CONTRACTS

Art. 1305 – C – M2M -1 binds himself with respect to the other to GS/RS
Art. 1159 – Obligations arising from contracts have the force of law between the
contracting parties and must be complied with in good faith.

ELEMENTS (ENA)

1. Essential – without them a contract cannot exist because these are indispensable
requirements.

(COC)

A. Consent – Art. 1319 (MO-c A-a) Meeting of the

Offer (certain proposal made by the offeror to the
offeree to enter into a contract) and the
Acceptance (absolute manifestation of the
offeree of his assent to the terms of the
contract)

VICES/DEFECTS/FLAWS OF CONSENT (FUnVIM) – Art. 1330

1. Fraud (Art. 1338)

2. Undue Influence (Art. 1337)
3. Violence (Art. 1335 1st par and 1336)
4. Intimidation (Art. 1335 2nd par)
5. Mistake (Arts. 1331-1334)

B. Object (De Future CoPoL )- Art. 1347-49

Determinate (Art. 1349), Future things (Art. 1347 1st par), within the
Commerce of man (Art. 1347 1st par), Possible (Art. 1348), Licit/Legal
(not contrary to law, morals, good customs, public policy, public order-
Art. 1347 3rd par)

C. Cause /Consideration (ROP/G)- Art. 1350

Kinds:
Remuneratory – Contract of employment (employee gets remuneration
in terms of salary)
Onerous – contract of sale (seller parts to buyer ownership of a
determinate thing)
Pure beneficence/mere liberality of the benefactor
/Gratuitous – contract of donation (donor gives a specific thing to donee
practically for free)

2. Natural – these are found in certain contracts and are presumed to exist, unless excluded
by stipulation of the parties.

(W-H/En)
Warranty against hidden defects and
Warranty against eviction

3. Accidental – not considered as agreed upon by the parties unless expressly stipulated.

(S-TIP)
stipulated time and place of payment in a contract of sale
stipulated payment of interest in a contract of mutuum (loan)-Art. 1956
vis-à-vis NEW LEGAL RATE OF INTEREST
STAGES IN THE LIFE OF CONTRACT (CoPeCo)

1. Preparation and Conception – this is the preparatory step taken by the parties leading to
the perfection of the contract, otherwise known as bargaining point.
2. Perfection/Birth – the meeting of minds regarding the subject matter and the cause of the
contract.
3. Consummation or death or termination – the point of time when the parties have
performed their respective obligations and the contract is put to an end.

KINDS

1. According to perfection (CoRe)

a. Consensual – perfected my mere consent, such as sale and barter

b. Real – perfected by the delivery of the object of the contract, such as pledge, loan
and deposit

2. According to name (NomInno)

a. Nominate – with a special name designated by law, such as pledge, barter and
lease
b. Innominate – without any name designated by law/regulated by the stipulation of
the parties, by rules governing analogous contracts and by customs of the place
such as:

1. Do ut des – I give that you give (now BARTER-Art. 1638)

2. Do ut facias – I give that you do
3. Facio ut des – I do that you give
4. Facio ut facias – I do that you do

CHARACTERISTICS OF CONTRACTS (AMOR)

1. Autonomy (Art. 1306)
Doctrine of Liberty or Freedom of Contract/Principle of Autonomy –
The contracting parties may establish such stipulations, clauses, terms, and
conditions as they may deem convenient, provided, that they are not contrary to
law, morals, good customs, public order, or public policy.
2. Mutuality (Art. 1308)
Doctrine of Mutuality of Contract – The contracts must bind BOTH
contracting parties, its validity or compliance cannot be left to the will of one of
them.
3. Obligatoriness or Consensuality (Art. 1315)
Doctrine of Consensuality – Contracts are generally perfected by mere
consent (except real contracts) and from that moment, the parties are bound not
only to the fulfillment of what has been expressly stipulated but also to all
consequences, which, according to their nature may be in keeping with good
faith, usage and law.
4. Relativity (Art. 1311)
Art. 1311 – Doctrine of Relativity of Contract – Contract is only valid
between the parties, their assigns and heirs.

Exceptions to the Doctrine of Relativity

i. Art. 1311 – Obligations arising from contract which are not

transmissible by their nature, stipulation or provision of law
ii. Art. 1311 - Stipulation pour autri – Stipulation in favor of a third person
made by the contracting parties with the clear and deliberate intention of
conferring a favor upon such third person and whose fulfillment the latter
may demand by communicating his acceptance to the obligor before its
revocation.
iii. Art. 1314 - When a third person induces another to violate his contract
 iv. Art. 1313 – Contract entered into in fraud of creditors (the defrauded
creditor can sue the debtor)

FORM OF CONTRACTS –

General Rule – ANY FORM (MNEMONICS-BOWSE)

Exceptions – IN WRITING (compliance with Statute of Frauds or Law on
Form)

a. Private writing/document/memorandum – Art. 1403 (2 a -

f) and Art. 1358 2nd par (monetary contracts exceeding P500)
b. Public document (notarized by a notary public) – Art. 1358

(RIGHT/ACT and POWER of REAL HEIR)

Rights/Actions – cession of
Power – general power of attorney/special power of
attorney
Real properties- sale of
Real rights – creation/transmission/modification/
extinguishment
Heir – hereditary rights/conjugal partnership of gains –
cession, repudiation/renunciation of

c. ELECTRONIC/CYBER MODE-RA 8792 (E-Commerce

Act of 2000) – formal requirements to make contracts
effective as against 3rd persons and to establish the existence
of a contract are deemed complied with provided that the
electronic document is unaltered and can be authenticated as
to be usable fore future reference (example-text/fax/e-mail
messages/FB/IG/TWITTER MESSAGES may now be used
as evidence in court-SUBJECT TO UPDATED COURT
RULESANENT E-EVIDENCE)
COMPARATIVE TABLE OF DEFECTIVE CONTRACTS (VURV)

Item Void Unenforceable Rescissible Voidable

1. Defect lack of lack of form, caused by caused by

essential authority or lesion - vices of
elements capacity injury/ consent
damage

2. Legal None cannot be en- valid and valid and

Effect forced by enforceable enforceable
Court action until rescinded until annulled
(no evidence to by competent by competent
enforce contract) court court

3. Kinds SOCI-OIL(7) USI(3) GAFLO(5) VI(2)

Simulated Unauthorized Guardians vs Vitiated

contracts contracts wards consent

Object con- Statute of Absentees Incapacity

trary to Frauds – non of ONE
law compliance party to

give consent
Cause- Incapacity of Fraud – in fraud
inexistent BOTH parties of creditors
to give
Intention not consent Litis pendentia-
ascertained things under
litigation

Outside com- Other contracts

merce of man declared by law
as rescissible
Impossible
Service

Law –declared
as void

4. Action Action for

Declaration Action for Action for Action for
of Nullity Recovery- Rescission Annulment
(impres- if there was (prescribes in (prescribes in
criptible) total/partial 4 years) 4 years)
performance
(prescription
not
applicable)
 Item Void Unenforceable Rescissible Voidable
5. Ratifi- cannot be can be need not be can be
Cation
(act of
validating
an act)

6. Cure not cured same cured by same

by prescription
prescription

7. Assailed contracting ONLY by contracting ONLY by

by whom? party or contracting party or contracting
directly party prejudiced party
affected 3rd party 3rd party

3rd party

8. Type of Direct(main
COA) or same Direct ONLY Direct or
Attack Collateral Collateral
(other issue/
COA

Prepared by:

ATTY. GENE B. CALONGE

Assistant Professor