Rush study for Oblicon finals

PAYMENT OR PERFORMANCE
1232-Payment
1233-considered paid
1234-substantial performance in good faith
1235-accepts without protest and objection
1236-creditor not bound to receive payment from third persons, so does the debtor to the
extent of benefit it receives
1237-with consent of the debtor, subrogation exist to the third person; but if without consent,
only reimbursement
1238-donation, must no be compel to accept the generosity of others
1239-free disposal of a thing due and capacity to alienate it
1240-must pay to the person in whose favor the obligation is constituted
1241-pay to the incapacitated person or to the third person insofar as it can benefit the
former and the creditor
1242-payment to any person insofar as it has the possession of the credit not merely the
document
1243-payment after the court order to retain debt is invalid unless the debtor paid before it
was known to him
1244-delivery of a specific thing, cannot be substituted by inferior nor of superior quality
unless it is not against the will of the creditor
1245-dation of payment by paying of property instead of money, yet it still needs the
consent of the creditor or obligee; then too, it could become an exchange equivalent to
performance.
1246-delivery of a generic thing can be substituted insofar as it is not superior or inferior of
quality, and it must be judged based on circumstances and prudence
1247-extrajudicial expenses must be charged to the debtor, because it is to the extent of his
benefit
1248-partial payments are allowed when the creditor accepts it or it is expressed in the
stipulation, when it is half liquidated and half unliquidated, when the debt due is on an
installment basis.
1249-the currency of the debt must be based upon the stipulation, and if there is no
stipulation, then it shall be based on the legal tender of the philippines. Legal tender is the
currency offered by the debtor in the right amount, and thus, it shall be accepted by the
creditor
1250-whenever there is an extraordinary inflation or deflation, then currency must be based
upon at the moment the obligation was established.

INFLATION: DROP IN THE VALUE OF MONEY (opposite effect of IN)

DEFLATION: INCREASE IN THE VALUE OF MONEY (opposite effect of DE)

1251-designation of place where to pay or extinguish the obligation.

If the place is stipulated, then it shall be paid there.

If the debt due is a determinate thing, then it shall be paid on wherever the latter is
located at the moment the obligation was constituted.

If the debt due is generic and there is no stipulation, then it shall be delivered at the
domicile of the debtor, and the expenses is certainly charge to the creditor unless the debtor
changes his domicile in bad faith, then the additional expenses shall be charged to the
debtor.

Venue- where the court or litigation is held

Domicile- person’s habitual residence, in which whenever he is absent, he has the
intention of returning to.

1252- Application of payment is whenever the debtor has many debts to a one creditor with
the same kind of amount on his hand, then he can have the choice as to where should his
amount on hand be applied to his several debts to the same creditor. Application shall be
allowed whenever the debts are not yet due, unless it is stipulated or when the payment of
the debts that are not yet due will benefit the creditor or debtor.

More = 2 or more

Requisites of application of payment: (OMKDS)

1. One creditor, and one debtor
2. Several debts(two or more)
3. The debts must be of the same kind
4. The debts that can only be applied is due or demandable
5. The application payment must not be sufficient to cover all the debts
Rules in application of payment.

Rules in application of payment:

1. Debtor is the first choice
2. Once, debtor has made the choice, then it shall be irrevocable unless the creditor
consents to change it.
3. If the debtor does not made the choice, then the creditor will make choice specified
in the receipt
4. If neither the debtor or creditor has made the choice, then it shall be applied to the
must burdensome to the debtor or which they called onerous.
 5. Then if the debts are of the same level of burden or of the same kind, then the
payment shall be applied proportionately to them.

1253-Interest must be covered first, and principal debt shall never be considered paid
unless the interest is paid too.
1254-Orenous when it is burdensome, those with interest are more burdensome than those
who does not have; those carried with it a security are more burdensome than those that
are not; a sole debtor is more burdensome than those who are not; an obligation with
penalty clause is more burdensome than those that are not.

1255-Payment by cession where the debts are being paid to let several creditors be
assigned to the properties of the debtor, and the proceeds shall be charged to the
satisfaction of the obligation.

Requisites of payment by cession:(MISAC)

1. Several creditors
2. The debtor must be partially insolvent and solvent.
3. All properties must be assigned to the creditors
4. The creditors must consent to this tedious form of payment.

