Definition of terms

A
Antichresis – is a contract for security between the debtor and his creditor, a transfer of possession of the
pledged real property from the debtor to the creditor including the fruits
Absentee – is a person who disappears from his domicile his whereabouts being unknown, and without leaving
an agent to administer his property
Absolute – free from imperfection, walang condition, no exemption
Annulment – remedy provided by law for the declaration of the inefficacy of a contract based on a defect or
vice in the consent
Assent – to agree to or approve of something
Acceptance – manifestation by the offeree of his assent to all the terms of the offer, pagpapakita ng taong in-
offer-an na nag aagree siya sa lahat ng terms ng offer
Accion pauliana – deprive rights to enforce claim
Absence or want of cause – there is a total lack of any valid consideration for the contract
Ambiguous – deep, masyadong malalim words
B
Breach of contract – failure to fulfill the obligation without valid or legal reasons
C
Chattel mortgage – security pero hindi i-dedeliver, must be registered, legal term for a type of loan contract, the
purchaser borrows funds for the purchase of movable personal property (the chattel) from the lender
Contract of addition – a legal document between parties that clearly spells out just what is expected and
required each party, relationships between businesses and consumers are controlled by contracts
Commodatum – refers to a gratuitous loan of movable property which is to be returned undamaged to the
lender, latin word commodore which means “to lend”
Conformity – agreement
Counter-offer – extinguishing the original offer ex. Bigyan kita 50 tsaka jacket ni kuya wil (orig offer) tas sabi
mo de, gawin mo ng 100 pero wala ng jacket ni kuya wil (counter offer)
D
Demented – mahina ulo
E
Earnest money – partial payment of the purchase price and is considered as proof of perfection ng contract
Erroneous – based on facts believed to be existing but inexistent
Estoppel - touch move, a legal bar to alleging or denying a fact because of one’s own previous actions or words
to the contrary, prevents someone from arguing something contrary to a claim or act performed by that person
previously
Emptio rei sperati – expected thing
Emptio spei – mere hope or expectancy
F
Future inheritance – any property or right, not in existence or capable of determination at the time of the
contract, that a person may inherent in the future
Failure of cause – negligence?
Falsity of cause – is meant that the contract states a valid consideration, but such statement is not true
G
General – may requisites, may condition, may exemption
I
Ignorantia legis neminem excusat - ignorance of the law excuses no one
In jest – or in anger
Inadequacy of cause
Illegal per se – the contract is illegal because it is wrong by its nature
Illegal per accidens - means that the contract is illegal because it is prohibited by law
In pari delicto – both parties are guilty, both parties are in bad faith
L
LMCPP – Law, Morals, good Customs, Public order, Public Policy
Lucid interval – temporary period of sanity
Lesion – any damage caused by the fact that the price is unjust or inadequate or insufficient, gross inadequacy
of the price, injury or wound, refers to loss from another’s failure to perform contract
M
Manifestation – demonstration, ipakita, showing
Motive – purely personal or private reason which a party has in entering into a contract
O
Offer – proposal made by one party (offerer o yung nag offer) to another (offeree o yung in-offer-an) indicating
a willingness to enter into a contract
Option – may refer to the privilege itself to the offeree to accept an offer within a certain period
Option contract – giving a person for a consideration a certain period within which to accept the offer of the
offerer
Option period – period given
Option money – money paid or promised to be paid in consideration for the option
Obscure – malalim
P
Prima facie – sufficient to establish a fact or raise a presumption unless disproved or rebutted
Public document or instrument – notarized document, one which is acknowledged before a notary public or any
official authorized to administer oath, by the person who executed the same, evidence na valid yung contract
Private document – hindi notarized
Plaintiff – a person who is accusing another person or group of some wrongdoing
R
Reverential fear – religion, ex. Pari, sige ka nakatingin si Lord
Remunerate/d – to pay an equivalent to for a service
Rectify – to set right; remedy
Rescission – is a remedy granted by law to the contracting parties and sometimes sa third persons in order to
secure reparation of damages caused them by a valid contract
Ratification – means that one voluntarily adopts or approves some defective or unauthorized act or contract,
cleanses the contract from all its defects
Restitution
S
Sale of hope
Simulate – to give or assume the effect of often with the intent to deceive
U
Unemancipated – not free, still dependent sa parents
Unauthorized contracts – those entered into in the name of another person by one who has been given no
authority or legal representation
V
Void abinitio – void at the very beginning
W
Ward – is a person under guardianship by reason of some incapacity
 OBLICON
Chapter 1 Contracts
ART. 1305 – ART. 1317
I. Definition/concept
Contract
 Under Art. 1305, it is a meeting of the minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.
 It is one of the sources of obligations
 It is not an absolute rule but rather a general rule
Auto-contract
 Or automatic contract happens when a person enters a contract with himself
 You enter it in behalf of another
 Agent ni A si B
II. Distinctions
 There can be no contract if there is no obligation
 Obligation is the effect of contract; while contract is the cause (juridical tie) of obligation
 All contracts are agreements but not all agreements are contracts
III. Elements of Contract
1. Natural elements – Assumed to exist in certain contracts and inherent (warranty)
2. Essential element – also known as requisites, must be present for a contract to be valid, no contract can
validly exist (consent, object, cause or consideration)
*common – present in all contracts (COC)
*special – not common to all contracts, specified contracts lang as regards to form (donation of
immovable property, chattel mortgage), as regards the subject matter (real property in antichresis), and
as regards the consideration or cause (price in sale, lease, liberality in commodatum)
3. Accidental elements – exist only when they are stipulated by the parties (conditions, periods, interest,
penalty, mode of payment: installments ba?)

