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

Damages
2. Generic
4 ELEMENTS OF OBLIGATION a. Performance
1. ACTIVE SUBJECT (creditor/obligee) – whose obligation is constituted b. Damages
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, to do or not to do c. Obligation be complied at debtor’s expense
3. OBJECT/PRESTATION – subject matter
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – reason Creditor’s rights if debtor does in contravention
1. Damages
CIVIL OBLIGATION NATURAL OBLIGATION 2. Ask it be UNDONE at debtor’s expense
derived from positive law derived from equity & justice
enforceable by court action not enforceable by court action FORTUITOUS EVENT – cannot be foreseen, if foreseen, inevitable
General Rule: No person liable to fortuitous event.
5 SOURCES OF OBLIGATION Exceptions:
1. LAW 1. Law states
2. CONTRACTS 2. Stipulation/contract states
3. QUASI-CONTRACTS – arise from lawful, voluntary acts; no one shall be 3. Assumption of risk
unjustly enriched... 4. Delay
2Kinds 5. Debtor promises deliver to 2/more persons who do not have same interest
a. Solutio indebiti – something received (delivered on a mistake), no right (bad faith)
to demand it
b. Negotiorum gestio – voluntary mgt of property/affairs of another w/o his EFFECTS OF FORTUITOUS EVENT to thing to be delivered
knowledge/consent - extinguish the obligation if determinate; generic does not extinguish the
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise from damage; obligation
fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law – arise from civil liability that 3 MISCELLANEOUS RULES ON PERFORMANCE OF OBLIGA-TION
is a consequence of a criminal offense 1. When to deliver determinate, accessions (additions/ improvements) and
accessories (joined/included with the principal) are INCLUDED even not
DILIGENCE OF A GOOD FATHER OF A FAMILY mentioned.
- care need to be exercised by a debtor to deliver/give determinate thing 2. If debtor fails to do, it shall be DONE AT HIS EXPENSE, same with doing
Exception: When law/stipulation of parties requires a differnt standard of the contravention; poorly done be undone.
care (slight/extraordinary diligence). 3. In obligation not to do, and obligor does what is forbidden, shall be
UNDONE AT HIS EXPENSE.
When creditor is entitled to the fruits
Rule: The creditor has personal right (right to ask for delivery) from the time 4 GROUNDS; debtor liable for damages
the obligation to deliver arises. 1. Default/mora
But NO real right (right enforceable against the whole world) until it is 2. Fraud/dolo
delivered. 3. Negligence/culpa
4. Contrary to terms of obligation
3 KINDS OF FRUITS
1. NATURAL – w/o human intervention 1. DEFAULT/MORA – delay
2. INDUSTRIAL – w/ human intervention 3kinds
3. CIVIL – derived by virtue of juridical relation a. Mora solvendi – debtor’s delay to give (real ob.), to do (personal ob.)
b. Mora accipiende – creditor’s delay to accept
Creditor’s rights if debtor fails to comply w/ the obligation c. Compensatio Morae – delay of both in reciprocal obligation
1. Determinate
a. Performance CONCEPT OF DELAY
General Rule: No demand, No delay 1. Pure
Exceptions: 2. Conditional
1. Law states 3. Alternative
2. Obligation states 4. Facultative
3. Time is the essence 5. Joint
4. Demand be useless if delay 6. Solidary
5. Debtor guilty of delay 7. Divisible
8. Indivisible
EFFECTS OF DELAY 9. Obligation w/ a period
1. Damages 10. Obligation w/ a penal clause
2. When to deliver determinate thing, STILL LIABLE in fortuitous event.
2. FRAUD/DOLO – conscious, deliberate, intentional evasion of fulfillment 1. PURE OBLIGATION
2Kinds - w/o condition, demandable at once (pure has resolutory condition/period)
a. Dolo causante/Causal fraud – fraud in obtaining consent; consent is
defective, contract is voidable. Remedy: annulment 2. CONDITIONAL OBLIGATION
b. Dolo incidente/Incidental fraud – fraud w/c vitiates consent. Remedy: - there is condition in performance; future & uncertain
damages 2Kinds
a. Suspensive condition – happening of condition gives RISE to obligation
3. NEGLIGENCE/CULPA – voluntary act/omission; no bad faith intended b. Resolutory condition – happening of condition EXTINGUISHES
3Kinds obligation
a. Culpa aquiliana/Civil negligence – quasi-delict/torts
b. Culpa contractual/Contractual negligence – breach 6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION
c. Culpa criminal/Criminal negligence – crime/delict 1. Impossible conditions, contrary to law, shall ANNUL obligation.
2. The condition not to do an impossible thing is considered not agreed upon.
4. Contrary to the terms of obligation 3. The condition that happens in determinate time, EXTINGUISHES
obligation.
2 RULES OF PRINCIPAL & INSTALLMENT 4. The condition that happens in INDETERMINATE time, obligation only
1. Receipt of principal w/o mention of interest, presumed interest is paid also. effective at arrival.
2. Receipt of latter installment w/o mention of prior installment, presumed 5. The condition is fulfilled if DEBTOR prevents fulfillment.
prior installment is paid also. 6. The effect of conditional obligation, once fulfilled:
- to give: retroact to the day of constitution of obligation
4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim against - has reciprocal prestations: fruits & interests be mutually compensated
DEBTOR - has unilateral obligation: debtor shall give fruits & interests
1. Exact payment
2. Attach debtor’s properties RULES in case of Loss, Improvement, or Deterioration of thing during
3. Accion subrogatoria – exercise rights & actions except inherent in person the pendency of condition
4. Accion pauliana – cancel acts/contracts by debtor to defraud creditor 1. LOST
a. w/ debtor’s fault – damages
TRANSMISSIBILITY OF RIGHTS b. w/o debtor’s fault – extinguishes obligation
General Rule: ALL RIGHTS are transmissible.
Exceptions: 2. DETERIORATION
1. Law states a. w/ debtor’s fault - (1) cancel obligation & damages; or (2) fulfill obligation
2. Contract states w/ damages
3. Obligation is purely personal b. w/o debtor’s fault – creditor suffer impairment

10 Kinds of Obligation 3. IMPROVEMENT

a. By nature/time – benefit to creditor future only future/past but unknown
b. at expense of debtor – debtor no right than that granted to usufructuary (*influence upon obligation) only upon (*) on the very existence of obligation
(debtor no right to compensate amount for improvement) its demandability itself

EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION FOR WHOSE BENEFIT IS THE PERIOD?

General Rule: The obligation becomes effective retroactively to the day General Rule: Both the debtor & creditor.
obligation was constituted. Therefore, NEITHER of them can demand performance of obligation.
Exceptions: Exception: If the term of obligation has to favor one of them.
1. In reciprocal obligation, fruits & interests during pendency of condition
shall compensate each other. 5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE “PERIOD”
2. In unilateral obligation, debtor gets fruits & interests unless there is a 1. Debtor is insolvent.
contrary intent. 2. Debtor attempts to abscond.
3. Impairment of guarantees/securities.
3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION 4. Failure to furnish guarantees/securities promised.
1. Extinguish obligation. 5. Violation of undertaking.
2. Both parties restore what they received plus fruits & interests.
3. The rule on L, D, or I will apply to person who has to return the thing. 4. ALTERNATIVE OBLIGATION
When one of debtors in reciprocal obligation does not comply w/ his - w/ 2 or more prestations, only 1 is due.
obligation
1. The right of injured party is (1) cancel contract & damages; or (2) fulfill 5. FACULTATIVE OBLIGATION
obligation & damages - w/ ONLY 1 prestation but can be substituted.

3 Kinds of Obligation (Accdng to PERSON OBLIGED) ALTERNATIVE prestations LOST w/ debtor’s fault
1. UNILATERAL – only 1 party obliged to comply Creditor entitled to damages but needs ff requisites:
2. BILATERAL – both parties; performance not same time 1. Debtor can choose.
3. RECIPROCAL – both parties; performance same time 2. All prestations lost/become impossible due to debtor’s fault.

3. OBLIGATION W/ A PERIOD ALTERNATIVE OBLIGATION FACULTATIVE OBLIGATION

- demandability/extinguishment subject to the expiration of period several prestations due, giving one is one prestation due, but can be
sufficient subtituted
PERIOD – interval of time; either suspends demandability or produces
right to choose (debtor) unless granted right to choose DEBTOR ONLY
extinguishment
to creditor
DAY CERTAIN – must come, not known when If 1 of the prestation is illegal, others nullity of principal carries w/ it nullity of
may be valid, obligation remains accessory/
7 CASES CONSIDERED TO BE “OBLIGATION W/ A PERIOD” substitute
1. Little by little loss/impossibility of ALL prestations loss/impossibility of presta-tion due, w/o
2. In partial payment due, w/o debtor’s fault, extinguishes debtor’s fault, extinguishes obligation
3. Payable ASAP obligation
4. When I can afford it
5. When I have the money (3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR IN
6. When I am able to ALTERNATIVE OBLIGATION
7. When my means permit me to do so 1. If 1 of prestations lost through fortuitous event, shall still be perform by
choosing (creditor) from the remainder.
PERIOD CONDITION 2. If 1 of prestations lost through debtor’s fault, creditor may claim any of
certain uncertain remainders w/ damages.
3. If ALL prestations lost through debtor’s fault, creditor choose price w/
damages. In case obligation has a PENAL CLAUSE
General Rule: Penalty takes the place of damages & interest in case of non-
RULES on LOSS/DETERIORATION of the thing intended as compliance.
SUBSTITUTE in FACULTATIVE OBLIGATION Exceptions:
1. If there is a loss/deterioration of thing intended as substitute, debtor is 1. Stipulation states.
NOT liable if NOT HIS FAULT. 2. Debtor refuse to pay penalty.
But if substitution is already made, debtor is liable for loss of substitute when 3. Debtor guilty of fraud in performance of obligation.
in DELAY, NEGLIGENCE, or FRAUD.
NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE
6. JOINT OBLIGATION Nullity of principal obligation = nullity of penal clause
- obligation is to be paid proportionately by debtors or to be demanded Nullity of penal clause = NOT nullity of principal obligation
proportionately by creditors
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
7. SOLIDARY OBLIGATION 1. Payment or performance
- each one of debtors has right to render or each one of creditors has right to 2. Prescription
demand the entire compliance w/ prestation 3. Compensation
4. Confusion/merger
MAXIMS & SYNONYMS 5. Condonation/remission
MAXIMS SYNONYMS 6. Fulfillment of resolutory condition
JOINT Obligation “To each his own” proportionate 7. Annulment
SOLIDARY Obligation “One for all, all for one” individually & collectively 8. Rescission
9. Novation
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES 10. Loss of thing due
1. Law states
2. Stipulation states 1. PAYMENT/PERFORMANCE
3. Nature of obligation requires - Payment means delivery of money & performance of obligation

2 PRESUMPTIONS THAT OBLIGATION IS JOINT 2 PLACE OF PAYMENT

1. The debts be divided as many shares as there are debtors/creditors. 1. At place agreed upon
2. The debtors/creditors are distinct from one another. 2. If w/o agreement
a. Object is indeterminate – paid at domicile of DEBTOR
8. DIVISIBLE OBLIGATION b. Object is determinate – place of thing at the time of constitution of
- prestation is capable of partial performance obligation

