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CONTRACTS

COMPROMISE; defined
Is a contract whereby the parties, by making
PRELIMINARY reciprocal concessions, avoid a litigation or

CONTRACTS; defined

put an end to the one already commenced.

EFFECT OF COMPROMISE
is a meeting of minds between 2 persons AGREEMENT BETWEEN THE
whereby one binds himself, with respect to the PARTIES
other, to give something or to render some for a valid compromise agreement

service

DUTY OF THE COURT IN INTERPRETING

between parties
- it has the effect and authority of res
judicata, with respect to the matter
CONTRACTS definitely stated therein, or which by
limited lang dito, it cannot alter a contract by implication from its terms should be
construction, supply material stipulations, or to deemed to have been included therein.

make a new contract for the parties.

DIFFERENT PHASES OR STAGES IN THE

- remains true even if the CA is not

judicially approved.

LIFE OR BIOLOGY OF A CONTRACT WHEN DOES CA BECOME BINDING

1. G E N E R AT I O N ; t h e p r e l i m i n a r y o r TO THE PARTIES
preparation process for the formation of the being consensual contract, it binds the
contract party from execution and not on its
2. BIRTH OF THE CONTRACT;
3. FULFILLMENT OF THE PURPOSE, for
court approval.

which the contract was constituted

4 MOST ESSENTIAL CHARACTERISTICS

HOWEVER; for it to have the forceof
res judicata
- it must be approved by final order of
OF A CONTRACT
1. the obligatory force or character of
contracts (obligatoriedad del contrato), or

the court

FOR CA TO BE VALID
the principle that once contract is perfected, it must be based on real claims and
it shall be of obligatory force upon both of actually agreed upon in gf, and not
the contracting parties
2. the autonomy of contracts, or the principle
that the contracting parties are free to enter

contrary to LMPPG

Q: what is the status of a contract of

into contract and to establish such employment prohibiting an employee who
stipulations, clauses, terms and conditions is separated (resigns to terminated) from
as they may deem convenient work, that he shall not engaged in another
3. the mutuality of contracts, or the essential
equality of the contracting parties whereby
the contract must bind both of them; and

employment for 5 years from termination?

A: void, contrary to public policy

4. the relativity of contracts (relatividad del
contrato), or the principle that the contract
take effect only between the parties, their

there is an undue restraint of trade.

REQUISITES FOR THERE TO HAVE

assigns and heirs.

BREACH OF CONTRACT; defined

NO UNDE RESTRAINT OF TRADE
1. there is a limitation as to the time
or place
The failure, without legal reason, to comply 2. t h e p r o h i b i t i o n r e a s o n a b l y
with the terms of the contract, or perform any necessary for the protection of the
promise which forms the whole or part of the

contract.
parties

- ang pwede wag lang absolute

L I M I TAT I O N S O N A U T O N O M Y O F prohibition for other employment, only
CONTRACT limited to similar industry for a period
SO LONG AS : it is not contrary to law, morals, of time from termination. hence, there

good customs, public order and public policy. is a valid interest of the employer to
protect its trade secrets, thus justifying

the condtion of the contract.

insert. page 812-17 jurado book

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CONTRACTS

Q: A and B entered into contract. C induces 4 KINDS OF INNOMINATE CONTRACT

A to break the contract and offers a better 1. DO UT DES; i give that you give
terms to A for the same subject matter as in 2. DO UT FACIAS; i give that you do
the contract of A to B. A agreed. can B sue 3. FACIO UT DES; i do that you give

C for damages?

A: yes

4. FACIO UT FACIAS; i do that you do

THEY SHALL BE REGULATED BY

NCC any third person who induces another to the general provisions or principles of
violate his contract shall be liable for damages obligations and contracts,

to the other contracting party. by the rules governing the most
analogous nominate contracts and
REQUISITES FOR IT TO BE ACTIONABLE
1. there is an existing valid contract
2. knowledge on part of the third person of the

by the customs of the place

MUTUALITY OF CONTRACTS; defined

existence of a valid contract; and the position of essential equality which must be
3. interference by the third person without occupied by both of the contracting parties in

legal justification or excuse

SO if the case is one which A induced

relation to the contract.

ART. 1308 NCC

B to break his contract of employment contract must bind both contracting parties; its
to C, for the purpose of liberating B validity or compliance cannot be left to the will
from C for unjust terms (ie. piso per
hour of work)
of one of them

- A cannot be held liable for damages

Q: A was a scholar of Arellano Universtity.

ART. 1308 PROHIBITS THE FF
DELEGATION
1. delegation of the power to
when he signed the scholarship grant, it determine whether the contract
provides a provision that should he transfer shall be valid or nog
to other school, he is liable to refund the 2. the delegation of the power to
previous grants that he received. is the determine whether the contract

stipulation valid?

A: no. null and void for being contrary to

shall be complied or not.

HENCE; should there is a delegation

public policy to BOD for the determination of the
Scholarship grants are awarded in recognition amount to be receive by an employee
of the merit and not to attract and keep brilliant who resigns from the corp (bonus)
students in school for their propaganda value. - if only granted 100 pesos as bonus, it
to looks at such grants as a business scheme cannot complain and assail violation of
designed to increase the business potential of Art, 1308, as it such not amount to any
an educational institution is not only prohibited delegation.
inconsistent with sound public policy but also - in fact ,the BOD recognizes its

good morals.

Q: what is the status of a contract with

promise when it awarded 100 pesos

as bonus. yun nga lang, 100 lang.

"influence peddlers" and "ten percenters" Q: is the stipulation in a loan

akin to fixers

A: null and void, being contrary to public

agreement authorizing the creditor
to increase the rate of interest
within the limits allowed by law,
policy constitute a violation of mutuality of
no need of proof of actual injury, as what is
violated here is public policy.
- as when public policy is violated, it is already

contracts?

A: yes
sufficient to establish as such depending on its as what the law provide is that, parties

purpose and tendency.

Hence; all agreement the purpose of

are free to stipulate on any adjustment
in the interest rate on a loan or
forbearance of money,
which is to create a situation which - and does not authorized any
tends to operate to the detriment of the unilateral increase in the interest rate
public interest by one party without the consent of the
- are aginst public policy na agad
agad, regardless on WON the purpose
other.

of the agreement is effected.

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CONTRACTS

RELATIVITY OF CONTRACTS NOTE: once acceptance was made,

a contract can only bind the parties who had and the same was intimated prior to
entered into it or their successor who have the revocation by the parties
assumed their personality or their juridical - the third person may demand for its
position, compliance.
and as a consequence, such contract - this operates as an exception to the
can neither favor nor prejudice third
person.
mutuality of contracts

res inter alios acta aliis beque nocet
prodest.
HOW CONTRACTS ARE PERFECTED

would depend upon the nature of the contract.

