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OBLIGATIONS
AND
CONTRACTS
ARTICLES 1305-1354
Submitted
by:
KRISTINE
R.
APALE.
MW 12:00 1:30
Submitted to:
ATTY. ADRIAN
INSTRUCTOR
FERNANDEZ
ANSWER: No, they are not bound by the determination of the performance
if it is evidently inequitable.
QUESTION: Who will decide what is equitable under the circumstances?
ANSWER: The court is called upon to decide what is equitable under the
circumstances.
Art. 1311. Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir
is not liable beyond the value of the property he received from
the decedent.
If a contract should contain some stipulation in favor of a third
person, he may demand its fulfillment provided he
communicated his acceptance to the obligor before its
revocation. A mere incidental benefit or interest of a person is
not sufficient. The contracting parties must have clearly and
deliberately conferred a favor upon a third person. (1257a)
QUESTION: Are the contracts only effective to the contracting parties?
ANSWER: It depends. The contract are only effective to them when the
rights and obligations arising from the contract are not transmissible
by law, stipulation or nature. But in general, the contract take effect
between the parties, their assigns and heirs.
QUESTION: What are the requisites of stipulation pour autrui, the second
paragraph of this article?
ANSWER: The parties by their stipulation must have clearly and deliberately
conferred a favor upon a third person. The favorable stipulation should
not be conditioned or compensated by any kind of obligation
whatsoever. Neither of the contracting parties bears the legal
representation or authorization of third party and the acceptance of
the third person must be communicated to the parties of the contract
before its revocation.
Art. 1312. In contracts creating real rights, third persons who come
into possession of the object of the contract are bound
thereby, subject to the provisions of the Mortgage Law and
the Land Registration Laws. (n)
QUESTION: What is the reason behind this article?
ANSWER: In this article, the real right is produced by the publicity given by
the Registry. A real right binds the property over which it is exercised.
QUESTION: A third person bought a land that was registered in the Register
of Property. Is he bound between the contracts of the debtor who
mortgaged the land and the creditor?
ANSWER: Yes, although he is a stranger to the contract of the debtor and
creditor because the right of the creditor to the mortgage follows the
property over which the real right is exercised.
Art. 1313. Creditors are protected in cases of contracts intended to
defraud them. (n)
QUESTION: What right is focused in these article?
ANSWER: The article focuses in the right of the creditor to impugn contracts
intended to defraud them.
QUESTION: If Mimi, who is indebted to Kiki by the amount of P20, 000,
gratuitously give a parcel of land to Okok so Kiki may not attach the
land in payment of her debt and Mimi has no other property. What can
Kiki do?
ANSWER: The creditor Kiki may ask for the rescission or cancellation of the
condonation of the land as it is her right to impugn contracts intended
to defraud him.
Art. 1314. Any third person who induces another to violate his
contract shall be liable for damages to the other contracting
party. (n)
QUESTION: Who can sue the third person who is responsible for the breach
of contract?
ANSWER: Whoever is injured may properly sue for damages.
QUESTION: What is the source of obligation of the third person who is
responsible for the breach of contract?
ANSWER: His/her liability for damages is based on the theory of quasi-delict.
Art. 1315. Contracts are perfected by mere consent, and from that
moment the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in
keeping with good faith, usage and law. (1258)
QUESTION: What is the classification of this contract according to
perfection?
ANSWER: This is a consensual contract or that which is perfected by mere
consent.
QUESTION: When are consensual contracts perfected?
ANSWER: They are perfected from the moment there is agreement in the
subject matter, and the cause or consideration.
Art. 1316. Real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of the
object of the obligation. (n)
QUESTION: What are required in the perfection of real contracts?
ANSWER: Real contracts require consent, subject matter, cause of
consideration and DELIVERY.
QUESTION: Are contracts to make a deposit, to make a pledge or to make a
commodatum refer to real contracts?
ANSWER: No, they are consensual contracts. They will become real
contracts after the delivery of the contract. An agreement to
constitute a deposit, pledge or commodatum is binding, but the real
contract is not perfected until the delivery of the thing.
Art. 1317. No one may contract in the name of another without
being authorized by the latter, or unless he has by law a right
to represent him.
A contract entered into in the name of another by one who
has no authority or legal representation, or who has acted
beyond his powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf
it has been executed, before it is revoked by the other
contracting party. (1259a)
QUESTION: Can a contract entered into in the name of another person be
enforceable?
SECTION 1. - Consent
Art. 1319. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to
constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a
counter-offer.
