BOOK IV of the Civil Code

Obligations and Contracts

5 unit subject Usually taken during second semester f the 1 st year
Contracts- kasunduan agreement
Kailangan ba nakasulat? No. the contract is not the paper itself, it is the meeting of the minds.
Contract is the meeting of the minds between two persons; there is already a contrac even if there is no
paper; there was an agreement
Obligation vs contract
Article 1156. An obligation is a juridical necessity to give, to do or not to do. (n)
Article 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
(4) Acts or omissions punished by law; and
(5) Quasi-delicts. (1089a)

TITLE II
CONTRACTS

CHAPTER 1
General Provisions

Article 1305. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. (1254a)
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy. (1255a
Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left
to the will of one of them. (1256a)
Article 1315. Contracts are perfected by mere consent, and from that moment the parties are bound
not only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. (1258)
Obligation- has many sources; exists because of a crime, or a contract, or a quasi contract
A contract- is just one source where an obligation arises
There can be no contract if there is no obligation
4 principles of contract: ROMA
1. Relativity of contracts- mean as that the contracts take effect only between the parties
-it will not bind third person, only between parties of the contract, It is
only relative/binding to the two parties
-the law only means obliger and oblige (2 parties) does not mean 2 tao
lang, kundi dalawang Partido
-art 1311
-exception: if may contract yung parents mo and you are the heir to their
contracts, you are also bound to that contact, dili nimo pwede iingon nga wala kay labot sa
contract so pahawaun nimo sila sa balay…
-hindi transmissible ang utang unless may na tanggap kang property sa
decedent
Contracts: ex: contract of sale, you buy items, marriage, MOA, waiver, the moment u step in the
jeepney is contract of transportation
Article 1311. Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by their
nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the
property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may demand its
fulfillment provided he communicated his acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is not sufficient. The contracting parties must
have clearly and deliberately conferred a favor upon a third person. (1257a)
2. The principle of obligatoriness or the obligatory force of contracts
Art 1356
-contracts shall be obligatory; if there is contract, there is an obligatory force
CHAPTER 3
Form of Contracts
Article 1356. Contracts shall be obligatory, in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. However, when the law
requires that a contract be in some form in order that it may be valid or enforceable, or that a
contract be proved in a certain way, that requirement is absolute and indispensable. In such
cases, the right of the parties stated in the following article cannot be exercised.
3. the mutuality of contracts
Article 1308. The contract must bind both contracting parties; its validity or compliance cannot be left
to the will of one of them. -dili pwede sya lang obliged, kamo duha obliged mag observe ani na
contracts
Contract of adhesion- sila lang ang nag draft sa contract, daghan terms and conditions, mu pirma nalang
ka. EX: sa BPI.
Ex: Sa eroplano, yung mga tickets… wala mo na gina basa.
A contract of adhesion refers to a contract drafted by one party in a position of power, leaving the
weaker party to “take it or leave it.” Adhesion contracts are generally created by businesses providing
goods or services in which the customer must either sign the boilerplate contract or seek services
elsewhere
Is contract of adhesion valid? Supreme court: valid; it is not entirely prohibited. Because the one na
pumirma is in reality free to reject it entirely.
Can you say na gamay ang font mao na wala nimo nabasa?
If there is doubt as to the interpretation, it will be taken against the party who drafted it?
Contract of adhesion is -about who prepares it and what happens in the contract

4. Autonomy of contracts
Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public order,
or public policy. (1255a)
-it is the freedom of the parties to contract provided it is not contrary to law etc…
-liberty of contracts- hindi pwede sya lang; pakinggan mo din yung kabilang party
- you have the freedom to stipulate lahat ng gusto mo istipulate
- kung dili nimo mahatag, anak ang kapalit. Bawal because it is contrary to law, good morals, good
conduct, . pwede ka magstipulate within the parameters of legality
Pwede ma invalidate yung isang portion na di apketado yung iba- divisibility of contract

