Subtopic, Defenitions
While in the resolutory
Chapter 4 Section 1- Payment and Performance
II. Discussions
1. Illustrate an obligation subject to:
(a) Suspensive Condition
- When an obligation is subject to a suspensive
condition, the creation of the obligation will
depend on the occurrence of an event or on the
certainty that the event will not occur; thus, the
condition delays the creation of a relationship
between the parties. As long as the condition has
not occurred, the very existence of the obligation
is not yet arises. For example, If your rent is due
on the 30th, you have an obligation to pay the
rent. The performance to pay occurs on the 30th.
The performance is suspended until the 30th.
(b) Resolutory Condition
● Resolutory condition refers to a condition
whereby, upon fulfillment terminates an already
enforceable obligation. The continuance of such a
contract is made dependent upon the happening
of an uncertain future event. However, there is no
postponement or suspension of the contract and
all rights and obligations come into existence
immediately upon conclusion of an agreement
between the parties. For instance, You have a car
note over the next 10 years. Once you pay the last
payment at the end of 10 years, the obligation
ends.
● What is the effect of the fulfillment of the
condition in a conditional obligation?
○ The suspensive condition is when the
parties agree that the duty to perform is
postponed until a determined or
determinable date due to the pending
event, and that this event is certain to
happen. However, the exact date is
unknown. The obligation will arises
when the said condition is already
fulfilled.
condition, when the parties agree that
the obligations in the contract will be
terminated upon a certain future time.
This exact time is certain to happen, but
the exact date is unknown.
2. Give two (2) cases when the conditional obligation is
valid although the condition depends entirely upon the
will of the debtor. Explain.
- First case is when the debtor promises to pay
when his means permit him to do so. In this case,
what depends upon the will of the debtor is the
duration of the period when he is capable on
paying his debt and not whether he should
comply or not. For example, Mr. G binds himself
to pay Ms. Y of his debt that costs ₱10,000 little
by little. This obligation is valid and it shall be
deemed to be one with a period of time.
- Next case is when the debtor is capable of doing
the said obligation. For example, Marie borrowed
5,000 to Rose payable on September 13. Due to
the review of financial reverses, Marie now is not
capable on paying the debt to Rose but Marie is
willing to pay the said debt. The remedies of
Rose will arise
3. May an obligor be liable under an obligation subject
to a suspensive condition although the condition has not
yet been fulfilled? Explain.
- Under the suspensive condition, the obligation
will arises when the said condition is already
fulfilled. Therefore, under this type of condition,
the obligor or the debtor is not yet liable. The
debtor would be liable if the condition is already
fulfilled.
4. In obligation to give a parcel of land subject to a
suspensive condition, who is entitled to the fruits that
accrued during the pendency of the condition once said
condition is fulfilled?
Upon the fulfillment of the obligation, the seller has the
right to keep to himself all the fruits and interests he may
have received during the pendency of the condition, unless
a contrary intention by the seller that he shall render an
accounting of fruits received during its pendency.
5. State the rules in case the thing to be delivered:
(a) is lost with the debtor’s fault; without his fault;
- If the delivery lost is due to the debtor’s fault, the
debtor has an obligation to pay the damages that
incurred and the price of the thing that is lost also
can be demand. If the delivery lost without the
fault of the debtor, the debtor is not liable for any
obligation or the obligation shall be extinguished.
We are not liable for the fortuitous event or any
event that beyond our powers.
(b) Deteriorates with the debtor’s fault; without his
fault
- If it deteriorates through the fault of the debtor,
the creditor may choose between the 2 remedies
as a creditor, which is the rescission or the
fulfillment of the obligation, with damages that
incurred in either case. As a creditor, you only
have to choose one of the remedies that are given.
- If it deteriorates without the fault of the debtor,
the value of thing that delivered will be
depreciated and the value will be reduced due to
the deterioration of the thing.
III. Problems
1. D (debtor) borrowed 20,000 from C (creditor)
payable on or before August 30. Before the arrival of
the due date, C agreed to the promise of B to pay C if B
wants. Can C insist that B pay not later than August
30?
- On this situation, the conditional obligation
whose fulfillment depends partly on the will of
the debtor and partly upon the will of the third
person is perfectly valid. In this case, it shows
that the creditor demands the third person to pay
him not later than August 30 but on the said case,
they agreed on the promise of the third person to
pay the creditor if the third person wants.
