Art. 1343 to Art.

1359

Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error.
-Effect of mispresentation made in good faith: If the mispresentation is not intentional but made
in good faith (the person making the false statement believed it to be true), it is considered a
mere mistake or error: Fraud is definitely more serious than mistake; hence the party guilty of
fraud is subject to greater liability.

Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not
have been employed by both contracting parties. Incidental fraud only obliges the person
employing it to pay damages.
Requisites:(Fraud to Vitiate Consent)
-the fraud must be serious
-the parties must not be in pari delicto (mutual guilt), otherwise, neither party may ask for
annulment. The contract would, therefore, be considered valid.
Incidental Fraud Does Not Vitiate Consent: Incidental fraud should not be confused with causal
fraud.
Incidental fraud is not a cause for annulment.
-To ensure the risk of both (serious fraud)
-Incidental fraud depends on the agreement

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the
parties do not intend to be bound at all; the latter, when the parties conceal their true
agreement.

-Simulation of a Contract: It is the process of intentionally deceiving others by producing the

appearance of a contract that really does not exist (absolute simulation) or which is different
from the true agreement (relative simulation).
Requisites:
*An outward declaration of will different from the will of
the parties.
*The false appearance must have been intended by mutual
agreement.
*The purpose is to deceive third persons.
-There is really no contract, there is no agreement (kunwari-kunwari na contract)
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it
does not prejudice a third person and is not intended for any purpose contrary to law, morals,
good customs, public order, or public policy binds the parties to their real agreement.
*Kinds of simulated contracts:
-Absolutely simulated (simulados) fictitious contracts: Here, the parties do not intend to be
bound. Effect: The contract is VOID.
-Relatively simulated (disimulados) disguised contracts: Here, the parties conceal their true
agreement. Effect: The parties are bound to the real or true agreement except:if the contract
should prejudice a third person; or if the purpose is contrary to law, morals, good
customs, public order, or public policy.

OBJECT OF CONTRACTS:
Art. 1347. All things which are not outside the commerce of men, including future things, may be
the object of a contract. All rights which are not intransmissible may also be the object of
contracts. No contract may be entered into upon future inheritance except in cases expressly
authorized by law. All services which are not contrary to law, morals, good customs, public order
or public policy may likewise be the object of a contract.
Object (Subject Matter) of a Contract:The object of a contract is really to create or to end
obligations which, in turn, may involve things or services. Hence, elliptically, it may be said that
the object of a contract is a thing or a service.
Requisites:
*the thing or service must be within the commerce of man
*must be transmissible
*must not be contrary to law, morals, good customs, public order, or public policy
*must not be impossible (Art. 1348, Civil Code)
*must be determinate as to its kind or determinable without the need of a new contract or
agreement. (Art. 1349, Civil Code).
Transmissible:All rights which are not intransmissible may be the object of contracts. But strictly
political rights (like the right to vote) or strictly personal rights (like parental authority) cannot be
the subject of a contract.
Not Contrary to Law, Morals, etc.:
*Future things may be the object of a contract; thus, the future harvest of sugarcane in a specific
field may be sold; but by express provision of law, said future property may
not be donated.
*Future inheritance (one where the source of property is still alive) cannot be the subject of a
contract except:
-in the case of marriage settlements.
-in the case of partitions of property inter vivos by the deceased.
NOTE: Future inheritance is any property or right not in existence or capable of determination,
at the time of the contract, that a person may in the future acquire by succession.
No Extension After Expiration: If a lease has expired, the trial court can no longer extend
the same without the consent of both lessor and lesse. (Gindoy v. Tapucar)
Human Blood is not an Object of Contract: they are outside the commerce of men. As such,
the extraction, collecting, and selling of human blood by any individual or agency is an aspect of
the medical profession and should not be considered a taxable entity for business tax purposes.
-Defines here what is valid object contract
-anything can be an object contract

Art. 1348. Impossible things or services cannot be the object of contracts.

Impossible things or service may be:
-because of the nature of the transaction or because of the law
-absolute (objectively impossible) (here, NO ONE can do it)
-relative (subjectively impossible) (here, the particular debtor cannot comply).
NOTE: Generally, the impossibility referred to by the law is absolute impossibility. If a blind man
enters into a contract which requires the use of his eyesight, the contract is void although in
this particular case, we have only a relative impossibility. This is because here, the relative
impossibility is not merely temporary.
Impossibility Not to Be Confused from Mere Difficulty: showing of mere inconvenience,
unexpected impediments, or increased expenses is not enough.