CHAPTER 2 Essential Requisites of Contracts

General Provisions
Article 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established. (1261)
Elements of a contract C-O-C
1. Consent-
Pumayag talaga kayong dalawa.
Legal capacity should be taken into account. Ex: minors cannot go into contracts
If ikaw brayt ka unya imong kasabot dugay kasabot- is it binding? YES. If naa syay legal capacity
yes. There is a contract.
If minor, voidable. Except contract for necessaries magpalit ug candy…
If the person misrepresents herself as legal age, unya minor diay, the contract is VALID. The
minor cannot claim na minor sya dapat panindigan nya na dili sya minor kay estopped kana. Gi
liba nimo sya…..
If you are of legal age, sound mind… etc that is already enough
Deaf mute has legal capacity if they know how to read and write…
Insane person- can an insane person enter into a contract,but it is voidable, defective ang
contrata…. But there are portions na maulian sya. If naulian sya, while nagenter sya into
contract, if he is in lucid interval THEN the contract is VALID
If there was Intimidation or vitiation- that makes the consent not freely given, the status of the
contract is voidable
Intimidation, violence, undue influence, fraud…
Intimidation- huraw or threat… there was no freedom on your part to enter into a contract
Mistake- ang pagsabot nimo lahi nga lote, in reality, lahi diay imong gusting paliton.
If later on mali ang na realize nimo sa papel ug sa oral…. That is mistake. So you can question
that.
Undue influence- when a person deprives the person of choice. Ex: you take advantage of a
persons incapacity to understand English,or napugos ka sa financial distress
What if under the influence of alcohol?
-if you are lucid during hubog, then valid ang contract
-if thumbmark, dapat iexplain bkit thumbark, ex: tigulang na…

LEGAL BASIS OF CONSENT:

Article 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time it came to
his knowledge. The contract, in
such a case, is presumed to have been entered into in the place where the offer was made.
(1262a)
Article 1320. An acceptance may be express or implied. (n)
Article 1321. The person making the offer may fix the time, place, and manner of acceptance, all
of which must be complied with. (n)
Article 1322. An offer made through an agent is accepted from the time acceptance is
communicated to him. (n)
Article 1323. An offer becomes ineffective upon the death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed. (n)
Article 1324. When the offerer has allowed the offeree a certain period to accept, the offer may
be withdrawn at any time before
acceptance by communicating such withdrawal, except when the option is founded upon a
consideration, as something paid or promised. (n)
Article 1325. Unless it appears otherwise, business advertisements of things for sale are not
definite offers, but mere invitations to make an offer. (n)
Article 1326. Advertisements for bidders are simply invitations to make proposals, and the
advertiser is not bound to accept the highest or lowest bidder, unless the contrary appears. (n)
Article 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to write. (1263a)
Article 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a
state of drunkenness or during a hypnotic spell are voidable. (n)
Article 1329. The incapacity declared in article 1327 is subject to the modifications determined
by law, and is understood to be
without prejudice to special disqualifications established in the laws. (1264)
Article 1330. A contract where consent is given through mistake, violence, intimidation, undue
influence, or fraud is voidable. (1265a)
Article 1331. In order that mistake may invalidate consent, it should refer to the substance of the
thing which is the object of the contract, or to those conditions which have principally moved
one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when
such identity or qualifications have been the principal cause of the contract. A simple mistake of
account shall give rise to its correction. (1266a)
Article 1332. When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract must show
that the terms thereof have been fully explained to the former. (n)
Article 1333. There is no mistake if the party alleging it knew the doubt, contingency or risk
affecting the object of the contract. (n)
Article 1334. Mutual error as to the legal effect of an agreement when the real purpose of the
parties is frustrated, may vitiate consent. (n)
Article 1335. There is violence when in order to wrest consent, serious or irresistible force is
 employed. There is intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil upon his person or property,
or upon the person or property of his spouse, descendants or ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person shall be borne
in mind. A threat to enforce one's claim through competent authority, if the claim is just or legal,
does not vitiate consent. (1267a)
Article 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. (1268)
Article 1337. There is undue influence when a person takes improper advantage of his power
over the will of another, depriving the latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family, spiritual and other relations between
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)
Article 1338. There is fraud when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which, without them, he would
not have agreed to. (1269)
Article 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties
are bound by confidential relations, constitutes fraud. (n)
Article 1340. The usual exaggerations in trade, when the other party had an opportunity to know
the facts, are not in themselves fraudulent. (n)
Article 1341. A mere expression of an opinion does not signify fraud, unless made by an expert
and the other party has relied on the former's special knowledge. (n)
Article 1342. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual. (n)
Article 1343. Misrepresentation made in good faith is not fraudulent but may constitute error.
(n)
Article 1344. In order that fraud may make a contract 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 damages. (1270)
Article 1345. Simulation of a contract may be absolute or relative. The former takes place when
the parties do not intend to be bound at all; the latter, when the parties conceal their true
agreement. (n)
Article 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it
does not prejudice a third person and is not intended for any purpose contrary to law, morals,
good customs, public order or public policy binds the parties to their real agreement. (n)

