Contracts

[Essential Elements – Status1]

[Follow the Outline]

Part One
Modified True or False. Consider the statement true only when it is absolutely true.
Explain ALL your answers.

1. Mistake as to the qualifications of one of the parties vitiates consent.

2. A mere expression of an opinion does not signify fraud.
3. In contracts of pure beneficence, the cause is the liberality of the benefactor.
4. There is violence when in order to wrest consent, serious or irresistible force is employed.
5. A contract where consent is given through fraud is voidable.
6. Contracts shall be obligatory, in whatever form they may have been entered into,
provided all the essential requisites for their validity are present.
7. The contract is void if the cause is not stated in the contract.
8. The particular motives of the parties in entering into a contract are different from the
cause thereof.
9. A contract may be voidable even though there may have been no damage to the
contracting parties.
10. The action or defense for the declaration of the inexistence of a contract prescribes in 10
years.

Part Two
Multiple Choice. Choose the best answer.

1. The elements of a contract without which a contract would not exist are known as:

a. Accidental elements
b. Natural elements
c. Civil elements
d. Essential elements

2. Mistake in three of the following will make a contract voidable. Which one will not?

a. Mistake as to the substance of the thing which is the object of the contract
b. Mistake as to the principal conditions which principally moved one or both parties
to enter into the contract
c. Mistake as to the identity or qualifications of one of the parties, which identity or
qualifications have been the principal cause of the contract.
d. Simple mistake of account.
3. It is present when one of the contracting parties is compelled by a reasonable and well-
grounded fear of an imminent and grave evil upon his person or property, or upon the
person or property of his spouse, descendants, and ascendants to give his consent:

a. Violence c. Intimidation
b. Physical coercion d. Mistake

4. Elements that accompany certain contracts unless set aside or suppressed by the parties are
known as:

a. Natural elements
b. Accidental elements
c. Essential elements
d. Original elements

5. One of the following is not an accidental element of contract:

a. Terms of payment
b. Rate of interest
c. Place of delivery
d. Warranty against eviction

6. One of the following is not incapacitated to give his consent.

a. Insane persons
b. Deaf-mutes who do not know how to write
c. Deaf-mutes who know how to read
d. Unemancipated minors

7. A contract entered into by an incapacitated person is:

a. Void c. Rescissible
b. Voidable d. Unenforceable

8. The following are the vices of consent, except:

a. Violence c. Mistake
b. Intimidation d. Due influence

9. Mistake in three of the following will make a contract voidable. Which one will not?

a. Mistake as to the substance of the thing which is the object of the contract
 b. Mistake as to the principal conditions which principally moved one or both parties to
enter into the contract
c. Mistake as to the identity or qualifications of one of the parties, which identity or
qualifications have been the principal cause of the contract.
d. Simple mistake of account.

10. It involves the employment of serious or irresistible force to obtain consent.

a. Intimidation c. Violence
b. Threat d. Moral coercion

11. The following are rescissible contracts, except:

a) Entered into by guardian whenever ward suffers damage more than ¼ of value of
property.
b) Agreed upon in representation of absentees, if absentee suffers lesion by more than ¼
of value of property.
c) Contracts where fraud is committed on creditor (accion pauliana).
d) Contracts entered into by minors.

12. The following are the requisites before a contract entered into in fraud of creditors may
be rescinded, except:
a) There must be credit existing prior to the celebration of the contract.
b) There must be fraud, or at least, the intent to commit fraud to the prejudice of the
creditor seeking rescission.
c) The creditor cannot in any legal manner collect his credit (subsidiary character of
rescission)
d) The object of the contract must be legally in the possession of a 3rd person in good
faith.

13. Which of the following expresses a correct principle of law? Choose the best answer.
a) Failure to disclose facts when there is a duty to reveal them, does not constitute fraud.
b) Violence or intimidation does not render a contract annullable if employed not by a contracting
party but by a third person.
c) A threat to enforce one’s claim through competent authority, if the claim is legal or just, does
not vitiate consent.
d) Absolute simulation of a contract always results in a void contract.

