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

do Creditor’s rights if debtor does in contravention


1. Damages
4 ELEMENTS OF OBLIGATION 2. Ask it be UNDONE at debtor’s expense
1. ACTIVE SUBJECT (creditor/obligee) – whose obligation
is constituted FORTUITOUS EVENT – cannot be foreseen, if foreseen,
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, inevitable
to do or not to do General Rule: No person liable to fortuitous event.
3. OBJECT/PRESTATION – subject matter Exceptions:
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – 1. Law states
reason 2. Stipulation/contract states
3. Assumption of risk
CIVIL OBLIGATION NATURAL OBLIGATION 4. Delay
derived from positive law derived from equity & 5. Debtor promises deliver to 2/more persons who do not
justice have same interest (bad faith)
enforceable by court action not enforceable by court
action EFFECTS OF FORTUITOUS EVENT to thing to be
delivered
5 SOURCES OF OBLIGATION - extinguish the obligation if determinate; generic does
1. LAW not extinguish the obligation
2. CONTRACTS
3. QUASI-CONTRACTS – arise from lawful, voluntary acts; 3 MISCELLANEOUS RULES ON PERFORMANCE OF
no one shall be unjustly enriched... OBLIGA-TION
2Kinds 1. When to deliver determinate, accessions (additions/
a. Solutio indebiti – something received (delivered on improvements) and accessories(joined/included with the
a mistake), no right to demand it principal) are INCLUDED even not mentioned.
b. Negotiorum gestio – voluntary mgt of 2. If debtor fails to do, it shall be DONE AT HIS EXPENSE,
property/affairs of another w/o his knowledge/consent same with doing the contravention; poorly done be
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise from undone.
damage; fault/negligence 3. In obligation not to do, and obligor does what is
5. CRIMES/ACTS/OMISSIONS punished by law – arise forbidden, shall be UNDONE AT HIS EXPENSE.
from civil liability that is a consequence of a criminal
offense 4 GROUNDS; debtor liable for damages
1. Default/mora
DILIGENCE OF A GOOD FATHER OF A FAMILY 2. Fraud/dolo
- care need to be exercised by a debtor to 3. Negligence/culpa
deliver/give determinate thing 4. Contrary to terms of obligation
Exception: When law/stipulation of parties requires a
differnt standard of care (slight/extraordinary diligence). 1. DEFAULT/MORA – delay
3kinds
When creditor is entitled to the fruits a. Mora solvendi – debtor’s delay to give (real ob.), to
Rule: The creditor has personal right (right to ask for do (personal ob.)
delivery) from the time the obligation to deliver arises. b. Mora accipiende – creditor’s delay to accept
But NO real right (right enforceable against the whole c. Compensatio Morae – delay of both in reciprocal
world) until it is delivered. obligation

