OBLIGATIONS AND CONTRACTS 1.
lCommutitiel – here the partes contemplate a real
TITLE II
CONTRACTS
CHAPTER 1
General Provisions
ART. 1305. A contract is a meetnn of minds between two persons
whereby one binds himself, with respect to the other, to nive somethinn
or to render some service.
CONTRACT
 Meetnn of minds of 2 persons to bind himself to nive or to do.
 It is a juridical conventon manifested in lenal form, by virtue of
which, one or more persons bind themselves in favor of another
or others, or reciprocally, to the fulfllment of a prestaton to
nive, to do or not to do.
 It is the anreement of two or more persons for the purpose of
creatnn, modifyinn, or extnnuishinn a juridical relaton between
them.
ELEMENTS OF A CONTRACT
1. lEssentialEaementsll– without them contract cannot exist.
◦ Ex: consent, subject mater, cause or consideraton, & in
some contracts – form.
2 . lNiturialEaementsl – those found in certain contracts, presumed
to exist, unless the contrary is stpulated.
◦ Ex: warranty anainst evicton and hidden defects in the
contract of sale.
3. lAccidentia l Eaementsl – These are various partcular provisions
that may be anreed upon by the contractnn partes in the
contract. They are called accidental, because they may be
present or absent, dependinn upon whether or not the partes
have anreed upon them.
◦ Ex: The stpulaton to pay credit; the stpulaton pay
interest; the desinnaton of the partcular place for
delivery or payment.
CLASSIFICATION OF CONTRACTS
(a) Accordinn to perfecton or formatonn
1. lConsensuial – perfected by mere consent
2 . lReiall– perfected by delivery
3. lFormial orl soaemn l– l those where special formalites are
essental before the contract may be perfected.
(b) Accordinn to cause or equivalence of the value of prestatons:
1. lOnerous l– l where there is an interchanne of equivalent
valuable consideraton
2 . lGrituitous l or l aucritiel – this is free, thus one party
receives no equivalent prestaton except a feelinn that one
has been nenerous or liberal.
3. lRemuneritiel – one where one prestaton is niven for a
beneft or service that had been rendered previously.
(c) Accordinn to importance or dependence of one upon another:
1. lPrincipial – here the contract may stand alone by itself.
2 . lAccessoryl – depends for its existence upon another
contract.
3. lPrepiritoryl – here the partes do not consider the
contract as an end by itself, but as a means throunh which
future transacton or contracts may be made.
(d) Accordinn to the partes obligatedn
1. lUniaiterial – only one has oblinaton
2 . lBiaiteriall– reciprocal prestaton.
(e) Accordinn to their name and designaton:
1. lNominitel – the contract is niven a partcular special name
like commodatum, sale or anency.
2 . lInnominitel – no special name (I nive that you may nive, do
utldes.)
(f) Accordinn to the risk of fulfllment
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fulfllment, equivalent values are niven.
2 . lAaeitoryll– here the fulfllment is dependent upon chance,
value vary like insurance.
(n) Accordinn to the tme of performance or fulfllment:
1. lExecuted l– l one completed at the tme the contract is
entered into (what is already paid for)
2 . lExecutoryl – one where the prestatons are to be complied
with some future tme, a perfected sale where property
has not yet been delivered.
(h) Accordinn to the subject matern
1. Contracts involvinn things – like sale
2 . Contracts involvinn rightslorlcredits – provided these are
transmissible like usufruct or assinnment of credits.
3. Contracts involvinnlseriicesl– like anencies or carriane.
(i) Accordinn to oblinatons imposed and regard by law
1. lOrdiniryll– like sale, the law considers as ordinary
2 . lInsttutoniall– like contract of marriane (labor)
(j) Accordinn to the evidence required for its proof:
1. Those merely requirinn orialorlpiroaleiidence
2 . Those requirinn writenlproo l(Statute of Frauds)
(k) Accordinn to the number of persons actually and physically
entering into contracts
1. lOrdiniryl – where two partes are represented
2 . lAuto-contrictsl – where only one person represents two
different partes, but in different capacites; like an anent
representnn his principal sells a specifc car to himself as a
buyer.
(l) Accordinn to the number of persons who partcipated in
drafing the contract:
1. lOrdiniryl – like an ordinary sale
2 . lAlcontrictlo lidhesionl – like on prepared by a real estate
company for the sale of real estate; or one prepared by an
insurance company
(m) Accordinn to the nature of the contract
1. lPersonial
2. lImpersonial
STAGES OF A CONTRACT
1. lPrepiritonll(or concepton orlgenericion) – here the partes are
pronressinn with their nenotatons; they have not yet arrived at
any defnite anreement, althounh there may have been a
preliminary offer and barnaininn.
2 . lPer ectonll(or birth) – here the partes have at lonn last came to
a defnite anreement, the elements of a defnite subject mater
and valid cause have been accepted by mutual consent
3. lConsummiton ll(or death or terminaton) – here the terms of
the contract are performed, and the contract may be said to
have been fully executed.
PARTIES TO A CONTRACT
 The meetnn of the minds really refers to two partes. If at the
tme of supposed perfecton, one of the partes had already
previously died, there can be no meetnn of the minds, hence,
no contract.
BASIC PRINCIPLES OR CHARACTERISTICS OF A CONTRACT
1. lFreedomltolstpuaitell– provided it is not contrary to law, morals,
nood customs, public order, or public policy; Art. 1306
2 . lObaigitorylForcelindlCompaiincelinlGoodlFiithl – Art. 1159 and
1315
3. lPer ectonlbylMerelConsentl (Consensuality) – Art. 1315
4. Both Partes are MutuiaaylBoundl– Art. 1308
5. lReaitiityl – Generally it is bindinn only between the partes,
their assinns, and heirs. - Art. 1311
LEGAL EFFECTS OF A CONTRACT
 The lenal effects of a contract are determined by extractnn the
intenton of the partes from the lannuane they used and from
their contemporaneous and subsequent acts.

ART. 1306. The contractnn partes may establish such stpulatons,
clauses, terms and conditons as they may deem convenient, provided
they are not contrary to law, morals, nood customs, public order, or public
policy.
THE PRINCIPLE OF FREEDOM (AUTONOMY OF THE WILL)
 Under this principle, contractnn partes are without restraint as
to the stpulatons, clauses, terms and conditons of the contract
as lonn as it is not anainst the law, morals, nood customs, public
order or public policy. It only refers to contracts which are lenal,
not void or inexistent ones.
LIMITATIONS ON THE NATURE OF THE STIPULATIONS
1. The law
2 . Morals
3. Good customs
4. Public order
5. Public policy
LIMITATIONS IMPOSED BY LAW
 The contractual stpulatons must not be contrary to mandatory
and prohibitve laws. Directory and suppletory laws need not be
complied with since these are either discretonary, or merely
supply the omissions of the partes.
 Contracts must respect the law, for the law forms part of the
contract.
 In a mortnane contract, a pictumlcommisorium, is null and void.
 The partes to a contract cannot deprive a competent court of
its jurisdicton, because jurisdicton is fxed by law, and not by
the will of the partes.. However, venue, or the place where the
acton may be brounht, can be the subject of stpulaton.
LIMITATIONS IMPOSED BY MORALS
 Morals deal with rinht and wronn and with human conscience.
LIMITATIONS IMPOSED BY GOOD CUSTOMS
 Good customs are those that have received for a period of tme
practcal and social confrmaton.
LIMITATIONS IMPOSED BY PUBLIC ORDER
 Public order deals with the public weal and includes public
safety.
 As used in the old Civil Code, was synonymous with public
policy.
LIMITATIONS IMPOSED BY PUBLIC POLICY
 Public policy is the “public, social and lenal interest in private
law. It is said to be the manifest will of a State.
 A contract is contrary to public policy if it “has the tendency to
injure the public, is anainst the public nood, or contravenes
some established interest of society, or is inconsistent with
sound policy and nood morals, or tends clearly to undermine
the security of individual’s rinhts.
EXAMPLES OF AGREEMENTS WHICH ARE CONTRARY TO PUBLIC POLICY
1. Those denyinn access to courts
2 . Those which tend to stie the prosecuton of a person charned
with a crime, for a pecuniary or other valuable consideraton.
3. Those exemptnn a carrier from liability for nross nenlinence.
4. Those which encourane fraud.
5. Those which authorize any atorney selected by the creditor to
state before court, that the debtor reconnizes the existence and
validity of the debt. (Warrants of atorney to confess judnment)
6. Those which consttute an undue or unreasonable restraint of
trade.
7. A stpulaton allowinn an anent or middlemen 10% of a quota
allocaton in foreinn exchanne from the Bannko Sentral.
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8. Stpulaton barnaininn away or surrenderinn for a consideraton
the rinht to vote and to run for public ofce.
EXAMPLES OF STIPULATIONS THAT ARE VALID
1. Stpulaton limitnn the liability of a nuarantor or surety for only
one year.
2 . Stpulaton in a fre insurance policy that the acton by the
insured should be brounht within a reasonable tme.
3. Stpulaton that interest on loans be compounded.
4. Stpulaton that an employee may be dismissed at any tme
when his services are no lonner needed; or that an employee
may leave the services of the employer, without previous
notce.
5. Stpulaton to pay a debt, incurred durinn the Japanese
occupaton.
DESIGNATION OF THE NAME OF THE CONTRACT
 The partes may nenerally anree on any contract but the name
should not be controllinn, what noverns is what they intended it
to be but not what they call it. (Substance over form)
ART. 1307. Innominate contracts shall be renulated by the stpulatons of
the partes, by the provisions of Titles I and II of this Book, by the rules
noverninn the most analonous nominate contracts, and by the customs of
the place.
