OBLIGATION – juridical necessity to give, to do or not to do 3.

In obligation not to do, and obligor does what is forbidden, shall

be UNDONE AT HIS EXPENSE.
4 ELEMENTS OF OBLIGATION
1. ACTIVE SUBJECT (creditor/obligee) – whose obligation is 4 GROUNDS; debtor liable for damages
constituted 1. Default/mora/delay
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, to do or not 2. Fraud/dolo/deceit
to do 3. Negligence/culpa/fault
3. OBJECT/PRESTATION – subject matter 4. Contrary to terms of obligation
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – reason
1. DEFAULT/MORA – delay
CIVIL OBLIGATION NATURAL OBLIGATION      3kinds
derived from positive law derived from equity & justice      a. Mora solvendi – debtor’s delay to give (real ob.), to do
enforceable by court action not enforceable by court action (personal ob.)
     b. Mora accipiendi – creditor’s delay to accept
5 SOURCES OF OBLIGATION      c. Compensatio Morae – delay of both in reciprocal obligation
1. LAW
2. CONTRACTS CONCEPT OF DELAY
3. QUASI-CONTRACTS – arise from lawful, voluntary acts; no one General Rule: No demand, No delay
shall be unjustly enriched... Exceptions:
     2Kinds 1. Law states
     a. Solutio indebiti – something received (delivered on a mistake), 2. Obligation states (if he promised)
no right to demand it 3. Time is the essence
     b. Negotiorum gestio – voluntary mgt of property/affairs of (not necessary to state in contract, intent is sufficient)
another w/o his knowledge/consent 4. Demand be useless if delay
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise from 5. There's already a performance by one party (reciprocal oblig.)
damage; fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law – arise from civil EFFECTS OF DELAY
liability that is a consequence of a criminal offense 1. Damages
2. When to deliver determinate thing, STILL LIABLE in fortuitous
DILIGENCE OF A GOOD FATHER OF A FAMILY event.
- care need to be exercised by a debtor to deliver/give determinate 2. FRAUD/DOLO/DECEIT – conscious, deliberate, intentional evasion
thing of fulfillment (malice/dishonesty)
Exception: When law/stipulation of parties requires a differnt -bad faith (to mislead/deceive another)
standard of care (slight/extraordinary diligence).      2 Kinds
     a. Dolo causante/Causal fraud – fraud in obtaining consent;
When creditor is entitled to the fruits consent is defective, contract is voidable. Remedy: annulment
Rule: The creditor has personal right (right to ask for delivery) from      b. Dolo incidente/Incidental fraud – fraud w/c vitiates consent.
the time the obligation to deliver arises. Remedy: damages
But NO real right (right enforceable against the whole world) until it
is delivered. 3. NEGLIGENCE/CULPA/FAULT – voluntary act/omission; no bad
faith intended
3 KINDS OF FRUITS - failure to observe for the protection of interests of another person
1. NATURAL – w/o human intervention the degree of care the circumstance justly demand.
2. INDUSTRIAL – w/ human intervention      3Kinds
3. CIVIL – derived by virtue of juridical relation      a. Culpa aquiliana/Civil negligence – quasi-delict/torts
-(source of obligation) by parties not related by any preexisting
Creditor’s rights if debtor fails to comply w/ the obligation contract.
1. Determinate      b. Culpa contractual/Contractual negligence – breach
a. Performance -(not a source of obligation) there's preexisting obligation.
b. Damages - contract may be expressed/implied
2. Generic Remedy: damages
a. Performance      c. Culpa criminal/Criminal negligence – crime/delict
b. Damages - causes damages/civil liability
c. Obligation be complied at debtor’s expense -(may choose bet. criminal action/civil action)

Creditor’s rights if debtor does in contravention 4. CONTRARY TO THE TERMS OF OBLIGATION - violation of terms
1. Damages and conditions
2. Ask it be UNDONE at debtor’s expense - not due to fortuitous events. Remedy: damages

FORTUITOUS EVENT – cannot be foreseen, if foreseen, inevitable 2 RULES OF PRINCIPAL & INSTALLMENT
General Rule: No person liable to fortuitous event. 1. Receipt of principal w/o mention/reservation of interest,
- Oblig. extinguished presumed interest is paid also.
Exceptions: 2. Receipt of latter installment w/o mention/reservation of prior
1. Law states installment, presumed prior installment is paid also.
a.) debtor guilty of fraud, negligence, or delay, or.
contravention of tenor of oblig. 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim against
b.) Debtor promises deliver to 2/more persons who do not DEBTOR
have same interest (bad faith) 1. Exact payment plus damages
c.) Oblig. to deliver specific thing arises from crime 2. Attach debtor’s properties
d.) Thing to be delivered is generic 3. Accion subrogatoria – exercise rights & actions except inherent in
2. Stipulation/contract states- freedom of contract (but must be person
clearly expressed) 4. Accion pauliana – cancel acts/contracts by debtor to defraud
3. Assumption of risk creditor

