OBLIGATION – juridical necessity to give, to do DILIGENCE OF A GOOD FATHER OF A FAMILY

or not to do
- care need to be exercised by a debtor to
4 ELEMENTS OF OBLIGATION deliver/give determinate thing

1. ACTIVE SUBJECT (creditor/obligee) – whose Exception: When law/stipulation of parties

obligation is constituted requires a differnt standard of care
(slight/extraordinary diligence).
2. PASSIVE SUBJECT (debtor/obligor) – has duty
to give, to do or not to do

3. OBJECT/PRESTATION – subject matter When creditor is entitled to the fruits

4. JURIDICAL/LEGAL TIE (vinculum/efficient Rule: The creditor has personal right (right to
cause) – reason ask for delivery) from the time the obligation to
deliver arises.
CIVIL OBLIGATION NATURAL
OBLIGATION But NO real right (right enforceable against the
whole world) until it is delivered.
derived from positive derived from equity
law & justice

enforceable by court not enforceable by 3 KINDS OF FRUITS

action court action
1. NATURAL – w/o human intervention

2. INDUSTRIAL – w/ human intervention

5 SOURCES OF OBLIGATION
3. CIVIL – derived by virtue of juridical relation
1. LAW

2. CONTRACTS
Creditor’s rights if debtor fails to comply w/
3. QUASI-CONTRACTS – arise from lawful, the obligation
voluntary acts; no one shall be unjustly
1. Determinate
enriched...
a. Performance
a. Solutio indebiti – something received
(delivered on a mistake), no right to demand it b. Damages
b. Negotiorum gestio – voluntary mgt of 2. Generic
property/affairs of another w/o his
a. Performance
knowledge/consent
b. Damages
4. QUASI-DELICT/TORTS/CULPA AQUILIANA –
arise from damage; fault/negligence c. Obligation be complied at debtor’s expense
5. CRIMES/ACTS/OMISSIONS punished by law –
arise from civil liability that is a consequence of
a criminal offense
Creditor’s rights if debtor does in 4 GROUNDS; debtor liable for damages
contravention
1. Default/mora
1. Damages
2. Fraud/dolo
2. Ask it be UNDONE at debtor’s expense
3. Negligence/culpa

4. Contrary to terms of obligation

FORTUITOUS EVENT – cannot be foreseen, if
foreseen, inevitable
1. DEFAULT/MORA – delay
General Rule: No person liable to fortuitous
event. a. Mora solvendi – debtor’s delay to give (real
ob.), to do (personal ob.)
Exceptions:
b. Mora accipiende – creditor’s delay to
1. Law states
accept
2. Stipulation/contract states
c. Compensatio Morae – delay of both in
3. Assumption of risk reciprocal obligation

4. Delay

5. Debtor promises deliver to 2/more persons CONCEPT OF DELAY

who do not have same interest (bad faith)
General Rule: No demand, No delay

Exceptions:
EFFECTS OF FORTUITOUS EVENT to thing to be
1. Law states
delivered
2. Obligation states
- extinguish the obligation if determinate;
generic does not extinguish the obligation 3. Time is the essence

4. Demand be useless if delay

3 MISCELLANEOUS RULES ON PERFORMANCE 5. Debtor guilty of delay
OF OBLIGATION

1. When to
deliver determinate, accessions (additions/ EFFECTS OF DELAY
improvements) and accessories(joined/included 1. Damages
with the principal) are INCLUDED even not
mentioned. 2. When to deliver determinate thing, STILL
LIABLE in fortuitous event.
2. If debtor fails to do, it shall be DONE AT HIS
EXPENSE, same with doing the contravention;
poorly done be undone.

