CONTRACTS (Arts. 1305-1317.

)
Chapter 1
GENERAL PROVISIONS

ART. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. (1254a)

Meaning of contract.
The above article gives the definition of a contract. It lays emphasis on the meeting of minds
between two contracting parties which takes place when an offer by one party is accepted by the other.1
(Art. 1319.)
In a contract, one or more persons bind himself or themselves with respect to another or others,
or reciprocally, to the fulfillment of a prestation to give, to do, or not to do.

- Ang obligation ay puwedeng walang kontrata pero kapag mayroong kontrata automatically
mayroong obligation.
- Every time na may contract, automatically there is also an obligation.

Elements
1. Essential elements (Art. 1318-1355) – required ang tatlong yan dahil hindi sya tatawaging
kontrata kapag wala iyan.
A. Consent
B. Object
C. Cause
2. Natural elements (e.g., warranty against eviction and hidden defects in case of sales) – not
required elements. Natural elements are elements that are initially present in some certain
contracts pero pwede syang alisin.
3. Accidental elements (e.g., stipulation such as interest in loan) – hindi initially na nag eexist sa
isang contract unlike sa natural elements. Accidental elements does not exist habang ginagawa
ang contract, it must be stipulated by the parties.

Classifications
1. According to perfection:
A. Consensual – perfected by consent, object, cause (COC)
(e.g., sales, partnership, real mortgage)
B. Real – perfected by COC + delivery
(e.g., pledge, loan, deposit)
C. Formal or Solemn – perfected by COC + formalities required by law
(e.g., donation of real property, chattel mortgage, antichresis)

2. According to relation to other contract:

A. Principal – can exist on its own
(e.g., sales, loan)
B. Accessory – existence depends upon a principal contract
(e.g., pledge, mortgage, guaranty)
 C. Preparatory – needed for the formation of subsequent contracts
(e.g., partnership, agency)

3. According to parties obliged:

A. Unilateral – only one party is obliged
(e.g., commodatum, donation)
B. Bilateral – both parties are obliged
(e.g., sales, barter)

4. According to name:
A. Nominate – the law gives it a special name or destination
(e.g., sales, loan, partnership, donation)
B. Innominate – the law does not give it a special name or designation
i. Do ut des: I give that you may give
ii. Do ut facias: I give that you may do
iii. Facio ut facias: I do that you may do
iv. Facio ut des: I do that you may give

When Dealing with Innominate Contracts

1. Stipulations of the parties
2. Rules governing law on obligations and contracts
3. Rules governing the most analogous contact
4. Customs of the place

5. According to risks:
A. Commutative – when the undertaking of one party is considered the equivalent of that the
other.
(e.g., sales, lease)
B. Aleatory – when it depends upon an uncertain event or contingency both as to benefit or loss.
(e.g., contract of insurance, sale of hope)

6. According to cause:
A. Onerous – cause has valuable consideration
(e.g., sales, lease)
B. Gratuitous – cause is purely generosity
(e.g., commodatum, donation)
C. Remuneratory – cause is based on services or benefits already received
(e.g., employment contract)
7. According to binding force: Gaano mababind sa contract
A. Valid
B. Rescissible
C. Voidable
D. Unenforceable
E. Void

Stages
1. Preparation/Conception/Generation/Negotiation
 2. Perfection/Birth/Formation
3. Consummation/Death/Extinguishment

Characteristics (MARCO)
1. Mutuality of contracts
2. Autonomy/Liberty of contracts
3. Relativity of contracts
4. Consensuality of contracts
5. Obligatory force of contracts

Mutuality of Contracts

The contract must bind both contracting parties; its validity or compliance cannot be left to the will of
one of them. (art. 1308)
- Kapag may dalawang parties na pumapasok sa isang kontrata, hindi pwede na yung validity or
yung compliance ay nakarest lang sa isang tao. Hindi yun matatawag na kontrata dahgil ang
kontrata ay mutual, ibig sabihin pinagkakasunduan yan ng dalawang parties. Kung may isang
bagay na hindi sila nagkasundo sa kontrata,hindi pwedeng maging effective or valid yun.

The determination of the performance may be left to a third person, whose decision shall not be binding
until it has been made known to both contracting parties. (art. 1309)
- Kung sakaling hindi magkasundo ang dalawang parties pwedeng ibigay yung determination ng
validity non or compliance ng specific stipulation non within the contract to a third person. Pero
kahit binigay mo na yun sa third person para magdecide, kailangan ay mayroon paring
communication yun sa dalawang parties at dapat na mapagkasunduan pa din dahil hindi pa din
pwede at hindi yun magiging effective kapag hindi napagkasunduan.

