CONTRACTS contracts; and (d) the customs of the place.

(Art. 1307, CC)

I. GENERAL PROVISIONS 2. According to perfection
a. Consensual: perfected by mere consent
Art. 1305. A contract is a meeting of minds
b. Real: perfected by the delivery of the
between two persons whereby one binds himself,
thing subject matter of the contract
with respect to the other, to give something or to
c. Solemn: requires compliance with certain
render some service.
formalities prescribed by law, such
prescribed form being thereby an
Q: What is the difference between an obligation
essential element thereof.
and a contract?
Note: From the moment the parties come to an
A: While a contract is one of the sources of
agreement on a definite subject matter and
obligations, an obligation is the legal tie or relations
valid consideration, they are bound not only to
itself that exists after a contract has been entered
the fulfilment of what has been expressly
into.
stipulated, but also to all the consequences
which according to their nature, may be in
Hence, there can be no contract if there is no
keeping with good faith, usage, and law. (Art.
obligation. But an obligation may exist without a
1315, CC)
contract. (De Leon, Obligations and Contracts, 2003
ed, p. 283‐284)
3. According to cause
a. Onerous: there us an exchange of
ELEMENTS OF A CONTRACT
consideration (e.g. sale, barter, lease)
b. Remuneratory: something is given for a
1. Essential elements: those without which
benefit or service performed without any
there can be no contract
legal obligation to do so
a. Consent
c. Gratuitous: there is no consideration in
b. Object
exchange for what is/has been given (e.g.
c. Cause/Consideration
donation, remission, commodatum).
2. Natural elements: those which are derived
4. According to their form
from the nature of the contract and ordinarily
a. Informal/common
accompany the same; they are presumed by
b. Formal/solemn
law, although they can be excluded by the
contracting parties if they so desire. (e.g.
5. According to obligatory force
warranty against eviction and warranty
a. Valid
against hidden defect in contract of sale)
b. Rescissible
c. Voidable
3. Accidental elements: those which exist only
d. Unenforceable
when the parties expressly provide for them
e. Void/inexistent
for the purpose of limiting or modifying the
normal effects of the contract (examples:
6. According to dependence on other contracts
conditions, terms, modes, payment of interest
a. Preparatory: contract is not an end by
in a contract of loan.)
itself, but a means thru which other
contracts may be made (e.g. contract of
CLASSIFICATION OF CONTRACTS
partnership, contract of agency)
b. Principal: can stand alone
1. According to name/designation
c. Accessory: its existence and validity is
dependent upon another contract (e.g.
a. Nominate: with a special name
pledge, mortgage, guaranty)
b. Innominate: without any name
7. According to the risk involved
Kinds of Innominate contracts:
a. Commutative: where equivalent values
i. Do ut des – I give that you give
are given by both parties (e.g. sale, barter,
ii. Do ut fcacias – I give that you do
lease)
iii. Facio ut des – I do that you give
b. Aleatory: where the fulfilment of the
iv. Facio ut facias – I do that you do
contract is dependent upon chance (e.g.
insurance)
Note: Innominate contracts shall be regulated
by: (a) the stipulations of the parties; (b) the
8. According to liability
general provisions of the Civil Code on
a. Unilateral: where only one of the parties
obligations and contracts; (c) the rules
is obliged to give or to do something (e.g.
governing the most analogous nominate
commodatum, gratuitous deposit,