EFFECTS OF FORTUITOUS EVENT to thing to be delivered TRANSMISSIBILITY OF RIGHTS

- extinguish the obligation if determinate; generic does not General Rule: ALL RIGHTS are transmissible.
extinguish the obligation Exceptions:
1. Law states
3 MISCELLANEOUS RULES ON PERFORMANCE OF OBLIGA-TION 2. Contract states
1. When to deliver determinate, accessions (additions/ 3. Obligation is purely personal
improvements) and accessories (joined/included with the principal)
are INCLUDED even not mentioned. 10 Kinds of Obligation
2. If debtor fails  to do, it shall be DONE AT HIS EXPENSE, same with 1. Pure
doing the contravention; poorly done be undone. 2. Conditional
3. Alternative
4. Facultative > Reciprocal Oblig.-- same cause; simultaneous/the fulfillment of
5. Joint one considered suspensive condition of another to fulfill his.
6. Solidary (contract of sale)
7. Divisible > Non-reciprocal -- different cause; not simultaneous.
8. Indivisible 3. OBLIGATION W/ A PERIOD
9. Obligation w/ a period - demandability/extinguishment subject to the expiration/arrival of
10. Obligation w/ a penal clause period
11. Unilateral & Bilateral
12. Real & Personal PERIOD – future and certain
13. Determinate & Generic - interval of time; either gives RISE to oblig. or produces
14. Civil & Natural EXTINGUISHMENT
15. Legal, conventional, and penal obligations.
DAY CERTAIN – must come, not known when
1. PURE OBLIGATION
- w/o condition & specific date, demandable at once (pure has 7 CASES CONSIDERED TO BE “OBLIGATION W/ A PERIOD”
resolutory condition/period) 1. Little by little/time to time
2. In partial payment
2. CONDITIONAL OBLIGATION 3. Payable ASAP
- there is condition in performance; future & uncertain 4. When I am in a position to pay
     2 Kinds of Condition 5. When I have the money
     a. Suspensive condition (condition precedent/antecedent)  – 6. At any time I have the money
happening of condition gives RISE to obligation 7. When my means permit me to do so
- suspended until the happening of condition.
     b. Resolutory condition (condition subsequent) – happening of PERIOD CONDITION
condition EXTINGUISHES obligation certain uncertain
- ends as if it never existed. future only future/past but unknown
(*influence upon obligation) only (*) on the very existence of
6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION upon its demandability obligation itself (arise/cease)
1. Impossible conditions, contrary to law, shall ANNUL obligation. (*If left to debtor's will): court (*): invalidates oblig.
2. The condition not to do an impossible thing is considered not fixes duration.
agreed upon. No retroactivity Has retroactivity
3. The condition that happens in determinate time, EXTINGUISHES
obligation. FOR WHOSE BENEFIT IS THE PERIOD?
4. The condition that happens in INDETERMINATE time, obligation General Rule: Both the debtor & creditor.
only effective at arrival. Therefore, NEITHER of them can demand performance of obligation.
5. The condition is fulfilled if DEBTOR prevents fulfillment. Exception: If the term of obligation has to favor one of them.
6. The effect of conditional obligation, once fulfilled:
- to give: retroact to the day of constitution of obligation 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE “PERIOD”
- has reciprocal prestations: fruits & interests be mutually General Rule: Obligation not demandable before lapse of period.
compensated 1. Debtor is insolvent.
- has unilateral obligation: debtor shall keep fruits & interests 2. Debtor attempts to abscond.
3. Impairment/disappearance of guarantees/securities.
RULES in case of Loss, Improvement, or Deterioration of thing 4. Failure to furnish guarantees/securities promised.
during the pendency of condition 5. Violation of undertaking.
1. LOST
a. w/ debtor’s fault – damages(value of thing+incidental damages) 4. ALTERNATIVE OBLIGATION
b. w/o debtor’s fault – extinguishes obligation - SEVERAL prestations due; performance of 1 sufficient.