Acceptance made by letter or telegram does not bind the
offerer except from the time it came to his knowledge. The
contract, in such a case, is presumed to have been entered
into in the place where the offer was made. (1262a)
QUESTION: Mimi offered 100 lollipops to Kiki for P2.00 each. Kiki proposes
shed buy if she is to pay only P1.00 each. Is this considered
acceptance of the original offer?
ANSWER: No. His acceptance is qualified and becomes a counter-offer
making the original offer be extinguished.
QUESTION: When is the acceptance made by letter or telegram binding?
ANSWER: It will bind the offerer from the time it has come to his knowledge.
Art. 1320. An acceptance may be express or implied. (n)
QUESTION: What are the forms of acceptance of an offer?
ANSWER: An acceptance may be expressed orally or in writing or implied.
QUESTION: What is an implied acceptance?
ANSWER: It is one that is inferred from a conduct or acceptance of
unsolicited services.
Art. 1321. The person making the offer may fix the time, place, and
manner of acceptance, all of which must be complied with. (n)
QUESTION: Who has the right to prescribe the time, place and manner of
acceptance of the offer?
ANSWER: The offerer has the right to fix the time, place and manner of
acceptance.
QUESTION: Can the prescribed terms be acted in the contrary?
ANSWER: Yes. The act in contrary of the prescribed terms constitutes
counter-offer or counter proposal.
Art. 1322. An offer made through an agent is accepted from the
time acceptance is communicated to him. (n)
QUESTION: Mimi, the principal, appointed Kiki as her agent, to sell a specific
laptop for P20,000. Kiki offered the same to Okok on June 10 by letter
and was received by Okok on the same date. Okok sends his letter of
acceptance to Kiki on June 20 and was received by the latter on the
same date. Kiki communicated to Mimi the acceptance of the offer on
June 30. When was the contract perfected?
ANSWER: It was perfected on June 20 because it was the date when the
acceptance of the offer came into the knowledge of Kiki.
QUESTION: Is there a meeting of the minds if the principal made an offer
and the acceptance is communicated to his/her agent?
ANSWER: No, there would be no meeting of the mind unless the agent is
authorized to receive the acceptance.
Art. 1323. An offer becomes ineffective upon the death, civil
interdiction, insanity, or insolvency of either party before
acceptance is conveyed. (n)
QUESTION: What is the effect to the offer if one of the parties is dead before
acceptance is communicated?
ANSWER: The offer becomes ineffective because there was no meeting of
the minds.
QUESTION: Are there other instances when the offer becomes ineffective
aside from what is stated in Article 1323?
ANSWER: Yes, like when the offeree rejects the offer, when the offer is
accepted with a qualification or consideration, when before the
acceptance, the subject matter becomes illegal or impossible, when
the period fixed in the offer of acceptance expired, when the offer is
revoked in due time, when the thing due is destructed before the
acceptance.
Art. 1324. When the offerer has allowed the offeree a certain period
to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when
the option is founded upon a consideration, as something paid
or promised. (n)
QUESTION: What is the general rule in options?
ANSWER: If the offerer allowed the offeree a certain time to accept the offer,
the offer may be withdrawn at any time by communicating it before
the acceptance.
QUESTION: What is the exception to the rule?
ANSWER: When the option is founded upon a consideration, as something
paid or promised. So if Mimi paid P100 which is distinct from the price
to Kiki in consideration for the option, Kiki cannot withdraw her offer
until after the expiration of the option time.
Art. 1325. Unless it appears otherwise, business advertisements of
things for sale are not definite offers, but mere invitations to
make an offer. (n)
QUESTION: Are all business advertisements of things for sale not definite
offers?
ANSWER: No. When a business advertisement contains all the specific
particulars needed in a contract, it is a definite offer.
QUESTION: For Sale: 1200 sq. meters of lots for P35,000,000 to
P55,0000,000 a lot in Junquera Street Tel 88-8888-8888. Is this a
definite offer?
ANSWER: No, this is merely an invitation to make offer by stating a range for
the price, not the exact one.
Art. 1326. Advertisements for bidders are simply invitations to
make proposals, and the advertiser is not bound to accept the
highest or lowest bidder, unless the contrary appears. (n)
QUESTION: What is the general rule of this article?
ANSWER: The advertiser is not bound to accept the highest bidder (as when
the offer is to buy or purchase) or the lowest bidder (as when the offer
is to contract a building) unless the contrary appears.