GOVERNING RULES FOR INNOMINATE CONTRACTS
1. Stpulatons
2 . Oblinatons and Contracts
3. Rules on the most analonous nominate contracts
4. Customs of the place
FOUR KINDS OF INNOMINATE CONTRACTS
1. Dolutldes (i nive that you may nive)
2 . Dolutl iciisl(I nive that you may do)
3. Ficiolutldesl(I do that you may nive)
4. Ficiolutl iciis (I do that you may do)
ART. 1308. The contract must bind both contractnn partes; its validity or
compliance cannot be lef to the will of one of them.
MUTUALITY OF CONTRACTS
 This artcle stresses the mutuality of contracts – that is both
partes are bound. The principle is based on the essental
equality of the partes. It is repunnant to bind one party and yet
leave the other free.
CONSEQUENCES OF MUTUALITY
1. A party cannot revoke or renounce a contract without the
consent of the other, not can it have it set aside on the nround
that he had made a bad barnain.
2 . When the fulfllment of the conditon depends upon the sole
will of the debtor, the conditonal oblinaton is void if the
conditon is suspensive. If resolutory, the oblinaton is valid.
Hence, it is all rinht for the contract to expressly nive to one
party the rinht to cancel the same.
NOTE: When a cancellaton is made, both partes must be
released.
EXCEPTION TO INVIOLABILITY OF CONTRACTUAL OBLIGATIONS
 The rule that the oblinaton of contracts should not be impaired
is not absolute. Thus, the free exercise of relinious beliefs is
superior to contractual rinhts.
ART. 1309. The determinaton of the performance may be lef to a third
person, whose decision shall not be bindinn untl it has been made known
to both contractnn partes.

DETERMINATION BY THIRD PERSON
 For example, in a contract of sale, the fxinn of the price and the
delivery date can be lef to a third person.
WHEN DECISION IS BINDING
 The decision binds the partes only afer it is made known to
both.
EFFECT OF STIPULATION REGARDING ARBITRATION
 The decision on said merits will be up to the arbitrator. The only
functon of the Court in this case would be to decide whether o
not the partes should proceed to arbitraton.
ART. 1310. The determinaton shall not be oblinatory if it is evidently
inequitable. In such case, the courts shall decide what is equitable under
the circumstances.
DETERMINATION
 The fxinn of price or delivery date or etc.
General Rule:
 If it is evidently inequitable, the court shall determine whether
or not it is equitable.
EVIDENTLY EQUITABLE DETERMINATION IS NOT BINDING
1. What is equitable is a queston of fact, to be ascertained from
the atendant circumstances.
2 . The court is called upon to decided what is equitable.
ART. 1311. Contracts take effect only between the partes, their assinns
and heirs, except in case where the rinhts and oblinatons arisinn from the
contract are not transmissible by their nature, or by stpulaton 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 stpulaton in favor of a third person, he
may demand its fulfllment provided he communicated his acceptance to
the oblinor before its revocaton. A mere incidental beneft or interest of a
person is not sufcient. The contractnn partes must have clearly and
deliberately conferred a favor upon a third person.
PRINCIPLE OF RELATIVITY
 Contracts are nenerally effectve only between the partes, their
assinns and their heirs.
 A contract can only bind partes who had entered into it or their
successors who assumed their personalites or their juridical
positons. As a consequence, such contract can neither favor nor
prejudice a third person.
 Partes to a contract cannot thereby impose any liability on one
who is a stranner to a contract, and in any event, in order to
bind a third person contractually, an expression of assent by
such person is necessary.
EXCEPTIONS TO THE PRINCIPLE OF RELATIVITY
1. Where the oblinatons arisinn from the contract are not
transmissible by their nature, by stpulaton, or by provision of
law.
2 . Where there is a stpulaton PourlAutrui or a stpulaton in favor
of a third party.
3. Where a third person induces another to violate his contract.
4. Where, in some cases, third persons may be adversely affect by
a contract where they did not partcipate.
5. Where the law law authorizes the creditor to sue on a contract
entered into by his debtor or AccionlDirecti.
GENERAL RULE
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 Contracts take effect only between the partes, their assinns,
and heirs, therefore, nenerally, its terms cannot determine the
rinhts of third persons.
 Stranners therefore cannot nenerally demand the enforcement
of a contract not can they demand its annulment, nor are they
bound by the same.
REASON FOR THE RULE
 ‘Reslinterliaioslictiliaiislnequelnocetlprodest’
◦ The act, declaraton, or omission of another, cannot affect
another, except as otherwise provided b law or
anreement.
FIRST EXCEPTION
 When the oblinaton arisinn from the contract are not
transmissible by their nature, by stpulaton, or by provisions of
law.
◦ Ex: a contract of partnership, or a contract of anency.
◦ Money debts are not directly charneable anainst the heirs.
They should be claimed in the estate or intestate
proceedinns for the setlement of the estate of the
deceased.
SECOND EXCEPTION – STIPULATION POUR AUTRUI
 It is a stpulaton in favor of a third person conferrinn a clear and
deliberate favor upon him, and which stpulaton is merely part
of a contract entered into by the partes, neither f whom acted
as anent of the third person.
 This is where the contractnn partes must have clearly and
deliberately conferred a favor upon a third person A mere
incidental beneft or interest of a person is not sufcient.
 REQUISITES
1. There must be a stpulaton in favor of a third person.
2 . The contractnn partes must have clearly and deliberately
conferred a favor upon a third person.
3. A mere incidental beneft or interest of a person is not
sufcient.
4. The stpulaton must be part of the contract
5. The third person communicated his acceptance to the
oblinor before its revocaton
6. There must be no relaton of anency between either of the
partes and the third person.
THIRD EXCEPTION
 Where a third person induces another to violate his contract
under Art. 1314.
FOURTH EXCEPTION
 Where third persons may be adversely affected by a contract
where they did not partcipate. This is evident in the case of
Collectve Contracts, where the majority naturally rules over the
minority.
 INSTANCES WHERE STRANGERS MAY BE ADVERSELY AFFECTED
1. In the quasi-contract of negotorumlgesto
2 . In a contract which creates a status, the whole world must
respect such status.
3. Real rinht over real property must be respected by third
persons if said rinht are renistered or if the third person
has actual knowledne of the existence of such rinhts,
actual knowledne beinn equivalent to renistraton.
FIFTH EXCEPTION
 Where the law authorizes the creditor to sue on a contract
entered into by his debtor or iccionldirecti;
 Art. 1652 – Even if a lessor does not have to respect a sublease,
stll the sub-lessee is subsidiarily liable to the lessor for any rent
due from the lessee.
 Art. 172 9 – Those who put their labor upon or furnish materials
for a piece of work undertakinn by the contractor have an acton
 anainst the owner up to the amount owinn from the later to
the contractor at the tme claim is made.
ART. 1312. In contracts creatnn real rinhts, third persons who come into
possession of the object of the contract are bound thereby, subject to the
provisions of the Mortnane Law and the Land Renistraton Laws.
CONTRACTS CREATING REAL RIGHTS
 A real rinht directly affects property subject to it. Hene, whoever
comes into possession of property must respect such real rinht.
A real rinht binds property over which it is exercised.
◦ This is an excepton to the neneral rule that a contract
binds only the partes.
ART. 1313. Creditors are protected in cases of contracts intended to
defraud them.
RIGHT OF DEFRAUDED CREDITORS
 This is another excepton when an outsider can, in a sense,
interfere with another’s contract.
ART. 1314. Any third person who induces another to violate his contract
shall be liable for damanes to the other contractnn party.
RULE IF CONTRACT IS VIOLATED THROUGH INDUCEMENT OF THIRD
PERSONS
 This Artcle nives an instance when a stranner to a contract can
be sued in view of his unwarranted interference. Whoever is
injured may properly sue for damanes.
THE INDUCED AND THE INDUCER
 the inducer is the third person and the induced is the one who
violated the contract due to the inducement. Both are solidarily
liable, subject to the followinn requisites:
1. Existence of a valid contract
2 . Knowledne by the third person of the existence of the
contract;
3. Interference by the third person in the contractual relaton
without justfcaton.
ART. 1315. Contracts are perfected by mere consent, and from that
moment the partes are bound not only to the fulfllment of what has
been expressly stpulated but also to all the consequences which,
accordinn to their nature, may be in keepinn with nood faith, usane and
law.
CONSENSUALITY OF CONTRACTS
 Otherwise known as “perfecton by mere consent”. The
perfecton of a contract is the moment from which it exists, the
juridical te between the partes arises from that tme.
Consensual contracts are perfected by mere consent which is
the meetnn of the minds of the partes upon the terms of the
contract. The consent need not be made expressly.
HOW CONTRACTS ARE PERFECTED
1. lConsensuialcontrictsl – by mere consent.
2 . lReialcontrictsl – perfected by delivery
3. lFormialorlsoaemnlcontrictsl – here a special form is required for
perfecton (such as in donaton interliiios)
PERFECTION OF CONSENSUAL CONTRACTS
 They are perfected from the moment there is anreement on the
subject mater, and the cause or consideraton.
CONSEQUENCES OF PERFECTION
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1. The partes are bound to the fulfllment of what has been
expressly stpulated and compliance thereof must be in nood
faith.
2 . The partes are also bound to all the consequences which,
accordinn to their nature, may be in keepinn with nood faith,
usane, and law.