gratuitous mutuum)
1
 b. Bilateral: where both parties are obliged
to give or to do something (e.g. sale,
barter, lease)
CHARACTERISTICS/PRINCIPLES OF CONTRACTS
1. Autonomy
2. Obligatory force of contracts
3. Mutuality
4. Relativity
5. Consensuality
Autonomy (Art. 1306)
The contracting parties may establish such
stipulations, clauses, terms and conditions as they
may deem convenient.
Note: The right to enter into a contract is one of the
liberties guaranteed by the Constitution to every
individual. BUT, in appropriate cases, it cannot be
invoked as against the right of the state to exercise its
police power.
Limitation to the principle of autonomy: Stipulation
should not be contrary to law, morals, good customs,
public order, or public policy.
Obligatory force of contracts
This principle is expressly recognized in Articles
1153, 1308, 1315, and 1356.
It is a rule that once the contract is perfected, it shall
be of obligatory force upon both the contracting
parties.
Mutuality (Art. 1308, CC)
The contract must bind both parties.
Note: The validity or fulfillment of a contract cannot be
left to the will of one of the contracting parties.
Validity or fulfillment may be left to (1) the will of a
third person, whose decision shall not be binding until
made known to both contracting parties (Art. 1309,
CC); or (2) chance.
Art. 1310. The determination shall not be obligatory if
it is evidently inequitable. In such case, the courts shall
decide what is equitable under the circumstances.
Relativity (Art. 1311, CC)
General Rule: Contracts take effect only between the
parties, their assigns and heirs.
Exception: with respect to assignees or heirs, the
general rule under Art. 1131 is not applicable if the
rights and obligations arising from the contract are
not transmissible or are purely personal: (a) by their
nature; (b)by stipulation; or (c) by provision of law.
Q: Does a third person have rights and obligations
under a contract to which he is a stranger?
A: As a general rule, a third person has no rights and
obligations under a contract to which he is a stranger.
Exceptions:
1. Beneficial Stipulation/Stipulation pour autrui
(stipulaton in favour of a third person)
Requisites:
a. The contracting parties by their
stipulation must have clearly and
deliberately conferred a favour upon a
third person;
b. The third person must have
communicated his acceptance to the
obligor before its revocation by the oblige
or the original parties;
c. The stipulation in favour of the third
person should be a part, not the whole, of
the contract;
d. The favourable stipulation should not be
conditioned or compensated by any kind
of obligation whatever; and
e. Neither of the contracting parties bears
legal representation or authorization of
the third party for otherwise, the rules on
agency will apply.
2. Where the third person comes into
possession of the object of a contract creating
real rights (Art. 1312, CC)
3. Where the contract is entered into in order to
defraud a creditor (Art. 1313, CC)
Here, the creditor may ask for rescission.
4. Where the third person induces a contracting
party to violate his contract. (Art. 1314)
Such third person can be held liable for
damages.
Requisites:
a. The existence of a valid contract
b. Knowledge on the part of the third person
of the existence of the contract; and
c. Interference by third person without legal
justification or excuse
Consensuality of Contracts (Art. 1315)
General Rule: 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. (Art. 1315, CC)
Exception: Real contracts (examples: deposit, pledge,
commodatum) are not perfected until the delivery of
the object of the obligation.
2

