OBLIGATION – juridical necessity to give, to do or not to do EFFECTS OF FORTUITOUS EVENT to thing to be delivered

- extinguish the obligation if determinate; generic does not

4 ELEMENTS OF OBLIGATION extinguish the obligation
1. ACTIVE SUBJECT (creditor/obligee) – whose obligation is
constituted 3 MISCELLANEOUS RULES ON PERFORMANCE OF OBLIGA-TION
2. PASSIVE SUBJECT (debtor/obligor) – has duty to give, to do or 1. When to deliver determinate, accessions (additions/
not to do improvements) and accessories (joined/included with the
3. OBJECT/PRESTATION – subject matter principal) are INCLUDED even not mentioned.
4. JURIDICAL/LEGAL TIE (vinculum/efficient cause) – reason 2. If debtor fails to do, it shall be DONE AT HIS EXPENSE, same
with doing the contravention; poorly done be undone.
CIVIL OBLIGATION NATURAL OBLIGATION 3. In obligation not to do, and obligor does what is forbidden, shall
derived from positive law derived from equity & justice be UNDONE AT HIS EXPENSE.
enforceable by court action not enforceable by court action
4 GROUNDS; debtor liable for damages
5 SOURCES OF OBLIGATION 1. Default/mora
1. LAW 2. Fraud/dolo
2. CONTRACTS 3. Negligence/culpa
3. QUASI-CONTRACTS – arise from lawful, voluntary acts; no one 4. Contrary to terms of obligation
shall be unjustly enriched...
     2Kinds 1. DEFAULT/MORA – delay
     a. Solutioindebiti – something received (delivered on a      3kinds
mistake), no right to demand it      a. Mora solvendi – debtor’s delay to give (real ob.), to do
     b. Negotiorumgestio – voluntary mgt of property/affairs of (personal ob.)
another w/o his knowledge/consent      b. Mora accipiende – creditor’s delay to accept
4. QUASI-DELICT/TORTS/CULPA AQUILIANA – arise from      c. CompensatioMorae – delay of both in reciprocal obligation
damage; fault/negligence
5. CRIMES/ACTS/OMISSIONS punished by law – arise from civil CONCEPT OF DELAY
liability that is a consequence of a criminal offense General Rule: No demand, No delay
Exceptions:
DILIGENCE OF A GOOD FATHER OF A FAMILY 1. Law states
- care need to be exercised by a debtor to 2. Obligation states
deliver/give determinate thing 3. Time is the essence
Exception: When law/stipulation of parties requires a differnt 4. Demand be useless if delay
standard of care (slight/extraordinary diligence). 5. Debtor guilty of delay

