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See Arts. 1156 - 1162: and Unilateral Acts, Which Has For Its Purpose, The
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1. Articles 100-113 of the RPC and other penal laws
• Must be expressly or impliedly set forth and subject to Art 2177 Civil Code (quasi-delict);
cannot be presumed 2. Chapter 2, Preliminary title, on Human Relations
( Civil Code )
CONTRACT (OBLIGATION EX CONTRACTU) 3. Title 18 of Book IV of the Civil Code on damages
• Must be complied with in good faith
• it is the “law” between parties; SCOPE OF CIVIL LIABILITY
1. Restitution
—Ad vise r: De a n Cynthia d e l Ca stillo He a d : Joy Ponsa ra n, Ele a n or Ma te o ; Und e rstud y: J oy Ta ja n, John Pa ul Lim ;
Sub je c t He a d : Je nnife r Sa nc he z; Ple d g e e s: Ma ria Ang e la Ala rilla , Gre g o rio Ra fa e l Bue ta , Kristi Fe Ma ri Lu
2. Reparation for damage caused 2. Real Obligations: obligations to give; where the
3. Indemnity for Consequential damages subject matter is a thing which the obligor must
deliver to the obligee
EFFECT OF ACQUITTAL IN CRIMINAL CASE a. Determinate or specific – object is particularly
1. When due to reasonable doubt – no civil liability designated or physically segregated from all
2. When due to exempting circumstances – there is other things of the same class
civil liability b. Generic –object is designated by its class or
3. When there is preponderance of evidence – there genus
is civil liability c. Limited Generic – generic objects confined to
a particular class
CRIMES WITHOUT CIVIL LIABILITY Ex: An obligation to deliver one of my horses
1. Contempt (Tolentino, Volume IV, p. 91; De Leon, 2003 ed.,
2. Insults to persons in authority p. 7)
3. gambling
4. violations of traffic regulations (De Leon, 2003 EFFECT OF OBLIGATIONS
ed.,p. 23)
DUTIES OF DEBTOR IN AN OBLIGATION TO GIVE
QUASI-DELICT/TORTS (OBLIGATION EX QUASI- A DETERMINATE THING (See Arts. 1163, 1164,
DELICTO Or EX QUASI MALEFICIO ) 1166.)
• It is an act or omission arising from fault or 1. To preserve or take care of the thing due with the
negligence which causes damage to another, diligence of a good father of a family
there being no pre-existing contractual relations
between the parties DILIGENCE OF A GOOD FATHER OF A FAMILY –
• ELEMENTS: ordinary care or that diligence which an average or
1. There must be an act or omission reasonably prudent person would exercise over his
2. There must be fault or negligence attributable to own property
the person charged
3. There must be damage or injury NOTE: Rule on Standard of Care
4. There must be a direct relation of cause and • That which the law requires; or
effect between the act arising from fault or • That stipulated by the parties; or
negligence and the damage or injury (proximate • In the absence of the two, diligence of a good
cause ); father of a family
5. There is no pre-existing contractual relation
between the parties. 2. To deliver the fruits of the thing: Right to the
fruits of the thing from the time the obligation to
NEGLIGENCE deliver it arises
• Failure to observe for the protection of the
interests of another person, that degree of care, WHEN OBLIGATION TO DELIVER ARISES
precaution and vigilance which the circumstances • GENERAL RULE: From the time of the
justly demand, whereby such other person perfection of the contract (i.e. meeting of the
suffers injury. (US v. Barrias, 23 Phil. 434 [1912]) minds between the parties)
• EXCEPTIONS
CHAPTER 2. – NATURE & EFFECTS OF
a. when the parties made a stipulation as
OBLIGATIONS
regards the right of the creditor to the fruits of
See Arts. 1163 - 1178 the thing
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suspensive condition or period; arises upon
1. Personal Obligations: obligations to do or not fulfillment of the condition or arrival of the
to do; where the subject matter is an act to be period
done or not to be done
a. Positive – obligation to do PERSONAL V. REAL RIGHT
b. Negative – obligation not to do Personal Real
Jus ad rem, a right Jus in re, a right
enforceable only enforceable against
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ty o f breach of the • renunciation (express or implied)
obligation • prescription
b. Liability: If obligation to pay money- must • NOTE: There is no delay in negative obligations
pay interest. If no extra-judicial demand, and natural obligations.