3. In obligation not to do, and obligor does what

is forbidden, shall be UNDONE AT HIS EXPENSE.
2. FRAUD/DOLO – conscious, deliberate,
intentional evasion of fulfillment
TRANSMISSIBILITY OF RIGHTS
a. Dolo causante/Causal fraud – fraud in
General Rule: ALL RIGHTS are transmissible.
obtaining consent; consent is defective, contract
is voidable. Remedy: annulment Exceptions:
b. Dolo incidente/Incidental fraud – fraud 1. Law states
w/c vitiates consent. Remedy: damages
2. Contract states

3. Obligation is purely personal

3. NEGLIGENCE/CULPA – voluntary
act/omission; no bad faith intended

a. Culpa aquiliana/Civil negligence – quasi- 10 Kinds of Obligation

delict/torts 1. Pure
b. Culpa contractual/Contractual 2. Conditional
negligence – breach
3. Alternative
c. Culpa criminal/Criminal negligence –
crime/delict 4. Facultative

5. Joint

4. Contrary to the terms of obligation 6. Solidary

7. Divisible

2 RULES OF PRINCIPAL & INSTALLMENT 8. Indivisible

1. Receipt of principal w/o mention of interest, 9. Obligation w/ a period

presumed interest is paid also. 10. Obligation w/ a penal clause
2. Receipt of latter installment w/o mention of
prior installment, presumed prior installment is
paid also. 1. PURE OBLIGATION

- w/o condition, demandable at once (pure has

resolutory condition/period)
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy
claim against DEBTOR

1. Exact payment 2. CONDITIONAL OBLIGATION

2. Attach debtor’s properties - there is condition in performance; future &

uncertain
3. Accion subrogatoria – exercise rights &
actions except inherent in person 2Kinds

4. Accion pauliana – cancel acts/contracts by a. Suspensive condition – happening of

debtor to defraud creditor condition gives RISE to obligation
 b. Resolutory condition – happening of 2. DETERIORATION
condition EXTINGUISHES obligation
a. w/ debtor’s fault - (1) cancel obligation &
damages; or (2) fulfill obligation w/ damages

6 MISCELLANEOUS RULES ON CONDITIONAL b. w/o debtor’s fault – creditor suffer

OBLIGATION impairment

1. Impossible conditions, contrary to law, shall

ANNUL obligation.
3. IMPROVEMENT
2. The condition not to do an impossible thing is
a. By nature/time – benefit to creditor
considered not agreed upon.
b. at expense of debtor – debtor no right than
3. The condition that happens in determinate
that granted to usufructuary (debtor no right to
time, EXTINGUISHES obligation.
compensate amount for improvement)
4. The condition that happens in
INDETERMINATE time, obligation only effective
at arrival. EFFECTS OF FULFILLMENT OF SUSPENSIVE
CONDITION
5. The condition is fulfilled if DEBTOR prevents
fulfillment. General Rule: The obligation becomes effective
retroactively to the day obligation was
6. The effect of conditional obligation, once
constituted.
fulfilled:
Exceptions:
- to give: retroact to the day of constitution of
obligation 1. In reciprocal obligation, fruits & interests
during pendency of condition shall compensate
- has reciprocal prestations: fruits & interests be
each other.
mutually compensated
2. In unilateral obligation, debtor gets fruits &
- has unilateral obligation: debtor shall give
interests unless there is a contrary intent.
fruits & interests

3 EFFECTS OF FULFILLMENT OF RESOLUTORY

RULES in case of Loss, Improvement, or
CONDITION
Deterioration of thing during the pendency of
condition 1. Extinguish obligation.
1. LOST 2. Both parties restore what they received plus
fruits & interests.
a. w/ debtor’s fault – damages
3. The rule on L, D, or I will apply to person who
b. w/o debtor’s fault – extinguishes obligation
has to return the thing.

When one of debtors in reciprocal obligation

does not comply w/ his obligation
1. The right of injured party is (1) cancel PERIOD CONDITION
contract & damages; or (2) fulfill obligation &
certain uncertain
damages
future only future/past but
unknown
3 Kinds of Obligation (Accdng to PERSON
(*influence upon (*) on the very
OBLIGED)
obligation) only upon existence of
1. UNILATERAL – only 1 party obliged to comply its demandability obligation itself
2. BILATERAL – both parties; performance not
same time
FOR WHOSE BENEFIT IS THE PERIOD?
3. RECIPROCAL – both parties; performance
General Rule: Both the debtor & creditor.
same time
Therefore, NEITHER of them can demand
performance of obligation.
3. OBLIGATION W/ A PERIOD
Exception: If the term of obligation has to favor
- demandability/extinguishment subject to the one of them.
expiration of period

5 INSTANCES WHEN DEBTOR LOSES RIGHT TO

PERIOD – interval of time; either suspends USE “PERIOD”
demandability or produces extinguishment
1. Debtor is insolvent.