9. INDIVISIBLE OBLIGATION 4 SPECIAL MODES OF PAYMENT

- prestation incapable of partial performance a. Application of payment
b. Cession
10. OBLIGATION W/ A PENAL CLAUSE c. Tender of payment & consignation
- one w/ accessory undertaking attached to obligation to assume greater d. Dacion in payment
liablity in case of breach/non-fulfillment of obligation
a. APPLICATION OF PAYMENT
3 PURPOSES OF PENAL CLAUSE - designation of debt to w/c payment must be applied when debtor has
1. Ensure performance of obligation several obligations of same kind in favor of same creditor.
2. Substitute for damages & interest in case of noncompli-ance
3. Penalize debtor in case of breach 3 REQUISITES OF APPLICATION OF PAYMENT
1. Only 1 debtor & 1 creditor
2. 2 or more debts, same kind 2. Creditor refused the tender of payment w/o just cause
3. All debts are due 3. Notice of consignation already given to persons interested in fulfillment of
4. Insufficient payment to exinguish ALL debts obligation
4. Consignation of thing/amount due
3 RIGHTS TO MAKE APPLICATION OF PAYMENT 5. Subsequent notice of consignation to interested persons
1. Right belongs to CREDITOR.
2. If debtor does not avail, creditor can give him receipt designating the debt 5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT
from which payment will be applied. 1. Creditor is absent/unknown.
3. If debtor accepts the receipt, he cannot complain unless THERE IS just 2. Creditor is incapacitate to receive at time it is due.
cause to invalidate the contract. 3. Creditor refused give a receipt, w/o just cause.
4. 2 or more persons claim the right to collect.
b. CESSION 5. Title of obligation lost.
- debtor abandons ALL his property for creditor’s benefit to obtain payment
from proceeds of his property 2. LOSS OF THING DUE
- perishes, disappears, or goes out of commerce; existence is unknown;
5 REQUISITES OF VALID CESSION cannot be recovered
1. 1 debtor & 2 or more creditors
2. Debtor is in partial/total insolvency. 3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS
3. Debtor to deliver ALL his property to creditors 1. Determinate thing.
4. Debt is due & demandable. 2. W/o debtor’s fault.
5. Creditors must sell the properties & apply the proceeds to their respective 3. No delay.
credits proportionately.
3. CONDONATION/REMISSION
c. DACION IN PAYMENT (dacion en pago) - gratuitous abandonment of right by the creditor
- alienation of property to the creditor in satisfaction of debt
3 REQUISITES OF A VALID CONDONATION/REMISSION
3 REQUISITES OF DACION IN PAYMENT 1. It must be gratuitous.
1. Consent of creditor 2. Accepted by obligor.
2. NOT prejudicial to another creditor 3. Obligation is demandable.
3. Debtor not insolvent declared by a judicial decree
4. CONFUSION/MERGER
CESSION DACION IN PAYMENT - meeting in 1 person of qualities of debtor & creditor w/ same obligation
all properties NOT all properties
require more than 1 creditor NOT require all creditors 3 REQUISITES OF VALID CONFUSION/MERGER
NOT act of novation act of novation 1. The merger of characters of debtor & creditor must be in same person.
2. Take place between principal debtor & creditor.
NOT transfer ownership transfer ownership
3. Clear & definite.
requires partial/total insol-vency may happen during solvency of debtor
5. COMPENSATION
d. TENDER OF PAYMENT & CONSIGNATION - 2 persons are debtors & creditors of each other
TENDER OF PAYMENT – act of offering the creditor what is due to him w/ a
demand that the creditor accept it 6 ESSENTIAL REQUISITES OF COMPENSATION
CONSIGNATION – act of depositing thing due w/ the court when creditor 1. Parties both principal debtors & creditors of each other.
cannot/refuses acceptance of payment 2. Compensation is not prohibited by law.
3. No retention/controversy by 3rd person.
5 REQUISITES OF CONSIGNATION 4. 2 debts are due & demandable.
1. Debt due.
5. 2 debts are liquidated.
6. 2 debts both in money/consumable things. 2 KINDS OF SUBROGATION
1. CONVENTIONAL – consent of original parties & 3rd person
(2) CLASSES OF COMPENSATION 2. LEGAL – by law
1. As to effect a. creditor pays another preferred creditor even w/o debtor’s knowledge
a. TOTAL – obligations completely extinguished. b. 3rd person pays the express approval of debtor
b. PARTIAL – a balance remains c. 3rd person pays even w/o knowledge of debtor

2. As to origin or cause
a. LEGAL – by law
b. VOLUNTARY/CONVENTIONAL – agreement of parties CONTRACT – meeting of minds between 2 persons to give something or to
c. JUDICIAL – order from the court render service.
d. FACULTATIVE – 1 of parties can choose/oppose claiming compensation
3 ELEMENTS OF CONTRACT
6. NOVATION 1. ESSENTIAL – w/o them, contract cannot exist
- substitution/change of obligation a. CONSENT of contracting parties
- substitution of debtor b. OBJECT CERTAIN – subject matter
- subrogation of creditor c. CAUSE/CONSIDERATION
In some contracts, ff are also essential:
(3) OBLIGATIONS MAY BE MODIFIED BY: d. FORM
1. Changing object/principal conditions. (REAL NOVATION) e. DELIVERY
2. Changing the person of debtor/creditor. (PERSONAL NOVATION)
a. Substitution – change of debtor 2. NATURAL – found in certain contract, presumed to exist unless stipulated
b. Subrogation – change of creditor
3. Changing person of the parties & the objects of principal condition. 3. ACCIDENTAL – various particular stipulations that may be agreed upon
(MIXED NOVATION) by contracting parties

