- which explains and justifies

- the creation of an obligation

CONTRACTS - through the will of the contracting parties.

CHAPTER 2 Essential Requisites of DEFINITION: REMUNERATORY CONTRACTS

Contracts
SECTION 3 Cause of Contracts
Article 1350. In onerous contracts the cause is
understood to be, for each contracting party, the
prestation or promise of a thing or service by the
other; in remuneratory ones, the service or benefit
which is remunerated; and in contracts of pure
beneficence, the mere liberality of the benefactor.
(1274)
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CAUSE OF CONTRACTS
“consideration” in the old civil code
(2000) Lolita was employed in a finance company. Because she
could not account for the funds entrusted to her, she was
charged with estafa and ordered arrested. In order to secure
her release from jail, her parents executed a promissory note to
pay the finance company the amount allegedly
misappropriated by their daughter. The finance company then
executed an affidavit of desistance which led to the withdrawal
of the information against Lolita and her release from jail. The
parents failed to comply with their promissory note and the
finance company sued them for specific performance. Will the
action prosper or not? (3%)
The action will not prosper because the consideration for the
promissory note was the non-prosecution of the criminal case for
estafa. This cannot be done anymore because the information
has already been filed in court and to do it is illegal. That the
consideration for the promissory note is the stifling of the criminal
prosecution is evident from the execution by the finance
company of the affidavit of desistance immediately after the
execution by Lolita's parents of the promissory note. The
consideration being illegal, the promissory note is invalid and
may not be enforced by court action.
- is one where a party gives something to another
[money?]
- because of some service or benefit given or rendered
by the latter to the former.
DEFINITION: ONEROUS CONTRACTS
- a contract in which the unavoidable costs of meeting
the obligations under the contract exceed the
economic benefits expected to be received under it.
RULE: ACCESSORY CONTRACTS
- In accessory contracts the rule is that the cause of the
accessory contract is identical with that of the principal
contract.
- Thus, it has been held that as a mortgage is
an accessory contract, its cause is the very
cause of the principal contract from which it
receives its life, and without which it cannot
exist as an independent contract, although it
may secure an obligation incurred by another
GENERAL RULE: MORAL OBLIGATIONS
- May a moral or natural obligation constitute a suffi
cient cause or consideration to support an onerous
contract?
- The jurisprudence with respect to this question in this
jurisdiction is meager.
- It is, however, clear that where the moral obligation
- arises wholly from ethical considerations,
- unconnected with any civil obligation
- and, as such, is not demandable in law but
only in conscience,
- it can not constitute a sufficient cause or
consideration
- to support an onerous contract,
EXCEPTION RULE:
- but where such moral obligation is based upon a
previous civil obligation which has already been
barred by the statute of limitations at the time

(NOTE: Under the old Civil Code, “consideration” was the word Classification of Contracts as to CAUSE
used instead of “cause of the obligation.”)
- Actually, in this jurisdiction, cause and consideration
CAUSE CAUSE CAUSE
are used interchangeably
IN IN IN PURE
ONEROUS REMUNERATORY BENEFICENCE /
DEFINITION: CAUSE [1708 Manresa, 5th Ed., Bk. 2, pp. 445-446] CONTRACTS CONTRACTS GRATUITOUS
- is the why of the contract
- or is understood to Article 726. When a
person gives to another
- the essential reason be, a thing or right on
- which moves the contracting parties to enter account of the latter's
into the contract. for each merits or of the services
rendered by him to the
contracting donor, provided they do
DEFINITION: CAUSE [Castan, 7th Ed., p. 347, citing 2 Planiol] party, not constitute a
- it is the immediate, direct or most proximate reason
• __

demandable debt, or IN ONEROUS CONTRACTS IN ONEROUS CONTRACTS

when the gift imposes
upon the donee a
burden which is less than
the value of the thing cause is the object is
given, there is also a
donation. (619)
is the promise of a thing is the thing itself

the prestation the mere

or promise of a the service or liberality
in a contract of sale, in a contract of sale
thing or service benefit which is
remunerated of the the cause, as far as the the objects
by the other benefactor. vendor is concerned,
- is the acquisition of - are the thing which
Example: contract Example: pure the purchase price is sold
of sale donation - cause of the - and
obligation of the - the price which is
vendor is the paid.1
cause consideration obligation of the
vendee
merely the civil law term common law term.
the cause, as far as the
causa in civil law jurisdictions than consideration in Anglo- vendee is concerned,
is broader in scope American jurisdictions - is the acquisition of
the thing
can be enforced under the Many agreements which - while the cause of
broader doctrine of causa cannot be supported in the obligation of the
[Tolentino, Civil Code, 1956 Anglo-American law for want vendee is the
Ed., p. 486] of consideration obligation of the
vendor

BAR QUESTION: If a particular piano is sold for P500,000 what is

the object and what is the cause?

