OBLIGATION – juridical necessity to give, to 3.

 CIVIL – derived by virtue of juridical

do or not to do
relation

4 ELEMENTS OF OBLIGATION
Creditor’s rights if debtor fails to comply w/
1. ACTIVE SUBJECT (creditor/obligee) – the obligation

whose obligation is constituted

1. Determinate

2. PASSIVE SUBJECT (debtor/obligor) – has a. Performance

duty to give, to do or not to do

b. Damages

3. OBJECT/PRESTATION – subject matter

2. Generic

4. JURIDICAL/LEGAL TIE (vinculum/efficient a. Performance

cause) – reason
b. Damages

c. Obligation be complied at debtor’s

expense

CIVIL OBLIGATION NATURAL OBLIGATION

derived from derived from equity & Creditor’s rights if debtor does in
positive law justice contravention

enforceable by not enforceable by 1. Damages

court action court action 2. Ask it be UNDONE at debtor’s expense

5 SOURCES OF OBLIGATION
FORTUITOUS EVENT – cannot be foreseen,
1. LAW - must be clearly set forth by law
if foreseen, inevitable

2. CONTRACTS - meeting of the minds of General Rule: No person liable to fortuitous

two persons, where one binds himself, to event.

give or to render service to the other

Exceptions:

3. QUASI-CONTRACTS – arise from lawful, 1. Law states

2. Stipulation/contract states

voluntary acts; no one shall be unjustly

enriched...
3. Assumption of risk

4. Delay

     2 Kinds

5. Debtor promises deliver to 2/more

     a. Solutio indebiti – something received
(delivered on a mistake), no right to demand persons who do not have same interest (bad
faith)

it

     b. Negotiorum gestio – voluntary mgt of

property/affairs of another w/o his EFFECTS OF FORTUITOUS EVENT to thing
to be delivered

knowledge/consent

- extinguish the obligation if determinate;

4. QUASI-DELICT/TORTS/CULPA
generic does not extinguish the obligation

AQUILIANA – arise from damage; fault/

negligence

3 MISCELLANEOUS RULES ON
5. CRIMES/ACTS/OMISSIONS punished by
PERFORMANCE OF OBLIGA-TION

law – arise from civil liability that is a 1. When to

consequence of a criminal offense111

deliver determinate, accessions (additions/
improvements) and accessories(joined/
DILIGENCE OF A GOOD FATHER OF A
included with the principal) are INCLUDED
FAMILY

even not mentioned.

- care need to be exercised by a debtor to

2. If debtor fails to do, it shall be DONE AT
deliver/give determinate thing

HIS EXPENSE, same with doing the

Exception: When law/stipulation of parties
contravention; poorly done be undone.

requires a differnt standard of care (slight/

3. In obligation not to do, and obligor does
extraordinary diligence).

what is forbidden, shall be UNDONE AT HIS

EXPENSE.

When creditor is entitled to the fruits

Rule: The creditor has personal right (right to

4 GROUNDS; debtor liable for damages

ask for delivery) from the time the obligation 1. Default/mora

to deliver arises.
2. Fraud/dolo

But NO real right (right enforceable against 3. Negligence/culpa

the whole world) until it is delivered.

4. Contrary to terms of obligation

3 KINDS OF FRUITS
1. DEFAULT/MORA – delay

1. NATURAL – w/o human intervention

     3kinds

2. INDUSTRIAL – w/ human intervention

1 of 11
     a. Mora solvendi – debtor’s delay to give Exceptions:

(real ob.), to do (personal ob.)

1. Law states

     b. Mora accipiende – creditor’s delay to 2. Contract states

accept
3. Obligation is purely personal

     c. Compensatio Morae – delay of both in

reciprocal obligation
10 Kinds of Obligation

1. Pure

CONCEPT OF DELAY
2. Conditional

General Rule: No demand, No delay

3. Alternative

Exceptions:
4. Facultative

1. Law states
5. Joint

2. Obligation states
6. Solidary

3. Time is the essence

7. Divisible

4. Demand be useless if delay

8. Indivisible

5. Debtor guilty of delay

9. Obligation w/ a period

10. Obligation w/ a penal clause

EFFECTS OF DELAY

1. Damages
1. PURE OBLIGATION

2. When to deliver determinate thing, STILL - w/o condition, demandable at once (pure
LIABLE in fortuitous event.
has resolutory condition/period)

