1330 - 1355 Obligations

DESIDERIO P.
JURADO
MIGUELA ANCHETA LUNA
OBLIGATIONS and CONTRACTS 12th Revised Edition

The Law On Obligations and Contracts Revised Edition
c o n t r a c t s
Articles 1330 1355
A R T I C L E
1330
legal
effects of a
certain
ACT
or
TRANSACTI
ON
What are the vices which may vitiate

consent?
VICES OF THE WILL
vicios de la formacion de la
voluntad
-renders the contract voidableo [M]istake
Article 1331
Wrong conception of a
thing and the lack of
knowledge with respect
to the thing
-T W O K I N D S1. Mistake of fact
When one or
both of the
contracting
parties
believe that
a
fact
exist when
in fact IT
DOES NOT
-R E Q U I S I T
E S-
2. Mistake of law
When one or
both of the
contracting
parties
arrive
at
an
ERRONEOU
S
CONCLUSI
ON
regarding
the
interpretatio
n
of
a
question of
law or the
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[V]iolence
Article 1335-1336
Use of irresistible
force
Force
employed to
WREST
CONSENT
must be
serious or
irresistible
It must be
the
DETERMINI
NG CAUSE
for party
[upon whom it
is employed]
in entering
the contract
[I]ntimidation
COMPELLING by
reasonable and well
grounded fear of an
imminent or grave evil
upon his person,
property or upon the
person or property of his
spouse, descendants or
ascendants
DESIDERIO P. JURADO

-R E Q U I S I T E
Vicios de la declaracion
One of the
contracting
parties is
compelled to
give consent
by a
reasonable
and well
grounded
fear of an
evil
CHARACTER OF
INTIMIDATION
o
o
o
Actual and Serious

Actor can carry out
his threat
Possible of
realization
[U]ndue Influence
Article 1337
Taking IMPROPER
ADVANTAGE
of
ones power over
the
will
of
another
depriving
the
latter
of
a
reasonable
According to Manresa, Article1330 is a

NEGATIVE ENUMERATION of the
requisites of consent
freedom of choice
WHAT ARE THE REQUISITES OF

CONSENT? [R I F S]
[F]raud
Article 1338
Insidious words or
machinations
employed by ONE
of the contracting
parties in order
to
induce
the
other to enter
into a contract
which without he
would NOT have
agreed to.
Requisites
of must Article 1330
The evil
be. . .
Consent
imminent and
INTELLIGENT
Mistake
grave
FREE
Violence,
unjust
Intimidation,
the
determining Undue Influence
SPONTANEOUS
Fraud
REAL
Simulation of
Contracts
VOIDABLE
= first three requisites are absent
VICES OF DELCARATION
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Simulation of contracts
Articles 1345
1346
ABSOLUTE
o Contracti
ng
parties
do
not
intend
to
be
BOUND
by
the
contract
at all
RELATIVE
o Parties
CONCEA
L
their
true
agreeme
nt.
DESIDERIO P. JURADO

CONTRACT
-REQUISITES[Name &
Qualifications]
V O I D ab initio or valid as far as

the real agreement is concerned.
= fourth requisite is absent
1. the mistake must be

Generally, mistake
with regard to the
as to the identity
identity or
or qualifications
qualification of the
of one of the
person
parties
DOES
NOT 2. such
VITIATE
identity or
CONSENT
unless must have
qualification
such been
identity
or
the principal
qualifications
consideration for the
have celebration
been theof the
principal
cause of
contract
the contract
Example: -THESE MISTAKES
USUALLY
A believing
that B OCCUR
is
an
accountant
appointed
to
the
latter as instructor
to teach Accounting
1 & 2. If it turns
out that B is a
physician and not an
accountant,
the
contract
can
be
annulled.
SUBSTANCE of
the thing
[error in
substantia]
Mistake as to the
substance of the
thing which is the
object of the
contract.
A R T I C L E 1331
WHAT IS MISTAKE?
A wrong conception of a thing

and the lack of knowledge with
respect to the thing.
Example:
When a watch is
bought thinking that
it is solid gold,
but it turns out to
be gold plated.
WHAT ARE THE TWO KINDS OF

MISTAKE?
CONDITIONS of
the thing
[provided such
condition,
principally
moved one or
both contracting
MISTAKE OF FACT
Mistake
As To OBJECT
IDENTITY of the
thing
[error in corpore]
Mistake
As To PERSON
IDENTITY of a
person
effect: VOIDABLE
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DESIDERIO P. JURADO

A R T I C L E 1332
parties to enter
into the
contract.]
Intended for the protection of a

party to a contract who is at a
disadvantage due to his illiteracy,
ignorance, mental weakness or
handicap.
Example:
When a contract of
sale
is
signed
thinking it to be a
contract
of
mortgage.
F R A U D is present when there is