3 KINDS OF FRUITS CONCEPT OF DELAY


1. NATURAL – w/o human intervention General Rule: No demand, No delay
2. INDUSTRIAL – w/ human intervention Exceptions:
3. CIVIL – derived by virtue of juridical relation 1. Law states
2. Obligation states
Creditor’s rights if debtor fails to comply w/ the 3. Time is the essence
obligation 4. Demand be useless if delay
1. Determinate 5. Debtor guilty of delay
a. Performance
b. Damages EFFECTS OF DELAY
2. Generic 1. Damages
a. Performance 2. When to deliver determinate thing, STILL LIABLE in
b. Damages fortuitous event.
c. Obligation be complied at debtor’s expense
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2. FRAUD/DOLO – conscious, deliberate, intentional a. Suspensive condition – happening of condition gives
evasion of fulfillment RISE to obligation
2Kinds b. Resolutory condition – happening of condition
a. Dolo causante/Causal fraud – fraud in obtaining EXTINGUISHES obligation
consent; consent is defective, contract is voidable.
Remedy: annulment 6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION
b. Dolo incidente/Incidental fraud – fraud w/c vitiates 1. Impossible conditions, contrary to law, shall ANNUL
consent. Remedy: damages obligation.
2. The condition not to do an impossible thing is
3. NEGLIGENCE/CULPA – voluntary act/omission; no bad considered not agreed upon.
faith intended 3. The condition that happens in determinate time,
3Kinds EXTINGUISHES obligation.
a. Culpa aquiliana/Civil negligence – quasi-delict/torts 4. The condition that happens in INDETERMINATE time,
b. Culpa contractual/Contractual negligence – breach obligation only effective at arrival.
c. Culpa criminal/Criminal negligence – crime/delict 5. The condition is fulfilled if DEBTOR prevents
fulfillment.
4. Contrary to the terms of obligation 6. The effect of conditional obligation, once fulfilled:
- to give: retroact to the day of constitution of obligation
2 RULES OF PRINCIPAL & INSTALLMENT - has reciprocal prestations: fruits & interests be mutually
1. Receipt of principal w/o mention of interest, presumed compensated
interest is paid also. - has unilateral obligation: debtor shall give fruits &
2. Receipt of latter installment w/o mention of prior interests
installment, presumed prior installment is paid also.
RULES in case of Loss, Improvement, or Deterioration
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim of thing during the pendency of condition
against DEBTOR 1. LOST
1. Exact payment a. w/ debtor’s fault – damages
2. Attach debtor’s properties b. w/o debtor’s fault – extinguishes obligation
3. Accion subrogatoria – exercise rights & actions except
inherent in person 2. DETERIORATION
4. Accion pauliana – cancel acts/contracts by debtor to a. w/ debtor’s fault - (1) cancel obligation & damages;
defraud creditor or (2) fulfill obligation w/ damages
b. w/o debtor’s fault – creditor suffer impairment
TRANSMISSIBILITY OF RIGHTS
General Rule: ALL RIGHTS are transmissible. 3. IMPROVEMENT
Exceptions: a. By nature/time – benefit to creditor
1. Law states b. at expense of debtor – debtor no right than that
2. Contract states granted to usufructuary (debtor no right to compensate
3. Obligation is purely personal amount for improvement)

10 Kinds of Obligation EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION


1. Pure General Rule: The obligation becomes effective
2. Conditional retroactively to the day obligation was constituted.
3. Alternative Exceptions:
4. Facultative 1. In reciprocal obligation, fruits & interests during
5. Joint pendency of condition shall compensate each other.
6. Solidary 2. In unilateral obligation, debtor gets fruits & interests
7. Divisible unless there is a contrary intent.
8. Indivisible
9. Obligation w/ a period 3 EFFECTS OF FULFILLMENT OF RESOLUTORY
10. Obligation w/ a penal clause CONDITION
1. Extinguish obligation.
1. PURE OBLIGATION 2. Both parties restore what they received plus fruits &
- w/o condition, demandable at once (pure has resolutory interests.
condition/period) 3. The rule on L, D, or I will apply to person who has to
return the thing.
2. CONDITIONAL OBLIGATION When one of debtors in reciprocal obligation does not
- there is condition in performance; future & uncertain comply w/ his obligation
2Kinds 1. The right of injured party is (1) cancel contract &
damages; or (2) fulfill obligation & damages
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several prestations due, one prestation due, but can
3 Kinds of Obligation (Accdng to PERSON OBLIGED) giving one is sufficient be subtituted
1. UNILATERAL – only 1 party obliged to comply right to choose (debtor) right to choose DEBTOR
2. BILATERAL – both parties; performance not same time unless granted to creditor ONLY
3. RECIPROCAL – both parties; performance same time If 1 of the prestation is nullity of principal carries
illegal, others may be w/ it nullity of accessory/
3. OBLIGATION W/ A PERIOD valid, obligation remains substitute
- demandability/extinguishment subject to the expiration loss/impossibility of ALL loss/impossibility of presta-
of period prestations due, w/o tion due, w/o debtor’s
debtor’s fault, extinguishes fault, extinguishes
PERIOD – interval of time; either suspends demandability obligation obligation
or produces extinguishment
(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF
DAY CERTAIN – must come, not known when DEBTOR IN ALTERNATIVE OBLIGATION
1. If 1 of prestations lost through fortuitous event, shall
7 CASES CONSIDERED TO BE “OBLIGATION W/ A
still be perform by choosing (creditor) from the
PERIOD”
remainder.
1. Little by little 2. If 1 of prestations lost through debtor’s fault, creditor
2. In partial payment
may claim any of remainders w/ damages.
3. Payable ASAP
3. If ALL prestations lost through debtor’s fault, creditor
4. When I can afford it
choose price w/ damages.
5. When I have the money
6. When I am able to
RULES on LOSS/DETERIORATION of the thing intended
7. When my means permit me to do so
as SUBSTITUTE in FACULTATIVE OBLIGATION
1. If there is a loss/deterioration of thing intended as
PERIOD CONDITION substitute, debtor is NOT liable if NOT HIS FAULT.
certain uncertain But if substitution is already made, debtor is liable for
future only future/past but unknown loss of substitute when in DELAY, NEGLIGENCE, or FRAUD.
(*influence upon obligation) (*) on the very existence of
only upon its demandability obligation itself 6. JOINT OBLIGATION
- obligation is to be paid proportionately by debtors or to
FOR WHOSE BENEFIT IS THE PERIOD? be demanded proportionately by creditors
General Rule: Both the debtor & creditor.
Therefore, NEITHER of them can demand performance of 7. SOLIDARY OBLIGATION
obligation. - each one of debtors has right to render or each one of
Exception: If the term of obligation has to favor one of creditors has right to demand the entire compliance w/
them. prestation