When creditor is entitled to the fruits EFFECTS OF DELAY

Rule: The creditor has personal right (right to ask for delivery) 1. Damages
from the time the obligation to deliver arises. 2. When to deliver determinate thing, STILL LIABLE in fortuitous
But NO real right (right enforceable against the whole world) until event.
it is delivered. 2. FRAUD/DOLO – conscious, deliberate, intentional evasion of
fulfillment
3 KINDS OF FRUITS      2Kinds
1. NATURAL – w/o human intervention      a. Dolocausante/Causal fraud – fraud in obtaining consent;
2. INDUSTRIAL – w/ human intervention consent is defective, contract is voidable. Remedy: annulment
3. CIVIL – derived by virtue of juridical relation      b. Doloincidente/Incidental fraud – fraud w/c vitiates consent.
Remedy: damages
Creditor’s rights if debtor fails to comply w/ the obligation
1. Determinate 3. NEGLIGENCE/CULPA – voluntary act/omission; no bad faith
a. Performance intended
b. Damages      3Kinds
2. Generic      a. Culpa aquiliana/Civil negligence – quasi-delict/torts
a. Performance      b. Culpa contractual/Contractual negligence – breach
b. Damages      c. Culpa criminal/Criminal negligence – crime/delict
c. Obligation be complied at debtor’s expense
4. Contrary to the terms of obligation
Creditor’s rights if debtor does in contravention
1. Damages 2 RULES OF PRINCIPAL & INSTALLMENT
2. Ask it be UNDONE at debtor’s expense 1. Receipt of principal w/o mention of interest, presumed interest
is paid also.
FORTUITOUS EVENT – cannot be foreseen, if foreseen, inevitable 2. Receipt of latter installment w/o mention of prior installment,
General Rule: No person liable to fortuitous event. presumed prior installment is paid also.
Exceptions:
1. Law states 4 SUCCESSIVE RIGHTS OF CREDITOR to satisfy claim against
2. Stipulation/contract states DEBTOR
3. Assumption of risk 1. Exact payment
4. Delay 2. Attach debtor’s properties
5. Debtor promises deliver to 2/more persons who do not have 3. Accionsubrogatoria – exercise rights & actions except inherent
same interest (bad faith) in person
4. Accionpauliana – cancel acts/contracts by debtor to defraud Exceptions:
creditor 1. In reciprocal obligation, fruits & interests during pendency of
condition shall compensate each other.
TRANSMISSIBILITY OF RIGHTS 2. In unilateral obligation, debtor gets fruits & interests unless
General Rule: ALL RIGHTS are transmissible. there is a contrary intent.
Exceptions:
1. Law states 3 EFFECTS OF FULFILLMENT OF RESOLUTORY CONDITION
2. Contract states 1. Extinguish obligation.
3. Obligation is purely personal 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
10 Kinds of Obligation thing.
1. Pure When one of debtors in reciprocal obligation does not comply
2. Conditional w/ his obligation
3. Alternative 1. The right of injured party is (1) cancel contract & damages; or
4. Facultative (2) fulfill obligation & damages
5. Joint
6. Solidary 3 Kinds of Obligation (Accdng to PERSON OBLIGED)
7. Divisible 1. UNILATERAL – only 1 party obliged to comply
8. Indivisible 2. BILATERAL – both parties; performance not same time
9. Obligation w/ a period 3. RECIPROCAL – both parties; performance same time
10. Obligation w/ a penal clause
3. OBLIGATION W/ A PERIOD
1. PURE OBLIGATION - demandability/extinguishment subject to the expiration of
- w/o condition, demandable at once (pure has resolutory period
condition/period)
PERIOD – interval of time; either suspends demandability or
2. CONDITIONAL OBLIGATION produces extinguishment
- there is condition in performance; future & uncertain
     2Kinds DAY CERTAIN – must come, not known when
     a. Suspensive condition – happening of condition gives RISE to
obligation 7 CASES CONSIDERED TO BE “OBLIGATION W/ A PERIOD”
     b. Resolutory condition – happening of condition 1. Little by little
EXTINGUISHES obligation 2. In partial payment
3. Payable ASAP
6 MISCELLANEOUS RULES ON CONDITIONAL OBLIGATION 4. When I can afford it
1. Impossible conditions, contrary to law, shall ANNUL obligation. 5. When I have the money
2. The condition not to do an impossible thing is considered not 6. When I am able to
agreed upon. 7. When my means permit me to do so
3. The condition that happens in determinate time, EXTINGUISHES
obligation. PERIOD CONDITION
4. The condition that happens in INDETERMINATE time, obligation certain uncertain
only effective at arrival. future only future/past but unknown
5. The condition is fulfilled if DEBTOR prevents fulfillment. (*influence upon obligation) (*) on the very existence of
6. The effect of conditional obligation, once fulfilled: only upon its demandability obligation itself
- to give: retroact to the day of constitution of obligation
- has reciprocal prestations: fruits & interests be mutually
FOR WHOSE BENEFIT IS THE PERIOD?
compensated
General Rule: Both the debtor & creditor.
- has unilateral obligation: debtor shall give fruits & interests
Therefore, NEITHER of them can demand performance of
obligation.
RULES in case of Loss, Improvement, or Deterioration of thing
Exception: If the term of obligation has to favor one of them.
during the pendency of condition
1. LOST
5 INSTANCES WHEN DEBTOR LOSES RIGHT TO USE “PERIOD”
a. w/ debtor’s fault – damages
1. Debtor is insolvent.
b. w/o debtor’s fault – extinguishes obligation
2. Debtor attempts to abscond.
3. Impairment of guarantees/securities.
2. DETERIORATION
4. Failure to furnish guarantees/securities promised.
a. w/ debtor’s fault  - (1) cancel obligation & damages; or (2) fulfill
5. Violation of undertaking.
obligation w/ damages
b. w/o debtor’s fault – creditor suffer impairment
4. ALTERNATIVE OBLIGATION
- w/ 2 or more prestations, only 1 is due.
3. IMPROVEMENT
a. By nature/time – benefit to creditor
5. FACULTATIVE OBLIGATION
b. at expense of debtor – debtor no right than that granted to
- w/ ONLY 1 prestation but can be substituted.
usufructuary (debtor no right to compensate amount for
improvement)
ALTERNATIVE prestations LOST w/ debtor’s fault
Creditor entitled to damages but needs ff requisites:
EFFECTS OF FULFILLMENT OF SUSPENSIVE CONDITION
