SECTION 2.

— Object of Contracts The exceptions are when they are intransmissible by

their nature, or by stipulation, or by provision of law.
ART. 1348. Impossible things or services cannot be (Art. 1311, par. 1.)
the object of contracts. (1272)
EXAMPLES:
Concept of object of a contract
(1) Outside the commerce of men.
The object of a contract is its subject matter. 2) Impossible, physically or legally
(3) Determinable things
Kinds of object of contract
(4) Future things or rights
Object certain is the second essential element of a valid (5) Intransmissible rights
contract
Meaning of future inheritance
Contracts can be:
a. things (as in sale of property) Future inheritance is any property or right, not in
b. rights (as an assignment of credit) existence or capable of determination at the time of the
c. services (as in agency) contract, that a person may inherit in the future.

Requisites of inheritance to be considered future

Requisites of things as object of contract
A contract may be classified as a contract upon future
In order that things may be the object of a contract, the inheritance where the following requisites concur:
following requisites must be present: (1) The succession has not yet been opened at the time
of the contract;
(1) The thing must be within the commerce of men, that
(2) The object of the contract forms part of the
is, it can legally be the subject of commercial
inheritance; and
transaction (Art. 1347.);
(3) The promissor has, with respect to the object, an
(2) It must not be impossible, legally or physically (Art. expectancy of a right which is purely hereditary in
1348.) nature.

(3) It must be in existence or capable of coming into

Validity of contracts upon future inheritance
existence (see Arts. 1461, 1493, 1494.); and

(4) It must be determinate or determinable without the Except in cases expressly authorized by law, a contract
need of a new contract between the parties. (Arts. concerning future inheritance is void and consequently,
1349, 1460, par. 2.) cannot be the source of any right nor the creator of any
obligation between the parties.
Requisites of services as object of contract

In order that service may be the object of a contract, the Exceptions: The law permits contracts on future
following requisites must concur: inheritance —

(1) The service must be within the commerce of men; (1) in the case of future spouses who agree in their
(2) It must not be impossible, physically or legally (Art. marriage settlements upon a regime other than the
1348.); and absolute community of property, they may donate to
each other as much as one-fi fth of their present
(3) It must be determinate or capable of being made property, but with respect to their future property, such
determinate. (Arts. 1318[2], 1349.) donations shall be governed by the provisions on
Rights as object of contract testamentary succession and the formalities of wills.
(Art. 84, Family Code.) This means that such donations
As a general rule, all rights may be the object of a (by reason of marriage) of future property shall take
contract. effect only in the event of death, to the extent laid
down by law in testamentary succession; and
 contract, such as blindness in contracts which require
(2) in the case of partition of property by act inter vivos the use of eyesight. (8 Manresa 685.)
by a person (i.e., owner or source of the property) to
take effect upon his death. (Art. 1080; see Arroyo vs. ART. 1349. The object of every contract must be
Gerona, 58 Phil. 226 [1933].) Partition of property determinate as to its kind. The fact that the quantity is
representing future inheritance cannot be made not determinate shall not be an obstacle to the
effective during the lifetime of the owner. (Arrogante existence of the contract, provided it is possible to
vs. Deliarte, 528 SCRA 63 [2007].) determine the same, without the need of a new
contract between the parties. (1273)
Future inheritance cannot be renounced. (Uson vs. Del
Rosario, 92 Phil. 531 [1952].) Quantity of object of contract need not be determinate