EXE: to relativity of contracts WHILE AS A GENRAL RULE:
1. where a contract contains a since contract are consensual, it is perfected
beneficial stipulation in favor of a by mere consent.
third person, provided that such UNLESS: it is a real contract
third person had communicated - wherein, it is deemed perfected by
his acceptance to the obligor delivery of the object of the contract by
before it is revoked. one of the contracting party to the
2. where a third person comes into
the possession of the object of a
contract creating a real right
other.

3. where the contract entered into in

order to defraud a third person
4. where the third person induces a
contracting party to violate his

contract

STIPULATION POUR AUTRUI

a stipulation in a contract clearly and
deliberately conferred by the
contracting parties as a favor upon a
third person,
who must communicate his
acceptance of the favor or
benefit to the obligor before it

could be revoked

in here; neither of the parties

contracting the stipulation pour atrui
acting as an agent of the third person-

beneficiary

REQUISITES OF STIPULATION
POUR ATRUI
1. that the stipulation in favor of the
third person should be a part, not
the whole of the contract
2. that the favorable stipulation
should not be conditioned or
compensated by any kind of
obligation whatever; and
3. neither of the contracting parties
bears the legal representation or
authorization of the third person
4. acceptance of the benefit by the
third person communicated to the

obligor before it could be revoked.

NOTE: the acceptance of the third

person in whose favor the stipulation
pour atrui was constituted need not be
express
- the law admits implied acceptance.

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CONTRACTS

FF THEORIES WHEN ACCEPTANCE

ESSENTIAL REQUISITES OF IS MANIFESTED BY LETTER OR
CONTRACT

TELEGRAM

M A N I F E S TAT I O N T H E O R Y
ESSENTIAL REQUISITES OF CONTRACTS (manifestacion)
1. consent of the contracting parties - the contract is perfected from the
2. object certain which is the subject matter of moment the acceptance is declared or
the contract; and made. this is what Code of Commerce
3. cause of the obligation which is established

follows

EXPEDITION THEORY (expedicion)

- the contract is perfected from the
CONSENT moment the offeree transmits the
notification of acceptance to the
offeror, as when the letter is placed in
CONSENT; defined as applied in contracts the mailbox
signifies the concurrence of the will of the
contracting parties with respect to the object
and the cause which shall constitute the

- this is what American Courts ffs.

RECEPTION THEORY (recepcion)

the contract is perfected from the

contract

NCC defined it as:

moment that the notification of
acceptance is in the hand of the offeror
meeting of the offer and the acceptance upon in such a manner that he can, under
the thing and the cause which are to constitute ordinary conditions, procure the
knowledge of its contents, even if he is

the contract

ELEMENTS
not able actually to acquire such
knowledge by reason of absence,
1. the consent must be manifested by the sickness or some other cause.
c o n c u r r e n c e o f t h e o ff e r a n d t h e
acceptance
2. the contracting parties must possess the

- German Courts

COGNITION THEORY
necessary legal capacity; and - the contract is perfected from the
3. the consent must be intelligent, free, moment the acceptance comes to the
knowledge of the offeror
spontaneous and real

- Spanish Civil Code, what Phil ffs

CONTRACTS ARE PERFECTED
Q: gulo nung example sa book ni
GEN RULE
from the moment that there is a manifestation
of the concurrence between the offer and the

jurado pg 833

Q: A offered to B through letter a

acceptance with respect to the object and the lease agreement. B accepted the
same through letter and sent it to A.

cause which shall constitute the contract

IF A C C E P TA N C E IS
this was sent 1pm and was received
by A at 4pm. however, A sent B a
COMMUNICATED BY LETTER OR letter withdrawing the offer at 2pm.
is there a perfected contract of

TELEGRAM

In General:
lease?

- from the moment that the offeror has A: NO

contracts are perfected from the

knowledge of such acceptance

EXE: for purely commercial contracts

moment the offeror acquires
knowledge of the acceptance of the
(joint-accounts, maritime contracts) offeree.
- from the moment an answer is made - in the given problem, although A
acquires knowledge of the acceptance

accepting the offer.
at 4pm, but there was a prior
withdrawal made by the same at 2pm.
hence, at the time A acquires
knowledge of the acceptance, there is
no longer any offer. hence, no

perfected contract is created.

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CONTRACTS

note: revocation of the acceptance death ni offeree. plus, agent, if acting

may also be made through telegram within the scope of his authority, can
- so long as there is no perfected bind the principal.
contract yet, the parties are not yet - or was it treated as ineffective kasi in
bound, and there is no juridical reason contract of insurance, the insured is
why the offeree cannot revoke his the offeror while the insurer as the

acceptance.

NOTE: there is no acceptance when the

offeree?

OPTION PERIOD WITHIN WHICH TO

parties failed to agree on the size of the land ACCEPT, MAY THE OFFEROR STILL
sold

WITHDRAW THE OFFER?

NOTE: in case of proposal instead of

acceptance, it constitute as a counter-offer and
IT DEPENDS

a rejection of the original offer.

Q: is there a perfected contract of sale

IF THE OPTION IS COUPLED WITH
CONSIDERATION
- offeror may still withdraw, but he is liable for
where the buyer after his acceptance,
moved for the postponement of payment of
the contract price until certain event has

damages.

URIBE: mali si Jurado, or rather, he

been complied with, and the evnt has begs to disagree
become impossible due to fortuitous - kasi sabi nya, dapat lagi voluntary, so
event?

A: YES
he cannot be compelled to accept, vis
a vis, wait for the period to expire
- so should he disregard theo period,
as there is already a concurrence between the he is only liable for damages.
offer and the acceptance with respect to the - note, there is no perfected contract of
object and the cause which shall constitute the sale here, only a perfected contract of
contract

Q: what is the nature of the promise to pay

option to sell.

IF THE OPTION IS NOT COUPLED WITH

(whether with a term or conditional); when CONSIDERATION
the agreement states "upon arrival in this - the offeror may withhdraw his offer by
port?"

A: the promise to pay is with a term
communicating such withdrawal to the offeree

at any time before the acceptance

- as the promise to pay is upon the arrival and NOTE: old case, once option contract has

not if the steamer arrive at the port...

WHEN NO PERIOD WITHIN WHICH

been perfected and still within the terms of the
agreement, pwede i compel the offeree si
offeror na ituoly yung contract.
ACCEPTANCE IS TO BE MADE, WHEN - pero sabi ni uribe, mali to kasi nga voluntary
SHOULD ACCEPTANCE SHOULD BE MADE dapat, consensual pa. so offeror cannot ve

- the acceptance must be made immediately

EFFECT OF DEATH, CIVIL INTERDICTION,

compelled, but in case such is supported by
option money, he is liable for damages, since
the offer wad withdrawn clearly in bf and a
INSANITY, OR INSOLVENCY OF EITHER
THE OFFEROR OR OFFEREE BEFORE THE
ACCEPTANCE IS CONVEYED

violation of the perfected option contract.