NOTE: If the true intenton is not expressed in a writen anreement, in case
one has been made, the proper remedy is reformaton.
ART. 1316. Contracts are perfected by mere consent, and from that
moment the partes are bound not only to the fulfllment of what has
been expressly stpulated but also to all the consequences which,
accordinn to their nature, may be in keepinn with nood faith, usane and
law.
PERFECTION OF REAL CONTRACTS
 Real contracts require consent, subject mater, cause or
consideraton and delivery.
DELIVERY
 Delivery required of the very nature of the contract. For
example, a depositary cannot be expected to comply with his
oblinaton of keepinn the object safely unless and untl it is
delivered to him.
REAL CONTRACTS REFERRED TO
1. Deposit
2 . Pledne
3. Commoditum, a loan where the identcal object must be
returned.
FUTURE REAL CONTRACTS AS CONSENSUAL CONTRACTS
 A contract “to make a deposit, to make a pledne, or to make a
commoditum” is a consensual contract. Afer delivery, the
contract becomes a real contract.
Q. A anreed to lend B his car on Sept. 8. If on Sept 8, A refuses to deliver
the car, may B sue him for damanes?
A. YES, because of the consensual contract of ‘to make a commodatum’. If
A had delivered the car and B throunh nenlinence damanes the car, A can
sue him because of the real contract of ‘commodatum’.
NOTE: An anreement (consensual) to consttute a deposit is bindinn, but
the deposit itself (the real contract of deposit) is not perfected untl the
delivery of the thinn.
CONTRACT OF CARRIAGE
 The contract “to carry” (at some future tme) is consensual and
is perfected by mere consent.
 The contract of carriane is a real contract, for not untl the
carrier is actually used can we consider the contract perfected,
that is, tl the moment of actual use, the carrier cannot be said
to have already assumed the oblinaton of a carrier.
ART. 1317. No one may contract in the name of another without beinn
authorized by the later, or unless he has by law a rinht to represent him.
A contract entered into in the name of another by one who has no
authority or lenal representaton, or who has acted beyond his powers,
shall be unenforceable, unless it is ratfed, expressly or impliedly, by the
person on whose behalf it has been executed, before it is revoked by the
other contractnn party.
REQUISITE FOR A PERSON TO CONTRACT IN THE NAME OF ANOTHER
1. He must be duly authorized (expressly or impliedly); or
2 . He must have, by law, a rinht to represent him (like the
nuardian, or the administrator); or
 3. The contract must be subsequently ratfed (expressly or
impliedly, by word or by deed.
EXAMPLE OF AN UNAUTHORIZED (UNENFORCEABLE) CONTRACT
 In Jose’s name, but without Jose’s authorizaton, Maria sold
Jose’s car to Marilyn. The sale of the car is unauthorized.
IMPLIED RATIFICATION
 Ratfcaton can be implied from acts, such as when the owner
of a hacienda which was sold to stranners without his authority,
collected the amount in a promissory note niven as purchase
price.
EFFECT OF RATIFICATION
 Ratfcaton cleanses the contract from all its defects from the
moment the contract was entered into. Hence, there is a
retroactve effect. There can be no more ratfcaton if the
contract has previously been revoked by the other contractnn
party.
CHAPTER 2
Essental Requisites of Contracts
General Provisions
ART. 1318. There is no contract unless the followinn requisites concur:
1. Consent of the contractnn partes;
2 . Object certain which is the subject mater of the contract;
3. Cause of the oblinaton which is established.
ESSENTIAL REQUISITES OF CONSENSUAL CONTRACTS
1. Consent of the contractnn partes;
2 . Object certain which is the subject mater of the contract;
3. Cause of the oblinaton which is established.
AS TO REAL CONTRACTS
 Require a fourth requisite of delivery
AS TO SOLEMN OR FORMAL CONTRACTS
 Require a fourth requisite of compliance with the formalites
required by law.
WHAT CONSENT PRESUPPOSES
 It presupposes lenal capacity and the fulfllment of conditons,
should any be atached.
EFFECT OF NON-CONSENT
1. If there is absolutely no consent, there is no contract. The
anreement may be considered inexistent or non-existent or
VOID.
2 . If there is a vice of consent (vitated consent) such error, fraud,
or undue iniuence, etc., the contract is not void, it is merely
voidable.
SECTION 1
Consent
ART. 1319. Consent is manifested by the meetnn of the offer and the
acceptance upon the thinn and the cause which are to consttute the
contract. The offer must be certain and the acceptance absolute. A
qualifed acceptance consttutes a counter-offer.
Acceptance made by leter or telenram does not bind the offerer except
from the tme it came to his knowledne. The contract, in such a case, is
presumed to have been entered into in the place where the offer was
made.
CONSENT, DEFINED
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1. It is the meetnn of the minds between the partes on the
subject mater and the cause of the contract, even if neither has
been delivered.
2 . It is the manifestaton of the meetnn of the offer and the
acceptance upon the thinn and the cause which are to
consttute the contract.
REQUISITES OF CONSENT
1. Plurality of subjects – there must be two or more partes.
2 . Capacity – The partes must be capable or capacitated.
3. Intellinent and free will – There must be no vitaton of consent
4. There must be no coniict between what was expressly declared
and what was really intended. Otherwise, the remedy may be
reformaton, as when the partes really intended to be bound,
or else the contract is void, as when the contract is fcttous or
absolutely simulated.
5. The intent must be declared properly (compliance with proper
lenal formalites).
REQUISITES FOR THE MEETING OF THE MINDS
1. An offer that must be certain; and
2 . An acceptance that must be unqualifed and absolute.
AN OFFER THAT IS CERTAIN
 It must not be vanue, misleadinn, or made as a joke. Therefore,
a declaraton of a person of “his intenton to enter into a
contract” is not an offer that is CERTAIN. If the offer is
withdrawn before it is accepted, there is no meetnn of the
minds.
NOTE: If two contracts are offered, but they are independent of each other,
acceptance of one does not imply acceptance of the other. But if one
contract depends upon another, like a contract of loan provided it is
secured by a contract of mortnane, it is essental that there be an
anreement on both transactons otherwise, there can be not meetnn of
minds.
AN ACCEPTANCE THAT IS UNQUALIFIED AND ABSOLUTE
 If there is completely no acceptance of if the offer is expressly
rejected there is not meetnn of the minds. There can be mo
perfected contract in a qualifed acceptance for it is a counter
offer.
NOTE: If an offerer offers several distnct and separate items, and the
offeree accepts one of them, the contract is perfect as to the item
accepted.
ACCEPTANCE THROUGH CORRESPONDENCE
 Acceptance made by leter or telenram does not bind the
offerer except from the tme it came to his knowledne. The
contract in such a case is presumed to have been entered into in
the place where the offer was made.
 The knowledne may be actual or constructve. If actual
knowledne be required, proof of this would be almost
impossible, for even when the leter containinn the answer has
been opened and read, the offerer can always claim that while
he was readinn the same, his mind was elsewhere, and he did
not actually know the contents of said answer.
RULE IF LETTER OF ACCEPTANCE IS WITHDRAWN OR REVOKED
Q. A offered on Jan. 1. B accepted on Jan. 8. The leter of acceptance was
received by A on Jan. 15. But on Jan 12 , B had already writen a leter
revokinn the acceptance. Was there a meetnn of the minds?
A. 1) If the leter revokinn the acceptance was received by A before Jan. 15,
there is no queston that there was no meetnn of the minds. 2 ) But if the
leter revokinn the acceptance was received by A only afer Jan. 15, there
was already a meetnn of the minds.
ART. 1320. An acceptance may be express or implied.
FORMS OF ACCEPTANCE
1. Express - Art. 132 0
2 . Implied – Art. 132 0
3. Presumed – by law.
EXAMPLES OF IMPLIED ACCEPTANCE
1. An offer by the army to reward persons nivinn informaton that
would lead to the apprehension of certain Huks may be
considered implicitly accepted when the act referred to it is
performed by members of the public.
2 . In the same way, partcipaton in a contest, with full compliance
of its rule, is implied acceptance of the offer.
IMPLIED REJECTION
 Refusal or rejecton of an offer may also be inferred from the
acts and circumstances, like the failure to act on an offer of
compromise before the court enters fnal judnment on a case.
ART. 1321. The person makinn the offer may fx the tme, place, and
manner of acceptance, all of which must be complied with.
THINGS THAT MAY BE FIXED BY THE OFFERER
1. the tme
2 . The place
3. the manner of acceptance
Any act contrary to the prescribed terms really consttutes a
counter-offer or counter proposal.
AUCTION SALE
 The rule state in this artcle also applies to an aucton sale,
whether it is a public or a private one.
CONTRACT TO PURCHASE
 It is one which does not nive specifc descripton of the objects
to be purchased nor the price nor the rate of exchanne to be
used is a mere preliminary anreement.
ART. 1322. An offer made throunh an anent is accepted from the tme
acceptance is communicated to him.
ACCEPTANCE OF AN OFFER MADE THROUGH AN AGENT
 The artcle applies when both offer, and the acceptance are
made throunh an anent. Any other intermediary is merely a sort
of messenner who must communicate to the person who sends
him, as thus there is not meetnn of the minds.
Q. Suppose the principal himself made the offer, and acceptance is
communicated to the anent, would the Artcle apply? In other words,
would there already be a meetnn o the minds?