2. Debtor attempts to abscond.

DAY CERTAIN – must come, not known when
3. Impairment of guarantees/securities.

4. Failure to furnish guarantees/securities

7 CASES CONSIDERED TO BE “OBLIGATION W/ promised.
A PERIOD”
5. Violation of undertaking.
1. Little by little

2. In partial payment
4. ALTERNATIVE OBLIGATION
3. Payable ASAP
- w/ 2 or more prestations, only 1 is due.
4. When I can afford it

5. When I have the money

5. FACULTATIVE OBLIGATION
6. When I am able to
- w/ ONLY 1 prestation but can be substituted.
7. When my means permit me to do so

ALTERNATIVE prestations LOST w/ debtor’s fault

Creditor entitled to damages but needs ff RULES on LOSS/DETERIORATION of the thing
requisites: intended as SUBSTITUTE in FACULTATIVE
OBLIGATION
1. Debtor can choose.
1. If there is a loss/deterioration of thing
2. All prestations lost/become impossible due to
intended as substitute, debtor is NOT liable if
debtor’s fault.
NOT HIS FAULT.

But if substitution is already made, debtor is

ALTERNATIVE FACULTATIVE liable for loss of substitute when in DELAY,
OBLIGATION OBLIGATION NEGLIGENCE, or FRAUD.

several prestations one prestation due,

due, giving one is but can be subtituted 6. JOINT OBLIGATION
sufficient
- obligation is to be paid proportionately by
right to choose right to choose
debtors or to be demanded proportionately by
(debtor) unless DEBTOR ONLY
creditors
granted to creditor

If 1 of the prestation nullity of principal

is illegal, others may carries w/ it nullity of 7. SOLIDARY OBLIGATION
be valid, obligation accessory/
- each one of debtors has right to render or
remains
substitute each one of creditors has right to demand
the entire compliance w/ prestation
loss/impossibility of loss/impossibility of
ALL prestations due, presta-tion due, w/o
w/o debtor’s fault, debtor’s fault,
MAXIMS & SYNONYMS
extinguishes extinguishes
obligation obligation MAXIMS SYNONYMS

JOINT “To each proportionate

Obligation his own”
(3) SUMMARY OF RULES, OBLIGATIONS, &
RIGHTS OF DEBTOR IN ALTERNATIVE SOLIDARY “One for individually &
OBLIGATION Obligation all, all for collectively
one”
1. If 1 of prestations lost through fortuitous
event, shall still be perform by choosing
(creditor) from the remainder.

2. If 1 of prestations lost through debtor’s fault,

creditor may claim any of remainders w/
damages. (3) SOLIDARY OBLIGATION EXIST ONLY IF:
3. If ALL prestations lost through debtor’s fault, *RULES
creditor choose price w/ damages. 1. Law states

2. Stipulation states
3. Nature of obligation requires 1. Stipulation states.

2. Debtor refuse to pay penalty.

2 PRESUMPTIONS THAT OBLIGATION IS JOINT 3. Debtor guilty of fraud in performance of

obligation.
1. The debts be divided as many shares as there
are debtors/creditors.