Insidious words
Machinations [of one of the
contracting parties, where the
other is induced to enter into the
contract, without which he would
have not agreed to it ]
QUANTITY of the
thing
[error in
quantitate]
Mistake of Account
A mistake in
computation or a
mathematical
error DOES NOT
VITIATE
CONSENT, the
error committed
will be
CORRECTED
A R T I C L E 1333
There is NO MISTAKE if the party
alleging it know the doubt,
contingency, or risk affecting the
object of the contract
Example:
B bought a watch which he knew
was stolen by the seller. If the watch is
recovered by the true owner, B cannot
allege mistake in buying it.
Example:
If the interest of a
loan
of
P20,000
which is agreed to
be with 10% interest
is
computed
at
P1,500 for one year,
the interest is to
be
corrected
from
P1,500 to P1,000.
A R T I C L E 1334
General Rule:
mistake of law will NOT VITIATE
CONSENT
MISTAKE OF LAW
General
Exception: M U T U A L
Rule
Requisites: [LE M F]
Only mistake of fact which will vitiate

the consent renders the contract
voidable; a mistake of law DOES NOT
RENDER THE CONTRACT VOIDABLE because
ignorantia legis non excusat [Article 3]
except on account of mutual error
1. Mistake must be with respect to

the LEGAL EFFECT of the
agreement
2. Mistake must be MUTUAL
3. The real purpose of the parties
have been FRUSTRATED
Example:
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ERROR
DESIDERIO P. JURADO

B offered to sell to C a radio and

refrigerator. C accepted them from B
thinking that they are being donated to
him. There is no meeting of the minds
of the parties, so the agreement should
be set aside.
Example:
A signs a promissory note because an
armalite rifle is pointed at him by one
who threatens to kill him if he does not
sign the said promissory note.
A R T I C L E 1335
V I O L E N C E use of irresistible
force
Requisites:
CHARACTER OF INTIMIDATION
1. The force employed to wrest

consent must be s e r i o u s or i
rresistible
2. It must be the DETERMINING
CAUSE for the party upon whom it
is employed in entering into
contract.
Actual
Serious
Possible of Realization
Actor can carry out his threat
DETERMINATION OF THE DEGREE OF

INTIMIDATION [A]ge, [S]ex,
[C]ondition of the Person.
Example:
DINSTINGUISH CONSENT GIVEN

THROUGH INTIMIDATION AND
RELUCTANT CONSENT
C signs a contract of sale in favour of D

because C is hitting him by the butt of an
armalite rifle at the time of the
perfection of the contract.
In the law, there is no difference
WHAT IS THE EFFECT OF JUST or LEGAL

THREAT?
I N T I M I D A T I O N compelling
by
REASONABLE
and
WELL
GROUNDED FEAR of an imminent or
grave evil upon his person or property or
upon the person or property of his
spouse, descendants or ascendants
Does NOT VITIATE CONSENT

The contract would STILL be
PERFECTLY VALID and not
voidable
Requisites:
Example:
1. One of the contracting parties is

compelled to give consent by
REASONABLE and WELL
GROUNDED FEAR of an evil.
2. The evil must be
a. [I]mminent and grave
b. [U]njust
c. [D]etermining cause for the
party to enter into contract
Where it is established that a demand for

the settlement of an obligation made by
the creditor upon the debtor was
accompanied by the threat that upon
failure of the latter to do so, an action
would be instituted against him in court.
Violence
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Intimidation
DESIDERIO P. JURADO
External
[physical
compulsion]
Prevents
the
EXPRESSION
of
the
will,
substituting
it
with a material
act DICTATED by
another

Whether or not the influence

exerted has overpowered or
subjugated
the mind of a
contracting party as to destroy
his free agency, making him
express the will of another rather
his own
Internal
[moral compulsion]
INFLUENCES THE
WILL inhibits in a
way
that
the
expression
is
apparently
of
a
person who has
freely given his
consent
Internal
force
OPERATING on the
mind of the party
intimidated
Things to be considered: [C S F]
Confidential
Spiritual
Family
Other relations between parties
Financial Distress
Ignorance
Mental weakness
A R T I C L E 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
Example
A R T I C L E 1338
If B is compelled to sell and C is

compelled to buy a ring by X who
threatened to kill both of them unless the
sale is executed, the contract may be
annulled.
F R A U D is present when there is

Insidious words
Machinations [of one of the contracting
parties, where the other is induced to
enter into the contract, without which
he would have not agreed to it]
A R T I C L E 1337
U N D U E
I N F L U E N C E
taking improper advantage of ones
power OVER the will of another,
depriving the latter of a reasonable
freedom of choice. [if deprivation of his
free agency is not proved there is no
undue influence which will invalidate the
contract]
K I N D S
Article 1338
Fraud
in the
PERFECTION
of
the CONTRACT
Fraud
is
employed
in
SECURING
the
CONSENT of the
TEST
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O F
F R A U D
Article 1170-1171
Fraud
in
the
PERFORMANCE of
the OBLIGATION
Fraud employed by
the obligor in the
PERFORMANCE of
a
PRE-EXISTING
DESIDERIO P. JURADO
other party

CAUSAL
inducement
or
consideration
FOR
THE CONSENT OF THE
OTHER PARTY
2. Fraud should HAVE NOT BEEN
EMPLOYED by the contracting
parties or third persons
OBLIGATION
WHAT IS DOLO CAUSANTE?

