CONTRACT [ART.

1305 - 1430]
Aleatory
- the consideration are not the same,
Contract - is a meeting of minds between
not equivalent consideration
two persons whereby one binds himself,
➔ A buys from B a lotto ticket for 20
with respect to the others, to give something
pesos, and the winning price is 5M.
or to render some services.
the consideration is not the same,
not equivalent (di pareho)
Requirements:
➢ Can there be two or more parties?
Executory vs. Executed
[YES]
Executory
➢ Can there be only one party?
- the parties will be complying with the
[NO]
obligation
EXCEPTION:
- none of the party performed their
Auto Contract
obligations
➔ if A not yet delivered and B not yet
5 Basic Principles/ Characteristics paid
➢ M - Mutuality [1308]
➢ A - Autonomy [1306] Executed
➢ R - Relativity [1311] - one of the parties or both of the
➢ C - Consensual [1315] parties are already complied
➢ O - Obligatory force [1159] - if one of the party performed their
❖ it’s mandatory the parties obligation
have to comply, if they’re not ➔ if A already delivered and B already
going to comply, they will be paid
liable to pay damages
[question: why is that important]
Kinds of Contract ➢ it’s important because of the Statute
[notes: this 3 distinction are most important of Frauds
in this topic] Statute of Frauds - the contract
Consensual vs. Real must be in writing of conference only
Consensual executory contract
- created by mere consent
- they only need one thing which is [note: if one of them performed it is
the consent no longer covered by the statute of
fraud, and we call that as executed]
Real [1316]
- we need two things [consent & ARTICLE 1306 [Autonomy/ Liberty]
delivery of the thing] - liberty, freedom to contract
Commutative vs. Aleatory GR: parties can agree on anything provided
Commutative E: if they are not contrary to law, morals,
- equivalent consideration must be good customs, public order, or public policy
given [note: if it’s contrary to 5 (law, morals, good
➔ If A sell car for 100,00 and B buy it customs,public order, public policy)- VOID]
for 100,000 or 95,000 or 90,000 so
there’s a equivalent consideration
(or pareho)
 Ex: A offer 100,000, B offer to buy thing
ARTICLE 1307 [Innominate Contracts] 80,000, the decision of TP is 50,000 [hindi
- it has no name sya patas to one of the party] NOT VALID

Nominate vs Innominate Therefore, the court will be the one to

Nominate - merong pangalan decide
Innominate - walang pangalan
ARTICLE 1311 (1) [Relativity]
Kinds of Innominate - the contract take effect only between
1. Do Ut Des (mean: i give that you the parties, their assigns, and heirs
may give)
2. Do Ut Facias [notes: other words to Parties are PRIVY]
3. Facio Ut Des (mean: I do that you GR: TP are not bound that liable or affected
may give) by the contract
4. Facio Ut Facias E: TP are liable / bound / affected
[notes: pagmahaba sya, maikli. pag maikli ❖ Stipulation Pour Autrui [1311(2)]
sya, mahaba] ❖ Contracts creating real rights [1312]
Facio - Do ❖ Contracts to defraud creditor [1313]
Do - Give ❖ Interference in contractual relations
[1314]
Rules Governing Innominate Contract
❖ A - Agreement of parties ARTICLE 1311 (2) [Stipulation POUR
❖ C - Civil code AUTRUI]
❖ A - Analogous Contract - Pour Autrui (Stipulation in favor of
❖ C - Custom of the place TP)

[Question: if we have a nominate contract 5 Requisites

what are the rules to apply?] 1. clearly and deliberately conferred
- just apply the ACAC 2. communication of acceptance before
its revocation (important)
ARTICLE 1308 [Mutuality] 3. should be part of the contract
- both must be agree, there must be a 4. no condition or it’s not compensated
consent both of the parties by any kind of obligation
- A and B must be agree 5. legal representation or authorization
of parties
ARTICLE 1309 [GR: TP cannot decide]
[notes: reason why communication is
[Question: Why TP cannot decide?] important]
➢ because both parties must agree not ➢ because TP must be communicate
the Third person acceptance of both of the parties to
E: TP was authorized by BOTH parties be a part of a contract
Effect: Valid to both parties
Exception-E: if the decision of the TP is
evidently INEQUITABLE, or unfair to one of
the parties [Art. 1310].
ARTICLE 1312 [Contract creating real - you need two things [consent,
rights] delivery of the thing]
- the real right here, created by the Formal / Solemn contract [1356]
Registration - you need particular form

