CHAPTER 2 – Essential Requisites of Contracts (Articles 1347-1355)

CHAPTER 2
ESSENTIAL REQUISITES OF CONTRACTS

STUDY GUIDE : (FT SESSION 6)

(Arts. 1347-1349)

1. What may be the object (or subject matter) of a contract? (Art. 1347)
(a) things; (b) rights; or (c) services.

What are the preconditions in order that things may be the object of a

Section 2 – OBJECT OF CONTRACTS

2. contract?

(a) It must be within the commerce of men – that is, it can legally be the
subject of commercial transactions. (Art. 1347, par. 1)
(b) It must not be physically or legally impossible. (Art. 1348)
(c) It must be in existence or capable of coming into existence.
NOTE, however, that future inheritance (not hereditary rights) cannot be
the object of a contract, except in the cases expressly authorized by law. (Art.
1347, par. 2)

(d) It must be determinate, or determinable, without the necessity of a new

contract between the parties.

3. What services may be the object of a contract?

 All services which are not contrary to law, morals, good customs,
public order, or public policy may be the object of a contract. (Art. 1347, par. 3)
4. What rights may be the object of a contract?

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 All rights may be the object of a contract, except those which are
instransmissible. (Art. 1347, par. 3; See also Art. 1311, par. 1)

APPLICATION/PROBLEMS :
1. Leon owns a 2-hectare farmland in Villareal, Samar, which was planted
with mango trees. In one of their leisurely walks, Leon promised his son,
Lydio, that after he (Leon) is gone, Lydio is sure to inherit the particular
farmland. Two months thereafter, Lydio executed a deed of sale covering
the 2-hectare farmland in favour of Manuel. Two years after the sale, Lydio
died. Is the sale of the farmland to Manuel valid?

2. Every night, Luis and his younger brother Tim climb to the roof top of
their 3-storey house to fly a remote-controlled plane. They are able to let the
plane fly at an altitude of 30 meters, and within a radius of 15 meters atop
the houses of their neighbors in the subdivision. One night, Mr. Cruz, their
next door neighbor, talked to their father and proposed that a contract of
lease be executed between them. Mr. Cruz proposed that Luis and his family
should pay him a rental of P1000.00 a month so Luis and his brother can use
the airspace above the property of Mr. Cruz in flying their plane. Mr. Cruz
and their father then signed a contract of lease, and had it notarized by a
notary public. Is this contract valid? Is it enforceable?

3. Today, Lolong promised to sell to Raerae for P50.00 per kilo all the
harvest from his mango plantation for the month of October, 2016. As of
today, is there already a perfected contract of sale between Lolong and
Raerae? Is there a valid object considering that the quantity of the object
cannot as yet be determined as of today?

4. On September 1, 2016, since Shiela was migrating to the Canada with

her family, she executed a Deed of Assignment in favor of Travis assigning
to him her right to vote at precinct no. 125-A in Las Piñas. She then attached
to the deed her voter’s ID. The agreement was signed by both parties, and
was duly notarized by a notary public. Is this agreement valid? Is it
enforceable?

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FOOD FOR THOUGHT

“Beware of endeavoring to become a great man in a hurry.
One such attempt in ten thousand may succeed.
These are fearful odds.”
Benjamin Disraeli

Section 3 – CAUSE OF CONTRACTS

(Arts. 1350-1355)

1. What is the meaning of cause?

 The cause of a contract is the “why” of the contract, the essential

reason which impels the contracting parties to enter into the contract.

2. What is the cause of a contract? (Art. 1350)

(a) In onerous contracts – the prestation of the other party.
(b) In remuneratory contracts – the service or benefit remunerated.
(c) In gratuitous contracts – the mere liberality of the benefactor.

3. What is the distinction between cause and object?

 The difference is only a matter of viewpoint. Thus, in reciprocal
contracts, the object or subject matter for one is the cause for the other, and vice
versa. For example, in a contract of sale of a lot for P5M, as to the seller, the object
is the lot and the cause or consideration (the primary reason why he sells his lot)
is the payment to him by the buyer of the P5M purchase price. As to the buyer, the
object is the P5M and the cause or consideration (the primary reason why he buys
the lot) is the delivery to him by the seller of the lot.

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4. What is the distinction between cause and motive?