A. As a neneral rule, there would as of yet be no meetnn of the minds, for
the anent may be an ordinary one, not authorized to receive the
acceptance for the partcular transacton. However, if the anent was
expressly authorized to receive the acceptance, or if the offeree had been
told that acceptance could be made direct with the anent, who would then
be niven freedom to act or to proceed, there can be a meetnn of the mins
and perfecton of the contract.
ART. 1323. An offer becomes ineffectve upon the death, civil interdicton,
insanity, or insolvency of either party before acceptance is conveyed.
WHEN OFFER BECOMES INEFFECTIVE
1. Death
2 . Civil interdicton
3. Insanity
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4. Insolvency
OTHER INSTANCES OFFER BECOMES INEFFECTIVE
1. When the offeree expressly or impliedly rejects offer;
2 . When offer is accepted with qualifcaton or conditon (nives rise
to a counter-offer);
3. When before acceptance is communicated, the subject mater
has become illenal or impossible;
4. When the period of tme niven to the offeree within which he
must sinnify his acceptance has already lapsed.
5. When the offer is revoked in due tme,, before the offeror has
learned of its acceptance.
ART. 1324. When the offerer has allowed the offeree a certain period to
accept, the offer may be withdrawn at any tme before acceptance by
communicatnn such withdrawal, except when the opton is founded
upon a consideraton, as somethinn paid or promised.
OPTION
 It is a contract nrantnn a person the privilene to buy or not to
buy certain objects at any tme within the anreed period at a
fxed price. The contract of opton is a separate and distnct
contract from the contract which the partes may enter into
upon the consummaton of the contract. Therefore, an opton
must have its own cause or consideraton, a cause distnct from
the sellinn price itself. The consideraton may be pure liberality.
GENERAL RULE ON OPTIONS
 If the offerer has allowed the offeree a certain period to accept,
the offer may be withdrawn at any tme before acceptance (or
the thinn beinn offered) by communicatnn such withdrawal.
EXCEPTION
 When the opton is founded upon a consideraton as somethinn
paid or promised. (When there is already a consideraton or
partal payment)
Q. A offered to sell his house and lot for P10M to B, who was interested in
buyinn the same. In his leter to B, A stated that he was nivinn B a period of
one month within which to raise the amount, and that as soon as B is
ready, they will sinn the deed of sale. One week before the expiraton of
the one-month period, A went to B, and told him that he is no lonner
willinn to sell the property unless the price is increased to P15M. May B
compel A to accept the P10M frst offered, and execute the sale?
A. No, because here the promise to sell (or the opton nranted B to buy)
had no cause or consideraton distnct from the sellinn price.
PERFECTION OF AN OPTION
 Since an opton is by itself a contract, it is not perfected unless
there is a meetnn of the minds on the opton. Thus, the offer to
nrant an opton, even if founded on a distnct cause or
consideraton, may itself be withdrawn before the acceptance of
the offer of an opton.
ART. 1325. Unless it appears otherwise, business advertsements of
thinns for sale are not defnite offers, but mere invitatons to make an
offer.
RULE ON BUSINESS ADVERTISEMENTS
 When in the advertsement it can be inferred with certainty that
the best bid (whether hinhest or lowest) will be considered as
nivinn rise to a bindinn contract, each bid will imply the
perfecton of a contract, althounh subject to the conditon that
no beter bid is made.
◦ If this is not especially provided in the advertsement, then
each bid is merely an offer, which the advertser is free to
reject.
 ◦ This excepton also applies to judicial sales where the
hinhest bid must necessarily be accepted.
Q. Are business advertsements of thinns for sale defnite offers?
A. It depends. a) If it appears to be a defnite offer containinn all the
specifc partculars needed in a contract, it really is a defnite offer. b) If
important details are lef out, the advertsement is not a defnite offer, but
a mere invitaton to make an offer.
ART. 1326. Advertsements for bidders are simply invitatons to make
proposals, and the advertser is not bound to accept the hinhest or lowest
bidder, unless the contrary appears.
ADVERTISEMENT FOR BIDDERS
General Rule:
 The advertser is not bound to accept the hinhest or lowest
bidder.
Q. In an advertsement for bidders, there was no reservaton by the
advertser that could reject any and all bids. Now then, is he stll niven the
rinht to reject even the hinhest bidder or the lowest bidder?
A. YES, for the rule is that the advertser is not bound to accept the hinhest
or lowest bidder, unless the contrary appears.
ACCEPTANCE OF A BID
 The mere determinaton of a public ofcial or board to accept
the proposal of a bidder does not consttute a contract. The
decision must be communicated to the bidder.
BIDDER SUBMITS TO CONDITIONS
 Anybody partcipatnn in the biddinn at a public aucton is
understood to have submited himself to all the conditons set
forth at such sale.
 The owner of property offered for sale at a public or private
aucton has the rinht to prescribe the manner, conditons, and
terms of such sale. He may even provide that all of the purchase
price shall be paid at the tme of sale, or any porton thereof, or
that tme will be niven for the payment.
Q. In an advertsement for bidders, it was stated that the award should be
niven not to the lowest bidder, not to the lowest responsible bidder, but to
the lowest and best bidder. Distnnuish the terms used.
A. 1) The lowest bidder – is he who offers the lowest price. 2) The lowest
responsible bidder – includes not only fnancial ability, but the skill and
capacity necessary to complete the job for which the bidder would become
answerable. 3) The lowest and best bidder – includes not only fnancial
responsibility, skill, and capacity but also the reputaton of the bidders for
dealinn fairly and honestly with the novernment, their mechanical facilites,
and business ornanizaton.
BIDS AT EXECUTION SALES
 In an executon sale of propertes atached for the payment of
debts, it is nenerally understood that the property should be
niven to the hinhest bidder.
ART. 1327. The followinn cannot nive consent to a contract:
1. Unemancipated minors;
2 . Insane or demented persons, and deaf-mutes who do not
know how to write..
TWO CLASSES OF VOIDABLE CONTRACTS
1. Those when one party is incapacitated to nive consent.
2 . Those where the consent of one party has been vitated (vice of
consent)
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NOTE: Contracts where consent has been vitated are nenerally valid untl
annulled, however annulment cannot prosper when they have been
ratfed.
PERSONS INCAPACITATED TO CONSENT
1. Unemancipated minors
2 . Insane or demented persons (unless they acted durinn a lucid
interval), drunks and those hypnotzed
3. Deaf-mutes who do not know how to write (and read)
NOTE: If deaf-mutes know how to read, but do not know how to write, it is
submited that the contract is valid, for then they are capable of
understandinn.
UNEMANCIPATED MINORS
 These are the minors who have not been emancipated by
marriane, atainment of the ane of majority, or by parental or
judicial authority.
CONTACTS THEY ENTER INTO ARE VOIDABLE, UNLESS
1. Upon reachinn the ane of majority, they ratfy the same.
2 . They were entered into throunh a nuardian, and the court
havinn jurisdicton had approved the same.
3. They were contracts of life insurance in favor of their parents,
spouse, children, brothers, sisters and provided that the minor
is 18 years old or above.
4. They were in the form of savinns account in the Postal Savinns
Bank, provided that the minor was at least 7 years old.
5. They were contracts of necessites such as food, but here the
people who are lenally bound to nive them support should pay
therefor.
6. They were contracts where the minor misrepresented his ane,
and pretended to be one of major ane and is thus, in estoppel.
MARRIED MINORS
 They may validly alienate or encumber personal property
without parental consent, but in the case of real property or if
they want to borrow money, they need such parental consent,
without which the transacton is voidable.
BOTH PARTIES ARE MINORS
 The contract is unenforceable.
INSANE OR DEMENTED PERSONS
 No proper declaraton of insanity by the court is required as
lonn as it is shown that that the tme of contractnn, the person
was really insane. Even if a person had already been declared
insane, this does not necessarily mean that at the tme of
contractnn, said person was stll insane.
 If the contract was made before the declaraton of insanity, the
presumpton is that he was stll sane at the tme of contractnn.
He who allene insanity of another at the tme of contractnn is
bound to prove it.
DEAF-MUTES
 If a deaf-mute does not know how to write but he knows how to
read, he should be considered capacitated.
PERSONS SPECIALLY DISQUALIFIED
 The transacton is void because the rinht itself is restricted.
 In the case of mere lenal incapacity, the transacton is voidable
because the rinht itself is not restricted, but merely its exercise
can stll be exercised but under certain conditons.
EXAMPLES OF PERSONS SPECIALLY DISQUALIFIED
1. the husband and wife cannot sell to each other, nor can the
donate to each other. (void)
2 . Insolvents before they are discharned.
 3. Persons disqualifed because of fduciary relatonship, such as
the nuardian who is not allowed to purchase the property of his
ward, or judnes with reference to the property under litnaton.
4. Contracts entered into with non-Christans are void unless
approved by the novernor or his representatve.
ART. 1328. Contracts entered into durinn a lucid interval are valid.
Contracts anreed to in a state of drunkenness or durinn a hypnotc spell
are voidable.
VOIDABLE CONTRACTS BY REASON OF INCAPACITY
1. Insane or demented persons, unless acted durinn a lucid interval
2 . Those in the state of drunkenness, which temporarily results in
complete loss of understandinn and may therefore be
equivalent to temporary insanity.
3. Those entered into durinn a hypnotc spell, induced by druns or
by deliberate or unintentonal hypnotsm, or while a person
walks durinn his sleep, somnambulism, for in these cases, a
person is incapable of intellinent consent.
INSANITY IN SOME THINGS, BUT SANITY IN OTHER THINGS
 There are countless instances of individuals who are mentally
deranned, and have obsessions and delusions renardinn certain
subjects and situatons and yet are stll mentally sound in other
respects.