2. the Object/subject matter of the contract

Object- service in a labor contract
Contrct should spell out the object of the contract
Di kailangang ispecify yung brand, basta may object.
5 requirements of an object
1. It must be determinate
Namaligya ir nagdonate kag hayop, is the object determinable, yes pets, specific ba? enough na yung
pets, as long as alam mon a yun ang object, as to what specific pet is beyond the matter of discussion
• The object must be existingor has the potential to exist – pwede ba nimo ibaligya balay saimong
mama na buhi pa? no. you cannot sell future things.basig disinherit diay ka..
Pwede mo bang ibenta uing titolo na wala sayo and wala nakapangalan sayo? No you cannot
• it must be legal- ex drugs is illegal
• it must be within the commerce of men- ex ibenta nimo ang isa ka human being,
• it’s transmissible- can be transmitted from one owner to another
what cannot be an object of the con9tract? If wala sya ka pasok sa limang requirements
impossible things or services, things contrary to law, good customs, good morals, objects
impossible to be determined
LEGAL BASIS OF OBJECT

SECTION 2
Object of Contracts
Article 1347. All things which are not outside the commerce of men, including future things, may
be the object of a contract. All rights which are not intransmissible may also be the object of
contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized by
law.
All services which are not contrary to law, morals, good customs, public order or public policy
may likewise be the object of a contract. (1271a)
Article 1348. Impossible things or services cannot be the object of contracts. (1272)
Article 1349. The object of every contract must be determinate as to its kind. The fact that the
quantity is not determinate shall not be an obstacle to the existence of the contract, provided it
is possible to determine the same, without the need of a new contract between the parties.
(1273

3. the cause/ the consideration

cause or consideration
-it is the impelling reason why a party assumes an obligation
-kailangan ba talaga ilagay ang reason bat kayo pumasok sa conttrata no
-cause is not the same with motive; consideration is legal
 Article 1350. In onerous contracts the cause is understood to be, for each contracting party, the
prestation or promise of a thing or service by the other; in remuneratory ones, the service or
benefit which is remunerated; and in contracts of pure beneficence, the mere liberality of the
benefactor. (1274)
Article 1351. The particular motives of the parties in entering into a contract are different from
the cause thereof. (n)
Article 1352. Contracts without cause, or with unlawful cause, produce no effect whatever. The
cause is unlawful if it is contrary to law, morals, good customs, public order or public policy.
(1275a)
Article 1353. The statement of a false cause in contracts shall render them void, if it should not
be proved that they were founded upon another cause which is true and lawful. (1276)
Article 1354. Although the cause is not stated in the contract, it is presumed that it exists and is
lawful, unless the debtor proves the contrary. (1277)
Article 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a
contract, unless there has been fraud, mistake or undue influence. (n)

Kinds of contracts:
A. Accdg as to the perfection or the formation of the contract
1. consensual contract
CONSENSUAL Contracts which are perfected by mere consent of the parties regarding the subject matter
and the cause of the contract [Art.1315].