14. Aligada orally offered to sell his two-hectare rice land to Balane for P 10Million. The
offer was orally accepted. By agreement, the land was to be delivered (through execution
of a notarized Deed of Sale) and the price was to be paid exactly one-month from their
oral agreement. Which statement is most accurate?
 a) If Aligada refuses to deliver the land on the agreed date despite payment by Balane, the latter
may not successfully sue Aligada because the contract is oral.
b) If Aligada refused to deliver the land, Balane may successfully sue for fulfillment of the
obligation even if he has not tendered payment of the purchase price.
c) The contract between the parties is rescissible.
d) The contract between the parties is subject to ratification by the parties.

15. Which of the following contracts is void?

a) An oral sale of a parcel of land.
b) A sale of land by an agent in a public instrument where his authority from the principal is oral.
c) A donation of a wrist watch worth P 4,500.00.
d) A relatively simulated contract.

Part Three
Instruction : State the status of the contract, as a rule, under the following circumstances:

1. Those undertaken in fraud of creditors when the latter cannot in

any other manner collect the claims due them.
2. The purchaser of a private agricultural land is a former Filipino
citizen.
3. Contracts with a false cause.
4. Contract where the consideration is in Chinese Yuan.
5. Oral sale of an immovable for P450.00.
6. Sale of large cattles in a private instrument.
7. The guardian sold the property of his ward valued at P100t to
another person for the price of P70t.
8. A Deed of Absolute Sale which does not contain a provision as to
the price.
9. Oral sale of a bag where it was agreed that the bag will he
delivered after 18 months and payment will be upon delivery.
10. Lease involving a car for three years.

Part Four
Give direct and concise but complete answers.
Cite authorities, if any.

1. With the intention of raising money to buy a gun which he would use in killing X, his
mortal enemy, S sold his only car for P100,000.00 cash to B who knew nothing of the
intention of S in selling the car. After the sale, S was able to buy a gun complete with all
 the papers required by law. B, on the other hand, was able to register the car in his name
at the Land Transportation Office. What is the status of the sale?

2. On March 13, 2008, Ariel entered into a Deed of Absolute Sale (DAS) with Noel where the
former sold his titled lot in Quezon City with an area of three hundred (300) square meters to the
latter for the price of P300,000.00. The prevailing market value of the lot was P3,000.00 per
square meter. On March 20, 2008, they executed another “Agreement to Buy Back/Redeem
Property” where Ariel was given an option to repurchase the property on or before March 20, 210
for the same price. Ariel, however, remained in actual possession of the lot. Since Noel did not
pay the taxes, Ariel paid the real property taxes to avoid a delinquency sale.

On March 21, 2010, Ariel sent a letter to Noel, attaching thereto a manager’s check for
P300,000.00 manifesting that he is redeeming the property. Noel rejected the redemption
claiming that the DAS was a true and valid sale representing the true intent of the parties. Ariel
filed a suit for the nullification of the DAS or the reformation of said agreement to that of a Loan
with Real Estate Mortgage. He claims the DAS and the redemption agreement constitute an
equitable mortgage. Noel however claims it is a valid sale with pacto de retro and Ariel clearly
failed to redeem the property.

As the RTC judge, decide the case with reasons.

3. Lino entered into a contract to sell with Ramon, undertaking to convey to the latter one of
the five lots he owns, without specifying which lot it was, for the price of P1 million.
Later, the parties could not agree which of five lots he owned Lino undertook to sell to
Ramon. What is the standing of the contract?