Casual Fraud
Deceptions
or
Misrepresentation of a SERIOUS
CHARACTER employed by one
party.
Without this the other party
would have NOT ENTERED INTO
THE AGREEMENT
TEST
There must be proof of concrete
facts constituting the fraud or
insidious words or machinations
employed
by
one
of
the
contracting partied.
WHAT IS DOLO INCIDENTE?

Incidental Fraud
Deceptions or Misrepresentation
NOT of a SERIOUS CHARACTER.
Employed by one of the party and
even without it THE PARTY
WOULD STILL HAVE ENTERED
INTO THE AGREEMENT
It is also an essential element that such
INSIDIOUS WORDS
or
MACHINATIONS
must be
PRIOR
or
CONTEMPORANEOUS
with the
Dolo CAUSANTE
Fraud is SERIOUS
in CHARACTER
CAUSE
which
induces the party
to enter in the
contract
What is the effect?
Contract
is
VOIDABLE
Requisites:
B I R T H
Dolo INCIDENTE
Not so serious
or
P E R F E C T I O N
OF THE CONTRACT
Not so serious
Example:
S offers to sell to B for P50,000 a ring

allegedly a diamond ring. If B buys the
ring relying on the presentation made
by S that it is a diamond ring. When
actually it is but an ordinary glass, there
is fraud by insidious words or
machinations.
What is the effect?

Liability for
DAMAGES
1. INSIDIOUS WORDS
a. . . . must be serious
b. . . . must have induced the
other party to ENTER in to
contract
i. such fraud must be
the PRINCIPAL or
A R T I C L E 1339
FAILURE TO DISCLOSE FACTS, when
there is duty to reveal them, as when the
parties are bound by confidential
relations, CONSTITUTES F R A U D
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DESIDERIO P. JURADO

does
nothing
to
prevent
such
investigations from being as complete as
the former might wish, the purchaser
cannot later allege that the vendor made
false representations to him
Where the defendant, who is a manager

of a certain corporation as well as the
owner of the of the shares of capital
stock thereof, bought through an agent
800 shares of capital stocks from the
plaintiff, without disclosing the fact
that he had just negotiated the sale
of
valuable
properties
to
the
government thus enhancing the value of
the capital stocks of the company, such
nondisclosure of a fact, therefore the
sale can be annulled.
One who contracts for the purchase of

real
estate
in
reliance
on
the
representations and statements of the
vendor as to its character and value, but
after he has visited and examined it for
himself, and has had the means and
opportunity of verifying such statements,
cannot avoid the contract on the ground
that such statements were false or
exaggerated.
NO DUTY TO DISCLOSE FACTS = NO FRAUD

This nondisclosure does not affect the
formation of the contract or operate to
discharge the parties from their
agreement.
A R T I C L E 1341
A mere expression of an opinion does
not signify fraud, unless made by an
expert and the other party relied on the
formers special knowledge.
A applied for was issued a life insurance

policy for P20,000. However, A did not
disclose to the insurer that he had
suffered
from
incipient
pulmonary
tubercolosis. The contract insurance is
voidable
on
the
ground
of
FRAUDULENT CONCEALMENT
See: Eguaras
Assurance Co.
Great
Eastern
DEALERs TALK
It is natural for dealers to appraise
the kind, quality and value of their
wares. Hence, the law allows
considerable latitude to dealers
talk; and experience teaches that is
exceedingly risky to accept it as its
face value. A man who relies upon
affirmation on the ground of fraud
[Songco
v
Sellner]
provided,
however that the other has had the
means and opportunity of verifying
such affirmations [Azarraga v Gay]
Life
A R T I C L E 1340
The usual exaggerations in trade, when
the other party had an opportunity to
know the facts, are not in themselves
fraudulent
A R T I C L E 1342
Example:
When the purchaser proceeds to make
investigations by himself, and the vendor
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DESIDERIO P. JURADO
WHAT
IS
THE
MISREPRESENTATION
PERSONS?