The determination shall not be obligatory if it is evidently inequitable. In such case, the courts shall
decide what is equitable under the circumstances. (art. 1310)
- Kung sakaling hindi pa din magkasundo, pwede silang pumunta sa korte tapos idedetermine
kung ano yung magiging equitable.

Example:
S sold his parcel of land to B. It was agreed that X, a real estate appraiser, would be the one to determine
the reasonable price of the land. X, then, fixed the price after considering all the circumstances and
factors affecting the value of the land.

Autonomy of Contracts

Also called liberty of contracts or freedom to stipulate in contracts.

The contracting parties may establish such stipulations, clauses, terms, and conditions as may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.
(art. 1306)
- In short under the economy of contract, which is a characteristic of contract, pwede tayong
gumawa ng kahit anong klase ng kasunduan basta hindi ito labag sa mga nakasualt sa taas.
Relativity of Contracts

Contracts take effect only between the parties, their assigns and heirs. Except in case where the rights
and obligations arising from the contract are not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value of the property he received from the decedent.
(art. 1131 par. 1)
- Ang kontrata ay nageexist lang between the parties. Ibig sabihin, anuman ang meron, anuman
ang benefit, or anuman ang consequence dun sa kontrata na yun ang involve lang ay yung
dalawang parties na yun or yung mga assigns nila or heirs in case may namatay so sasaluhin nila
yung right to demand.

 Contracts take effect between the parties in the contract (with exceptions)
 Contracts are generally transmissible except:
o Law
o Stipulation
o Nature
 Their heir is not liable beyond the value of the property he received from the decedent.

Exceptions:
1. Stipulation Pour Autrui (art. 1131 par. 2)
2. Third persons in possession creating real rights (art. 1312)
3. Contract is entered to defraud creditor (art. 1313)
4. Third person induced a party to a contract to violate the contract (art. 1314)

Stipulation Pour Autrui

- Direct conferment of a benefit toward a third person.
Requisites:

a. There must be a stipulation in favor of a third person.

b. The stipulation must be part, not the whole of the contract.
c. The contracting parties must have clearly and deliberately conferred a favor upon a third person,
NOT a mere incidental benefit or interest.
d. The third person must have communicated his acceptance to the obligor before its revocation.
e. No relation of agency exists between any of the parties and the third person favored.

Example:
D is indebted to C for P1,000,000 with 12% interest. It was stipulated that X will receive the 12%
interest. The stipulation is accepted by X and duly communicated the acceptance to D and C.

After a year, D and C decided to change the contract into giving a specific house and lot. Under
relativity of contracts, third person cannot act upon the decisions of the parties in a contract. However, X
in this case is an exemption.
Third persons in possession creating real rights

S sold to B a specific land for P1, 000,000. B occupied the said land but did not register it. One day, S
sold the same land to X. X registered the said property at the Registry of Deeds.
- Contract between S and B only. Pero binenta ulit sa ibang tao at niregister. Pwedeng mangielam
ang third person sa contract although he is a third party with regards to the contract because he is
the rightful owner of the land.

Contract is entered to defraud creditor

D is indebted to C for P1,000,000. D fearing that he won’t be able to pay the debt and ultimately his land
being levied, sold the said land at a very low price to X with the condition that he can purchase it back.
- The main contract is between D and X and sabi sa relativity contract hindi pwedeng mangielam
ag third person. But in this case, pwedeng mangielam si C kasi isa syang creditor na nadefraud
by the acts of D

Third person induced a party to a contract to violate the contract

After agreeing to sell his parcel of land to B, S sells the land to C instead because of the inducement of
D. In this case, B can sue D for damages.
- Contract between B and S. Ang isa ay hindi nag comply, instead binenta ni S kay C. In this case,
pwedeng mandamay ng third party. Under the exemption on the relativity of contract, pwedeng
kasuhan yung third person na nag induced sa kanya not to comply on his obligations.

Consensuality of Contracts

Contracts are perfected by mere consent, and from that moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law. (art. 1315)
- Contracts are perfected by mere consent with regards to object and the cause. Ibig sabihin ito
lang yung contracts that are generally perfected by COC.

Exceptions: Real (art. 1316) and Formal Contracts

Obligatory Force of a Contract

Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in a good faith. (art. 1159)
- Kapag ikaw ay pumasok sa isang contract mababind ka na doon.
ART. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service.

- Ang pagtatagpo ng dalawang isipan – it takes place when an offer by one party is accepted by the
other.
- Is it necessary that contract must be in writing? – No, because on the definition of contracts says
that it is the meeting of minds. Meaning, it is not necessary na nakasualt sya except sa contracts
na may exception. May mga kontrata na nakasulat na batas na nirerequire ang writing but
generally hid naman necessary. Sa sandaling tinanggap ng isang party ang offer ng kabilang
party without any qualifications.

 Contract is one of the sources of obligations.