1256-tender of payment by consignation happens whenever the creditor does not accept
the offer of the debtor without just cause despite the fact that debtor has the capacity and
intentions to deliver the thing due. Then, the thing due shall be deposited in the court.

1257-notice people that are interested in fulfilling the obligation before consignation
1258-make the consignation, then make notice again to the people that are interest in the
fulfillment of the obligation
1259-the judicial expenses of consignation must be charged upon the creditor, because its
the fault of the creditor; however if the consignation is not properly made(the two preceding
articles are not followed), then the expense shall be charge to the debtor
1260-When the consignation is duly made, it can cancel the obligation
1261-The creditor can ask the debtor to withdraw the consignation, but he loses preference
to the debt.
Loss of the thing Due (includes impossibility)

1262-Delivery of a specific or determinate thing, when lost or destroyed by fortuitous event,

it can extinguish the obligation insofar as it is not within the fault of the debtor, the debtor is
not guilty of delay, it is not in the stipulation, and the obligation to deliver did not arise from
criminal offense.

Loss = when the partial of or the thing itself disappears with an understanding that it can no
longer be recovered.

1263-Delivery of a generic, when lost or destroyed by a fortuitous event, does not

extinguish an obligation, for the very reason the principle gave, “generic never perishes”.

1264-The courts shall determine whether a loss or partial loss will extinguish the obligation,
judging based on the purpose of the obligation together with its circumstances.

1265-When the thing due is in the possession of the debtor, then the presumption of fault on
the part of debtor shall apply unless there is a natural calamity(beyond control). However, if
it is proven otherwise, then it shall be nullified.

1266-Physical or legal impossibility can extinguish the obligation, judging based upon the
purpose of the obligation with its circumstances, and the fact that the impossibility factors
are beyond the control of the debtor.

1267-Impossibility(beyond control) despite efforts of several debtors shall release the

obligor.

1268-When the delivery of a determinate thing arises from a criminal offense, then the loss
of the thing due regardless of the cause, never extinguishes the obligation.

1269-The thing loss due to the third persons, can also give the creditor to absorb the rights
of debtor in order to go against the third person whom the loss is caused.
CONDONATION OR REMISSION OF DEBT

1270-Condonation or remission shall take place when it is expressly gratuitous, and with the
consent of the debtor insofar as it is not excessive to what the will can give or inofficious.

Classifications: (EFE)
1. Extent
a. Partial-only part of the obligation
b. Total-whole obligation
2. Form
a. Express - written and verbal
b. Implied - conduct or action
3. Effectivity
a. Inter vivos - lifetime of the donor
b. Mortis causa - begins at the death of the donor

1271-when the private document of the credit itself is in the hands of the debtor, because of
voluntary delivery, it will be followed by presumption of implied remission unless proven
otherwise or proven to be inofficious.

1272-when the private document of the credit itself is in the hands of the debtor are not
known how, then there shall be a presumption of voluntary delivery, followed by
presumption of payment by the debtor, and if it is made known that he had not, then the
implied remission shall apply unless proven otherwise or proven to be inofficious.

1273-The renunciation of the principal debt will extinguish the accessory obligation, but not
vice versa.

1274-when the thing is pledged to the creditor, yet, after delivery, it is in the hands of the
debtor, then the accessory obligation is only extinguished.
CONFUSION OR MERGER

1275- Confusion takes place when the characters of debtor and creditor are in the same
person, and thus, it shall extinguish the obligation. However, the one same person must be
a principal debtor.

1276-Confusion in part of the guarantor does not extinguish the obligation.

1277- Confusion effect on joint obligation will be based upon the share of the debt of a
certain debtor can only be extinguished, but in case of solidary obligation, then the whole
obligation is extinguished and the person whom the merger had held possession can
demand reimbursement from his co-debtors.

Compensation

1278 - Compensation when two persons, in their own right, are principal debtors and creditors
of each other—in order to prevent unnecessary payment and litigations through mutual
extinguishment of their debts accompanied with balancing of the two debts that one can cover
over the other.

