ang aksyon at depensa para idiklara ang
kawalan ng kontrata ay hindi iiutos o
ihahatol.
Comment:
If a contract is null and void, the action to
declare it existence does not prescribe. The
action can be filed anytime. The mere laps of
time does not validate a void contract unlike
voidable contracts if not assailed within the
specific period provided by law shall remain
valid.
A valid contract remains void even if no
court has declared its in-existence or
illegality. However, there are certain
contracts the nullity of which is not apparent
on their faces. (e.g.) Declaration for Nullity
of marriage. It must be declared by the court
as null and void otherwise if you contract a
subsequent marriage you will be liable for
bigamy.
Illustration:
In his complaint against B to annul a deed of
sale, S alleged that he was surprised to find
that the deed was a sale for the document had
been represented by B to be for a different
purpose. The action of S based upon the
grounds that there is fraud in securing his
signature in said deed. There was no
consideration given at the of the transaction.
B raised the defense of prescription,
contending that since the action was based of
fraud it should have been brought within four
years from the time the discovery of the
document.
Has S action prescribed?
Supreme Court held no. His action is to
declare void and in-existent the deed of sale,
which action is imperceptible. (Encarnacion
vs. Galvan)
Article 1411. When the nullity proceeds
from the illegality of the cause or object of
the contract, and the act constitutes a
criminal offense, both parties being in pari
delicto, they shall have no action against
each other, and both shall be prosecuted.
Moreover, the provisions of the Penal
Code relative to the disposal of effects or
instruments of a crime shall be applicable
to the things or the price of the contract.
This rule shall be applicable when only one
of the parties is guilty; but the innocent
one may claim what he has given, and shall
not be bound to comply with his promise. 
By: Janine Gumangol
        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”.
 Article 1412. If the act in which the
unlawful or forbidden cause consists does
not constitute a criminal offense, the
following rules shall be observed:
(1) When the fault is on the part of both
contracting parties, neither may recover
what he has given by virtue of the contract,
or demand the performance of the other’s
undertaking;
(2) When only one of the contracting
parties is at fault, he cannot recover what
he has given by reason of the contract, or
ask for the fulfillment of what has been
promised him. The other, who is not at
fault, may demand the return of what he
has given without any obligation to comply
his promise.  2. The guilty party cannot ask for
By: Algy Riguer
Kapag ang mga nagawang labag sa batas o
mga bawal na sanhi na kabilang dito ay
hindi naging kriminal na kasalanan, ang
mga sumusunod na hakbang ay dapat
gawin.
(1)Kapag ang pagkakamali ay sa partido ng
parehong kampo na nakipagkasundo,
alinman ay maaaring bumawi ng kanilang
ibinigay na nakapaloob sa kontrata, o
anumang kagustuhan nila na gawin ng
kabilang partido;
(2)Kapag ang isa sa nakipagkasundong
partido ay nagkasala, hindi nila maaaring
bawiin ang anumang naibigay na nila sa
kadahilanang ito ang nasa kontrata,
humingi ng anumang makapupuno sa
anumang pangako. Ang kabilang partido
na hindi nakagawa ng mali, ang pwedeng
humiling na ibalik ang mga naibigay nya
nang wala nang dapat pang gampanang   recovered by the debtor, with interest
pangako.
Rules were contracts is illegal but 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,
Rules;
1. The guilty party loses what he
has given by reason of the
contract;
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 1413. Interest paid in excess of the
interest allowed by the usury laws may be
thereon from the date of the payment.
By: Rose Ann Villanueva
Ang interest na binayaran na kung saan
humigit pa sa interest na pinahihintulutan
ng usury laws ay maaring maibalik sa
nangutang, kasama ang interest simula sa
araw na kung saan binayaran nya ito.
Usury is the illegal act of charging for a loan  The contract is
a higher rate of interest than that which is repudiated before
allowed by law. Recovery of usurious interest the purpose has
Any rate of interest in excess of the been
maximum allowed under the Usury Law is accomplished OR
usurious and if paid, may be recovered before any
together with interest thereon from the date of damage has
payment in a proper action for the same. (Art. caused to a third
1413.) person
 The court
A stipulation for the payment of usurious considers that
interest is void. The person paying the public interest
usurious interest can recover in an will be subserved
independent civil action not only the interest by allowing
in excess of that allowed by the usury laws, recovery
but the whole interest paid.
Article 1414 NCC | example:
Article 1414. When money is paid or
property delivered for an illegal purpose,  Zain is accused of murder.
the contract may be repudiated by one of  Xander paid ₱10,000 to
the parties before the purpose has been Yazmin to hide Zain.
accomplished, or before any damage has  Before Yazmin could hide
been caused to a third person. In such Zain, Xander changed his
case, the courts may, if the public interest mind.
will thus be subserved, allow the party  The court may allow Xander
repudiating the contract to recover the to recover the ₱10,000 given
money or property. to Yazmin.