1. Debtor can choose.
General Rule: The obligation becomes effective retroactively to
2. All prestations lost/become impossible due to debtor’s fault.
the day obligation was constituted.
 ALTERNATIVE OBLIGATION FACULTATIVE OBLIGATION General Rule: Penalty takes the place of damages & interest in
several prestations due, giving one prestation due, but can be case of non-compliance.
one is sufficient subtituted Exceptions:
right to choose (debtor) unless right to choose DEBTOR ONLY 1. Stipulation states.
granted to creditor 2. Debtor refuse to pay penalty.
If 1 of the prestation is illegal, nullity of principal carries w/ it 3. Debtor guilty of fraud in performance of obligation.
others may be valid, obligation nullity of accessory/
remains substitute NULLITY OF PRINCIPAL OBLIGATION OR THE PENAL CLAUSE
Nullity of principal obligation = nullity of penal clause
loss/impossibility of ALL loss/impossibility of presta-tion
Nullity of penal clause = NOT nullity of principal obligation
prestations due, w/o debtor’s due, w/o debtor’s fault,
fault, extinguishes obligation extinguishes obligation
10 MODES OF EXTINGUISHMENT OF OBLIGATIONS
1. Payment or performance
(3) SUMMARY OF RULES, OBLIGATIONS, & RIGHTS OF DEBTOR
2. Prescription
IN ALTERNATIVE OBLIGATION
3. Compensation
1. If 1 of prestations lost through fortuitous event, shall still be
4. Confusion/merger
perform by choosing (creditor) from the remainder.
5. Condonation/remission
2. If 1 of prestations lost through debtor’s fault, creditor may claim
6. Fulfillment of resolutory condition
any of remainders w/ damages.
7. Annulment
3. If ALL prestations lost through debtor’s fault, creditor choose
8. Rescission
price w/ damages.
9. Novation
10. Loss of thing due
RULES on LOSS/DETERIORATION of the thing intended as
SUBSTITUTE in FACULTATIVE OBLIGATION
1. PAYMENT/PERFORMANCE
1. If there is a loss/deterioration of thing intended as substitute,
- Payment means delivery of money & performance of obligation
debtor is NOT liable if NOT HIS FAULT.
But if substitution is already made, debtor is liable for loss of
2 PLACE OF PAYMENT
substitute when in DELAY, NEGLIGENCE, or FRAUD.
1. At place agreed upon
2. If w/o agreement
6. JOINT OBLIGATION
a. Object is indeterminate – paid at domicile of DEBTOR
- obligation is to be paid proportionately by debtors or to be
b. Object is determinate – place of thing at the time of
demanded proportionately by creditors
constitution of obligation
7. SOLIDARY OBLIGATION
4 SPECIAL MODES OF PAYMENT
- each one of debtors has right to render or each one of creditors
a. Application of payment
has right to demand the entire compliance w/ prestation
b. Cession
c. Tender of payment & consignation
MAXIMS & SYNONYMS
d. Dacion in payment
MAXIMS SYNONYMS
JOINT Obligation “To each his own” proportionate a. APPLICATION OF PAYMENT
SOLIDARY “One for all, all for individually & - designation of debt to w/c payment must be applied when
Obligation one” collectively debtor has several obligations of same kind in favor of same
creditor.
(3) SOLIDARY OBLIGATION EXIST ONLY IF: *RULES
1. Law states 3 REQUISITES OF APPLICATION OF PAYMENT
2. Stipulation states 1. Only 1 debtor & 1 creditor
3. Nature of obligation requires 2. 2 or more debts, same kind
3. All debts are due
2 PRESUMPTIONS THAT OBLIGATION IS JOINT 4. Insufficient payment to exinguish ALL debts
1. The debts be divided as many shares as there are
debtors/creditors. 3 RIGHTS TO MAKE APPLICATION OF PAYMENT
2. The debtors/creditors are distinct from one another. 1. Right belongs to CREDITOR.
2. If debtor does not avail, creditor can give him receipt
8. DIVISIBLE OBLIGATION designating the debt from which payment will be applied.
- prestation is capable of partial performance 3. If debtor accepts the receipt, he cannot complain unless THERE
IS just cause to invalidate the contract.
9. INDIVISIBLE OBLIGATION
- prestation incapable of partial performance b. CESSION
- debtor abandons ALL his property for creditor’s benefit to obtain
10. OBLIGATION W/ A PENAL CLAUSE payment from proceeds of his property
- one w/ accessory undertaking attached to obligation to assume
greater liablity in case of breach/non-fulfillment of obligation 5 REQUISITES OF VALID CESSION
1. 1 debtor & 2 or more creditors
3 PURPOSES OF PENAL CLAUSE 2. Debtor is in partial/total insolvency.
1. Ensure performance of obligation 3. Debtor to deliver ALL his property to creditors
2. Substitute for damages & interest in case of noncompli-ance 4. Debt is due & demandable.
3. Penalize debtor in case of breach 5. Creditors must sell the properties & apply the proceeds to their
respective credits proportionately.
In case obligation has a PENAL CLAUSE
c. DACION IN PAYMENT (dacion en pago) 2. Compensation is not prohibited by law.
- alienation of property to the creditor in satisfaction of debt 3. No retention/controversy by 3rd person.
4. 2 debts are due & demandable.
3 REQUISITES OF DACION IN PAYMENT 5. 2 debts are liquidated.
1. Consent of creditor 6. 2 debts both in money/consumable things.
2. NOT prejudicial to another creditor
3. Debtor not insolvent declared by a judicial decree (2) CLASSES OF COMPENSATION
1. As to effect
CESSION DACION IN PAYMENT a. TOTAL – obligations completely extinguished.
all properties NOT all properties b. PARTIAL – a balance remains
require more than 1 creditor NOT require all creditors
NOT act of novation act of novation 2. As to origin or cause
a. LEGAL – by law
NOT transfer ownership transfer ownership
b. VOLUNTARY/CONVENTIONAL – agreement of parties
requires partial/total insol- may happen during solvency  of
c. JUDICIAL – order from the court
vency debtor
d. FACULTATIVE – 1 of parties can choose/oppose claiming
compensation
d. TENDER OF PAYMENT & CONSIGNATION
TENDER OF PAYMENT – act of offering the creditor what is due to 6. NOVATION
him w/ a demand that the creditor accept it - substitution/change of obligation
CONSIGNATION – act of depositing thing due w/ the court when - substitution of debtor
creditor cannot/refuses acceptance of payment - subrogation of creditor