Classifications
1. The extent of the effect
a. Partial - different amount of debts, and remains a balance
b. Total - same amount of debts, and remains no balance on the part of the smaller
debt
2. Cause
a. Law - need not consent of the parties and it performs automatically
b. Voluntary - needs the consent of the parties in agreement
c. Judicial - when the other suffer damages then the cost of the damages be
compensated
d. Facultative - when only one of the parties can set up compensation

1279 - The requisites of compensation: (PCPDKDLA)

1. Each of the obligor must be the principal debtor and creditor of each other
2. The debt must be in the sum money, and if consumable, they must be of the same kind
3. The debt must be due
4. The debt must liquidated as well as demandable
5. The debt must not be attached to any third persons that induces controversies

1280 - The guarantor has the right to set up compensation, and so, when the principal debtor
sets compensation, so does the accessory.
1281 - The compensation can be partial or total depending upon the amount of the debts due

1282 - The compensation can be done even when it is not yet due

1283 - There can be compensation too when the other suffers damages from the other party,
and thus, the cost of the damages will be offsetted by the debt of the other.

1284 - The compensation can take place before the rescissible or voidable is rescinded.
However, if the compensation takes place despite the fact that there is fraud, then at the
moment when the debt has been rescinded, the liability of the other person will persist.

1285 - The consent of the debtor to the assignment before compensation, loses the defense of
the debtor to compensation unless he will notify that his right is reserved for compensation; and
if after the compensation then he can set up defense for compensation.

Classifications:
1. If the assignment was with consent of the debtor:
a. Just follow the assignment relating to the compensation
2. If the assignment was with the knowledge but without the consent of debtor:
a. Follow the compensation without conforming to the assignment unless on the
date when the assignment occurred.
3. If the assignment was without the knowledge of the debtor:
a. It will be based on the effect of the preceding classifications with additional
information that he will collect the later ones when he has obtained the
knowledge of the assignment, if he consents so.

1286 - There shall be no compensation arising from depositum(not the owner of the thing),
commodatum(because the thing was borrowed gratuitously), and support(essential for life).

1287 - There shall be no compensation when the debt arises from penal offense or criminal
offense.

1288 - The compensation is equivalent to payment, and thus, the application of payment can be
applied with the first choice of the debtor, and if he does not make any choice then it shall be
applied upon the most onerous debt

1289 - When all of the requisites of a compensation are met, then the operation of law
extinguishes the obligation, whether it may be partial or total, automatically without the need of
consent and legal capacities of the two parties.
Novation

1290 - Novation is the changing(modification) or extinguishing(extinctive)of the old obligation

due to the change in the primary object or purpose of the obligation, substitution of the debtor,
or subrogation of the creditor. It has double stipulation: To remove and To replace with new.

Kinds of novation:
1. According to its origin:
a. Legal - operation of law without
b. Conventional - Agreement of the parties
2. According to how it is constituted:
a. Express - must be indicated in an unequivocal terms
b. Implied - when the old and new obligations are incompatible
3. According to the extent of its effect:
a. Partial - when it can only modify
b. Total - when it can extinguish the old obligation
4. According to its subject:
a. Real or objective - changes in the purpose or object of obligation
b. Personal or subjective - changes merely in the parties involved
c. Mixed - combination of both real and personal

1291 - Requisites of novation: (OVIMV)

1. There must be an old valid obligation
2. There must be the capacity and intention to modify or extinguish the old obligation
3. There must be modification or extinction of obligation
4. The new obligation must be valid

1292 - Only when the novation is expressed in unequivocal terms and can make the old and
new obligation incompatible, will the old obligation be extinguished(judge it based on the
circumstances)

1293 - Novation consists of changing the debtor may not need the consent and with knowledge
of the old debtor. The new debtor then gains reimbursement

Kinds of personal novation:

1. Substitution - change of debtor
2. Subrogation - change of creditor gaining the creditors right
Kinds of substitution:
1. Expromission - need not the consent and with knowledge of the old debtor, but it
releases the old debtor to his obligation
2. Delegacion - Needs the consent of all the parties in order for the new debtor to come
forth, and thus the old debtor be released from the obligation
1294 - When the old debtor was substituted through expromission, the new debtor is entitled to
reimbursement insofar to the extent to the benefits of the old debtor; when the old debtor was
substituted through delegacion, then the new debtor gains subrogation and gains the rights of
the creditor.

1295 - when the new debtor is insolvent, and thus, cannot fulfill the obligation, then the creditor
action against the old debtor can no longer be revived unless the new debtor’s insolvency is
already existing to public knowledge and to the knowledge of the old debtor.