STAGES OF CONTRACTS
1. Generation: comprehends the preliminary or
preparation or conception. It is the period of
negotiation and bargaining.
2. Perfection: the moment when the parties
come to agree on the terms of the contract
3. Consummation: the fulfillment or
performance of the terms agreed upon in the
contract.
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.
Q: What is the effect if a person contract in the
name of another person without being authorized
by the latter?
A:
General Rule: The contract shall be unenforceable.
(Rationale: A contract involves the free will of the
parties and only he who enters into the contract can
be bound thereby.
Exception: If ratified by that person under whose
name the contract was entered into or by his duly
authorized agent BEFORE it is revoked by the other
contracting party (Article 1311, par. 2). Such
ratification must be clear and express so as not to
admit of any doubt or vagueness.
Q: What are the requisites in order that a person
may be bound by the contract of another?
A:
1. The person entering into the contract must be
duly authorized, expressly or impliedly, by
the person in whose name he contracts or he
must have, by law, a right to represent him;
and
2. He must act within his power.
Note: A contract entered into by an agent in
excess of his authority is unenforceable
against the principal, but the agent is
personally liable to the party with whom he
contracted where such party was not given
sufficient notice of the limits of the powers
granted by the principal.
II. ESSENTIAL REQUISITES OF CONTRACTS
Art. 1318. There is no contract unless the
following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of
the contract;
(3) Cause of the obligation which is established.
ESSENTIAL REQUISITES/ELEMENTS OF A
CONTRACT
1. Consent
2. Object or subject matter
3. Cause or consideration.
CONSENT
Consent is the conformity of the parties to the
terms of the contract; the acceptance by the
offeree of the offer made by the other.
Requisites:
1. Must be manifested by the concurrence of the
offer and acceptance (Arts. 1318-1326, CC);
2. Parties must possess the necessary legal
capacity (Arts. 1327-1329, CC);
3. Must be intelligent, free, spontaneous, and
real (Arts. 1330-1346, CC)
Note: Intelligence in consent is vitiated by error;
freedom by violence, intimidation or undue
influence; and spontaneity by fraud.
OFFER: Unilateral proposition which one party
makes to the other for the celebration of a contract.
Q: May an offer be withdrawn?
A: Yes, the offer/proposal may be withdrawn so long
as the offeror has no knowledge of acceptance by
offeree.
Q: What is the rule on complex offers?
A:
1. If offers are interrelated, the contract is
perfected if all the offers are accepted.
2. If offers are not interrelated, single
acceptance of each offer results in a perfected
contract unless the offeror has made it clear
that one is dependent upon the other and
acceptance of both is necessary.
ACCEPTANCE: Must be certain or definite and
absolute in character. A qualified acceptance
constitutes a counter-offer (Art 1319, CC)
It may be express or implied (Art 1320, CC).
Requisites of acceptance:
1. Absolute
2. Directed to the offeror
3. Made with the intention to be bound
4. Made within the proper time
3
 5. Communicated to the offeror and learned by
him unless the offeror knows of the
acceptance.
Q: What is the rule on amplified acceptance?
A: Under certain circumstances, a mere amplification
on the offer must be understood as an acceptance of
the original offer, plus a new offer which is contained
in the amplification
RULE ON WITHDRAWAL OF ACCEPTANCE
FIRST VIEW: Although the offeror is not bound until
he learns of the acceptance, the same thing cannot be
said of the offeree who, from the moment he accepts,
loses the power to retract such acceptance since the
right to withdraw between the time of the acceptance
and its communication is a right which is expressly
limited by law to the offeror. Since the offeree is the
first person who knows of the concurrence of the
wills of the parties, as a consequence, the obligation,
as far as he is concerned, must also commence
earlier.
SECOND VIEW: Acceptance may be revoked before it
comes to the knowledge of the offeror because in
such case there is still no meeting of the minds, since
the revocation has cancelled or nullified the
acceptance which thereby ceased to have any legal
effect.
Note: The offerer may fix the time, place, and manner
of acceptance, all of which must be complied with. (Art.
1321, CC)
 Art. 1322. An offer made through an agent is
accepted from the time acceptance is
communicated to him.
 Art. 1323. An offer becomes ineffective upon
the death, civil interdiction, insanity, or
insolvency of either party before acceptance is
conveyed.
Other grounds which render the offer
ineffective: (a) failure to comply with the
condition of the offer as to the time, place, and
the manner of payment; (b) expiration of the
period fixed in the offer for the acceptance; (c)
destruction of the thing due before acceptance;
(d) rejection of the offer.
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.
Option: the privilege given to the offeree to accept an
offer within a certain period.
Option contract: a contract giving a person for a
consideration a certain period within which to accept
the offer of the offerer. It is a separate and distinct
from the contract which will be perfected upon the
acceptance of the offer.
Option period: period within which the offeree must
accept the offer.
Option money: the money paid or promised to be
paid in consideration for the option (as opposed to
earnest money, which is actually a partial payment of
the purchase price and is considered as proof of the
perfection of the contract).
BUSINESS ADVERTISEMENTS (Art. 1325, CC)
Unless it appears otherwise, business advertisements
of things for sale are not definite offers, but mere
invitations to make an offer.
ADVERTISEMENTS FOR BIDDERS (Art. 1326, CC)
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.
PERSONS INCAPACITATED TO GIVE CONSENT
(Art. 1327, CC)
1. Minors
Exceptions:
a. When minor misrepresents his age.
-the circumstances of the minor (i.e. he
appears to be of legal age) must be of such
nature that it could have been relied upon by
the other party. Otherwise, the contract
remains voidable.
b. Contracts involving sale and delivery of
necessaries to minors (Art. 1489, CC)
c. Contracts entered into by guardians/legal
representatives
2. Insane/demented persons, UNLESS the
contract was entered into during a lucid
interval (Art. 1328, CC)
Note: Insanity/mental incapacity must be
existing at the celebration of the contract
3. Deaf-mutes who do not know how to read
and write.
Note: If both parties are incapable of giving consent,
the contract is unenforceable. (Art. 1403, CC)
4
INCAPACITY TO GIVE CONSENT (Art. 1327) VS.
DISCQUALIFICATION TO CONTRACT (Art. 1329) Note:

Art. 1327 Art. 1329 Art. 1334. Mutual error as to the legal effect of an
Restrains the exercise of Restrains the very right agreement when the real purpose of the parties is
right to contract itself frustrated, may vitiate consent.
Based upon subjective Based upon public policy
circumstances of certain and morality Requisites for applicability:
persons a. The error must be mutual
Voidable Void b. It must be as to the legal effect of an
agreement
VICES OF CONSENT (Art. 1330, CC) c. It must frustrate the real purpose of the parties

1. Mistake Q: When does mistake vitiate consent?

2. Violence
3. Intimidation
4. Undue influence
5. Fraud
Rationale: Consent should be (a) intelligent, or with an
exact notion of the matter to which it refers, (b) it
should be free, and (c) it should be spontaneous.
Intelligence is vitiated by mistake; freedom by violence,
intimidation, and undue influence; and spontaneity by
fraud.
Note: Causes vitiating consent are temporary and refer
to the contract itself as opposed to causes of incapacity
which are more or less permanent and refer to the
person entering into the contract. In both cases, the
contract is VOIDABLE.
MISTAKE
Mistake refers to the substance of the thing which
is the object of the contract, or to those conditions
which have principally moved one or both parties
to enter into the contract. ( Art. 1331, CC)
In short: Mistake is the false notion of a thing or a
favt which is material to the contract.
A: When it refers to:
1. The substance of the thing which is the object
of the contract; or
2. Those conditions which have principally
moved one or both parties to enter into the
contract; or
3. The identity or qualifications of one of the
parties provided that the same was the
principal cause of the contract.
INSTANCES WHERE MISTAKE OF FACT DOES NOT
VITIATE CONSENT
1. Error as regard the incidents of a thing or
accidental qualities thereof unless the error is
caused by fraud by the other party
2. Mistake as to quantity or amount (mistake, in
this case, only gives rise to its correction
unless it goes to the essence of the contract)
3. Error as regard the motives of the contract
unless the motives constitute a condition or
cause of the contract
4. Mistake as regard the identity or
qualifications of a party unless such identity
or qualifications have been the principal
cause of the contract.

TWO GENERAL KINDS OF MISTAKE

Q: Who has the burden of proof where mistake or
Mistake of Fact Mistake of Law fraud is alleged?
One of or both One of or both parties
contracting parties arrive at an erroneous A:
believe that a fact exists conclusion regarding the General Rule: When a person signs a document, the
when in reality, it does interpretation of a presumption is that he does so with full knowledge of
not. question of law or legal the contents of the same. Should he later on allege
effect of a certain act or fraud or mistake, it is incumbent upon him to prove
transaction. his allegation.
Vitiates consent Does not vitiate consent
when it involves mutual Exception: When one of the parties is unable to read,
error as to the effect of or if the contract is in a language not understood by
an agreement when the him, and mistake or fraud is alleged, the person
real purpose is enforcing the contract must show that the terms
frustrated. thereof have been fully explained to the former. (Art.
1332, CC)

Note: The mistake referred to under Art. 1331 is

mistake of fact, a substantial one, that is, the party Q: If one of the parties has knowledge of risk
would not have given his consent had he known of the affecting the object of the contract, can he claim
mistake. mistake?