- Yung obligations ay mas broad.
 Obligations is the legal tie or relation itself that exists after a contract has been entered into.
 Hence, there can be no contract if there is no obligation. But an obligation may exist without a
contract.
 All contracts are agreement
- Contract is enforceable through a legal proceedings kasi mayroon din naming mga agreements
which cannot be enforced by action in courts.
 NOT all agreements are contracts.

Stages in the Life of Contract

1. Preparation or Conception
o Preparatory step – which is eventually will lead us to the perfection of the contract.
o Bargaining point – may nag offer pero hindi pa nagkakasundo, wala pang meeting of
minds.
o Negotiation stage
2. Perfection
o Meeting of minds regarding the subject matter and the cause of the contract – eto yung
from the moment ang parties come to an agreement or come to agree on the terms of their
contract.
 3. Consummation
o Parties performed their respective obligations, and so the contract is put to an end.

Example:
Preparation or Conception: On December 1, P offer to sell his car for P1,000,000
Perfection: On December 2, G counter offer and said that she will buy the car for P800,000
Consummation: On December 3, P deliver the car to G and G pay P800,000

Classifications
1. According to Perfection or Formation:
a. Consensual – perfected by mere agreement of the parties (ex. sales, lease)
b. Real – requires not only the consent of the parties for their perfection but also the delivery of
the object by one party to the other (ex. commodatum, deposit, pledge)
c. Formal or Solemn – requires some particular form (ex. donation, chattel, mortgage)
2. According to Cause or Equivalent Value of Prestation:
a. Onerous – each of the parties aspires to procure for himself a benefit through the giving of an
equivalent or compensation (ex. sale)
b. Gratuitous – one of the parties proposes to give the other a benefit without any equivalent pr
compensation (ex. commodatum)
c. Remunerative – for service rendered previously
3. According to Degree of Dependence:
a. Principal – one which can subsist independently from other contracts and whose purpose can
be fulfilled by themselves (ex. sales, lease) If stand alone
b. Accessory – one which can exist only as a consequence of or in relation with, another prior
contract (ex. pledge, mortgage) Ex. mayroong principal obligation which is loan tapos iattach
doon si mortgage
c. Preparatory – one which has for its object the establishment of condition in law which is
necessary as a preliminary-steps towards the celebration of another subsequent contract (ex.
partnership, agency) Pag yung parties ay hindi pa nila kino consider yung contract as an end
by itself. Pero sya ay means lang for a future transactions or contracts na gagawin.
4. According to Parties Obligated:
a. Unilateral – on which gives rise to an obligation for only one of the parties (ex.
commodatum, gratuitous deposit) Pero ang consent ay bilateral
b. Bilateral – one which gives rise to reciprocal obligations for both parties ex. sale, lease)
Involve parties are required to render prestations
5. According to Name or Designation:
a. Nominate – one which has a name and is regulated by special provisions of law (ex. sale,
deposit, agency, lease)
b. Innominate – no specific name or designation in law
6. According to Subject Matter:
a. Involving Things (ex. sale, deposit, pledge)
b. Involving Rights or Credits (ex. usufruct, assignment of credits)
c. Involving services (ex. agency, lease of services)
7. According to Number of Person who Participated in the Drafting of Contracts:
a. Ordinary (ex. sale)
 b. Contract of adhesion (ex. insurance contract) – Provisions are drafted by the only
participation of the other party is to sign his name, his signature or his adhesion to the
contract.

ART. 1306. The contracting parties may establish such stipulations, clauses terms, and conditions
as they may deem convenient provided, they are not contrary to law, morals, good customs, public
order, or public policy.

- This provision talks about the freedom to stipulate/autonomy of will/principle of

freedom/principle of autonomy of contracts.
- The right to enter into contract, actually is one of the liberties guaranteed by the constitution.
- General rule, yung parties are actually free to stipulate into anything. They can establish to such
stipulations, clauses, terms, and conditions as they may deem convenient.

ART. 1307. Innominate contracts shall be regulated by the stipulations of the parties, by the
provisions of Titles I and II of this Book, by the rules governing the most analogous nominate
contracts, and by the customs of the place.

- This provides for the answer kung ano ba ang mag gogovern sa kanila kasi lahat supposedly
igogovern. But innominate contracts has no specific designations in the law.
- Ang mag gogovern daw sa mga innominate, una ay ang mga stipulations ng parties, pangalawa is
the provisions Title I and II of this Book (actually this refers to the law on obligations and
contracts, panagtlo ay yung rules governing the most analogous nominate contracts at pang-apat
ay yung customs of the place.

Four Kinds of Innominate Contracts

1. Do ut des (I give that you may give)
2. Do ut facias (I give that you may do)
3. Facio ut des (I do that you may give)
4. Facio ut facias (I do that you may do)

ART. 1308. The contracts must bind both contracting parties; its validity or compliance cannot be
left to the will of one of them.