Either the insolvency is of public knowledge or to the knowledge of the old debtor—or both, then
the old debtor will be held liable for it is equivalent to fraud.

1296 - Whenever the third person in the parties did not consent to the novation, then the
accessory obligation persists regardless of the extinguishment of the principal obligation

1297 - There will be no novation too, if the new obligation is void and thus the original subsist. If
the new obligation is voidable, then the latter is valid, and so does the novation until the court
will invalidate it through annulment. If, however, the courts validate it, then therefore the
novation continues to be valid.

1298 - There will be novation, when the original obligation is void. If the original obligation is
voidable, then the latter is valid, and so does the novation until the court will invalidate it through
annulment. If, however, the courts validate it, then therefore the novation continues to be valid.

1299 - If the original obligation is under the conditions of suspensive or resolutory, then so does
the new obligation or novation unless stipulated otherwise.

1300 - Subrogation can either be legal or conventional

Kinds of subrogation:
1. Conventional - agreement of the parties
2. Legal - by operation of law even without the knowledge of the parties

1301 - Conventional subrogation needs the consent of all parties

1302 - Legal subrogation will be presumed when the other creditor pays the other creditor even
without the knowledge of the debtor, when the third person uninterested in fulfilling the
obligation pays it with the consent of the debtor, when the third person interested in the
obligation pays it without the knowledge of the debtor.

1303 - The effect of subrogation is certainly allowing the new debtor when he paid the debt,
becoming a creditor with all of his rights against the third persons.
1304 - Partial payment to the former creditor will still make him a creditor up to the extent of the
remaining balance

CONTRACTS

1305 - it is formed by the meeting of minds of the contracting parties, binding themselves, to
give, to do, not to do or to render service.

Classifications
1. According name
a. Nominate - has a specific name or designation in law
b. Innominate - has no specific name or designation in law
2. According to perfection
a. Consensual - perfected by consent
b. Real - perfected by the delivery of the subject matter
3. According to cause
a. Remunerative
b. Onerous
c. Gratuitous
4. According to form
a. Informal, or common or simple
b. Formal or solemn
5. According to obligatory force
a. Valid
b. Recissible
c. Void or non-existent
d. Voidable
e. Unenforceable
6. According to person obliged to
a. Unilateral
b. Bilateral
7. According to risk
a. Commutative - ex. sales or lease(not so risky)
b. Aleasory - sales of hope(very risky tbh)
8. According to the extent of liability
a. Unilateral - when it binds one of the parties
b. Bilateral - when it binds both parties
9. According to status
a. Executory - when both parties have completely performed the service or
whatever.
b. Executed - when both parties have performed the service completely.
10. According to its dependence to another contract
 a. Preparatory - (agency, partnership) it is a means to an end.
b. Accessory - (guaranty, security) when it only exist to support the principal cause
of the other principal obligation
11. According to its dependence on the parts of the contract:
a. Divisible - when part of the contract is independent to satisfactorily render
performance.

b. Indivisible - when each part of the contact is dependent upon each other to
satisfactorily render performance.

1306 - Contracting parties can establish stipulations, conditions, terms insofar as it is convenient
to them as well as not contrary to laws, public policy, public order, customs, and police power.

Contracts are valid insofar it meets all the essential prerequisites elements, and it may
exist despite the fact it is contrary to the Statutes of Fraud, but it is no longer enforceable.

1307 - Innominate contracts shall be regulated with these requisites:

Governed by:
1. Agreement of both parties
2. Provisions of civil code on obligations and contracts
3. The rules governing is the most analogous contracts
4. Customs of the place
1308 - The contracts must bind both of contracting parties, but its validity and compliance must
not be left only to the will of the other, unless the latter consents.

1309 - The determination of performance may be left to the third person, and it will not bind the
two contracting parties unless it was made known to them already.

1310 - However when the determination of performance of the third person is evidently
inequitable, then it must not be obligatory, and the courts of justice will step to seek what is
equitable under the circumstances.

1311 - Although contracts bind only the both parties, yet they can also be transmissible. In other
words, it can bind the assignee, and heirs except when the contract is non-transmissible(by
nature such as singing or painting), contrary stipulated in the contract, prohibited by the
provisions of law. It must be remembered, that the heirs are not liable beyond the value of his
inheritance from the decedent.