IV. Stages in the life of a contract (PPC)

1. Preparation or negotiation or conception – bargaining stage, offer and counteroffer, parties are preparing
to enter into contract, not yet arrived at any definite agreement
2. Perfection or birth – have come to a definite agreement, meeting of the minds regarding the object and
cause, the acceptance must be absolute, binding force
 3. Consummation or termination or death – parties have performed their respective obligations, doesn’t
mean na extinguish na yung obligation just liquidation phase
V. Basic principles or characteristics of contract (AMOR)
1. Autonomy, Freedom or liberty to contract – may autonomy or power to enter into contract, free to agree
on any terms or conditions, not absolute, limitations: LMCPP
2. Obligatory force – contract must bind both parties, its validity or compliance cannot be left to the will of
one of them. Pero yung determination of the performance may be left to a third person pero dapat in
good faith si third person
3. Perfection by mere consent
4. Mutuality of contract – both parties are mutually bound by what they have agreed at dapat with honesty
and good faith, meeting of minds
5. Relativity of contract – those who are relative to the contract, parties, their heirs and assigns except sa
mga rights na hindi pwede i-transfer or not transmissible, pwede ring si third person
*Cases when third persons may be affected by a contract:
 Stipulation pour autrui
 Contracts creating real rights or immovable rights
 Contracts entered to defraud creditors by the debtor
 Contracts which have been violated at the inducement of a third person
Stipulation pour autrui is a stipulation conferring or consulting a favor upon a third person
*Requisites of stipulacion pour atrui
 Must have clearly and deliberately conferred a favor kay third peron
 Dapat part lang si third person hindi whole ng contract kasi di naman talaga siya kasama sa contract
nung una palang
 Should not be conditioned or compensated
 Neither of the contracting parties bears the legal representation or authorization of the third person
Any third person na inakit o inimpluwensyahan yung isa na i-violate yung contract ay liable for damages
VI. Classifications of Contract
Acc to name or designation
 Nominate – has a specific name or designation in law (ex. Commodatum, lease, agency, sale)
 Innominate – has no specific name or designation in law
Kinds of innominate:
 Do ut des (I give that you may give)
 Do ut facias (I give that you may do)
 Facto ut des (I do that you may give)
 Facto ut facias (I do that you may do)
*Do ut des is no longer an innominate contract kasi already been given a name which is barter or exchange.
*Rules governing innominate contracts
1. The agreement of the parties
2. The provisions of the civil code on oblicon
3. The rules governing the most analogous (comparison, parallel, related to)
4. The customs of the place
Acc to perfection
 Consensual – perfected by mere consent (ex. Sale, lease, agency)
 Real – perfected by the delivery of the thing (ex. Depositum, pledge, commodatum)
 Solemn contract – when the law requires that a contract be in some form to be valid (donation of real
property which must be in a public instrument)
Acc to cause
 Onerous – exchange of valuable consideration bet. Parties, detrimental, may bayad, reciprocally
obligated to each other (sale, lease, partnership)
 Remuneratory or remunerative – one the cause of which is the service or benefit which is
remunerated, the purpose is to reward, monetary
 Gratuitous – does not give valuable consideration, liberality of the benefactor or giver, generosity
(donation, commodatum)