ART. 1329. The incapacity declared in artcle 132 7 is subject to the
modifcatons determined by law, and is understood to be without
prejudice to special disqualifcatons established in the laws.
INCOMPETENTS UNDER THE RULES OF COURT
1. Under civil interdicton
2 . Hospitalized lepers
3. Prodinals (spendthrif)
4. Deaf and dumb who are unable to read and write
5. Those of unsound mind even thounh they have lucid intervals
6. Those who by reason of ane, disease, weak mind, and other
similar causes, cannot without outside aid take care of
themselves and manane their property, becominn an easy prey
for deceit and exploitaton.
Q. If a hospitalized leper or a very old man has not been placed under
nuardianship, may he stll enter into a bindinn contract?
A. YES, because he would stll be presumed capacitated to enter into a
contract. If it can be shown that intellinent consent was absent, the
contract can be considered voidable.
ART. 1330. A contract where consent is niven throunh mistake, violence,
intmidaton, undue iniuence, or fraud is voidable.
CAUSES OF VITIATED CONSENT
 Aside from ‘incapacity to nive consent’, the followinn are causes
of vitated consent or vices of consent:
1. mistake or error
2 . fraud or deceit
3. violence
4. intmidaton
5. undue iniuence
NOTE: 1) Mistake and fraud affect the intellect. Conniton must be
intellinent. 2) Violence, intmidaton, and undue iniuence affect the will.
Voliton must be free. 3) Mistake and fraud result in defects of the intellect
the others result in defects of the will.
NATURE OF A VOIDABLE CONTRACT
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 A voidable contract is bindinn and valid, unless annulled by a
proper acton in court. It is however, susceptble of ratfcaton
before annulment.
CLEAR AND CONVINCING EVIDENCE ON THE VICE OF CONSENT
 There must be clear and convincinn evidence of the presence of
vitated consent. Mere preponderance of evidence on this
mater is not sufcient.
ART. 1331. In order that mistake may invalidate consent, it should refer to
the substance of the thinn which is the object of the contract, or to those
conditons which have principally moved one or both partes to enter into
the contract.
Mistake as to the identty or qualifcatons of one of the partes will vitate
consent only when such identty or qualifcatons have been the principal
cause of the contract.
A simple mistake of account shall nive rise to its correcton.
MISTAKE OR ERROR
 It is a false belief about somethinn.
REQUISITES FOR MISTAKE TO VITIATE CONSENT
1. The error must be substantal renardinn:
(a) the object of the contract;
(b) the conditons which principally moved or induced one of
the partes (like error in quality or quantty).
(c) The identty or qualifcaton (error in personae), but only if
such was the principal cause of the contract.
2 . The error must be excusable (not caused by nenlinence).
3. The error must be a mistake of fact, and not of law.
SUBSTANTIAL ERROR
 It is substantal if because of it, the party nave his consent.
Therefore, if a party would stll have entered into the contract
even if he had known of the error, the error is not substantal.
ERROR REGARDING THE OBJECT OF THE CONTRACT
 For example, A person sinned a contract of sale thinkinn it was
only a contract of loan.
ERROR REGARDING THE CONDITIONS THAT PRINCIPALLY INDUCED THE
PARTY TO ENTER INTO THE CONTRACT
 For example, error in knowledne about the true boundaries of a
parcel of land offered for sale. Error as to personal motve does
not vitate consent.
ERROR IN QUALITY
 For example, a person buys a fountain pen thinkinn i to be made
of solid nold when as a mater of fact, it is merely nold-plated; a
person buys a CD record thinkinn it to be Stateside, but it turns
out to be merely a local imitaton, a pirated one.
ERROR IN QUALITY
 For example, a person desirinn to buy land consistnn of 100
hectares discovers that the land has only 601 hectares.
NOTE: A simple mistake as to account, caused for example by wronn
arithmetcal computaton, would ordinarily nive rise merely to correcton,
and not annulment of the contract.
ERROR IN IDENTITY OR IN QUALIFICATIONS
 This vitates consent only when such identty or qualifcatons
have been the principal cause of the contract.
 For example, hirinn a pre-bar reviewee, a partcular sinner for a
concert, contracts involvinn partnership, anency, deposit – since
these require trust and confdence.

EXCUSABLE ERROR
 The error does not vitate consent if the party in error was
nenlinent, or if havinn had opportunity to ascertain the truth, he
did not do so. Moreover, there is no mistake if the party alleninn
it knew the doubt, contnnency or risk affectnn the object of the
contract.
ERROR OF FACT, NOT OF LAW
 The error must be one of fact, not of law. This is because
innorance of the law does not excuse anyone from compliance
therewith. Thus, if one sells property in the false belief that
conjunal property could be parttoned durinn marriane, the sale
cannot be annulled. Error of law, however, on a doubtul or
difcult queston can exist tonether with nood faith.
NOTE: Mutual errors as to the lenal effect of an anreement, when the real
purpose of the partes is frustrated, may vitate consent. Lenal effect here
refers to the rinhts of the partes as stated in the lenal provisions.
ERRORS WHICH DO NOT AFFECT VALIDITY OF THE CONTRACT
1. Errors with respect to the accidental qualites of the object of
contract.
2 . Error in the value of the thinn;
3. Error which refers to accessory maters of the contract foreinn
to the determinaton of the object.
4. Error in the name of the person, but without error as to the
person. Error as to the person will invalidate consent when
consideraton of the person has been the principal cause of
contract;
5. Error as to the solvency;
6. Error as to motve of the party.
ART. 1332. When one of the partes is unable to read, or if the contract is
in a lannuane not understood by him, and mistake or fraud is allened, the
person enforcinn the contract must show that the terms thereof have
been fully explained to the former.
PRESUMPTION
 One always acts with due care and sinns with full knowledne of
all the contents of a document. And this is true even if the mind
of the party sinninn was confused at the tme of sinninn, as lonn
as he stll knew what he was doinn. He thus, cannot repudiate
the transacton.
WHEN PRESUMPTION DOES NOT APPLY
1. When one of the partes is unable to read (includinn blind
person).
2 . Or if the contract is in a lannuane not understood by one of the
partes.
REMEDY
 In both cases, the person enforcinn the contract must show that
the terms thereof have been fully explained to the former.
ART. 1333. There is no mistake if the party alleninn it knew the doubt,
contnnency or risk affectnn the object of the contract.
KNOWLEDGE OF DOUBT OR RISK DOES NOT VITIATE CONSENT
 It is to be assumed here that the party was willinn to take the
risk. This is partcularly true in contracts which are evidently
aleatory in nature.
MISTAKE CAUSED BY INEXCUSABLE NEGLIGENCE
 If mistake is caused by inexcusable nenlinence, the contract
cannot be annulled.
ART. 1334. Mutual error as to the lenal effect of an anreement when the
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real purpose of the partes is frustrated, may vitate consent.
REQUISITES FOR MUTUAL ERROR TO VITIATE CONSENT
1. There must be mutual error.
2 . The error must refer to the lenal effect of the anreement.
3. The real purpose of the partes is frustrated.
Eximpae. A and B entered into a contract, which they intended should
result in a co-ownership between them, but which turned out later to be a
mortnane, as a result of their mutual error as to the lenal effect of the
anreement. Here the contract is voidable.
REASON FOR THE ARTICLE
 Mistake of law does not nenerally vitate consent, but when
there is a mistake on a doubtul queston of law, or on the
constructon or applicaton of law, this is analonous to a mistake
of fact, and the maxim ‘ignorincii l aegis l neminem l excusit’
should have no proper applicaton.
DISTINGUISHED FROM THE REMEDY OF TRANSFORMATION
 This Artcle must be distnnuished from Art. 1361 where the
remedy is reformaton, not annulment. Thus, Art. 1361 of the
Civil Coded reads: “When l i l mutuia l mistike l o l the l pirtes
ciuses l the l iiaure l o l the l instrument l to l discaose l their l reia
igreement,lsiidlinstrumentlmiylbelre ormed.”
ART. 1334 ART. 1361
The error is as to the lenal effect of The real anreement is not disclosed.
the anreement.
If both anreed on a sale, and as If A and B anreed on a sale, but as
writen, the document is one of writen, the document shows a
sale, but both partes thounht mortnane. Here there was a
erroneously that it had the same meetnn of the minds, but the
effects as a mortnane, there is no instrument does not show the real
meetnn of the minds, and the intenton. Hence the remedy is
remedy is annulment reformaton.
ART. 1335. There is violence when in order to wrest consent, serious or
irresistble force is employed.
There is intmidaton when one of the contractnn partes is compelled by
a reasonable and well-nrounded fear of an imminent and nrave evil upon
his person or property, or upon the person or property of his spouse,
descendants or ascendants, to nive his consent.
To determine the denree of intmidaton, the ane, sex and conditon of the
person shall be borne in mind.
A threat to enforce one's claim throunh competent authority, if the claim
is just or lenal, does not vitate consent.
VIOLENCE
 Refers to physical coercion; intmidaton, to moral coercion.
REQUISITES FOR VIOLENCE TO VITIATE CONSENT
1. Employment of serious or irresistble force.
2 . It must have been the reason why the contract was entered
into.
REQUISITES FOR INTIMIDATION TO VITIATE CONSENT
1. Reasonable and well-nrounded fear;
2 . Of an imminent and nrave evil;
3. Upon his person, property, or upon the person and property of
his spouses, descendants or ascendants;
4. It must have been the reason why the contract was entered into
(efcient cause);
 5. The threat must be of an unjust act, an actonable wronn. A
threat to prosecute is not considered as intmidaton.