Whenever the contract contains some stipulation in favor of the third person, then the person
can demand fulfillment insofar as he had communicated and consented before its revocation
(stipulation pour autrui)

A third person is one who has not taken part of the contract; therefore, he is a stranger to the
contract. Then too, he does not have any rights and obligations under a contract to which he is
a stranger. He has no standing in law to demand enforcement of a contract or question its
validity.

Cases where a stranger or third person is affected by a contract:

1. Stipulation pour autrui
2. Contracts with real rights
3. Contracts entered to defraud creditors
4. When he is guilty of inducement to violate the contract.

1312 - Contracts with real rights bind everybody regardless of wherever it goes.

1313 - Whenever there is an intention to defraud the creditor, then the creditors have a right to
impugn the contract of the debtor with the third person through rescission or cancellation.

1314 - Whenever violation of contract by the other is induced by the third person, then the latter
should be liable to the damages, but must not go beyond the actual amount of liability.

1315 - Consensual rights are perfected by mere consent, and from that moment they are bound
to the fulfillment of its obligation theron, and also to all the consequences, according to their
nature, in good faith, usage and law

1316- Real rights such as deposit, loans, and commodatum cannot be perfected by mere
consent, but it needs also the actual delivery or performance of the subject matter

Stages in perfecting the contract:

1. Preparation or negotiation - when both have not reached a definite agreement but only
the steps towards the latter.
2. Perfection or birth - when both parties have reached a definite agreement with its
corresponding subject matter as well as purpose as to the purpose upon which the
contract is established
3. Consummation or termination - When the performance was already fulfilled through
performance, however, it is not always the case in termination—for both parties can
agree to terminate the contract without performance, and whenever a contract is
perfected, they can also apply termination.

1317- No one may contract in the name of the other without the consent of the
latter(unauthorized). Plus, one cannot act beyond his power endowed by the assignor.

Whenever the preceding paragraph happens, then one can cure them through ratification. The
defects that it brought have so manifested that, whenever ignored, they would be unenforceable
unless cured by implied or express ratification.

The effects of ratification is retroactive.

ESSENTIAL REQUISITES OF CONTRACTS

1318 - Contracts need consent, object, and cause.

A contract must have all the essential elements, for essential elements are those without which
a contract cannot exist.

Kinds of essential elements:

1. Common - where it exists in all contracts
2. Special - where it exist not in all contracts
a. Form - ex. Public instrument
b. Subject matter - ex. Thing pledge, antichresis
c. Cause - price in sale or liberality in commodatum
3. Natural Elements - presumed to exist in the contracts such as warranties
4. Accidental elements - are the stipulations, terms, and conditions that are set up by the
contracting parties

CONSENT
1319 - Consent is just the manifested meeting of the stipulations, terms and conditions of the
contract, and accepts those objects and causes upon which the contract is constituted.
Acceptance is absolute. There is also an unqualified acceptance when it renders another
attempt of entering a contract in a different basis rather than render to accept or reject.

Acceptance through letter and telegram does not bind unless it had reach to the
knowledge to the offerer. The contract is entered where the offer was made.

Consent is the conformity to the terms of the contract, and no longer needs an affixed
signature–because mutual agreement comes forth when an offer is presented, and the
acceptance of that offer.

Requisites of an offer:
1. Certain or specific
2. Serious intentions - an offer that is not serious, yet the other had led to believe that is
serious will never invalidate the offer.

1320 - An acceptance can be implied or express

Express - through verbal and written

Implied - through conduct presumption
Silence - never an acceptance
1321 - The offerer has capacity to make conditions of specific time, place, and manner of
payment that must be complied with by the offeree.

1322 - The offer or acceptance can be communicated through an agent insofar as the agent is
authorized by the offerer.

1323 - The incapacity or death of either parties before acceptance was made or the contract
was perfected will invalidate the offer. Plus the failure to comply with the conditions given by the
offerer in 1321 will invalidate the offer, for it will prevent the creation of the contract.

1324 - The offerer can give an option-period(allowed time to reject or accept the offer), and
option-money.

Option-period: Where the party offering can withdraw the offer before the acceptance period
Option-money: Where the party offering can no longer withdraw the offer because he has been
paid or in a compromise.