- Commonly referred as the principle of mutuality of contract

- Both parties are bound meaning the principle is based on the equality of the parties.
- Contract should not just be left or should not just depends upon the surreal name ng isang party
lang.
- Both parties are of the same footing.
- Lahat ng parties inside the contract dapat may say.
- A contract can be renewed, revived, extended, modified, renounced, terminated but with mutual
consent of the parties.

Example:
In loan contract, pag yung isang party has the SOLE DISCRETION/UNILATERAL RIGHT to adjust
interest anytime as he wants.
P agree to sell his car to G. G agreed to pay P1,000,000
- Stipulations that P ALONE will determine/adjust the price of the car, and G has no right to
negate P’s decision, violates Mutuality of contracts.
- That is the time that the sale is perfected. The mere fact that a party to a contract has made a bad
bargain.
- Bad bargain in itself is noy ground for setting assign the agreement or does not necessarily
violate mutuality of contracts.

ART. 1309. The determination of the performance may be left to a third person, whose decision
shall not be binding until it has been made known to both contracting parties.

- Eto yung exception. Hindi pwede or yung compliance ng contract should not be left or cannot be
left to the will of one of the contracting parties only di pwedeng sa kanya lang at sya lang ang
magdecide.
- However, under this article 1309, determination of its performance may be left to a third person.
- This rule is actually not absolutely, may exception din sya. Ang exception ay actually article
1310.

Example:
P sold his land to G. Both agreed that there will be one person who will determine the price of the land
and it will be B who is a real estate appraiser.
- Magiging binding lang yung desisyon or yung determination ni third person after nyang ipaalam
sa parties.

ART. 1310. The determination shall not be obligatory if it is evidently inequitable. In such case,
the courts shall decide what is equitable under the circumstances.

- The decision of third person ay hindi rin binding if yung determination nya ay evidently
inequitable
- If ganun yung nangyari, ang court na ang magdedecide.

ART. 1311. Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is not liable beyond the value of the property he
received from the decedent.

If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere
incidental benefit or interest of a person is not sufficient. The contracting parties must have
clearly and deliberately conferred a favor upon a third person.

- The principle of relativity of contracts. Meaning, yung contracts are generally effective only
between parties.
- General rule, contracts will take effect only between the parties, their assigns and heirs. Yan
yung principle of relativity of contracts.
- Yung exception jan is kung yung rights and obligations which arise from that contract is actually
not transmissible.
- Aericle 1311 provides for a principle of contract. Ibig sabihin, sila lang ang may rights and
obligations under that contract.
- Sila lang ang may rights and obligations under their contract. Sa kanila lang effective yung
contracts. Yan yung ibig sabihin ng Principles of Relativity. Yung parties lang, hindi kasama
yung hindi PRIVY (stranger/third person) to the contract.
- Strangers cannot demand at your contract, mas lalong hindi rin sya pwedeng magdemand for its
annulment.

Example:
SI P ay may utang kay G na P1,000,000.
- Silang dalawa yung parties and the contract will take effect between them.
- But if later on, namatay si G, yung bayad ni P ay ibibigay nya sa mga heirs of G
- If si P naman ang namatay, the heirs of P will pay G P1,000,000
- Kung walang pera, yung property na naiwan ni P ang ibabayad kay G.

Stipulation Pour Autrui Requisites:

1. There must be a stipulation in favor of a third person.
2. The stipulation must be part, not the whole of the contract or the contract itself.
3. The contracting parties must have clearly and deliberately conferred a favor upon a third person,
NOT a mere incidental benefit or interest.
4. The third person must have communicated his acceptance to the obligor before its revocation by
the obligee or the original parties.
5. Neither of the contracting parties bears the legal representation or authorization of the third party
for otherwise the rules on agency will apply.

Example:
Si P ay may utang kay G na P10,000 at may 12% na interest payable on December 25, 2020. Tapos sa
contract, yung 12% interest daw ay ibibigay kay B, a third person.
- Take note that the two parties involve ay si P at G pero mayroon syang stipulation in favor of B.
- Dito sa situation na to, dapat si B ay makipag communicate para sa acceptance to P and G.
Otherwise, hindi sya ma entitled to the benefit of the contract
- So, the moment B has communicated the for the acceptance, B becomes a party to the contract.

Exception to the Principle of Relativity of Contracts

Stipulation pour Autrui (art. 1311 par. 2)
 Third person is bound by contracts creating real rights (art. 1312)
  Right of defrauded creditors under (art. 1313)
 Contract is violated through inducement by third person (art. 1314)

Art. 1312. In contracts creating real rights, third persons who come into possession of the object of
the contract are bound thereby, subject to the provisions of the Mortgage Law and the Land
Registration Laws.