interest runs from the filing of the
complaint. In other obligations, pay FORTUITOUS EVENT – An event which could not be
damages. foreseen, or which though foreseen, was inevitable
Pa g e 108 o f 297
REQUIREMENTS: (Nakpil and Sons vs. CA):
1. The cause of the breach of the obligation must be virtue of an obligation are transmissible, if there has
independent of the will of the debtor been no stipulation to the contrary. (1112)
2. The event must be either unforeseeable or Art. 1191. The power to rescind obligations is implied
unavoidable in reciprocal ones, in case one of the obligors should
3. The event must be such as to render it not comply with what is incumbent upon him.
impossible for the debtor to fulfill his obligation in The injured party may choose between the fulfillment
a normal manner and the rescission of the obligation, with the payment
4. The debtor must be free from any participation in, of damages in either case. He may also seek
or aggravation of injury to the creditor rescission, even after he has chosen fulfillment, if the
latter should become impossible.
RULE ON FORTUITOUS EVENT: The court shall decree the rescission claimed, unless
• GENERAL RULE: No liability for fortuitous event there be just cause authorizing the fixing of a period.
• EXCEPTIONS: This is understood to be without prejudice to the
1. When expressly declared by law ( bad faith, rights of third persons who have acquired the thing, in
subject matter is generic, debtor is in delay ) accordance with Articles 1385 and 1388 and the
2. When expressly declared by stipulation or Mortgage Law. (1124)
contract Art. 1192. In case both parties have committed a
3. When nature of obligation requires assumption of breach of the obligation, the liability of the first
risk infractor shall be equitably tempered by the courts. If
4. When the obligor is in default or has promised to it cannot be determined which of the parties first
deliver the same thing to two or more persons violated the contract, the same shall be deemed
who do not have the same interest (Art. 1165[3]) extinguished, and each shall bear his own damages.
Pa g e 109 o f 297
e. The right of account is not purely personal fulfillment of a condition or upon the expiration of a
6. Accion Pauliana – asking the court to rescind or period and is demandable at once
to impugn all the acts which the debtor may have CONDITIONAL – one whose effectivity is
done to defraud the creditors (Arts. 1380-1389) subordinated to the fulfillment or non-fulfillment of a
• REQUISITES: future AND uncertain event or upon a past event
a. There is a credit in favor of plaintiff unknown to the parties
b. The debtor has performed an act subsequent CONDITION - Future and uncertain event or a past
to the contract, giving advantage to other event unknown to the parties
persons
c. The creditor is prejudiced by the debtor's act 1. Suspensive – happening of condition gives rise
which are in favor of 3rd parties and to obligation
rescission will benefit the creditor • Effects:
d. The creditor has no other legal remedy a. Effectivity retroacts to the day of the
e. The debtor's acts are fraudulent constitution of the obligation
b. No retroactivity with reference to fruits or
Without the With the fault of the
interest and prescription
fault of the debtor
debtor c. Creditor may preserve rights
Loss Obligation is Debtor obliged to pay d. Debtor – recovery of payment by mistake or
extinguished damages even w/o mistake
Deterioration Impairment Creditor may choose
borne by the between rescission RULES ON LOSS, DETERIORATION, AND
creditor or its fulfillment with IMPROVEMENTS DURING PENDENCY OF A
damages in either SUSPENSIVE CONDITION (Art. 1189)
case
Pa g e 110 o f 297
a. Positive – extinguished if time expires or contrary
indubitable of condition to happen When it is left When it is left exclusively
b. Negative – effective from moment of time exclusively to the will to the will of the debtor,
elapsed or evident it can't happen of the debtor, the the obligation is void
existence of the
IMPOSSIBLE AND ILLEGAL CONDITIONS obligation is affected
• GENERAL RULE: They shall annul the
obligation which depends upon them
• EXCEPTIONS:
a. pre-existing obligation
b. if obligation is divisible WHEN COURTS MAY FIX PERIOD:
c. in simple or remuneratory donations 1. If the obligation does not fix a period, but from its
d. testamentary dispositions nature and circumstances it can be inferred that a
e. conditions not to do an impossible thing period was intended by the parties
2. If the duration of the period depends upon the will
of the debtor
3. In case of reciprocal obligations, when there is a
OBLIGATIONS WITH A PERIOD just cause for fixing a period
4. If the debtor binds himself when his means
WITH A PERIOD – An obligation which depends on a permit him to do so
future and certain event (See Arts 1193, 1196)
PERIOD FOR WHOSE BENEFIT
WHEN STIPULATION SAYS “PAYABLE WHEN • GENERAL RULE: When a period is designated
ABLE” – IT IS WITH A PERIOD, REMEDY: for the performance or fulfillment of an obligation,