2. The debtors/creditors are distinct from one NULLITY OF PRINCIPAL OBLIGATION OR THE
another. PENAL CLAUSE

Nullity of principal obligation = nullity of penal

clause
8. DIVISIBLE OBLIGATION
Nullity of penal clause = NOT nullity of principal
- prestation is capable of partial performance
obligation

9. INDIVISIBLE OBLIGATION
10 MODES OF EXTINGUISHMENT OF
- prestation incapable of partial performance OBLIGATIONS

1. Payment or performance

10. OBLIGATION W/ A PENAL CLAUSE 2. Prescription

- one w/ accessory undertaking attached to 3. Compensation

obligation to assume greater liablity in case of
4. Confusion/merger
breach/non-fulfillment of obligation
5. Condonation/remission

6. Fulfillment of resolutory condition

3 PURPOSES OF PENAL CLAUSE
7. Annulment
1. Ensure performance of obligation
8. Rescission
2. Substitute for damages & interest in case of
noncompli-ance 9. Novation

3. Penalize debtor in case of breach 10. Loss of thing due

In case obligation has a PENAL CLAUSE 1. PAYMENT/PERFORMANCE

General Rule: Penalty takes the place of - Payment means delivery of money &
damages & interest in case of non-compliance. performance of obligation

Exceptions:
2 PLACE OF PAYMENT 3. If debtor accepts the receipt, he cannot
complain unless THERE IS just cause to
1. At place agreed upon
invalidate the contract.
2. If w/o agreement

a. Object is indeterminate – paid at domicile of

b. CESSION
DEBTOR
- debtor abandons ALL his property for
b. Object is determinate – place of thing at the
creditor’s benefit to obtain payment from
time of constitution of obligation
proceeds of his property

4 SPECIAL MODES OF PAYMENT

5 REQUISITES OF VALID CESSION
a. Application of payment
1. 1 debtor & 2 or more creditors
b. Cession
2. Debtor is in partial/total insolvency.
c. Tender of payment & consignation
3. Debtor to deliver ALL his property to creditors
d. Dacion in payment
4. Debt is due & demandable.

5. Creditors must sell the properties & apply the

a. APPLICATION OF PAYMENT proceeds to their respective credits
proportionately.
- designation of debt to w/c payment must be
applied when debtor has several obligations of
same kind in favor of same creditor.
c. DACION IN PAYMENT (dacion en pago)

- alienation of property to the creditor in

3 REQUISITES OF APPLICATION OF PAYMENT satisfaction of debt

1. Only 1 debtor & 1 creditor

2. 2 or more debts, same kind 3 REQUISITES OF DACION IN PAYMENT

3. All debts are due 1. Consent of creditor

4. Insufficient payment to exinguish ALL debts 2. NOT prejudicial to another creditor

3. Debtor not insolvent declared by a judicial

decree

CESSION DACION IN PAYMENT

3 RIGHTS TO MAKE APPLICATION OF PAYMENT
all properties NOT all properties
1. Right belongs to CREDITOR.
require more than 1 NOT require all
2. If debtor does not avail, creditor can give him
creditor creditors
receipt designating the debt from which
payment will be applied. NOT act of novation act of novation
 5. Title of obligation lost.

NOT transfer transfer ownership

ownership
2. LOSS OF THING DUE
requires may happen
- perishes, disappears, or goes out of
partial/total insol- during solvency of
commerce; existence is unknown; cannot be
vency debtor
recovered

d. TENDER OF PAYMENT & CONSIGNATION

3 REQUISITES TO EXTINGUISH OBLIGATION
TENDER OF PAYMENT – act of offering the DUE TO LOSS
creditor what is due to him w/ a demand that
1. Determinate thing.
the creditor accept it
2. W/o debtor’s fault.
CONSIGNATION – act of depositing thing due w/
the court when creditor cannot/refuses 3. No delay.
acceptance of payment

3. CONDONATION/REMISSION
5 REQUISITES OF CONSIGNATION
- gratuitous abandonment of right by the
1. Debt due. creditor
2. Creditor refused the tender of payment w/o
just cause
3 REQUISITES OF A VALID
3. Notice of consignation already given to CONDONATION/REMISSION
persons interested in fulfillment of obligation
1. It must be gratuitous.
4. Consignation of thing/amount due
2. Accepted by obligor.
5. Subsequent notice of consignation to
3. Obligation is demandable.
interested persons

4. CONFUSION/MERGER
5 VALID CONSIGNATION W/O PREVIOUS
TENDER OF PAYMENT - meeting in 1 person of qualities of debtor &
creditor w/ same obligation
1. Creditor is absent/unknown.