2. FRAUD/DOLO – conscious, deliberate,

intentional evasion of fulfillment
2. CONDITIONAL OBLIGATION

     2Kinds
- there is condition in performance; future &
     a. Dolo causante/Causal fraud – fraud in uncertain

obtaining consent; consent is defective,      2Kinds

contract is voidable. Remedy: annulment

     a. Suspensive condition – happening of
     b. Dolo incidente/Incidental fraud – fraud condition gives RISE to obligation

w/c vitiates consent. Remedy: damages

     b. Resolutory condition – happening of
condition EXTINGUISHES obligation

3. NEGLIGENCE/CULPA – voluntary act/

omission; no bad faith intended
6 MISCELLANEOUS RULES ON
     3Kinds
CONDITIONAL OBLIGATION

     a. Culpa aquiliana/Civil negligence – 1. Impossible conditions, contrary to law,

quasi-delict/torts
shall ANNUL obligation.

     b. Culpa contractual/Contractual 2. The condition not to do an impossible

negligence – breach
thing is considered not agreed upon.

     c. Culpa criminal/Criminal negligence – 3. The condition that happens in determinate

crime/delict
time, EXTINGUISHES obligation.

4. The condition that happens in

4. Contrary to the terms of obligation
INDETERMINATE time, obligation only
effective at arrival.

2 RULES OF PRINCIPAL & INSTALLMENT

5. The condition is fulfilled if DEBTOR
1. Receipt of principal w/o mention of prevents fulfillment.

interest, presumed interest is paid also.

6. The effect of conditional obligation, once
2. Receipt of latter installment w/o mention fulfilled:

of prior installment, presumed prior - to give: retroact to the day of constitution

installment is paid also.
of obligation

- has reciprocal prestations: fruits & interests

4 SUCCESSIVE RIGHTS OF CREDITOR to be mutually compensated

satisfy claim against DEBTOR

- has unilateral obligation: debtor shall give
1. Exact payment
fruits & interests

2. Attach debtor’s properties

3. Accion subrogatoria – exercise rights & RULES in case of Loss, Improvement, or

actions except inherent in person
Deterioration of thing during the pendency of
4. Accion pauliana – cancel acts/contracts condition

by debtor to defraud creditor

1. LOST

a. w/ debtor’s fault – damages

TRANSMISSIBILITY OF RIGHTS
b. w/o debtor’s fault – extinguishes
General Rule: ALL RIGHTS are obligation

transmissible.

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2. DETERIORATION
2. In partial payment

a. w/ debtor’s fault  - (1) cancel obligation & 3. Payable ASAP

damages; or (2) fulfill obligation w/ damages

4. When I can afford it

b. w/o debtor’s fault – creditor suffer 5. When I have the money

impairment
6. When I am able to

7. When my means permit me to do so

3. IMPROVEMENT

a. By nature/time – benefit to creditor

PERIOD CONDITION
b. at expense of debtor – debtor no right
than that granted to usufructuary (debtor no certain uncertain
right to compensate amount for
future only future/past but
improvement)
unknown

(*influence upon (*) on the very

EFFECTS OF FULFILLMENT OF
obligation) only upon existence of obligation
SUSPENSIVE CONDITION
its demandability itself
General Rule: The obligation becomes
effective retroactively to the day obligation
was constituted.

FOR WHOSE BENEFIT IS THE PERIOD?

Exceptions:

General Rule: Both the debtor & creditor.

1. In reciprocal obligation, fruits & interests

Therefore, NEITHER of them can demand
during pendency of condition shall
performance of obligation.

compensate each other.

Exception: If the term of obligation has to

2. In unilateral obligation, debtor gets fruits &
favor one of them.

interests unless there is a contrary intent.

3 EFFECTS OF FULFILLMENT OF 5 INSTANCES WHEN DEBTOR LOSES

RIGHT TO USE “PERIOD”

RESOLUTORY CONDITION

1. Debtor is insolvent.

1. Extinguish obligation.

2. Both parties restore what they received 2. Debtor attempts to abscond.

3. Impairment of guarantees/securities.

plus fruits & interests.

