Self-Made Reviewer on Obligation and Contracts Exception: When law/stipulation of parties requires a differnt

standard of care (slight/extraordinary diligence).

If you are a law student or just an ordinary student who needs
a reviewer, read this. This is my personal reviewer for my
subject in Law on Obligations and Contracts. Hope you learn
from it and enjoy reading! :) When creditor is entitled to the fruits

DISCLAIMER: Not all grammars and punctuations are
technically correct because I use "keywords", "shortcuts" for
easy understanding and memorization, as for myself.
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.

OBLIGATION – juridical necessity to give, to do or not to do

4 ELEMENTS OF OBLIGATION 3 KINDS OF FRUITS

1. ACTIVE SUBJECT (creditor/obligee) – whose obligation is 1. NATURAL – w/o human intervention

constituted
2. INDUSTRIAL – w/ human intervention
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, to
3. CIVIL – derived by virtue of juridical relation
do or not to do

3. OBJECT/PRESTATION – subject matter

Creditor’s rights if debtor fails to comply w/ the obligation
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) –
reason 1. Determinate

a. Performance
CIVIL OBLIGATION NATURAL OBLIGATION b. Damages
derived from positive law derived from equity &
justice 2. Generic
enforceable by court action not enforceable by court
action a. Performance

b. Damages
5 SOURCES OF OBLIGATION c. Obligation be complied at debtor’s expense
1. LAW

2. CONTRACTS Creditor’s rights if debtor does in contravention

3. QUASI-CONTRACTS – arise from lawful, voluntary acts; 1. Damages
no one shall be unjustly enriched...
2. Ask it be UNDONE at debtor’s expense
2Kinds

a. Solutio indebiti – something received (delivered on a

mistake), no right to demand it FORTUITOUS EVENT – cannot be foreseen, if foreseen,
inevitable
b. Negotiorum gestio – voluntary mgt of property/affairs of
another w/o his knowledge/consent General Rule: No person liable to fortuitous event.

4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise Exceptions:

from damage; fault/negligence
1. Law states
5. CRIMES/ACTS/OMISSIONS punished by law – arise
from civil liability that is a consequence of a criminal offense 2. Stipulation/contract states

3. Assumption of risk

DILIGENCE OF A GOOD FATHER OF A FAMILY 4. Delay

- care need to be exercised by a debtor to 5. Debtor promises deliver to 2/more persons who do not have
deliver/give determinate thing same interest (bad faith)
 EFFECTS OF DELAY

EFFECTS OF FORTUITOUS EVENT to thing to be 1. Damages

delivered
2. When to deliver determinate thing, STILL LIABLE in
- extinguish the obligation if determinate; generic does not fortuitous event.
extinguish the obligation
2. FRAUD/DOLO – conscious, deliberate, intentional evasion
of fulfillment

3 MISCELLANEOUS RULES ON PERFORMANCE OF 2Kinds

OBLIGA-TION
a. Dolo causante/Causal fraud – fraud in obtaining consent;
1. When to deliver determinate, accessions (additions/ consent is defective, contract is voidable. Remedy: annulment
improvements) and accessories (joined/included with the
principal) are INCLUDED even not mentioned. b. Dolo incidente/Incidental fraud – fraud w/c vitiates
consent. Remedy: damages
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, 3. NEGLIGENCE/CULPA – voluntary act/omission; no bad
shall be UNDONE AT HIS EXPENSE. faith intended

3Kinds

4 GROUNDS; debtor liable for damages a. Culpa aquiliana/Civil negligence – quasi-delict/torts

1. Default/mora b. Culpa contractual/Contractual negligence – breach

2. Fraud/dolo c. Culpa criminal/Criminal negligence – crime/delict

3. Negligence/culpa

4. Contrary to terms of obligation 4. Contrary to the terms of obligation

1. DEFAULT/MORA – delay 2 RULES OF PRINCIPAL & INSTALLMENT

3kinds 1. Receipt of principal w/o mention of interest, presumed

a. Mora solvendi – debtor’s delay to give (real ob.), to do
(personal ob.)
b. Mora accipiende – creditor’s delay to accept
interest is paid also.
2. Receipt of latter installment w/o mention of prior
installment, presumed prior installment is paid also.