Inheritance ceases to be future upon death of decedent It is sufficient that it is possible to determine the same
without the need of a new contract between the
Upon the death of the deceased who is the source of parties.
the property, however, future inheritance ceases to be
future and consequently, may be the object of a When the obligation consists in the delivery of a generic
contract. thing, whose quality and circumstances have not been
stated, Article 1246 governs.
Kinds of impossibility
SECTION 3. — Cause of Contracts
Impossibility may be:
ART. 1350. In onerous contracts the cause is understood
(1) Physical. — when the thing or service in the very to be, for each contracting party, the prestation or
nature of things cannot exist (e.g., a monkey that talks) promise of a thing or service by the other; in
or be performed. With particular reference to services remuneratory ones, the service or benefit which is
(see Arts. 1266, 1267.), the impossibility may be: remunerated; and in contracts of pure beneficence, the
mere liberality of the benefactor. (1274)
(a) Absolute. — when the act cannot be done in
any case so that nobody can perform it (e.g., to
Meaning of cause
fly like a bird, etc.); or
(b) Relative. — when it arises from the special
Cause (causa) is the essential or more proximate
circumstances of the case (e.g., to make
purpose or reason which the contracting parties have in
payment to a dead person, to drive a car on
view at the time of entering into the contract or, as
flooded highways, etc.) or the special conditions
expressed in another case, it is the “why of the contract,
or qualifications of the obligor (to paint a
the essential reason which moves the contracting
portrait by a blind person, etc.); or
parties to enter into the contract.’’
(2) Legal. — when the thing or service is contrary to
Distinguished from the English doctrine of consideration
law, morals, good customs, public order, or public
policy.
The terms “cause” and “consideration” are used
interchangeably but there is an essential difference
Effect of physical impossibility on validity of contract
between the two.

(1) The absolute impossibility nullifies the contract

According to its accepted meaning in common law,
(2) The relative impossibility, if temporary, does not
consideration may consist either in some legal right,
nullify the contract, such as when a partner agrees to
interest, benefit or advantage conferred upon the
contribute to the partnership an amount more than is
promissor, to which he is otherwise not lawfully
permissible by his means; if permanent, it annuls the
entitled, or in some legal detriment, prejudice, loss or
disadvantage suffered or undertaken by the promisee
other than to such as he is at the time of consent bound ART. 1351. The particular motives of the parties in
to suffer. entering into a contract are different from the cause
thereof.
Unlike the English principle, the continental doctrine
never rejects any cause or consideration as insufficient. Meaning of motive
Whatever inducement is enough to satisfy the
contracting parties, is enough to satisfy the law. (see Motive is the purely personal or private reason which a
Salmond, Jurisprudence) party has in entering into a contract. It is different from
the cause of the contract.
Cause distinguished from object
Cause distinguished from motive
In a bilateral or reciprocal contract like purchase and
sale, the cause for one is the subject matter or object Motive has been defined as the condition of mind
for the other, and vice versa. Hence, the distinction is which incites to action, but includes also the inference
only a matter of viewpoint. as to the existence of such condition from an external
fact of a nature to produce such a condition.
Classification of contracts according to cause
They are: The differences are as follows:
(1) Cause is the immediate or direct reason, while
(1) Onerous or one the cause of which, for words, in motive is the remote or indirect reason;
this contract, the parties are reciprocally obligated to (2) Cause is always known to the other contracting
each other each contracting party, is the prestation or party, while motive may be unknown;
promise of a thing or service by the other. In other. (3) Cause is an essential element of a contract, while
motive is not; and
(2) Remuneratory or remunerative or one the cause of (4) The illegality of the cause affects the validity of a
which is the service or benefit which is remunerated. contract, while the illegality of one’s motive does not
The purpose of the contract is to reward the service render the contract void.
that had been previously rendered by the party
renumerated; and When motive regarded as cause

3) Gratuitous or one the cause of which is the mere As a general principle, the motive or particular purpose
liberality of the benefactor or giver, such as of a party in entering into a contract does not affect the
commodatum; pure donation; guaranty or suretyship validity nor existence of the contract.
unless there is a stipulation to the contrary (Art. 2048.),
mortgage given by a third person to secure an Under certain circumstances, the motive may be
obligation of a debtor (see Art. 2085, last par.) unless a considered the cause in a contract when such motive
consideration is paid for such mortgage. predetermines the cause of the contract.