2. DETERIORATION 5. FACULTATIVE OBLIGATION

a. w/ debtor’s fault  - (1) cancel obligation & damages; or (2) - ONLY 1 prestation due; but can be substituted.
fulfillment obligation w/ damages
b. w/o debtor’s fault – creditor suffer impairment ALTERNATIVE prestations LOST w/ debtor’s fault
Creditor entitled to damages but needs ff requisites:
3. IMPROVEMENT 1. Debtor can choose.
a. By nature/time – benefit to creditor 2. All prestations lost/become impossible due to debtor’s fault.
b. at expense of debtor – debtor no other right than that granted to
usufructuary (debtor no right to compensate amount for ALTERNATIVE OBLIGATION FACULTATIVE OBLIGATION
improvement)
several prestations due, giving one prestation due, but can be
one is sufficient subtituted
EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION
right to choose (debtor) unless right to choose: ONLY DEBTOR
General Rule: The obligation becomes effective retroactively to the
expressly granted to creditor or
day obligation was constituted.
third person
Exceptions:
1. In reciprocal obligation, fruits & interests during pendency of Loss of 1 or more alternatives Loss of thing due thru fortuitous
condition shall compensate each other. thru fortuitous events: oblig. not events: oblig. extinguished
2. In unilateral obligation, debtor gets fruits & interests unless there extinguished
is a contrary intent. Debtor's choice: loss of 1 of the Loss of thing due thru debtor:
alternatives thru debtor, debtor debtor liable
3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION not liable Loss of substitute thru debtor:
1. Extinguish obligation. Creditor's choice: loss of one of (Before sub.)-not liable; (After
2. Both parties restore what they received plus fruits & interests. the alternatives thru debtor, sub.)-liable
3. The rule on L, D, or I will apply to person who has to return the debtor liable
thing.
When one of debtors in reciprocal obligation does not comply w/ RULES on LOSS/DETERIORATION of the thing intended as
his obligation SUBSTITUTE in FACULTATIVE OBLIGATION
1. The right of injured party is (1) cancel contract & damages; or (2) 1. If there is a loss/deterioration of thing intended as substitute,
fulfill obligation & damages debtor is NOT liable if NOT HIS FAULT.
But if substitution is already made, debtor is liable for loss of
3 Kinds of Obligation (Accdng to PERSON OBLIGED) substitute when in DELAY, NEGLIGENCE, or FRAUD.
1. UNILATERAL – only 1 party obliged to comply. (Donation)
2. BILATERAL – both parties; mutually bound/both parties debtor 6. JOINT OBLIGATION
and creditor of each other. (mancomunada/mancomunadamente/pro
2 Kinds of Bilateral rata/proportionately/"we promise to pay")
- obligation is to be paid proportionately by debtors or to be
demanded proportionately by creditors
 2. Loss of thing due
7. SOLIDARY OBLIGATION 3. Condonation/remission
(jointly and/or severally; solidaria; in solidum; together and/or 4. Confusion/merger
separately; individually and/or collectively; juntos o separadamente; 5. Compensation
"I promise to pay") 6. Novation
- each one of debtors is bound to render or each one of creditors has **OTHER CAUSES**
right to demand from any debtor the entire compliance w/ 7. Annulment
prestation 8. Rescission
9. Fulfillment of resolutory condition
MAXIMS & SYNONYMS 10. Prescription
MAXIMS SYNONYMS
JOINT Obligation “To each his own” proportionate 1. PAYMENT/PERFORMANCE
SOLIDARY Obligation “One for all, all for individually & - Payment means delivery of money & performance of obligation
one” collectively (act to do or not to do/give a thing)
-damages/penalty also considered payment
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states 2 PLACE OF PAYMENT
2. Stipulation states 1. At place agreed upon
3. Nature of obligation requires 2. If w/o agreement
a. Object is indeterminate – paid at domicile of DEBTOR (creditor
2 PRESUMPTIONS THAT OBLIGATION IS JOINT bears expenses <ex. fare>)
1. The debts be divided as many shares as there are (debtor bears expense if he's in bad faith/delay)
debtors/creditors. b. Object is determinate – place of thing at the time of constitution
2. The debtors/creditors are distinct from one another. of obligation

8. DIVISIBLE OBLIGATION 4 SPECIAL MODES OF PAYMENT

- prestation is capable of partial fulfillment a. Application of payments (Strictly speaking, not special form of
payment)
9. INDIVISIBLE OBLIGATION b. Payment by Cession
- prestation incapable of partial fulfillment c. Tender of payment & consignation
d. Dation in payment (Dacion en pago)
*object is physically divisible BUT oblig. may be indivisible (depends
on intention) a. APPLICATION OF PAYMENT
*if object not physically divisible, oblig. ALWAYS indivisible - designation of debt to w/c payment must be applied when debtor
(intention notwithstanding)---absolute rule has several obligations of same kind in favor of same creditor.