2. Creditor is incapacitate to receive at time it is

due. 3 REQUISITES OF VALID CONFUSION/MERGER
3. Creditor refused give a receipt, w/o just 1. The merger of characters of debtor & creditor
cause. must be in same person.
4. 2 or more persons claim the right to collect. 2. Take place between principal debtor &
creditor.
3. Clear & definite. - substitution of debtor

- subrogation of creditor

5. COMPENSATION

- 2 persons are debtors & creditors of each (3) OBLIGATIONS MAY BE MODIFIED BY:
other
1. Changing object/principal conditions. (REAL
NOVATION)

6 ESSENTIAL REQUISITES OF COMPENSATION 2. Changing the person of

debtor/creditor. (PERSONAL NOVATION)
1. Parties both principal debtors & creditors of
each other. a. Substitution – change of debtor

2. Compensation is not prohibited by law. b. Subrogation – change of creditor

3. No retention/controversy by 3rd person. 3. Changing person of the parties & the objects
of principal condition. (MIXED NOVATION)
4. 2 debts are due & demandable.

5. 2 debts are liquidated.

4 REQUISITES OF NOVATION
6. 2 debts both in money/consumable things.
1. Old valid obligation.

2. Agreement of parties to new obligation.

(2) CLASSES OF COMPENSATION
3. Extinguishment of old obligation.
1. As to effect
4. Validity of new obligation.
a. TOTAL – obligations completely extinguished.

b. PARTIAL – a balance remains

2 FORMS OF NOVATION BY SUBSTITUTION OF
DEBTOR
2. As to origin or cause
1. EXPROMISION – w/ consent of creditor, NO
a. LEGAL – by law consent of old debtor

b. VOLUNTARY/CONVENTIONAL – agreement of 2REQUISITES

parties
a. Initiative of 3rd person.
c. JUDICIAL – order from the court
b. Consent of creditor.
d. FACULTATIVE – 1 of parties can
2. DELEGACION – all must agree (creditor, old
choose/oppose claiming compensation
debtor, new debtor)

3REQUISITES
6. NOVATION
a. Initiative from old debtor.
- substitution/change of obligation
b. Consent of debtor.
 c. Acceptance by creditor.

7. SUBROGATION

- change of creditor

2 KINDS OF SUBROGATION

1. CONVENTIONAL – consent of original parties

& 3rd person

2. LEGAL – by law

a. creditor pays another preferred creditor

even w/o debtor’s knowledge

b. 3rd person pays the express approval of

debtor

c. 3rd person pays even w/o knowledge of

debtor

CONTRACT – meeting of minds between 2

persons to give something or to render service.

3 ELEMENTS OF CONTRACT

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

 a. CONSENT of contracting parties c. REMUNERATORY – something is given for
benefit/service that had been rendered
b. OBJECT CERTAIN – subject matter
previously
c. CAUSE/CONSIDERATION

In some contracts, ff are also essential:

4. RISK OF FULFILLMENT
d. FORM
a. COMMUTATIVE – equivalent values are
e. DELIVERY given by both parties

b. ALEATORY – fulfillment of contract

depends on chance (eg. insurance)
2. NATURAL – found in certain contract,
presumed to exist unless stipulated
5. IMPORTANCE

3. ACCIDENTAL – various particular stipulations a. PRINCIPAL – contract may stand alone (eg.
that may be agreed upon by contracting parties sale, partnership)

b. ACCESSORY – existence depends on

another contract (pledge, guarantee)
(7) CLASSIFICATION OF CONTRACTS
c. PREPARATORY – contract not an end by
According to: itself but a means thru w/c other contracts may
1. PERFECTION/FORMATION be made (eg. agency)

a. CONSENSUAL – perfected by mere consent

b. REAL – perfected by delivery 6. NAME

c. FORMAL/SOLEMN – special formalities are a. NOMINATE – contract given a

essential before perfection of contract particular/special name (eg. partnership)

b. INNOMINATE – not given special name (eg.