c. Compensatio Morae – delay of both in reciprocal

obligation 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim
against DEBTOR

1. Exact payment
CONCEPT OF DELAY
2. Attach debtor’s properties
General Rule: No demand, No delay
3. Accion subrogatoria – exercise rights & actions except
Exceptions: inherent in person

1. Law states 4. Accion pauliana – cancel acts/contracts by debtor to defraud

creditor
2. Obligation states

3. Time is the essence

TRANSMISSIBILITY OF RIGHTS
4. Demand be useless if delay
General Rule: ALL RIGHTS are transmissible.
5. Debtor guilty of delay
Exceptions:
1. Law states 5. The condition is fulfilled if DEBTOR prevents fulfillment.

2. Contract states 6. The effect of conditional obligation, once fulfilled:

3. Obligation is purely personal - to give: retroact to the day of constitution of obligation

- has reciprocal prestations: fruits & interests be mutually

compensated
10 Kinds of Obligation
- has unilateral obligation: debtor shall give fruits & interests
1. Pure

2. Conditional
RULES in case of Loss, Improvement, or Deterioration of
3. Alternative thing during the pendency of condition
4. Facultative 1. LOST
5. Joint a. w/ debtor’s fault – damages
6. Solidary b. w/o debtor’s fault – extinguishes obligation
7. Divisible

8. Indivisible 2. DETERIORATION
9. Obligation w/ a period a. w/ debtor’s fault - (1) cancel obligation & damages; or (2)
10. Obligation w/ a penal clause fulfill obligation w/ damages

b. w/o debtor’s fault – creditor suffer impairment

1. PURE OBLIGATION

- w/o condition, demandable at once (pure has resolutory 3. IMPROVEMENT

condition/period) a. By nature/time – benefit to creditor

b. at expense of debtor – debtor no right than that granted to

2. CONDITIONAL OBLIGATION usufructuary (debtor no right to compensate amount for
improvement)
- there is condition in performance; future & uncertain

2Kinds
EFFECTS OF FULFILLMENT OF SUSPENSIVE
a. Suspensive condition – happening of condition gives CONDITION
RISE to obligation
General Rule: The obligation becomes effective retroactively
b. Resolutory condition – happening of condition to the day obligation was constituted.
EXTINGUISHES obligation
Exceptions:

1. In reciprocal obligation, fruits & interests during pendency

6 MISCELLANEOUS RULES ON CONDITIONAL of condition shall compensate each other.
OBLIGATION
2. In unilateral obligation, debtor gets fruits & interests unless
1. Impossible conditions, contrary to law, shall ANNUL there is a contrary intent.
obligation.

2. The condition not to do an impossible thing is considered

not agreed upon. 3 EFFECTS OF FULFILLMENT OF RESOLUTORY
CONDITION
3. The condition that happens in determinate time,
EXTINGUISHES obligation. 1. Extinguish obligation.

4. The condition that happens in INDETERMINATE time, 2. Both parties restore what they received plus fruits &
obligation only effective at arrival. interests.
3. The rule on L, D, or I will apply to person who has to return Therefore, NEITHER of them can demand performance of
the thing. obligation.

When one of debtors in reciprocal obligation does not comply Exception: If the term of obligation has to favor one of them.
w/ his obligation

1. The right of injured party is (1) cancel contract & damages;

or (2) fulfill obligation & damages 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE
“PERIOD”

1. Debtor is insolvent.
3 Kinds of Obligation (Accdng to PERSON OBLIGED)
2. Debtor attempts to abscond.
1. UNILATERAL – only 1 party obliged to comply
3. Impairment of guarantees/securities.
2. BILATERAL – both parties; performance not same time
4. Failure to furnish guarantees/securities promised.
3. RECIPROCAL – both parties; performance same time
5. Violation of undertaking.

3. OBLIGATION W/ A PERIOD
4. ALTERNATIVE OBLIGATION
- demandability/extinguishment subject to the expiration of
period - w/ 2 or more prestations, only 1 is due.

PERIOD – interval of time; either suspends demandability or 5. FACULTATIVE OBLIGATION

produces extinguishment - w/ ONLY 1 prestation but can be substituted.