Article 1415. Where one of the parties to

By: Jayson Calventas
Kapag ang pera ay binayaran o ang ari-
arian ay inihatid para sa isang iligal na
layunin, ang kanduan ay maaaring itakwil
ng isa sa mga partido bago ang
naisakatuparan ang layunin, o bago
makapagdulot ng anumang pinsala sa
ibang tao. Sa gayong sitwasyon, ang korte
ay maaaring pahintulutan ang partido na
nagtatakwil ng kasunduan na bawiin ang
pera o ari-arian, kung ito ay magiging
naaangkop sa pampublikong interes.
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.
By: Johannes Aquino
Kung ang isang panig sa kasunduan ay
walang kapasidad na magbigay ng
pamamayagan, ang mga hukom ay maaring
mamayagan sa pagbalik ng binayad o sa
mga ari-ariang naibigay nito sa ngalan ng
hustisya.

Article 1414 NCC | speaks of…

Recovery where contract for an illegal
purpose
 The law allows recovery by
one of the parties even though
both of them have acted
contrary to laws.
 Requisites:
 A contract that is
for an illegal
purpose
Recovery by an incapacitated person.
This article is another exception to the in pari
delicto rule in Articles 1411-1412. Recovery
can be allowed if one of the parties is
incapacitated and the interest of justice so
demands. It is not necessary that the illegal
purpose has not been accomplished or that no
damage has been caused to a third person.
(see Art. 1414.)
EXAMPLE: Tony Stork, an insane but crazy
rich person, paid Thanos $1 million dollars to
hide Peter Porker, who is currently accused
of murder. Under Art. 1415, the court may
allow Tony Stork to recover the money paid
by him if the interest of justice so demands.
Article 1416. When the agreement is not
illegal per se but is merely prohibited, and
the prohibition by the law is designed for
the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover
what he has paid or delivered.
By: Kristia Capio
Artikulo 1416. Kung ang nagpagsang-
ayunan ay hindi labag sa batas pero ito ay
pinagbabawal, at ang pagbabawal ay ayon
sa batas ay ginawa para proteksyon ang
nagdemanda, sya ay, kung pambubliko na
polisiya ay maaaring magdagdag, maibalik
sa kanya kung ano ang binayaran nya or
dinala.
Article 1416 is another exception to the rule
that where both parties are in pari delicto,
they will be left where they are without relief.
Recovery is permitted provided:
(1) The agreement is not illegal per se but is
merely prohibited;
(2) The prohibition is designed for the
protection of the plaintiff; and
(3) Public policy would be enhanced by
allowing the plaintiff to recover what he has
paid or delivered.
EXAMPLE
Black Widow donated to Hawkeye
everything that she (Black Widow) possessed
and owned, leaving nothing for herself. This
is prohibited but not illegal per se. Since
public policy is hereby enhanced, Black
Widow will be allowed to recover, at least
that necessary for her own support and the
support of her relatives.
Article 1417. When the price of any article
or commodity is determined by statute, or
by authority of law, any person paying any
amount in excess of the maximum price
allowed may recover such excess.
By: Bryan Glenn Fabiaña
Kapag ang presyo ng ano mang bilihin o
produkto ay itinalaga ng batas o sa
kapangyarihan ng batas, ang sino man na
nagbayad ng sobra ayt maaring bawiin ang
kalabisan.
Comment:
This article refers to the ceiling price. If a
ceiling price for a certain commodity has
been determined by statute by law or
competent authority who pays any amount
more than what has been determined may
recover such excess
This is usually applies to basic needs and
during an emergency or crisis. Prices of can
goods, noodles etc.
Illustration:
A regulation was promulgates by the
government fixing the maximum price of a
particular brand of rice at 700.00 pesos per
cavan. Algy a buyer paid 1000 pesos per
cavan whether or not he knew the regulation
he is allowed to recover the excess of 300.00
which he paid for the price of each cavan.
Article 1418. When the law fixes, or
authorizes the fixing of the maximum
number of hours of labor, and a contract is
entered into whereby a laborer undertakes
to work longer than the maximum thus
fixed, he may demand additional
compensation for service rendered beyond
the time limit.
By: Janine Gumangol