5
A: No. Under Article 1333 of the Civil Code, there is
no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the
contract.
Note: If a party knew beforehand the doubt,
contingency, or risk affecting the object of the contract,
it is to be assumed that he was willing to take chance
and cannot, therefore, claim mistake. (Martinez vs.
Court of Appeals, 56 SCRA 647)
VIOLENCE/FORCE
Q: What should be the nature of violence/force in
order that it may vitiate consent?
A: Violence requires the employment of physical
force. To make the consent defective, the force
employed must be either serious or irresistible.
INTIMIDATION
Q: What are the requisites of intimidation as a
vice of consent?
A:
1. It must produce a reasonable and well-
grounded fear of an evil;
2. The evil must be imminent and grave;
3. The evil must be upon the person of the party
to the contract or his property, or the person
of his spouse, descendants, or ascendants;
and
4. It is the reason why he enters into a contract.
Note: Whether or not the fear is reasonable and well-
grounded or the evil imminent and grave depends
upon the circumstances including the age, sex, and
condition of the person.
The threat of a court action as a means to enforce a
just claim is justified and does not vitiate consent.
Art. 1336. Violence or intimidation shall annul
the obligation, although it may have been
employed by a third person who did not take part
in the contract.
Note: To make the contract voidable/annullable, it is
necessary that the violence or intimidation must be of
the character required in Article 1335.
UNDUE INFLUENCE
There is undue influence when a person takes
improper advantage of his power over the will of
another, depriving the latter of a reasonable freedom
of choice. (Coso vs Fernandez Deza, 42 Phil. 595)
Mere general or reasonable influence is not sufficient.
If gained by kindness and affection or argument or
persuasion, the influence will not vitiate consent.
Examples of Circumstances which shall be
considered to determine whether undue
influence has been exercised:
1. Confidential, family, spiritual, and other
relations between the parties;
2. Mental weakness
3. Ignorance
4. Financial distress of the person alleged to
have been unduly influenced. (Art. 1337, CC)
FRAUD (CAUSAL FRAUD)
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. (Art.
1338, CC)
Requisites:
1. There must be misrepresentation or
concealment;
2. It must be serious
3. It must have been employed by only one of
the contracting parties. [Note: Fraud
committed by a third person does not vitiate
consent unless it was practiced in connivance
with, or at least with the knowledge of, the
favoured contracting party.(Art. 1342, CC)]
Exceptional Cases
1. Usual exaggerations in trade, when the other
party had an opportunity to know the facts,
are not in themselves fraudulent. (Art. 1340)
*Caveat Emptor – dealer’s talk, buyer Beware
2. Opinions: A mere expression of an opinion
does not signify fraud, unless made by an
expert and the other party has relied on the
former's special knowledge. (Art. 1341)
Requisites:
a. It must be made by an expert;\The
other contracting party has relied on
the expert’s opinion;
b. The opinion turned out to be false or
erroneous.
3. Misrepresentation by a third person does not
vitiate consent, unless such
misrepresentation has created substantial
mistake and the same is mutual. (Art. 1342)
4. Misrepresentation made in good faith is not
fraudulent but may constitute error. (Art.
1343)
Note: When there is a duty to reveal facts, as when the
parties are bound by confidential relations, constitutes
fraud. (Art. 1339)
6
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.
Kinds of Fraud
1. Dolo Causante (Art. 1338) – renders the
contract voidable
Requisites:
a. It should be serious
b. It should not have been employed by both
contracting parties;
c. It should not have been known by the
other contracting party
2. Dolo Incidente (Art. 1339) – holds the guilty
party liable for damages
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.
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.
SIMULATION
Simulation of a contract is the act of deliberately
deceing others, by feigning or pretending by
agreement, the appearance of a contract which is
either non-existent or concealed.
Q: What are the kinds of simulated contracts?
A:
1. Absolute – There is no intention on the part
of the contracting parties to be bound by the
contract at all. The contract is merely
fictitious making it void from beginning
2. Relative – There is an intention by the
parties to be bound but they conceal their
true agreement
Note: Relative simulated contracts are binding when:
1. They do not prejudice 3rd persons
2. They are not contrary to law, morals, good
customs, public order or public policy.
Addendum for the topic on consent and general
provisions on contracts 
-We follow the theory of cognition and not the theory
of manifestation. Under our civil law, the offer and
acceptance concur only when the offeror comes to
know, and not when the offeree merely manifests his
acceptance.
Auto Contract: A contract made by a person acting in
another’s name in one capacity and his own name or
that of another in another capacity.
Collective Contract: A contract where the law
authorizes that the will of the majority binds a
minority to an agreement, notwithstanding the
opposition of the latter.
Contract of Adhesion: A contract where one party has
already a prepared form of a contract, containing the
stipulations he desires, and he simply asks the other
party to agree to them if he wants to enter into the
contract.
Dragnet Clause: One which is specifically phrased to
subsume all debts of past or future origins. Mortgages
of this character enable the parties to provide
continuous dealings, the nature or extent of which may
not be known or anticipated at the time, and they