QUESTION: Mimi Company published in the newspaper an invitation to bid
to buy an antique vase dated 1700s. Kiki, Lili, Nini, and Okok
submitted bids. When the bids were opened, Okok appeared to be the
highest bidder. However, Mimi Company awarded the contract to Kiki
as she is the most responsible bidder among the four though she has
the lowest bid. Is this possible?
ANSWER: Yes, because the advertiser is not bound to accept the highest
bidder who was Okok in this case.
Art. 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not
know how to write. (1263a)
QUESTION: Who are considered as minors?
ANSWER: Minors are persons who have not yet reached the age of majority.
In the Philippines, according to Republic Act No. 6809, majority
commences at the age of eighteen years.
QUESTION: Are deaf-mutes who know how to read but cannot write
considered incapacitated?
ANSWER: No, they are capable of understanding the contract, therefore
considered capacitated.
Art. 1328. Contracts entered into during a lucid interval are valid.
Contracts agreed to in a state of drunkenness or during a
hypnotic spell are voidable. (n)
QUESTION: What is a lucid interval?
ANSWER: It is a temporary period of sanity. This is the period of suspension
of insanity to sanity to insanity again.
QUESTION: What is the effect of contracts of the people in the state of
drunkenness and during a hypnotic spell in giving consent?
ANSWER: The contracts are considered voidable or valid until annulled by
court. Being in a state of drunkenness and during a hypnotic spell
impairs their capacity to give intelligent consent.
Art. 1329. The incapacity declared in Article 1327 is subject to the
modifications determined by law, and is understood to be
without prejudice to special disqualifications established in
the laws. (1264)
QUESTION: Is it possible that the incapacitated persons declared in Article
1327 give valid consent?
ANSWER: Yes, there are some certain cases wherein their incapacity may be
modified by law that they can give valid consent like when minors can
enter contracts of life insurance in favor of their parents, spouse,
children, brothers, sisters and provided that the minor is 18 years old
and above.
QUESTION: What is the effect to the consent if the undue influence was
exercised by a third person?
ANSWER: Undue influence from a third person vitiate consent just like in
violence and intimidation.
Art. 1338. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he
would not have agreed to. (1269)
QUESTION: What is causal fraud?
ANSWER: It is the fraud committed before or at the time of perfection of the
contract to secure the consent of the other.
QUESTION: How is causal fraud committed?
ANSWER: It may be committed through the use of insidious words and
QUESTION: Mimi sold a ring to Kiki. Mimi believes in her heart that what she
sold was a diamond ring but it turned out that it was not. Is there
fraud?
ANSWER: No, the misrepresentation is a mere mistake which makes the
contract voidable on the ground of mistake or error.
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. (1270)
QUESTION: What is an incidental fraud?
ANSWER: It is committed after the perfection of a contract and it was not
the principal inducement that led the other to give his/her consent.
QUESTION: If both parties employed fraud, can one of them annul the
contract?
ANSWER: No. The contract is considered valid. Neither may ask for
annulment as the fraud of one offsets or neutralizes the fraud of the
other.
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. (n)
QUESTION: What is simulation?
ANSWER: It is a process of deceiving others by producing the appearance of
a transaction which does not exist at all or is different from their
original agreement.
QUESTION: What is the difference between absolute and relative
simulation?
ANSWER: In an absolute simulation, the parties do not intend to be bounded
from the very beginning while in relative simulation, the parties
conceal their true agreement by a different agreement.
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. (n)
QUESTION: What is the effect of an absolutely simulated contract?
ANSWER: No, the illegality of one's motive does not make a void contract for
it is not an essential elememt of a contract.
Art. 1352. Contracts without cause, or with unlawful cause, produce
no effect whatever. The cause is unlawful if it is contrary to
law, morals, good customs, public order or public policy.
(1275a)
QUESTION: What are the requisites of cause?
ANSWER: The cause must be present that it must exist at the time the
contract is entered into. It must also be lawful and true or real.
QUESTION: What is the effect of unlawful of cause to the contract?
ANSWER: If the object of the contact is unlawful, the contract is void.
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. (1276)
QUESTION: What is false clause?
ANSWER: It is meant that the contract states valid and legal cause but thr
estatement is not true.
QUESTION: Is it necessary that if the clause is false, the contract is void?
ANSWER: No. It is necessary for the parties are given the chance to prove
the clause exists and it is true and lawful.
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. (1277)
QUESTION: Is it necessary to state the cause of the contract?
ANSWER: No, because its existence is presumed.
QUESTION:
ANSWER: