INTRODUCTION TO LAW

Definition of Law- any rule of action or norm of conduct b. Administrative Law- law which fixes the organization
applicable to all kinds of actions and to all object of and determines the competence of the administrative
creation authorities, and which regulates the methods by which the
functions of the government are performed.
Legal Definition- rule of conduct, just and obligatory, laid
down by legitimate authority for common observance and c.International Law- body of rules which regulates the
benefit. community of nations.

Rule of Conduct- laws serve as guides of an individual in d. Private Law- body of rules which creates duties, rights
relation to his fellowmen and to his community. and obligations, and the means and methods of setting
courts in motion for the enforcement of a right or of a
Law must be just- "should run as golden threads through redress of wrong.
society, to the end that law may approach its supreme ideal
which is the sway and dominance of justice" Obligatory- if i. Substantive Private Law- those rules which declare
laws are not enforced, the purpose for which they are legal relations of litigants when the courts have been
intended will not be served. properly moved to action upon facts duly presented to them

Prescribed by legitimate authority- if not prescribed by ii. Procedural or Adjective Private Law- means and
legitimate authority, people could not be expected to methods of setting the courts in motion, making the facts
observe them. Authority to make laws is conferred upon known to them and effectuating their judgments.
those duly chosen by the sovereign will of the people.

-Art. II, Sec. 1- "sovereignty resides in the people and all

government authority emanates from them." SOURCES OF LAW

Ordained for the common benefit- "Salus Populi Est a. Legislation- power to legislate laws is vested in the
Suprema Lex" — the welfare of the people shall be the Congress of the Philippines which consists of Senate and
supreme law. Laws should be applied not only to a House of Representatives before the declaration of Martial
particular group of citizens but applied equally to all Law in 09/21/1972.
citizens regardless of their religion, political persuasion, -After the dissolution of the Congress, the power to
and status in life. legislate law is vested in the President of the Philippines.
CLASSIFICATION OF LAW This is the reason why the President used presidential
decrees and letter of instructions
1. Natural Law- derives its force and authority from God.
It is superior than other laws. It is binding to the whole
world, in all countries, and at all times. b. Precedent- decisions or principles enunciated by a court
a. Physical Law- universal rule of action that governs the of competent jurisdiction on a question of law do not serve
conduct and movement of things which are non-free and only as guides but also as authority to be followed by all
material. other courts.

b. Moral Law- set of rules which establishes what is right -New Civil Code provides- Judicial decisions applying or
and what is wrong as dictated by the human conscience and interpreting the laws or the Constitution shall form a part of
as inspired by the eternal law. the legal system of the Philippines."

2. Positive Law c. Custom- only have the force of law when they are
acknowledged and approved by society through long and
Divine Law- (a.) Divine Positive Law, i.e., Ten uninterrupted usage.
Commandments

(b.) Divine Human Positive Law, i.e., Commandments of

the Church Requisites before court considers customs:

Public Law a. A custom must be proved as a fact according to the rules

of evidence
a. Constitutional Law- fundamental law of the land that
defines the powers of the government. b. Custom must not be contrary to law (Art. 11, NCC)
c. There must be a number of repeated acts and these 10. Jus utendi- The right to use
repeated acts must have been uniformly performed.
11. Jus fruendi- The right to the fruits
d. There must be a judicial intention to make a rule of
social conduct. 12. Jus disponendi- The right to dispose

e. A custom must be acknowledged and approved by 13. Jus vendicandi- The right to recover
society through long and uninterrupted usage 14. Nulla poena sine lege- There is no crime when there is
d. Court Decision- judicial decisions which apply or no law punishing it
interpret the Constitution and the laws are part of the legal 15. Salus populi est suprema lex- The welfare of the
system in the Philippines, but they are not laws, they are people shall be the supreme law
evidence of the meaning and interpretations of the laws.
16. Caveat emptor- Buyers beware

17. Solutio indebiti- unjust enrichment

STARE DECISIS- once a case has been decided one way,
then another case involving exactly the same question or 18. Aedificum solo credit- The building follows the land
point of law should be decided in the same manner.
19. Accessorium siquitur principale- Land is always the
principal

WORLD’S LEGAL SYSTEMS 20. Nullum tempus occurit regi- Time runs not against the
sovereign.
ROMAN LAW- body of rules and principles adopted to
guide the Romans in the conduct or observance of their
personal and official affairs without necessarily specifying
PHILIPPINE LEGISLATIVE PROCESS
the period or the time when those rules were adopted or
promulgated. The Congress is not just composed of congressmen. The
Congress is the legislative branch of the country, and it
-was dominated by ritualism and strong religious tenor and
consists of two chambers: the Senate (Upper House) and
referred to as JUS QUIRITIUM.
House of Representatives (Lower House).
-later on, it was referred to as the civil law of the Romans,
-The Senate has 24 seats, half of which are voted on by the
then known as JUS CIVILE. nation every 3 years. Each Senator serves a 6-year term,
and can be a member of any of the 40 permanent
-New Civil Code is basically Roman in origin committees. They cannot serve for more than 2 consecutive
terms.

LATIN MAXIMS -The House of Representatives (HOR), on the other hand,

is composed of 292 representatives serving 238 districts
1. Ignoratia legis non excusat- Ignorance of the law and 47 party lists. Each representative can be a member of
excuses no one; the house’s 58 standing or 14 special committees. They
serve a 3-year term and can be re- elected but cannot go
2. Dura lex sed lex- The law may be harsh but it is the law;
beyond 3 consecutive terms.
3. Cessante ratione cessat ipsa lex- When the reason for
A resolution conveys principles and sentiments of the
the law ceases, the law also ceases to exist;
Senate or the HOR. They are divided into:
4. Sic utere tuo ut alienium non laedas- The owner of a
• Joint resolutions – requires approval from the Senate, the
thing cannot make use thereof in such manner as to injure
HOR, and the signature of the President. They have the
the rights of a third person. (Art. 431, NCC);
force and effect of a law once approved.
5. Patria potesta- Parental authority;
• Concurrent resolutions – used for matters affecting
6. Negotiurum gestio- Unauthorized management; operations of both chambers and must be approved in the
same form by both. These are not transmitted to the
7. Res perit domino- The thing perishes with the owner; President; hence, they do not have the same force and effect
8. Jus possidendi- The right to possess of a law.

9. Jus abutendi- The right to abuse;

• Simple resolutions – deals with matters entirely within vote, after which it is essentially approved, and takes effect
one of the chambers. As such, these are not referred to the 15 days after being publicized.
President and do not have the force and effect of a law.
5.3 Lapsed into law. A bill is said to have lapsed into law if
the President fails to act on it within 30 days after receiving
the bill. It takes effect 15 days after being publicized.
A bill, on the other hand, is a law in the making. These are
the “proposed laws” or “proposed amendment” you hear
about in the news, like House Bill No. 2379, which seeks to
amend the National Internal Revenue Code of 1997, the CONTRACTS
country’s 20-year-old tax code. House Bills are those made ART. 1305. A contract is a meeting of minds between two
by a Representative, while Senate Bills are those made by a persons whereby one binds himself, with respect to the
Senator. other, to give something or to render some service.(1254a)

1. Proposals and suggestions are taken from the President, ELEMENTS OF A CONTRACT
government agencies, private individuals, interest groups,
and legislators themselves. (1) Freedom or autonomy of contracts - The parties may
establish such stipulations, clauses, terms, and conditions as
2. The author(s) then writes the bill and sign it before being they may deem convenient, provided, they are not contrary
filed with the Secretary General. to law, morals, good customs, public order, and public
3. The bill then goes through three readings. policy (Art. 1306.).

3.1 The first reading consists of reading the title and (2) Obligatoriness of contracts- Obligations arising from
author(s) and its referral to the appropriate committee(s). contracts have the force of law between the contracting
The committee then studies the bill and either submits it to parties and should be complied with in good faith (Arts.
the Committee on Rules or is laid on the table. 1159, 1315.);

3.2 The second reading comes after the bill has been (3) Mutuality of contracts- Contracts must bind both and
included in the Calendar of Business by the Committee on not one of the contracting parties; their validity or
Rules. This is when sponsorships, debates, and compliance cannot be left to the will of one of them (Art.
amendments take place. A vote is taken after all the debates 1308.);
and amendments, after which the bill is either archived or (4) Consensuality of contracts- Contracts are perfected, as
goes through a third reading. a general rule, by mere consent,4 and from that moment the
3.3 The third reading happens when the bill goes through a parties are bound not only by the fulfi llment of what has
final check and vote via roll call. If it’s approved, it is then been expressly stipulated but also to all the consequences
sent to the other house, where it goes through the same which, according to their nature, may be in keeping with
procedures. If not, it gets archived. good faith, usage and law (Art.1315.);

4. After going through three readings from both houses, the (5) Relativity of contracts- Contracts take effect only
conference committee of both houses ratifies the bill and between the parties, their assigns and heirs, except in cases
submits it to the President for signing. If, however, there where the rights and obligations arising from the contract
are conflicts in the provisions proposed by both Houses, a are not transmissible by their nature, or by stipulation, or by
Bicameral Conference Committee is called upon to provision of law. (Art. 1311.)
reconcile them.