       Kung aayusin ng batas, o
pinapahintulutan nito ang paglaan ng
pinakamataas na bilang ng oras ng
pagtatrabaho,  ang kawani ay maaaring
humingi ng karagdagang kabayaran
sa labis na oras ng serbisyong kanyang
inilaan.
Basis of Minimum Wage Rates
         The basis of the minimum wage rates is
not more than eight hours daily labor in the
case of employees working in non-
agricultural enterprises, and not more than the
customary hours of work in the case of
agricultural workers. (Article 1, Section 3,
Code of Rules and Regulations to Implement
the Minimum Wage Law, as Amended.
Example: Dina works in Toshiba Company in
Canlubang, Laguna. She works from Monday
to Saturday from 8am to 5pm as the
maximum working hours. However, s she
works from Monday, Wednesday, and Friday
from 8am to 7pm exceeding two hours
beyond the maximum working hours.
Article 1419. When the law sets, or
authorizes the setting of a minimum wage
for laborers, and a contract is agreed upon
by which a laborer accepts a lower wage,
he shall be entitled to recover the
deficiency.
By: Algy Riguer
Kapag ang batas ay nagtalaga, o
pinahintulutan ang pagtatakda ng
minimum wage para sa mga trabahador,
at ang kontrata ay napagkasunduan na
kung saan ang trabahador ay tumanggap
ng maliit na sahod, ang trabahador ay may
karapatan na maibalik sa kanya ang
kulang.
If the laborer has agreed to receive a wage
lower than the minimum wage fixed by law
he is not barred from recovering the
deficiency. Such contract or agreement is
void under the minimum wage law.
 Example
“A” the owner of a candy factory in Manila
executed a contract with “B” as a laborer.
When the pay day comes “B” reacted for the
sum of money that he received because the
amount that he received is only P380.00/day
instead of P481.00, therefore “B” can recover
for the deficiency that he received from “A”
which stated on this art. that “When the law
sets, or authorizes the setting of a minimum
wage for laborers, and a contract is agreed
upon by which a laborer accepts a lower
wage, he shall be entitled to recover the
deficiency.”
Article 1420. In case of a divisible contract,
if the illegal terms can be separated from
the legal ones, the latter may be enforced.
By: Rose Ann Villanueva
Sa mga kaso na maaaring hatiin ang
kontrata, kung ang illegal na mga bahagi
nito ay maaaring ihiwalay sa mga legal na
bahagi, ito ay ipatutupad.
This article applies if there are several
stipulations in a contract and is not applicable
by if it is in the nature of the contract, the
terms thereof are indivisible. Effect of
illegality where contract is indivisible or
divisible: When the consideration is entire
and single, the contract is indivisible so that if
the part of such consideration is illegal, the
whole contract is void and unenforceable.
Where the contract is divisible or severable,
that is, the consideration is made up of
several parts, and the illegal ones can be
separated from the legal portions, the latter
may be enforced. This rule, however, is
subject to the contrary intention of the
parties.
Article 1421. The defense of illegality of
contract is not available to third persons
whose interests are not directly affected.
By: Jayson Calventas
 Ang depensang ilegal na kasunduan ay
hindi magagamit ng ibang tao na ang mga
interes ay hindi direktang naapektuhan
nito.
Article 1421 NCC | speaks of…
Persons entitled to raise defense of
illegality
 Third persons are NOT
allowed to bring an action to
annul OR assail a voidable and
unenforceable contracts.
 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.
Article 1421 NCC | 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.
Article 1422. A contract which is the direct
result of a previous illegal contract, is also
void and inexistent.
By: Johannes Aquino
Ang isang kasunduan na bunga lamang ng
isang nauang kasunduan na illegal, ay siya
ring walang bisa.
Void contract cannot be novated.
This provision is based on the requisites of a
valid novation. An illegal contract is void and
inexistent and cannot, therefore, give rise to a
valid contract.
Example:
Optimus sells a yellow Chevrolet Camaro to
Megatron. The two parties also signed a
repurchase contract wherein Optimus has the
right to buy back the car within two years. It
turned out that the Yellow Chevrolet Camaro
was rightfully owned by Bumblebee, and not
by Optimus. Under Art. 1422, the contract of
repurchase is dependent on the validity of the
contract of sale. Since the contract of sale is
void because Optimus, the seller, is not the
owner, the subsequent contract of repurchase
is also void because it presupposes a valid
contract of sale between the same parties.
One can repurchase only what he has
previously sold.
ARTICLE 1318. There is no contract
unless the following requisites concur:
dstwmi
(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. (1261)
ARTICLE 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 lawful. (1276)
ARTICLE 1378. When it is absolutely
impossible to settle doubts by the rules
established in the preceding articles, and
the doubts refer to incidental
circumstances of a gratuitous contract,
the least transmission of rights and
interests shall prevail. If the contract is
onerous, the doubt shall be settled in
favor of the greatest reciprocity of
interests.
If the doubts are cast upon the principal
object of the contract in such a way that
it cannot be known what may have been
the intention or will of the parties, the
contract shall be null and void. (1289)
ARTICLE 1491. The following persons
cannot acquire by purchase, even at a