Therefore, the creditor cannot demand to the
debtor if the due date is not yet passed.
2. Suppose in the same problem, D obliges himself to
pay C 10,000 after C has paid his obligation to T. Is the
obligation valid?
- The said condition is considered as the
suspensive condition wherein the obligation will
only arises if the condition is already fulfilled.
The debtor obliges himself to pay the creditor if
the creditor already paid the third party. If the
creditor has not yet fulfilled his obligation to the
third party, he cannot demand the debtor to pay
him immediately. Therefore, the obligation of the
debtor is invalid. The debtor is not liable to pay
the creditor if the creditor is not yet paid to the
third party.
3. S (Seller) agreed to sell to B (buyer) a specific car for
200,000, delivery of the car and the payment of the price
to be made on June 15. Suppose S delivered the car on
June 15 but B failed to pay the price, what are the
remedies of S?
- If the buyer does not comply with his obligation
to pay, the seller may choose between the two
remedies: (a) action for specific performance
(fulfillment) of the obligation with the damages;
or (b) action for the rescission of the obligation
also with damages. The seller has the privilege to
choose only one of the remedies, and not both. If
the creditor chosen rescission, he cannot demand
the fulfillment of obligation to the buyer. Same
as, if he chosen the buyer to fulfill the obligation,
he cannot practice the rescission later on.
4. S sold a parcel of the land to B for 240,000 payable in
installment of 20,000 a year. The land was delivered to
B who obtained ownership thereof. After B had paid
200,000, he could no longer continuing paying in view of
financial reverses but he was willing to pay the balance
of 40,000 if given more time. Thereupon, S sued for
rescission under Article 1191. If you were the judge,
would you grant rescission?
- If I were the judge, I would grant the rescission
of Seller in default a term or period for the
performance of the Buyer. The buyer is willing to
comply with his obligation to pay the maintaining
balance that cost 40,000 but needs time to do so
due to the view of his financial reverses, not
because he doesn’t want to pay the maintaining
balance that he’d left.
5. D (debtor) binds himself to pay C (creditor) a sum of
money. Give the three (3) cases when the obligation of D
is demandable at once by C?
1. When the obligation is pure- An obligation is
demandable at once if it is pure obligation which
one is not suspended by any condition, whether it
has been contracted without any condition, or
when thus contracted, the condition has been
performed. It is immediately demandable. Their
agreement doesn’t have specific date, and
conditions so the creditor can demand to pay the
said amount to the debtor.
2. When the obligation is subject to a resolutory
condition- On the above description of resolutory
obligation, once the condition is already fulfilled,
the obligation will be extinguish. The creditor can
demand to the debtor during the fulfilling of the
condition.
3. When the obligation is subject to a resolutory
period- same as the case above, the creditor can
demand to the buyer while in the process of
fulfilling the condition. If the creditor and the
debtor agree on the period wherein the obligation
is extinguished, he can demand to the buyer to
pay the amount he borrowed.
Chapter 4, Sec.2: Loss of the Thing Due Study Guide
I. Definitions
1. Legal impossibility – occurs when the
obligation cannot be
performed because it is rendered impossible by
provision of law, although physically it may
still be possible of performance.
2. Loss of thing – occurs when the object
perishes, or goes out of commerce, or
disappears in such a way that its existence is
unknown or it cannot be recovered.
3. Difficulty of performance- performance has
become so
difficult as to be manifestly beyond the
contemplation of both parties.
II. Discussions
1. Give two cases when a person may be
released from an obligation validly entered
into.
· According to Art.1266, a person
may be released from an
obligation if the prestation
becomes legally or illegally
impossible without the fault of the
obligor. Another case is when
(according to Art.1267) the
service has become so difficult, as
to be manifestly beyond the
contemplation of both parties, the
obligor may be released in whole
or part
2. Give the cases when loss of the specific
thing to be delivered will not exempt the
obligor from liability even in the absence of
fault or delay.
· According to Art.1262, the
obligor will not be exempt from
liability if it is stated by law or
stipulation. This also applies when
the nature of the obligation
requires the assumption of risk.