5. Once received by the Office of the President, the bill can ART. 1306. The contracting parties may establish such
take one of three routes: stipulations, clauses, terms and conditions as they may
5.1 Approved. Once it is approved by the President, it deem convenient, provided they are not contrary to law,
becomes a Republic Act and takes effect 15 days after morals, good customs, public order, or public policy.
publication in the Official Gazette or at least two national (1255a)
newspapers of general circulation.

5.2 Vetoed. The bill is returned to the originating house Freedom to contract guaranteed.
with an explanation on why it was vetoed. The house can
either accept the veto or override it with a 2/3 (majority)
The freedom to contract is both a constitutional and (4) facio ut facias (I do that you may do).
statutory right.
Do ut des is, however, no longer an innominate contract. It
Limitations on contractual stipulations has already been given a name of its own, i.e., barter or
exchange. (Art. 1638.)
1. Law

2. Police power
ART. 1308. The contracts must bind both contracting
Contract must not be contrary to law. In its specific sense, parties; its validity or compliance cannot be left to the will
law has been defined as “a rule of conduct, just, obligatory, of one of them. (1256a)
promulgated by legitimate authority, and of common
observance and benefit.” Contract binds both contracting parties.

Contract must not be contrary to morals. Morals deal with 1. Principle of mutuality of contract- Article 1308
norms of good and right conduct evolved in a community. expresses this principle. The ultimate purpose of the
These norms may differ at different times and places and principle is to nullify a contract containing a condition
with each group of people. which makes its fulfillment or pre-termination dependent
exclusively upon the uncontrolled will of one of the
Contract must not be contrary to good customs. Customs contracting parties) A contract is an agreement which gives
consist of habits and practices which through long usage rise to obligations. It must bind both parties in order that it
have been followed and enforced by society or some part of can be enforced against either. Needless to say, a contract
it as binding rules of conduct. It has the force of law when can be renewed, revived, extended, abandoned, renounced,
recognized and enforced by law. A custom must be proved or terminated only by mutual consent of the parties
as a fact, according to the rules of evidence. (Art. 12; see
Art. 1376.) 2. Fulfillment or extinguishment of contract.- A contract
containing a condition which makes its fulfillment or
Contract must not be contrary to public order. Public order extinguishment dependent exclusively upon the
refers principally to public safety although it has been uncontrolled will of one of the contracting parties is void.
considered to mean also the public weal.
3. Renunciation or violation of contract-It is an
Contract must not be contrary to public policy. Public elementary rule that no party can renounce or violate the
policy is broader than public order, as the former may refer law of the contract unilaterally or without the consent of the
not only to public safety but also to considerations which other. (Fernandez vs. MRR, 14 Phil. 274 [1909]; 11
are moved by Art. 1306 455 the common good. Manresa 380-382.) Hence, “its validity or compliance
cannot be left to the will of one of them.” (Art. 1308; see
Art. 1182.) Just as nobody can be forced to enter into a
ART. 1307. Innominate contracts shall be regulated by the contract, no one may be permitted to change his mind or
stipulations of the parties, by the provisions of Titles I and disavow and go back upon his own acts, or to proceed
II of this Book, by the rules governing the most analogous contrary thereto, to the prejudice of the other party.
nominate contracts, and by the customs of the place.
(4) Proof of alleged defect in contract- If after a perfect
Classification of contracts according to its name or and binding contract has been executed between the parties
designation. it occurs to one of them to allege defect as a reason for
annulling it, the alleged defect must be conclusively proved
They are:
since the validity and fulfillment of contracts cannot be left
(1) Nominate contract or that which has a specific name or to the will of one of the contracting parties
designation in law (e.g., commodatum, lease, agency, sale,
(5) Release of obligor from compliance- The mere fact
etc.); and
that a party to a contract has made a bad bargain,may not be
(2) Innominate contract or that which has no specific name a ground for setting aside the agreement. (see Art. 1355.)
or designation in law. Kinds of innominate contract. Where, however, the performance of the contract has
become so difficult as to be manifestly beyond the
They are: contemplation of the parties, the obligor may be released
(1) do ut des (I give that you may give); therefrom, in whole or in part. (Art. 1267.) The debtor in
obligations to do shall also be released when the prestation
(2) do ut facias (I give that you may do); becomes legally or physically impossible without the fault
of the obligor. (Art. 1266.)
(3) facio ut des (I do that you may give);
 3. Exceptions. — The cases when a contract are effective
only between the parties are when the rights and obligations
ART. 1309. The determination of the performance may be arising from the contract are not transmissible:16
left to a third person, whose decision shall not be binding
until it has been made known to both contracting parties. (a) by their nature (like a contract requiring or
(n) involving personal qualifications, as painting, singing, etc.);
or
Determination of performance by a third person.
(b) by stipulation (in accordance with the principle of
Under the preceding article, compliance with a contract freedom to contract); or
cannot be left to the will of one of the contracting parties.
However, under the above provision, the determination of (c) by provision of law (as in agency, partnership, and
its performance may be left to a third person. commodatum, when death extinguishes the legal
relationships). (Art. 1178.)

ART. 1310. The determination shall not be obligatory if it

is evidently inequitable. In such case, the courts shall Cases when strangers or third persons affected by a
decide what is equitable under the circumstances. contract.

Effect where determination inequitable. A third person is one who has not taken part in a contract
and is, therefore, a stranger to the contract. As a general
This article is a qualification to Article 1309. A contracting rule, a third person has no rights and obligations under a
party is not bound by the determination if it is evidently contract to which he is a stranger.
inequitable or unjust as when the third person acted in bad
faith or by mistake. In such case, the courts shall decide
what is equitable under the circumstances.
ART. 1312. In contracts creating real rights, third persons
who come into possession of the object of the contract are
bound thereby, subject to the provisions of the Mortgage
ART. 1311. Contracts take effect only between the parties, Law and the Land Registration Laws.19 (n)
their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible Third persons bound by contracts creating real rights.
by their nature, or by stipulation or by provision of law.
The heir is not liable beyond This article is an exception to the general rule that a
contract binds only the parties.
the value of the property he received from the decedent.

If a contract should contain some stipulation in favor of a

third person, he may demand its fulfillment provided he ART. 1313. Creditors are protected in cases of contracts
communicated his acceptance to the obligor before its intended to defraud them. (n)
revocation. A mere incidental benefit or interest of a person Right of creditor to impugn contracts intended to defraud
is not sufficient. The contracting parties must have clearly them.
and deliberately conferred a favor upon a third person.
(1257a) Article 1313 is another qualification to the rule that
contracts take effect only between the parties. The creditor,
although he is not a party to the contract, is given the right
1. General rule- Contracts take effect only between the to impugn the contracts of his debtor intended to defraud
parties, their assigns and heirs. This means that only the him (Art. 1177.), such as contracts undertaken by a debtor
parties, their assigns and heirs can have rights and in fraud of his creditor without the knowledge of the latter.
(see Art. 1381[3].) He can sue to rescind the contract to
1. Real parties in interest- Since a contract may be prevent fraud upon him.
violated only by the parties thereto as against each other, in
an action upon the contract, the real parties in interest,
either as plaintiff or as defendant, must be parties to said
contract. Therefore, a party who has not taken part in it and
for whose benefi t it was not expressly made, cannot sue or Right of creditor to enforce contracts of debtor with a third
be sued for performance or for cancellation thereof. person.
In some cases, the law gives a right of action to a creditor (3) Solemn contract or that which requires compliance with
to enforce a contract entered into by his debtor with a third certain formalities prescribed by law such prescribed form
person. Thus: being thereby an essential element thereof (e.g., donation of
real property).
(1) Those who put their labor upon or furnish materials for
a piece of work undertaken by the contractor have an action
against the owner up to the amount owing from the latter to
the contractor at the time the claim is made. (Art. 1729.) Stages in the life of a contract.

(2) The lessor may recover rent due from a sublessee since A contract undergoes three (3) distinct stages.
the sublessee is subsidiarily liable to the lessor for any rent They are:
due from the lessee. (Art. 1652.)
(1) Preparation or negotiation. — This includes all the
steps taken by the prospective parties from the time they
ART. 1314. Any third person who induces another to manifest interest in entering into a contract, leading to the
violate his contract shall be liable for damages to the other perfection of the contract. At this stage, the parties have not
contracting party. yet arrived at any definite agreement. They are yet
undergoing the preliminary steps towards the formation ofa
Liability of third person responsible for breach of contract. valid contract. Either party may stop the negotiation or
withdraw an offer made;
This is a rule of American law. It is also proper under the
general principles of the Philippine law, because a (2) Perfection or birth- This takes place when the parties
contractual right is property. have come to a definite agreement or meeting of the minds
regarding the terms, that is, the subject matter and cause of
the (consensual) contract (Art. 1319.), i.e., upon
Article 1314 recognizes an instance when a stranger to a concurrence of the essential elements of the contract; and
contract can be sued for damages for his unwarranted (3) Consummation or termination- This takes place when
interference with the contract. The tort or wrongful conduct the parties have fulfilled or performed their respective
is known as “interference with contractual relations.’’ It obligations or undertakings under the contract and the
presupposes that the contract interfered with is valid and contract may be said to have been fully accomplished or
the third person has knowledge of the existence of the executed, resulting in the extinguishment thereof. Once a
contract or must have known of it after a reasonable contract is shown to have been consummated or fully
inquiry. performed by the parties thereto, its existence and binding
effect can no longer be disputed.

ART. 1315. Contracts are perfected by mere consent, and

from that moment the parties are bound not only to the ART. 1317. No one may contract in the name of another
fulfillment of what has been expressly stipulated but also to without being authorized by the latter, or unless he has by
all the consequences which, according to their nature, may law a right to represent him. A contract entered into in the
be in keeping with good faith, usage and law. (1258) 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 ratifi ed, expressly or
ART. 1316. Real contracts, such as deposit, pledge and impliedly, by the person on whose behalf it has been
commodatum, are not perfected until the delivery of the executed, before it is revoked by the other contracting
object of the obligation. party. (1259a)
Classification of contracts according to perfection.

They are: Unauthorized contracts are unenforceable.

(1) Consensual contract or that which is perfected by mere As a general rule, a person is not bound by the contract of
consent (e.g., sale, lease, agency) (Art. 1315.); another of which he has no knowledge or to which he has
not given his consent. A contract involves the free will of
(2) Real contract or that which is perfected, in addition to
the parties and only he who enters into the contract can be
the above, by the delivery of the thing subject matter of the
bound thereby. (see Art. 1311, par. 1.) Thus, under Article
contract (e.g., depositum, pledge, commodatum) (Art.
1316; see Arts. 1934, 1963, 2093.); and
1317, a contract entered into in the name of another by one The offer must be certain or defi nite and clear, and not
who has no authority is vague or speculative so that the liability (or the rights) of
the parties may be exactly fixed because it is necessary that
unenforceable24 against the former unless it is ratifi ed by the acceptance be identical with the offer to create a
him before it is revoked by the other contracting party. (see contract without any further act on the part of the offeror.
Art. 1403[1].)
EX: (1) “Will you buy this watch for P1,000.00?” This is
an offer.
ESSENTIAL REQUISITES OF A CONTRACT Meaning of acceptance.
ART. 1318. There is no contract unless the following Acceptance is the manifestation by the offeree of his assent
requisites concur: to the terms of the offer. Without acceptance, there can be
(1) Consent of the contracting parties; no meeting of the minds between the parties. (Art. 1305.) A
mere offer produces no obligation.
(2) Object certain which is the subject matter of the
contract; Acceptance of offer must be absolute.

(3) Cause of the obligation which is established. (1261) The acceptance of an offer must be absolute, unconditional
or unqualified, that is, it must be identical in all respects
with that of the offer so as to produce the consent or
meeting of the minds necessary to perfect a contract.
SECTION 1- CONSENT
Acceptance made by letter or telegram.
ART. 1319. Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause With regard to contracts between absent persons, the
which are to constitute the contract. The offer must be acceptance may be transmitted by any means which the
certain and the acceptance absolute. A qualified acceptance offerer has authorized the offeree to use.
constitutes a counter-offer.

Acceptance made by letter or telegram does not bind the

1. Knowledge of the acceptance- If transmitted by letter or
offerer except from the time it came to his knowledge. The
telegram, the contract is perfected not from the time the
contract, in such a case, is presumed to have been entered
letter or telegram is sent but from the time of the offerer’s
into in the place where the offer was made. (1262a)
knowledge, actual or constructive, of the acceptance. This
is the theory of cognition or information which the Civil
Code has adopted. (Art. 1319, par. 2.) An example of
Meaning of consent. constructive knowledge is where the letter or telegram
Consent is the conformity of wills and with respect to containing the acceptance is received by the offerer who for
contracts, it is the agreement of the will of one contracting some reason did not read it but not where he could not have
party with that of another or others, upon the object and read it as when he was absent or physically incapacitated at
terms of the contract. (4 Sanchez Roman 191; 8 Manresa the time of the receipt of the same. The presumption,
648.) Concurrence of offer and acceptance. It is the meeting however, is that the offerer read the contents thereof or
of minds, i.e., the concurrence of offer and acceptance came to know of the acceptance.
between the parties which expresses their intent in entering 2. Revocation of offer- Before the acceptance is known,
into the contract respecting the subject matter and the cause the offer can be revoked, it not being necessary, in order for
or consideration thereof. the revocation to have the effect of preventing the
perfection of the contract, that it be known by the
acceptant. (see Laudico and Harden vs. Arias, 43 Phil. 270
Meaning of offer. [1922].)
Offer is a proposal made by one party (offerer) to another 3. Revocation of acceptance- Similarly, the offeree may
to enter into a contract. It is more than an expression of revoke the acceptance he has already sent, provided, the
desire or hope. It is really a promise to act or to refrain revocation reaches the offeror before the latter learns of the
from acting on condition that the terms thereof are accepted acceptance. In short, both the offer and acceptance may be
by the person (offeree) to whom it is made. revoked before the contract is perfected which takes place
from the time the acceptance comes to the offerer’s
Offer must be certain.
knowledge.
 ART. 1322. An offer made through an agent is accepted
from the time acceptance is communicated to him. (n)
ART. 1320. An acceptance may be express or implied.
Form of acceptance of offer. Communication of acceptance to agent.

An express acceptance may be oral or written. An implied For a contract to arise, the acceptance must be made known
acceptance is one that is inferred from act or conduct. to the offeror. By legal fiction, an agent is considered an
extension of the personality of his principal. (Art. 1910,
par. 1.) If duly authorized, the act of the agent is, in law, the
(1) Acceptance by promise- An offer of a promise or an act of the principal. Article 1322 applies only if the offer is
act may be accepted by giving a promise, as where a person made through the agent and the acceptance is
offers to deliver to another a certain thing if the latter will communicated through him. Hence, there would be no
pay a certain amount, and the other accepts by promising to meeting of the minds if the principal himself made the
so pay according to the conditions of the offer. The promise offer and the acceptance is communicated to the agent
need not be by words but may be inferred from the acts of unless, of course, the latter is authorized to receive the
the parties, as by one or both acting on it as though it were acceptance.
a completed agreement.

(2) Acceptance by act- An acceptance of an offer may be

by act, as where an offer is made that the offerer will do ART. 1323. An offer becomes ineffective upon the death,
something else, if the offeree shall do a particular thing. In civil interdiction, insanity, or insolvency of either party
such a case, performance is the only thing needful to before acceptance is conveyed. (n)
complete the agreement and to create a binding promise.
When offer becomes ineffective.
(3) Acceptance by silence or inaction- As a rule, silence
An offer may be withdrawn before it is accepted. After
cannot be construed as acceptance. The acceptance must be
acceptance, the contract is already perfected. (Art. 1319.)
affirmatively and clearly made and evidenced by words or
Under Article 1323, even if the offer is not withdrawn, its
some acts or conduct communicated to the offeror. The
acceptance will not produce a meeting of the minds in case
exceptions are:
the offer has already become ineffective because of the
(a) where the parties agree expressly or impliedly that it death, civil interdiction, insanity, or insolvency of either
shall amount to acceptance; party before the conveyance of the acceptance to the
offeror. It must be observed that the law refers to “either
(b) where specific provisions of law so declare (e.g., Arts. party.” This means that at the time the acceptance is
1670, 1870-1873.); and communicated, both parties, offerer and offeree, must be
(c) where under the circumstances such silence constitutes living and capacitated. (see Art. 1327.) The death of either
estoppel. (see Art. 1431.) party or his loss of capacity before perfection precludes the
formation of a contract

ART. 1321. The person making the offer may fix the time,
place, and manner of acceptance, all of which must be ART. 1324. When the offerer has allowed the offeree a
complied with. certain period to accept, the offer may be withdrawn at any
time before acceptance by communicating such withdrawal,
Matters that may be fixed by the offerer. except when the option is founded upon a consideration, as
something paid or promised. (n)
The person making the offer may prescribe the time, the
place, and the manner of acceptance, all of which must be Meaning of contract of option; option period; option
complied with otherwise the offer shall be deemed money.
terminated. An offer is terminated when it is rejected by the
offeree. An acceptance departing from the terms of the 1. Option contract is a preparatory contract giving a
offer constitutes a counter-offer. Take note that a person for a consideration a certain period and
counteroffer has the effect of extinguishing the offer. It, in under specified conditions within which to accept
effect, constitutes a new offer which the original offerer the offer of the offerer.
may accept or reject. Option may also refer to the privilege itself given to the
offeree to accept an offer within a certain period.
2. Option period is the period given within which the The capacity of persons, whether natural or artificial
offeree must decide whether or not to enter into the (associations, partnerships, corporations, etc.), to give
principal contract. consent may be classified into:

3. Option money is the money paid or promised to be paid

as a distinct consideration for an option contract. It is not to
be confused with earnest money which is actually a partial (1) Natural capacity- Only natural persons have natural
payment of the purchase price and is considered as proof of capacity, but in order that they may have full capacity to
the perfection of the contract. contract, they must not only have the natural capacity to
contract, but also the legal capacity.
Withdrawal of offer where period for acceptance stipulated.
The absence of natural capacity results in natural
When the offerer gives to the offeree a certain period incapacity, the causes of which are based on nature or real
within which to accept the offer, the general rule is that the absence of aptitude to consent, as
offer may be withdrawn as a matter of right at any time
before acceptance. in the case of an insane; and

(2) Legal capacity- it refers not only to natural persons, but

also to artificial as well. The absence of legal capacity
ART. 1325. Unless it appears otherwise, business results in legal incapacity, the causes of which are based on
advertisements of things for sale are not definite offers, but positive provisions of law, and exist in opposition to, or as
mere invitations to make an offer. limitations of, natural capacity, as in the case of persons
under civil interdiction.

ART. 1326. Advertisements for bidders are simply

invitations to make proposals, and the advertiser is not ART. 1328. Contracts entered into during a lucid interval
bound to accept the highest or lowest bidder, unless the are valid. Contracts agreed to in a state of drunkenness or
contrary appears. (n) during a hypnotic spell are voidable.

Contracts entered into during a lucid interval.

Advertisements for bidders generally not definite offers. Lucid interval is a temporary period of sanity. A contract
entered
• Acceptance of bid- In an advertisement for bidders, the
advertiser is not the one making the offer. In reality, the into by an insane or demented person during a lucid
bidder is the one making the offer which the advertiser is interval is valid. It must be shown, however, that there is a
free to accept or reject. full return of the mind to sanity as to enable him to
understand the contract he is entering into.
• Compliance with terms of bid- (a) One who submits a
bid not only signifies assent to the terms and conditions of a ART. 1329. The incapacity declared in Article 1327 is
proposal, but impliedly binds himself to them, if and when subject to the modifications determined by law, and is
the bid is considered. understood to be without prejudice to special
disqualifications established in the laws. (1264)

Incapacity declared in Article 1327 subject to modifi

ART. 1327. The following cannot give consent to a cations.
contract:
(1) When necessaries such as food, are sold and delivered
(1) Unemancipated minors; to a minor or other person without capacity to act, he must
(2) Insane or demented persons, and deaf-mutes who donot pay a reasonable price therefor.
know how to write. (1263a) (2) A minor, 18 years old or above may contract for life,
Capacity and incapacity classified and distinguished. health and accident insurance, provided, the insurance is
taken on his life and the beneficiary appointed is the
To form a valid and legal agreement, it is necessary that minor’s estate or the minor’s father, mother, spouse,
there be a party capable of contracting and a party capable brother, or sister.
of being contracted with
(3) A contract is valid if entered into through a guardian or
legal representative. (see Art. 1381[1, 2].)
(4) A contract is valid where the minor who was near ART. 1332. When one of the parties is unable to read, or if
majority age misrepresented his actual age and the contract is in a language not understood by him, and
convincingly led the other party to believe in his legal mistake or fraud is alleged, the person enforcing the
capacity. contract must show that the terms thereof have been fully
explained to the former. (n)
(5) A contract is valid where a minor between 18 and 21
years of age voluntarily pays a sum of money or delivers a
fungible thing in fulfillment of his obligation thereunder
and the obligee has spent or consumed it in good faith. (Art. Burden of proof in case of mistake or fraud.
1427.) When a person signs a document, the presumption is that he
(6) Emancipation of a minor for any cause such as by does so with full knowledge of its contents and
marriage or by recorded agreement, shall terminate parental consequences. Should he later on allege fraud or mistake, it
authority over his person and property and he shall then be is incumbent upon him to prove his allegation since it is
qualified and responsible for all acts of civil life. presumed that a person takes ordinary care of his concerns
and that private contracts have been fair and regular. This
rule is especially applied with aspect to notarial documents
which are clothed with the presumption of regularity and
ART. 1330. A contract where consent is given through due execution.
mistake, violence, intimidation, undue influence, or fraud is
voidable. (1265a) Effect of mistake of law.

As a rule, mistake of law does not invalidate consent

because “ignorance of the law excuses no one from
Characteristics of consent. compliance therewith.”
there is no valid consent unless:

(1) It is intelligent. — There is legal capacity to act. ART. 1335. There is violence when in order to wrest
The consent must be given with an exact notion over the consent, serious or irresistible force is employed. There is
thing consented to or the matter to which it refers. In the intimidation when one of the contracting parties is
case of a juridical persons such as a corporation, consent compelled by a reasonable and well- grounded fear of an
may only be given through officers duly authorized by its imminent and grave evil upon his person or property, or
board of directors; upon the person or property of his spouse, descendants or
ascendants, to give his consent.
(2) It is free and voluntary- There is no vitiation of
consent by reason of violence or intimidation (see Art. To determine the degree of the intimidation, the age, sex
1330.); and and condition of the person shall be borne in mind. A threat
to enforce one’s claim through competent authority, if the
(3) It is conscious or spontaneous- There is no vitiation of claim is just or legal, does not vitiate consent.
consent by reason of mistake, undue influence, or fraud.
Nature of violence or force.

Violence requires the employment of physical force. Under

ART. 1331. In order that mistake may invalidate consent, it Article 1335, to make consent defective, the force
should refer to the substance of the thing which is the employed must be either serious or irresistible. In either
object of the contract, or to those conditions which have case, consent is not free. It is essential that the force
principally moved one or both parties to enter into the employed must be the determining cause or reason for
contract. Mistake as to the identity or qualifications of one giving consent.
of the parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract. Nature of intimidation or threat.
A simple mistake of account shall give rise to its correction. Under the above article, for intimidation to vitiate the
(1266a) consent of a party to a contract, the following requisites
Meaning of mistake or error. must be present:

Mistake or error is the false notion of a thing or a fact

material to the contract. (1) It must produce a reasonable and well-grounded fear of
an evil;
(2) The evil must be imminent and grave; (1) insidious words or machinations “include false
promises, exaggerated expectations or benefits, abuse of
(3) The evil must be upon his person or property, or that of confidence, fictitious names, qualities, or power; in fine,
his spouse, descendants, or ascendants; and the thousand forms of fraud, which can deceive a
(4) It is the reason why he enters into the contract. contracting party, producing a vitiated consent”

(2) “Insidious machinations” may be said to be a deceitful

scheme or plot with an evil design, or in other words, with
ART. 1336. Violence or intimidation shall annul the a fraudulent purpose. Thus, deceit which avoids a contract
obligation, although it may have been employed by a third need not be by means of misrepresentation in words.
person who did not take part in the contract.

Violence or intimidation by a third person.

Fraud, in its general sense, embraces all multifarious
Violence or intimidation may be employed by a third means which human ingenuity can device and which are
person who did not take part in the contract. However, to resorted to by one individual to secure an unfair advantage
make the contract voidable or annullable, it is necessary by which another is cheated.
that the violence or intimidation must be of the character
required in Article 1335. Deceit is a species of fraud. It is the false representation of
a matter of fact, by false or misleading allegations or by
concealment which deceives orintended to deceive another.
ART. 1337. There is undue influence when a person takes Concealing or omitting to state material facts, when there is
improper advantage of his power over the will of another, a special duty to disclose the same, with intent to deceive,
depriving the latter of a reasonable freedom of choice. The by reason of which concealment or omission, the other
following circumstances shall be considered: the party was induced to give a consent which he would not
confidential, family, spiritual and other relations between otherwise have given.
the parties, or the fact that the person alleged to have been
unduly influenced was suffering from mental weakness, or
was ignorant or in financial distress. (n)
ART. 1339. Failure to disclose facts, when there is a duty
Meaning of undue influence. to reveal them, as when the parties are bound by
confidential relations, constitutes fraud. (n)
The rule as to what constitutes undue influence has been
variously stated but the substance of the different Fraud by concealment.
statements is that, to be sufficient, the influence must be
A neglect or failure to communicate that which a party to a
of a kind that so overpowers and subjugates the mind of a contract knows and ought to communicate constitutes
party as to destroy his free agency and make him express concealment.
the will of another, rather than his own.