public or judicial auction, either in person
or through the mediation of another:
(1) The guardian, the property of the
person or persons who may be under his
guardianship;
(2) Agents, the property whose
administration or sale may have been
intrusted to them, unless the consent of
the principal has been given;
(3) Executors and administrators, the
property of the estate under
administration;
(4) Public officers and employees, the
property of the State or of any
subdivision thereof, or of any
government-owned or controlled
corporation, or institution, the
administration of which has been
intrusted to them; this provision shall
apply to judges and government experts
who, in any manner whatsoever, take part
in the sale;
(5) Justices, judges, prosecuting
attorneys, clerks of superior and inferior
courts, and other officers and employees
connected with the administration of
justice, the property and rights in
litigation or levied upon an execution
before the court within whose jurisdiction
or territory they exercise their respective
functions; this prohibition includes the
act of acquiring by assignment and shall
apply to lawyers, with respect to the
property and rights which may be the
object of any litigation in which they may
take part by virtue of their profession;
(6) Any others specially disqualified by
law. (1459a)
ARTICLE 1898. If the agent contracts in
the name of the principal, exceeding the
scope of his authority, and the principal
does not ratify the contract, it shall be
void if the party with whom the agent
contracted is aware of the limits of the
powers granted by the principal. In this
case, however, the agent is liable if he
undertook to secure the principal’s
ratification. (n)
Title III – NATURAL
OBLIGATIONS
Article 1423. Obligations are civil or
natural. Civil obligations give a right
of action to compel their
performance. Natural obligations, not
being based on positive law but on
equity and natural law, do not grant a
right of action to enforce their
performance, but after voluntary
fulfillment by the obligor, they
authorize the retention of what has
been delivered or rendered by reason
thereof. Some natural obligations are
set forth in the following articles.
Artikulo 1423. Ang obligasyon ay civil
o natural. Obligasyong sibil ay
nagbibigay ng hakbang para iutos ang
pagsasagawa. Obligasyong natural, ay
hindi ayon sa positibong batas ngunit
sa equity at natural law, hindi
nagbibigay ng karapatan sa isang
hakbang para ipatupad ang
pagsasagawa, ngunit pagkatapos ng
boluntaryong pagsasakatuparan ng
may utang , pinapayagan nila ang
pagpapanatili ng kung ano mang
naibigay o naisagawa para sa
kadahilanan nito. May ilang natural
obligation ay tinatalaga sa mga
susunod na artikulo.
CIVIL OBLIGATIONS AND
NATURAL OBLIGATIONS
DISTINGUISHED
Article 1423 gives the distinctions
between civil obligations and natural
obligations, viz.:
(1) Civil obligations arise from law,
contracts, quasi-contracts, delicts, and
quasi-delicts (Art. 1157.), while natural
obligations are based not on positive
law but on equity and natural law; and
(2) Civil obligations give a right of
action in courts of justice to compel
their fulfi llment or performance (Art.
1156.), while natural obligations do
not grant such right of action to enforce
their performance.
Voluntary fulfillment means that the
debtor complied with the same even if
he knew that he could not have been
legally forced to do so.
EXAMPLES
(a) obligation to pay interest for use of
money, even if not agreed upon in
writing.  obligation to do.
(b) duty to support natural or spurious
children (even if not recognized
voluntarily or by judicial compulsion
and even if there is a judgment denying
recognition).
(c) giving of material and financial
assistance to children upon their
marriage.
Article 1424. When a right to sue
upon a civil obligation has lapsed by
extinctive prescription, the obligor
who voluntarily performs the contract
cannot recover what he has delivered
or the value of the service he has
rendered.
By: Bryan Glenn Fabiaña
Kapag ang karapatan na maghain ng
reklamo sa isang obligasyonng sibil ay
natapos na sa papamagitan ng
extinctive prescription, ang may
pananagutan na kusang isinagawa
ang kontrata ay hindi na maaring
bawiin ang naibigay o halaga ng
serbisyong ginawa.
Comment:
Article 1424 provides that if an obligee
fails to pursue a cause of action based
on a civil obligation within the period
fixed by law, the obligation is
extinguished. It cannot be anymore be
enforced in court. It becomes a stale
claim.
While the prescribed cannot be asserted
anymore in a court, nevertheless under
the rule on performance of natural
obligations it is indirectly ressurected
when the obligor voluntarily pays the
stale claim. The payment is valid
payment because of the obligors
recognition of his debt. He cannot
recover what he paid or the value of the
service he had rendered in cases of
Illustration:
Morning owes Evening the sum of 5,000
pesos under a written contract. After ten
years the debt of morning prescribes for
failure of evening to file the necessary
action for the recovery of the same. If
morning knowing the prescription
voluntarily pays evening, he cannot
recover anymore what he has paid.
Article 1425. When without the
knowledge or against the will of the
debtor, a third person pays a debt
which the obligor is not legally bound
to pay because the action thereon has
prescribed, but the debtor later
voluntarily reimburses the third
person, the obligor cannot recover
what he has paid.
By Janine Gumangol