1. Agreement among parties it is presumed to have been established for the
2. Court shall fix period of payment when benefit of both creditor and debtor.
parties unable to agree • EXCEPTION: When it appears from the tenor of
the obligation or other circumstances that the
KINDS: period has been established in favor of one or the
1. Resolutory ( in diem ) – demandable at once but other.
terminates upon arrival of the day certain
• Day certain – that which must necessarily PERIOD FOR THE BENEFIT OF THE CREDITOR
come, although it may not be known when • Creditor may demand the fulfillment of the
2. Suspensive ( ex die ) –obligation becomes obligation at any time but the debtor cannot
demandable on the day stipulated compel him to accept before the expiration of the
period
ALTERNATIVE OBLIGATIONS (See Arts. 1199 – REQUISITES FOR MAKING THE CHOICE:
1206) 1. Made properly so that creditor or his agent will
actually know
FACULTATIVE - only one prestation has been 2. Made with full knowledge that a selection is
agreed upon but another may be given in substitution indeed being made
3. Made voluntarily and freely
EFFECT OF LOSS OR DETERIORA0TION THRU 4. Made in due time – before or upon maturity
NEGLIGENCE, DELAY OR FRAUD OF OBLIGOR: 5. Made to all proper persons
• Of thing intended as substitute - no liability 6. Made w/o conditions unless agreed by the
• Of the substitute after substitution is made – with creditor
liability 7. May be waived, expressly or impliedly
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h. Complete/ personal defense – total or partial
( up to amount of share only ) if not personal CHAPTER 4. - EXTINGUISHMENT OF
to him OBLIGATIONS
See Arts. 1232 - 1304
EFFECT OF LOSS OR IMPOSSIBILITY OF THE
PRESTATION: MODES OF EXTINGUISHMENT OF OBLIGATION
1. If without fault – no liability (Art. 1231):
2. If with fault – there is liability (also for damage 1. Payment or performance
and interest) 2. Loss of the thing due
3. Loss due to fortuitous event after default – there 3. Condonation or remission of debt
is liability (because of default) 4. Confusion or merger of rights
5. Compensation
DIVISIBLE AND INDIVISIBLE OBLIGATIONS (See 6. Novation
Arts. 1223 – 1225) 7. Annulment
8. Rescission
DIVISIBLE - obligation that is capable of partial 9. Fulfillment of resolutory condition
performance
PAYMENT OR PERFORMANCE
• Execution of certain no of days work - delivery of money and performance, in any other
• Expressed by metrical units manner of the obligation
• Nature of obligation – susceptible of partial
fulfillment REQUISITES FOR VALID
PAYMENT/PERFORMANCE
INDIVISIBLE – one not capable of partial
performance 1. With respect to prestation itself
a. Identity
• To give definite things b. Integrity or completeness
• Not susceptible of partial performance c. Indivisibility
• Provided by law 2. With respect to parties - must be made by
• Intention of parties proper party to proper party
a. Payor
OBLIGATIONS WITH A PENAL CLAUSE (See i. Payor - the one performing, he can be
Arts. 1226 – 1230) the debtor himself or his heirs or assigns
or his agent, or anyone interested in the
fulfillment of the obligation; can be
WITH PENAL CLAUSE – One to which an accessory
anyone as long as it is with the creditor's
undertaking is attached for the purpose of insuring its
consent
performance by virtue of which the obligor is bound to 3RD person pays/performs
ii. - only the
pay a stipulated indemnity or perform a stipulated
creditor's consent; If performance is done
prestation in case of breach
also with debtor's consent - he takes the
place of the debtor. There is subrogation
CHARACTERISTICS OF PENAL CLAUSES: except if the 3rd person intended it to be
1. Subsidiary - As a general rule, only penalty can a donation
be demanded, principal cannot be demanded, iii. 3rd person pays/performs with consent of
except: Penalty is joint or cumulative creditor but not with debtor's consent, the
2. Exclusive - takes place of damage, damage can repayment is only to the extent that the