ART. 1340. The usual exaggerations in trade, when the

ART. 1338. There is fraud when, through insidious words other party had an opportunity to know the facts, are not in
or machinations of one of the contracting parties, the other themselves fraudulent.
is induced to enter into a contract which, without them, he
Usual exaggerations in trade.
would not have agreed to.
It is the natural tendency for merchants and traders to resort
Meaning of causal fraud.
to exaggerations in their attempt to make a sale at the
Causal fraud or dolo causante is the fraud employed by highest price possible. When the person dealing with them
one party prior to or simultaneous with the creation of the had an opportunity to know the facts, the usual
contract to secure the consent of the other. It is the fraud exaggerations in trade are not in themselves fraudulent. The
used by a party to induce the other to enter into a contract law allows considerable latitude to seller’s statements or
without which the latter would not have agreed to, taking dealer’s talk and experience teaches that it is exceedingly
into account the circumstances of the case. risky to accept it at its face value. Customers are expected
to know how to take care of their concerns and to rely on
How causal fraud is committed their own independent judgment. Any person who relies on
said exaggerations does so at his own peril.
Dealer’s talk or trader’s talk are representations which do Article 1344 distinguishes two kinds of (civil) fraud in the
not appear on the face of the contract and these do not bind making of a contract, to wit:
either party.
(1) causal fraud, or fraud employed to secure the
consent of the other party, which is a ground for
the annulment of a contract (par. 1.), although it
ART. 1341. A mere expression of an opinion does not may also give rise to an action for damages; and
signify fraud, unless made by an expert and the other party (2) incidental fraud, or fraud likewise employed to
has relied on the former’s special knowledge. secure the consent of the other party but which
Expression of opinion. only renders the party who employs it liable for
damages. (par. 2.) This kind of fraud must not be
To constitute fraud, the misrepresentation must refer to confused with the fraud in Articles 1170 and 1171
facts, not opinions. Ordinarily, a mere expression of an which refers to that occurringin the performance of
opinion does not signify fraud. In order that it may amount a pre-existing obligation under
to fraud, the following requisites must be present:
a contract without affecting the validity of the contract.
(1) It must be made by an expert; Both kinds of incidental fraud do not vitiate consent.
(2) The other contracting party has relied on the expert’s
opinion; and
ART. 1345. Simulation of a contract may be absolute or
(3) The opinion turned out to be false or erroneous. 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. 1342. Misrepresentation by a third person does not
vitiate consent, unless such misrepresentation has created
substantial mistake and the same is mutual. ART. 1346. An absolutely simulated or fictitious contract
is void. A relative simulation, when it does not prejudice a
Fraud by a third person.
third person and is not intended for any purpose contrary to
A third person has no connection with a contract. law, morals, good customs, public order or public policy
Consequently, a misrepresentation by him does not vitiate binds the parties to their real agreement.
consent. A party should not be made to suffer for the
imprudence of another in believing the fraud of a third
person. The presumption is that both contracting parties are Meaning of simulation of a contract.
acting in good faith.
Simulation of a contract is the act of deliberately deceiving
others, by feigning or pretending by agreement, the
appearance of a contract which is either non-existent or
ART. 1343. Misrepresentation made in good faith is not
concealed or is different from that which was really
fraudulent but may constitute error.
executed.
Effect of misrepresentation made in good faith.
SECTION 2- OBJECT OF CONTRACTS
If the misrepresentation is not intentional but made in good
ART. 1347. All things which are not outside the commerce
faith (the person making the false statement believed it to
of men, including future things, may be the object of a
be true), it is considered a mere mistake or error. Fraud is
contract. All rights which are not intransmissible may also
definitely more serious than mistake; hence, the party guilty
be the object of contracts. No contract may be entered into
of fraud is subject to greater liability.
upon future inheritance except in cases expressly
authorized by law. All services which are not contrary to
law, morals, good customs, public order or public policy
ART. 1344. In order that fraud may make a contract may likewise be the object of a contract. (1271a)
voidable, it should be serious and should not have been
employed by both contracting parties.

Incidental fraud only obliges the person employing it to pay ART. 1348. Impossible things or services cannot be the
damages. (1270) object of contracts. (1272)

Two kinds of fraud in the making of a contract. Concept of object of a contract.

The object of a contract is its subject matter. Meaning of cause.

Kinds of object of contract. Cause (causa) is the essential or more proximate purpose
or reason which the contracting parties have in view at the
Object certain is the second essential element of a valid time of entering into the contract
contract. (Ibid.) The object may be things (as in sale of
property), rights (as in assignment of credit), or services (as Classification of contracts according to cause.
in agency).
(1) Onerous or one the cause of which, for each
Requisites of things as object of contract. contracting party, is the prestation or promise of a thing or
service by the other.
In order that things may be the object of a contract, the
following requisites must be present: (2) Remuneratory or remunerative or one the cause of
which is the service or benefit which is remunerated.
(1) The thing must be within the commerce of men, that is,
it can legally be the subject of commercial transaction (3) Gratuitous or one the cause of which is the mere
liberality of the benefactor or giver, such as commodatum;
(2) It must not be impossible, legally or physically (Art. pure donation; guaranty or suretyship unless there is a
1348.); stipulation to the contrary, mortgage given by a third
(3) It must be in existence or capable of coming into person to secure an obligation of a debtor unless a
existence (see Arts. 1461, 1493, 1494.); and consideration is paid for such mortgage.

(4) It must be determinate or determinable without the need

of a new contract between the parties. ART. 1351. The particular motives of the parties in
Meaning of future inheritance. entering into a contract are different from the cause thereof.

Future inheritance is any property or right, not in existence Meaning of motive.

or capable of determination at the time of the contract, that Motive is the purely personal or private reason which a
a person may inherit in the future. party has in entering into a contract. It is different from the
cause of the contract.

ART. 1349. The object of every contract must be

determinate as to its kind. The fact that the quantity is not ART. 1352. Contracts without cause, or with unlawful
determinate shall not be an obstacle to the existence of the cause, produce no effect whatever. The cause is unlawful if
contract, provided it is possible to determine the same, it is contrary to law, morals, good customs, public order or
without the need of a new contract between the parties. public policy.
(1273)
Requisites of cause.
Quantity of object of contract need not be determinate.
The following are the requisites of cause:
The object of a contract must be determinate as to its kind
or at least determinable without the necessity of a new or (1) It must exist at the time the contract is entered into
further agreement between the parties. It need not be
specified with absolute certainty. The same is true of the (2) It must be lawful
quantity of the object of the contract. It is sufficient that it (3) It must be true or real.
is possible to determine the same without the need of a new
contract between the parties. Effect of absence of cause.

Absence or want of cause means that there is a total lack of

any valid consideration for the contract.
SECTION 3- CAUSE OF CONTRACTS
(1) Statement in contract of a non-existent cause-
ART. 1350. In onerous contracts the cause is understood to Contracts without cause confer no right and produce no
be, for each contracting party, the prestation or promise of a legal effect whatever. Thus, a contract which is absolutely
thing or service by the other; in remuneratory ones, the simulated or fictitious is inexistent and void.
service or benefit which is remunerated; and in contracts of
pure beneficence, the mere liberality of the benefactor. (2) Grant of right of first refusal- It is not correct to say
(1274) that there is no consideration for the grant of the right of
first refusal if such grant is embodied in the same contract international obligations towards our friends of the Free
of lease. World. We will carry this out within the framework of our
special relations with the United States to whose citizens
Effect of illegality of cause. we granted until 1974, by Constitutional provision, equal
Illegality of cause implies that there is a cause but the same rights as Filipinos in the exploitation of our natural
is unlawful or illegal. The cause is unlawful if it is contrary resources and public utilities, and to whom we also granted
to law, morals, good customs public order, or public policy. trading parity rights under the Laurel-Langley Agreement.
Under this policy we will welcome friendly and
understanding foreign capital willing to collaborate with us
in the exploitation of our vast natural resources preferably
ART. 1353. The statement of a false cause in contracts
on joint venture basis.
shall render them void, if it should not be proved that they
were founded upon another cause which is true and lawful.
(1276)
ARTICLE XII
Effect of falsity of cause.