Example: where registered your ARTICLE 1316 [3 kinds of Real

name?[NSO] Contracts]
where u registered car? [LTO] - consent + delivery
where u registered land? [Registry of Digs] 2 Requirements:
- The person must agree
[notes: we register to create real rights, we - Physical delivery is required
can inform whole word it’s ours]
3 kinds of Real Contracts
ARTICLE 1313 [Contract to defraud ➢ Pledge
creditors] [notes: if there’s no delivery of a
- Accion Pauliana thing, there’s NO PLEDGE]
[because physical, actual is required
Example: A owes B 100,000, and A has for pledge to be created, so
only 1 land. for A to pay B, A has sold his DELIVERY is required]
land to C, which A defraud B
➢ Deposition
therefore, B can go after C because of the [notes:deposit will not be created, if
Element of Fraud committed by A against B thing is not delivered]

ARTICLE 1314 [Interference in ➢ Loan [Mutuum, Commodatum]

contractual relation] [notes: if there’s NO PHYSICAL
DELIVERY, then the LOAN will NOT
- Interference because of the BE CREATED]
interference of the TP committed
against one of the parties Stages of Contract
1. Preparation | Negotiation |
ARTICLE 1315 [Consensual] Conception
- mere consent, require consent ➢ Parties are bargaining (nag
GR: contracts are created by mere consent tatawaran)
Example: A hiring a Secretary, A told the ➢ wala pang contract
person his salary to be 2k, and person 2. Perfection | Creation | Birth
agree, then A hired the person ➢ The contract has been
created, there’s a meeting of
[Question: did we put it in writing? NO] minds
- the mere fact that we agreed we ➢ may contract na
gave consent to each other the 3. Termination | Consummation
contract is NOT CREATED, and ➢ The parties will perform their
that’s the principle of CONSENSUAL respective obligations
➢ you have to perform the
Exception: contract
Real contract [1316] [notes: when ownership required-
TERMINATION]
ARTICLE 1317 [Unauthorized Contract | - if the parties did not agree to
Unenforceable Contract] accidental - VALID
- the parties can agree or
GR: A person is not bound by the contract disagree, it may or may not
of another to which he has no knowledge or be present
to which he did not give his consent
E: Authorization given to TP 3 Essential elements of Contract
C - Consent
2 Requisites to be bound by TP O - Objective
1. He must be authorized C - Cause
2. Act within the scope of authority [notes: if 1 is missing - VOID]
[notes: if 1 of them is missing-
UNENFORCEABLE]
ARTICLE 1319 [Consent]
Remedy: Ratification - offer + acceptance
- you give your consent after - if there’s a meeting of a mind of
the contract was created acceptance and consent
Effect of Ratification Offer - must be certain | definite
- it cleanses the contract from Acceptance - must be absolute
all defects
Counter Offer | Qualified Acceptance
- when you change the offer
ARTICLE 1318 [Classes of elements of
Contract] POLICITACION
- did not reply
1. Essential - imperfect promise or unaccepted
➢ Common -COC [Consent, unilateral promise to buy or to sell
Object, Cause] - only one makes an offer the other
➢ Special- form and delivery party did not even reply
need them or required
➢ Extraordinary- price sale EX:
[notes: if 1 of them missing - - A offers to B to buy a car amounting
VOID] to 100k, but B did not reply
- B tells A he will buy his car for 100k,
2. Natural but A did not reply
- presumed to exist in certain
contracts (automatic) ARTICLE 1319 (2) [Cognition Theory]
- once na pumasok ka sa Question:
contract, it’s already part of a When is a contract perfected?
contract Ans: from the time of the knowledge of the
EX: warranty against eviction | acceptance
warranty of hidden defects, etc. Where is the contract created?
Ans: on the place where it was made
3. Accidental Ex: A from Manila, B from Cebu, therefore
- specific terms, conditions the contract was created from Manila,
stipulations [1321] because that is where an offer sent to B.
Notes: 4 Theory to [1319] Instances of ineffective offer
➢ B decided - Manifestation Theory 1. Death
➢ B sent - Expedition Theory 2. Insanity
➢ A received - Reception Theory 3. Civil Interdiction
➢ A knowledge - Cognition Theory - When a person commits his
crime, there are 2 liability
which is criminal civil
[Notes: New Law - Electronic | E-commerce] - (aspect: he cannot enter to a
- a contract can be created or contact)
perfected, if it is sent by email or by 4. Insolvency
electronic mail.
[notes: insanity, civil interdiction are-
ARTICLE 1320 [Form of Acceptance] VOIDABLE]
➢ Express
➔ Oral - verbal Other Instances
➔ Writing - write a letter - Failure to perform condition
➢ Implied - There’s arrival of the period
- based on the acts of parties - The party rejected the offer

ARTICLE 1321 [Accidental Elements] ARTICLE 1324 [Option Money vs Earnest

- Matters that may be fixed by the Money]
offerer (accidental)
- the parties may or may not stipulate Option Money
on those things - Distinct part (separate, di sya
kasama sa pricing)
ARTICLE 1322 [Offer made by agent] - Sale is not yet created
- Agency - Not required to buy
- A tells B do you like to buy my car
for 100k, i’ll give you 10% [notes: B has option if he will buy or not the
commision, thing]

