OBLIGATIONS AND CONTRACTS

ARTICLES 1345-1356
GROUP 2 REPORTERS:
BRIONES, JESSICA
DE GUZMAN, RICA MAE
FERNANDEZ, DINDO
MANUEL, MATT KEITH
SALITA, RONALYN
URBANO, MICHAEL
 ARTICLE 1345 AND 1346

• Art. 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.
• Art. 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.
 SIMULATION OF CONTRACTS
• Simulations of contract, which Castan calls vices of declaration (vicios de la declaración), may be
either absolute or relative. The simulation is absolute when there is colorable contract but it has no
substance as the contracting parties do not intend to be bound by the contract at all, as when a
debtor simulates the sale of his properties to a friend in order to prevent their possible attachment
by creditors. The basic characteristic of this type of simulation of contract is the fact that the
apparent contract is not really desired or intended to produce legal effects or in any way alter the
juridical situation of the parties.
• It is relative when the contracting parties state a false cause in the contract to conceal their true
agreement, as when a person conceals a donation by simulating a sale of the property to the
beneficiary for a fictitious consideration. The primary consideration in determining the true nature
of a contract is the intention of the parties. such intention is determined from the express terms of
their agreement as well as from their contemporaneous and subsequent acts (Nena Lazalita
Tating vs. Felicidad Tating Marcella, et al., G.R. No. 155208, March 27,2007).
 EFFECTS OF CONTRACTS:

While the other vices of consent (vicios de la formacion de la voluntad) render the contract voidable,
simulation of contracts affects the contract in an entirely different manner.
Thus, according to Art. 1346, an absolutely simulated contract is void, while a relatively simulated
contract binds the parties and the parties may recover from each other what they may have given
under the contract, while a relatively simulated contract is binding and enforceable between the
parties and their successors in interest to their real agreement, 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 (Gaudencio Valerio et al., vs. Vicenta Refresca, et al., G.R. No. 163687, March
28,2006).
 CONTRACT OF ADHESION

In the case of Development Bank of the Philippines vs. Perez, G.R. No. 14854, Nov. 11, 2004, the
Court held that:
(a) A contract of adhesion is so-called because its terms are prepared by only one party while the
other party merely affixes his signature signifying his adhesion thereto.
(b) A contract of adhesion is just as binding as ordinary contracts. It is true that we have, on
occasion, struck down such contracts as void when the weaker party is imposed upon in dealing
with the dominant bargaining party and is reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing.
(c) Nevertheless, contracts of adhesion are not invalid per se; they are not entirely prohibited. The
one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his
consent
 SECTION 2. — OBJECT OF CONTRACT

Concept of Object. — Of all the requisites of a contract, the object is, if not the most fundamental,
the most indispensable in order to have at least the shadow of a contract. Without a cause an
agreement is possible, although inexplicable; without consent it is possible at least to have the
appearance of a contract; but without an object there is nothing.
Although there are commentators who distinguish between the juridical relations or obligations
created and the prestations which constitute the objects of these obligations, under the Civil Code,
the objects of contracts and that of obligations are identical. This fact is recognized by the provisions
of Art. 1347 in relation with the definition of obligations in Art. 1156 of the Code. 140 Consequently,
the object of a contract may be defined as the thing, right or service which is the subject matter of the
obligation which is created or established.
 ARTICLE 1347 AND 1348

Art. 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 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.
Art. 1348. Impossible things or services cannot be the object of contracts.
REQUISITE OF AN OBJECT

1. The object should be within the commerce of men

2.The object should be real or possible
3.The object should be licit
4.The object should be determinate.
IMPOSSIBLE OBJECT

1. Physical.
a. Absolute. — when the act cannot be done in any case so that nobody can
perform it.
b. Relative. — when it arises from the special circumstances or the special
conditions or qualifications of the obligor.
2. Legal. — when the thing or service is contrary to law, morals, good customs, public order, or
public policy. An act is contrary to law, either because it is forbidden by penal law (e.g., to sell prohibited
drugs, etc.) or a rule of law makes it impossible to be done (e.g., to make a valid donation of real property
without a public instrument, to make a valid will, where the testator is under 18 years of age
 ART 1349
• Art. 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.

Determinability of object. — The object of the Contract must be determinate, or at

least, determinable, as to its kinds.

Note:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
 EXAMPLE:
Pogi promise to deliver one of his horse
to Mr. Tan.

Pogi promise Beauty to deliver his January

2024 harvest of Palay

Note:
Art 1246 “When the obligation consists in the delivery of an
indeterminate or generic thing, whose quality and
circumstances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor
deliver a thing of inferior quality. The purpose of the
obligation and other circumstances shall be taken into
consideration.”
If there is no specification of the quantity, although there is a specification of the
class or genus to which the object belongs, is the contract valid?