By falsity of cause is meant that the contract states a valid

consideration, but such statement is not true. A false cause NATIONAL ECONOMY AND PATRIMONY
may be erroneous or simulated. The first always produces Section 1. The goals of the national economy are a more
the inexistence of a contract. If the cause is false, the equitable distribution of opportunities, income, and wealth;
contract is rendered void because the same actually does a sustained increase in the amount of goods and services
not exist. produced by the nation for the benefit of the people; and an
expanding productivity as the key to raising the quality of
life for all, especially the underprivileged.
ART. 1354. Although the cause is not stated in the
contract, it is presumed that it exists and is lawful, unless The State shall promote industrialization and full
the debtor proves the contrary. (1277) employment based on sound agricultural development and
agrarian reform, through industries that make full and
Cause presumed to exist and lawful. efficient use of human and natural resources, and which are
competitive in both domestic and foreign markets.
It is not necessary that the cause be expressly stated in the
However, the State shall protect Filipino enterprises against
contract. The presumption is that the cause exists and is
unfair foreign competition and trade practices.
lawful unless the debtor proves the contrary.
In the pursuit of these goals, all sectors of the economy and
all regions of the country shall be given optimum
ART. 1355. Except in cases specified by law, lesion or opportunity to develop. Private enterprises, including
inadequacy of cause shall not invalidate a contract, unless corporations, cooperatives, and similar collective
there has been fraud, mistake or undue influence. organizations, shall be encouraged to broaden the base of
their ownership.
Meaning of lesion.

Lesion is any damage caused by the fact that the price is

unjust or inadequate. Section 2. All lands of the public domain, waters, minerals,
coal, petroleum, and other mineral oils, all forces of
THE “FILPINO FIRST” POLICY potential energy, fisheries, forests or timber, wildlife, flora
The ”Filipino First” policy of this administration received a and fauna, and other natural resources are owned by the
resounding popular indorsement in the last election. State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration,
Politically we became independent since 1946, but development, and utilization of natural resources shall be
economically we are still semi-colonial. This is especially under the full control and supervision of the State. The
true in our foreign trade. This policy is therefore designed State may directly undertake such activities, or it may enter
to regain economic independence. It is a national effort to into co-production, joint venture, or production-sharing
the end that Filipinos obtain major and dominant agreements with Filipino citizens, or corporations or
participation in their own national economy. This we will associations at least sixty per centum of whose capital is
achieve with malice towards none and with fairness to all. owned by such citizens. Such agreements may be for a
We will accomplish this with full understanding of our period not exceeding twenty-five years, renewable for not
more than twenty-five years, and under such terms and diminished, except by law. The Congress shall provide for
conditions as may be provided by law. In cases of water such period as it may determine, measures to prohibit
rights for irrigation, water supply fisheries, or industrial logging in endangered forests and watershed areas.
uses other than the development of water power, beneficial
use maybe the measure and limit of the grant. Section 5. The State, subject to the provisions of this
Constitution and national development policies and
The State shall protect the nation’s marine wealth in its programs, shall protect the rights of indigenous cultural
archipelagic waters, territorial sea, and exclusive economic communities to their ancestral lands to ensure their
zone, and reserve its use and enjoyment exclusively to economic, social, and cultural well-being.
Filipino citizens.
The Congress may provide for the applicability of
The Congress may, by law, allow small-scale utilization of customary laws governing property rights or relations in
natural resources by Filipino citizens, as well as determining the ownership and extent of ancestral domain.
cooperative fish farming, with priority to subsistence
fishermen and fish workers in rivers, lakes, bays, and Section 6. The use of property bears a social function, and
lagoons. all economic agents shall contribute to the common good.
Individuals and private groups, including corporations,
The President may enter into agreements with foreign- cooperatives, and similar collective organizations, shall
owned corporations involving either technical or financial have the right to own, establish, and operate economic
assistance for large-scale exploration, development, and enterprises, subject to the duty of the State to promote
utilization of minerals, petroleum, and other mineral oils distributive justice and to intervene when the common good
according to the general terms and conditions provided by so demands.
law, based on real contributions to the economic growth
and general welfare of the country. In such agreements, the Section 7. Save in cases of hereditary succession, no
State shall promote the development and use of local private lands shall be transferred or conveyed except to
scientific and technical resources. individuals, corporations, or associations qualified to
acquire or hold lands of the public domain.
The President shall notify the Congress of every contract
entered into in accordance with this provision, within thirty Section 8. Notwithstanding the provisions of Section 7 of
days from its execution. this Article, a natural-born citizen of the Philippines who
has lost his Philippine citizenship may be a transferee of
Section 3. Lands of the public domain are classified into private lands, subject to limitations provided by law.
agricultural, forest or timber, mineral lands and national
parks. Agricultural lands of the public domain may be Section 9. The Congress mayestablish an independent
further classified by law according to the uses to which economic and planning agency headed by the President,
they may be devoted. Alienable lands of the public domain which shall, after consultations with the appropriate public
shall be limited to agricultural lands. Private corporations agencies, various private sectors, and local government
or associations may not hold such alienable lands of the units, recommend to Congress, and implement continuing
public domain except by lease, for a period not exceeding integrated and coordinated programs and policies for
twenty-five years, renewable for not more than twenty-five national development.
years, and not to exceed one thousand hectares in area. Until the Congress provides otherwise, the National
Citizens of the Philippines may lease not more than five Economic and Development Authority shall function as the
hundred hectares, or acquire not more than twelve hectares independent planning agency of the government.
thereof, by purchase, homestead, or grant.
Section 10. The Congress shall, upon recommendation of
Taking into account the requirements of conservation, the economic and planning agency, when the national
ecology, and development, and subject to the requirements interest dictates, reserve to citizens of the Philippines or to
of agrarian reform, the Congress shall determine, by law, corporations or associations at least sixty per centum of
the size of lands of the public domain which may be whose capital is owned by such citizens, or such higher
acquired, developed, held, or leased and the conditions percentage as Congress may prescribe, certain areas of
therefor. investments. The Congress shall enact measures that will
Section 4. The Congress shall, as soon as possible, encourage the formation and operation of enterprises whose
determine, by law, the specific limits of forest lands and capital is wholly owned by Filipinos. In the grant of rights,
national parks, marking clearly their boundaries on the privileges, and concessions covering the national economy
ground. Thereafter, such forest lands and national parks and patrimony, the State shall give preference to qualified
shall be conserved and may not be increased nor Filipinos.
The State shall regulate and exercise authority over foreign privately-owned public utility or business affected with
investments within its national jurisdiction and in public interest.
accordance with its national goals and priorities.
Section 18. The State may, in the interest of national
Section 11. No franchise, certificate, or any other form of welfare or defense, establish and operate vital industries
authorization for the operation of a public utility shall be and, upon payment of just compensation, transfer to public
granted except to citizens of the Philippines or to ownership utilities and other private enterprises to be
corporations or associations organized under the laws of the operated by the Government.
Philippines, at least sixty per centum of whose capital is
owned by such citizens; nor shall such franchise, Section 19. The State shall regulate or prohibit monopolies
certificate, or authorization be exclusive in character or for when the public interest so requires. No combinations in
a longer period than fifty years. Neither shall any such restraint of trade or unfair competition shall be allowed.
franchise or right be granted except under the condition that Section 20. The Congress shall establish an independent
it shall be subject to amendment, alteration, or repeal by the central monetary authority, the members of whose
Congress when the common good so requires. The State governing board must be natural-born Filipino citizens, of
shall encourage equity participation in public utilities by known probity, integrity, and patriotism, the majority of
the general public. The participation of foreign investors in whom shall come from the private sector. They shall also
the governing body of any public utility enterprise shall be be subject to such other qualifications and disabilities as
limited to their proportionate share in its capital, and all the may be prescribed by law. The authority shall provide
executive and managing officers of such corporation or policy direction in the areas of money, banking, and credit.
association must be citizens of the Philippines. It shall have supervision over the operations of banks and
Section 12. The State shall promote the preferential use of exercise such regulatory powers as may be provided by law
Filipino labor, domestic materials and locally produced over the operations of finance companies and other
goods, and adopt measures that help make them institutions performing similar functions.
competitive. Until the Congress otherwise provides, the Central Bank of
Section 13. The State shall pursue a trade policy that serves the Philippines operating under existing laws, shall function
the general welfare and utilizes all forms and arrangements as the central monetary authority.
of exchange on the basis of equality and reciprocity. Section 21. Foreign loans may only be incurred in
Section 14. The sustained development of a reservoir of accordance with law and the regulation of the monetary
national talents consisting of Filipino scientists, authority. Information on foreign loans obtained or
entrepreneurs, professionals, managers, high-level technical guaranteed by the Government shall be made available to
manpower and skilled workers and craftsmen in all fields the public.
shall be promoted by the State. The State shall encourage Section 22. Acts which circumvent or negate any of the
appropriate technology and regulate its transfer for the provisions of this Article shall be considered inimical to the
national benefit. national interest and subject to criminal and civil sanctions,
The practice of all professions in the Philippines shall be as may be provided by law.
limited to Filipino citizens, save in cases prescribed by law. PREAMBLE
Section 15. The Congress shall create an agency to We, the sovereign Filipino people, imploring the aid of
promote the viability and growth of cooperatives as Almighty God, in order to build a just and humane society,
instruments for social justice and economic development. and establish a Government that shall embody our ideals
Section 16. The Congress shall not, except by general law, and aspirations, promote the common good, conserve and
provide for the formation, organization, or regulation of develop our patrimony, and secure to ourselves and our
private corporations. Government-owned or controlled posterity, the blessings of independence and democracy
corporations may be created or established by special under the rule of law and a regime of truth, justice,
charters in the interest of the common good and subject to freedom, love, equality, and peace, do ordain and
the test of economic viability. promulgate this Constitution