5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE MAXIMS & SYNONYMS


“PERIOD” MAXIMS SYNONYMS
1. Debtor is insolvent. JOINT Obligation “To each his proportionate
2. Debtor attempts to abscond. own”
3. Impairment of guarantees/securities. SOLIDARY “One for all, all individually &
4. Failure to furnish guarantees/securities promised. Obligation for one” collectively
5. Violation of undertaking.
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
4. ALTERNATIVE OBLIGATION 1. Law states
- w/ 2 or more prestations, only 1 is due. 2. Stipulation states
3. Nature of obligation requires
5. FACULTATIVE OBLIGATION
- w/ ONLY 1 prestation but can be substituted. 2 PRESUMPTIONS THAT OBLIGATION IS JOINT
1. The debts be divided as many shares as there are
ALTERNATIVE prestations LOST w/ debtor’s fault debtors/creditors.
Creditor entitled to damages but needs ff requisites: 2. The debtors/creditors are distinct from one another.
1. Debtor can choose.
2. All prestations lost/become impossible due to debtor’s 8. DIVISIBLE OBLIGATION
fault. - prestation is capable of partial performance

ALTERNATIVE OBLIGATION FACULTATIVE OBLIGATION 9. INDIVISIBLE OBLIGATION


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- prestation incapable of partial performance
3 REQUISITES OF APPLICATION OF PAYMENT
10. OBLIGATION W/ A PENAL CLAUSE 1. Only 1 debtor & 1 creditor
- one w/ accessory undertaking attached to obligation to 2. 2 or more debts, same kind
assume greater liablity in case of breach/non-fulfillment 3. All debts are due
of obligation 4. Insufficient payment to exinguish ALL debts

