OBLIGATION juridical necessity to give, to do Exception: When law/stipulation of parties

or not to do requires a differnt standard of care

4 ELEMENTS OF OBLIGATION
1. ACTIVE SUBJECT (creditor/obligee) whose
obligation is constituted
2. PASSIVE SUBJECT (debtor/obligor) has duty
to give, to do or not to do
3. OBJECT/PRESTATION subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient
cause) reason
(slight/extraordinary diligence).
When creditor is entitled to the fruits
Rule: The creditor has personal right (right to
ask for delivery) from the time the obligation to
deliver arises.
But NO real right (right enforceable against the
whole world) until it is delivered.

CIVIL OBLIGATION NATURAL 3 KINDS OF FRUITS

OBLIGATION 1. NATURAL w/o human intervention
derived from positive derived from equity & 2. INDUSTRIAL w/ human intervention
law justice 3. CIVIL derived by virtue of juridical relation
enforceable by court not enforceable by
action court action Creditors rights if debtor fails to comply w/
the obligation
5 SOURCES OF OBLIGATION 1. Determinate
1. LAW a. Performance
2. CONTRACTS b. Damages
3. QUASI-CONTRACTS arise from lawful, 2. Generic
voluntary acts; no one shall be unjustly a. Performance
enriched... b. Damages
2Kinds c. Obligation be complied at debtors expense
a. Solutio indebiti something received
(delivered on a mistake), no right to demand it Creditors rights if debtor does in
b. Negotiorum gestio voluntary mgt of contravention
property/affairs of another w/o his 1. Damages
knowledge/consent 2. Ask it be UNDONE at debtors expense
4. QUASI-DELICT/TORTS/CULPA AQUILIANA FORTUITOUS EVENT cannot be foreseen, if
arise from damage; fault/negligence foreseen, inevitable
5. CRIMES/ACTS/OMISSIONS punished by law General Rule: No person liable to fortuitous
arise from civil liability that is a consequence of event.
a criminal offense Exceptions:
1. Law states
DILIGENCE OF A GOOD FATHER OF A FAMILY 2. Stipulation/contract states
- care need to be exercised by a debtor to 3. Assumption of risk
deliver/give determinate thing 4. Delay
5. Debtor promises deliver to 2/more persons
who do not have same interest (bad faith)
EFFECTS OF FORTUITOUS EVENT to thing to be
delivered
- extinguish the obligation if determinate;
generic does not extinguish the obligation
3 MISCELLANEOUS RULES ON PERFORMANCE
OF OBLIGA-TION
1. When to
deliver determinate, accessions (additions/
improvements)
and accessories (joined/included with the
principal) are INCLUDED even not mentioned.
2. If debtor fails to do, it shall be DONE AT HIS
EXPENSE, same with doing the contravention;
poorly done be undone.
3. In obligation not to do, and obligor does what
is forbidden, shall be UNDONE AT HIS EXPENSE.
4 GROUNDS; debtor liable for damages
1. Default/mora
2. Fraud/dolo
3. Negligence/culpa
4. Contrary to terms of obligation
1. DEFAULT/MORA delay
3kinds
a. Mora solvendi debtors delay to give
(real ob.), to do (personal ob.)
b. Mora accipiende creditors delay to
accept
c. Compensatio Morae delay of both in
reciprocal obligation
CONCEPT OF DELAY
General Rule: No demand, No delay
Exceptions:
1. Law states
2. Obligation states
3. Time is the essence
4. Demand be useless if delay
5. Debtor guilty of delay
EFFECTS OF DELAY
1. Damages
2. When to deliver determinate thing, STILL
LIABLE in fortuitous event.