Yes. According to the second sentence of Art. 1349, 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. There can be no question about the validity of a contract in which there is no
specification of the quantity. This would occur in those cases where the contract
itself has established the basis upon which such quantity can be determined, such as
the needs of a family, the provisions needed for a factory, the materials for a
particular work, and others of a similar nature.

This can be determined from the purpose or motive of the contract itself. In case of
failure of any of these means, the contract is without force whatsoever.
(Aurora Fe B. Camacho vs. CA et al., G.R. No.127520, Feb. 9, 2007)

SC held that Arts. 1349 and 1460 of the New Civil Code provide the guidelines in
determining whether or not the object of the contract is certain.

In this case, the object of the contract is a 5,000 sq.m. portion of Lot 261, Balanga
Cadastre. The failure of the parties to state the exact location in the contract is of no
moment. This is a mere error occasioned by the parties’ failure to describe with
particularity the subject property, which does not indicate the absence of the principal
object as to render the contract void. Since in this case, Camacho bound herself to deliver
a potion of Lot 261 to Atty. Banzon, the description of the property subject of the contract
is sufficient to validate the same.
Section 3. — Cause of Contracts

Art. 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.

Concept of Cause. — In general, cause is the why of the contract or the essential
reason which moves the contracting parties to enter into the contract. In other words, it
is the immediate, direct or most proximate reason which explains and justifies the
creation of an obligation through the will of the contracting parties.
 Distinguished
Cause Object
the service or benefit which is remunerated thing which is given in remuneration
the liberality of the donor or benefactor the thing which is given or donated
In onerous contracts
the prestation or promise of a thing or The thing or service itself
service by the other

In a contract of sale,
The cause, as far as the vendor is concerned, is the acquisition of the purchase price, while the
cause, as far as the vendee is concerned, is the acquisition of the thing, stated in another way, the
cause of the obligation of the vendor is the obligation of the vendee, while the cause of the
obligation of the vendee is the obligation of the vendor. The objects of the contract, on the other
hand, are the thing which is sold and the price which is paid.
 If A sells, an automobile to B for P20,000, delivery and payment to be made at some specified
date, the cause of the contract, as far as A is concerned, is the promise of B to pay him P20,000,
while the cause, as far as B is concerned, is the promise of A to deliver the automobile to him.
The objects of the contract, on the other hand, are the automobile and the purchase price of
P20,000.
As to the vendor the cause is the obligation of the vendee to pay the price, and as to the
vendee it is the obligation of the vendor to deliver the automobile.

The thing sold is the object, while the price paid is the cause.
Cause 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. From this it necessarily follows that a promise made by one party may be
a sufficient cause for a promise made by another party. It is not, therefore, necessary that the
cause or consideration should pass from one party to the other at the time of the execution of the
contract

Thus, where a logging company by contract designated a certain agency as its distributor to
export logs to Korea and Europe at the best market price obtainable on condition that it would pay
the latter a commission of 13% of the gross value of the logs, it was held that for the former the
cause of the agreement is the distribution of its logs in the areas agreed upon which the latter
undertook to accomplish, whereas for the latter the cause is its commitment to sell or export the
logs for onerous consideration.
Moral obligations - arises wholly from ethical considerations, unconnected with any civil
obligation and, as such, is not demandable in law but only in conscience.

May a moral or natural obligation constitute a sufficient cause or consideration to support an

onerous contract?
It can not constitute a sufficient cause or consideration to support an onerous contract, but
where such moral obligation is based upon a previous civil obligation which has already been
barred by the statute of limitations at the time when the contract is entered into, it constitutes a
sufficient cause or consideration to support the said contract.
 Fisher vs. Robb 69 Phil. 101
The defendant was one of the organizers of a certain enterprise known as the Philippine
Greyhound Club, Inc. which was formed for the purpose of introducing dog racing in the
Philippines, while the plaintiff was one of those who had invested a certain sum of money in the
venture. It appears that this venture did not succeed, and, as a result, the defendant wrote a letter
to the plaintiff explaining the critical condition of the company, and, at the same time, stating that
he felt “a moral responsibility for those who had sent in the second payment of their subscription”
and that he will see to it that “stockholders who had made such payment shall be reimbursed such
amount as soon as possible out of his own personal funds.” This action now is brought to enforce
the “obligation.” The principal question to be decided, among others, is whether there is a
sufficient cause or consideration to justify the promise made by the defendant in his letter.
Held:
“The contract sought to be judicially enforced by the plaintiff appellee against the defendant is
onerous in character, because it supposes the deprivation of the latter of an amount of money
which impairs his property, which is a burden, and for it to be legally valid it is necessary that it
should have a consideration consisting in the lending or promise of a thing or service by such
party. The defendant-appellant is required to give a thing, namely the payment of the sum of
P2,000, but the plaintiff-appellee has not given or promised anything or service to the former
which may compel him to make such payment. The promise which said defendant-appellant has
made to the plaintiff-appellee to return to him P2,000 which he had paid to the Philippine
Greyhound Club, Inc. as a second installment of the amount of the shares for which he had
subscribed, was prompted by a feeling of pity which said defendant-appellant had for the
plaintiff-appellee as a result of the loss which the latter had suffered because of the failure of the
enterprise. The obligation which the said defendant-appellant had contracted with the plaintiff-
appellee is, therefore, purely moral, and, as such, is not demandable in law, but only in
conscience, over which human judges have no jurisdiction.”
 Villaroel vs. Estrada 71 Phil. 140