3 PURPOSES OF PENAL CLAUSE 3 RIGHTS TO MAKE APPLICATION OF PAYMENT


1. Ensure performance of obligation 1. Right belongs to CREDITOR.
2. Substitute for damages & interest in case of 2. If debtor does not avail, creditor can give him receipt
noncompli-ance designating the debt from which payment will be applied.
3. Penalize debtor in case of breach 3. If debtor accepts the receipt, he cannot complain
unless THERE IS just cause to invalidate the contract.
In case obligation has a PENAL CLAUSE
General Rule: Penalty takes the place of damages & b. CESSION
interest in case of non-compliance. - debtor abandons ALL his property for creditor’s benefit
Exceptions: to obtain payment from proceeds of his property
1. Stipulation states.
2. Debtor refuse to pay penalty. 5 REQUISITES OF VALID CESSION
3. Debtor guilty of fraud in performance of obligation. 1. 1 debtor & 2 or more creditors
2. Debtor is in partial/total insolvency.
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL 3. Debtor to deliver ALL his property to creditors
CLAUSE 4. Debt is due & demandable.
Nullity of principal obligation = nullity of penal clause 5. Creditors must sell the properties & apply the proceeds
Nullity of penal clause = NOT nullity of principal to their respective credits proportionately.
obligation
c. DACION IN PAYMENT (dacion en pago)
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS - alienation of property to the creditor in satisfaction of
1. Payment or performance debt
2. Prescription
3. Compensation 3 REQUISITES OF DACION IN PAYMENT
4. Confusion/merger 1. Consent of creditor
5. Condonation/remission 2. NOT prejudicial to another creditor
6. Fulfillment of resolutory condition 3. Debtor not insolvent declared by a judicial decree
7. Annulment
8. Rescission CESSION DACION IN PAYMENT
9. Novation all properties NOT all properties
10. Loss of thing due require more than 1 NOT require all creditors
creditor
1. PAYMENT/PERFORMANCE NOT act of novation act of novation
- Payment means delivery of money & performance of
NOT transfer ownership transfer ownership
obligation
requires partial/total insol- may happen
vency during solvency of debtor
2 PLACE OF PAYMENT
1. At place agreed upon
2. If w/o agreement d. TENDER OF PAYMENT & CONSIGNATION
a. Object is indeterminate – paid at domicile of DEBTOR TENDER OF PAYMENT – act of offering the creditor what
b. Object is determinate – place of thing at the time of is due to him w/ a demand that the creditor accept it
constitution of obligation CONSIGNATION – act of depositing thing due w/ the court
when creditor cannot/refuses acceptance of payment
4 SPECIAL MODES OF PAYMENT
a. Application of payment 5 REQUISITES OF CONSIGNATION
b. Cession 1. Debt due.
c. Tender of payment & consignation 2. Creditor refused the tender of payment w/o just cause
d. Dacion in payment 3. Notice of consignation already given to persons
interested in fulfillment of obligation
a. APPLICATION OF PAYMENT 4. Consignation of thing/amount due
- designation of debt to w/c payment must be 5. Subsequent notice of consignation to interested
applied when debtor has several obligations of same kind persons
in favor of same creditor.
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5 VALID CONSIGNATION W/O PREVIOUS TENDER OF - substitution/change of obligation
PAYMENT - substitution of debtor
1. Creditor is absent/unknown. - subrogation of creditor
2. Creditor is incapacitate to receive at time it is due.
3. Creditor refused give a receipt, w/o just cause. (3) OBLIGATIONS MAY BE MODIFIED BY:
4. 2 or more persons claim the right to collect. 1. Changing object/principal conditions. (REAL
5. Title of obligation lost. NOVATION)
2. Changing the person of debtor/creditor. (PERSONAL
2. LOSS OF THING DUE NOVATION)
- perishes, disappears, or goes out of commerce; a. Substitution – change of debtor
existence is unknown; cannot be recovered b. Subrogation – change of creditor
3. Changing person of the parties & the objects of
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS principal condition. (MIXED NOVATION)
1. Determinate thing.
2. W/o debtor’s fault. 4 REQUISITES OF NOVATION
3. No delay. 1. Old valid obligation.
2. Agreement of parties to new obligation.
3. CONDONATION/REMISSION 3. Extinguishment of old obligation.
- gratuitous abandonment of right by the creditor 4. Validity of new obligation.

3 REQUISITES OF A VALID CONDONATION/REMISSION 2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR


1. It must be gratuitous. 1. EXPROMISION – w/ consent of creditor, NO consent of
2. Accepted by obligor. old debtor
3. Obligation is demandable. 2REQUISITES
a. Initiative of 3rd person.
4. CONFUSION/MERGER b. Consent of creditor.
- meeting in 1 person of qualities of debtor & creditor w/ 2. DELEGACION – all must agree (creditor, old debtor,
same obligation new debtor)
3REQUISITES
3 REQUISITES OF VALID CONFUSION/MERGER a. Initiative from old debtor.
1. The merger of characters of debtor & creditor must be b. Consent of debtor.
in same person. c. Acceptance by creditor.
2. Take place between principal debtor & creditor.
3. Clear & definite. 7. SUBROGATION
- change of creditor
5. COMPENSATION
- 2 persons are debtors & creditors of each other 2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original parties &
6 ESSENTIAL REQUISITES OF COMPENSATION 3rd person
1. Parties both principal debtors & creditors of each 2. LEGAL – by law
other. a. creditor pays another preferred creditor even w/o
2. Compensation is not prohibited by law. debtor’s knowledge
3. No retention/controversy by 3rd person. b. 3rd person pays the express approval of debtor
4. 2 debts are due & demandable. c. 3rd person pays even w/o knowledge of debtor
5. 2 debts are liquidated.
6. 2 debts both in money/consumable things.