- contract is perfected by virtue of the meeting of the minds

may mga contrata sa pilipinas na hindi enough ang meeting of the midns ; kailangan nasa papel… ex
contract of sale, contract of lease

2. real contract
which are perfected not merely by consent but by delivery, actual or constructive, of the object of the
obligation [Art.1316]. Example: contract of pledge, commodatum, mutuum.

- those contracts which require the consent of both parties for the perfection of the conrracts, and the
delivery of the object by one party to another…
ex: pagsasangla; the teller will ask you to surrender the collateral; contract of pledge; ex: land,
contract of mortgage; how about loan? Is it loan or consensual, it is real contract kay kailangan
naa man syay ma receive na contract; deposit- whenever you leave your bag sa dept store, you
entered into a contract of the management, contract of deposit;
when you deposit the money to the teller, what contract do you enter in? same bas a baggage
 counter? Contract of loan- si bank ngayon ang debtor. Hindi contract of deposit kasi tumutubo
ang pera mo… nakasanayan lang na depositor ka but you are actually the creditor
3. solemn contract

FORMAL OR SOLEMN Contracts for which a special form is necessary for its perfection [Art. 1356].

- contracts which must be in writing; hindi maperfect kahit may meeting of the mind skung hindi sya
naka sulat
Donations- need naka sulat pag mag exceed ng 5,000 ang donation
Land- It needs to be written kasi its more than 5,000
Charging interest- if you enter into a loan, and you charge interest, hindi pwede oral or verbal
lang yan,dapat naka sulat yan.. pwede verbal ang loan itself pero paghatag money,real nay an
sya… pero pag may interest, dapat in writing nay an….
authority to sell- if you are the owner of the land or condo, you must have an aythority to sell,
and that must be in writing, if you have no written authority… if you are the buyer mangita kag
authority asa imong ID etc etc…
Reason why the law requires a certain form: 3reasons
• Because of validity- di ka makapasok kung hindi valid
• Inforcability-
• Convenienc eof the parties
Ex: Donation

Anong object of tehcontract ang dinonate-things ervice oritem involved in the contract
If ga exceed ug 5,000 the donation must be in writing, also the acceptance
Pag real property ang dinonate, it must be in public instrument meaning NAKA NOTARYO DAPAT
The acceptance must also be in writing
Ex: nagpabenta ng lupa
Kailangan may authority
It must be in qriting- di kailangan naka notarize
Ex: pagcharge ng interest
Kailangan naka sulat; kailangan ban aka notaryo? Hindi basta nakasulat lang…

B. According to the relation to other contracts

1. Principal
May mga contrata na hindi pwede mag isa, kailangan nya ng kasama
Ex: pagsasangla… (KAILANGAN NG PRINSIPAL NA KONTRATA)
2. Accessory
ACCESSORY CONTRACTS- exists only as a consequence of a principal contract Pledge or mortgage
are called ACCESSORY CONTRACTS
Mangutag ka, pero kailangan mo isangla yung relo mo,
So ilang contrata?
• Loan and pledge- It cannot stand alone, maghatag yan ng principal contract, utang or loan
contract then pledge; Pero yung utang pwede magstand yan ng mag isa
Ang pag sangla ngyuta and relo is itthe same? No; Relo:contract of pledge When you secure your
loan with personal or movable property, pagsasangla yun pero pledge ang tawag
• If immovable, farm or condo, CONTRACT OF MORTGAGE
Mortgage-is ifthe object is real or immovable… role: to secure the loan….
• Pag secyre ng registration ng sasakyan? CONTRACT OF PLEDGE
3. Preparatory contract
- mga contrata na that exists in preparation for another contract
-preliminary steps towards the formation of another contract
-ex: contract to sell- IBA SA CONTRACT OF SALE
-contract to sell- contract na bayaran nimo sya in 5 yrs…
-pag na fully pay mo na yung bayad, pasok na kayo sa contrata na contract of sale- major contract na
ning contract to sale
C. According to formalities
1. Informal contract- contracts which have no particular form; bisag asa ra pwede isuwat
2. Formal contracts- ex: donation yung “written acceptance” naay form
Article 1358. The following must appear in a public document:
(1) Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property; sales of real property or of an interest therein
are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership
of gains;
(3) The power to administer property, or any other power which has for its object an act appearing or
which should appear in a public document, or should prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even
a private one. But sales of goods, chattels or things in action are governed by articles, 1403, No. 2 and
1405. (1280a)
D. According to cause or consideration
Onerous contracts are those in which something is given or promised as a consideration for the
engagement or gift, or some service, interest, or condition is imposed on what is given or promised,
although unequal to it in value. A gratuitous contract is sometimes called a contract of beneficence.
1. Onerus- may burden ang contrata;contract of sale, ibigay ko property ibigay mo bayad yun ang burden
2. Gratuitus- ibigay k sayo, liberality, you do not pay me anything