Section 17. In times of national emergency, when the

public interest so requires, the State may, during the
emergency and under reasonable terms prescribed by it,
temporarily take over or direct the operation of any
 (2) Meddling with or disturbing the private life or family
relations of another;

(3) Intriguing to cause another to be alienated from his

friends;
FINALS!! (4) Vexing or humiliating another on account of his
The Civil Code of the Philippines religious beliefs, lowly station in life, place of birth,
physical defect, or other personal condition.
AN ACT TO ORDAIN AND INSTITUTE THE CIVIL
CODE OF THE PHILIPPINES Art. 27. Any person suffering material or moral loss
because a public servant or employee refuses or neglects,
CHAPTER 2 without just cause, to perform his official duty may file an
action for damages and other relief against he latter,
HUMAN RELATIONS (n)
without prejudice to any disciplinary administrative action
Art. 19. Every person must, in the exercise of his rights that may be taken.
and in the performance of his duties, act with justice,
Art. 28. Unfair competition in agricultural, commercial or
give everyone his due, and observe honesty and good
industrial enterprises or in labor through the use of force,
faith.
intimidation, deceit, machination or any other unjust,
Art. 20. Every person who, contrary to law, wilfully or oppressive or highhanded method shall give rise to a right
negligently causes damage to another, shall indemnify the of action by the person who thereby suffers damage.
latter for the same.
Art. 29. When the accused in a criminal prosecution is
Art. 21. Any person who willfully causes loss or injury to acquitted on the ground that his guilt has not been proved
another in a manner that is contrary to morals, good beyond reasonable doubt, a civil action for damages for the
customs or public policy shall compensate the latter for the same act or omission may be instituted. Such action
damage. requires only a preponderance of evidence. Upon motion
of the defendant, the court may require the plaintiff to file a
Art. 22. Every person who through an act of performance bond to answer for damages in case the complaint should
by another, or any other means, acquires or comes into be found to be malicious.
possession of something at the expense of the latter without
just or legal ground, shall return the same to him. If in a criminal case the judgment of acquittal is based upon
reasonable doubt, the court shall so declare. In the absence
Art. 23. Even when an act or event causing damage to of any declaration to that effect, it may be inferred from the
another's property was not due to the fault or negligence of text of the decision whether or not the acquittal is due to
the defendant, the latter shall be liable for indemnity if that ground.
through the act or event he was benefited.
Art. 30. When a separate civil action is brought to demand
Art. 24. In all contractual, property or other relations, when civil liability arising from a criminal offense, and no
one of the parties is at a disadvantage on account of his criminal proceedings are instituted during the pendency of
moral dependence, ignorance, indigence, mental weakness, the civil case, a preponderance of evidence shall likewise
tender age or other handicap, the courts must be vigilant for be sufficient to prove the act complained of.
his protection.
Art. 31. When the civil action is based on an obligation not
arising from the act or omission complained of as a felony,
Art. 25. Thoughtless extravagance in expenses for pleasure such civil action may proceed independently of the criminal
or display during a period of acute public want or proceedings and regardless of the result of the latter.
emergency may be stopped by order of the courts at the Art. 32. Any public officer or employee, or any private
instance of any government or private charitable institution. individual, who directly or indirectly obstructs, defeats,
Art. 26. Every person shall respect the dignity, personality, violates or in any manner impedes or impairs any of the
privacy and peace of mind of his neighbors and other following rights and liberties of another person shall be
persons. The following and similar acts, though they may liable to the latter for damages:
not constitute a criminal offense, shall produce a cause of (1) Freedom of religion;
action for damages, prevention and other relief:
(2) Freedom of speech;
(1) Prying into the privacy of another's residence:
(3) Freedom to write for the press or to maintain a The indemnity shall include moral damages. Exemplary
periodical publication; damages may also be adjudicated.

(4) Freedom from arbitrary or illegal detention; The responsibility herein set forth is not demandable from a
judge unless his act or omission constitutes a violation of
the Penal Code or other penal statute.
(5) Freedom of suffrage; Art. 33. In cases of defamation, fraud, and physical injuries
(6) The right against deprivation of property without due a civil action for damages, entirely separate and distinct
process of law; from the criminal action, may be brought by the injured
party. Such civil action shall proceed independently of the
(7) The right to a just compensation when private property criminal prosecution, and shall require only a
is taken for public use; preponderance of evidence.
(8) The right to the equal protection of the laws; Art. 34. When a member of a city or municipal police force
refuses or fails to render aid or protection to any person in
(9) The right to be secure in one's person, house, papers,
case of danger to life or property, such peace officer shall
and effects against unreasonable searches and seizures;
be primarily liable for damages, and the city or
(10) The liberty of abode and of changing the same; municipality shall be subsidiarily responsible therefor. The
civil action herein recognized shall be independent of any
(11) The privacy of communication and correspondence; criminal proceedings, and a preponderance of evidence
(12) The right to become a member of associations or shall suffice to support such action.
societies for purposes not contrary to law; Art. 35. When a person, claiming to be injured by a
(13) The right to take part in a peaceable assembly to criminal offense, charges another with the same, for which
petition the government for redress of grievances; no independent civil action is granted in this Code or any
special law, but the justice of the peace finds no reasonable
(14) The right to be free from involuntary servitude in any grounds to believe that a crime has been committed, or the
form; prosecuting attorney refuses or fails to institute criminal
proceedings, the complaint may bring a civil action for
(15) The right of the accused against excessive bail;
damages against the alleged offender. Such civil action
(16) The right of the accused to be heard by himself and may be supported by a preponderance of evidence. Upon
counsel, to be informed of the nature and cause of the the defendant's motion, the court may require the plaintiff
accusation against him, to have a speedy and public trial, to to file a bond to indemnify the defendant in case the
meet the witnesses face to face, and to have compulsory complaint should be found to be malicious.
process to secure the attendance of witness in his behalf;
If during the pendency of the civil action, an information
(17) Freedom from being compelled to be a witness should be presented by the prosecuting attorney, the civil
against one's self, or from being forced to confess guilt, or action shall be suspended until the termination of the
from being induced by a promise of immunity or reward to criminal proceedings.
make such confession, except when the person confessing
Art. 36. Pre-judicial questions which must be decided
becomes a State witness;
before any criminal prosecution may be instituted or may
(18) Freedom from excessive fines, or cruel and unusual proceed, shall be governed by rules of court which the
punishment, unless the same is imposed or inflicted in Supreme Court shall promulgate and which shall not be in
accordance with a statute which has not been judicially conflict with the provisions of this Code.
declared unconstitutional; and
TORT LAW
(19) Freedom of access to the courts.
The Civil Code of the Philippines never used the
In any of the cases referred to in this article, whether or not word ‘tort’ in any of its provisions. Instead, the term ‘quasi-
the defendant's act or omission constitutes a criminal delict’ is used which is the nearest counterpart of the
offense, the aggrieved party has a right to commence an Roman law concept. Unlike the Roman law concept of
entirely separate and distinct civil action for damages, and ‘tort’, intentional and malicious acts are governed by the
for other relief. Such civil action shall proceed Revised Penal Code and not by the law on quasi-delict.
independently of any criminal prosecution (if the latter be
Quasi-delict is used to designate those obligations which
instituted), and mat be proved by a preponderance of
do not arise from law, contracts, quasi-contracts or criminal
evidence.
offences. The concept of liability in quasi-delictual cases is proximate and primary cause of the injury but only
embodied in Chapter 2, Title XVII of the Civil Code. contributed to his harm, the court shall mitigate the
damages to be awarded.
The basic provision on quasi-delict, or culpa
aquiliana or extra-contractual culpa, is article 2176 of the However, if the plaintiff’s own negligence is the immediate
Civil Code which provides: and proximate cause of his injury, he cannot recover
damages.
Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the The doctrine of res ipsa loquitor establishes a presumption
damage done. Such fault or negligence, if there is no of negligence in the absence of any statement by the person
pre-existing contractual relation between the parties, is who has control of the object causing the injury, where the
called a quasi-delict and is governed by the provisions thing which caused the injury, without fault of the injured
of this chapter. persons, is under the exclusive control of the defendant and
the injury is such as in the ordinary course of things does
Liability for quasi-delict under this article requires the not occur if having such control use proper care, it affords
following conditions: (ELEMENTS) reasonable evidence, in the absence of the explanation, that
(1) an unlawful act or omission amounting to a fault or the injury arose from the defendant’s want of care.
negligence, imputable to the defendant; As recognized in American jurisprudence, the doctrine of
(2) damage or injury to the plaintiff; respondeat superior, wherein the negligence of the
employee is conclusively presumed to be the negligence of
(3) such damage or injury being the natural and probable, the employer found its way in the Civil Code.
or direct and immediate consequence of the defendant’s
wrongful act or omission; and Pursuant to Article 2180 of the Civil Code, the following
persons are liable for the acts or omissions of those persons
(4) there being no pre-existing contractual relation between for whom one is responsible:
the plaintiff and defendant.