NOTE: an unaccepted proposal of dacion en

- the acceptance becomes ineffective

Hence; in one of the example of

pago does not results to extinguishment of the

contract.

Jurado. NOTE: advertisements for bidders are simply

- insurance contract. notice of invitations to make proposal, and the
acceptance (by the head office in advertisers is not bound to accept the highest
Canada) was received by the insured or the lowest bidder, unless the contrary
at his received a day after his death,
sabi ni jurado, the acceptance
becomes ineffective,

appears

- ang labo lang, kasi may provisional

receipt na inissue yung local office sa
Phil.. talos diba, once acceptance has
been made effective na, may
perfection na. so irrelevant na yung

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CONTRACTS

WHO ARE INCAPACITATED TO GIVE THE FF ARE PROHIBITED TO ENTER INTO

CONSENT CONTRACTS
1. minors (wala nang unemancipated minor) 1. insolvents
2. insane or demented persons 2. husband and wife during their marriage, as
3. deaf-mutes who do not know how to read a general rule.
and write 3. persons who are prohibited from giving
4. married women in cases specified by law each other any donation or advantage
5. persons suffering from civil interdiction; and 4. persons holding a fiduciary relations with

6. incompetents under guardianship

NOTE: advanced years of age or by

respect to certain properties

Art. 1490. The husband and the wife

reason of physical infirmities does not cannot sell property to each other,
automatically incapacitates a person to except:
give consent 1. When a separation of property
- dapat, such impair his mental was agreed upon in the marriage
faculties to the extent that he is unable settlements; or
to properly, intelligently and fairly 2. When there has been a judicial
understand the provisions of said separation or property under

contract

EXE TO THE RULE THAT CONTRACTS

Article 191.

Art. 1491. The following persons

ENTERED INTO BY MINORS WITHOUT THE cannot acquire by purchase, even at a
C O N S E N T O F T H E I R PA R E N T S O R public or judicial auction, either in
GUARDIANS ARE VOIDABLE person or through the mediation of
1. when the contract is entered into by a minor another:
who misrepresents his age, applying the 1. The guardian, the property of the
doctrine of estoppel (note, dapat active person or persons who may be
misrepresentation amounting to fraud, under his guardianship;
whether it be active or constructive. pero 2. Agents, the property whose
pag mere silence, it cannot be said that administration or sale may have
there is fraud) been entrusted to them, unless the
2. where the contract involves the sale and consent of the principal has been
delivery of necessaries to the minor given;
3. when it is a life, health or accident 3. Executors and administrators, the
insurance taken on the life of the minor, property of the estate under
provided that the beneficiary is the minor's administration;
esrate, his parents or his siblings 4. Public officers and employees, the
4. when it involves a natural obligation and property of the State or of any

fulfilled by the minor voluntarily

MINORITY IS ONLY A PERSONAL DEFENSE

subdivision thereof, or of any
government-owned or controlled
corporation, or institution, the
HENCE; between co-debtors (joint), the administration of which has been
minority of other debtors does not results to intrusted to them; this provision
nullity of the contract of loan they contracted. shall apply to judges and
to those who are capacitated, they cannot government experts who, in any
assail the minority of their co-debtors as a manner whatsoever, take part in
defense. the sale;
EXE: as regards the part of the debt 5. Justices, judges, prosecuting

for which the minor are responsible. attorneys, clerks of superior and
inferior courts, and other officers
and employees connected with the
administration of justice, the
property and rights in litigation or
levied upon an execution before
the court within whose jurisdiction
or territory they exercise their
respective functions; this
prohibition includes the act of
acquiring by assignment and shall
apply to lawyers, with respect to
the property and rights which may
be the object of any litigation in

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CONTRACTS

which they may take part by virtue

vitiates consent, does not result to
of their profession.
resulting to voidable vitiation of consent,
6. Any others specially disqualified
character of the - ff the rule that
by law.
contract created
thereto
ignorance of the law
excuses no one
INCAPACITY TO PROHIBITION TO from compliance
ENTER INTO
CONTRACTS
ENTER INTO
CONTRACTS
therewith.

EXE:
restraints the restraints the very mutual error as to
exercise of the right right itself the legal effect of an
to contract agreement, when
the real purpose of
based upon based upon public the parties us
s u b j e c t i v e policy and morality frustrated
circumstances of - amounting to
certain persons vitiation of consent
which compel the
law to suspend for a
WHAT MISTAKE OF FACT WHICH
definite or indefinite WILL RENDER A CONTRACT
period their right to
contract
VOIDABLE

MISTAKE AS TO THE OBJECT OF

in case of violation, the contract entered THE CONTRACT (ERROR IN RE)
the contract entered into is void which may refer to either of the ff
into by incapacitated 1. mistake as to the identity of the
person is merely thing (error in corpore)
voidable 2. mistake as to the substance of the
thing (error in substancia)
3. mistake as to the condition of the

VICES OF CONSENT

VICES OF WILL
thing, provided that such condition
has principally moved one or both
(vicious de la formacion de la voluntad) of the parties to enter into the
1. mistake contract
2. violence 4. mistake as to the quantity of the
3. intimidation thing (error quantitate), provided
4. undue influence that the extent or dimension of the
thing was one of the principal

5. fraud

VICES OF DECLARATION
reasons of one or both of the
parties for entering into the

all forms of simulated contracts

contract

MISTAKE AS TO PERSON (ERROR

MISTAKE OF FACT MISTAKE OF LAW IN PERSONA)
- mistake with regard to the identity or
when one or both of when one or both of with regard to the qualification of one
the contracting
parties believe that a
the contracting
arties arrive at an
of the parties

fact exists when in

reality it does not or
e r r o n e o u s
conclusion regarding
VIOLENCE AND INTIMIDATION

REQUISITES FOR VIOLENCE TO

that such fact does the interpretation of
not exists when in a question of law or A M O U N T T O V I T I AT I O N O F
reality it does the legal effects of a CONSENT
certain act or 1. that the force employed to wrest
transaction consent must be serious or
irresistible
2. it must be the determining cause
for the party upon whom it is
employed in entering into the

contract

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CONTRACTS

REQUISITES FOR INTIMIDATION TO

VITIATE CONSENT
1. one of the contracting parties is

KINDS OF FRAUD

1. fraud in the perfection of the contract; in

compelled to give has consent by securing the consent of the contracting
a reasonable and well-grounded parties (Art. 1338)
fear of an evil 2. fraud in the performance of the obligation
2. the evil must be imminent and
grave
3. the evil must be unjust; and
(Art. 1170)