This was originally an action commenced by the plaintiff (respondent) against the defendant
(petitioner) for the purpose of enforcing a contract entered into on August 9, 1930, by virtue of
which the defendant undertook to pay to the plaintiff a certain debt which his deceased mother
had incurred from the deceased parents of the said plaintiff more than eighteen years ago. It is
submitted that this debt had already prescribed. The question now is whether this action will
prosper, considering that the debt incurred by the defendant’s mother had already prescribed. The
Supreme Court, speaking through Justice Avanceña.
Ruled: “The present action is not founded on the original obligation contracted by the mother of
the defendant, which had already prescribed, but on that contracted by the defendant on August 9,
1930, in assuming the obligation which had already prescribed. The defendant being the only heir
of the original debtor with the right to succeed in her inheritance, that debt lawfully contracted by
his mother, although it lost its efficacy by prescription, is nevertheless now a moral obligation as
far as he is concerned, a moral obligation which is a sufficient consideration to create and make
effective and demandable the obligation which he had voluntarily contracted on August 9, 1930.’’
Cause in Remuneratory Contracts

⮚ The service or benefit which is remunerated.

⮚ One of the contracting parties remunerates or compensates the service or benefit rendered or
given by the other party, although such service or benefit does not constitute a demandable
debt.

Example:
If A gives a certain property in accordance with the formalities prescribed by law to his lawyer
friend, B, in remuneration for legal services which the latter had rendered to him freely in the past
and such gift is duly accepted, the cause as far as A is concerned would be the legal services
rendered by B, although such services do not constitute demandable debts.
Cause in Contracts of Pure Beneficence.
⮚ The mere liberality of the benefactor

Example:

If A makes a pure donation of a certain property to B in accordance with the formalities

prescribed by law, its cause is the mere liberality (causa liberalitatis) of the donor or benefactor.
The liberality would be the equivalent of what Manresa calls “el cariño, el desprendimiento, la
admiracion, la generosidad, el agradecimiento, la compasion.”
ARTICLE 1351- The particular motives of the parties in entering
into a contract are different from the cause thereof
What is motive?

A motive is the purely personal or private reason in which a

party has entering into a contract. It is a different from the
cause of contract
 CAUSE MOTIVE

Immediate or direct reason Remote or indirect reason

Always known to the other contracting parties May be unknown

The illegality of the cause affects the validity of a The illegality of one’s motives does not render the
contract contract void
Example:

A bought a gun worth Php 25,000 to kill B

The casue of the contract is the GUN, as to A, while the seller is the Php25,000

The motive here is the killing of B

As a general rule, the motive or particular purpose of a
party in entering into a contract does not affect the validity
nor existence of the contract.

Exception: A motive may render a contract void if it pre-

determines the cause of the contract
ARTICLE 1352- Contracts without cause, or with
unlawful cause, produce no effect whatever. The
cause is unlawful if its contrary to law, morals,
good customs, public order, or public policy
If the contract is without cause, it is actually “inexistent”
because the same is absolutely simulated or fictitious. It is
the total absence of cause or consideration that renders
such contract absolutely void and inexistent

Where the cause is unlawful, or contrary to law, morals

good customs, public order or public policy, the contract is
also void and inexistent
CONTRACT WITH UNLAWFUL CAUSE CONTRACT WITHOUT CAUSE

The cause exists but is unlawful There is absence of an essential element,

which prevents the existence of a valid
contract

The contract should properly be classified as The contract is made to appear but which, in
“void” and note merely inexistent reality does not exist (inexistent)
REQUISITES OF CAUSE:

1. It must exist
2. It must be true
3. It must be lawful