EFFECT
OF
BY
THIRD
obligation of V. it is
crystal clear that Cs
participation in Vs
obligation both as comaker
and
as
mortgagor is voidable
not on the ground of
fraud because the
Bank
was
not
a
participant
in
the
fraud committed by V,
but on the ground of
mistake. There was
substantial mistake on
the part of both C and
the Bank mutually
committed by them as
a consequence of the
fraud employed by V
[Rural Bank of
Caloocan City v CA]
b. Was there a valid and
effective consignation
considering that there was
no previous tender of
payment made by C to the
Bank? Why?
Despite the fact that
there was no previous
tender of payment
made directly to the
Bank,
nevertheless,
the consignation was
valid and effective.
The
deposit
was
attached to the record
of the case and the
Bank had not made
any claim thereto.
Therefore, C was right
in thinking that it was
useless and futile for
her
to
make
a
previous offer and
tender of payment
directly to the Bank.
Under the foregoing
circumstances,
the
consignation
was
DOES NOT VITIATE CO

N S E N T, unless such
misrepresentation
has
created
SUBSTANTIAL MISTAKE and the
same is MUTUAL
This will not be applicable if the third

person makes the misrepresentation
with the complicity or, at least, with the
knowledge, but without any objection, of
the contracting party who is favored.
Neither
is
it
applicable
if
the
misrepresentation has created substantial
mistake and the same is mutual.
Example:
C, an old and ignorant woman, as helped
by V in obtaining a loan of P3,000 from X
Rural Bank secured by a mortgage on her
house and lot. On the day she signed the
promissory note and the mortgage
covering the loan, she also signed several
documents. One of these documents
signed by her was promissory note of V
for a loan of P3,000 also secured by a
mortgage on her house and lot. Several
years later, she received advice from the
sheriff that her property shall be sold at
public auction to satisfy the obligations.
Immediately she filed suit for annulment
of her participation as co-maker in the
obligation or contracted by V as well as of
the mortgage in relation to the said
obligation of V on the ground of fraud and
mistake. Upon filing of the complaint, she
deposited P 3,383 in court as payment of
her personal obligation including interests
a. Can C be held liable for the
obligation of V? Why?
C cannot be held
liable
for
the
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DESIDERIO P. JURADO

valid, if not under the

strict provisions of the
law, under the more
liberal
consideration
of equity.
the right to annul the sale plus

damages. However, if both parties
are guilty of fraud, neither party
can set aside the contract which is
considered valid [Valdez v Sibal]
Dolo INCIDENTE
Where the existence of a franchise
was not the determining cause in
the purchase of an electric light
plant, the mere fact that the
vendor did not disclose that he had
given up such franchise does not
constitute such fraud as would
annul the sale [Tuason v Marquez]
A R T I C L E 1343 1344
IS THERE FRAUD WHEN THE
MISREPRESENTATION WAS MADE IN
GOOD FAITH?
To constitute fraud, there must be
deliberate intent to deceive the
other party to the contract. Hence,
if the misrepresentation is made in
good faith, NO FRAUD IS
COMMITTED
A R T I C L E 1345 1346
Vicios de la declaracion
Absolute
Contracting
paties DO NOT
INTEND to be
BOUND by the
contract at all
WHAT WILL BE THE EFFECT?

The contract can be annulled on
the ground of mistake
When a debtor
simulates the
sale of his
properties to a
friend, in order
to prevent their
possible
attachment by
the creditors
WHEN CANNOT ANNULMENT BE

INVOKED?
On minor or common acts of fraud
Presence of ordinary deviations
from the truth
SERIOUS CHARACTER OF FRAUD
Refers to the magnitude and
importance of fraud in
SECURING THE CONSENT of the
other party.
Contract is not
really desired or
intended to
produce legal
effects or in any
way alter the
judicial situation
of the parties
Effect?
Example
Dolo CAUSANTE
Thus is a ring which is an ordinary
glass is sold by the seller to a
buyer misrepresenting it as a
diamond ring, the buyer is given
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Relative
Parties CONCEAL
their true
agreement by
stating a false
cause in the
contract
As when a person
conceals a
donation by
simulating a
sale of the
property to the
beneficiary for
a fictitious
consideration.
Still HAS LEGAL

EFFECTS
DESIDERIO P. JURADO
VOID CONTRACT

Section 2. Object of Contract
BINDING &
ENFORCEABLE
between parties
and their
successors in
interest.
Still binds the
contracting
parties to their
real agreement,
WHEN IT DOES
NOT PREJUDICE A
3RD person
-andIs not intended
for any purpose
contrary to law,
morals, good
customs, public
order, or public
policy
O B J E C T most fundamental and