avoid the expense and inconvenience of executing a
new security on each new transaction.
Quantum Meruit: Under the principle of quantum
meruit, a contractor is allowed to recover the
reasonable value of the thing or services rendered
despite the lack of a written contract, in order to avoid
unjust enrichment. Quantum meruit means that in an
action for work and labor, payment shall be made in
such amount as the plaintiff reasonably deserves. (for
example: To deny payment for a building almost
completed and already occupied would be to permit
unjust enrichment at the expense of the contractor.)
OBJECT
The object of a contract is its subject matter.
In reality, the object of every contract is the
obligation created. But since a contract cannot exist
without an obligation, it may be said that the thing,
service or right which is the object of the obligation is
also the object of a contract. (2 Castan 9)
Q: What are the kinds of object of a contract?
A:
1. Things
2. Rights
3. Services
Q: What are the requisites of things as an object?
A:
1. Determinate as to kind (even if not
determinate, provided it is possible to
determine the same without the need of a
new contract);
2. Existing or the potentiality to
exist subsequent to the contract;
7
 3. Must be licit;
4. Within the commerce of man; and
5. Transmissible
Future Things
May be interpreted in two ways (Manresa):
1. Conditional Contract – the thing must come
into existence otherwise the contract is void.
2. Aleatory Contract – One of the parties bears
the risk of loss that the thing might not come
into existence.
Note: The most evident and fundamental requisite in
order that a thing, right or service may be the object
of a contract, it should be in existence at the moment
of the celebration of the contract, or at least, it can
exist subsequently or in the future.
Q: What can be the object of contracts?
A:
General Rule: All things or services may be the
object of contracts.
Exceptions:
1. Things outside the commerce of men;
2. Intransmissible rights;
3. Future inheritance, except in cases expressly
authorized by law
Note: The law permists contracts on future
inheritance:
a. In the case of donations by reason
marriage between future spouses with
respect to their future property to take
effect, only in the event of death, to the
extent laid down by law in testamentary
succession (see Art. 84, FC)
b. In the case of partition of property by act
inter vivos by a person to take effect uon
his death (Art. 1080, CC)
4. Services which are contrary to law, morals,
good customs, public order or public policy;
5. Impossible things or services;
Note: Impossibility may be
a. Physical: when the thing or service in the
very nature of things cannot exist or be
performed. With particular reference to
services, impossibility may be:
i. Absolute: when the act cannot be
done in any case so that nobody
can perform it; or
ii. Relative: when it arises from
special circumstances of the case
or the special conditions or
qualifications of the obligor)
b. Legal: when the thing or service is
contrary to law, morals, good customs,
public order, public policy
6. Objects which are not possible of
determination as to their kind.
CAUSE
Cause is the “why” of the contract, the essential
reason which impels the parties to enter into the
contract.
Q: What are the requisites of a cause?
A: It must:
1. exist
2. be true
3. be licit
Q: What are the two presumptions in contracts as
to cause?
A:
1. Every contract is presumed to have
a cause; and
2. The cause is valid.
Q: What are the kinds of causes?
A:
1. Cause of onerous contracts – the prestation or
promise of a thing or service by the other
2. Cause of remuneratory contracts– the service or
benefit remunerated
3. Cause of gratuitous contracts – the mere
liberality of the donor or benefactor
4. Accessory – identical with cause of principal
contract, the loan which it derived its life and
existence (e.g.: mortgage or pledge)
Q: What is the effect of the error of cause on
contracts?
A:
1. Absence of cause (want of cause; there is
total lack or absence of cause) – Confers
no right and produces no legal effect
2. Failure of cause ‐ Does not render the
contract void
3. Illegality of cause (the cause is contrary to
law, morals, good customs, public order and
public policy)–Contract is null and void
4. Falsity of cause (the cause is stated but the
cause is not true)–Contract is void, unless the
parties show that there is another cause
which is true and lawful
5. Lesion or inadequacy of cause –Does not
invalidate the contract, unless:
a. there is fraud, mistake, or undue
influence;
b. when the parties intended a donation
or some other contract; or
c. in cases specified by law (e.g.contracts
entered when ward suffers lesion of more
than 25%)
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Q: What are rules on the form of contracts? A: It is a remedy to conform to the real intention of
the parties due to mistake, fraud, inequitable
A: conduct, accident. (Art. 1359)
General Rule: Contracts shall be obligatory, in
whatever form they may have been entered into, Note: Reformation is based on justice and equity.
provided all essential requisites for their validity are
present. Q: What are the requisites in reformation of
instruments?
Exceptions: Contracts must be in a certain form
when the law requires that a contract be in some A:
form to be: 1. Meeting of the minds to the contract
a. valid 2. True intention is not expressed
b. enforceable (Statute of Frauds); or in the instrument by reason of (MARFI)
c. for the convenience of the parties or for a. Mistake,
the purpose of affecting third persons. b. Accident,
c. Relative simulation,
***The parties may compel each other to reduce the d. Fraud, or
verbal agreement into writing. e. Inequitable conduct
3. Clear and convincing proof of MARFI