3 KINDS OF DIVISION 3 REQUISITES OF APPLICATION OF PAYMENT

1.) Qualitative Division- quality 1. Only 1 debtor & 1 creditor
2.) Quantitative Division-quantity 2. 2 or more debts, same kind
3.) Ideal/Intellectual Division-only in the minds 3. Debts where payment will be applied must be due
4. Insufficient payment to cover ALL debts
3 KINDS OF INDIVISIBILITY
3 RIGHTS TO MAKE APPLICATION OF PAYMENT
1.) Legal- law
1. Right belongs to DEBTOR.
2.) Conventional- will of parties
2. If debtor does not avail, creditor can give him receipt designating
3.) Natural- nature
the debt from which payment will be applied.
3. If debtor accepts the receipt, he cannot complain unless THERE IS
*Obligation PRESUMED indivisible if only 1 creditor & 1 debtor
just cause to invalidate the contract.
*Personal Obligations are GENERALLY indivisible.
b. CESSION
10. OBLIGATION W/ A PENAL CLAUSE
- debtor assigns/abandons ALL his property for creditor’s benefit to
- one w/ accessory undertaking attached to obligation to assume
obtain payment from proceeds of his property
greater liablity in case of breach/non-fulfillment or
partly/irregularity of obligation.
4 REQUISITES OF VALID CESSION
- penalty substitutes damages and interests.
1. 1 debtor & 2 or more creditors
2. Debtor is in (partial) insolvency.
General Rule: Penalty ang masunod whether damage is greater than
3. Must involve ALL properties.
or less than.
4. Cession must be accepted by creditors.
PENAL CLAUSE- an accessory undertaking.
*Unless there's stipulation, creditors aren't the owners of debtor's
*Nullity of principal oblig. CARRIES w/ it penal clause
properties.
*Nullity of penal clause DOES NOT CARRY w/ it principal oblig.
*Unless there's stipulation, debtor released only up to the net
proceeds of sale of property assigned. In other words, debtor still
3 PURPOSES OF PENAL CLAUSE
liable for the balance.
1. Ensure performance of obligation
2. Substitute penalty for damages & interest in case of
c. DATION IN PAYMENT (dacion en pago)
noncompliance OR (1.) Reparation (2.) Punishment
- alienation of property to the creditor in satisfaction of debt
3. Penalize debtor in case of breach
3 REQUISITES OF DACION IN PAYMENT
In case obligation has a PENAL CLAUSE
1. Consent of creditor
General Rule: Penalty takes the place of damages & interest in case
2. NOT prejudicial to another creditor
of non-compliance.
3. Debtor not insolvent declared by a judicial decree
Creditor may recover damages when:
1. Stipulation states.
CESSION DATION IN PAYMENT
2. Debtor refuse to pay penalty. (but not damage kundi LEGAL
INTEREST) ALL properties NOT all properties
3. Debtor guilty of fraud in performance of obligation. (pwede pud Several creditors 1 creditor
ma-recover ang penalty w/ damage.) NOT act of novation act of novation
NO transfer of ownership transfers ownership
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE requires insolvency may happen during solvency  of
Nullity of principal obligation = nullity of penal clause debtor (not insolvent)
Nullity of penal clause = NOT nullity of principal obligation
d. TENDER OF PAYMENT & CONSIGNATION
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS TENDER OF PAYMENT – act of offering the creditor what is due to
1. Payment or performance him.
CONSIGNATION – act of depositing thing due w/ the court when - total or partial extinction of obligation thru creation of a new one
creditor cannot/refuses acceptance of payment which substitutes it.
- it either EXTINGUISHES/MODIFIES the orig. obligation
5 REQUISITES OF CONSIGNATION *Substitution/change of OLD obligation TO a NEW one by:
1. Valid debt that's due. - Changing object/principal conditions
2. Creditor refused the tender of payment w/o just cause - substitution of debtor
3. Prior notice of consignation  already given to persons interested in - subrogation of creditor
fulfillment of obligation (like guarantors)
4. Consignation of thing/amount due KINDS OF NOVATION
5. Subsequent notice of consignation to interested persons >Origin<
1. Legal- by operation of law
*Consignation expenses charged to creditor BUT to debtor if 2. Conventional- agreement of parties
consignation not properly made/withdrawal by debtor >How it's constituted<
*In case of loss of thing consigned, creditor bears loss/risk 1. Express- declared in unequivocal terms
2. Implied- old & new oblig. incompatible
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT >Extent/Effect<
1. Creditor is absent/unknown. 1. Total (Extinctive)- old oblig. completely extinguished
2. Creditor is incapacitate to receive at time it is due. 2. Partial (Modificatory)- old oblig. merely modified
3. Creditor refused give a receipt, w/o just cause.
4. 2 or more persons claim the right to collect. (3) OBLIGATIONS MAY BE MODIFIED BY:
5. Title of obligation lost. 1. Changing object/principal conditions. (REAL NOVATION)
2. Changing the subject or person of debtor/creditor. (PERSONAL
2. LOSS OF THING DUE NOVATION)
- perishes, disappears, or goes out of commerce; existence is Kinds of Personal Novation
unknown; cannot be recovered a. Substitution – change of debtor
b. Subrogation – change of creditor
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS 3. Changing person of the parties & the objects of principal
1. Determinate thing. condition. (MIXED NOVATION)
2. W/o debtor’s fault.
3. Not guilty of delay. 4 REQUISITES OF NOVATION
1. Previous valid obligation.
LOSS OF THING WILL NOT EXTINGUISH LIAB. WHEN: 2. Capacity & Intention of parties to modify/extinguish oblig.
1.) Law provides 3. Modification/Extinguishment of old obligation.
2.) Stipulation provides 4. Creation of new valid obligation.
3.) Oblig. requires assumption of risk
4.) When oblig. arises from crime 2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR
1. EXPROMISION – w/ consent of creditor, NO consent of old debtor
Loss of determinate thing = Impossibility of performance      2REQUISITES
Partial loss = Difficulty of performance      a. Initiative of 3rd person.
     b. Consent of creditor.
3. CONDONATION/REMISSION (expressed/implied) 2. DELEGACION – all must agree (creditor, old debtor, new debtor)
- gratuitous abandonment of right by the creditor      3REQUISITES
-req. acceptance by obligor      a. Initiative from old debtor.
     b. Consent of debtor.
5 REQUISITES OF A VALID CONDONATION/REMISSION      c. Acceptance by creditor.
1. It must be gratuitous.
2. Accepted by obligor. 7. SUBROGATION
3. Parties have capacity. - change of creditor
4. Not inofficious.
5. Comply w/ forms of donation (if made expressly) 2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original parties & 3rd person
4. CONFUSION/MERGER 2. LEGAL – by law
- meeting in 1 person of qualities of debtor & creditor w/ same      a. creditor pays another preferred creditor even w/o debtor’s
obligation knowledge
     b. 3rd person pays the express approval of debtor
3 REQUISITES OF VALID CONFUSION/MERGER      c. 3rd person pays even w/o knowledge of debtor
1. Must take place between principal debtor & creditor.
2. Must be complete
                                                                                                       
5. COMPENSATION (simplified payment) CONTRACT – meeting of minds between 2 persons to give
- 2 persons are debtors & creditors of each other something or to render service.
- extinguishment to the concurrent amount of debts of 2 persons
mentioned above. *No contract if there's no obligation BUT there can be an oblig. w/o
a contract (ex. Pay tax)
5 ESSENTIAL REQUISITES OF LEGAL COMPENSATION *All contracts are agreements but not all agreements are contracts.
1. Parties both principal debtors & creditors of each other.
2. Both debts consist sum of money/consumable things of same kind 3 ELEMENTS OF CONTRACT
& quality. 1. ESSENTIAL – w/o them, contract cannot exist
3. 2 debts are due & demandable.      a. CONSENT of contracting parties
4. 2 debts are liquidated.      b. OBJECT CERTAIN – subject matter
5. No retention/controversy by 3rd person. (Negative requisite)      c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
(2) CLASSES OF COMPENSATION      d. FORM
1. As to effect      e. DELIVERY
a. TOTAL – obligations completely extinguished. (same amt.)
b. PARTIAL – a balance remains. (different amt.) 2. NATURAL – found in certain contract, presumed to exist unless
stipulated
2. As to origin or cause
a. LEGAL – by law 3. ACCIDENTAL – various particular stipulations that may be agreed
b. VOLUNTARY/CONVENTIONAL – agreement of parties upon by contracting parties
c. JUDICIAL – order from the court
d. FACULTATIVE – only 1 of parties can choose/oppose claiming (11) CLASSIFICATION OF CONTRACTS
compensation According to:
1. NAME
6. NOVATION
 a. NOMINATE – contract given a particular/specific name (eg.      e. Public policy
partnership)
b. INNOMINATE – not given specific name (eg. I give that you may 2. MUTUALITY OF CONTRACTS
give)(4 kinds) - the contract must bind both parties; its validity/compliance cannot
be left to the will of one of them
2. PERFECTION/FORMATION
a. CONSENSUAL – perfected by mere consent 3. RELATIVITY OF CONTRACTS
b. REAL – perfected by delivery - Contracts take effect only between the parties, their assigns &
c. SOLEMN - requires compliance w/ certain formalities heirs except when there are rights & obligations not transmissible:
prescribed by laws (w/ public instrument) an essential element      a. by their nature
3. CAUSE      b. by stipulation
     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 benefit/service that - Contracts are perfected by mere consent
had been rendered previously Exceptions:
     a. REAL CONTRACTS – perfected by delivery
4. FORM      b. FORMAL/SOLEMN CONTRACTS – special form required for its
a. INFORMAL ( Common/Simple) - may be entered into perfection
WHATEVER FORM provided all essential requisites are present.
- refers to consensual contracts, oral/written, expressed/implied 5. OBLIGATORINESS OF CONTRACTS
b. FORMAL (Solemn) - required by law to be in a certain specified - The contract, once perfected, has the force of law between parties
form. which bound to comply in good faith