However, when after the allowed period had lapsed, in the absence of acceptance, certainly the
offer becomes ineffective.

1325 - Advertisements are not definite offers, but only an invitation to offer.

1326 - Advertisers are offeree, while the bidders are the offerer. The former is not bound to
accept the highest or lowest bid. Only the auctioneer or sherriff is bound to accept the highest
bid.

1327 - The emancipated minor, deaf-mutes(cannot read or write–or both),

incapacitated(insane), are not able to give a consent.

1328 - Contracts entered into a lucid interval are valid but voidable.

1329 - There is a modification of the provisions in the 1327, in which all of the conditions are
able to give consent when cured by ratification by their legal representative or guardian, when
the thing delivered to the minor is a necessity, when it is for their benefit, when the minor
misrepresents his age that led the other believe its legal capacity.

1330 - A contract where the consent is given through intimidation, violence, mistake, undue
influence, fraud is voidable.

Consent is not only the agreement of the offer, but also having the knowledge, complete
understanding, awareness over which one has consented to.

A contract will never be valid unless:

1. It is due to intelligent consent - capacity to act
 2. It is free and voluntary - there is no vitiation of consent through intimidation and violence
3. It is conscious - there is no vitiation of consent by mistake or fraud.

Vices of consent:
(Make the consent defective as to make the contract voidable)

1. Fraud
2. Mistake
3. Violence
4. Intimidation
5. Undue Influence

1331 - Mistake can invalidate the consent when it refers to the object or subject matter of the
contract, when it is the purpose of the contract, when it is reason as to why the parties entered
into a contract, when it is the principal binding force for which the contract is
established—----INSOFAR AS IT IS THE PRINCIPAL, MAIN, PRIMARY, REASONS OF THE
CONTRACT TO BE ESTABLISHED

Mistake cannot invalidate consent when it does not refer to the main reason as to why the
contract was erected or why the parties entered into—they are referred to as simple mistake,
which can be cured by correction.

Mistakes that cannot invalidate consent:

1. Accidental qualities
2. Amount or quantity
3. Motives
4. It is not personal qualifications
5. Errors that could have been avoided

1332 - When one is unable to read or understand the terms of the contract, then subsequently,
alleged fraud, the person enforcing the contract has the burden of showing the proof that he had
already genuinely explained wholly the conditions thereof.

Judged based on proof

1333 - There is no mistake when the other party knows the doubt as well as the risk

1334 - Mutual error due to misunderstanding of the legal laws, and will frustrate the real purpose
of the parties can vitiate consent.

1335 - There is of course NO CONSENT, when the consent is induced by intimidation, violence,
irresistible force upon the person, property or family of the one being forced to consent.
However, if the threat is of legal and competent authority, such as the courts, then the consent is
valid insofar as it is accompanied with just cause.

1336 - A violence or intimidation by a third person will annul the obligation.

1337 - Undue Influence is taking advantage of the power over the will of the other; and thus,
depriving the freedom of choice of the latter. It must be considered in terms of (1) confidential,
family relations, spiritual-–(2) mental weakness, (3) ignorance, (4) financial distress. Undue
influence is when as if the influenced person is expressing the will of the other, rather than his
own. But influence through persuasion, argument, affection, and kindness will not vitiate
consent.

1338 - Causal fraud is when one enters into the contract through the insidious words or
machinations of the other party, and will secure the consent of the former, when without which,
he would not enter into the contract.

Causal fraud is equivalent to misrepresentation of facts.

Not all fraud annuls consent. So a fraud cannot annul a consent unless the following is
manifested in it:
1. Misrepresentation of material facts with the knowledge of that falsity
2. It must be serious or covers a substantial part of the object of the contract
3. It is committed by one of the parties, even when the other party has the knowledge of
the fraud that is induce by the third person
4. It must be done in bad faith and with the intention the other who had no knowledge of
the fraud
5. It must induced the consent of the other to enter the contract
6. It must clearly and strongly proved by a evidence

1339 - When one does not reveal a fact, especially in a confidential relationship, when one has
the duty to reveal them and ought to communicate them; then, it will be considered fraudulent.

Concealment equivalent to misrepresentation or false presentation.

1340 - the exaggerations of the merchants or traders in the market are not considered
fraudulent.