Q: What are the acts which must appear in a Note: When there is no meeting of the minds, the
public document? proper remedy is annulment and not reformation.

A: Q: In what cases is reformation of instruments

1. Donation of real properties (Art. 719); not allowed?
2. Partnership where immoveable property or
real rights are contributed to the common A:
fund (Arts. 1171 & 1773); 1. Simple, unconditional donations inter vivos
3. Acts and contracts which have for their object 2. Wills
the creation, transmission, modification or 3. When the agreement is void
extinguishment of real rights over 4. When an action to enforce the
immovable property; sales of real property instrument is filed (estoppel)
or of an interest therein is governed by Arts.
1403, No. 2, and 1405 [Art. 1358 (1)]; Q: What is the prescriptive period in reformation
4. The cession, repudiation or renunciation of of instruments?
hereditary rights or of those of the conjugal
partnership of gains [Art. 1358 (2)] A: 10 years from the date of the execution of the
5. The power to administer property or any instrument.
other power which has for its object an act
appearing or which should appear in a Q: Who may ask for the reformation of an
public document or should prejudice a third instrument?
person [Art. 1358 (3)];
6. The cession of actions or rights proceeding A: It may be ordered at the instance of:
from an act appearing in a public document 1. if the mistake is mutual –
[Art. 1358 (4)]. either party or his successors in interest;
otherwise;
Note: Numbers 3 to 6 are valid and binding though not 2. upon petition of the injured party; or
contained in a public document/instrument or in 3. his heirs and assigns.
writing. The public document is required only for the
convenience and greater protection of the parties and Note: When one of the parties has brought an action
to make the contract binding as against third persons. to enforce the instrument, no subsequent
reformation can be asked (estoppel).
Q: What are contracts that must be registered?
DEFECTIVE CONTRACTS
A:
1. Chattel mortgages (Art. 2140) Kinds of Defective Contracts
2. Sale or transfer of large cattle (Cattle
Registration Act) 1. Rescissible Contracts
2. Voidable Contracts
REFORMATION OF INSTRUMENTS 3. Unenforceable Contracts
4. Void or Inexistent Contracts
Q: What is reformation of instruments?

/acnc
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