Art. 1349. The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be obstacle to the existence of the contract,
provided it is possible to determine the same, without the need of a new contract between the
parties.
Object of the Contract:
-The object must be determinate or determinable (without need of a new agreement).
-If the object is not determinate or determinable, the contract is void for want of an essential
requisite — the object of the contract
Quantity of object of contract need not be determinate as to kind or at least determinate without
the necessity of a new or further agreement between the parties. The same is true of the
quantity of the object of the contract. It is sufficient that it is possible to determine the same
without the need of a new contract between parties. When the obligation consists in the delivery
of a generic thing, whose quality and circumstances have not been stated, Art. 1246 governs.

CAUSE OF CONTRACTS:
Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other; in remuneratory ones, the service or
benefi t which is remunerated; and in contracts of pure benefi cence, the mere liberality of the
benefactor.

Cause: It is the essential and impelling reason why a party assumes an obligation. Strictly
speaking, there is no cause of a contract, but there is a cause for an obligation.
Classification of contracts as to cause:
-Onerous — here the cause is, for each contracting party, the prestation or promise of a thing or
service by the other.
-Remuneratory — the past service or benefit which by itself is a recoverable debt.
-Gratuitous (or contracts of pure beneficence) — here, the cause is the mere liability of the
benefactor.
*Cause in Accessory Contracts Like Mortgage and
Pledge: Here generally, the cause is the same as the cause for the principal contract of loan.
*Cause in Accessory Contracts of Personal Guaranty (Guaranty and Suretyship): Here the
cause is, generally, pure liberality. As a matter of fact, the contract of guaranty is gratuitous,
unless there is stipulation to the contrary. (Art. 2048, Civil Code). Sometimes, however, some
material consideration may be given.
*Moral Obligation as a Valid Cause of a Civil Obligation: if the moral obligation really does not
exist, there is no valid cause, as when the promise was made on the erroneous belief that one
was morally responsible for the failure of a certain particular enterprise.

Art. 1351. The particular motives of the parties in entering into a contract are different from the
cause thereof.
Motive: Purely personal or private reason which a party has in entering into a contract. It is
difference from the cause of the contract.

Motive Distinguished from Cause:

-The motive of a person may vary although he enters into the same kind of contract; the cause
is always the same.
-The motive may be unknown to the other; the cause is always known.
-The presence of motive cannot cure the absence of cause.

Art. 1352. Contracts without cause, or with unlawful cause, produce no effect whatsoever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or
public policy.
Requisites:
-It must be present (at the time the contract was entered into)
-It must be true (not false)
-It must be lawful (not contrary to law, morals, good customs, public order, or public policy)
Existing cause:
-If there is no cause whatsoever, the contract is VOID. Thus,
a fi ctitious sale is VOID.
-Just because the seller was not the owner of the thing sold, it does not mean that there was
lack of cause, for after all, there is a warranty does failure to pay the price result in a lack of
cause.
NOTE: the cause must exist at the time of the perfection of the contract; it need not exist later.
TRUE CAUSE: If the cause is false, the contract is not valid unless some other cause which is
lawful really exists.
LAWFUL CAUSE:
-If the cause is unlawful, the transaction is null and void.
-Thus, a contract to stifl e criminal prosecution for theft is void because this is manifestly
contrary to public policy and the due administration of justice.
-A promissory note to cover a gambling debt or to cover accumulated usurious
debts, is VOID.
-If a person claims that some parts of a contract are illegal but the rest are valid, he has the
burden of showing which parts are supported by a lawful cause; otherwise, the whole contract
shall be considered VOID.
-While an absolutely simulated contract can have no effect, a contract with an illegal cause may
produce effects under certain circumstances where the parties are not of equal guilt.
Effect if the Cause Is Illegal:
-If one party is innocent he cannot be compelled to perform his obligation, and he may recover
what he has already given.
-If both parties are guilty, in general, neither can sue the other, the law leaving them as they are.
But certain exceptions exist.

Art. 1353. The statement of a false cause in contracts shall render them void, if it should not be
proved that they were founded upon another cause which is true and lawful.
Statement of a False Cause:
-Just because the cause stated is false does not necessarily mean that the contract is void.
Reason: The parties are given a chance to show that a cause really exists, and that said cause
is true and lawful.
-Thus under this Article, it would seem that the contract with a statement of a false cause is not
void, but merely revocable or voidable.