Acc to form
 Informal, common or simple – which may be entered into in whatever form provided all the essential
requisites for their validity are present, consensual contracts lang
 Formal or solemn – required by law
Acc to obligatory force
 Valid
 Rescissible
 Voidable
 Unenforceable
 Void
 Inexistent
Acc to person obliged
 Unilateral – one person
 Bilateral – two persons, reciprocal obligation, give and take
Acc to risks
 Commutative – when the undertaking of one party is considered equivalent, there is an exchange of
consideration (ex. Sale, lease)
 Aleatory – kapag nakadepende sa certain event or contingency both as to benefit or loss, dependent
upon chance (ex. Insurance, sale of hope, gambling)

Acc to liability
 Unilateral – kapag ang obligation ay nasa part lang ng one party
 Bilateral – reciprocal obligations for both parties
Acc to status
 Executory – not yet been completely performed by both parties
 Executed – fully and satisfactorily carried out by both parties
Acc to dependence to another contract
 Preparatory – means to an end (agency, partnership)
 Accessory – nakadepende sa isa pang contract, cannot stand alone (mortgage, guaranty, pledge)
 Principal – does not depend upon another contract, can stand alone (sale, lease, barter)
Acc to dependence of part of contract to other parts
 Indivisible or entire – when each part of the contract is dependent upon the other parts (sale of a
dining room table and 8 matching chairs)
 Divisible – when one part of the contract can be performed independently of the other parts

Oral contract – word of mouth

Written contract – embodied in a document
Express contract – terms and condition are agreed orally or in writing
Implied contract – established based on the conduct of the parties
Chapter 2 Essential requisites
Art. 1318 - 1355
VII. Essential elements or requisites of contract
1. Consent – conformity or concurrence of wills (offer and counter-offer), meeting of minds or mutual assent
between parties sa object and conditions ng contract. Acceptance must be absolute, and the offer must be
certain. Advertisements are not definite offers, mere invitations lang sila to make offers. Yung mga acceptance
through letters, telegrams at perfected once na nakuha o na-receive na nung isa.
Who cannot give consent?
 Unemancipated minors –until maka reach ng 18 years old, it varies: unless may kasamang parent/s,
necessity like clothing at pagkain
 Insane or demented persons
 Deaf-mutes
 Others: persons suffering the accessory penalty civil interdiction, hospitalized lepers, prodigals
(spendthrifts), deaf and dumb who are unable to read and write, unsound mind even though they have
lucid intervals
Lucid interval VALID
Drunkenness VOIDABLE
Hypnotic spell VOIDABLE
Reverential fear VALID
Characteristics of consent
1. It is intelligent
2. It is free and voluntary – no vitiation of consent by reason of violence or intimidation
3. It is conscious or spontaneous – no vitiation of consent by reason of mistake, undue influence, or fraud
Vices of consent VIMUF VOIDABLE
 1. Violence or force
2. Intimidation or threat or duress
3. Mistake or error – wrong conception of a thing or lack of knowledge, may mali sa object or condition ng
contract
*Mistake of fact (general) – object, condition, quantity or amount, motives, identity or qualifications,
*Mistake of law – arises from an ignorance of some provision of law, or from an erroneous
interpretation of its meaning
4. Undue influence – exercise of superiority, overpowers the mind of a party as to prevent him na
makapag-isip ng maayos
5. Fraud or deceit – causal fraud, inuto ka para pumasok sa contract
*fraud by concealment – failure to disclose facts when there is a duty to reveal them
2. Object – subject matter, really the object of every contract
Kinds of object of contract
1. Things (as in sale)
2. Rights (as in assignment of credit)
3. Services (as in agency)
Requisites of things as object of contract CIED
1. The thing must be within the commerce of men
2. It must not be impossible, legally or physically
3. Must be in existence
4. Must be determinate or determinable (can be determine not specific thing)
Requisites sa services ganun din pero wala lang E. CID lang
All rights may be the object of a contract. The exceptions are when they are intransmissible by their nature, or
by stipulation, or by provision of law.
Future things ay PWEDE
Future inheritance ay HINDI PWEDE
Kinds of impossibility
1. Physical – when the thing or service in the very nature of things cannot exist or be performed.
a. Absolute – the act cannot be done in any case ex. To fly like a bird
b. Relative – arises from the special circumstances, conditions or qualifications of the obligor ex. To
make payment to a dead person, to paint a portrait by a blind person)
2. Legal – when the thing or service is contrary or against to LMCPP
3. Cause or consideration of contracts – or causa, the essential reason or purpose which the contracting parties
have in view at the time of entering into the contract
Cause distinguished from motive
Cause Motive
Immediate or direct reason Remote or indirect reason
Known to other contracting party May be unknown
Essential element Is not
 Affects the validity of a contract Does not render the contract void