4. Failure to furnish guarantees/securities

3. The rule on L, D, or I will apply to person
who has to return the thing.
promised.

5. Violation of undertaking.

When one of debtors in reciprocal obligation

does not comply w/ his obligation

1. The right of injured party is (1) cancel 4. ALTERNATIVE OBLIGATION

- w/ 2 or more prestations, only 1 is due.

contract & damages; or (2) fulfill obligation &

damages

5. FACULTATIVE OBLIGATION

- w/ ONLY 1 prestation but can be

3 Kinds of Obligation (Accdng to PERSON
substituted.

OBLIGED)

1. UNILATERAL – only 1 party obliged to

ALTERNATIVE prestations LOST w/ debtor’s
comply

fault

2. BILATERAL – both parties; performance

not same time
Creditor entitled to damages but needs ff
requisites:

3. RECIPROCAL – both parties; performance

1. Debtor can choose.

same time

2. All prestations lost/become impossible

due to debtor’s fault

3. OBLIGATION W/ A PERIOD

- demandability/extinguishment subject to
the expiration of period

ALTERNATIVE FACULTATIVE
PERIOD – interval of time; either suspends OBLIGATION OBLIGATION
demandability or produces extinguishment
several prestations one prestation due,
due, giving one is but can be
DAY CERTAIN – must come, not known sufficient subtituted
when

right to choose right to choose

(debtor) unless DEBTOR ONLY
7 CASES CONSIDERED TO BE
granted to creditor
“OBLIGATION W/ A PERIOD”

1. Little by little

3 of 11
ALTERNATIVE FACULTATIVE
OBLIGATION OBLIGATION

If 1 of the prestation nullity of principal

(3) SOLIDARY OBLIGATION EXIST ONLY IF:
is illegal, others may carries w/ it nullity of
*RULES

be valid, obligation accessory/

1. Law states

remains substitute
2. Stipulation states

loss/impossibility of loss/impossibility of 3. Nature of obligation requires

ALL prestations due, presta-tion due, w/o

w/o debtor’s fault, debtor’s fault, 2 PRESUMPTIONS THAT OBLIGATION IS
extinguishes extinguishes JOINT

obligation obligation 1. The debts be divided as many shares as

there are debtors/creditors.

(3) SUMMARY OF RULES, OBLIGATIONS, & 2. The debtors/creditors are distinct from
RIGHTS OF DEBTOR IN ALTERNATIVE one another.

OBLIGATION

1. If 1 of prestations lost through fortuitous 8. DIVISIBLE OBLIGATION

event, shall still be perform by choosing - prestation is capable of partial performance

(creditor) from the remainder.

9. INDIVISIBLE OBLIGATION

2. If 1 of prestations lost through debtor’s

- prestation incapable of partial performance

fault, creditor may claim any of remainders

w/ damages.

10. OBLIGATION W/ A PENAL CLAUSE

3. If ALL prestations lost through debtor’s

- one w/ accessory undertaking attached to
fault, creditor choose price w/ damages.

obligation to assume greater liablity in case

of breach/non-fulfillment of obligation

RULES on LOSS/DETERIORATION of the

thing intended as SUBSTITUTE in
3 PURPOSES OF PENAL CLAUSE

FACULTATIVE OBLIGATION
1. Ensure performance of obligation

1. If there is a loss/deterioration of thing

2. Substitute for damages & interest in case
intended as substitute, debtor is NOT liable if
of noncompli-ance

NOT HIS FAULT.

3. Penalize debtor in case of breach

But if substitution is already made, debtor is

liable for loss of substitute when in DELAY,
In case obligation has a PENAL CLAUSE

NEGLIGENCE, or FRAUD.

General Rule: Penalty takes the place of

damages & interest in case of non-
6. JOINT OBLIGATION

compliance.

- obligation is to be paid proportionately by Exceptions:

debtors or to be
1. Stipulation states.

demanded proportionately by creditors
2. Debtor refuse to pay penalty.