4. X was the owner of a 10,000 square meter property. X married Y and out of their union,
A, B and C were born. After the death of Y, X married Z and they begot as children, D,
E and F. After the death of X, the children of the first and second marriages executed an
extrajudicial partition of the aforestated property on May 1, 1970. D, E and F were given
a one thousand square meter portion of the property. They were minors at the time of the
execution of the document. D was 17 year old, E was 14 and F was 12; and they were
made to believe by A, B and C that unless they sign the document they will not get any
share. Z was not present then. In January 1974, D, E and F filed an action in court to
nullify the suit alleging they discovered the fraud only in 1973.
a) Can the minority of D, E and F be a basis to nullify the partition? Explain your
answer.
b) How about fraud? Explain your answer.

5. Eduardo borrowed P50,000.00 from Diego payable within 30 days. Eduardo failed to
pay the debt on the due date despite repeated demands from Diego. When the debt
remained unpaid for 6 months, Diego asked his counsel, Atty. Santos, to write a letter to
Eduardo informing him that unless Eduardo assigns his lot to Diego, Diego would be
compelled to file a civil complaint against Eduardo for the collection of Diego’s claim.
 Eduardo, afraid of the threat of a court action against him, was forced to sign a deed of
assignment of his lot in favor of Diego. What is the status of the assignment?

6. Michael Fermin, without the authority of Pascual Lacas, owner of a car, sold the same car in the
name of Mr. Lacas to Atty. Buko. What is the status of the contract between Atty. Buko and Mr.
Lacas ?

7. “X” came across an advertisement in the “Manila Daily Bulletin” about the rush sale of three
slightly used TOYOTA cars, Model 1989 for only P200,000 each. Finding the price to be very
cheap and in order to be sure that he gets one unit ahead of the others, “X” immediately phoned
the advertiser “Y” and placed an order for one car. “Y” accepted the order and promised to
deliver the ordered unit on July 15, 1989. On the said date, however, “Y” did not deliver the unit.
“X” brings an action to compel “Y” to deliver the unit. Will such action prosper? Give your
reasons.

8. Sergio is the registered owner of a 500-square meter land. His friend, Marcelo, who has long
been interested in the property, succeeded in persuading Sergio to sell it to him. On June 2, 2012,
they agreed on the purchase price of P600,000 and that Sergio would give Marcelo up to June 30,
2012 within which to raise the amount. Marcelo, in a light tone usual between them, said that
they should seal their agreement through a case of Jack Daniels Black and P5,000 "pulutan"
money which he immediately handed to Sergio and which the latter accepted. The friends then sat
down and drank the first bottle from the case of bourbon.

On June 15, 2013, Sergio learned of another buyer, Roberto, who was offering P800,000 in ready
cash for the land. When Roberto confirmed that he could pay in cash as soon as Sergio could get
the documentation ready, Sergio decided to withdraw his offer to Marcelo, hoping to just explain
matters to his friend. Marcelo, however, objected when the withdrawal was communicated to
him, taking the position that they have a firm and binding agreement that Sergio cannot simply
walk away from because he has an option to buy that is duly supported by a duly ·accepted
valuable consideration.

Can Sergio claim that whatever they might have agreed upon cannot be enforced because
any agreement relating to the sale of real property must be supported by evidence in
writing and they never reduced their agreement to writing?

9. In 1950, the Bureau of Lands issued a Homestead patent to A. Three years later, A sold the
homestead to B. A died in 1990, and his heirs filed an action to recover the homestead from B on
the ground that its sale by their father to the latter is void under Section 118 of the Public Land
Law. B contends, however, that the heirs of A cannot recover the homestead from him anymore
because their action has prescribed and that furthermore, A was in pari delicto. Decide.

10. Simon owned a townhouse that he rented out to Shannon, a flight attendant with Soleil Philippine
Airlines (SPA). They had no written contract but merely agreed on a three (3)-year lease.
Shannon had been using the townhouse as her base in Manila and had been paying rentals for
more than a year when she accepted a better job offer from Sing Airlines. This meant that
Singapore was going to be her new base and so she decided, without informing Simon, to
sublease the townhouse to Sylvia, an office clerk in SPA.
(a) Can Simon compel Shannon to reduce the lease agreement into writing?