3. Will partial loss of the specific thing to be
delivered extinguish the obligation? Explain
· According to Art.1264, the courts
will determine if the partial loss of
the object of the obligation is so
important as to extinguish the
obligation.
III. Problems
1. X obliged himself to deliver to Y a specific
carabao to Y on July 31. The Carabao died
on July 25. Y has no proof that X was
negligent.Is X liable to Y?
● Yes. According to Art.1265, if the object is lost
in the possession of the debtor, it shall be
presumed that the loss was due to his fault, unless
there is proof to the contrary. Thus, X is still
liable to Y unless he proves the contrary.
2. X obliges himself to deliver a specific thing
to Y on a certain date. The thing was lost by
X without his fault and before he has
incurred in delay. Does it mean that X is
already exempt from his liability.
 ● Yes. According to Art 1262, the
obligation which consists in the
delivery of a specific thing shall be
extinguished if it should be lost without
the fault of the debtor, and before he
has incurred in delay. Since the thing
was lost without X’s fault and he is not
yet in delay, then he is already exempt
from his liability.
3. Suppose in the preceeding problem, the
thing was lost through the fault of Z, a third
person. State the effects of loss as far as X,
Y, and Z are concerned.
● According to Art.1269, the creditor shall have the
rights of action which the debtor may have
against the third persons by reason of the loss.
Thus the obligation of X is extinguished and he is
no longer liable to Y. However, Y has the right to
bring an action against Z to recover the price of
the thing with damages.
Chapter 4, Sec.3: Condonation or Remission of Debt
Study Guide
I. Definitions
1. Condonation or remission of debt – the
gratuitous
abandonment by the creditor of his right against
the debtor. It is thus a form of donation
2. Inofficious remission – when the remission
given is more than that which the creditor
can give by will.
II. Discussions
1. Give the requisites in order that a
condonation or remission of debt may be
valid.
· According to Art.1270, the
requisites of remission or
condonation are: (1) it must be
gratuitous, (2) it must be accepted
by the obligor, (3) the parties must
have capacity, (4) it must not be
inofficious, and (5) if made
expressly, it must comply with the
forms of donations.
2. When is the condonation or remission of
debt considered inofficious? What is the
remedy of the party adversely affected
thereby?
· According to Art.1270, the
condonation or remission of the
debt is considered inofficious if it
is more than that which the
creditor can give by will. The
remedy is that the testamentary
dispositions which impair the
legitime shall be reduced on
petition of the heirs.
III. Problems
1. D borrowed money rom C evidenced by a
promissory note signed by D.
a. What presumption arises if:
1. The promissory note is voluntarily
given by C to D?
· According to Art.1271, the
delivery of a private credit
evidencing a credit, made
voluntarily br the creditor to the
debtor, implies the renunciation of
the action which the former had
against the latter. Thus the
presumption is that C has
renounced his rights against D and
a remission of debt occurred.
2. It is found in the possession of D?
· According to Art.1272, whenever
the private document in which the
debt appears is found in the
possession of the debtor, it shall
be presumed that the creditor
delivered it voluntarily. Thus it is
presumed that C delivered the
promissory note to D and the debt
has been remitted.
b. When will the presumption of remission arise?
- The presumption of remission will arise when the
private document in which the debt appears is
found in the possession of the debtor.
2. Suppose in the same problem, the debt of D, aside from
being guaranteed by G, is secured by a pledge of a
certificate of shares of stock delivered by D to C. What
presumption arises if:
a. The debt is condoned by C?
● According to Art.1273, the renunciation of the
principal debt shall extinguish the accessory
obligations. Thus, if C condoned the debt, then
the guaranty and security is likewise
extinguished.
b. The certificate is later found in the possession
of D?
● According to Art.1274, it is presumed that the
accessory obligation of pledge has been remitted
when the thing pledged, after its delivery to the
creditor, is found in the possession of the debtor.
Thus, it is presumed that D’s pledge of shares of
stock has been remitted.
Chapter 4, Sec.4: Confusion or Merger of Rights
I. Definitions
1. Confusion – meeting in one person of the
qualities of creditor and debtor with respect
to the same obligation
2. Merger – when the creditor is in itself his
own debtor.
II. Discussions
1. What is the rationale behind confusion or
merger as a mode of extinguishing an
obligation?