2. FRAUD/DOLO conscious, deliberate,
intentional evasion of fulfillment
2Kinds
a. Dolo causante/Causal fraud fraud in
obtaining consent; consent is defective,
contract is voidable. Remedy: annulment
b. Dolo incidente/Incidental fraud fraud
w/c vitiates consent. Remedy: damages
3. NEGLIGENCE/CULPA voluntary
act/omission; no bad faith intended
3Kinds
a. Culpa aquiliana/Civil negligence
quasi-delict/torts
b. Culpa contractual/Contractual
negligence breach
c. Culpa criminal/Criminal
negligence crime/delict
4. Contrary to the terms of obligation
2 RULES OF PRINCIPAL & INSTALLMENT
1. Receipt of principal w/o mention of
interest, presumed interest is paid also.
2. Receipt of latter installment w/o
mention of prior installment, presumed
prior installment is paid also.
4 SUCCESSIVE RIGHTS OF CREDITOR to
satisfy claim against DEBTOR
1. Exact payment
2. Attach debtors properties
3. Accion subrogatoria exercise rights &
actions except inherent in person
4. Accion pauliana cancel
acts/contracts by debtor to defraud
creditor
TRANSMISSIBILITY OF RIGHTS
General Rule: ALL RIGHTS are
transmissible.
Exceptions:
1. Law states
2. Contract states
3. Obligation is purely personal
10 Kinds of Obligation
1. Pure
2. Conditional
3. Alternative
4. Facultative
5. Joint
6. Solidary
7. Divisible
8. Indivisible
9. Obligation w/ a period
10. Obligation w/ a penal clause
1. PURE OBLIGATION
- w/o condition, demandable at once
(pure has resolutory condition/period)
2. CONDITIONAL OBLIGATION
- there is condition in performance;
future & uncertain
2Kinds
a. Suspensive condition happening
of condition gives RISE to obligation
b. Resolutory condition happening
of condition EXTINGUISHES obligation
6 MISCELLANEOUS RULES ON
CONDITIONAL OBLIGATION
1. Impossible conditions, contrary to law,
shall ANNUL obligation.
2. The condition not to do an impossible
thing is considered not agreed upon.
3. The condition that happens in
determinate time, EXTINGUISHES
obligation.
4. The condition that happens in
INDETERMINATE time, obligation only
effective at arrival.
5. The condition is fulfilled if DEBTOR
prevents fulfillment.
6. The effect of conditional obligation,
once fulfilled:
- to give: retroact to the day of
constitution of obligation
- has reciprocal prestations: fruits &
interests be mutually compensated
- has unilateral obligation: debtor shall
give fruits & interests
RULES in case of Loss, Improvement, or
Deterioration of thing during the
pendency of condition
1. LOST
a. w/ debtors fault damages
b. w/o debtors fault extinguishes
obligation
2. DETERIORATION
a. w/ debtors fault - (1) cancel
obligation & damages; or (2) fulfill
obligation w/ damages
b. w/o debtors fault creditor suffer
impairment
3. IMPROVEMENT
a. By nature/time benefit to creditor
b. at expense of debtor debtor no right
than that granted to usufructuary
(debtor no right to compensate amount
for improvement)
EFFECTS OF FULFILLMENT OF
SUSPENSIVE CONDITION
General Rule: The obligation becomes
effective retroactively to the day
obligation was constituted.
Exceptions:
1. In reciprocal obligation, fruits & 7 CASES CONSIDERED TO BE
interests during pendency of condition OBLIGATION W/ A PERIOD
shall compensate each other. 1. Little by little
2. In unilateral obligation, debtor gets 2. In partial payment
fruits & interests unless there is a 3. Payable ASAP
contrary intent. 4. When I can afford it
5. When I have the money
3 EFFECTS OF FULFILLMENT OF 6. When I am able to
RESOLUTORY CONDITION 7. When my means permit me to do so
1. Extinguish obligation.
2. Both parties restore what they PERIOD CONDITION
received plus fruits & interests. certain uncertain
3. The rule on L, D, or I will apply to future only future/past
person who has to return the thing. but unknown
When one of debtors in reciprocal (*influence (*) on the very
obligation does not comply w/ his upon obligation) existence of
obligation only upon its obligation
1. The right of injured party is (1) cancel demandability itself
contract & damages; or (2) fulfill
obligation & damages FOR WHOSE BENEFIT IS THE PERIOD?