5 REQUISITES OF CONSIGNATION (3) OBLIGATIONS MAY BE MODIFIED BY:

1. Debt due. 1. Changing object/principal conditions. (REAL NOVATION)
2. Creditor refused the tender of payment w/o just cause 2. Changing the person of debtor/creditor. (PERSONAL
3. Notice of consignation  already given to persons interested in NOVATION)
fulfillment of obligation a. Substitution – change of debtor
4. Consignation of thing/amount due b. Subrogation – change of creditor
5. Subsequent notice of consignation to interested persons 3. Changing person of the parties & the objects of principal
condition. (MIXED NOVATION)
5 VALID CONSIGNATION W/O PREVIOUS TENDER OF PAYMENT
1. Creditor is absent/unknown. 4 REQUISITES OF NOVATION
2. Creditor is incapacitate to receive at time it is due. 1. Old valid obligation.
3. Creditor refused give a receipt, w/o just cause. 2. Agreement of parties to new obligation.
4. 2 or more persons claim the right to collect. 3. Extinguishment of old obligation.
5. Title of obligation lost. 4. Validity of new obligation.

2. LOSS OF THING DUE 2 FORMS OF NOVATION BY SUBSTITUTION OF DEBTOR

- perishes, disappears, or goes out of commerce; existence is 1. EXPROMISION – w/ consent of creditor, NO consent of old
unknown; cannot be recovered debtor
     2REQUISITES
3 REQUISITES TO EXTINGUISH OBLIGATION DUE TO LOSS      a. Initiative of 3rd person.
1. Determinate thing.      b. Consent of creditor.
2. W/o debtor’s fault. 2. DELEGACION – all must agree (creditor, old debtor, new debtor)
3. No delay.      3REQUISITES
     a. Initiative from old debtor.
3. CONDONATION/REMISSION      b. Consent of debtor.
- gratuitous abandonment of right by the creditor      c. Acceptance by creditor.