DAY CERTAIN – must come, not known when ALTERNATIVE prestations LOST w/ debtor’s fault

Creditor entitled to damages but needs ff requisites:

7 CASES CONSIDERED TO BE “OBLIGATION W/ A 1. Debtor can choose.
PERIOD”
2. All prestations lost/become impossible due to debtor’s fault.
1. Little by little

2. In partial payment
3. Payable ASAP
4. When I can afford it
5. When I have the money
6. When I am able to
7. When my means permit me to do so
PERIOD
certain
future only
(*influence upon obligation)
only upon its demandability
ALTERNATIVE FACULTATIVE
OBLIGATION OBLIGATION
several prestations due, one prestation due, but can
giving one is sufficient be subtituted
right to choose (debtor) right to choose DEBTOR
unless granted to creditor ONLY
If 1 of the prestation is nullity of principal carries
illegal, others may be valid, w/ it nullity of accessory/
obligation remains substitute
loss/impossibility of ALL loss/impossibility of presta-
prestations due, w/o tion due, w/o debtor’s fault,
CONDITION debtor’s fault, extinguishes extinguishes obligation
uncertain obligation
future/past but unknown
(*) on the very existence of
(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS
obligation itself
OF DEBTOR IN ALTERNATIVE OBLIGATION

1. If 1 of prestations lost through fortuitous event, shall still be

FOR WHOSE BENEFIT IS THE PERIOD?
perform by choosing (creditor) from the remainder.
General Rule: Both the debtor & creditor.
2. If 1 of prestations lost through debtor’s fault, creditor may
claim any of remainders w/ damages.
3. If ALL prestations lost through debtor’s fault, creditor - prestation incapable of partial performance
choose price w/ damages.

10. OBLIGATION W/ A PENAL CLAUSE

RULES on LOSS/DETERIORATION of the thing intended as
SUBSTITUTE in FACULTATIVE OBLIGATION
1. If there is a loss/deterioration of thing intended as
substitute, debtor is NOT liable if NOT HIS FAULT.
- one w/ accessory undertaking attached to obligation to
assume greater liablity in case of breach/non-fulfillment of
obligation

But if substitution is already made, debtor is liable for loss of

substitute when in DELAY, NEGLIGENCE, or FRAUD. 3 PURPOSES OF PENAL CLAUSE

1. Ensure performance of obligation

6. JOINT OBLIGATION 2. Substitute for damages & interest in case of noncompli-ance

- obligation is to be paid proportionately by debtors or to be 3. Penalize debtor in case of breach

demanded proportionately by creditors

In case obligation has a PENAL CLAUSE

7. SOLIDARY OBLIGATION General Rule: Penalty takes the place of damages & interest in
- each one of debtors has right to render or each one of case of non-compliance.
creditors has right to demand the entire compliance w/ Exceptions:
prestation
1. Stipulation states.

2. Debtor refuse to pay penalty.

MAXIMS & SYNONYMS
3. Debtor guilty of fraud in performance of obligation.
MAXIMS SYNONYMS
JOINT Obligation “To each his proportionate
own”
SOLIDARY “One for all, all individually & NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL
Obligation for one” collectively CLAUSE

Nullity of principal obligation = nullity of penal clause

(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
Nullity of penal clause = NOT nullity of principal obligation
1. Law states

2. Stipulation states
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
3. Nature of obligation requires
1. Payment or performance

2. Prescription
2 PRESUMPTIONS THAT OBLIGATION IS JOINT
3. Compensation
1. The debts be divided as many shares as there are
4. Confusion/merger
debtors/creditors.
5. Condonation/remission
2. The debtors/creditors are distinct from one another.
6. Fulfillment of resolutory condition

7. Annulment
8. DIVISIBLE OBLIGATION
8. Rescission
- prestation is capable of partial performance
9. Novation

10. Loss of thing due

9. INDIVISIBLE OBLIGATION
1. PAYMENT/PERFORMANCE

- Payment means delivery of money & performance of 5 REQUISITES OF VALID CESSION

obligation
1. 1 debtor & 2 or more creditors

2. Debtor is in partial/total insolvency.

2 PLACE OF PAYMENT
3. Debtor to deliver ALL his property to creditors
1. At place agreed upon
4. Debt is due & demandable.
2. If w/o agreement
5. Creditors must sell the properties & apply the proceeds to
a. Object is indeterminate – paid at domicile of DEBTOR their respective credits proportionately.