I give that you may give)
2. PARTIES OBLIGATED

a. UNILATERAL – only 1 has obligation

7. SUBJECT MATTER
b. BILATERAL – both parties require to render
reciprocal prestations. a. Contracts involving things

3. CAUSE b. Contracts involving rights/credits

a. ONEROUS – exchange of considerations c. Contracts involving services

b. GRATUITOUS – no consideration received 3 STAGES OF CONTRACT

in exchange of what is given 1. PREPARATION/CONCEPTION – preparatory
steps to perfect contract
2. PERFECTION/BIRTH – meeting of minds a. REAL CONTRACTS – perfected by delivery
between 2 contracting parties
b. FORMAL/SOLEMN CONTRACTS – special
3. CONSUMMATION/TERMINATION – terms of form required for its perfection
contract are performed, & contract is fully
executed
5. OBLIGATORINESS OF CONTRACTS

- The contract, once perfected, has the force of

5 BASIC PRINCIPLES/CHARACTERISTICS OF A
law between parties which bound to comply in
CONTRACT
good faith
1. PRINCIPLE OF AUTONOMY (liberty to
contract)
4 KINDS OF INNOMINATE CONTRACTS
Provided they are not contrary to:
1. I give that you may give
a. Law
2. I do that you may do
b. Morals
3. I give that you may do
c. Good customs
4. I do that you may give
d. Public order

e. Public policy
4 RULES FOR INNOMINATE CONTRACTS

1. Agreement of parties
2. MUTUALITY OF CONTRACTS
2. Law on Obligations & Contracts
- the contract must bind both parties; its
validity/compliance cannot be left to the will of 3. Rules on most analogous nominate contract
one of them
4. Customs of place

3. RELATIVITY OF CONTRACTS
STIPULATION POR AUTRI
- Contracts take effect only between the parties,
their assigns & heirs except when there are - stipulation in favor of 3rd person
rights & obligations not transmissible:

a. by their nature 5 REQUISITES OF STIPULATION POR AUTRI

b. by stipulation (stipulation por autri) 1. Stipulation in favor of 3rd person
c. by provision of law 2. Stipulation is only PART, not the whole of the
4. CONSENSUALITY OF CONTRACTS contract.

- Contracts are perfected by mere consent 3. Both parties must conferred upon a favor of
3rd person
Exceptions:
4. 3rd person must accept & say it to debtor ANYTIME unless there is something
before its revocation/cancellation PAID/PROMISED.

5. Neither of both parties be the legal

representation/autho-rization of 3rd person
3 persons who CANNOT GIVE CONSENT to a
contract (if entered into, contract is voidable)

CONSENT 1. UNEMANCIPATED MINORS

- meeting of offer (certain) & acceptance 2. INSANE/DEMENTED PERSONS (unless they

(absolute) upon a thing acted DURING LUCID INTERVAL)

3. DEAF-MUTES who DO NOT know how to

write
5 REQUISITES OF CONSENT

1. Must be given by 2 or more parties

DEMENTED PERSON – NOT exactly insane;
2. Parties are capacitate to enter in contract
difficult to distin-guish right from wrong
3. No vitiation of consent

4. No conflict between declared & intended

LUCID INTERVAL – period when an INSANE has
5. Legal formalities must be complied acquired SANITY temporarily, therefore,
capacitated to enter into a valid contract

7 RULES ON OFFER/ACEPTANCE
2 RULES on persons WHO CANNOT GIVE
1. An offer must be certain. CONSENT to a contract
2. Business advertisements for sale are NOT 1. Age of majority is 18 yrs old
offers but ONLY invitations to make an offer.
2. A contract entered into by UNEMANCIPATED
3. Advertisements for bidders are ONLY MINOR w/o parents/guardian’s consent
invitations. is voidable, except:
4. An acceptance made by letter/telegram does a. Minor MISREPRESENTS his age (estoppel)
NOT bind offeror EXCEPT from the TIME it came
to his knowledge. b. Contract involves sale & delivery of
necessities to minor
5. An offer made through an agent is accepted
from the TIME the acceptance is done through
an agent.