         Kung walang kaalaman o labag
sa loob ng nagkautang, ang ibang tao
na nagbayad sa utang na hindi
obligadong bayaran ng nagkautang
ang utang na hindi na siningil, ngunit
kung boluntaryong babayaran ng
nagkautang ang taong kusang
nagbayad sa utang nito, hindi na nito
pwedeng singilin ang naibayad na.
Example:
          Algy owes Bryan Php500,000.00.
But the debt soon prescribes. Later,
Cristia, against the consent of Algy, pay
Bryan the said amount. Algy here does
not have to reimburse Cristia because
Algy has not at all been benefited by the
transaction. However, Algy later
voluntarily reimburses Cristia. May
Algy now recover what he has given to
Cristia?Answer: No more. This is the
express provision of the law.
Article 1426. When a minor between
eighteen and twenty-one years of age
who has entered into a contract
without the consent of the parent or
guardian, after the annulment of the
contract voluntarily returns the whole
thing or price received,
notwithstanding the fact the he has
not been benefited thereby, there is no
right to demand the thing or price
thus returned.
By: Algy Riguer
Kung ang isang menor-de-edad na
nasa 18 taong gulang hanggang 21
taong gulang na pumasok sa isang
kontrata nang walang pahintulot ang
mga magulang o ang guardian,
pagkatapos boluntaryong
naipasawalang-bisa ang kontrata at
ibinalik ang kung anumang
natanggap, sa kabila ng hindi
pagtanggap ng anumang benepisyo
mula sa kontrata, ay walang
karapatang magdemanda na ibalik ang
kaniyang binalik.
Restitution by minor after
annulment of contract.
When a contract is annulled, a minor is
not obliged to make any restitution
except insofar as he has been benefited
by the thing or price received by him.
However, should he voluntarily return
the thing or price received although he
has not been benefited thereby, he
cannot recover what he has returned.
Take note that this article applies only if 
the minor who has entered into a
contract without the consent of
his parent or guardian is between 18 and
21 years of age.
The law considers that at such age,
a minor has already a conscious idea of
what is morally just or unjust.
EXAMPLE:
S, a minor 18 years old, sold for P100,0
00.00 his car to B without securing the
consent of his parents. He lost
P20,000.00 to a pickpocket although he
was able to deposit the P80,000.00 in a
bank. If the contract is annulled, S is obl
iged to return only P80,000.00.
However, he has the natural obligation
to return P100,000.00. If he voluntarily
returns the whole amount, there is no
right to demand the same.
Article 1427. When a minor between
eighteen and twenty-one years of age,
who has entered into a contract
without the consent of the parent or
guardian, voluntarily pays a sum of
money or delivers a fungible thing in
fulfillment of the obligation, there
shall be no right to recover the same
 from the obligee who has spent or
consumed it in good faith.
By: Rose Ann Villanueva
Kung ang isang menor de edad na tao
sa pagitan ng edad na labin walo at
dalawampu at isa ang gulang, ay
pumasok sa isang usapan na walang
pahintulot ang kanyang magulang o
tagapagbantay, kusang loob magbayad
ng halaga ng pera o nagbigay ng
bagay na katumbas ng halaga ng pera
bilang kabayaran ng obligasyon, wala
nang karapatan bawiin mula sa may
utang na lumustay o kumunsumo noon
ng may mabuting loob.
Delivery by minor of money or fungible
thing in fulfillment of obligation. By the
decree of annulment, the parties, as a
general rule, are obliged to make mutual
restitution. However, the obligee who
has spent or consumed in good faith the
money or consumable thing voluntarily
paid or delivered by the minor, is not
bound to make restitution. Although
Article 1427 speaks of “fungibe thing,”
nevertheless it may also apply to things
that are non-consumable when they have
been lost without fault of
Article 1428. When, after an action to
enforce a civil obligation has failed
the defendant voluntarily performs
the obligation, he cannot demand the
return of what he has delivered or the
payment of the value of the service he
has rendered.
By: Jayson Calventas
Kung pagkatapos na ang aksyon para
ipatupad ang isang pananagutang sibil
ay mabigo, ang nasasakdal ay kusang-
loob na gumanap ng obligasyon, hindi
niya maaaring hingiin na ibalik ang
anumang kanyang inihatid o
pagbayarin ang halaga ng serbisyo na
kanyang ibinigay.
Article 1428 NCC | speaks of…
Performance after action to enforce
civil obligation has failed
 Since the debtor was under
NO legal obligation to
perform the service that the
court did NOT require him
to perform,
 his choice to
perform
becomes an act
of liberality on
his part that
creates NOT an
obligation on
the part of the
benefited party
to compensate.
Article 1428 NCC | example:
 Arturo has failed to pay his
obligation.
 Arturo is sued by Ben, the
creditor.
 Arturo won the case.
 Notwithstanding this,
Arturo voluntarily
performs his obligation.
 Arturo CANNOT demand
the return of what he has
delivered OR the payment
of the value of the service
he has rendered.
Article 1429. When a testate or
intestate heir voluntarily pays a debt
of the decedent exceeding the value of
the property which he received by will
or by the law of intestacy from the
estate of the deceased, the payment is
valid and cannot be rescinded by the
payer.
 Kung ang tapagpamana ay nagbayad
ng pagkakautang ng kanyang
pinagmanahan na higit pa sa kanyang
minana, ang kabayaran ay wasto at
hindi nya maaring ipawalang-bisa.
Payment by heir of debt exceeding
value of property inherited.
The heir is not personally liable beyond
the value of the property he received
from the decedent. (Art. 1311, par. 1.)
But if he voluntarily pays the difference,
the payment is valid and cannot be
rescinded by him. An heir has a moral
duty to perform or pay obligations
legally contracted by his dead relatives.
Example:
Twins Julio and Julia received P50
million each as inheritance upon their
father’s death. But their father was
indebted to the Empress Dowager of
China in the amount of P60 million.
Julio, solely and voluntarily, paid the
P60 million debt of his deceased father.
Under Art. 1429, the payment is valid
and cannot be rescinded by Julio.
Article 1430. When a will is declared
void because it has not been executed
in accordance with the formalities
required by law, but one of the
intestate heirs, after the settlement of
the debts of the deceased, pays a
legacy in compliance with a clause in
the defective will, the payment is
effective and irrevocable.
Artikulo 1430. Kung ang isang habilin
ay ipinahayag na walang bisa dahilan
sa hindi ito sinagawa ng tama ayon sa
pormalidad na itinakda ng batas,
ngunit ang isa sa mga tagapagmana,
matapos bayaran ang utang ng
namatay, ay pinagtuunan ng pansin
ang pag-aayos ng kasulatan na siyang
nagpamali sa kasulutan, ang
kabayaran ay epektibo at di mababago.
If the will is void, the legacy would also
be void and the deceased is considered
to have died without a will. This is the
reason for the existence of the Article.
Legacy is the act of disposition by the
testator in separating from the
inheritance for definite purposes, things,
rights, or a definite portion of his
property. It may be viewed also as that
same portion, or those things or special
rights, which the testator separates from
his inheritance for a definite purpose.
The purpose of a legacy is to reward
friends, servants and others for services
they have rendered, to give alms, etc.
EXAMPLE
In a will defective for lack of the needed
legal formalities, Xian, a friend, was
given a legacy. The legacy is void, and
the whole estate should go to the
intestate heirs. If however, the intestate
heirs give Xian the legacy, they cannot
get it back now, provided that the debts
of the deceased have been settled.
Title IV – ESTOPPEL 
Article 1431. Through estoppel an
admission or representation is
rendered conclusive upon the person
making it, and cannot be denied or
disproved as against the person
relying thereon.
By: Bryan Glenn Fabiaña
Sa pamamqagitan ng estoppel ang pag
tanggap o pangangatawan ay
naisasagawa sa hiling ng taong
gumagawa nito at hindi na maaring
tanggihan o hindi papayagan laban sa
taong umasa rito.
Comment:
Estoppel is a bar which precludes a
person from, denying or asserting
anything contrary to that which has been
in contemplation of law, established the
truth either acts of judicial or
representation either express or implied.
If one person speaks, acts or leads one to
believe him and the latter reasonably
relied on those acts, words and behavior
the former cannot later on back out and
hide behind the clock of denial.
Illustration:
Seller did not object to the construction
of electric sub-station by a buyer on
property within subdivision for
residential purposes only.
S sold to Meralco lots subject to
restriction that only construction
exclusively for residential purposes shall
be built. It appears that S did not object
to the construction of an electric
substation by Meralco but merely asked
in a letter for technical assurance that
the electric substation is not dangerous
to neighbours nor would they be
nuisance.
Later on S sought the cancellation of the
sale for violation of restriction.
Supreme Court held that S is guilty of
estoppel for this was no timely objection
on his part to the establishment of the
substation as being not for residential
purposes. On the contrary by his letter S
did not consider it violative of the
restriction. (Meralco vs. CA)
 