Fraud only refers to misrepresentation of facts, not opinions

1341 - The mere expressing of opinion is fraudulent despite the fact that the opinion is untrue,
unless it is made by an expert of that special knowledge, and the other relies to the latter
1342 - Misrepresentation of a third person must not be automatically presumed that can annul a
contract or consent unless the other party has the knowledge of the presentation and when it
results into a substantial mistake of both parties reliance on the misrepresentation.

1343 - Misrepresentation in good faith is not fraudulent, but only a mistake or error.

1344 - In order for the fraud to cause the contracts to be voidable, then it must be serious and
must not be employed by both parties. Incidental fraud happens when only one of the parties
employed fraud and will be liable for the damages, when the fraud does not induce the other to
enter the contract.

1345 - Simulation may be absolute or relative. The former when both parties really do not intend
to be bound at all; therefore , the contract is void or non-existent

1346 - Simulation will be relative when the true agreement of the parties is different from their
agreement in the contract; therefore, the contract is concealed.

OBJECT OF CONTRACTS

1347 - All things, including future things, insofar as it is within the commerce of men, can be an
object of the contract. Transmissible rights can be the object of a contract.

However, future inheritance cannot be an object of a contract unless authorized by law.

All services insofar as it is not contrary to law, customs, public policy, and public order can be an
object of a contract.

1348 - Services or Objects that hold with it an impossibility, cannot be an object of a contract.

An object of a contract is actually the obligation, and thus the object of the obligation is the
object of the contract. An object of the contract can be a thing, rights, or services.

Requisites of a thing to be an object of a contract:

1. It must be within the commerce of men
2. It must not be physically or legally impossible
3. It must be in existence or at least capable of coming forth into existence
4. It must determinate or determinable

Requisites of a service to be an object of a contract:

1. It must be within the commerce of men

 2. It must not be physically or legally impossible
3. It must be determinate or capable of becoming determinable

Requisites of rights:

1. Outside the commerce of men - public places or things that are man’s kind common
property
2. Physical or legal impossibility - impossible to do(use common sense nalang)
3. Determinate - obligations that are no need of a new contract to make it determinate such
as A owes B a P100 CASH.
4. Future things or rights - objects that may comeforth at the later time such as the eggs of
the chicken, winning the world cup in 2022
5. Intransmissible rights - Rights that cannot be transferred such as right to vote, marital
and parental rights

Future Inheritance:
1. Things that would be inherited by the person in future at the death of the decedent are
VOID unless authorized by law.
It will not be void when:
1. Donation, testimony of succession
2. Inter vivos

Kinds of impossibility:
1. Physical - it can nullify the contract when it is absolute; it cannot nullify the contract when
it is only temporary.
2. Legal - acts that are contrary or prohibited by law

1349 - The object of the contract must be determinate; however, when the quantity is not
determinate, it will not be an obstacle to the contract insofar it is determinate or can be
determinate without the need of creating a new contract.

CAUSE OF CONTRACTS

1350 - Cause of contracts may be onerous where each parties are obligated to the other;
remunerative when the service or benefit is remunerated; beneficence or gratuitous for the sake
of mere liberality of the benefactor.

Cause or consideration is the purpose or reason or rationale on why the contract was
constituted.

Its distinction between object of the contract is the viewpoint.

1351 - Motive is never equivalent to cause.

Motive is the personal or private reason as to why the contracting party entered in to the
contract.

Difference between motive and cause:

1. Cause is the direct reason, the motive is indirect.

2. Cause is known to the contracting party, the motive may not be known.
3. Cause is an essential element of a contract, the motive is not.
4. The quality of the cause affects the validity of the contract, the motive does not affect the
contract at all UNLESS the motive is to fraud a third person.

1352 - Unlawful cause or consideration will make the contract void, and thus produce no effect.

1353 - False cause will make the contract void unless proven otherwise.

Requisites of cause:
1. It must exist at the moment the contract is entered to
2. It must be lawful
3. It must be true and real.

ILLEGAL CAUSE OR CONSIDERATION WILL MAKE THE CONTRACT ILLEGAL.