3. Debtor guilty of fraud in performance of

7. SOLIDARY OBLIGATION
obligation.

- each one of debtors has right to render or

each one of creditors has right to demand NULLITY OF PRINCIPAL OBLIGATION OR
the entire compliance w/ prestation
THE PENAL CLAUSE

Nullity of principal obligation = nullity of

penal clause

Nullity of penal clause = NOT nullity of

MAXIMS SYNONYMS principal obligation

JOINT “To each his proportionat 10 MODES OF EXTINGUISHMENT OF

Obligation own” e OBLIGATIONS

SOLIDARY “One for all, individually & 1. Payment or performance

Obligation all for one” collectively 2. Prescription

3. Compensation

4. Confusion/merger

5. Condonation/remission

6. Fulfillment of resolutory condition

7. Annulment

8. Rescission

4 of 11
9. Novation
c. DACION IN PAYMENT (dacion en pago)

10. Loss of thing due

- alienation of property to the creditor in
satisfaction of debt

1. PAYMENT/PERFORMANCE

- Payment means delivery of money & 3 REQUISITES OF DACION IN PAYMENT

performance of obligation
1. Consent of creditor

2. NOT prejudicial to another creditor

2 PLACE OF PAYMENT
3. Debtor not insolvent declared by a judicial
1. At place agreed upon
decree

2. If w/o agreement

a. Object is indeterminate – paid at domicile CESSION DACION IN

of DEBTOR
PAYMENT
b. Object is determinate – place of thing at
all properties NOT all properties
the time of constitution of obligation

require more than 1 NOT require all

4 SPECIAL MODES OF PAYMENT
creditor creditors
a. Application of payment
NOT act of novation act of novation
b. Cession

c. Tender of payment & consignation

NOT transfer of transfer ownership
ownership
d. Dacion in payment

requires partial/total may happen during

a. APPLICATION OF PAYMENT
insolvency solvency of debtor
- designation of debt to w/c payment must
be applied when debtor has several
obligations of same kind in favor of same d. TENDER OF PAYMENT & CONSIGNATION

creditor.
TENDER OF PAYMENT – act of offering the
creditor what is due to him w/ a demand that
3 REQUISITES OF APPLICATION OF the creditor accept it

PAYMENT
CONSIGNATION – act of depositing thing
1. Only 1 debtor & 1 creditor
due w/ the court when creditor cannot/
2. 2 or more debts, same kind
refuses acceptance of payment

3. All debts are due

4. Insufficient payment to exinguish ALL 5 REQUISITES OF CONSIGNATION

debts
1. Debt due.

2. Creditor refused the tender of payment w/

3 RIGHTS TO MAKE APPLICATION OF o just cause

PAYMENT
3. Notice of consignation  already given to
1. Right belongs to CREDITOR.
persons interested in fulfillment of obligation

2. If debtor does not avail, creditor can give 4. Consignation of thing/amount due

him receipt designating the debt from which 5. Subsequent notice of consignation to
payment will be applied.
interested persons

3. If debtor accepts the receipt, he cannot

complain unless THERE IS just cause to 5 VALID CONSIGNATION W/O PREVIOUS
invalidate the contract.
TENDER OF PAYMENT

1. Creditor is absent/unknown.

b. CESSION
2. Creditor is incapacitate to receive at time
- debtor abandons ALL his property for it is due.

creditor’s benefit to obtain payment from 3. Creditor refused give a receipt, w/o just
proceeds of his property
cause.

4. 2 or more persons claim the right to

5 REQUISITES OF VALID CESSION
collect.

1. 1 debtor & 2 or more creditors

5. Title of obligation lost.

2. Debtor is in partial/total insolvency.

3. Debtor to deliver ALL his property to 2. LOSS OF THING DUE

creditors
- perishes, disappears, or goes out of
4. Debt is due & demandable.
commerce; existence is unknown; cannot be
5. Creditors must sell the properties & apply recovered

the proceeds to their respective credits

proportionately.