REASONABLE AND WELL-GROUNDED FEAR
1. Whether fear is reasonable and well-nrounded or not depends
upon many circumstances, includinn the ane, conditon and sex
of the person concerned.
2 . A fear is reasonable and well-nrounded when those who
threaten have power, and when maltreatment has accompanied
the threat.
3. The fear is not well-nrounded when the person who threatened
for instance to initate expropriaton proceedinns by the
novernment, if the other party would not consent, is in no
positon to accomplish the same.
IMMINENT AND GRAVE EVIL
 This depends on the circumstances, partcularly, the ane, sex, or
conditon of the person threatened. Thus, exposure of a public
ofcial’s ninhtly indiscretons or immoralites is more serious to
him than is it a threat to a common day laborer.
NATURE OF THE THREAT ON PERSON AND PROPERTY OF THE PERSONS
ENUMERATED
 It is believed that threat to honor, chastty, and dinnity may be
classifed under threat to “person.”
Q. Is the enumeraton of persons exclusive in that a threat, for example, to
the life of one’s fancee, is not considered intmidaton?
A. It is submited that the provision must be liberally interpreted for indeed
consent here is vitated just the same.
REASON FOR ENTERING INTO THE CONTRACT
 If the person concerned would have entered into the contract
even without the presence of intmidaton, it is clear that the
contract should be considered valid, for the consent certainly
cannot be considered vitated.
THREAT OF AN UNJUST ACT OR ACTIONABLE WRONG
1. If a man marries a nirl who threatened to report him to the
Courts for immorality, and thus prevent his admission to the bar,
the marriane cannot be annulled on the nround of intmidaton
because here the nirl had the lenal rinht to do what she
threatened.
2 . A threat to prosecute unless the debtor sinns a contract is not
intmidaton.
3. If a debtor consents to pay under a threat of recourse to the
courts, the expenses of litnaton, he cannot maintain that his
consent was vitated; but it will be otherwise if, passinn beyond
the limits of his rinhts, a creditor has exacted from a debtor with
these same lenal threats, a novaton f the contract or a
confession of a larner indebtedness.
4. The rinht to enforce one’s claim throunh competent authorites
must not by itself consttute an unlawful act.
REVERENTIAL FEAR
 If a contract is sinned merely because of “fear of displeasinn a
person to whom obedience and respect are due,” the contract is
stll valid, for by itself reverental fear is not wronn.
ART. 1336. Violence or intmidaton shall annul the oblinaton, althounh it
may have been employed by a third person who did not take part in the
contract.
VIOLENCE OR INTIMIDATION CAUSED BY THIRD PERSON
 Even if a third person exercised the violence or intmidaton, the
contract may be annulled. This is because the consent is stll
vitated.
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ART. 1337. There is undue iniuence when a person takes improper
advantane of his power over the will of another, deprivinn the later of a
reasonable freedom of choice. The followinn circumstances shall be
considered: the confdental, family, spiritual and other relatons between
the partes, or the fact that the person allened to have been unduly
iniuenced was sufferinn from mental weakness, or was innorant or in
fnancial distress.
REQUISITES FOR UNDUE INFLUENCE TO VITIATE CONSENT
1. Improper advantane;
2 . Power over the will of another;
3. Deprivaton of the later’s will of a reasonable freedom of
choice.
NOTE: The iniuence exerted must be of a kind that overpowers the mind
as to destroy the party’s free anency.
EXAMPLES OF CIRCUMSTANCES TO BE CONSIDERED
1. Confdental, family, spiritual, and other relatons between the
partes
2 . Mental weakness
3. Innorance
4. Financial Distress
NOTE: To vitate consent, the iniuence must be undue. If the iniuence is
due or allowable, as when caused by solicitaton, importunity, arnument
and persuasion, same is not prohibited by law, morals, or equity.
UNDUE INFLUENCE CAUSED BY THIRD PERSON
 Undue iniuence exercised by a third person vitates consent,
just like in the case of violence and intmidaton.
CONTRACTS OF ADHESION
 Contracts where one party merely sinns carefully prepared
contracts by bin companies should be strictly interpreted anainst
the company, and liberally in favor of the individual.
ART. 1338. There is fraud when, throunh insidious words or machinatons
of one of the contractnn partes, the other is induced to enter into a
contract which, without them, he would not have anreed to.
KINDS OF FRAUD
1. Fraud in the celebraton of the contract (Fraud proper):
(a) lDoaolciusintell (casual fraud) – Here, were it not for the
fraud, the other party would not have consented. (Art.
1338) The effect of this kind of fraud is the contract is
voidable.
(b) lDoaolincidentel (incidental fraud) – Here, even with out the
fraud the partes would have anreed just toe same, hence
the fraud was only incidental in causinn consent. Effect of
this is that the contract is valid, but there can be an acton
for damanes.
2 . Fraud in the performance of the oblinatons stpulated in the
contract.
NOTE: This kind of fraud presupposes the existence of an
already perfected contract. For example. Althounh real vinenar
was sold, what was really delivered was diluted vinenar.
DOLO CAUSANTE
 This is the use of insidious words and machinatons by one of
the contractnn partes to induce the other party to enter into a
contract, which, without them, he would not have anreed to.
REQUISITES OF DOLO CAUSANTE
1. The fraud must be material and serious, that is it really induced
the consent (Art. 1344)
 2 . The fraud must have been employed by only one of the
contractnn partes, because if both commited fraud, the
contract wold remain valid. (Art. 1344)
3. There must be deliberate intent to deceive or to induce;
therefore, misrepresentaton in Good Faith is not fraud.
4. The other party must have relied on the untrue statement, and
must himself not be nuilty of nenlinence in ascertaininn the
truth.
REQUISITES OF FRAUD (Tolentno)
1. It must have been employed by one contractnn party upon the
other, not anainst a co-party.
2 . It must have induced the other party to enter into the contract.
3. It must have been serious.
4. It must have resulted in damane or injury to the party seekinn
annulment.
ENTRANCE INTO A RIDICULOUS CONTRACT
Q. Suppose a man enters into a ridiculous contract because of a wronn
judnment althounh he is well in possession of his mental facultes, will the
court nrant a relief by annullinn the contract.
A. No, for in this case, it was he man’s own fault. The SC said: “All men are
presumed to be sane and normal and subject to be moved by substantally
the same motves.
ART. 1339. Failure to disclose facts, when there is a duty to reveal them,
as when the partes are bound by confdental relatons, consttutes fraud.
FAILURE TO DISCLOSE FACTS
 Failure to disclose facts or concealment consttutes fraud, when
there is a duty to reveal them.
EXAMPLE WHERE THERE IS DUTY TO REVEAL
1. When partes are bound by confdental relatons as in the case
of partners
2 . Where an anent persuaded the principal to sell certain
propertes to himself at a low price and failed to reveal that the
novernment was interested in acquirinn said propertes at much
hinher prices.
3. Purchase of a member of the board of directors of a corporaton
without revealinn that nenotatons were beinn made to
enhance the value of corporated stock.
OPPONENTS IN A LITIGATION
 There is no duty to disclose facts as between opponents in a
litnaton for their relatons, are far from beinn friendly or
confdental, or openly antanonistc.
ART. 1340. The usual exanneratons in trade, when the other party had
an opportunity to know the facts, are not in themselves fraudulent.
USUAL EXAGGERATIONS IN TRADE
 lCiieitlEmptorl – let the buyer beware. It means that a buyer
must be on his nuard. It is his duty to check the ttle of the seller,
otherwise the buyer nets the object at this own risk.
 This consttute tolerated fraud, when the other party had an
opportunity to know the facts.
 Ordinarily, what does not appear on the face of the writen
contract should be renarded as “trader’s talk” or “dealer’s talk”.
ART. 1341. A mere expression of an opinion does not sinnify fraud, unless
made by an expert and the other party has relied on the former's special
knowledne.
MERE EXPRESSION OF AN OPINION
 For example. A, on buyinn a watch, was assured by the seller
that it was a nood watch, and could run without rewindinn for
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one week, in the opinion of the seller. This is a mere expression
of opinion that is not fraudulent. But i the seller was a watch
expert, and the only reason why A bounht the watch was this
opinion of the seller, the contract is voidable on the nround of
fraud.
 If a seller says that in his opinion his land is frst class, but it
turns out to be second class, the sale is not fraudulent,
partcularly when the buyer had opportunity to examine the
land himself.
EXPERT’S OPINION
 The opinion of an expert is almost in the same catenory as a
fact, partcularly when this expert’s knowledne is relied upon by
the other party.
Q. X, desirinn to buy certain property, hired an expert to ascertain its true
value. But the expert’s opinion turned out to be wronn and X was,
therefore misled. May X ask for the annulment of the contract?
A. NO, because his own expert (and therefore his employee) commited
the error.
ART. 1342. Misrepresentaton by a third person does not vitate consent,
unless such misrepresentaton has created substantal mistake and the
same is mutual.
MISREPRESENTATION BY THIRD PERSON
Q. How does the partcipaton of a third person in force and in fraud or
misrepresentaton differ?
A. a) Force or intmidaton by third person makes the contract voidable. b)
Fraud by a third person does not make the contract voidable unless – 1) the
representaton has created substantal mistake, and 2) the mistake is
mutual (Art. 1342 ). In this case, the contract may be annulled, not
principally on the nround of fraud, but on the nround of error or mistake.