· According to Art.1275, the
obligation is extinguished if the
roles of creditor and debtor are
merged into the same person. This
is so because it becomes absurd
since a person cannot claim
payment from himself.
2. Give the effect of merger when it takes
place:
 a. In the person of the principal debtor or
creditor
· According to Art.1276, merger in
the person of the principal debtor
or creditor extinguishes the
obligation.
b. .in the person of the guarantor of the principal
obligation.
- According to Art.1276, confusion which takes
place in the person of the guarantor does not
extinguish the obligation. It only extinguishes the
guaranty.
III. Problems
1. A, B, and C are jointly liable to D in the
amount of P15,000. Subsequently, D
assigned his credit to C in consideration for
goods sold by C to D. Give the effect of the
assignment.
● According to Art.1277, confusion does not
extinguish a joint obligation. Since C, who is
originally a joint debtor, becomes the creditor,
then A and B are now liable to him for their share
of P5000 each.
2. Assuming the obligation of A, B and C is
solidary, distinguish the effect of the
assignment from the first problem.
● According to Art.1277, merger in the person of
one of the solidary debtors shall extinguish the
entire obligation. Thus, the solidary obligation of
A, B, and C to D is extinguished. However, C can
still ask for reimbursement from A and B of their
share in the obligation of P5000 each.
Chapter 4, Sec.5: Compensation Study Guide
I. Definitions
1. Compensation – the extinguishment to the
concurrent
amount of the debts of two persons, who, in their
own right, are debtors and creditors of each
other.
2. Legal compensation– when it takes place by
operation of law even without the
knowledge of the parties
3. Facultative compensation- when it can be
set up only by one of the parties.
II. Discussions
1. What are the distinctions between confusion
and compensation as modes for
extinguishing an obligation?
· According to Art.1278, there is
compensation when TWO persons
are creditors and debtors of each
other. Confusion occurs when
ONE person is his own creditor
and debtor.
2. In what way is compensation similar to
payment?
· According to Art.1289,
compensation and payment is
similar in way due to the fact that
application of payments can be
applied to compensation.
3. May there be compensation although the
things due are not consumable? Explain.
· According to Art.1279, there will
be no compensation if both debts
are NOT in the form of sums of
money or consumable things of
the same kind and quality.
4. When may compensation take place when
only one of the debts is due?
· According to Art.1279,
compensation may take place
when A has not yet paid B on the
date that B’s obligation is due.
III. Problems
1. D borrowed P50,000 as character loan (no
security) from a bank. Despite demands for
payment after the loan fell due, D did not
pay the bank. D has a savings deposit of
P40,000 with the bank. Has the bank the
right to apply the deposit to the payment of
D’s debt?
- Yes. According to Art.1287, since the other party
is a bank deposit, it may apply the deposit to the
payment of D’s debt.
2. D owes C P10,000 payable on November
20. C owes D P10,000 payable on October
20. Can compensation also take place
although the debts are not payable on the
same debt?
- According to Art.1282, the parties may agree
upon the compensation of debts which are not yet
due. Thus, if C and D would agree, compensation
can take place. It can also happen if by Oct20, D
hasn’t paid C yet.
3. Illustrate compensation which can be set up
by one of the parties.
- According to Arts.1287,1288, If A deposited an
object to B, B the depository cannot claim
compensation. However, A can set up his deposit
as a compensation to B. Also If B borrowed the
thing, only A can set up the compensation.
4. After contracting a debt in the amount of
P10,000 in favor of C, D succeeded through
fraudulent means to make C liable to him in
the same amount. Assuming that both
obligations are now due, may the two debts
be compensated against each other? What is
the effect if the debt of C is later annulled in
court at the instance of D?
- According to Art.1284, they may be
compensated. However, when C’s debt is later
annulled, D is still liable to C because the
annulment will make it seem like as if there had
been no compensation.
Chapter 4, Sec.6: Novation Study Guide
I. Definitions
1. Novation – the extinction of an obligation
through the creation of a new one which
substitutes it.
2. Mixed novation– when the object and/or
principal conditions of the obligation and the
 debtor or creditor, or both parties, are
changed.