5 of 11
3 REQUISITES TO EXTINGUISH - subrogation of creditor

OBLIGATION DUE TO LOSS

1. Determinate thing.
(3) OBLIGATIONS MAY BE MODIFIED BY:

2. W/o debtor’s fault.

1. Changing object/principal
3. No delay.
conditions. (REAL NOVATION)

2. Changing the person of debtor/

3. CONDONATION/REMISSION
creditor. (PERSONAL NOVATION)

- gratuitous abandonment of right by the a. Substitution – change of debtor

creditor
b. Subrogation – change of creditor

3. Changing person of the parties & the

3 REQUISITES OF A VALID CONDONATION/ objects of principal condition. (MIXED
REMISSION
NOVATION)

1. It must be gratuitous.

2. Accepted by obligor.
4 REQUISITES OF NOVATION

3. Obligation is demandable.
1. Old valid obligation.

2. Agreement of parties to new obligation.

4. CONFUSION/MERGER
3. Extinguishment of old obligation.

- meeting in 1 person of qualities of debtor & 4. Validity of new obligation.

creditor w/ same obligation

2 FORMS OF NOVATION BY
3 REQUISITES OF VALID CONFUSION/ SUBSTITUTION OF DEBTOR

MERGER
1. EXPROMISION – w/ consent of creditor,
1. The merger of characters of debtor & NO consent of old debtor

creditor must be in same person.

     2REQUISITES

2. Take place between principal debtor &      a. Initiative of 3rd person.

creditor.
     b. Consent of creditor.

3. Clear & definite.

2. DELEGACION – all must agree (creditor,
old debtor, new debtor)

5. COMPENSATION
     3REQUISITES

- 2 persons are debtors & creditors of each      a. Initiative from old debtor.

other
     b. Consent of debtor.

     c. Acceptance by creditor.

6 ESSENTIAL REQUISITES OF
COMPENSATION
7. SUBROGATION

1. Parties both principal debtors & creditors - change of creditor

of each other.

2. Compensation is not prohibited by law.

2 KINDS OF SUBROGATION

3. No retention/controversy by 3rd person.
1. CONVENTIONAL – consent of original
4. 2 debts are due & demandable.
parties & 3rd person

5. 2 debts are liquidated.

2. LEGAL – by law

6. 2 debts both in money/consumable      a. creditor pays another preferred creditor

things.
even w/o debtor’s knowledge

     b. 3rd person pays the express approval

(2) CLASSES OF COMPENSATION
of debtor

1. As to effect
     c. 3rd person pays even w/o knowledge of
a. TOTAL – obligations completely debtor

extinguished.

b. PARTIAL – a balance remains

                                                                        
2. As to origin or cause
                               

a. LEGAL – by law
CONTRACT – meeting of minds between 2
b. VOLUNTARY/CONVENTIONAL – persons to give something or to render
agreement of parties
service.

c. JUDICIAL – order from the court

d. FACULTATIVE – 1 of parties can choose/ 3 ELEMENTS OF CONTRACT

oppose claiming compensation

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

6. NOVATION
     a. CONSENT of contracting parties

- substitution/change of obligation
     b. OBJECT CERTAIN – subject matter

- substitution of debtor
     c. CAUSE/CONSIDERATION

6 of 11
In some contracts, ff are also essential:
3 STAGES OF CONTRACT

     d. FORM
1. PREPARATION/CONCEPTION –
     e. DELIVERY
preparatory steps to perfect contract

2. PERFECTION/BIRTH – meeting of minds

2. NATURAL – found in certain contract, between 2 contracting parties

presumed to exist unless stipulated

3. CONSUMMATION/TERMINATION – terms
of contract are performed, & contract is fully
3. ACCIDENTAL – various particular executed

stipulations that may be agreed upon by

contracting parties
5 BASIC PRINCIPLES/CHARACTERISTICS
OF A CONTRACT

(7) CLASSIFICATION OF CONTRACTS

1. PRINCIPLE OF AUTONOMY (liberty to
According to:
contract)

1. PERFECTION/FORMATION
Provided they are not contrary to:

     a. CONSENSUAL – perfected by mere      a. Law

consent
     b. Morals

     b. REAL – perfected by delivery

     c. Good customs

     c. FORMAL/SOLEMN – special formalities      d. Public order

are essential before perfection of contract

     e. Public policy

2. PARTIES OBLIGATED
2. MUTUALITY OF CONTRACTS

     a. UNILATERAL – only 1 has obligation

- the contract must bind both parties; its
     b. BILATERAL – both parties require to validity/compliance cannot be left to the will
render reciprocal prestations
of one of them