5. OBLIGATORY FORCE 4 KINDS OF INNOMINATE CONTRACTS

a. VALID 1. I give that you may give
b. RESCISSIBLE 2. I give that you may do
c. VOIDABLE 3. I do that you may give
d. UNENFORCEABLE 4. I do that you may do
e. VOID/INEXISTENT
4 RULES FOR INNOMINATE CONTRACTS
6. PERSON OBLIGED 1. Agreement of parties
a. UNILATERAL 2. Law on Obligations & Contracts
b. BILATERAL 3. Rules on most analogous contract
4. Customs of place
7. RISK OF FULFILLMENT
a. COMMUTATIVE – (ex. Sale) undertaking of one party equivalent STIPULATION POUR AUTRUI
of the other. - stipulation in favor of 3rd person
b. ALEATORY – fulfillment of contract depends on uncertain
event/contingency to benefit or loss (eg. insurance/sale of hope) 5 REQUISITES OF STIPULATION POUR AUTRUI
1. Stipulation NOT conditioned/compensated by any oblig.
8. LIABILITY 2. Stipulation is only PART, not the whole of the contract.
a. UNILATERAL – (ex. commodatum) creates oblig. on part of only 3. Both parties must conferred upon a favor of 3rd person
1 of the parties. 4. 3rd person must accept & say it to debtor before its
b. BILATERAL – (ex. sale) gives rise to reciprocal oblig. on both revocation/cancellation
parties. 5. Neither of both parties be the legal representation/autho-rization
of 3rd person
9. STATUS
CONSENT
a. EXECUTORY - NOT COMPLETELY performed by both parties
- meeting of offer (certain) & acceptance (absolute) upon a thing and
b. EXECUTED - FULLY & SATISFACTORILY carried out by both
cause
parties.
5 REQUISITES OF CONSENT
10. DEPENDENCE TO ANOTHER CONTRACT
1. Must be given by 2 or more parties
a. PRINCIPAL – contract may stand alone (eg. sale, lease)
2. Parties are capacitate to enter in contract
- does not depend for its existence.
3. No vitiation of consent
b. ACCESSORY – existence depends on another contract it secures
4. No conflict between declared & intended
(pledge, guarantee)
5. Legal formalities must be complied
c. PREPARATORY – entered as a means to an end
-contract not an end by itself but a means thru w/c other contracts
7 RULES ON OFFER/ACEPTANCE
may be made (eg. agency/partnership)
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY
11. DEPENDENCE OF PART OF CONTRACT TO OTHER PARTS
invitations to make an offer.
a. INDIVISIBLE (Entire) - each part of contract is DEPENDENT to
3. Advertisements for bidders are ONLY invitations.
other parts for satisfactory performance.
4. An acceptance made by letter/telegram does NOT
b. DIVISIBLE - Satisfactorily performed INDEPENDENTLY of other
bind offeror EXCEPT from the TIME it came to his knowledge.
parts.
5. An  offer made through an agent is accepted from the TIME the
acceptance is done through an agent.
3 STAGES OF CONTRACT
6. An  offer is ineffective upon death, insanity, insolvency, of EITHER
1. PREPARATION/CONCEPTION – steps taken by parties leading to
party BEFORE acceptance is made.
perfection. Not yet arrived at definite agreement.
7. When offeror  allowed offeree a certain period
2. PERFECTION/BIRTH – definite agreements or meeting of minds.
to accept, offer  MAY be withdrawn AT ANYTIME BEFORE
3. CONSUMMATION/TERMINATION – parties have performed, &
ACCEPTANCE unless there is something
contract is fully accomplished or executed. Extingiushment or
PAID/PROMISED(consideration).
termination of contract.
- may be terminated after perfection (mutual agreement), not by
3 persons who CANNOT GIVE CONSENT to a contract (if entered
performance.
into, contract is voidable)
1. UNEMANCIPATED MINORS
5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT
2. INSANE/DEMENTED PERSONS (unless they acted DURING LUCID
1. PRINCIPLE OF AUTONOMY (liberty to contract)
INTERVAL)
Provided they are not contrary to:
3. DEAF-MUTES who DO NOT know how to write
     a. Law
     b. Morals
DEMENTED PERSON – NOT exactly insane; difficult to distin-guish
     c. Good customs
right from wrong
     d. Public order
LUCID INTERVAL – period when an INSANE has acquired 3 RULES ON INTIMIDATION
SANITY temporarily, therefore, capacitated to enter into a valid 1. Age, sex, & condition of person must used to determine the
contract degree of intimidation.
2. Intimidation ANNULS obligation although it is DONE by 3rd person
2 RULES on persons WHO CANNOT GIVE CONSENT to a contract not part of contract.
1. Age of majority is 18 yrs old 3. A threat to enforce one’s claim (claim must be just & legal), DOES
2. A contract entered into by UNEMANCIPATED MINOR w/o NOT vitiate consent.
parents/guardian’s consent is voidable, except:
     a. Minor MISREPRESENTS his age (estoppel) VIOLENCE INTIMIDATION
     b. Contract involves sale & delivery of necessities to minor External Internal
Physical contact/coercion NO physical coercion; ONLY
5 VICES OF CONSENT MENTAL/MORAL coercion
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties,
contract is voidable; Remedy: annulment of contract. 5. UNDUE INFLUENCE
1. MISTAKE/ERROR - a person takes improper advantage of his power over other’s will,
2. FRAUD/DECEIT depriving the other to his reasonable freedom of choice.
3. VIOLENCE/FORCE
4. INTIMIDATION/THREAT 3 RULES ON UNDUE INFLUENCE
5. UNDUE INFLUENCE 1. There is a person who takes improper advantage of his