Liberality as cause in contracts of beneficence

Under Article 1350, the liberality of the benefactor is

deemed causa only in those contracts that are of pure
beneficence, that is to say, contracts designed solely
and exclusively to procure the welfare of the
beneficiary, without any intent of producing any
satisfaction for the donor; contracts, in other words, in
which the idea of self-interest is totally absent on the
part of the transferor.
ART. 1352. Contracts without cause, or with unlawful ART. 1353. The statement of a false cause in contracts
cause, produce no effect whatever. The cause is shall render them void, if it should not be proved that
unlawful if it is contrary to law, morals, good customs, they were founded upon another cause which is true
public order or public policy. (1275a) and lawful. (1276)

Requisites of cause Effect of falsity of cause

The following are the requisites of cause: By falsity of cause is meant that the contract states a
valid consideration but such statement is not true.
(1) It must exist at the time the contract is entered into
(Arts. 1352, 1409[3].); A false cause may be erroneous or simulated. The first
(2) It must be lawful (Ibid.); and always produces the inexistence of a contract. If the
(3) It must be true or real. (Art. 1353.) cause is false, the contract is rendered void because the
same actually does not exist.

Effect of absence of cause The second does not always produce this effect,
because it may happen that the hidden but true cause is
Absence or want of cause means that there is a total sufficient to support the contract. If the parties can
lack of any valid consideration for the contract. show that there is another cause and that said cause is
true and lawful, then the parties shall be bound by their
(1) Statement in contract of a non-existent cause. true agreement.
(2) Grant of right of first refusal
ART. 1354. Although the cause is not stated in the
Effect of failure of cause contract, it is presumed that it exists and is lawful,
unless the debtor proves the contrary. (1277)
Absence of cause should be distinguished from
inadequacy of cause which, as a general rule, is not a Cause presumed to exist and lawful
ground for relief (see Art. 1355.), and from failure of
cause which does not render a contract void. (see Arts. It is not necessary that the cause be expressly stated in
1169, par. 3; 1170, 1191.) the contract.

Failure to pay the consideration is different from lack of The presumption is that the cause exists and is lawful
consideration. The former results in a right to demand unless the debtor proves the contrary.
the fulfillment or cancellation of the obligation under an
existing valid contract while the latter prevents the
ART. 1355. Except in cases specified by law, lesion or
existence of a valid contract.
inadequacy of cause shall not invalidate a contract,
unless there has been fraud, mistake or undue influence.
Effect of illegality of cause
TERMS:
Illegality of cause implies that there is a cause but the
same is unlawful or illegal. Lesion is any damage caused by the fact that the price is
unjust or inadequate.
The cause is unlawful if it is contrary to law, morals, TWO IMPORTANT CONCEPTS:
good customs public order, or public policy. (see Art.
1306.) Contracts with unlawful cause are also null and Simulation of Contracts and Gross inadequacy of price
void. ===both are distinct concepts.
===when the parties to an alleged contract do not really some form in order that it may be valid or enforceable,
intend to be bound by it, the contract is simulated and or that a contract be proved in a certain way, that
void. requirement is absolute and indispensable. In such cases,
the right of the parties stated in the following article
===A simulated or fictitious contract has no legal effect
cannot be exercised.
whatsoever because there is no real agreement between
the parties. TERMS:

===a contract with inadequate consideration may The form of a contract refers to the manner in which a
nevertheless embody a true agreement between the contract is executed or manifested.
parties.
FORMS OF CONTRACTS
EFFECT OF LESION OR INADEQUACY OF CAUSE:
1. Can be:
A. General Rule: Lesion or inadequacy of cause (e.g.,
a. parol or oral
price of thing sold) does not of itself invalidate a contract.
b. in writing
B. Exemptions: Lesions will invalidate a contract if:
c. partly oral and partly writing (maybe in public
(a) when there has been fraud, mistake, or
or private instrument)
undue influence (Art. 1355.); and
2. Can be:
(b) in cases specified by law. (see Art. 1381.)
a. contained in a SINGLE WRITING
C. Related Provisions:
b. collected in DIFFERENT WRITING.
a. Article 1098
3. Can be:
b. Article 1470
a. encompassed in several instruments (all not
c. Article 1539
signed but made part of the signed instrument)
d. Article 1542
4. Can be:
e. Article 1602
a. a written agreement of which there are two
D. Filial love or affection: — In a case, the Supreme Court copies, one signed by each of the parties is
did “not find the stipulated price as so inadequate to binding on both to the same extent as though
shock the court’s conscience considering that the price there had been only one copy of the agreement
paid was much higher than the assessed value of the and both had signed.
subject properties and considering that the sales were
effected by a father to her daughter in which case filial
love must be taken into account.” WHEN CONTRACT CONSIDERED IN WRITTEN FORM
===in short, Filial love or affection must be taken into In general: to be considered as WRITTEN CONTRACT, its
consideration. Therefore, does not invalidate the terms must be in WRITING.
contract. As long as there is the absence of FRAUD.
==ORAL CONTRACT can be partly in writing and partly
oral.