3. CAUSE
3. RELATIVITY OF CONTRACTS

     a. ONEROUS – exchange of - Contracts take effect only between the

considerations
parties, their assigns & heirs except when
     b. GRATUITOUS – no consideration there are rights & obligations not
received in exchange of what is given
transmissible:

     c. REMUNERATORY – something is given      a. by their nature

for benefit/service that had been rendered      b. by stipulation (stipulation por autri)

previously
     c. by provision of law

4. RISK OF FULFILLMENT
4. CONSENSUALITY OF CONTRACTS

     a. COMMUTATIVE – equivalent values are - Contracts are perfected by mere consent

given by both parties

Exceptions:

     b. ALEATORY – fulfillment of contract      a. REAL CONTRACTS – perfected by

depends on chance (eg. insurance)
delivery

     b. FORMAL/SOLEMN CONTRACTS –
5. IMPORTANCE
special form required for its perfection

     a. PRINCIPAL – contract may stand alone

(eg. sale, partnership)
5. OBLIGATORINESS OF CONTRACTS

     b. ACCESSORY – existence depends on - The contract, once perfected, has the force
another contract (pledge, guarantee)
of law between parties which bound to
     c. PREPARATORY – contract not an end comply in good faith

by itself but a means thru w/c other

contracts may be made (eg. agency)
4 KINDS OF INNOMINATE CONTRACTS

1. I give that you may give

6. NAME
2. I do that you may do

     a. NOMINATE – contract given a 3. I give that you may do

particular/special name (eg. partnership)

4. I do that you may give

     b. INNOMINATE – not given special name

(eg. I give that you may give)
4 RULES FOR INNOMINATE CONTRACTS

1. Agreement of parties

7. SUBJECT MATTER
2. Law on Obligations & Contracts

     a. Contracts involving things

3. Rules on most analogous nominate
     b. Contracts involving rights/credits
contract

     c. Contracts involving services

4. Customs of place

7 of 11
STIPULATION POR AUTRI
LUCID INTERVAL – period when an INSANE
- stipulation in favor of 3rd person
has acquired SANITY temporarily, therefore,
capacitated to enter into a valid contract

5 REQUISITES OF STIPULATION POR

AUTRI
2 RULES on persons WHO CANNOT GIVE
1. Stipulation in favor of 3rd person
CONSENT to a contract

2. Stipulation is only PART, not the whole of 1. Age of majority is 18 yrs old

the contract.
2. A contract entered into by
3. Both parties must conferred upon a favor UNEMANCIPATED MINOR w/o parents/
of 3rd person
guardian’s consent is voidable, except:

4. 3rd person must accept & say it to debtor      a. Minor MISREPRESENTS his age
before its revocation/cancellation
(estoppel)

5. Neither of both parties be the legal      b. Contract involves sale & delivery of
representation/autho-rization of 3rd person
necessities to minor

CONSENT
5 VICES OF CONSENT

- meeting of offer (certain) & acceptance - NOTE: When there is a DEFECTIVE

(absolute) upon a thing
CONSENT of EITHER of parties, contract
is voidable; Remedy: annulment of contract.

5 REQUISITES OF CONSENT

1. MISTAKE/ERROR

1. Must be given by 2 or more parties

2. FRAUD/DECEIT

2. Parties are capacitate to enter in contract

3. VIOLENECE

3. No vitiation of consent

4. INTIMIDATION

4. No conflict between declared & intended

5. UNDUE INFLUENCE

5. Legal formalities must be complied

1. MISTAKE/ERROR

7 RULES ON OFFER/ACEPTANCE
- wrong conception & lack of knowledge
1. An offer must be certain.
upon a thing

2. Business advertisements for sale are NOT

offers but ONLY invitations to make an offer.
(2) MISTAKES W/C VITIATES CONSENT

3. Advertisements for bidders are ONLY It should refer to:

invitations.
1. substance of thing that is the OBJECT of
4. An acceptance made by letter/telegram contract

does NOT bind offeror EXCEPT from the 2. conditions w/c MOVED either/both parties

TIME it came to his knowledge.
to enter into contract

5. An offer made through an agent is

accepted from the TIME the acceptance is 4 RULES ON MISTAKE

done through an agent.