ANS.: There are two schools of thought here.

cause of the contract object of the contract
(a) According to Manresa,
MANRESA: CASTAN: - for the seller
- the object is the piano and
the essential reason thing, service, or right - the cause is the price;
- for the buyer
which moves the contracting which is the object of the - the object is the price and
parties to enter into the obligation - the cause is the piano.
contract.
(b) According to others,
IN REMUNERATORY IN REMUNERATORY - for both the seller and the buyer, there is just one
CONTRACTS CONTRACTS object, namely, the piano.
- The cause for the seller
the cause is the object - is the price;
- the cause for the buyer
the service or benefit is the thing - is the delivery of the piano.

which is remunerated, which is given in ---------------------------------------------------------

IN GRATUITOUS CONTRACTS
cause is
the “mere” liberality of the
donor or benefactor
remuneration Article 1351. The particular motives of the parties in
entering into a contract are different from the cause
IN GRATUITOUS CONTRACTS
thereof. (n)
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the object is
CAUSE OF CONTRACTS
the thing which is given or
donated MOTIVES OF THE PARTIES

2
• __
RULE: particular MOTIVES of the parties in entering into
a contract
- are different from the cause thereof.
cause of the contract MOTIVES of the contract
These circumstances The motives
may constitute the motive which impel one to a sale or
which induces the purchase purchase
are not always the
consideration of the contract
but the real consideration of One may purchase an article
the purchase (as far as the not because it is cheap, for in
vendor is concerned) is the fact it may be dear, but
money which passed because he may have some
particular use to which it may
be put
REASON: REASON: One may purchase
, an article not because it is
cheap, for in fact it may be
dear, but because he may
have some particular use to
which it may be put,
because of a particular
quality which the article has,
or the relation which it will
bear, to other articles with
which it will be associated.
cause is the direct or most motives are the indirect or
proximate reason of a remote reasons;
contract
cause is the objective or motives are the
juridical reason of a contract, psychological or purely
personal reasons
cause is always the same motives differ for each
contracting party
legality or illegality of the legality or illegality of the
cause will affect the motives will not affect the
existence or validity of the existence of the contract.
contract
There are times, however, when the boundary line between
motive and cause disappears altogether.
The motive may be regarded as causa when
- the contract is conditioned upon
- the attainment of the motive of either contracting
party.
In other words, motive becomes causa when
- it predetermines the purpose of the contract.
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Article 1352. Contracts without cause, or with
unlawful cause, produce no effect whatever. The
cause is unlawful if it is contrary to law, morals, good
customs, public order or public policy. (1275a)
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OBJECT OF THE CONTRACT
1ST REQUISITE [SUFFICIENT CAUSE]: EXISTING CAUSE
NOTE: In order that there will be a sufficient cause upon which a
contract may be founded, it is essential that the following
requisites must concur:
First: The cause should be in existence
- at the time of the celebration of
the contract;
- in other words, contracts without cause
- that is, where cause is not existent
- produce no effect whatever [void?]
- inexistent and void from the
beginning: [Art. 1409]
- EXAMPLE: Thus, a fictitious sale is VOID. (Navarro v.
Diego, [C.A.] 40 O.G. 2106).
RULE: This precept is confirmed by Art. 1409 of the Code which
declares as inexistent those contracts which are absolutely
simulated or fictitious as well as those whose cause did not
exist at the time of the transaction.
- (3) Those whose cause or object did not
exist at the time of the transaction;
RULE: [NOTE that the cause must exist at the time of the
perfection of the contract; it need not exist later. (See Juan
Serrano v. Federico Miave, et al., L-14678, Mar. 31, 1965).]
RULE: Just because the seller was not the owner of the thing
sold, it does not mean that there was lack of cause, for after
all, there is a warranty (See Levy v. Johnson, 44 Phil. 463); nor
does failure to pay the price result in a lack of cause. (De la
Cruz v. Legaspi, 51 O.G. 6212).
EXAMPLE: it has been held that
- if the purchase price in a contract of sale