CLASSIFICATION OF FRAUD PRESENT OR

4. the evil must be the determining EMPLOYED AT THE TIME OF THE BIRTH OR
cause for the party upon whom it
is employed in entering into the
PERFECTION OF THE CONTRACT

contract
DOLO CAUSANTE DOLO INCIDENTE

VIOLENCE INTIMIDATION fraud is present only fraud is present only

at the time of the during the
external internal birth of the performance of the
obligation obligation
prevents the i n fl u e n c e s t h e
fraud is employed fraud is employed
expression of the operation of the will,
- for the purpose of - in order to evade
will substituting it inhibiting it in such a
securing the consent the normal fulfillment
with a material act way that the
of the other party to of an obligation
dictated by another expression thereof is
enter into the
apparently that of a
contract
person who has
freely given his
results to results to
consent
- vitiation of consent - non-fulfillment or
breach of the
a physical a moral compulsion
obligation
compulsion

UNDUE INFLUENCE
rights of the creditor/
obligee/ innocent
rights of the creditor/
obligee
when a person takes improper advantage of party - to recover
his power over the will of another, depriving the - to ask for damages from the

latter of a reasonable freedom of choice

FACTORS TO BE CONSIDERED
annulment of he
contract; or
- f u l fi l l m e n t p l u s
debtor or obligor

1. family, spiritual and other relations damages

between the parties
2. the fact that the person alleged to
have been influenced was serious in character not serious in
• suffering from mental weakness character
• was ignorant or - refers to

FRAUD
• in financial distress deceptions or
misrepresentations
employed by one
through insidious words or machination of one party without which
of the contracting parties, the other is induced the other party
to enter into a contract which, without them, he would still have

would not have agreed to.

REQUISITES FOR IT TO VITIATE

entered into the
contract

CONSENT makes the contract only entitle the

1. it was employed by a contracting voidable injured party for
party upon the other damages
2. it was serious
3. it resulted in damages and injury the fraud is in the in here, not in the
to the third party seeking cause of the cause

annulment

contract

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CONTRACTS

W H E N D O E S FA I L U R E TO SIMULATION OF CONTRACTS

DISCLOSE FACTS CONSTITUTE AS
FRAUD
AKA: VICES OF DECLARATION

ABSOLUTE
ONLY WHEN - when there is colorable contract but it has no
- there is a duty to disclose it substance as the contracting parties do not
as when they are bound by intend to be bound by the contract at all.

confidential relation

WHEN DOES EXAGGERATION IN

(ie. creditor simulates a contract of
sale over his properties, in order to
prevent their possible attachment by

TRADE CONSTITUTE AS FRAUD

SO LONG AS
creditors)

STATUS OF THE CONTRACT

1. not a usual exaggeration of trade; - void ab initio
and - the parties may recover from each
2. the other party has no opportunity other what they may have given under

to know the facts

EXPRESSION OF OPINION RELATIVE

the contract

CONSTITUTE AS FRAUD

AS AN EXCEPTION TO THE RULE;

- when the contracting parties state a false
cause in the contract to conceal their true
agreement
when (ie, conceal a donation by simulating a
1. made by an expert; and contract of sale, for the purpose of

2. the other party has relied on the
former's special knowledge
accomplishing tax evasion)

PRIMARY CONSIDERATION IN
NOTE: fraud cannot be raised DETERMINING THE TRUE
against a person or entity who is INTENTION OF THE PARTIES
not a party to the fraud - by the express terms of their
so the proper defense would be agreement as well as from their
- substantial mistake, as a contemporaneous and subsequent

consequence of the fraud employed

ART. 1342

acts.

STATUS OF THE CONTRACT

Misrepresentation by a third person remains to be valid and binding, ad
does not vitiate consent, enforceable between the parties and
unless such misrepresentation their successor in interest, long as:
has created substantial • it does not prejudice third person;
mistake and the same is and

mutual

ie, through fraud of B, a was lead to

• not intended for any purpose
contrary to law, morals, good
customs, public order or public
sign a promissory note in which he
never intended to be bound. now, the
Bank demands for the payment of the
policy

NOTE: based from the foregoing, the law

PN executed by A, can A raise the
defense of fraud employed by B?
still presumes the validity of contracts.

A: no. dapat, i follow nya yung 1342 HENCE; the burden of proof rests upon the

party who assails the regularity and its validity.

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CONTRACTS

NOTE: mere failure to indicate the exact

location of the object of the contract, does
OBJECT

not negate the certainty of the object.

- hence; pag indicated lang by Lot number,

DEFINITION jurisprudence that it is deemed sufficient.
the thing, right or service which is the subject such failure is treated only as a mere
matter of the obligation which is created or error occasioned by the parties' failure

established

REQUISITES IN ORDER A THING, RIGHT

to describe wth particularity the subject
property,
- which does not indicate the absence
OR SERVICE MAY BE THE OBJECT OF of the principal object as to render the
CONTRACTS contract void.
1. that the object should be within the
commerce of men; susceptible of
appropriation and transmissible from one
person to another CAUSE
2. the object should be real or possible; it
should exist at the moment of the
celebration of the contract, or, at least, it DEFINITION
can exists subsequently or in the future the essential reason which moves the
3. the object should be licit; it should not be contracting parties to enter into the contract.
contrary to law, morals, good customs, - it is the immediate, direct or most proximate
public order or public policy reason which explains and justifies the
4. the object should be determinate, or at creation of an obligation through the will of the
least possible of determination

THE FF ARE THOSE THAT CANNOT BE AN

contracting parties

IN ONEROUS CONTRACT
OBJECT OF A CONTRACT - the cause is understood to be for
1. things which are outside the commerce of each contracting party, the prestation
men or promise of a thing or service by the
2. intransmissible rights
3. future inheritance, except in cases
expressly authorized by law

other

IN REMUNERATORY CONTRACTS
4. impossible thing or service - the service or benefit which is
5. service which are contrary to law, morals,
good customs, public order or public policy
6. objects which are not determinable as to

remunerated

IN CONTRACT OF PURE
their kind BENEFICENCE
OTHERWISE; the contract entered whose
object are any of the ff as mentioned above,

- the liberality of the benefactor

the contract is void.

EXE WITH REGARD TO FUTURE

CAUSE CONSIDERATION

use in the Philippines interchangeably.

INHERITANCE; when it may be an
object of a contract
1. ART. 130 FC; future spouse to
give or donate to each other in CAUSE OBJECT
their marriage settlement their
future property to take effect upon IN
the death of the donor and to the
extent laid down by the provisions
of the NCC relating to
REMUNERATORY
CONTRACTS
the service or

is the thing which is
testamentary succession b e n e fi t w h i c h i s given in
2. ART. 1080 NCC; allows a person remuneraed remuneration
to make partition of his estate
among his heirs by an act inter IN CONTRACT OF
vivos, provided that the legitime of
the compulsory heirs are not
prejudiced
P U
BENEFICIENCE
R E

the liberality of the

the thing donated

3. also, cesti que trust. benefactor

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CONTRACTS

IN ONEROUS
CONTRACT
REQUISITES FOR THERE TO HAVE A
SUFFICIENT CAUSE UPON WHICH
CONTRACT MAY BE FOUNDED
the prestation or the the thing or the
1. the cause should be in existence
promise of a thing or service itself
2. the cause should be licit or lawful

service by the other

ie. contract of sale

3. the cause should be true

NOTE: if the contract is not supported by a

- for the seller; it is
sufficient cause, there is no contract perfected,
the acquisition of the
or the contract entered into is void from the
purchase price
- for the buyer;
acquisition of the

beginning.