- This article is an exception to the general rule that a contract binds only the parties. Kasi sabi
dito, yung third person is bound by contracts creating real tights

Example:
Suppose si P mortgage his land to G
Mortgage as to the parcel of land of P in favor of G as a security for his death.
Since gipit si G kulang ang pera, binenta nya yung same land kay B
- Yung mortgage nay un is actually nakaregister in the registry of property. So since owner pa rin
naman si P ng kanyang lupa, pwede nyang imortgage yung kay G.
- In this case, binili na ni B at dun sa pagbili nya at alam nating mayroon syang (diko marinig)
dahil yung lupang yun ay mayroong mortgage na in favor kay G.
- In other words, kahit pa si G ay hindi party nung contract of sale between P and B, dahil sa
contract of mortgage, dahil mayroong pre-existing contract of mortgage which is actually a real
rights dahil nakaregister sya then B will be bound by the contract between P and G]
- Sa contract ni P and G third person si B.
- Sa contract ni P and B third person si G.

ART. 1313. Creditors are protected in cases of contracts intended to defraud them.

- It is another instance kung ang outsider, third person or stranger can interfere with another
contract.
- The concept is actually not new
Example:
Si P ay may utang kay G na P1,000,000 tapos si P ay may property. May lupa siya na nakapangalan sa
kanya at dahil ayaw niyang maattach ang property na yon bago pa man ang due date ng utang nya kay G
kasi wala syang pambayadat alam nya na ang mangyayari ay iaattach ang lupa na yon para ipambayad
sa utang nya kay G. So, ang ginawa ni P ay dinonate nya ang lupa kay B para wala nang mahagilap at
makuha si G.
- In this case, G is actually the defrauded creditor, siya ay may right to impune the contracts
between P and B although she is not a party to that contract. She is just a stranger.
- G is given by law the right to ask for the recession or the cancellation of that donation In order
that she may be paid.

Art. 1314. Any third person who induces another to violate his contract shall be liable for damages
to the other contracting party.

- This position provides for another exception to the principle of relativity.

- Contracting party are actually the enjoyed party has the right to claim for damages against that
person who induces to violate his contract.
- Whoever is injured may sue for damages for damages. He can claim for damages.
 - The word induced in this provision refers to the situations where a person causes another to
choose one course of conduct by persuasion or intimidation

Example:
Supposedly, G is a movie actress who have a 1year contract with 123 Studio. B is a friend of G, induces
G to break her contract without justifiable cause. 123 Studio, can sue B for damages.
- The liability of B does not arise ex contractor for actually there are no contracts between B and G
and that studio. Pero dahil sa article 1314, pwedeng makapag file ng case or makapag (diko
alam) ng damages ang 123 studio against B. Because B actually induces G to violate her contract
with 123 studio.
- A third person is not liable where sufficient justification for interference or inducement can be
shown.

yyART. 1315. Contracts are perfected by mere consent, and from that moment the parties are
bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and law.

- This refers to the, another principle are characteristics of contracts, the consensuality of
contracts.
- It simply means perfection and contract by mere consent of the parties regarding the subject
matter or the object of the contract and the cost of the contract.
- Consent as to the object and to the cause of the contract.
- Signing is not generally a legal requirement in entering into a contract. Pwede lang na meeting of
minds, it is not necessarily for a contract to be in writing unless the law requires it to be in
writing or to have some specific formalities.
- Consequence of perfection of contract: the parties will be bound first to the fulfillment of what
has been expressly stipulated. They will now be bound to the fulfillment kung ano man ang
mapagusapan nila. Second, as to the consequences na according to their nature maybe in keeping
with goo faith usage and law.

How contracts are perfected?

General Rule: Principle consensuality of contracts
Exceptions: Real contracts – kailangan ng delivery
Formal contracts – nagrerequire ng specific forms or specific documents like
documentation.

ART. 1316. Real contracts, such as deposit, pledge and commodatum, are not perfected until the
delivery of the object of the obligation.

- First exception to the rule, non-consensuality of contracts.

- General rule contracts is perfected by mere consent, this article 1316 hindi lang mere consent
para maging perfected yung contracts. Some real contracts such as deposit, pledge, and
commodatum are not perfected until the delivery of the object of the obligation.
- Dito na yung perfection ng contracts. Actually, same pa rin sila ng consent pero may nadagdag
lang na requirement and that is delivery.
 - In real contracts, delivery is required for the perfection of the contract.