1. Mistake to identity/qualifications of either
6. An offer is ineffective upon death, insanity, of parties will vitiate consent ONLY when IT
insolvency, of EITHER party BEFORE is the principal cause of contract.

acceptance is made.
2. Simple mistake of account must
7. When offeror allowed offeree a certain be corrected.

period to accept, offer MAY be withdrawn AT 3. No mistake if parties knew the risk/doubt

ANYTIME unless there is something PAID/ affecting OBJECT of contract.

PROMISED.
4. When one of parties is unable to read or
the contract is in language not understood
3 persons who CANNOT GIVE CONSENT to by him, & mistake/fraud is alleged, the
a contract (if entered into, contract person enforcing the contract must FULLY
is voidable)
explained the terms to him.

1. UNEMANCIPATED MINORS

2. INSANE/DEMENTED PERSONS (unless 2. FRAUD/DOLO

they acted DURING LUCID INTERVAL)

- when through insidious words/
3. DEAF-MUTES who DO NOT know how to machinations of one of the parties, INDUCED
write
the other to enter into a contract, & w/o
them, he will not agree.

DEMENTED PERSON – NOT exactly insane;

difficult to distin-guish right from wrong

8 of 11
DOLO CAUSANTE DOLO INCIDENTE VIOLENCE INTIMIDATION

serious NOT serious physical contact/ NO physical coercion:

coercion ONLY MENTAL/
cause induces party NOT the cause to MORAL coercion
to ENTER into enter into contract
contract
5. UNDUE INFLUENCE

make contract is valid; - a person takes improper advantage of his

contract voidable liable for damages
power over other’s will, depriving the other to
his reasonable freedom of choice.

7 RULES OF FRAUD
3 RULES ON UNDUE INFLUENCE

1. Failure to disclose facts when these needs 1. There is a person who takes improper
to be revealed, is a fraud.
advantage of his power over other’s will,
2. Fraud should be SERIOUS (dolo causante) depriving the other to his reasonable
& SHOULD NOT be done by BOTH parties to freedom of choice.

make contract voidable.
2. Undue influence ANNULS obligation
3. Incidental fraud (dolo incidente) ONLY although it is DONE by 3rd person not part of
obliges person to PAY DAMAGES.
contract.

4. Usual exaggerations in trade, when other 3. To constitute undue influence, ff

party know the “real” facts, is NOT FRAUD.
circumstances must be considered: (1)
5. A mere expression of opinion is NOT confidential, family, spiritual, & other relations
FRAUD UNLESS made by an expert & the of parties; or (2) the aggrieved party is
other party relies on his special knowledge.
suffering from mental weakness; or (3)
6. Misrepresentation made in good faith is ignorant; or (4) in financial distress.

NOT FRAUD but may constitute an error.

7. Misrepresentation by 3rd person DOES SIMULATION OF CONTRACT

NOT vitiate consent UNLESS it - process of INTENTIONALLY deceiving

created substantial mistake.
others by producing a contract not really
exist (absolute simulation), or w/c is different
3. VIOLENCE
from true agreement (relative simulation).

- serious/irresistible force is employed.

2 KINDS OF SIMULATED CONTRACT

2 RULES ON VIOLENCE
1. ABSOLUTE SIMULATION (the parties DO
1. Serious/irresistible force is employed w/c NOT intend to be bound at all)

constitutes the reason why one entered into - completely fictitious/make-believe; VOID

a contract.
2. RELATIVE SIMULATION (parties conceal
2. Violence ANNULS obligation although it is their true/real agreement)

DONE by 3rd person not part of contract.

- parties are bound to real/true
agreement, EXCEPT:

4. INTIMIDATION
     a. contract prejudice 3rd person

- 1 of the parties is compelled by      b. purpose is contrary to law, morals,

a reasonable & well-grounded fear of an good customs, public order, public policy

imminent & grave evil upon his person/

property to give his consent.
7 REQUISITES OF OBJECT OF CONTRACT

1. Specific & certain

3 RULES ON INTIMIDATION
2. Services not contrary to law, morals, good
1. Age, sex, & condition of person must used customs, public order, public policy

to determine the degree of intimidation.