Article 1173 of the Civil Code defines negligence as the VICARIOUS LIABILITY- Vicarious liability is a situation in
omission of that diligence which is required by the nature which one party is held partly responsible for the unlawful actions of a
of the obligation and corresponds with the circumstances of third party. The third party also carries their own share of the liability.
the persons, of the time and of the place. If the law or The word vicarious is used here to describe the fact that the liability
contract does not state the diligence which is to be observed imposed in indirect.
in the performance, that which is expected of a good father
of a family shall be required. However, the degree of care Vicarious liability can arise in situations where one party is supposed to
and diligence required of a common carrier is extraordinary be responsible for (and have control over) a third party and is negligent
diligence. in carrying out that responsibility and exercising that control.
As a basis for liability, the negligent act or omission must
be the proximate cause of the damage suffered by the
plaintiff. Thus, negligence is a relative term whose
(1) The father and, in case of his death or incapacity, the
application depends upon the situation of the parties and the
mother, are responsible for the damages caused by the
degree of case and vigilance which the circumstances
minor children who live in their company.
reasonably require and so where the danger is great, a high
degree of care is necessary, and the failure to observe it is a (2) Guardians are liable for damages caused by minors or
want of ordinary care under the circumstances. Where the incapacitated persons who are under their authority and live
concurrent or successive negligence acts or omission of two in their company.
or more persons, although acting independently of each
other are, in combination, the direct and proximate cause of (3) The owners and managers of an establishment or
a single injury to a third person, and it is impossible to enterprise are likewise responsible for damages caused by
determine in what proportion each contributed to the injury, their employees in the service of the branches in which the
either is responsible for the whole injury, even though his latter are employed or on the occasion of their functions.
act done might not have caused the entire injury, it has been (4) Employers are liable for the damages caused by their
held that the owners of two vehicles are liable solidarily for employees and household helpers acting within the scope
the death of the passenger. of their assigned tasks, even though the former are not
Negligence on the part of the plaintiff will not defeat a engaged in any business or industry.
claim for damages in quasi-delict, if it was not the
(5) The State is responsible in like manner when it acts But proximate cause can also be the most difficult issue in a
through a special agent; but not when the damage has been personal injury case. Not every remote cause of an injury
caused by the official or to whom the task done properly will result in a right to recover damage.
pertains.
Example: Driver of “Car A” runs a red light, and “Car B”
(6) Teachers and heads of establishments of arts and which has a green light, swerves to avoid being hit. The
trade shall be liable for damages caused by their pupils and driver of Car B is fuming and nervous, with a racing pulse.
students or apprentices, so long as they remained in their Upset, the driver of Car B continues driving, and three
custody. blocks later, hits a parked car, injuring himself. The driver
of Car B can try and claim that the actions of the driver of
However, if it is shown to the court that they Car A caused him to get hurt when he hit the parked car.
observed all the diligence of a good father of a family to And it may well be a remote cause; but it is probably not
prevent damage, their responsibility ceases. the proximate cause.
In several cases decided by the Supreme Court, the Sometimes, the actions of the person who got hurt can be
following are some of the defenses which have been the cause of their own injuries.
interposed and were considered meritorious:
Example: You are playing catch, and your ball goes over a
(a) Last clear chance - According to the doctrine, a person fence onto someone else’s property. The fence is locked,
who has the last clear chance or opportunity of avoiding an and a sign says, “Do not enter; ring bell.” You ring the bell,
accident, notwithstanding the act of his opponent or the and the owner opens the gate for you, inviting you to his
negligence of a third person which is imputed to his property. You explain you lost your ball. The owner tells
opponent is considered in law solely responsible for the you to wait by the gate while he retrieves your ball
consequences of the accident. “because the yard is not safe.” The owner starts going to
(b) Assumption of risk – Here the plaintiff knowing the retrieve the ball, walking in a strange pattern across his
dangers involved had voluntarily assumed the risk of injury yard. You become impatient and decide to follow him. You
and therefore foresee the impending harm that will result if walk onto the grass and, within seconds, notice that your
he continues. feet are bleeding because there is glass all around. The
owner knew the glass was there and didn’t tell you. But
(c) Prescription – A motion may be filed on the ground there may be some question as to whether the owner’s
that the action on quasi-delict has already prescribed if such actions proximately caused your injuries, since he warned
action has been filed after four years from the day the you that the yard was dangerous and that you should wait
quasi-delict was committed. The prescriptive period is not while he got the ball.
interrupted by the filing of a criminal complaint as the civil
action is entirely independent of the criminal action.

Proximate Cause- The actions of the person (or entity)

who owes you a duty must be sufficiently related to your Aside from articles 2176 to 2194 of the Civil Code on
injuries such that the law considers the person to have quasi-delicts, the Civil Code chapter on Human Relations
caused your injuries in a legal sense. If someone’s actions also provides for ‘special torts’ which incorporates not only
are a remote cause of your injury, they are not a proximate principles of equity but also universal moral precepts such
cause. However, if your injury would not have occurred as:
“but for” the actions of another, then usually you can
conclude there was proximate causation. Usually, this is an Art 20. Every person who, contrary to law, willfully or
easy question. negligently causes damage to another, shall indemnify
the latter for the same. and
Example: Driver of “Car A” runs a red light and hits “Car
B,” which had a green light, causing injury to the driver of Art 21. aAny person who willfully causes loss or injury
Car B. Driver of Car A had a duty to not run the red light, to another in a manner that is contrary to morals, good
and, assuming no extenuating circumstances that excused customs or public policy, shall compensate the latter for
running the red light, his actions in doing so directly (and the damage.
therefore, proximately) caused injuries to the driver of Car
B. It is to be noted, however, that, while article 2176 et seq is
limited to acts or omissions causing damage or injury to
another, article 20 includes both intentional and negligent
acts without qualifications.
“Eminent Domain” – also called “condemnation” – is the
power of local, state or federal government agencies to take
private property for “public use” so long as the government Sec. 2. Upon the filing of the petition for expropriation and
pays “just compensation.” The government can exercise its the deposit in the Philippine National Bank at its main
power of eminent domain even if the owner does not wish office or any of its branches of an amount equivalent to ten
to sell his or her property. per cent (10%) of the amount of compensation provided in
Section 1 hereof, the government or its authorized
In the Philippines, the power of expropriation is also set in instrumentality agency or entity shall be entitled to
stone as it is enshrined in all our constitutions, present and immediate possession, control and disposition of the real
present. Under the 1987 Constitution, the power of property and the improvements thereon, including the
eminent domain is contained in article III section 9, which power of demolition of necessary, notwithstanding the
provides: Private property shall not be taken for public pendency of the issues before the courts.
use without just compensation.

Eminent domain refers to the inherent right of the state to

condemn private property to public use upon payment of Sec. 3. Presidential Decree No. 42, Section pars. 2 and 3 of
just compensation. PD No. 76, Sec. 92 of PD No. 464, PD 794, Sections 2 and
3 of PD 1224, Sections 2 and 3 of PD 1259 and Section 1
Before the property can be taken for purposes of eminent of PD 1313 and all other acts, decrees, letters of
domain, the following elements must be present: instructions, orders, ordinances or rules and regulations
which are inconsistent herewith are hereby repealed,
amended or modified accordingly.
(1) the expropriator must enter a private property; ART 2176-2180
(2) the entrance into private property must be for more than    
a momentary period;

(3) the entry into the property should be under warrant or

color of legal authority;

(4) the property must be devoted to a public use or

otherwise informally appropriated or injuriously affected;
and

(5) the utilization of the property for public use must be in

such a way as to oust the owner and deprive him of all
beneficial enjoyment of the property.

Just compensation is determined according to the

following rules stated by Presidential Decree No. 1533
otherwise known as ESTABLISHING A UNIFORM
BASIS FOR DETERMINING JUST COMPENSATION
AND THE AMOUNT OF DEPOSIT FOR IMMEDIATE
POSSESSION OF THE PROPERTY INVOLVED IN
EMINENT DOMAIN PROCEEDINGS.

Section 1. In determining just compensation for private

property acquired through eminent domain proceedings, the
compensation to be paid shall not exceed the value declared
by the owner or administrator or anyone having legal
interest in the property or determined by the assessor,
pursuant to the Real Property Tax Code, whichever value is
lower, prior to the recommendation or decision of the
appropriate Government office to acquire the property.