3. Expromission- that which takes place when
a third person of his own initiative and
without the knowledge or against the will of
the original debtor assumes the obligation of
the latter with the consent of the creditor.
4. Delegacion- that which takes place when the
creditor accepts a third person to take place
of the debtor at the instance of the latter.
II. Discussions
1. Give the requisites of novation.
● According to Art.1292, the requisites of
novation are (1) a previously valid
obligation, (2) capacity and intention of
the parties to modify or extinguish the
obligation, (3) the modification or
extinguishment of the obligation and
(4) the creation of a new valid
obligation.
2. When there is subrogation, what rights are
acquired by the new creditor?
● According to Art.1303, subrogation
transfers all the rights, either against
the debtor of against third persons,
subject to stipulation in a conventional
subrogation.
3. In novation, give the effect where:
a. The new obligation is voidable
● According to Art.1297, if the new obligation is
void, the original one shall subsist, unless the
parties intended that the former relation should be
extinguished in any event
b. The old obligation is voidable. Explain
● According to Art.1298, the novation is void if the
original obligation is void, except hen annulment
may be claimed only by the debtor or when
ratification validates acts which are voidable
4. In novation, are accessory obligations
necessarily extinguished? Explain.
● According to Art.1296, when the principal
obligation is extinguished in consequence of a
novation, accessory obligations may subsist only
insofar as they may benefit third persons who did
not give their consent. Thus if a third person is
affected by the accessory in the original
obligation, it will not be extinguished without his
consent.
III. Problems
1.T (3rd person) tells C (Creditor) that T will pay
the debt of D (debtor). C agrees. Is D
released from his obligation to C.
● According to Art.1293, there is
expromission only if D is released from
his obligation to C. If T and C didn’t
agree as to such, D is not liable because
T paid without his knowledge or
consent.
2. Suppose in the above problem, D proposed
to C that T would substitute D as the new
debtor to which C agreed. Is D still liable to
C in case of insolvency of T?
● No. According to Art.1295, the insolvency of the
new debtor will not revive the creditor’s actions
against the original one.
● *Old debtor is not liable in non-fulfillment of the
new debtor. As a general rule, old debtor is not
liable for insolvency of new debtor EXCEPT:
1. The said insolvency was already existing and of public
knowledge at the time of delegacion
2. The insolvency was already existing and known to the
debtor at the time of delegacion.
3. T paid C the debt of D without objection
from the latter. What are the rights of T?
● According to Art.1302, There is a legal
subrogation if the creditor pays another creditor
who is preferred without the debtor’s knowledge.
Therefore, T has the all the previous rights that C
had.
4. Illustrate a mixed novation.
● Jo will deliver to Jacq a sundae cone. In the
agreement of the parties, Jo will instead deliver a
tetra pack of jungle juice to Nix.
TITLE II CONTRACTS
CHAPTER 1: GENERAL PROVISIONS
Study Guide
I.DEFINITIONS
1. Contract
● As defined under Article 1305, a contract is a
meeting of minds between two persons whereby
one binds himself, with respect to the other, to
give something or to render some service
2. Stipulation of pour autrui
● Stipulation in a contract clearly and deliberately
conferring a favor upon a third person who has a
right to demand its fulfillment provided he
communicates his acceptance to the obligor
before its revocation by the oblige or the original
parties
3. Real Contract
● Which perfected by the delivery of the thing
subject matter of the contract
● Ex. Depositum, pledge, commodatum
4. Perfection of Contract
● Stages in the life of a contract
1. Preparation/ Negotiation – includes all the steps taken by
the parties leading to the perfection of the contract. The
parties have not yet arrived at any definite agreement
2. Perfection/ Birth – this is when the parties have come to
a definite agreement or meeting of the minds regarding to
the subject matter and cause of the contract
3. Consummation/ Termination – this is when the parties
have performed their respective obligations and the
contract may be said to have been fully accomplished or
executed, resulting in the extinguishment or termination
thereof. A contract may also be terminated after its
perfection, not by performance but by mutual agreement of
the parties.
II. DISCUSSION
 1. May a third person acquire rights under a
contract to which he is a stranger or be bound
thereby?
● Under Article 1311
- Contracts take effect only in between the parties,
their assigns and heirs, except in case where the
rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heirs is
not liable beyond the value of the property he
received from the decedent.