3 REQUISITES OF A VALID CONDONATION/REMISSION 7. SUBROGATION

1. It must be gratuitous. - change of creditor
2. Accepted by obligor.
3. Obligation is demandable. 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. The merger of characters of debtor & creditor must be in same
person.
2. Take place between principal debtor & creditor.                                                                                                        
3. Clear & definite. CONTRACT – meeting of minds between 2 persons to give
something or to render service.
5. COMPENSATION
- 2 persons are debtors & creditors of each other 3 ELEMENTS OF CONTRACT
1. ESSENTIAL – w/o them, contract cannot exist
6 ESSENTIAL REQUISITES OF COMPENSATION      a. CONSENT of contracting parties
1. Parties both principal debtors & creditors of each other.
     b. OBJECT CERTAIN – subject matter      d. Public order
     c. CAUSE/CONSIDERATION      e. Public policy
In some contracts, ffare also essential:
     d. FORM 2. MUTUALITY OF CONTRACTS
     e. DELIVERY - the contract must bind both parties; its validity/compliance
cannot be left to the will of one of them
2. NATURAL – found in certain contract, presumed to exist unless
stipulated 3. RELATIVITY OF CONTRACTS
- Contracts take effect only between the parties, their assigns &
3. ACCIDENTAL – various particular stipulations that may be heirs except when there are rights & obligations not transmissible:
agreed upon by contracting parties      a. by their nature
     b. by stipulation (stipulation porautri)
(7) CLASSIFICATION OF CONTRACTS      c. by provision of law
According to:
1. PERFECTION/FORMATION 4. CONSENSUALITY OF CONTRACTS
     a. CONSENSUAL – perfected by mere consent - Contracts are perfected by mere consent
     b. REAL – perfected by delivery Exceptions:
     c. FORMAL/SOLEMN – special formalities are essential before      a. REAL CONTRACTS – perfected by delivery
perfection of contract      b. FORMAL/SOLEMN CONTRACTS – special form required for its
perfection
2. PARTIES OBLIGATED
     a. UNILATERAL – only 1 has obligation 5. OBLIGATORINESS OF CONTRACTS
     b. BILATERAL – both parties require to render reciprocal - The contract, once perfected, has the force of law between
prestations parties which bound to comply in good faith

3. CAUSE 4 KINDS OF INNOMINATE CONTRACTS

     a. ONEROUS – exchange of considerations 1. I give that you may give
     b. GRATUITOUS – no consideration received in exchange of 2. I do that you may do
what is given 3. I give that you may do
     c. REMUNERATORY – something is given for benefit/service 4. I do that you may give
that had been rendered previously
4 RULES FOR INNOMINATE CONTRACTS
4. RISK OF FULFILLMENT 1. Agreement of parties
     a. COMMUTATIVE – equivalent values are given by both parties 2. Law on Obligations & Contracts
     b. ALEATORY – fulfillment of contract depends on chance (eg. 3. Rules on most analogous nominate contract
insurance) 4. Customs of place