6. An offer is ineffective upon death, insanity,

5 VICES OF CONSENT
insolvency, of EITHER party BEFORE acceptance
is made. - NOTE: When there is a DEFECTIVE CONSENT of
EITHER of parties, contract is voidable;
7. When offeror allowed offeree a certain
Remedy: annulment of contract.
period to accept, offer MAY be withdrawn AT
1. MISTAKE/ERROR INDUCED the other to enter into a contract, &
w/o them, he will not agree.
2. FRAUD/DECEIT

3. VIOLENECE
DOLO CAUSANTE DOLO INCIDENTE
4. INTIMIDATION
Serious Not serious
5. UNDUE INFLUENCE
cause induces party to NOT the cause to
ENTER into contract enter into contract
1. MISTAKE/ERROR
make contract is valid;
- wrong conception & lack of knowledge upon a contract voidable liable for damages
thing

7 RULES OF FRAUD
(2) MISTAKES W/C VITIATES CONSENT
1. Failure to disclose facts when these needs to
It should refer to: be revealed, is a fraud.

1. substance of thing that is the OBJECT of 2. Fraud should be SERIOUS (dolo causante) &
contract SHOULD NOT be done by BOTH parties to make
contract voidable.
2. conditions w/c MOVED either/both parties to
enter into contract 3. Incidental fraud (dolo incidente) ONLY obliges
person to PAY DAMAGES.

4. Usual exaggerations in trade, when other

4 RULES ON MISTAKE
party know the “real” facts, is NOT FRAUD.
1. Mistake to identity/qualifications of either of
5. A mere expression of opinion is NOT FRAUD
parties will vitiate consent ONLY when IT is
UNLESS made by an expert & the other party
the principal cause of contract.
relies on his special knowledge.
2. Simple mistake of account must be corrected.
6. Misrepresentation made in good faith is NOT
3. No mistake if parties knew the risk/doubt FRAUD but may constitute an error.
affecting OBJECT of contract.
7. Misrepresentation by 3rd person DOES NOT
4. When one of parties is unable to read or the vitiate consent UNLESS it created substantial
contract is in language not understood by him, mistake.
& mistake/fraud is alleged, the person enforcing
the contract must FULLY explained the terms to
him.

2. FRAUD/DOLO

- when through insidious 3. VIOLENCE

words/machinations of one of the parties,
- serious/irresistible force is employed.
 - a person takes improper advantage of his
power over other’s will, depriving the other to
2 RULES ON VIOLENCE
his reasonable freedom of choice.
1. Serious/irresistible force is employed w/c
constitutes the reason why one entered into a
contract. 3 RULES ON UNDUE INFLUENCE

2. Violence ANNULS obligation although it is 1. There is a person who takes improper

DONE by 3rd person not part of contract. advantage of his power over other’s will,
depriving the other to his reasonable freedom
of choice.
4. INTIMIDATION
2. Undue influence ANNULS obligation although
- 1 of the parties is compelled by a reasonable & it is DONE by 3rd person not part of contract.
well-grounded fear of an imminent & grave
3. To constitute undue influence, ff
evil upon his person/property to give his
circumstances must be considered: (1)
consent.
confidential, family, spiritual, & other relations
of parties; or (2) the aggrieved party is suffering
from mental weakness; or (3) ignorant; or (4) in
3 RULES ON INTIMIDATION financial distress.
1. Age, sex, & condition of person must used to
determine the degree of intimidation.
SIMULATION OF CONTRACT
2. Intimidation ANNULS obligation although it is
DONE by 3rd person not part of contract. - process of INTENTIONALLY deceiving others by
producing a contract not really exist (absolute
3. A threat to enforce one’s claim (claim must be simulation), or w/c is different from true
just & legal), DOES NOT vitiate consent. agreement (relative simulation).