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Article 1432. The principles of
estoppel are hereby adopted insofar
as they are not in conflict with the
provisions of this Code, the Code of
Commerce, the Rules of Court and
special laws.
by: Janine Gumangol
Effect of the General Principles of
Estoppel
     The principles of Estoppel are only
suppletory.
Pleading of Alleged Estoppel
       If facts are alleged as constituting
estoppel, they must be expressly
pleaded. (Castañeda v. Yap, 48
O.G.3364)
Article 1433. Estoppel may be in
pais or by deed.
by: Algy Riguer
Kinds of Estoppel:
1. Estoppel by deed: as technical
estoppel is the kind of estoppel that is in
writing and signed by someone who is
now barred from denying the material
facts stated in writing. It applies only to
the parties and their privies hence
cannot be availed of by third person. It
may be utilized only in a suit on the
deed itself or concerning any right
arising from it.
Example:
1. If O conveys property she doesn’t
own to A by warranty deed, but O later
acquires title to that land, then title
immediately passes to A.
2. However, if, as above, O conveys
property she doesn’t own
to A by warranty deed, but O later
acquires title to that land, A may elect to
treat O’s lack of title at the time of the
conveyance as a breach of the covenants
of seisin and right to convey (two of the
six traditional forms of Covenants for
Title that are contained in a
general warranty deed), and sue O for
damages. A cannot be forced to
accept O’s after-acquired title if she
wishes instead to receive damages.
3. If O conveys property she doesn’t
own to A by quitclaim deed, but O later
acquires title to that land, then A owns
nothing. This is because O passed her
interest to A with a quitclaim deed; at
the time of the conveyance, O’s interest
was nothing, so she passed nothing.
2. Estoppel in pais: as
equitabble estoppel arises
from conduct or
misrepresentation and
includes all forms of
estoppel  not arising from a
record, deed, written
instrument. It is found on
morality and has for
its purpose to serve justice.
Example:
1. A city entered into a
contract with another
party. The contract stated
that it had been reviewed
by the city’s counsel and
that the contract was
proper. Estoppel applied to
estop the city from
claiming the contract was
invalid.
2. A creditor unofficially
informs a debtor that the
creditor forgives
the debt between them.
Even if such forgiveness is
not formally documented,
the creditor may be
estopped from changing its
mind and seeking to collect
the debt, because that
change would be unfair.
3. A landlord informs
a tenant that rent has been
reduced, for example,
because there was
construction or a lapse in
utility services. If the
tenant relies on this
statement in choosing to
remain in the premises, the
landlord could be estopped
from collecting the full
rent.
Article 1434. When a person who is
not the owner of a thing sells or
alienates and delivers it, and later the
seller or grantor acquires title thereto,
such title passes by operation of law to
the buyer or grantee.
by: Rose Ann Villanueva
Kapag ang tao na hindi nagmamay-ari
ng mga bagay na ibinenta o inihatid, at
nang maglaon ang nagbenta o nag
garantiya ay nakuha ang titulo nito,
ang titulong iyon ay ipapasa sa bumili
o nagmay-ari ng naaayon sa batas.
When a person sells or alienates a
property or thing not yet in his
possession of ownership but later on
acquires ownership or title over that
same property, its title or ownership
passes effectively to the transferee or
vendee.
Article 1435. If a person in
representation of another sells or
alienates a thing, the former cannot
subsequently set up his own title as
against the buyer or grantee.
By: Jayson Calventas
Kung ang isang tao na kumakatawan
sa isa pa ay nagbenta o nagpawala ng
isang bagay, ang taong ito ay hindi
makabubuo ng sarili niyang titulo
laban sa namili o tumanggap.
Article 1435 NCC | speaks of…
Estoppel against agents who sells for  HOWEVER, for the sake
another of neighborliness, Jacinto
offers to authorize
 If the representative has a Marciano to lease the land
power of attorney from the out to someone who would
owner to sell, like to lease a portion of it.
 and the third  Even if this would win a
person, relying truce, Marciano should
and believing reject Jacinto’s offer.
such right to  Accepting to act for and in
represent, behalf of Jacinto in regard
purchases the to the lease to a third party
property from of the portion of the
the contested piece of land
representative, would estop Marciano
 the from denying Jacinto’s
representative ownership.
CANNOT
claim that the Article 1436. A lessee or a bailee is
sale he estopped from asserting title to the
participated in thing leased or received, as against the
is void because lessor or bailor.
he is the real
owner of the by: Johannes Aquino
thing sold.