Requisites of a void contract: VOID CONTRACT = UNENFORCEABLE

1. It has ABSOLUTE legal and physical impossibility is void
2. Future inheritance UNLESS authorized by law is void
3. Unlawful or illegal cause of contract is void
4. False cause of the contract is void
5. Simulated contract (EXCEPT THE TRUE AGREEMENT, IF LAWFUL) is void
6. Sale without cause is void
7. Erroneous cause is void
8. Improper form of contract that is against the requirement of the law is void
9. When the object of the contract is outside of the commerce of men it is void

1354 - Although the cause or consideration is not stated, then the law presumed that it exists
and it be lawful, unless proven otherwise.

1355 - Lesion does not invalidate a contract unless specified by law or by mistake, fraud, and
undue influence.

Lesion is the inadequacy of exchange of the contracting parting, and thus, composed of injury.
FORMS OF CONTRACT
1356 - Contracting parties may entered into a contract in whatever form, insofar as it is in
accordance to the essential elements that makes it valid. However, when the law so required
that must be in some form, then the contracting parties must obey it in order for the contract to
be enforceable and can be proven.

Form of a contract refers to the manner in which a contract is manifested or executed.

A contract is in written form when all of the terms are in written, and thus, when it is partially
written or partially oral, then it is not considered as written form.

Classification of forms:
1. Common, informal, and simple - It can be in whatever insofar as it is in accordance to
the requisites of validity(consent, object, cause)
2. Formal or solemn - When the contract must in some form required by the law.

Actually the form can be in whatever except:

1. When the law requires that must be in some form to be valid
2. When it must be in some form in order to be enforceable and proven
3. When it must be in some form for the convenience of the two parties or for the purpose
affecting the third person.

Cases where the contract must be in a definite form:

1. Donation of real property - it must be in a public instrument
2. Donation of personal property - it must be in writing
3. Sale of property - it must be in writing
4. Sale of land through an agent - it must be in writing
5. Stipulation to pay interest - it must be inwriting
6. Contract in partnership - must be of the public instrument

1357 - when the law says so to be in some form, then the contracting parties must be compel to
do so or else it will make the contract void.

1358 - the following must appear in a public document or instrument:

1. Creation of real rights over immovable property or sale of property
2. Cession or renunciation of hereditary rights or those of conjugal partnership of gains
3. Power to administer property
4. Cession of actions or rights.
ALL CONTRACTS WHERE THE AMOUNT INVOLVED EXCEEDS FIVE HUNDRED PESO
MUST APPEAR IN WRITING, EVEN IN A PRIVATE ONE.

REFORMATION OF INSTRUMENTS
1359 - Reformation is a remedy when a writing instrument fails to express the true intentions of
the contracting parties whether it may be due to fraud, mistake, accident or any inequitable
conduct–when they have already the meeting of minds.

However, if the inequitable conducts prevent the meeting of the minds, then the remedy is
annulment

Requisites for reformation:

1. There must be a meeting of minds.

2. The written instrument does not express their true intentions or agreement
3. The failure to express true intention is due to inequitable conduct
4. There is a clear and convincing evidence of mistake, fraud, and any other inequitable
conduct.

1360 - The Provisions of the new Civil Code takes precedence over the general law of
reformation

1361 - Whenever the mistake is mutual, and it causes the failure of the instrument to express
the true intentions, then reformation is a remedy.

Requisites of reformation in a mutual mistake:

1. The mistake of fact
2. The mistake must be proved by clear and convincing evidence
3. The mistake is common to both
4. The mistake causes the instrument to be unable to express the true intentions of the
contracting parties

1362 - Whenever the other party was at mistake in good faith, while the other acted fraudulently
or any other inequitable conduct, then the former can have the remedy of reformation.

1363 - Whenever the other party was at mistake, and the other know that it would make the
instrument be unable to express the true agreement, then the latter is guilty of concealment or
fraud; and thus therefore, reformation can be made.

1364 - Whenever the typist due to ignorance or bad faith or any circumstances causes the
instrument to be unable to express the true agreement, then reformation can be applied by both
1365 - When the agreement of the contracting parties is mortgage, while the instrument stated
property sold, then reformation is proper

1366 - Reformation is not allowed when it is a inter vivos donation, will, and the real agreement
is void
1367- Reformation is not allowed too when either of the contracting parties already taken action
to enforce the contract

1368 - Reformation can be done by the either of the two parties if it is mutual mistake, or heirs
or assign

1369 - The procedures of reformation must be governed by the supreme court.