b. Object is determinate – place of thing at the time of

constitution of obligation
c. DACION IN PAYMENT (dacion en pago)

- alienation of property to the creditor in satisfaction of debt

4 SPECIAL MODES OF PAYMENT

a. Application of payment
3 REQUISITES OF DACION IN PAYMENT
b. Cession
1. Consent of creditor
c. Tender of payment & consignation
2. NOT prejudicial to another creditor
d. Dacion in payment
3. Debtor not insolvent declared by a judicial decree

a. APPLICATION OF PAYMENT
CESSION
- designation of debt to w/c payment must be applied when all properties
debtor has several obligations of same kind in favor of same require more than 1 creditor
creditor. NOT act of novation
NOT transfer ownership
requires partial/total insol-
vency
3 REQUISITES OF APPLICATION OF PAYMENT
DACION IN PAYMENT
NOT all properties
NOT require all creditors
act of novation
transfer ownership
may happen
during solvency of debtor

1. Only 1 debtor & 1 creditor

d. TENDER OF PAYMENT & CONSIGNATION
2. 2 or more debts, same kind
TENDER OF PAYMENT – act of offering the creditor what
3. All debts are due is due to him w/ a demand that the creditor accept it

4. Insufficient payment to exinguish ALL debts CONSIGNATION – act of depositing thing due w/ the court
when creditor cannot/refuses acceptance of payment

3 RIGHTS TO MAKE APPLICATION OF PAYMENT

5 REQUISITES OF CONSIGNATION
1. Right belongs to CREDITOR.
1. Debt due.
2. If debtor does not avail, creditor can give him receipt
designating the debt from which payment will be applied. 2. Creditor refused the tender of payment w/o just cause

3. If debtor accepts the receipt, he cannot complain unless 3. Notice of consignation already given to persons interested
THERE IS just cause to invalidate the contract. in fulfillment of obligation

4. Consignation of thing/amount due

b. CESSION 5. Subsequent notice of consignation to interested persons

- debtor abandons ALL his property for creditor’s benefit to

obtain payment from proceeds of his property
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF - 2 persons are debtors & creditors of each other
PAYMENT

1. Creditor is absent/unknown.
6 ESSENTIAL REQUISITES OF COMPENSATION
2. Creditor is incapacitate to receive at time it is due.
1. Parties both principal debtors & creditors of each other.
3. Creditor refused give a receipt, w/o just cause.
2. Compensation is not prohibited by law.
4. 2 or more persons claim the right to collect.
3. No retention/controversy by 3rd person.
5. Title of obligation lost.
4. 2 debts are due & demandable.

5. 2 debts are liquidated.

2. LOSS OF THING DUE
6. 2 debts both in money/consumable things.
- perishes, disappears, or goes out of commerce; existence is
unknown; cannot be recovered
(2) CLASSES OF COMPENSATION

3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO 1. As to effect

LOSS a. TOTAL – obligations completely extinguished.
1. Determinate thing. b. PARTIAL – a balance remains
2. W/o debtor’s fault.

3. No delay. 2. As to origin or cause

a. LEGAL – by law
3. CONDONATION/REMISSION b. VOLUNTARY/CONVENTIONAL – agreement of parties
- gratuitous abandonment of right by the creditor c. JUDICIAL – order from the court

d. FACULTATIVE – 1 of parties can choose/oppose claiming

3 REQUISITES OF A VALID compensation
CONDONATION/REMISSION

1. It must be gratuitous. 6. NOVATION

2. Accepted by obligor. - substitution/change of obligation
3. Obligation is demandable. - substitution of debtor

- subrogation of creditor
4. CONFUSION/MERGER

- meeting in 1 person of qualities of debtor & creditor w/ same (3) OBLIGATIONS MAY BE MODIFIED BY:
obligation
1. Changing object/principal conditions. (REAL NOVATION)

2. Changing the person of debtor/creditor. (PERSONAL

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.
NOVATION)
a. Substitution – change of debtor
b. Subrogation – change of creditor
3. Changing person of the parties & the objects of principal
condition. (MIXED NOVATION)