5. IMPORTANCE STIPULATION POR AUTRI

     a. PRINCIPAL – contract may stand alone (eg. sale, partnership) - stipulation in favor of 3rd  person
     b. ACCESSORY – existence depends on another contract
(pledge, guarantee) 5 REQUISITES OF STIPULATION POR AUTRI
     c. PREPARATORY – contract not an end by itself but a means 1. Stipulation in favor of 3rd person
thru w/c other contracts may be made (eg. agency) 2. Stipulation is only PART, not the whole of the contract.
3. Both parties must conferred upon a favor of 3rd person
6. NAME 4. 3rd person must accept & say it to debtor before its
     a. NOMINATE – contract given a particular/special name (eg. revocation/cancellation
partnership) 5. Neither of both parties be the legal representation/autho-
     b. INNOMINATE – not given special name (eg. I give that you rization of 3rd person
may give)
CONSENT
7. SUBJECT MATTER - meeting of offer (certain) & acceptance (absolute) upon a thing
     a. Contracts involving things
     b. Contracts involving rights/credits 5 REQUISITES OF CONSENT
     c. Contracts involving services 1. Must be given by 2 or more parties
2. Parties are capacitate to enter in contract
3 STAGES OF CONTRACT 3. No vitiation of consent
1. PREPARATION/CONCEPTION – preparatory steps to perfect 4. No conflict between declared & intended
contract 5. Legal formalities must be complied
2. PERFECTION/BIRTH – meeting of minds between 2 contracting
parties 7 RULES ON OFFER/ACEPTANCE
3. CONSUMMATION/TERMINATION – terms of contract are 1. An offer must be certain.
performed, & contract is fully executed 2. Business advertisements for sale are NOT offers but ONLY
invitations to make an offer.
5 BASIC PRINCIPLES/CHARACTERISTICS OF A CONTRACT 3. Advertisements for bidders are ONLY invitations.
1. PRINCIPLE OF AUTONOMY (liberty to contract) 4. An acceptance made by letter/telegram does NOT
Provided they are not contrary to: bind offeror EXCEPT from the TIME it came to his knowledge.
     a. Law 5. An offer made through an agent is accepted from the TIME the
     b. Morals acceptance is done through an agent.
     c. Good customs
6. An  offer is ineffective upon death, insanity, insolvency, of 1. Failure to disclose facts when these needs to be revealed, is a
EITHER party BEFORE acceptance is made. fraud.
7. When offeror  allowed offeree a certain period 2. Fraud should be SERIOUS (dolocausante) & SHOULD NOT be
to accept, offer  MAY be withdrawn AT ANYTIME unless there is done by BOTH parties to make contract voidable.
something PAID/PROMISED. 3. Incidental fraud (doloincidente) ONLY obliges person to PAY
DAMAGES.
3 persons who CANNOT GIVE CONSENT to a contract (if entered 4. Usual exaggerations in trade, when other party know the “real”
into, contract is voidable) facts, is NOT FRAUD.
1. UNEMANCIPATED MINORS 5. A mere expression of opinion is NOT FRAUD UNLESS made by
2. INSANE/DEMENTED PERSONS (unless they acted DURING LUCID an expert & the other party relies on his special knowledge.
INTERVAL) 6. Misrepresentation made in good faith is NOT FRAUD but may
3. DEAF-MUTES who DO NOT know how to write constitute an error.
7. Misrepresentation by 3rd person DOES NOT vitiate consent
DEMENTED PERSON – NOT exactly insane; difficult to distin-guish UNLESS it created substantial mistake.
right from wrong
3. VIOLENCE
LUCID INTERVAL – period when an INSANE has acquired - serious/irresistible force is employed.
SANITY temporarily, therefore, capacitated to enter into a valid
contract 2 RULES ON VIOLENCE
1. Serious/irresistible force is employed w/c constitutes the reason
2 RULES on persons WHO CANNOT GIVE CONSENT to a contract why one entered into a contract.
1. Age of majority is 18 yrs old 2. Violence ANNULS obligation although it is DONE by 3rd person
2. A contract entered into by UNEMANCIPATED MINOR w/o not part of contract.
parents/guardian’s consent is voidable, except:
     a. Minor MISREPRESENTS his age (estoppel) 4. INTIMIDATION
     b. Contract involves sale & delivery of necessities to minor - 1 of the parties is compelled by a reasonable & well-grounded
fear of an imminent & grave evil upon his person/property to give
5 VICES OF CONSENT his consent.
- NOTE: When there is a DEFECTIVE CONSENT of EITHER of parties,
contract is voidable; Remedy: annulment of contract. 3 RULES ON INTIMIDATION
1. MISTAKE/ERROR 1. Age, sex, & condition of person must used to determine the
2. FRAUD/DECEIT degree of intimidation.
3. VIOLENECE 2. Intimidation ANNULS obligation although it is DONE by
4. INTIMIDATION 3rd person not part of contract.
5. UNDUE INFLUENCE 3. A threat to enforce one’s claim (claim must be just & legal),
DOES NOT vitiate consent.
1. MISTAKE/ERROR
- wrong conception & lack of knowledge upon a thing VIOLENCE INTIMIDATION
