A.

Causal Fraud

Example:
The employment of causal fraud will cause the annulment of the
contract due to a defective consent.

- S offered to sell to B a BMW car E320 for P6M.

- After the sale, B found out that what he really bought was a
BMW E230 worth P3.5M.
- It appears that A just jumbled the numbers 2 and 3 brass signs
at the back of the car changing the sign from BMW E230 to
E320.
- Because of this, B filed an action for annulment of the
contract of sale on the ground of fraud.
Question: Will the action for annulment prosper?

Answer: YES. In this case, had B known that he was merely

buying a BMW car E230, which is of inferior quality than the BMW
E320, B would not have bought the car. However, because S
represented that it was a BMW E320, B was fooled into buying the
car offered by S. This is what we call causal fraud which makes
the consent of B defective, and which prevents the perfection of
a contract of sale between the parties. Hence, an action for
annulment is proper under the facts of this case.

Fraud or deceit
B. Fraud in the performance of the obligations under the contract
Example:

- On February 5, 2011, S offered to sell his Omega watch to B for

P350,000.
- After B examined the watch, B agreed to buy it at the price offered by
S. Delivery date and payment was then set by the parties on February
15, 2011.
- Before delivery date, S went to Virra Mall, Greenhills and bought an
exact imitation of the Omega watch he offered for sale to B.
- Two weeks after the Omega watch was delivered to B, he discovered that
the watch delivered to him was only an imitation of the original.

Question: What is the remedy of B in this case?

Answer: In this case, a contract of sale was perfected on February 5,

2011 between S and B.
- There was already consent – meeting of minds between the parties with
respect to the object (an authentic Omega watch) and the cause (the
P350,000 purchase price) of the contract.
- S did not employ fraud to convince B to buy the watch. S is guilty of
fraud in the performance of his obligation. He employed fraud at the
time the object was to be delivered to the buyer by replacing it with an
imitation. The proper remedy of B here is to file an action against S
for specific performance (to compel S to deliver the genuine watch) and
for damages for fraud.

Fraud or deceit