CHAPTER 3 TWO ASPECTS OF CONTRACTS

FORM OF CONTRACTS ==Article 1318, unless the requisites of consent, object,

and cause concur there is NO CONTRACT.
ART. 1356. Contracts shall be obligatory, in whatever
form they may have been entered into, provided all the ==the concurrence of these elements in the minds of the
essential requisites for their validity are present. parties without expression, will NOT PRODUCE A
However, when the law requires that a contract be in CONTRACT.
Two aspects of contracts: (c) when the law requires that a contract
be in some form for the convenience of
1. Intent or will
the parties or for the purpose of
— This is internal and as long as a contract exists affecting third persons. (Art. 1356.)
merely as a psychological fact, it produces no
No particular form of evidence is
legal effect, because the law cannot take
required to prove the existence of an
cognizance of its existence; and
employer-employee relationship.
2. Expression of such intent or will Hence, the absence of a copy of the
contract of employment will not in any
--It is necessary, in order that the will may manner negate the existence of the
produce legal effect, that it be expressed. This contract.
expression or declaration of the will is its form.
On this basis, contracts are divided into formal FORM FOR VALIDITY OF CONTRACT
and informal.
(1) Donation of real property
CLASSIFICATION OF CONTRACTS ACCORDING TO FORM
— It must be in a public instrument. (Art. 749.)
1. Informal or common contract
(2) Donation of personal property the value of which
or that which may be entered into in whatever exceeds P5k
form, provided, all the essential requisites for
— The donation and acceptance must be in
their validity are present. (Art. 1356.) This refers
writing. (Art. 748.)
only to consensual contracts (Art. 1356.), such as
the contract of sale. An informal contract may be (3) Sale of land through an agent.
oral or written; and
— The authority of the agent must be in writing;
2. Formal or solemn contract otherwise, the sale is void. (Art. 1874.)

or that which is required by law for its efficacy to (4) Contract of antichresis.
be in a certain specified form.
— The amount of the principal and of the
RULES REGARDING FORM OF CONTRACTS interest must be specified in writing. (Art. 2134.)

A. General Rule: — Contracts are binding and, (5) Stipulation to pay interest.
therefore, enforceable reciprocally by the
— It must be in writing; otherwise, no interest is
contracting parties, whatever may be the form in
due. (Art. 1956.)
which the contract has been entered into
provided all the three essential requisites
(consent, object, and cause), for their validity are
present.

B. Exceptions (6) Contract of partnership.

==The form, however, is required in the — If immovables are contributed, it must be in a

following cases: public instrument to which shall be attached a
signed inventory of the immovable property
(a) when the law requires that a contract contributed. (Arts. 1771, 1773.)
be in some form to be valid;
(7) Transfer or sale of large cattle.
(b) when the law requires that a contract
be in some form to be enforceable or — It must be registered (so it must be in a public
proved in a certain way; or instrument) and a certificate of transfer secured.
(Act No. 1147, Sec. 22.)

(8) Negotiable instruments.