Requisites of cause ELT

1. Must exist at the time of the contract is entered
2. Must be lawful
3. Must be true or real
Effect of absence of cause
1. A contract which is absolutely simulated or fictitious is INEXISTENT and VOID
2. Promise to make a gift, or to render some gratuitous service in the future are NOT ENFORCEABLE
kasi walang consideration
3. Promises made in gratitude for good deeds CANNOT BE ENFORCED because they constitute only
moral not legal consideration
Illegality of cause implies that there is a cause but the same is unlawful or illegal or VOID AND NULL
Effect of lesion or inadequacy of cause
1. (General rule) Lesion or inadequacy of cause does not invalidate the contract, does not affect the validity
of a contract if the consent between the parties is not defective
2. (Exceptions) Lesion will invalidate a contract
a. when there has been fraud, mistake, or undue influence
b. in cases specified by law

Chapter 3 Form of Contracts

ART. 1356 - 1358
Form of contracts
 It refers to the manner in which a contract is executed or manifested.
 The contract may be oral, writing or partly oral and partly writing.
 May be express or implied
 A written contract may consist of a letter, memorandum, note or other instrument

Form for validity of contract

1. Donation of real property – it must be in a public instrument
2. Donation of personal property the value of which exceeds P5,000 – must be in writing
3. Sale of land through an agent – the authority of the agent must be in writing; otherwise, the sale is void
4. Stipulation to pay interest – writing, otherwise no interest is due, contract of loan
5. Contract of partnership
Public document ay for convenience, for future reference, must be in writing kasi kung hindi, hindi siya
considered as valid
Kapag umayaw sa pamana, dapat in writing din
 Chapter 4 Reformation of Instruments
ART. 1359 – 1369
X. Reformation
Reformation or doctrine of reformation is that remedy allowed by law by means of which a written instrument
is amended or rectified to express or conform to the real agreement or intention of the parties
Reason: the courts do not attempt to make another contract kasi it would be unjust and inequitable to allow the
enforcement of a written instrument na hindi naman talaga focused sa real agreement or meeting of the minds
ng parties.
Requisites of reformation
1. There is a meeting of the minds
2. The written instrument does not express the true agreement or intention of the parties
3. The failure to express he true intention is due to mistake, fraud, inequitable conduct or accident
In reformation of contracts, what is reformed is not the contract itself, but the written instrument embodying the
contract.
Reformation distinguished from annulment
Reformation Annulment
There has been a meeting of the minds There has been no meeting of the minds

The written instrument purporting to embody the The consent of one of the parties being vitiated by
contract does not express the true intention of the mistake
parties