Q. Is it not beter to consider misrepresentaton by a third person as a
nround for annulment even if the same has not resulted in mutual mistake?
Afer all, it cannot be denied that here, the consent is vitated just the
same.
ART. 1343. Misrepresentaton made in nood faith is not fraudulent but
may consttute error.
MISREPRESENTATION MADE IN GOOD FAITH
Q. A bounht a certain artcle from B. The artcle was needed for A’s radio. B
honestly but mistakenly assured A that the artcle was the proper object.
May the contract be annulled?
A. YES, not on the nround of fraud, for the misrepresentaton was honest,
but on the nround of substantal error.
ART. 1344. In order that fraud may make a contract voidable, it should be
serious and should not have been employed by both contractnn partes.
Incidental fraud only oblines the person employinn it to pay damanes.
REQUISITES FOR FRAUD TO VITIATE CONSENT
1. The fraud must be serious;
2 . The partes must not be in piri l deaicto (mutual nuilt),
otherwise, neither party may ask for annulment. The contract
would therefore be considered valid.
NOTE: Incidental fraud should not be confused with casual fraud. Incidental
is not a cause for annulment.
INCIDENTAL FRAUD
  Those which are not serious in character and without which the
other party would stll have entered into the contract.
FRAUD IS INCOMPATIBLE WITH GOOD FAITH
 Fraud or malice (doao) had been defned as a “conscious and
intentonal desinn to evade the normal fulfllment of existnn
oblinatons”, and is incompatble with nood faith.
TYPES OF FRAUD CONTEMPLATED IN THE PERFORMANCE OF CONTRACTS
1. The fraud must be ‘doao l ciusinte’ or it must be fraud in
obtaininn the consent of the party; and
2 . this fraud must be proven by clear and convincinn evidence.
EFFECT OF FRAUD IN THE PERFORMANCE OF A CONTRACT
 If there is fraud in the performance of the contract, then this
fraud will nive rise to damanes.
ART. 1345. Simulaton of a contract may be absolute or relatve. The
former takes place when the partes do not intend to be bound at all; the
later, when the partes conceal their true anreement.
SIMULATION OF A CONTRACT
 It is the process of intentonally deceivinn others by producinn
the appearance of a contract that really does not exist (absolute
simulaton) or which is different from the true anreement
(relatve simulaton).
REQUISITES FOR SIMULATION
1. An outward declaraton of will different from the will of the
partes;
2 . The false appearance must have been intended by mutual
anreement;
3. The purpose is to deceive third persons.
ART. 1346. An absolutely simulated or fcttous contract is void. A
relatve simulaton, when it does not prejudice a third person and is not
intended for any purpose contrary to law, morals, nood customs, public
order or public policy binds the partes to their real anreement.
KINDS OF SIMULATED CONTRACTS
1. lAbsoauteaylsimuaitedl (simuaidos) fcttous contracts:
(a) Here the partes do not intend to be bound.
(b) Effect: The contract is void.
2 . lReaitieaylsimuaitedl (disimuaidos) disnuised contracts:
(a) Here the partes conceal their true anreement.
(b) Effect: The partes are bound to the real or true
anreement, except:
1. if the contract should prejudice a third person; or
2 . If the purpose is contrary to law, morals, nood
customs, public order, or public policy.
EXAMPLE OF ABSOLUTELY SIMULATED CONTRACT
 As a joke, A and B executed a deed of sale althounh they did not
intend to be bound at all by the contract. An absolutely
simulated contract is inexistent and void.
EXAMPLE OF RELATIVELY SIMULATED CONTRACTn
 Althounh a deed of sale was made, the partes really intended a
donaton but they wanted to conceal the existence of the
donaton; or a true sale at a different price had really been
anreed upon.
NOTE: Third persons should not be prejudiced; therefore, as to them, the
apparent or ostensible contract is the one valid. Reasonn The contractnn
partes are in estoppel, and they should be penalized for their decepton.
ABSOLUTELY SIMULATED ILLEGAL CONTRACT
CONTRACT
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The contract is not really desired to Intended t be real and effectve,
produce an illenal effect or in any and entered in such form as to
way alter the juridical situaton of circumvent a prohibited act.
the partes.
ABSOLUTE SIMULATION FRAUDULENT ALIENATION
Implies there is no existnn contract; Means that there is a true and
existnn transfer of contract;
Can be atacked by any creditor Can be assailed only by the
includinn one subsequent to the creditors before the alienaton;
contract;
The insolvency of the debtor The acton to rescind (iccionl
makinn the simulated transfer is not piuaiini) requires that the creditor
a pre-requisite to nullity cannot recover in any manner
Imprescriptble Prescribes in four years
SECTION 2
Object of Contracts
ART. 1347. All thinns which are not outside the commerce of men,
includinn future thinns, may be the object of a contract. All rinhts 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, nood 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 oblinatons
which, in turn, may involve thinns or services. Hence, elliptcally,
it may be said that the object of a contract is a thinn or a
service.
REQUISITES
1. The thinn or service must be within the commerce of man;
2 . Must be transmissible;
3. Must not be contrary to law, morals, nood customs, public order,
or public policy;
4. Must not be impossible (Art. 1348)
5. Must be determinate as to its kind or determinable without the
need of a new contract or anreement.
WITHIN THE COMMERCE OF MAN
 If the object is outside the commerce of man, such as side-walks
or public plazas, or public bridnes, they cannot be the object of
contracts of alienaton. Taxes are fxed by law, and are not
subject to contract between the taxpayer and tax ofcer, except
when there is an actual compromise.
EXAMPLES THAT ARE OUTSIDE THE COMMERCE OF MAN (Sintigolnotes)
1. Services which imply an absolute submission by those renderinn
them, sacrifcinn their liberty, such as perpetual servitude or
slavery.
2 . Personal rinhts such as pitriilpotestis or marital authority, the
status and capacity of persons, and honorary ttles and
distnctons.
3. Public ofcers and politcal rinhts like suffrane.
4. Property while they pertain to the public dominion such as
those roads, plazas, squares, and rivers.
5. Sacred thinns, or common thinns, like the air and the sea, and
reslnuaaius as lonn as they have not been appropriated.
TRANSMISSIBLE
  All rinhts which are not intransmissible may be the object of
contracts. But strictly politcal rinhts (like the rinht to vote) or
strictly personal rinhts (like parental authority) cannot be the
subject of a contract.
NOT CONTRARY TO LAW, MORALS, ETC.
1. Future thinns may be object of a contract, thus the future
harvest of sunar cane in a specifc feld may be sold; but by
express provision of law, said future property may not be
donated.
2 . Future inheritance cannot be the subject of a contract except:
(a) In the case of marriane setlements.
(b) In the case of parttons of property inter l iiios by the
deceased.
ART. 1348. Impossible thinns or services cannot be the object of
contracts.
IMPOSSIBLE THINGS OR SERVICES
1. Because of the nature of the transacton or because of the law;
2 . Absolute (objectvely impossible) – no one can do it;
3. Relatve (subjectvely impossible) – the partcular debtor cannot
comply.
NOTE: Generally, the impossibility referred to by the law is absolute
impossibility.
IMPOSSIBILITY NOT TO BE CONFUSED FROM MERE DIFFICULTY
 A showinn of mere inconvenience, unexpected impediments, or
increased expenses is not enounh.
ART. 1349. The object of every contract must be determinate as to its
kind. The fact that the quantty is not determinate shall not be an
obstacle to the existence of the contract, provided it is possible to
determine the same, without the need of a new contract between the
partes.
OBJECT OF THE CONTRACT
 The object must be determinate or determinable. If the object is
not determinate or determinable, the contract is void for want
of an essental requisite – the object of the contract.
SECTION 3
Cause of Contracts
ART. 1350. In onerous contracts the cause is understood to be, for each
contractnn party, the prestaton or promise of a thinn or service by the
other; in remuneratory ones, the service or beneft which is remunerated;
and in contracts of pure benefcence, the mere liberality of the
benefactor.
CAUSE
 It is the essental and impellinn reason why a party assumes an
oblinaton.
CAUSE V. SUBJECT MATTER
 The difference is only a mater of viewpoint in some way,
because what may be the subject mater for one party will be
the cause or consideraton for the other party.
Q. If a partcular piano is sold for P500,000 what is the object and what is
the cause?
A. There are 2 schools of thounht here. 1) Accordinn to Manresa, for the
seller the object is the piano and the cause is the price; for the buyer the
object is the price and the cause is the piano. 2) Accordinn to others, for
both the seller and the buyer, there is just one object – the piano. The
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cause for the seller is the price; the cause for the buyer is the delivery of
the piano.
CLASSIFICATION OF CONTRACTS AS TO CAUSE
1. lOnerousl – here the cause is, for each contractnn party, the
prestaton or promise of a thinn or service by the other. (Ex.
Contract of sale)
2 . lRemuneritoryl – the past service or beneft which by itself is a
recoverable debt.
NOTE: In a remuneratory donaton, the past service or debt is
not by itself a recoverable debt.
3. lGrituitousl (or contracts of pure benefcence) – here, the cause
is the mere liability of the benefactor (Ex. Pure donaton).
CAUSE IN ACCESSORY CONTRACTS LIKE MORTGAGE AND PLEDGE
 Generally, the cause is the same as the cause for the principal
contract of loan.
CAUSE IN ACCESSORY CONTRACTS OF PERSONAL GUARANTY (GUARANTY
OR SURETYSHIP)
 Generally, pure liberality. As a mater of fact, the contract of
nuaranty is nratuitous, unless there is stpulaton to the contrary.