- was never in fact paid by the purchaser or vendee
- to the vendor,
- the contract is inexistent for all purposes for lack of a
cause or consideration.
EXAMPLE: The same rule is applicable in cases of
conveyances of property where the conveyance or transfer is
simulated without any cause or consideration whatsoever
whether the purpose of the grantor is to defraud his creditors
or to avert the possible attachment of the property.
NOT APPLICABLE: However, the rule is not applicable where
3
• __
the purchaser or vendee failed to fully pay for the property,
even if there is a stipulation in the contract of sale that full
payment shall be made at the time of the celebration
thereof.
NOT APPLICABLE: As a matter of fact, even where the
contract itself expressly states that the consideration for the
sale of a piece of land is only one peso (P1.00), it does not
follow that the contract or sale is void or inexistent for lack of
a cause or consideration. The reason is obvious. There is a
consideration. The contract may be voidable because of the
inadequacy of the cause or consideration, but certainly, it is
not void or inexistent.
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OBJECT OF THE CONTRACT
2ND REQUISITE [SUFFICIENT CAUSE]: LAWFUL CAUSE
NOTE: In order that there will be a sufficient cause upon which a
contract may be founded, it is essential that the following
requisites must concur:
Second: The cause should be licit or
lawful;
- in other words, a contract with an unlawful cause
- produce no effect whatever [ void
from the very beginning]
RULE: It must also be noted that in applying the provision of
Art. 1352 regarding the effect of an unlawful cause, it is
always necessary to consider the provisions of Arts. 1411 and
1412 of the Code.
- It must be observed that these provisions presuppose
the existence of an illicit or illegal cause which is
determinative of the nullity of the contract
DEFINITION: unlawful cause
- if it is:
contrary to law
EXAMPLE: Thus, it has been held that
- where the cause or consideration
- for the sale of a certain property
- is no other than the accumulated usurious interests
which the vendor-debtor has not yet paid,
- the sale is void
- because of the illegality of the cause or
consideration
EXAMPLE: (PARAS): A promise of marriage based on sexual
intercourse is based on an illegal cause. (Batarra v. Marcos, 7
Phil. 156).
EXAMPLE: (PARAS): A promissory note to cover a gambling
debt (Palma v. Canizares, 1 Phil. 602),
- JURISPRUDENCE: A promissory note which represents
a gambling debt and is therefore unenforceable in
the hands of the payee, obtains no greater validity
in the hands of an assignee in the absence of
showing that the debtor has consented to and
approved of the assignment.
- Article 1798 of the civil Code provides that "the
person who loses at a game of chance, luck, or
hazard can not recover what he has voluntarily
paid.
contrary to morals
contrary to good customs
contrary to public order
contrary to public policy
EXAMPLE: It has also been held
- that a contract affecting the course of a criminal
prosecution is invalid,
- because such a contract would be manifestly
contrary to public policy and the due administration
of justice
EXAMPLE: (PARAS)Thus, a contract to stifle criminal
prosecution for theft is void because this is manifestly contrary
to public policy and the due administration of justice. (Arroyo
v. Berwin, 36 Phil. 386).
NOT APPLICABLE: Accordingly, they cannot be applied to
simulated or fictitious transfers of property, where the motive
of the grantor may be either to defraud his creditors or to
avert the possible attachment of the property.
EFFECTS: IF ILLEGAL
(a) If one party is innocent
- he cannot be compelled to perform his obligation,
and he may recover what he has already given.
(See Art. 1411, Civil Code).
- RULE: While an absolutely simulated contract can
have no effect, a contract with an illegal cause may
produce effects under certain circumstances where
the parties are not of equal guilt. (Liguez v. Court of
Appeals, et al., L-11240, Dec. 18, 1957)
(b) If both parties are guilty,
- GENERAL RULE: neither can sue the other, the law
leaving them as they are.
- EXCEPTION RULES: But certain exceptions exist. (See
Arts. 1414, 1416, etc., Civil Code)
- Article 1414. When money is paid or
property delivered for an ILLEGAL
purpose, the contract may be repudiated
by one of the parties before the purpose
has been accomplished, or before any
damage has been caused to a third
person. In such case, the courts may, if the
public interest will thus be subserved, allow
the party repudiating the contract to
4
• __

recover the money or property.