indispensable requisite of a contract.
The thing, right or service, which
is the subject matter of the
obligation which is created or
established.
The WHAT the contract.
A R T I C L E 1347 1349
As a general rule,
All things or services may be the
object of contracts
The following Requisites must concur [C R
L D]
1. The object should be within the
[C]ommerce of men (outside of
commerce cannot be the object of contracts)
Susceptible
of
Appropriation
and
Transmissible from one
person to another
-outside of the commerce
o Air or the sea, sacred
things, res nullius,
property belonging to
the public domain
o Special prohibitions
established by law,
such as
Poisonous
substance
Drugs
Arms
Explosives
Contrabands
o Intransmissble rights
Purely personal
in character
The
primary
consideration
in
determining the true nature of a contract
is the intention of the parties, such
intention is determined from the express
terms of their agreement as well as from
their contemporaneous and subsequent
acts
WHAT IS A CONTRACT OF ADHESION?
A contract of adhesion is so-called
because its terms are PREPARED
by only one party
And the other party merely
AFFIXES HIS SIGNATURE
signifying his adhesion to it
A contract of adhesion is just as binding
as ordinary contracts. Contracts of
adhesion are not invalid per se, they are
not entirely prohibited. The one who
adheres to the contract is in reality free
to reject it entirely.
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2.
respect to future
inheritance
Jus
consortiu
m
Patria
potestas
Honorary
and
political
in
character
The object should be [R]eal or
possible
EXISTENCE OF OBJECT
o Should be in existence at
the moment of the
celebration of the contract
THINGS WHICH HAVE PERISHED
o Cannot be the object of
contracts because they are
inexistent
Article 1 4 9 3
If at the time the contract
of sale is perfected, the
thing which is the object of
the contract has been
entirely lost, the contract
shall be WITHOUT any
effect.
FUTURE THINGS [deemed to be conditional]
o CONDITIONAL CONTRACT
If its efficacy
depends upon the
future existence of
the thing
o ALEATORY CONTRACT
If one of the
contracting parties
should bear the risk
that the thing will
never come into
existence
-reasonsThere will be always a

possibility that one of
the parties may be
tempted
to
INSTIGATE
THE
DEATH
OF
THE
OTHER in order that
the inheritance will
COMMUNAL become his.
THINGS cannot
There is also the
be sold or leased
possibility that fraud
because they are
and
prejudice
be
outside of the
committed
commerce of
It has man
been held that
An agreement for the partition
of the estate of a living person,
made between those who, in case of
death, would inherit the estate is
NULL and VOID
Where a vendor undertook to
convey
to
the
vendee
his
participation in the property left
by his deceased father, the part of
the
property
belonging
to
his
mother, who is still living, cannot
at all be affected by conveyance,
since his interest in the property
of his mother at the time of the
execution of the deed of sale was a
future inheritance and could not be
the subject matter of a valid
contract
In the case where, after the
death of the decedent anyone of the
co-heirs may enter into a contract
with respect to the inheritance EVEN
BEFORE PARTITION HAS BEEN EFFECTED.
This is so because, the principle
announced in Article 777 that the
rights
succession
are
In
case of to
transmitted
at the moment of the
doubt, it
should of
be the decedent
death
RULE WITH RESPECT TO FUTURE

INHERITANCE
o The exception is in
Article 1 3 4 7 [2]
no contract may be
entered into with
resolved in
favour
of
IS THE
PROHIBITION
ENUNCIATED IN Article
the paragraph
GREATEST
1347
2 ABSOLUTE?
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RECIPROCITY
OF INTEREST
DESIDERIO P. JURADO

It
is
NOT
ABSOLUTE
IN
CHARACTER
There are two exceptions:
a. Under Article 130 of the
Code, which allows the
future spouses to GIVE or
DONATE to each other in
their marriage settlement
their future property TO
TAKE EFFECT UPON THE
DEATH OF THE DONOR
and to the extent laid down
by the provisions of the Civil
Code
relating
to
testamentary
succession;
and
b. Under
Article
1080,
which
allows
a
person
to
MAKE
PARTITION
of
his
estate
by
an
act
inter vivos, provided
that the legitime of
compulsory heirs is
NOT prejudiced.
CAN AN IMPOSSIBLE THING

OBJECT OF CONTRACT?
BE
obligor
rendering
him
incapable of executing the
act or service, allows the
perfection of the contract,
although
the
fulfilment
thereof is hardly probable.
In a contract of partnership
where one of the partners obligates
himself to contribute to the common
fund an amount which is beyond his
means, the contract is NOT void,
because
the
impossibility
may
disappear. When the impossibility is
permanent, however, as in the case
of a person who is unable to perform
the service which he has contracted
because of total blindness, the
contract is VOID.
3. The object should be [L]icit [not

contrary to law, morals, good
customs and public order]
Licitness of Object is an
indispensable requisite
Article 1347 complements the
provision of Article 1306.
THE
4. The object should be