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b. Refusal to pay penalty i. Payee - creditor or obligee or successor
c. With dolo ( not of creditor ) in interest of transferee, or agent
ii. 3rd person - if any of the ff. concur:
CAUSES FOR REDUCTION OF PENALTY: • It must have redounded to the
1. Partial/irregular performance obligee's
2. Penalty provided is iniquitous/ unconscionable
• benefit and only to the extent of such
benefit
Pa g e 114 o f 297
• It falls under art 1241, par 1,2,3 - the
benefit is total so, performance is performance, knowing its incompleteness or
total irregularity, and without expressing any protest or
iii. Anyone in possession of the credit - but objection, the obligation is deemed fully complied
will apply only if debt has not been
previously garnished
• Attempt in Good Faith to perform without willful or
PAYMENT MADE TO AN INCAPACITATED
intentional departure
PERSON, VALID IF
• Deviation is slight
1. Incapacitated person kept the thing delivered, or
• Omission/Defect is technical or unimportant
2. Insofar as the payment has been beneficial to
him • Must not be so material that intention of parties is
not attained
PAYMENT TO 3RD PARTY NOT AUTHORIZED,
VALID IF PROVED AND ONLY TO THE EXTENT EFFECT OF SUBSTANTIAL PERFORMANCE IN
OF BENEFIT; PRESUMED IF GOOD FAITH
1. After payment, 3rd person acquires the creditor’s • Obligor may recover as though there has been
rights strict and complete fulfillment, less damages
2. Creditor ratifies payment to 3rd person suffered by the oblige
3. By creditor’s conduct, debtor has been led to • Right to rescind cannot be used for slight breach
make the payment (estoppel)
SPECIAL RULES/FORMS OF PAYMENT
PAYMENT MADE IN GOOD FAITH TO A PERSON
IN POSSESSION OF CREDIT SHALL RELEASE 1. APPLICATION OF PAYMENTS – the designation
DEBTOR; REQUISITES: of the debt which payment shall be made, out of
1. Payment by debtor must be made in good faith 2 or more debts owing the same creditor:
2. Creditor must be in possession of the credit and stipulation or application of party given benefit of
not merely the evidence of indebtedness period – OK; to be valid: must be debtor’s choice
or w/ consent of debtor
• NOTE: With respect to time and place of
payment - must be according to the obligation REQUISITES FOR THE APPLICATION OF
PAYMENT:
WHERE PAYMENT SHOULD BE MADE a. Various debts of the same kind
1. In the place designated in the obligation b. Same debtor
2. If there is no express stipulation and the c. Same creditor
undertaking is to deliver a specific thing – at the d. All debts must be due
place where the thing might be at the moment the • EXCEPTION: there may be application of
obligation was constituted payment even if all debts are not yet due if:
3. In other case – in the place of the domicile of the a. Parties so stipulate
debtor b. When application of payment is made by the
• Time of payment - time stipulated party for whose benefit the term has been
• Effect of payment – extinguish obligation constituted
Except: order to retain debt c. Payment is not enough to extinguish all debts
4. CESSION or ASSIGNMENT
4. CONSIGNATION
CESSION/ASSIGNMENT IN FAVOR OF
CREDITORS – the process by which debtor transfer TENDER -the act of offering the creditor what is
all the properties not subject to execution in favor of due him together with a demand that the creditor
creditors is that the latter may sell them and thus, accept the same (When creditor refuses w/o just
apply the proceeds to their credits; extinguish up to cause to accept payment, he becomes in mora
amount of net proceeds ( unless w/ contrary accepiendi and debtor is released from
stipulation ) responsibility if he consigns the thing or sum due)
Pa g e 119 o f 297
a. Creditor pays another preferred 4. Fulfill what has been expressly stipulated
creditor even w/o debtor’s 5. All consequences w/c may be in keeping with
knowledge good faith, usage and law
b. 3 6. Relativity – binding only between the parties,
rd personpays
obligation not w/interested
approval in
of their assigns, heirs; strangers cannot demand
debtor enforcement