 The representative’s
acceptance of the power of
Ang isang nangungupahan o isang
attorney estops him from
binigyan ng pansamantalang pag-aari
denying that he is merely
ay hindi maaring kastiguhin ang titulo
the representative of the
ng pagmamay-ari sa bagay na
owner.
inuupahan o natanggap laban sa
 If a person assets
nagpaupa o sa nagbigay.
ownership of a thing,
 such a person
should NOT in
any way accept
representative Estoppel against tenant or bailee.
status insofar as
the thing he  A tenant will not be heard
claims as he is to dispute his landlord’s
concerned. title. (see Lizada vs.
Omanan, 59 Phil. 547
Article 1435 NCC | example: [1934].) This estoppel
applies even though the
 Marciano asserts that the lessor had no title at the
piece of land on which he time the relation of lessor
has built his house is his, and lessee was created, and
having inherited it from his may be asserted not only
father. by the original lessor, but
 HOWEVER, his neighbor, also by those who succeed
Jacinto, claims that to his title. (Geminiano vs.
Marciano’s father sold the Court of Appeals, 259
same piece of land to him. SCRA 344 [1996].) Under
the Rules of Court,
 conclusive presumptions
include: “(b) The tenant is
not permitted to deny the
title of his landlord at the
time of the commencement
of the relation of landlord
and tenant between them.”
(Sec. 3-b, Rule 131, Rules
of Court.) (2) Similarly, a
bailee in commodatum (see
Art. 1933.), depositum (see
Art. 1962.), or pledge (see
Art. 2093.) is estopped to
assert title to the thing
received as against the
bailor.
Example:
Nancy Vinay is a tenant in a land owned
by Chess Escudero. Under Art. 1436,
Nancy’s acceptance of a tenancy
relationship is an acknowledgement of
Chess Escudero’s ownership of the land
and therefore she is barred from
claiming title over that land.
Article 1437. When in a contract
between third persons concerning
immovable property, one of them is
misled by a person with respect to the
ownership or real right over the real
estate, the latter is precluded from
asserting his legal title or interest
therein, provided all these requisites
are present:
(1) There must be fraudulent
representation or wrongful
concealment of facts known to the
party estopped;
(2) The party precluded must intend
that the other should act upon the
facts as misrepresented;
(3) The party misled must have been
unaware of the true facts; and
Kapag ang kontrata sa pagitan ng
ikatlong partido na may pananagutan
sa mga pag-aaring may matibay na
pinanghahawakan, kapag ang alin
mang sa kanila ay hindi napagbigyan
bilang respeto sa kanilang pagmamay-
ari o karapatan sa mga ito, ang mga ito
ay maaaring hadlangan kung ang mga
sumusunod ay narito:
1) Kung mayroong panlilinlang sa
representasyon o maling pagtatago ng
mga katunayan sa partido na
nagkasundo ng estoppel.
2) Kapag mayroong partido na
kakatawan at maninindigan na
mayroong maling interpretasyon sa
mga katunayan.
3) Kung ang partido na nilinlang ay
walang alam sa totong katotohanan.
4) Kung ang partido na nilinlang ay
umaksyon ng nararapat sa mga maling
interpretasyon.
COMMENT:
ESTOPPEL CONCERNING
IMMOVABLE PROPERTY
To apply this Article, one should have
been misled, otherwise there is no
estoppel. Knowledge of the true facts by
the stranger prevents deception, so
estoppel cannot apply. On the part of the
party who is to be in estoppel, should
have made a fraudulent representation or
wrongful concealment of facts known to
him.
 