5. COMPENSATION
4 REQUISITES OF NOVATION 3 ELEMENTS OF CONTRACT

1. Old valid obligation. 1. ESSENTIAL – w/o them, contract cannot exist

2. Agreement of parties to new obligation. a. CONSENT of contracting parties

3. Extinguishment of old obligation. b. OBJECT CERTAIN – subject matter

4. Validity of new obligation. c. CAUSE/CONSIDERATION

In some contracts, ff are also essential:

2 FORMS OF NOVATION BY SUBSTITUTION OF d. FORM

DEBTOR
e. DELIVERY
1. EXPROMISION – w/ consent of creditor, NO consent of
old debtor

2REQUISITES 2. NATURAL – found in certain contract, presumed to exist

unless stipulated
a. Initiative of 3rd person.

b. Consent of creditor.
3. ACCIDENTAL – various particular stipulations that may be
2. DELEGACION – all must agree (creditor, old debtor, new agreed upon by contracting parties
debtor)

3REQUISITES
(7) CLASSIFICATION OF CONTRACTS
a. Initiative from old debtor.
According to:
b. Consent of debtor.
1. PERFECTION/FORMATION
c. Acceptance by creditor.
a. CONSENSUAL – perfected by mere consent

b. REAL – perfected by delivery

7. SUBROGATION
c. FORMAL/SOLEMN – special formalities are essential
- change of creditor before perfection of contract

2 KINDS OF SUBROGATION 2. PARTIES OBLIGATED

1. CONVENTIONAL – consent of original parties & a. UNILATERAL – only 1 has obligation

3rd person
b. BILATERAL – both parties require to render reciprocal
2. LEGAL – by law prestations

a. creditor pays another preferred creditor even w/o

debtor’s knowledge
3. CAUSE
b. 3rd person pays the express approval of debtor
a. ONEROUS – exchange of considerations
c. 3rd person pays even w/o knowledge of debtor
b. GRATUITOUS – no consideration received in exchange
of what is given

c. REMUNERATORY – something is given for

benefit/service that had been rendered previously

CONTRACT – meeting of minds between 2 persons to give 4. RISK OF FULFILLMENT

something or to render service.
a. COMMUTATIVE – equivalent values are given by both
parties
 b. ALEATORY – fulfillment of contract depends on
chance (eg. insurance)
2. MUTUALITY OF CONTRACTS

- the contract must bind both parties; its validity/compliance

5. IMPORTANCE cannot be left to the will of one of them

a. PRINCIPAL – contract may stand alone (eg. sale,

partnership)
3. RELATIVITY OF CONTRACTS
b. ACCESSORY – existence depends on another contract
(pledge, guarantee) - Contracts take effect only between the parties, their assigns
& heirs except when there are rights & obligations not
c. PREPARATORY – contract not an end by itself but a transmissible:
means thru w/c other contracts may be made (eg. agency)
a. by their nature

b. by stipulation (stipulation por autri)

6. NAME
c. by provision of law
a. NOMINATE – contract given a particular/special name
(eg. partnership)

b. INNOMINATE – not given special name (eg. I give that 4. CONSENSUALITY OF CONTRACTS
you may give) - Contracts are perfected by mere consent

Exceptions:
7. SUBJECT MATTER a. REAL CONTRACTS – perfected by delivery
a. Contracts involving things b. FORMAL/SOLEMN CONTRACTS – special form
b. Contracts involving rights/credits required for its perfection

c. Contracts involving services

5. OBLIGATORINESS OF CONTRACTS

3 STAGES OF CONTRACT - The contract, once perfected, has the force of law between
parties which bound to comply in good faith
1. PREPARATION/CONCEPTION – preparatory steps to
perfect contract

2. PERFECTION/BIRTH – meeting of minds between 2 4 KINDS OF INNOMINATE CONTRACTS

contracting parties 1. I give that you may give
3. CONSUMMATION/TERMINATION – terms of contract 2. I do that you may do
are performed, & contract is fully executed
3. I give that you may do