(2) CLASSES OF COMPENSATION


1. As to effect CONTRACT – meeting of minds between 2 persons to give
a. TOTAL – obligations completely extinguished. something or to render service.
b. PARTIAL – a balance remains
3 ELEMENTS OF CONTRACT
2. As to origin or cause 1. ESSENTIAL – w/o them, contract cannot exist
a. LEGAL – by law a. CONSENT of contracting parties
b. VOLUNTARY/CONVENTIONAL – agreement of parties b. OBJECT CERTAIN – subject matter
c. JUDICIAL – order from the court c. CAUSE/CONSIDERATION
d. FACULTATIVE – 1 of parties can choose/oppose In some contracts, ff are also essential:
claiming compensation d. FORM
e. DELIVERY
6. NOVATION
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2. NATURAL – found in certain contract, presumed to 5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT
exist unless stipulated 1. PRINCIPLE OF AUTONOMY (liberty to contract)
Provided they are not contrary to:
3. ACCIDENTAL – various particular stipulations that may a. Law
be agreed upon by contracting parties b. Morals
c. Good customs
(7) CLASSIFICATION OF CONTRACTS d. Public order
According to: e. Public policy
1. PERFECTION/FORMATION
a. CONSENSUAL – perfected by mere consent 2. MUTUALITY OF CONTRACTS
b. REAL – perfected by delivery - the contract must bind both parties; its
c. FORMAL/SOLEMN – special formalities are essential validity/compliance cannot be left to the will of one of
before perfection of contract them