NOTE: void ab inition if based on a false

thing sold
cause.
UNLESS: proven that it is founded
upon another cause which is true and
CAUSE OF A
CONTRACT
MOTIVES

lawful.

ie of an illegal cause.
is the direct or the indirect or - a contract of loan was executed in order to
proximate reason of remote reasons allow the parties to make an agreement
a contract designed to prevent or stifle prosecution of

the objective or
juridical reason of a
the psychological or
personal readins

crime.

contract

the cause of a motives will differ or

certain contract is vary depending
always the sane upon who are the
parties

can affect the cannot

validity of a contract


IN RE: MOTIVES

RULE:
the particular motives of the parties in entering
into a contract are different from the cause of

the contract.

Q: may a moral obligation constitute a

sufficient cause to support an onerous

contract

A:
NO; when
the moral obligation arises wholly from
ethical considerations, unconnected
with any civil obligation, and as such is
demandable only be conscience, and

not in law

YES; when
the moral obligation is based upon a
previous civil obligation which has
already been barred by the statute of
limitation at the time when the contract

is entered into

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CONTRACTS

THE FF ARE FORMALITIES WHICH ARE

NECESSARY FOR THE VALIDITY OF
FORMALITY

CONTRACTS

THE FF WHICH THE LAW REQUIRES THAT

WHAT IS THE REQUIRED FORM OF A IT MUST BE IN WRITING FOR IT TO BE
C O N T R A C T F O R I T T O H AV E A N VALID

OBLIGATORY FORCE

GEN RULE
1. donation of personal property, the value of
which exceeds 5k
2. sale of a piece of land or any interest
the form in which a contract is executed has no therein by an agent, the authority of the
effect as to the obligatory force, provided all agent must be in writing
the essential requisites for its validity are 3. in contract of antichresis, the amount of the

present.

EXE:
principal and the interest must be specified
in writing
4. agreement regarding payment of interest,
1. SOLEMN CONTRACTS; when the law as no interest shall be due unless expressly
requires that the contract must be in a
certain form in order to be valid; and
2. when the law requires that the contract
stipulated in writing

FF CONTRACTS WHICH MUST APPEAR IN A

must be in a certain form in order to be PUBLIC DOCUMENT

enforceable

DIFFERENT KINDS OF FORMALITIES

1. donation of an immovable property, as well
as the acceptance which may be made
either on the same deed of donation or in a
WHICH ARE PRESCRIBED BY LAW FOR separate public instrument
CERTAIN CONTRACTS 2. in partnership, where immovable property
1. those which are for the convenience or for or real rights are contributed to the common
the purpose of binding 3rd persons
2. those which are necessary for the validity of
the contract
fund

FF CONTRACTS WHICH MUST BE

3. those which are necessary for the REGISTERED

enforcement of the contract

THE FF ARE FORMALITIES FOR

1. sale or transfer of large cattel (and a
certificate of transfer is secured)
2. chattel mortgage (the subject personal
THE CONVENIENCE OF THE property must be recorded in the Chattel
PARTIES Mortgage Register as a security for the
THE FF MUST APPEAR IN PUBLIC performance of an obligation. in case of
DOCUMENT non-compliance. instead the personal
1. acts and contracts which have for property is delivered yo a third person, it is
their object the creation, treated as a pledge and not as a chattel
transmission, modification or
extinguishment of real rights over
immovable property, sale of real
mortgage)

property or of an interest therein

(ART. 1403 no. 3 and 1405)
2. t h e c e s s i o n , r e p u d i a t i o n o r
renunciation of hereditary rights,
or of those 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 action or rights
proceeding from an act appearing

in a public instrument

MUST BE IN WRITING, EVEN IN

INSTRUMENT
- all other contracts where the amount
involved exceeds 500

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CONTRACTS

#2-5; the injured party, or his heirs or

REFORMATION OF
INSTRUMENTS

assigns

FF INSTRUMENTS WHICH CANNOT BE

REFORMED
1. simple donation inter vivos wherein no
when the true intention of the parties to a condition is imposed
perfected and valid contract are not expressed 2. wills; and
in the instrument purporting to embody their
agreement,
by reason of mistake, fraud,

3. those where the real agreement is void

WHERE SHALL THE ACTION FOR

inequitable conduct or accident, REFORMATION OF INSTRUMENT BE
one of the parties may ask for the reformation INSTITUTED
of the instrument,
so that such true intention may be
- in a special civil action of declaratory relief

expressed.

REQUISITES
-------------------------------------------

CONTRACT OF ADHESION
1. there must be a meeting of the minds of the contracts where its terms are prepared by one
parties one party while the other party merely affixes
2. their true intention is not expressed in the
instrument; and
3. such failure to express their true intention is

his signature signifying his adhesion thereto

STATUS OF THE CONTRACT

due to MFIA

IF NO MEETING OF MINDS
valid and binding, just like any ordinary

contract

- the proper remedy is for the BUT SOME OF ITS PROVISIONS

annulment of the contract

BASIS OF REFORMATION OF CONTRACT

MAY BE DISREGARDED BY THE
COURT; when
1. when some of its provisions are
based on the principle of equity where, vague, that any ambiguity shall be
- to express the true intention of the construed against the party who
contracting parties, an instrument already prepared the contract

executed is allowed by law to be reformed

INSTANCES WHERE REFORMATION OF

2. when it is unconscionable

INSTRUMENT IS POSSIBLE
1. when a mutual mistake of the parties

RULE IN INTERPRETATION OF CONTRACT

THE TERMS OF THE CONTRACT ARE

causes the failure of the instrument to CLEAR AND LEAVE NO DOUBT UPON THE
disclose their real agreement INTENTION OF THE PARTIES
2. if one of the party was mistaken and the
other acted fraudulently or inequitable in
such a way that the instrument does not

- literal meaning shall control

when the terms of an agreement have

show their true intention been reduced to writing, it is cinsidered
3. when one party was mistaken and the other as containing all the terms agreed
knew or believed that the instrument did not upon and there can be, between the
state their real agreement, but concealed parties and their successor-in-interest,
the fact from the former no evidence of such terms other than
4. when through the ignorance, lack of skill,
negligence or bf on the part of the person
drafting the instrument or of the clerk or

the contents of the written agreement.