General Rule: Both the debtor &
3 Kinds of Obligation (Accdng to creditor.
PERSON OBLIGED) Therefore, NEITHER of them can demand
1. UNILATERAL only 1 party obliged to performance of obligation.
comply Exception: If the term of obligation has
2. BILATERAL both parties; to favor one of them.
performance not same time
3. RECIPROCAL both parties; 5 INSTANCES WHEN DEBTOR LOSES
performance same time RIGHT TO USE PERIOD
1. Debtor is insolvent.
3. OBLIGATION W/ A PERIOD 2. Debtor attempts to abscond.
- demandability/extinguishment subject 3. Impairment of guarantees/securities.
to the expiration of period 4. Failure to furnish
guarantees/securities promised.
PERIOD interval of time; either 5. Violation of undertaking.
suspends demandability or produces
extinguishment 4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
DAY CERTAIN must come, not known
when 5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be perform by choosing (creditor) from the
substituted. remainder.
2. If 1 of prestations lost
ALTERNATIVE prestations LOST w/ through debtors fault, creditor may
debtors fault claim any of remainders w/ damages.
Creditor entitled to damages but needs ff 3. If ALL prestations lost through debtors
requisites: fault, creditor choose price w/ damages.
1. Debtor can choose.
2. All prestations lost/become impossible RULES on LOSS/DETERIORATION of the
due to debtors fault. thing intended as SUBSTITUTE in
FACULTATIVE OBLIGATION
ALTERNATIVE FACULTATIVE 1. If there is a loss/deterioration of thing
OBLIGATION OBLIGATION intended as substitute, debtor is NOT
several one prestation liable if NOT HIS FAULT.
prestations due, but can be But if substitution is already made,
due, giving one subtituted debtor is liable for loss of substitute
is sufficient when in DELAY, NEGLIGENCE, or FRAUD.
right to choose right to choose
(debtor) unless DEBTOR ONLY 6. JOINT OBLIGATION
granted to - obligation is to be
creditor paid proportionately by debtors or to be
If 1 of the nullity of demanded proportionately by creditors
prestation is principal carries
illegal, others w/ it nullity of 7. SOLIDARY OBLIGATION
may be valid, accessory/ - each one of debtors has right to render
obligation substitute or each one of creditors has right to
remains demand the entire compliance w/
loss/impossibili loss/impossibili prestation
ty of ALL ty of presta-
prestations tion due, w/o MAXIMS & SYNONYMS
due, w/o debtors fault, MAXIMS SYNONYMS
debtors fault, extinguishes
extinguishes obligation JOINT To each proportionate
obligation Obligation his own

(3) SUMMARY OF RULES, OBLIGATIONS,

& RIGHTS OF DEBTOR IN ALTERNATIVE SOLIDARY One for individually &
OBLIGATION Obligation all, all collectively
1. If 1 of prestations lost for one
through fortuitous event, shall still be
 3. Debtor guilty of fraud in performance
(3) SOLIDARY OBLIGATION EXIST ONLY of obligation.
IF: *RULES
1. Law states NULLITY OF PRINCIPAL OBLIGATION OR
2. Stipulation states THE PENAL CLAUSE
3. Nature of obligation requires Nullity of principal obligation = nullity of
penal clause
2 PRESUMPTIONS THAT OBLIGATION IS Nullity of penal clause = NOT nullity of
JOINT principal obligation
1. The debts be divided as many shares
as there are debtors/creditors. 10 MODES OF EXTINGUISHMENT OF
2. The debtors/creditors are distinct OBLIGATIONS
from one another. 1. Payment or performance
2. Prescription
8. DIVISIBLE OBLIGATION 3. Compensation
- prestation is capable of partial 4. Confusion/merger
performance 5. Condonation/remission
6. Fulfillment of resolutory condition
9. INDIVISIBLE OBLIGATION 7. Annulment
- prestation incapable of partial 8. Rescission
performance 9. Novation
10. Loss of thing due
10. OBLIGATION W/ A PENAL CLAUSE 1. PAYMENT/PERFORMANCE
- one w/ accessory undertaking attached - Payment means delivery of money &
to obligation to assume greater liablity in performance of obligation
case of breach/non-fulfillment of
obligation 2 PLACE OF PAYMENT
1. At place agreed upon
3 PURPOSES OF PENAL CLAUSE 2. If w/o agreement
1. Ensure performance of obligation a. Object is indeterminate paid at
2. Substitute for damages & interest in domicile of DEBTOR
case of noncompli-ance b. Object is determinate place of thing
3. Penalize debtor in case of breach at the time of constitution of obligation

In case obligation has a PENAL CLAUSE 4 SPECIAL MODES OF PAYMENT

General Rule: Penalty takes the place of
damages & interest in case of non-
compliance.