power over other’s will, depriving the other to his reasonable
1. MISTAKE/ERROR freedom of choice.
- wrong conception & lack of knowledge upon a thing 2. Undue influence ANNULS obligation although it is DONE by
3rd person not part of contract.
(3) MISTAKES W/C VITIATES CONSENT (Accdg. to law) 3. To constitute undue influence, ff circumstances must be
It should refer to: considered: (1) confidential, family, spiritual, & other relations of
1. substance of thing that is the OBJECT of contract parties; or (2) the aggrieved party is suffering from mental
2. conditions w/c principally MOVED 1 or both parties to enter into weakness; or (3) ignorant; or (4) in financial distress.
contract
3. Identity/Qualifications of 1 of the parties w/c was the principal SIMULATION OF CONTRACT
cause of contract. - process of INTENTIONALLY deceiving others by producing a
contract not really exist (absolute simulation), or w/c is different
4 RULES ON MISTAKE from true agreement (relative simulation).
1. Mistake to identity/qualifications of either of parties will vitiate
consent ONLY when IT is the principal cause of contract. 2 KINDS OF SIMULATED CONTRACT
2. Simple mistake of account must be corrected. 1. ABSOLUTE SIMULATION (the parties DO NOT intend to be bound
3. No mistake if parties knew the risk/doubt affecting OBJECT of at all)
contract. - completely fictitious/make-believe; VOID
4. When one of parties is unable to read or the contract is in 2. RELATIVE SIMULATION (parties conceal their true/real
language not understood by him, & mistake/fraud is alleged, the agreement)
person enforcing the contract must FULLY explained the terms to - parties are bound to real/true agreement, EXCEPT:
him.      a. contract prejudice 3rd person
     b. purpose is contrary to law, morals, good customs, public order,
2. FRAUD/DOLO public policy
- when through insidious words/machinations of one of the parties,
INDUCED the other to enter into a contract, w/c w/o them, he 7 REQUISITES OF OBJECT OF CONTRACT
wouldn't have agreed to. 1. Specific & certain
2. Services not contrary to law, morals, good customs, public order,
DOLO CAUSANTE DOLO INCIDENTE public policy
Serious Not serious 3. Services/things must NOT be legally/physically impossible
cause induces party to ENTER NOT the cause to enter into 4. Services/things are w/in commerce of men, in existence or
into contract contract capable of coming into existence.
make contract voidable contract is valid; liable 5. (Gen. Rule: ALL rights may be object of contract) Except those
for damages INTRANSMISSIBLE.
6. Determinate (kind) or determinable ( w/o the need of new
7 RULES OF FRAUD contract/agreement)
1. Failure to disclose facts when these needs to be revealed, is a 7. NO contract be entered for future inheritance UNLESS law states.
fraud. 8. Services/things must NOT be future things/rights TO BE
2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT be done ACQUIRED after perfection of contract.
by BOTH parties to make contract voidable.
3. Incidental fraud (dolo incidente) ONLY obliges person to PAY 4 REQUISITES OF CAUSE
DAMAGES. 1. It is just & equitable.
4. Usual exaggerations in trade, when other party know the “real” 2. It exists.
facts, is NOT FRAUD. 3. It is lawful.
5. A mere expression of opinion is NOT FRAUD UNLESS made by 4. It is true.
an expert & the other party relies on his special knowledge.
6. Misrepresentation made in good faith is NOT FRAUD but may LESION
constitute an error. - inadequacy of cause (eg. insufficient price for thing sold)
7. Misrepresentation by 3rd  person DOES NOT vitiate consent UNLESS
it created substantial mistake. RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
3. VIOLENCE      a. Fraud
- serious/irresistible force is employed.      b. Mistake
     c. Undue influence
2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes the reason 2 FORM OF CONTRACTS
why one entered into a contract. 1. Contracts in writing
2. Violence ANNULS obligation although it is DONE by 3rd person not 2. Contracts in a public instrument
part of contract.
1. Contracts w/c must be IN WRITING to be valid:
4. INTIMIDATION      a. Donation of personal property exceeds P5000.
- 1 of the parties is compelled by a reasonable & well-grounded fear      b. Agent’s authority in sale of land/any interest.
of an imminent & grave evil upon his person/property to give his      c. Contract of antichresis.
consent.      d Stipulation to pay interest on loans.
     e. Stipulation to reduce common carrier’s extraordinary diligence 7. Those expressly prohibited/declared VOID by law.
& to limit its liability.
* For a contract to be binding against third persons, it must be
2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be valid: registered w/ "Registry of Property".
     a. Donation of real property (both the donation & accep-tance).
     b. Sale of real property. * RESCISSION- remedy granted by law to parties/3rd persons to
     c. Partnership where real property/rights is contributed; or when secure REPARATION OF DAMAGES/restoration of things.
capital contribution exceeds P3000. * ANNULMENT- remedy provided by law for PUBLIC INTEREST.