4. I do that you may give

5 BASIC PRINCIPLES/CHARACTERISTICS OF A
CONTRACT

1. PRINCIPLE OF AUTONOMY (liberty to contract) 4 RULES FOR INNOMINATE CONTRACTS

Provided they are not contrary to: 1. Agreement of parties

a. Law 2. Law on Obligations & Contracts

b. Morals 3. Rules on most analogous nominate contract

c. Good customs 4. Customs of place

d. Public order

e. Public policy STIPULATION POR AUTRI

- stipulation in favor of 3rd person 1. UNEMANCIPATED MINORS

2. INSANE/DEMENTED PERSONS (unless they acted

DURING LUCID INTERVAL)
5 REQUISITES OF STIPULATION POR AUTRI
3. DEAF-MUTES who DO NOT know how to write
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
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

CONSENT 2 RULES on persons WHO CANNOT GIVE CONSENT to a

- meeting of offer (certain) & acceptance (absolute) upon a contract
thing 1. Age of majority is 18 yrs old

2. A contract entered into by UNEMANCIPATED MINOR

5 REQUISITES OF CONSENT w/o parents/guardian’s consent is voidable, except:

1. Must be given by 2 or more parties a. Minor MISREPRESENTS his age (estoppel)

2. Parties are capacitate to enter in contract b. Contract involves sale & delivery of necessities to minor

3. No vitiation of consent

4. No conflict between declared & intended 5 VICES OF CONSENT

5. Legal formalities must be complied - NOTE: When there is a DEFECTIVE CONSENT of

EITHER of parties, contract is voidable; Remedy: annulment
of contract.
7 RULES ON OFFER/ACEPTANCE 1. MISTAKE/ERROR
1. An offer must be certain. 2. FRAUD/DECEIT
2. Business advertisements for sale are NOT offers but ONLY 3. VIOLENECE
invitations to make an offer.
4. INTIMIDATION
3. Advertisements for bidders are ONLY invitations.
5. UNDUE INFLUENCE
4. An acceptance made by letter/telegram does NOT
bind offeror EXCEPT from the TIME it came to his
knowledge. 1. MISTAKE/ERROR
5. An offer made through an agent is accepted from the TIME - wrong conception & lack of knowledge upon a thing
the acceptance is done through an agent.

6. An offer is ineffective upon death, insanity, insolvency, of

EITHER party BEFORE acceptance is made. (2) MISTAKES W/C VITIATES CONSENT

7. When offeror allowed offeree a certain period It should refer to:

to accept, offer MAY be withdrawn AT ANYTIME unless
there is something PAID/PROMISED. 1. substance of thing that is the OBJECT of contract

2. conditions w/c MOVED either/both parties to enter into

contract
3 persons who CANNOT GIVE CONSENT to a contract (if
entered into, contract is voidable)
4 RULES ON MISTAKE 2 RULES ON VIOLENCE

1. Mistake to identity/qualifications of either of parties will
vitiate consent ONLY when IT is the principal cause of
contract.
2. Simple mistake of account must be corrected.
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.

3. No mistake if parties knew the risk/doubt affecting

OBJECT of contract.
4. When one of parties is unable to read or the contract is in
language not understood by him, & mistake/fraud is alleged,
the person enforcing the contract must FULLY explained the
terms to him.
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.

2. FRAUD/DOLO 3 RULES ON INTIMIDATION

- when through insidious words/machinations of one of the 1. Age, sex, & condition of person must used to determine the
parties, INDUCED the other to enter into a contract, & w/o degree of intimidation.
them, he will not agree. 2. Intimidation ANNULS obligation although it is DONE by
3rd person not part of contract.