Exceptions:
1. Stipulation states.
2. Debtor refuse to pay penalty.
a. Application of payment
b. Cession
c. Tender of payment & consignation
d. Dacion in payment
a. APPLICATION OF PAYMENT
- designation of debt to w/c payment
must be applied when debtor has several 3 REQUISITES OF DACION IN PAYMENT
obligations of same kind in favor of same 1. Consent of creditor
creditor. 2. NOT prejudicial to another creditor
3. Debtor not insolvent declared by a
3 REQUISITES OF APPLICATION OF judicial decree
PAYMENT
1. Only 1 debtor & 1 creditor CESSION DACION IN
2. 2 or more debts, same kind PAYMENT
3. All debts are due all properties NOT all
4. Insufficient payment to exinguish ALL properties
debts require more NOT require all
than 1 creditor creditors
3 RIGHTS TO MAKE APPLICATION OF NOT act of act of novation
PAYMENT novation
1. Right belongs to CREDITOR. NOT transfer transfer
2. If debtor does not avail, creditor can ownership ownership
give him receipt designating the debt
requires may happen
from which payment will be applied.
partial/total ins during solvency
3. If debtor accepts the receipt, he
ol-vency of debtor
cannot complain unless THERE IS just
cause to invalidate the contract.
d. TENDER OF PAYMENT &
CONSIGNATION
b. CESSION
TENDER OF PAYMENT act of offering
- debtor abandons ALL his property for
the creditor what is due to him w/ a
creditors benefit to obtain payment
demand that the creditor accept it
from proceeds of his property
CONSIGNATION act of depositing thing
due w/ the court when creditor
5 REQUISITES OF VALID CESSION
cannot/refuses acceptance of payment
1. 1 debtor & 2 or more creditors
2. Debtor is in partial/total insolvency.
5 REQUISITES OF CONSIGNATION
3. Debtor to deliver ALL his property to
1. Debt due.
creditors
2. Creditor refused the tender of
4. Debt is due & demandable.
payment w/o just cause
5. Creditors must sell the properties &
3. Notice of consignation already given
apply the proceeds to their respective
to persons interested in fulfillment of
credits proportionately.
obligation
4. Consignation of thing/amount due
c. DACION IN PAYMENT (dacion en
5. Subsequent notice of consignation to
pago)
interested persons
- alienation of property to the creditor in
satisfaction of debt
5 VALID CONSIGNATION W/O PREVIOUS
TENDER OF PAYMENT
1. Creditor is absent/unknown.
2. Creditor is incapacitate to receive at
time it is due.
3. Creditor refused give a receipt, w/o
just cause.
4. 2 or more persons claim the right to
collect.
5. Title of obligation lost.
2. LOSS OF THING DUE
- perishes, disappears, or goes out of
commerce; existence is unknown; cannot
be recovered
3 REQUISITES TO EXTINGUISH
OBLIGATION DUE TO LOSS
1. Determinate thing.
2. W/o debtors fault.
3. No delay.
3. CONDONATION/REMISSION
- gratuitous abandonment of right by the
creditor
3 REQUISITES OF A VALID
CONDONATION/REMISSION
1. It must be gratuitous.
2. Accepted by obligor.
3. Obligation is demandable.
4. CONFUSION/MERGER
- meeting in 1 person of qualities of
debtor & creditor w/ same obligation
3 REQUISITES OF VALID
CONFUSION/MERGER
1. The merger of characters of debtor &
creditor must be in same person.