3. Services/things must NOT be legally/
2. Intimidation ANNULS obligation although physically impossible

it is DONE by 3rd person not part of contract.

4. Services/things are w/in commerce of man
3. A threat to enforce one’s claim (claim must including future things

be just & legal), DOES NOT vitiate consent.

5. Rights are NOT TRANSMISSIBLE.

6. Determinate (kind) or determinable ( w/o

the need of new contract/agreement)

VIOLENCE INTIMIDATION
7. NO contract be entered for future
external internal inheritance UNLESS law states

4 REQUISITES OF CAUSE

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1. It is just & equitable.
states the property is sold ABSOLUTELY, or
2. It exists.
w/ the right to repurchase.

3. It is lawful.

4. It is true.
(3) NO REFORMATION OF INSTRUMENT
WHEN:

LESION
1. Simple donation inter vivos where NO
- inadequacy of cause (eg. insufficient price CONDITION is imposed.

for thing sold)

2. Will.

3. Real agreement is VOID.

RULES ON LESION

- Lesion DOES NOT invalidate contract, 4 KINDS OF DEFECTIVE CONTRACTS

except there is:

1. RESCISSIBLE – valid until rescinded; has
     a. Fraud
ALL essential requisites but because
     b. Mistake
of injury/damage to one of the parties, the
     c. Undue influence
contract may be rescinded.

2. VOIDABLE – valid until annulled; has ALL

2 FORM OF CONTRACTS
essential requisites but because of defect in
1. Contracts in writing
consent, contract may be annulled.

2. Contracts in a public instrument

 3. UNENFORCEABLE – cannot be sued/

enforced unless ratified; no effect NOW but
1. Contracts w/c must be IN WRITING to be
may take effect upon ratification.

valid:

4. VOID – NO effect at all; cannot be ratified/

     a. Donation of personal property exceeds
validated.

P5000.

     b. Agent’s authority in sale of land/any

5 RESCISSIBLE CONTRACTS

interest.

1. Those entered by guardians & suffered

     c. Contract of antichresis.

     d Stipulation to pay interest on loans.

LESION by more than ¼ of value of the value
     e. Stipulation to reduce common carrier’s that is the OBJECT.

extraordinary diligence & to limit its liability.

2. Those agreed upon in representation of
absentees, if the absentees suffered
2. Contracts w/c must be IN A PUBLIC LESION.

INSTRUMENT to be valid:
3. Those undertaken in FRAUD of creditors
     a. Donation of real property (both the when the creditors cannot further claim.

donation & accep-tance).

4. If entered into contract w/o knowledge/
     b. Sale of real property.
approval of litigants under litigation.

     c. Partnership where real property/rights 5. Contracts subjected to rescission

is contributed; or when capital contribution declared by law.

exceeds P3000.

REFORMATION OF INSTRUMENTS

- REMEDY in equity in w/c a written 3 VOIDABLE CONTRACTS

instrument is made/construed to the REAL 1. One of the parties INCAPABLE of giving

intention of parties when there is an error/ consent to a contract.

mistake.
2. Those where consent vitiates by vices of
consent. (MFVIU)

3. Those agreed in the state of drunkenness/

(5) CASES REFORMATION OF
hypnotic spell.

INSTRUMENT IS AVAILABLE

1. Mutual mistake of parties.

3 UNENFORCEABLE CONTRACTS

2. One party was mistaken & the other acted

1. Those entered in name of other person, or
fraud.

who acted BEYOND his powers.

3. One party was mistaken & the other knew/

believed that the instrument did not state 2. Those who do not comply w/ the Statute
their REAL agreement.
of Frauds.

4. Ignorance, lack of skill, negligence, or bad 3. Both parties are incapable of giving

faith of person drafting the instrument DOES consent to a contract.

NOT state the TRUE INTENTION of parties

5. Two parties agree on mortgage/pledge of 7 VOID/INEXISTENT CONTRACTS

personal/real property BUT the instrument 1. Those w/c are ABSOLUTELY simulated/
fictitious.

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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.

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