[D]eterminate
Article 1349
Also an indispensable requisite,
the object must be
determinate or at least
determinable
The object must be determinate
as to its kind
According
to
Article
1348
impossible things or object cannot
be the object of contracts
o Mythical Bird or Animal
o Trip to Uranus
IMPOSSIBILITY CAN EITHER BE
Genus of the object

should be expressed
although there might be no
determination of individual
specie.
ABSOLUTE
o Arises from the very nature
or essence of the act or
service itself
o CONTRACT IS VOID
RELATIVE
o Arises
from
the
circumstances
or
qualifications
of
the
[There need not be any

specification of the qualities
and circumstances of the
thing which constitutes the
13
HM
DMD
DESIDERIO P. JURADO

object of the contract - refer

to Article 1246 ]
The immediate , direct , most

proximate reason which explains
and justifies the creation of an
obligation through the will of the
contracting parties
ONEROUS
contracts
Let us assume that there is no

specification of the quantity, although
there is a specification of the class or
genus to which the objects belongs, is the
contract valid?
REMUNETORY
contracts
According to Article 1349 second

sentence, the fact that the quantity
is no 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 parties.
o This would occur in cases
where the contract itself has
established the basis upon
which such quantity can be
determined, such as the
needs of a family ,
provisions needed for a
factory , materials for
particular work and others
of a similar nature.
o IN CASE OF FAILURE OF
ANY
OF
THESE
THE
CONTRACT IS WITHOUT
FORCE
PURE
BENEFICENCE
The prestation or
promise
of
a
thing or service
by the other
Service
or
the
benefit which is
remunerated
or
compensated.
Liberality
or
generosity of the
benefactor
Example:
Onerous Contract
In a contract of sale, the
cause, as far as the vendor is
concerned is the acquisition of
the purchase price, while the
cause as far as the vendee is
concerned, is the acquisitions of
the thing. [The cause of the obligation of
the vendor is the obligation of the vendee, while
the cause of the obligation of the vendee is the
obligation of the vendor]
Remember: Objects of the Contract

are the thing which is sold and the price
which is paid
Example:
If A sells an automobile to B for
P20,000, delivery and payment to be
made at some specified date, the cause
of the contract, as far as A is concerned,
is the promise of B to pay him P20,000,
while the cause, as far as B is concerned,
is the promise of A to deliver the
automobile to him.
Section 3. Cause of Contracts

A R T I C L E 1350 1351
In ONEROUS Contracts, a mere promise
is sufficient causa or consideration.
or specific
CRemedy:
A U S rescission
E the WHY
of the contract
performance
The object
an onerous
contracts
is
The of
essential
reason
which
the same
as
to
both
parties,
although
moves the contracting parties to
the cause is different
enter into the contract
14
HM
DMD
DESIDERIO P. JURADO
WHAT ARE
CONTRACT?
THE
OBJECTS

OF
THE
predicated upon an illegal

causa.
Consequently, it is void. Therefore, under
Article 1412, NCC there can be no
recovery of what has already been
delivered
[Liguez v CA]
The automobile
The purchase price of P20,000
CAUSE
DIRECT
and
proximate reason
of a contract
OBJECTIVE
or
Juridical
reason
of a contract
ALWAYS
SAME
Its
legality
illegality
affect
VALIDITY of
contract
THE
or
will
the
the
MOTIVES
INDIRECT
and
remote reason of a
contract
Psychological and
PURELY
PERSONAL
reasons
DIFFERS for each
contracting parties
Its
legality
or
illegality will N O T
affect the VALIDITY
of the contract
Where a mother sold two fishponds

to a daughter and the latter, in turn
resold the same fishponds to her and her
stepfather, as a consequence of which
said fishponds were converted into
conjugal properties, it is clear that the
motive or purpose is to circumvent
the law against donations between
spouses. The motive or the purpose is
the illegal causa rendering the contract
void. In pari delicto non oritur action now
enunciated in Article 1412 NCC
[Rodriguez v Rodriguez]
A Filipino leased a parcel of land to
an alien for 99 years with an option to
buy the property within 50 years,
provided that the latter shall become a
Filipino citizen, it is clear that the motive
or purpose of the arrangement, which has
resulted in the virtual transfer of
ownership to the lesse is to circumvent
the Constitutional prohibition of transfer
of lands to aliens. This motive or purpose
is the illegal causa rendering the contract
void. However it will be Article 1416, NCC
will apply. Because of public policy, the
lessor will be allowed to recover the
property
[Phil. Banking Corp. v Lui She]
CAUSE IN ONEROUS CONTRACTS
In case of a contract of sale, the cause as

far as the vendor is concerned is always
the acquisition of the purchase
price . . .
-Castan
WILL THERE BE AN INSTANCE WHERE
THE MOTIVE IS REGARDED AS THE
CAUSA?
Yes, when the contract is
conditioned
upon
the
attainment of the motive
Motive becomes Causa when it
PREDETERMINES the purpose
of the contract
Examples:
Where a married man of mature
years donated a parcel of land to a girl of
sixteen subject to the condition that the
latter shall cohabit with him and such
condition is accepted, it is clear that the
donation is conditioned upon the
attainment of the motive of the
donor; in other words, it predetermines
the purpose of the contract. Thus
considered, the conveyance is clearly
The cause is for each contracting

party
Not necessary that the cause or
consideration should pass from one
party to the other at the time of
the execution of the contract
WHAT IS THE RULE WITH RESPECT TO