c. Person interested in fulfillment of
obligation pays debt even w/o EXCEPTION TO RELATIVITY:
knowledge of debtor 1. Accion pauliana
2. Accion directa
Difference from Change of debtor 3. Stipulation pour autrui
payment by 3rd
person REQUISITES OF STIPULATION POUR AUTRUI
1. debtor is not 1. debtor is released 1. Parties must have clearly and deliberately
necessarily conferred a favor upon a 3rd person
released from debt 2. The stipulation in favor of a 3rd person should be
2. can be done w/o 2. needs consent of creditor a part of, not the whole contract
consent of creditor – express or implied 3. That the favorable stipulation should not be
conditioned or compensated by any kind of
obligation whatsoever
3. one obligation 3. two obligations; one is
4. Neither of the contracting parties bears the legal
extinguished and new one
representation or authorization of 3rd party
created
4. 3rd person has no 4. new debtor is obliged to pay 5. The third person communicates his acceptance
obligation to pay if before revocation by the original parties
insolvent 6. Art 1312; Art 1314
Pa g e 120 o f 297
b. Bilateral – both parties are required to offeror comes to know, and not when the offeree
render reciprocal prestations merely manifests his acceptance
5. As to name or designation
a. Nominate ELEMENTS OF VALID OFFER / ELEMENTS OF
b. Innominate VALID ACCEPTANCE
I. Do ut des – I give that you may give 1. Definite--unequivocal
II. Do ut facias – I give that you may do 2. Complete--unconditional
III. Facio ut des – I do that you may give 3. Intentional
IV. Facio ut facias – I do that you may do
WHEN OFFER BECOMES INEFFECTIVE:
STAGES IN A CONTRACT: 1. Death, civil interdiction, insanity or insolvency of
1. Preparation - negotiation either party before acceptance is conveyed
2. Perfection/birth 2. Express or implied revocation of the offer by the
3. Consummation – performance offeree
3. Qualified or conditional acceptance of the offer,
CHAPTER 2. – ESSENTIAL REQUISITES OF A which becomes a counter-offer
CONTRACT 4. Subject matter becomes illegal or impossible
See Arts. 1318 - 1355 before acceptance is communicated
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Pa g e 121 o f 297
c. They were contracts for necessities such as
food, but here the persons who are bound to
RULE ON ADVERTISEMENTS AS OFFERS give them support should pay therefor
• Business advertisements – Not a definite offer, d. Minor is estopped for having misrepresented
but mere invitation to make an offer, unless it his age and misled the other party (when age
appears otherwise is close to age of majority as in the Mercado
• Advertisement for Bidders – only invitation to v Espiritu and Sia Suan v Alcantara cases.
make proposals and advertiser is not bound to
accept the highest or lowest bidder, unless
appears otherwise
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1. Entered into by guardian whenever e. transfer of all his property by a debtor when
ward suffers damage by more than he is financially embarrassed or insolvent
1/4 of value of object f. transfer made between father and son where
2. Agreed upon in representation of there is present any of the above
absentees, if absentee suffers lesion circumstances
by more than ¼ of value of property g. failure of the vendee to take exclusive
3. Contracts where rescission is based possession of the property
on fraud committed on creditor
(accion pauliana) Rescission in Art Rescission Proper in
4. Objects of litigation; contract entered 1191 Art 1381
into by defendant w/o knowledge or It is a principal action it is a subsidiary remedy
approval of litigants or judicial retaliatory in character
authority Only ground is non- There are 5 grounds to
5. Payment by an insolvent – on debts performance of one’s rescind. Non-
w/c are not yet due; prejudices claim obligation or what is performance by the other
of others incumbent upon him is not important
6. Provided for by law - art 1526, 1534, Applies only to Applies to both unilateral
1538, 1539, 1542, 1556, 1560, 1567 reciprocal obligation and reciprocal obligations
and 1659 Only a party to the Even a third person who
ii. Under art 1382 - Payments made in a contract may demand is prejudiced by the
state of insolvency fulfillment or seek the contract may demand the
1. Plaintiff has no other means to obtain rescission of the rescission of the contract.
reparation. contract
2. Plaintiff must be able to return Court may fix a period Court cannot grant
whatever he may be obliged to return or grant extension of extension of time for
due to rescission time for the fulfillment fulfillment of the
3. The things must not have been of the obligation obligation
passed to 3rd parties who did not act Its purpose is to cancel Its purpose is to seek
in bad faith the contract reparation for the damage
4. It must be made within the or injury caused, thus
prescribed period (of 4 years) allowing partial rescission
of the contract
OBLIGATION CREATED BY THE RESCISSION OF 2. VOIDABLE CONTRACTS – intrinsic defect; valid
THE CONTRACT: Mutual Restitution until annulled; defect is due to vice of consent or
a. Things w/c are the objects of the contract legal incapacity
and their fruits • CHARACTERISTICS:
b. Price with interest a. Effective until set aside
b. May be assailed or attacked only in an action
MUTUAL RESTITUTION NOT APPLICABLE WHEN for that purpose
a. creditor did not receive anything from c. Can be confirmed ( NOTE: confirmation is
contract the proper term for curing the defect of a
b. thing already in possession of party in good voidable contract)
faith; subject to indemnity only; if there are 2 d. Can be assailed only by the party whose
or more alienations – liability of 1st infractor consent was defective or his heirs or assigns
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conveyance is a. Minors ( below 18 )
inadequate or fictitious b. Insane unless acted in lucid interval
b. transfer was made by a debtor after a suit c. Deaf mute who can’t read or write
has been begun and while it is pending d. Persons specially disqualified: civil
against him interdiction
c. sale upon credit by an insolvent debtor e. In state of drunkenness
d. evidence of indebtedness or complete f. In state of hypnotic spell
insolvency
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MISTAKE qualities and giving it qualities it does not
• false belief into something have; LAWFUL misrepresentation
• REQUISITES: • NOTE:
a. Refers to the subject of the thing which is the • Expression of an opinion – not fraud unless
object of the contract made by expert and other party relied on the
b. Refers to the nature of the contract former’s special knowledge
c. Refers to the principal conditions in an • Fraud by third person – does not vitiate
agreement consent; only action for damages except if there
d. Error as to person - when it is the principal is collusion between one party and the third
consideration of the contract person, or resulted to substantial mistake, mutual
e. Error as to legal effect - when mistake is between parties.
mutual and frustrates the real purpose of
parties CAUSES OF EXTINCTION OF ACTION TO ANNUL
a. PRESCRIPTION - Period to bring an action
VIOLENCE for Annulment
• serious or irresistible force is employed to wrest i. Intimidation, violence, undue influence -
consent 4 years from time defect of consent
ceases
INTIMIDATION ii. Mistake, fraud – 4 years from time of
• one party is compelled by a reasonable and well- discovery
grounded fear of an imminent and grave danger iii. Incapacity - From time guardianship
upon person and property of himself, spouse, ceases
ascendants or descendants (moral coercion)
Carantes vs. CA, 76 SCRA 514, discovery of
UNDUE INFLUENCE fraud must be reckoned to have taken place from
• person takes improper advantage of his power the time the document was registered in the
over will of another depriving latter of reasonable office of the register of deeds. Registration
freedom of choice constitutes constructive notice to the whole world D e le t e d : (9a)
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extrinsic defect; produce legal effects only after g. Anyone may invoke the nullity of the contract
ratified whenever its juridical effects are asserted
against him
KINDS:
a. Unauthorized or No sufficient authority – KINDS OF VOID CONTRACT:
entered into in the name of another when: a. Those lacking in essential elements: no
i. No authority conferred consent, no object, no cause (inexistent
ii. In excess of authority conferred ( ultra ones) – essential formalities are not complied
vires) with ( ex: donation propter nuptias – should
b. Curable by Ratification - Both parties conform to formalities of a donation to be
incapable of giving consent -2 minor or 2 valid )
insane persons i. Those w/c are absolutely simulated or
c. Curable by Acknowledgment - Failure to fictitious – no cause
comply with Statute of Frauds ii. Those which cause or object did not exist
i. Agreement to be performed within a year at the time of the transaction – no
after making contract cause/object
ii. Special promise to answer for debt, iii. Those whose object is outside the
default or miscarriage of another commerce of man – no object
iii. Agreement made in consideration of iv. Those w/c contemplate an impossible
promise to marry service – no object
iv. Agreement for sale of goods, chattels or v. Those w/c intention of parties relative to
things in action at price not less than principal object of the contract cannot be
500; exception: auction when recorded ascertained
sale in sales book b. Prohibited by law
v. Agreement for lease of property for more c. Those expressly prohibited or declared
than one year and sale of real property void by law - Contracts w/c violate any legal
regardless of price provision, whether it amounts to a crime or
vi. Representation as to credit of another not
d. Illegal/Illicit ones – Those whose cause,
TWO WAYS OF CURING UNENFORCEABLE object or purpose is contrary to law, morals,
CONTRACTS: good customs, public order or public policy ;
a. Failure of defendant to object in time, to Ex: Contract to sell marijuana
the presentation of parole evidence in court,
the defect of unenforceability is cured
b. Acceptance of benefits under the
contract. If there is performance in either
part and there is acceptance of performance,
it takes it out of unenforceable contracts; also
estoppel sets in by accepting performance,
the defect is waived
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ATENEO CENTRAL BAR OPERATIONS 2007
the purpose has been accomplished, or
before any damage has been caused to a 3rd
CONTRACT DOES NOT person
CONSTITUTE CONSTITUTE c. payment of money or delivery of property
CRIMINAL OFFENSE CRIMINAL OFFENSE made by an incapacitated person
but is ILLEGAL
/UNLAWFUL PER SE
d. agreement or contract which is not illegal per
Parties a. No action for a. No action for se and the prohibition is esigned for the
are in specific specific protection of the plaintiff
pari performance performance e. payment of any amount in excess of the
delicto h. No action for b. No action for maximum price of any article or commodity
restitution on restitution on fixed by law or regulation by competent
either side. either side. The authority
The law will law will leave f. contract whereby a laborer undertakes to
leave you you where you work longer than the maximum number of
where you are are hours fixed by law
i. Both shall be c. No confiscation g. one who lost in gambling because of
prosecuted fraudulent schemes practiced on him is
j. Thing/price to allowed to recover his losses (Art. 313 RPC)
be confiscated even if gambling is prohibited.