E. According to the names of contract

1. Nominate contract- conitracts which are named by the law “contract of sale, loan, mortgage”
-may kanya kanya silang treatment
2. innominate contract- awla ka kabalo unsa ang category “memorandum of agreement/understanding”
hindi ma classify accdg sa mga pangalan na binigay ng batas…

Defective Contracts
1.void contract- absence of one or any of the essential elements
c-o-c absence of one will make the contract void ab initio
if there is object but object is illegal
the effect is that contract is void,
if the contract is void can u cure it? no it is not curable
if the contract is void u file a case- declaration of nullity of contract
nullity is different from anullment; remedey is to file a petition for the declaration of nullity
2. voidable contract

A voidablecontract is one in which the consent of one party is defective, either because of
want of capacity, or because consent is vitiated.
- mostly it focuses on the vitiation of consent
like incapacity ang ground or naay vitiation of consent, naay force, threat, fraud
if one of the parties, walang free will kay may nag influence, it is vitiation
if there is vitiation then contract is voidable
can voidable contracts be cured? YES
if nawala na yung takot and ngpatuloy ka parin, it is already cured
if in case you think a cn9tract is voidable YOU FILE AN ANULLMENT CASE- anullment of
contract
PRESCRIPTION: if 4 years after the vitiation wala mp parin gi anull, that will make the contract
perfect. 4 years starts from the time na nawala ang vitiation or the factors na naginfluence sayo na
pumasok ka jan. if nalagpas na you can no longer question that

3. unenforcable contract- does not attack on the validity of the contract

-An unenforceablecontract is one that, for lack of authority or of the required writing, or for
incompetence of both parties, cannot be given effect unless properly ratified.
-iba ang validity sa enforcability
 -these are contracts entered without authority or wala nya gi comply ang statute of frauds?
what if dalawang minors ang nag contrata?
3 conditions
-wala or in excess of your SPA, the contract you entered is not enforcable
-non compliance of statute of frauds- merong batas kung saan kailangan nakasulat ang contrata, if not
unenforcable sya. found in statute of frauds
contracts covered by sof, mga kailangan naka sulat:
-when an agreement is not to be performed within the year from the making thereof. ang
sabot will take effect 2 yrs from now. pag ang performance mangayri a year or more pa it should be in
writing. it may be a valid promise buut it is not enforcable.
-a special promise to answer for debt, default, or miscourage of another.- nag utang si a kay b
karon kay friend ni c si a sya nlg nag salo sa utang ni a. that is a special promise kay dili naman si a ang
mubayad. will b agrree? dili sya mu agree unless wala na nakasulat.
-an agreement for the sale of goods at a price not less than 500 or 500 and above, for it to be
enforcable dapat naka sulat
agreement for lease for a period more than 1 year, or mg baligya kag real property it should be in
writing
a representation as to the credit of the third person
all these are under art 1403 under the civil code.
if you wrote all these but you didnt write, it is unenforcable
WHAT IS THE REMEDY if it is unenforcable: Proper thing to do is to ratify. general rule: unenforacble
contract canot be rememdied. so ratify, enter again into a contract, sabot mo duha.
-third ground, if both of them are incapacitated, that makes contracts unenforcable, not void