IN CASE OF AMBIGUITY
typist, the instrument does not express the 1. if the words appear to be contrary to the
true intention of the parties evident intention of the parties, the latter
5. if 2 or more parties agree upon the shall prevail over the former
mortgage or pledge of real or personal 2. contemporaneous and subsequent acts are
property, but the the instrument states that
the property is sold absolutely, or with right principally considered

of repurchase

WHO CAN BRING THE ACTION

#1; either party or their successor-in-
interes

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CONTRACTS

VOID AND INEXISTENT CONTRACTS

1. their defect consists in the fact that they
DEFECTIVE CONTRACTS lack absolutely either in fact or in law one or
some of the elements of a valid contract
2. as a general rule, they produces no legal
4 MAIN CLASSES OF DEFECTIVE effects
CONTRACTS 3. they are not susceptible of convalidation
1. rescissible contracts either by ratification of by prescription
2. voidable contracts 4. the rights to set up the defense of absolute
3. unenforceable contracts; and nullity or inexistence cannot be renounced

4. void and inexistent contracts

ESSENTIAL F E AT U R E S OR
5. they can be attacked or assailed either by a
contracting party or by a third person
whose interest is directly affected.
CHARACTERISTICS OF DEFECTIVE

CONTRACTS

RESCISSIBLE CONTRACTS RESCISSIBLE CONTRACTS

1. their defect consist in injury or damage
either to one of the contracting parties or to
third persons CONCEPT
2. before rescission, they are valid and is a valid contract as it contains all of the
therefore legally effective essential requisites prescribed by law,
3. they are susceptible of convalidation only but which is defective because of
by prescription and not by ratification injury or damage to either of the
4. they can be attacked directly only, not contracting parties or to third persons,
collaterally - as a consequence of which, it may be
5. they can be attacked either by a contracting rescinded by means of a proper action
party who suffers injury or by a third person

who is defraud
for rescission

RECSISSION; defined
VOIDABLE CONTRACTS is a remedy granted by law to the contracting
1. their defect consists in the vitiation of parties, and event to third persons,
consent or in the legal incapacity of one of - to secure the reparation of damages caused
the contracting parties to them by a contract, even if the same should
2. they are binding until they are annulled by a be valid,
competent court by means of
3. they are susceptible of convalidation either - restoration of things to their condition
by ratification or prescription
4. they cannot be attacked or assailed by a
prior to the celebration of the contract

third persons

UNENFORCEABLE CONTRACTS
RESCISSION OF
CONTRACTS
RESCISSION OR
RESOLUTION OF
RECIPROCAL OBLI
1. their defect consists either in the fact that
they were entered into in excess or without
any authority, or they do not comply with
PA RT Y W H O M AY
INITIATE THE ACTION

- by a party to the contract - only by a party to the
the statute of frauds, or both contracting and by third persons contract
parties are legally incapacitated
2. they cannot be enforced by a proper action AS TO THE CAUSE only; failure of one of the
in court there are several causes contracting parties to
3. they are susceptible of convalidation by comply with what is
incumbent upon him
ratification
4. they cannot be attacked or assailed by their AS TO THE POWER OF
persons THE COURT
- if there is a gorund for
rescission, the court has
- the court has the
discretionary power to
grant extension of time for
no power to grant the performance of the
extension of time for the obli,
performance of the Provided: there is a just
obligation cause

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CONTRACTS

AS TO CONTRACTS REQUISITES FOR CONTRACTS

WHICH
RESCINDED
RESOLVED
M AY BE
OR MAY BE RESCINDED ON THE
GROUND OF LESION
1. the contract must be entered into
- whether reciprocal or - only reciprocal contracts
unilateral contracts may be resolved. by the guardian in behalf of his

ward or by the legal representative

in behalf of an absentee

THE FF ARE RESCISSIBLE CONTRACTS

Art. 1381.
2. the ward or absentee suffered
lesion of more than 1/4 of the
value of the property which is the
The following contracts are rescissible: object of the contract
1. Those which are entered into by guardians 3. the contract must be entered into
whenever the wards whom they represent without judicial approval
suffer lesion by more than one-fourth of the 4. there must be no other legal
value of the things which are the object means for obtaining reparation for
thereof; the lesion
2. Those agreed upon in representation of 5. the person bring the action must
absentees, if the latter suffer the lesion be able to return whatever he may
stated in the preceding number; be obliged to restore
3. Those undertaken in fraud of creditors 6. the object of the contract must not
when the latter cannot in any other manner be legally in the possession of a
collect the claims due them;
4. Those which refer to things under litigation
if they have been entered into by the

third person who did not act in bf

REQUISITES TO RESCIND A
defendant without the knowledge and CONTRACT BASED ON FRAUD OF
approval of the litigants or of competent CREDITORS
judicial authority; 1. there must be a credit existing
5. All other contracts specially declared by law prior to the celebration of the

to be subject to rescission.

Art. 1382.
contract
2. there must be a fraud, or at least
the intent to commit fraud, to the
Payments made in a state of insolvency prejudice of the creditor seeking
for obligations to whose fulfillment the the rescission
debtor could not be compelled at the 3. the creditor cannot in any other
time they were effected, are also legal manner collect his credit

rescissible.

NOTE: violation of a third party's right of first

4. the object of the contract must not
be legally in the possession of a

refusal, is also rescissible.
third person who did not act in bf

E S S E N T I A L T H AT F R A U D B E
NATURE OF ACTION FOR RESCISSION PROVEN;
SUBSIDIARY EXE: when it is presumed; as in the ff
- it cannot be instituted except when the party instances
suffering damages has no other legal means to a. alienation of property by gratuitous
obtain reparation for the same title if the debtor has not reserved

- as a remedy of last resort

TIMEFRAME OF FILING
sufficient property to pay all of his
debts before such alienation
b. alienation of property by onerous
WITHIN 4 YEARS, title, if made by a debtor against
- from the time the cause of rescission whom some judgment has been

transpired

EXE:
rendered in any instances or some
writ of attachment has been
issued. note, the writ of
1. for wards; from the time they attachment beed not refer to the
reached the age of majority property alienated, and need not
2. for absentees; from the time the have been obtained by the party

domicile is known
seeking rescission.