Sometmes, however, some material consideraton may be
niven.
MORAL OBLIGATION AS A VALID CAUSE OF A CIVIL OBLIGATION
 A moral oblinaton may be the cause of a civil oblinaton. Of
course, if the moral oblinaton 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 partcular enterprise.
ART. 1351. The partcular motves of the partes in enterinn into a
contract are different from the cause thereof.
MOTIVE CAUSE
Motve may vary althounh he enters Cause is always the same.
into the same kind of contract.
It be unknown to the other. It is always known
Its presence cannot cure the Absence renders contract void.
absence of cause
ILLEGAL CAUSE ILLEGAL MOTIVE
Makes a contract void Does not necessarily render the
transacton void.
ART. 1352. Contracts without cause, or with unlawful cause, produce no
effect whatever. The cause is unlawful if it is contrary to law, morals, nood
customs, public order or public policy.
REQUISITES FOR CAUSE
1. It must be present at the tme the contract was entered into;
2 . It must be true and not false;
3. It must be lawful, not contrary to law, morals, nood customs,
public order, public policy.
EXISTING CAUSE
 If there is no cause whatsoever, the contract is void, thus, a
fcttous sale is void.
 The cause must exist at the tme of the perfecton of the
contract, it need not exist later.
Q. On Jan. 5, A sold and delivered his truck tonether with the
correspondinn certfcate of public convenience to B for the sum of P1.6M,
payable within 60 days. Two weeks afer the sale, and while the certfcate
of public convenience was stll in the name of A, the certfcate was revoked
by the LTO throunh no fault of A. Upon the expiraton of the 60-day period,
A demanded payment of the price from B. B refused o pay alleninn that the
certfcate of public convenience which was the main consideraton of the
sale no lonner existed. Is the contenton of B tenable?
A. NO, for the certfcate was in existence at the tme of the perfecton of
the contract. Its subsequent revocaton is of no consequence insofar as the
validity of the contract is concerned. Besides, B was nenlinent to his name.
Afer all, it had already been delivered to him.
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 transacton is null and void. Thus, a
contract to stie criminal prosecuton for thef is void because
this is manifestly contrary to public policy and the due
administraton of justce.
EFFECT IF THE CAUSE IS ILLEGAL
1. If one party is innocent he cannot be compelled to prform his
oblinaton, and he may recover what he ha already niven.
2 . If both partes are nuilty, in neneral, neither can sure the other,
the law leavinn them as they are. But certain exceptons 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 FALSE CAUSE
 Just because the cause stated is false does not necessarily mean
that the contract is void. Reason: The partes are niven the
chance to show that a cause really exists, and that said cause is
true and lawful. A statement of a false cause is not void, but
merely revocable or voidable.
ART. 1354. Althounh 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.
Q. Under the Statue of Frauds, certain anreements have to be in writnn.
No then, in these anreements, is it essental to put down the consideraton
in writnn?
A. NO, because of the presumpton under this artcle that the cause exists.
Q. A made a promissory note in favor of B. A, however, allened that the
cause was his namblinn losses in a prohibited name. Who has the burden of
provinn that the name was indeed a prohibited one?
A. A because under the law, the presumpton is that the cause is lawful.
ART. 1355. Except in cases specifed by law, lesion or inadequacy of cause
shall not invalidate a contract, unless there has been fraud, mistake or
undue iniuence.
LESION
 It is inadequacy of cause, like an insufcient price for a thinn
sold.
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RULES ON LESION
General Rule:
 Lesion or inadequacy of price does not invalidate a contract.
Exceptions:
1. When, tonether with lesion, there has been:
(a) fraud;
(b) mistake; or
(c) undue iniuence
2 . In case expressly provided by law (in the followinn, the contracts
may be rescinded):
(a) Those which are entered into by nuardians whenever the
wards they represent suffer lesion by more than 1/4 of the
value of thinns which are the objects thereof (Art.
1381(1)).
(b) Those anreed upon in representaton of absentees if the
later suffer lesion stated in the precedinn number (Art.
1381(2 )).
(c) Partton amonn co-heirs, when anyone of them received
thinns with a value less by at leas 1/4 than the share to
which he is enttled (Art. 1098).
Q. A nuardian of A sold A’s mansion worth P12 0M for P60M. May the
contract be rescinded on the nround of lesion?
A. YES, such a case is expressly provided for by law as one of the contracts
that may be rescinded on the nround of lesion.
Q. A sold his mansion worth P12 0M to B for only P60M because A did not
know the true value of the house. May the contract of sale be rescinded?
A. NO. As a rule lesion or inadequacy of price, by itself, does not invalidate
a contract. But if A had sold it only for this amount because of fraud or
mistake or undue iniuence, the contract may be annulled.
LESION AS EVIDENCE OF VITIATED CONSENT
 Lesion may be evidence of the presence of fraud, mistake, or
undue iniuence.
CHAPTER 3
Form of Contracts
ART. 1356. Contracts shall be oblinatory, in whatever form they may have
been entered into, provided all the essental requisites for their validity
are present. However, when the law 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 certain way, that requirement is absolute and indispensable.
In such cases, the rinht of the partes stated in the followinn artcle cannot
be exercised.
FORM AS A REQUIREMENT
 In neneral, form does not mater for the validity of a contract. It
is enounh that there be consent, subject mater, and cause. This
rule applies, however, to consensual contracts.
FORMAL CONTRACTS (SOLEMN CONTRACTS)
 Require a certain specifed form, in additon to consent, subject
mater, and cause.
REAL CONTRACTS
 Require delivery to be valid as a real contract even as between
the partes, in additon to consent, subject mater, and cause.
WHEN FORM IS IMPORTANT
1. Validity – this is true in formal or solemn contracts;
2 . Enforceability – true for the anreements enumerated under the
Statute of Frauds, but of course this requirement may be waived
by acceptance of benefts or by failure to object to the
presentaton of oral evidence.
 3. Convenience – true for the contracts enumerated for example
under Art. 1385.
EXAMPLES OF FORMAL CONTRACTS
1. Donatons of real property
2 . Donatons of personal property in excess of P5000.
3. Stpulaton to pay interest on loans, interest for the use of the
money (must be in writnn).
4. Transfer of larne catle (requires the transfer of the certfcate of
renistraton)
5. Sale of land throunh an anent (must be in writnn)
6. Contracts of antchresis (principal loan and the interest must be
specifed in writnn)
7. Nenotable instruments under the Nenotable Instruments Law.
(Santano notes)
8. Chatel Mortnane must be in public instrument (Santano notes)
Q. Is an oral sale of land valid as between the partes?
A. 1) If the land had been delivered or the money has been paid, the sale is
completely valid. Althounh the statute of frauds requires this contract to be
in writnn, stll said statute does not apply to executed or partally executed
contracts. 2) If the land has not been delivered and the price has not been
paid, the sale is unenforceable.
 Formal requirements are for the beneft of third partes Non-
compliance therewith does not adversely affect the validity of
the contract nor the contractual rinhts and oblinatons of the
partes thereunder.
Q. A loan was contracted orally. If the amount is P800, may the lender
recover the sum lent?
A. Yes, because althounh the law says that contracts involvinn more than
P500 must appear in writnn, even a private one, stll this requirement is
only for convenience, not for validity.
PRESUMPTION OF THE VALIDITY OF A PUBLIC INSTRUMENT
 the principle that to destroy the validity of an existnn public
document, stronn and convincinn evidence is necessary,
operates only when the acton is brounht by one party anainst
the other to impunn the contract, and not when the suit is
insttuted by a third person, not a party to the contract, but
precisely the victm of it.

ART. 1357. If the law requires a document or other special form, as in the
acts and contracts enumerated in the followinn artcle, the contractnn
partes may compel each other to observe that form, once the contract
has been perfected. This rinht may be exercised simultaneously with the
acton upon the contract.

RIGHT OF ONE PARTY TO COMPEL THE OTHER TO EXECUTE THE

NECESSARY FORM
 The artcle applies only when form is needed only for
convenience, not for validity or enforceability. In other words,
befoe the contractnn partes may be compelled to execute the
needed form, it is essental that the contract be:
(a) perfected (valid) (Art. 1357)
(b) enforceable under the Statute of Frauds (Art. 1356)

NOTE: Art. 1356 says that when the law requires that a contract be in some
form in order that it may be valid or enforceable, that requirement is
absolute and indispensable.

NOTE: A contract partly writen and partly oral is, in lenal effect, an oral
contract.

ART. 1358. The followinn must appear in a public document:

1. Acts and contracts which have for their object the creaton,
transmission, modifcaton or extnnuishment of real rinhts
over immovable property; sales of real property or of an
interest therein are noverned by artcles 1403, No. 2 , and
1405;
2 . The cession, repudiaton or renunciaton of hereditary rinhts
or of those of the conjunal partnership of nains;
3. The power to administer property, or any other power which
has for its object an act appearinn or which should appear in a
public document, or should prejudice a third person;
4. The cession of actons or rinhts proceedinn from an act
appearinn in a public document.
All other contracts where the amount involved exceeds fve hundred
pesos must appear in writnn, even a private one. But sales of noods,
chatels or thinns in acton are noverned by artcles, 1403, No. 2 and
1405.

FORM OF CONVENIENCE
 The necessity for the public document in the contracts
enumerated here is only for convenience, not for validity or
enforceability.

Obligations and Contracts Annotated by Justice Paras

Xelly J. 2018 - 2019 |ADDU Law I-Manresa