Example:
June 1, P borrowed money from G worth P10,000 with a promise that P will give his diamond ring to G
as a security on June 15. Now, before June 15 even if G gave the P10,000 to P the contract of pledge is
not yet perfected because in the contract of pledge the perfection is only upon the delivery of the object
pledge.
- Hindi pa rin naman naidedeliver kay G ang diamond ring so wala pang contract of pledge pero
mayroon nang contract of loan kasi binigay n ani P kay G ang P10,000

ART. 1317. No one may contract in the name of another without being authorized by the latter, or
unless he has by law a right to represent him.

A contract entered into in the name of another by one who has no authority or legal representation,
or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party.

- This provision talks about a form of unenforceable contracts.

- Simply says, yung mga unathorized contracts. So, contracts entered into without the authority of
the principal is the unenforceable contracts.
- Contract entered into the name of the owner or another person purpose without that authority
from that person is unenforceable.

Example:
G own a car and that car sold by P without being authorized in the name of G but without the authority
from G. P sold the car to B.
- So yung sale being unauthorized is unenforceable, hindi sya valid.
Requisites for a person to contract in the name of another
1. He must be authorized (expressly or impliedly).
2. He must have by law, a right to represent him.
3. The contract must be subsequently RATIFIED (expressly or implied).
4. He must act within his power.
 CONTRACTS (Arts. 1318-1355.)
Chapter 2
Essential Requisites of Contracts

ART. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.

Classes of Elements of Contracts

1. Common – present in all contracts such as consent, object, and cause.
2. Special – present only in certain contracts.
o Real Contracts – delivery
o Solemn or Formal Contracts – compliance with the formalities required by law

SECTION 1. — Consent

ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. The offer must be certain and the acceptance
absolute.
A qualified acceptance constitutes a counter-offer. Acceptance made by letter or telegram
does not bind the offerer except from the time it came to his knowledge. The contract, in such a
case, is presumed to have been entered into in the place where the offer was made.

- Offer must be certain – it must not be obviously vague, not misleading, or major joke it must be
seriously intended. The offer must be definite so that upon acceptance of the other parties, the
agreement can be reached on the whole contract.
- Acceptance absolute – it must be unqualified. Acceptance absolute talaga, inaccept ng buo
walang kondsiyon at pwedeng recounter offer.
- Second paragraph: talks about acceptance through correspondence. If yung acceptance ay
pinadala through a letter or telegram.
- Acceptance made by letter or telegram does not bind the offerer except from the time it came to
his knowledge – magiging bidning lang yung offer ni offeror from the time na inaccept na yung
offer nya and it has come to his knowledge.
Consent
Requisites:
1. It must be manifested by the concurrence of the offer and acceptance (Arts. 1319-1326)
2. The contracting parties must possess the necessary legal capacity (Arts. 1327-1329)
3. It must be intelligent, free, spontaneous, and real (not vitiated) (Arts. 1330-1346)

Requisites of Consent:
1. There must be two parties
2. The parties must be CAPABLE or CAPACITATED
3. There must be NO VITIATION of consent
4. There must be NO CONFLICT between what was expressly declared and what was really
intended
5. Intent must be declared PROPERLY

Consent
1. It must be manifested by the concurrence of the offer and acceptance (Arts. 1319-1326)
o Offer – a specific proposal to enter into an agreement with another.
o Acceptance – agreeing verbally or in writing to the terms of a contract, which is one of
the requirements to show there was a contract.

Offer – an offer must be intentional certain (Art. 1319 par. 1)

Example: When offering to sell something, you should specify the object being sold.

Acceptance
Note:
1. An acceptance must be absolute (Art. 1319) – absolute: inaccept mo lahat ng inooffer.
2. Communicated to the offeror (Art. 1319 par. 2 and 1322)
3. May be expressed/implied – kapag express talagang sinabi, kapag implied actions

Example:
S offers B to sell a specific house and lot in Quezon City for P1,500,000. B accepted the offer but is only
willing to buy the land.
- Inaccept yung offer pero hindi lahat so wala pang consent at wala pang offer so this is a counter-
offer.

Promises in Offer and Acceptance

Promise Binding Perfected Contract
Unilateral promise No None
Binding if promise is supported
Unilateral promise accepted Option contract only
by consideration
Binding contract of promise to
Bilateral promise Yes
enter into contract
Example:
S offers to sell his land to B for P1,000,000. B refused. However, S still insist that he is willing to give B
30 days to decide. However, B still refuse. Again, S still stand with his promise.
 - Unilateral promise that is not accepted by other party.
- Policitacion
- In this case, there will be no case wherein mababind sila.

S offers to sell his land to B for P1,000,000. B refused. However, S still insist that he is willing to give B
30 days to decide. B accepted the promise.
- Within 30 days hindi magiging binding ang unilateral promise na ito.
- Unilateral promise accepted
- Binding if the promise was supported by a consideration. Pero in this case walang consideration
na magsusupport sa promise.