CAUSE MOTIVE
1. The remote or indirect
1. The immediate or direct reason.
reason.

2. It is always known to the other 2. May be unknown to the

party. other party.

3. It is an essential element of a 3. Not an essential element of

contract. a contract.

4. Its illegality affects the contract’s 4. Illegality does not void the
validity. contract.

 READ THIS CASE IN ITS ORIGINAL TEXT: Olegario vs. Court

of Appeals, G.R. No. 104892, November 14, 1994.

5. What are the requisites for cause in a contract?

It must be present (existing at the time of perfection of the
contract). Hence, absence of cause (as distinguished from
inadequacy, and failure of cause) voids a contract. (Art. 1352)
(a) It must be lawful. (Art. 1352)
(b) It must be true or real. If the cause stated is false, the contract is VOID,
unless some other cause which is lawful really exists. (Art. 1353)

6. Is the contract valid although the cause is not stated?

 Yes, because it is presumed that the cause exists and is lawful,

unless the debtor proves the contrary. (Art. 1354)

7. What is the rule on lesion or inadequacy of cause in a contract? (Art. 1355)

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(a) General Rule – Lesion per se does not invalidate a contract.

(b) Exceptions :
(a.1.) When the lesion is attended with fraud, mistake, or undue
influence.
(a.2.) When specified by law. (e.g., Art. 1381, pars. 1 & 2.)

APPLICATION/PROBLEMS :
1. What is the status of a contract wherein any of the defects enumerated
below are found to be existing? Give an example of contracts where each of
the following defects can be shown.
(a) Want or absence of cause
(b) Illegality of cause
(c) Failure of cause
(d) Failure to state the cause
(e) False cause
(f) Lesion or inadequacy of cause

2. Tony wanted to kill Alvin and hired Billy, the hitman, to do the job. Billy
demanded P250,000.00 in cash for his services. Since Tony was out of cash,
he sold his Nikon camera to Fred for P300,000.00, so that the planned
execution will be carried out. When the mother of Tony found out about the
sale, and the reason why Tony had sold his camera, Tony’s mother sought to
have the sale avoided on the ground of illegality of cause. Will the action of
Tony’s mother prosper? ⇨ Arts. 1350 & 1351

3. On August 30, 2016, Smith sold to Caloy his BMW big bike for
P250,000.00. It was stipulated in their contract that delivery and payment was
to be simultaneously made on September 15, 2016. On the agreed date,
Smith delivered the bike to Caloy who promised to pay the P250,000.00 the
following day as he was short of cash. Caloy, however, failed to make
payments despite demands from Smith. Hence, Smith filed an action to have
the sale declared null and void by the court on the ground of absence of cause

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since the consideration had not been paid. Is the remedy taken by Smith
proper? ⇨ Art. 1352

4. On June 15, 2016, Susie signed a promissory note in favor of Milcah.

The promissory note is worded as follows: “I promise to pay Milcah the
amount of P50,000.00 on or before September 15, 2016.” The promissory
note, however, does not state what Susie received from Milcah in exchange
for the P50,000.00 promised to be paid. Is this promissory note valid despite
the apparent absence of cause? ⇨ Art. 1354

5. On September 6, 2016, Mrs. Reyes offered to sell her beach resort in

Batangas to Mr. Cayco for P14M. Considering the prevailing price of similarly
situated resorts in the area, Mr. Cayco felt he found himself a good deal.
Hence, Mr. Cayco readily accepted the offer, and immediately bought the
resort from Mrs. Reyes. Three weeks after the parties closed the sale, Mrs.
Reyes came to know from a friend that the resort she had sold to Mr. Cayco
had a valuation of P20M. Mrs. Reyes then filed an action to have the contract
of sale cancelled. May the contract of sale between Mrs. Reyes and Mr.
Cayco be cancelled on the ground of lesion or inadequacy of cause? ⇨ Art.
1355

*** END ***

FOOD FOR THOUGHT

“Let me… remind you that it is only by working with an

energy which is almost superhuman and which looks to
uninterested spectators like insanity that we can accomplish
anything worth the achievement. Work is the keystone of a
perfect life. Work and trust in God.”
Woodrow Wilson

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“Nothing is more harmful to the service, than the neglect of

discipline; for that discipline, more than numbers, gives one
army superiority over another.”
George Washington

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