2. Take place between principal debtor &
creditor.
3. Clear & definite.
5. COMPENSATION
- 2 persons are debtors & creditors of
each other
6 ESSENTIAL REQUISITES OF
COMPENSATION
1. Parties both principal debtors &
creditors of each other.
2. Compensation is not prohibited by
law.
3. No retention/controversy by
3rd person.
4. 2 debts are due & demandable.
5. 2 debts are liquidated.
6. 2 debts both in money/consumable
things.
(2) CLASSES OF COMPENSATION
1. As to effect
a. TOTAL obligations completely
extinguished.
b. PARTIAL a balance remains
2. As to origin or cause
a. LEGAL by law
b. VOLUNTARY/CONVENTIONAL
agreement of parties
c. JUDICIAL order from the court
d. FACULTATIVE 1 of parties can
choose/oppose claiming compensation
6. NOVATION
- substitution/change of obligation
- substitution of debtor
- subrogation of creditor
(3) OBLIGATIONS MAY BE MODIFIED BY:
1. Changing object/principal
conditions. (REAL NOVATION)
2. Changing the person of
debtor/creditor. (PERSONAL NOVATION)
a. Substitution change of debtor
b. Subrogation change of creditor
3. Changing person of the parties & the
objects of principal condition. (MIXED
NOVATION)
4 REQUISITES OF NOVATION
1. Old valid obligation.
2. Agreement of parties to new
obligation.
3. Extinguishment of old obligation.
4. Validity of new obligation.
2 FORMS OF NOVATION BY
SUBSTITUTION OF DEBTOR
1. EXPROMISION w/ consent of
creditor, NO consent of old debtor
2REQUISITES
a. Initiative of 3rd person.
b. Consent of creditor.
2. DELEGACION all must agree
(creditor, old debtor, new debtor)
3REQUISITES
a. Initiative from old debtor.
b. Consent of debtor.
c. Acceptance by creditor.
7. SUBROGATION
- change of creditor
2 KINDS OF SUBROGATION
1. CONVENTIONAL consent of original
parties & 3rd person
2. LEGAL by law
a. creditor pays another preferred
creditor even w/o debtors knowledge
b. 3rd person pays the express
approval of debtor
c. 3rd person pays even w/o
knowledge of debtor
CONTRACT meeting of minds between
2 persons to give something or to render
service.
3 ELEMENTS OF CONTRACT
1. ESSENTIAL w/o them, contract
cannot exist
a. CONSENT of contracting parties
b. OBJECT CERTAIN subject matter
c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
d. FORM
e. DELIVERY
2. NATURAL found in certain contract,
presumed to exist unless stipulated
3. ACCIDENTAL various particular
stipulations that may be agreed upon by
contracting parties
(7) CLASSIFICATION OF CONTRACTS
According to:
1. PERFECTION/FORMATION
a. CONSENSUAL perfected by mere
consent
b. REAL perfected by delivery
c. FORMAL/SOLEMN special
formalities are essential before
perfection of contract
2. PARTIES OBLIGATED
a. UNILATERAL only 1 has obligation
b. BILATERAL both parties require to
render reciprocal prestations
3. CAUSE
 a. ONEROUS exchange of
considerations
b. GRATUITOUS no consideration
received in exchange of what is given
c. REMUNERATORY something is
given for benefit/service that had been
rendered previously
4. RISK OF FULFILLMENT
a. COMMUTATIVE equivalent values
are given by both parties
b. ALEATORY fulfillment of contract
depends on chance (eg. insurance)
5. IMPORTANCE
a. PRINCIPAL contract may stand
alone (eg. sale, partnership)
b. ACCESSORY existence depends on
another contract (pledge, guarantee)
c. PREPARATORY contract not an
end by itself but a means thru w/c other
contracts may be made (eg. agency)
6. NAME
a. NOMINATE contract given a
particular/special name (eg. partnership)
b. INNOMINATE not given special
name (eg. I give that you may give)
7. SUBJECT MATTER