4 REQUISITES OF NOVATION (7) CLASSIFICATION OF CONTRACTS

1. Old valid obligation. According to:
2. Agreement of parties to new obligation. 1. PERFECTION/FORMATION
3. Extinguishment of old obligation. a. CONSENSUAL – perfected by mere consent
4. Validity of new obligation. b. REAL – perfected by delivery
c. FORMAL/SOLEMN – special formalities are essential before perfection
2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR of contract
1. EXPROMISION – w/ consent of creditor, NO consent of old debtor
2REQUISITES 2. PARTIES OBLIGATED
a. Initiative of 3rd person. a. UNILATERAL – only 1 has obligation
b. Consent of creditor. b. BILATERAL – both parties require to render reciprocal prestations
2. DELEGACION – all must agree (creditor, old debtor, new debtor)
3REQUISITES 3. CAUSE
a. Initiative from old debtor. a. ONEROUS – exchange of considerations
b. Consent of debtor. b. GRATUITOUS – no consideration received in exchange of what is
c. Acceptance by creditor. given
c. REMUNERATORY – something is given for benefit/service that had
7. SUBROGATION been rendered previously
- change of creditor
4. RISK OF FULFILLMENT 4. CONSENSUALITY OF CONTRACTS
a. COMMUTATIVE – equivalent values are given by both parties - Contracts are perfected by mere consent
b. ALEATORY – fulfillment of contract depends on chance (eg. insurance) Exceptions:
a. REAL CONTRACTS – perfected by delivery
5. IMPORTANCE b. FORMAL/SOLEMN CONTRACTS – special form required for its
a. PRINCIPAL – contract may stand alone (eg. sale, partnership) perfection
b. ACCESSORY – existence depends on another contract (pledge,
guarantee) 5. OBLIGATORINESS OF CONTRACTS
c. PREPARATORY – contract not an end by itself but a means thru w/c - The contract, once perfected, has the force of law between parties which
other contracts may be made (eg. agency) bound to comply in good faith

6. NAME 4 KINDS OF INNOMINATE CONTRACTS

a. NOMINATE – contract given a particular/special name (eg. partnership) 1. I give that you may give
b. INNOMINATE – not given special name (eg. I give that you may give) 2. I do that you may do
3. I give that you may do
7. SUBJECT MATTER 4. I do that you may give
a. Contracts involving things
b. Contracts involving rights/credits 4 RULES FOR INNOMINATE CONTRACTS
c. Contracts involving services 1. Agreement of parties
2. Law on Obligations & Contracts
3 STAGES OF CONTRACT 3. Rules on most analogous nominate contract
1. PREPARATION/CONCEPTION – preparatory steps to perfect contract 4. Customs of place
2. PERFECTION/BIRTH – meeting of minds between 2 contracting parties
3. CONSUMMATION/TERMINATION – terms of contract are performed, & STIPULATION POR AUTRI
contract is fully executed - stipulation in favor of 3rd person

5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT 5 REQUISITES OF STIPULATION POR AUTRI

1. PRINCIPLE OF AUTONOMY (liberty to contract) 1. Stipulation in favor of 3rd person
Provided they are not contrary to: 2. Stipulation is only PART, not the whole of the contract.
a. Law 3. Both parties must conferred upon a favor of 3rd person
b. Morals 4. 3rd person must accept & say it to debtor before its revocation/cancellation
c. Good customs 5. Neither of both parties be the legal representation/autho-rization of 3rd
d. Public order person
e. Public policy
CONSENT
2. MUTUALITY OF CONTRACTS - meeting of offer (certain) & acceptance (absolute) upon a thing
- the contract must bind both parties; its validity/compliance cannot be left to
the will of one of them 5 REQUISITES OF CONSENT
1. Must be given by 2 or more parties
3. RELATIVITY OF CONTRACTS 2. Parties are capacitate to enter in contract
- Contracts take effect only between the parties, their assigns & heirs except 3. No vitiation of consent
when there are rights & obligations not transmissible: 4. No conflict between declared & intended
a. by their nature 5. Legal formalities must be complied
b. by stipulation (stipulation por autri)
c. by provision of law 7 RULES ON OFFER/ACEPTANCE
1. An offer must be certain.
2. Business advertisements for sale are NOT offers but ONLY invitations to 1. substance of thing that is the OBJECT of contract
make an offer. 2. conditions w/c MOVED either/both parties to enter into contract
3. Advertisements for bidders are ONLY invitations.
4. An acceptance made by letter/telegram does NOT bind offeror EXCEPT 4 RULES ON MISTAKE
from the TIME it came to his knowledge. 1. Mistake to identity/qualifications of either of parties will vitiate consent
5. An offer made through an agent is accepted from the TIME the ONLY when IT is the principal cause of contract.
acceptance is done through an agent. 2. Simple mistake of account must be corrected.
6. An offer is ineffective upon death, insanity, insolvency, of EITHER party 3. No mistake if parties knew the risk/doubt affecting OBJECT of contract.
BEFORE acceptance is made. 4. When one of parties is unable to read or the contract is in language not
7. When offeror allowed offeree a certain period to accept, offer MAY be understood by him, & mistake/fraud is alleged, the person enforcing the
withdrawn AT ANYTIME unless there is something PAID/PROMISED. contract must FULLY explained the terms to him.