PARTIES WHO MAY INSTITUTE AN ACTION

FOR THE RESCISSION OF CONTRACTS
1. the person who is prejudiced
2. their representatives
3. their heirs; and

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CONTRACTS

4. their creditors by virtue of the subrogatory

different cause
action as defined in Art. 1177

BADGES OF FRAUD susceptible of not

circumstances from which fraud may be ratification
inferred.
1. the fact that the cause or consideration of may be invoked only may be invoked not
the conveyance is inadequate the contracting party only by the
2. a transfer made by a debtor after a suit has contracting party but
been begun and while it is pending against as well ad by a third
him person prejudiced
3. a sale on credit by an insolvent debtor thereby
4. evidence of large indebtedness or simple
insolvency
FF ARE VOIDABLE CONTRACTS
5. the transfer of all or nearly all of his
property by a debtor, especially when he is 1. those where one of the contracting parties
insolvent or greatly embarrassed financially is incaable of giving consent
6. the fact that the transfer is made between 2. those where the consent is vitiated by
father and sone, when there are present
other of the above circumstances FIUVM

HOW VOIDABLE CONTRACTS MAY BE

7. the failure of the vendee to take exclusive
possession of all the property CONVALIDATED
1. by prescription of the action for annulment
2. by ratification or confirmation; and
3. by the loss of the thing which is the object
VOIDABLE CONTRACTS of the contract through the fraud or fault of
the person who is entitled to institute the

DEFINITION
action for the annulment of the contract

PRESCRIPTION PERIOD
those in which all of the essential elements for 4 years
the validity are present, from---- for fraud; from discovery
but the element of consent is vitiated, for incapacity; from the time incapacity
either by:
• lack of legal capacity of one of the
contraction parties, or
ceases

NOTE: if the action is for the recovery

• by mistake, violence, intimidation, of ownership, and not for annulment of
undue influence or fraud. contract, over an immovable

VOIDABLE
CONTRACTS
RESCISSIBLE
CONTRACTS

- the prescriptive period is 10 years

RATIFICATION OF VOIDABLE CONTRACT

AKA: confirmation
intrinsic defect extrinsic defect - the act or means by virtue of which efficacy is
- because it consists - because it only given to a contract which suffers from a vice of
of a vice which
vitiate consent
consist damage or
prejudice either to
one of the

curable nullity

REQUISITES
contracting parties 1. the contract should be tainted with
or to a 3rd person a vice which is susceptible of
being cured
damage or prejudice required 2. t h e c o n fi r m a t i o n s h o u l d b e
is not required effected by the person who is
entitled to do so under the law
annulability of the rescissibility of the 3. i t s h o u l d b e e f f e c t e d w i t h
contract is based on contract is based in knowledge of the reason which
renders the contract voidable

law

HENCE;

equity

HENCE;
4. the reason which renders the
contract voidable should have
annulment is not
only a remedy, but a
rescission is merely

a remedy already disappear.

sanction.
- public interest is
involved
- only private
interest is involved

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CONTRACTS

FORMS

EXPRESS RATIFICATION

EFFECT OF VOIDABLE CONTRACT

IN AN OBLIGATION TO GIVE
ratification made with the knowledge of the parties shall restore to each other
the reason which renders the contract • the things which have been the subject
voidable and such reason having matter of the contract with their fruits; and
ceased, • the price with its interest
- the person who has the right to
invoke it should expressly declare his
renunciation of his right to annul the
EXE: in cases provided by law.

IN AN OBLIGATION TO DO / NOT TO DO

contract

TACIT RATIFICATION
there will have to be an apportionment of
damages based on the value of such
prestation with corresponding interest.
with knowledge of the reason which
renders the contract voidable and such
reason having ceased,

- mutual restitution shall ensue.

NOTE: MUTUAL RESTITUTION

- the person who has a right to invoke FOLLOWING THE ANNULMENT THE
it should execute an act which CONTRACT WILL NOT APPLY TO
necessarily implies an intention to - incapacitated person, when the

waive his rights

EFFECT OF RATIFICATION
defect of the contract consists in the
incapacity of one of the contracting
parties
1. extinguishes the action to annul as the incapacitated person is
the contract not obliged to make any
2. cleanses the contract of its defects restitution
from the moment it was EXE: insofar as he has been

constituted

REQUISITES FOR A PERSON TO ACQUIRE

benefited thereby

RIGHT TO INSTITUTE ACTION FOR THE

ANNULMENT OF VOIDABLE CONTRACTS
1. the plaintiff must have an interest in the
contract in the sense that he is obliged
thereby, either principally or subsidiarily;
and
2. the plaintiff is the victim and not the party

responsible for the vices or defect

EXE FOR #1
even though the plaintiff is neither
principally or subsidiarily obliged on
voidable contracts; when
a. he is prejudiced in his rights with
respect to one of the contracting
parties; and
b. can show detriment which would
positive,y results to him from the
contract in which he has no

intervention

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CONTRACTS

THE FF ARE UNENFORCEABLE

UNENFORCEABLE CONTRACTS
CONTRACTS

Art. 1403. The following contracts are

unenforceable, unless they are ratified:
DEFINITION • Those entered into in the name of another
those which cannot be enforced by a proper person by one who has been given no
action in court, unless they are ratified, authority or legal representation, or who has
because either
• they are entered into without or in
excess of authority
acted beyond his powers;

• Those that do not comply with the Statute of

• they do not comply with the Statute Frauds as set forth in this number. In the
of Frauds; or following cases an agreement hereafter
• both of the contracting parties do made shall be unenforceable by action,
not possess the required legal unless the same, or some note or
capacity memorandum, thereof, be in writing, and
subscribed by the party charged, or by his
agent; evidence, therefore, of the agreement
UNENOFRCEABLE RESCISSIBLE cannot be received without the writing, or a
secondary evidence of its contents:
cannot be enforced valid and 1. An agreement that by its terms is not to
by a proper action in enforceable unless be performed within a year from the
court rescinded making thereof;
2. A special promise to answer for the
susceptible of not debt, default, or miscarriage of
ratification another;
3. An agreement made in consideration
cannot be assailed pwede, so long as of marriage, other than a mutual
by 3rd person he was prejudiced promise to marry;
thereby 4. An agreement for the sale of goods,
chattels or things in action, at a price
UNENFORCEABLE VOIDABLE not less than five hundred pesos,
unless the buyer accept and receive
cannot be enforced valid and part of such goods and chattels, or the
by a proper action in enforceable unless evidences, or some of them, of such
court annulled by a proper things in action or pay at the time some
action is court part of the purchase money; but when
a sale is made by auction and entry is
made by the auctioneer in his sales
UNENFORCEABLE VOID book, at the time of the sale, of the
amount and kind of property sold,
valid, but they do not produce, as a terms of sale, price, names of the
cannot be enforced general rule, any purchasers and person on whose
account the sale is made, it is a
by a proper action in

court
effect whatsoever
sufficient memorandum;
5. An agreement of the leasing for a
- susceptible of - not longer period than one year, or for the
ratification sale of real property or of an interest
therein;
6. A representation as to the credit of a

third person.

• Those where both parties are incapable of

giving consent to a contract.

NOTE: unenforceable contracts are valid

contracts. di nga lang pwede i-enforce.