a. Contracts involving things
b. Contracts involving rights/credits
c. Contracts involving services
3 STAGES OF CONTRACT
1. PREPARATION/CONCEPTION
preparatory steps to perfect contract
2. PERFECTION/BIRTH meeting of
minds between 2 contracting parties
3. CONSUMMATION/TERMINATION
terms of contract are performed, &
contract is fully executed
5 BASIC PRINCIPLES/CHARACTERISTICS
OF A CONTRACT
1. PRINCIPLE OF AUTONOMY (liberty to
contract)
Provided they are not contrary to:
a. Law
b. Morals
c. Good customs
d. Public order
e. Public policy
2. MUTUALITY OF CONTRACTS
- the contract must bind both parties; its
validity/compliance cannot be left to the
will of one of them
3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the
parties, their assigns & heirs except
when there are rights & obligations not
transmissible:
a. by their nature
b. by stipulation (stipulation por autri)
c. by provision of law
4. CONSENSUALITY OF CONTRACTS
- Contracts are perfected by mere
consent
Exceptions:
a. REAL CONTRACTS perfected by
delivery
b. FORMAL/SOLEMN CONTRACTS
special form required for its perfection
5. OBLIGATORINESS OF CONTRACTS
- The contract, once perfected, has the
force of law between parties which
bound to comply in good faith
4 KINDS OF INNOMINATE CONTRACTS
1. I give that you may give
2. I do that you may do
3. I give that you may do
4. I do that you may give
4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties
2. Law on Obligations & Contracts
3. Rules on most analogous nominate
contract
4. Customs of place
STIPULATION POR AUTRI
- stipulation in favor of 3rd person
5 REQUISITES OF STIPULATION POR
AUTRI
1. Stipulation in favor of 3rd person
2. Stipulation is only PART, not the whole
of the contract.
3. Both parties must conferred upon a
favor of 3rd person
4. 3rd person must accept & say it to
debtor before its revocation/cancellation
5. Neither of both parties be the legal
representation/autho-rization of
3rd person
CONSENT
- meeting of offer (certain) & acceptance
(absolute) upon a thing
5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
2. Parties are capacitate to enter in
contract
3. No vitiation of consent
4. No conflict between declared &
intended
5. Legal formalities must be complied
7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are
NOT offers but ONLY invitations to make
an offer.
3. Advertisements for bidders are ONLY
invitations.
4. An acceptance made by
letter/telegram does NOT
bind offeror EXCEPT from the TIME it
came to his knowledge.
5. An offer made through an agent is
accepted from the TIME the acceptance
is done through an agent.
6. An offer is ineffective upon death,
insanity, insolvency, of EITHER party
BEFORE acceptance is made.
7. When offeror allowed offeree a certain
period to accept, offer MAY be
withdrawn AT ANYTIME unless there is
something PAID/PROMISED.
3 persons who CANNOT GIVE CONSENT
to a contract (if entered into, contract
is voidable)
1. UNEMANCIPATED MINORS
2. INSANE/DEMENTED PERSONS (unless
they acted DURING LUCID INTERVAL)
3. DEAF-MUTES who DO NOT know how
to write
DEMENTED PERSON NOT exactly
insane; difficult to distin-guish right from
wrong
LUCID INTERVAL period when an
INSANE has acquired SANITY temporarily,
therefore, capacitated to enter into a
valid contract
2 RULES on persons WHO CANNOT GIVE
CONSENT to a contract
1. Age of majority is 18 yrs old
2. A contract entered into by alleged, the person enforcing the
UNEMANCIPATED MINOR w/o contract must FULLY explained the terms
parents/guardians consent is voidable, to him.