 — They must be in writing. (Act No. 2031, Sec. (1) Acts and contracts which have for their object the
1.) creation, transmission, modification or extinguishment
of real rights over immovable property; sales of real
property or of an interest therein are governed by
FORM FOR ENFORCEABILITY OF CONTRACT Articles 1403, No. 2, and 1405;

a. In WRITING –valid (2) The cession, repudiation or renunciation of

hereditary rights or of those of the conjugal partnership
In the cases of contracts covered by the Statute of Frauds, of gains;
the law requires that they be in writing subscribed by the
party charged or by his agent. (3) The power to administer property, or any other
power which has for its object an act appearing or which
b. Not in WRITING—still valid should appear in a public document, or should prejudice
If the contract is not in writing, the contract is valid a third person;
(assuming all the essential elements are present) but, (4) The cession of actions or rights proceeding from an
upon the objection of a party, it cannot be proved and, act appearing in a public document. All other contracts
therefore, it cannot be enforced unless it is ratified. 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
ART. 1357. If the law requires a document or other Articles 1403, No. 2 and 1405. (1280a)
special form, as in the acts and contracts enumerated in
the following article, the contracting parties may compel CONTRACT WHICH MUST APPEAR IN A PUBLIC
each other to observe that form, once the contract has INSTRUMENT
been perfected. This right may be exercised The contracts covered by this article are valid and
simultaneously with the action upon the contract. enforceable though not embodied in a public document
(1279a) or instrument or in writing. The public document is
FORM FOR THE CONVENIENCE OF THE PARTIES required only for the convenience and greater protection
of the parties and registration is needed only to make the
==In certain cases, a certain form (e.g., public contract effective as against third persons
instrument) is required for the convenience of the
parties in order that the contract may be registered in a public document or instrument is one which is
the proper registry to make effective, as against third acknowledged before a notary public or any official
persons, the right acquired under such contract. authorized to administer oath, by the person who
executed the same.
==Non-compliance with the required form would not
adversely affect the validity nor enforceability of the PROBATIVE VALUE OF PUBLIC DOCUMENTS
contract between the parties themselves. (1) The effect of the notarization of a private document
== As between the parties, the form is not indispensable is to convert the said document into a public one and
since they are allowed by law to compel the other to render it admissible in evidence in court without further
observe the proper form and this right may be exercised proof of its authenticity and due execution.
simultaneously with the action to enforce the contract. (2) Public documents are entitled to full faith and credit
It is essential, however, before a party may be compelled on their face in the absence of any clear and convincing
to execute the required form, that the contract be both evidence, more than merely preponderant, that their
valid and enforceable. execution was tainted by defects or irregularities that
would warrant a declaration of nullity

ART. 1358. The following must appear in a public (3) They enjoy the presumption of validity and regularity.
document: It is not, however, the intention nor the function of the
notary public to validate and make binding an instrument
never, in the first place, intended to have any binding
legal effect upon the parties thereto. Furthermore, document, any provision of the Act may be
notarization per se is not a guarantee of the validity of varied by agreement between and among them.
the contents of a document. (Sec. 38, Ibid.)

ACTION TO COMPEL EXECUTION OF CONTRACT IN

PUBLIC INSTRUMENT

Under Article 1357, the parties may compel each other

to have the contract reduced in proper form and the
action may be fi led simultaneously with the suit to
enforce the contract. But the latter action may be
brought without the bringing of the former. The
reduction to writing in a public or private document,
required by the law with respect to certain contracts, is
not an essential requisite of their existence, but is simply
a coercive power granted to the contracting parties by
which they can reciprocally compel the observance of
these formal requisites.

The contract can be enforced even if it may not be in

writing.

LEGAL RECOGNITION OF ELECTRONIC DATA MESSAGES

AND ELECTRONIC DOCUMENTS

R.A. No. 8792, otherwise known as the “Electronic

Commerce Act5 (June 14, 2000) gives legal recognition to
any kind of electronic data message and electronic
document used in the context of commercial and non-
commercial activities to include domestic and
international dealings, transactions, arrangements,
agreements, contracts and exchanges and storage of
information. (Sec. 4, Ibid.)

(1) Electronic data message

- Information shall not be denied validity or

enforceability solely on the ground that it is in
the form of an electronic data message
purporting to give rise to such legal effect, or
that it is merely incorporated by reference in
that electronic data message.

(2) Electronic documents

- Electronic documents shall have the legal

effect, validity or enforceability as any other
document or legal writing, and —

(3) Variation by agreement.

— As between parties involved in generating,

sending, receiving, storing or otherwise
processing electronic data message or electronic