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CONTRACTS

STATUE OF FRAUDS RATIFICATION OF UNENFORCEABLE

is a descriptive of a statue which requires CONTRACTS; by
certain classes of contracts to be in writing, to 1. failure to object to the presentation of oral

render it enforceable

PURPOSE
evidence to prove the same
2. by the acceptance of benefits under them

to prevent fraud and perjury in the

CONFIRMATIO
enforcement of the obligation pending RATIFICATION
N
RECOGNITION
their evidence on the unassisted
memory of witnesses by requiring the act by which the act by which defect of proof
certain enumerated contracts and a contract is a voidable
entered into by a contract was
transactions to be evidence by a person in behalf cured of its vices
writing, signed by the party to be of another or defect

charged.

DOES NOT APPLY IN TRANSACTION

without or in
excess
authority
of

I N V O LV I N G R I G H T O F F I R S T but presently under the civil code

REFUSAL OVER AN IMMOVABLE - ratification is now used to designate the act of validating
- as such contractual grant is not a ANY KIND of defective contract
perfected contract of sale of a real
property

- hence, enforceable and valid even

entered into by oral agreement

STATUTE OF FRAUDS APPLIES

ONLY TO
- executory contracts, and not to
executed contracts, whether it be total

or partial.

RATION:
the purpose why contracts
should be in writing would no
longer lie.
- further, in excluding parole
evidence, it would rather assist
the party in perpetuating fraud

and/or bf.

HENCE; kung may partial

payment na, the contract is
deemed partially executed and
therefore removed from the
requirement of statute of

frauds

Q: may utang si B kay A, payable

after 2 years from date. di
nakabayad si B. C assumed the
payment without knowledge of B, in
which A accepted. when A filed an
action against C for payment, can C
interpose the defense of statute of
fraud, should the assumption of

debt was made orally?

A: no
as the promise of A is independent or

original

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CONTRACTS

VOID OR INEXISTENT
CONTRACTS

DEFINITION VOID / INEXISTENT RESCISSIBLE

those which CONTRACTS CONTRACTS
• lack absolutely either in fact or in law one or
some or all of those elements which are produces no effect valid, unless
essential for its validity, or whatsoever rescinded
• which while possessing all the essential
requisites prescribed by law for contracts, but
the cause, object or purpose is contrary to
defect consist of
- absolute lack in

- lesion or damage
law, morals, good customs, public order or fact or in law of one to one of the
public policy, or they are prohibited by law or or some or all of the contracting parties

declared by law to be void essential elements

of a contract
or to third person

VOID INEXISTENT
nullity is based on rescissibility is
CONTRACT CONTRACT
law based on equity
where all of the where one or some
imprescriptibe 4 yrs
requisites of a or all of those
contract are present requisites which are
BUT essential for validity cannot be assailed pwede
the cause, object or are absolutely as a rule by 3rd
purpose is contrary lacking person
to law, morals, good
customs, public

policy or public VOID CONTRACTS VOIDABLE
order, or the contract
itself is prohibited or
declared void by law produces no effect valid, until annulled
whatsever
in pari delicto not applicable
applies not susceptible for pwede

ratification

imprescriptible 4yrs
VOID / INEXISTENT RESCISSIBLE
CONTRACTS CONTRACTS
defense of nullity or not available to 3rd
there is in law or in there is a valid inexistence of persons
reality, no contract at contract contract is available
all - which cannot be to 3rd persons
enforced by a court whose interest are
action, unless it is directly affected
ratified thereby

not susceptible of pwede

ratification
can be assailed by hindi pwede
3rd person whose
interest is directly
affected

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CONTRACTS

THE FF CONTRACTS ARE VOID OR 2. before any damage has

INEXISTENT CONTRACTS been caused to a third
1. Those whose cause, object or purpose is person.
contrary to law, morals, good customs, In such case, the courts may, if the
public order or public policy; public interest will thus be subserved,
2. Those which are absolutely simulated or allow the party repudiating the
fictitious; contract to recover the money
3. Those whose cause or object did not exist
at the time of the transaction;
4. Those whose object is outside the
or property.

Art. 1415.
commerce of men; Where one of the parties to an illegal
5. Those which contemplate an impossible contract is incapable of giving consent,
service; the courts may,
6. Those where the intention of the parties if the interest of justice so
relative to the principal object of the demands
contract cannot be ascertained; - allow recovery of money or
7. Those expressly prohibited or declared void property delivered by the

by law.

PLUS
incapacitated person.

Art. 1416.
a. those which are the direct result of previous When the agreement is not illegal per
illegal contracts se but is merely prohibited,
b. those where there is no concurrence and the prohibition by the law
between the offer and acceptance with is designated for the protection
regard to the object and the cause of the of the plaintiff,
contract; and - he may, if public policy is
c. those which do not comply with the thereby enhanced, recover

required form where such form is essential
for validity what he has paid or delivered.

ie. prohibition to alienate real

These contracts cannot be ratified. Neither can
the right to set up the defense of illegality be property to aliens.

waived.

IN RE: USURIOUS INTEREST,

Art. 1417.
When the price of any article or
commodity is determined by statute, or
- the debt due to be considered without the by authority of law,
stipulation of the excessive interest. any person paying any amount
- instead, a legal interest will be added in place in excess of the maximum
of the excessive interest formerly imposed price
- also; since interest is merely an accessory to - allowed may recover such
the principal obligation of paying the principal
sum owed, the usurious interest is void and excess.

shall not affect the principal

IN PARI DELICTO
Art. 1418.
When the law fixes, or authorizes the
fixing of the maximum number of hours
when the defect of a void contract consists in of labor, and
the illegality of the cause or the object of the a contract is entered into
contract, and both of the parties are at fault or whereby a laborer undertakes
in pari delicto, to work longer than the
the law refuses them every remedy maximum thus fixed,

and leaves them where they are - he may demand additional

compensation for service

EXE:

Art. 1414.
rendered beyond the time
limit.

When money is paid or property Art. 1419.

delivered for an illegal purpose, When the law sets, or authorizes the
the contract may be setting of a minimum wage for
repudiated by one of the laborers, and
parties a contract is agreed upon by
1. before the purpose has which a laborer accepts a
been accomplished, or lower wage,

AAA - BASTE / ATB

prepared by: ronie ablan
 THE AWESOME NOTES
Page 22 of 22

CONTRACTS

- he shall be entitled to recover

the deficiency.

ALSO; in homestead; as the purpose

of the law or public policy dictates that
the homesteader or his heirs should be
allowed to reacquire the land event if it

has been sold

Q: A executed a deed of donation in favor

of B, who was a minor, in consideration that
B shall cohabit with him. B agreed. after
several years, A files an action for nullity of
the donation based on illegal cause. will the

action prosper?

A: no. in pari delicto applies

however, since B was still a minor then, she

occupies a privileged position under the law.

contracts having illegal cause, when executed

(not merely executory), will produce the effect
of barring any action by a guilty party to
recover what he has already given under the
contract

AAA - BASTE / ATB

prepared by: ronie ablan