- B is a agent, A is a principal, but B Earnest Money

was able to sell it to a TP - Arras or Earnest money called as
down payment
[question:to whom will the TP give his - Part of pricing
acceptance?] - Perfected sale
- Required to buy
Answer: TP will initially gave his consent to
B, however TP can also give his acceptance [notes: A cannot sell his car to TP if B give
to A his downpayment or earnest money to A,

ARTICLE 1323 [Ineffective Offer] A cannot sell to TP, because the way B give
- Both parties must LIVING and downpayment, the contrat are already
CAPACITATED at the time of the perfected and made
knowledge of acceptance
ARTICLE 1325 2. Insane e- crazy person
GR: Business Advertisement are NOT 3. Deaf mute who don’t know how to
definite offers write
[notes: it’s a paper transaction eg. news 4. Person under civil interdiction - in
paper ads] imprisonment
[Question: suppose you give your 5. Incompetent under under
acceptance, is the contract of sale created?] guardianship
Ans: NO, because they are not a definite
offers ARTICLE 1328 [Lucid Interval]
[Question; Why?] - Person is not insane (VALID)
Ans: because, only mere invitation to make - Hypnotic Spell (VOIDABLE)
an offer - State of Drunkenness (VOIDABLE)

E: if its complete in ALL respects [notes: Voidable- its valid until it is annulled]

ARTICLE 1329 [Other instances of

ARTICLE 1326 Incapacity]
- Advertisement for bidders NOT - Hospitalized person
definite offers - Prodigals
- Deaf and numb
[Ques: Why?] Case:
Ans: Invitations to make proposals NOT - If a minor answered the contract
bound to accepts the HIGHEST or about Legal age, and he still sign the
LOWEST proposal, unless it is mentioned in contract kahit na nabasa nya na ito
ads to accept the higher or lower, ay for Legal, therefore he commited
[ACTIVE MISREPRESENTATION]
But, generally it's not required to accept - A mother along with his 2 minor
highest, and lowest bid children, then she sign the contract

ARTICLE 1327 [Person who cannot give [Question: we’re the minors liable?]
consent] Answer: No, the mother are Liable
for [PASSIVE
Incapacitated vs. Prohibited MISREPRESENTATION]
[notes: Prohibited is worse]
ARTICLE 1330 [Characteristics of
➢ If 1 is Incapacitated- VOIDABLE Consent]
➢ If both are Incapacitated- 1. Intelligent
UNENFORCEABLE 2. Free & Voluntary
E: in case of marriage, if 3. Conscious or Spontaneous
BOTH or 1 of them are minors, it is [notes: this 3 need to be present, for
VOID, because a minor cannot enter a contract to be VALID]
into a contract of marriage
➢ If one or both are incapacitated-
VIOD
Person who are incapacitated
1. Minors - 13-18 yrs old before its
13-21
Vices of Consent [MIVUF] Answer: Translate it , because it's in another
➢ M - Mistake language
➢ I - Intimidation
➢ V - Violence
➢ U - Undue Influence ARTICLE 1333 [Effect of Knowledge of
➢ F - Fraud Risk]
[notes: if one them are present - - VALID
VOIDABLE] - [Example: You know the danger, you
- We called that as Vitiated consent, still enter into contract, therefore
- If there’s NO consent - VOID there’s no mistake there]

ARTICLE 1331 [Mistake] ARTICLE 1334 [Mistake of Law]

- It enumerate the instances of GR: If there’s a mistake of law that’s
mistake of fact VALID
2 Kinds | Effect
➢ Mistake of Fact - VOIDABLE E: Requisites to Apply 1334 and
➢ Mistake of Law - VALID become VOIDABLE
1. Error must be mutual
Instances of Mistake of Fact 2. Legal effect of an agreement
1. Substance of the thing 3. Frustrate the real purpose of
2. Condition which principally moved the parties
one or both of them [notes: if the 3 are present,
3. Identity or qualifications of one of the it's possible a contract to be
parties VOIDABLE

[notes: all of them are VOIDABLE] ARTICLE 1335 [Violence vs Intimidation]