2. PARTIES OBLIGATED 3. RELATIVITY OF CONTRACTS


a. UNILATERAL – only 1 has obligation - Contracts take effect only between the parties, their
b. BILATERAL – both parties require to render assigns & heirs except when there are rights & obligations
reciprocal prestations not transmissible:
a. by their nature
3. CAUSE b. by stipulation (stipulation por autri)
a. ONEROUS – exchange of considerations c. by provision of law
b. GRATUITOUS – no consideration received in
exchange of what is given 4. CONSENSUALITY OF CONTRACTS
c. REMUNERATORY – something is given for - Contracts are perfected by mere consent
benefit/service that had been rendered previously Exceptions:
a. REAL CONTRACTS – perfected by delivery
4. RISK OF FULFILLMENT b. FORMAL/SOLEMN CONTRACTS – special form
a. COMMUTATIVE – equivalent values are given by both required for its perfection
parties
b. ALEATORY – fulfillment of contract depends on 5. OBLIGATORINESS OF CONTRACTS
chance (eg. insurance) - The contract, once perfected, has the force of law
between parties which bound to comply in good faith
5. IMPORTANCE
a. PRINCIPAL – contract may stand alone (eg. sale, 4 KINDS OF INNOMINATE CONTRACTS
partnership) 1. I give that you may give
b. ACCESSORY – existence depends on another 2. I do that you may do
contract (pledge, guarantee) 3. I give that you may do
c. PREPARATORY – contract not an end by itself but a 4. I do that you may give
means thru w/c other contracts may be made (eg.
agency) 4 RULES FOR INNOMINATE CONTRACTS
1. Agreement of parties
6. NAME 2. Law on Obligations & Contracts
a. NOMINATE – contract given a particular/special 3. Rules on most analogous nominate contract
name (eg. partnership) 4. Customs of place
b. INNOMINATE – not given special name (eg. I give
that you may give) STIPULATION POR AUTRI
- stipulation in favor of 3rd person
7. SUBJECT MATTER
a. Contracts involving things 5 REQUISITES OF STIPULATION POR AUTRI
b. Contracts involving rights/credits 1. Stipulation in favor of 3rd person
c. Contracts involving services 2. Stipulation is only PART, not the whole of the contract.
3. Both parties must conferred upon a favor of 3 rd person
3 STAGES OF CONTRACT 4. 3rd person must accept & say it to debtor before its
1. PREPARATION/CONCEPTION – preparatory steps to revocation/cancellation
perfect contract 5. Neither of both parties be the legal
2. PERFECTION/BIRTH – meeting of minds between 2 representation/autho-rization of 3rd person
contracting parties
3. CONSUMMATION/TERMINATION – terms of contract are CONSENT
performed, & contract is fully executed - meeting of offer (certain) & acceptance (absolute) upon
a thing
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(2) MISTAKES W/C VITIATES CONSENT
5 REQUISITES OF CONSENT It should refer to:
1. Must be given by 2 or more parties 1. substance of thing that is the OBJECT of contract
2. Parties are capacitate to enter in contract 2. conditions w/c MOVED either/both parties to enter
3. No vitiation of consent into contract
4. No conflict between declared & intended
5. Legal formalities must be complied 4 RULES ON MISTAKE
1. Mistake to identity/qualifications of either of parties
7 RULES ON OFFER/ACEPTANCE will vitiate consent ONLY when IT is the principal cause
1. An offer must be certain. of contract.
2. Business advertisements for sale are NOT offers but 2. Simple mistake of account must be corrected.
ONLY invitations to make an offer. 3. No mistake if parties knew the risk/doubt affecting
3. Advertisements for bidders are ONLY invitations. OBJECT of contract.
4. An acceptance made by letter/telegram does NOT 4. When one of parties is unable to read or the contract is
bind offeror EXCEPT from the TIME it came to his in language not understood by him, & mistake/fraud is
knowledge. alleged, the person enforcing the contract must FULLY
5. An offer made through an agent is accepted from the explained the terms to him.
TIME the acceptance is done through an agent.
6. An offer is ineffective upon death, insanity, 2. FRAUD/DOLO
insolvency, of EITHER party BEFORE acceptance is made. - when through insidious words/machinations of one of
7. When offeror allowed offeree a certain period the parties, INDUCED the other to enter into a contract,
to accept, offer MAY be withdrawn AT ANYTIME unless & w/o them, he will not agree.
there is something PAID/PROMISED.
DOLO CAUSANTE DOLO INCIDENTE
3 persons who CANNOT GIVE CONSENT to a contract (if Serious Not serious
entered into, contract is voidable) cause induces party to NOT the cause to enter
1. UNEMANCIPATED MINORS ENTER into contract into contract
2. INSANE/DEMENTED PERSONS (unless they acted DURING make contract voidable contract is valid; liable
LUCID INTERVAL) for damages
3. DEAF-MUTES who DO NOT know how to write
7 RULES OF FRAUD
DEMENTED PERSON – NOT exactly insane; difficult to
1. Failure to disclose facts when these needs to be
distin-guish right from wrong
revealed, is a fraud.
2. Fraud should be SERIOUS (dolo causante) & SHOULD
LUCID INTERVAL – period when an INSANE has acquired NOT be done by BOTH parties to make contract voidable.
SANITY temporarily, therefore, capacitated to enter into
3. Incidental fraud (dolo incidente) ONLY obliges person
a valid contract
to PAY DAMAGES.
4. Usual exaggerations in trade, when other party know
2 RULES on persons WHO CANNOT GIVE CONSENT to a the “real” facts, is NOT FRAUD.
contract
5. A mere expression of opinion is NOT FRAUD UNLESS
1. Age of majority is 18 yrs old
made by an expert & the other party relies on his special
2. A contract entered into by UNEMANCIPATED MINOR w/o
knowledge.
parents/guardian’s consent is voidable, except: 6. Misrepresentation made in good faith is NOT FRAUD
a. Minor MISREPRESENTS his age (estoppel)
but may constitute an error.
b. Contract involves sale & delivery of necessities to
7. Misrepresentation by 3rd person DOES NOT vitiate
minor
consent UNLESS it created substantial mistake.
5 VICES OF CONSENT
3. VIOLENCE
- NOTE: When there is a DEFECTIVE CONSENT of EITHER
- serious/irresistible force is employed.
of parties, contract is voidable; Remedy: annulment of
contract. 2 RULES ON VIOLENCE
1. MISTAKE/ERROR
1. Serious/irresistible force is employed w/c constitutes
2. FRAUD/DECEIT
the reason why one entered into a contract.
3. VIOLENECE
2. Violence ANNULS obligation although it is DONE by
4. INTIMIDATION 3rd person not part of contract.
5. UNDUE INFLUENCE
4. INTIMIDATION
1. MISTAKE/ERROR
- wrong conception & lack of knowledge upon a thing