ACCESSORY CONTRACTS?
15
HM
DMD
DESIDERIO P. JURADO

The cause of the accessory contract is

identical with that of the principal
contract
CONSTITUTE
DEBT
A PROMISSORY NOTE where a party

binds himself jointly and severally affix
his signature to it for the payment of a
debt
Supreme Court: the consideration
which supports the promise of
the accommodation maker is that
parted with by the person taking
the note and received by the
person accommodated
WHAT IS THE CAUSE IN CONTRACTS OF

PURE BENEFICENCE?
Mere
liberality
of
the
benefactor
Causa liberalitatis
CAN
A
MORAL
OBLIGATION
CONSTITUTE A SUFFICIENT CAUSE or
CONSIDERATION
TO
SUPPORT
AN
ONEROUS CONTRACT?
Thus, if A makes a pure donation of a

certain property to be in accordance with
the formalities prescribed by law, its
cause is the mere liberality of the
donor or benefactor.
Moral Obligations arises wholly

from ethical considerations NOT
demandable IN LAW but in
conscience [unconnected with any
civil obligation]
IT
CANNOT
CONSTITUE
A
SUFFICIENT
CAUSE
or
CONSIDERATION TO SUPPORT
AN ONEROUS CONTRACT
A R T I C L E 1352 1355
WHAT ARE THE REQUISITES OF CAUSE?
The cause should be
In EXISTENCE
at the time of
the celebration
of the contract.
LICIT
or
LAWFUL
TRUE
-e x c e p tWhere a moral obligation is based

upon a previous civil obligation
which has been barred by the
statute of limitations at the time
when the contract is entered into,
IT CONSTITUTE A SUFFICIENT
CAUSE or CONSIDERATION TO
SUPPORT THE SAID CONTRACT
WHAT IS THE CAUSE IN REMUNERATORY
CONTRACTS?
If the contract has no cause or even if it

has, if the cause should be illicit or
unlawful, the rule is that
IT SHALL NOT PRODUCE ANY EFFECT
it is the service or benefit which

is
remunerated
though
such
service or benefit DOES NOT
16
HM
DEMANDABLE
If A gives a certain property in

accordance
with
the
formalities
prescribed by law to his lawyer friend, B,
in remuneration for legal services which
the latter had rendered to him freely in
the past and such gift is duly accepted,
the cause as far as A is concerned would
be the legal service rendered by B,
ALTHOUGH SUCH SERVICES DO NOT
CONSTITUTE DEMANDABLE DEBT
A MORTGAGE is an accessory contract,

its cause is the very cause of the principal
contract from which it receives life.
DMD
DESIDERIO P. JURADO

The same is true if the cause stated in the

contract is false except if founded upon
another lawful cause
IS IT NECESSARY THAT THE CAUSE

SHOULD BE STATED IN THE CONTRACT TO
BE CONSIDERED EXISTING?
WHAT IS THE EFFECT OF LACK OF

CLAUSE?
If the cause is not stated in the

contract, it is presumed that it
exists and is lawful, unless the
debtor proves the contrary.
If the contract is not founded upon

any cause, then it SHALL NOT
PRODUCE
ANY
EFFECT
WHATSOEVER.
If the purchase price in a contract of sale
was never in fact paid by the purchaser or
vendee to the vendor, the contract is
inexistent for all purposes for lack of a
cause or consideration.
IF THERE IS A LESION or INADEQUACY OF

CAUSE, SHALL THIS INVALIDATE THE
CONTRACT?
According to Article 1355, NCC, the
lesion or inadequacy SHALL NOT
INVALIDATE a contract, unless
there is
Fraud
Mistake
Undue Influence
If the lesion or inadequacy of the
cause was due fraud, mistake or
undue influence, such fact will
render the contract VOIDABLE
In cases of conveyances of property

where the conveyance or transfer is
simulated
without
any
cause
or
consideration whatsoever whether the
purpose of the grantor is to defraud his
creditors or to avert the possible
attachment of the property.
The rule is not applicable
REMEDY: file an action for rescission
Where the purchaser or vendee

failed to fully pay for the property, even if
there is a stipulation in the contract of
sale that full payment shall be made at
the time of the celebration thereof.
WHAT IS THE EFFECT OF UNLAWFUL