VIOLENCE INTIMIDATION

External Internal

Physical NO physical coercion;

contact/coercion ONLY
MENTAL/MORAL
coercion

5. UNDUE INFLUENCE

2 KINDS OF SIMULATED CONTRACT

1. ABSOLUTE SIMULATION (the parties DO NOT - inadequacy of cause (eg. insufficient price for
intend to be bound at all) thing sold)

- completely fictitious/make-believe; VOID

2. RELATIVE SIMULATION (parties conceal their RULES ON LESION

true/real agreement)
- Lesion DOES NOT invalidate contract, except
- parties are bound to real/true there is:
agreement, EXCEPT:
a. Fraud
a. contract prejudice 3rd person
b. Mistake
b. purpose is contrary to law, morals, good
c. Undue influence
customs, public order, public policy

2 FORM OF CONTRACTS
7 REQUISITES OF OBJECT OF CONTRACT
1. Contracts in writing
1. Specific & certain
2. Contracts in a public instrument
2. Services not contrary to law, morals, good
customs, public order, public policy

3. Services/things must NOT be 1. Contracts w/c must be IN WRITING to be

legally/physically impossible valid:
4. Services/things are w/in commerce of man a. Donation of personal property exceeds
including future things P5000.
5. Rights are NOT TRANSMISSIBLE. b. Agent’s authority in sale of land/any
interest.
6. Determinate (kind) or determinable ( w/o the
need of new contract/agreement) c. Contract of antichresis.
7. NO contract be entered for future d Stipulation to pay interest on loans.
inheritance UNLESS law states
e. Stipulation to reduce common carrier’s
extraordinary diligence & to limit its liability.
4 REQUISITES OF CAUSE

1. It is just & equitable. 2. Contracts w/c must be IN A PUBLIC

INSTRUMENT to be valid:
2. It exists.
a. Donation of real property (both the
3. It is lawful.
donation & accep-tance).
4. It is true.
b. Sale of real property.

LESION
 c. Partnership where real property/rights is of injury/damage to one of the parties, the
contributed; or when capital contribution contract may be rescinded.
exceeds P3000.
2. VOIDABLE – valid until annulled; has ALL
essential requisites but because of defect in
consent, contract may be annulled.
REFORMATION OF INSTRUMENTS
3. UNENFORCEABLE – cannot be
- REMEDY in equity in w/c a written instrument
sued/enforced unless ratified; no effect NOW
is made/construed to the REAL intention of
but may take effect upon ratification.
parties when there is an error/mistake.
4. VOID – NO effect at all; cannot be
ratified/validated.
(5) CASES REFORMATION OF INSTRUMENT IS
AVAILABLE
5 RESCISSIBLE CONTRACTS
1. Mutual mistake of parties.
1. Those entered by guardians & suffered
2. One party was mistaken & the other acted
LESION by more than ¼ of value of the value
fraud.
that is the OBJECT.
3. One party was mistaken & the other
2. Those agreed upon in representation of
knew/believed that the instrument did not state
absentees, if the absentees suffered LESION.
their REAL agreement.
3. Those undertaken in FRAUD of creditors
4. Ignorance, lack of skill, negligence, or bad
when the creditors cannot further claim.
faith of person drafting the instrument DOES
NOT state the TRUE INTENTION of parties 4. If entered into contract w/o
knowledge/approval of litigants under litigation.
5. Two parties agree on mortgage/pledge of
personal/real property BUT the instrument 5. Contracts subjected to rescission declared by
states the property is sold ABSOLUTELY, or w/ law.
the right to repurchase.

(3) NO REFORMATION OF INSTRUMENT WHEN:

1. Simple donation inter vivos where NO

3 VOIDABLE CONTRACTS
CONDITION is imposed.
1. One of the parties INCAPABLE of giving
2. Will.
consent to a contract.
3. Real agreement is VOID.
2. Those where consent vitiates by vices of
consent. (MFVIU)

4 KINDS OF DEFECTIVE CONTRACTS 3. Those agreed in the state of

drunkenness/hypnotic spell.
1. RESCISSIBLE – valid until rescinded; has ALL
essential requisites but because
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.