3 persons who CANNOT GIVE CONSENT to a contract (if entered into, 2. FRAUD/DOLO
contract is voidable) - when through insidious words/machinations of one of the parties, INDUCED
1. UNEMANCIPATED MINORS the other to enter into a contract, & w/o them, he will not agree.
2. INSANE/DEMENTED PERSONS (unless they acted DURING LUCID
INTERVAL) DOLO CAUSANTE DOLO INCIDENTE
3. DEAF-MUTES who DO NOT know how to write Serious Not serious
cause induces party to ENTER into NOT the cause to enter into contract
DEMENTED PERSON – NOT exactly insane; difficult to distin-guish right contract
from wrong make contract voidable contract is valid; liable for damages
LUCID INTERVAL – period when an INSANE has acquired SANITY
7 RULES OF FRAUD
temporarily, therefore, capacitated to enter into a valid contract
1. Failure to disclose facts when these needs to be revealed, is a fraud.
2. Fraud should be SERIOUS (dolo causante) & SHOULD NOT be done by
2 RULES on persons WHO CANNOT GIVE CONSENT to a contract
BOTH parties to make contract voidable.
1. Age of majority is 18 yrs old
3. Incidental fraud (dolo incidente) ONLY obliges person to PAY DAMAGES.
2. A contract entered into by UNEMANCIPATED MINOR w/o 4. Usual exaggerations in trade, when other party know the “real” facts, is
parents/guardian’s consent is voidable, except: NOT FRAUD.
a. Minor MISREPRESENTS his age (estoppel)
5. A mere expression of opinion is NOT FRAUD UNLESS made by an expert
b. Contract involves sale & delivery of necessities to minor
& the other party relies on his special knowledge.
6. Misrepresentation made in good faith is NOT FRAUD but may constitute
5 VICES OF CONSENT
an error.
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties,
7. Misrepresentation by 3rd person DOES NOT vitiate consent UNLESS it
contract is voidable; Remedy: annulment of contract.
created substantial mistake.
1. MISTAKE/ERROR
2. FRAUD/DECEIT
3. VIOLENCE
3. VIOLENECE
- serious/irresistible force is employed.
4. INTIMIDATION
5. UNDUE INFLUENCE 2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes the reason why one
1. MISTAKE/ERROR
entered into a contract.
- wrong conception & lack of knowledge upon a thing
2. Violence ANNULS obligation although it is DONE by 3rd person not part of
contract.
(2) MISTAKES W/C VITIATES CONSENT
It should refer to:
4. INTIMIDATION
- 1 of the parties is compelled by a reasonable & well-grounded fear of an 2. Services not contrary to law, morals, good customs, public order, public
imminent & grave evil upon his person/property to give his consent. policy
3. Services/things must NOT be legally/physically impossible
3 RULES ON INTIMIDATION 4. Services/things are w/in commerce of man including future things
1. Age, sex, & condition of person must used to determine the degree of 5. Rights are NOT TRANSMISSIBLE.
intimidation. 6. Determinate (kind) or determinable ( w/o the need of new
2. Intimidation ANNULS obligation although it is DONE by 3rd person not part contract/agreement)
of contract. 7. NO contract be entered for future inheritance UNLESS law states
3. A threat to enforce one’s claim (claim must be just & legal), DOES NOT
vitiate consent. 4 REQUISITES OF CAUSE
1. It is just & equitable.
VIOLENCE INTIMIDATION 2. It exists.
External Internal 3. It is lawful.
Physical contact/coercion NO physical coercion; ONLY 4. It is true.
MENTAL/MORAL coercion
LESION
5. UNDUE INFLUENCE - inadequacy of cause (eg. insufficient price for thing sold)
- a person takes improper advantage of his power over other’s will, depriving
the other to his reasonable freedom of choice. RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
3 RULES ON UNDUE INFLUENCE a. Fraud
1. There is a person who takes improper advantage of his power over other’s b. Mistake
will, depriving the other to his reasonable freedom of choice. c. Undue influence