S offers to sell his land to B for P1,000,000. B refused. However, S still insist that he is willing to give B
30 days to decide. B accepted the promise and gave P1,000 as option money.
- Magbabind si S sa kanyang promise kay B
- Unilateral promise accepted

S promised to sell his land to B for P1,000,000 after 1 month. Likewise, B promise to buy S’s land for
P1,000,000 after 1 month.
- Bilateral promise
- Binding sya without the need of valuable consideration and this converts into a perfected
contract. However, not a perfected contract of sale, it is still a binding contract that will bind
them to sell the said property in the future. Which is specifically one month.

ART. 1320. An acceptance may be express or implied.

- Express meaning in the form of expressly either written or verbally sinabi.

- Implied is challenging.

ART. 1321. The person making the offer may fix the time, place, and manner of acceptance, all of
which must be complied with.

- It talks about the things that maybe fixed by the offerer at ito ay yung time, place, and manner of
acceptance. So, the offerer ang magfifix nyan and then any act contrary dun sa nirequire na offer
actually constitutes a counter offer or counter proposal on the part of the offering.
- Pwedeng ispecify kung paano kung paano iaaccept ng kabilang party ang offer dahil kung hindi
sumunod ang kabilang party dun sa manner ng acceptance na gusto nya may chance na hindi
magkaroon ng valid consent. Kapag walang consent ibig sabihin walang kontrata na nabuo.
- All of which must be complied with, so kung ano yung manner of acceptance na gusto nung nag
offer, kailangan sundin yon nung nag aaccept para magkaroon ng consent.

Offer
Special Cases of Offers:
1. The person making the offer may fix the time, place, and manner of acceptance, all of which
must be complied with. (Art. 1321)
2. An offer made through an agent is accepted from the time acceptance is communicated to him.
(Art. 1322)
 3. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either
party is conveyed. (Art. 1323)
4. Advertisement for bidders are simply invitations to make offers. (Art. 1326)

ART. 1322. An offer made through an agent is accepted from the time acceptance is
communicated to him.

- Merong offerer, agent.

- Agent are extension of the personality of the principal.
- If meron kang inauthorize na person na mag communicate or made the offer to
- Offer daw is considered as accepted from the time nayung acceptance was communicated to the
agent.
- When referring to the HIM ayan ay yung agent
- General rule is when making an offer yung acceptance kailangan may communicate yun sayona
nag offer kasi kung wala ay hindi pa yun nagkakaroon ng consent.

ART. 1323. An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency
of either party is conveyed.

- Mawawalan ng bisa ang offer from the time na may death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed.
- If prior to acceptance, namatay, nagkaron ng civil interdiction, insanity, insolvency
- Civil interdiction is an accessory penalty in criminal law mawawalan ng certain rights. Usually,
kasi kapag may taong Nakagawa ng krimen and he is found guilty on that may mga specific
crimes, specific penalty and access or like life imprisonment or death penalty.
- If may nangyari before the acceptance is conveyed ibig sabihin magiging ineffective at wala
nang chance magkaroon pa ng consent kasi patay nayung isang party.

Art. 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be
withdrawn at any time before acceptance by communicating such withdrawal, except when the
option is founded upon a consideration, as something paid or promised.

- Yung offer ay pwede naming mawithdraw any time before yung acceptanceni offeree kung
papaano iwithdraw ang offer. It is simple as communicating such.
- Hindi ka na interesado at willing to sell ng ibebenta mo
- Hindi siya absolute, meron din syang exception.

Option Contract – within which to accept the offer

Option Money – it is the money paid or promised before the option. Not form part of price.
Earnest Money – that will constitute or will form part with the whole purchase price.

ART. 1325. Unless it appears otherwise, business advertisements of things for sale are not definite
offers, but mere invitations to make an offer.

- It speaks about the business advertisements.

 - If you will be asked kung yung business advertisements ba ay definite offers ang sagot ay
depende. One, if it appear to be a definite offer containing all the specific particulars needed in a
contract then it is really a definite offer.
- If it does not appear to be a definite offer then it is just a mere invitation to make an offer.
- Malalaman daw kapag definite offer if all the specific particulars needed in contract ay nandon
na. Kapag broad naman that is just a mere invitation to make an offer.

Definite Offer:
For sale: 100 Square Meters Lot with 2-storey house located at 123, ABC St., Malate, Manila for
Php 10,000,000.00 cash.
Mere Invitation to Make an Offer:
For sale: 100 Square Meters Lot, at 10 million to 20 million a lot at 123, ABC St., Malate,
Manila.

Art. 1326. Advertisements for bidders are simply invitations to make proposals, and the advertiser
is not bound to accept the highest or lowest bidder, unless the contrary appears.