- Article 1416. When the agreement is not
ILLEGAL per se but is merely prohibited,
and the prohibition by the law is designed
for the protection of the plaintiff, he may, if
public policy is thereby enhanced, recover
what he has paid or delivered.
BURDEN OF PROOF
= WHO ALLEGED
• If a person claims that some parts of a contract are illegal
but the rest are valid, he has the burden of showing which
parts are supported by a lawful cause; otherwise, the whole
contract shall be considered VOID. (Lichauco v. Martinez, 6
Phil. 694). —
---------------------------------------------------------
Article 1353. The statement of a false cause in
contracts shall render them void, if it should not be
proved that they were founded upon another cause
which is true and lawful. (1276)
---------------------------------------------------------
OBJECT OF THE CONTRACT
3RD REQUISITE [SUFFICIENT CAUSE]: TRUE CAUSE
RULE It is, therefore, clear that if a contract is simulated, it does
not necessarily follow that it is inexistent or void, provided, of
course, that it can be established that it is, in reality, founded
upon another cause which is true and lawful.
EXCEPTION: if it should be proved
- that they were founded
- upon another cause which is
- true and
- lawful.
RULE IIf the cause is false, the contract is not valid unless some
other cause which is lawful really exists. (See Art. 1353, Civil
Code).
---------------------------------------------------------
Article 1354. Although the cause is not stated in the
contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary. (1277)
---------------------------------------------------------
CAUSE OF CONTRACTS
PRESUMPTION OF EXISTENCE OF SUFFICIENT CAUSE
PRESUMPTION: Although the cause is not stated in the
contract
- it is presumed that it exists and is lawful

NOTE: In order that there will be a sufficient cause upon which a EXCEPTION: unless the debtor proves the contrary
contract may be founded, it is essential that the following
requisites must concur:

BURDEN OF PROOF
First: Third: The cause should be true = debtor
- statement of a false cause in
in other words,
• WHEN cause is not stated —
contracts
- Debtor may prove IT DOES NOT exist
- shall render them void, - AND/OR
- BUT SEE BELOW: - Debtor may prove IT IS NOT lawful
- [apparently VOIDABLE]
---------------------------------------------------------
RULE: Just because the cause stated is false does not
necessarily mean that the contract is void. Article 1355. Except in cases specified by law, lesion
- Reason: The parties are given a chance to show that or inadequacy of cause shall not invalidate a contract,
a cause really exists, and that said cause is true and unless there has been fraud, mistake or undue
lawful. influence. (n)
- RULE: Thus under this Article, it would seem that the
---------------------------------------------------------
contract with a statement of a false cause is not CAUSE OF CONTRACTS
void, but merely revocable or voidable.
(Concepcion v. Sta. Ana, 87 Phil. 787).
LESION [INSUFFICIENT CAUSE]
RULE: Thus, where the deed of sale expressly states that the
purchase price has been paid when in fact it has never been DEFINITION: lesion
paid, it is evident that the contract of sale is invalid in - it is inadequacy of cause
accordance with the general rule announced in Art. 1353 - like an insufficient price for a thing sold
and confi rmed by Art. 1409, No. 2, which declares as
inexistent those contracts which are absolutely simulated or fi
GENERAL RULE: Lesion or inadequacy of price/cause shall
ctitious.
not invalidate a contract

5
• __

EXCEPTION RULE: Lesion or inadequacy of price/cause

shall invalidate a contract

RULE: Lesion may be EVIDENCE of the presence of fraud,

mistake, or undue infl uence. (Rosales de Echaus v. Gan, 55
Phil. 527).

(a) When, together with lesion, there has been:

1) fraud

2) mistake

3) or undue influence

EXCEPTION RULE Lesion or inadequacy of price/cause

shall invalidate a contract

(b) In cases expressly provided by law (in the following, the

contracts may be rescinded):

1) “Those which are entered into by guardians whenever the

wards they represent suffer lesion by more than one-fourth of
the value of the things which are the objects thereof.” (Art.
1381, par. 1, Civil Code).

2) “Those agreed upon in representation of absentees, if the

latter suffer the lesion stated in the preceding number.” (Art.
1381, par. 2, Civil Code).

3) Partition among co-heirs, when anyone of them received

things with a value less by at least one-fourth than the share
to which he is entitled. (Art. 1098, Civil Code).

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