CLAUSE?
It shall not produce any effect or
whatsoever, in other words it is
void ab initio
As a matter of fact, even where the

contract itself expressly states that the
consideration for the sale of a piece of
land is only P1.00, it does not follow that
the contract is void or inexistent for lack
of cause or consideration.
Reason:
because
consideration
there
Where the cause or consideration for the

sale of a certain property is no other than
the accumulated usurious interests which
the vendor-debtor has not yet paid, the
sale is void because of the illegality of
the cause or consideration.
is
CONTRACT MIGHT BE VOIDABLE due

to inadequacy of consideration but not
void or inexistent
It has also been held that a contract

affecting the course of a criminal
prosecution is invalid, because such a
contract would manifestly contrary to
17
HM
DMD
DESIDERIO P. JURADO

public policy and the due administration

of justice.
Example:
Ramas]
purpose becomes illegal causa thus

rendering the contract void ab initio
[Velez v
C, wife of A and daughter of

B, while employed in a pawnshop
owned by X, embezzled the
amount of more than P2,000. In
order
to
prevent
criminal
prosecution, A and B signed a
document obligating themselves
jointly and severally to pay X the
amount
embezzled
including
interest. Because of their failure to
comply with their promise the
latter filed this action against them.
-HELDA contract based upon an
unlawful object, is always void
ab initio.
It must also be noted that in

applying the provision of Article 1352
regarding the effect of an unlawful clause,
it is always necessary to consider the
provisions of Articles 1411 and and 1412
of the Code. It must be observed that
these provisions presuppose the
existence of an illicit or illegal
cause which is to determine the
nullity of the contract. Accordingly,
they cannot be applied to SIMULATED
or
FICTITIOUS
TRANSFERS
OF
PROPERTY, where the motive of the
grantor may either be to defraud his
creditors or to avert the possible
attachment of the property.
WHAT IS THE EFFECT OF FALSE CAUSE?

False cause in contracts shall
render them VOID
Example:
The deed of sale expressly states
that the purchase price has been paid
when in fact it has NEVER been pain,
it is evident that the contract of sale is
invalid in accordance with the general
rule announced in Article 1353 and
confirmed by Article 1409, No. 2, which
declares
as
inexistent
those
contracts which are ABSOLUTELY
SIMULATED or FICTITIOUS
Remember:
When the motive of one of the
contracting parties predetermines the
purpose of the contract and such motive
or purpose is ILLEGAL or IMMORAL, it
is clear that such illegal or illicit motive or
If a contract is simulated it does not

necessarily follow that it is inexistent or
18
HM
DMD
DESIDERIO P. JURADO

void, provided that it can be established

that it is
Founded upon
another cause
which is TRUE
and LAWFUL
Reality
19
HM
DMD

1330 - 1355 Obligations

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DESIDERIO P.

OBLIGATIONS and CONTRACTS 12th Revised Edition

What are the vices which may vitiate

OBLIGATIONS and CONTRACTS 12th Revised Edition

Actual and Serious

According to Manresa, Article1330 is a

WHAT ARE THE REQUISITES OF

OBLIGATIONS and CONTRACTS 12th Revised Edition

V O I D ab initio or valid as far as

1. the mistake must be

A wrong conception of a thing

WHAT ARE THE TWO KINDS OF

OBLIGATIONS and CONTRACTS 12th Revised Edition

Intended for the protection of a

F R A U D is present when there is

Only mistake of fact which will vitiate

1. Mistake must be with respect to

OBLIGATIONS and CONTRACTS 12th Revised Edition

B offered to sell to C a radio and

1. The force employed to wrest

DETERMINATION OF THE DEGREE OF

DINSTINGUISH CONSENT GIVEN

C signs a contract of sale in favour of D

In the law, there is no difference

WHAT IS THE EFFECT OF JUST or LEGAL

Does NOT VITIATE CONSENT

1. One of the contracting parties is

Where it is established that a demand for

OBLIGATIONS and CONTRACTS 12th Revised Edition

Whether or not the influence

If B is compelled to sell and C is

F R A U D is present when there is

OBLIGATIONS and CONTRACTS 12th Revised Edition

WHAT IS DOLO CAUSANTE?

WHAT IS DOLO INCIDENTE?

It is also an essential element that such

S offers to sell to B for P50,000 a ring

What is the effect?

OBLIGATIONS and CONTRACTS 12th Revised Edition

Where the defendant, who is a manager

One who contracts for the purchase of

NO DUTY TO DISCLOSE FACTS = NO FRAUD

A applied for was issued a life insurance

OBLIGATIONS and CONTRACTS 12th Revised Edition

DOES NOT VITIATE CO

This will not be applicable if the third

OBLIGATIONS and CONTRACTS 12th Revised Edition

valid, if not under the

the right to annul the sale plus

WHAT WILL BE THE EFFECT?

WHEN CANNOT ANNULMENT BE

Still HAS LEGAL

OBLIGATIONS and CONTRACTS 12th Revised Edition

Section 2. Object of Contract

O B J E C T most fundamental and

OBLIGATIONS and CONTRACTS 12th Revised Edition

-reasonsThere will be always a

RULE WITH RESPECT TO FUTURE

OBLIGATIONS and CONTRACTS 12th Revised Edition