2. Undue influence ANNULS obligation although it is DONE by 3rd person not
part of contract. 2 FORM OF CONTRACTS
3. To constitute undue influence, ff circumstances must be considered: (1) 1. Contracts in writing
confidential, family, spiritual, & other relations of parties; or (2) the aggrieved 2. Contracts in a public instrument
party is suffering from mental weakness; or (3) ignorant; or (4) in financial
distress. 1. Contracts w/c must be IN WRITING to be valid:
a. Donation of personal property exceeds P5000.
SIMULATION OF CONTRACT b. Agent’s authority in sale of land/any interest.
- process of INTENTIONALLY deceiving others by producing a contract not c. Contract of antichresis.
really exist (absolute simulation), or w/c is different from true agreement d Stipulation to pay interest on loans.
(relative simulation). e. Stipulation to reduce common carrier’s extraordinary diligence & to limit
its liability.
2 KINDS OF SIMULATED CONTRACT
1. ABSOLUTE SIMULATION (the parties DO NOT intend to be bound at all) 2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be valid:
- completely fictitious/make-believe; VOID a. Donation of real property (both the donation & accep-tance).
2. RELATIVE SIMULATION (parties conceal their true/real agreement) b. Sale of real property.
- parties are bound to real/true agreement, EXCEPT: c. Partnership where real property/rights is contributed; or when capital
a. contract prejudice 3rd person contribution exceeds P3000.
b. purpose is contrary to law, morals, good customs, public order, public
policy REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written instrument is made/construed to the
7 REQUISITES OF OBJECT OF CONTRACT REAL intention of parties when there is an error/mistake.
1. Specific & certain
(5) CASES REFORMATION OF INSTRUMENT IS AVAILABLE 2. Those who do not comply w/ the Statute of Frauds.
1. Mutual mistake of parties. 3. Both parties are incapable of giving consent to a contract.
2. One party was mistaken & the other acted fraud.
3. One party was mistaken & the other knew/believed that the instrument did 7 VOID/INEXISTENT CONTRACTS
not state their REAL agreement. 1. Those w/c are ABSOLUTELY simulated/fictitious.
4. Ignorance, lack of skill, negligence, or bad faith of person drafting the 2. Those w/c contemplate an impossible service.
instrument DOES NOT state the TRUE INTENTION of parties 3. Those whose OBJECT is outside the commerce of man.
5. Two parties agree on mortgage/pledge of personal/real property BUT the 4. Those whose CAUSE/OBJECT did not exist at time of tran-saction.
instrument states the property is sold ABSOLUTELY, or w/ the right to 5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law, morals,
repurchase. good customs, public order, or public policy.
6. Those where INTENTION of parties to principal object CANNOT be
(3) NO REFORMATION OF INSTRUMENT WHEN: ascertained.
1. Simple donation inter vivos where NO CONDITION is imposed. 7. Those expressly prohibited/declared VOID by law.
2. Will.
3. Real agreement is VOID.

4 KINDS OF DEFECTIVE CONTRACTS

1. RESCISSIBLE – valid until rescinded; has ALL essential requisites but
because of injury/damage to one of the parties, the contract may be
rescinded.
2. VOIDABLE – valid until annulled; has ALL essential requisites but
because of defect in consent, contract may be annulled.
3. UNENFORCEABLE – cannot be sued/enforced unless ratified; no effect
NOW but may take effect upon ratification.
4. VOID – NO effect at all; cannot be ratified/validated.

5 RESCISSIBLE CONTRACTS
1. Those entered by guardians & 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.

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

3 UNENFORCEABLE CONTRACTS
1. Those entered in name of other person, or who acted BEYOND his
powers.