- Yung mga advertisements for bidder daw generally are not definite offers. So, when you say na
hindi sila definite offers then meaning they are just simply as invitation to make proposals.
- In reality, yung talagang gunagawa ng offer ay yung mga bidders, yung nag aadvertise, they are
justinviting bidders to make proposals.
- The advertiser is free to accept or to reject kasi hindi naman sya definite offer.
- Para magkaron ng contract kailangan iaccept ni advertiseryung proposal or offer nung bidder.
- Most advertisements are simply invitations to make an offer and are not offer in themselves.
Since not all the necessary terms can fit in that advertisement.
- General rule, human advertisement talaga are mere invitations unless the contrary appears.

Example:
S sells at a public auction a specific land. The starting bidding is P1,000,000. A placed a P1,100,000 bid;
B placed P1,150,000; and C place P1,300,000.
- Hindi automatically magkakaroon ng contract between S and C. In this case, mayroon pang
option si S na tanggihan ang offer ni C.
- Nakasalalay kay S kung kaninong offer ang tatanggapin nya. Normally, in auction, it is granted
to the highest bidder.

ART. 1327. The following cannot give consent to a contract:

(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write.

- This talks about the capacity of a person to enter into a contract or to give a consent.
- Unemancipated minor
- Insane or demented person: unless they acted during lucid intervals soi they have the capacity to
give consent at that time so malamang valid ang contract nila.
- Deaf mutes who do not know how to read and write: they are not capable of understanding
things unless they can read and write
- The reason for disqualifying them or for making them incapable of giving consent dahil yun sa
situation nila.
 - They are presumed that they are not yet or they are still unable to take care of themselves fully
- Contracts who are entered into by a person who are incapacitated person to give consent are
voidable.
- Merong dalawang uri ng voidable contracts: first is yung one party are incapacitated to give
consent second is yung consent ng kabilang party is vshaped or merong errors, fraud, violence,
intimidation or may influence na nangyari.

Consent
2. The contracting parties must possess the necessary legal capacity. (Arts. 1327-1329)
Two Kinds of Incapacity
1. Absolute Incapacity/Absolutely Incapacitated:
a. Unemancipated minors
o Except for contracts involving necessary
o Where minor misrepresented his age
b. Insane or demented person
o Lucid interval
c. Deaf mutes who do not know how to write
2. Relative Incapacity/Relatively Incapacitated
a. Those under Civil Interdiction for transactions inter vivos (RPC Art. 34)
b. Undischarged insolvents (Insolvency Law, Sec. 24)
c. Husband and wife: cannot donate (Art. 123 FC) to each other, nor sell if the marriage is
under ACP (Art. 1490)

ART. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a state
of drunkenness or during a hypnotic spell are voidable.

- Also talks about some situation kung saan voidable contracts pa rin.

Effect of drunkenness and hypnotic spell.

Drunkenness and hypnotic spell impair the capacity of a person to give intelligent consent. (8
Manresa 660-661.)
These conditions are equivalent to temporary insanity. Hence, the law considers a contract
entered into in a state of drunkenness or during a hypnotic spell voidable, and it is not required that such
state was procured by the circumvention of the other party.

ART. 1329. The incapacity declared in Article 1327 is subject to the modifications determined by
law, and is understood to be without prejudice to special disqualifications established in the laws.

- Talks about modification, incapacity. Sinasabi nya dito na yung incapacity as declared in article
1327 ay pwede naman syang mamodify subject to modifications determined by law.
- Kasi may mga instances din naman although they are incapacitated they can still enter into a
contract or a valid contract.

ART. 1330. A contract where consent is given through mistake, violence, intimidation, undue
influence, or fraud is voidable.
 - Two classes of voidable contracts: first is yung person or one of the parties is incapacitated to
give consent, second is with the vices of consent
- In order that a consent may be valid for purposes of a contract kailangan hindi lang sya basta nag
exist kumabaga.
- This also enumerates cause for a viscated consent
- Voidable contract is binding and valid unless annulled – through proper action.

Requisites
1. Consent must be intelligently given. – dapat yung nagbibigay ng consent has the capacity to act,
to give that consent.
2. Consent must be free and voluntary. – Hindi pinilit, walang violence at intimidation
3. Consent must be conscious or spontaneous. – Meaning walang viscation ng consent. Dapat yung
consent ay hindi binigay by mistake, by fraud, by undue influence.

Consent
3. It must be intelligent, free, spontaneous, and real (not vitiated) (Art. 1330-1346)

Vices of Consent:
 Violence – there is physical force
 Intimidation – no physical force however, merong pagbabanta
 Mistake – it’s very substantial wherein kung alam mo sana na may mistake hindi mo papasukan
yung kontrata
 Fraud – panloloko. Fraud in obtaining consent and fraud in obtaining consent.
 Undue Influence