External Internal
(2) MISTAKES W/C VITIATES CONSENT Physical contact/coercion NO physical coercion; ONLY
It should refer to: MENTAL/MORAL coercion
1. substance of thing that is the OBJECT of contract
2. conditions w/c MOVED either/both parties to enter into 5. UNDUE INFLUENCE
contract - a person takes improper advantage of his power over other’s
will, depriving the other to his reasonable freedom of choice.
4 RULES ON MISTAKE
1. Mistake to identity/qualifications of either of parties will vitiate 3 RULES ON UNDUE INFLUENCE
consent ONLY when IT is the principal cause of contract. 1. There is a person who takes improper advantage of his
2. Simple mistake of account must be corrected. power over other’s will, depriving the other to his reasonable
3. No mistake if parties knew the risk/doubt affecting OBJECT of freedom of choice.
contract. 2. Undue influence ANNULS obligation although it is DONE by
4. When one of parties is unable to read or the contract is in 3rd person not part of contract.
language not understood by him, & mistake/fraud is alleged, the 3. To constitute undue influence, ff circumstances must be
person enforcing the contract must FULLY explained the terms to considered: (1) confidential, family, spiritual, & other relations of
him. parties; or (2) the aggrieved party is suffering from mental
weakness; or (3) ignorant; or (4) in financial distress.
2. FRAUD/DOLO
- when through insidious words/machinations of one of the SIMULATION OF CONTRACT
parties, INDUCED the other to enter into a contract, & w/o them, - process of INTENTIONALLY deceiving others by producing a
he will not agree. contract not really exist (absolute simulation), or w/c is different
from true agreement (relative simulation).
DOLO CAUSANTE DOLO INCIDENTE
Serious Not serious 2 KINDS OF SIMULATED CONTRACT
cause induces party to ENTER NOT the cause to enter into 1. ABSOLUTE SIMULATION (the parties DO NOT intend to be
into contract contract bound at all)
make contract voidable contract is valid; liable - completely fictitious/make-believe; VOID
for damages 2. RELATIVE SIMULATION (parties conceal their true/real
agreement)
7 RULES OF FRAUD - parties are bound to real/true agreement, EXCEPT:
     a. contract prejudice 3rd person
     b. purpose is contrary to law, morals, good customs, public
order, public policy
7 REQUISITES OF OBJECT OF CONTRACT
1. Specific & certain
2. Services not contrary to law, morals, good customs, public
order, public policy
3. Services/things must NOT be legally/physically impossible
4. Services/things are w/in commerce of man including future
things
5. Rights are NOT TRANSMISSIBLE.
6. Determinate (kind) or determinable ( w/o the need of new
contract/agreement)
7. NO contract be entered for future inheritance UNLESS law
states
4 REQUISITES OF CAUSE
1. It is just & equitable.
2. It exists.
3. It is lawful.
4. It is true.
LESION
- inadequacy of cause (eg. insufficient price for thing sold)
RULES ON LESION
- Lesion DOES NOT invalidate contract, except there is:
     a. Fraud
     b. Mistake
     c. Undue influence
2 FORM OF CONTRACTS
1. Contracts in writing
2. Contracts in a public instrument
1. Contracts w/c must be IN WRITING to be valid:
     a. Donation of personal property exceeds P5000.
     b. Agent’s authority in sale of land/any interest.
     c. Contract of antichresis.
     d Stipulation to pay interest on loans.
     e. Stipulation to reduce common carrier’s extraordinary
diligence & to limit its liability.
2. Contracts w/c must be IN A PUBLIC INSTRUMENT to be valid:
     a. Donation of real property (both the donation &accep-tance).
     b. Sale of real property.
     c. Partnership where real property/rights is contributed; or
when capital contribution exceeds P3000.
REFORMATION OF INSTRUMENTS
- REMEDY in equity in w/c a written instrument is made/construed
to the REAL intention of parties when there is an error/mistake.
(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 intervivos 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 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.
2. Those who do not comply w/ the Statute of Frauds.
3. Both parties are incapable of giving consent to a contract.
7 VOID/INEXISTENT CONTRACTS
1. Those w/c are ABSOLUTELY simulated/fictitious.
2. Those w/c contemplate an impossible service.
3. Those whose OBJECT is outside the commerce of man.
4. Those whose CAUSE/OBJECT did not exist at time of tran-
saction.
5. Those whose CAUSE/OBJECT/PURPOSE is contrary to law,
morals, good customs, public order, or public policy.
6. Those where INTENTION of parties to principal object CANNOT
be ascertained.
7. Those expressly prohibited/declared VOID by law.