Between New Civil Code and principles of the general law, NEW CIVIL CODE PREVAILS. The latter
(principles of gen law) will have only suppletory (additional) effect.
Mutual mistake – is mistake of fact that is common to both parties which causes the failure of the instrument to
express their true intention
1. The mistake must be of fact
2. Mistake must be proved by clear and convincing evidence
3. Mistake must be mutual
4. Mistake must cause the failure of the instrument to express their true intention
If not mutual, reformation is granted only to the party who was mistaken in good faith.
Kapg si third person na guumagawa ng instrument or clerk or typist na acted in bad faith, neither party is
responsible for the mistake. Hence, either party may ask for reformation.
There shall be no reformation in the ff cases:
1. Simple donations inter vivos where no condition is imposed
2. Wills – can be change through another will
3. When the real agreement is void
 4. When one party has brought an action to enforce the instrument – he admits its validity and that it
expresses the true intention of the parties so kung mag file pa ng reformation, inconsistent na yung
argument niya
The burden of proof ay nasa tao na humiling ng reformation
Chapter 5 Interpretation of contracts
ART. 1370 – 1379
VIII. Interpretation of contracts
 Interpretation of a contract is the determination of the intention of the parties to a contract
 It is the process of ascertaining (to find out or learn with certainty) the intention of the parties from the
written words.
 Necessary only when the terms and stipulations in the contract are ambiguous and not clear.
 If the terms are clear and no doubt upon the intention of the parties, the literal meaning shall control.
Rules:
1. The intention of the contracting parties should always prevail
2. The intention of the parties can be determined through their action
3. Yung interpretation ng general terms shall be limited to those things or cases na napagusapan ng parties
4. Kapag may several meaning and contract, piliin ang most adequate or sufficient
5. Usage and custom of the place
6. Shall not favor the party who caused the obscurity
7. If gratuitous contract is ambiguous, the least transmission of rights shall prevail ex. R gave his car to E,
is it donation or commodatum? Commodatum.
8. If onerous contract, in favor dapat sa greatest reciprocity of interest ex. D borrowed from C 5,000 at
12% interest. 6 mos or 1 yr? 1 yr.
IX. Simulation of contract
Act of deliberately deceiving others by pretending by agreement
Kinds of simulation
1. Absolute simulation or absolutely simulated contract – lacks of COC, contract does not really exist, and
the parties do not intend to be bound at all VOID
2. Relative simulation or relatively simulated contract – where the parties only hide or conceal their true
agreement, obscure terms VALID ex. Yung donation ginawang contract of sale kunwari just to avoid
paying of tax
Valid contracts are those that meet all the legal requirements and limitations for the type of agreement and are
legally binding and enforceable.
Limitations on contractual stipulations LMCPP
1. Law
2. Morals – good and right conduct, norms
3. Good customs – habits and practices na finofollow na din habang tumatagal
4. Public order – public safety or public weal (weal meaning well-being)
5. Public policy – broader than public order, also about sa considerations
XI. Kinds of defective contracts RVUV
Chapter 6 Rescissible contracts
1. Rescissible contracts – there are no defects in the essential elements of a contract, but damages or injuries are
suffered by another person, such as:
a. The ward, whose property is alienated by the guardian with a lesion of more than one-fourth;
b. The absentee, whose property is alienated by the administrator with a lesion of more than one-fourth;
c. The creditor, who is defrauded by the debtor; when the creditor cannot in any other manner collect the
claim due to him;
d. The plaintiff in a case where the property under litigation is alienated by the defendant without his
consent or without the authority of the court; and
e. In other cases, expressly declared by law to be subject to rescission
Under oblicon, you can validate a rescissible contract through prescription not ratification
Requisites of rescission
1. Contract must be validly agreed upon
2. There must be lesion or pecuniary prejudice
3. Must be based upon a case provided by law
4. No other legal remedy
5. The party asking for rescission must be able to return what he is obliged to restore
6. Object of contract must not legally be in the possession of third persons who did not act in bad faith
7. Period must not have prescribed
Chapter 7 Voidable contracts
2. Voidable contracts – are those which possess all the essential requisites of a valid contract but one of the
parties is incapable of giving consent or consent is vitiated by VIMUF
Kinds of voidable contracts
1. Legal incapacity to give consent
2. Violation or vitiation of consent
Period for filing action for annulment
(4-year period)
1. From the time the intimidation ceases
2. From the time fraud is discovered
3. From the time the guardianship ceases
Kinds of ratification
1. Express
2. Implied or tacit
Requisites of ratification
1. There must be knowledge of the reason
2. Reason must have ceased
3. Injured party must have executed an act which implies to waive his right
Who may ratify?
1. Guardian
2. Injured party himself
3. Party whose consent is vitiated
Chapter 8 Unenforceable contracts
3. Unenforceable contracts – those that cannot be enforced or given effect in a court of law, before the court,
requires writing or evidence
Kinds of unenforceable contracts
1. those entered in the name of another by without or in excess of authority
2. those do not comply with the statute of fraud
3. those where both parties are incapable of giving
Statute of frauds – kailangan written kasi kapag nagkaroon ng fraud, dapat may evidence, purpose: not only to
prevent fraud but also to guard against the mistakes of honest men by requiring that certain agreements
specified
Must appear in writing in order to be enforceable:
 Agreement not to be performed within a year
 Guaranty or special promise to answer for the debt, default or miscarriage of another
 Agreement made in consideration of marriage other than mutual promise to marry
 Agreement for the sale of goods, chattels, or things in action at a price of P500
 Lease for more than one year
 Sale or real property or an interest therein
 Representation as to the credit of a third person
Chapter 9 Void or inexistent contracts
4. Void or inexistent contracts – is one where the object or cause is defective (void), or where one, some, or all
the essential elements of a contract are missing (inexistent), cannot be ratified
Void
a. Those whose cause, object, or purpose is contrary to LMCPP
b. Those whose object is outside the commerce of men
c. Those which contemplate an impossible service
d. Those expressly prohibited or declared void by law
Inexistent
a. Those which are simulated or fictitious
b. Those whose cause or object did not exist at the time of the transaction
c. Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained
Rescissible Voidable Unenforceable Void Inexistent
There’s a valid There’s a valid Valid and binding
contract contract
External or outside Internal or inside
the contract factors the contract factors
Consent