except:
a. Minor MISREPRESENTS his age 2. FRAUD/DOLO
(estoppel) - when through insidious
b. Contract involves sale & delivery of words/machinations of one of the
necessities to minor parties, INDUCED the other to enter into
a contract, & w/o them, he will not
5 VICES OF CONSENT agree.
- NOTE: When there is a DEFECTIVE
CONSENT of EITHER of parties, contract DOLO CAUSANTE DOLO
is voidable; Remedy:annulment of INCIDENTE
contract. Serious Not serious
1. MISTAKE/ERROR cause induces NOT the
2. FRAUD/DECEIT party to ENTER cause to
3. VIOLENECE into contract enter into
4. INTIMIDATION contract
5. UNDUE INFLUENCE make contract is
contract voidable valid; liable
1. MISTAKE/ERROR fordamages
- wrong conception & lack of knowledge
upon a thing 7 RULES OF FRAUD
1. Failure to disclose facts when these
(2) MISTAKES W/C VITIATES CONSENT needs to be revealed, is a fraud.
It should refer to: 2. Fraud should be SERIOUS (dolo
1. substance of thing that is the OBJECT causante) & SHOULD NOT be done by
of contract BOTH parties to make contractvoidable.
2. conditions w/c MOVED either/both 3. Incidental fraud (dolo incidente) ONLY
parties to enter into contract obliges person to PAY DAMAGES.
4. Usual exaggerations in trade, when
4 RULES ON MISTAKE other party know the real facts, is NOT
1. Mistake to identity/qualifications of FRAUD.
either of parties will vitiate consent ONLY 5. A mere expression of opinion is NOT
when IT is theprincipal cause of contract. FRAUD UNLESS made by an expert & the
2. Simple mistake of account must other party relies on his special
be corrected. knowledge.
3. No mistake if parties knew the 6. Misrepresentation made in good
risk/doubt affecting OBJECT of contract. faith is NOT FRAUD but may constitute
4. When one of parties is unable to read an error.
or the contract is in language not
understood by him, & mistake/fraud is
7. Misrepresentation by 3rd person DOES
NOT vitiate consent UNLESS it
created substantial mistake.
3. VIOLENCE
- serious/irresistible force is employed.
2 RULES ON VIOLENCE
1. Serious/irresistible force is employed
w/c constitutes the reason why one
entered into a contract.
2. Violence ANNULS obligation although
it is DONE by 3rd person not part of
contract.
4. INTIMIDATION
- 1 of the parties is compelled by
a reasonable & well-grounded fear of an
imminent & grave evil upon his
person/property to give his consent.
3 RULES ON INTIMIDATION
1. Age, sex, & condition of person must
used to determine the degree of
intimidation.
2. Intimidation ANNULS obligation
although it is DONE by 3rd person not
part of contract.
3. A threat to enforce ones claim (claim
must be just & legal), DOES NOT vitiate
consent.
VIOLENCE INTIMIDATION
External Internal
Physical NO physical
contact/coercio coercion; ONLY
n MENTAL/MORA
L coercion
5. UNDUE INFLUENCE
- a person takes improper advantage of
his power over others will, depriving the
other to hisreasonable freedom of
choice.
3 RULES ON UNDUE INFLUENCE
1. There is a person who takes improper
advantage of his power over others will,
depriving the other to his reasonable
freedom of choice.
2. Undue influence ANNULS obligation
although it is DONE by 3rd person not
part of contract.
3. To constitute undue influence, ff
circumstances must be considered: (1)
confidential, family, spiritual, & other
relations of parties; or (2) the aggrieved
party is suffering from mental weakness;
or (3) ignorant; or (4) in financial distress.
SIMULATION OF CONTRACT
- process of INTENTIONALLY deceiving
others by producing a contract not really
exist (absolute simulation), or w/c is
different from true agreement (relative
simulation).