REFORMATION OF INSTRUMENTS *Effect of ratification RETROACTIVE.

- REMEDY in equity in w/c a written instrument is amended/rectified *Ratification EXTINGUISHES right of action to annul.
to express/conform the REAL intention of parties when by mistake,
fraud, inequitable conduct, or accident instrument fails to express *Statute of Frauds- applicable only to completely executory
real agreement. contracts.
- not available where no writing exists or even if there's writing but
doesn't show any defect. *Inexistent Contracts- agreements w/c lack 1 or some or all of the
elements or don't comply w/ formalities.
(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE
1. Mutual mistake of parties.
2. One party was mistaken & the other acted fraud.
3. One party was mistaken & the other knew/believed that the
instrument did not state their REAL agreement.
4. Ignorance, lack of skill, negligence, or bad faith of person drafting
the instrument DOES NOT state the TRUE INTENTION of parties
5. Two parties agree on mortgage/pledge of personal/real property
BUT the instrument states the property is sold ABSOLUTELY, or w/
the right to repurchase.

(3) NO REFORMATION OF INSTRUMENT WHEN:

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 economic injury/damage   to one of the parties or
3rd persons, the contract may be rescinded.
2. VOIDABLE – valid & binding until annulled UNLESS ratified
(expressly/impliedly); has ALL essential requisites but because
of defect caused by VICES OF CONSENT, contract may be annulled.
-once ratified (expressly/tacitly), it becomes ABSOLUTELY VALID &
can no longer be annulled.
 3. UNENFORCEABLE – cannot be sued/enforced unless ratified; no
effect NOW but may take effect upon ratification.
-though valid are unenforceable in court unless CURED or RATIFIED.
-Once ratified, contract may then be enforceable.
4. VOID – NO effect at all; absolutely NULL & VOID; cannot be
ratified/validated.
- inexistent from its inception or from the very beginning.

5 RESCISSIBLE CONTRACTS
1. Those entered by guardians in behalf of their wards & 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.
*Payments made in a state of insolvency

3 VOIDABLE CONTRACTS
1. One of the parties INCAPABLE of giving consent to a contract.
2. Those where consent is vitiated by vices of consent. (VIMFU)
3. Those agreed in the state of drunkenness/hypnotic spell.

3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person who is given no
authority/legal representation, or who acted BEYOND his
powers/authority. (Unauthorized Contracts)
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable/doesn't have capacity of giving consent
to a contract.
4. Contracts w/ NO considerations.

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 men.
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.