- If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is
not sufficient. The contracting parties must have
clearly deliberately conferred a favor upon a third
person
Under Article 1312
- In contracts creating real rights, third persons
who come into possession of the object of the
contract are bound thereby, subject to the
provisions of the Mortgage Law and the Land
Registration law.
Under Article 1313
- Creditors are protected in cases of contracts
intended to defraud them.
Under Article 1314
- Any third person who induces another to violate
his contract shall be liable for damages to the
other contracting party.
2. How are contracts perfected?
Under Article 1315
Contracts are perfected by mere consent, and
from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to
all the consequences which, according to their nature, may
be in keeping with good faith, usage and law.
Under Article 1316
Real contracts, such as deposit, pledge and
Commodatum, are not perfected until the delivery of the
object of the obligation
Under Article 1356
Contracts shall be obligatory, in whatever form
they may have been entered into, provided all the essential
requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it
may be valid or enforceable, or that a contract be proved in
a certain way, that requirement is absolute and
indispensable. In such cases, the right of the parties stated
in the following article cannot be exercised.
3. When will the a person be bound by a contract
entered into by another?
Under Article 1317
- No one may contract in the name of another
without being authorized by the latter, or unless
he has by law a right to represent him.
- A contract entered into in the name of another by
one who has no authority or legal representation,
or who has acted beyond his powers, shall be
unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has
been executed, before it is revoked by the other
contracting party
4. Give the effect of the perfection of a contract
Under Article 1316
Real contracts, such as deposit, pledge and Commodatum,
are not perfected until the delivery of the object of the
obligation. From the parties come to an agreement on a
definite subject matter and valid consideration, they are
bound not only
1) To the fulfillment of what has been
expressly stipulated.
2) To all the consequences which
according to the their nature may be in
keeping with good faith, usage, and
law.
III. Problems
1. A and B entered in to a contract not specifically
provided in the Civil Code. Is the contract valid and
binding?
● Under Article 1307
- Innominate contract shall be regulated by the
stipulations of the parties, by the provisions of
the Titles I and II of this Book, by the rules
governing the most analogous nominate
contracts, and by the customs of the place.
- If it is not contrary to law and is signed by all
parties it is binding
2. S and B entered in to a contract of sale. It was agreed
that the price shall be determined by T (third person). Can
S or B refuse to be bound by T’s determination of the price
if he does not agree with the amount thereof?
● Under article 1309
- The determination of the performance may be left
to a third person, whose decision shall not be
binding until it has been made known to both
contracting parties. (n)
● Under Article 1310
- The determination shall not be obligatory if it is
evidently inequitable. In such case, the courts
shall decide what is equitable under the
circumstances.
- Yes as long as the act of T is evidently
inequitable or unjust or when T acted in bad faith
or mistake. Because of this, the courts shall
decide what is equitable under their
circumstances/situation.
3. D owes C P20,000, both are house painters. It was
agreed that D instead of paying C, will paint the house of E
to which E expressed his conformity to C whose service as
painter was previously contracted by E. Has B the right to
enforce the stipulation between C and D?
● Under Article 1311 part 2
- If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is
 not sufficient . The contracting parties must have
clearly deliberately conferred a favor upon a third
person
- Therefore, he has the right to enforce since the 3rd
party acknowledged and agreed to the contract.
4. X made an office desk for Y. X told Y that the latter
may pay whatever amount he would like to pay for it.
When the desk was finished, Y offered to pay P2,000 but X
finished instead demanded P3,000, its fair value. Is X
entitled to P3,000?
● Under Article 1308
- The contract must bind both contracting parties;
its validity or compliance cannot be left to the
will of one of them.
- No, X is entitled to nothing as the agreement for
payment was “whatever amount he would like to
pay for it”. Therefore X may demand whatever
he wants to but Y is also free to ignore him and
pay nothing.
Chapter 2: Essential Requisites of Contracts
Section 1: Consent
Problems
1.) In a contract containing an option period, when is
the offerer not allowed to withdraw his offer even
before acceptance by the offeree? When is the offerer
allowed to withdraw his offer even after acceptance?