in favor of
government REQUISITES OF ILLEGAL CONTRACTS:
Only a. Contract is for an illegal purpose
a.No action for a.No action for
one b. Contract must be repudiated by any of the
specific specific
party is performance performance parties before purpose is accomplished or
damage is caused to 3rd parties
guilty b.Innocent party b.Innocent party is
c. Court believes that public interest will be
is entitled to entitled to
served by allowing recovery (discretionary
restitution restitution
upon the court ) – based on remorse;
c.Guilty party is c.Guilty party is
illegality is accomplished when parties
not entitled to not entitled to
entered into contract; before it takes effect
restitution restitution
– party w/c is remorseful prevents it
d.Guilty party will
be prosecuted
WHERE LAWS ARE ISSUED TO PROTECT
e.Instrument of
crime will be CERTAIN SECTORS: CONSUMER PROTECTION,
LABOR, USURY LAW
confiscated in
favor of gov’t. a. Consumer protection – if price of
commodity is determined by statute, any
are
person paying an amount in excess of the
ned e
maximum price allowed may recover such
excess
KINDS OF ILLEGAL CONTRACTS
t
b. Labor – if law sets the minimum wage for
oeth s
laborers, any laborer who agreed to receive
PARI DELICTO DOCTRINE
e
less may still be entitled to recover the
• Both parties are guilty, no action against each
i
deficiency; if law set max working hours
other; those who come in equity must come with
sptu
and laborer who undertakes to work longer
clean hands; applies only to illegal contracts and
ic
may demand additional compensation
not to inexistent contracts; does not apply when a
e. r
c. Interest paid in excess of the interest
superior public policy intervenes
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• EXCEPTION recovered by debtor with interest from date
T
of payment
O
EFFECTS OF ILLEGAL CONTRACTS
a. Payment of Usurious interest P
a. If one party is incapacitated, courts may
b. payment of money or A delivery of property for
R where the party who paid allow recovery of money, property delivered
an illegal purpose, by incapacitated person in the interest of
I
or delivered repudiates the contract before justice; pari delicto cannot apply because an
D Pa g e 128 o f 297
E
L ICTO
RULE - If
purpose has not yet been accomplished and If
damage has not been caused to any 3rd person
OTHER EXCEPTIONS:
C ivil La w Sum m e r Re vie we r
ATENEO CENTRAL BAR OPERATIONS 2007
incapacitated person does not know what he 1. estoppel in pais (by conduct)
is entering into; unable to understand the c. estoppel by silence
consequences of his own action d. estoppel by acceptance of benefits
b. If agreement is not illegal per se but merely 2. Technical estoppel
prohibited and prohibition is designated for a. Estoppel by deed
the protection of the plaintiff – may recover b. Estoppel by record
what he has paid or delivered by virtue of c. Estoppel by judgment
public policy d. Estoppel by laches
KINDS
Pa g e 129 o f 297
C ivil La w Sum m e r Re vie we r
ATENEO CENTRAL BAR OPERATIONS 2007
TITLE 4. – ESTOPPEL
See Arts. 1431 - 1439
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Pa g e 130 o f 297