2 KINDS OF SIMULATED CONTRACT
1. ABSOLUTE SIMULATION (the parties
DO NOT intend to be bound at all)
- completely fictitious/make-believe;
VOID
2. RELATIVE SIMULATION (parties
conceal their true/real agreement)
- parties are bound to real/true
agreement, EXCEPT:
a. contract prejudice 3rd person
b. purpose is contrary to law, morals,
good customs, public order, public policy
7 REQUISITES OF OBJECT OF CONTRACT
1. Specific & certain
2. Services not contrary to law, morals,
good customs, public order, public policy
3. Services/things must NOT be
legally/physically impossible
4. Services/things are w/in commerce of
man including future things
5. Rights are NOT TRANSMISSIBLE.
6. Determinate (kind) or determinable (
w/o the need of new
contract/agreement)
7. NO contract be entered for future
inheritance UNLESS law states
4 REQUISITES OF CAUSE
1. It is just & equitable.
2. It exists.
3. It is lawful.
4. It is true.
LESION
- inadequacy of cause (eg. insufficient
price for thing sold)
RULES ON LESION
- Lesion DOES NOT invalidate contract,
except there is:
a. Fraud
b. Mistake
c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
1. Contracts w/c must be IN WRITING to
be valid:
a. Donation of personal property
exceeds P5000.
b. Agents authority in sale of
land/any interest.
c. Contract of antichresis.
d Stipulation to pay interest on loans.
e. Stipulation to reduce common
carriers extraordinary diligence & to
limit its liability.
2. Contracts w/c must be IN A PUBLIC
INSTRUMENT to be valid:
a. Donation of real property (both the
donation & accep-tance).
b. Sale of real property.
c. Partnership where real
property/rights is contributed; or when
capital contribution exceeds P3000.
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written
instrument is made/construed to the
REAL intention of parties when there is
an error/mistake.
(5) CASES REFORMATION OF
INSTRUMENT IS AVAILABLE
1. Mutual mistake of parties.
2. One party was mistaken & the other
acted fraud.
3. One party was mistaken & the other
knew/believed that the instrument did
not state their REAL agreement.
4. Ignorance, lack of skill, negligence, or
bad faith of person drafting the
instrument DOES NOT state the TRUE
INTENTION of parties
5. Two parties agree on mortgage/pledge
of personal/real property BUT the
instrument states the property is sold
ABSOLUTELY, or w/ the right to
repurchase.
(3) NO REFORMATION OF INSTRUMENT
WHEN:
1. Simple donation inter vivos where NO
CONDITION is imposed.
2. Will.
3. Real agreement is VOID.
4 KINDS OF DEFECTIVE CONTRACTS
1. RESCISSIBLE valid until rescinded;
has ALL essential requisites but because
of injury/damage to one of the parties,
the contract may be rescinded.
2. VOIDABLE valid until annulled; has
ALL essential requisites but because
of defect in consent, contract may be
annulled.
3. UNENFORCEABLE cannot be
sued/enforced unless ratified; no effect
NOW but may take effect upon
ratification.
4. VOID NO effect at all; cannot be
ratified/validated.
5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & suffered
LESION by more than of value of the
value that is the OBJECT.
2. Those agreed upon in representation
of absentees, if the absentees suffered
LESION.
3. Those undertaken in FRAUD of
creditors when the creditors cannot
further claim.
4. If entered into contract w/o
knowledge/approval of litigants under
litigation.
5. Contracts subjected to rescission
declared by law.
3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving
consent to a contract.
2. Those where consent vitiates by vices
of consent. (MFVIU)
3. Those agreed in the state of
drunkenness/hypnotic spell.
3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other
person, or who acted BEYOND his
powers.
2. Those who do not comply w/
the Statute of Frauds.
3. Both parties are incapable of giving
consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY
simulated/fictitious.
2. Those w/c contemplate an impossible
service.
3. Those whose OBJECT is outside the
commerce of man.
4. Those whose CAUSE/OBJECT did not
exist at time of tran-saction.
5. Those whose
CAUSE/OBJECT/PURPOSE is contrary to
law, morals, good customs, public order,
or public policy.
6. Those where INTENTION of parties to
principal object CANNOT be ascertained.
7. Those expressly prohibited/declared
VOID by law.