Art 1314- Any third person who induces another to violate
his contract shall be liable for damages to the other
contracting party
Art. 1479.- A promise to buy and sell a determinate thing
for a price certain is reciprocally demandable. An accepted
unilateral promise to buy or to sell a determinate thing for a
price certain is binding upon the promisor if the promise is
supported by a consideration distinct from the price.
(1451a)
- need of a new contract between the parties
2.) S sold his house to B believing that B was C. Can
S legally withdraw from the contract on the ground of
mistake?
Art. 1331, par.2- Mistake as to the identity or
qualifications of one of the parties will vitiate consent only
when such identity or qualifications have been the principal
cause of the contract. -
● Therefore S can legally withdraw from the
contract because there’s an erroneous belief of S
to B. In such case, after the mistake was
discovered, S can go to the court and ask for an
annulment of contract or withdraw the contract.
3.) S agreed to deliver to B 500 cavans of rice at
P600 per cavan. S delivered only 490 cavans
deliberately misrepresenting that the deliver consisted
of 500 cavans. Can B ask the court to annul the
contract on the ground of fraud?
Art.1344- Mutual error as to the legal effect of an
agreement when the real purpose of the parties is frustrated,
may vitiate consent
● produce no effect whatever. The cause is unlawful if it is
4.) S sold to B a commercial land for P1,000,000. S
assured B that it is certain that in two years time, the
land would increase in market value by 50% or
P1,500,000. It turned out that the market value of the
land even decreased about P800,000. Is S liable to B
for misrepresentation?
Art.1340- The Usual exaggerations in trade, when the other
party had an opportunity to know the facts, are not in
themselves fraudulent
●
5.) Suppose in the same problem, what S sold to B,
hardware owner, are 500 bags of cement. S had every
reason to believe that the price of cement would go
down. After two weeks, it did go down, Has B the
right to have the sale annulled?
Art.1339- Failure to disclose facts, when there is a duty to
reveal them, as when the parties are bound by confidential
relations, constitutes fraud
Section 2: Object of contracts
Problems
S sold to B for P100,000 a parcel of land belonging to S
located in his hometown without specifying its exact
location and area. Is the sale valid?
Art.1349- The object of every contract must be determinate
as to its kind. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the
need of a new contract between the parties
● The contract is void if the particular land sold
cannot be determined without new agreement
between the parties
S has several pigs. Under a contract of sale, S binds himself
to deliver a pig to a B for P3,000 if the pig has a weight of
at least 30 kilos. State the binding effect of sale
Art.1349- The object of every contract must be determinate
as to its kind. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the
● The delivery of the pig should be determinate for
the reason that the object of every contract must
be determinate to its kind. Also, the contract is
not perfected until the weight of the pig is agreed
upon.
Section 3: Cause of contracts
Problems
1. S sold his fishing boat to B who intends to use
the boat for smuggling. Is the contract of sale illegal?
Art.1351- The particular motives of the parties entering
into a contract are different from the cause thereof.
● B has the right to ask the court for rescission or
cancellation of the sale.
2. S sold to B a specific parcel of land for P500,000.
B failed to pay. Has C the right to have the sale
declared void by the court on the ground of absence of
cause for non-payment of the price?
Art.1352-Contracts without cause, or with unlawful cause,
contrary to law, morals, good customs, public order or
public policy.
Art. 1409 (3)- Those whose cause or object did not exist at
the time of the transaction
-
 3. X gave P10,000 to Y who signed a receipt
stating: “This is to acknowledge payment by X in the
amount of P12,000”. X later complains that he
received nothing from Y for the P10,000. Is Y bound
to return the P10,000?
Art. 1354- Although the cause is not stated in the contract,
it is presumed that it exists and is lawful, unless the debtor
proves the contrary
● Yes, this is because o the receipt which was
acknowledged by the both parties. Therefore, the
law presumes that X must received P10,000 to Y
or there’s a consideration that should be received.
●
4. S sold to B his car worth of P250,000 for only
P200,000. There is no question that the purchase price
is grossly inadequate. Has S the right to have the sale
annulled?
Art.1355- Except in cases specified by law, lesion or
inadequacy of cause shall not invalidate a contract, unless
there has been fraud, mistake or undue influence.
● Contract is valid although the price is inadequate.
In addition, when both parties are form an
independent judgement regarding the transaction
does not mean that the contract between them is
cancelled.