❖ Simple mistake of account - VALID ➢ Violence - when in order to us

- Pag ito ay nagkamali lang ng consent serious or irresistible forces
bilang ng things employ
- Other word: Force
ARTICLE 1332 [Burden of proof in case - Physical
of Mistake] - External
GR: Party of mistake ➢ Intimidation - there is intimidation
E: Other party in one of the contracting parties is
Instances: compelled a reasonable and well
1. If 1 party is unable to read grounded fear of an imminent or
[Question: if a person is illiterate can grave engine upon his person or
he enter into a contract?] property or upon the person or
Answer: Yes, just read aloud the property spouses and as
content of a contract, therefore he descendants the give his consent
can listen, he can agree - Keyword: Fear
2. If it’s a language not understood by - Moral
him - Internal
[Question: if it's Spanish, Chinese, [notes: both are voidable]
or another language he can still
enter into a contract?]
 - Threat to enforce one's claim
through competent authority if the ARTICLE 1339 [Fraud by Concealment]
claim is just a legal -VALID - Failure to disclose facts
- Whether fraud is intentional or not,
ARTICLE 1336 it’s possible to be committed, eg.
- Violence or Intimidation commited by partnership
a TP [ yes, it is possible]
ARTICLE 1340 [Usual Exaggerations in
ARTICLE 1337 [Under Influence] Trade | Sale’s Talk]
- takes place when a person takes - Valid
improper advantage over the will of
another depriving the person of ➢ CAVEAT EMPTOR
reasonable freedom of choice - Buyer beware
- Other word: Improper Advantage - Buyer should be careful,
because sales talk is part of
Circumstances to be considered craft of seller for them to be
- Family relations | Confidential | able to sell things
Spiritual relations ➢ CAVEAT VENDITOR
- Mutual weakness | Ignorance - Seller beware
- Financial distress
ARTICLE 1341 [Expression of Opinion]
ARTICLE 1338 [Fraud] GR: Mere expression of an opinion by an
ordinary person does not signify fraud.
2 Kinds of Fraud E: it becomes Voidable - if the person who
➢ Dolo Causante (1338) made it is an expert and you relied on this
- committed at start expertise only special knowledge
- Purpose: to get the security
consent ARTICLE 1342 [Fraud by a TP]
- Voidable GR: Does NOT vitiate consent
- Remedy: Annulment E: it becomes Voidable if it,
➢ Dolo Incidente (1170) 1. Created a substantial mistake
- Committed after the 2. The same is mutual
creation [notes: exception, when a third
- Purpose: to violate, to breach person commits fraud, and becomes
the obligation voidable
- Valid
- Remedy: Pay damages ARTICLE 1343 [Effect of
[Question: how is casual fraud committed?] Misrepresentation in Good Faith]
1. insidious words or imagination - That’s only a Error, only a mistake,
number it’s NOT FRAUD
- Nanaloloko ka
2. Concealment ARTICLE 1344 [Causal Fraud]
- Failure to disclose facts 2 requisites to be substantial
1. It must be serious
2. It must be unilateral (not employed
by BOTH)
ARTICLE 1345 [Simulation by Conduct] Future Inheritance vs. Right to inherit
- Simulate means you pretend
- The parties are pretending to imply, Future Inheritance
pretending to agree - You cannot sell future inheritance,
because it does not belong to you
ARTICLE 1346 [ 2 kinds of Simulation] - NOT possible
1. Absolute | Fictitious
- Worse Right to Inherit
- No intention to be bound - You can sell, because you are
- Effect: VOID selling the right future inheritance
2. Relative - Possible
- Parties conceal their true
agreement ARTICLE 1348 [Impossible Things]
GR: VALID 2 kinds
E: 1. Does not prejudice a TP 1. Physically Impossible
2. Not contrary to 1306 2. Legally Impossible

OBJECT OF CONTRACT ARTICLE 1349 [Quantity of object need

not be Determinate]
ARTICLE 1347 [Object- Subject Matter] - Future Things’
- Thing, right or services - You don't need to agree how many,
the important is that it must come
Requisites into existence
1. It must be within the commence of
man CAUSE OF CONTRACTS
- It can be appropriated - Causa (Latin word0
- It can be transferred - Consideration
- It can be assigned - Why of the contract
2. Real or possible
- It’s already existing ARTICLE 1350 [3 kinds of Cause]
3. Licet or Lawful 1. ONEROUS - prestation | promise |
4. Determinant or capable of being reciprocally obligated (may bayad)
made determinate 2. GRATUITOUS - pure beneficence |
- Without a new agreement mere liberatory (free, walang bayad)
between parties 3. REMUNERATORY - services |
- Specific benefit
5. Transmissible
ARTICLE 1351 [ Motive]
GR: All rights may be an object - Private reason which person has in
E: If prohibited by: entering into a contract
- Law - You don’t tell it
- Stipulation
- Nature Cause vs. Motive

Cause
- Immediate | direct
- Known to other
 - Essential element
- Effect: if illegal (VOID)

Motive
- Remote | indirect reason
- Unknown
- Not an element
- Effect: if illegal (VALID)
[ques: why is it valid?]
Answer: because it's not an Element

ARTICLE 1352 | 1353 [Requisites of

Cause]

1. It must be in existence at the time,

the contract in entered into
2. Licit | Lawful
3. True or Real

Effect of Cause
1. Absence| Want
2. Illegal
3. False
4. Failure
5. Insuffic