(4) The party defrauded must have EXAMPLE

acted in accordance with the
misrepresentation.

by: Kristia Capio

 proceeds of the mortgage to Victor.
When Victor has received the proceeds
he is estopped from assailing the
validity of the mortgage by asserting
that he is the factual owner of the car.

To misled others, two brothers, Loki and Article 1439. Estoppel is effective only
Thor, drew up a plan whereby Loki, as between the parties thereto or their
although the registered owner of a successors in interest.
parcel of land, admitted that Thor was
really the owner. by: Janine Gumangol
Question: May Thor or his successors-
in-interest claim ownership over the
land by virtue of such written admission        Ang estoppel ay mabisa lamang sa
by Loki? pagitan ng dalawang partido o ang
Answer: No, because Thor was a party kanilang tagapagmana na may hangad
to the collusion, and therefore, he could nito.
not have been misled. Had third parties
been misled, there would have been Persons Bound by Estoppel
estoppel.
Article 1438. One who has allowed        Both parties are, however, bound
another to assume apparent such as parties to a sale. Successors-in-
ownership of personal property for interest (as well as privies and grantees)
the purpose of making any transfer of are bound but third parties are not.
it, cannot, if he received the sum for
which a pledge has been constituted,
set up his own title to defeat the
pledge of the property, made by the
other to a pledgee who received the
same in good faith and for value.
By: Bryan Glenn Fabiaña

Comment:

This article applies only to personal

property. It deals with estoppel by
acceptance of benefits. It is based upon
the acceptance and retention by one
having knowledge or notice of the facts,
of benefits from a transaction, contract
or statute which he might have rejected
or contested.

Illustration:

Victor owns a car and he needs a loan

but he loathe to make one. So he makes
it appear by a deed of donation that his
friend Randolf is the car’s owner. It is
then Randolf who executes a chattel
mortgage on the car turning over the