Art. 1354. Although the cause is not stated in the contract, it is presumed that it exists and is
lawful, unless the debtor proves the contrary.
Presumption That Cause Exists:
-It is necessary that the cause must exist, BUT it is not necessary to STATE the cause in the
contract. Reason: It is presumed that the cause EXISTS and is LAWFUL, unless the debtor
proves the contrary.
-Under the Statute of Frauds, certain agreements have to be in writing. Now then, in these
agreements it is not essential to put down the consideration in writing. Reason: the presumption
under this Article that the cause exists.

Art. 1355. Except in cases specifi ed by law, lesion or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or undue influence.

Lesion: It is inadequacy of cause, like an insuffi cient price for a thing sold.

General Rule — Lesion or inadequacy of price does not invalidate a contract.

Exceptions:
-When, together with lesion, there has been:
*fraud
*mistake
*or undue influence

In cases expressly provided by law (in the following, the contracts may be rescinded):
-“Those which are entered into by guardians whenever the wards they represent suffer lesion by
more than
one-fourth of the value of the things which are the objects thereof.”
-“Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the
preceding number.”
-Partition among co-heirs, when anyone of them received things with a value less by at least
one-fourth
than the share to which he is entitled.
Lesion as Evidence of Vitiated Consent: the presence of fraud, mistake, or undue influence.

FORMS OF CONTRACTS:
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. However, when the aw requires
that a contract be in some form in order that it may be valid or enforceable, or that a contract be
proved in a ertain way, that requirement is absolute and indispensable. In such cases, the rights
of the parties stated in the following aticle cannot be exercised.

Form is not required: form does not matter for the validity of a contract. It is enough that there
be consent, subject matter, and cause. This rule applies, however, to CONSENSUAL
CONTRACTS.

-FORMAL CONTRACTS (SOLEMN CONTRACTS) require

a certain specified form, in addition to consent, subject matter, and cause.
-REAL CONTRACTS require DELIVERY to be valid as a
real contract even as between the parties, in addition to
consent, subject matter, and cause.

When form is important:

-Validity
-Enforceability
-Convenience

Art. 1357. If the law requires a document or other special form, as in the acts and contracts
enumerated in the following article, the contracting parties may compel each other to
observe that form, once the contract has been perfected. This right may be exercised
simultaneously with the action upon the contract.

-Right of One Party to Compel the Other to Execute the

Necessary Form
-Perfected (valid)
-Enforceable under the statute of Fraud.

Art. 1358. The following must appear in a public document:

(1) Acts and contracts which have for their object the creation, transmission, modifi cation or
extinguishment of real rights over immovable property; sales of real property or of
an interest therein are governed by Articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal
partnership of gains;
(3) The power to administer property, or any other power which has for its object an act
appearing or which should appear in a public document, or should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in
writing, even a private one. But sales of goods, chattels or things in action are governed
by Articles 1403, No. 2 and 1405.
Form for convenience: The necessity for the public document in the contracts enumerated here
is only for convenience, not for validity or enforceability.

REFORMATION OF INSTRUMENTS:
Reformation: is that remedy in equity by means of which a written instrument is made or
construed so as to express or conform to the real intention of the parties when some error or
mistake has been committed

Reason:
-Equity orders the reformation of an instrument in order that the true intention of the contracting
parties may be expressed. The courts do not attempt to make another contract
for the parties. The rationale of the doctrine is that it would be unjust and inequitable to allow the
enforcement of a written instrument which does not refl ect or disclose the real meeting
of the minds of the parties. The rigor of the legalistic rule that a written instrument should be the
fi nal and inflexible criterion and measure of the rights and obligations of the contracting parties
is thus tempered to forestall the effects of mistake, fraud, inequitable conduct or accident

Art. 1359. When, there having been a meeting of the minds of the parties to a contract, their true
intention is not expressed in the instrument purporting to embody the agreement, by reason of
mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of
the instrument to the end that such true intention may be expressed. If mistake, fraud,
inequitable conduct, or accident has prevented a meeting of the minds of the parties, the proper
remedy is not reformation of the instrument but annulment of the contract.

Refomation v. Annulment:
Where there has been a meeting of the minds, but there is mistake, fraud, inequitable conduct
or accident in the contract as written, the remedy is REFORMATION. When there has been no
meeting of the minds, because of vitiated consent, the proper remedy is ANNULMENT.

Reformation does not invalidate a contract; annulment invalidates a contract.

Requisites:
-There must be a meeting of the minds.
- The true intention is not expressed in the instrument.