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- 1 of the parties is compelled by a reasonable & well- 6. Determinate (kind) or determinable ( w/o the need of
grounded fear of an imminent & grave evil upon his new contract/agreement)
person/property to give his consent. 7. NO contract be entered for future inheritance UNLESS
law states
3 RULES ON INTIMIDATION
1. Age, sex, & condition of person must used to 4 REQUISITES OF CAUSE
determine the degree of intimidation. 1. It is just & equitable.
2. Intimidation ANNULS obligation although it is DONE by 2. It exists.
3rd person not part of contract. 3. It is lawful.
3. A threat to enforce one’s claim (claim must be just & 4. It is true.
legal), DOES NOT vitiate consent.
LESION
VIOLENCE INTIMIDATION - inadequacy of cause (eg. insufficient price for thing
External Internal sold)
Physical contact/coercion NO physical coercion; ONLY
MENTAL/MORAL coercion RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
5. UNDUE INFLUENCE a. Fraud
- a person takes improper advantage of his power over b. Mistake
other’s will, depriving the other to his reasonable c. Undue influence
freedom of choice.
2 FORM OF CONTRACTS
3 RULES ON UNDUE INFLUENCE 1. Contracts in writing
1. There is a person who takes improper advantage of his 2. Contracts in a public instrument
power over other’s will, depriving the other to
his reasonable freedom of choice. 1. Contracts w/c must be IN WRITING to be valid:
2. Undue influence ANNULS obligation although it is DONE a. Donation of personal property exceeds P5000.
by 3rd person not part of contract. b. Agent’s authority in sale of land/any interest.
3. To constitute undue influence, ff circumstances must c. Contract of antichresis.
be considered: (1) confidential, family, spiritual, & other d Stipulation to pay interest on loans.
relations of parties; or (2) the aggrieved party is suffering e. Stipulation to reduce common carrier’s
from mental weakness; or (3) ignorant; or (4) in financial extraordinary diligence & to limit its liability.
distress.
2. Contracts w/c must be IN A PUBLIC INSTRUMENT to
SIMULATION OF CONTRACT be valid:
- process of INTENTIONALLY deceiving others by a. Donation of real property (both the donation &
producing a contract not really exist (absolute accep-tance).
simulation), or w/c is different from true b. Sale of real property.
agreement (relative simulation). c. Partnership where real property/rights is
contributed; or when capital contribution exceeds P3000.
2 KINDS OF SIMULATED CONTRACT
1. ABSOLUTE SIMULATION (the parties DO NOT intend to REFORMATION OF INSTRUMENTS
be bound at all) - REMEDY in equity in w/c a written instrument is
- completely fictitious/make-believe; VOID made/construed to the REAL intention of parties when
2. RELATIVE SIMULATION (parties conceal their true/real there is an error/mistake.
agreement)
- parties are bound to real/true agreement, EXCEPT: (5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE
a. contract prejudice 3rd person 1. Mutual mistake of parties.
b. purpose is contrary to law, morals, good customs, 2. One party was mistaken & the other acted fraud.
public order, public policy 3. One party was mistaken & the other knew/believed
that the instrument did not state their REAL agreement.
7 REQUISITES OF OBJECT OF CONTRACT 4. Ignorance, lack of skill, negligence, or bad faith of
1. Specific & certain person drafting the instrument DOES NOT state the TRUE
2. Services not contrary to law, morals, good customs, INTENTION of parties
public order, public policy 5. Two parties agree on mortgage/pledge of
3. Services/things must NOT be legally/physically personal/real property BUT the instrument states the
impossible property is sold ABSOLUTELY, or w/ the right to
4. Services/things are w/in commerce of man including repurchase.
future things
5. Rights are NOT TRANSMISSIBLE. (3) NO REFORMATION OF INSTRUMENT WHEN:
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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 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.
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.

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