DOLO CAUSANTE DOLO INCIDENTE 3. A threat to enforce one’s claim (claim must be just & legal),
Serious Not serious DOES NOT vitiate consent.
cause induces party to NOT the cause to enter into
ENTER into contract contract
make contract voidable contract is valid; liable VIOLENCE INTIMIDATION
for damages External Internal
Physical contact/coercion NO physical coercion;
ONLY MENTAL/MORAL
7 RULES OF FRAUD coercion
1. Failure to disclose facts when these needs to be revealed, is
a fraud. 5. UNDUE INFLUENCE
2. Fraud should be SERIOUS (dolo causante) & SHOULD - a person takes improper advantage of his power over other’s
NOT be done by BOTH parties to make contract voidable. will, depriving the other to his reasonable freedom of choice.
3. Incidental fraud (dolo incidente) ONLY obliges person to
PAY DAMAGES.
3 RULES ON UNDUE INFLUENCE
4. Usual exaggerations in trade, when other party know the
“real” facts, is NOT FRAUD. 1. There is a person who takes improper advantage of his
power over other’s will, depriving the other to his reasonable
5. A mere expression of opinion is NOT FRAUD UNLESS freedom of choice.
made by an expert & the other party relies on his special
knowledge. 2. Undue influence ANNULS obligation although it is DONE
by 3rd person not part of contract.
6. Misrepresentation made in good faith is NOT FRAUD but
may constitute an error. 3. To constitute undue influence, ff circumstances must be
considered: (1) confidential, family, spiritual, & other
7. Misrepresentation by 3rd person DOES NOT vitiate consent relations of parties; or (2) the aggrieved party is suffering from
UNLESS it created substantial mistake. mental weakness; or (3) ignorant; or (4) in financial distress.

3. VIOLENCE SIMULATION OF CONTRACT

- serious/irresistible force is employed. - process of INTENTIONALLY deceiving others by
producing a contract not really exist (absolute simulation), or
w/c is different from true agreement (relative simulation).
 c. Undue influence

2 KINDS OF SIMULATED CONTRACT

1. ABSOLUTE SIMULATION (the parties DO NOT intend to 2 FORM OF CONTRACTS

be bound at all)
1. Contracts in writing
- completely fictitious/make-believe; VOID
2. Contracts in a public instrument
2. RELATIVE SIMULATION (parties conceal their true/real
agreement)

- parties are bound to real/true agreement, EXCEPT: 1. Contracts w/c must be IN WRITING to be valid:

a. contract prejudice 3rd person a. Donation of personal property exceeds P5000.

b. purpose is contrary to law, morals, good customs, public b. Agent’s authority in sale of land/any interest.
order, public policy c. Contract of antichresis.

d Stipulation to pay interest on loans.

7 REQUISITES OF OBJECT OF CONTRACT e. Stipulation to reduce common carrier’s extraordinary
1. Specific & certain diligence & to limit its liability.

2. Services not contrary to law, morals, good customs, public

order, public policy 2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be
3. Services/things must NOT be legally/physically impossible valid:

4. Services/things are w/in commerce of man including future a. Donation of real property (both the donation & accep-
things tance).

5. Rights are NOT TRANSMISSIBLE. b. Sale of real property.

6. Determinate (kind) or determinable ( w/o the need of new c. Partnership where real property/rights is contributed; or
contract/agreement) when capital contribution exceeds P3000.

7. NO contract be entered for future inheritance UNLESS law

states REFORMATION OF INSTRUMENTS

- REMEDY in equity in w/c a written instrument is

4 REQUISITES OF CAUSE made/construed to the REAL intention of parties when there is
an error/mistake.
1. It is just & equitable.

2. It exists.
(5) CASES REFORMATION OF INSTRUMENT IS
3. It is lawful. AVAILABLE

4. It is true. 1. Mutual mistake of parties.

2. One party was mistaken & the other acted fraud.

LESION 3. One party was mistaken & the other knew/believed that the
instrument did not state their REAL agreement.
- inadequacy of cause (eg. insufficient price for thing sold)
4. Ignorance, lack of skill, negligence, or bad faith of person
drafting the instrument DOES NOT state the TRUE
RULES ON LESION INTENTION of parties

- Lesion DOES NOT invalidate contract, except there is: 5. Two parties agree on mortgage/pledge of personal/real
property BUT the instrument states the property is sold
a. Fraud ABSOLUTELY, or w/ the right to repurchase.
b. Mistake
(3) NO REFORMATION OF INSTRUMENT WHEN: 3. Both parties are incapable of giving consent to a contract.

1. Simple donation inter vivos where NO CONDITION is

imposed.
7 VOID/INEXISTENT CONTRACTS
2. Will.
1. Those w/c are ABSOLUTELY simulated/fictitious.
3. Real agreement is VOID.
2. Those w/c contemplate an impossible service.

3. Those whose OBJECT is outside the commerce of man.

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.
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.

3. UNENFORCEABLE – cannot be sued/enforced unless 7. Those expressly prohibited/declared VOID by law.

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 ¼ 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.